WEEK 1

FUNDAMENTAL PRINCIPLES AND POLICIES

A. CONSTITUTIONAL PROVISIONS

I.A.1

Espina v. Zamora, G.R. No. 143855, September 21, 2010 – CHRISTIAN

Doctrine:

 While Section 19, Article II of the 1987 Constitution requires the development of a
self-reliant and independent national economy effectively controlled by Filipino
entrepreneurs, it does not impose a policy of Filipino monopoly of the economic
 environment.

 While the Constitution mandates a bias in favor of Filipino goods, services, labor and
enterprises, it also recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino
 enterprises only against foreign competition and trade practices that are unfair.

 Section 10, Article XII of the 1987 Constitution gives Congress the discretion to
reserve to Filipinos certain areas of investments upon the recommendation of the
 NEDA and when the national interest requires.

 The control and regulation of trade in the interest of the public welfare is of course
an exercise of the police power of the State. A person’s right to property, whether he
is a Filipino citizen or foreign national, cannot be taken from him without due
process of law.

FACTS:
Estrada signed into law Republic Act (R.A.) 8762, also known as the Retail Trade
Liberalization Act of 2000.R.A. 8762 also allows natural-born Filipino citizens, who had lost
their citizenship and now reside in the Philippines, to engage in the retail trade business
with the same rights as Filipino citizens. Some members of the House of Representatives,
filed the present petition, assailing the constitutionality of R.A. 8762 on the following
grounds:

Petitioners mainly argue that R.A. 8762 violates the mandate of the 1987 Constitution for
the State to develop a self-reliant and independent national economy effectively controlled
by Filipinos. They invoke the provisions of the Declaration of Principles and State Policies
under Article II of the 1987 Constitution, which read as follows:

Section 9. The State shall promote a just and dynamic social order that will ensure the
prosperity and independence of the nation and free the people from poverty through
policies that provide adequate social services, promote full employment, a rising standard
of living, and an improved quality of life for all.

xxxx

Section 19. The State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos.

Section 20. The State recognizes the indispensable role of the private sector, encourages
private enterprise, and provides incentives to needed investments.

Petitioners also invoke the provisions of the National Economy and Patrimony under
Article XII of the 1987 Constitution, which reads:

Section 10. The Congress shall, upon recommendation of the economic and planning
agency, when the national interest dictates, reserve to citizens of the Philippines or to
corporations or associations at least sixty per centum of whose capital is owned by such
citizens, or such higher percentage as Congress may prescribe, certain areas of
investments. The Congress shall enact measures that will encourage the formation and
operation of enterprises whose capital is wholly owned by Filipinos.
In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its national
jurisdiction and in accordance with its national goals and priorities.

xxxx

Section 12. The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods, and adopt measures that help make them
competitive.

Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes
all forms and arrangements of exchange on the basis of equality and reciprocity.

ISSUE:

Whether the Retail Trade Liberalization Act of 2000 is unconstitutional.

SC RULING:

No. The law is NOT unconstitutional.

The provisions of Article II of the 1987 Constitution, the declarations of principles and
state policies, are not self-executing. Legislative failure to pursue such policies cannot give
rise to a cause of action in the courts.

The Court further explained in Tañada that Article XII of the 1987 Constitution lays down
the ideals of economic nationalism: (1) by expressing preference in favor of qualified
Filipinos in the grant of rights, privileges and concessions covering the national economy
and patrimony and in the use of Filipino labor, domestic materials and locally-produced
goods; (2) by mandating the State to adopt measures that help make them competitive; and
(3) by requiring the State to develop a self-reliant and independent national economy
effectively controlled by Filipinos.

In other words, while Section 19, Article II of the 1987 Constitution requires the
development of a self-reliant and independent national economy effectively controlled by
Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the economic
environment. The objective is simply to prohibit foreign powers or interests from
maneuvering our economic policies and ensure that Filipinos are given preference in all
areas of development.

Indeed, the 1987 Constitution takes into account the realities of the outside world as it
requires the pursuit of a trade policy that serves the general welfare and utilizes all forms
and arrangements of exchange on the basis of equality and reciprocity; and speaks of
industries which are competitive in both domestic and foreign markets as well as of the
protection of Filipino enterprises against unfair foreign competition and trade practices.
Thus, while the Constitution mandates a bias in favor of Filipino goods, services, labor and
enterprises, it also recognizes the need for business exchange with the rest of the world on
the bases of equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair.

The 1987 Constitution does not rule out the entry of foreign investments, goods, and
services. While it does not encourage their unlimited entry into the country, it does not
prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity,
frowning only on foreign competition that is unfair. The key, as in all economies in the
world, is to strike a balance between protecting local businesses and allowing the entry of
foreign investments and services.1avvphi1

Section 10, Article XII of the 1987 Constitution gives Congress the discretion to reserve to
Filipinos certain areas of investments upon the recommendation of the NEDA and when the
national interest requires. Thus, Congress can determine what policy to pass and when to
pass it depending on the economic exigencies. It can enact laws allowing the entry of
foreigners into certain industries not reserved by the Constitution to Filipino citizens. In
this case, Congress has decided to open certain areas of the retail trade business to foreign
investments instead of reserving them exclusively to Filipino citizens. The NEDA has not
opposed such policy.

The control and regulation of trade in the interest of the public welfare is of course an
exercise of the police power of the State. A person’s right to property, whether he is a
Filipino citizen or foreign national, cannot be taken from him without due process of law.
The Retail Trade Liberalization Act, lessens the restraint on the foreigners’ right to
property or to engage in an ordinarily lawful business, it cannot be said that the law
amounts to a denial of the Filipinos’ right to property and to due process of law. Filipinos
continue to have the right to engage in the kinds of retail business to which the law in
question has permitted the entry of foreign investors.

There is no showing that the law has contravened any constitutional mandate. The Court is
not convinced that the implementation of R.A. 8762 would eventually lead to alien control
of the retail trade business. Petitioners have not mustered any concrete and strong
argument to support its thesis. The law itself has provided strict safeguards on foreign
participation in that business. Thus –

First, aliens can only engage in retail trade business subject to the categories above-
enumerated; Second, only nationals from, or juridical entities formed or incorporated in
countries which allow the entry of Filipino retailers shall be allowed to engage in retail
trade business; and Third, qualified foreign retailers shall not be allowed to engage in
certain retailing activities outside their accredited stores through the use of mobile or
rolling stores or carts, the use of sales representatives, door-to-door selling, restaurants
and sari-sari stores and such other similar retailing activities.

In sum, petitioners have not shown how the retail trade liberalization has prejudiced and
can prejudice the local small and medium enterprises since its implementation about a
decade ago.

Manila Water v. Del Rosario, G.R. No. 188747, January 29, 2014 – ROWELA

Doctrine:

 Separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character.

 Social justice cannot be permitted to be refuge of scoundrels any more than can equity
be an impediment to the punishment of the guilty. Those who invoke social justice may
do so only if their hands are clean and their motives blameless and not simply because
 they happen to be poor. This great policy of our Constitution is not meant for the
protection of those who have proved they are not worthy of it, like the workers who
have tainted the cause of labor with the blemishes of their own character.

Facts:

On 22 October 1979, Del Rosario was employed as Instrument Technician by Metropolitan

Waterworks and Sewerage System (MWSS). Due to the reorganization, he was absorbed
and became an employee of Manila Water.

Sometime in May 2000, Manila Water discovered that 24 water meters were missing in its
stockroom. Upon initial investigation, it appeared that Del Rosario and his co-employee
were involved in the pilferage and the sale of water meters to the company’s contractor.
Consequently, Manila Water issued a Memorandum directing Del Rosario to explain in
writing within 72 hours why he should not be dealt with administratively for the loss of the
said water meters. In his letter-explanation, Del Rosario confessed his involvement in the
act charged and pleaded for forgiveness, promising not to commit similar acts in the future.

On 29 June 2000, Manila Water conducted a hearing to afford Del Rosario the opportunity
to personally defend himself and to explain and clarify his defenses to the charge against
him. During the formal investigation Del Rosario was found responsible for the loss of the
water meters and therefore liable for violating Section 11.1 of the Company’s Code of
Conduct. Manila Water proceeded to dismiss Del Rosario from employment on 3 July 2000.

This prompted Del Rosario to file an action for illegal dismissal claiming that his severance
from employment is without just cause and that his admission to the misconduct charged
was not voluntary but was coerced by the company. Such admission therefore, made
without the assistance of a counsel, could not be made basis in terminating his
employment. However, Manila Water pointed out that the act of stealing the company’s
property is punishable by dismissal.

The Labor Arbiter dismissed the complaint filed by Del Rosario for lack of merit, however,
he was awarded separation pay. According to the Labor Arbiter, Del Rosario’s length of
service for 21 years, without previous derogatory record, warrants the award of separation
pay.
The NLRC dismissed the appeal interposed by Manila Water for its failure to append a
certification against forum shopping in its Memorandum of Appeal and denied the Motion
for Reconsideration filed by Manila Water.

The Court of Appeals affirmed the decision of the Labor Arbiter awarding separation pay to
Del Rosario. Considering that Del Rosario rendered 21 years of service to the company
without previous derogatory record, the appellate court considered the granting of
separation pay by the labor officer justified.

Issue:

Whether or not Mr. Del Rosario is entitled to separation pay who was then dismissed for
stealing the company’s property .

SC Ruling:

NO. As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282of the Labor Code is not entitled to a separation pay. Section
7, Rule I, Book VI of the Omnibus Rules implementing the Labor Code provides:

Sec. 7. Termination of employment by employer. — The just causes for terminating

the services of an employee shall be those provided in Article 282 of the Code. The
separation from work of an employee for a just cause does not entitle him to the
termination pay provided in the Code, without prejudice, however, to whatever
rights, benefits and privileges he may have under the applicable individual or
collective agreement with the employer or voluntary employer policy or practice.

In exceptional cases, however, the Court has granted separation pay to a legally dismissed
employee as an act of "social justice" or on "equitable grounds." In both instances, it is
required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on
the moral character of the employee.

Separation pay shall be allowed as a measure of social justice only in those instances where
the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is, for example,
habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is called, on the
ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. The Court does not agree that
the punishment is his dismissal only and that the separation pay has nothing to do with the
wrong he has committed. Of course it has. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly dismissed, it is not unlikely that he
will commit a similar offense in his next employment because he thinks he can expect a like
leniency if he is again found out. This kind of misplaced compassion is not going to do labor
in general any good as it will encourage the infiltration of its ranks by those who do not
deserve the protection and concern of the Constitution.

The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best, it may mitigate the penalty but it certainly will
not condone the offense. Compassion for the poor is an imperative of every humane society
but only when the recipient is not a rascal claiming an undeserved privilege. Social justice
cannot be permitted to be refuge of scoundrels any more than can equity be an impediment
to the punishment of the guilty. Those who invoke social justice may do so only if their
hands are clean and their motives blameless and not simply because they happen to be
poor. This great policy of our Constitution is not meant for the protection of those who

have proved they are not worthy of it, like the workers who have tainted the cause of labor
with the blemishes of their own character.

The attendant circumstances in the present case considered, the Court is constrained to
deny Del Rosario’s separation pay since the admitted cause of his dismissal amounts to
serious misconduct. He is not only responsible for the loss of the water meters in flagrant
violation of the company’s policy but his act is in utter disregard of his partnership with his
employer in the pursuit of mutual benefits.

That Del Rosario rendered 21 years of service to the company will not save the day for him.

If an employee's length of service is to be regarded as a justification for moderating the

penalty of dismissal, such gesture will actually become a prize for disloyalty, distorting
the meaning of social justice and undermining the efforts of labor to cleanse its ranks
of undesirables.
The appellate court erred in awarding separation pay to Del Rosario without taking into
consideration that the transgression he committed constitutes a serious offense. The grant
of separation pay to a dismissed employee is determined by the cause of the dismissal. The
years of service may determine how much separation pay may be awarded. It is, however, not
the reason why such pay should be granted at all.

In sum, the award of separation pay or any other kind of financial assistance to Del Rosario,
under the nomenclature of compassionate justice, is not warranted in the instant case. A
contrary rule would have the effect of rewarding rather than punishing an erring employee,
disturbing the noble concept of social justice.

Philippine Telegraph v. NLRC, G.R. No. 118978, May 23, 1997 – DANESSA

Doctrine:

 It shall be unlawful for an employer to require as a condition of employment or

continuation of employment that a woman shall not get married, or to stipulate
expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of marriage.

Facts:

Grace de Guzman was initially hired by PT& T as a reliever for C.F Tenorio specifically as a
"Supernumerary Project Worker," for a fixed period from November 21, 1990 until April
20, 1991. Under the Reliever Agreement which she signed, her employment was to be
immediately terminated upon expiration of the agreed period. Thereafter, from June 10,
1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, her services as reliever
were again engaged by petitioner in replacement of Erlinda F. Dizon who went on leave
during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her
services were terminated.

On September 2, 1991, she was once more asked to join the company as a probationary
employee, the probationary period to cover 150 days. In the job application form, she
indicated in the portion for civil status that she was single although she had contracted
marriage a few months earlier, that is, on May 26, 1991. It appears that she had made the
same representation in the two successive reliever agreements which she signed on June
10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its
branch supervisor in Baguio City sent her a memorandum requiring her to explain the
discrepancy. In that memorandum, she was reminded about the company's policy of not
accepting married women for employment.

In her reply letter, she stated that she was not aware of PT&T's policy regarding married
women at the time, and that all along she had not deliberately hidden her true civil status.
Unconvinced by her explanations, she was dismissed from the company effective January
29, 1992, which she readily contested by initiating a complaint for illegal dismissal, coupled
with a claim for non-payment of COLA before the RAB of the NLRC in Baguio City.

At the preliminary conference conducted in connection therewith, private respondent

volunteered the information, and this was incorporated in the stipulation of facts between
the parties, that she had failed to remit the amount of P2,380.75 of her collections. She then
executed a promissory note for that amount in favor of petitioner. All of these took place in
a formal proceeding and with the agreement of the parties and/or their counsel.

On November 23, 1993, the Labor Arbiter handed down a decision declaring that private
respondent, who had already gained the status of a regular employee, was illegally
dismissed by petitioner. On appeal to the NLRC, LA’s decision was upheld. It held that
private respondent had indeed been the subject of an unjust and unlawful discrimination
by her employer, PT & T. However, the decision of the labor arbiter was modified with the
qualification that Grace de Guzman deserved to be suspended for three months in view of
the dishonest nature of her acts which should not be condoned. Petitioner’s subsequent
motion for reconsideration was rebuffed by NLRC, hence this petition.

Issue:

Whether or not the company policy of not accepting married women for employment was
discriminatory.

SC Ruling:
Yes. The Constitution, cognizant of the disparity in rights between men and women in
almost all phases of social and political life, provides a gamut of protective provisions. To
cite a few of the primordial ones, Section 14, Article II on the Declaration of Principles and
State Policies, expressly recognizes the role of women in nation-building and commands
the State to ensure, at all times, the fundamental equality before the law of women and
men. Corollary thereto, Section 3 of Article XIII (the progenitor whereof dates back to both
the 1935 and 1973 Constitution) pointedly requires the State to afford full protection to
labor and to promote full employment and equality of employment opportunities for all,
including an assurance of entitlement to tenurial security of all workers. Similarly, Section
14 of Article XIII mandates that the State shall protect working women through provisions
for opportunities that would enable them to reach their full potential.

In the case at bar, petitioner's policy of not accepting or considering as disqualified from
work any woman worker who contracts marriage runs afoul of the test of, and the right
against, discrimination, afforded all women workers by our labor laws and by no less than
the Constitution. Contrary to petitioner's assertion that it dismissed private respondent
from employment on account of her dishonesty, the record discloses clearly that her ties
with the company were dissolved principally because of the company's policy that married
women are not qualified for employment in PT & T, and not merely because of her
supposed acts of dishonesty.

The government, to repeat, abhors any stipulation or policy in the nature of that adopted
by petitioner PT & T. The Labor Code state, in no uncertain terms, as follows:

Art. 136. Stipulation against marriage. — It shall be unlawful for an employer to require as
a condition of employment or continuation of employment that a woman shall not get
married, or to stipulate expressly or tacitly that upon getting married, a woman employee
shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of marriage.

It is logical to presume that, in the absence of said standards or regulations which are as
yet to be established, the policy of respondent against marriage is patently illegal. This
finds support in Section 9 of the New Constitution, which provides:
Sec. 9. The State shall afford protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race, or creed, and
regulate the relations between workers and employees. The State shall assure the rights of
workers to self-organization, collective bargaining, security of tenure, and just and humane
conditions of work . . . .

Petitioner's policy is not only in derogation of the provisions of Article 136 of the Labor
Code on the right of a woman to be free from any kind of stipulation against marriage in
connection with her employment, but it likewise assaults good morals and public policy,
tending as it does to deprive a woman of the freedom to choose her status, a privilege that
by all accounts inheres in the individual as an intangible and inalienable right. Hence, while
it is true that the parties to a contract may establish any agreements, terms, and conditions
that they may deem convenient, the same should not be contrary to law, morals, good
customs, public order, or public policy. Carried to its logical consequences, it may even be
said that petitioner's policy against legitimate marital bonds would encourage illicit or
common-law relations and subvert the sacrament of marriage.

Parenthetically, the Civil Code provisions on the contract of labor state that the relations
between the parties, that is, of capital and labor, are not merely contractual, impressed as
they are with so much public interest that the same should yield to the common good. It
goes on to intone that neither capital nor labor should visit acts of oppression against the
other, nor impair the interest or convenience of the public. In the final reckoning, the
danger of just such a policy against marriage followed by petitioner PT & T is that it strikes
at the very essence, ideals and purpose of marriage as an inviolable social institution and,
ultimately, of the family as the foundation of the nation. That it must be effectively
interdicted here in all its indirect, disguised or dissembled forms as discriminatory conduct
derogatory of the laws of the land is not only in order but imperatively required.

Wesleyan University v. Faculty, G.R. No. 181806, March 12, 2014 – ALBERT

Doctrine:

 If there is doubt in the CBA’s interpretation, it should be resolved in favor of labor,

as this is mandated by no less than the Constitution. Art. II, sec. 18 of the 1987
Constitution provides, The State affirms labor as a primary social economic force. It
shall protect the rights of workers and promote their welfare.
FACTS:

Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational

institution duly organized and existing under the laws of the Philippines. Respondent
Wesleyan University-Philippines Faculty and Staff Association, on the other hand, is a duly
registered labor organization acting as the sole and exclusive bargaining agent of all rank-

and-file faculty and staff employees of petitioner. In December 2003, the parties signed a 5-
year CBA effective June 1, 2003 until May 31, 2008.

On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty.
Maglaya), issued a Memorandum providing guidelines on the implementation of vacation
and sick leave credits as well as vacation leave commutation which in effect unilaterally
altered the CBA without the organization’s consent.

On August 25, 2005, respondent’s President, Cynthia L. De Lara (De Lara) wrote a letter to
Atty. Maglaya informing him that respondent is not amenable to the unilateral changes
made by petitioner. De Lara questioned the guidelines for being violative of existing
practices and the CBA.

The issue was submitted to voluntary arbitration which ruled in favor of the organization,
stating that the alterations of the CBA are contrary to law. The petitioner appealed with the
CA. The CA affirmed the decision of the Voluntary Arbitrator.

The petitioner argued that there can be no two retirement benefits, because it did not ripe
into a company practice, or assuming without admitting, that there are two retirement
benefits offered by the company, it cannot ripe into a company practice because it was
done by mere oversight or mistake as there is no Board Resolution authorizing their
release. And since these benefits are unauthorized and irregular, these cannot ripen into a
company practice or policy.

ISSUE:
Whether or not the changes made by petitioner, through the memorandum, is in
accordance with law.

SC Ruling:
No.
The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits
employers from eliminating or reducing the benefits received by their employees. This rule,
however, applies only if the benefit is based on an express policy, a written contract, or has
ripened into a practice. To be considered a practice, it must be consistently and deliberately
made by the employer over a long period of time. An exception to the rule is when "the
practice is due to error in the construction or application of a doubtful or difficult question
of law." The error, however, must be corrected immediately after its discovery; otherwise,
the rule on Non-Diminution of

Benefits would still apply. In this case, respondent was able to present substantial evidence
in the form of affidavits to support its claim that there are two retirement plans. Based on
the affidavits, petitioner has been giving two retirement benefits as early as 1997. Also, the
memorandum executed by petitioner is contrary to the existing CBA. Sections 1 and 2 of
Article XII of the CBA provide that all covered employees are entitled to 15 days sick leave
and 15 days vacation leave with pay every year and that after the second year of service, all
unused vacation leave shall be converted to cash and paid to the employee at the end of
each school year, not later than August 30 of each year. The Memorandum dated August 16,
2005, however, states that vacation and sick leave credits are not automatic as leave credits
would be earned on a month-to-month basis. This, in effect, limits the available leave
credits of an employee at the start of the school year. For example, for the first four months
of the school year or from June to September, an employee is only entitled to five days
vacation leave and five days sick leave. Considering that the Memorandum dated August
16, 2005 imposes a limitation not agreed upon by the parties nor stated in the CBA, we
agree with the CA that it must be struck down.

In closing, it may not be amiss to mention that when the provision of the CBA is clear,
leaving no doubt on the intention of the parties, the literal meaning of the stipulation shall
govern.

However, if there is doubt in its interpretation, it should be resolved in favor of labor, as

this is mandated by no less than the Constitution.

Serrano v. Gallant Maritime, G.R. No. 167614, March 24, 2009 – ELERLENNE

Doctrine:

 Section 18, Article II and Section 3, Article XIII accord all members of the labor
sector, without distinction as to place of deployment, full protection of their
rights and welfare. To Filipino workers, the rights guaranteed under the
foregoing constitutional provisions translate to economic security and parity: all
monetary benefits should be equally enjoyed by workers of similar category,
 while all monetary obligations should be borne by them in equal degree; none
should be denied the protection of the laws which is enjoyed by, or spared the
burden imposed on, others in like circumstances.

 Our present Constitution has gone further in guaranteeing vital social and economic
rights to marginalized groups of society, including labor. Under the policy of social
justice, the law bends over backward to accommodate the interests of the working
class on the humane justification that those with less privilege in life should have more
in law. And the obligation to afford protection to labor is incumbent not onlyon the
legislative and executive branches but also on the judiciary to translate this pledge
into a living reality. Social justice calls for 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.

Facts:

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of

Section 10, Republic Act (R.A.) No. 8042,2 to wit:

Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just,
valid or authorized cause as defined by law or contract, the workers shall be entitled to the
full reimbursement of his placement fee with interest of twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.

does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired
portion of their employment contract "or for three months for every year of the unexpired
term, whichever is less" (subject clause). Petitioner claims that the last clause violates the
OFWs' constitutional rights in that it impairs the terms of their contract, deprives them of
equal protection and denies them due process.

On March 19, 1998, the date of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second Officer with a monthly salary
of US$1,000.00, upon the assurance and representation of respondents that he would be
made Chief Officer by the end of April 1998. Respondents did not deliver on their promise
to make petitioner Chief Officer. Hence, petitioner refused to stay on as Second Officer and
was repatriated to the Philippines on May 26, 1998.

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up
to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only
two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9)
months and twenty-three (23) days.

The LA rendered a Decision, declaring the dismissal of petitioner illegal and awarding him
monetary benefits.

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on

the salary period of three months only -- rather than the entire unexpired portion of nine
months and 23 days of petitioner's employment contract - applying the subject clause.

Respondents appealed to the National Labor Relations Commission (NLRC) to question the
finding of the LA that petitioner was illegally dismissed. Petitioner also appealed to the
NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple

Integrated Services, Inc. v. National Labor Relations Commission that in case of illegal
dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts.

The NLRC modified the LA Decision. The NLRC corrected the LA's computation of the lump-
sum salary awarded to petitioner by reducing the applicable salary rate from US$2,590.00
to US$1,400.00 because R.A. No. 8042 "does not provide for the award of overtime pay,
which should be proven to have been actually performed, and for vacation leave pay.
"Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause. The NLRC denied the motion. Petitioner filed a
Petition for Certiorari with the CA. His Motion for Reconsideration having been denied by
the CA, petitioner brings his cause to the Supreme Court.

Issue:

Whether or not the subject clause is unconstitutional.

Ruling:

Yes. Section 18, Article II and Section 3, Article XIII accord all members of the labor sector,
without distinction as to place of deployment, full protection of their rights and welfare. To
Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally enjoyed
by workers of similar category, while all monetary obligations should be borne by them in
equal degree; none should be denied the protection of the laws which is enjoyed by, or
spared the burden imposed on, others in like circumstances.

In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko
Sentral ng Pilipinas, the constitutionality of a provision in the charter of the Bangko Sentral
ng Pilipinas (BSP), a government financial institution (GFI), was challenged for maintaining
its rank-and-file employees under the Salary Standardization Law (SSL), even when the
rank-and-file employees of other GFIs had been exempted from the SSL by their respective
charters. Finding that the disputed provision contained a suspect classification based on
salary grade, the Court deliberately employed the standard of strict judicial scrutiny in its
review of the constitutionality of said provision. More significantly, it was in this case that
the Court revealed the broad outlines of its judicial philosophy, to wit:

xxx

Our present Constitution has gone further in guaranteeing vital social and economic rights
to marginalized groups of society, including labor. Under the policy of social justice, the law
bends over backward to accommodate the interests of the working class on the humane
justification that those with less privilege in life should have more in law. And the
obligation to afford protection to labor is incumbent not only on the legislative and
executive branches but also on the judiciary to translate this pledge into a living reality.
Social justice calls for 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.

Xxx

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs.
However, a closer examination reveals that the subject clause has a discriminatory intent
against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more;

Second, among OFWs with employment contracts of more than one year; and
Third, OFWs vis-à-vis local workers with fixed-period employment;

The first category includes OFWs with fixed-period employment contracts of less than one
year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired
portion of their contract. The second category consists of OFWs with fixed-period
employment contracts of one year or more; in case of illegal dismissal, they are entitled to
monetary award equivalent to only 3 months of the unexpired portion of their contracts.

The disparity in the treatment of these two groups cannot be discounted. The disparity
becomes more aggravating when the Court takes into account jurisprudence that, prior to
the effectivity of R.A. No. 8042 on July 14, 1995, illegally dismissed OFWs, no matter how
long the period of their employment contracts, were entitled to their salaries for the entire
unexpired portions of their contracts.

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule
of computation: their basic salaries multiplied by the entire unexpired portion of their
employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
computation of the money claims of illegally dismissed OFWs based on their employment
periods, in the process singling out one category whose contracts have an unexpired
portion of one year or more and subjecting them to the peculiar disadvantage of having
their monetary awards limited to their salaries for 3 months or for the unexpired portion
thereof, whichever is less, but all the while sparing the other category from such prejudice,
simply because the latter's unexpired contracts fall short of one year. .
Rosario v. Victory Ricemill, G.R. No. 147572, February 19, 2003 – EVY

DOCTRINE:

 It is true the Constitution regards labor as “a primary social economic force.” But so
does it declare that it “recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investment. The
Constitution bids the State to “afford full protection to labor.” But it is equally true
that “the law, in protecting the rights of the laborer, authorizes neither oppression
nor self-destruction of the employer. And it is oppression to compel the employer to
continue in employment one who is guilty or to force the employer to remain in
operation when it is not economically in his interest to do so.

 To effect the dismissal of an employee, however, the law requires not only that there
be just and valid cause as provided under Article 282 of the Labor Code. It likewise
enjoins the employer to afford the employee the opportunity to be heard and to
defend himself. On the latter aspect, the employer is mandated to furnish the
employee with two (2) written notices: (a) a written notice containing a statement
of the cause for the termination to afford the employee ample opportunity to be
 heard and defend himself with the assistance of his representative, if he so desires;
(b) if the employer decides to terminate the services of the employee, the employer
must notify him in writing of the decision to dismiss him, stating clearly the reason
therefor.

FACTS:

The case stemmed from a complaint for illegal dismissal with money claims (separation
pay, overtime pay, 13th month pay and incentive pay) filed by petitioner against
respondent Victory Ricemill, a single proprietorship owned by Emilio Uy. The antecedent
facts, as culled from the records of the case are, as follows:

Emilio Uy was engaged in the business of milling palay under the business name Victory
Ricemill. He employed petitioner as truck driver from January 11, 1982 up to his dismissal
on June 22, 1993. Petitioner was paid the wage rate of P110.00 per day. As truck driver,
petitioner was tasked to, among others, haul palay from various points in Isabela and
Cagayan and bring them to respondents ricemill in Cabatuan, Isabela. In addition,
petitioner acted as personal driver to the family of Mr. Uy during their trips to Manila.

On June 22, 1993, respondent terminated petitioners employment for his notorious acts of
insubordination and that he attempted to kill a fellow employee. According to respondent,
petitioner was guilty of insubordination when he refused to serve as driver of Mr. Uy’s son
when the latter needed a driver. Further, on one occasion, petitioner was instructed to
deliver 600 bags of cement to the Felix Hardware in Tuguegarao. Instead of bringing the
merchandise to the said store, petitioner delivered the same to one Eduardo Interior, who
had not since then paid for it to the damage of respondent in the total sum of P60,000.00.
Because of petitioners tendency to disobey the orders to him, respondent was constrained
to engage the services of another driver in the person of Michael Ng. Petitioner resented
the new driver and became uncooperative, disrespectful and quarrelsome. On June 21,
1993, petitioner, armed with a dagger, fought with Michael Ng and inflicted an injury on the
latter. Petitioner likewise inflicted injuries on the head of Rody Senias, a co-employee,
when he intervened in the fight and tried to pacify petitioner.

After the proceedings, the regional labor arbiter rendered his decision dismissing for lack
of merit the complaint for illegal dismissal. The regional labor arbiter found that there were
valid causes, i.e., willful disobedience to the lawful orders of the employer and commission
of a crime or offense against the employers duly authorized representative, for the
termination of petitioners employment.

On appeal, the NLRC ordered the remand of the case to the regional labor arbiter for
further proceedings. The NLRC found that petitioner was denied due process during the
proceedings with the regional labor arbiter as he (petitioner) was not given the
opportunity to present his additional rebuttal evidence. On the other hand, respondent was
allowed to submit in evidence various exhibits to discredit the rebuttal testimony of
petitioner.

During the subsequent proceedings before the regional labor arbiter, petitioner submitted
the affidavit of Mario Roque. Roque averred that contrary to respondents claim, the 600
bags of cement delivered to Eduardo Interior had been paid as evidenced by DBP Check No.
B-065462, dated May 22, 1993, in the sum of P58,950.00 payable to respondent.

Thereafter, the regional labor arbiter promulgated his decision stating that he found no
reason to deviate from his previous decision. Roques testimony was not given any
probative value as the same was found to be hearsay. The regional labor arbiter concluded
that respondent was justified in terminating the employment of petitioner on ground of
loss of confidence. Accordingly, the regional labor arbiter again dismissed, for lack of merit,
petitioners complaint for illegal dismissal.

On appeal, the NLRC affirmed the ruling of the regional labor arbiter and declared that
petitioners dismissal was valid.

Petitioner then elevated the case to the CA which rendered the assailed decision. The
appellate court accorded respect to the findings of the NLRC. It declared that petitioners act
of delivering the merchandise to Edgardo Interior, instead of Felix Hardware, without being
authorized to do so by respondent was not only inimical to the latters business interests,
but constitutive of insubordination or willful disobedience as well. The CA likewise held
that petitioners act of fomenting a fight with a co-worker constituted serious misconduct. It
further noted that petitioners contumacious refusal to obey the reasonable orders of
respondent was not sufficiently explained. The CA thus found that respondent had
justifiable cause to dismiss petitioner.

Anent the procedural aspect, the CA observed that although there was no strict compliance
with the two-notice rule, it could be gleaned from the records that petitioner was given
ample opportunity to explain his side. Moreover, even granting that respondent fell short of
the two-notice requirement, such irregularity, according to the CA, does not militate against
the legality of the dismissal.

Petitioner filed a motion for reconsideration of the decision but the CA denied the same in
the assailed resolution. Aggrieved, petitioner filed with this Court the instant petition.

ISSUES: 1. WON petitioner’s termination was for a just and lawful cause.

2. WON petitioner’s dismissal from his employment was in accordance with the
due process requirement of the law.

3. WON petitioner is entitled to separation pay, overtime pay, incentive leave pay,
holiday pay and other benefits granted by law.

HELD: 1. YES.
The unanimous finding of the regional labor arbiter, the NLRC and the CA that petitioner is

guilty of willful disobedience is based on substantial evidence on record. Petitioner’s cause

is not helped by the fact that he committed a crime against his co-worker. His actuations

clearly constituted willful disobedience and serious misconduct justifying his dismissal
under Article 282(a) of the Labor Code which
provides:

Art. 282. Termination by employer. — An employer may terminate an employment

for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful

orders of his employer or representative in connection with his work;

Willful disobedience of the employer’s lawful orders, as a just cause for the dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee’s assailed
conduct must have been

willful or intentional, the willfulness being characterized by a “wrongful and perverse

attitude;” and (2) the order violated must have been reasonable, lawful, made known to the
employee and must

pertain to the duties which he had been engaged to discharge.

In this case, the order to petitioner was simple, i.e., to deliver the merchandise to the Felix
Hardware. It was clearly reasonable, lawful, made known to petitioner and pertained to his
duty as driver of respondent. Petitioner did not even proffer a justifiable explanation for his
disobedience thereto . Every employee is charged with the implicit duty of caring for the
employer’s property. Petitioner’s conduct showed that he could not even be trusted with
this task. Further, his hostile attitude towards his co-workers which eventually led him to
inflict physical injuries on one of them cannot be countenanced. As correctly put by the

NLRC, petitioner’s “continuance in the service of respondent company is partly inimical not
only to its

interests but also to the interest of its other employees.”

2. NO.
A careful review of the records revealed that, indeed, respondent’s manner of dismissing
petitioner fell short of the two-notice requirement. While it furnished petitioner the
written notice informing him of his dismissal, respondent failed to furnish petitioner the
written notice apprising him of the charge or charges against him. Consequently, petitioner
was deprived of the opportunity to respond thereto.

However, as correctly opined by the CA, respondent’s omission does not render petitioner’s
dismissal invalid but merely ineffectual. The prevailing rule is that when the dismissal is
effected for a just and valid cause, as in this case, the failure to observe procedural
requirements does not invalidate nor nullify the dismissal of an employee.

3. YES

On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that
the employee was dismissed for any of the just causes mentioned in said Art. 282, then, in
accordance with that article, he should not be reinstated. However, he must be paid
backwages from the time his employment was terminated until it is determined that the
termination of employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect

In fine, the lack of notice and hearing is considered as being a mere failure to observe a
procedure for the termination of employment which makes the dismissal ineffectual but
not necessarily illegal. The procedural infirmity is then remedied by ordering the payment
to the employee his full backwages from the time of his dismissal until the court finally
rules that the dismissal has been for a valid cause.

I.A.2
Sameer Overseas v. Cabiles, G.R. No. 170139, August 5, 2014 - FAITH

Doctrine:

 A valid dismissal requires both a valid cause and adherence to the valid procedure o
f dismissal. The employer is required to give the charged employee at least two writt
en notices before termination. One of the written notices must inform the employee
of the particular acts that may cause his or her dismissal. The other notice must "[inf
orm] the employee of the employer’s decision." Aside from the notice requirement, t
he employee must also be given "an opportunity to be heard."

Facts:

Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement

agency . Responding to an ad it published, respondent, Joy C. Cabiles, submitted her
application for a quality control job in Taiwan.

Joy’s application was accepted. Joy was later asked to sign a oneyear employment contract
f or a monthly salary of NT$15,360.00. She alleged that Sameer Overseas Agency required
he r to pay a placement fee of P70,000.00 when she signed the employment contract.

Joy was deployed to work for TaiwanWacoal, Co. Ltd. (Wacoal) on June 26, 1997. She allege
d that in her employment contract, she agreed to work as quality control for one year. In Ta
iwan, she was asked to work as a cutter.

Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr. Huwang fro
m Wacoal informedJoy, without prior notice, that she was terminated and that "she should
i mmediately report to their office to get her salary and passport." She was asked to
"prepare for immediate repatriation."
Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of NT
$9,000. According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.

On October 15, 1997, Joy filed a complaint with the National Labor Relations Commission a
gainst petitioner and Wacoal. She claimed that she was illegally dismissed. She asked for th
e return of her placement fee, the withheld amount for repatriation costs, payment of her s
alary for 3 months as well as moral and exemplary damages. She identified Wacoal as
Same er Overseas Placement Agency’s foreign principal.

Sameer Overseas Placement Agency alleged that respondent's termination was due to her i
nefficiency, negligence in her duties, and her "failure to comply with the work requirements
[of] her foreign [employer]." The agency also claimed that it did not ask for a placement fe
e of P70,000.00. As evidence, it showedOfficial Receipt No. 14860 dated June 10, 1997,
bear ing the amount of P20,360.00. Petitioner added that Wacoal's accreditation with
petitioner had already been transferred to the Pacific Manpower & Management Services,
Inc. (Pacific ) as of August 6, 1997. Thus, petitioner asserts that it was already substituted
by Pacific Ma npower.

Pacific Manpower moved for the dismissal of petitioner’s claims against it. It alleged that th
ere was no employer-employee relationship between them. Therefore, the claims against it
were outside the jurisdiction of the Labor Arbiter. Pacific Manpower argued that the emplo
yment contract should first be presented so that the employer’s contractual obligations mig
ht be identified. It further denied that it assumed liability for petitioner’s illegal acts.

On July 29, 1998, the Labor Arbiter dismissed Joy’s complaint. Acting Executive Labor
Arbit er Pedro C.Ramos ruled that her complaint was based on mereallegations.

In a resolution dated March 31, 2004, the National Labor Relations Commission declared th
at Joy was illegally dismissed. It reiterated the doctrine that the burden of proof to show th
at the dismissal was based on a just or valid cause belongs to the employer. It found that Sa
meer Overseas Placement Agency failed to prove that there were just causes for terminatio
n. There was no sufficient proofto show that respondent was inefficient in her work and
tha t she failed to comply with company requirements.41 Furthermore, procedural
dueprocess was not observed in terminating respondent.

The Commission denied the agency’s motion for reconsideration dated May 12, 2004
throu gh a resolution dated July 2, 2004.

Aggrieved by the ruling, Sameer Overseas Placement Agency caused the filing of a
petition4 9 for certiorari with the Court of Appeals assailing the National Labor Relations
Commissio n’s resolutions dated March 31, 2004 and July 2, 2004.

The Court of Appeals affirmed the decision of the National Labor Relations Commission wit h
respect to the finding of illegal dismissal, Joy’s entitlement to the equivalent of three mont hs
worth of salary, reimbursement of withheld repatriation expense, and attorney’s fees. Th e
Court of Appeals remanded the case to the National Labor Relations Commission to addre

ss the validity of petitioner's allegations against Pacific.

Issue:
Whether the Court of Appeals erred when it affirmed the ruling of the National Labor
Relati ons Commission finding respondent illegally dismissed and awarding her three
months’ wo rth of salary, the reimbursement of the cost ofher repatriation, and attorney’s
fees despite t he alleged existence of just causes of termination.

SC Ruling:

NO
Sameer Overseas Placement Agency failed to show that there was just cause for causing
Joy ’s dismissal. The employer, Wacoal, also failed to accord her due process of law.

Petitioners admit that they did not inform private respondent in writing of the charges agai
nst him and that they failed to conduct a formal investigation to give him opportunity to air
his side. However, petitioners contend that the twin requirements of notice and hearing ap
plies strictly only when the employment is within the Philippines and that these need not b
e strictly observed in cases of international maritime or overseas employment.

The Court does not agree. The provisions of the Constitution as well as the Labor Code whic h
afford protection to labor apply to Filipino employees whether working within the Philip pines
or abroad. Moreover, the principle of lex loci contractus (the law of the place where t he
contract is made) governs in this jurisdiction. In the present case, it is not disputed that t he
Contract of Employment entered into by and between petitioners and private responden t was
executed here in the Philippines with the approval of the Philippine Overseas Employ ment
Administration (POEA). Hence, the Labor Code together with its implementing rules a nd
regulations and other laws affecting labor apply in this case.

Petitioner’s allegation that respondentwas inefficient in her work and negligent in her duti
es may, therefore, constitute a just cause for termination under Article 282(b), but only if
p etitioner was able to prove it.

Respondent’s dismissal less than one year from hiring and her repatriation on the same day
show not onlyfailure on the partof petitioner to comply with the requirement of the existen
ce of just cause for termination. They patently show that the employersdid not comply with
the due process requirement.

A valid dismissal requires both a valid cause and adherence to the valid procedure of dismi
ssal. The employer is required to give the charged employee at least two written notices
bef ore termination. One of the written notices must inform the employee of the particular
acts that may cause his or her dismissal. The other notice must "[inform] the employee of
the e mployer’s decision." Aside from the notice requirement, the employee must also be
given "a n opportunity to be heard."

Petitioner failed to comply with the twin notices and hearing requirements. Respondent
sta rted working on June 26, 1997. She was told that she was terminated on July 14, 1997
effec tive on the same day and barely a month from her first workday. She was also
repatriated o n the same day that she was informed of her termination. The abruptness of
the terminatio n negated any finding that she was properly notified and given the
opportunity to be heard. Her constitutional right to due process of law was violated.

Respondent Joy Cabiles, having been illegally dismissed, is entitled to her salary for the
unexpired portion ofthe employment contract that was violated together with
attorney’s fees and reimbursement of amounts withheld from her salary.

Tongko v. Manulife, G.R. No. 167622, November 7, 2008 – MARCELO

Doctrine:

 When there is no showing of a clear, valid and legal cause for the termination of
employment, the law considers the matter a case of illegal dismissal and the burden
is on the employer to prove that the termination was for a valid or authorized cause.
This burden of proof appropriately lies on the shoulders of the employer and not on
the employee because a workers job has some of the characteristics of
 property rights and is therefore within the constitutional mantle of protection. No
person shall be deprived of life, liberty or property without due process of law, nor
shall any person be denied the equal protection of the laws.

 The law mandates that the burden of proving the validity of the termination of
employment rests with the employer. Failure to discharge this evidentiary burden
would necessarily mean that the dismissal was not justified, and, therefore, illegal.
Unsubstantiated suspicions, accusations and conclusions of employers do not
provide for legal justification for dismissing employees. In case of doubt, such cases
should be resolved in favor of labor, pursuant to the social justice policy of our labor
laws and Constitution

Facts:

Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged
in life insurance business. Renato A. Vergel De Dios was, during the period material, its
President and Chief Executive Officer. Gregorio V. Tongko started his professional
relationship with Manulife on July 1, 1977 by virtue of a Career Agents Agreement[2]
(Agreement) he executed with Manulife.

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent

contractor and nothing contained herein shall be construed or interpreted as
creating an employer-employee relationship between the Company and the
Agent.

XXXXXX

The Company may terminate this Agreement for any breach or

violation of any of the provisions hereof by the Agent by giving written notice
to the Agent within fifteen (15) days from the time of the discovery of the
breach. No waiver, extinguishment, abandonment, withdrawal or
cancellation of the right to terminate this Agreement by the Company shall
 be construed for any previous failure to exercise its right under any
provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at

any time without cause, by giving to the other party fifteen (15) days notice
in writing

In 1983, Tongko was named as a Unit Manager in Manulifes Sales Agency Organization. In
1990, he became a Branch Manager.

The problem started sometime in 2001, when Manulife instituted manpower development
programs in the regional sales management level. Relative thereto, De Dios addressed a
letter dated November 6, 2001 to Tongko stating, in the main, that the latter is not
recruiting more agents in line with the new business strategy of Manulife to become the
Philippine’s major agency-led distribution company.

Subsequently, De Dios wrote Tongko another letter dated December 18, 2001, terminating
Tongkos services.

Note: The issue of illegal dismissal stemmed from Manulife’s assumption the Tongko, being an
insurance agent, is not its employee. The Supreme Court in this case ruled that Tongko is an
employee of Manulife and because of that it had to resolve the issue of the dismissal.

Caveat:

Being an insurance agent, as such, does not automatically mean that there is no employer-
employee relationship. The determination of such a relationship is on a case-to-case basis
following the four-fold test and the establishment of its most important element that is
control.

HOWEVER,
In 2011, the Supreme Court reversed this ruling finding the existence of employer-
employee relationship between Manulife and Tongko. (See Tongko v. Manulife, G.R.
No. 167622, November 7, 2008)

Issue:

Whether or not Manulife sufficiently established by substantial evidence the dismissal of

Tongko.

SC Ruling:

No.

In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife
argued that even if Tongko is considered as its employee, his employment was validly
terminated on the ground of gross and habitual neglect of duties, inefficiency, as well as
willful disobedience of the lawful orders of Manulife. Manulife stated:

In the instant case, private respondent, despite the written reminder

from Mr. De Dios refused to shape up and altogether disregarded the latters
advice resulting in his laggard performance clearly indicative of his willful
disobedience of the lawful orders of his superior. x x x

xxxx
As private respondent has patently failed to perform a very
fundamental duty, and that is to yield obedience to all reasonable rules,
orders and instructions of the Company, as well as gross failure to reach at
least minimum quota, the termination of his engagement from Manulife is
highly warranted and therefore, there is no illegal dismissal to speak of.
 It is readily evident from the above-quoted portions of Manulifes petition that it
failed to cite a single iota of evidence to support its claims. Manulife did not even point out
which order or rule that Tongko disobeyed. More importantly, Manulife did not point out
the specific acts that Tongko was guilty of that would constitute gross and habitual neglect
of duty or disobedience. Manulife merely cited Tongkos alleged laggard performance,
without substantiating such claim, and equated the same to disobedience and neglect of
duty.

In Quebec, Sr. v. National Labor Relations Commission, we ruled that:

When there is no showing of a clear, valid and legal cause for the
termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination
was for a valid or authorized cause. This burden of proof appropriately lies
on the shoulders of the employer and not on the employee because a workers
job has some of the characteristics of property rights and is therefore within
the constitutional mantle of protection. No person shall be deprived of life,
liberty or property without due process of law, nor shall any person be
denied the equal protection of the laws.

Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in
explicit terms that the burden of proving the validity of the termination of
employment rests on the employer. Failure to discharge this evidential
burden would necessarily mean that the dismissal was not justified, and,
therefore, illegal.[27]

We again ruled in Times Transportation Co., Inc. v. National Labor Relations

Commission that:

The law mandates that the burden of proving the validity of the
termination of employment rests with the employer. Failure to discharge this
evidentiary burden would necessarily mean that the dismissal was not
justified, and, therefore, illegal. Unsubstantiated suspicions, accusations and
 conclusions of employers do not provide for legal justification for dismissing
employees. In case of doubt, such cases should be resolved in favor of labor,
pursuant to the social justice policy of our labor laws and Constitution

Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife
even failed to identify the specific acts by which Tongkos employment was terminated
much less support the same with substantial evidence. To repeat, mere conjectures cannot
work to deprive employees of their means of livelihood. Thus, it must be concluded that
Tongko was illegally dismissed.

Serrano v. NLRC, G.R. No. 117040, January 27, 2000 – IMEE

Doctrine:

 Art. 283 also provides that to terminate the employment of an employee for any of the
authorized causes the employer must serve "a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the intended date
 thereof."
 Art. 283 of the Labor Code, the employers failure to comply with the notice requirement
does not constitute a denial of due process but a mere failure to observe a procedure for
the termination of employment which makes the termination of employment merely
ineffectual.

FACTS:

Petitioner was hired by private respondent Isetann Department Store as a security checker
to apprehend shoplifters and prevent pilferage of merchandise.[1] Initially hired on October
4, 1984 on contractual basis, petitioner eventually became a regular employee on April 4,
1985. In 1988, he became head of the Security Checkers Section of private respondent.[2]
Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its
entire security section and engage the services of an independent security agency. It wrote
to petitioner a memorandum. NOTE: The memorandum was sent on October 11, 1991
which on the same day petitioner Serrano was terminated.

The loss of his employment prompted petitioner to file a complaint on December 3, 1991
for illegal dismissal, illegal layoff, unfair labor practice, underpayment of wages, and
nonpayment of salary and overtime pay.

LA’s decision: He ruled that private respondent failed to establish that it had retrenched its
security section to prevent or minimize losses to its business; that private respondent
failed to accord due process to petitioner; that private respondent failed to use reasonable
standards in selecting employees whose employment would be terminated; that private
respondent had not shown that petitioner and other employees in the security section
were so inefficient so as to justify their replacement by a security agency, or that "cost-
saving devices [such as] secret video cameras (to monitor and prevent shoplifting) and
secret code tags on the merchandise" could not have been employed; instead, the day after
petitioners dismissal, private respondent employed a safety and security supervisor with
duties and functions similar to those of petitioner.

NLRC Decision: reversed LA’s decision. held that the phase-out of private respondents
security section and the hiring of an independent security agency constituted an exercise
by private respondent of "[a] legitimate business decision

Hence, this petition.

ISSUE:

1. WON petitioner was illegally dismissed.

2. WON the requirement of notice is complied
3. WON petitioner was not afforded with due process.

SC RULING:

1. NO.
Termination of employment is a right guaranteed to employers under the Constitution. [14]
Indeed, that the phase-out of the security section constituted a "legitimate business
decision" is a factual finding of an administrative agency which must be accorded respect
and even finality by this Court since nothing can be found in the record which fairly
detracts from such finding.[15]

Accordingly, we hold that the termination of petitioners services was for an

authorized cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor Code,
petitioner should be given separation pay at the rate of one month pay for every year of
service.

2. NO.

VIOLATION OF THE NOTICE REQUIREMENT

Art. 283 also provides that to terminate the employment of an employee for any of the
authorized causes the employer must serve "a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the intended date
thereof." In the case at bar, petitioner was given a notice of termination on October 11,
1991. On the same day, his services were terminated. He was thus denied his right to be
given written notice before the termination of his employment, and the question is the
appropriate sanction for the violation of petitioners right.

Validity of Petitioners Layoff Not Affected by Lack of Notice

OLD RULE: The rule of ordering an employee to be reinstated and paid backwages when
it is shown that he has not been given notice and hearing although his dismissal or
layoff is later found to be for a just or authorized cause was abandoned in Wenphil
because it is really unjust to require an employer to keep in his service one who is guilty,
for example, of an attempt on the life of the employer or the latters family, or when the
employer is precisely retrenching in order to prevent losses.

RULE NOW: The remedy is to order the payment to the employee of full backwages from
the time of his dismissal until the court finds that the dismissal was for a just cause. But,
otherwise, his dismissal must be upheld and he should not be reinstated. This is because
his dismissal is ineffectual.
3. NO

FIRST, the Due Process Clause of the Constitution is a limitation on governmental powers.
It does not apply to the exercise of private power, such as the termination of employment
under the Labor Code. This is plain from the text of Art. III, 1 of the Constitution, viz.: "No
person shall be deprived of life, liberty, or property without due process of law. . . ." The
reason is simple: Only the State has authority to take the life, liberty, or property of the
individual. The purpose of the Due Process Clause is to ensure that the exercise of this
power is consistent with what are considered civilized methods.

SECOND, The purpose for requiring a 30-day written notice before an employee is laid off
is not to afford him an opportunity to be heard on any charge against him, for there is none.
The purpose rather is to give him time to prepare for the eventual loss of his job and the
DOLE an opportunity to determine whether economic causes do exist justifying the
termination of his employment.

The time for notice and hearing is at the trial stage. Then that is the time we speak of notice
and hearing as the essence of procedural due process. Thus, compliance by the employer
with the notice requirement before he dismisses an employee does not foreclose the right
of the latter to question the legality of his dismissal.

Lack of Notice Only Makes Termination Ineffectual

with respect to Art. 283 of the Labor Code, the employers failure to comply with the notice
requirement does not constitute a denial of due process but a mere failure to observe a
procedure for the termination of employment which makes the termination of employment
merely ineffectual.

Indeed, under the Labor Code, only the absence of a just cause for the termination of
employment can make the dismissal of an employee illegal. This is clear from Art. 279
which provides:

Security of Tenure. - In cases of regular employment, the employer shall not

terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his
 compensation was withheld from him up to the time of his actual
reinstatement.[37]

Thus, only if the termination of employment is not for any of the causes provided by law is
it illegal and, therefore, the employee should be reinstated and paid backwages.

WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations
Commission is MODIFIED by ordering private respondent Isetann Department Store, Inc. to
pay petitioner separation pay equivalent to one (1) month pay for every year of service, his
unpaid salary, and his proportionate 13th month pay and, in addition, full backwages from
the time his employment was terminated on October 11, 1991 up to the time the decision
herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for
computation of the separation pay, backwages, and other monetary awards to petitioner.

Agabon v. NLRC, G.R. No. 158693, November 17, 2004 – ROUNALD

Doctrine:

The violation of the petitioners right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case at bar, we deem it
proper to fix it at P30,000.00. We believe this form of damages would serve to deter
employers from future violations of the statutory due process rights of employees. At the
very least, it provides a vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules.

FACTS:
Petitioners are machine operators. Petitioners abandoned their work. However they filed
an illegal dismissal case against the private respondents for failure to afford due process in
their termination (substantial and procedural).

The Labor Arbiter’s Decision:

WHEREFORE, premises considered, We find the termination of the complainants illegal.

Accordingly, respondent is hereby ordered to pay them their backwages up to November
29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93

2. Virgilio C. Agabon - 56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1) month for every
year of service from date of hiring up to November 29, 1999.

Respondent is further ordered to pay the complainants their holiday pay and service
incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay for
holidays and rest days and Virgilio Agabons 13th month pay differential amounting to TWO
THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE
HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100
(P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND
EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as
per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR.

SO ORDERED.

Appealed to the Commission. The Commission reversed and set aside the decision of the LA
finding that complainants abandoned their work. The monetary award was also deleted.
Complainants filed a timely motion for reconsideration but still was denied. Thus, elevated
the case at the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal
because they had abandoned their employment but ordered the payment of money claims.
The dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only
insofar as it dismissed petitioners money claims. Private respondents are ordered to pay
petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as
their service incentive leave pay for said years, and to pay the balance of petitioner Virgilio
Agabons 13th month pay for 1998 in the amount of P2,150.00.

SO ORDERED.

ISSUE:

WHAT IS THE CONSEQUENCE FOR FAILURE TO AFFORD DUE PROCESS (PROCEDURAL) IN

TERMINATING AND EMPLOYEE BY AN EMPLOYER?

RULING:

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a
system of rights based on moral principles so deeply imbedded in the traditions and
feelings of our people as to be deemed fundamental to a civilized society as conceived by
our entire history. Due process is that which comports with the deepest notions of what is
fair and right and just.[26] It is a constitutional restraint on the legislative as well as on the
executive and judicial powers of the government provided by the Bill of Rights.

Due process under the Labor Code, like Constitutional due process, has two aspects:
substantive, i.e., the valid and authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process
requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended
by Department Order Nos. 9 and 10.[27] Breaches of these due process requirements
violate the Labor Code. Therefore statutory due process should be differentiated from
failure to comply with constitutional due process.

Constitutional due process protects the individual from the government and assures him of
his rights in criminal, civil or administrative proceedings; while statutory due process
found in the Labor Code and Implementing Rules protects employees from being unjustly
terminated without just cause after notice and hearing.
In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and
valid cause but the employee was not accorded due process. The dismissal was upheld by
the Court but the employer was sanctioned. The sanction should be in the nature of
indemnification or penalty, and depends on the facts of each case and the gravity of the
omission committed by the employer.

In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee
was not given due process, the failure did not operate to eradicate the just causes for
dismissal. The dismissal being for just cause, albeit without due process, did not entitle the
employee to reinstatement, backwages, damages and attorneys fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National
Labor Relations Commission,[30] which opinion he reiterated in Serrano, stated:

C. Where there is just cause for dismissal but due process has not been properly observed
by an employer, it would not be right to order either the reinstatement of the dismissed
employee or the payment of backwages to him. In failing, however, to comply with the
procedure prescribed by law in terminating the services of the employee, the employer
must be deemed to have opted or, in any case, should be made liable, for the payment of
separation pay. It might be pointed out that the notice to be given and the hearing to be
conducted generally constitute the two-part due process requirement of law to be accorded
to the employee by the employer. Nevertheless, peculiar circumstances might obtain in
certain situations where to undertake the above steps would be no more than a useless
formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur
rule and award, in lieu of separation pay, nominal damages to the employee. x x x.[31]

After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissals for cause but
without observance of the twin requirements of notice and hearing, the better rule is to
abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for
just cause but imposing sanctions on the employer. Such sanctions, however, must be
stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair
result by dispensing justice not just to employees, but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes
but not complying with statutory due process may have far-reaching consequences.
This would encourage frivolous suits, where even the most notorious violators of company
policy are rewarded by invoking due process. This also creates absurd situations where
there is a just or authorized cause for dismissal but a procedural infirmity invalidates the
termination. Let us take for example a case where the employee is caught stealing or
threatens the lives of his co-employees or has become a criminal, who has fled and cannot
be found, or where serious business losses demand that operations be ceased in less than a
month. Invalidating the dismissal would not serve public interest. It could also discourage
investments that can generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to be a sword to
oppress employers. 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.[32] Certainly, an
employer should not be compelled to pay employees for work not actually performed and
in fact abandoned.

The employer should not be compelled to continue employing a person who is admittedly
guilty of misfeasance or malfeasance and whose continued employment is patently inimical
to the employer. The law protecting the rights of the laborer authorizes neither oppression
nor self-destruction of the employer.[33]
It must be stressed that in the present case, the petitioners committed a grave offense, i.e.,
abandonment, which, if the requirements of due process were complied with, would
undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not be
protected by the Social Justice Clause of the Constitution. Social justice, as the term
suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel
observed, social justice must be founded on the recognition of the necessity of
interdependence among 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.[34]

This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano
and related cases. Social justice is not based on rigid formulas set in stone. It has to allow
for changing times and circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-
management relations and dispense justice with an even hand in every case:

We have repeatedly stressed that social justice or any justice for that matter is for the
deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true
that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the
Constitution fittingly extends its sympathy and compassion. But never is it justified to give
preference to the poor simply because they are poor, or reject the rich simply because they
are rich, for justice must always be served for the poor and the rich alike, according to the
mandate of the law.[35]

Justice in every case should only be for the deserving party. It should not be presumed that
every case of illegal dismissal would automatically be decided in favor of labor, as
management has rights that should be fully respected and enforced by this Court. As
interdependent and indispensable partners in nation-building, labor and management
need each other to foster productivity and economic growth; hence, the need to weigh and
balance the rights and welfare of both the employee and employer.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due
process should not nullify the dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee for the violation of his statutory rights, as ruled
in Reta v. National Labor Relations Commission.[36] The indemnity to be imposed should
be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought
to deter in the Serrano ruling. The sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking into special consideration the
gravity of the due process violation of the employer.

Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for any loss suffered by him.[37]

As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an

employer is liable to pay indemnity in the form of nominal damages to an employee who
has been dismissed if, in effecting such dismissal, the employer fails to comply with the
requirements of due process. The Court, after considering the circumstances therein, fixed
the indemnity at P2,590.50, which was equivalent to the employees one month salary. This
indemnity is intended not to penalize the employer but to vindicate or recognize the
employees right to statutory due process which was violated by the employer.[39]
The violation of the petitioners right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal damages. The
amount of such damages is addressed to the sound discretion of the court, taking
into account the relevant circumstances.[40] Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We
believe this form of damages would serve to deter employers from future violations
of the statutory due process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to the latter under the
Labor Code and its Implementing Rules.

De Jesus v. Hon. Aquino, G.R. No. 164662, February 18, 2013 – JIGO

DOCTRINE:

 The first written notice would inform her of the particular acts or omissions for
which her dismissal was being sought. The second written notice would notify her
of the employer’s decision to dismiss her. But the second written notice must not be
made until after she was given a reasonable period after receiving the first written
notice within which to answer the charge, and after she was given the ample
opportunity to be heard and to defend herself with the assistance of her
representative, if she so desired. The requirement was mandatory.

Under the Labor Code, the intention to sever the employee’s services must be made
clear in the notice.

FACTS:

Petitioner De Jesus filed with the Labor Arbiter a complaint for illegal dismissal against
private respondents Supersonic, Pakistan Airlines, Gil Puyat, Jr. and Divina Abad Santos
praying for the payment of separation pay, full backwages, moral and exemplary damages,
etc.

De Jesus alleged that: she was employed by Supersonic since February 1976 until her
illegal dismissal of March 15, 2001, she held the position of eservation staff, and from 1992
until her illegal dismissal on March 15, 2001, she held the position of Sales Promotion
Officer where she solicited clients for Supersonic and sold plane tickets to various travel
agencies on credit; on March 12, 2001, she had an emergency hysterectomy operation
preceded by continuous bleeding; she stayed at the Makati Medical Center for three (3)
days and applied for a sixty-(60) day leave in the meantime; on June 1, 2001, she went to
Supersonic and found the drawers of her desk opened and her personal belongings packed,
without her knowledge and consent; while there, Santos, the company’s general manager,
asked her to sign a promissory note and directed her secretary, Malubay not to allow her to
leave unless she execute a promissory note; she was later forced to execute a promissory
note which she merely copied from the draft prepared by Santos and Malubay; she was also
forced to indorse to Supersonic her SSS check in the amount of P25,000.00 which
represents her benefits from the hysterectomy operation; there was no notice and hearing
nor any opportunity given her to explain her side prior to the termination of her
employment; Supersonic even filed a case for Estafa against her for her alleged failure to
remit collections despite the fact that she had completely remitted all her collections; and
the termination was done in bad faith and in violation of due process.

She occupied a highly confidential and financially sensitive position in the company.

After due proceedings, on October 30, 2002, the Labor Arbiter ruled against De Jesus,
declaring her dismissal to be for just cause and finding that she had been accorded due
process of law.

Aggrieved, De Jesus appealed to the National Labor Relations Commission (NLRC), insisting
that she had not been afforded the opportunity to explain her side.

Records show that pursuant to a Memorandum dated May 12, 2001, complainant was
required to explain in writing why she should not be dismissed from employment for her
failure to account for the cash collections in her custody. Complainant acknowledged her
failure to effect a turn-over of the amount of US$36,168.39 to the respondent. More than
this, she offered no explanation for her failure to immediately account for her collections.
Having been given the opportunity to explain her side, complainant may not successfully
claim that she was denied due process. Further, her admission and other related evidence,
particularly the finding of a prima facie case for estafa against her.

ISSUES:

Whether or not Supersonic complied with the due process required by law. (2 notice rule)

HELD:
1. No.
A careful consideration of the records persuades us to affirm the decision of the CA holding
that Supersonic had not complied with the two written notice rule.

It ought to be without dispute that the betrayal of the trust the employer reposed in De
Jesus was the essence of the offense for which she was to be validly penalized with the
supreme penalty of dismissal. Nevertheless, she was still entitled to due process in order to
effectively safeguard her security of tenure. The law affording to her due process as an
employee imposed on Supersonic as the employer the obligation to send to her two written
notices before finally dismissing her.

The evidence on record is bereft of any indicia that the two written notices were furnished
to De Jesus prior to her dismissal. The various memoranda given her were not the same
notices required by law, as they were mere internal correspondences intended to remind
De Jesus of her outstanding accountabilities to the company. Assuming for the sake of
argument that the memoranda furnished to De Jesus may have satisfied the minimum
requirements of due process, still, the same did not satisfy the notice requirement
under the Labor Code because the intention to sever the employee’s services must be
made clear in the notice. Such was not apparent from the memoranda.

Contrary to Supersonic’s contention, however, the aforequoted memoranda did not satisfy
the requirement for the two written notices under the law. The March 26, 2001
memorandum did not specify the grounds for which her dismissal would be sought, and for
that reason was at best a mere reminder to De Jesus to submit her report on the status of
her accounts. The May 12, 2001 memorandum did not provide the notice of dismissal
under the law because it only directed her to explain why she should not be
dismissed for cause. The latter memorandum was apparently only the first written
notice under the requirement. The insufficiency of the two memoranda as compliance
with the two-written notices requirement of due process was, indeed, indubitable enough
to impel the CA to hold:

The various memoranda given her were not the same notices required by law, as they
were mere internal correspondences intended to remind De Jesus of her outstanding
accountabilities to the company. Assuming for the sake of argument that the memoranda
furnished to De Jesus may have satisfied the minimum requirements of due process, still,
the same did not satisfy the notice requirement under the Labor Code because the
intention to sever the employee’s services must be made clear in the notice. Such was not
apparent from the memoranda.

Abbott v. Alcaraz, G.R. No. 192571, July 23, 2013 – KIRBY

Doctrine:

 Illegal recruitment is committed when it is shown that petitioner gave the

complainant the distinct impression that she had the power or ability to send the
complainant abroad for work, such that the latter was convinced to part with his
money in order to be employed. To be engaged in the practice of recruitment and
placement, it is plain that there must, at least, be a promise or an offer of
employment from the person posing as a recruiter whether locally or abroad.
Petitioner’s misrepresentations concerning her purported power and authority to
recruit for overseas employment, and the collection from Menardo of various
amounts, clearly indicate acts constitutive of illegal recruitment.

Facts:

Private complainant Menardo Villarin (Menardo) and his sister Vilma Villarin (Vilma) met
petitioner Arlene N. Lapasaran, who worked at Silver Jet Travel Tours Agency. For a fee of
P85,000.00, petitioner undertook the processing of the papers necessary for the
deployment (under a tourist visa) and employment of Menardo in South Korea. Petitioner
informed Menardo that he would be employed as "factory worker," which was,
subsequently, changed to "bakery worker." Thereafter, Menardo paid the said fee in
installments. Menardo left for South Korea . Unfortunately, he was incarcerated by South
Korean immigration authorities and was immediately deported to the Philippines because
the travel documents issued to him by the petitioner were fake. He immediately contacted
petitioner and informed her of what happened. Thereupon, petitioner promised to send
him back to South Korea, but the promise was never fulfilled. Consequently, Menardo and
his sister Vilma demanded the return of the money they paid, but petitioner refused and
even said, "Magkorte na lang tayo." It was later found out that petitioner was no longer
connected with Silver Jet.
Hence, the charge for illegal recruitment.

In her defense, petitioner testified that she owned a travel agency named A&B Travel and
Tours General Services, engaged in the business of visa assistance and ticketing. She
admitted transacting with the Villarins, but committed only to securing a tourist visa and a
two-way airplane ticket for Menardo, for which she received P70,000.00 as payment.

Issue:

Won petitioner is guilty of illegal recruitment.

SC Ruling:

YES.
Petitioner was charged with illegal recruitment, defined and penalized by the Labor Code
as amended by Republic Act (R.A.) No. 8042. Illegal recruitment is committed when it is
shown that petitioner gave the complainant the distinct impression that she had the power
or ability to send the complainant abroad for work, such that the latter was convinced to
part with his money in order to be employed. To be engaged in the practice of recruitment
and placement, it is plain that there must, at least, be a promise or an offer of employment
from the person posing as a recruiter whether locally or abroad. Petitioner’s
misrepresentations concerning her purported power and authority to recruit for overseas
employment, and the collection from Menardo of various amounts, clearly indicate acts
constitutive of illegal recruitment.

Petitioner’s claim that she did not represent herself as a licensed recruiter, but that she
merely tried to help the complainants secure a tourist visa could not make her less guilty of
illegal recruitment, it being enough that she gave the impression of having had the
authority to recruit workers for deployment abroad.
Duncan v. Glaxo, G.R. No. 162994, September 17, 2004 – LORELIE

Doctrine:

 The prohibition against personal or marital relationships with employees of

competitor companies upon Glaxo’s employees is reasonable under the
circumstances because relationships of that nature might compromise the interests
of the company. In laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor company will gain
access to its secrets and procedures.

Facts:

Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome

Philippines, Inc. (Glaxo) as medical representative on October 24, 1995.Thereafter, Tecson
signed a contract of employment which stipulates, among others, that he agrees to study
and abide by existing company rules; to disclose to management any existing or future
relationship by consanguinity or affinity with co-employees or employees of competing
drug companies and should management find that such relationship poses a possible
conflict of interest, to resign from the company.

Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-
Camarines Norte sales area. Subsequently, Tecson entered into a romantic relationship
with Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Even
before they got married, Tecson received several reminders from his District Manager
regarding the conflict of interest which his relationship with Bettsy might engender.
Still, love prevailed, and Tecson married Bettsy in September 1998.

In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-

Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his request
was denied. Tecson sought Glaxo’s reconsideration regarding his transfer and brought
the matter to Glaxo’s Grievance Committee. Glaxo, however, remained firm in its
decision and gave Tescon until February 7, 2000 to comply with the transfer order.
 Tecson defied the transfer order and continued acting as medical representative in the
Camarines Sur-Camarines Norte sales area.

Because the parties failed to resolve the issue at the grievance machinery level,
they submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation
pay of one-half (½) month pay for every year of service, or a total of P50,000.00 but he
declined the offer. On November 15, 2000, the National Conciliation and Mediation
Board (NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships
between its employees and persons employed with competitor companies, and
affirming Glaxo’s right to transfer Tecson to another sales territory.

Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing
the NCMB Decision. The appellate court held that Glaxo’s policy prohibiting its
employees from having personal relationships with employees of competitor
companies is a valid exercise of its management prerogatives.

Issues:

(1) Whether or not that Glaxo’s policy against its employees marrying employees
from competitor companies is valid

(2) Whether or not said policy violates the equal protection clause of the
Constitution

(3) Whether Tecson was constructively dismissed.

Ruling:

(1) No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s
policy prohibiting an employee from having a relationship with an employee of a
competitor company is a valid exercise of management prerogative. Glaxo has a right to
guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors, especially so that it and Astra
are rival companies in the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor

companies upon Glaxo’s employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying
down the assailed company policy, Glaxo only aims to protect its interests against the
possibility that a competitor company will gain access to its secrets and procedures.
 That Glaxo possesses the right to protect its economic interests cannot be denied. No
less than the Constitution recognizes the right of enterprises to adopt and enforce such
a policy to protect its right to reasonable returns on investments and to expansion and
growth. Indeed, while our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean that every labor dispute will
be decided in favor of the workers. The law also recognizes that management has rights
which are also entitled to respect and enforcement in the interest of fair play.

(2) The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only to the state or those acting
under color of its authority. Corollarily, it has been held in a long array of U.S. Supreme
Court decisions that the equal protection clause erects no shield against merely private
conduct, however, discriminatory or wrongful. The only exception occurs when the
state in any of its manifestations or actions has been found to have become entwined or
involved in the wrongful private conduct. Obviously, however, the exception is not
present in this case. Significantly, the company actually enforced the policy after
repeated requests to the employee to comply with the policy. Indeed, the application of
the policy was made in an impartial and even-handed manner, with due regard for the
lot of the employee.

In any event, from the wordings of the contractual provision and the policy in its
employee handbook, it is clear that Glaxo does not impose an absolute prohibition
against relationships between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry persons of their own
choosing. What the company merely seeks to avoid is a conflict of interest between the
employee and the company that may arise out of such relationships.

(3) The Court finds no merit in petitioners’ contention that Tescon was constructively
dismissed when he was transferred from the Camarines Norte-Camarines Sur sales area
to the Butuan City-Surigao City-Agusan del Sur sales area, and when he was excluded
from attending the company’s seminar on new products which were directly competing
with similar products manufactured by Astra. Constructive dismissal is defined as a
quitting, an involuntary resignation resorted to when continued employment becomes
impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution
in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee. None of these conditions are present in the instant case.
The record does not show that Tescon was demoted or unduly discriminated upon by
reason of such transfer. As found by the appellate court, Glaxo properly exercised its
management prerogative in reassigning Tecson to the Butuan City sales area.
Yrasuegui v. PAL, G.R. No. 168081, October 17, 2008 – MEL

Doctrines:
 A reading of the weight standards of PAL would lead to no other conclusion than
that they constitute a continuing qualification of an employee in order to keep the
job. Tersely put, an employee may be dismissed the moment he is unable to
comply with his ideal weight as prescribed by the weight standards. The dismissal
of the employee would thus fall under Article 282(e) of the Labor Code.


 At this point, Article 223 of the Labor Code finds relevance:

o In any event, the decision of the Labor Arbiter reinstating a dismissed

or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for
reinstatement provided herein.

The law is very clear. Although an award or order of reinstatement is self-

executory and does not require a writ of execution, the option to exercise actual
reinstatement or payroll reinstatement belongs to the employer. It does not belong to the
employee, to the labor tribunals, or even to the courts.

FACTS:

In this case, petitioner Armando G. Yrasuegui was a former international flight steward of
Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (58) with a large body
frame. The proper weight for a man of his height and body structure is from 147 to 166
pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual of PAL.
Petitioner repeatedly failed to comply with the weight standard of the company. He was
given ample to time to comply and report the progress of his weight but he repeatedly
refused to heed such reports. After many occasions of not reporting and violating the
weight standard of the company, PAL finally served petitioner a Notice of
Administrative Charge for violation of the company standards on weight requirements.

A clarificatory hearing was held where petitioner manifested that he was undergoing a
weight reduction program to lose at least two (2) pounds per week so as to attain his ideal
weight. Then petitioner was formally informed by PAL that due to his inability to attain his
ideal weight, and considering the utmost leniency extended to him which spanned a period
covering a total of almost five (5) years, his services were considered terminated effective
immediately. Petitioner filed a complaint for illegal dismissal against PAL.

ISSUE:

(1) Whether or not obesity is a ground for dismissal.

(2) Whether or not petitioner claims of reinstatement and wages are moot

RULING:

Anent the first issue, the High Court said yes.

A reading of the weight standards of PAL would lead to no other conclusion than that they
constitute a continuing qualification of an employee in order to keep the job. Tersely put,
an employee may be dismissed the moment he is unable to comply with his ideal weight as
prescribed by the weight standards. The dismissal of the employee would thus fall under
Article 282(e) of the Labor Code.
As explained by the CA:

[T]he standards violated in this case were not mere orders of the employer;
they were the prescribed weights that a cabin crew must maintain in order to
qualify for and keep his or her position in the company. In other words, they
were standards that establish continuing qualifications for an employees
position. In this sense, the failure to maintain these standards does not fall
under Article 282(a) whose express terms require the element of willfulness
in order to be a ground for dismissal. The failure to meet the

employers qualifying standards is in fact a ground that does not squarely fall
under grounds (a) to (d) and is therefore one that falls under Article 282(e)
the other causes analogous to the foregoing.

By its nature, these qualifying standards are norms that apply prior to and
after an employee is hired. They apply prior to employment because these are
the standards a job applicant must initially meet in order to be hired. They
apply after hiring because an employee must continue to meet these
standards while on the job in order to keep his job. Under this perspective, a
violation is not one of the faults for which an employee can be dismissed
pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed
simply because he no longer qualifies for his job irrespective of whether or
not the failure to qualify was willful or intentional.

Anent the second issue, the Supreme Court said yes.

At this point, Article 223 of the Labor Code finds relevance:

In any event, the decision of the Labor Arbiter reinstating a dismissed or

separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation or, at the option of the employer, merely
 reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein.

The law is very clear. Although an award or order of reinstatement is self-executory and
does not require a writ of execution, the option to exercise actual reinstatement or payroll
reinstatement belongs to the employer. It does not belong to the employee, to the labor
tribunals, or even to the courts.

Opinaldo v. Ravina, G.R. No. 196573, October 16, 2013 – LOURDES

DOCTRINE:

 It is a basic principle of labor protection in this jurisdiction that a worker cannot

be deprived of his job without satisfying the requirements of due process.44 Labor
is property and the right to make it available is next in importance to the rights of
life and liberty.45 As enshrined under the Bill of Rights, no person shall be
deprived of life, liberty or property without due process of law.46 The due process
requirement in the deprivation of one’s employment is transcendental that it
limits the exercise of the management prerogative of the employer to control and
regulate the affairs of the business.

FACTS:

Respondent Narcisa Ravina (Ravina) is the general manager and sole proprietor of
St. Louisse Security Agency (the Agency). Petitioner Victorino Opinaldo (Opinaldo) is a
security guard who had worked for the Agency until his alleged illegal dismissal by
respondent on December 22, 2006. The Agency hired the services of petitioner on October
5, 2005, with a daily salary of P176.66 and detailed him to PAIJR Furniture Accessories
(PAIJR) in Mandaue City.
 In a letter dated August 15, 2006, however, the owner of PAIJR submitted a written
complaint to respondent requesting to relieve one of the company guard[s] and chose SG.
VICTORINO B. OPINALDO[,] detailed/assigned at PAIJR FURNITURE ACCESSORIES located
at TAWASON, MANDAUE CITY. For the reason: He is no longer physically fit to perform his
duties and responsibilities as a company guard because of his health condition.

Acceding to PAIJR’s request, respondent relieved petitioner from his work.

Respondent also required petitioner to submit a medical certificate to prove that he is
physically and mentally fit for work as security guard.

On September 6, 2006, respondent reassigned petitioner to Gomez Construction at

Mandaue City. After working for a period of two weeks for Gomez Construction and upon
receipt of his salary for services rendered within the said two-week period, petitioner
ceased to report for work.7 The records show that petitioner’s post at Gomez Construction
was the last assignment given to him by respondent.

On November 7, 2006, petitioner filed a complaint8 against respondent with the

Department of Labor and Employment (DOLE) Regional Office in Cebu City for
underpayment of salary and nonpayment of other labor standard benefits. The parties
agreed to settle and reached a compromise agreement. On November 27, 2006, petitioner
signed a Quitclaim and Release9 before the DOLE Regional Office in Cebu City for the
amount of P5,000.

After almost four weeks from the settlement of the case, petitioner returned to
respondent’s office on December 22, 2006. Petitioner claims that when he asked
respondent to sign an SSS11 Sickness Notification which he was going to use in order to
avail of the discounted fees for a medical check- up, respondent allegedly refused and
informed him that he was no longer an employee of the Agency. Respondent allegedly told
him that when he signed the quitclaim and release form at the DOLE Regional Office, she
already considered him to have quit his employment.12 Respondent, on the other hand,
counterclaims that she did not illegally dismiss petitioner and that it was a valid exercise of
management prerogative that he was not given any assignment pending the submission of
the required medical certificate of his fitness to work.Hence, the filing of the Illegal
dismissal complaint by the petitioner.

The Labor Arbiter held the Agency liable for illegal dismissal. Respondent appealed
to the NLRC which, however, affirmed the decision of the Labor Arbiter. Respondent
elevated the case to the CA on a Petition for Certiorari. The CA reversed and set aside the
decision and resolution of the NLRC. The petitioner moved for reconsideration but his
motion was denied.

ISSUE:

WON petitioner was illegally dismissed.

SC RULING:

Petitioner was illegally dismissed.

It is utterly significant in the case at bar that a considerably long period has lapsed from
petitioner’s last day of recorded work on September 21, 2006 until he was informed by
respondent on December 22, 2006 that he was no longer an employee of the Agency. In the
words of petitioner, he had been on a “floating status”42 for three months. Within this
period, petitioner did not have any work assignment from respondent who proffers the
excuse that he has not submitted the required medical certificate. While it is a management
prerogative to require petitioner to submit a medical certificate, we hold that respondent
cannot withhold petitioner’s employment without observing the principles of due process
and fair play.

What behooves the Court is the lack of evidence on record which establishes that
respondent informed petitioner that his failure to submit the required medical certificate
will result in his lack of work assignment. It is a basic principle of labor protection in this
jurisdiction that a worker cannot be deprived of his job without satisfying the
requirements of due process.44 Labor is property and the right to make it available is next
in importance to the rights of life and liberty.45 As enshrined under the Bill of Rights, no
person shall be deprived of life, liberty or property without due process of law.46 The due
process requirement in the deprivation of one’s employment is transcendental that it limits
the exercise of the management prerogative of the employer to control and regulate the
affairs of the business. In the case at bar, all that respondent employer needed to prove was
that petitioner employee was notified that his failure to submit the required medical
certificate will result in his lack of work assignment – and eventually the termination of his
employment – as a security guard. There is no iota of evidence in the records, save for the
bare allegations of respondent, that petitioner was notified of such consequence for non-
submission. In truth, the facts of the case clearly show that respondent even reassigned
petitioner to Gomez Construction from his PAIJR post despite the non-submission of a
medical certificate. If it was indeed the policy of respondent not to give petitioner any work
assignment without the medical certificate, why was petitioner reassigned despite his
noncompliance?

We need not reiterate that respondent did not properly exercise her management
prerogative when she withheld petitioner’s employment without due process. Respondent
failed to prove that she has notified petitioner that her continuous refusal to provide him
any work assignment was due to his non-submission of the medical certificate. Had
respondent exercised the rules of fair play, petitioner would have had the option of
complying or not complying with the medical certificate requirement – having full
knowledge of the consequences of his actions.

Petition for review on certiorari granted. CA’s decision reversed and set aside.

Phimco Industries v. PILA, G.R. No. 170830, August 11, 2010 – ROCHE

Doctrine:

 Right to Strike is merely a statutory right, hence it should be done in

accordance with law.

A strike is the most powerful weapon of workers in their struggle with management
in the course of setting their terms and conditions of employment. It is premised on the
concept of economic war between labor and management, it is a weapon that can either
breathe life to or destroy the union and its members, and one that must also necessarily
affect management and its members.

The decision to declare a strike must be exercised responsibly and must always rest
on rational basis, free from emotionalism, and unswayed by the tempers and tantrums of
hot heads; it must focus on legitimate union interests. To be legitimate, a strike should not
be antithetical to public welfare, and must be pursued within legal bounds. The right to
strike as a means of attaining social justice is never meant to oppress or destroy anyone,
least of all, the employer.
 Since strikes affect not only the relationship between labor and management but
also the general peace and progress of the community, the law has provided limitations on
the right to strike.

FACTS:

PHIMCO and PILA negotiated for the renewal CBA when it was about to expire on
December 14, 1994. The negotiation resulted in a deadlock on economic issues, mainly due
to disagreements on salary increases and benefits. PILA faithfully complied with the
procedural requirements for staging a strike. On April 21, 1995, PILA staged a strike.

On May 3, 1995, PHIMCO filed with the NLRC a petition for preliminary injunction
and temporary restraining order (TRO), to enjoin the strikers from preventing through
force, intimidation and coercion the ingress and egress of non-striking employees into and
from the company premises. On May 15, 1995, the NLRC issued an ex-parte TRO, effective
for a period of twenty (20) days, or until June 5, 1995.

On June 23, 1995, PHIMCO sent a letter to thirty-six (36) union members, directing
them to explain within twenty-four (24) hours why they should not be dismissed for the
illegal acts they committed during the strike. On June 26, 1995, the thirty-six (36) union
members were informed of their dismissal.

On July 6, 1995, PILA filed a complaint for unfair labor practice and illegal dismissal
(illegal dismissal case) with the NLRC.
 On August 28, 1995, PHIMCO filed a Petition to Declare the Strike Illegal. PHIMCO
claimed that the strikers prevented ingress to and egress from the PHIMCO compound,
thereby paralyzing PHIMCOs operations.

LA Mayor found the strike illegal; the respondents committed prohibited acts during
the strike by blocking the ingress to and egress from PHIMCOs premises and preventing the
non-striking employees from reporting for work.

On March 5, 1998, PILA and its officers and members appealed LA Mayors decision
to the NLRC.

The NLRC set aside the LA ruling and did not give weight to PHIMCOs evidence, and
relied instead on the respondent’s evidence showing that the union conducted a peaceful
moving picket.

The NLRC rendered its Decision in the consolidated cases, ruling totally in the
unions favor. It dismissed the appeal of the illegal dismissal case, and denied PHIMCOs
motion for reconsideration in the illegal strike case.

PHIMCO filed a petition for certiorari before CA which was dismissed, hence the
instant petition.

ISSUE: Whether or not the strike was illegal.

RULING:

YES.

In the present case, while the respondents fully satisfied the legal procedural
requirements; a strike notice was filed on March 9, 1995; a strike vote was reached on
March 16, 1995; notification of the strike vote was filed with the DOLE on March 17, 1995;
and the actual strike was launched only on April 25, 1995, the picketing that respondent
PILA officers and members undertook as part of their strike activities effectively blocked
the free ingress to and egress from PHIMCOs premises, thus preventing non-striking
employees and company vehicles from entering the PHIMCO compound. In this manner,
the picketers violated Article 264(e) of the Labor Code.

Requisites of a valid strike

For a strike to be valid, it must comply with Article 263 of the Labor Code, which
requires that: (a) a notice of strike be filed with the Department of Labor and Employment
(DOLE) 30 days before the intended date thereof, or 15 days in case of unfair labor practice;

(b) a strike vote be approved by a majority of the total union membership in the bargaining
unit concerned, obtained by secret ballot in a meeting called for that purpose; and (c) a
notice be given to the DOLE of the results of the voting at least seven days before the
intended strike.

These requirements are mandatory, and the union’s failure to comply renders the

strike illegal. The 15 to 30-day cooling-off period is designed to afford the parties the
opportunity to amicably resolve the dispute with the assistance of the NCMB
conciliator/mediator, while the seven-day strike ban is intended to give the DOLE an
opportunity to verify whether the projected strike really carries the imprimatur of the
majority of the union members.

Despite the validity of the purpose of a strike and compliance with the procedural
requirements, a strike may still be held illegal where the means employed are illegal. The
means become illegal when they come within the prohibitions under Article 264(e) of the
Labor Code which provides:

No person engaged in picketing shall commit any act of violence,

coercion or intimidation or obstruct the free ingress to or egress from the
employer's premises for lawful purposes, or obstruct public thoroughfares.

BPI v. BPI Employees, G.R. No. 164301, August 10, 2010 – TEPI

Doctrine:

 The individual employees right not to join a union may be validly restricted by a
union security clause in a CBA and such union security clause is not a violation of
the employees constitutional right to freedom of association.

 In the hierarchy of constitutional values, this Court has repeatedly held that the
right to abstain from joining a labor organization is subordinate to the policy of
encouraging unionism as an instrument of social justice.

Facts:

BPI merged with Far East Bank and Trust Company (FEBTC). BPI has an existing CBA with
the respondent BPI Employees Union. The CBA has a union shop clause:

Section 2. Union Shop - New employees falling within the bargaining unit as defined in
Article I of this Agreement, who may hereafter be regularly employed by the Bank shall,
within thirty (30) days after they become regular employees, join the Union as a condition of
their continued employment. It is understood that membership in good standing in the Union
is a condition of their continued employment with the Bank.

The Union sought to enforce the union shop clause with respect to the employees absorbed
by BPI from the former FEBTC. Some FEBTC employees joined the Union, while others
refused. Later, however, some of those who initially joined retracted their membership.

The Union requested BPI to implement the Union Shop Clause of the CBA and to terminate
their employment pursuant thereto and the matter was referred to the Grievance
Committee to no avail, hence the dispute proceeded to Voluntary Arbitration.

The VA agreed with BPI that the FEBTC employees did not fall within the “new employees”
described in the union shop clause because they were not new employees who were hired
and subsequently regularized, but were absorbed employees by operation of law because
the former employees of FEBTC can be considered assets and liabilities of the
absorbed corporation.

On appeal, the ruling was reversed by the CA which held that the VA erred in construing the
CBA literally at the expense of industrial peace in the company and the interpretation was
at war with the spirit and the rationale why the Labor Code itself allows the existence of
such provision which is “THE MOST PRIZED ACHIEVEMENT OF UNIONISM. IT ADDS
MEMBERSHIP AND COMPULSORY DUES. By holding out to loyal members a promise of
employment in the closed-shop, it wields group solidarity.”

Hence, the instant case.

Petitioner argues that the term new employees in the Union Shop Clause of the CBA is
qualified by the phrases who may hereafter be regularly employed and after they become
regular employees which led petitioner to conclude that the new employees referred to in,
and contemplated by, the Union Shop Clause of the CBA were only those employees who
were new to BPI, on account of having been hired initially on a temporary or probationary
status for possible regular employment at some future date.

Issue:
Whether or not the former FEBTC employees that were absorbed by petitioner upon the
merger between FEBTC and BPI should be covered by the Union Shop Clause found in the
existing CBA between petitioner and respondent Union.

SC Ruling:

YES, the FEBTC employees are covered by the union shop clause. Petition DENIED, and the
Decision of the Court of Appeals is AFFIRMED.

Union security is a generic term which is applied to and comprehends closed shop, union
shop, maintenance of membership or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular employees are required to join the
union within a certain period for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the
bargaining unit or the agreement is terminated.A closed-shop, on the other hand, may be
defined as an enterprise in which, by agreement between the employer and his employees
or their representatives, no person may be employed in any or certain agreed departments
of the enterprise unless he or she is, becomes, and, for the duration of the agreement,
remains a member in good standing of a union entirely comprised of or of which the
employees in interest are a part.

In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc. we ruled that:

It is the policy of the State to promote unionism to enable the

workers to negotiate with management on the same level and with
more persuasiveness than if they were to individually and
independently bargain for the improvement of their respective
conditions. To this end, the Constitution guarantees to them the rights to
self-organization, collective bargaining and negotiations and peaceful
concerted actions including the right to strike in accordance with law. There
is no question that these purposes could be thwarted if every worker were to
choose to go his own separate way instead of joining his co-employees in
planning collective action and presenting a united front when they sit down
to bargain with their employers. It is for this reason that the law has
sanctioned stipulations for the union shop and the closed shop as a means of
encouraging the workers to join and support the labor union of their own
 choice as their representative in the negotiation of their demands and the
protection of their interest vis--vis the employer. (Emphasis ours.)

In other words, the purpose of a union shop or other union security arrangement is
to guarantee the continued existence of the union through enforced membership for the
benefit of the workers.

All employees in the bargaining unit covered by a Union Shop Clause in their CBA with
management are subject to its terms. However, under law and jurisprudence, the
following kinds of employees are exempted from its coverage, namely, employees who
at the time the union shop agreement takes effect are bona fide members of a religious
organization which prohibits its members from joining labor unions on religious grounds;
employees already in the service and already members of a union other than the
majority at the time the union shop agreement took effect; confidential employees who
are excluded from the rank and file bargaining unit; and employees excluded from the
union shop by express terms of the agreement.

When certain employees are obliged to join a particular union as a requisite for
continued employment, as in the case of Union Security Clauses, this condition is a valid
restriction of the freedom or right not to join any labor organization because it is in favor of
unionism. This Court, on occasion, has even held that a union security clause in a CBA is not
a restriction of the right of freedom of association guaranteed by the Constitution.

Moreover, a closed shop agreement is an agreement whereby an employer binds himself to

hire only members of the contracting union who must continue to remain members in good
standing to keep their jobs. It is the most prized achievement of unionism. It adds
membership and compulsory dues. By holding out to loyal members a promise of
employment in the closed shop, it wields group solidarity.

Indeed, the situation of the former FEBTC employees in this case clearly does not fall
within the first three exceptions to the application of the Union Shop Clause discussed
earlier.No allegation or evidence of religious exemption or prior membership in another
union or engagement as a confidential employee was presented by both parties. The sole
category therefore in which petitioner may prove its claim is the fourth recognized
exception or whether the former FEBTC employees are excluded by the express terms of
the existing CBA between petitioner and respondent.
Right of an Employee not to Join a Union is not

Absolute and Must Give Way to the Collective Good of

All Members of the Bargaining Unit

Time and again, this Court has ruled that the individual employees right not to join a
union may be validly restricted by a union security clause in a CBA and such union security
clause is not a violation of the employees constitutional right to freedom of association.

It is unsurprising that significant provisions on labor protection of the 1987 Constitution

are found in Article XIII on Social Justice. The constitutional guarantee given the right to
form unions and the State policy to promote unionism have social justice considerations. In
Peoples Industrial and Commercial Employees and Workers Organization v. Peoples
Industrial and Commercial Corporation, we recognized that [l]abor, being the weaker in
economic power and resources than capital, deserve protection that is actually substantial
and material.

The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge
upon the individual employees right or freedom of association, is not to protect the union
for the unions sake. Laws and jurisprudence promote unionism and afford certain
protections to the certified bargaining agent in a unionized company because a strong and
effective union presumably benefits all employees in the bargaining unit since such a
union would be in a better position to demand improved benefits and conditions of work
from the employer. This is the rationale behind the State policy to promote unionism
declared in the Constitution

In the case at bar, since the former FEBTC employees are deemed covered by the Union
Shop Clause, they are required to join the certified bargaining agent, which supposedly has
gathered the support of the majority of workers within the bargaining unit in the
appropriate certification proceeding. Their joining the certified union would, in fact, be in
the best interests of the former FEBTC employees for it unites their interests with the
majority of employees in the bargaining unit. It encourages employee solidarity and affords
sufficient protection to the majority status of the union during the life of the CBA which are
the precisely the objectives of union security clauses, such as the Union Shop Clause
involved herein. We are indeed not being called to balance the interests of individual
employees as against the State policy of promoting unionism, since the employees, who
were parties in the court below, no longer contested the adverse Court of Appeals decision.
Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in
recognition that ultimately the individual employee will be benefited by that policy. In the
hierarchy of constitutional values, this Court has repeatedly held that the right to abstain
from joining a labor organization is subordinate to the policy of encouraging unionism as
an instrument of social justice.

Pryce Corp. v. Chinabank, G.R. No. 172302, February 18, 2014 – CLEA

Doctrine:

 “The SC has brushed aside invocations of the non-impairment clause to give way to a
 valid exercise of police power and afford protection to labor.”

 “The non-impairment clause must yield to the police power of the State. Property
rights and contractual rights are not absolute. The constitutional guaranty of non-
impairment of obligations is limited by the exercise of the police power of the State for
the common good of the general public.”

Facts:

A petition for corporate rehabilitation was filed by petitioner with the RTC. On 2004, the
rehabilitation court gave due course to the petition and directed the rehabilitation receiver
to evaluate and give recommendations on petitioner proposed rehabilitation plan attached
to its petition.

The rehabilitation receiver did not approve this plan and submitted instead an amended
rehabilitation plan, which the rehabilitation court approved by order. The court found

petitioner “eligible to be placed in a state of corporate rehabilitation.” The disposition

likewise identified the assets to be held and disposed of by petitioner and the manner by
which its liabilities shall be paid and liquidated.

On 2005, respondent elevated the case to the CA. Its petition questioned the court’s order
that included the following items:
1. The indebtedness to China Bank and BPI as well as the long term commercial papers will be
paid through a dacion en pago of developed real estate assets of the petitioner.
xxx 4. All accrued penalties are waived

5. Interests shall accrue only up to July 13, 2004, the date of issuance of the stay order.

6. No interest will accrue during the pendency of petitioner’s corporate rehabilitation.

7. Dollar-denominated loans will be converted to Philippine Pesos on the date of the issuance
of this Order using the reference rate of the Philippine Dealing System as of this date.

Respondent China Banking Corporation contended that the rehabilitation plan’s approval

impaired the obligations of contracts. It argued that neither the provisions of P.D. No.
902-A nor the Interim Rules of Procedure on Corporate Rehabilitation (Interim Rules)

empowered commercial courts “to render without force and effect valid contractual
stipulations. Moreover, the plan’s approval authorizing dacion en pago of petitioner’s
properties without respondent ChinaBank’s consent not only violated “mutuality of

contract and due process, but was also antithetical to the avowed policies of the state to
maintain a competitive financial system.

Issue:

Whether the constitutional proscription against impairment of contractual obligations has

been violated.

SC Ruling:

No. The SC has brushed aside invocations of the non-impairment clause to give way to a
valid exercise of police power and afford protection to labor.
In Pacific Wide Realty and Development Corporation v. Puerto Azul Land, Inc. which
similarly involved corporate rehabilitation, this court found no merit in Pacific Wide’s
invocation of the non-impairment clause, explaining as follows:

We also find no merit in PWRDC’s contention that there is a violation of the impairment
clause. Section 10, Article III of the Constitution mandates that no law impairing the
obligations of contract shall be passed. This case does not involve a law or an executive
issuance declaring the modification of the contract among debtor PALI, its creditors and its
accommodation mortgagors. Thus, the non-impairment clause may not be invoked.

Furthermore, as held in Oposa v. Factoran, Jr. even assuming that the same may be invoked,
the non-impairment clause must yield to the police power of the State. Property rights and
contractual rights are not absolute. The constitutional guaranty of non-impairment of
obligations is limited by the exercise of the police power of the State for the common good
of the general public.

Successful rehabilitation of a distressed corporation will benefit its debtors, creditors,

employees, and the economy in general. The court may approve a rehabilitation plan even
over the opposition of creditors holding a majority of the total liabilities of the debtor if, in
its judgment, the rehabilitation of the debtor is feasible and the opposition of the creditors
is manifestly unreasonable. The rehabilitation plan, once approved, is binding upon the
debtor and all persons who may be affected by it, including the creditors, whether or not
such persons have participated in the proceedings or have opposed the plan or whether or
not their claims have been scheduled.

Abella v. NLRC, G.R. No. 71813, July 20, 1987 – JUN MARLON

DOCTRINE:

 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. 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.

FACTS:

Petitioner Abella leased a farmland known as Hacienda Danao-Ramona in Monteverde,

Negros Occidental from Ramona for a period of 10 years and renewable for another 10
years at the option of the former. Abella hired the private respondents Quitco and Dionele
as farm workers. Abella renewed the lease for another ten years. At the expiration of the
lease, she dismissed both private respondents and turned over the hacienda to the owners.
Private respondents filed a complaint against Abella at the Ministry of Labor and
Employment for overtime pay, illegal dismissal and reinstatement with backwages. The
Labor Arbiter ruled that the dismissal was warranted by the cessation of business, but the
respondents are entitled to separation pay, invoking Art. 284 of the Labor Code, as
amended. On appeal, the NLRC affirmed the decision and dismissed the appeal for lack of
merit.

ISSUE:

Whether or not private respondents are entitled to separation pay.

RULING:

YES, private respondents are entitled to separation pay.

There is no question that Article 284 of the Labor Code as amended by BP 130 is the law
applicable in this case.

Article 284 of the Labor Code is 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.

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).

Goya v. Goya Employees, G.R. No. 170054, January 21, 2013 – LUVERNIE

  Doctrine:
Management prerogative of contracting out services, however, is not without
limitation. In contracting out services, the management must be motivated by good
faith and the contracting out should not be resorted to circumvent the law or must
not have been the result of malicious arbitrary actions.

Facts:

Goya Inc. (company) hired contractual employees PESO Resources Development

Corporation (PESO) to perform temporary and occasional services in its factory in Marikina
City. This prompted respondent Goya, Inc. Employees Union–FFW (Union) to request for a
grievance conference on the ground that the contractual workers do not belong to the
categories of employees stipulated in the existing Collective Bargaining Agreement (CBA).
When the matter remained unresolved, the grievance was referred to the National
Conciliation and Mediation Board (NCMB) for voluntary arbitration. During the hearing
before the Voluntary Arbitrator (VA) Laguesma, the Company and the Union manifested
that amicable settlement was not possible. The Union asserted that the hiring of
contractual employees from PESO is not a management prerogative and in gross violation
of the CBA tantamount to unfair labor practice (ULP). It noted that the contractual workers
engaged have been assigned to work in positions previously handled by regular workers
and Union members, in effect violating theCBA.

The Company argued that:

(a) the law expressly allows contracting and subcontracting arrangements

through Department of Labor and Employment (DOLE) Order No. 18-02;
(b) the engagement of contractual employees did not, in any way, prejudice the
Union, since not a single employee was terminated and neither did it result in a
reduction of working hours nor a reduction or splitting of the bargaining unit; and
(c) Section 4, Article I of the CBA merely provides for the definition of the categories of
employees and does not put a limitation on the Company’s right to engage the services of
job contractors or its management prerogative to address temporary/occasional needs
in its operation.

The VA dismissed the Union’s petition for lack of basis and directed the Company to
comply with the provisions of the CBA and that the engagement of PESO is not in keeping
with the intent and spirit of the CBA provision in question. It must be stressed that the
right of management to outsource parts of its operations is not totally eliminated but is
merely limited by the CBA.

The company filed for a Petition for Review with CA. CA dismissed the petition.

Issue:

1. WON the Company is guilty of unfair labor practice engaging the services of
PESO, a third party service provider under existing CBA, laws, and
jurisprudence.

2. WON engaging the services of PESO a valid exercise of management

prerogative.

SC Ruling:

1.No.

While the engagement of PESO is inviolation of Section 4, Article I of the CBA, it does not
constitute unfair labor practice as it not characterized under the law as a gross violation of
the CBA. Violations of a CBA, except those which are gross in character, shall no longer be
treated as unfair labor practice. Gross violations of a CBA means flagrant and/or malicious
refusal to comply with the economic provisions of such agreement. The Company justified
its engagement of contractual employees through PESO as a management prerogative,
which is not prohibited by law. Also, it further alleged that no provision under the CBA
limits or prohibits its right to contract out certain services in the exercise of management
prerogatives.

2.No.

The Company posits that its engagement of PESO was a management prerogative. It bears
stressing that a management prerogative refers to the right of the employer to regulate all
aspects of employment, such as the freedom to prescribe work assignments, working
methods, processes to be followed, regulation regarding transfer of employees, supervision
of their work, lay-off and discipline, and dismissal and recall of work, presupposing the
existence of employer-employee relationship. On the basis of the foregoing definition, the
engagement of PESO was indeed a management prerogative. This management prerogative
of contracting out services, however, is not without limitation. In contracting out services,
the management must be motivated by good faith and the contracting out should not be
resorted to circumvent the law or must not have been the result of malicious arbitrary
actions. In the case at bench, the CBA of the parties has already provided for the categories
of the employees in the Company’s establishment. These categories of employees
particularly with respect to casual employees serve as limitation to the Company’s
prerogative to outsource parts of its operations especially when hiring contractual
employees. The work to be performed by PESO was similar to that of the casual employees.
With the provision on casual employees, the hiring of PESO contractual employees,
therefore, is not in keeping with the spirit and intent of their CBA. To emphasize, declaring
that a particular act falls within the concept of management prerogative is significantly
different from acknowledging that such act is a valid exercise thereof. What the VA and the
CA correctly ruled was that the Company’s act of contracting out/outsourcing is within the
purview of management prerogative. Both did not say, however, that such act is a valid
exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed
upon by the Company and the Union delimit the free exercise of management prerogative
pertaining to the hiring of contractual employees.

Indeed, the VA opined that “the right of the management to outsource parts of its
operations is not totally eliminated but is merely limited by the CBA,” while the CA held
that “this management prerogative of contracting out services, however, is not without
limitation. x x x These categories of employees particularly with respect to casual
employees serve as limitation to [the Company’s] prerogative to outsource parts of its
operations especially when hiring contractual employees.” A collective bargaining
agreement is the law between the parties.
Imbong v. Ochoa, G.R. No. 204819, April 8, 2014 – MAE CLAIRE

Doctrine:

 The Practice of medicine is undeniably imbued with public interest that it is

both a power and a duty of the State to control and regulate it in order
toprotect and promote the public welfare. Like the legal profession, the
practice of medicine is not a right but a privileged burdened with conditions as it
directly involves the very lives of the people. A fortiori, this power includes the
power of Congress to prescribe the qualifications for the practice of professions
or trades which affect the public welfare, the public health, the public morals,
and the public safety; and to regulate or control such professions or trades, even
to the point of revoking such right altogether.

Facts:

Republic Act (R.A.) No. 10354, otherwise known as the Responsible Parenthood and
Reproductive Health Act of 2012 (RH Law), was enacted by Congress on December 21,
2012.

Shortly after the President placed his imprimatur on the said law, challengers from various
sectors of society came knocking on the doors of the Court, beckoning it to wield the
sword that strikes down constitutional disobedience.

The RH Law
Despite the foregoing legislative measures, the population of the country kept on galloping
at an uncontrollable pace. The executive and the legislative, thus, felt that the measures
were still not adequate. To rein in the problem, the RH Law was enacted to provide
Filipinos, especially the poor and the marginalized, access and information to the full range
of modem family planning methods, and to ensure that its objective to provide for the
peoples' right to reproductive health be achieved. To make it more effective, the RH Law
made it mandatory for health providers to provide information on the full range of modem
family planning methods, supplies and services, and for schools to provide reproductive
health education. To put teeth to it, the RH Law criminalizes certain acts of refusals to carry
out its mandates.
Stated differently, the RH Law is an enhancement measure to fortify and make effective the
current laws on contraception, women's health and population control.

In relation to Labor:
Involuntary Servitude

The petitioners also aver that the RH Law is constitutionally infirm as it violates the
constitutional prohibition against involuntary servitude. They posit that Section 17 of the
assailed legislation requiring private and non-government health care service providers to
render forty-eight (48) hours of pro bono reproductive health services, actually amounts to
involuntary servitude because it requires medical practitioners to perform acts against
their will.
The OSG counters that the rendition of pro bono services envisioned in Section 17 can
hardly be considered as forced labor analogous to slavery, as reproductive health care
service providers have the discretion as to the manner and time of giving pro bono
services. Moreover, the OSG points out that the imposition is within the powers of the
government, the accreditation of medical practitioners with PhilHealth being a privilege
and not a right.

Issue:

Whether or not the RH law is unconstitutional as it violates the constitutional prohibition

against Involuntary Servitude.

SC Ruling:

No.

The point of the OSG is well-taken.

It should first be mentioned that the practice of medicine is undeniably imbued with public
interest that it is both a power and a duty of the State to control and regulate it in order to
protect and promote the public welfare. Like the legal profession, the practice of medicine
is not a right but a privileged burdened with conditions as it directly involves the very lives
of the people. A fortiori, this power includes the power of Congress to prescribe the
qualifications for the practice of professions or trades which affect the public welfare, the
public health, the public morals, and the public safety; and to regulate or control such
professions or trades, even to the point of revoking such right altogether.

Moreover, as some petitioners put it, the notion of involuntary servitude connotes the
presence of force, threats, intimidation or other similar means of coercion and compulsion.
A reading of the assailed provision, however, reveals that it only encourages private and
non- government reproductive healthcare service providers to render pro bono service.
Other than non-accreditation with PhilHealth, no penalty is imposed should they choose to
do otherwise. Private and non-government reproductive healthcare service providers also
enjoy the liberty to choose which kind of health service they wish to provide, when, where
and how to provide it or whether to provide it all. Clearly, therefore, no compulsion, force
or threat is made upon them to render pro bono service against their will. While the
rendering of such service was made a prerequisite to accreditation with PhilHealth, the
Court does not consider the same to be an unreasonable burden, but rather, a necessary
incentive imposed by Congress in the furtherance of a perceived legitimate state interest.

Consistent with what the Court had earlier discussed, however, it should be emphasized
that conscientious objectors are exempt from this provision as long as their religious
beliefs and convictions do not allow them to render reproductive health service, pro bona
or otherwise.

For reference:

TOPIC
I. Fundamental Principles and Policies
A. Constitutional Provisions
2. Article III, Secs. 1, 4, 7, 8, 10, 16, 18 (2)

ARTICLE III
 BILL OF RIGHTS

Section 1. No person shall be deprived of life, liberty, or property without due process of
law, nor shall any person be denied the equal protection of the laws.

Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the
press, or the right of the people peaceably to assemble and petition the government for
redress of grievances.
Section 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents and papers pertaining to official
acts, transactions, or decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such limitations as may be
provided by law.

Section 8. The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary to law shall not
be abridged.

Section 10. No law impairing the obligation of contracts shall be passed.

Section 16. All persons shall have the right to a speedy disposition of their cases before all
judicial, quasi-judicial, or administrative bodies.
Section 18.

xxx
2. No involuntary servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.

I.A.3

International School v. Quisumbing, G.R. No. 128845, June 1, 2000 – MARGARET

FACTS: Private respondent International School, Inc. (School), pursuant to PD 732, is a

domestic educational institution established primarily for dependents of foreign diplomatic
personnel and other temporary residents. The decree authorizes the School to employ its own
teaching and management personnel selected by it either locally or abroad, from Philippine
or other nationalities, such personnel being exempt from otherwise applicable laws and
regulations attending their employment, except laws that have been or will be enacted for the
protection of employees. School hires both foreign and local teachers as members of its
faculty, classifying the same into two: (1) foreign-hires and (2) local-hires.
The School employs four tests to determine whether a faculty member should be classified as a
foreign-hire or a local hire: a. What is one's domicile? b. Where is one's home economy? c. To
which country does one owe economic allegiance d. Was the individual hired abroad
specifically to work in the School and was the School responsible for bringing that individual
to the Philippines? Should the answer to any of these queries point to the Philippines, the
faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local-hires. Foreign-hires are
also paid a salary rate 25% more than local-hires.

When negotiations for a new CBA were held on June 1995, petitioner ISAE, a legitimate labor
union and the collective bargaining representative of all faculty members of the School,
contested the difference in salary rates between foreign and local-hires. This issue, as well as
the question of whether foreign-hires should be included in the appropriate bargaining unit,
eventually caused a deadlock between the parties.

ISAE filed a notice of strike. Due to the failure to reach a compromise in the NCMB, the matter
reached the DOLE which favored the School. Hence this petition.

ISSUES:
1. Whether or not the Foreign-hires are also paid a salary rate twenty-five percent (25%)
more than local-hires is an invalid and unreasonable classification and violates the Equal
Protection Clause.
2. Whether or not the Union can invoke the equal protection clause to justify its claim of
parity.
3. Whether or not the foreign-hires should be included in bargaining unit of local- hires.

RULING:
1. Yes.
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. The
foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of “equal pay for equal work.” Persons who work with substantially equal
qualifications, skill, effort and responsibility, under similar conditions, should be paid similar
salaries. This rule applies to the School, its “international character” notwithstanding. The
School contends that petitioner has not adduced evidence that local-hires perform work equal
to that of foreign-hires. The employer in this case has failed to show evidence that foreign-
hires perform 25% more efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under similar working conditions.

In this case, the court find the point-of-hire classification employed by respondent School to
justify the distinction in the salary rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the services rendered by foreign-
hires and local-hires. The practice of the School of according higher salaries to foreign-hires
contravenes public policy and, certainly, does not deserve the sympathy of the Court.

2. Yes.
The Labor Code’s and the Constitution’s provisions impregnably institutionalize in this
jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work
with substantially equal qualifications, skill, effort and responsibility, under similar
conditions, should be paid similar salaries. If an employer accords employees the same
position and rank, the presumption is that these employees perform equal work. If the
employer pays one employee less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. That would be adding insult to injury.

In this case, the employer has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups
have similar functions and responsibilities, which they perform under similar working
conditions.

Hence, the Court finds the point-of-hire classification employed by respondent School to justify
the distinction in the salary rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the services rendered by foreign-
hires and local-hires.

3. NO.
The Constitution, Article XIII, Section 3, specifically provides that labor is entitled to “humane
conditions of work.” These conditions are not restricted to the physical workplace – the
factory, the office or the field – but include as well the manner by which employers treat their
employees.

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 248
declares it an unfair labor practice for an employer to discriminate in regard to wages in
order to encourage or discourage membership in any labor organization.

The Constitution enjoins the State to “protect the rights of workers and promote their welfare,
In Section 18, Article II of the constitution mandates “to afford labor full protection”. The
State has the right and duty to regulate the relations between labor and capital. These
relations are not merely contractual but are so impressed with public interest that labor
contracts, collective bargaining agreements included, must yield to the common good.

However, foreign-hires do not belong to the same bargaining unit as the local-hires.

A bargaining unit is a group of employees of a given employer, comprised of all or less than all
of the entire body of employees, consistent with equity to the employer indicate to be the best
suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.

The factors in determining the appropriate collective bargaining unit are (1) the will of the
employees (Globe Doctrine); (2) affinity and unity of the employees’ interest, such as
substantial similarity of work and duties, or similarity of compensation and working
conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4)
similarity of employment status. The basic test of an asserted bargaining unit’s acceptability
is whether or not it is fundamentally the combination which will best assure to all employees
the exercise of their collective bargaining rights.

In the case at bar, it does not appear that foreign-hires have indicated their intention to be
grouped together with local-hires for purposes of collective bargaining. The collective
bargaining history in the School also shows that these groups were always treated separately.
Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreign-hires
perform similar functions under the same working conditions as the local-hires, foreign-hires
are accorded certain benefits not granted to local-hires such as housing, transportation,
shipping costs, taxes and home leave travel allowances. These benefits are reasonably related
to their status as foreign-hires, and justify the exclusion of the former from the latter. To
include foreign-hires in a bargaining unit with local-hires would not assure either group the
exercise of their respective collective bargaining rights

See:Serrano v. Gallant Maritime, G.R. No. 167614, March 24, 2009 supra
Canuel v. Magsaysay Maritime, G.R. No. 190161, October 13, 2014 – JESON

Doctrine:

 Concordant with the State’s avowed policy to give maximum aid and full protection to
labor as enshrined in Article XIII of the 1987 Philippine Constitution, contracts of
labor, such as the 2000 POEA-SEC, are deemed to be so impressed with public
interest that the more beneficial conditions must be endeavored in favor of the
laborer. The rule therefore is one of liberal construction.

 Applying the rule on liberal construction, the Court is thus brought to the recognition
that medical repatriation cases should be considered as an exception to the phrase
"work-related death of the seafarer, during the term of his employment contract.

Facts:

Nancing R. Canuel (Nancing) was hired by respondent Magsaysay Maritime Corporation

(Magsaysay) as Assistant Engineer for its foreign principal, respondent Kotani Ship
management Limited (Kotani), to be deployed on board the vessel M/V North Sea.

On the 8th month of his service, Nancing figured in an accident while in the performance of
his duties on board the vessel, and, as a result, injured the right side of his body. He was
was diagnosed to have suffered "bilateral closed traumatic hemothorax."

He was medically repatriated (here, per 2000 POEA-SEC, the contract is terminated) and
immediately admitted to the Manila Doctor’s Hospital where he eventually died due to
acute respiratory failure with lung metastasis.

Nancing’s widow, Anita, filed a complaint against the respondents for recovery of death
benefits, death compensation of minor children, and burial allowance.

Respondents denied any liability contending that the real cause of his death (lung cancer),
as shown in the autopsy is not work-related and that his death took place after the
termination of the contract, hence, not compensable.
While the LA and NLRC ruled for the petitioner, CA reversed the ruling on the ground that
the death of the Nancing took place after the termination of his contract (by reason of
medical repatriation) and thus not compensable.

Issue:

Whether or not petitioner is entitled for the benefits claimed.

Ruling:

Yes.

Seafarer’s beneficiaries may successfully claim death benefits if they are able to establish
that the seafarer’s death is (a) work-related, and (b) had occurred during the term of his
employment contract.

The first Requirement that the Seafarer’s Death Should Be Work-Related was complied. (this
is not the issue).

The second Requirement, i.e., that the Seafarer’s Death Should Occur during the Term of
Employment, will not be complied if the law be strictly construed because upon his death
the contract has already been terminated by reason of his medical repatriation.

However, a strict and literal construction of the 2000 POEA-SEC, especially when the same
would result into inequitable consequences against labor, is not subscribed to in this
jurisdiction. Concordant with the State’s avowed policy to give maximum aid and full
protection to labor as enshrined in Article XIII of the 1987 Philippine Constitution,
contracts of labor, such as the 2000 POEA-SEC, are deemed to be so impressed with
public interest that the more beneficial conditions must be endeavoured in favor of
the laborer. The rule therefore is one of liberal construction.

Applying the rule on liberal construction, the Court is thus brought to the recognition that
medical repatriation cases should be considered as an exception to Section 20 of the
2000 POEA-SEC. Accordingly, the phrase "work-related death of the seafarer, during
the term of his employment contract" under Part A (1) of the said provision should not

be strictly and literally construed to mean that the seafarer’s work-related death should
have precisely occurred during the term of his employment. Rather, it is enough that the
seafarer’s work-related injury or illness which eventually causes his death should have
occurred during the term of his employment. Taking all things into account, the Court
reckons that it is by this method of construction that undue prejudice to the laborer and his
heirs may be obviated and the State policy on labor protection be championed.

Asia Brewery v. TPMA, G.R. Nos. 171594-96, September 18, 2013 – RAMON

DOCTRINE:

 In cases of compulsory arbitration before the Secretary of labor pursuant to Article

263(g) of the labor Code, the financial statements of the employer must be properly
audited by an external and independent auditor in order to be admissible in
 evidence for purposes of determining the proper wage award.
 While the rules of evidence prevailing in the courts of law or equity are not
controlling in proceedings before the NLRC, the evidence presented before it
must at least have a modicum of admissibility for it to be given some probative
 value.
 It is also well-settled that factual findings of labor administrative officials, if
supported by substantial evidence, are entitled not only to great respect but
even to finality

Facts:

[Respondent union] Tunay Na Pagkakaisa ng mga Manggagawa sa Asia (TPMA) is a

legitimate labor organization, certified as the sole and exclusive bargaining agent of all
regular rank and file employees of [petitioner corporation] Asia Brewery, Incorporated
(ABI).

[Respondent union] and [petitioner corporation] had been negotiating for a new collective
bargaining agreement (CBA) for the years 2003-2006 since the old CBA expired last July
2003. After about 18 sessions or negotiations, the parties were still unable to reconcile
their differences on their respective positions on most items, particularly on wages and
other economic benefits.
On October 21, 2003, the [respondent union] declared a deadlock. On October 27, 2003,
[respondent union] filed a notice of strike with the National Conciliation and
Mediation Board (NCMB), docketed as NCMB-RB-IV-LAG- NS-10-064-03. However, the
parties did not come to terms even before the NCMB.

On November 18, 2003, [respondent union] conducted a strike vote. Out of the 840
union members, 768 voted in favor of holding a strike.

On November 20, 2003, [petitioner corporation] then petitioned the Secretary of the

Department of Labor and Employment (DOLE) to assume jurisdiction over the parties’
labor dispute, invoking Article 263 (g) of the Labor Code. In answer, [respondent
union] opposed the assumption of jurisdiction, reasoning therein that the business of
[petitioner corporation] is not indispensable to the national interest.

On December 2, 2003, [respondent union] filed before [the Court of Appeals] a petition for
injunction, docketed as CA-G.R. SP No. 80839, which sought to enjoin the respondent
Secretary of Labor from assuming jurisdiction over the labor dispute, or in the
alternative, to issue a temporary restraining order, likewise to enjoin the former
from assuming jurisdiction.

On December 19, 2003, the public respondent, through Undersecretary/ Acting

Secretary Manuel G. Imson, issued an order assuming jurisdiction over the labor
dispute between the [respondent union] and [petitioner corporation].

On January 19, 2004, [respondent union] filed another petition for certiorari with [the
Court of Appeals], docketed as CA-G.R. SP No. 81639, imputing bad faith and grave
abuse of discretion to the Secretary of Labor. [Respondent union] prayed therein for
the nullification of the order of assumption of jurisdiction and the declaration that
[petitioner corporation] is not an industry indispensable to the national interest.

In the meantime, in a decision dated January 19, 2004, Secretary of Labor Patricia
Sto. Tomas resolved the deadlock between the parties. As summarized in a later
resolution, the public respondent granted the arbitral awards.
Thereafter, on February 9, 2004, the parties executed and signed the Collective
Bargaining Agreement with a term from August 1, 2003 to July 31, 2006.

Subsequently, on April 1, 2004, [respondent union] filed another petition for

certiorari before [the Court of Appeals], which was docketed as SP-83168, assailing

the arbitral award and imputing grave abuse of discretion upon the public
respondent.
x x x x4

Court of Appeal’s Ruling

xxxxxThe computation of wage increase should be remanded to the Secretary of

Labor because the computation was based on petitioner corporation’s unaudited

financial statements xxx

Issue:

Whether the CA erred when it remanded to the Secretary of Labor the issue on wage
increase.

Our Ruling:

The Petition lacks merit.

The remand of this case to the Secretary of Labor as to the issue of wage increase was
proper.

Petitioner corporation admits that what it submitted to the Secretary of Labor were
unaudited financial statements which were then used as one of the bases in fixing the wage
award. However, petitioner corporation argues that these financial statements were duly
signed and certified by its chief financial officer. These statements have also been allegedly
submitted to various government agencies and should, thus, be considered official and
public documents. Moreover, respondent union did not object to the subject financial
statements in the proceedings before the Secretary of Labor and even used the same in
formulating its (the union’s) arguments in said proceedings. Thus, petitioner corporation
contends that although the subject financial statements were not audited by an external
and independent auditor, the same should be considered substantial compliance with the
order of the Secretary of Labor to produce the petitioner corporation’s complete audited
financial statements for the past five years. Furthermore, the Decision of the Secretary of
Labor was not solely based on the subject financial statements as the CBA history, costing
of the proposals, and wages in other similarly situated bargaining units were considered.

The contention is untenable.

In Restaurante Las Conchas v. Llego,21 several employees filed a case for illegal dismissal
after the employer closed its restaurant business. The employer sought to justify the
closure through unaudited financial statements showing the alleged losses of the business.
We ruled that such financial statements are mere self-serving declarations and
inadmissible in evidence even if the employees did not object to their presentation before
the Labor Arbiter.22 Similarly, in Uichico v. National Labor Relations Commission,23 the
services of several employees were terminated on the ground of retrenchment due to
alleged serious business losses suffered by the employer. We ruled that by submitting
unaudited financial statements, the employer failed to prove the alleged business losses.

x x x It is true that administrative and quasi-judicial bodies like the NLRC are not bound by
the technical rules of procedure in the adjudication of cases. However, this procedural rule
should not be construed as a license to disregard certain fundamental evidentiary rules.

While the rules of evidence prevailing in the courts of law or equity are not
controlling in proceedings before the NLRC, the evidence presented before it must at
least have a modicum of admissibility for it to be given some probative value. xxxx
While the above-cited cases involve proof necessary to establish losses in cases of business
closure or retrenchment, we see no reason why this rule should not equally apply to the
determination of the proper level of wage award in cases where the Secretary of Labor
assumes jurisdiction in a labor dispute pursuant to Article 263(g)25 of the Labor Code.

This Court has recognized the Secretary of Labor's distinct expertise in the study and
settlement of labor disputes falling under his power of compulsory arbitration. It is
also well-settled that factual findings of labor administrative officials, if supported
by substantial evidence, are entitled not only to great respect but even to finality. x x
x
Thus, we rule that the Secretary of Labor gravely abused her discretion when she relied
on the unaudited financial statements of petitioner corporation in determining the wage
award because such evidence is self-serving and inadmissible.

I.B.1

Dongon v. Rapid Movers, G.R. No. 163431, August 28, 2013 – RIZA MAE

DOCTRINE:

 It is true that an employer is given a wide latitude of discretion in managing its own
affairs. The broad discretion includes the implementation of company rules and
regulations and the imposition of disciplinary measures on its employees. But the
exercise of a management prerogative like this is not limitless, but hemmed in by
good faith and a due consideration of the rights of the worker. In this light, the
management prerogative will be upheld for as long as it is not wielded as an
implement to circumvent the laws and oppress labor.

FACTS:

Tanduay’s security guard called the attention of private respondent as to the fact that Mr.
Villaruz’ was not wearing an I.D. Card. Petitioner, then, assured the guard that he will secure a
special permission from the management to warrant the orderly release of goods. Instead of
complying with his compromise, he lent his I.D. Card to Villaruz; and by reason of such
misrepresentation, private respondent and Mr. Villaruz got a clearance from Tanduay for
the release of the goods. However, the security guard, who saw the misrepresentation
committed by private respondent and Mr. Villaruz, accosted them and reported the matter
to the management of Tanduay. He was then dismissed.

Petitioner submits that his dismissal was a penalty too harsh and disproportionate to his
supposed violation; and that his dismissal was inappropriate due to the violation being his
first infraction that was even committed in good faith and without malice.

Rapid Movers argues, however, that the strict implementation of company rules and
regulations should be accorded respect as a valid exercise of its management prerogative.
ISSUE:

Whether or not an employer can dismiss an employee by virtue of its managerial

prerogative considering that it was established that the employee’s act did not constitute
just cause provided by the Labor Code.

RULING:

No. It is true that an employer is given a wide latitude of discretion in managing its own
affairs. The broad discretion includes the implementation of company rules and regulations
and the imposition of disciplinary measures on its employees. But the exercise of a
management prerogative like this is not limitless, but hemmed in by good faith and a due
consideration of the rights of the worker. In this light, the management prerogative will be
upheld for as long as it is not wielded as an implement to circumvent the laws and oppress
labor.

To SC, dismissal should only be a last resort, a penalty to be meted only after all the
relevant circumstances have been appreciated and evaluated with the goal of ensuring that
the ground for dismissal was not only serious but true. The cause of termination, to be
lawful, must be a serious and grave malfeasance to justify the deprivation of a means of
livelihood. This requirement is in keeping with the spirit of our Constitution and laws to
lean over backwards in favor of the working class, and with the mandate that every doubt
must be resolved in their favor.

Although we recognize the inherent right of the employer to discipline its employees, we
should still ensure that the employer exercises the prerogative to discipline humanely and
considerately, and that the sanction imposed is commensurate to the offense involved and
to the degree of the infraction. The discipline exacted by the employer should further
consider the employee’s length of service and the number of infractions during his
employment. The employer should never forget that always at stake in disciplining its
employee are not only his position but also his livelihood, and that he may also have a
family entirely dependent on his earnings.

Considering that petitioner’s motive in lending his company ID to Villaruz was to benefit
Rapid Movers as their employer by facilitating the loading of goods at the Tanduay Otis
Warehouse for distribution to Rapid Movers’ clients, and considering also that petitioner
had rendered seven long unblemished years of service to Rapid Movers, his dismissal was
plainly unwarranted. The NLRC’s reversal of the decision of the Labor Arbiter by holding
that penalty too harsh and disproportionate to the wrong attributed to him was legally and
factually justified, not arbitrary or whimsical. Consequently, for the CA to pronounce that
the NLRC had thereby gravely abused its discretion was not only erroneous but was itself a
grave abuse of discretion amounting to lack of jurisdiction for not being in conformity with
the pertinent laws and jurisprudence. We have held that a conclusion or finding derived
from erroneous considerations is not a mere error of judgment but one tainted with grave
abuse of discretion.

Furthermore, petitioner was not guilty of willful disobedience; hence, his dismissal was
illegal. Willful disobedience to the lawful orders of an employer is one of the valid grounds
to terminate an employee under Article 296 (formerly Article 282) of the Labor Code. For
willful disobedience to be a ground, it is required that: (a) the conduct of the employee
must be willful or intentional; and (b) the order the employee violated must have been
reasonable, lawful, made known to the employee, and must pertain to the duties that he
had been engaged to discharge. Willfulness must be attended by a wrongful and perverse
mental attitude rendering the employee’s act inconsistent with proper subordination. In
any case, the conduct of the employee that is a valid ground for dismissal under the Labor
Code constitutes harmful behavior against the business interest or person of his employer.
It is implied that in every act of willful disobedience, the erring employee obtains undue
advantage detrimental to the business interest of the employer.

Under the foregoing standards, the disobedience attributed to petitioner could not be justly
characterized as willful within the contemplation of Article 296 of the Labor Code. He
neither benefitted from it, nor thereby prejudiced the business interest of Rapid Movers.
His explanation that his deed had been intended to benefit Rapid Movers was credible.
There could be no wrong or perversity on his part that warranted the termination of his
employment based on willful disobedience.

Cirtex Employees v. Cirtex, G.R. No. 190515, November 15, 2010 – STEPHEN

Doctrine:

 A CBA, as a labor contract within the contemplation of Article 1700 of the

Civil Code of the Philippines which governs the relations between labor and
capital, is not merely contractual in nature but impressed with public
interest, thus, it must yield to the common good.

FACTS:
Prior to the 3rd year of the CBA of respondent and petitioner, the parties renegotiated its
economic provisions but failed to reach a settlement, particularly on the issue of wage
increases. Petitioner thereupon declared a bargaining deadlock and filed a Notice of Strike.
Respondent, upon the other hand, filed a Notice of Lockout.

In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on
strike. The Secretary of Labor assumed jurisdiction over the controversy and issued a
Return to Work Order which was complied with.

Before the Secretary of Labor could rule on the controversy, respondent created a Labor
Management Council through which it concluded with the remaining officers of petitioner a
Memorandum of Agreement providing for daily wage increases.

The Secretary of Labor resolved the CBA deadlock by awarding a wage increase.

Respondent moved for a reconsideration of the Decision stating that the union members
were waiving their rights and benefits under the Secretary ’s Decision. Reconsideration of
the Decision was denied. Hence, respondent filed a petition for certiorari before the Court

of Appeals.

The appellate court ruled in favor of respondent and accordingly set aside the Decision of
the Secretary of Labor. It held that the Secretary of Labor gravely abused his discretion in
not respecting the MOA.

ISSUE:

Whether or not the Secretary of Labor is authorized to give an award higher than that
agreed upon in the MOA?

HELD:
Yes, the Secretary of Labor is Authorized to give a higher award than agreed.

It is well-settled that the Secretary of Labor, in the exercise of his power to assume
jurisdiction under Art. 263 (g) of the Labor Code, may resolve all issues involved in the
controversy including the award of wage increases and benefits. While an arbitral award
cannot per se be categorized as an agreement voluntarily entered into by the parties
because it requires the intervention and imposing power of the State thru the Secretary of
Labor when he assumes jurisdiction, the arbitral award can be considered an
approximation of a collective bargaining agreement which would otherwise have been
entered into by the parties, hence, it has the force and effect of a valid contract obligation.

That the arbitral award was higher than that which was purportedly agreed upon in the
MOA is of no moment. For the Secretary, in resolving the CBA deadlock, is not limited to
considering the MOA as basis in computing the wage increases. He could, as he did,
consider the financial documents submitted by respondent as well as the parties
bargaining history and respondents financial outlook and improvements as stated in its
website.

It bears noting that since the filing and submission of the MOA did not have the effect of
divesting the Secretary of his jurisdiction, or of automatically disposing the controversy,
then neither should the provisions of the MOA restrict the Secretarys leeway in deciding
the matters before him.

While a contract constitutes the law between the parties, this is so in the present case with
respect to the CBA, not to the MOA in which even the unions signatories had expressed
reservations thereto. But even assuming arguendo that the MOA is treated as a new CBA,
since it is imbued with public interest, it must be construed liberally and yield to the
common good.

While the terms and conditions of a CBA constitute the law between the parties, it is not,
however, an ordinary contract to which is applied the principles of law governing ordinary
contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil
Code of the Philippines which governs the relations between labor and capital, is not
merely contractual in nature but impressed with public interest, thus, it must yield to the
common good. As such, it must be construed liberally rather than narrowly and technically,
and the courts must place apractical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and purpose which it is intended to
serve.
PNCC Traffic v. PNCC, G.R. No. 171231, February 17, 2010 – MARVIN

Doctrine:

 Although it is a rule that a contract freely entered into between the parties should
be respected, since a contract is the law between the parties, there are, however,
certain exceptions to the rule, specifically Article 1306 of the Civil Code, which
 provides:

The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs, public order, or public policy.

 Moreover, the relations between capital and labor are not merely contractual.
"They are so impressed with public interest that labor contracts must yield to the
common good x x x."22 The supremacy of the law over contracts is explained by the
fact that labor contracts are not ordinary contracts; they are imbued with public
interest and therefore are subject to the police power of the state. 23 However, it
should not be taken to mean that provisions agreed upon in the CBA are absolutely
beyond the ambit of judicial review and nullification. If the provisions in the CBA
run contrary to law, public morals, or public policy, such provisions may very well
be voided.

FACTS:

Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the DOLE. Respondent
PNCC Skyway Corporation is a corporation duly organized and operating under and by
virtue of the laws of the Philippines.

On November 15, 2002, petitioner and respondent entered into a Collective Bargaining
Agreement (CBA) incorporating the terms and conditions of their agreement which
included vacation leave and expenses for security license provisions.
Article VIII, Section 1 (b) of the CBA, the pertinent provisions of the CBA relative to
vacation leave and sick leave that the company shall schedule the vacation leave of
employees during the year taking into consideration the request of preference of the
employees. Any unused vacation leave shall be converted to cash and shall be paid to the
employees on the first week of December each year."

Petitioner objected to the implementation of the said memorandum. It insisted that the
individual members of the union have the right to schedule their vacation leave. It opined
that the unilateral scheduling of the employees' vacation leave was done to avoid the
monetization of their vacation leave in December 2004.

Petitioner also demanded that the expenses for the required in-service training of its
member security guards, as a requirement for the renewal of their license, be shouldered
by the respondent. However, the respondent did not accede to petitioner's demands and
stood firm on its decision to schedule all the vacation leave of petitioner's members.

Due to the disagreement between the parties, petitioner elevated the matter to the DOLE-
NCMB for preventive mediation. For failure to settle the issue amicably, the parties agreed
to submitthe issue before the voluntary arbitrator.

Respondent filed a motion for reconsideration, which the voluntary arbitrator denied.
Aggrieved, respondent filed a Petition for Certiorari with Prayer for Temporary Restraining
Order and/or Writ of Preliminary Injunction with the CA, and the CA annulled and setting
aside the decision and order of the voluntary arbitrator. The CA ruled that since the
provisions of the CBA were clear, the voluntary arbitrator has no authority to interpret the
same beyond what was expressly written.

Petitioner filed a motion for reconsideration, which the CA denied Hence, the instant
petition assigning the following errors:

ISSUE:
Whether the Court of Appeals erred in holding that the management has sole discretion
to schedule the vacation leave of the petitioner

SC Ruling:

The decision of the Court of Appeals is sustained.

The rule is that where the language of a contract is plain and unambiguous, its meaning
should be determined without reference to extrinsic facts or aids. The intention of the
parties must be gathered from that language, and from that language alone. Stated
differently, where the language of a written contract is clear and unambiguous, the
contract must be taken to mean that which, on its face, it purports to mean, unless some
good reason can be assigned to show that the words used should be understood in a
different sense.

In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII,
Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall
be under the option of the employer. The preference requested by the employees is not
controlling because respondent retains its power and prerogative to consider or to ignore
said request.

Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall prevail. RFM Corporation-
Flour Division and SFI Feeds Division v. Kasapian ng Manggagawang Pinagkaisa-RFM
(KAMPI-NAFLU-KMU) and Sandigan at Ugnayan ng Manggagawang Pinagkaisa-SFI
(SUMAPI-NAFLU-KMU)G.R. No. 162324, February 4, 2009.In fine, the CBA must be strictly
adhered to and respected if its ends have to be achieved, being the law between the parties.
The parties cannot be allowed to change the terms they agreed upon on the ground that the
same are not favorable to them.

There is, thus, no basis for the Voluntary Arbitrator to interpret the subject provision
relating to the schedule of vacation leaves as being subject to the discretion of the union
members. There is simply nothing in the CBA which grants the union members this right.
It must be noted the grant to management of the right to schedule vacation leaves is not
without good reason. Indeed, if union members were given the unilateral discretion to
schedule their vacation leaves, the same may result in significantly crippling the number of
key employees of the petitioner manning the toll ways on HOLIDAYS and other peak
seasons, where union members may wittingly or unwittingly choose to have a vacation.
Put another way, the grant to management of the right to schedule vacation leaves ensures
that there would always be enough people manning and servicing the toll ways, which in
turn assures the public plying the same orderly and efficient toll way service.

Indeed, the multitude or scarcity of personnel manning the tollways should not rest upon
the option of the employees, as the public using the skyway system should be assured of
its safety, security and convenience.

Although the preferred vacation leave schedule of petitioner's members should be given
priority, they cannot demand, as a matter of right, that their request be automatically
granted by the respondent. If the petitioners were given the exclusive right to schedule
their vacation leave then said right should have been incorporated in the CBA. In the
absence of such right and in view of the mandatory provision in the CBA giving respondent
the right to schedule the vacation leave of its employees, compliance therewith is mandated
by law.

In the grant of vacation leave privileges to an employee, the employer is given the leeway to
impose conditions on the entitlement to and commutation of the same, as the grant of
vacation leave is not a standard of law, but a prerogative of management.Sobrepe, Jr. v.

Court of Appeals, 345 Phil. 714. It is a mere concession or act of grace of the employer and
not a matter of right on the part of the employee. Thus, it is well within the power and
authority of an employer to impose certain conditions, as it deems fit, on the grant of
vacation leaves, such as having the option to schedule the same.

Although it is a rule that a contract freely entered into between the parties should be
respected, since a contract is the law between the parties, there are, however, certain
exceptions to the rule, specifically Article 1306 of the Civil Code, which provides:
The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs,
public order, or public policy.

Moreover, the relations between capital and labor are not merely contractual. "They are so
impressed with public interest that labor contracts must yield to the common good x x x."22
The supremacy of the law over contracts is explained by the fact that labor contracts are
not ordinary contracts; they are imbued with public interest and therefore are subject to
the police power of the state.23 However, it should not be taken to mean that provisions
agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification.
If the provisions in the CBA run contrary to law, public morals, or public policy, such
provisions may very well be voided.

Magis Center v. Manalo, G.R. No. 178835, February 13, 2009 – KEISHA

Topic: ARTICLE 1702 OF THE CIVIL CODE APPLIED TO LABOR CASES (I. B. 3.)

Doctrine:

 Article 1702 of the Civil Code that all doubts regarding labor contracts should be
construed in favor of labor, then it should be respondent’s copy which did not
provide for an express period which should be upheld, especially when there are
circumstances that render the version of petitioner suspect. This is in line with the
State policy of affording protection to labor, such that the lowly laborer, who is
usually at the mercy of the employer, must look up to the law to place him on equal
footing with his employer.

Facts:

Respondent Manalo was hired as a teacher and acting principal of herein petitioner on
April 18, 2002. The former wrote a letter of resignation to School Directress Cario on March
29, 2003 stating that her effective date of resignation is on April 1, 2003. However, even
before such resignation letter was tendered, respondent received a letter of termination
from their school directress claiming that respondent Manalo’s contract, which will expire
on March 31, 2003, will no longer be renewed since the position of Principal, which
respondent holds, will be abolished as part of the school’s cost-cutting measure. Hence, this
prompted respondent to file a complaint for illegal dismissal and non-payment of 13th
month pay on April 4, 2003.

The Labor Arbiter (LA) dismissed the complaint for illegal dismissal due to lack of merit
but ordered payment of respondent’s 13th month. NLRC, on the other hand, reversed LA’s
judgment and ordered Manalo’s reinstatement. Petitioner’s motion for reconsideration was
also denied by the NLRC. Thus, the former filed a petition for certiorari at the Court of
Appeals imputing that NLRC committed grave abuse of discretion but CA affirmed the
lower courts decision and dismissed the petition. Hence, this petition for review on
certiorari.

Issue:

Whether the probationary appointment of the respondent on April 18, 2002 was for a fixed
period of one (1) year, or without a fixed term? And whether or not respondent, even as a
probationary employee, was illegally dismissed?

SC Ruling:

The Court cited the CA’s decision in this case. [CA’s decision is important in this case]

As articulated by the CA:

In plain language, We are confronted with two (2) copies of an agreement, one with a
negative period and one provided for a one (1) year period for its effectivity. Ironically,
none among the parties offered corroborative evidence as to which of the two (2)
discrepancies is the correct one that must be given effect. x x x.

The CA resolved the impassé in this wise:

Under this circumstance, We can only apply Article 1702 of the Civil Code which
provides that, in case of doubt, all labor contracts shall be construed in favor of the
laborer. Then, too, settled is the rule that any ambiguity in a contract whose terms
are susceptible of different interpretations must be read against the party who
drafted it. (contra proferentem) In the case at bar, the drafter of the contract is
herein petitioners and must, therefore, be read against their contention.

We agree with the CA.

In this case, there truly existed a doubt as to which version of the employment agreement
should be given weight. In respondent’s copy, the period of effectivity of the agreement
remained blank. On the other hand, petitioner’s copy provided for a one-year period,
surprisingly from April 1, 2002 to March 31, 2003, even though the pleadings submitted by
both parties indicated that respondent was hired on April 18, 2002. What is noticeable
even more is that the handwriting indicating the one-year period in petitioner’s copy is
different from the handwriting that filled up the other needed information in the same
agreement.

Thus, following Article 1702 of the Civil Code that all doubts regarding labor contracts
should be construed in favor of labor, then it should be respondent’s copy which did not
provide for an express period which should be upheld, especially when there are
circumstances that render the version of petitioner suspect. This is in line with the State
policy of affording protection to labor, such that the lowly laborer, who is usually at the
mercy of the employer, must look up to the law to place him on equal footing with his
employer.

In addition, the employment agreement may be likened into a contract of adhesion

considering that it is petitioner who insists that there existed an express period of one year
from April 1, 2002 to March 31, 2003, using as proof its own copy of the agreement. While
contracts of adhesion are valid and binding, in cases of doubt which will cause a great
imbalance of rights against one of the parties, the contract shall be construed against the
party who drafted the same. Hence, in this case, where the very employment of respondent
is at stake, the doubt as to the period of employment must be construed in her favor.

The other issue to resolve is whether respondent, even as a probationary employee, was
illegally dismissed. We rule in the affirmative.
As above discussed, probationary employees enjoy security of tenure during the term of
their probationary employment such that they may only be terminated for cause as
provided for by law, or if at the end of the probationary period, the employee failed to meet
the reasonable standards set by the employer at the time of the employee’s engagement.
Undeniably, respondent was hired as a probationary teacher and, as such, it was incumbent
upon petitioner to show by competent evidence that she did not meet the standards set by
the school. This requirement, petitioner failed to discharge. To note, the termination of
respondent was effected by that letter stating that she was being relieved from
employment because the school authorities allegedly decided, as a cost-cutting measure,
that the position of "Principal" was to be abolished. Nowhere in that letter was respondent
informed that her performance as a school teacher was less than satisfactory.

Finally, we rule on the propriety of the monetary awards. Petitioner, as employer, is

entitled to decide whether to extend respondent a permanent status by renewing her
contract beyond the three-year period. Given the acrimony between the parties which must
have been generated by this controversy, it can be said unequivocally that petitioner had
opted not to extend respondent’s employment beyond this period. Therefore, the award of
backwages as a consequence of the finding of illegal dismissal in favor of respondent
should be confined to the three-year probationary period. Computing her monthly salary of
P15,000.00 for the next two school years (P15,000.00 x 10 months x 2), respondent already
having received her full salaries for the year 2002-2003, she is entitled to a total amount of
P300,000.00. Moreover, respondent is also entitled to receive her 13th month pay
correspondent to the said two school years, computed as yearly salary xxx.

I.C.1

Moresco v. Cagalawan, G.R. No. 175170, September 5, 2012 – CHRISTIAN

Doctrine:

 In labor cases, strict adherence with the technical rules is not required.1 This literal
policy, however, should still conform with the rudiments of equitable principles of
law. For instance, belated submission of evidence may only be allowed if the delay is
adequately justified and the evidence is clearly material to establish the party's
 cause.
 It is within the ambit of the employer’s prerogative to transfer an employee for valid
reasons and according to the requirement of its business, provided that the transfer
 does not result in demotion in rank or diminution of salary, benefits and other
 privileges.

 The Court has always considered the management’s prerogative to transfer its
employees in pursuit of its legitimate interests. But this prerogative should be
exercised without grave abuse of discretion and with due regard to the basic
elements of justice and fair play, such that if there is a showing that the transfer was
unnecessary or inconvenient and prejudicial to the employee, it cannot be upheld.

FACTS:

MORESCO II, a rural electric cooperative, hired Cagalawan as a Disconnection Lineman on a

probationary basis. On 1994 Cagalawan was appointed to the same post this time on a
permanent basis. On 2001, he was designated as Acting Head of the disconnection crew in
Area III sub-office of MORESCO II Balingasag sub-office. In a Memorandum dated May
2002, MORESCO II General Manager Ke-e transferred Cagalawan to Area I sub-office in
Gingoog sub-office as a member of the disconnection crew. Said memorandum stated that
the transfer was done "in the exigency of the service."

Cagalawan assailed his transfer claiming he was effectively demoted from his position as
head of the disconnection crew to a mere member thereof. He also averred that his transfer
to the Gingoog sub-office is inconvenient and prejudicial to him as it would entail
additional travel expenses to and from work. He likewise sought clarification on what kind
of exigency exists as to justify his transfer and why he was the one chosen to be
transferred. In a Memorandum, Ke-e explained that Cagalawan’s transfer was not a
demotion since he was holding the position of Disconnection Head only by mere
designation and not by appointment. Ke-e did not, however, state the basis of the transfer
but instead advised Cagalawan to just comply with the order and not to question
management’s legitimate prerogative to reassign him.

Cagalawan claimed that he was transferred because he executed an Affidavit in support of

his co-employee Jessie Rances, who filed an illegal dismissal case against MORESCO II. He
emphasized though that his action was not an act of disloyalty to MORESCO II, contrary to
what was being accused of him. Nonetheless, Cagalawan still reported for work at Gingoog
sub-office but reserved his right to contest the legality of such transfer. In view of
Cagalawan’s transfer, Ke-e issued an order recalling the former’s previous designation as
Acting Head of the disconnection crew of the Balingasag sub-office. Cagalawan eventually
stopped reporting for work. He filed a Complaint for constructive dismissal before the
Arbitration branch of the NLRC against MORESCO II and its officers, Ke-e and Danilo
Subrado (Subrado), in their capacities as General Manager and Board Chairman.
It was only Cagalawan who complied with the orders of the LA to submit a position paper.
He alleged that his transfer was unnecessary and was made only in retaliation for his
having executed an affidavit in favor of a co -worker and against MORESCO II. In support of
his contention, Cagalawan submitted a certification executed by the Head of the
disconnection crew of the Gingoog sub-office, Ortiz, attesting that the said sub-office was
not undermanned. In fact, when Cagalawan stopped working, no other employee was
transferred or hired in his stead, a proof that there were enough disconnection crew
members in Gingoog sub-office who can very well handle the assigned tasks. Moreover,
Cagalawan claimed that his transfer constituted a demotion from his position as Acting
Head of the disconnection crew which he had occupied for almost 10 months. As such, he
should be considered regular in that position and entitled to its corresponding salary.

Cagalawan further alleged that his transfer from Balingasag to Gingoog sub-office was
tantamount to illegal constructive dismissal for being prejudicial and inconvenient as he
had to spend an additional amount per day, leaving him nothing of his salary. He therefore
had no choice but to stop working.

Aside from reinstatement and backwages, Cagalawan sought to recover damages and
attorney’s fees because to him, his transfer was effected in a wanton, fraudulent,
oppressive or malevolent manner. Apart from MORESCO II, he averred that Ke-e and
Subrado should also be held personally liable for damages since the two were guilty of bad
faith in effecting his transfer. He believed that Subrado had a hand in his arbitrary transfer
considering that he is the son-in-law of Subrado’s opponent in the recent election for
directorship in the electric cooperative.

The LA rendered a Decision in favor of Cagalawan.However, the LA denied his prayer for
regularization as head of the disconnection crew since the period of six months which he
claimed as sufficient to acquire regular status applies only to probationary employment.
Hence, the fact that he was acting as head of the disconnection crew for 10 months did not
entitle him to such position on a permanent basis. Moreover, the decision to promote him
to the said position should only come from the management.

The LA found Ke-e to have acted capriciously in effecting the transfer, hence, he awarded
moral and exemplary damages to Cagalawan.

ON APPEAL
In its Memorandum on Appeal, MORESCO II invoked the liberal application of the rules and
prayed for the NLRC to admit its evidence on appeal. MORESCO II denied that Cagalawan’s
transfer was done in retaliation for executing an affidavit in favor of a co-worker.
MORESCO II explained that the transfer was in response to the request of the area manager
in Gingoog sub-office for additional personnel in his assigned area. To substantiate this, it
submitted a letter dated May 2002 from Gingoog sub-office Area Manager, Engr. Canada,
addressed to Ke-e. In said letter, Engr. Canada requested for two additional disconnection
linemen in order to attain the collection quota allocated in his area. MORESCO II then
averred that as against this letter of Engr. Canada who is a managerial employee, the
certification issued by Ortiz should be considered as incompetent since the latter is a mere
disconnection crew. Moreover, Cagalawan’s claim of additional expenses brought about by
his transfer, specifically for meal and transportation, deserves no appreciation at all since
he would still incur these expenses regardless of his place of assignment and also
considering that he was provided with a rented motorcycle with fuel and oil allowance.

In his Reply to MORESCO II’s Memorandum of Appeal, Cagalawan averred that the latter
cannot present any evidence for the first time on appeal without giving any valid reason for
its failure to submit its evidence before the LA as provided under the NLRC rules. Further,
the evidence sought to be presented by MORESCO II is not newly discovered evidence as to
warrant its admission on appeal.

ISSUE:

Whether or not MORESCO can present evidence for the first time on appeal.
Was Cagalawan constructively dismissed.
SC RULING:

1. No.
MORESCO II’s belated submission of evidence cannot be permitted.

Labor tribunals, such as the NLRC, are not precluded from receiving evidence submitted on
appeal as technical rules are not binding in cases submitted before them. However, any
delay in the submission of evidence should be adequately explained and should adequately
prove the allegations sought to be proven.

In the present case, MORESCO II did not cite any reason why it had failed to file its position
paper or present its cause before the LA despite sufficient notice and time given to do so.
Only after an adverse decision was rendered did it present its defense and rebut the
evidence of Cagalawan by alleging that his transfer was made in response to the letter-
request of the area manager of the Gingoog sub-office asking for additional personnel to
meet its collection quota. To our mind, however, the belated submission of the said letter-
request without any valid explanation casts doubt on its credibility, specially so when the
same is not a newly discovered evidence. For one, the letter-request was dated May 8, 2002
or a day before the memorandum for Cagalawan’s transfer was issued. MORESCO II could
have easily presented the letter in the proceedings before the LA for serious examination.
Why it was not presented at the earliest opportunity is a serious question which lends
credence to Cagalawan’s theory that it may have just been fabricated for the purpose of
appeal.

2. Yes. Cagalawan was constructively dismissed.

The rule is that it is within the ambit of the employer’s prerogative to transfer an employee
for valid reasons and according to the requirement of its business, provided that the
transfer does not result in demotion in rank or diminution of salary, benefits and other
privileges. This Court has always considered the management’s prerogative to transfer its
employees in pursuit of its legitimate interests. But this prerogative should be exercised
without grave abuse of discretion and with due regard to the basic elements of justice and
fair play, such that if there is a showing that the transfer was unnecessary or inconvenient
and prejudicial to the employee, it cannot be upheld.

While we find that the transfer of Cagalawan neither entails any demotion in rank since he
did not have tenurial security over the position of head of the disconnection crew, nor
result to diminution in pay as this was not sufficiently proven by him, MORESCO II’s
evidence is nevertheless not enough to show that said transfer was required by the
exigency of the electric cooperative’s business interest. Simply stated, the evidence sought
to be admitted by MORESCO II is not substantial to prove that there was a genuine business
urgency that necessitated the transfer.

Notably, the only evidence adduced by MORESCO II to support the legitimacy of the
transfer was the letter-request of Engr. Canada. However, this piece of evidence cannot in
itself sufficiently establish that the Gingoog sub-office was indeed suffering from losses due
to collection deficiency so as to justify the assignment of additional personnel in the area.
Engr. Canada’s letter is nothing more than a mere request for additional personnel to
augment the number of disconnection crew assigned in the area.
When there is doubt between the evidence submitted by the employer and that submitted
by the employee, the scales of justice must be tilted in favor of the employee. This is
consistent with the rule that an employer’s cause could only succeed on the strength of its
own evidence and not on the weakness of the employee’s evidence. Thus, MORESCO II
cannot rely on the weakness of Ortiz’s certification in order to give more credit to its own
evidence. Clearly, not only was the delay in the submission of MORESCO II’s evidence not
explained, there was also failure on its part to sufficiently support its allegation that the
transfer of Cagalawan was for a legitimate purpose.

Ke-e and Subrado, as corporate officers, could not be held personally liable for Cagalawan’s
monetary awards. Although the court agrees with the LA that Ke-e acted in an arbitrary
manner in effecting Cagalawan’s transfer, the same, absent any showing of some dishonest
or wrongful purpose, does not amount to bad faith.

PAL v. PALEA, G.R. No. 85985, August 13, 1993 – ROWELA

Doctrine:

 R.A No. 6715, amending Article 211 of the Labor Code, that the law explicitly
considered it a State policy "to ensure the participation of workers in decision and
 policy-making processes affecting the rights, duties and welfare."
 The exercise of managerial prerogatives is not unlimited. It is circumscribed by
limitations found in law, a collective bargaining agreement, or the general principles
 of fair play and justice.
 We must uphold the constitutional requirements for the protection of labor and the
 promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt
"the scales of justice when there is doubt, in favor of the worker”.
 The attainment of a harmonious labor-management relationship and the then
already existing state policy of enlightening workers concerning their rights as
employees demand no less than the observance of transparency in managerial
moves affecting employees' rights.

Facts:
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of
Discipline. The Code was circulated among the employees and was immediately
implemented, and some employees were forthwith subjected to the disciplinary measures
embodied therein.

On August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a
complaint before the NLRC for unfair labor practice. PALEA contended that PAL, by its
unilateral implementation of the Code, was guilty of unfair labor practice, specifically
Paragraphs E and G of Article 249 and Article 253 of the Labor Code and alleged that copies
of the Code had been circulated in limited numbers; that being penal in nature the Code
must conform to the requirements of sufficient publication, and that the Code was
arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that PAL
should discuss the substance of the Code with PALEA; that employees dismissed under the
Code be reinstated and their cases subjected to further hearing; and that PAL be declared
guilty of unfair labor practice and be ordered to pay damages.

PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to
prescibe rules and regulations regarding employee’s' conduct in carrying out their duties
and functions, and alleging that by implementing the Code, it had not violated the collective
bargaining agreement (CBA) or any provision of the Labor Code. PAL maintained that
Article 253 of the Labor Code cited by PALEA referred to the requirements for negotiating a
CBA which was inapplicable as indeed the current CBA had been negotiated.

PALEA maintained that Article 249 (E) of the Labor Code was violated when PAL
unilaterally implemented the Code, and cited provisions of Articles IV and I of Chapter II of
the Code as defective for, respectively, running counter to the construction of penal laws
and making punishable any offense within PAL's contemplation. These provisions are the
following:

Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and
regulations of the company. Every employee is bound to comply with all applicable
rules, regulations, policies, procedures and standards, including standards of quality,
productivity and behaviour, as issued and promulgated by the company through its
duly authorized officials. Any violations thereof shall be punishable with a penalty to be
determined by the gravity and/or frequency of the offense.

Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative. The

penalty for an offense shall be determined on the basis of his past record of offenses of
any nature or the absence thereof. The more habitual an offender has been, the greater
 shall be the penalty for the latest offense. Thus, an employee may be dismissed if the
number of his past offenses warrants such penalty in the judgment of management
even if each offense considered separately may not warrant dismissal. Habitual
offenders or recidivists have no place in PAL. On the other hand, due regard shall be
given to the length of time between commission of individual offenses to determine
whether the employee's conduct may indicate occasional lapses (which may
nevertheless require sterner disciplinary action) or a pattern of incorrigibility.

Labor Arbiter Ortiguerra called the parties to a conference but they failed to appear at the
scheduled date. For failure of the parties to appear, the labor arbiter considered the case
submitted for decision and found no bad faith on the part of PAL in adopting the Code and
ruling that no unfair labor practice had been committed. However, the arbiter held that
PAL was "not totally fault free" considering that while the issuance of rules and regulations
governing the conduct of employees is a "legitimate management prerogative" such rules
and regulations must meet the test of "reasonableness, propriety and fairness" and that
PAL "failed to prove that the new Code was amply circulated." Thus, the arbiter concluded
that "(t)he phrase ignorance of the law excuses no one from compliance . . . finds
application only after it has been conclusively shown that the law was circulated to all the
parties concerned and efforts to disseminate information regarding the new law have been
exerted.

PAL appealed to the NLRC and it found no evidence of unfair labor practice committed by
PAL and affirmed the dismissal of PALEA's charge. PAL then filed the instant petition for
certiorari charging public respondents with grave abuse of discretion.

Issue: Whether or not management may be compelled to share with the union or its
employees its prerogative of formulating a code of discipline.

SC Ruling:

No.

PAL asserts that when it revised its Code on March 15, 1985, there was no law which
mandated the sharing of responsibility therefor between employer and employee.
It was only on March 2, 1989, with the approval of R.A No. 6715, amending Article 211 of
the Labor Code, that the law explicitly considered it a State policy "to ensure the
participation of workers in decision and policy-making processes affecting the rights,
duties and welfare." However, even in the absence of said clear provision of law, the
exercise of management prerogatives was never considered boundless. Thus, in Cruz vs.
Medina it was held that management's prerogatives must be without abuse of discretion.

The exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations

found in law, a collective bargaining agreement, or the general principles of fair play and
justice. Moreover, it must be duly established that the prerogative being invoked is clearly a
managerial one.

A close scrutiny of the objectionable provisions of the Code reveals that they are not purely
business-oriented nor do they concern the management aspect of the business of the
company. The provisions of the Code clearly have repercussions on the employee's right to
security of tenure. The implementation of the provisions may result in the deprivation of an
employee's means of livelihood which, as correctly pointed out by the NLRC, is a property
right. In view of these aspects of the case which border on infringement of constitutional
rights, we must uphold the constitutional requirements for the protection of labor and the
promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt "the
scales of justice when there is doubt, in favor of the worker”.

Verily, a line must be drawn between management prerogatives regarding business

operations per se and those which affect the rights of the employees. In treating the latter,
management should see to it that its employees are at least properly informed of its
decisions or modes action. PAL asserts that all its employees have been furnished copies of
the Code. Public respondents found to the contrary, which finding, to say the least is
entitled to great respect.

PAL posits the view that by signing the 1989-1991 collective bargaining agreement, PALEA
in effect, recognized PAL's "exclusive right to make and enforce company rules and
regulations to carry out the functions of management without having to discuss the same
with PALEA and much less, obtain the latter's conformity thereto". Such provision in the
collective bargaining agreement may not be interpreted as cession of employees' rights to
participate in the deliberation of matters which may affect their rights and the formulation
of policies relative thereto. And one such mater is the formulation of a code of discipline.
Indeed, industrial peace cannot be achieved if the employees are denied their just
participation in the discussion of matters affecting their rights. Thus, even before Article
211 of the Labor Code was amended by R. A. No. 6715, it was already declared a policy of
the State, "(d) To promote the enlightenment of workers concerning their rights and
obligations . . . as employees." This was, of course, amplified by Republic Act No 6715 when
it decreed the "participation of workers in decision and policy making processes affecting
their rights, duties and welfare." PAL's position that it cannot be saddled with the
"obligation" of sharing management prerogatives as during the formulation of the Code,
Republic Act No. 6715 had not yet been enacted cannot thus be sustained. While such
"obligation" was not yet founded in law when the Code was formulated, the attainment of a
harmonious labor-management relationship and the then already existing state policy of
enlightening workers concerning their rights as employees demand no less than the
observance of transparency in managerial moves affecting employees' rights.