EN BANC

G.R. No. 78909 June 30, 1989

MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO,
President, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR OF LABOR,
REGION X, respondents.

MEDIALDEA, J.:
This is a petition for certiorari seeking the annulment of the Decision of the respondent Secretary
of Labor dated September 24, 1986, affirming with modification the Order of respondent Regional
Director of Labor, Region X, dated August 4, 1986, awarding salary differentials and emergency
cost of living allowances (ECOLAS) to employees of petitioner, and the Order denying petitioner's
motion for reconsideration dated May 13, 1987, on the ground of grave abuse of discretion.
Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de
Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover
President. The hospital derives its finances from the club itself as well as from paying patients,
averaging 130 per month. It is also partly subsidized by the Philippine Charity Sweepstakes
Office and the Cagayan De Oro City government.
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees
are given food, but the amount spent therefor is deducted from their respective salaries (pp. 77-
78, Rollo).
On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions
filed a complaint with the Office of the Regional Director of Labor and Employment, Region X, for
underpayment of their salaries and ECOLAS, which was docketed as ROX Case No. CW-71-86.
On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers
to inspect the records of the petitioner to ascertain the truth of the allegations in the complaints
(p. 98, Rollo). Payrolls covering the periods of May, 1974, January, 1985, November, 1985 and
May, 1986, were duly submitted for inspection.
On July 17, 1986, the Labor Standard and Welfare Officers submitted their report confirming that
there was underpayment of wages and ECOLAs of all the employees by the petitioner, the
dispositive portion of which reads:
IN VIEW OF THE FOREGOING, deficiency on wage and ecola as verified and confirmed per review
of the respondent payrolls and interviews with the complainant workers and all other information
gathered by the team, it is respectfully recommended to the Honorable Regional Director, this
office, that Antera Dorado, President be ORDERED to pay the amount of SIX HUNDRED FIFTY
FOUR THOUSAND SEVEN HUNDRED FIFTY SIX & 01/100 (P654,756.01), representing
underpayment of wages and ecola to the THIRTY SIX (36) employees of the said hospital as
appearing in the attached Annex "F" worksheets and/or whatever action equitable under the
premises. (p. 99, Rollo)
Based on this inspection report and recommendation, the Regional Director issued an Order
dated August 4, 1986, directing the payment of P723,888.58, representing underpayment of
wages and ECOLAs to all the petitioner's employees, the dispositive portion of which reads:

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WHEREFORE, premises considered, respondent Maternity and Children Hospital is hereby ordered
to pay the above-listed complainants the total amount indicated opposite each name, thru this
Office within ten (10) days from receipt thereof. Thenceforth, the respondent hospital is also
ordered to pay its employees/workers the prevailing statutory minimum wage and allowance.
SO ORDERED. (p. 34, Rollo)
Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S.
Sanchez, who rendered a Decision on September 24, 1986, modifying the said Order in that
deficiency wages and ECOLAs should be computed only from May 23, 1983 to May 23, 1986, the
dispositive portion of which reads:
WHEREFORE, the August 29, 1986 order is hereby MODIFIED in that the deficiency wages and
ECOLAs should only be computed from May 23, 1983 to May 23, 1986. The case is remanded to
the Regional Director, Region X, for recomputation specifying the amounts due each the
complainants under each of the applicable Presidential Decrees. (p. 40, Rollo)
On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the
Secretary of Labor in his Order dated May 13, 1987, for lack of merit (p. 43 Rollo).
The instant petition questions the all-embracing applicability of the award involving salary
differentials and ECOLAS, in that it covers not only the hospital employees who signed the
complaints, but also those (a) who are not signatories to the complaint, and (b) those who were
no longer in the service of the hospital at the time the complaints were filed.
Petitioner likewise maintains that the Order of the respondent Regional Director of Labor, as
affirmed with modifications by respondent Secretary of Labor, does not clearly and distinctly
state the facts and the law on which the award was based. In its "Rejoinder to Comment",
petitioner further questions the authority of the Regional Director to award salary differentials
and ECOLAs to private respondents, (relying on the case of Encarnacion vs. Baltazar, G.R. No. L-
16883, March 27, 1961, 1 SCRA 860, as authority for raising the additional issue of lack of
jurisdiction at any stage of the proceedings, p. 52, Rollo), alleging that the original and exclusive
jurisdiction over money claims is properly lodged in the Labor Arbiter, based on Article 217,
paragraph 3 of the Labor Code.
The primary issue here is whether or not the Regional Director had jurisdiction over the case and
if so, the extent of coverage of any award that should be forthcoming, arising from his visitorial
and enforcement powers under Article 128 of the Labor Code. The matter of whether or not the
decision states clearly and distinctly statement of facts as well as the law upon which it is based,
becomes relevant after the issue on jurisdiction has been resolved.
This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by
E.O. No. 111. Labor standards refer to the minimum requirements prescribed by existing laws,
rules, and regulations relating to wages, hours of work, cost of living allowance and other
monetary and welfare benefits, including occupational, safety, and health standards (Section 7,
Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September
16, 1987). 1 Under the present rules, a Regional Director exercises both visitorial and
enforcement power over labor standards cases, and is therefore empowered to adjudicate money
claims, provided there still exists an employer-employee relationship, and the findings of the
regional office is not contested by the employer concerned.
Prior to the promulgation of E.O. No. 111 on December 24, 1986, the Regional Director's
authority over money claims was unclear. The complaint in the present case was filed on May 23,
1986 when E.O. No. 111 was not yet in effect, and the prevailing view was that stated in the case
of Antonio Ong, Sr. vs. Henry M. Parel, et al., G.R. No. 76710, dated December 21, 1987, thus:

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. . . the Regional Director, in the exercise of his visitorial and enforcement powers under Article
128 of the Labor Code, has no authority to award money claims, properly falling within the
jurisdiction of the labor arbiter. . . .
. . . If the inspection results in a finding that the employer has violated certain labor standard
laws, then the regional director must order the necessary rectifications. However, this does not
include adjudication of money claims, clearly within the ambit of the labor arbiter's authority
under Article 217 of the Code.
The Ong case relied on the ruling laid down in Zambales Base Metals Inc. vs. The Minister of
Labor, et al., (G.R. Nos. 73184-88, November 26, 1986, 146 SCRA 50) that the "Regional Director
was not empowered to share in the original and exclusive jurisdiction conferred on Labor Arbiters
by Article 217."
We believe, however, that even in the absence of E. O. No. 111, Regional Directors already had
enforcement powers over money claims, effective under P.D. No. 850, issued on December 16,
1975, which transferred labor standards cases from the arbitration system to the enforcement
system.
To clarify matters, it is necessary to enumerate a series of rules and provisions of law on the
disposition of labor standards cases.
Prior to the promulgation of PD 850, labor standards cases were an exclusive function of labor
arbiters, under Article 216 of the then Labor Code (PD No. 442, as amended by PD 570-a), which
read in part:
Art. 216. Jurisdiction of the Commission. The Commission shall have exclusive appellate
jurisdiction over all cases decided by the Labor Arbiters and compulsory arbitrators.
The Labor Arbiters shall have exclusive jurisdiction to hear and decide the following cases
involving all workers whether agricultural or non-agricultural.
xxx xxx xxx
(c) All money claims of workers, involving non-payment or underpayment of wages, overtime
compensation, separation pay, maternity leave and other money claims arising from employee-
employer relations, except claims for workmen's compensation, social security and medicare
benefits;
(d) Violations of labor standard laws;
xxx xxx xxx
(Emphasis supplied)
The Regional Director exercised visitorial rights only under then Article 127 of the Code as
follows:
ART. 127. Visitorial Powers. The Secretary of Labor or his duly authorized representatives,
including, but not restricted, to the labor inspectorate, shall have access to employers' records
and premises at any time of the day or night whenever work is being undertaken therein, and the
right to copy therefrom, to question any employee and investigate any fact, condition or matter
which may be necessary to determine violations or in aid in the enforcement of this Title and of
any Wage Order or regulation issued pursuant to this Code.
With the promulgation of PD 850, Regional Directors were given enforcement powers, in
addition to visitorial powers. Article 127, as amended, provided in part:

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SEC. 10. Article 127 of the Code is hereby amended to read as follows:
Art. 127. Visitorial and enforcement powers.
xxx xxx xxx
(b) The Secretary of Labor or his duly authorized representatives shall have the power to order
and administer, after due notice and hearing, compliance with the labor standards provisions of
this Code based on the findings of labor regulation officers or industrial safety engineers made in
the course of inspection, and to issue writs of execution to the appropriate authority for the
enforcement of their order.
xxx xxx xxx
Labor Arbiters, on the other hand, lost jurisdiction over labor standards cases. Article 216, as
then amended by PD 850, provided in part:
SEC. 22. Article 216 of the Code is hereby amended to read as follows:
Art. 216. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall
have exclusive jurisdiction to hear and decide the following cases involving all workers, whether
agricultural or non-agricultural:
xxx xxx xxx
(3) All money claims of workers involving non-payment or underpayment of wages, overtime or
premium compensation, maternity or service incentive leave, separation pay and other money
claims arising from employer-employee relations, except claims for employee's compensation,
social security and medicare benefits and as otherwise provided in Article 127 of this Code.
xxx xxx xxx
(Emphasis supplied)
Under the then Labor Code therefore (PD 442 as amended by PD 570-a, as further amended by
PD 850), there were three adjudicatory units: The Regional Director, the Bureau of Labor
Relations and the Labor Arbiter. It became necessary to clarify and consolidate all governing
provisions on jurisdiction into one document. 2 On April 23, 1976, MOLE Policy Instructions No. 6
was issued, and provides in part (on labor standards cases) as follows:
POLICY INSTRUCTIONS NO. 6
TO: All Concerned
SUBJECT: DISTRIBUTION OF JURISDICTION OVER LABOR CASES
xxx xxx xxx
1. The following cases are under the exclusive original jurisdiction of the Regional Director.
a) Labor standards cases arising from violations of labor standard laws discovered in the course
of inspection or complaints where employer-employee relations still exist;
xxx xxx xxx
2. The following cases are under the exclusive original jurisdiction of the Conciliation Section of
the Regional Office:
a) Labor standards cases where employer-employee relations no longer exist;
xxx xxx xxx
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6. The following cases are certifiable to the Labor Arbiters:
a) Cases not settled by the Conciliation Section of the Regional Office, namely:
1) labor standard cases where employer-employee relations no longer exist;
xxx xxx xxx
(Emphasis supplied)
MOLE Policy Instructions No. 7 (undated) was likewise subsequently issued, enunciating the
rationale for, and the scope of, the enforcement power of the Regional Director, the first and
second paragraphs of which provide as follows:
POLICY INSTRUCTIONS NO. 7
TO: All Regional Directors
SUBJECT: LABOR STANDARDS CASES
Under PD 850, labor standards cases have been taken from the arbitration system and placed
under the enforcement system, except where a) questions of law are involved as determined by
the Regional Director, b) the amount involved exceeds P100,000.00 or over 40% of the equity of
the employer, whichever is lower, c) the case requires evidentiary matters not disclosed or
verified in the normal course of inspection, or d) there is no more employer-employee
relationship.
The purpose is clear: to assure the worker the rights and benefits due to him under labor
standards laws without having to go through arbitration. The worker need not litigate to get what
legally belongs to him. The whole enforcement machinery of the Department of Labor exists to
insure its expeditious delivery to him free of charge. (Emphasis supplied)
Under the foregoing, a complaining employee who was denied his rights and benefits due him
under labor standards law need not litigate. The Regional Director, by virtue of his enforcement
power, assured "expeditious delivery to him of his rights and benefits free of charge", provided of
course, he was still in the employ of the firm.
After PD 850, Article 216 underwent a series of amendments (aside from being re-numbered as
Article 217) and with it a corresponding change in the jurisdiction of, and supervision over, the
Labor Arbiters:
1. PD 1367 (5-1-78) gave Labor Arbiters exclusive jurisdiction over unresolved issues in
collective bargaining, etc., and those cases arising from employer-employee relations duly
indorsed by the Regional Directors. (It also removed his jurisdiction over moral or other
damages) In other words, the Labor Arbiter entertained cases certified to him. (Article 228, 1978
Labor Code.)
2. PD 1391 (5-29-78) all regional units of the National Labor Relations Commission (NLRC)
were integrated into the Regional Offices Proper of the Ministry of Labor; effectively transferring
direct administrative control and supervision over the Arbitration Branch to the Director of the
Regional Office of the Ministry of Labor. "Conciliable cases" which were thus previously under the
jurisdiction of the defunct Conciliation Section of the Regional Office for purposes of conciliation
or amicable settlement, became immediately assignable to the Arbitration Branch for
joint conciliation and compulsory arbitration. In addition, the Labor Arbiter had jurisdiction even
over termination and labor-standards cases that may be assigned to them for compulsory
arbitration by the Director of the Regional Office. PD 1391 merged conciliation and compulsory
arbitration functions in the person of the Labor Arbiter. The procedure governing the disposition
of cases at the Arbitration Branch paralleled those in the Special Task Force and Field Services
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Division, with one major exception: the Labor Arbiter exercised full and untrammelled authority
in the disposition of the case, particularly in the substantive aspect, his decisions and orders
subject to review only on appeal to the NLRC. 3
3. MOLE Policy Instructions No. 37 Because of the seemingly overlapping functions as a result
of PD 1391, MOLE Policy Instructions No. 37 was issued on October 7, 1978, and provided in part:
POLICY INSTRUCTIONS NO. 37
TO: All Concerned
SUBJECT: ASSIGNMENT OF CASES TO LABOR ARBITERS
Pursuant to the provisions of Presidential Decree No. 1391 and to insure speedy disposition of
labor cases, the following guidelines are hereby established for the information and guidance of
all concerned.
1. Conciliable Cases.
Cases which are conciliable per se i.e., (a) labor standards cases where employer-employee
relationship no longer exists; (b) cases involving deadlock in collective bargaining, except those
falling under P.D. 823, as amended; (c) unfair labor practice cases; and (d) overseas employment
cases, except those involving overseas seamen, shall be assigned by the Regional Director to the
Labor Arbiter for conciliation and arbitration without coursing them through the conciliation
section of the Regional Office.
2. Labor Standards Cases.
Cases involving violation of labor standards laws where employer- employee relationship still
exists shall be assigned to the Labor Arbiters where:
a) intricate questions of law are involved; or
b) evidentiary matters not disclosed or verified in the normal course of inspection by labor
regulations officers are required for their proper disposition.
3. Disposition of Cases.
When a case is assigned to a Labor Arbiter, all issues raised therein shall be resolved by him
including those which are originally cognizable by the Regional Director to avoid multiplicity of
proceedings. In other words, the whole case, and not merely issues involved therein, shall be
assigned to and resolved by him.
xxx xxx xxx
(Emphasis supplied)
4. PD 1691(5-1-80) original and exclusive jurisdiction over unresolved issues in collective
bargaining and money claims, which includes moral or other damages.
Despite the original and exclusive jurisdiction of labor arbiters over money claims, however, the
Regional Director nonetheless retained his enforcement power, and remained empowered to
adjudicate uncontested money claims.
5. BP 130 (8-21-8l) strengthened voluntary arbitration. The decree also returned the Labor
Arbiters as part of the NLRC, operating as Arbitration Branch thereof.
6. BP 227(6-1- 82) original and exclusive jurisdiction over questions involving legality of strikes
and lock-outs.

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The present petition questions the authority of the Regional Director to issue the Order, dated
August 4, 1986, on the basis of his visitorial and enforcement powers under Article 128 (formerly
Article 127) of the present Labor Code. It is contended that based on the rulings in the Ong vs.
Parel (supra) and the Zambales Base Metals, Inc. vs. The Minister of Labor (supra) cases, a
Regional Director is precluded from adjudicating money claims on the ground that this is an
exclusive function of the Labor Arbiter under Article 217 of the present Code.
4
On August 4, 1986, when the order was issued, Article 128(b) read as follows:
(b) The Minister of Labor or his duly authorized representatives shall have the power to order and
administer, after due notice and hearing, compliance with the labor standards provisions of this
Code based on the findings of labor regulation officers or industrial safety engineers made in the
course of inspection, and to issue writs of execution to the appropriate authority for the
enforcement of their order, except in cases where the employer contests the findings of the labor
regulations officer and raises issues which cannot be resolved without considering evidentiary
matters that are not verifiable in the normal course of inspection. (Emphasis supplied)
On the other hand, Article 217 of the Labor Code as amended by P.D. 1691, effective May 1,
1980; Batas Pambansa Blg. 130, effective August 21, 1981; and Batas Pambansa Blg. 227,
effective June 1, 1982, inter alia, provides:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have
the original and exclusive jurisdiction to hear and decide within thirty (30) working days after
submission of the case by the parties for decision, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other terms and conditions of
employment;
3. All money claims of workers, including those based on non-payment or underpayment of
wages, overtime compensation, separation pay and other benefits provided by law or
appropriate agreement, except claims for employees' compensation, social security, medicare
and maternity benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including questions involving the
legality of strikes and lock-outs. (Emphasis supplied)
The Ong and Zambales cases involved workers who were still connected with the company.
However, in the Ong case, the employer disputed the adequacy of the evidentiary foundation
(employees' affidavits) of the findings of the labor standards inspectors while in the Zambales
case, the money claims which arose from alleged violations of labor standards provisions were
not discovered in the course of normal inspection. Thus, the provisions of MOLE Policy
Instructions Nos. 6, (Distribution of Jurisdiction Over Labor Cases) and 37 (Assignment of Cases
to Labor Arbiters) giving Regional Directors adjudicatory powers over uncontested money claims
discovered in the course of normal inspection, provided an employer-employee relationship still
exists, are inapplicable.
In the present case, petitioner admitted the charge of underpayment of wages to workers still in
its employ; in fact, it pleaded for time to raise funds to satisfy its obligation. There was thus no
contest against the findings of the labor inspectors.

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Barely less than a month after the promulgation on November 26, 1986 of the Zambales Base
Metals case, Executive Order No. 111 was issued on December 24, 1986, 5 amending Article
128(b) of the Labor Code, to read as follows:
(b) THE PROVISIONS OF ARTICLE 217 OF THIS CODE TO THE CONTRARY NOTWITHSTANDING AND
IN CASES WHERE THE RELATIONSHIP OF EMPLOYER-EMPLOYEE STILL EXISTS, the Minister of
Labor and Employment or his duly authorized representatives shall have the power to order and
administer, after due notice and hearing, compliance with the labor standards provisions of this
Code AND OTHER LABOR LEGISLATION based on the findings of labor regulation officers or
industrial safety engineers made in the course of inspection, and to issue writs of execution to
the appropriate authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor regulation officer and raises issues which cannot be
resolved without considering evidentiary matters that are not verifiable in the normal course of
inspection. (Emphasis supplied)
As seen from the foregoing, EO 111 authorizes a Regional Director to order compliance by an
employer with labor standards provisions of the Labor Code and other legislation. It is Our
considered opinion however, that the inclusion of the phrase, " The provisions of Article 217 of
this Code to the contrary notwithstanding and in cases where the relationship of employer-
employee still exists" ... in Article 128(b), as amended, above-cited,
merely confirms/reiterates the enforcement adjudication authority of the Regional Director
over uncontested money claims in cases where an employer-employee relationship still exists. 6
Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos. 6, 7 and
37, it is clear that it has always been the intention of our labor authorities to provide our workers
immediate access (when still feasible, as where an employer-employee relationship still exists) to
their rights and benefits, without being inconvenienced by arbitration/litigation processes that
prove to be not only nerve-wracking, but financially burdensome in the long run.
Note further the second paragraph of Policy Instructions No. 7 indicating that the transfer of labor
standards cases from the arbitration system to the enforcement system is
. . to assure the workers the rights and benefits due to him under labor standard laws, without
having to go through arbitration. . .
so that
. . the workers would not litigate to get what legally belongs to him. .. ensuring delivery . . free of
charge.
Social justice legislation, to be truly meaningful and rewarding to our workers, must not be
hampered in its application by long-winded arbitration and litigation. Rights must be asserted
and benefits received with the least inconvenience. Labor laws are meant to promote, not defeat,
social justice.
This view is in consonance with the present "Rules on the Disposition of Labor Standard Cases in
the Regional Offices " 7 issued by the Secretary of Labor, Franklin M. Drilon on September 16,
1987.
Thus, Sections 2 and 3 of Rule II on "Money Claims Arising from Complaint Routine Inspection",
provide as follows:
Section 2. Complaint inspection. All such complaints shall immediately be forwarded to the
Regional Director who shall refer the case to the appropriate unit in the Regional Office for
assignment to a Labor Standards and Welfare Officer (LSWO) for field inspection. When the field

8
inspection does not produce the desired results, the Regional Director shall summon the parties
for summary investigation to expedite the disposition of the case. . . .
Section 3. Complaints where no employer-employee relationship actually exists. Where
employer-employee relationship no longer exists by reason of the fact that it has already been
severed, claims for payment of monetary benefits fall within the exclusive and original
jurisdiction of the labor arbiters. . . . (Emphasis supplied)
Likewise, it is also clear that the limitation embodied in MOLE Policy Instructions No. 7 to
amounts not exceeding P100,000.00 has been dispensed with, in view of the following provisions
of pars. (b) and (c), Section 7 on "Restitution", the same Rules, thus:
xxx xxx xxx
(b) Plant-level restitutions may be effected for money claims not exceeding Fifty Thousand
(P50,000.00). . . .
(c) Restitutions in excess of the aforementioned amount shall be effected at the Regional Office
or at the worksite subject to the prior approval of the Regional Director.
which indicate the intention to empower the Regional Director to award money claims in
excess of P100,000.00; provided of course the employer does not contest the findings made,
based on the provisions of Section 8 thereof:
Section 8. Compromise agreement. Should the parties arrive at an agreement as to the whole
or part of the dispute, said agreement shall be reduced in writing and signed by the parties in the
presence of the Regional Director or his duly authorized representative.
E.O. No. 111 was issued on December 24, 1986 or three (3) months after the promulgation of the
Secretary of Labor's decision upholding private respondents' salary differentials and ECOLAs on
September 24, 1986. The amendment of the visitorial and enforcement powers of the Regional
Director (Article 128-b) by said E.O. 111 reflects the intention enunciated in Policy Instructions
Nos. 6 and 37 to empower the Regional Directors to resolve uncontested money claims in cases
where an employer-employee relationship still exists. This intention must be given weight and
entitled to great respect. As held in Progressive Workers' Union, et. al. vs. F.P. Aguas, et. al. G.R.
No. 59711-12, May 29, 1985, 150 SCRA 429:
. . The interpretation by officers of laws which are entrusted to their administration is entitled to
great respect. We see no reason to detract from this rudimentary rule in administrative law,
particularly when later events have proved said interpretation to be in accord with the legislative
intent. ..
The proceedings before the Regional Director must, perforce, be upheld on the basis of Article
128(b) as amended by E.O. No. 111, dated December 24, 1986, this executive order "to be
considered in the nature of a curative statute with retrospective application." (Progressive
Workers' Union, et al. vs. Hon. F.P. Aguas, et al. (Supra); M. Garcia vs. Judge A. Martinez, et al.,
G.R. No. L- 47629, May 28, 1979, 90 SCRA 331).
We now come to the question of whether or not the Regional Director erred in extending the
award to all hospital employees. We answer in the affirmative.
The Regional Director correctly applied the award with respect to those employees
who signed the complaint, as well as those who did not sign the complaint, but were still
connected with the hospital at the time the complaint was filed (See Order, p. 33 dated August 4,
1986 of the Regional Director, Pedrito de Susi, p. 33, Rollo).

9
The justification for the award to this group of employees who were not signatories to the
complaint is that the visitorial and enforcement powers given to the Secretary of Labor is
relevant to, and exercisable over establishments, not over the individual members/employees,
because what is sought to be achieved by its exercise is the observance of, and/or compliance
by, such firm/establishment with the labor standards regulations. Necessarily, in case of an
award resulting from a violation of labor legislation by such establishment, the entire
members/employees should benefit therefrom. As aptly stated by then Minister of Labor Augusto
S. Sanchez:
. . It would be highly derogatory to the rights of the workers, if after categorically finding the
respondent hospital guilty of underpayment of wages and ECOLAs, we limit the award to only
those who signed the complaint to the exclusion of the majority of the workers who are similarly
situated. Indeed, this would be not only render the enforcement power of the Minister of Labor
and Employment nugatory, but would be the pinnacle of injustice considering that it would not
only discriminate but also deprive them of legislated benefits.
. . . (pp. 38-39, Rollo).
This view is further bolstered by the provisions of Sec. 6, Rule II of the "Rules on the Disposition
of Labor Standards cases in the Regional Offices" (supra) presently enforced, viz:
SECTION 6. Coverage of complaint inspection. A complaint inspection shall not be limited to
the specific allegations or violations raised by the complainants/workers but shall be a thorough
inquiry into and verification of the compliance by employer with existing labor standards and
shall cover all workers similarly situated. (Emphasis supplied)
However, there is no legal justification for the award in favor of those employees who were no
longer connected with the hospital at the time the complaint was filed, having resigned
therefrom in 1984, viz:
1. Jean (Joan) Venzon (See Order, p. 33, Rollo) 6. Teresita Agcopra
2. Rosario Paclijan 7. Felix Monleon
3. Adela Peralta 8. Teresita Salvador
4. Mauricio Nagales 9. Edgar Cataluna
5. Consesa Bautista 10. Raymond Manija (p.7 Rollo)
The enforcement power of the Regional Director cannot legally be upheld in cases of separated
employees. Article 129 of the Labor Code, cited by petitioner (p. 54, Rollo) is not applicable as
said article is in aid of the enforcement power of the Regional Director; hence, not applicable
where the employee seeking to be paid underpayment of wages is already separated from the
service. His claim is purely a money claim that has to be the subject of arbitration proceedings
and therefore within the original and exclusive jurisdiction of the Labor Arbiter.
Petitioner has likewise questioned the order dated August 4, 1986 of the Regional Director in that
it does not clearly and distinctly state the facts and the law on which the award is based.
We invite attention to the Minister of Labor's ruling thereon, as follows:
Finally, the respondent hospital assails the order under appeal as null and void because it does
not clearly and distinctly state the facts and the law on which the awards were based. Contrary
to the pretensions of the respondent hospital, we have carefully reviewed the order on appeal
and we found that the same contains a brief statement of the (a) facts of the case; (b) issues
involved; (c) applicable laws; (d) conclusions and the reasons therefor; (e) specific remedy
granted (amount awarded). (p. 40, Rollo)

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ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all
persons still employed in the Hospital at the time of the filing of the complaint, but GRANTED as
regards those employees no longer employed at that time. SO ORDERED.
FIRST DIVISION
[G.R. No. 132564. October 20, 1999]
SAMEER OVERSEAS PLACEMENT AGENCY, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, Third Division, Q.C. and PRISCILA ENDOZO, respondents.
DECISION
PARDO, J.:
The case before the Court is a special civil action for certiorari with application for a temporary
restraining order seeking to set aside the resolution of the National Labor Relations Commission
affirming in toto the decision of Labor Arbiter Andres C. Zaballa finding the termination of
employment of respondent Priscila Endozo as domestic helper in Taiwan as unwarranted and
ordering petitioner to pay her salary for the unexpired portion of her contract of employment of
eleven (11) months and (19) nineteen days amounting to NT$151,996.60, plus ten percent (10%)
thereof as attorney's fees.
The facts are as follows:
In June 1993, respondent Priscila Endozo applied to petitioner Sameer Overseas Employment
Agency, a local recruitment placement agency, for overseas employment in Taiwan as a
domestic helper. As she was initially found to have a "minimal spot" she was advised to rest for
at least two (2) months.
On April 6, 1994, petitioner told respondent Endozo that she would be finally deployed to Taiwan
and required her to pay the amount of P30,000.00, which she did, but petitioner did not issue
any receipt.
On April 8, 1994, respondent Endozo left for Taiwan. She was to be employed as a housemaid of
Sung Kui Mei with a monthly salary of NT$13,380.00 for a period of one year.
However, she stayed in Taiwan only for eleven (11) days as her employer terminated her
services, and sent her home on April 19, 1994 for alleged incompetence.
Immediately upon her return, she confronted petitioner agency and Rose Mahinay of said agency
told her that she was just unlucky and that she would be refunded the amount of P50,000.00.
On June 20, 1995, private respondent filed with the Philippine Overseas Employment
Administration a complaint against petitioner for illegal dismissal, payment of salary
corresponding to the unexpired portion of her contract, illegal exaction, violation of the Labor
Code, falsification of contract of employment, attorneys fees and costs.
Meantime, on June 7, 1995, Congress enacted Republic Act No. 8042, vesting jurisdiction over
claims of overseas workers with the National Labor Relations Commission (hereafter
NLRC).Consequently, respondents claim was transferred to the National Labor Relations
Commission, Arbitration Branch, in San Pablo City.
After position papers were filed, on May 28, 1997, Labor Arbiter Andres C. Zavalla rendered a
decision finding that private respondent was illegally dismissed and ordering petitioner to pay
her salary corresponding to the unexpired portion of her contract of employment of eleven (11)
months and nineteen (19) days equivalent to NT$151,996.80, plus ten percent (10%) of the
award equivalent to NT$15,199.68 as attorney's fees. [1]
11
In time, petitioner appealed the decision to the National Labor Relations Commission, Third
Division, Quezon City.
On November 28, 1997, the NLRC rendered decision affirming in toto the decision of the Labor
Arbiter.[2]
On December 23, 1997, petitioner filed with the NLRC a motion for reconsideration; [3] however,
on January 28, 1998, the NLRC denied the motion. [4]
Hence, this recourse.[5]
On May 14, 1998, we required respondents to comment on the petition within ten (10) days from
notice.[6] On July 13, 1998, the Solicitor General filed his comment, submitting the proposition
that private respondent had been illegally dismissed by her foreign employer entitling her to
payment of her salaries corresponding to the unexpired portion of her contract. [7] However,
private respondent failed to submit her comment, and on February 1, 1999, we required her
counsel to show cause why she should not be disciplinarily dealt with or held in contempt for
such failure.[8]
We now resolve to give due course to the petition. We consider private respondent to have
waived the filing of her comment and set aside the resolution of February 1, 1999.
The issue presented is whether the employer in Taiwan could lawfully terminate private
respondent's employment as domestic helper for incompetence during the probationary period
of her employment.
Petitioner recruited private respondent for employment in Taiwan, and she executed a contract of
employment with her Taiwanese employer under which she was to serve as domestic helper for a
period of one year, with six months probationary period. After only eleven days of work, the
Taiwanese employer terminated private respondent's employment for alleged incompetence.
It is an elementary rule in the law on labor relations that even a probationary employee is
entitled to security of tenure. [9] A probationary employee can not be terminated, except for
cause.[10]
In this case, the employment contract was for a definite period of one (1) year, with six (6)
months probationary period. After only eleven days of work, the employer dismissed
private respondent without just cause.
Under Article 281 of the Labor Code, a probationary employee may be terminated on two
grounds: (a) for just cause or (b) when he fails to qualify as a regular employee in accordance
with reasonable standards made known by the employer to the employee at the time of his
engagement.[11] Under the contract of employment, the employer may terminate the services of
private respondent during the probationary period for "being found losing ability to work."
However, the power of the employer to terminate a probationary employment contract is subject
to limitations. First, it must be exercised in accordance with the specific requirements of the
contract. Secondly, the dissatisfaction of the employer must be real and in good faith, not
feigned so as to circumvent the contract or the law; and thirdly, there must be no unlawful
discrimination in the dismissal.[12] In termination cases, the burden of proving just or valid cause
for dismissing an employee rests on the employer. [13] In this case, petitioner was not able to
present convincing proof establishing respondent Endozos alleged incompetence. Due process
dictates that an employee be apprised beforehand of the conditions of his employment and of
the terms of advancement therein. [14] Precisely, implicit in Article 281 of the Code is the
requirement that reasonable standards be previously made known by the employer to the
probationary employee at the time of his engagement. [15] Thus, the termination of respondent
Endozos employment was not justified[16] and hence, illegal.[17] Consequently, private respondent
12
is entitled to payment of her salaries corresponding to the unexpired portion of her contract of
employment for a period of one year.[18]
WHEREFORE, the Court hereby DISMISSES the petition and AFFIRMS the resolution of the
National Labor Relations Commission adopted on November 28, 1997, in NLRC NCR CA No.
013114-97.
No costs.
SO ORDERED.

FIRST DIVISION
[G.R. No. 117378. March 26, 1997]
GIL CAPILI and RICARDO CAPILI, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, National Capital Region (First Division), BENIGNO SANTOS, DELFIN
YUSON, LUISITO SANTOS, URSINO BASISTER, RICARDO REYES, JOSELITO SANTOS,
JORGE BINUYA and NICOLAS MULINGBAYAN, respondents.
DECISION
BELLOSILLO, J.:
Respondents Benigno Santos, Delfin Yuson, Luisito Santos, Ursino Basister, Ricardo Reyes,
Joselito Santos, Jorge Binuya and Nicolas Mulingbayan are licensed drivers of public
utilityjeepneys plying the Libertad-Sta. Cruz route in Manila. The jeepneys were formerly owned
by petitioner Gil Capili. For the use of the jeepney for twelve hours a driver would pay rent or so-
called "boundary" of P280.00 and earn a net profit of P200.00 per day.
On 7 May 1991, at a time when petitioner Ricardo Capili jointly with his wife had assumed
ownership and operation of the jeepneys driven by private respondents, the latter and the other
drivers similarly situated were required by the jeepney operators to sign individually contracts of
lease of the jeepneys to formalize their lessor-lessee relationship. However, having gathered the
impression that the signing of the contracts of lease was a condition precedent before they could
continue driving for petitioners, all the drivers stopped plying their assigned routes beginning 7
May 1991.
A week later or on 14 May 1991 the drivers, numbering twenty-two (22), filed a complaint for
illegal dismissal before the Labor Arbiter praying not for reinstatement but for separation pay.[1]
In the interim, fourteen (14) of the complainants desisted and resumed plying their routes. The
remaining eight (8) complaintants with their reckoning dates of employment follow: (a) Benigno
Santos, 1972; (b) Jorge Binuya, 1965; (c) Luisito Santos, 1982; (d) Delfin Yuson, 1983; (e) Ursino
Basister, 1980; (f) Ricardo Reyes, 1985; (g) Joselito Santos, 1989; and, (h) Nicolas Mulingbayan,
1978.
Petitioners opposed the claim of private respondents before the Labor Arbiter alleging that the
latter voluntarily abandoned their respective jobs without any valid cause and thereafter refused

13
and still continue to refuse to return to work despite repeated demands and/or notices given to
them to return to work.
In resolving the dispute, the Labor Arbiter ruled -
On the issue of dismissal versus abandonment, we are inclined to believe that the latter scenario
happened. It is not sound business practice to dismiss many employees at the same time since it
would cripplethe operations.
What was more likely was that the drivers, all 22 of them x x x boycotted respondents on May 7,
1991 by not reporting for work on that day.
xxxx
From the viewpoint of complainants, their signing of the lease contract was a condition sine qua
non to the continuous driving of their respective drivers (jeepneys?). But from the point of view
of respondent Capili and as shown in the aforequoted paragraph 5 of his affidavit, and as further
shown in the notices (Exhibits "3-B" and "3-B-1") which merely asked complainants to
return to work without mentioningany condition like the signing of the contract, the signing of the
lease contract by the drivers was merely intended as a confirmation of the original concept of a
no employer-employee relationship, and to streamline the operation by indicating the
amount of the boundary per driver, depending on the number of hours they drive and their
obligation to check on the motor/engine, oil, tires, brakes and other routinary requirements in
order to insure the vehicles' roadworthiness. It was never meant to be that if a driver refuses to
sign the contract, he would not be allowed to continue driving.
To our mind, both parties misappreciated the situation. Respondents' erroneous insistence of a
no employer-employee relationship even in the face of a well-established contrary doctrine as
postulated in the Dinglasan case [2] (98 Phil. 649) and complainants' erroneous apprehension of
the loss of such employer-employee relationship if they sign the lease contract propelled
the complainants to file the instant complaint.
In short, this is merely a simple case of misunderstanding.
To remedy the situation, we feel that the most prudent approach would be to let the parties
return to the relationship that existed between them prior to May 7, 1991. [3]
The Labor Arbiter thus concluded -
WHEREFORE, decision is hereby rendered declaring the breakage (sic) of relationship between
respondent Ricardo Capili and complainants Benigno T. Santos, Delfin Yuson, Luisito Santos,
Ursino Basister, Ricardo Reyes, Joselito Santos, Jorge Binuya and Nicholas Mulingbayan, as a
product of misunderstanding and misappreciation of
the situation by both parties and, therefore, respondents are hereby directed to reinstate them to
their former position without loss of seniority rights and other benefits, but without back
wages (p. 7, Annex "F, " underscoring supplied). [4]
Private respondents appealed to the National Labor Relations Commission. They reiterated their
prayer for separation pay equivalent to one (1) month salary for every year of service and, in
addition, three (3) years back wages.
Respondent NLRC upheld the finding of the Labor Arbiter that the case arose due to simple
misunderstanding between the complaining drivers on one hand and their employers on the
other. However, it took exception to the relief granted to private respondents and modified the
appealed decision accordingly by holding that -

14
Since there was misunderstanding between the parties and this misunderstanding resulted in
animosity and strained relationship between them, we deem it proper and most prudent
approach to maintain industrial peace for respondents to pay the complainants their separation
pay of one half (1/2) month for every year of service, based on their daily earnings of P200.00.[5]
The petitioners moved to have the above disquisition of respondent NLRC reconsidered but the
latter denied the motion. They now come to us arguing that since there was a clear finding of
abandonment by the Labor Arbiter consisting in the failure of private respondents to report for
work without justifiable reason, the award of separation pay could not be warranted.
The NLRC brushed aside the arguments of petitioners. It emphasized that if it were the finding of
the Labor Arbiter that private respondents were guilty of abandonment he
would nothave ordered reinstatement but dismissal of the case. Thus on 9 August 1994 NLRC
denied reconsideration.
Petitioners impute grave abuse of discretion on the part of respondent NLRC in awarding
separation pay to private respondents.
We agree with petitioners. The legal basis for the award of separation pay is clearly provided by
Art. 279 of the Labor Code which states that the remedy for illegal dismissal is reinstatement
without loss of seniority rights plus back wages computed from the time compensation was
withheld up to reinstatement. However there may be instances where reinstatement is not a
viable remedy as where the relations between employer and employee have been so severely
strained that it is no longer advisable to order reinstatement or where the employee decides not
to be reinstated. In such events, the employer will instead be ordered to pay separation pay. [6]
A reading of Art. 279 in relation to Art. 282 of the Labor Code reveals that an employee who is
dismissed for cause after appropriate proceedings in compliance with the due process
requirements is not entitled to an award of separation pay. Under Arts. 283 and 284 of the same
Code, separation pay is authorized only in cases of dismissals due to any of these reasons: (a)
installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the
employer's business, and, (e) when the employee is suffering from a disease and his continued
employment is prohibited by law or is prejudicial to his health and to the health of his co-
employees.[7] However, separation pay shall be allowed as a measure of social justice in those
cases where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character, but only when he was illegally dismissed.
The common denominator of those instances where payment of separation pay is warranted is
that the employee was dismissed by the employer. In the instant case there was no dismissal at
all. Respondent NLRC affirmed the factual findings of the Labor Arbiter that there was only
a misunderstanding between petitioners and private respondents which caused the latter to stop
reporting for work. If the Labor Arbiter ordered reinstatement it should not be construed as relief
proceeding from illegal dismissal; instead, it should be considered as a declaration or affirmation
that private respondents may return to work because they were not dismissed in the first place,
and they should be happy that their employers are accepting them back. This could be the
reason why complainants asked only for separation pay - not for reinstatement - in their
complaint before the Labor Arbiter.
The award of separation pay cannot be justified solely because of the existence of "strained
relations" between the employer and the employee. It must be given to the employee only as an
alternative to reinstatement emanating from illegal dismissal. When there is no illegal dismissal,
even if the relations are strained, separation pay has no legal basis. Besides, the doctrine on
"strained relations" cannot be applied indiscriminately since every labor dispute almost
invariably results in "strained relations;" otherwise, reinstatement can never be

15
possiblesimply because some hostility is engendered between the parties as a result of their
disagreement. That is human nature.[8]
The constitutional policy of providing full protection to labor is not intended to oppress or destroy
management. The commitment of this Court to the cause of labor does not prevent us from
sustaining the employer when it is in the right, as in this case. [9]
When respondents filed their complaint, and taking account of the allegations therein, they
foreclosed reinstatement as a relief, since they prayed only for an award of separation pay.This is
confirmed in their appeal to the NLRC where they prayed for a modification of the decision of the
Labor Arbiter, from reinstatement without back wages to payment of three (3) years back wages
and separation pay equivalent to one (1) month salary for every year of service. [10] It is therefore
clear that respondents never desired to be reinstated. This being so, the Court cannot order
them to return to work.[11] If private respondents voluntarily chose not to return to work anymore
they must be considered as having resigned from their employment. This is without prejudice
however to the willingness of both parties to continue with their former contract of employment
or enter into a new one whenever they so desire.
WHEREFORE, the petition is GRANTED and the employer-employee relationship between
petitioners on one hand and each private respondent on the other is deemed voluntarily
terminated. Consequently, the decision of respondent National Labor Relations Commission
dated 28 February 1994 is REVERSED and SET ASIDE.
SO ORDERED.

FIRST DIVISION

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents
Williams, Fragante and Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

16
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION
OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND SECRETARY OF
PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. The
provisions of section 1 of Commonwealth Act No. 648 do not confer legislative power upon the
Director of Public Works and the Secretary of Public Works and Communications. The authority
therein conferred upon them and under which they promulgated the rules and regulations now
complained of is not to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit
upon, and avoid obstructions on, roads and streets designated as national roads by acts of the
National Assembly or by executive orders of the President of the Philippines" and to close them
temporarily to any or all classes of traffic "whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public convenience and interest." The
delegated power, if at all, therefore, is not the determination of what the law shall be, but merely
the ascertainment of the facts and circumstances upon which the application of said law is to be
predicated. To promulgate rules and regulations on the use of national roads and to determine
when and how long a national road should be closed to traffic, in view of the condition of the
road or the traffic thereon and the requirements of public convenience and interest, is an
administrative function which cannot be directly discharged by the National Assembly. It must
depend on the discretion of some other government official to whom is confided the duty of
determining whether the proper occasion exists for executing the law. But it cannot be said that
the exercise of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. Commonwealth

Act No. 548 was passed by the National Assembly in the exercise of the paramount police power
of the state. Said Act, by virtue of which the rules and regulations complained of were
promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the
interest and convenience of the public. In enacting said law, therefore, the National Assembly
was prompted by considerations of public convenience and welfare. It was inspired by a desire to
relieve congestion of traffic, which is, to say the least, a menace to public safety. Public welfare,
then, lies at the bottom of the enactment of said law, and the state in order to promote the
general welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all kinds of restraints and burdens, in
order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomer Jesus, 31
Phil., 218). To this fundamental aim of our Government the rights of the individual are
subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made
to prevail over authority because then society will fall into anarchy. Neither should authority be
made to prevail over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through education and, personal
discipline, so that there may be established the resultant equilibrium, which means peace and
order and happiness for all. The moment greater authority is conferred upon the government,
logically so much is withdrawn from the residuum of liberty which resides in the people. The
paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of
insuring its preservation.

3. ID.; ID.; SOCIAL JUSTICE. Social justice is "neither communism, nor despotism, nor atomism,
nor anarchy," but the humanization of laws and the equalization of social and economic forces by
the State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the adoption
by the Government of measures calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally, through the adoption of
measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying
17
the existence of all governments on the time-honored principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of interdependence
among divers and diverse units of a society and of the protection that should be equally and
evenly extended to all groups as a combined force in our social and economic life, consistent
with the fundamental and paramount objective of the state of promoting the health, comfort, and
quiet of all persons, and of bringing about "the greatest good to the greatest number."
DECISION
LAUREL, J.:
Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before
this court this petition for a writ of prohibition against the respondents, A. D. Williams, as
Chairman of the National Traffic Commission; Vicente Fragante, as Director of Public Works;
Sergio Bayan, as Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as
Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940,
resolved to recommend to the Director of Public Works and to the Secretary of Public Works and
Communications that animal-drawn vehicles be prohibited from passing along Rosario Street
extending from Plaza Calderon de la Barca to Dasmarias Street, from 7:30 a.m. to 12:30 p.m.
and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at
Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the
date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic
Commission, on July 18, 1940 recommended to the Director of Public Works the adoption of the
measure proposed in the resolution aforementioned, in pursuance of the provisions of
Commonwealth Act No. 548 which authorizes said Director of Public Works, with the approval of
the Secretary of Public Works and Communications, to promulgate rules and regulations to
regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director
of Public Works, in his first indorsement to the Secretary of Public Works and Communications,
recommended to the latter the approval of the recommendation made by the Chairman of the
National Traffic Commission as aforesaid, with the modification that the closing of Rizal Avenue to
traffic to animal-drawn vehicles be limited to the portion thereof extending from the railroad
crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public
Works and Communications, in his second indorsement addressed to the Director of Public
Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue be
closed to traffic of animal-drawn vehicles, between the points and during the hours as above
indicated, for a period of one year from the date of the opening of the Colgante Bridge to traffic;
that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be
enforced the rules and regulations thus adopted; that as a consequence of such enforcement, all
animal-drawn vehicles are not allowed to pass and pick up passengers in the places above-
mentioned to the detriment not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public
Works, with the approval of the Secretary of Public Works and Communications, is authorized to
promulgate rules and regulations for the regulation and control of the use of and traffic on
national roads and streets is unconstitutional because it constitutes an undue delegation of
legislative power. This contention is untenable. As was observed by this court in Rubi v. Provincial
Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been better stated than in the early
Ohio case decided by Judge Ranney, and since followed in a multitude of cases, namely: The
true distinction therefore is between the delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring an authority or discretion as to its
execution, to be exercised under and in pursuance of the law. The first cannot be done; to the
18
latter no valid objection can be made. (Cincinnati, W. & Z. R. Co. v. Commrs. Clinton County, 1
Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1)
may be committed by the Legislature to an executive department or official. The Legislature may
make decisions of executive departments or subordinate officials thereof, to whom it has
committed the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed.,
141.) The growing tendency in the decisions is to give prominence to the necessity of the
case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of the
President of the Philippines, the Director of Public Works, with the approval of the Secretary of
Public Works and Communications, shall promulgate the necessary rules and regulations to
regulate and control the use of and traffic on such roads and streets. Such rules and regulations,
with the approval of the President, may contain provisions controlling or regulating the
construction of buildings or other structures within a reasonable distance from along the national
roads. Such roads may be temporarily closed to any or all classes of traffic by the Director of
Public Works and his duly authorized representatives whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the public convenience and interest,
or for a specified period, with the approval of the Secretary of Public Works and
Communications."cralaw virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public Works and
the Secretary of Public Works and Communications. The authority therein conferred upon them
and under which they promulgated the rules and regulations now complained of is not to
determine what public policy demands but merely to carry out the legislative policy laid down by
the National Assembly in said Act, to wit, "to promote safe transit upon and avoid obstructions
on, roads and streets designated as national roads by acts of the National Assembly or by
executive orders of the President of the Philippines" and to close them temporarily to any or all
classes of traffic "whenever the condition of the road or the traffic makes such action necessary
or advisable in the public convenience and interest." The delegated power, if at all, therefore, is
not the determination of what the law shall be, but merely the ascertainment of the facts and
circumstances upon which the application of said law is to be predicated. To promulgate rules
and regulations on the use of national roads and to determine when and how long a national
road should be closed to traffic, in view of the condition of the road or the traffic thereon and the
requirements of public convenience and interest, is an administrative function which cannot be
directly discharged by the National Assembly. It must depend on the discretion of some other
government official to whom is confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the exercise of such discretion is the
making of the law. As was said in Lockes Appeal (72 Pa. 491): "To assert that a law is less than a
law, because it is made to depend on a future event or act, is to rob the Legislature of the power
to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet
developed, or to things future and impossible to fully know." The proper distinction the court said
was this: "The Legislature cannot delegate its power to make the law; but it can make a law to
delegate a power to determine some fact or state of things upon which the law makes, or intends
to make, its own action depend. To deny this would be to stop the wheels of government. There
are many things upon which wise and useful legislation must depend which cannot be known to
the law-making power, and, must, therefore, be a subject of inquiry and determination outside of
the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmea, G.R. Nos. 46076 and 46077, promulgated June
19
12, 1939, and in Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065,
promulgated June 26, 1940, this Court had occasion to observe that the principle of separation of
powers has been made to adapt itself to the complexities of modern governments, giving rise to
the adoption, within certain limits, of the principle of "subordinate legislation," not only in the
United States and England but in practically all modern governments. Accordingly, with the
growing complexity of modern life, the multiplication of the subjects of governmental regulations,
and the increased difficulty of administering the laws, the rigidity of the theory of separation of
governmental powers has, to a large extent, been relaxed by permitting the delegation of greater
powers by the legislative and vesting a larger amount of discretion in administrative and
executive officials, not only in the execution of the laws, but also in the promulgation of certain
rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents
pursuant to the provisions of Commonwealth Act No. 548 constitute an unlawful interference with
legitimate business or trade and abridge the right to personal liberty and freedom of locomotion.
Commonwealth Act No. 548 was passed by the National Assembly in the exercise of the
paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to
promote safe transit upon and avoid obstructions on national roads, in the interest and
convenience of the public. In enacting said law, therefore, the National Assembly was prompted
by considerations of public convenience and welfare. It was inspired by a desire to relieve
congestion of traffic. which is, to say the least, a menace to public safety. Public welfare, then,
lies at the bottom of the enactment of said law, and the state in order to promote the general
welfare may interfere with personal liberty, with property, and with business and occupations.
Persons and property may be subjected to all kinds of restraints and burdens, in order to secure
the general comfort, health, and prosperity of the state (U.S. v. Gomez Jesus, 31 Phil., 218). To
this fundamental aim of our Government the rights of the individual are subordinated. Liberty is
a blessing without which life is a misery, but liberty should not be made to prevail over authority
because then society will fall into anarchy. Neither should authority be made to prevail over
liberty because then the individual will fall into slavery. The citizen should achieve the required
balance of liberty and authority in his mind through education and personal discipline, so that
there may be established the resultant equilibrium, which means peace and order and happiness
for all. The moment greater authority is conferred upon the government, logically so much is
withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact
that the apparent curtailment of liberty is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of
Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power
is a continuing one, and a business lawful today may in the future, because of the changed
situation, the growth of population or other causes, become a menace to the public health and
welfare, and be required to yield to the public good." And in People v. Pomar (46 Phil., 440), it
was observed that "advancing civilization is bringing within the police power of the state today
things which were not thought of as being within such power yesterday. The development of
civilization, the rapidly increasing population, the growth of public opinion, with an increasing
desire on the part of the masses and of the government to look after and care for the interests of
the individuals of the state, have brought within the police power many questions for regulation
which formerly were not so considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon the
constitutional precept regarding the promotion of social justice to insure the well-being and
economic security of all the people. The promotion of social justice, however, is to be achieved
20
not through a mistaken sympathy towards any given group. Social justice is "neither
communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the
equalization of social and economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated. Social justice means the promotion
of the welfare of all the people, the adoption by the Government of measures calculated to
insure economic stability of all the competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of all governments on the time-honored
principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence
among divers and diverse units of a society and of the protection that should be equally and
evenly extended to all groups as a combined force in our social and economic life, consistent
with the fundamental and paramount objective of the state of promoting the health, comfort, and
quiet of all persons, and of bringing about "the greatest good to the greatest number."
In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against
the petitioner. So ordered.
EN BANC G.R. No. L-2089 October 31, 1949
JUSTA G. GUIDO, petitioner, vs. RURAL PROGRESS ADMINISTRATION, c/o FAUSTINO
AGUILAR, Manager, Rural Progress Administration, respondent.
Guillermo B. Guevara for petitioner.
Luis M. Kasilag and Lorenzo B. Vizconde for respondent.
TUASON, J.:
This a petition for prohibition to prevent the Rural Progress Administration and Judge Oscar
Castelo of the Court of First Instance of Rizal from proceeding with the expropriation of the
petitioner Justa G. Guido's land, two adjoining lots, part commercial, with a combined area of
22,655 square meters, situated in Maypajo, Caloocan, Rizal, just outside the north Manila
boundary, on the main street running from this city to the north. Four grounds are adduced in
support of the petition, to wit:
(1) That the respondent RPA (Rural Progress Administration) acted without jurisdiction or
corporate power in filling the expropriation complaint and has no authority to negotiate with the
RFC a loan of P100,000 to be used as part payment of the value of the land.
(2) That the land sought to be expropriated is commercial and therefore excluded within the
purview of the provisions of Act 539.
(3) That majority of the tenants have entered with the petitioner valid contracts for lease, or
option to buy at an agreed price, and expropriation would impair those existing obligation of
contract.
(4) That respondent Judge erred in fixing the provisional value of the land at P118,780 only and
in ordering its delivery to the respondent RPA.
We will take up only ground No. 2. Our conclusion on this branch of the case will make
superfluous a decision on the other questions raised.
Sections 1 and 2 of Commonwealth Act No. 539, copied verbatim, are as follows:
SECTION 1. The President of the Philippines is authorized to acquire private lands or any interest
therein, through purchaser or farms for resale at reasonable prices and under such conditions as
he may fix to their bona fide tenants or occupants or to private individuals who will work the
lands themselves and who are qualified to acquire and own lands in the Philippines.
21
SEC. 2. The President may designated any department, bureau, office, or instrumentality of the
National Government, or he may organize a new agency to carry out the objectives of this Act.
For this purpose, the agency so created or designated shall be considered a public corporation.
The National Assembly approved this enactment on the authority of section 4 of Article XIII of the
Constitution which, copied verbatim, is as follows:
The Congress may authorize, upon payment of just compensation, the expropriation of lands to
be subdivided into small lots and conveyed at cost to individuals.
What lands does this provision have in view? Does it comprehend all lands regardless of their
location, nature and area? The answer is to be found in the explanatory statement of Delegate
Miguel Cuaderno, member of the Constitutional Convention who was the author or sponsor of the
above-quoted provision. In this speech, which was entitled "Large Estates and Trust in Perpetuity"
and is transcribed in full in Aruego's "The Framing of the Philippine Constitution," Mr. Cuaderno
said:
There has been an impairment of public tranquility, and to be sure a continuous of it, because of
the existence of these conflicts. In our folklore the oppression and exploitation of the tenants are
vividly referred to; their sufferings at the hand of the landlords are emotionally pictured in our
drama; and even in the native movies and talkies of today, this theme of economic slavery has
been touched upon. In official documents these same conflicts are narrated and exhaustively
explained as a threat to social order and stability.
But we should go to Rizal inspiration and illumination in this problem of this conflicts between
landlords and tenants. The national hero and his family were persecuted because of these same
conflicts in Calamba, and Rizal himself met a martyr's death because of his exposal of the cause
of the tenant class, because he would not close his eyes to oppression and persecution with his
own people as victims.lawphi1.nt
I ask you, gentlemen of the Convention, knowing this as you do and feeling deeply as you must
feel a regret over the immolation of the hero's life, would you not write in the Constitution the
provision on large estates and trust in perpetuity, so that you would be the very instrument of
Providence to complete the labors of Rizal to insure domestic tranquility for the masses of our
people?
If we are to be true to our trust, if it is our purpose in drafting our constitution to insure domestic
tranquility and to provide for the well-being of our people, we cannot, we must fail to prohibit the
ownership of large estates, to make it the duty of the government to break up existing large
estates, and to provide for their acquisition by purchase or through expropriation and sale to
their occupants, as has been provided in the Constitutions of Mexico and Jugoslavia.
No amendment was offered and there was no debate. According to Dean Aruego, Mr. Cuaderno's
resolution was readily and totally approved by the Convention. Mr. Cuaderno's speech therefore
may be taken as embodying the intention of the framers of the organic law, and Act No. 539
should be construed in a manner consonant with that intention. It is to be presumed that the
National Assembly did not intend to go beyond the constitutional scope of its powers.
There are indeed powerful considerations, aside from the intrinsic meaning of section 4 of Article
XIII of the Constitution, for interpreting Act No. 539 in a restrictive sense. Carried to extremes,
this Act would be subversive of the Philippine political and social structure. It would be in
derogation of individual rights and the time-honored constitutional guarantee that no private
property of law. The protection against deprivation of property without due process for public use
without just compensation occupies the forefront positions (paragraph 1 and 2) in the Bill for
private use relieves the owner of his property without due process of law; and the prohibition

22
that "private property should not be taken for public use without just compensation" (Section 1
[par. 2], Article III, of the Constitution) forbids necessary implication the appropriation of private
property for private uses (29 C.J.S., 819). It has been truly said that the assertion of the right on
the part of the legislature to take the property of and citizen and transfer it to another, even for a
full compensation, when the public interest is not promoted thereby, is claiming a despotic
power, and one inconsistent with very just principle and fundamental maxim of a free
government. (29 C.J.S., 820.)
Hand in hand with the announced principle, herein invoked, that "the promotion of social justice
to insure the well-being and economic security of all the people should be the concern of the
state," is a declaration, with which the former should be reconciled, that "the Philippines is a
Republican state" created to secure to the Filipino people "the blessings of independence under a
regime of justice, liberty and democracy." Democracy, as a way of life enshrined in the
Constitution, embraces as its necessary components freedom of conscience, freedom of
expression, and freedom in the pursuit of happiness. Along with these freedoms are included
economic freedom and freedom of enterprise within reasonable bounds and under proper
control. In paving the way for the breaking up of existing large estates, trust in perpetuity,
feudalism, and their concomitant evils, the Constitution did not propose to destroy or undermine
the property right or to advocate equal distribution of wealth or to authorize of what is in excess
of one's personal needs and the giving of it to another. Evincing much concern for the protection
of property, the Constitution distinctly recognize the preferred position which real estate has
occupied in law for ages. Property is bound up with every aspects of social life in a democracy as
democracy is conceived in the Constitution. The Constitution owned in reasonable quantities and
used legitimately, plays in the stimulation to economic effort and the formation and growth of a
social middle class that is said to be the bulwark of democracy and the backbone of every
progressive and happy country.
The promotion of social justice ordained by the Constitution does not supply paramount basis for
untrammeled expropriation of private land by the Rural Progress Administration or any other
government instrumentality. Social justice does not champion division of property or equality of
economic status; what it and the Constitution do guaranty are equality of opportunity, equality of
political rights, equality before the law, equality between values given and received on the basis
of efforts exerted in their production. As applied to metropolitan centers, especially Manila, in
relation to housing problems, it is a command to devise, among other social measures, ways and
means for the elimination of slums, shambles, shacks, and house that are dilapidated,
overcrowded, without ventilation. light and sanitation facilities, and for the construction in their
place of decent dwellings for the poor and the destitute. As will presently be shown,
condemnation of blighted urban areas bears direct relation to public safety health, and/or morals,
and is legal.
In reality, section 4 of Article XIII of the Constitution is in harmony with the Bill of Rights. Without
that provision the right of eminent domain, inherent in the government, may be exercised to
acquire large tracts of land as a means reasonably calculated to solve serious economic and
social problem. As Mr. Aruego says "the primary reason" for Mr. Cuaderno's recommendation was
"to remove all doubts as to the power of the government to expropriation the then existing
landed estates to be distributed at costs to the tenant-dwellers thereof in the event that in the
future it would seem such expropriation necessary to the solution of agrarian problems therein."
In a broad sense, expropriation of large estates, trusts in perpetuity, and land that embraces a
whole town, or a large section of a town or city, bears direct relation to the public welfare. The
size of the land expropriated, the large number of people benefited, and the extent of social and
economic reform secured by the condemnation, clothes the expropriation with public interest and
public use. The expropriation in such cases tends to abolish economic slavery, feudalistic

23
practices, and other evils inimical to community prosperity and contentment and public peace
and order. Although courts are not in agreement as to the tests to be applied in determining
whether the use is public or not, some go far in the direction of a liberal construction as to hold
that public advantage, and to authorize the exercise of the power of eminent domain to promote
such public benefit, etc., especially where the interest involved are considerable magnitude. (29
C.J.S., 823, 824. See also People of Puerto Rico vs. Eastern Sugar Associates, 156 Fed. [2nd],
316.) In some instances, slumsites have been acquired by condemnation. The highest court of
New York States has ruled that slum clearance and reaction of houses for low-income families
were public purposes for which New York City Housing authorities could exercise the power of
condemnation. And this decision was followed by similar ones in other states. The underlying
reasons for these decisions are that the destruction of congested areas and insanitary dwellings
diminishes the potentialities of epidemic, crime and waste, prevents the spread of crime and
diseases to unaffected areas, enhances the physical and moral value of the surrounding
communities, and promotes the safety and welfare of the public in general. (Murray vs. La
Guardia, 52 N.E. [2nd], 884; General Development Coop. vs. City of Detroit, 33 N.W. [2ND], 919;
Weizner vs. Stichman, 64 N.Y.S. [2nd], 50.) But it will be noted that in all these case and others of
similar nature extensive areas were involved and numerous people and the general public
benefited by the action taken.
The condemnation of a small property in behalf of 10, 20 or 50 persons and their families does
not inure to the benefit of the public to a degree sufficient to give the use public character. The
expropriation proceedings at bar have been instituted for the economic relief of a few families
devoid of any consideration of public health, public peace and order, or other public advantage.
What is proposed to be done is to take plaintiff's property, which for all we know she acquired by
sweat and sacrifice for her and her family's security, and sell it at cost to a few lessees who
refuse to pay the stipulated rent or leave the premises.
No fixed line of demarcation between what taking is for public use and what is not can be made;
each case has to be judge according to its peculiar circumstances. It suffices to say for the
purpose of this decision that the case under consideration is far wanting in those elements which
make for public convenience or public use. It is patterned upon an ideology far removed from
that consecrated in our system of government and embraced by the majority of the citizens of
this country. If upheld, this case would open the gates to more oppressive expropriations. If this
expropriation be constitutional, we see no reason why a 10-, 15-, or 25-hectare farm land might
not be expropriated and subdivided, and sold to those who want to own a portion of it. To make
the analogy closer, we find no reason why the Rural Progress Administration could not take by
condemnation an urban lot containing an area of 1,000 or 2,000 square meters for subdivision
into tiny lots for resale to its occupants or those who want to build thereon. The petition is
granted without special findings as to costs.
EN BANC G.R. No. 81958 June 30, 1988
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner, vs. HON. FRANKLIN
M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as
Administrator of the Philippine Overseas Employment Administration, respondents.
Gutierrez & Alo Law Offices for petitioner.
SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged
principally in the recruitment of Filipino workers, male and female, for overseas
placement," 1 challenges the Constitutional validity of Department Order No. 1, Series of 1988, of
the Department of Labor and Employment, in the character of "GUIDELINES GOVERNING THE
TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS,"

24
in this petition for certiorari and prohibition. Specifically, the measure is assailed for
"discrimination against males or females;" 2 that it "does not apply to all Filipino workers but only
to domestic helpers and females with similar skills;" 3 and that it is violative of the right to travel.
It is held likewise to be an invalid exercise of the lawmaking power, police power being
legislative, and not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution,
providing for worker participation "in policy and decision-making processes affecting their rights
and benefits as may be provided by law." 4 Department Order No. 1, it is contended, was passed
in the absence of prior consultations. It is claimed, finally, to be in violation of the Charter's non-
impairment clause, in addition to the "great and irreparable injury" that PASEI members face
should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and
Administrator of the Philippine Overseas Employment Administration, filed a Comment informing
the Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in
the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and
Switzerland. * In submitting the validity of the challenged "guidelines," the Solicitor General
invokes the police power of the Philippine State.
It is admitted that Department Order No. 1 is in the nature of a police power measure. The only
question is whether or not it is valid under the Constitution.
The concept of police power is well-established in this jurisdiction. It has been defined as the
"state authority to enact legislation that may interfere with personal liberty or property in order
to promote the general welfare." 5 As defined, it consists of (1) an imposition of restraint upon
liberty or property, (2) in order to foster the common good. It is not capable of an exact definition
but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.
"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future
where it could be done, provides enough room for an efficient and flexible response to conditions
and circumstances thus assuring the greatest benefits." 6
It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the
Charter. Along with the taxing power and eminent domain, it is inborn in the very fact of
statehood and sovereignty. It is a fundamental attribute of government that has enabled it to
perform the most vital functions of governance. Marshall, to whom the expression has been
credited, 7 refers to it succinctly as the plenary power of the State "to govern its citizens." 8
"The police power of the State ... is a power coextensive with self- protection, and it is not inaptly
termed the "law of overwhelming necessity." It may be said to be that inherent and plenary
power in the State which enables it to prohibit all things hurtful to the comfort, safety, and
welfare of society." 9
It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the
conception that men in organizing the state and imposing upon its government limitations to
safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of
citizens to obstruct unreasonably the enactment of such salutary measures calculated to ensure
communal peace, safety, good order, and welfare." 10 Significantly, the Bill of Rights itself does
not purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the
greatest of all rights, is not unrestricted license to act according to one's will." 11 It is subject to
the far more overriding demands and requirements of the greater number.
Notwithstanding its extensive sweep, police power is not without its own limitations. For all its
awesome consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in

25
that event, it defeats the purpose for which it is exercised, that is, to advance the public good.
Thus, when the power is used to further private interests at the expense of the citizenry, there is
a clear misuse of the power. 12
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of clear and
convincing evidence to the contrary, the presumption logically stands.
The petitioner has shown no satisfactory reason why the contested measure should be nullified.
There is no question that Department Order No. 1 applies only to "female contract
workers," 14 but it does not thereby make an undue discrimination between the sexes. It is well-
settled that "equality before the law" under the Constitution 15 does not import a perfect Identity
of rights among all men and women. It admits of classifications, provided that (1) such
classifications rest on substantial distinctions; (2) they are germane to the purposes of the law;
(3) they are not confined to existing conditions; and (4) they apply equally to all members of the
same class. 16
The Court is satisfied that the classification made-the preference for female workers rests on
substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our
female labor force abroad, especially domestic servants, amid exploitative working conditions
marked by, in not a few cases, physical and personal abuse. The sordid tales of maltreatment
suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by
testimonies of returning workers, are compelling motives for urgent Government action. As
precisely the caretaker of Constitutional rights, the Court is called upon to protect victims of
exploitation. In fulfilling that duty, the Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place, there is no evidence
that, except perhaps for isolated instances, our men abroad have been afflicted with an Identical
predicament. The petitioner has proffered no argument that the Government should act similarly
with respect to male workers. The Court, of course, is not impressing some male chauvinistic
notion that men are superior to women. What the Court is saying is that it was largely a matter
of evidence (that women domestic workers are being ill-treated abroad in massive instances) and
not upon some fanciful or arbitrary yardstick that the Government acted in this case. It is
evidence capable indeed of unquestionable demonstration and evidence this Court accepts. The
Court cannot, however, say the same thing as far as men are concerned. There is simply no
evidence to justify such an inference. Suffice it to state, then, that insofar as classifications are
concerned, this Court is content that distinctions are borne by the evidence. Discrimination in
this case is justified.
As we have furthermore indicated, executive determinations are generally final on the Court.
Under a republican regime, it is the executive branch that enforces policy. For their part, the
courts decide, in the proper cases, whether that policy, or the manner by which it is
implemented, agrees with the Constitution or the laws, but it is not for them to question its
wisdom. As a co-equal body, the judiciary has great respect for determinations of the Chief
Executive or his subalterns, especially when the legislature itself has specifically given them
enough room on how the law should be effectively enforced. In the case at bar, there is no
gainsaying the fact, and the Court will deal with this at greater length shortly, that Department
Order No. 1 implements the rule-making powers granted by the Labor Code. But what should be
noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that
prevailing conditions indeed call for a deployment ban.

26
There is likewise no doubt that such a classification is germane to the purpose behind the
measure. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the
protection for Filipino female overseas workers" 17 this Court has no quarrel that in the midst of
the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be for
their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is intended to apply
indefinitely so long as those conditions exist. This is clear from the Order itself ("Pending review
of the administrative and legal measures, in the Philippines and in the host countries . . ." 18),
meaning to say that should the authorities arrive at a means impressed with a greater degree of
permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary
malleability, depending on the circumstances of each case. Accordingly, it provides:
9. LIFTING OF SUSPENSION. The Secretary of Labor and Employment (DOLE) may, upon
recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection
of Filipino workers. 19
The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas
workers. That it does not apply to "all Filipina workers" 20 is not an argument for
unconstitutionality. Had the ban been given universal applicability, then it would have been
unreasonable and arbitrary. For obvious reasons, not all of them are similarly circumstanced.
What the Constitution prohibits is the singling out of a select person or group of persons within
an existing class, to the prejudice of such a person or group or resulting in an unfair advantage to
another person or group of persons. To apply the ban, say exclusively to workers deployed by A,
but not to those recruited by B, would obviously clash with the equal protection clause of the
Charter. It would be a classic case of what Chase refers to as a law that "takes property from A
and gives it to B." 21 It would be an unlawful invasion of property rights and freedom of contract
and needless to state, an invalid act. 22 (Fernando says: "Where the classification is based on
such distinctions that make a real difference as infancy, sex, and stage of civilization of minority
groups, the better rule, it would seem, is to recognize its validity only if the young, the women,
and the cultural minorities are singled out for favorable treatment. There would be an element of
unreasonableness if on the contrary their status that calls for the law ministering to their needs
is made the basis of discriminatory legislation against them. If such be the case, it would be
difficult to refute the assertion of denial of equal protection." 23 In the case at bar, the assailed
Order clearly accords protection to certain women workers, and not the contrary.)
It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment.
From scattered provisions of the Order, it is evident that such a total ban has hot been
contemplated. We quote:
5. AUTHORIZED DEPLOYMENT-The deployment of domestic helpers and workers of similar skills
defined herein to the following [sic] are authorized under these guidelines and are exempted
from the suspension.
5.1 Hirings by immediate members of the family of Heads of State and Government;
5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and
5.3 Hirings by senior officials of the diplomatic corps and duly accredited international
organizations.

27
5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral labor
agreements or understanding.
xxx xxx xxx
7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--Vacationing domestic
helpers and/or workers of similar skills shall be allowed to process with the POEA and leave for
worksite only if they are returning to the same employer to finish an existing or partially served
employment contract. Those workers returning to worksite to serve a new employer shall be
covered by the suspension and the provision of these guidelines.
xxx xxx xxx
9. LIFTING OF SUSPENSION-The Secretary of Labor and Employment (DOLE) may, upon
recommendation of the Philippine Overseas Employment Administration (POEA), lift the
suspension in countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection
of Filipino workers. 24
xxx xxx xxx
The consequence the deployment ban has on the right to travel does not impair the right. The
right to travel is subject, among other things, to the requirements of "public safety," "as may be
provided by law." 25 Department Order No. 1 is a valid implementation of the Labor Code, in
particular, its basic policy to "afford protection to labor," 26pursuant to the respondent
Department of Labor's rule-making authority vested in it by the Labor Code. 27 The petitioner
assumes that it is unreasonable simply because of its impact on the right to travel, but as we
have stated, the right itself is not absolute. The disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1 constitutes an invalid
exercise of legislative power. It is true that police power is the domain of the legislature, but it
does not mean that such an authority may not be lawfully delegated. As we have mentioned, the
Labor Code itself vests the Department of Labor and Employment with rulemaking powers in the
enforcement whereof. 28
The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and
decision-making processes affecting their rights and benefits" 29 is not well-taken. The right
granted by this provision, again, must submit to the demands and necessities of the State's
power of regulation.
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all. 30
"Protection to labor" does not signify the promotion of employment alone. What concerns the
Constitution more paramountly is that such an employment be above all, decent, just, and
humane. It is bad enough that the country has to send its sons and daughters to strange lands
because it cannot satisfy their employment needs at home. Under these circumstances, the
Government is duty-bound to insure that our toiling expatriates have adequate protection,
personally and economically, while away from home. In this case, the Government has evidence,
an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of such protection,
and as part of its duty, it has precisely ordered an indefinite ban on deployment.

28
The Court finds furthermore that the Government has not indiscriminately made use of its
authority. It is not contested that it has in fact removed the prohibition with respect to certain
countries as manifested by the Solicitor General.
The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier
purposes targetted by the Government. 31 Freedom of contract and enterprise, like all other
freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never
been fully accepted as a controlling economic way of life.
This Court understands the grave implications the questioned Order has on the business of
recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of
Government regulation. The interest of the State is to provide a decent living to its citizens. The
Government has convinced the Court in this case that this is its intent. We do not find the
impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief
prayed for.
WHEREFORE, the petition is DISMISSED. No costs.
SO ORDERED.

EN BANC
G.R. No. L-10107 February 4, 1916
CLARA CEREZO, plaintiff-appellant,
vs.
THE ATLANTIC GULF & PACIFIC COMPANY, defendant-appellant..
Luciano de la Rosa for plaintiff.
William A. Kincaid and Thomas L. Hartigan for defendant.
TRENT, J.:
This is an action for damages against the defendant for negligently causing the death of the
plaintiff's son, Jorge Ocumen, on the 7th of July, 1913, deceased being plaintiff's only means of
support. Judgment was entered in a favor of the plaintiff for the sum of P1,250, together with
interest and costs. Defendant appealed.
The deceased was an employee of the defendant as a day laborer on the 8th of July, 1913,
assisting in laying gas pipes on Calle Herran in the city of Manila. The digging of the trench was
completed both ways from the cross-trench in Calle Paz, and the pipes were laid therein up to
that point. The men of the deceased's gang were filling the west end, and there was no work in
the progress at the east end of the trench. Shortly after the deceased entered the trench at the
east end to answer a call of nature, the bank caved in, burying him to his neck in dirt, where he
died before he could be released. It has not been shown that the deceased had received orders
from the defendant to enter the trench at this point; nor that the trench had been prepared by
the defendant as a place to be used as a water-closet; nor that the defendant acquiesced in the
using of this place for these purposes. The trench at the place where the accident occurred was
between 3 and 4 feet deep. Nothing remained to be done there except to refill the trench as soon
as the pipes were connected. The refilling was delayed at that place until the completion of the
connection. At the time of the accident the place where the deceased's duty of refilling the
trench required him to be was at the west end. There is no contention that there was any danger
whatever in the refilling of the trench.

29
The plaintiff insists that the defendant was negligent in failing to shore or brace the trench at the
place where the accident occurred. While, on the other hand, the defendant urges (1 ) that it was
under no obligation, in so far as the deceased was concerned, to brace the trench, in the
absence of a showing that the soil was of a loose character or the place itself was dangerous,
and (2) that although the relation of master and servant may not have ceased, for the time
being, to exist, the defendant was under no duty to the deceased except to do him no intentional
injury, and to furnish him with a reasonably safe place to work.
As the complaint fails to show whether the plaintiff's right to recover is based on the Employers'
Liability Act (Act No. 1874) or the Civil Code, it is necessary to determine just what effect the
former has had upon the law of industrial accidents in this country.
Act No. 1874 is essentially a copy of the Massachusetts Employers' Liability Act (Rev. Laws. 1902,
chap. 106 secs. 71-79), it having been originally enacted in that jurisdiction in 1887. (Stat. 1887,
chap. 270.) The Massachusetts statute was "copied verbatim, with some variations of detail,
from the English statute (43 & 44 Vict., c. 42). Therefore it is proper, if not necessary, to begin by
considering how the English act had been constructed before our statute was enacted.'
(Ryalls vs. Mechanics' Mills, 150 Mass., 190; 5 L.R.A. 667.)
The English statute was enacted effective January 1, 1881. The Employers' Liability Act of
Alabama, first enacted in 1885 (Civil Code, 1907, chap. 80, sec. 3910), "is a substantial, if not an
exact, copy of the English act of 1880. This court is not finally concluded by the decision of any
other State court or the British court, in their construction of a similar statute, but the opinion of
learned courts upon similar questions are entitled to great weight and this is especially true
when the statute, from which ours was copied, had been construed prior to its enactment by our
legislature." (Birmingham Ry. and Electric Co. vs. Allen, 99 Ala. 359, 371; 120 L. R. A., 457.)
The employers' Liability Act of Colorado (Laws 1893, chap. 77; Mill's Annotated Statutes, Supp.
1891-1896, sec,. 1511a) was copied from the Massachusetts Act of 1887 and the Colorado
legislature "presumably adopted the act with the construction that had been given it by the
courts of that state." (Colorado Milling and Elevator Co. vs. Mitchell [1899], 26 Colo., 284).
Generally speaking, when a statute has been adopted from another state or country and such
statute has previously been constructed by the courts of such state or country, the statute is
deemed to have been adopted with the construction so given it (2 Lewis Southerland on Stat.
Const., sec. 738). The law being so clearly ascertain what the law stands for in those jurisdiction
where it has been in force for a long time past.
To adequately comprehend the significance of the Act in England and in those States of the
United States where it has been adopted, it is necessary to set forth briefly the liability of an
employer for personal injuries suffered by his workmen prior to its enactment. At common law
masters impliedly agreed to use reasonable care to provide reasonably safe premises and places
in and about which the servant was required to work, to furnish reasonably safe and suitable
machinery, and a sufficient supply of proper materials, tools, and appliances for the work to be
done, and at all times during the continuance of the work to repair and to keep in the same safe
and suitable condition the places, machinery, and appliances; to provide competent workmen;
and so far as the servant could not be assumed to know the perils of the work itself, or of the
particular portion of it in which he was engaged, to instruct him and to warn him of any secret
danger of which the master was aware. As to these matters, the master was bound to exercise
that measure of care which reasonably prudent men take under similar circumstances. But the
master was not an insurer and was not required to provide the safest possible plant or to adopt
the latest improvements or to warrant against latent defects which a reasonable inspection did
not disclose. It was only necessary that the danger in the work be not enhanced through his
fault.

30
The right of the master to shift responsibility for the performance of all or at least most of these
personal duties to the shoulders of a subordinate and thereby escape liability for the injuries
suffered by his workmen through his non-performance of these duties, was, in England, definitely
settled by the House of Lords in the case of Wilson vs. Merry (L.R. 1 H.L. Sc. Appl Cas., 326; 19
Eng. Rul. Cas., 132). This was just two years before the enactment of the Employers' Liability Act
of 1880, and no doubt the full significance of such a doctrine was one of the impelling causes
which expedited the passage of the Act, and chiefly accounts for the presence in it of subsection
1 of section 1.
While there were some authorities in the United States prior to 1880 decidedly in favor of the
doctrine of Wilson vs. Merry, by far the greater weight of authority was that such duties were
personal to the master and that he could not by delegating such duties to subordinates escape
liability for their negligent performance.
The servant, on his part, by entering the employment, was held to impliedly agree to take upon
himself the perils arising from the carelessness and recklessness of those who were in the same
employment, without regard to their grade or rank or authority in the service, provided that the
act causing the injury was not in the performance of any personal duty of the master intrusted to
the negligent servant.
In Street's edition of Shearman and Redfield on Negligence (vol. 1, sec. 180), the following
statement and history of the rule is given:
Under the principles before stated, it must be conceded to be settled at common law that a
master is not liable for injuiries personally suffered by his servant through the ordinary risks of
the business, including the negligence of a fellow servant, acting as such, while engaged in the
same common employment, unless the master is chargeable with negligence in the selection of
the servant in fault, or in retaining him after actual or constructive notice of his incompetency.
This "bad exception to a bad rule," as Lord Esher called it, in his testimony before a
parliamentary committee, was first suggested in 1837, in an English court, in Priestly vs. Fowler
(3 M. and W., 1), where the precise point did not arise. That case, however, is always spoken of
as the foundation of the rule. The first real decision of the question was made in South Carolina
in 1841 (Murray vs. South Carolina R. Co., 1 McMull. Law, 385.) This was cited and approved by
Chief Justice Shaw, of Massachusetts, 1841, in the Farwell case (Farwell vs. Boston, etc., R. Co., 4
Met., 49), which is the leading case on the question, and contains all the reasoning in favor of the
rule which is worth mentioning. His opinion was followed in New York in 1847 (Coon vs. Syracuse,
etc., R. Co., 6 Barb., 231, affirmed 1851, 5 N. Y., 492). ... Since then the rule has been forced
upon Scotland, by the votes of English judges, overruling the Scotch courts; and it has been
accepted by all American courts, both Federal and State, with only some qualification in Kentucky
and some western and southern States; which, however, turn rather upon the interpretation of
the rule than upon the rule itself.
As the inadequacy of the doctrine to keep pace with the marvelous industrial development of the
last century became apparent, it was sought, in most jurisdictions, to soften its rigors by
introducing the fiction of vice-principalship which undertook to increase the number of
responsibilities which the master could not escape by delegating them to subordinates. The
whole doctrine was in brief, a denial as to the employees, of the principle of respondeat superior.
Under the latter, a stranger invited upon the master's premises, either expressly or impliedly,
could recover for injuries received through the negligence of the masters' employees. It was this
right which was denied to the employee.
Another defense to which the master was entitled under the common law was that known as
contractual assumption of risks. Practically the same thing is referred to in very many cases as
the defense of volenti non fit injuria. (That to which a person assents is not deemed in law an

31
injury.) While these two defenses are theoretically distinct, it has been said by one learned writer
that it is impossible to treat the two separately in reviewing American decisions (5 Labatt's
Master and Servant, sec. 1647a). The distinction is usually important only when the master's
breach of a statutory duty is concerned. In those jurisdictions holding that the continuance in the
service of an employee after he has knowledge of the violation of a statutory duty by the master
is not a defense, the holding is usually justified on the ground of an implied contract of the
servant to assume the risks of the business; and that, consequently, it would be against public
policy to permit the master to contract against the effects of violation of the statute. It is in those
jurisdictions that recognize the same state of facts as a defense available to the master where
the maxim volenti non fit injuria is relied upon, such courts holding that no contract, express or
implied, is involved, and that consequently, the public policy in question is not involved. Under
either name, the defense in question leaves the workman without remedy when his injury results
from a risk known or imputable to him before entering the employment or because of his
continuance at work after such knowledge came to him, whether such a risk was due to a defect
in the ways, works or machinery, or to negligence of the master or other persons in the common
employment.
A third defense which a master could interpose in an action against him by an employee for
personal injuries received in the course of the employment was that of contributory negligence.
It has been frequently remarked that this defense is often confused with that of assumption of
risk or volenti non fit injuria. The Supreme Court of the United States explained the distinction
between the tow defense in the following language in the recent case of Seaboard Air Line
Railway vs. Horton (233 U.S., 492, 503):
The distinction, although simple, is sometimes overlooked. Contributory negligence involves the
notion of some fault or breach of duty on the part of the employee; and since it is ordinary his
duty to take some precaution for his won safety when engaged in hazardous occupation,
contributory negligence is sometimes defined as a failure to use such care for his safety as
ordinarily prudent employees in similar circumstances would use. On the other hand, the
assumption of risk, even though the risk be obvious, may be free from any suggestion of fault or
negligence on the part of the employee. The risks may be present, notwithstanding the exercise
of all reasonable care on his part. Some employments are necessarily fraught with danger to the
workmen danger hat must be and is confronted in the line of his duty. Such dangers as are
normally and necessarily incident to the occupation are presumably taken into the account in
fixing the rate of wages. And a workman of mature years is taken to assume risks of this sort,
whether he is actually aware of them or not. But risks of another sort, not naturally incident to
the occupation, may arise out of the failure of the employer to exercise due care with respect to
providing a safe place of work and suitable and safe appliances for the work. These the
employee is not treated as assuming until he becomes aware of the defect or disrepair and of the
risk arising from it, unless defect and risk alike are so obvious that an ordinarily prudent person
under the circumstances would have observed and appreciated them.
See also Dowd vs. New York, O. and W. Ry. Co. (170 N. Y. 459). In Halsbury's Laws of England (vol.
20, p. 138), it is said:
The defense of contributory negligence is always available in actions for compensation for
negligence. It is a common law defense available to a master sued by a workman in respect of
personal negligence, and, if proved, defeats the action.
Cooley on Torts (2nd ed., page 667), says:
Where the master is sued by his servant for an injury which it is claimed has been occasioned by
his negligence, it is very properly and justly held that the plaintiff is not to recover if his own
negligence contributed with that of the defendant in producing the injury.

32
Summing up the defenses available to the master under the common law of England and the
United States, it may be said that he could defend against an action by his servant by proving his
own freedom from negligence, the plaintiff's contributory negligence, that injury was caused by
the negligence of a fellow servant, or that it happened through one of the ordinary risks of the
employment. Any one of these defenses was a sufficient answer to the plaintiff's claim. The first
two are defenses which he might urge against the claim of a stranger, but the last two are
peculiar to the relationship of master and servant, and are said to arise from the implied contract
of service between them.
Let us now see what effect the Employers' Liability Act had upon the common law. In England, as
we have stated above, the employer was not liable under the common law for injuries to his
employees caused by the negligence of a fellow servant who had been intrusted by the master
with the duty of furnishing the employees safe places, machinery, etc., for their work. Under the
first subsection of section 1 of the Employers' Liability Act, it is clear that an employer may no
longer claim exemption from liability upon this ground. But, as above stated, it was already the
majority rule of the common law in the United States that masters could not delegate their
responsibilities to provide safe premises and machinery for their employees or subordinates.
Hence, we find the Massachusetts court saying in McCafferty vs. Lewando's F. D. and C. Co.
(1914 Mass., 412; 120 Am. St. Rep., 562):
So far as defects in the ways, works, and machinery are concerned, there is no difference
between the liability under the Employers' Liability Act (Rev. Laws. c. 106, sec. 71, cl. 1) and at a
common law, except in the amount which can be recovered.
In Alabama it was said in Wilson vs. Louisville, etc., R. Co., (35 Ala., 269):
Under the statute, negligence in causing, or failing to discover or remedy a defect, is essential to
liability. It does not undertake to define what shall constitute a defect, or negligence in regard to
the condition of the ways, works, machinery or plant. To determine these matters, reference
must be made to the principles of the common law. Therefore, whether the plaintiff's right to
recover is based on the statutory or common law liability of an employer, the measure of
defendant's duty to plaintiff is essentially the same.
In Colorado Milling and Elevator Co. vs. Mitchell (26 Colo., 284), it was said:
Clauses 1 and 2, which are the only provisions that can be said to have any bearing upon the
case in hand, are, so far as they go, but a legislative recognition of the principles laid down in the
former decisions of this court.
It is, however, observed in Toomey vs. Donovan (158 Mass., 232), that section 4 of their Act (sec.
6 of our own) enlarges "the liability of the employer; otherwise, it is meaningless. The inference
from the section plainly is that the employer should be liable when a contractor does part of his
work and an employee of the contractor is injured by reason of a defect in the condition of the
ways, works, machinery, or plant furnished by the employer to the contractor, which has not
been discovered or remedied through the negligence of the employer, or of some person
intrusted by him with the duty of seeing that they were in proper condition."
In England, the view is entertained that the liability imposed by the Act in extension or
derogation of the employer's common law liability arises almost entirely from the partial
abrogation of the doctrine of common employment which the Act effects (Weblin vs. Ballard, 17
Q, B. D., 122).
The Employers' Liability Act was passed to obviate the injustice to workmen that employers
should escape liability where persons having superintendence and control in the employment
were guilty of negligence causing injury to workmen. The object of the Act was to get rid of the

33
inference arising from the fact of common employment with respect to injuries caused by any
persons who are intrusted with the duty of seeing that the ways, works, or machinery are in
proper condition, who have duties of superintendence and control. And, in the case of railroads,
who have charge or control of engines, switches, signals, or trains. (Griffiths vs. Earl or Dudley , 9
Q. B. D., 357, 362.)
In Massachusetts, prior to the enactment in question, it had always been the rule that the
common employer was not liable to an employee for injuries sustained through the negligence of
a superintendent or superior workman (Zeigler vs. Day, 123 Mass., 152; Kalleck vs. Deering, 161
Mass., 469; 42 Am. St. Rep., 421). In Quinlan vs. Lackawanna Steel Co. (107 App. Div., 176; 94 N.
Y. S., 942), it was said that the act was undoubtedly intended to make the employer liable for the
acts of a superintendent while engaged in acts of superintendence. In 1 Dresser on Employers'
Liability is it said:
The effect of the Act is to except from the class of fellow servants, the risk of whose negligence
the servant was held to have assumed, such persons as are intrusted by the master with duties
of superintendents while in the exercise of them.
In Alabama it has been said that the statute does not make the master liable for the negligence
of an employee who is a mere fellow servant and nothing more of the injured employee
(Walton vs. Tennessee Coal, Iron & R. R. Co., 166 Ala., 538).
IN 5 Labatt's Master and Servant, p. 5192, it is said that, generally speaking, conditions
precedent to recovery are (1) that the servant was a "superintendent" within the meaning of the
acts; (2) that the act which was the immediate cause of the injury was negligent; and (3) that the
act was done in the exercise of the controlling functions of the superintendent. It has been
suggested that, in effect, subsection 2 of section 1 extends to workmen the benefit of the
principle of respondeat superior so far as negligent act of "superintendents" are concerned.
The third subsection of section 1 carries the abrogation of the fellow-servant doctrine even
farther as respects employees of what is generally known as the operating department of
railroads. In this industry an employer is liable not only for negligent acts of those who may be
properly said to be within subsection 2, but also, according to subsection 3, to all persons " in
charge or control of any signal, switch, locomotive engine or train." Railroad companies have
thus special liabilities and railroad employees have special benefits under the Act.
The effect of the Act on the fellow-servant doctrine was not to entirely abolish it but to reduce it
scope. As was said in Henahan vs. Lyons (1909) (201 Mass., 269), "There can be no recovery for
the negligence of an employee where there is no evidence that superintendence was his sole or
principal duty."
Now, what effect has the Act had upon the common law defense of assumption of risk, or as it is
considered in some jurisdictions, volenti non fit injuria? In a recent case decided by the Supreme
Court of the United States, in which the Federal Employers' Liability Act of April 22, 1908 (c. 149,
35 Stat., 65) was discussed, it was said:
Upon the merits, we of course sustain the contention that by the Employers' Liability Act the
defense of assumption of risk remains as at common law, saving in cases mentioned in section 4,
that is to say: "any case where the violation by such common carrier of any statute enacted for
the safety of employees contributed to the injury or death of such employee." (Southern ry.
co. vs. Crockett, 234 U.S., 725.)
In England, it was said in the case of Thomas vs. Quartermaine (18 Q. B. D., 685) that the Act
had not varied the effect of the maxim volenti non fit injuria so far as it involves the ordinary
risks inherent in his particular employment. To the same effect is O'Maley vs. South Boston Gas

34
Light Co. (158 Mas., 135); Birmingham Ry. and Electric Co. vs. Allen (99 Ala., 359); Whitcomb vs.
Standard Oil Co. (153 Ind., 513). But while the Act made no change in the doctrine of assumed
risks, there is, nevertheless, a noticeable difference in the difference in the application of the
doctrine in favor of the workman since the enactment of these Acts. The doctrine is based upon
the implied consent of the servant to accept or continue in the employment after becoming
aware of the risk resulted in his injury. It was formerly held that mere acceptance of the
employment or continuance in it with knowledge of the risk was conclusive of the workman's
consent to accept the risk, and the usual practice was, when evidence of this nature was
satisfactory, to direct a verdict or nonsuit in favor of the defendant. The trend of modern public
sentiment in favor of compensation for industrial accidents, however, has had the influence of
making the assumption of risks almost entirely a question of fact instead of, as under the former
practice, practically inferring his consent from the fact of his knowledge of the risk coupled with
his continuance in the service. The unwillingness of the employee to sacrifice his employment
has been recognized as an inducement for him to run the risk, however, unwilling he may be, in
fact, to do so. This new theory of the assumption of risk, however, does not abrogate the
doctrine at all. It merely requires more convincing evidence of the employee's assumes the
ordinary risks inherent abnormal risks arising from unusual conditions, the new view of the
doctrine requires the question of his consent to undergo such risks to be considered purely as a
question of fact and to require cogent and convincing evidence of such consent. Cases in which
the whole matter is discussed at length are Thomas vs. Quartermaine (18 Q. B. D., 685);
Yarmouth vs. France (19 Q. B. D., 647; 17 Eng. Rul. Cas., 217);(60 L.J., Q. B. D., N. S., 688);
Fitzgerald vs. Connecticut River Paper Co. (155 Mass., 155;31 Am. St. Rep., 537); Mahoney vs.
Dore (155 Mass., 513); Davis vs. Forbes, 171 Mass., 548); Simoneau vs. Rice & Hutchins (202
Mass., 82); and see 3 Labatt's Master and Servant, p. 3627, et seq.; 2 Dresser on Employers'
Liability, p. 326.
The defense of contributory negligence is always available in actions for compensation for
negligence. It is a common law defense available to a master sued by a workman in respect of
personal negligence, and, if proved, defeats the action. The act has not deprived the employer of
this defense. (20 Halsbury's Laws of England, p. 138.)
In Massachusetts it was said that assuming the negligence of a superintendent, the servant could
not recover if he were guilty of contributory negligence. (Regan vs. Lombard, 192 Mass., 319).
This doctrine, however, like that of the assumption of risk, has been more recently partially
abrogated by statutes. Under the Federal Employers' Liability Act of April 22, 1908 (36 Stat., 65
U. S. Comp. Stat. Supp., 1911, p. 1322), the defense of contributory negligence "is abrogated in
all instances where the employer's violation of a statute enacted for the safety of his employees
contributes to the injury." And in several States the doctrine of comparative negligence, as to
some industries, has been established by statute. The effect of these statutes is to diminish the
damages recoverable in proportion to the negligence of the injured person. (Arkansas, Laws of
1907, p. 162; Colorado, Act of May 27, 1911; Morrison and De Soto Stat. Ann., secs. 2060 and
2063; Florida, Gen. Stat. 1906, secs. 3148 et seq.; Georgia, Code 1911, Acts 1909 p. 160).
Viewing the act as a whole, it was said in Thomas vs. Quartermaine (18 Q. B. D., 685), per
Bawen, L. J.:
The true view in my opinion is that the Act, with certain exceptions, has placed the workman in a
position as advantageous as but no better than that of the rest of the world who use the master's
premises at his invitation on business. If it has created any further or other duty to be fulfilled by
the master I do not know what it is, how it is to be defined, or who is to define it.
In Mobile etc., Ry. Co. vs. Holborn (84 Ala., 133), it was said:

35
The purpose of the statute is to protect the employee against the special defenses growing out
of, and incidental to, the relation of employer and employee; and the result is to take from the
employer such special defenses, but to leave him all the defenses which he has by the common
law against one to of the public, not a trespasser, nor a bare licensee.
In 1 Dresser on Employers' Liability, sec. 2, it is observed that it is apparent that the Act has not
attempted to define generally the rights and duties of masters and servants, and is not a
codification of the law. Constant reference must be made to the common law to define who are
masters and who are servant, what is the scope of the employment and whether the inquiry was
the proximate result of the negligence; and negligence itself is determined by the common law,
and not by the Act. The Act, moreover, is silent concerning certain terms of the contract of
service. It does not impose any obligation on the master to employ competent servants, nor to
instruct or warn his servants about their work or the dangers of it. These obligations were too
well settled and important to be taken away by implication merely, and the courts have held that
the Act was remedial, and a concurrent, instead of an exclusive, remedy.
It is manifest, therefore, that the purpose of the Employers' Liability Act was, at most, to abolish
certain defenses in certain specified cases, but in no manner to prejudice common law right of
employees or to interfere with the enforcement of any right that the Act itself did not create.
Such have been the holdings of the courts in England and the United States form the very
beginning.
We now come to the consideration of Act No. 1874 for the purpose of determining what effect
this Act has had upon the law of damages in personal injury cases in this country, bearing in
mind that the Act is, as we have indicated, essentially a copy of the Massachusetts Employers'
Liability Act which has "prevailed in the State of Massachusetts some years and upon which
interpretations have been made by the Massachusetts courts, defining the exact meaning of the
provision of the law." (Special report of the joint committee of the Philippine Legislature on the
Employers' Liability Act, Commission Journal 1908, p. 296.) We agree with the Supreme Court of
Massachusetts that the Act should be liberally construed in favor of employees. The main
purpose of the Act, as its title indicates, was to extend the liability of employers and to render
them liable in damages for certain classes of personal injuries for which it was thought they were
liable under the law prior to the passage of the Act.
We do not doubt that it was, prior to the passage of Act No. 1874 and still is, the duty of the
employer in this jurisdiction to perform those duties, in reference to providing reasonably safe
places, and safe and suitable ways, works, and machinary, etc., in about which his employees
are required to work, which under the common law of England and America, are termed personal
duties, and which in the United States are held to be such that the employer cannot delegate his
responsibility and liability to his subordinates.
This (rule of) contractual obligation, implied from the relation and perhaps so inherent in its
nature to be invariable by the parties, binds the employer to provide safe appliances for the use
of the employee, thus closely corresponding to the English and American law. (Rakes vs. Atlantic,
Gulf and Pacific Co., 7 Phil. Rep., 359, 366.)
So, to this extent, the first subsection of section 1 of the Act is simply declaratory of the law as it
stood previous to the enactment. It may be that the employer would not be liable, under the Civil
Code, for personal injuries caused to his employees as a result of the negligence of the
employer's superintendent or acting superintendent, or that of a person in charge or control of a
signal, etc., provided that the employer "employed all the diligence of a good father of a family
to avoid the damage." (Art. 1903 of the Civil Code, and Chaves and Garcia vs. Manila Electric
Railroad and Light Co., 31 Phil. Rep., 47.) Under the Act the employer would be liable in damages
for such negligence of the employees named. If this view be correct, a question which we are not

36
now called upon to definitely determine, then the liability of employers was, in fact, extended
and new rights of action were created by the Act. It is these new rights to which the Act refers,
wherein it provides that "the employee, or his legal representative, shall, subject to the
provisions of this Act, have the rights to compensation and of action against the employer as if
he had not been an employee, nor in the service, nor engaged in the work, of the employer."
Standing in this form, it is quite clear that it was not intended that all rights to compensation and
of action against employers by injured employees or their representatives must be brought under
be governed by the Act. The strongest proof of all, showing that the Legislature never intended
by the Act to curtail the rights of employees, is that of the defense of contributory negligence
which defeats the action under the Act, while under the Civil Code, such complete defense does
not exist at all in this country. (Rakes vs. Atlantic, Gulf and Pacific Co., supra; Eades vs. Atlantic
Gulf and Pacific Co., 19 Phil. Rep., 561.) That the defense of contributory negligence, as it is
understood in the United States, is recognized in the Act with all its force and effects is clear,
because the first section requires as an essential requisite that the employee be "in the exercise
of due care" at the time of the injury in order to hold the employer liable for damages. The
plaintiff in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (supra) could not have recovered
under the Act because he was not in the exercise of due care at the time of the inquiry.
Taking into consideration what we have said above in reference to the origin and history of the
Act, its plain purport, and realizing that the legislature was content with the expounded meaning
of the words which it adopted, we find no difficulty in reaching the conclusion that in those cases
either within or without the words of the Act in which the law, as it stood prior to the passage of
the Act, gives an employee a remedy, he still has a right to sue under the same conditions and to
recover damages to the same extent as if the Act had not been passed. We are also of the
opinion that so far as section 1 of the Act is concerned, the provisions giving the employees the
same rights to compensation and to action as if they had not been employees, the requirement
of notice as a condition to maintaining the action, that relating to the time within which the
action must be brought, and that requiring the employee to give notice to his employer within a
reasonable time after he becomes aware of the defect or negligence, only apply to those
extremes lying outside of the Civil and allied Codes, but embraced by the Act, unless a case shall
arise in which the plaintiff, although he has a remedy under the Civil Code, insists upon relying
upon the Act alone. (Ryalls vs. Mechanics' Mills, 150 Mass., 190, and cases cited therein.) Act No.
2473 has not in the least changed these principle.
The net result is that we are required, under the pleadings and record in the case at bar, to
determine whether the plaintiff can recover for the death of her son under either Act No. 1874 or
the Civil Code.
Assuming that the excavation for the gas pipe is within the category of "ways, works, or
machinery connected with the used in the business of the defendant, " we are of the opinion that
recovery cannot be had under the Act for the reason that, as we have indicated, the deceased
was at a place where he had no right to be at the time he met his death. His work did not call
him there, nor is it shown that he was permitted there tacitly or otherwise. Under the Anglo-
American law the applicable to such a set of facts is that the master is not responsible, under the
Employers' Liability Act, for accidents to his employees when they are outside the scope of their
employment for purpose of their own.
The obligations of the master ... continue in force, not only during all the time in which his
servants are actually engaged in his service, but also during the time reasonably occupied by
them on his premises in going to and returning from their work and in intervals of rest
between. ... But he is under no obligation to keep in safe condition for their use any part of the
premises to which their duties do not call them and to which he has not given them permission
to go. (Street's edition of Shearman and Redfield on Negligence [vol. 1], sec. 188.)
37
To the same effect is 4 Labatt's Master and Servant, p. 4697.
A master's duty in respect to furnishing his servants a safe place in which to work extends to
such parts of his premises only as he has prepared for their occupancy while doing his work, and
to such other parts as he knows or ought to know they are accustomed to use while doing it. The
application of this principle has frequently prevented recovery in cases where the injury
proximately resulted form the fact that the injured servant was occupying the dangerous position
merely for his own convenience and accommodation. Under such circumstances his legal rights
are no greater than those of a licensee.
Besides the many cases cited by this author supporting his text, we note Connell vs. New York C.
and H. R. R. Co. (129 N. Y., Sup. 666); Louisville and N. R. R. Co. vs. Hocker (111 Ky., 707);
Gawlack vs. Michigan C. R. Co. (11 Ohio C. C., 59); Pfeiffer vs. Ringer (12 Daly, 437) in all of
which cases the injured persons were attending a call of nature in dangerous circumstances at
places not authorized by the employer to be used for that purpose; Wilson vs. Chesapeake and
O. Ry. Co. (130 Ky., 182), where plaintiff left a roundhouse in which he was working at night and
get something to eat; Pioneer Mining and Mfg. Co. vs. Talley (12 L. R. A., N. S., 861), where
plaintiff, a miner, left his work and went into another portion of the mine to get his own tools
which he had loaned to other workmen; McCann vs. Atlantic Mills (20 R. I., 566), where plaintiff
went into a dark place to get a drink of water and was injured by falling into a reservoir; and
Adams vs. Iron Cliffs Co. (78 Mich., 271; 18 Am. St. Rep., 441), where plaintiff left his work during
working hours and started to cross some railroads racks for the purpose of attending to his
private business. In all these cases it was held that the injured person was outside the scope of
his employment at the time and, hence, had no right of action against his employer.
Article 1105 of the Civil Code provides that:
No one shall be liable for events which could not be foreseen, or which having been foreseen
were inevitable, with the exception of the cases expressly mentioned in the law of those in which
the obligation so declares.
The case under consideration does not fall within the exceptions mentioned in the above quoted
article. (Manresa, vol. 8, p. 91.) After providing a reasonably safe place in and about which the
deceased was required to work, the defendant's liability was then limited to those events which
could have been foreseen. Article 1902 provides that a person who, by an act or omission causes
damage to another when there is fault or negligence shall be obliged to repair the damage so
done. Article 1903 after providing for the liability of principals for the acts of their employees,
agents, or these for whom they are otherwise responsible, provides that such liability shall cease
when the persons mentioned therein prove that they employed all the diligence of a good father
of a family to avoid the damage. We have then, on the one hand, nonliability of an employer for
events which could not be foreseen (article 1105), and where he has exercised the care of a good
father of a family (article 1903), and, on the other hand, his liability where fault or negligence
may be attributed to him (article 1902).
Gideon, city engineer of Manila and a witness for the plaintiff, testified concerning his experience
with trenches in the city. He stated that if the trenches are very dangerous his department uses
sheathing piles and braces them firmly. If the trenches are of considerable depth and the ground
is not considered safe, they put planks on both sides, supported by braces. If the trenches are
not very deep or if the ground is considered safe, they simply make the excavations. The
conditions vary and the precautions used depend upon the opinion of an experienced engineer.
Seaver, chief of police of the city of Manila and also a witness for the plaintiff, testified that the
slide which caused the death of the deceased came principally from the side of the trench
farthest from the street-car tracks. Captain Ordax of the police department, another witness for
the plaintiff, testified that the earth which covered the deceased's body came from the side

38
opposite the street-car tracks. Another witness testified that the distance from the street-car
tracks to the trench was only a few feet, but that the trench had been open for a week. From the
testimony of the witnesses it does not appear that there was any water in the bottom of the
trench, although some of the witnesses said that it was damp. The trench was only three and
one-half to four and one-half feet deep. The cause of Ocumen's death was not the weight of the
earth which fell upon him, but was due to suffocation. He was sitting or squatting when the slide
gave way. Had he been even half-erect, it is highly probable that he would have escaped
suffocation or even serious injury. Hence, the accident was of a most unusual character.
Experience and common sense demonstrate that ordinarily no danger to employees is to be
anticipated from such a trench as that in question. The fact that the walls had maintained
themselves for a week, without indication of their giving way, strongly indicates that the
necessity for bracing or shoring the trench was remote. To require the company to guard against
such an accident as the one in question would virtually compel it to shore up every foot of the
miles of trenches dug by it in the city of Manila for the gas mains. Upon a full consideration of the
evidence, we are clearly of the opinion that ordinary care did not require the shoring of the
trench walls at the place where the deceased met his death. The event properly comes within
the class of those which could not be foreseen; and, therefore, the defendant is not liable under
the Civil Code.
Having reached the conclusions above set forth, it is unnecessary to inquire into the right of the
plaintiff to bring and maintain this action.
For the foregoing reasons the judgment appealed from is reversed and the complaint dismissed,
without costs. So ordered.

EN BANC
G.R. No. L-10091 January 29, 1958
BOY SCOUTS OF THE PHILIPPINES, petitioner,
vs.
JULIANA V. ARAOS, respondent.
MONTEMAYOR, J.:
39
This is a petition to review on certiorari the decision of the Court of Industrial Relations of
October 10, 1955 and the resolution of said court en banc of December 5, of the same year,
denying the motion for reconsideration of the decision. Because of the view we take of the case,
we deem it unnecessary to state the facts in detail.
The petitioner, Boy Scouts of the Philippines, a public corporation created under Commonwealth
Act 111, is a civic and benevolent institution engaged in the promotion and development of the
character, patriotism, courage, self-reliance, and kindred virtues in the boys of the country.
Section 4 of the Act of creation states its objectives as "solely of a benevolent character and not
for pecuniary profit". Respondent Juliana V. Araos worked with the petitioner as scout executive,
holding such position and rank from 1948 up to her dismissal from the service on June 1, 1954.
Respondent, during her incumbency, organized the BSP Employees Welfare Association, a sort of
labor organization or union of employees working in the Boy Scouts of the Philippines. She
became president thereof. On January 29, 1954, respondent filed charges with the National
Bureau of Investigation against Exequiel Villacorta, Chief Scout Executive, for alleged "anomalous
actuations of the said person in the performance of his duties in the said office." On February 1,
1954, respondent addressed a letter to the President of the Boy Scouts of the Philippines, Jose B.
Vargas, bringing to his attention the charges she had filed against Villacorta with the NBI. She
also sent and distributed copies of her charges to each and every member of the Executive
Board of the Boy Scouts of the Philippines, to the Presidential Complaint and Action Committee,
Malacaang, and to the President of the Philippines, to scouters all over the Philippines, and to all
the delegates to the 15th Annual Meeting, National Council, Boy Scouts of the Philippines. It is
said that the NBI found Villacorta guilty of the charges filed by Araos.
Thereafter, H.B. Reyes, Chairman of the Personnel Committee of the BSP, on May 18, 1954,
addressed a letter to respondent, which is self-explanatory, and which we quote below:
Dear Madam:
A report and complaint have been received by President Jorge B. Vargas, and the National
Executive Board of the Boy Scouts of the Philippines, to the effect that you have engaged
systematically in activities inimical to the best interests of the Boy Scouts of the Philippines, with
total disregard and in defiance of the duly-constituted authorities of the Boy Scouts of the
Philippines, consisting of the following acts:
a. That you have filed a complaint with a request for an immediate investigation of Mr. Exequiel
Villacorta, Chief Scout Executive of the Boy Scouts of the Philippines, with the President's
Complaints and Action Commission (PCAC) directly, and with the National Bureau of
Investigation, and have only furnished copy thereof to the President of the Boy Scouts of the
Philippines.
b. That you have reproduced the same complaints and distributed copies thereof to various
newspaper offices in the City of Manila, and sent copies thereof to various Scouters in the City of
Manila and the provinces, notwithstanding that you knew that the complaints were under
investigation by the Committee on Personnel of the Boy Scouts of the Philippines and the NBI.
c. That notwithstanding your knowledge and information that the Committee on Personnel has
your complaints under consideration, and that the report of the NBI agent, in charge of the case,
has not been submitted to nor received by the Boy Scouts of the Philippines, you have
distributed copies of the same complaints to the delegates of the 15th National Council Meeting
of the Boy Scouts of the Philippines, and/or mailed copies, thereof to the delegates.
d. That immediately after the closing of the 15th National Council Meeting and upon learning that
no delegates had taken up the subject matter of your complaints at the Council Meeting, you
proceeded to see Mr. Rafael Yabut, the radio commentator, and furnished him copy of the same
40
charges which were under investigation with the intention to have those charges aired over the
radio, as in fact they were made the subject matter of Mr. Yabut's broadcast in the morning of
May 12, 1954.
By instruction of the National Executive Board, you are hereby requested to submit your reply to
the above specification of charges, and explain within 72 hours why disciplinary action should
not be taken against you for your censurable conduct against the best interests of the Boy
Scouts of the Philippines and in disregard and defiance of the duly-constituted authorities of the
Organization.

Respectfully yours
For the National Executive
Board.
(Sgd.) H. B. REYES
Chairman
Personnel Committee
Respondent answered the letter, practically admitting the activities and acts imputed to her said
to be inimical to the interests of the BSP, but trying to justify the same.
On May 26, 1954, the Personnel Committee of the BSP, composed of H.B. Reyes, Gabriel A. Daza,
Enrique A. Lolarga, Sergio Bayan, F.E.V. Sison, Eugenio Padua, and Teodoro K. Molo, the latter
reserving his vote, filed a report with the National Executive Board of the BSP. After discussing
the merits of the case, the Committee came "to the unanimous conclusion that Mrs. Juliana V.
Araos is guilty as charged and that her present conduct, judged in the light of her past record, is
such that her continuation in the service of the scouting movement in the Philippines is highly
prejudicial to its interest and therefore, recommends that she be dismissed from the service
effective immediately." Presumably acting upon said report and recommendation, BSP President
Vargas, on June 1, 1954, sent a letter to respondent dismissing her from the service of the BSP.
On August 3, 1954, respondent filed charges against the BSP in the Court of Industrial Relations
for unfair labor practice, alleging that her dismissal was in violation of Section 4, Subsection (a),
paragraphs 4 and 5 of Republic Act No. 875, claiming that she had been dismissed due to her
union activities, in filing charges against the Chief Scout Executive. On September 28 1954,
acting prosecutor Ilagan of the CIR filed a formal complaint in the case. On October 4, 1954, the
BSP filed a motion to dismiss the case among other grounds that the CIR had no jurisdiction over
the case for the reason that the BSP was a civic, charitable, humanitarian and patriotic
enterprise, not created for profit and consequently, there could be no labor dispute over which
the CIR may exercise jurisdiction. By the order of October 14, 1954, the CIR deferred action on
the motion to dismiss, until trial, so that all questions of law and fact may be determined in a
single decision. After hearing, Judge Jose S. Bautista, Acting Presiding Judge of the CIR, rendered
decision on October 10, 1955, the dispositive part of which reads as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the respondent is hereby ordered:
1. To cease and desist from dismissing any of the employees for having filed charges against it;
2. To reinstate Mrs. Juliana V. Araos to her former or equivalent position with back pay, without
prejudice to all privileges accruing in her favor, from June 1, 1954 up to her reinstatement;
3. To post a copy of the dispositive portion of this decision in its bulletin board, the same to
remain posted therein for thirty (30) days from the date of this decision becomes final and
executory.
Acting upon a motion for reconsideration, Judge Bautista with Associate Judges V. Jimenez
Yanson, and Arsenio I. Martinez, concurring, denied the motion for reconsideration, while
41
Associate Judge Juan L. Lanting, took no part. As already stated, petitioner BSP is appealing from
that decision and resolution.
We propose to decide the present case exclusively on the question of jurisdiction, regardless of
the merits of the case.
Is the BSP an employer as contemplated by Republic Act No. 875, and was the controversy
between it and the respondent a labor or industrial dispute cognizable by the Court of Industrial
Relations?
In the case of U.S.T. Hospital Employees Association vs. Santo Tomas University Hospital, 95 Phil.,
40, which involved the question of whether the employees of said hospital were entitled to extra
compensation for working at night and whether the hospital was governed by the Eight Hour
Labor Law, Commonwealth Act No. 444, this Court, through Mr. Justice Pablo, sustained the order
of the Court of Industrial Relations dismissing the action filed by the U.S.T. Hospital Employees
association, for lack of jurisdiction, and we held that inasmuch as the Santo Tomas University
Hospital was not established for profit or gain, but on the contrary was organized for the elevated
purpose of serving suffering humanity, the posts occupied by the employees and laborers of the
hospital may not be considered as industrial employment, and that their controversy with the
hospital regarding additional pay cannot be considered as an industrial dispute; consequently,
the action filed by said laborers and employees was not within the jurisdiction of the Court of
Industrial Relations.
The doctrine laid down in the hospital case above-mentioned was reiterated in the case of San
Beda College vs. National Labor Union, et al., 97 Phil., 787, 51 Off. Gaz. 5636, where this Court,
through Mr. Justice Sabino Padilla, held that inasmuch as the San Beda College was not operated
and maintained for profit or for purpose of gain, the persons working in said college cannot be
deemed to be industrial employees and consequently, any controversy or dispute they may have
with the College in connection with or arising out of their employment does not come within the
purview of Commonwealth Act 103, as amended by Commonwealth Act Nos. 254 and 559.
In the cases of Quezon Institute vs. Velasco, and Quezon Institute vs. Paraso, 97 Phil., 905, 51
Off. Gaz. (12) 6175, respectively, this Court, through Mr. Justice Jugo, held, citing the Santo
Tomas University Hospital case (supra), that "with greater reason the Quezon Institute should be
declared as an institution not established for gain within the meaning of the Workmen's
Compensation Law", and reversed the orders of the Workmen's Compensation Commissioner
requiring the Quezon Institute to pay indemnities to two employees of said Institute who
contracted tuberculosis due to their work there, were incapacitated for certain periods of time,
and later filed claims with the Workmen's Compensation Commission.
Again, in the case of Baselides Marcelo, et al., vs. Philippine National Red Cross, 101 Phil., 544,
where the employees of the Red Cross filed an action in the Court of First Instance of Manila,
claiming overtime pay, including payment for services rendered on Sundays and holidays, and
where the trial court, acting upon a motion to dismiss, dismissed the complaint for lack of cause
of action on the ground that the Eight Hour Labor Law, Commonwealth Act No. 444, did not apply
to said employees of the Red Cross, this Court affirmed the order of dismissal, and through Mr.
Justice Alfonso Felix, we said that the Philippine National Red Cross performs humanitarian work
and is not engaged in an industry or occupation for purposes of gain, and consequently, its
employees cannot demand as a matter of right the application to them of the Eight Hour Labor
Law.
In the course of the discussion of this case, particularly, the aforementioned cases of the Santo
Tomas Hospital, San Beda College, Quezon Institute, and Philippine National Red Cross, supra, it
was claimed that none of these cases is in point, for the reason that they do not touch upon or
involve the jurisdiction of the Industrial Court. Strictly speaking, the claim is correct. However,
42
these case cited not exactly to support the theory that the Industrial Court has no jurisdiction
over the present case, but rather to show that this high Tribunal has laid down the doctrine that
labor legislation, like Commonwealth Act 103, as amended, creating the Court of Industrial
Relations, the Eight-Hour Labor Law and the Workmen's Compensation Act, have no application
to institutions organized and operated for charity, education, etc., and not for profit or gain, as
far as the relationship between the management and its employees or laborers is concerned;
that despite the solicitude shown by the Legislature for labor and its policy to promote the
welfare of the employees and laborers, nevertheless, it did not see fit or deem it necessary to
extend to the workers in these charitable and educational organizations, the benefits of extra
compensation for overtime work and work on Sundays and holidays, and for compensation for
injuries suffered or illness contracted and aggravated, arising out of and in the course of
employment; and that by analogy, the Industrial Peace Act, Republic Act 875, also a labor law,
has no application to the Boy Scouts of the Philippines.
It was also asserted that our decisions in the cases of Metropolitan Water District Workers Union
vs. Court of Industrial Relations, 91 Phil., 840, and Government Service Insurance System vs.
Castillo, 98 Phil., 878, 52 Off. Gaz. (9) 4269, somewhat weaken and adversely affect our ruling in
the Santo Tomas Hospital and San Beda College cases, for the reason that in the two cases
involving the instrumentalities of the Government, neither engaged in the production of goods
nor in seeking monetary gain, Metropolitan Water District having been established to render
public service by furnishing an adequate water supply and sewerage service and the
Government Service Insurance System, to promote the efficiency and welfare of the employees
of the Philippine Government, still we held that the Industrial Court had jurisdiction under
Commonwealth Act 103, as amended, to settle disputes between said entities and their
employees. The seeming conflict in our rulings in the two sets of cases can readily be explained.
In the first place, the Metropolitan Water District and the Government Service Insurance System
are government corporations or entities engaged not in governmental functions, but rather in
proprietary functions of the Government, and these entities are expressly not excluded from the
provisions of the Industrial Peace Act, Republic Act 875, under Section 11 thereof, and that
consequently, the policy of the Government against strikes for the purpose of securing changes
or modifications in the terms and conditions for employment of employees in the Government,
including the political subdivisions thereof, does not apply. In the second place, as regards the
Metropolitan Water District it cannot be truly said that it does not seek monetary gain. For the
water and sewerage service it renders, it charges compensation, sometimes at a rate which in
the opinion of the consumers is above the value of said service, resulting in general complaints
and petitions for reduction of rate. This profit or gain over the expenses incurred by the
Metropolitan Water District is utilized to expand its facilities and resources, so that after many
years, the property, resources and assets of the Metropolitan Water District will be far in excess
and beyond its original capital or investment, and any time or when this entity is dissolved or its
functions are taken over by a private entity, which is possible and legally permissible, and its
assets are bought as an entity, there would be a sizeable, if not a tremendous gain for the
Government. Besides, any increase in pay, extra compensation, monism, etc., which may be
demanded by and granted its employees and laborers, if they cannot be taken from or absorbed
by the income and profits, can easily be passed on to its customers by increasing its rates.
Surely, the Metropolitan Water District can in no sense be considered a charitable, benevolent, or
philanthropic institution. And as to the Government Service Insurance System, it is well known of
government employees, in huge amounts and at substantial interest, and the profits made
therefrom are in part are distributed as dividends among its insured. Surely, said insurance entity
does not operate for charity, but in practice operates for profit or gain for the benefit of those
insured by it. This, aside from the fact that insurance has been generally considered and even
held by the courts to be a business.

43
Now, may the Boy Scout of the Philippines, which is admittedly organized and operated not for
profit or gain, be considered as engaged in an industry so that its relation with its employees
may be governed by the Industrial Peace Act, Republic Act No. 875, that the dismissal of one of
its employees for alleged union activities may be considered as unfair labor practice, within the
meaning of said Industrial Peace Act, and consequently, cognizable by the Court of Industrial
Relations?
The main issue involved in the present case is whether or not a charitable institution or one
organized not for profit but for more elevated purposes, charitable, humanitarian, etc., like the
Boy Scout of the Philippines, is included in the definition "employer" contained in Republic Act
875, and whether the employees of said institution fall under the definition of "employee" and
also contained in the same Republic Act. If they are included, then the act which may be
considered unfair labor practice, within the meaning of said Republic Act, would come under the
jurisdiction of the Court of Industrial Relations; but if they do not fall within the scope of said
Republic Act, particularly, its definitions of employer and employee, then the Industrial Court
would have no jurisdiction at all.
During the discussion of this case, it was claimed that our Industrial Peace Act is partly modelled
after the National labor Relations Act, known as the Wagner Act; that said Wagner Act contains
Similar definitions of "employer" and "employee"; and that in a number of cases decided by the
Federal courts, including the United States Supreme Court, interpreting and applying said
Wagner Act, it has been consistently and uniformly held that non-profit organizations and
charitable institutions fall within the scope of the term employer within the meaning of the
Wagner Act, and on that consequently, if we are to follow said judicial authorities, we must
perforce hold that a non-profit organization like the Boy Scouts of the Philippines comes within
the scope of the definition of employer under our Industrial Peace Act, and so any unfair labor
practice committed by the management of said institution would come within the jurisdiction of
the Court of Industrial Relations. The point raised as quite important and deserves extended
discussion and explanation.
For purposes of reference, we shall reproduce the definitions of "employer" and "employee" in
the Wagner Act and the corresponding Act 875:

WAGNER ACT REPUBLIC ACT

The term 'employer' includes any
person acting in the interest of an
employer, directly or indirectly, but
shall not include the United States or
any State or political subdivision
thereof or any person subject to the
Railway Labor Act, as amended from
time to time or any labor organization.
(other than when acting as an
employer) or anyone acting in the
capacity office or agent of such labor
organization. [Sec. 2(2)]
The term 'employer' includes any
person acting in the interest of an
employer, directly or indirectly, but
shall not include or any labor
organization (otherwise , than when
acting as an employer) or any one
acting in the capacity of officer or
agent of such labor organization. [Sec.
2 (c)]

The term 'employee' shall include any
employee, and shall not be limited to
the employees of a particular
employer, unless the Act explicitly
states otherwise, and shall include any
The term 'employee' shall include any
employee and shall not be limited to
the employee of a particular employer
unless the Act explicitly states
otherwise, and shall include any

44
 individual whose work has ceased as a individual whose work has ceased as a
consequence of or in connection with, consequence of, or in connection with,
any current labor dispute or because any current labor dispute or because
of any unfair labor practice, and who of any unfair labor practice and who
has not obtained any other regular has not obtained any other
and substantially equivalent substantially equivalent and regular
employment [but shall not include any employment. [Sec. 2 (d)]
individual employed as an agricultural
laborer in the domestic service of any
family or persons at his home, or any
individual employer by his parent or
spouse.] [Sec. 2 (3).]

(NOTE: The portions in the Wagner Act included in brackets ([ ]) are not found
in Republic Act 875.).

For purposes of reference, we shall reproduce the definitions of "employer" and "employee" in
the Wagner Act and the corresponding definitions under Republic Act 875: By comparison, it will
be observed that the Wagner's Act's definition of "employer" exempts or excludes the United
States or any State or political subdivision thereof, or any person subject to the Railway Labor
Act. As a matter of fact, the Labor Management Relations Act of 1947, known as the Taft-Hartley
Act, amending the Wagner Act, introduced additional exemptions from the term "employer", such
as Government corporations, Federal banks, and particularly corporations operating hospitals,
and from the term "employee" additional exemptions, such as individuals employed as
independent contractors and supervisors.
On the other hand, our Industrial Peace Act's definition of "employer" contains no such
exemptions. The obvious implication is that the Wagner Act and later as amended, made an
express exemption or exception in favor of all those entities, such as the United States or any
States or political subdivision, which it wanted to be excluded, so that any organization, entity, or
institution not so included in the exemption must naturally fall under the definition of employer.
Naturally, the Federal courts in interpreting this part of the Wagner Act and finding that the
exemption or exception did not expressly mention charitable or non-profit institutions, were
constrained to hold that said institutions were considered under the Wagner Act.
The same thing may be said of the term "employee" under said Wagner Act. It contains several
exemptions, such as any individual employed in the domestic service or any person employed by
his parent or spouse. Such exemptions are absent under the term "employee" used in our
Industrial Peace Act; and yet those exempted under the Wagner Act's definitions of employer and
employee are obviously and clearly entitled to exception or exemption under our own Industrial
Peace Act. For instance, there can be no question that under our Industrial Peace Act, the
Republic or any political division or subdivision, like a province or municipality, must and should
also be excluded from the definition of employer. Similarly, under the term "employee" of our
law, agricultural laborers or individuals employed in the domestic services, like private or
domestic drivers, housemaids, kitchen help, etc., should be excluded. From this, we can logically
conclude that our Legislature, in drafting the law, particularly the portion defining employer and
employee, did not deem it necessary or advisable to make the obvious and necessary
exemptions or exceptions, but left it to the courts for interpretation and application. For this
reason, the decided by the United States Federal courts, interpreting the Wagner Act as regards
employer and employee, are not applicable.
But there is a more important and fundamental reason why the Federal cases cited as ruling
against our interpretation of Republic Act 875, cannot be considered applicable, even relevant.
45
The Wagner Act, a Federal legislation, was promulgated for a specific purpose-to eliminate or
diminish as much as possible the causes of labor disputes which may obstruct or interfere with
interstate and foreign commerce.
Incidentally, it should be stated that the only justification for the United States Federal
Government to promulgate the Wagner Act is that dealt with and involved interstate commerce,
otherwise, the Federal Congress would have no jurisdiction or right to act at all. Labor
management relations involving institutions whose activities are entirely and exclusively within
the State legislation, or the State Labor Relations Act.
The very first part of said Wagner Act, which we reproduce below, is self-explanatory:
An Act to diminish the causes of labor disputes burdening or obstructing interstate and foreign
commerce, to create a National Labor Relations Board, and for other purposes. (Emphasis
supplied.)
The first, second, third, and fourth paragraphs of said Wagner Act, which we reproduce below,
also speak of commerce and flow of commerce:
SECTION 1. The denial by employers of the right of employees to organize and the refusal by
employers to accept the procedure of collective bargaining lead to strikes and other forms of
industrial strife or unrest, which have the intent or the necessary effect of burdening of
obstructing commerce by (a) impairing the efficiency, safety, or operation of the
instrumentalities of commerce; (b) occurring in the current of commerce; (c) materially affecting,
restraining, or controlling the flow of raw materials or manufactured or processed goods from or
into the channels of commerce, or (d) causing diminution of employment and wages in such
volume as substantially to impair disrupt the market for goods and flowing from or into the
channels of commerce.
The inequality of bargaining power between employees who do not possess full freedom of
association or actual liberty of contract, and employers who are organized in the corporate or
other forms of ownership-association substantially burdens and affects the flow of commerce,
and tends to aggravate recurrent business depressions, by depressing wage rates and the
purchasing power of wage earners in industry and by preventing the stabilization of competitive
wage rates and working conditions within and between industries.
Experience has proved that protection by law of the right of employees to organize and bargain
collectively safeguards from injury, impairment or interruption, and promotes the flow
of commerce by removing certain recognized sources of industrial strife and unrest, encouraging
practices fundamental to the friendly adjustment of industrial disputes arising out of differences
as to wages, hours, or other working conditions, and by restoring equality or bargaining power
between employers and employees.
It is hereby declared to be the policy of the United States to eliminate the causes of certain
substantial obstructions to the free flow of commerce and to mitigate and eliminate these
obstructions when they have occurred by encouraging the practice and procedure of collective
bargaining and by protecting the exercise by workers of full freedom of association, self-
organization, and designation, of representatives of their own choosing, for the purpose of
negotiating the terms and conditions of their employment or other mutual aid or protection."
(Emphasis supplied.).
And paragraph six of Section 2 of the Wagner Act defines the term "commerce":
(6) The term 'commerce' means trade, traffic, commerce, transportation or
communication among the several States, or between the District of Columbia or any Territory of
the United States and any State or other Territory, or between any foreign country and any State,
46
Territory, or the District of Columbia within the District of Columbia or any territory, or between
points in the same State but through any other State or any Territory or the District of Columbia
or any foreign country. (Emphasis supplied.)
In other words, the main concern of the United States Congress in promulgating the Wagner Act
was to eliminate the causes of the interruption or obstruction to the free flow of commerce
among and between the States and between the United States and foreign countries, so that any
institution, regardless of the purpose of its organization and the objective of its operation,
whether for profit, or whether charitable, benevolent, philanthropic as long as its activities cross
state lines, and that any labor dispute between it and its employees may affect. obstruct, or
interrupt interstate commerce or foreign Commerce, must necessarily be considered as an
employer within the meaning of the Wagner Act, and subject to the jurisdiction of the National
Labor Relations Board. That is the reason why in the Federal cases cited, specially in the case of
The Polish National Alliance vs. N.L.R.B. 322 U.S 643, and the N.L.R.B. vs. Central Dispensary
Emergency Hospital, (1944) 135 F, 2d 852, the courts therein held that the fraternal and benefit
society and hospital involved therein were subject to the provisions of the Wagner Act. In the first
case, The National Labor Relations Board found that the Police National Alliance was engaged in
unfair labor practice. On a petition for review and a cross-petition of the Board of enforcement,
the Circuit Court of Appeals sustained the order, and on appeal by certiorari the United States
Supreme Court found and said the following:
The Polish National Alliance is a fraternal benefit society providing death, disability, and accident
benefits to its members and their beneficiaries. Incorporated under the laws of Illinois, it is
organized into 1,817 lodges scattered through twenty-seven States, the District of Columbia, and
the Province of Manitoba, Canada. As the "largest fraternal organization in the world of
Americans of Polish descent, "it had an outstanding, in 1941, 272, 897, insurance benefit
certificates with a face value of nearly $160,000,000.00. Over 76% of the certificates were held
by persons living outside of Illinois. At the end of that year, petitioners assets totaled about
$30,000,000.00, in cash, real estate in five States, United States Government bonds, foreign
government bonds, bonds of various States and their political subdivisions, railroad, public utility,
and industrial bonds, and stocks. From its organization in 1880 until the end of 1940, the Alliance
spent over $7,000,000 for charitable, educational, and fraternal activities among its members.
During the same period, it paid out over $38,000,000 in mortuary claims.
Petitioner directs from its home office in Chicago a staff of over 225 full and part-time organizers
and field agents in twenty-six States whose traveling expenses are borne by Alliance and who
receive commissions for new memberships. Since its 1939 convention, Alliance has admitted no
more 'social members'. Thereafter, all applicants have been required to buy insurance
certificates providing various types of life, endowment, and term coverage. These Policies
contain the typical loan, cash surrender value, optional settlement, and dividend provisions.
Petitioner spent over $10,000 for advertising outside of Illinois during 1941. It employs a Georgia
credit company to report on the financial standing and character of the applicants, and reinsures
substandard risks with an Indiana company.
Alliance lodges are organized into 190 councils, 160 of which are outside the State of Illinois. The
councils elect delegates to the national convention, and it in turn elects the executive and
administrative officers. The Censor of Alliance is its ranking officer and he appoints an editorial
staff which publishes a weekly paper distributed to members. Of the 6,857,556 copies published
in 1941, about 80% were mailed to persons living outside of Illinois.
This summary of the activities of Alliance and of the methods and facilities for their pursuit amply
shows the web of money-making transactions woven across many State lines. An effective strike
against such a business enterprise, centered in Chicago but radiating from it all over the country,
would as a practical matter certainly burden and obstruct the means of transmission and
47
communication across these state lines. Stoppage or disruption of the work in Chicago involves
interruptions of the steady stream, in and out of Illinois, of bills, notices, and policies, the
payments of commissions, the making of loans on policies, the insertion and circulation of
advertising material in newspapers, and its dissemination over the radio. The effect of such
interruptions on commerce is unmistakable. The load of interstate communication and
transportation services is lessened, cash necessary for interstate business becomes unavailable,
the business, interstate, of newspapers and radio stations suffer. Nor is this all. Alliance, it
appears, plays a credit role in interstate industries, railroads and other public utilities. In 1941, it
acquired securities in an amount in excess of $11,000,000, and sold or redeemed securities
costing more than $7,500,000. Financial transactions of the magnitude cannot he impeded even
temporarily without affecting to an extent not negligible the interstate enterprises in which the
large assets of Alliance are invested. That such are the substantial effects on interstate
commerce of dislocating labor practices by the insurance companies was established before the
Labor Board in at least thirteen comparable situations. The practical justification of such a
conclusion has not heretofore been challenged. Considerations like these led the Board to find
that petitioner's practices 'have a close, intimate, and substantial relation to trade, traffic, and
commerce among the several States and tend to lead to labor disputes burdening and
obstructing commerce,' and were therefore 'unfair labor practices affecting commerce within the
meaning of Section 2(6) and (7),' and as such, prohibited by Section 10 of the Wagner Act, 29
USCA, Section 160, 9 FCA Title 29, Section 160.
xxx xxx xxx.
We have said enough to indicate the ground for our conclusion that the Board was not unjustified
in finding that the unfair labor practices found by it would affect commerce. And the undoubted
fact that Alliance promotes, among Americans of Polish descent, interest in and devotion to, the
contributions that Poland has made to civilization does not subordinate its business activities to
insignificance. Accordingly, the Board could find that its cultural and fraternal activities do not
withdraw Alliance from amenability to the Wagner Act" (Polish National Alliance vs. National
Labor Relations Board, 322 U.S. 643; pp. 644-647, 648).
In the second case of the National Labor Relations Board vs. Central Dispensary and Emergency
Hospital, the National Labor Relations Board certified to the United States Court of Appeals,
District of Columbia, the enforcement of its order requiring respondent Hospital to bargain
collectively with Building Service Employees' International Union, exclusive representative of
respondent's employees. Respondent attacked the order on the ground that it is a non-profit
charitable institution not engaged in trade, traffic, commerce, or transportation within the
meaning of the National Labor Relations Act. The United States Court of Appeals, in granting the
petition of the Board, held that respondent Hospital was not exempted from the operation of the
Act, for the reason that its activity involved the sale of medical services and supplies for which it
received about $600,000 a year and it purchased from commercial houses material with the
value of about $240,000; it employs about 230 persons for non-professional services and
maintenance work, and 120 technical and professional employees. According to the court, "such
activities are trade and commerce and the fact that they are carried on by a charity hospital is
immaterial to a decision of this issue." (Emphasis supplied.) It cited the case of American Medical
Association vs. United States, wherein the same court held that the sale of medical and hospital
services for a fee has been considered as trade by English and American common law cases,
going back to 1793.
On the applicability of the Wagner Act and the Taft-Hartley Act amending it, and the jurisdiction
of the National Labor Relations Board therein created, Rothenberg in his book on Labor Relations,
p. 311, says the following:
D. Interstate Commerce as a Test of Board's Jurisdiction.
48
Whether one adopts the view that the primary purpose of the Act is to aid interstate commerce
or the alternative view that the basic state commerce, under either position the elements of
interstate commerce is an integral and indispensable consideration, and which as we shall
shortly see, is one of the deciding factors in questions of applicability of the Act and jurisdiction
of the Board in a given case. "If the Act is scrutinized carefully, it will be found that the
applicability of the Act itself and the jurisdiction of the Board is predicated on two elements: first,
a proper subject matter, i.e., rights, wrongs or duties comprehended by the Act; second, the
involvement of interstate commerce.
The first of these two elements, viz: a proper subject matter, will be given consideration at a
later and appropriate point.
With respect to the matter of the requirement of an involvement of interstate commerce, it must
be remembered that this was passed by Congress in exercise of its right to control and regulate
interstate commerce and it was on that basis that the constitutionality of the original Act was
upheld. Accordingly, to maintain its constitutional integrity, the Act can have application only to
cases in which there is not only a proper subject matter, but also an involvement of interstate
commerce. (Emphasis supplied.).
In our jurisdiction, however, the situation is entirely different. There is no interstate commerce to
be considered. Republic Act 875 is concerned only with regulating relations between
management and labor, not commerce or the flow of commerce. And so we feel free to interpret
the term "employer" in accordance with the ruling spirit that pervades the whole Industrial Peace
Act. We are convinced that this Act refers only to organizations and entities created and operated
for profit, engaged in a profitable trade, occupation, or industry. The law itself is called "An Act to
Promote Industrial Peace and for Other Purposes, and Section 1, paragraph (a) declares the
policy of the Act to eliminate the causes of industrial unrest, and paragraph (b), to promote
sound stable industrial peace. Then Section 10 entitled "Labor Disputes in Industries
Indispensable to the National Interest", provides that when in the opinion of the President, there
exist a labor dispute in an industry indispensable to the national interest, he may certify the case
to the Court of Industrial Relations. From these, it is obvious that what the Legislature had in
mind and what it intended the law to govern were the industries, whose meaning is too obvious
to need explanation. Surely, institutions like hospitals, the National Red Cross, Boy Scouts of the
Philippines, Gota de Leche, Philippine Tuberculosis Society, and other organizations whose
purpose is not to make profit or gain, but to aid in alleviating the suffering of humanity and in
developing the character in the youth of the land, in furnishing milk to babies of the indigent,
etc., can hardly be considered industries.
Republic Act 875 is patterned after the labor relations legislation in the United States of America,
particularly, the Federal Labor Relations Act, including the labor relations acts of the different
States. Naturally, American authorities interpreting said American labor legislation are applicable
and may be considered by us with profit.
The case of The Petition of the Salvation Army (U.S.A.), 36 A. 2d 479, involved the application of
the Pennsylvania Labor Relations Act, and particularly, whether the Salvation Army was governed
by it. A union of hotel and restaurant employees filed a petition with the Labor Relations Board,
asserting that the Salvation Army was engaged in the hotel and restaurant business at The
Evangeline Residence in Pittsburgh, employing approximately twenty-eight employees and it had
declined to bargain collectively, and asking that the Board investigate the matter. The petition
was resisted by the Salvation Army. After hearing, the Board decided that the Salvation Army was
an employer within the meaning of the State Labor Relations Act, and ordered an election to
ascertain representatives for the purpose of collective bargaining. Upon exceptions, the Board
upon hearing, dismissed the exceptions and reaffirmed the order. A petition for review was
presented to the Court of Common Pleas, and after hearing, majority of the court, with one
49
dissent, affirmed the order. Upon appeal to the Supreme Court of Pennsylvania, the latter cited
the case of Western Pennsylvania Hospital, where it was decided that the State Labor Relations
Act did not apply to non-industrial disputes. Then the court proceeded to analyze the Labor
Relations Act of the State, saying that this Act was designed to protect the rights of employees to
organize and bargain collectively and by express terms the Act must be liberally construed. We
quote:
Finding and Policy. (a) Under prevailing economic conditions, individual employees do not
possess full freedom of association or actual liberty of contract. Employers in many instances,
organized in corporate or other forms of ownership association with the aid of government
authority, have superior economic power in bargaining with employee. This growing inequality of
bargaining power substantially and adversely affects the general welfare of the State by creating
variations and instability in competitive wage rates and working conditions within and between
industries, and depressing the purchasing power of wage earners, thus (1) creating sweat-
shops with their attendant dangers to the health, peace, and morals of the people; (2) increasing
the disparity between production and consumption; and (3) tending to produce and aggravate
recurrent business depressions. The denial by some employers of the right of employees to
organize and the refusal by employers to accept the procedure of collective bargaining tend to
lead to strikes, lockouts, and other forms of industrial strife and unrest, which are inimical to the
public safety and welfare, and frequently endanger the public health.
(b) Experience has proved that protection by law of the right of employees to organize and
bargain collectively removes certain recognized sources of industrial strife and unrest,
encourages practices fundamental to the friendly adjustment of industrial disputes arising out of
differences as to wages, hours or other working conditions, and tends to restore equality of
bargaining power between employers and employees. . .
The Pennsylvania Supreme Court arrived at the following conclusion:
In the light of these plainly expressed legislative findings declaring the necessity for the law and
the mischief to be remedied we are drawn irresistibly by the language used to the conclusion
that the Legislature meant to limit its provisions to industrial pursuits. The phrases: 'within and
between industries' 'sweat shops', 'production and consumption', 'business depressions' and
'industrial strife and unrest' certainly do not relate to charitable or eleemosynary associations. It
appears too plain for argument that the Legislature intended all of the statutory provisions and
regulations of the Act to apply exclusively to industrial disputes."
It reversed the appealed order and entered one in favor of the appellant Salvation Army.
It will be noticed from the analysis made by the Pennsylvania Supreme Court of the State Labor
Relations Acts that said Act and our Industrial Peace Act are similar, at least in basic purpose.
Then we have the case of St. Lukes Hospital vs. Labor Relations Commission, et al., 70 N.E. 2d
10, which is in point. It would appear that the members of a trade union, working as non-
professional employees of St. Lukes Hospital, sought certification as the bargaining agent of 125
employees, including laundry workers, maids, porters, machinists, yard help, watchmen,
storemen, waitresses, page girls, kitchen and cafeteria help, and orderlies. It seems that the
Labor Relations Commission took action on the petition for certification. The Hospital filed action
against the Commission for a declaratory decree claiming that said Commission had no
jurisdiction to entertain the petition. The court issued an interlocutory decree granting a
preliminary injunction, restraining the Commission from taking any further action in the
certification proceedings. Acting upon the appeal, the Supreme Judicial Court of Massachusetts
held that the hospital was a charitable institution, a public charity, established not for profit and
was not covered by the State Labor Relations Act, and so the Labor Relations Commission had no
jurisdiction over the petition for certification filed by its employees. It would also appear that the
50
State Labor Relations Act is similar to our Industrial Peace Act, Republic Act No. 875. The
Massachusetts Supreme Judicial Court describes said State Labor Relations Act as follows:
It "constitutes a complete and comprehensive legislative plan for the elimination of substantial
obstructions to trade and industry arising from disputes between employers and employees by
removing the basis of such disputes, by protecting the right of employees to self-organization
and to join and form labor organizations, and by encouraging the practice of collective bargaining
through representatives of their own choosing to negotiate the terms and conditions of their
employment.
The commission is empowered to take appropriate means to ascertain and designate the
representatives selected by the employees as their bargaining agency, to define the units for
such representation, to decide, whether the employer has committed any unfair labor practice
and to secure enforcement of its orders by application to the Superior Court. . .
The case of Office Employees International Union vs. National Labor Relations Board, 235 F. 2d
832, involves an interpretation of the National Labor Relations Act itself, after which, as already
stated, our Industrial Peace Act is patterned. A group of organizations, mostly unions, in this case
known collectively as Teamsters, was charged before the National Labor Relations Board with
unfair labor practice with respect to its office and clerical employees. The Board found that the
labor organizations represented by the Teamsters were employers with respect to their own
employees, but inasmuch as they were not engaged in commerce, and applying to them the
standards regularly applied to non-profit organizations, it refused to take jurisdiction over the
case, finding 'that the policies of the Act (National Labor Relations Act) would not be effectuated
by asserting jurisdiction in the proceeding". From the action of the Board, the case was finally
taken up to the United States Court of Appeals, District of Columbia Circuit. Said Court upheld
and affirmed the order of the Board.
It is true that there are some States in the American Union, like Wisconsin and Minnesota, the
Supreme Courts of which have held that charitable institutions, like hospitals, are not exempted
from the provisions of their labor relations laws. Thus, in the case of Wisconsin Employment
Relations Board vs. Evangelical Deaconess Society, 7 N.W. 2d 590, the Wisconsin Supreme Court
held that the Deaconess Society was correctly held guilty of unfair labor practice for having
refused to bargain with the union with which its employees were affiliated, for the reason that
said Society was not included within the exceptions in the statute whose words are broad enough
to cover it. But said decision may be possibly explained in the sense that since the Labor
Relations Statute of Wiscons in contained exceptions, it was presumed that any institution not
excluded in said exemptions was covered by the law. Moreover, the statute of Wisconsin is
entitled "Employment Peace Act", which may give the idea that it covers any kind of
employment, whether industrial or otherwise. On the other hand, our law on the subject is known
as the Industrial Peace Act, and there is every reason to believe that it applies and was intended
to apply only to industries, not to charitable institutions and others not organized or operated for
profit.
Then in the case of Northwestern Hospital, Minneapolis, Minnesota vs. Public Building Service
Employees Union, 294 N.W. 215, the Minnesota Supreme Court held that the Northwestern
Hospital was not exempted from the operation of the State Labor Relations Act because neither
said hospital nor its employees were included in the exceptions mentioned in the law's
definitions of "employer" and "employee". What we have said about the Wisconsin Supreme
Court decision about the exemptions contained in its Employment Peace Act are applicable to the
Minnesota Supreme Court decision, meaning that the labor relations laws in those States
expressly mentioned and enumerated all the entities and institutions which the Legislature
intended to exempt, so that anyone not so exempted would naturally come under their
operation. But even if we assume that the court decisions in these two States hold that
51
charitable institutions and those organized not for profit or game come under the provisions of
labor relations laws, still we prefer to follow the rulings of the Supreme Court of Pennsylvania and
Massachusetts as more reasonable and more in keeping with the spirit that pervades our
Industrial Peace Act.
But it is also claimed that the doctrines laid down by the Pennsylvania Supreme Court on the
subject matter has been rejected by the United States Court of Appeals for the District of
Columbia in its decision in National Labor Relations Board vs. Central Dispensary and Emergency
Hospital, supra. We cannot subscribe to this claim or contention. In the said case of Central
Dispensary, the Federal Court of Appeals for the District of Columbia was interpreting and
applying the Wagner Act, which as we have already explained, was intended to cover only
entities and institutions whose activities cross state lines, and where any labor dispute, specially
when resulting in scheme of our Industrial Peace Act.
During our deliberations, attention was also called to the fact that the right to self-organization is
consecrated in the Universal Declaration of Human Rights, adopted by the General Assembly of
the United Nations by the vote of many nations, including the Philippines and that by joining said
Declaration, the Republic of the Philippines has undertaken to promote and secure the effective
recognition of said right to self-organization among its people. We see no incompatibility
between said recognition by our country of the right to self-organization and the non-application
of our Industrial Peace Act to Charitable institutions. The employees and laborers in these
charitable institutions are not prohibited from organizing and joining a labor union. Even Section
11 of our Industrial Peace Act entitled "Prohibition Against Strikes in the Government," provides
that government employees may belong to any labor organization provided that said
organization does not impose the obligation to strike or to join any strike. There can be no valid
legal objection to the employees and laborers of, say, the Red Cross, the Boy Scouts, or a charity
hospital organizing themselves into an association or in joining a labor union. The line is drawn
only when they try to compel the management to bargain and if refused, resort to coercive
measures which may frustrate or paralyze the purposes and activities of these institutions.
Digressing a bit, it may be pertinent to state our concept of some of the reasons for the
promulgation of labor relations laws, not excluding our Industrial Peace Act. When a person or a
group of persons organizes and operates a business or industry for purposes of gain, the
intention is to make as much profits as possible from the financial investment made, sometimes
in disregard of the reasonableness of the wages paid to its employees and laborers. The state
feels that when the capitalists and management make substantial and sometimes excessive
profits, labor should receive a reasonable share in said profits in the form of fair wages. However,
it has been seen that unorganized labor for lack of bargaining power is in no position to demand
and succeed in its bid for a reasonable share in said profits in the form of more reasonable
wages, better working conditions, etc. So, labor relations acts were passed allowing, even
encouraging the organization of labor unions, through which the laborers may collectively
bargain with the capitalists or management, the law compelling the latter to bargain and making
it an unfair labor practice for said management to refuse to bargain, or to discriminate or take
measures of reprisals against the employees and laborers for union activities. Laborers are even
allowed to resort to coercive measures to enforce their legitimate demands, such as strikes
oftentimes accompanied by picketing. However, where entities or institutions are organized not
for profit, but for humanitarian, charitable, benevolent and analogous purposes, then the
situation is entirely different for there are no profits in which labor may demand a share in the
form of higher wages. There is no capital invested for financial returns. The funds used to
operate these institutions come from voluntary contributions, endowments, government
subsidies, etc. Oftentimes, the top executives and officials in these organizations like the Red
Cross and the Boy Scouts of the Philippines serve without pay in order that the funds of these
institutions, must often meager, could be kept intact as much as possible and channeled to the
52
use and benefit of the persons from whom they were intended. Naturally, the reason for the
promulgation and operation of these labor relations acts to aid laborers and employees in
general, is absent and there would be no excuse or occasion for resort to coercive measures like
strikes, in order to force these institutions to bargain and pay higher wages. Besides, the
application of these labor relations acts to these charitable institutions would in some cases be
disastrous. One can, for instance, easily imagine the result and dire, consequences if the nurses,
attendants and laborers of a charity hospital presented demands for higher wages and if refused,
stage a strike at a time purposely sought when there was a raging epidemic of say, influenza or
cholera; the activities of the hospital will then be paralyzed and if the management tried to
employ, even temporarily, other nurses, attendants and laborers to attend to the patients in the
crowded hospital needing immediate attention, the strikers would discourage or even prevent
said employment and hiring of substitutes by picketing the hospital premises. The same would
be true with employees and laborers of the Red Cross who upon the rejection of their demands
for higher wages, would stage a strike, and to make it more effective, time to make it coincide
with the occasion of a calamity, such as a destructive typhoon, flood, earthquake, etc., thereby
paralyzing the activities of said Red Cross and preventing it from extending relief to the victims.
We cannot believe that the Legislature in enacting our Industrial Peace Act could have intended
the law to so operate and apply.
On the basis of the foregoing considerations, there is every reason to believe that our labor
legislation from Commonwealth Act No. 103, creating the Court of Industrial Relations, down
through the Eight Hour Labor Law, to the Industrial Peace Act, was intended by the Legislature to
apply only to industrial employment and to govern the relations between employers engaged in
industry and occupations for purposes of profit and gain, and their industrial employees, but not
to organizations and entities which are organized, operated, and maintained not for the profit or
gain, but for elevated and lofty purposes, such as, charity, social service, the encouragement
and promotion of character, patriotism and kindred virtues in the youth of the nation, etc.
In conclusion, we find and hold that Republic Act No. 875, particularly, that portion thereof
regarding labor disputes and unfair labor practice, does not apply to the Boy Scouts of the
Philippines, and consequently, the Court of Industrial Relations had no jurisdiction to entertain
and decide the action or petition filed by respondent Araos.
Wherefore, the appealed decision and resolution of the CIR are hereby set aside, with costs
against respondent.

EN BANC
G.R. No. 71813 July 20, 1987
ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and
RICARDO DIONELE, SR., respondents.
PARAS, J.:

53
This is a petition for review on certiorari of the April 8, 1985 Resolution of the Ministry of Labor
and Employment affirming the July 16, 1982 Decision of the Labor Arbiter, which ruled in favor of
granting separation pay to private respondents.
On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in Monteverde,
Negros Occidental, known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable,
at her option, for another ten (10) years (Rollo, pp. 16-20).
On August 13, 1970, she opted to extend the lease contract for another ten (10) years (Ibid, pp.
26-27).
During the existence of the lease, she employed the herein private respondents. Private
respondent Ricardo Dionele, Sr. has been a regular farm worker since 1949 and he was promoted
to Cabo in 1963. On the other hand, private respondent Romeo Quitco started as a regular
employee in 1968 and was promoted to Cabo in November of the same year.
Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned
over the hacienda to the owners thereof on October 5, 1981, who continued the management,
cultivation and operation of the farm (Rollo, pp. 33; 89).
On November 20, 1981, private respondents filed a complaint against the petitioner at the
Ministry of Labor and Employment, Bacolod City District Office, for overtime pay, illegal dismissal
and reinstatement with backwages. After the parties had presented their respective evidence,
Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982 (Ibid, pp. 29-31), ruled that
the dismissal is warranted by the cessation of business, but granted the private respondents
separation pay. Pertinent portion of the dispositive portion of the Decision reads:
In the instant case, the respondent closed its business operation not by reason of business
reverses or losses. Accordingly, the award of termination pay in complainants' favor is warranted.
WHEREFORE, the respondent is hereby ordered to pay the complainants separation pay at the
rate of half-month salary for every year of service, a fraction of six (6) months being considered
one (1) year. (Rollo pp. 29-30)
On appeal on August 11, 1982, the National Labor Relations Commission, in a Resolution dated
April 8, 1985 (Ibid, pp. 3940), affirmed the decision and dismissed the appeal for lack of merit.
On May 22, 1985, petitioner filed a Motion for Reconsideration (Ibid, pp. 41-45), but the same
was denied in a Resolution dated June 10, 1985 (Ibid, p. 46). Hence, the present petition (Ibid,
pp. 3-8).
The First Division of this Court, in a Resolution dated September 16, 1985, resolved to require the
respondents to comment (Ibid, p. 58). In compliance therewith, private respondents filed their
Comment on October 23, 1985 (Ibid, pp. 53-55); and the Solicitor General on December 17, 1985
(Ibid, pp. 71-73-B).
On February 19, 1986, petitioner filed her Consolidated Reply to the Comments of private and
public respondents (Ibid, pp. 80-81).
The First Division of this Court, in a Resolution dated March 31, 1986, resolved to give due course
to the petition; and to require the parties to submit simultaneous memoranda (Ibid., p. 83). In
compliance therewith, the Solicitor General filed his Memorandum on June 18, 1986 (Ibid, pp. 89-
94); and petitioner on July 23, 1986 (Ibid, pp. 96-194).
The petition is devoid of merit.
The sole issue in this case is

54
WHETHER OR NOT PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.
Petitioner claims that since her lease agreement had already expired, she is not liable for
payment of separation pay. Neither could she reinstate the complainants in the farm as this is a
complete cessation or closure of a business operation, a just cause for employment termination
under Article 272 of the Labor Code.
On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the private
respondents is Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of which,
specifically provides:
Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:
xxx xxx xxx
Art. 284. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establisment or undertaking unless the closing is for the purpose of circumventing the provisions
of this title, by serving a written notice on the workers and the Ministry of Labor and Employment
at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closure or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay
or at least one-half (1/2) month pay for every year of service whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.1avvphi1
There is no question that Article 284 of the Labor Code as amended by BP 130 is the law
applicable in this case.
Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination.
The Labor Arbiter does not argue the justification of the termination of employment but applied
Article 284 as amended, which provides for the rights of the employees under the circumstances
of termination.
Petitioner then contends that the aforequoted provision violates the constitutional guarantee
against impairment of obligations and contracts, because when she leased Hacienda Danao-
Ramona on June 27, 1960, neither she nor the lessor contemplated the creation of the obligation
to pay separation pay to workers at the end of the lease.
Such contention is untenable.
This issue has been laid to rest in the case of Anucension v. National Labor Union (80 SCRA 368-
369 [1977]) where the Supreme Court ruled:
It should not be overlooked, however, that the prohibition to impair the obligation of contracts is
not absolute and unqualified. The prohibition is general, affording a broad outline and requiring
construction to fill in the details. The prohibition is not to read with literal exactness like a
mathematical formula for it prohibits unreasonable impairment only. In spite of the constitutional
prohibition the State continues to possess authority to safeguard the vital interests of its people.
Legislation appropriate to safeguard said interest may modify or abrogate contracts already in
effect. For not only are existing laws read into contracts in order to fix the obligations as between
the parties but the reservation of essential attributes of sovereign power is also read into
contracts as a postulate of the legal order. All contracts made with reference to any matter that

55
is subject to regulation under the police power must be understood as made in reference to the
possible exercise of that power. Otherwise, important and valuable reforms may be precluded by
the simple device of entering into contracts for the purpose of doing that which otherwise maybe
prohibited. ...
In order to determine whether legislation unconstitutionally impairs contract of obligations, no
unchanging yardstick, applicable at all times and under all circumstances, by which the validity
of each statute may be measured or determined, has been fashioned, but every case must be
determined upon its own circumstances. Legislation impairing the obligation of contracts can be
sustained when it is enacted for the promotion of the general good of the people, and when the
means adopted must be legitimate, i.e. within the scope of the reserved power of the state
construed in harmony with the constitutional limitation of that power. (Citing Basa vs. Federacion
Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113], November
19, 1974; 61 SCRA 93,102-113]).
The purpose of Article 284 as amended is obvious-the protection of the workers whose
employment is terminated because of the closure of establishment and reduction of personnel.
Without said law, employees like private respondents in the case at bar will lose the benefits to
which they are entitled for the thirty three years of service in the case of Dionele and fourteen
years in the case of Quitco. Although they were absorbed by the new management of the
hacienda, in the absence of any showing that the latter has assumed the responsibilities of the
former employer, they will be considered as new employees and the years of service behind
them would amount to nothing.
Moreover, to come under the constitutional prohibition, the law must effect a change in the
rights of the parties with reference to each other and not with reference to non-parties.
As correctly observed by the Solicitor General, Article 284 as amended refers to employment
benefits to farm hands who were not parties to petitioner's lease contract with the owner of
Hacienda Danao-Ramona. That contract cannot have the effect of annulling subsequent
legislation designed to protect the interest of the working class.
In any event, it is well-settled that in the implementation and interpretation of the provisions of
the Labor Code and its implementing regulations, the workingman's welfare should be the
primordial and paramount consideration. (Volshel Labor Union v. Bureau of Labor Relations, 137
SCRA 43 [1985]). It is the kind of interpretation which gives meaning and substance to the liberal
and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which
states that "all doubts in the implementation and interpretation of the provisions of this Code
including its implementing rules and regulations shall be resolved in favor of labor." The policy is
to extend the applicability of the decree to a greater number of employees who can avail of the
benefits under the law, which is in consonance with the avowed policy of the State to give
maximum aid and protection to labor. (Sarmiento v. Employees Compensation Commission, 144
SCRA 422 [1986] citing Cristobal v. Employees Compensation Commission, 103 SCRA 329; Acosta
v. Employees Compensation Commission, 109 SCRA 209).
PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982 Decision
of the Labor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and Employment are
hereby AFFIRMED.
SO ORDERED.

56
EN BANC
G.R. No. L-2779 October 18, 1950
DANIEL SANCHEZ, ET AL., plaintiffs-appellees,
vs.
HARRY LYONS CONSTRUCTION, INC., ET AL., defendants-appellants.
Gibbs, Gibbs, Chuidian and Quasha for appellant Harry Lyons Construction, Inc.
Cecilio I. Lim and Antonio M. Castro for appellees.

MORAN, C. J.:
This case originated in the Municipal Court of Manila upon a complaint filed on March 9, 1948, by
the herein appellees as plaintiffs, against the herein appellants as defendants, for the sum of
P2,210 plus interest, which plaintiffs claimed as one month advance pat due them. On April 28,
1948, the parties entered into a stipulation of facts upon which said municipal court rendered
judgment for the plaintiffs. Upon denial of their motion for reconsideration of this judgment, the
defendants filed an appeal to the Court of First Instance of Manila, wherein the parties submitted
the case upon the same facts agreed upon in the Municipal Court. On October 2, 1948, the Court
of First Instance of Manila rendered its decision holding for plaintiffs, as follows:
Wherefore judgment is hereby rendered
1. Ordering defendant Material Distributors, Inc. to pay plaintiff Enrique Ramirez the sum of P360
and plaintiff Juan Ramirez the sum of P250 with legal interest on each of the said sums from the
date of the filing of the complaint in the Municipal Court of Manila until the date of full payment
thereof; and
2. Ordering defendant Harry Lyons Construction, Inc. to pay plaintiff Daniel Sanchez the sum of
P250, and plaintiff Mariano Javier, Venancio Diaz, Esteban Bautista, Faustino Aquillo, Godofredo
Diamante, Marcial Lazaro, Ambrosio de la Cruz, and Marcelino Maceda the sum of P150 each,
with legal interest on each of the said sums from the date of the filing of the complaint in the
Municipal Court of Manila until the date of full payment thereof.
One half of the costs is to be paid by Material Distributors, Inc. and the other half by Harry Lyons
Construction, Inc.
From this judgment, defendants filed an appeal with this court purely upon a question of law. The
stipulation of facts entered into by the parties on April 28, 1948, is as follows:lawphil.net
STIPULATION OF FACTS.
Come now the plaintiffs and the defendants, by their respective undersigned attorneys and to
this Honorable Court, respectfully submit the following stipulation of facts:

57
1. That the plaintiffs were respectively employed as follows:
EMPLOYED BY DEFENDANT MATERIAL DISTRIBUTORS, INC.
Name Date of Position Salary
employment
Enrique Ramirez .............. 12/16/46 Warehouseman P450 a mo.
Juan Ramirez ................... do do 250 a mo.
NOTE. The salary of Enrique Ramirez was later reduced to P360 per month. This was the
amount he was receiving at the time of his dismissal.
EMPLOYED BY DEFENDANT HARRY LYONS CONSTRUCTION, INC.
Daniel Sanchez ................ 1/1/47 Carpenter- P250 a mo.
Foreman
Mariano Javier ................. ....do.................. Guard................. 5 a day
Venancio Diaz ................. ....do.................. do....................... 5 a day
Esteban Bautista ............ ....do.................. do....................... 5 a day
Faustino Aquillo ............ ....do.................. do....................... 5 a day
Godofredo Diamante ..... ....do.................. do....................... 5 a day
Marcial Lazaro ................ ....do.................. do....................... 5 a day
Ambrosio de la Cruz ..... ....do.................. do....................... 5 a day
Marcelino Macada ........ ....do.................. do....................... 5 a day
as per contracts of employment, copies of which are attached to defendants' answer marked
Exhibits 1 to 11 inclusive
2. That in said contracts of employment the plaintiff agreed as follows:
"I accept the foregoing appointment, and in consideration thereof I hereby agree that such
employment may be terminated at any time, without previous notice, and I further agree that
salary and wages, shall be computed and paid at the rate specified up to the date of such
termination.
"Also in consideration of such employment I hereby expressly waive the benefit of article 302 of
the Code of Commerce and that of any other law, ruling, or custom which might require notice of
discharge or payment of salary or wages after date of the termination of such employment."
3. That the plaintiffs were dismissed by the defendants on December 31, 1947 without one
months' previous notice.
4. That each of the plaintiffs demanded payment of one month's salary from the defendants and
that the latter refused to pay the same.
WHEREFORE, it is respectfully prayed that judgment on the foregoing stipulation of facts be
rendered by this Honorable Court.
The points in issue herein are: first, whether plaintiffs, both those paid on a monthly and daily
basis, are entitled to the benefit granted in article 302 of the Code of Commerce; and secondly, if
they are so entitled, was their waiver of such benefits legal and valid?
Article 302 of the Code of Commerce reads as follows:
ART. 302. In cases in which no special time is fixed in the contracts of service, any one of the
parties thereto may cancel it, advising the other party thereof one month in advance.
The factor or shop clerk shall be entitled, in such case, to the salary due for said month.

58
It is a clear doctrine, as gleaned from the provision of the law and settled jurisprudence, 1 that in
a mercantile contract of service in which no special time is fixed, any one of the parties may
cancel said contract upon giving of a one-month notice, called a mesada, to the other party. The
law gives an added proviso that in the case of factors or shop clerks, these shall be entitled to
salary during this one month of standing notice. In any case, the one-month notice must be given
to any employee, whether factor, shop clerk or otherwise, so long as the two conditions concur,
namely, that no special time is fixed in the contract of service, and that said employee is a
commercial employee. And when such notice is not given under these conditions, not only the
factor or shop clerk but any employee discharged without cause, is entitled to indemnity which
may be one month's salary. 2
In the instant case, there lies no doubt that plaintiffs are commercial employees of appellant
corporations, rendering service as warehousemen, carpenter-foreman and guards. There is
likewise no doubt as can be seen from the contracts of employment submitted as exhibits, that
no special time has been fixed in the contracts of services between plaintiffs-appellees and
defendants-appellants. The stated computation or manner of payment, whether monthly or daily,
does not represent nor determine a special time of employment. Thus, a commercial employee
may be employed for one year and yet receive his salary on the daily or weekly or monthly or
other basis.
Appellants allege that the use of the word "temporary" in the contracts of services of some of the
plaintiffs shows that their employment was with a term, and the term was "temporary, on a day
to day basis." The record discloses that this conclusion is unwarranted. The contracts simply say
"You are hereby employed as temporary guard with a compensation at the rate of P5 a day . . .
." The word "temporary" as used herein does not mean the special time fixed in the contracts
referred to in article 302 of the Code of Commerce. The daily basis therein stipulated is for the
computation of pay, and is not necessarily the period of employment. Hence, this Court holds
that plaintiffs-appellants come within the purview of article 302 of the Code of Commerce.
Now, as the second question, namely, the validity of plaintiffs' waiver of the benefits given them
by said article 302. This court holds that such a waiver, made in advance, is void as being
contrary to public policy. Granting that the "mesada" given in article 302 of the Code of
Commerce, is for the bilateral benefit of both employer and employee, nevertheless, this does
not preclude the finding that a waiver of such "mesada" in advance by the employee is contrary
to public policy.
Public policy, with regard to labor, is clearly stated in article II, section 5, of the Philippine
Constitution, which reads
The promotion of social justice to insure the well-being and economic security of all the people
should be the concern of the State.
and article XIV, section 6, which reads
The State shall afford protection to labor, especially to working women and minors, and shall
regulate the relations between land-owner and tenant, and between labor and capital in industry
and in agriculture. . . .
Article 302 of the Code of Commerce must be applied in consonance with these provisions of our
constitution. In the matter of employment bargaining, there is no doubt that the employer stands
on higher footing than the employee. First of all, there is greater supply than demand for labor.
Secondly, the need for employment by labor comes from vital and even desperate, necessity.
Consequently, the law must protect labor, at least, to the extent of raising him to equal footing in
bargaining relations with capital and to shield him from abuses brought about by the necessity
for survival. It is safe to presume therefore, that an employee or laborer who waives in advance
59
any benefit granted him by law does so, certainly not in his interest or through generosity but
under the forceful intimidation of urgent need, and hence, he could not have so acted freely and
voluntarily.
For all the foregoing, this court hereby affirms the decision of the lower court, with costs against
appellants.

SECOND DIVISION
[G.R. No. 111933. July 23, 1997]
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and LETTIE P. CORPUZ, respondents.
DECISION
ROMERO, J.:
This petition for certiorari pleads for the revocation of the November 16, 1992, decision of the
National Labor Relations Commission (NLRC), affirming in toto the resolution of Labor Arbiter Jose
G. De Vera dated February 28, 1991, as well as its resolution dated August 20, 1993, denying
petitioners motion for reconsideration for lack of merit.
Private respondent Lettie Corpuz was employed as traffic operator at the Manila International
Traffic Division (MITD) by the Philippine Long Distance Telephone Company (PLDT) for ten years
and nine months, from September 19, 1978, until her dismissal on June 17, 1989. Her primary
task was to facilitate requests for incoming and outgoing international calls through the use of a
digital switchboard.
Sometime in December 1987, PLDTs rank-and-file employees and telephone operators went on
strike, prompting the supervisors of the MITD to discharge the formers duties to prevent a total
shutdown of its business operations. While in the course of their emergency assignments, two
supervisors almost simultaneously received two different requests for overseas calls bound for
different Middle East countries and both callers reported the same calling number (98-68-16).
[1]
The tone verifications having yielded negative results, the callers were advised to hang up
their telephones to enable the supervisors to effect an alternative verification system by calling
the same number again. As in the first instance, the number remained unverified.Investigating
the seemingly anomalous incident, the matter was reported to the Quality Control Inspection
60
Department (QCID) which revealed that the subject number was temporarily disconnected on
June 10, 1987, and permanently on September 24, 1987. It also showed that 439 overseas calls
were made through the same number between May and November 1987.
On account of such disclosure, the microfiches containing the completed calls through telephone
number 98-68-16 were ordered to be re-run. It yielded the following results: (1) 235 telephone
operators handled the 439 calls placed through the supposedly disconnected number; (2)
respondent handled 56 or 12.8% of the total calls, while the other operators had an average of
only 1.8% calls each; (3) respondent completed one call on May 23, 1987 and effected 34 calls
after the disconnection, 24 of which were completed through tone verification while the other 10
calls were done without the requisite tone verification or call-back procedure, and 21 other calls
were cancelled; (4) of the 21 cancelled calls handled by respondent, one bared a BU report (party
unavailable) but fetched a long OCD (operator call duration) of 13 minutes and 21 seconds while
another call registered a BB report (called party, busy) but with an OCD of 22 minutes and 34
seconds, both considered unusually protracted by respondent for holding a connection; and (5)
respondent made several personal calls to telephone numbers 96-50-72, 99-92-82 and 97-25-68,
the latter being her home phone number.
Premised on the above findings, on July 26, 1988, MITD Manager Erlinda Kabigting directed
respondent to explain her alleged infraction, that is, facilitating 34 calls using the disconnected
number.
Instead of tendering the required explanation, respondent requested a formal investigation to
allow her to confront the witnesses and rebut the proofs that may be brought against her.On
grounds of serious misconduct and breach of trust, the Legal Department recommended her
dismissal. In a letter dated June 16, 1989, respondent was terminated from employment effective
the following day.
In a complaint for illegal dismissal filed by respondent against petitioner, Labor Arbiter Jose G. De
Vera rendered a decision, the dispositive portion of which reads thus:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering
the respondent company to reinstate the complainant to her former position with all the rights,
benefits and privileges thereto appertaining including seniority plus backwages which as
of February 28, 1991 already amounted to P103,381.50 (P5,043.00 mo. x. 20.5 mos.). Further,
the respondent company is ordered to pay complainant attorneys fees equivalent to ten percent
(10%) of such backwages that the latter may recover in this suit.
SO ORDERED.[2]
On appeal, said decision was affirmed by the NLRC on November 16, 1992. Its motion for
reconsideration having been denied on August 20, 1993, petitioner filed the instant petition for
certiorari.
The instant petition must be dismissed. Petitioner failed to adduce any substantial argument that
would warrant a reversal of the questioned decision.
Time and again, this Court has reminded employers that while the power to dismiss is a normal
prerogative of the employer, the same is not without limitations. [3] The right of an employer to
freely discharge his employees is subject to regulation by the State, basically through the
exercise of its police power. This is so because the preservation of the lives of citizens is a basic
duty of the State, an obligation more vital than the preservation of corporate profits. [4]
Petitioner insists that respondent was guilty of defrauding them when she serviced 56 of the 439
calls coming from telephone number 98-68-16 and received numerous requests for overseas

61
calls virtually from the same calling number, which could not have been a mere coincidence but
most likely was a pre-arranged undertaking in connivance with certain subscribers.
The records show, however, that the subject phone calls were neither unusual nor coincidental as
other operators shared similar experiences. A certain Eric Maramba declared that it is not
impossible for an operator to receive continuous calls from the same telephone number. He
testified that at one time, he was a witness to several calls consistently effected from 9:30 p.m.
to 5:30 a.m. The calls having passed the verification tone system, the incident was undoubtedly
alarming enough but there was no way that he or his co-operators could explain the same.
This Court agrees with the labor arbiter when he stated that the more frequent handling by the
respondent of overseas calls from the same calling number than other operators does not give
rise to the conclusion that, indeed, respondent was a party to such anomalous transaction.
As regards petitioners claim that no call can be filed through a disconnected line, a certain Ms.
Bautista averred getting the same subject number after going through the standard verification
procedures. She added that this complexity extends even to other disconnected telephone
lines. Equally important is the fact that on February 7, 1989, or about two years after it was
permanently disconnected, telephone number 98-68-16 was used in calling an international
number, 561-6800, that lasted for 46 minutes. [5] Telephone operator number 448 seems to have
been spared from any administrative sanction considering that this lapse has aggravated the
persistent problem concerning telephone number 98-68-16.
Thus, Labor Arbiter de Vera correctly ruled:
It need not be emphasized here that there were lapses in certain operational aspects of the
respondent company which made the irregularity possible, for indeed there exists a mystery
about the serviceability of the subject telephone line. That there were personnel of the
respondent company involved who could have restored what was earlier disconnected
permanently appears certain.Nonetheless, exacting the ultimate blame upon the respondent
(complainant) in the absence of concrete inculpatory proofs of her complexity (sic) to an anomaly
if there be one, cannot be justified.[6]
This Court will not sanction a dismissal premised on mere conjectures and suspicions. To be a
valid ground for respondents dismissal, the evidence must be substantial and not arbitrary and
must be founded on clearly established facts sufficient to warrant his separation from work. [7]
It should be borne in mind that in termination cases, the employer bears the burden of proving
that the dismissal is for just cause failing which would mean that the dismissal is not justified and
the employee is entitled to reinstatement. [8] The essence of due process in administrative
proceedings is the opportunity to explain ones side or a chance to seek reconsideration of the
action or ruling complained of. [9] The twin requirements of notice and hearing constitute the
essential elements of due process. This simply means that the employer shall afford the worker
ample opportunity to be heard and to defend himself with the assistance of his representative, if
he so desires. Ample opportunity connotes every kind of assistance that management must
accord the employee to enable him to prepare adequately for his defense including legal
representation.[10] In the instant case, the petitioner failed to convincingly establish valid bases
on the alleged serious misconduct and loss of trust and confidence.
In carrying out and interpreting the Labor Codes provisions and its implementing regulations, the
workingmans welfare should be the primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal and compassionate spirit of the law as
provided for in Article 4 of the Labor Code, as amended, which states that all doubts in the
implementation and interpretation of the provisions of the Labor Code including its implementing
rules and regulations shall be resolved in favor of labor, [11] as well as the Constitutional mandate
62
that the State shall afford full protection to labor and promote full employment opportunities for
all. Likewise, it shall guarantee the rights of all workers to security of tenure. Such constitutional
right should not be denied on mere speculation of any unclear and nebulous basis. [12]
WHEREFORE, in view of the foregoing, the instant petition is DISMISSED and the decision dated
November 16, 1992 is AFFIRMED. Costs against petitioner Philippine Long Distance Telephone Co.
SO ORDERED.

63