Labor Law 1

PEARANDA V BAGANGA PLYWOOD CORP.

PANGANIBAN; May 3, 2006
NATURE
Petition for review assailing the resolutions of the Court of
Appeals (CA)
FACTS
- Petitioners Claims
> Petitioner Charlito Pearanda alleges that he was employed by
respondent [Baganga] with a monthly salary of P5,000.00 as
Foreman/Boiler Head/Shift Engineer
> His services were terminated without the benefit of due
process and valid grounds.
> He was not paid his overtime pay, premium pay for working
during holidays/rest days, night shift differentials and finally
claims for payment of damages and attorneys fees having been
forced to litigate the present complaint.
- Respondents Claims
> Respondent [BPC] represented by its General Manager
HUDSON CHUA, allege that complainants separation from
service was done pursuant to Art. 283 of the Labor Code. > BPC
was on temporary closure due to repair and general
maintenance and it applied for clearance with the DOLE,
Regional Office No. XI to shut down and to dismiss employees.
> Pearanda was not terminated from employment much less
illegally. He opted to severe employment when he insisted
payment of his separation benefits.
> Furthermore, being a managerial employee he is not entitled
to overtime pay and if ever he rendered services beyond the
normal hours of work, there was no office order/or authorization
for him to do so.
- The labor arbiter ruled that there was no illegal dismissal and
that petitioners complaint was premature because he was still
employed by BPC. The temporary closure of BPCs plant did not
terminate his employment.
- Nevertheless, the labor arbiter found petitioner entitled to
overtime pay, premium pay for working on rest days, and
attorneys fees in the total amount of P21,257.98.
- NLRC deleted the award of overtime pay and premium pay for
working on rest days for the petitioner was not entitled to these
awards because he was a managerial employee.
- CA dismissed Pearandas Petition for Certiorari and held that
he failed to: 1) attach copies of the pleadings submitted before
the labor arbiter and NLRC; and 2) explain why the filing and
service of the Petition was not done by personal service.
- In its later Resolution, CA denied reconsideration on the ground
that petitioner still failed to submit the pleadings filed before the
NLRC.
ISSUE
WON petitioner is entitled to overtime pay and premium pay for
working on rest days
HELD
NO
- Article 82 of the Labor Code exempts managerial employees
from the coverage of labor standards. Labor standards provide
the working conditions of employees, including entitlement to
overtime pay and premium pay for working on rest days.
- Under this provision, managerial employees are those whose
primary duty consists of the management of the establishment
in which they are employed or of a department or subdivision.
- The Implementing Rules of the Labor Code state that
managerial employees are those who meet the following
conditions:
(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department
or subdivision thereof;
(2) They customarily and regularly direct the work
of two or more employees therein;
(3) They have the authority to hire or fire other
employees of lower rank; or their suggestions and

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recommendations as to the hiring and firing and as to

the promotion or any other change of status of other
employees are given particular weight.
- The Court disagreed with the NLRCs finding that petitioner was
a managerial employee. However, petitioner was a member of
the managerial staff, which also takes him out of the coverage of
labor standards.
Like managerial employees, officers and
members of the managerial staff are not entitled to the
provisions of law on labor standards. The Implementing Rules of
the Labor Code define members of a managerial staff as those
with the following duties and responsibilities:
(1) The primary duty consists of the performance of work
directly related to management policies of the employer;
(2) Customarily and regularly exercise discretion and
independent judgment;
(3) (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists of the
management of the establishment in which he is employed or
subdivision thereof; or (ii) execute under general supervision
work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under
general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours
worked in a workweek to activities which are not directly and
closely related to the performance of the work described in
paragraphs (1), (2), and (3) above.
- Petitioners duties and responsibilities conform to the definition
of a member of a managerial staff under the Implementing
Rules. Petitioner supervised the engineering section of the
steam plant boiler. His work involved overseeing the operation
of the machines and the performance of the workers in the
engineering section. This work necessarily required the use of
discretion and independent judgment to ensure the proper
functioning of the steam plant boiler. As supervisor, petitioner is
deemed a member of the managerial staff.
- Noteworthy, even petitioner admitted that he was a supervisor.
In his Position Paper, he stated that he was the foreman
responsible for the operation of the boiler. The term foreman
implies that he was the representative of management over the
workers and the operation of the department. Petitioners
evidence also showed that he was the supervisor of the steam
plant. His classification as supervisor is further evident from the
manner his salary was paid. He belonged to the 10% of
respondents 354 employees who were paid on a monthly basis;
the others were paid only on a daily basis.
Disposition Petition was DENIED

BATONG BUHAY GOLDMINES V DELA SERNA

PURISIMA, August 6, 1999
FACTS
- Employees filed a complaint against Batong Buhay for: unpaid
salaries from March 16, 1987 to present, unpaid and ECOLA
differentials under Wage Order Nos. 2 and 5, unpaid 13th
months
pay
for
1985
and
1986,
and
upaid
vacation/sick/compensatory leave benefits.
- Labor Standards and Welfare Officers & Regional Director:
Batong Buhay must pay Ty et al. P4,818,746.40
- Regional Director directed Batong Buhay to put up a cash or
surety bond otherwise a writ of execution will be issued.
- The Special Sheriff seized three units of Peterbuilt trucks and
then sold the same by public auction. Various materials and
motor vehicles were also seized on different dates and sold at
public auction.
- Batong Buhay finally posted a supersedeas bond and appealed
the Order contending that the Regional Director had no
jurisdiction over the case.
- Undersec dela Serna upheld the jurisdiction of the Regional
Director and annulled all the auction sales conducted by Special
Sheriff. MR denied.
- Motion for Intervention was filed by MFT Corporation and Salter
Holdings Pty., Ltd. For exclusion from annulment of the
properties sold at the auction sale. Granted. MR denied.

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ISSUES
1. WON the Regional Director has jurisdiction over the complaint
filed by the employees of BBGMI
2. WON the auction sales conducted by the said Special Sheriff
are valid
HELD
1. YES
- The subject labor standards case of the petition arose from the
visitorial and enforcement powers by the Regional Director of
DOLE.
- Labor standards refers to the minimum requirements
prescribed by existing laws, rules and regulations relating to
wages, hours of work, cost of living allowance and other
monetary and welfare benefits, including occupational, safety
and health standards. Labor standards cases are governed by
Article 128(b) of the Labor Code.
- Even in the absence of E.O. 111 , Regional Directors already
had enforcement powers over money claims, effective under
P.D. 850, issued on December 16, 1975, which transferred labor
standards cases from the arbitration system to the enforcement
system.
- E.O. No. 111 was issued on December 24, 1986 or three(3)
months after the promulgation of the Secretary of Labor's
decision upholding private respondents' salary differentials and
ECOLAs on September 24, 1986. The amendment of the visitorial
and enforcement powers of the Regional Director (Article 128(b))
by said E.O. 111 reflects the intention enunciated in Policy
Instructions Nos. 6 and 37 to empower the Regional Directors to
resolve uncontested money claims in cases where an employeremployee relationship still exists. This intention must be given
weight and entitled to great respect.
- The Court would have ruled differently had the petitioner
shown that subject labor standards case is within the purview of
the exception clause in Article 128 (b) of the Labor Code. Said
provision requires the concurrence of the following elements in
order to divest the Regional Director or his representatives of
jurisdiction, to wit: (a) that the petitioner (employer) contests the
findings of the labor regulations officer and raises issues
thereon; (b) that in order to resolve such issues, there is a need
to examine evidentiary matters; and (c) that such matters are
not verifiable in the normal course of inspection.
- Petitioner's refusal to allow the Labor Standards and Welfare
Officers to conduct inspection in the premises of their head
office and the failure to file their position paper is equivalent to a
waiver of its right to contest the claims of the employees.
- This involves a labor standards case and it is in keeping with
the law that "the worker need not litigate to get what legally
belongs to him, for the whole enforcement machinery of the
Department of Labor exists to insure its expeditious delivery to
him free of charge.
- The present law, RA 7730, can be considered a curative statute
to reinforce the conclusion that the Regional Director has
jurisdiction over the present labor standards case.
2. NO
- As a general rule, findings of fact and conclusion of law arrived
at by quasi-judicial agencies are not to be disturbed absent any
showing of grave abuse of discretion tainting the same.
- There was grave abuse of discretion when the Undersec,
without any evidentiary support, adjudged such prices as
"scandalously low". He merely relied on the self-serving
assertion by the petitioner that the value of the auctioned
properties was more than the price bid.
- The sales are null and void since on the properties of petitioner
involved was constituted a mortgage between petitioner and the
Development Bank of the Philippines

CMS ESTATE, INC. V SOCIAL SECURITY SYSTEM

CUEVAS; September 28, 1984
NATURE
Appeal by the CMS Estate, Inc.

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FACTS
- Petitioner is a domestic corporation organized primarily for the
purpose of engaging in real estate business. On December 1,
1952, it started doing business with only six (6) employees.
- January 28, 1957: petitioner entered into a contract of
management with one Eufracio D. Rojas for the operation and
exploitation of the forest concession. The logging operation
actually started on April 1, 1957 with four monthly-salaried
employees. As of September 1, 1957, petitioner had 89
employees and laborers in the logging operation.
- December 26, 1957: petitioner revoked its contract of
management with Mr. Rojas.
- August 1, 1958: petitioner became a member of the
Social Security System with respect to its real estate
business. On September 6, 1958, petitioner remitted to
the System the sum of P203.13 representing the initial
premium on the monthly salaries of the employees in its
logging business.
- October 9, 1958: petitioner demanded the refund of the
said amount.
- On November 10, 1958, petitioner filed a petition with the
Social Security Commission praying for the determination of the
effectivity date of the compulsory coverage of petitioner's
logging business.
- January 14, 1960: the instant petition was denied and petitioner
was adjudged to be subject to compulsory coverage as Sept. 1,
1957 and the Social Security System was directed to effect such
coverage of petitioner's employees in its logging and real estate
business conformably to the provisions of Rep. Act No. 1161, as
amended.
- Petitioners Claim
CMS Estate, Inc. is not yet subject to compulsory coverage with
respect to its logging business because it does not have the
minimum required number of employees (per company).
- Respondents Comments
The logging business was a mere expansion of petitioner's
activities and for purposes of the Social Security Act, petitioner
should be considered a member of the System since December
1, 1952 when it commenced its real estate business.
ISSUES
1. WON the contributions required of employers and employees
under our Social Security Act of 1954 are obligatory because the
said Act was allegedly enacted by Congress in the exercise of
the police power of the State, not of its taxing power
2. WON a contractee-independent contractor relationship existed
between petitioner and Eufracio Rojas. during the time that he
was operating its forest concession at Baganga, Davao
3. WON Section 9 of the Social Security Act on the question of
compulsory membership and employers should be given a liberal
interpretation
HELD
1. Ratio The said enactment implements the general welfare
mandate of the Constitution and constitutes a legitimate
exercise of the police power of the State.
Reasoning
- The Social Security Law was enacted pursuant to the policy of
the government "to develop, establish gradually and
perfect a social security system which shall be suitable to
the needs of the people throughout the Philippines, and
shall provide protection against the hazards of disability,
sickness, old age and death" (Sec. 2, RA 1161, as amended).
- Membership in the SSS is not a result of bilateral,
concensual agreement where the rights and obligations
of the parties are defined by and subject to their will, RA
1161 requires compulsory coverage of employees and
employers under the System. It is actually a legal imposition on
said employers and employees, designed to provide social
security to the workingmen. The principle of non-impairment of
the obligation of contract as provided in the Bill of Rights is not a
proper defense, the enactment being a lawful exercise of the
police power of the State.

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- The taxing power of the State is exercised for the purpose of

raising revenues. However, under our Social Security Law, the
emphasis is more on the promotion of the general
welfare. The Act is not part of out Internal Revenue Code nor
are the contributions and premiums therein dealt with and
provided for, collectible by the Bureau of Internal Revenue. The
funds contributed to the System belong to the members who will
receive benefits, as a matter of right, whenever the hazards
provided by the law occur.
- Together with the contributions imposed upon employees and
the Government, they are intended for the protection of said
employees against the hazards of disability, sickness, old age
and death in line with the constitutional mandate to promote
social justice to insure the well-being and economic security of
all the people.
- It is the intention of the law to cover as many persons as
possible so as to promote the constitutional objective of social
justice. It is clear that a later law prevails over a prior statute
and moreover the legislative intent must be given effect.
2. Ratio Rojas was not an independent contractor but merely an
employee of the petitioner.
Reasoning
- Rojas was appointed as operations manager of the logging
concession; he has no power to appoint or hire employees; as
the term implies, he only manages the employees and it is
petitioner who furnishes him the necessary equipment for use in
the logging business; and he is not free from the control and
direction of his employer in matter connected with the
performance of his work. Rojas should be entitled to the
compulsory coverage of the Act.
3. Ratio Because of the broad social purpose of the Social
Security Act, all doubts in construing the Act should favor
coverage rather than exemption.
Reasoning
- Prior to its amendment, Sec. 9 of the Act provides that before
an employer could be compelled to become a member of the
System, he must have been in operation for at least two years
and has at the time of admission at least six employees. It
should be pointed out that it is the employer, either
natural, or judicial person, who is subject to compulsory
coverage and not the business.
- It is the intention of the law to cover as many persons as
possible so as to promote the constitutional objective of social
justice. It is axiomatic that a later law prevails over a prior
statute and moreover the legislative in tent must be given effect
Disposition The records show that petitioner started its real
estate business on December 1, 1952 while its logging
operation was actually commenced on April 1, 1957. Applying
the provision of Sec. 10 (previously Sec. 9) of the Act, petitioner
is subject to compulsory coverage as of December 1, 1952 with
respect to the real estate business and as of April 1, 1957 with
respect to its logging operation. The appeal is dismissed, with
costs against the petitioner.

Thereafter, petitioner filed a notice of strike on 11 November

1998 with the National Conciliation and Mediation Board on the
ground of CBA negotiation deadlock. Several conciliation
conferences were conducted but the parties failed to reach a
settlement. On 19 December 1998, petitioner held the strike in
private respondents Manila and Antipolo plants.
- Subsequently, both parties came to an agreement settling the
labor dispute. Thus, on 26 December 1998, both parties
executed and signed a MOA providing for salary increases and
other economic and non-economic benefits. It likewise contained
a provision for the regularization of contractual, casual and/or
agency workers who have been working with private respondent
for more than one year. Said MOA was later incorporated to form
part of the 1998-2001 CBA and was thereafter ratified by the
employees of the company.
- Consequently, petitioner demanded the payment of salary and
other benefits to the newly regularized employees retroactive to
1 December 1998, in accord with the MOA. However, the private
respondent refused to yield to said demands contending that the
date of effectivity of the regularization of said employees were 1
May 1999 and 1 October 1999. Meanwhile, a certification
election was conducted on 17 August 1999 wherein the
KASAMMA-CCO Independent surfaced as the winning union and
was then certified by the DOLE as the sole and exclusive
bargaining agent of the rank-and-file employees of private
respondents Manila and Antipolo plants for a period of five years
from 1 July 1999 to 30 June 2004. On 23 August 1999, the
KASAMMA-CCO Independent demanded the renegotiation of the
CBA which expired on 30 June 1998. Such request was denied by
private respondent as there was already an existing CBA which
was negotiated and concluded between petitioner and private
respondent which was yet to expire on 30 June 2001.
- On 9 December 1999, despite the pendency of petitioners
complaint before the NLRC, private respondent closed its Manila
and Antipolo plants resulting in the termination of employment
of 646 employees. About 500 workers were given a notice of
termination effective 1 March 2000 on the ground of
redundancy. The affected employees were considered on paid
leave from 9 December 1999 to 29 February 2000 and were paid
their corresponding salaries. On 13 December 1999, four days
after its closure of the Manila and Antipolo plants, private
respondent served a notice of closure to the DOLE.
- Petitioner contends that respondent violated the MOA by not
recognizing the regularization of the 61 employees as of
December 1, 1998 and giving them full benefits retroactive to
that date. Petitioner likewise claims the closure of the plants was
in bad faith, done in order to avoid renegotiations of the CBA,
and therefore illegal.

KASAPIAN NG MALAYANG MANGGAGAWA SA COCACOLA (KASAMMA-CCO) V CA

CHICO-NAZARIO; April 19, 2006

HELD
1. YES
Ratio It must be noted that both parties admit the existence of
said MOA and that they have voluntarily entered into said
agreement. Furthermore, neither of the parties deny that the 61
employees have indeed been regularized by private respondent.
The MOA, being a contract freely entered into by the parties,
now constitutes as the law between them, and the interpretation
of its contents purely involves an evaluation of the law as
applied to the facts herein. It is the contention of petitioner that
the date 1 December 1998 refers to the effective date of
regularization of said employees, while private respondent
maintains that said date is merely the reckoning date from which
the one year employment requirement shall be computed. We
agree with petitioner. It is logically absurd that the company will
only begin to extend priority to these employees on a date that
has already passed, when in fact they have already extended
priority to these employees by agreeing to the contents of the
MOA and signing said agreement. It is erroneous for the NLRC to
conclude that extending to them the benefits of the MOA would

NATURE
Petition for Review on Certiorari assailing the Decision of the
Court of Appeals which affirmed the Decision of public
respondent National Labor Relations Commission (NLRC)
dismissing petitioners complaint against private respondent
FACTS
- On 30 June 1998, the CBA for the years 1995-1998 executed
between petitioner union and private respondent company
expired. Petitioner submitted its demands to the company for
another round of collective bargaining negotiations. Said
negotiations came to a gridlock as the parties failed to reach a
mutually acceptable agreement with respect to certain economic
and non-economic issues.

ISSUES
1. WON the regularization of the 61 employees was effective
December 1, 1998
2. WON the closure of the plants was legal

Labor Law 1
violate the principle of "no-work-no-pay" as they are actually
rendering service to the company even before 1 December
1998, and continued to do so thereafter. Moreover, under Article
280 of the Labor Code, any employee who has rendered at least
one year of service, shall be considered a regular employee with
respect to the activity in which he is employed and his
employment shall continue while such activity exists. Also, under
the law, a casual employee is only casual for one year, and it is
the passage of time that gives him a regular status. Even if we
were to follow private respondents contention that the date 1
December 1998 provided in the MOA is merely a reckoning date
to determine who among the non-regular employees have
rendered one year of service as of said date, all those who have
been with the company for one year by said date must
automatically be considered regular employees by operation of
law.
2. YES
Ratio The characterization of the employees service as no
longer necessary or sustainable, and therefore properly
terminable, is an exercise of business judgment on the part of
the employer. The wisdom or soundness of such characterizing
or decision is not subject to discretionary review on the part of
the Labor Arbiter nor of the NLRC so long, of course, as violation
of law or merely arbitrary and malicious action is not shown. The
private respondents decision to close the plant was a result of a
study conducted which established that the most prudent course
of action for the private respondent was to stop operations in
said plants and transfer production to other more modern and
technologically advanced plants of private respondent. The
subject closure and the resulting termination of the 639
employees was due to legitimate business considerations, as
evidenced by the technical study conducted by private
respondent.
Disposition The assailed Decisions are hereby AFFIRMED with
MODIFICATION. The 61 subject employees are hereby declared
regular employees as of 1 December 1998 and are entitled to
the benefits provided for in the Memorandum of Agreement.

DOLE PHILIPPINES INC V PAWIS NG MAKABAYNG

OBRERO
CORONA; (date) 2003
NATURE
Petition for review on certiorari of the decision of the Court of
Appeals
FACTS
- The petitioner and the respondent executed a CBA for the
period starting February 1996 to February 2001. Under the
bonuses and allowances section of the said CBA, a P10 meal
allowance shall be given to employees who render at least 2 hrs
of overtime work and free meals shall be given after 3 hours of
actual overtime work.
- Pursuant to this provision, some departments of granted free
meals after exactly 3 ours of work. However, other departments
granted free meals only after more than 3 hours of overtime
work.
- The respondent filed a complaint against Dole, saying that free
meals should be granted after exactly 3 hrs of overtime work,
not after more than 3 hrs. The parties agreed to settle the
dispute to voluntary arbitration. It was decided in favor of the
respondent, directing the petitioner to grant free meals after
exactly 3 hrs of overtime work. CA affirmed.
ISSUES
1. WON free meals should be granted after exactly 3 hrs of work
2. WON the petitioner has the right to determine when to grant
free meals and its conditions
HELD
1. YES
- The same meal allowance provision is found in their previous
CBAs, the 1985-1988 CBA and the 1990-1995 CBA. However, it

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was amended in the 1993-1995 CBA, by changing the phrase

after 3 hrs of overtime work to after more than 3 hrs of
overtime work. In the 1996-2001 CBA, the parties had to
negotiate the deletion of the said phrase in order to revert to the
old provision. Clearly, both parties had intended that free meals
should be given after exactly 3 hrs of overtime work.
- The disputed provision is clear and unambiguous, hence the
literal meaning shall prevail. No amount of legal semantics can
convince the Court that after more than means the same as
after.
2. NO
- The exercise of management prerogative is not unlimited. It is
subject to the limitations provided by law. In this case, there was
a CBA, and compliance therewith is mandated by the express
policy of the law.
Disposition Petition denied

DAVAO FRUITS CORPORATION V ASSOCIATED

LABOR UNIONS (ALU)
QUIASON; August 24, 1993
NATURE
This is a petition for certiorari to set aside the resolution of the
National Labor Relations Commission (NLRC)
FACTS
- On December 28, 1982 respondent Associated Labor Unions
(ALU), for and in behalf of all the rank-and-file workers and
employees of petitioner, filed a complaint (NLRC Case No. 1791MC-XI-82) before the Ministry of Labor and Employment,
Regional Arbitration Branch XI, Davao City, against petitioner, for
"Payment of the Thirteenth-Month Pay Differentials." Respondent
ALU sought to recover from petitioner the thirteenth month pay
differential for 1982 of its rank-and-file employees, equivalent to
their sick, vacation and maternity leaves, premium for work
done on rest days and special holidays, and pay for regular
holidays which petitioner, allegedly in disregard of company
practice since 1975, excluded from the computation of the
thirteenth month pay for 1982.
- In its answer, petitioner claimed that it erroneously included
items subject of the complaint in the computation of the
thirteenth month pay for the years prior to 1982, upon a
doubtful and difficult question of law. According to petitioner,
this mistake was discovered only in 1981 after the promulgation
of the Supreme Court decision in the case of San Miguel
Corporation v. Inciong (103 SCRA 139).
- A decision was rendered on March 7, 1984 favoring ALU. That
ordered Davao Fruits Corporation to pay the 1982 13th month
pay differential to all its rank-and-file workers/employees herein
represented by complainant Union. Petitioner appealed the
decision of the Labor Arbiter to the NLRC, which affirmed the
said decision accordingly dismissed the appeal for lack of merit.
Petitioner elevated the matter to the Supreme Court.
ISSUES
1. WON the computation of the thirteenth month pay given by
employers to their employees under P.D. No. 851, payments for
sick, vacation and maternity leaves, premiums for work done on
rest days and special holidays, and pay for regular holidays may
be excluded in the computation and payment thereof, regardless
of long-standing company practice
2. WON the petitioner may invoke the principle of solution
indebiti
HELD
1. The "Supplementary Rules and Regulations Implementing P.D.
No. 851," which put to rest all doubts in the computation of the
thirteenth month pay, was issued by the Secretary of Labor as
early as January 16, 1976, barely one month after the effectivity
of P.D. No. 851 and its Implementing Rules. And yet, petitioner
computed and paid the thirteenth month pay, without excluding
the subject items therein until 1981. Petitioner continued its
practice in December 1981, after promulgation of the afore-

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quoted San Miguel decision on February 24, 1981, when
petitioner purportedly "discovered" its mistake. From 1975 to
1981, petitioner had freely, voluntarily and continuously
included in the computation of its employees' thirteenth
month pay, the payments for sick, vacation and
maternity leaves, premiums for work done on rest days
and special holidays, and pay for regular holidays. The
considerable length of time the questioned items had
been included by petitioner indicates a unilateral and
voluntary act on its part, sufficient in itself to negate any
claim of mistake.
- A company practice favorable to the employees had indeed
been established and the payments made pursuant thereto,
ripened into benefits enjoyed by them. And any benefit and
supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer, by
virtue of Section 10 of the Rules and Regulations Implementing
P.D. No. 851, and Article 100 of the labor of the Philippines,
which prohibit the diminution or elimination by the employer of
the employees' existing benefits (Tiangco v. Leogardo, Jr., 122
SCRA 267, [1983]).
2. Petitioner cannot invoke the principle of solutio indebiti which
as a civil law concept that is not applicable in Labor Law.
Besides, in solutio indebiti, the obligee is required to return to
the obligor whatever he received from the latter (Civil Code of
the Philippines, Arts. 2154 and 2155). Petitioner in the instant
case, does not demand the return of what it paid respondent
ALU from 1975 until 1981; it merely wants to "rectify" the error it
made over these years by excluding unilaterally from the
thirteenth month pay in 1982 the items subject of litigation.
Solutio indebiti, therefore, is not applicable to the instant case.
Disposition finding no grave abuse of discretion on the part of
the NLRC, the petition is hereby DISMISSED, and the questioned
decision of respondent NLRC is AFFIRMED

SAMAHANG MANGGAGAWA V NLRC

ROMERO; September 7, 1998
NATURE
Petition for Certiorari
FACTS
- Petitioner Samahang Manggagawa sa Top Form Manufacturing
United Workers of the Philippines (SM) was the certified
collective bargaining representative of all regular rank and file
employees of private respondent Top Form Manufacturing
Philippines, Inc.
- Employer Top Form Manufacturing (TFM) refused to grant
across-the-board increases to its employees in implementing
Wage Order No. 01 (granting an increase of P17 per day in the
salary of workers) and Wage Order No. 02 (providing for a P12
daily increase in salary) of the Regional Tripartite Wages and
Productivity Board of the National Capital Region (RTWPB-NCR).
Such refusal was aggravated by the fact that prior to the
issuance of said wage orders, the employer allegedly promised
at the collective bargaining conferences to implement any
government-mandated wage increases on an across-the-board
basis.
- The union (SM) requested the implementation of said wage
orders. But they demanded that the increase be on an acrossthe-board basis. Respondent TFM refused to accede to that
demand. Instead, it implemented a scheme of increases
purportedly to avoid wage distortion. TFM granted the P17
increase under WO#01 to workers/employees receiving salary of
P125/day and below. The P12 increase under by WO#02 was
granted to those receiving the salary of P140/day and below. For
employees receiving salary higher than P125 or P140.00/day,
TFM granted an escalated increase ranging from P6.99 to P14.30
and from P6.00 to P10.00, respectively.
- SM filed a complaint with the NCR NLRC.
- Petitioners contention: TFM's act of "reneging on its
undertaking/promise clearly constitutes act of unfair labor
practice through bargaining in bad faith." It charged TFM with

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acts of unfair labor practices or violation of A247 of the Labor

Code, as amended, specifically "bargaining in bad faith," and
prayed that it be awarded actual, moral and exemplary
damages. In its position paper, the union added that it was
charging private respondent with "violation of A100 of the Labor
Code."
- Respondents contention: In implementing Wage Orders Nos.
01 and 02, it had avoided "the existence of a wage distortion"
that would arise from such implementation.
- There was no agreement to the effect that future wage
increases mandated by the government should be implemented
on an across-the-board basis. Otherwise, that agreement would
have been incorporated and expressly stipulated in the CBA. It
quoted the provision of the CBA that reflects the parties'
intention to "fully set forth" therein all their agreements that had
been arrived at after negotiations that gave the parties
"unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not removed by
law from the area of collective bargaining."
- Labor Arbiter dismissed the complaint for lack of merit. On
appeal at the NLRC, same was dismissed for lack of merit. MFR
denied. Hence, this petition.
ISSUES
1. WON private respondent committed an unfair labor practice in
its refusal to grant across-the-board wage increases in
implementing Wage Orders Nos. 01 and 02
2. WON there was a significant wage distortion of the wage
structure in private respondent as a result of the manner by
which said wage orders were implemented.
HELD
1. NO
Ratio The CBA is the law between the contracting parties. Thus,
only provisions embodied in the CBA should be so interpreted
and complied with. Where a proposal or a promise raised by a
contracting party does not find print in the CBA it is not a part
thereof and the proponent has no claim whatsoever to its
implementation.
Reasoning
- If there was indeed a promise or undertaking on the part of
TFM to obligate itself to grant an automatic across-the-board
wage increase, union SM should have requested or demanded
that such "promise or undertaking" be incorporated in the CBA.
After all, petitioner has the means under the law to compel
private respondent to incorporate this specific economic
proposal in the CBA. It could have invoked A252 of the Labor
Code defining "duty to bargain," thus, the duty includes
"executing a contract incorporating such agreements if
requested by either party."
- A252 also states that the duty to bargain "does not compel any
party to agree to a proposal or make any concession." Thus,
petitioner may not validly claim that the proposal embodied in
the Minutes of the negotiation forms part of the CBA that it
finally entered into with private respondent.
- SMs contention that the Minutes of the collective bargaining
negotiation meeting forms part of the entire agreement is
pointless. If indeed private respondent promised to continue with
the practice of granting across-the-board salary increases
ordered by the government, such promise could only be
demandable in law if incorporated in the CBA.
(Obiter for our purposes Re: Past Practices) Granted that
private respondent TFM had granted an across-the-board
increase pursuant to Republic Act No. 6727, that single instance
may not be considered an established company practice.
2. NO
Ratio The issue of whether or not a wage distortion exists is a
question of fact that is within the jurisdiction of the quasi-judicial
tribunals below. Factual findings of administrative agencies are
accorded respect and even finality in this Court if they are
supported by substantial evidence.
Reasoning
- In this case, NLRC unanimously ruled that no wage distortions
marred private respondent's implementation of the wage orders.

Labor Law 1
There was a meaningful implementation of WO#01 and #02.
SMs contention on the issue of wage distortion and the resulting
allegation of discrimination against the TFM's employees are
anchored on its dubious position that TFM's promise to grant an
across-the-board increase in government-mandated salary
benefits reflected in the Minutes of the negotiation is an
enforceable part of the CBA.
Disposition NLRC resolutions affirmed. Petition dismissed.

AMERICAN WIRE AND CABLE DAILY RATED

EMPLOYEES UNION V AMERICAN WIRE AND CABLE
CO., INC.
CHICO-NAZARIO: April 29, 2005
FACTS
- American Wire and Cable Co., is a corporation engaged in the
manufacture of wires and cables. On Feb.16, 2001, an original
action was filed before the NCMB of the DOLE by the two unions
(American Wire and Cable Daily Rated Employees and American
Wire and Cable Monthly Rated Employees) for voluntary
arbitration. They alleged that respondent company, without valid
cause, suddenly and unilaterally withdrew and denied certain
benefits which they have long enjoyed. These are:
a) Service Award
b) 35% premium pay of an employees basic pay for the work
rendered during Holy Monday, Holy Tuesday, Holy Wednesday,
December 23, 26, 27, 28 and 29
c) Christmas party
d) Promotional increase.
- A promotional increase was sought by 15 of its members who
were given new job classifications. These new hob classifications
according to the union are in the form of a promotion. Increase
was not given.
Petitioners contention
- withdrawal of the 35% premium pay for selected days during
Holy Week and Christmas season, the holding of a Christmas
party, and its incidental benefits, and the giving of service
awards was a customary practice that can no longer be
unilaterally withdrawn by respondent without consent of the
petitioner. The benefits in question were given by respondent
consistently, deliberately and unconditionally since time
immemorial. The benefits given by the respondent cannot be
considered as a bonus as they are not founded on profit. Even
assuming that it can be treated as a bonus, the grant of the
same, by reason of its ling and regular concession, may be
regarded as part of regular compensation.
Respondents contention
-The grant of all subject benefits has not ripened into practice
that the employees concerned can claim a demandable right
over them. The grant of these benefits was conditional based
upon the financial conditions that existed before have indeed
substantially changed thereby justifying the discontinuance of
said grants.
ISSUE
WON respondent is guilty of violating article 100 of the Labor
Code, when the benefits/entitlements given to the members of
petitioner union were withdrawn
HELD
*preliminary issue raised by respondent was the error in the
mode of appeal by the petitioners. Respondent contends that
petitioner should have raised a petition for review on certiorari
under Rule 45, and not through a special civil action for certiorari
under Rule 65 of the Rules on Civil Procedure. Thus, case should
be dismissed outright.
NO
- Court ruled that the SC may brush aside the procedural barrier
and take cognizance of the petition as it raises an issue of
paramount importance.
- ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION
OF BENEFITS.-Nothing in this Book shall be construed to

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eliminate or in any way diminish supplements, or other

employee benefits being enjoyed at the time of promulgation of
this Code.
- a determination must first be made on whether the benefits are
in the nature of a bonus or no, and assuming they are so,
whether they are demandable and enforceable obligations.
- Definition of bonus (Producers Bank of the Philippines v. NLRC)
a bonus is an amount granted and paid to an employee for his
industry and loyalty it is an act of generosity granted by an
enlightened employer to spur the employee to greater efforts
the granting of a bonus is a management prerogative thus a
bonus is not a demandable and enforceable obligation except
when it is made part of the wage, salary or compensation of the
employee.
- Court ruled that the benefits /entitlements subjects of the
instant case are all bonuses given by respondent out of its
generosity and munificence. Benefits/entitlements are all in
excess of what the law requires each employer to give its
employees. Since they are above what is strictly due, the
granting of the same was a management prerogative, which,
whenever management sees necessary, may be withdrawn.
- the consequential question therefore that needs to be settled is
if the subject benefits, which are bonuses, are demandable or
not.
- the Court does not believe so. For a bonus to be enforceable, it
has to be promised by the employer and expressly agreed upon
by the parties or it must have a fixed amount and had been a
long and regular practice on the part of the employer. To be
considered regular practice the giving of the bonus should
have been done over a long period of time and must be shown
to have been consistent and deliberate.
- the benefits in question were never part of any express
agreement. They were never even incorporated in the Collective
Bargaining Agreement. The Christmas party and its incidental
benefits and the giving of cash incentive together with the
service award cannot be said to have fixed amounts. There was
a downtrend in the amount given for service awards. There was
also a downtrend with respect to the holding of Christmas
parties as the locations were changed from paid venues to free
ones. -The additional 35% premium pay for work during Holy
Week and Christmas season cannot be held to have ripened into
a company practice that the petitioners have a right to demand.
This practice was only granted for two years and with the
express reservation from respondent corporations owner that it
cannot continue the same in view of the companys current
financial condition.

PAG-ASA STEEL WORKS, INC. V CA

CALLEJO, SR; March 31, 2006
NATURE
Petition for review on certiorari of the decision of the Court of
Appeals in CA-G.R. SP No. 65171 ordering Pag-Asa Steel Works,
Inc. to pay the members of Pag-Asa Steel Workers Union the
wage increase prescribed under Wage Order No. NCR-08.
FACTS
- On September 23, 1999, petitioner and the Union entered into
a Collective Bargaining Agreement (CBA), effective July 1, 1999
until July 1, 2004. Section 1, Article VI (Salaries and Wage) of
said CBA provides:
Section 1. WAGE ADJUSTMENT - The COMPANY agrees to grant
all the workers, who are already regular and covered by this
AGREEMENT at the effectivity of this AGREEMENT, a general
wage increase as follows:
July 1, 1999 . . . . . . . . . . . P15.00 per day per employee
July 1, 2000 . . . . . . . . . . . P25.00 per day per employee
July 1, 2001 . . . . . . . . . . . P30.00 per day per employee
- The aforesaid wage increase shall be implemented across the
board. Any Wage Order to be implemented by the Regional
Tripartite Wage and Productivity Board shall be in addition to the
wage increase adverted to above. However, if no wage increase
is given by the Wage Board within six (6) months from the

Labor Law 1
signing of this AGREEMENT, the Management is willing to give
the following increases, to wit:
July 1, 1999 . . . . . . . . . . . P20.00 per day per employee
July 1, 2000 . . . . . . . . . . . P25.00 per day per employee
July 1, 2001 . . . . . . . . . . . P30.00 per day per employee
- The difference of the first year adjustment to retroact to July 1,
1999.
- The across-the-board wage increase for the 4th and 5th year of
this AGREEMENT shall be subject for a re-opening or
renegotiation as provided for by Republic Act No. 6715.
- On October 14, 1999, Wage Order No. NCR-07 was issued, and
on October 26, 1999, its Implementing Rules and Regulations. It
provided for a P25.50 per day increase in the salary of
employees receiving the minimum wage and increased the
minimum wage to P223.50 per day. Petitioner paid the P25.50
per day increase to all of its rank-and-file employees.
- On July 1, 2000, the rank-and-file employees were granted the
second year increase provided in the CBA in the amount of
P25.00 per day.
- On November 1, 2000, Wage Order No. NCR-08 took effect.
Section 1 thereof provides:
Section 1. Upon the effectivity of this Wage Order, private sector
workers and employees in the National Capital Region receiving
the prescribed daily minimum wage rate of P223.50 shall receive
an increase of TWENTY SIX PESOS and FIFTY CENTAVOS (P26.50)
per day, thereby setting the new minimum wage rate in the
National Capital Region at TWO HUNDRED FIFTY PESOS
(P250.00) per day.
- Then Union president Lucenio Brin requested petitioner to
implement the increase under Wage Order No. NCR-08 in favor
of the companys rank-and-file employees. Petitioner rejected
the request, claiming that since none of the employees were
receiving a daily salary rate lower than P250.00 and there was
no wage distortion, it was not obliged to grant the wage
increase.
- The Union elevated the matter to the National Conciliation and
Mediation Board. When the parties failed to settle, they agreed
to refer the case to voluntary arbitration.
- The Union alleged that it has been the companys practice to
grant a wage increase under a government-issued wage order,
aside from the yearly wage increases in the CBA.
- Petitioner alleged that there is no such company practice and
that it complied with the previous wage orders (Wage Order Nos.
NCR-01-05) because some of its employees were receiving
wages below the minimum prescribed under said orders. As for
Wage Order No. NCR-07, petitioner alleged that its compliance
was in accordance with its verbal commitment to the Union
during the CBA negotiations that it would implement any wage
order issued in 1999.
- On June 6, 2001, the VA rendered judgment in favor of the
company and ordered the case dismissed.
- The Union filed a petition for review with the CA. On September
23, 2004, the CA rendered judgment in favor of the Union and
reversed that of the VA. But the findings of the CA were
grounded on the CBA and not on the issue of past practices.
ISSUE
WON the petitioner is obliged to grant wage increase under
Wage Order No. NCR-08 as a matter of practice
HELD
Ratio To ripen into a company practice that is demandable as a
matter of right, the giving of the increase should not be by
reason of a strict legal or contractual obligation, but by reason of
an act of liberality on the part of the employer.
Reasoning
- The only instance when petitioner admittedly implemented a
wage order despite the fact that the employees were not
receiving salaries below the minimum wage was under Wage
Order No. NCR-07. Petitioner, however, explains that it did so
because it was agreed upon in the CBA that should a wage
increase be ordered within six months from its signing, petitioner
would give the increase to the employees in addition to the CBAmandated increases. Respondents isolated act could hardly be

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classified as a "company practice" or company usage that may

be considered an enforceable obligation.
Disposition petition is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 65171 and Resolution dated January
11, 2005 are REVERSED and SET ASIDE. The Decision of the
Voluntary Arbitrator is REINSTATED.

CHINA BANKING CORPORATION V BORROMEO

CALLEJO, SR.; October 19, 2004
NATURE
Certiorari
FACTS
- Borromeo was a Manager of CB assigned at Regional Office in
Cebu City. He then had the rank of Manager Level I.
Subsequently, the respondent was laterally transferred to
Cagayan de Oro City as Branch Manager of the petitioner Banks
branch thereat.
- He consistently received a "very good" performance rating and
was promoted to the position of Assistant Vice-President, Branch
Banking Group for the Mindanao area effective October 16,
1996.
- Each promotion had the corresponding increase in the
respondents salary as well as in the benefits he received from
the petitioner Bank.
- However, prior to his last promotion and then unknown to the
China Bank, Borromeo, without authority from the Executive
Committee or Board of Directors, approved several DAUD/BP
accommodations amounting to P2,441,375 in favor of Joel
Maniwan, with Edmundo Ramos as surety. DAUD/BP is the
acronym for checks "Drawn Against Uncollected Deposits/Bills
Purchased." Such checks, which are not sufficiently funded by
cash, are generally not honored by banks. Further, a DAUD/BP
accommodation is a credit accommodation granted to a few and
select bank clients through the withdrawal of uncollected or
uncleared check deposits from their current account. Under the
petitioner Banks standard operating procedures, DAUD/BP
accommodations may be granted only by a bank officer upon
express authority from its Executive Committee or Board of
Directors.
- As a result of the DAUD/BP accommodations in favor of
Maniwan, a total of ten out-of-town checks (7 PCIB checks and 3
UCPB checks) of various dates amounting to P2,441,375 were
returned unpaid from September 20, 1996 to October 17, 1996.
Each of the returned checks was stamped with the notation
"Payment Stopped/Account Closed."
- On October 8, 1996, the Borromeo wrote a Memorandum to the
petitioner Banks senior management requesting for the grant of
a P2.4 million loan to Maniwan.
- The memorandum stated that the loan was "to
regularize/liquidate subjects (referring to Maniwan) DAUD
availments."
- It was only then that the petitioner Bank came to know of the
DAUD/BP accommodations in favor of Maniwan. The petitioner
Bank further learned that these DAUD/BP accommodations
exceeded the limit granted to clients, were granted without
proper prior approval and already past due.
- Acting on this information, Samuel L. Chiong, the petitioner
Banks First Vice- President and Head-Visayas Mindanao Division,
in his Memorandum dated November 19, 1996 for the
respondent, sought clarification from the latter on the following
matters:
- May 23, 1997 - Nancy D. Yang, the CBanks Senior VP and
Head-Branch Banking Group, informed the B (through a
memorandum)
that
his
approval
of
the
DAUD/BP
accommodations in favor of Maniwan w/o authority and/or
approval of higher management violated the petitioner Banks
Code of Ethics. As such, B was directed to restitute the amount

Labor Law 1
of P1,507,736.79 representing 90% of the total loss of
P1,675,263.10 incurred by the petitioner Bank.
- However, in view of his resignation and considering the years
of service in the petitioner Bank, the management earmarked
only P836,637.08 from the respondents total separation benefits
or pay.
- In the Letter dated May 26, 1997 addressed to B, Remedios
Cruz, CBanks VP of the HR Division, again informed him that the
management would withhold the sum of P836,637.08 from his
separation pay, mid-year bonus and profit sharing.
- The said amount would be released upon recovery of the sums
demanded from Maniwan in Civil Case No. 97174 filed against
him by CBank with the RTC in Cagayan de Oro City.
- Consequently, the B, through counsel, made a demand on the
CBank for the payment of his separation pay and other benefits.
- The CBank maintained its position to withhold the sum of
P836,637.08.
- B filed with the NLRC, the complaint for payment of separation
pay, mid-year bonus, profit share and damages against the
petitioner Bank.
- The Labor Arbiter (LA)-dismissed the Bs complaint, for B had
committed a serious infraction when, in blatant violation of the
banks SOP and policies, he approved the DAUD/BP
accommodations in favor of Maniwan without authorization by
senior management. B even had admitted this breach in the
letters that he wrote to the senior officers of CBank.
- LA- made the finding that B offered to assign or convey a
property that he owned to CBank, as well as proposed the
withholding of the benefits due him to answer for the losses that
the petitioner Bank incurred on account of unauthorized
DAUD/BP accommodations.
- LA also held that CBanks act of withholding the benefits due
the respondent was justified under its Code of Ethics and that B
as an officer of the CBank, was bound by the provisions of the
said Code.
- B appealed to the NLRC.
- NLRC- affirmed in toto the findings and conclusions of the LA.
And ruled that the LA committed no grave abuse of discretion
when he decided the case on the basis of the position papers
submitted by the parties.
- B file a MR but the NLRC denied his motion. So he filed a
petition for certiorari with the CA.
- CA -set aside the decision of the NLRC and ordered that the
records of the case be remanded to the Labor Arbiter for further
hearings on the factual issues involved.
- CBank filed a MR but the CA denied as it found no compelling
ground to warrant reconsideration.
ISSUES
Procedural
WON the CA erred in remanding the case to the Labor Arbiter/
WON Bs right to due process was violated by CBank since no
administrative investigation was conducted prior to the
withholding of his separation benefits
Substantive
WON B pledged his benefits as guarantee for the losses the bank
incurred
resulting
from
the
unauthorized
DAUD/BP
accommodations in favor of Maniwan/
WON CBank could impose the penalty of restitution against B
HELD
Procedural
YES, CA committed reversible error/
NO, No formal administrative investigation was necessary
Reasoning
- It is settled that administrative bodies like the NLRC, including
the Labor Arbiter, are not bound by the technical niceties of the
law and procedure and the rules obtaining in courts of law.
- Rules of evidence are not strictly observed in proceedings
before administrative bodies like the NLRC, where decisions may
be reached on the basis of position papers.
- The holding of a formal hearing or trial is discretionary with the
Labor Arbiter and is something that the parties cannot demand
as a matter of right.

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- As a corollary, trial-type hearings are not even required as the

cases may be decided based on verified position papers, with
supporting documents and their affidavits.
- The assailed CA decisions directive requiring him to conduct
further hearings constitutes undue interference with the Labor
Arbiters discretion.
- To require the conduct of hearings would be to negate the
rationale and purpose of the summary nature of the proceedings
mandated by the Rules and to make mandatory the application
of the technical rules of evidence.
- As long as the decisions of the LA and the NLRC are devoid of
any arbitrariness in the process of their deduction from the
evidence proffered by the parties, all that is left is for the Court
to stamp its affirmation.
- In this case, the factual findings of the Labor Arbiter and those
of the NLRC concur on various points.
- Due process simply demands an opportunity to be heard and
this opportunity was not denied Borromeo as he was, through
the memoranda issued to him, given notice of the charge
against him. He was given the opportunity to be heard and
considering his admissions, it became unnecessary to hold any
formal investigation.
Substantive
YES to both. LA and NLRC concurred in finding that B indeed
pledged his benefits and CBanks Code of Ethics expressly
sanctions the imposition of restitution/forfeiture of benefits apart
from or independent of the other penalties.
Reasoning
- CBanks Code of Ethics-Restitution may be imposed
independently or together with any other penalty in case of loss
or damage to the property of the Bank, its employees, clients or
other parties doing business with the Bank. The Bank may
recover the amount involved by means of salary
deduction or whatever legal means that will prompt
offenders to pay the amount involved. But restitution shall
in no way mitigate the penalties attached to the violation or
infraction.
- Supra-Forfeiture of benefits/privileges may also be
effected in cases where infractions or violations were
incurred in connection with or arising from the
application/availment thereof.
- It is well recognized that company policies and
regulations are, unless shown to be grossly oppressive or
contrary to law, generally binding and valid on the
parties and must be complied with until finally revised or
amended unilaterally or preferably through negotiation
or by competent authority.
- Moreover, management has the prerogative to discipline its
employees and to impose appropriate penalties on erring
workers pursuant to company rules and regulations. With more
reason should these truisms apply to the respondent,
who, by reason of his position, was required to act
judiciously and to exercise his authority in harmony with
company policies.
- Obviously, in view of his voluntary separation from the
petitioner Bank, the imposition of the penalty of reprimand or
suspension would be futile. The petitioner Bank was left with no
other recourse but to impose the ancillary penalty of restitution.
It was certainly within the petitioner Banks prerogative to
impose on the respondent what it considered the appropriate
penalty under the circumstances pursuant to its company rules
and regulations.
- Significantly, B is not wholly deprived of his separation
benefits. The LA stressed in his decision, "the separation
benefits due the complainant (Borromeo) were merely
withheld." The NLRC made the same conclusion.
- B was not just a rank and file employee. At the time of his
resignation, he was the Asst. VP, Branch Banking Group for the
Mindanao area of CBank. His position carried authority for the
exercise of independent judgment and discretion, characteristic
of sensitive posts in corporate hierarchy.41 As such, he was, as
earlier intimated, required to act judiciously and to exercise his
authority in harmony with company policies.
Obiter

Labor Law 1
- CBanks business is essentially imbued with public interest and
owes great fidelity to the public it deals with.
- It is expected to exercise the highest degree of diligence in the
selection and supervision of their employees.
- As a corollary, and like all other business enterprises, its
prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company
rules and regulations must be respected.
- DAYAN v BPI ~ The law, in protecting the rights of labor,
authorized neither oppression nor self-destruction of an
employer company which itself is possessed of rights that must
be entitled to recognition and respect
Disposition
Petition is GRANTED. CAS DECISION AND
RESOLUTION REVERSED AND SET ASIDE. NLRCS DECISION,
affirming that of the Labor Arbiter, is REINSTATED.

CEBU ROYAL PLANT V DEPUTY MINISTER OF LABOR

CRUZ; August 12, 1987
NATURE
Petitioner faults the Deputy Minister of Labor with grave abuse of
discretion
FACTS
- Pilones was dismissed by Cebu Royal Plant (CRP)
- the alleged ground for his removal: pulmonary tuberculosis
minimal
- Pilones complained to the Ministry of Labor. The regional
director dismissed this complaint, but the Deputy Minister
reversed this and required CRP to reinstate Pilones and to pay
him back wages.
Public respondent maintains:
- that Pilones, the private respondent, was already a permanent
employee when he was dismissed, and thus entitled to security
of tenure
- that his pulmonary tuberculosis minimal (PTM) was not
certified as incurable within six months so as to justify his
separation
- that the petitioner should have first obtained a clearance for
the termination of Pilones employment
Petitioner maintains:
- Pilones was still on probation at the time of dismissal, and thus
had no security of tenure.
- dismissal was necessary for the protection of the public health
because he was handling ingredients in the processing of soft
drinks which were being sold to the public
- the findings of the regional director, who had direct access to
the facts, should not have been disturbed on appeal.
- that Pilones was employed on probation on Feb. 16, 1978; that
the six-month probation period ended on Aug. 17, 1978; that he
was dismissed on Aug. 21, 4 days after he ceased to be a
probationer, only because the x-ray examination (which showed
his PTM) was made only on Aug. 17, and the results were not
immediately available.
- There is, however, proof that PIlones may have been hired in
1977, as shown by a 1977 withholding tax statement issued for
him by CRP.
ISSUE
WON Pilones was still a probationary employee when he was
dismissed on August 21, 1978
HELD
NO
Ratio When an employee is dismissed due to a disease, the
applicable rule is:
Sec. 8, Rule I, Book VI, of the Rules and Regulations
implementing the Labor Code: Disease as a ground for dismissal.
Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to
the health of his co-employees, the employer shall not terminate
his employment unless there is a certification by a competent
public health authority that the disease is of such nature or at

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such a stage that it cannot be cured within a period of six (6)

months even with proper medical treatment. If the disease or
ailment can be cured within the period, the employer shall not
terminate the employee but shall ask the employee to take a
leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health.
Reasoning
- The records do not show the certification by a competent public
health authority that is required by the above rule, that the
disease cannot be cured within a period of 6 months. It only
contained a certificate offered by CRPs own physician, not a
public health authority. The court surmised that if the required
certification was not presented, it was because the disease was
not of such a nature that it could not be cured within a period of
6 months. If so, dismissal was an unlawful sanction.
- Also, the petitioners application for clearance to terminate
Pilones was filed only on August 28, 1978, 7 days after his
dismissal. This did not follow the prior clearance rule which
was in force at the time.
-- We agree that there was here an attempt to circumvent the
law by separating the employee after five months' service to
prevent him from becoming a regular employee, and then
rehiring him on probation, again without security of tenure. We
cannot permit this subterfuge if we are to be true to the spirit
and mandate of social justice. On the other hand, we have also
the health of the public and of the dismissed employee himself
to consider. Hence, although we must rule in favor of his
reinstatement, this must be conditioned on his fitness to resume
his work, as certified by competent authority.
Disposition
petition is DISMISSED and the temporary
restraining order of November 18, 1981, is LIFTED. The Order of
the public respondent dated July 14, 1981, is AFFIRMED, but with
the modification that the backwages shall be limited to three
years only and the private respondent shall be reinstated only
upon certification by a competent public health authority that he
is fit to return to work. Costs against the petitioner.

LAPANDAY AGRICULTURAL DEVELOPMENT

CORPORATION V CA (and COMMANDO SECURITY
SERVICE AGENCY, INC.)
GONZAGA-REYES; January 31, 2000
NATURE
Petition for Review on Certiorari of the decision of the CA which
affirmed the decision of the RTC.
FACTS
- In June 1986 private respondent and plaintiff entered into a
Guard Service Contract. Respondent provided security guards in
defendant's banana plantation. The contract called for the
payment to a guard of P754.28 on a daily 8-hour basis and an
additional P565.72 for a four hour overtime while the shift-incharge was to be paid P811.40 on a daily 8-hour basis and
P808.60 for the 4-hour overtime.
- Wage Orders increasing the minimum wage in 1983 were
complied with by the defendant. On June 16, 1984, Wage Order
No. 5 was promulgated directing an increase of P3.00 per day on
the minimum wage of workers in the private sector and a P5.00
increase on the ECOLA. This was followed on November 1, 1984
by Wage Order No. 6 which further increased said minimum
wage by P3.00 on the ECOLA. Both Wage Orders contain the
following provision:
"In the case of contract for construction projects and for
security, janitorial and similar services, the increase in the
minimum wage and allowances rates of the workers shall be
borne by the principal or client of the construction/service
contractor and the contracts shall be deemed amended
accordingly, subject to the provisions of Sec. 3 (b) of this
order" (Sec. 6 and Sec. 9, Wage Orders No. 5 and 6,
respectively).
- Respondent demanded that its Guard Service Contract with
defendant be upgraded in compliance with Wage Order Nos. 5
and 6. Plaintiff refused. Their Contract expired on June 6, 1986

Labor Law 1
without the rate adjustment called for Wage Order Nos. 5 and 6
being implemented. By the time of the filing of respondent's
Complaint, the rate adjustment payable by defendant amounted
to P462,346.25. Plaintiff opposed the Complaint.
- The trial court decided in favor of the respondent. Plaintiffs
MOR was denied, hence this petition.
ISSUES
1. WON RTC has jurisdiction over the case
2. WON petitioner is liable to the private respondent for the
wage adjustments provided under Wage Order Nos. 5 and 6 and
for attorney's fees
HELD
1. YES
- The enforcement of the written contract does not fall under the
jurisdiction of the NLRC because the money claims involved
therein did not arise from employer-employee relations between
the parties and is intrinsically a civil dispute. Thus, jurisdiction
lies with the regular courts. The RTC has jurisdiction over the
subject matter of the present case. It is well settled in law and
jurisprudence that where no employer-employee relationship
exists between the parties and no issue is involved which may
be resolved by reference to the Labor Code, other labor statutes
or any collective bargaining agreement, it is the Regional Trial
Court that has jurisdiction. In its complaint, private respondent is
not seeking any relief under the Labor Code but seeks payment
of a sum of money and damages on account of petitioner's
alleged breach of its obligation under their Guard Service
Contract. The action is within the realm of civil law hence
jurisdiction over the case belongs to the regular courts. While
the resolution of the issue involves the application of labor laws,
reference to the labor code was only for the determination of the
solidary liability of the petitioner to the respondent where no
employer-employee relation exists. Article 217 of the Labor Code
as amended vests upon the labor arbiters exclusive original
jurisdiction only over the following:
1.
Unfair labor practices;
2.
Termination disputes;
3.
If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
4.
Claims for actual, moral exemplary and other form of
damages arising from employer-employee relations;
5.
Cases arising from any violation of Article 264 of this
Code, including questions involving legality of strikes and
lockouts; and
6.
Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
- In all these cases, an employer-employee relationship is an
indispensable jurisdictional requisite; and there is none in this
case.
2.
Private respondent admits that there is no employeremployee relationship between it and the petitioner. The private
respondent is an independent/job contractor1 who assigned
security guards at the petitioner's premises for a stipulated
amount per guard per month. The Contract of Security Services
expressly stipulated that the security guards are employees of
the Agency and not of the petitioner. Articles 106 and 107 of the
Labor Code provides the rule governing the payment of wages of
employees in the event that the contractor fails to pay such
wages1.
1

Art. 106. Contractor or sub contractor. Whenever an employer enters into a

contract with another person for the performance of the former's work, the
employees of the contractor and of the latter's subcontractor, if any, shall be paid
in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and severally

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- It will be seen from the above provisions that the principal

(petitioner) and the contractor (respondent) are jointly and
severally liable to the employees for their wages. This Court held
in Eagle Security, Inc. vs. NLRC and Spartan Security and
Detective Agency, Inc. vs. NLRC that the joint and several
liability of the contractor and the principal is mandated by the
Labor Code to assure compliance with the provisions therein
including the minimum wage. The contractor is made liable by
virtue of his status as direct employer. The principal, on the
other hand, is made the indirect employer of the contractor's
employees to secure payment of their wages should the
contractor be unable to pay them. Even in the absence of an
employer-employee relationship, the law itself establishes one
between the principal and the employees of the agency for a
limited purpose i.e. in order to ensure that the employees are
paid the wages due them. In the above-mentioned cases, the
solidary liability of the principal and contractor was held to apply
to the aforementioned Wage Order Nos. 5 and 6. In ruling that
under the Wage Orders, existing security guard services
contracts are amended to allow adjustment of the consideration
in order to cover payment of mandated increases, and that the
principal is ultimately liable for the said increases.
- It is clear that it is only when contractor pays the increases
mandated that it can claim an adjustment from the principal to
cover the increases payable to the security guards. The
conclusion that the right of the contractor (as principal debtor) to
recover from the principal as solidary co-debtor) arises only if he
has paid the amounts for which both of them are jointly and
severally liable is in line with Article 12172 of the Civil Code.
- The right of reimbursement from a co-debtor is recognized in
favor of the one who paid.
The liability of the petitioner to reimburse the respondent only
arises if and when respondent actually pays its employees the
increases granted by Wage Order Nos. 5 and 6. Payment, which
means not only the delivery of money but also the performance,
in any other manner, of the obligation,is the operative fact which
will entitle either of the solidary debtors to seek reimbursement
for the share which corresponds to each of the debtors.
- It is not disputed that the private respondent has not actually
paid the security guards the wage increases granted under the
Wage Orders in question. Neither is it alleged that there is an
extant claim for such wage adjustments from the security guards
concerned, whose services have already been terminated by the
contractor. Accordingly, private respondent has no cause of
action against petitioner to recover the wage increases.
Needless to stress, the increases in wages are intended for the
benefit of the laborers and the contractor may not assert a claim
against the principal for salary wage adjustments that it has not
actually paid. Otherwise, as correctly put by the respondent, the
contractor would be unduly enriching itself by recovering wage
increases, for its own benefit.
- Finally, considering that the private respondent has no cause of
action against the petitioner, private respondent is not entitled
to attorney's fees.
Disposition Petition GRANTED. The decision of the CA
REVERSED and SET ASIDE. The complaint of private respondent
COMMANDO SECURITY SERVICE AGENCY, INC. is hereby
DISMISSED.

VILLAMARIA, JR. V CA
liable with his contractor or subcontractor to such employees to the extent of the
work performed under the contract, in the same manner and extent that he is liable
to employees directly employed by him.
Art. 107. Indirect employer. The provisions of the immediately preceding Article
shall likewise apply to any person, partnership, association or corporation which,
not being an employer, contracts with an independent contractor for the
performance of any work, task, job or project.

Art. 1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may choose
which offer to accept.
He who made payment may claim from his codebtors only the share which
corresponds to each, with interest for the payment already made. If the
payment is made before the debt is due, no interest for the intervening period
may be demanded. . . .

Labor Law 1
CALLEJO, SR.; April 19, 2006
NATURE
Petition for review on certiorari of the decision of the CA which
set aside the Resolution of the NLRC which in turn affirmed the
Decision of the Labor Arbiter dismissing the complaint filed by
respondent Bustamante.
FACTS
- Petitioner Oscar Villamaria, Jr. was the owner of Villamaria
Motors, a sole proprietorship engaged in assembling passenger
jeepneys with a public utility franchise to operate along the
Baclaran-Sucat route. By 1995, Villamaria stopped assembling
jeepneys and retained only nine, four of which he operated by
employing drivers on a boundary basis. One of those drivers
was respondent. Bustamante remitted P450 a day to Villamaria
as boundary and kept the residue of his daily earnings as
compensation for driving the vehicle. In August 1997, Villamaria
verbally agreed to sell the jeepney to Bustamante under the
boundary-hulog scheme, where Bustamante would remit to
Villarama P550 a day for a period of 4 years; Bustamante would
then become the owner of the vehicle and continue to drive the
same under Villamarias franchise. It was also agreed that
Bustamante would make a downpayment of P10,000.
- On August 7, 1997, Villamaria executed a contract entitled
Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng
Boundary-Hulog over the passenger jeepney. The parties
agreed that if Bustamante failed to pay the boundary-hulog for 3
days, Villamaria Motors would hold on to the vehicle until
Bustamante paid his arrears, including a penalty of P50 a day; in
case Bustamante failed to remit the daily boundary-hulog for a
period of one week, the Kasunduan would cease to have legal
effect and Bustamante would have to return the vehicle to
Villamaria Motors.
- Bustamante continued driving the jeepney under the
supervision and control of Villamaria. As agreed upon, he made
daily remittances of P550 in payment of the purchase price of
the vehicle. Bustamante failed to pay for the annual registration
fees of the vehicle, but Villamaria allowed him to continue
driving the jeepney.
- In 1999, Bustamante and other drivers who also had the same
arrangement with Villamaria Motors failed to pay their
respective boundary-hulog. This prompted Villamaria to serve a
Paalala, reminding them that under the Kasunduan, failure to
pay the daily boundary-hulog for one week, would mean their
respective jeepneys would be returned to him without any
complaints. He warned the drivers that the Kasunduan would
henceforth be strictly enforced and urged them to comply with
their obligation to avoid litigation. On July 24, 2000, Villamaria
took back the jeepney driven by Bustamante and barred the
latter from driving the vehicle.
- Bustamante filed a Complaint for Illegal Dismissal against
Villamaria and his wife Teresita. He narrated that in July 2000,
he informed the Villamaria spouses that the surplus engine of
the jeepney needed to be replaced, and was assured that it
would be done. However, he was later arrested and his drivers
license was confiscated because apparently, the replacement
engine that was installed was taken from a stolen vehicle. He
was no longer allowed to drive the vehicle unless he paid them
P70,000.
ISSUES
1. WON the existence of a boundary-hulog agreement negates
the employer-employee relationship between the vendor and
vendee
2. As a corollary, WON the Labor Arbiter has jurisdiction over a
complaint for illegal dismissal in such a case
HELD
1. NO
Ratio Under the boundary-hulog scheme, a dual juridical
relationship is created: that of employer-employee and vendorvendee. The Kasunduan did not extinguish the employer-

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employee relationship of the parties extant before the execution

of
said
deed.
Reasoning
- The boundary system is a scheme by an owner/operator
engaged in transporting passengers as a common carrier to
primarily govern the compensation of the driver, that is, the
latters daily earnings are remitted to the owner/operator less
the excess of the boundary which represents the drivers
compensation. Under this system, the owner/operator exercises
control and supervision over the driver. It is unlike in lease of
chattels where the lessor loses complete control over the chattel
leased but the lessee is still ultimately responsible for the
consequences of its use. The management of the business is still
in the hands of the owner/operator, who, being the holder of the
certificate of public convenience, must see to it that the driver
follows the route prescribed by the franchising and regulatory
authority, and the rules promulgated with regard to the business
operations. The fact that the driver does not receive fixed
wages but only the excess of the boundary given to the
owner/operator is not sufficient to change the relationship
between them. Indubitably, the driver performs activities which
are usually necessary or desirable in the usual business or trade
of
the
owner/operator.
- Under the Kasunduan, respondent was required to remit P550
daily to petitioner, an amount which represented the boundary
of petitioner as well as respondents partial payment (hulog) of
the purchase price of the jeepney. Thus, the daily remittances
also had a dual purpose: that of petitioners boundary and
respondents partial payment (hulog) for the vehicle. This dual
purpose was expressly stated in the Kasunduan. The wellsettled rule is that an obligation is not novated by an instrument
that expressly recognizes the old one, changes only the terms of
payment, and adds other obligations not incompatible with the
old provisions or where the new contract merely supplements
the previous one. The two obligations of the respondent to remit
to petitioner the boundary-hulog can stand together.
- The existence of an employment relation is not dependent on
how the worker is paid but on the presence or absence of control
over the means and method of the work. The amount earned in
excess of the boundary hulog is equivalent to wages and the
fact that the power of dismissal was not mentioned in the
Kasunduan did not mean that private respondent never
exercised such power, or could not exercise such power.
- Neither is such juridical relationship negated by petitioners
claim that the terms and conditions in the Kasunduan relative to
respondents behavior and deportment as driver was for his and
respondents benefit: to insure that respondent would be able to
pay the requisite daily installment of P550, and that the vehicle
would still be in good condition despite the lapse of 4 years.
What is primordial is that petitioner retained control over the
conduct of the respondent as driver of the jeepney.
- As respondents employer, it was the burden of petitioner to
prove that respondents termination from employment was for a
lawful or just cause, or, at the very least, that respondent failed
to make his daily remittances of P550 as boundary. However,
petitioner failed to do so. Well-settled is the rule that, the
employer has the burden of proving that the dismissal of an
employee is for a just cause. The failure of the employer to
discharge this burden means that the dismissal is not justified
and that the employee is entitled to reinstatement and back
wages.
2. YES
Reasoning
- The jurisdiction of Labor Arbiters and the NLRC under Article
217 of the Labor Code is limited to disputes arising from an
employer-employee relationship which can only be resolved by
reference to the Labor Code, other labor statutes or their
collective bargaining agreement.
Disposition
Petition is DENIED.
Decision of the CA is
AFFIRMED.

ANINO V NLRC
PANGANIBAN; May 21, 1998

Labor Law 1
NATURE
Special Civil Action in the Supreme Court. Certiorari.
FACTS
- Complainants are supervisors of Hinatuan Mining Corporation
(HMC) who planned the formation of a supervisors union. The
HINATUAN MINING SUPERVISORY UNION was formally organized
and registered with the DOLE. Complainants Anino, Navarro,
Daug-daug and Filoteo were elected officers, while complainants
Baladja and Ceredon were active members of the union.
- On 3 November 1993, HIMSU formally notified the company of
its legal existence through a letter addressed to HMC President
Zamora. It informed the company of its desire for a collective
bargaining agreement and submitted its proposals under letter
dated 16 November 1993, which again was addressed to
Zamora, VP-Operation Ganigan and VP-Finance Nacorda.
However, the company ignored these proposals.
- Union filed an unfair labor practice case against HMC on 13
May 1994.
- HMC dismissed the complainants under letter dated 16 June
1994.
- Labor Arbiter Legaspi held that the services of petitioners were
illegally terminated, ordered their reinstatement and the grant of
back wages and attorneys fees equivalent to 10% of monetary
award; that there was no positive showing that petitioners were
retrenched purposely to weaken or destroy their union; hence,
claim of unfair labor practice was dismissed. Likewise, claim for
damages was denied since no fraud or bad faith was committed
by private respondents in dismissing them.
- NLRC reversed Legaspis ruling, rejected all petitioners claims
and questioned complainants actuations considering that they
only challenged 2 months after dismissal and after receiving
separation pay. It also took judicial notice of the economic
difficulties suffered by the mining industry.
Petitioners Claim
- Dismissal was done with malicious intent to cause them and
the union damage for their exercise of the right to selforganization, in defiance of Labor Code Art. 248. Complainants
pray that respondents be: (a) declared guilty of unfair labor
practices; (b) ordered to reinstate complainants to their former
positions with backwages and to pay complainants jointly and
severally the amount of P150k, as moral damages and litigation
and attorney's fees, respectively.
Respondents Comments
- Retrenchment was a management prerogative implemented in
order to prevent further losses. It affected rank-and-file,
supervisors and managerial staffs and was done with due notice
to take effect 30 days from receipt thereof.
- Complainants had accepted separation pay equivalent to 1
month pay for every year of service plus other monetary
benefits, and complainants executed a waiver and quitclaim for
value received.
- Complaint was an afterthought in order to give semblance of
credence to their position/opposition to conduct a certification
election, as manifested by complainants counsel declaration in
open court that they were still filing a new complaint for unfair
labor practice (this case)
ISSUES
1.
WON the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it absolved
respondents from their duty to prove losses as a just ground for
retrenchment
2. WON the NLRC exceeded its jurisdiction in recognizing the
waivers/quitclaims executed by petitioners as an effective bar to
this complaint
3. WON the NLRC abused its discretion when it ordered the
dismissal of the instant complaint and totally disregarded the
labor arbiters findings of facts and petitioners motion for
execution
HELD
1. YES

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Ratio To justify retrenchment, the following requisites must be

complied with: (a) the losses expected should be substantial and
not merely de minimis in extent; (b) the substantial losses
apprehended must be reasonably imminent; (c) the
retrenchment must be reasonably necessary and likely to
effectively prevent the expected losses; and (d) the alleged
losses, if already incurred, and the expected imminent losses
sought to be forestalled must be proved by sufficient and
convincing evidence.
Reasoning
- In termination cases, the burden of proving that the dismissal
was for a valid or authorized cause rests upon the employer.
- HMC merely claimed that retrenchment was undertaken to
prevent losses due to the continuing decline of nickel prices and
export volume in the mining industry. Additionally, it alleged that
the reduction of excise taxes on mining from 5% to 1% on a
graduated basis, as provided under RA. 7729, was a clear
recognition by the government itself of the industry's worsening
economic difficulties. These bare statements miserably fall short
of the requirements to show the validity of a retrenchment
- Even if, arguendo, the contentions of HMC are accepted at face
value, they still fail to satisfy the jurisprudential requirements
that further or expected losses must be substantial and
reasonably imminent; and the dismissal of employees,
reasonably necessary and likely to be effective in preventing the
expected losses.
2. YES
Ratio The acceptance of termination pay does not divest a
laborer of the right to prosecute his employer for unfair labor
practice acts.
Reasoning
- Quitclaims and/or complete releases are against public policy
and, therefore, null and void.
- Employer and employee do not stand on the same footing. The
employer drove the employee to the wall. The latter must have
to get hold of money. Because, out of job, he had to face the
harsh necessities of life. He thus found himself in no position to
resist money proffered. His, then, is a case of adherence, not of
choice.
3. YES
Ratio A decision should faithfully comply with Sec. 14, Art. VIII
of the Constitution. (No decision shall be rendered by any court
[or quasi-judicial body] without expressing therein clearly and
distinctly the facts of the case and the law on which it is based.)
Reasoning
- The NLRC was definitely wanting in the observance of the
constitutional requirement. It merely raised a doubt on the
motive of the complaining employees and took "judicial notice
that in one area of Mindanao, the mining industry suffered
economic difficulties."
- The factual and legal bases of public respondent's conclusions
were bereft of substantial evidence the quantum of proof in
labor cases its disposition is manifestly a violation of the
constitutional mandate and an exercise of grave abuse of
discretion. Such decision is a nullity.
Disposition Petition granted; challenged NLRC Decision set
aside. Decision of Legaspi is reinstated except that Ganigan is
not liable for petitioners monetary claims. HMC ordered to pay
separation benefits.
NOTES
- On reinstatement: If reinstatement to former position, or one
substantially equivalent thereto, is not feasible anymore, the
employees are entitled to the grant of separation pay and full
back wages. Separation pay shall be equivalent to at least 1
month salary or 1 month salary for every year of service,
whichever is higher, a fraction of 6 months being considered as
1 whole year. It shall be computed from the date the petitioners
were employed by private respondent until this Decision
becomes final and executory.
- On liability of Vice President: While the president of the
erring company may be held jointly and severally liable for the
obligations of the latter to its dismissed employees, such
solidary liability does not extend to the vice president of the

Labor Law 1
company. Absent any proof of the extent of the participation of
the VP in the formulation and the implementation of
management policies and programs, he cannot be held
financially liable for the illegal dismissal of employees.

EDI STAFF BUILDERS INTERNATIONAL V MAGSINO

MENDOZA; June 20, 2001
NATURE
Petition for review on certiorari
FACTS
- EDI is a recruitment agency. Dominguez is its President and
Magsino was, until dismissal, its supervisor of Processing and
Documentation Group.
- The manager of the Processing and Documentation Grp sent a
memo to Magsino, saying that management received reports
that Magsino withheld collected premium payments for workers
mandatory repatriation bond.
Magsino was required to
clarify/explain.
- Magsino tendered resignation, but was held in abeyance
pending result of the investigation. Respondent was given
notice of termination.
- Magsino filed complaint for illegal dismissal, nonpayment of
salaries, leave pay, 13th mo pay, profit sharing, service award,
maternity benefits.
- Labor Arbiter told EDI to reinstate Magsino. NLRC found EDIs
claim unsupported by evidence. CA also held that EDI couldnt
present evidence on appeal for the first time, that EDI failed to
prove that Magsino was responsible for the discrepancy to justify
her termination. EDI insists Magsino was terminated for loss of
trust and confidence.
ISSUES
1. WON NLRC correctly disregarded evidence on appeal
2. WON considering evidence, Magsino was dismissed for cause
HELD
1. NO
- No undue sympathy is to be accorded to any claim of a
procedural misstep in labor cases. Such must be decided accdg
to justice and equity. Petitioners not implausibly ascribed to the
fault of counsel failure to file a position paper with Labor Arbiter.
Court deems it best to admit such evidence.
2. NO
- Court finds evidence insufficient to establish that Magsino was
dismissed for loss of trust and confidence. Petitioners simply
alleged that Magsino failed to account for P201,600 without
showing how that figure was arrived at.
- CA was right to order separation pay instead of reinstatement
because of the strain in the relationship of the employer and
employee. Backwages, from the time of dismissal to the time of
finality of decision, must also be given.

GUSTILO V WYETH PHILIPPINES INC.

SANDOVAL-GUTIERREZ; October 4, 2004
FACTS
- Gustilo was employed by Wyeth Phils Inc. as a pharmaceutical
territory manager.
- He was in-charge of the various branches in Metro Bacolod City
and Negros Occidental.
- Among his tasks were visiting hospitals, pharmacies,
drugstores and physicians; preparing and submitting his predated itinerary; and submitting periodic reports of his daily call
visits, monthly itinerary and weekly locator and incurred
expenses.
- His employment records show that on various dates, Wyeth
reprimanded and suspended him for habitually neglecting to
submit his periodic reports.
> Nov. 28, 1994- W sent a notice reprimanding G for the late
submission of weekly expense report

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> July 5, 1995- late submission of same report so W

suspended him for 5 days
> Oct 16 to 20, 23-27, Nov 6-10, 13-17, (all 1995)- late
submission of his daily call reports
> Nov 20-24, 1995- didnt submit his daily call reports so W
suspended him for 15 days.
- Wyeth put Gustilo in charge of promoting 4 Lederle (Ws sister
company) pharmaceutical products. G then submitted to W a
plan of action where G committed to make an ave of 18 daily
calls to physicians; submit promptly all periodic reports; and
ensure 95% territory program performance for every cycle.
- Gustilo failed to achieve his objectives so W sent him 2 notices
charging him with willful violation of company rules and
regulations and directed him to submit a written explanation.
- G explained that he was overworked and an object of reprisal
by his immediate supervisor, Filemon Verzano Jr.
- Wyeth, upon the recommendation of a review panel,
terminated Gustilos services.
- G then filed with the Regional Arbiter Br. No. 6 in Bacolod City a
complaint against W for illegal suspension, illegal dismissal and
payment for allowances, other monetary benefits, damages and
attys fees.
- The Labor Arbiter found that G was illegally dismissed from
employment and ordered W and Verzano to pay G jointly and
severally Php 991,157.90 representing backwages, separation
pay, car reimbursement, damages and attys fees.
- W appealed to the NLRC in Cebu City
- NLRC- affirmed but modified the Labor Arbiters decisionordered reinstatement of G, or in lieu of reinstatement, pay his
separation benefits.
- Ws MR was denied so they filed with the CA a petition for
Certiorari and TRO and a writ of preliminary injunction.
- CA- reversed NLRCs decision and dismissed Gs complaint for
illegal dismissal (as G was terminated based on A282 of the LCgross and habitual neglect by the employee of his duties) but
awarded him separation pay considering the mitigating factors
of length of service, loyalty awards G received and Verzanos
grudge against G.
- G filed an MR but was denied.
ISSUE
WON GUSTILO is entitled to his separation pay
HELD
NO, Gustilo isnt entitled to his SP OR to reinstatement as there
was a just cause for dismissal.
Reasoning
- Phil Journalists Inc v Mosqueda- SC ruled that the findings
of the CA are conclusive on the parties and not reviewable by
this Court
- Family Planning Org of the Phils Inc v NLRC SC held that
it is the employers prerogative to prescribe reasonable rules
and regulations necessary or proper for the conduct of its
business or concern to provide certain disciplinary measures to
implement said rules and to assure that the same be complied
with. At the same time, it is one of the fundamental duties of the
employee to yield obedience to all reasonable rules, orders, and
instructions of the employer, and willful or intentional
disobedience thereof, as a general rule, justifies rescission of the
contract of service and the preemptory dismissal of the
employee."
- Piedad v Lanao del Norte Electric Cooperative, Inc.- a
series of irregularities when put together may constitute serious
misconduct, which under A282 of the LC, as amended, is a just
cause for dismissal.
- The rule embodied in the Omnibus Rules Implementing the
Labor Code is that a person dismissed for cause as defined
therein is not entitled to separation pay.
- PLDT v NLRC and Abucay, "x x x henceforth, 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, x x x an

Labor Law 1
offense involving moral turpitude x x x, 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."
- Telefunken Semiconductors Employees Union-FFW v
Court of AppealsWe are of course aware that financial assistance may be
allowed as a measure of social justice in exceptional
circumstances and as an equitable concession. We are
likewise mindful that financial assistance is allowed only
in those instances where the employee is validly
dismissed for causes other than serious misconduct or
those reflecting on his moral character (Zenco Sales, Inc.
vs. National Labor Relations Commission, 234 SCRA 689). x x x."
- In the case at bar, there is NO exceptional circumstances to
warrant the grant of financial assistance or separation pay to
petitioner.
G did not only violate company disciplinary rules and
regulations. He falsified his employment application form
by not stating therein that he is the nephew of Mr.
Danao,
respondent
Wyeths
Nutritional
Territory
Manager.
- G manifested his slack of moral principle through his
infractions. In simple term, he is dishonest.
- Philippine Long Distance Telephone vs. NLRC and
Abucay- [T]hose who invoke social justice may do so only if
their hands are clean and their motives blameless x x x." Here,
petitioner failed to measure up to such requirement.
Disposition Petition is DENIED
***Wyeth did not interpose an appeal to this Court. Hence, no
affirmative relief can be extended to it. So it has to comply with
the CAs decision to grant G his SP.

PHILCOM EMPLOYEES UNION V PHILIPPINE GLOBAL

CORPORATION AND PHILCOM CORPORATION
CARPIO; July 17, 2006
NATURE
Petition for review to annul the decision of the CA affirming
Orders by the Secretary of Labor
FACTS
- Jun 30, 1997 CBA expired
- Jul 1997 Negotions for renewal pending
- Oct 21, 1997 PEU filed notice of Strike; ground: unfair labor
practices
- Company suspended CBA negotiations bec. of strike
- Nov 4, 1997 PEU filed 2nd notice of Strike; ground: bargaining
deadlock
- Nov 11, 1997 National Conciliatory and Mediation Board
(NCMB) proceedings resulting in agreement to maintain status
quo
- Nov 17, 1997 Proceedings ongoing, some PEU officers staged
a strike
- Nov 19, 1997 Acting Labor Secretary Trajano assumed
jurisdiction; issued Return-to-work order
- Nov 28, 1997 Return-to-work order reiterated
- Oct 2, 1998 The Secretary of Labor and Employment issued
1st assailed Order
> Obiter: PEUs manifestation to implead PhilCom granted.
(Note: Phil. Global is the predecessor company of PhilCom
resulting in a mere merger, not two separate entities; thus,
PhilCom is to be impleaded).
> PEUs charges of unfair labor practices dismissed. These
included:
= misimplementation or non-implementation of employee
benefits, non-payment of overtime and other monetary claims,
inadequate transportation allowance, water, and other
facilities
> PEU directed to cease and desist from strike and return to
work; PhilCom ordered to take back workers on strike under
the same terms prior to the strike

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- Nov 27, 1998 Motions for Reconsideration were filed and

denied in its 2nd assailed Order
- PEU filed petition for certiorari with SC re: the Secretarys
orders; SC referred the case to the CA
- CA held:
> It is proper for the Secretary to take cognizance of the
legality of the strike
> PhilComs acts do not constitute unfair labor practices.
ISSUES
1. WON it is proper for the Secretary of Labor to have taken
cognizance of the issue on the legality of the strike (issue of
jurisdiction)
2. WON certain acts committed by PhilCom constitute unfair
labor practices as enumerated in Art. 248 of the Labor Code
3. WON the strike is illegal (a necessary offshoot of the issue of
WON a writ of execution should issue upon PhilCom to permit the
PEU officers who participated in the illegal strike to return to
work)
HELD
1. YES
Ratio Since the very reason of the Secretarys assumption of
jurisdiction was PEUs declaration of the strike, any issue
regarding the strike is not merely incidental to, but is essentially
involved in, the labor dispute itself.
Reasoning
- Art 263(g) of the Labor Code grants the Secretary of Labor the
authority to assume jurisdiction over a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to
national interest. This includes and extends to all questions and
controversies arising from such labor dispute.
- The power is plenary and discretionary. He is granted great
breadth of discretion characterized as an exercise of police
power.
- PEU cannot prevent resolution of the legality of the strike by
merely refusing to submit the issue for resolution. It is also
immaterial that this issue, as PEU asserts, was not properly
submitted for resolution of the Secretary
2. NO
Ratio Unfair labor practice refers to acts that violate the
workers right to self-organization and to the observance of a
CBA. Without that element, the acts, no matter how unfair, are
not unfair labor practices.
Obiter The only exception is Article 248(f), which in any case is
not one of the acts specified in PEUs charge of unfair labor
practice
Reasoning
- A review of the acts complained of as unfair labor practices of
PhilCom convinces us that they do not fall under any of the
prohibited acts defined and enumerated in Article 248 of the
Labor Code
- The acts assailed are all a matter of implementation or
interpretation of the economic provisions of the CBA between
Philcom and PEU subject to the grievance procedure
- The Court has always respected a companys exercise of its
prerogative to devise means to improve its operations. Thus, it
has held that management is free to regulate, according to its
own discretion and judgment, all aspects of employment,
including hiring, work assignments, supervision and transfer of
employees, working methods, time, place and manner of work
- This is so because the law on unfair labor practices is not
intended to deprive employers of their fundamental right to
prescribe and enforce such rules as they honestly believe to be
necessary to the proper, productive and profitable operation of
their business
- Even assuming arguendo that Philcom had violated some
provisions in the CBA, there was no showing that the same was a
flagrant or malicious refusal to comply with the CBAs economic
provisions. Such showing is required for the acts to be
considered unfair labor practice
3. YES
Ratio The strike and strike activities were patently illegal for
the following reasons:

Labor Law 1
Reasoning
- PhilCom, being in the communications industry, is engaged in a
vital industry protected from strikes and lockouts by PD 823 as
amended by PD 849
- The Secretary had already assumed jurisdiction. Striking
employees defied the return-to-work order.
- Regardless of their motives, validity of claims, or pending
motions, the striking employees should have ceased and
desisted from all acts undermining the authority granted to the
Secretary under Art. 263(g)
- A return-to-work order is immediately effective and executory
despite the filing of a motion for reconsideration. It must be
strictly complied with even during the pendency of any petition
questioning its validity
- A return-to-work order imposes a duty that must be discharged
more than it confers a right that may be waived. While the
workers may choose not to obey, they do so at the risk of
severing their relationship with their employer as it is valid
ground for dismissal. Art. 264(a) governs defiance of such order.
1. PEU staged the strike using unlawful means.
- PEU posted human barricades at all entrances to and
egresses from the company premises and used
coercive methods to prevent company officials and
other personnel from leaving the company premises.
Art. 264(a) prohibits the commission of such acts during
a strike and declares any worker or union officer who
knowingly participates to have lost his employment
status.
- As PEU never disputed PhilComs assertions of
unlawful strike, the former is deemed to have admitted
to such acts.
2. PEU declared the strike (Nov 17) during the pendency of
preventive mediation proceedings at the NCMB (Nov 11).
Such is a blatant violation of Section 6, Book V, Rule XXII of
the Omnibus Rules Implementing the Labor Code, which
explicitly obliges the parties to bargain collectively in good
faith and prohibits them from impeding or disrupting the
proceedings
- Article 264(a) of the Labor Code also considers it a
prohibited activity to declare a strike during the pendency of
cases involving the same grounds for the same strike.
3. PEU staged the strike in utter disregard of the grievance
procedure established in the CBA
- A strike declared on the basis of grievances which have not
been submitted to the grievance committee as stipulated in the
CBA of the parties is premature and illegal.
- PEU could have just taken up their grievances in their
negotiations for the new CBA which was already pending
Disposition Petition is dismissed and the decision of the CA is
affirmed. The issue of who participated in the illegal
strike, being questions of fact, must be resolved in
appropriate proceedings with the Secretary of Labor

DOLE PHILIPPINES INC V PAWIS NG MAKABAYNG

OBRERO
CORONA; January 13, 2003
[PAGE 3]
VALIAO V CA
QUISUMBING; July 30, 2004
NATURE
Petition for review on certiorari of the decision and resolution of
the Court of Appeals
FACTS
- Petitioner Valiao was appointed by private respondent West
Negros College (WNC) as Student Affairs Office (SAO) Director,
with a starting salary of P2,800 per month. Subsequently, he was
assigned as Acting Director, Alumni Affairs Offfice. He was
transferred to staff position and designated as Records Chief at
the Registrars Office but was again re-assigned as a typist. The

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latest reassignment was due to his tardiness and absences, as

reflected in the summary of tardiness and absences report,
which showed him to have been absent or late for work from a
minimum of seven to maximum of 75 minutes for the period
March to October 31, 1991 and to have reported late almost
every day for the period November to December 1991.
- Copies of his tardiness/absences reports were furnished
petitioner, along with memoranda requiring him to explain but
his explanations were either unacceptable or unsatisfactory.
Subsequently, reports also showed that he did not change his
habits resulting in tardiness and absences. He was even caught
one time manipulating the bundy clock, thus necessitating
another memorandum to him asking him to explain his dishonest
actuations in accomplishing the daily attendance logbook and in
using the bundy clock. He received a suspension order without
pay for fifteen days because of dishonesty in reporting his actual
attendance. He reported back to office after serving the
suspension but was another adverse report on tardiness and
absences was made against the petitioner, prompting WNC to
send him another memorandum with an attached tardiness and
absences report. Petitioner sent a letter of appeal and explained
his side to the new college president who gave petitioner
another chance. The petitioner was appointed as Information
Assistant effective immediately. However, petitioner did not
promptly assume his post, prompting the president to call his
attention.
- Subsequently, WNC won a case against the official of the union
before the NLRC. Petitioner was ordered to prepare a media blitz
of this victory but the petitioner did not comply with the order on
the ground that such a press release would only worsen the
aggravated situation and strained relations between WNC
management and the union officials. When petitioner reported
for work on the first day of January 1993, he was relieved from
his post and transferred to the College of Liberal Arts as Records
Evaluator. Not for long, the Dean of the Liberal Arts sent a letter
to the Human Resources Manager complaining about the
petitioners poor performance and habitual absenteeism as
shown in the daily absence reports.
- On January 18, 1993, petitioner was again absent from work
without permission or notice to his immediate superior. It turned
out that he went to Bacolod City and on January 28, 1993, the
petitioner was one of those arrested during a raid in the house of
Toto Ruiz, a suspected drug pusher and was brought to the
Bacolod Police Station along with four other suspects. The
petitioner and other suspects were then charged with violation of
the Dangerous Drugs Act of 1972.
- Petitioner was asked to explain within 24 hours why he should
not be terminated as a result of the raid and charged against
him for violation of RA No. 6425 as amended. Petitioner was
dismissed
for
failure
to
answer
said
memorandum.
Subsequently, he wrote to the president of WNC explaining his
side and asking for due process. The petitioner was notified
through a memorandum about the grant of his request and that
a hearing would be conducted. He was then placed under
preventive suspension and an investigation committee was
organized to conduct the probe. A notice of hearing/investigation
was sent to the petitioner.
- After the investigation attended by the petitioner and his
counsel, with proceedings duly recorded, the investigation
committee recommended the dismissal of petitioner. A notice of
termination was then sent to petitioner informing him of his
termination from the service for serious misconduct and gross
and habitual neglect of duty. The petitioner received the notice
but did not file a grievance concerning the notice of termination.
- Petitioner filed a complaint against WNC for illegal suspension,
illegal dismissal backwages, salary differential for salary
increases and other benefits granted after his dismissal as well
as for moral and exemplary damages and attorneys fees. After
due proceedings, the Labor Arbiter found no justifiable reason to
place the petitioner under preventive suspension as there was
no serious or imminent threat to the life or property of his
coworkers. However, the Labor Arbiter found the dismissal of the
petitioner to be valid due to absenteeism and tardiness and after
he was accorded the procedural due process aspect of the law

Labor Law 1
as reflected in the records showing that petitioner was formally
investigated and given the opportunity to refute the alleged
findings by the management of WNC. The Labor Arbiter held that
frequent absenteeism and tardiness of the petitioner constituted
not only willful disobedience but also gross and habitual neglect
of duties, which are valid grounds for termination of
employment. He stressed that petitioners frequent absences
without proper leave of absence was not only unfair to WNC and
the petitioners co-employees but also set an undesirable
example to the employees under his supervision, considering
that the petitioner was not a mere rank-and-file employee but
one who owed more than the usual fealty to the organization.
- On appeal to the NLRC, the latter affirmed the decision of the
Labor Arbiter, sustained the latters findings of facts, and made
its own findings of the apprehension of the petitioner for
possession of prohibited drugs. Petitioner then filed a Petition for
Certiorari under Rule 65 before the CA but this was dismissed for
lack of merit. Petitioner duly filed a Motion for Reconsideration,
which was denied by the CA.
ISSUE
WON petitioner was validly dismissed from employment on the
ground of serious misconduct and gross habitual neglect of
duties, including habitual tardiness and absenteeism

HELD
YES
- So irresponsible an employee like petitioner does not deserve a
place in the workplace, and it is within the managements
prerogative of WNC to terminate his employment. Even as the
law is solicitous of the welfare of employees, it must also protect
the rights of an employer to exercise what are clearly
management prerogatives. As long as the companys exercise of
those rights and prerogatives is in good faith to advance its
interest and not for the purpose of defeating or circumventing
the rights of employees under the laws or valid agreements,
such exercise will be upheld.
Disposition Assailed decision and resolution affirmed with
modification.

ACUAV CA
QUISUMBING; May 5, 2006
FACTS
- Petitioners are Filipino overseas workers deployed by private
respondent Join International Corporation (JIC), a licensed
recruitment agency, to its principal, 3D Pre-Color Plastic, Inc.,
(3D) in Taiwan, Republic of China, under a uniformly-worded
employment contract for a period of two years. Herein private
respondent Elizabeth Alaon is the president of Join International
Corporation.
- September 1999 petitioners applied for employment abroad
with JIC. They each paid placement fee of P14,850. They signed
a uniformly-worded employment contract which stipulated that
they were to work as machine operators with a monthly salary of
NT$15,840.00, exclusive of overtime, for a period of two years.
- December 9, 1999 they left for Taiwan. Upon arriving at the
factory owned by 3D, they were made to sign another contract
which stated that their salary was only NT$11,840.00. - They
were also told that their dormitory was still under construction.
In the meantime, they were brought to a small room where forty
women were jampacked and each person was given a pillow.
Since the ladies' comfort room was out of order, they had to ask
permission to use the men's comfort room. Petitioners claim
they were made to work twelve hours a day, from 8:00 p.m. to
8:00 a.m.
- December 16, 1999 due to unbearable working conditions,
they informed management that they were leaving. They booked
a flight home, at their own expense. Before they left, they were
made to sign a written waiver. In addition, petitioners were not
paid any salary for work rendered on December 11-15, 1999.

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- Immediately upon arrival in the Philippines, petitioners went to

JIC, narrated what happened, and demanded the return of their
placement fees and plane fare. JIC refused. On December 28,
1999, JIC offered a settlement. Mendez received P15,080; Acua
and Ramones received P13,640 and P16,200, respectively. They
claim they signed a waiver, otherwise they would not be
refunded.
- January 2000 petitioners invoking Republic Act No. 8042, filed
a complaint for illegal dismissal and non-payment/underpayment
of salaries or wages, overtime pay, refund of transportation fare,
payment of salaries/wages for 3 months, moral and exemplary
damages, and refund of placement fee before the National Labor
Relations Commission (NLRC).
- The Labor Arbiter ruled in favor of petitioners, declaring that
Myrna Ramones, Juliet Mendez and Mercedita Acua did not
resign voluntarily from their jobs. Thus, private respondents
were ordered to pay jointly and severally, in Philippine Peso, at
the rate of exchange prevailing at the time of payment, the
unexpired portion, salary for 4 days, and overtime pay for 4 hrs
in 4 days, refund of placement fee, and moral and exemplary
damages, and attorneys fees (10% of the award).The award
which totaled NT$296,880.00 and P285,080.00
- The NLRC ordered that the amounts of P15,080, P13,640 and
P16,200 received under the quitclaim by Mendez, Acua and
Ramones, respectively, be deducted from their respective
awards. They were awarded attorney's fees equivalent to ten
percent (10%) of their awarded labor-standards claims for
unpaid wages and overtime pays. No moral and exemplary
damages and placement fees were awarded.
ISSUE
WON petitioners were illegally dismissed and are entitled to
benefits plus damages
HELD
NO
No Constructive Dismissal
- The Labor Arbiter and the NLRC ruled that there was
constructive dismissal because of the unbearable conditions.
Constructive dismissal covers the involuntary resignation
resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to an employee. In
this case, the appellate court found that petitioners did not deny
that the accommodations were not as homely as expected. In
the petitioners' memorandum, they admitted that they were told
by the principal, upon their arrival, that the dormitory was still
under construction and were requested to bear with the
temporary inconvenience and the dormitory would soon be
finished. Likewise, the petitioners did not refute private
respondents' assertion that they had deployed approximately
sixty other workers to their principal, and to the best of their
knowledge, no other worker assigned to the same principal has
resigned, much less, filed a case for illegal dismissal. These cited
circumstances do not reflect malice by private respondents nor
do they show the principal's intention to subject petitioners to
unhealthy accommodations. Under these facts, there was no
constructive dismissal.
Entitled to Overtime Pay
- The claim of overseas workers against foreign employers could
not be subjected to same rules of evidence and procedure easily
obtained by complainants whose employers are locally based.
While normally we would require the presentation of payrolls,
daily time records and similar documents before allowing claims
for overtime pay, in this case, that would be requiring the nearimpossible. It is private respondents who could have obtained
the records of their principal to refute petitioners' claim for
overtime pay. By their failure to do so, private respondents
waived their defense and in effect admitted the allegations of
the petitioners.
- It is a time-honored rule that in controversies between a worker
and his employer, doubts reasonably arising from the evidence,
or in the interpretation of agreements and writing should be

Labor Law 1
resolved in the worker's favor. 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. Accordingly, the private
respondents are solidarily liable with the foreign principal for the
overtime pay claims of petitioners.
No Moral and Exemplary Damages
- Moral and exemplary damages are recoverable only where the
dismissal of an employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy. The person
claiming moral damages must prove the existence of bad faith
by clear and convincing evidence, for the law always presumes
good faith. Petitioners allege they suffered humiliation, sleepless
nights and mental anguish, thinking how they would pay the
money they borrowed for their placement fees. Even so, they
failed to prove bad faith, fraud or ill motive on the part of private
respondents. Moral damages cannot be awarded. Without the
award of moral damages, there can be no award of exemplary
damages, nor attorney's fees.
Private Respondents Need Not Pay the Petitioners
- Quitclaims executed by the employees are commonly frowned
upon as contrary to public policy and ineffective to bar claims for
the full measure of the workers' legal rights, considering the
economic disadvantage of the employee and the inevitable
pressure upon him by financial necessity. Nonetheless, the socalled "economic difficulties and financial crises" allegedly
confronting the employee is not an acceptable ground to annul
the compromise agreement unless it is accompanied by a gross
disparity between the actual claim and the amount of the
settlement.
- The petitioners were not in any way deceived, coerced or
intimidated into signing a quitclaim waiver in the amounts of
P13,640, P15,080 and P16,200 respectively. Nor was there a
disparity between the amount of the quitclaim and the amount
actually due the petitioners. Conformably then the petitioners
are each entitled to NT$3,959.99 in Philippine Peso at the rate of
exchange prevailing at the time of payment. Since the prevailing
exchange rates on December 1999 was NT$1 to P1.268805, the
amount of the quitclaim paid to petitioners was actually higher
than the amount due them.

ORIENTAL SHIP MANAGEMENT CO INC V CA

QUISUMBING; January 25, 2006
NATURE
Petition for review on certiorari
FACTS
- Petitioner Oriental Ship Management Co., Inc. (Oriental, for
brevity) is a recruitment agency duly licensed by the Philippine
Overseas Employment Administration (POEA) to recruit seafarers
for employment on board vessels accredited to it. Kara Seal
Shipping Co., Ltd. (Kara Seal, for brevity) is petitioner's foreignbased principal, which owns and manages M/V Agios Andreas, a
vessel accredited to petitioner.
- Respondents Cuesta and Gonzaga were hired as Third
Engineers on board the said vessel for a one-year contract with a
monthly salary of $900.
- On Nov. 1998, Kara Seal through its vessels Shipmaster signed
an Agreement with the International Transport Workers
Federation (ITF for brevity) increasing the monthly salary from
$900 to $1,936.
- On Jan. 1999, an ITF inspector found out that the vessels crew
have not been paid properly. The Shipmaster assured him that
the workers will be paid accordingly.
- Upon reaching Port Piombino, however, respondents were
ordered repatriated to Manila and before such repatriation, they
were made to sign Letters of Indemnity saying the contract of
employment of the above crewmember is terminated by mutual
agreement up to 23rd January 1999, in the Port of Piombino
(Italy).The seamen (sic) hereby acknowledge has been received

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all what is due to him, arising from his employment on board of

the mentioned vessel; consequently he declares to have no
claim whatever against the Shipowner.
- Respondents received from Kara Seal payments not in
accordance with the Agreement. As such respondents filed
Complaint against Oriental and Kara Seal for illegal dismissal.
- The Labor Arbiter dismissed the complaint saying The
voluntariness of their resignation is confirmed and reflected from
the Letter of Indemnity they executed. They were executed in
the presence and with the participation of the ITF. ITF acts as the
protector of seamen's rights against any abuse or shortcomings
of ship owners. They will not allow such eventuality had the
complainants been under duress. Besides, there is really no
evidence of threat or intimidation to the complainant's
resignation. Accordingly, the validity of their resignation and
repatriation must be upheld.
- The NLRC affirmed the decision of the Labor Arbiter with
modification as regards the vacation pay of Cuesta. The NLRC
also denied the Motion for Recognition.
- The CA reversed the NLRC decision saying that the Letters of
Indemnity were void. The CA also denied the MFR filed by
Oriental and Kara Seal.
ISSUES
1. WON the quitclaims were valid
2. WON Cuesta and Gonzaga were illegally dismissed
HELD
1. NO
- Pacta privata juri publico derogare non possunct. Private
agreements between parties cannot derogate from public right.
- The law is solicitous of the welfare of employees because they
stand on unequal footing with their employers and are usually
left at the mercy of the latter. This is especially true of Filipino
migrant workers who, alone in a foreign country, might have no
adequate alternative resources even for their own personal daily
needs.
- Hence, quitclaims signed by our migrant workers, such as the
Letters of Indemnity in the instant case, are viewed with strong
disfavor. Public policy dictates that they be presumed to have
been executed at the behest of the employer. It is the
employer's duty to prove that such quitclaims were voluntary.
The employee's acknowledgment of his termination with nary a
protest or objection is not enough to satisfy the requirement of
voluntariness on his part.
- Resignation is defined as the voluntary act of an employee who
finds himself in a situation where he believes that personal
reasons cannot be sacrificed in favor of the exigency of the
service, and he has no other choice but to disassociate himself
from his employment.
- It would have been illogical for respondents to resign and then
claim that they were illegally terminated. Well-entrenched is the
rule that resignation is inconsistent with the filing of a complaint
for illegal dismissal.
- The Court noted that respondents Cuesta and Gonzaga, when
repatriated to Manila, had each been employed for only a little
over two (2) months and less than one (1) month, respectively.
Prior to their repatriation, their monthly salaries were even
increased from US$900 to US$1,936. Hence, it is rather strange
that they would suddenly resign after barely beginning service of
their twelve (12)-month contract.
- Based on the foregoing disquisition, The Sc is convinced that
respondents were forced to sign the Letters of Indemnity. Thus,
said Letters of Indemnity must be deemed void. The stamp and
signature of the ITF representative thereon add nothing to
render the letters of any legal effect, but instead add to the
impression of pressure exerted by ITF on the individual Filipino
seamen.
- Settled is the rule that quitclaims are ineffective in barring full
recovery of the benefits due the employee. The acceptance of
any monetary benefit, such as repatriation expenses and
accrued wages in this case, would not divest respondents of the
right to fully claim the remainder of what is rightfully due them.
2. YES

Labor Law 1
- There was no justification for terminating their services and
there was no due process as Oriental did not serve two written
notices to respondents prior to their termination from
employment, as required by the Labor Code.
- In this connection, paragraph 5; Section 10 of Republic Act No.
8042 provides:
- In case of termination of overseas employment without just,
valid or authorized cause as defined by law or contract, the
worker shall be entitled to the full reimbursement of his
placement fee with interest at 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. The SC also noted that there is no
evidence on record of payment of placement fee. Hence, it is
unable to award reimbursement of the same. Cuesta is also
entitled to vacation leave pay. Lastly, for petitioner's breach of
contract and bad faith, respondents should be awarded P50,000
in moral damages and another P50,000 as exemplary damages.
In addition, they should also be awarded attorney's fees
equivalent to ten percent (10%) of the aggregate monetary
awards.
Disposition Petition is DENIED

PERIQUET V NLRC
CRUZ; June 22, 1990
NATURE
Petition to review the decision of the NLRC
FACTS
- The petitioner, Corazon Periquet, was dismissed as toll collector
by the Construction Development Corporation of the Philippines
(CDCP), private respondent herein, for willful breach of trust and
unauthorized possession of accountable toll tickets allegedly
found in her purse during a surprise inspection.
- She filed a complaint for illegal dismissal claiming that she was
framed
- Said complaint was sustained by the labor arbiter, who ordered
her reinstatement within ten days "without loss of seniority
rights and other privileges and with full back wages to be
computed from the date of her actual dismissal up to date of her
actual reinstatement.
- On appeal, the order was affirmed by the NLRC on August 29,
1980.
- On March 11, 1989, almost nine years later, the petitioner
filed a motion for the issuance of a writ of execution of the
decision, which was granted by the executive labor arbiter in an
order dated June 26, 1989, requiring payment to the petitioner of
the sum of P205,207.42 "by way of implementing the balance of
the judgment amount" due from the private respondent.
- Said amount was garnished by the NLRC sheriff.
- On September 11, 1989, however, the NLRC sustained the
appeal of the CDCP and set aside the order dated June 20, 1989,
the corresponding writ of execution of June 26, 1989, and the
notice of garnishment.
- In its decision, the public respondent held that the motion for
execution was time-barred, having been filed beyond the fiveyear period prescribed by both the Rules of Court and the Labor
Code.
- It also rejected the petitioner's claim that she had not been
reinstated on time and ruled as valid the two quitclaims she
had signed waiving her right to reinstatement and
acknowledging settlement in full of her back wages and
other benefits. (Facts relating to quitclaims italicized in
reasoning)
- The petitioner contends that this decision is tainted with grave
abuse of discretion and asks for its reversal.

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Disini

ISSUE
WON the NLRC committed grave abuse of discretion amounting
to lack or excess of jurisdiction when it held that the motion for
execution was time-barred, and ruled as valid the two quitclaims
petitioner had signed
HELD
NO
On prescription
- Sec. 6, Rule 39 of the Revised Rules of Court, provides: A
judgment may be executed on motion within five (5) years from
the date of its entry or from the date it becomes final and
executory. After the lapse of such time, and before it is barred
by the statute of limitations, a judgment may be enforced by
action.
- A similar provision is found in Art. 224 of the Labor Code, as
amended by RA 6715, viz. ART. 224. Execution of decision,
orders, awards. (a) The Secretary of Labor and Employment or
any Regional Director, the Commission or any Labor Arbiter or
Med-Arbiter, or the Voluntary Arbitrator may, motu propio, or on
motion of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it becomes final and
executory, requiring a sheriff or a duly deputized officer to
execute or enforce a final decision, order or award.
- Periquet insists it was the private respondent that delayed and
prevented the execution of the judgment in her favor, but that is
not the way the SC sees it.
- The original decision called for her reinstatement within ten
days from receipt thereof following its affirmance by the NLRC
on August 29, 1980, but there is no evidence that she demanded
her reinstatement or that she complained when her demand was
rejected. What appears is that she entered into a
compromise agreement with CDCP where she waived her
right to reinstatement and received from the CDCP the
sum of P14,000.00 representing her back wages from the
date of her dismissal to the date of the agreement
On validity of quitclaims
- After accepting the sum of P14,000.00 from the private
respondent and waiving her right to reinstatement in the
compromise agreement, she applied for re-employment with the
CDCP and was on March 16,1987, given the position of xerox
machine operator.
- On June 27, 1988; she wrote the new management of the CDCP
and asked that the rights granted her by the decision dated
August 29, 1980, be recognized because the waiver she had
signed was invalid
- On September 19, 1988, the Corporate Legal Counsel of the
private respondent recommended the payment to the petitioner
of the additional sum of P9,544.00, representing the balance of
her back pay for three years at P654. 00 per month
- On November 10, 1988, the petitioner accepted this
additional amount and signed another Quitclaim and
Release
- In her petition she is now disowning both acknowledgments
- Not all waivers and quitclaims are invalid as against
public policy. If the agreement was voluntarily entered
into and represents a reasonable settlement, it is binding
on the parties and may not later be disowned simply
because of a change of mind. It is only where there is
clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law
will step in to annul the questionable transaction. But
where it is shown that the person making the waiver did
so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible
and reasonable, the transaction must be recognized as a
valid and binding undertaking.
Disposition Petition denied

EMCO PLYWOOD CORP V ABELGAS

PANGANIBAN; April 14, 2004

Labor Law 1
NATURE
Petition for review on certiorari of CA decision declaring EMCOs
attempted retrenchment of its employees as legally ineffective
FACTS
- EMCO is a domestic corporation engaged in the business of
wood processing, operating through its sawmill and plymill
sections where respondents used to be assigned as regular
workers.
- On Jan 20, 1993 and Mar 2, 1993, EMCO, represented by its
Gen Manager Lim, informed the DOLE of its intention to
retrench some of its workers on the ground of purported
financial difficulties.
- EMCO then issued a memorandum, addressed to all its
foremen, section heads, supervisors and department heads, with
the instruction of retrenching some workers based on the ff
guidelines:
a) Old Age (58 years and above except positions that are really
skilled);
b) Performance (Attitude, Attendance, Quality/ Quantity of Work)
- Per EMCOs notice to the DOLE, 104 workers were proposed for
inclusion in its retrenchment program. EMCO terminated 250
workers.
- Those terminated then received their separation pay of P4,815
each. But deductions were made by EMCO purportedly for the
attorneys fees payable to respondents lawyer, for his efforts in
renegotiating an increase in the wages contained in their CBA.
- Upon receipt of such pay, respondents were made to sign
quitclaims, releasing EMCO and all its officers from all forms of
actions/suits, debts, sums of money, etc.
- About 2 years later, they then lodged a complaint, through
their labor union, against EMCO for illegal dismissal, damages
and attys fees.
- EMCO interposed the defense of lack of cause of action;
respondents had waived whatever claims they may have against
the corporation after signing the quitclaims in favor of EMCO.
- LABOR ARBITER dismissed the complaint.
- Appeal to the NLRC was also dismissed. It anchored its
dismissal on the effect of the respondents waivers or
quitclaims. There is no doubt that the respondents voluntarily
executed their quitclaims/waivers as manifested by the fact that
they did not promptly question their validity within a reasonable
time. It took them two (2) years to challenge and dispute the
validity of the waivers by claiming belatedly that they were
either forced or misled into signing the same.
CA Ruling
- EMCO did not comply with one-month prior notice requirement
under LC:
a) Memorandum merely provided the guidelines on the conduct
of the intended lay-off; this did not constitute notice.
b) It was not addressed to the workers, but to the foremen, the
department supervisors and the section heads.
c) There was no proper notice to DOLE. EMCO terminated the
services of 250 employees but included only 104 of them in the
list it filed with DOLE.
- Before EMCO resorted to retrenchment, it failed to adduce
evidence of its losses and prove that it had undertaken
measures to prevent the occurrence of such losses.
- EMCO had not paid the legally prescribed separation pay.
EMCO violated the LC in deducting the amount of attorneys
fees. 3
- Employees cause of action had not yet prescribed when the
case was filed, because an action for illegal dismissal constituted
an injury to their rights. (Art.1146 of NCC is applicable: 4 yrs
prescription period)
ISSUES
3

"Article 222. APPEARANCES AND FEES. (b) No attorneys fees, negotiation fees
or similar charges of any kind arising from any collective bargaining negotiations or
conclusion of the collective bargaining agreement shall be imposed on any individual
member of the contracting union: Provided, however, That attorneys fees may be
charged against union funds in an amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the contrary shall be null and void."

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1. WON petitioner EMCO had substantially complied with the

requisites for a valid retrenchment
2. WON respondents had voluntarily executed their respective
Quitclaims
3. WON the CA may, in a petition for certiorari, correct the
evaluation of evidence made by both the Labor Arbiter and the
NLRC
HELD
1. NO
Ratio Retrenchment4 is one of the authorized causes for
dismissal of employees, resorted to by employers to avoid or
minimize business losses. It is only "a measure of last resort
when other less drastic means have been tried and found to be
inadequate." (Guerrero v NLRC)
* Standards to justify retrenchment and to avoid abuse:
a) Losses expected should be substantial
b) Losses must be reasonably imminent, as such imminence
can be perceived objectively and in good faith by the employer
c) Retrenchment is reasonably necessary and likely to
effectively prevent the expected losses. Employer should have
taken other measures prior or parallel to retrenchment to
forestall losses
d) Alleged losses if already realized, and expected losses sought
to be forestalled, must be proved by sufficient and convincing
evidence
Reasoning
- employer bears the burden of proving the existence or
imminence of substantial losses with clear and satisfactory
evidence. The evidence submitted by EMCO does not persuade
the SC:
a) Audited financial statements for the years 1991 and 1992.
EMCOs net income of P1.052M for 1991 decreased to P880T in
1992. The F/S also demonstrate that EMCOs liability then
increased from P106.5M to P123M.
* BUT in Somerville Stainless Steel Corp v NLRC, SC held that
the presentation of F/S for a particular year was inadequate to
overcome the stringent requirement of the law. Also, in the
analysis of F/S, one particular percentage of relationship may not
be too significant in itself; that is, it may not suffice to point out
those unfavorable characteristics of the company that would
require immediate or even drastic action."
b) EMCO undertook preventive measures to prevent the
occurrence of imminent losses; it implemented a work scheme
on a rotation basis.
* BUT it did not try other measures, such as cost reduction,
lesser investment on raw materials, adjustment of the work
routine to avoid the scheduled power failure, etc.
c) The 146 employees not included in the list submitted to DOLE
voluntarily resigned.
* BUT resignation is the voluntary act of employees who are
compelled by personal reasons to dissociate themselves from
their employment. It would have been illogical for respondents to
resign and then file a Complaint for illegal dismissal.
2. NO
Ratio The mere fact that the employees were not physically
coerced or intimidated does not necessarily imply that they
freely or voluntarily consented to the terms thereof. (Phil Carpet
Employees Assoc v Phil Carpet Manufacturing Corp)

ART. 283. 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 establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a
written notice on the worker 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 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 as one (1) whole year.

Labor Law 1
- The corporation, and not its employees, has the burden of
proving that the Quitclaims were voluntarily entered into.
(Salonga v NLRC)
- Because the retrenchment was illegal and of no effect, the
Quitclaims were therefore not voluntarily entered into by
respondents. Consent was similarly vitiated by mistake or fraud.
(Trendline Employees Assoc-Southern Phil Federation of Labor
(TEA-SPFL) v NLRC)
Reasoning
- EMCO claimed that aside from Eddie de la Cruz, the other
respondents did not submit their respective supporting affidavits
detailing how their individual consents had been obtained.
Allegedly, such documents do not constitute the clear and
convincing evidence required under the law to overturn the
validity of Quitclaims. But the SC held that the burden of proof is
actually on the part of EMCO.
- As a rule, deeds of release or quitclaim cannot bar employees
from demanding benefits to which they are legally entitled.
Acceptance of those benefits would not amount to estoppel;
however, amounts already received are to be deducted from
their respective monetary awards.
3. YES
Ratio The lower tribunals factual findings will not be upheld
where there is a showing that such findings were totally devoid
of support, or that the judgment was based on a
misapprehension of facts.
Disposition Petition is DENIED (EMCO is ordered to REINSTATE
employees with full backwages, inclusive of allowances and
other benefits)

ANTAMOC GOLDFIELDS MINING COMPANY V CIR

IMPERIAL; June 28, 1940
NATURE
Petition for review by means of certiorari.
FACTS
The National Labor Union, representing the workers of Antamok
Goldfield Mining Company, sent a letter to management
demanding higher pay and better working conditions.
Management accepted some of their demands and rejected the
others. Consequently the workers went on strike. The
Department of Labor intervened and an amicable settlement
between the parties was entered into. Despite this, another
strike was subsequently held. A stoning incident occurred which
resulted in the dismissal of forty-five workers. The matter was
heard in the Court of Industrial Relations (CIR) where witnesses
for both petitioners and respondents testified. The CIR ordered
one of its special agents to proceed to the premises of the mines
and to conduct further investigation. " The investigation
disclosed that the precipitate and unwarranted dismissal of the
forty-five men after the incident seems to have been spurred by
an over anxious desire on the part of the company to get rid of
these men. It was also found out that more than 400 workers of
different classes among them, mockers, miners, timbermen,
trammers and capataces coming from different mines in the
region have been employed by Antamok as fresh laborers and
that almost all, if not all, of these men are not members of the
the National Labor Union, Inc." The CIR ruled that the discharges
and indefinite suspensions were made by Antamok without first
securing the consent of the CIR in violation of a previous order
enjoining them from discharging any laborer involved in the
dispute without just cause and without previous authority of the
Court. Antamok insists in its right of selecting the men that it
should employ and that in the exercise of this right it should not
be restrained or interfered with by the CIR. Consequently, they
assail the validity of Commonwealth Act No. No. 103, which
created the CIR, on the ground that it deprives them of liberty
and property without due process of law.
ISSUE
WON Commonwealth Act No. 103 is unconstitutional

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HELD
NO
- In Commonwealth Act No. 103, and by it, our Government no
longer performs the role of a mere mediator or intervenor but
that of the supreme arbiter. The policy of laissez faire has to
some extent given way to the assumption by the government of
the right of intervention even in contractual relations affected
with public interests. Justice Laurel in Ang Tibay, and National
Workers Brotherhood v Court of Industrial Relations, and
National Labor Union, Inc. states that our Constitution was
adopted in the midst of surging unrest and dissatisfaction
resulting from economic and social distress which was
threatening the stability of governments the world over.
Embodying the spirit of the present epoch, general provisions
were inserted in the Constitution which are intended to bring
about the needed social and economic equilibrium between
component elements of society through the application of what
may be termed as the justitia communis advocated by Grotius
and Leibnits many years ago to be secured through the
counterbalancing of economic and social forces and
opportunities which should be regulated, if not controlled, by the
State or placed, as it were, in custodia societatis. 'The promotion
of social justice to in sure the well-being and economic security
of all the people' was thus inserted as vital principle in our
Constitution. (Sec. 5, Art. II, Constitution.) And in order that this
declaration of principle may not just be an empty medley of
words, the Constitution in various sections thereof has provided
the means towards its realization, For instance, section 6 of
Article XIII declares that the State 'shall afford protection to
labor, especially to working women and minors, and shall
regulate the relations between landowner and tenant, and
between labor and capital in industry and in agriculture.' The
same section also states that 'the State may provide for
compulsory arbitration.' In extraordinary cases mentioned in
section 16, Article VI, of the Constitution, the President of the
Philippines may be authorized by law, for a limited period and
subject to such restrictions as the National Assembly may
prescribe, to 'promulgate rules and regulations to carry out a
declared national policy.' Albeit, almost at the same time the
Congress of the United States approved the National Labor
Regulations Act (49 Stat., 449) on July 5, 1935, commonly known
as the Wagner Act, we were in the Philippines headway towards
the adoption of our fundamental law, pursuant to congressional
authority given in the Tydings-McDuffie Independence Act,
approved March 24, 1934. In our Bill of Rights we now find the
following provision 'The right to form associations or societies for
purposes not contrary to law shall not be abridged.' (Par. 6,
section 1, art. III, Constitution.) What was an agitation in the
United States which brought about the recommendation by the
Commission on Industrial Relations created by an Act of
Congress in 1912 for the adoption of a Labor Bill of Rights as an
amendment to the United States Constitution is, in our case,
virtually an accepted principle, which may be expanded and
vitalized by legislation to keep pace with the development of
time and circumstances.
- By and large, these provisions in our Constitution all evince and
express the need of shifting emphasis to community interest
with a view to affirmative enhancement of human values. In
conformity with the constitutional objective and cognizant of the
historical fact that industrial and agricultural disputes had given
rise to disquietude, bloodshed and revolution in our country, the
National Assembly enacted Commonwealth Act No. 103, entitled
'An Act to afford protection of labor by creating a Court of
Industrial Relations empowered to fix minimum wages for
laborers and maximum rental to be paid by tenants, and to
enforce compulsory arbitration between employers or landlords,
and employees or tenants, respectively; and by prescribing
penalties for the violation of the orders' and, later,
Commonwealth Act No. 213, entitled, 'An Act to define and
regulate legitimate labor organizations.'
- Commonwealth Act No. 213 was enacted in pursuance of what
appears to be the deliberate embodiment of a new social policy,
founded on the conception of a society integrated not by
independent individuals at dealing at arms length, but by

Labor Law 1
interdependent members of a consolidated whole whose
interests must be protected against mutual aggression and
warfare among and between divers and diverse units which are
impelled by countervailing and opposite individual and group
interests, and this is particularly true in the relationship between
labor and capital. Social and industrial disturbances which fifty
years ago were feudal-like and of isolated importance may now
well result in a serious strain upon the entire economic organism
of the nation. Several attempts at meeting and solving our
peculiar social and economic problems have already been made.
The system of voluntary arbitration devised by Act No. 4055 of
the defunct Philippine Legislature has apparently been
abandoned by the enactment of the aforementioned
Commonwealth Acts Nos. 103 and 213.

SAROCAM V INTERORIENT MARITIME ENT. INC. AND

DEMACO UNITED LTD.
CALLEJO, SR.; June 27 2006
NATURE
Petition for Review on certiorari under Rule 45 of the ROC of the
CA Decision in CA-G.R. SP No. 84883, which affirmed the
February 19, 2004 and April 27, 2004 Resolutions of the NLRC.
FACTS
- On June 27, 2000 petitioner Benjamin L. Sarocam was hired by
Interorient Maritime Ent., Inc. and Demaco United Ltd., for a
twelve-month contract as bosun on board M/V Despina.
- While the vessel was navigating to China, petitioner suffered
lumbar sprain when he accidentally fell from a ladder. On
Nov.15, 2000, he was examined and found to have
neuromyositis with the waist and diabetes. The examining
physician prescribed medicine and recommended the signing off
and hospitalization of petitioner. His employers agreed to
repatriate him on Nov. 30, 2000.
- On Dec. 5, 2000, petitioner was referred to the companydesignated physician, Dr. Pidlaoan. Petitioner was given Alaxan
tablet for his back pain and Euglocon for his elevated blood
sugar. He was also advised to return for follow-up evaluation.
On Dec. 13, 2000, he returned to the clinic with no more
complaints of back pains and his sugar examination revealed
normal results. Petitioner was then declared fit for duty
effective
on
that
day.
- On March 20, 2001, petitioner executed a release and quitclaim
in favor of his employers where he acknowledged the receipt of
US$405.00 as his sickwages and freed his employers from
further
liability.
- However, on Nov. 27, 2001, petitioner filed a complaint with
the NLRC for disability benefit, illness allowance/reimbursement
of medical expenses, damages and attorneys fees. To support
his claim, he presented medical certificates issued by his 3
personal doctors, recommending a Grade VIII disability under the
POEA schedule of disability grading.
- On July 11, 2003, Labor Arbiter Macam dismissed the
complaint, holding that petitioner was not entitled to disability
benefits because he was declared fit for duty and had
previously executed a release and quitclaim in favor of his
employers and already received his sickness allowance.
Petitioners claim for moral damages and attorneys fees were,
likewise, not awarded on the Labor Arbiters ruling that there
was no evidence of bad faith and malice on the part of the
employers.
- Upon petitioners appeal, the NLRC issued a Resolution
affirming the decision of the Labor Arbiter, with the modification
that petitioner was entitled to US$1,350.00 or its peso
equivalent, representing his salary for three (3) months. The
petitioners motion for reconsideration was denied by the NLRC.
The Petition for Certiorari filed with the CA was dismissed.
Petitioners MFR was denied by the CA.
- Petitioner avers that the quitclaim he executed is invalid, as the
amount he received as consideration therefor was much lower
than what he should have received under the POEA Standard
Employment Contract. He went on to argue that quitclaims are

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frowned upon by this Court as they are contrary to public

policy.
ISSUES
1. WON the respondents company-designated doctor be
considered competent and reliable enough to declare petitioner
as fit to work contrary to the declarations of three (3)
independent physicians similarly finding him otherwise
2. WON the execution by petitioner of a release and quitclaim
estop him from claiming disability benefits under the POEA
standard employment contract
HELD
1. YES
- Petitioner did not question the findings of Dr. Pidlaoan and his
recommendation. He questioned the doctors competency and
the correctness of his findings only when he filed the complaint
against respondents before the Labor Arbiter, roughly 11 months
after petitioner was examined by the doctor. Petitioner
consulted his personal doctors only in July and August 2001, long
after he had been examined by the company-designated
physician.
- Dr. Pidlaoan examined and treated petitioner from the time he
was repatriated up to his recovery and subsequent assessment
as fit for duty on December 13, 2000. As in the German Marine
case, the extensive medical attention extended by Dr. Pidlaoan
enabled the latter to acquire familiarity, if not detailed
knowledge, of petitioners medical condition. No doubt such
specialized knowledge enabled Dr. Pidlaoan to arrive at a much
more accurate appraisal of petitioners condition, as compared
to another physician not privy to petitioners case from the very
beginning. Indeed, the assessment of the three other personal
doctors of petitioner could not have been that reliable
considering that they based their conclusions on the prior
findings of Dr. Pidlaoan; moreover, they examined petitioner 7 or
8 months after he was assessed as fit to work and treated him
for
only
one
day.
- Furthermore and most importantly, petitioner did not question
the competency of Dr. Pidlaoan and his assessment when the
latter declared him as fit for duty or fit to work.
- Additionally, petitioner, instead of questioning the assessment
of the company-designated doctor, executed a release and
quitclaim in favor of respondents, around three months after the
assessment. In executing the said document, petitioner thus
impliedly admitted the correctness of the assessment of the
company-designated physician, and acknowledged that he could
no
longer
claim
for
disability
benefits.
2. YES
- While petitioner may be correct in stating that quitclaims are
frowned upon for being contrary to public policy, the Court has,
likewise, recognized
legitimate waivers that represent a
voluntary and reasonable settlement of a workers claim which
should be respected as the law between the parties. Where the
person making the waiver has done so voluntarily, with a full
understanding thereof, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as
being a valid and binding undertaking.
- In the instant case, petitioner wrote the release and quitclaim
with his own hand. From the document itself, the element of
voluntariness in its execution is evident. Petitioner also appears
to have fully understood the contents of the document he was
signing, as the important provision thereof had been relayed to
him in Filipino.
- Not all waivers and quitclaims are invalid as against public
policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of
mind. It is only where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law will step
in to annul the questionable transaction. But where it is shown
that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for

Labor Law 1
the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.
- As a final note, let it be emphasized that 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.
Disposition Petition is DENIED for lack of merit. The Decision
and Resolution of the CA are AFFIRMED.

PHILIPPINE AIRLINES, INC. V SANTOS

REGALADO; February 4, 1993
NATURE
Petition for certiorari assailng the NLRC decision in favor of the
private respondents (holding that there was illegal suspension,
that the respondents be paid their salaries corresponding to the
suspension period, and that disciplinary action from the
respondents service records be deleted)
FACTS
- The private respondents are all Port Stewards in the Catering
Sub-Department of the Passenger Services Department of PAL
whose jobs were to prepare meal orders and checklists, set up
standard equipment in accordance with the requirements of the
type of service for each flight; to ski, bin and make an inventory
of Commissary supplies and equipment.
- On several occasions, deductions were made from their salaries
allegedly representing losses of inventoried items charged to
them for mishandling of company properties.
- August 21, 1984: The respondents, through the union, made a
formal notice of the deductions to PAL through the Manager for
Catering, Mr. Reynaldo Abad. However, no action was taken by
PAL.
- November 4, 1984: Pursuant to the grievance machinery Step 1
of the CBA between PAL and the union, respondents filed a
formal grievance.
- November 21: The said grievance was submitted to the office
of Mr. Abad who was on leave.
- December 5: Mr. Abad was still on leave, and since in the CBA,
Mr. Abad (PAL) was supposed to resolve the grievance within 5
days, the respondents thru the shop steward wrote a letter
addressed to Mr. Abads office expressing their belief that the
grievance was deemed resolved in their favor
- December 7: Mr. Abad (finally) returned and scheduled a
meeting on December 12
- the respondents refused to conduct their inventory works
thereafter
- December 12: Mr. Abad and the union had the meeting where
the former denied the petition of the respondents, adopting the
position that it was the inventory of goods was the respondents
duty and that the deductions in their salaries were due to the
losses in the mishandling of goods
- Due to the respondents refusal to conduct inventory works in
early December, Mr. Abad issued an inter-office memo asking
them to explain why no disciplinary action should be taken
against them. The respondents argued that since their grievance
in accordance with the grievance machinery step 1 of their CBA
was not resolved within the 5-day period, they believed that the
grievance was resolved in their favor. Mr. Abad found this
reasoning
unsatisfactory,
THUS
suspending
the
said
respondents.
- the union filed another grievance asking for the lifting of the
suspension, but PAL denied the said lifting, only reducing the
suspension period for respondent Ramos.
- the union demanded for the reimbursement of the salaries of
individual respondents during the suspension but PAL denied
their demand.
- the respondents filed a complaint for ILLEGAL SUSPENSION
before the Arbitration Branch of the NLRC. Complaint dismissed,
rule in favor of PAL

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- Respondents appealed to NLRC, NLRC ruled in favor of

respondents
- PALs petition for reconsideration denied, hence this case
Petitioners claims (PAL)
- The CBA provision on grievance machinery was established
both for the union and the management (PAL), therefore, should
NOT be narrowly interpreted; it is the employees duty to
observe status quo (therefore, cant preempt that the decision is
resolved in their favor); the management should be given
chance to present their side since before the 5 day prescriptive
period begins to run, there should first be the presentment of
grievance and its discussion
ISSUES
1. WON NLRC acted with grave abuse of discretion amounting to
lack of jurisdiction in setting aside the Arbitration Branchs
decision in favor of PAL
2. WON Section 2, Article IV of the PAL-PALEA CBA5 should be
narrowly interpreted, THEREFORE favoring the respondents (the
prescriptive period runs after the filing of the grievance)
HELD
1. NO
- It has not been shown that respondent NLRC has unlawfully
neglected the performance of an act which the law specifically
enjoins it to perform as a duty or has otherwise unlawfully
excluded petitioner from the exercise of a right to which it is
entitled.
Ratio Judicial review by this Court in labor cases does not go so
far as to evaluate the sufficiency of the evidence upon which the
labor officer or office based his or its determination, but is
limited to issues of jurisdiction and grave abuse of discretion
2. YES
- Even if Mr. Abad was on leave when the grievance was filed
(and even if the union and respondents knew that Mr. Abad was
on leave), the CBA would still apply since it is hard to believe
that everything under Abad's authority would have to stand still
during his absence from office. To be sure, it is to be expected
that someone has to be left to attend to Abad's duties.
Ratio The sympathy of the Court is on the side of the laboring
classes, not only because the Constitution imposes such
sympathy, but because of the one-sided relation between labor
and capital. The constitutional mandate for the promotion of
labor is as explicit as it is demanding. The purpose is to place
the workingman on an equal plane with management with all
its power and influence in negotiating for the advancement of
his interests and the defense of his rights. 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 privileges in life should have more privileges in
law. (in short, interpretation should be made in favor of the
laborers)
Reasoning
- The grievance of employees is not a matter which requires the
personal act of Mr. Abad and thus could not be delegated.
Petitioner could at least have assigned an officer-in-charge to
look into the grievance and possibly make his recommendation
to Mr. Abad. It is of no moment that Mr. Abad immediately
looked into the grievance upon returning to work, for it must be
remembered that the grievants are workingmen who suffered
salary deductions and who rely so much on their meager income
for their daily subsistence and survival.
5

Sec. 2 Processing of Grievances

xxx xxx xxx
STEP 1 Any employee who believes that he has a justifiable grievance shall take the
matter up with his shop steward. If the shop steward feels there is justification for
taking the matter up with the Company, he shall record the grievance on the
grievance form heretofore agreed upon by the parties. Two (2) copies of the grievance
form properly filled, accepted, and signed shall then be presented to and discussed by
the shop steward with the division head. The division head shall answer the grievance
within five (5) days from the date of presentation by inserting his decision on the
grievance form, signing and dating same, and returning one copy to the shop steward.
If the division head fails to act within the five (5)-day regl(e)mentary period, the
grievance must be resolved in favor of the aggrieved party. If the division head's
decision is not appealed to Step II, the grievance shall be considered settled on the
basis of the decision made, and shall not be eligible for further appeal.

Labor Law 1
- when the respondents first presented their complaint on August
21, the petitioner (through Mr. Abad) failed to act on it
- if the provision would be interpreted as to allow the
management to act on their laborers complaints after the acting
officer returned from a leave then the causes of the
workingmen would be delayed, thus suffering a great injustice.
That could not have been the intendment of the pertinent
provision of the CBA, much less the benevolent policy underlying
our labor laws.
Disposition petition is hereby DENIED and the assailed decision
of respondent National Labor Relations Commission is AFFIRMED.
This judgment is immediately executory.

CALALANG V WILLIAMS
LAUREL; December 2, 1940
FACTS
- The Secretary of Public Works and Communications (PWC)
approved with modification the recommendation that originated
from the National Traffic Commission (NTC), which was favorably
indorsed by the Director of Public Works (PW), that Rosario
Street and Rizal Avenue be closed to traffic of animal-drawn
vehicles, between the points and during the hours from 7 a.m. to
11 p.m., for a period of one year from the date of the opening of
the Colgante Bridge to traffic; that the Mayor of Manila and the
Acting Chief of Police of Manila have enforced and caused to be
enforced the rules and regulations thus adopted; that as a
consequence of such enforcement, all animal drawn vehicles are
not allowed to pass and pick up passengers in the places abovementioned to the detriment not only of their owners but of the
riding public as well.
- Commonwealth Act No. 548 gives the Director of Public Works,
with the approval of the Secretary of the Public Works and
Communications the authority to promulgate rules and
regulations to regulate and control the use of and traffic on
national roads.
- Maximo Calang, in his capacity as private citizen and as a
taxpayer of Manila, filed a petition for a writ of prohibition
against the Chairman of NTC, Director of PW, Acting Secretary of
PWC, Mayor of Manila and Acting Chielf of Police of Manila.
ISSUES
1. WON Commonwealth Act No. 548 is unconstitutional because
it constitutes an undue delegation of legislative power
2. WON the rules and regulations promulgated constitute an
unlawful interference with legitimate business or trade and
abridge the right to personal liberty and freedom of locomotion
3. WON the rules and regulations complained of infringe the
upon the constitutional precept regarding the promotion of social
justice to insure the well-being of all the people
HELD
1. NO
- The Legislature cannot delegate power to make law; but it can
make a law to delegate a power to determine some fact or state
of things upon which the law makes, or intends to make, its own
action depend.
Reasoning
- adherence to precedent
Rubi vs. Provincial Board of Mindoro, Wayman vs. Southard it
was held here that discretion may be delegated to executive
departments or subordinate officials the execution of certain
acts, final on questions of fact.
- textual interpretation of Commonwealth Act No. 548
The provision that .the Director of Public Works, with the
approval of the Secretary of the Public Works and
Communications, shall promulgate rules and regulations to
regulate and control the use of and traffic on national
roads, is an administrative function which cannot be
directly discharged by the National Assembly.
- practicality
The complexities of modern governments, the multiplication of
the subjects of govtl regulations, and the increased difficulty

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in administering the law give rise to the adoption, within

certain limits, the delegation of greater powers by the
legislative and vesting a larger amount of discretion in
administrative and executive officials, not only in the
execution of the laws, but also in the promulgation of certain
rules and regulations.
2. NO
- The state may enact laws that may interfere with personal
liberty, with property, and with business and occupation if the
said laws are intended to promote the welfare of the public.
(police power of the State)
Reasoning
- precedents (US vs. Gomez, Dobbins vs. Los Angeles & People
vs. Pomar)
- Paradox - The apparent curtailment of liberty is precisely the
very means of insuring its preservation
- No. Social justice is promoted if the greatest good is brought
about to the greatest number.

PLDT V NLRC
ROMERO; July 23, 1997
NATURE
Petition for certiorari to revoke NLRCs Nov. 16, 1992 decision
affirming the resolution of Labor Arbiter Jose De Vera and
denying petitioners motion for reconsideration
FACTS
- Private respondent Lettie Corpuz was employed as traffic
operator at the Manila International Traffic Division (MITD) by
PLDT for 10 years 9 months from Sept. 19, 1978 until her
dismissal on June 17, 1989. She was tasked with facilitating
requests for incoming and outgoing international calls using a
digital switchboard.
- Sometime in Dec. 1987, PLDTs rank-and-file employees went
on strike, prompting MITD to discharge the formers duties to
prevent a shutdown of its operations. In the course of their
assignments, 2 supervisors received 2 overseas calls bound for
the Middle East, both callers reporting the same calling number
(98-68-16). It was shown that the number had been permanently
disconnected on Sept. 1987 but 439 overseas calls had been
made through it from May to Nov. 1987.
- It was further found that among the 235 telephone operators
who handled those calls (averaging 1.8% calls each), private
respondent had handled 12.8% of the total calls. Some calls,
though registered as partly unavailable or busy, yielded
unusually long operator call durations. Private respondent also
used said number to make several personal calls. Based on
these finding, MITD Manager Erlinda Kabigting directed
respondent to explain these allegations.
- instead of complying, respondent requested a formal
investigation to confront and rebut the witnesses allegations.
On grounds of misconduct and breach of trust, respondent was
terminated.
- In a complaint for illegal dismissal filed by respondent, Labor
Arbiter Jose De Vera rendered a decision ordering the
reinstatement of private respondent, later affirmed by NLRC.
ISSUE
WON the NLRC erred in ordering the reinstatement of private
respondent
HELD
NO. Although the power to dismiss is a normal prerogative of the
employer, the right to discharge employees is regulated by the
States police power in line with its duty to preserve its citizens
rights.
- Petitioner insists that respondent was guilty of defrauding them
by taking several calls through the disconnected number.
However, records show that these calls were neither unusual nor
made in connivance with certain subscribers as other operators
shared similar experiences. Although it is quite certain that there
were certain PLDT personnel who tampered with the line, the

Labor Law 1
ultimate blame cannot be set solely on private respondent based
on mere suspicion, but only with concrete and substantial
evidence.
- In the instant case, the petitioner failed to establish valid bases
of the alleged misconduct, thus denying private respondent her
right to due process. The requirement of notice and hearing
affords the worker ample opportunity to be heard and defend
himself.
- Art. 4 of the Labor Code states that all doubts in the
implementation and interpretation of the provisions of the Labor
Code including its implementing rules and regulations shall be
resolved in favor of labor, that is, the workers welfare is of
paramount importance. The Constitution furthers that the State
shall afford full protection to labor, promote full employment
opportunities for all and guarantee the right to security of
tenure.
Disposition instant petition is DISMISSED and the decision
dated Nov. 16, 1992 is AFFIRMED.

AGABON V NLRC
DAYAN V BPI
VITUG; November 20, 2001
NATURE
Review seeking reversal of the decision and resolution of CA
reversing the resolution of the NLRC.
FACTS
- Petitioner Rogelio C. Dayan (Dayan) started his employment on
30 June 1956 with the Commercial Bank and Trust Company
(CBTC). CBTC was eventually absorbed by the Bank of the
Philippine Islands. (BPI) where Dayan was maintained as
employee. In 1981, Dayan was promoted Administrative
Assistant by respondent bank in its centralized accounting office.
He held several positions thereafter - Assistant Manager of
Internal Operations in 1983, Assistant Manager of Correspondent
Bank in 1988, Assistant Manager of Branch Operations in 1990,
Assistant Manager of the Supplies Inventory in 1991, and then
Senior Assistant Manager of the Supplies Inventory in 19911992. In addition to the series of promotions, Dayan was the
recipient of various commendations.
- December 1991, the post of Purchasing Officer became vacant.
The vacated position was offered to Dayan which he initially
declined but, due to the insistence of his superiors, he later
accepted on a temporary basis in February 1993.
- 10 June 1993, Asst VP Gerlanda E. De Castro of the bank, in a
memorandum, placed petitioner under suspension.
- Dayan is placed under suspension due to matters presented to
him in a meeting on the same morning of the suspension memo.
- It appears that BPI conducted earlier interviews regarding
supposed malpractices committed by Dayan during his term as
Purchasing Officer. The report signed ad noted by Rololfo
Bernejo (Mgr) and Victor Guillermo (Sr Mgr) contained alleged
misconduct such as asking for 5% commission on purchase
orders, donations totaling 5K for medical bills, overpricing BPI
Family Banks passbook, etc. The report also made negative
findings and observations about his work performance.
- 14 June 1993, petitioner wrote a memorandum to the bank
narrating what had transpired in his meeting with the bank on 10
June 1993 where he denied all the accusations against him
and contested his preventive suspension. His denials and plea
for compassion notwithstanding, petitioner was dismissed by
respondent bank via a notice of termination, dated 25 October
1993, signed by AVP Gerlanda de Castro. In a letter of
confession, dated 28 October 1993, petitioner ultimately
admitted his infractions and instead asked for financial
assistance. He, at the same time, executed an undated
"Release Waiver and Quitclaim" acknowledging receipt of
P400,000.00 financial assistance from the bank and thereby
releasing and discharging it from any action or claim arising from
his employment with the bank and membership in the
retirement plan.
- Subsequently, however, petitioner claimed that the letter

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and the quitclaim were signed by him under duress. On

14 February 1994, he filed a case for Illegal Dismissal and Illegal
Suspension, with a prayer for an award of retirement benefits,
before the Labor Arbiter.
- In his decision of 30 June 1995, the Labor Arbiter upheld the
validity of the dismissal of petitioner based on loss of trust
and confidence and denied his claim for retirement benefits and
damages.
- On appeal, the NLRC reversed the decision of the labor
arbiter and declared the dismissal to be illegal on the ground
that petitioner was denied due process ratiocinating that a
hearing should have been afforded petitioner for a chance to
confront the witnesses against him.
- BPI filed with SC, a petition for certiorari questioning the NLRC
decision. The Court referred the petition to CA. The appellate
court reversed the judgment of the NLRC.
- In its petition for review before the SC, petitioner argues that
the CA has wrongly relied on unsworn statements taken by the
bank from its contractual employees. Petitioner believes that
the factual conclusions of the NLRC which has acquired
expertise on the matters entrusted to it should have instead
been respected by the appellate court.
ISSUES
1. WON CA committed an error in granting Dayans dismissal
2. WON there sufficient compliance of notice and hearing
3. WON he should be reinstated in BPI
4. WON the letter and quitclaim were obtained through
deception and coercion

HELD
1. NO
Ratio The CA was convinced that Dayans guilty of malfeasance
and that the petitioner's dismissal had been justified under
Article 282 of the Labor Code.6
Reasoning
- CA did not commit error in holding to be justifiable the
dismissal of Dayan from BPI as evidence of malpactice is too
numerous to be ignored. Contrary to Dayans claim, the
suppliers who complained executed affidavits as part of
the records of the case. An employee under his supervision even
narrated other incidents of malpractices. These charges were
even backed up by the audit report of the banks audit team.
- Dayan is not a rank and file employee. His job involves much
exercise of independent judgment and discretion. A bank, being
essentially imbued with public interest, cannot be compelled to
continue in its employ a person whom it has lost trust and
confidence.
Obiter
- The policy of preventively suspending an employee under
investigation for charges involving dishonesty is an acceptable
precautionary measure in order to preserve the integrity of vital
papers and documents that may be material and relevant to the
case and to which he, otherwise, would have access by virtue of
his position. It was only after an exhaustive investigation that
respondent bank finally decided to terminate the services of
petitioner on 25 October 1993.
2. NO
Ratio The law requires the employer with 2 written notices
before termination can be legally affected as well as a hearing
where the employee can explain his side.
A consultation or conference with the employee is not a
substitute for the actual observance of notice and hearing.
6

"`(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative.'

Labor Law 1
Reasoning
- The first notice apprises the employee of the particular acts or
omissions for which the dismissal is sought. The second notice
informs the employee of the employers decision to dismiss him.
- In the case at bench, Dayan was called to a meeting June 10
where he denied all charges against him. After which, he was
issued a notice of preventive suspension. After investigation, he
was given notice of dismissal. There was failure on the part of
BPI to conform to the notice and hearing requirement. The
preliminary meeting is not sufficient compliance rather it was
merely exploratory. Where the employee denies charges against
him, a hearing is necessary to thresh out any doubt.
3. NO
Ratio The 2 notice and hearing rule is indispensable for a
dismissal to be validly effected, but if it is for a just and
valid cause, the failure to observe procedural requirements
does not invalidate the dismissal of the employee. Instead,
he must be granted separation pay. Whether reinstated or
given separation pay, he should be paid backwages if he
has been laid off without written notice 30 days in advance.
For the omission, an appropriate sanction should be
imposed depending on the fact and gravity of the situation.
Reasoning
- In the case at hand, the purpose of the notice and hearing
requirement is not to comply with due process.
- Art 283 originated from the Spanish Code of Commerece of
1882, which gave either party to the employer-employee
relationship the right to terminate their relationship by giving
notice to the other a month in advance. This was repealed by
Art. 2270 of the Civil Code, then by RA 1052 or Termination Pay
Law, and finally by RA1787 providing for the advance notice or
payment of compensation at the rate of month for every year
of service.
- The Termination Pay Law is a regulatory measure to give
opportunity for the employer to look for a replacement or
substitute and for the employee to look for another job. The
notice was not required if the dismissal is for just cause. The
notice requirement is only implemented by BP130 amending the
Labor Code.
- The employer cannot be expected to be an entirely impartial
judge of his own cause.
4. NO
Ratio Quitclaims executed by employees are commonly frowned
upon as contrary to public policy and ineffective to bar
claims for the full measure of a workers legal rights.
However, if the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the
parties and may not be disowned unless there is clear proof
that the waiver was wangled from an unsuspecting gullible
person, or the terms are unconscionable on its face.
Reasoning
- Dayan is a managerial employee with vast experience. He
cannot be willing to compromise his future by agreeing to
execute a document highly prejudicial to his interest.
Complainant was well aware of the consequences of his acts.
Disposition decision of the Court of Appeals reinstating the
decision of the Labor Arbiter and setting aside the NLRC's
decision is AFFIRMED.

MANILA ELECTRIC COMPANY V QUISUMBING

MARTINEZ; January 27, 1999
NATURE
Petition for certiorari, MERALCO seeking to annul the orders of
the Sec. of Labor to execute a collective bargaining agreement
(CBA)
FACTS
- Meralco Workers Association (MEWA) is a duly recognized
labor organization of the rank-and-file employees of MERALCO.
On Sept. 7, 1995, it informed MERALCO of its intention to
renegotiate the terms and conditions of their existing 1992-97

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CBA covering the remaining period of 2 years starting from

December 1, 1995 to November 30, 1997.
- MERALCO signified its willingness to re-negotiate through a
letter and formed a CBA negotiating panel for the purpose.
Bargaining negotiations proceeded. However, despite the series
of meetings bet. The negotiating panels, the parties failed to
arrive at "terms and conditions acceptable to both of them.
- On April 23, 1996, MEWA filed a Notice of Strike with the
National Capital Region Branch of the National Conciliation and
Mediation Board (NCMB) of the Department of Labor and
Employment (DOLE). on the grounds of bargaining deadlock and
unfair labor practices. The NCMB then conducted a series of
conciliation meetings but the parties failed to reach an amicable
settlement. Faced with the imminence of a strike, MERALCO filed
an urgent petition with the DOLE praying the Secretary to
assume jurisdiction over the labor dispute and to enjoin the
striking employees to go back to work. The Secretary did so and
conducted conciliation conferences between the parties to
bridge their differences. Thereafter, the parties submitted their
respective memoranda and on August 19, 1996, the Secretary
resolved the labor dispute through an Order.
- Dissatisfied, MERALCO filed this petition contending that the
Sec. of Labor gravely abused its discretion in awarding wage
increases and other economic benefits (like 2 months xmas
bonus, loan for the employees cooperative, signing hours, 40day union leave, sick leave, etc.), in expanding the scope of the
bargaining unit to all regular rank and file employees, in
exercising discretion in determining the retroactivity of the CBA,
etc.
ISSUES
WON the Secretary failed to properly considered and
appreciated the evidence presented before him, thus committing
a grave abuse of discretion
HELD
YES
- the Secretary of Labor disregarded and misappreciated
evidence, particularly with respect to the wage award. The
Secretary of Labor apparently also acted arbitrarily and even
whimsically in considering a number of legal points; even the
Solicitor General himself considered that the Secretary gravely
abused his discretion on at least three major points: (a) on the
signing bonus issue; (b) on the inclusion of confidential
employees in the rank and file bargaining unit, and (c) in
mandating a union security "closed-shop" regime in the
bargaining unit.
- On the wages issue:
the Secretary gravely abused his
discretion in making this wage award because he disregarded
evidence on record. MERALCO projection had every reason to be
reliable because it was based on actual and undisputed figures
the union projection was based on a speculation of Yuletide
consumption that the union failed to substantiate. The amount
of the wage increase would also be an unreasonably high burden
for MERALCO to shoulder.
- On the economic issues:
> Christmas bonus - As a rule, a bonus is not a demandable and
enforceable obligation; ,it may nevertheless be granted on
equitable considerations as when the giving of such bonus has
been the company's long and regular practice, To be considered
a "regular practice," the giving of the bonus should have been
done over a long period of time, and must be shown to have
been consistent and deliberate. We can not, however, affirm the
Secretary's award of a two-month special Christmas bonus to the
employees since there was no recognized company practice of
giving a two-month special grant. The two-month special bonus
was given only in 1995 in recognition of the employees' prompt
and efficient response during the calamities. Instead, a onemonth special bonus, We believe, is sufficient, this being merely
a generous act on the part of MERALCO.
> RICE SUBSIDY and RETIREMENT BENEFITS for RETIREES
> EMPLOYEES' COOPERATIVE
> GHSIP,
HMP
BENEFITS
FOR
DEPENDENTS
and HOUSING EQUITY LOAN

Labor Law 1
> SIGNING BONUS, RED-CIRCLE-RATE ALLOWANCE
> SICK LEAVE RESERVE OF 15 DAYS, 40-DAY UNION LEAVE
- Non-economic issues
> Scope of the bargaining unit - employees holding a
confidential position are prohibited from joining the union of the
rank and file employees
> Security demand - the Secretary cannot rule on the union
security demand because this is not .1 mandatory subject for
collective bargaining agreement
> UNION REPRESENTATION IN COMMITTEES
> RETROACTIVITY OF THE CBA
Ratio The Secretary of Labor's statutory power under Art. 263
(g) of the Labor Code to, assume jurisdiction over a labor dispute
in an industry indispensable to the national interest, and, to
render, an award on compulsory arbitration, does not exempt
the exercise of this power from the judicial review. Under this
constitutional mandate, every legal power of the Secretary of
Labor under the Labor Code, or, for that matter, any act of the
Executive, that is attended by grave abuse of discretion is
subject to review by this Court in an appropriate proceeding. To
be sure, the existence of an executive power alone - whether
granted by statute or by the Constitution cannot exempt the
executive action from judicial oversight, interference or reversal
when grave abuse of discretion is, or is alleged to be, present.
Thus, the actions of the Sec. of Labor is subject to judicial
review.
- The extent of judicial review over the Secretary of Labor's
arbitral award is not limited to a determination of grave abuse in
the manner of the secretary's exercise of his statutory powers.
This Court is entitled to, and must - in the exercise of its judicial
power - review the substance of the Secretary's award when
grave abuse of discretion is alleged to exist in the award, i.e.; in
the appreciation of and the conclusions the Secretary drew from
the evidence presented. The natural and ever present limitation
on the Secretary's acts is, of course, the Constitution. But in this
case we believe that the more appropriate and available
standard - and one does not require a constitutional
interpretation - is simply the standard of reasonableness. In
layman's terms, reasonableness implies the absence of
arbitrariness
Disposition
petition is granted and the orders of public
respondent Secretary of Labor dated August 19, 1996 and
December 28, 1996 are set aside to the extent set forth above.
The parties are directed to execute a Collective Bargaining
Agreement incorporating the terms and conditions contained in
the unaffected portions of the Secretary of Labor's orders of
August 19, 1996 and December 28, 1996, and the modifications
set forth above. The retirement fund issue is remanded to the
Secretary of Labor for reception of evidence and determination
of the legal personality of the MERALCO retirement fund.

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submit her reply within the two-day period.

- Labor Arbiter Caday rendered judgment declaring that the
petitioner was illegally dismissed.
- On appeal, NLRC rendered the assailed decision which set
aside the Labor Arbiters ruling.
ISSUE
WON NLRC erred in finding that Asuncion was dismissed by the
Company for a just or authorized cause

SAROCAM V INTERORIENT MARITIME ENT. INC. AND

DEMACO UNITED LTD.
CALLEJO, SR.; June 27 2006
[PAGE 16]

HELD
YES
- There is lack of evidence to establish the charges of
absenteeism and tardiness.
- A workers employment is property in the constitutional sense.
He cannot be deprived of his work without due process. In order
for the dismissal to be valid, not only must it be based on just
cause supported by clear and convincing evidence, the
employee must also be given an opportunity to be heard and
defend himself. It is the employer who has the burden of
proving that the dismissal was with just or authorized cause. The
failure of the employer to discharge this burden means that the
dismissal is not justified and that the employee is entitled to
reinstatement and backwages.
- Company submitted mere handwritten listing and computer
print-outs. The handwritten listing was not signed by the one
who made the same. The handwritten listing and unsigned
computer print-outs were unauthenticated and, hence,
unreliable.
- Company failed to present a single piece of credible evidence
to serve as the basis for their charges against Asuncion and
consequently, failed to fulfill their burden of proving the facts
which constitute the just cause for the dismissal of the
petitioner.
- Asuncions letter did not amount to an admission of her alleged
absences. Her alleged absences were incurred on Saturdays.
These should not be considered as absences as there was an
arrangement between her and the private respondents that she
would not be required to work on Saturdays.
- Neither had the Company shown by competent evidence that
Asuncion was given any warning or reprimanded for her alleged
absences and tardiness.
- The two-day period given to Asuncion to explain and answer
the charges against her was most unreasonable, considering
that she was charged with several offenses and infractions (35
absences, 23 half-days and 108 tardiness), some of which were
allegedly committed almost a year before, the charges leveled
against her lacked particularity.
- The law mandates that every opportunity and assistance must
be accorded to the employee by the management to enable him
to prepare adequately for his defense.
If doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted
in favor of the latter. The employer must affirmatively show
rationally adequate evidence that the dismissal was for a
justifiable cause.
- Asuncion has been illegally terminated, she is necessarily
entitled to reinstatement to her former previous position without
loss of seniority and the payment of backwages.

ASUNCION V NLRC
KAPUNAN; July 31, 2001

EXECUTIVE SECRETARY V CA
CALLEJO, SR.; May 25, 2004

AGABON V NLRC

FACTS
- Asuncion was employed as an accountant/bookkeeper by the
respondent Mabini Medical Clinic.
- Officials of the DOLE conducted a routine inspection of the
company and discovered upon the disclosure of Asuncion
violations of the labor standards law. The company was made to
correct these violations.
- Dr. Juco charged Asuncion with offenses such Chronic
Absentism, Habitual tardiness, Loitering, Disobedience and
insubordination and consequently dismissed Asuncion on the
ground of disobedience of lawful orders and for her failure to

NATURE
Appeal from a decision of the Court of Appeals
FACTS
- The Asian Recruitment Council Philippine Chapter, Inc. (ARCOPhil) filed on July 17, 1995 a petition for declaratory relief under
Rule 63 0f the Rules of Court with the RTC of Quezon City to
declare as unconstitutional portions of RA 8042, otherwise
known as the Migrant Workers and Overseas Filipinos Act of
1995 with a plea for the issuance of a temporary restraining

Labor Law 1
order and/or a writ of preliminary injunction enjoining the
government from enforcing the said portions of the law. The
questioned portions of the said RA deal with illegal recruitment,
penalties for illegal recruitment, and on the venue of criminal
action for illegal recruitment.
- On August 1, 1995, the trial court issued a temporary
restraining order on the implementation or effectivity of the
questioned provisions based on the allegations of the private
respondents that they will suffer grave or irreparable damage or
injury if the law is implemented.
- ARCO-Phil was joined in the petition by eleven other
corporations which were allegedly members of the organization
when it filed an amended petition. The amended petition also
questioned other sections of the law which dealt with the
overseas deployment only of skilled Filipino workers alleging
discrimination against unskilled workers.
- The trial court issued a writ of preliminary injunction on August
21, 1995 upon a bond of Pesos 50,000.
- Petitioners filed a petition with the court of Appeals assailing
the order and the writ with the court of Appeals on the grounds
that respondent, ARCO-Phil, is not the real party-in-interest and
that it has not shown any convincing proof that in fact damage
or injury would result in the implementation of the questioned
statute. The Court however dismissed the petition. It
subsequently dismissed petitioners motion for reconsideration.
- Hence, the petition for review on certiorari to the Supreme
Court.
ISSUES
1. WON private respondents have standing to file suit
2. WON the trial court committed grave abuse of discretion
amounting to excess or lack of jurisdiction in issuing the assailed
order and the writ of preliminary injunction on a bond of only
Pesos 50,000
3. WON the appellate court erred in affirming the trial courts
order and the writ it issued
HELD
1. The SC ruled that the respondents have locus standi citing it
earlier ruling in Telecommunications and Broadcast Attorneys of
the Philippines vs Commission of Elections. It was held in that
case that standing jus tertii would be recognized if it can be
shown that the party suing has some substantial relation to the
third party, or that the right of the third party would be diluted
unless the party in court is allowed to espouse the third partys
constitutional rights.
With regard the portion relating to
discrimination against unskilled workers, the SC ruled that
respondents have no standing as they failed to implead any
unskilled worker in their petition.
2. The order and the writ of preliminary injunction issued by the
trial court is a grave abuse of its discretion amounting to excess
or lack of jurisdiction. The SC citing jurisprudence ruled that a
law is presumed constitutional until the same is declared
unconstitutional by judicial interpretation. This is so because
suspension of the operation of the law is an interference with the
official acts of the duly elected representatives of the people and
also of the highest magistrate of the land.
The possible
unconstitutionality of a statue, on its face, does not of itself
justify an injunction against good faith attempts to enforce it,
unless there is showing of bad faith, harassment, or any other
unusual circumstances that would call for equitable relief. To be
entitled to a preliminary injunction to enjoin the enforcement of
a law assailed to be unconstitutional, the party must establish
that it will suffer irreparable harm in the absence of injunctive
relief and must demonstrate that it is likely to succeed on the
merits, or that there are sufficiently serious questions going to
the merits and the balance of hardships tips decidedly in its
favor. This higher standard reflects judicial deference towards
legislation or regulations developed through presumptively
reasoned democratic process. In this case, none were shown.
3. The SC also held that the assailed order and writ of
preliminary injunction is mooted by case law. The SC cited

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various cases it had earlier decided on apply RA 8042. By these

rulings, the SC, in effect, affirmed the validity of the assailed
provisions. Hence the enforcement of the provisions cannot be
enjoined unless the SC, by final judgment declares the provisions
to be unconstitutional.

ANG TIBAY, AND NATIONAL WORKERS

BROTHERHOOD V CIR, AND NATIONAL LABOR
UNION, INC.
LAUREL; February 27, 1940
NATURE
The respondent National Labor Union, Inc., prays for the vacation
of the judgment rendered by the majority of this Court and the
remanding of the case to the Court of the Industrial Relations for
a new trial.
The petitioner, Ang Tibay, has filed an opposition to the motion
for reconsideration of the respondent National Labor Union, Inc.
FACTS
- CIR created by Commonwealth Act No. 103. Its functions are
specifically stated therein
- Nature of the CIR:
> more administrative than part of judicial system
> not a mere receptive organ of Govt, not passive
> active: not just judicial/quasi-judicial in disputes, but also
has jurisdiction over the entire Philippines to consider,
investigate, decide, settle any question, matter, controversy
or dispute arising between, and/or affecting employers and
employees or laborers, and regulate the relations between
them.
> mingling of executive and judicial functions (a departure
from the rigid doctrine of the separation of governmental
powers)
> not narrowly constrained by technical rules of procedure:
its required to act according to justice and equity and
substantial merits of the case, without regard to
technicalities or legal forms (Section 20, Commonwealth
Act No. 103)
> The fact that the CIR may be said to be free from certain
procedural requirements doe not mean that it can entirely
ignore or disregard the fundamental requirements of due
process in trials.
- Primary rights which must be respected even in proceedings of
this character:
(1) the right to a hearing, which includes the right of the party
interested or affected to present his own case and submit
evidence in support thereof. Morgan v. U.S "the liberty and
property of the citizen shall be protected by the rudimentary
requirements of fair play.
(2) Not only must the party be given an opportunity to present
his case and to adduce evidence tending to establish the rights
which he asserts but the tribunal must consider the evidence
presented. Edwards vs. McCoy, "the right to adduce evidence,
without the corresponding duty on the part of the board to
consider it, is vain. Such right is conspicuously futile if the
person or persons to whom the evidence is presented can thrust
it aside without notice or consideration."
(3) "While the duty to deliberate does not impose the obligation
to decide right, it does imply a necessity which cannot be
disregarded, namely, that of having something to support it is a
nullity, a place when directly attached." (Edwards vs. McCoy,
supra.) Law is both a grant and a limitation upon power.
(4) Not only must there be some evidence to support a finding
but the evidence must be "substantial." -such relevant evidence
as a reasonable mind accept as adequate to support a
conclusion." The statute provides that "the rules of evidence
prevailing in courts of law and equity shall not be controlling.'
The obvious purpose of this and similar provisions is to free
administrative boards from the compulsion of technical rules so
that the mere admission of matter which would be deemed
incompetent inn judicial proceedings would not invalidate the

Labor Law 1
administrative order. But this assurance of a desirable flexibility
in administrative procedure does not go far as to justify orders
without a basis in evidence having rational probative force.
(5) The decision must be rendered on the evidence presented at
the hearing, or at least contained in the record and disclosed to
the parties affected. -Protect parties in their right to know and
meet the case against them. It should not, however, detract
from their duty actively to see that the law is enforced, and for
that purpose, to use the authorized legal methods of securing
evidence and informing itself of facts material and relevant to
the controversy. Boards of inquiry may be appointed for the
purpose of investigating and determining the facts in any given
case, but their report and decision are only advisory. (Section 9,
Commonwealth Act No. 103.) The Court of Industrial Relations
may refer any industrial or agricultural dispute or any matter
under its consideration or advisement to a local board of inquiry,
a provincial fiscal. a justice of the peace or any public official in
any part of the Philippines for investigation, report and
recommendation, and may delegate to such board or public
official such powers and functions as the said Court of Industrial
Relations may deem necessary, but such delegation shall not
affect the exercise of the Court itself of any of its powers.
(6) The Court of Industrial Relations or any of its judges,
therefore, must act on its or his own independent consideration
of the law and facts of the controversy, and not simply accept
the views of a subordinate in arriving at a decision. It may be
that the volume of work is such that it is literally Relations
personally to decide all controversies coming before them. In the
United States the difficulty is solved with the enactment of
statutory authority authorizing examiners or other subordinates
to render final decision, with the right to appeal to board or
commission, but in our case there is no such statutory authority.
(7) The Court of Industrial Relations should, in all controversial
questions, render its decision in such a manner that the parties
to the proceeding can know the various issues involved, and the
reasons for the decision rendered. The performance of this duty
is inseparable from the authority conferred upon it.
- The record of the proceedings had before the CIR in this
particular case had no substantial evidence that the exclusion of
the 89 laborers was due to their union affiliation.
- The whole transcript of the hearing is just a record of
contradictory statements of opposing counsel, with sporadic
conclusion drawn to suit their own views
- these statements have no evidentiary value
Respondents' Comments
1. That Toribio Teodoro's claim that on September 26, 1938,
there was shortage of leather soles in ANG TIBAY making it
necessary for him to temporarily lay off the members of the
National Labor Union Inc., is entirely false and unsupported by
the records of the Bureau of Customs and the Books of Accounts
of native dealers in leather.
2. That the supposed lack of leather materials claimed by Toribio
Teodoro was but a scheme to systematically prevent the
forfeiture of this bond despite the breach of his CONTRACT with
the Philippine Army.
3. That Toribio Teodoro's letter to the Philippine Army dated
September 29, 1938, (re supposed delay of leather soles from
the States) was but a scheme to systematically prevent the
forfeiture of this bond despite the breach of his CONTRACT with
the Philippine Army.
4. That the National Worker's Brotherhood of ANG TIBAY is a
company or employer union dominated by Toribio Teodoro, the
existence and functions of which are illegal. (281 U.S., 548,
petitioner's printed memorandum, p. 25.)
5. That in the exercise by the laborers of their rights to collective
bargaining, majority rule and elective representation are highly
essential and indispensable. (Sections 2 and 5, Commonwealth
Act No. 213.)
6. That the century provisions of the Civil Code which had been
(the) principal source of dissensions and continuous civil war in
Spain cannot and should not be made applicable in interpreting
and applying the salutary provisions of a modern labor
legislation of American origin where the industrial peace has
always been the rule.

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7. That the employer Toribio Teodoro was guilty of unfair labor

practice for discriminating against the National Labor Union, Inc.,
and unjustly favoring the National Workers' Brotherhood.
8. That the exhibits hereto attached are so inaccessible to the
respondents that even with the exercise of due diligence they
could not be expected to have obtained them and offered as
evidence in the Court of Industrial Relations.
9. That the attached documents and exhibits are of such farreaching importance and effect that their admission would
necessarily mean the modification and reversal of the judgment
rendered herein.
ISSUE
WON a new trial in the CIR should be granted
HELD
YES
Ratio When a hearing before the CIR is conducted and a ruling
is arrived at without any substantial evidence, and there may be
more evidence to be heard, a new trial shall be granted.
Reasoning
- The SC found no substantial evidence that the exclusion of the
89 laborers here was due to their union affiliation or activity.
Although the CIR is a court with special nature- in that it may be
said to be free from technical rules of procedure- it must still
respect certain primary rights, one of which is that its decision
must be based on substantial evidence.
The interest of justice would be better served if the movant is
given opportunity to present at the hearing the documents
referred to in his motion and such other evidence as may be
relevant to the main issue involved. The legislation which
created the Court of Industrial Relations and under which it acts
is new. The failure to grasp the fundamental issue involved is not
entirely attributable to the parties adversely affected by the
result.
Disposition The motion for a new trial should be and the same
is hereby granted, and the entire record of this case shall be
remanded to the Court of Industrial Relations, with instruction
that it reopen the case, receive all such evidence as may be
relevant and otherwise proceed in accordance with the
requirements set forth hereinabove. So ordered.

AIR MANILA, INC. V BALATBAT

REYES; April 29, 1971
NATURE
Petition for certiorari to determine the validity of Resolution No.
139 (68) of the Civil Aeronautics Board in CAB Case No. 1414,
allegedly issued without or in excess of jurisdiction.
FACTS
- Philippine Airlines Inc (PAL) petitioned the Civil Aeronautics
Board (Board), for approval of a proposed schedule introducing
seven flights and the adjustment of the flight schedule that may
thus be affected. On April 15 1968, action on the petition was
deferred for further study.
- On April 22 1968, the Board passed Resolution No. 109 (68),
referring PAL's petition to a hearing examiner for economic
justification. PAL moved for reconsideration of Resolution No.
109 (68). The Board deferred action on this later motion, until
PAL shall have resumed its DC-3 services in certain airports
named therein. PAL filed another motion for reconsideration, on
the ground that the new flights which it was proposing to
operate will be serviced by jet-prop or pure jet equipment only,
thus, the order for resumption of DC-3 services was improper
and should be deleted. In its Resolution No. 131 (68) of May 20
1968, the Board deferred action on this motion for
reconsideration.
- On May 15 1968, PAL filed an Urgent Petition for approval of a
consolidated schedule of jet and jet prop flights, with an interim
DC-3 schedule to different secondary and feeder points (DTS35). On May 28 1968, the Board issued its Resolution No. 139
(68), approving DTS-35 for a period of 30 days, effective June 1

Labor Law 1
1968, subject to the conditions that (a) the flight between Manila
and San Fernando, La Union, F210/211 of the same timetable, be
operated daily instead of twice a week as proposed, and (b) that
all schedules under DTS-35, for which no previous approval has
been granted by the Board are to be referred to a hearing
examiner for reception of evidence on its economic justification.
- After the examiner's report, several of the proposed flights
were approved for 30 days from July 31 1968.
- On May 31 1968, Air Manila, Inc., filed the instant petition
claiming that the respondent Board acted without or in excess of
jurisdiction and/or with abuse of discretion in issuing its
Resolution No. 139 (68).
- Petitioner alleged that the proposed new schedule, involving an
in crease of frequencies, would not only saturate the routes
served also by petitioner, but would also affect its schedule; that
the Board's approval of said Domestic Traffic Schedule without
receiving the evidence of the parties constituted a deprivation of
petitioner's light to be heard; and that such authorization to PAL
to operate the proposed schedule without economic justification
amounted to a capricious and whimsical exercise by the Board of
its power amounting to lack of jurisdiction.
ISSUES
1. WON the Board acted without or in excess of jurisdiction
and/or with abuse of discretion in issuing its Resolution No. 139
(68)
2. WON the Board's approval of said Domestic Traffic Schedule
without receiving the evidence of the parties constituted a
deprivation of petitioner's light to be heard
HELD
1. NO
- It has been correctly said that administrative proceedings are
not exempt from the operation of certain basic and fundamental
procedural principles, such as the due process requirements in
investigations and trials. And this administrative due process is
recognized to include (a) the right to notice, be it actual or
constructive, of the institution of the proceedings that may affect
a person's legal rights; (b) reasonable opportunity to appear and
defend his rights, introduce witnesses and relevant evidence in
his favor, (c) a tribunal so constituted as to give him reasonable
assurance of honesty and impartiality, and one of competent
jurisdiction; and (4) a finding or decision by that tribunal
supported by substantial evidence presented at the hearing, or
at least contained in the records or disclosed to the parties
affected.
- However, it can not truthfully be said that the provisional
approval by the Board of PAL's proposed DTS-35 violates the
requisites of administrative due process. Admittedly, after PAL's
proposal to introduce new Mercury night flights had been
referred to a hearing examiner for economic justification, PAL
submitted a so-called consolidated schedule of flights, DTS-35,
that included the same Mercury night flights, and this was
allowed by Board Resolution No. 139(68). According to
respondents, however, the Board's action was impelled by the
circumstance that at the time, the authorizations of certain flight
schedules previously allowed but were incorporated in DTS-35
were about to expire; thus, the consolidated schedule had to be
approved temporarily if the operations of the flights referred to
were not to be suspended. In short, the temporary permit was
issued to prevent the stoppage or cessation of services in the
affected areas. This point petitioner has failed to refute.
- Under the law, the Civil Aeronautics Board is not only
empowered to grant certificates of public convenience and
necessity; it can also issue, deny, revise, alter, modify, cancel,
suspend or revoke, in whole or in part, any temporary operating
permit, upon petition or complaint of another or even at its own
initiative. The exercise of the power, of course, is supposed to be
conditioned upon the paramount consideration of public
convenience and necessity, and nothing has been presented in
this case to prove that the disputed action by the Board has
been prompted by a cause other than the good of the service.
2. NO

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- There is no proof that in the hearings conducted by hearing

examiner, petitioner was not notified or given opportunity to
adduce evidence in support of its opposition.
Disposition Petition dismissed

CENTURY TEXTILE MILLS INC. V NATIONAL LABOR

RELATIONS COMMISSION
FELICIANO; May 25, 1988
FACTS
- Eduardo Calangi, a machine operator at Century Textile Mills,
was terminated because he was allegedly behind the plot to kill
his two supervisors, Melchor Meliton and Antonio Santos. Marin,
another factory worker, noticed that Torrena, a machine
operator, put some substance in a pitcher where Meliton and
Santos usually drank from. It was later found out that the
substance was formaldehyde. Torrena confessed that Calangi
personally instructed him to put the substance in the pitcher as
an act of revenge against Meliton and Santos because they
repeatedly instigated the termination of the two machine
operators. Torrena and Calangi were preventively suspended
and eventually dismissed.
- Calangi filed a complaint against illegal dismissal with the
Arbitration Branch, NCR, MOLE and was dismissed because the
evidence was so overwheliming and sufficient enough
against Calangi and he failed inexplicable to deny or controvert
any charges. Calangi filed an appeal in NLRC and the decision of
the Arbitration Branch was reversed.
ISSUES
1.
WON respondent was illegally dismissed because his
termination was not in accordance with due process
2. If YES, WON respondent can be reinstated in the company
with full backwages and without loss of seniority rights
HELD
1. YES because termination is without notice and hearing. The
twin requirements for notice and hearing constitute essential
elements of due process in cases of employee dismissal: the
requirement of notice is intended to inform the employee
concerned of the employers intent and the reason for the
proposed dismissal; upon the other hand, the requirement of
hearing affords the employee the opportunity to answer his
employers charges against him and accordingly to defend
himself
Reasoning
- A278 Labor Code states that employer should furnish the
worker a written notice containing causes for termination and
shall afford ample opportunity to be heard and to defend
himself the burden of proving that the termination was valid
rests on the employer
- Rule XIV Book V of the Rules and Regulations Implementing the
Labor Code
Sec 2 Notice of Dismissal: written notice of the particular acts
or omission constituting grounds for dismissal
Sec 5 Answer and Hearing: employer shall afford the worker
ample opportunity to be heard and to defend himself with the
assistance of his representatives if he so desires
Sec 6 Decision to Dismiss: employer should immediately
inform the worker in writing of the decision to dismiss him
stating clearly the reasons
- prior consultation with the labor union is legally insufficient.
Right to notice and hearing are rights personal to an employee.
Such consultation or consent is not a substitute for actual
observance of the rights
- nothing in the record that Cainta police interrogated Calangi
himself. Basis for the ground of dismissal is anchored solely on
Torrenas sworn statement
2. YES, according to A280 Labor Code, there is security of
tenure. No loss of seniority rights and payment of backwages
are the normal consequences when finding an employee illegally
dismissed BUT reinstatement is not for the best interest of the
parties involved. The corporation cannot force to take back an

Labor Law 1
employee who poses a threat to the lives of other employees.
Therefore, separation pay must be paid in lieu of reinstatement
Disposition Petition for certiorari DISMISSED. TRO and
Resolutions WITHDRAWN. Decision in NLRC case affirmed with
modifications on awarding to of three years back wages and
addition of separation pay

LEYTE LAND TRANSPORTATION COMPANY INC V

LEYTE FARMERS' & LABORERS' UNION
PARAS; May 12, 1948
NATURE
Petition to review on certiorari decision of Court of Industrial
Relations.
FACTS
- Court of Industrial Relations (CIR) issued order directing Leyte
Land Transportation Company, Inc. (LLTCI) to (among others)
grant various employees increase in wages and salaries (Php5Php10), grant per diems (Php2/day) to its drivers, conductors,
mechanics and other workers, and grant 15 days vacation with
pay and 15 days sick leave with pay to employees and laborers.
LLTCI appealed.
- LLTCIs contentions: CIR made a mistake in conceding salary/
wage increases merely because such increases would enable
employees to meet high cost of living. The increases, if added to
the crippling losses, would only throw the company into
bankruptcy. CIR had no power to order such directives and
violated appellants freedom to contract.
ISSUES
1. WON CIR can validly take into account the high cost of living
as a factor for determining reasonableness of salary raise
2. WON CIR can validly determine and fix minimum wages for
workers
3. WON appealed decision in effect has deprived LLTCI of its
rights to enter into contract of employment as it and the
employee may agree
HELD
1. YES
Ratio The increases ordered are implied in the power/s granted
to the CIR by the Commonwealth Act No. 103.
- Sec.20 of Commonwealth Act no. 103 provides that "in the
hearing, investigation and determination of any question or
controversy and in exercising any duties and power under this
Act, the Court shall act according to justice and equity and
substantial merits of the case, without regard to technicalities or
legal forms."
- Sec.5 of same act provides, in connection with minimum wages
for a given industry or in a given locality, that the court shall fix
the same at a rate that "would give the workingmen a just
compensation for their labor and an adequate income to meet
the essential necessities of civilized life, Laborers' Union and at
the same time allow the capital a fair return on its investment."
2. YES
Ratio The court has already upheld the constitutionality of the
power of the CIR to determine and fix minimum wages for
workers (in a long line of cases). In fact, the power is
constitutionally mandated by Art.11,sec,5 ("the promotion of
social justice to insure the well-being and economic security of
all the Laborers' Union people should be the concern of the
State"); Art.14,sec. 6 ("the State shall afford protection to labor,
especially to working women and minors, and shall regulate the
relations between landowner and tenant, and between labor and
capital in industry and in agriculture" xxx "the State may provide
for compulsory arbitration.")
3. NO
Ratio The fact that both parties are of full age and competent to
contract does not necessarily deprive the State of the power to
interfere where the parties do not stand upon an equality, or
where the public health demands that one party to the contract
shall be protected against himself. The State still retains an

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interest in his welfare, however reckless he may be. The whole is

no greater than the sum of all the parts, and where the
individual health, safety and welfare are sacrificed or neglected,
the State must suffer (citing a US case: West Coast Hotel
Company vs. Parrish).
Citing Justice Laurel in Ang Tibay v CIR (concurring): The policy
of laissez faire has to some extent given way to the assumption
by the government of the right of intervention even in
contractual relations affected with public interest
Obiter regarding the criticism that the additional benefits would
benefit the union and well as non-union members, the court held
that as the workers are laborers of the company, they are
entitled to the increase regardless of their affiliation. To make a
distinction would only be an unjust and unwarranted
discrimination against non-members.
Disposition Decision Affirmed.

VICTORIANO V ELIZALDE ROPE WORKERS UNION

ZALDIVAR; September 12, 1974
NATURE
Appeal from a decision of the CFI enjoining Elizalde Rope
Factory, Inc. from dismissing Appellee Victoriano
FACTS
- RA 875 provides:
a. General Rule: An employer can make an agreement with a
labor organization to require as a condition of employment
membership therein.
- RA 3350 amending RA 875 provides:
b. Exception: But such agreement shall not cover members of
any religious sects which prohibit affiliation of their members in
any such labor organization.
- Appellee Victoriano is an employee of the Elizalde Rope
Factory, Inc. As such employee, pursuant to RA 875, he is a
member of the Elizalde Rope Workers Union which had with the
Company a Collective Bargaining Agreement containing a Closed
Shop Provision, i.e. membership in the Union is required as a
condition of employment.
- Victoriano is a member of Iglesia ni Cristo, a religious sect
prohibiting affiliation of its members with any labor organization.
As such, after RA 3350 was enacted, he tendered his resignation
to Appellant Union.
- Company dismissed Victoriano from service. He filed a case
with the CFI. The CFI decided in his favor. Appellant appealed
directly to SC.
Petitioners' Claim
1. RA 3350 infringes on the fundamental right to form lawful
associations in that it bans all those belonging to such religious
sects from affiliation with any labor organization
2. RA 3350 is unconstitutional for impairing the obligation of
contracts in that, while Union is obliged to comply with CBA:
a. the Act relieves the employer from its reciprocal obligation of
maintaining union membership as a condition for employment
b. impairs the Unions rights to dues from members who, under
the act, are relieved from the obligation to continue as such
members.
3. RA 3350 discriminatorily favors religious sects while leaving
no rights or protection to labor organizations.
4. RA 3350 violates the constitutional provision that no religious
test shall be required for the exercise of a civil right,
a. in that the laborers exercise of his civil right to join
associations has to be determined by his affiliation with a
religious sect
b. conversely, if a worker has to sever his religious connection
with a sect that prohibits membership in unions in order to join a
labor union, the Act would violate religious freedom
5. RA 3350 violates equal protection of laws, by exempting from
the operation of Closed Shop Agreement the members of the
Iglesia ni Cristo, thereby granting said members undue
advantages over their fellow members (i.e.
while the Act
exempts them from union obligation, it entitles them to

Labor Law 1
enjoyment of concessions and benefits the union might secure
from the employer)
6. RA 3350 violates the constitutional provision regarding the
promotion of social justice.
7. The amendment by RA 3350 in the form of the exception in
favor of religious sects prohibiting union membership is
necessary rooted in whether the Closed Shop Provision is
violative of religious freedom.
Respondents' Comments
1. No. The right to join associations includes the right not to join;
the Act actually prohibits compulsion of workers to join labor
organization
2. No. The Act formed part of, and was incorporated into, the
terms of the Closed Shop Agreement
3. No. The Act instead accommodated the religious needs of
workers and balanced the collective rights of organized labor
with the constitutional right of an individual to freely exercise his
chosen religion.
4. No. The constitutional right of an individual to freely exercise
his chosen religion has primacy over union security measures
which are merely contractual.
5 No. The classification of workers depending on their religious
tenets is:
a. based on substantial distinction
b. germane to the purpose of the law, and
c. applies to all the members of the given class
6. No. The Act was enacted precisely to equalize employment
opportunities for all citizens in the midst of diversities of religious
beliefs, a manifestation of social justice.
ISSUES
1 WON RA 3350 infringes on the fundamental right to form
lawful associations
2 WON RA 3350 is unconstitutional for impairing the obligation of
contracts
3 WON RA 3350 discriminatorily favors religious sects while
leaving no rights or protection to labor organizations.
4 WON RA 3350 violates the constitutional provision that no
religious test shall be required for the exercise of a civil right,
5 WON RA 3350 violates equal protection of laws
6 WON RA 3350 violates the constitutional provision regarding
the promotion of social justice
7. WON the amendment in the form of the exception in favor of
religious sects prohibiting union membership is necessary

HELD
1. NO
- The RA does not prohibit the members of such religious sects
from joining unions. Both RA 3350 and the Constitution
recognize the right of freedom of association.
A right
comprehends two broad notions:
a. Liberty or freedom absence of legal restraint whereby an
employee may act for himself without being prevented by law
b. Power whereby an employee may join or refrain from joining
Because before RA 3350, if any person, regardless of his
religious belief, wishes to be employed, he must become a
member of the Collective Bargaining Union. With the exception
provided in RA 3350 to member of religious organizations,
employees who are members of the same are given the power
to join or not to join. They cannot be compelled to join even
when the unions have closed shop agreements with employers.
2. NO
- The prohibition on impairment of obligations by Statute is not
unqualified. It prohibits only unreasonable impairment. In spite
of the constitutional prohibition, the State continues to possess
authority to safeguard the vital interests of the people. The
reservation of essential attributes of sovereign power is read into
contracts as a postulate to the preservation of the legal order.
The contract clause of the Constitution must therefore be not
only in harmony with, but also in subordination to the reserved
power of the state to safeguard vital interests of the people.
3. NO

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-In Aglipay v Ruiz, the Court said that the government should not
be precluded from pursuing valid objectives secular in character
even if the incidental result would be favorable to a religion or
sect, as long as it has a secular legislative purpose and a
primary effect that neither advances nor inhibits religion.
- The purpose of RA 3350 is secular: to advance the
constitutional right to free exercise of religion, by averting that
certain persons be refused work by reason of their religion and
union security agreements.
- The primary effect of the exemption in favor of members of
sects prohibiting union membership is the protection of said
employees against the aggregate force of the CBA, and relieving
certain citizens of a burden on their religious beliefs.
- Although it may benefit some sects in particular, the benefits
are merely incidental and indirect, not primary.
4. NO
- The Act does not require as a qualification for joining any lawful
association membership in any particular religion; neither does
the Act require affiliation with a religious sect that prohibits its
members from joining a labor union.
- Joining or withdrawing from a labor union requires a positive
act.
The Act only exempts members with such religious
affiliation from the coverage of closed shop agreements. Thus, a
religious objector is not required to do a positive act. He is
exempted ipso jure. How can there be a religious test required
for the exercise of a right when no right need be exercised?
5. Equal protection is not a guaranty of equality in the
application of laws upon all citizens, but on persons according to
the circumstances surrounding them.
It does not forbid
discrimination as to things that are different. All that is required
of valid classification is that it be:
a. reasonable, i.e. based on substantial distinctions which make
for real differences real: based on WON by reasons of their
religious belief, cannot sign up with a labor union
b. germane to the purpose of the law the purpose of the law is
precisely to avoid those who cannot, because of their religious
belief, join labor unions, from being deprived of their right to
work
c. it must not be limited to existing conditions only
d. apply equally to each member of the class
Every classification allowed by the Constitution by its nature
involves inequality. Whenever it is apparent from the scope of
the law that its object is for the benefit of the public and means
by which the benefit is to be obtained are of public character,
the law will be upheld even though incidental advantage may
occur to individuals beyond those enjoyed by the general public.
6. NO
- It is not necessary that the entire state be directly benefited.
Social justice does not require social or legal equality. Social
justice guarantees equality of opportunity, and this is precisely
what RA 3350 proposes to accomplish it gives laborers,
irrespective of their religious scrupples, equal opportunity for
work.
7. A statute which is not necessary is not, for that reason,
unconstitutional. Legislatures, being chosen by the people, are
presumed to understand the needs of the people, and it may
change the laws accordingly. For the validity of a statute, the
essential basis for the exercise of power, and not a mere
incidental result arising from its exertion, as in its effects on a
particular case, is the criterion.
Disposition appeal is dismissed. The decision of the CFI
appealed from is affirmed.

SEPARATE OPINION
FERNANDO [concur]
- Stressing the transcendent character of religious freedom and
its primacy even as against the claims of protection to labor.

Labor Law 1
- Gerona v Secretary of Education: But between the freedom of
belief and the exercise of said belief, there is quite a stretch of
road to travel. If the exercise of said religious belief clashes with
established institutions of society and with the law, then the
former must yield. The specific circumstances of the right
curtailed as against religious freedom should be given
consideration on a case to case basis.

ALALAYAN V NPC
FERNANDO; July 29, 1969
NATURE
Appeal from a judgment of the Court of First Instance of Manila.
Perez, J.
The facts are stated in the opinion of the Court.
FACTS
- The National Power Corporation was given the power (Sec. 3,
R.A. 3043, approved June 17, 1961, entitled "An Act to
Further Amend Commonwealth Act Numbered One
Hundred Twenty, as Amended by Republic Act Numbered
Twenty Six Hundred and Forty-One) to require from
franchise holders the conditions that:
a) they shall not realize a net profit of more than twelve
percent annually of its investments plus two-month
operating expenses;
b) NPC can renew all existing contracts with franchise
holders for the supply of electric power and energy.
- National Power Corporation has for some years now been
supplying, distributing, servicing and selling electric power and
energy at fixed rates schedules to the latter who have for some
years now been and still are, legally engaged in re-supplying, redistributing, re-servicing and re-selling the said electric power
and energy to individual customers within the coverage of their
respective franchises.
- Reference was made to the particular contracts petitioners
entered into with respondent, the contracts to continue
indefinitely unless and until either party would give to the other
two years previous notice in writing of its intention to terminate
the same.
- On June 18, 1960, an act authorizing the increase of the capital
stock of the National Power Corporation to P100 million took
effect. On June 17, 1961, it was alleged that the challenged
legislation became a law, purportedly to increase further the
authorized capital stock, but including the alleged rider referred
to above.
- National Power Corporation approved a rate increase of at least
17.5%, the effectivity of which, was at first deferred to
November 1, 1962, then subsequently to January 15, 1963, with
the threat that in case petitioners would fail to sign the revised
contract providing for the increased rate, 'respondent National
Power Corporation would then cease "to supply, distribute and
service electric power and energy to them."
- On March 21, 1963, the lower court, considering that there was
"no sufficient ground for the issuance of the writ of preliminary
injunction Petitioners Claims, dismissed the same.
- It was alleged in the facts that Alalayan did purchase and take
power and energy as follows: "Sixty (60) kilowatts and of not less
than 140,000 kilowatt-hours in any contract year at the rate of
P120.00 per kilowatt per year" payable in twelve equal monthly
installments, "plus an energy charge of P0.013 per kilowatt hour,
payable on the basis of monthly delivery.
- A letter of June 22, 1962 of respondent National Power
Corporation to petitioner approved his 17.5% rate increase of
power so that beginning July 1, 1962, the demand charge would
be P10.00 per kilowatt per month and the energy charge would
be P0.02 per kilowatt hour.
- The lower court, in a decision of January 30, 1965, sustained
the validity and constitutionality of the challenged provision,
hence this appeal.
Petitioners Claims

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The challenged provision is a violation of the constitutional

requirement that a bill cannot embrace more than one subject to
be expressed in its title.
ISSUES
1. WON the assailed amendment is a violation of the
constitutional requirement that a bill cannot embrace more than
one subject to be expressed in its title
2. WON the petitioner is deprived of the liberty to contract
without due process of law
HELD
1. Ratio The amendment does not constitute a rider problem.
The legislature is not required to make the title of the act a
complete index of its contents.
Reasoning
- The rider provision is aimed against the evils of the so-called
omnibus bills as logrolling legislation as well as surreptitious or
unconsidered enactments. Where the subject of a bill is limited
to a particular matter, the lawmakers along with the people
should be informed of the subject of proposed legislative
measures. This constitutional provision thus precludes the
insertion of riders in legislation, a rider being a provision not
germane to the subject matter of the bill. The provision merely
calls for all parts of an act relating to its subject finding
expression in its title.
- The Constitution does not require Congress to employ in the
title of an enactment, language of such precision as to mirror,
fully index or catalogue all the contents and the minute details
therein. It suffices if the title should serve the purpose of the
constitutional demand that it inform the legislators, the persons
interested in the subject of the bill, and the public, of the nature,
scope and consequences of the proposed law and its operation.
- If the law amends a section or part of a statute, it suffices if
reference be made to the legislation to be amended, there being
no need to state the precise nature of the amendment.
2. Ratio The petitioner is not deprived the liberty to contract
without due process of law.
Reasoning For in the face of a constitutional provision that
allows deprivation of liberty, including liberty of contract, as long
as due process is observed, the alleged nullity of a legislative act
of this character can only be shown if in fact there is such a
denial.
- The Constitution, when there was the fear expressed in many
quarters that a constitutional democracy, in view of its
commitment to the claims of property, would not be able to cope
effectively with the problems of poverty and misery that
unfortunately afflict so many of our people, is not susceptible to
the indictment that the government therein established is
impotent to take the necessary remedial measures.
- There is the clause on the promotion of social justice to ensure
the wellbeing and economic security of all the people, as well as
the pledge of protection to labor with the specific authority to
regulate the relations between landowners and tenants and
between labor and capital.
- The police power as an attribute to promote the common weal
would be diluted considerably of its reach and effectiveness if on
the mere plea that the liberty to contract would be restricted,
the statute complained of may be characterized as a denial of
due process.
- The liberty relied upon is not freedom of the mind, which
occupies a preferred position, nor freedom of the person, but the
liberty to contract, associated with business activities, which, as
has been so repeatedly announced, may be subjected, in the
interest of the general welfare under the Police Power, to
restriction valid in character and wide ranging in scope as long
as due process is observed.
- There is no controlling and precise definition of due process. It
furnishes though a standard to which governmental action
should conform in order that deprivation of life, liberty or
property, in each appropriate case, be valid.
Standard of Due Process: responsiveness to the supremacy of
reason, obedience to the dictates of justice.

Labor Law 1
- While not explicitly avowed by petitioner, there is the
intimation that to apply the challenged legislation to contracts
then in existence would be an infringement of the constitutional
prohibition against any law impairing the obligation of contracts.
Statutes enacted for the regulation of public utilities, being a
proper exercise by the state of its police power, are applicable
not only to those public utilities coming into existence after its
passage, but likewise to those already established and in
operation.
Disposition The decision of the lower court dismissing the
petition is dismissed.

EMPLOYEES CONFEDERATION OF THE PHILIPPINES

V NATIONAL WAGES AND PRODUCTIVITY
COMMISSION
PHILIPPINE AIRLINES, INC. (PAL) V NLRC
MELO; August 13, 1993
NATURE
Petition for certiorari from a decision of the NLRC upholding the
Labor Arbiters ruling directing the PAL to allow the latters
employees to participate in the formulation of the Code of
Discipline for PAL employees
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.
- Thus, on August 20, 1985, the Philippine Airlines Employees
Association (PALEA) filed a complaint before the National Labor
Relations Commission (NLRC) for unfair labor practice. In its
position paper, 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.
- PALEA alleged that copies of the Code had been circulated in
limited numbers; that being penal in nature the Code must
conform with the requirements of sufficient publication, and that
the Code was arbitrary, oppressive, and prejudicial to the rights
of the employees. It prayed that implementation of the Code be
held in abeyance; 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 (pp. 7-14, Record.).
- PAL filed a motion to dismiss the complaint, asserting its
prerogative as an employer to prescribe rules and regulations
regarding employees' conduct. In its reply to PAL's position
paper, 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:
- Section 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.
- Section 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

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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 Isabel P. Ortiguerra did not find PAL guilty of
unfair labor practice. However, she said that PAL was not totally
faultless and therefore ordered the management to share
decision-making on the code of discipline. NLRC affirmed the
Labor Arbiter. Hence, this case.
ISSUE
WON management may be compelled to share with the union or
its employees its prerogative of formulating a code of discipline
HELD
YES
- 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
(University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Moreover, as enunciated in Abbott Laboratories (Phil.), Inc. vs.
NLRC (154 SCRA 713 [1987]), 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
as in the San Miguel case. The provisions of the Code clearly
have repercusions on the employees' 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 (Callanta
vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]). 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" (Employees association of the Philippine American Life
Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).
- PAL posits the view that by signing the 1989-1991 collective
bargaining agreement, on June 27, 1990, 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 must less,
obtain the conformity thereto" (pp. 11-12, Petitioner's
Memorandum; pp. 180-181, Rollo.)
- 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 matter 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 (P.D. 442) was amended by Republic Act 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 (Petitioner's Memorandum, p. 44; Rollo, p. 212),
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

Labor Law 1
of transparency in managerial moves affecting employees'
rights.
Disposition Petition dismissed.

BREW MASTER INTERNATIONAL INC. V NATIONAL

FEDERATION OF LABOR UNIONS (NAFLU)
DAVIDE, JR; April 17, 1997
NATURE
A special civil action for certiorari seeking the reversal of the
decision of the National Labor Relations Commission (NLRC)
which modified the decision of the Labor Arbiter by directing the
reinstatement of private respondent Antonio D. Estrada, the
complainant, without loss of seniority rights and benefits.
FACTS
- Private respondent NAFLU, a co-complainant in the labor case,
is a labor union of which complainant is a member.
- Complainant was first employed by Brew Master on 16
September 1991 as route helper with the latest daily wage of
P119.00.
- From 19 April 1993 up to 19 May 1993, for a period of 1 month,
complainant went on absent without permission (AWOP).
- On 20 May 1993, Brew master sent him a Memo: Please
explain in writing within 24 hours of your receipt of this memo
why no disciplinary action should be taken against you for the
following offense: You were absent since April 19, 1993 up to
May 19, 1993.
- In answer to the aforesaid memo, complainant explained:
Sa dahilan po na ako ay hindi nakapagpaalam sainyo dahil
inuwi ko ang mga anak ko sa Samar dahil ang asawa ko ay
lumayas at walang mag-aalaga sa mga anak ko. Kaya naman
hindi ako naka long distance or telegrama dahil wala akong pera
at ibinili ko ng gamot ay puro utang pa.
- Finding said explanation unsatisfactory, the company issued a
Notice of Termination: ...we regret to inform you that we do not
consider it valid. You are aware of the company Rules and
Regulations that absence without permission for 6 consecutive
working days is considered abandonment of work...
- Complainants contend that individual complainants dismissal
was done without just cause; that it was not sufficiently
established that individual complainants absence from April 19,
1993 to June 16, 1993 are unjustified; that the penalty of
dismissal for such violation is too severe; that in imposing such
penalty, respondent should have taken into consideration
complainants length of service and as a first offender, a penalty
less punitive will suffice such as suspension for a definite period.
- Upon the other hand, respondent contends that individual
complainant was dismissed for cause allowed by the company
Rules and Regulations and the Labor Code; that the act of
complainant in absenting from work for 1 month without official
leave is deleterious to the business of respondent; that it will
result to stoppage of production which will not only destructive
to respondents interests but also to the interest of its
employees in general; that the dismissal of complainant from the
service is legal.
- The Labor Arbiter dismissed the complaint for lack of merit,
citing the principle of managerial control, which recognizes the
employers prerogative to prescribe reasonable rules and
regulations to govern the conduct of his employees. He relied
on Shoemart, Inc. vs. NLRC: ...that individual complainant has
indeed abandoned his work... therefore, under the law and
jurisprudence which upholds the right of an employer to
discharge an employee who incurs frequent, prolonged and
unexplained absences as being grossly remiss in his duties to
the employer and is therefore, dismissed for cause. An
employee is deemed to have abandoned his position or to have
resigned from the same, whenever he has been absent
therefrom without previous permission of the employer for three
consecutive days or more.
- the NLRC modified the Labor Arbiter's decision and held that
complainants dismissal was invalid for the following reasons:

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Complainant-appellants
prolonged
absences,
although
unauthorized, may not amount to gross neglect or abandonment
of work to warrant outright termination of employment.
Dismissal is too severe a penalty...Reliance on the ruling
enunciated in the cited case of Shoemart is quite misplaced
because of the obvious dissimilarities-- complainant in the
Shoemart Case was an inveterate absentee who does not
deserve reinstatement compared to herein complainantappellant who is a first offender
ISSUE
WON the NLRC committed grave abuse of discretion in modifying
the decision of the Labor Arbiter
HELD
NO
Ratio a) Petitioners finding that complainant was guilty of
abandonment is misplaced. Abandonment as a just and valid
ground for dismissal requires the deliberate, unjustified refusal
of the employee to resume his employment. Two elements must
then be satisfied: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to
sever the employer-employee relationship.
b) Verily, relations between capital and labor are not merely
contractual. They are impressed with public interest and labor
contracts must, perforce, yield to the common good.
While the employer is not precluded from prescribing rules and
regulations to govern the conduct of his employees, these rules
and their implementation must be fair, just and reasonable.
Reasoning
- complainants absence was precipitated by a grave family
problem as his wife unexpectedly deserted him and abandoned
the family. Considering that he had a full-time job, there was no
one to whom he could entrust the children and he was thus
compelled to bring them to the province. He was then under
emotional, psychological, spiritual and physical stress and
strain.
The reason for his absence is, under these
circumstances, justified. While his failure to inform and seek
petitioner's approval was an omission which must be corrected
and chastised, he did not merit the severest penalty of dismissal
from the service.
- the elements of abandonment are not present here. First, as
held above, complainant's absence was justified under the
circumstances. As to the second requisite, complainant
immediately complied with the memo requiring him to explain
his absence, and upon knowledge of his termination,
immediately sued for illegal dismissal. These plainly refuted any
claim that he was no longer interested in returning to work.
- our Constitution looks with compassion on the workingman and
protects his rights not only under a general statement of a state
policy, but under the Article on Social Justice and Human Rights,
thus placing labor contracts on a higher plane and with greater
safeguards.
- While we do not decide here the validity of petitioner's Rules
and Regulations on continuous, unauthorized absences, what is
plain is that it was wielded with undue haste resulting in a
deprivation of due process, thus not allowing for a determination
of just cause or abandonment. In this light, petitioner's dismissal
was illegal. This is not to say that his absence should go
unpunished, as impliedly noted by the NLRC in declining to
award back wages.
Disposition petition is hereby DISMISSED and the decision of
the NLRC is hereby AFFIRMED.

PT&TC V NLRC
REGALADO; May 23, 1997
NATURE
PT&TC seeks relief through certiorari on decision of NLRC
FACTS
- Private respondent Grace De Guzman (GdG) was initially hired
by PTTC, on 3 separate occasions, to relieve 2 of its employees

Labor Law 1
who went on maternity leave. The Reliever Agreement stated
that her employment was to be immediately terminated upon
expiration of the agreed period.
- She was later asked to join the company as a probationary
employee with the probation period covering 150 days. On her
application form, she indicated that her civil status was single
although she had contracted marriage 3 months earlier.
- Upon discovery, PTTC, through its Baguio branch supervisor,
sent a memorandum to GdG requiring her to explain the
discrepancy and reminding her of the companys policy of not
accepting married women for employment. GdG, in her response
dated Jan.17, 92, explained that she was not aware of such a
policy and that she had not deliberately hidden her true civil
status.
- PTTC was unconvinced and dismissed GdG on Jan. 29, 92
which GdG then contested before the regional arbitration branch
of the NLRC in Baguio through a complaint for illegal dismissal.
PTTC claimed that the dismissal was due to the fact that she had
concealed her civil status not because of the fact that she was
married.
- The Labor Arbiter handed down a decision declaring that GdG,
who had already gained the status of a regular employee, was
illegally dismissed by petitioner.
Her reinstatement, plus
payment of the corresponding back wages and COLA (cost of
living allowances), was ordered, with the view that the ground
relied upon by petitioner in dismissing private respondent was
clearly insufficient, and that it was apparent that she had been
discriminated against on account of her having contracted
marriage in violation of company rules
- PTTC appealed but the NLRC upheld the decision of the labor
arbiter with only the modification that GdG deserved to be
suspended for three months in view of the dishonest nature of
her acts. The subsequent MFR by PTTC was likewise rebuffed by
NLRC hence this special civil action.
ISSUE
WON the PTTC erred in dismissing GdG
HELD
1. YES
Ratio An employer is required, as a condition sine qua non prior
to severance of the employment ties of an individual under his
employ, to convincingly establish, through substantial evidence,
the existence of a valid and just cause in dispensing with the
services of such employee, ones labor being regarded as
constitutionally protected property.
- On the other hand, an employer is free to regulate, according
to his discretion and best business judgment, all aspects of
employment, from hiring to firing, except in cases of unlawful
discrimination or those which may be provided by law
Reasoning
- The petitioners 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 petitioners
assertion, the record discloses clearly that her ties with the
company were dissolved principally because of the companys
policy that married women are not qualified for employment in
PT&T, and not merely because of her supposed acts of
dishonesty.
- That it was so can easily be seen from the memorandum sent
to private respondent by the branch supervisor of the company,
with the reminder that youre fully aware that the company is
not accepting married women employee, as it was verbally
instructed to you. Again, in the termination notice sent to her by
the same branch supervisor, private respondent was made to
understand that her severance from the service was not only by
reason of her concealment of her married status but, over and
on top of that, was her violation of the companys policy against
marriage (and even told you that married women employees
are not applicable or accepted in our company.) Parenthetically,
this seems to be the curious reason why it was made to appear

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in the initiatory pleadings that petitioner was represented in this

case only by its said supervisor and not by its highest ranking
officers who would otherwise be solidarily liable with the
corporation.
- The government abhors any stipulation or policy in the nature
of that adopted by petitioner PT&T. The Labor Code states, 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.
- In Zialcita, et al. vs. Philippine Air Lines, a PAL policy requiring
that prospective flight attendants must be single and that they
will be automatically separated from the service once they marry
was declared void, it being violative of the clear mandate in
Article 136 of the Labor Code with regard to discrimination
against married women. In Gualberto, et al. vs. Marinduque
Mining & Industrial Corporation, the Court of Appeals considered
a policy of the same nature, as repugnant to the Civil Code,
Presidential Decree No. 148 and the Constitution and therefore
void and unlawful.
Disposition The petition is dismissed for lack of merit.

GENERAL BANK AND TRUST CO V CA

GUTIERREZ JR; April 9, 1985
FACTS
- plaintiff-appellee was employed with the Cebu Branch of the
First National City Bank of New York for 18 years, where he rose
to the position of Chief Clerk, Accounting Department
- on January 11, 1965, plaintiff-appellee joined the defendant
bank in its Cebu branch as accountant with an annual
compensation of P6,000.00
- April 26, 1965, the Cebu Branch of defendant bank began
operating and doing business with the public
- January 1, 1966, plaintiff received an increase of P50.00
bringing his monthly salary to P550.00
- April 11, 1967 defendant bank appointed the plaintiff to the
position of Acting Manager of its Cebu Branch, with the
corresponding increase of salary to P700.00 a month
- effective September 1, 1967, defendant bank granted plaintiff
a monthly housing allowance of P200.00 in addition to his
monthly salary
- October 3, 1967 defendant bank appointed plaintiff as the
regular Manager of its Cebu Branch effective May 1, 1968
- defendant bank increased plaintiff's salary to P800.00 a month
- May 16, 1969 while the plaintiff was on vacation leave, he
happened to visit the bank and learned that three tellers of
defendant bank's branch in Cebu City, namely, Miss Crystal
Enriquez, Miss Yolanda Chu, and Miss Sonia Chiu, had been
transferred to the head office in Manila by defendant Jose D.
Santos
- plaintiff went to Manila on May 18, 1969 to make personal
representation with the head office for the retention of the said
tellers in Cebu
- May 26, 1969 the plaintiff reported back for duty with
defendant bank's branch in Cebu and reinstated immediately the
three tellers to their respective positions in the Cebu branch of
defendant bank
- May 28, 1969 defendant Jose D, Santos submitted a report to
defendant Salvador D. Tenorio alleging that there was excess
personnel in the Cebu Branch; that on the same date defendant
Jose D. Santos submitted a supplementary report to defendant
Salvador D. Tenorio charging the plaintiff of over-appraising the
real estate offered by Domingo Chua as collateral for his credit
accommodation;
that
defendant
Salvador
D.
Tenorio
immediately dispatched a letter to the plaintiff dated May 30,
1969 requiring him to explain within twenty-four hours why no
disciplinary action should be taken against him for alleged

Labor Law 1
repeated violation of defendant bank's policies and directives
regarding credit accommodations and for over-appraisal of the
real estate collateral for Domingo Chua's account, among others
- June 6, 1969, the plaintiff received the said letter of defendant
Salvador D. Tenorio but found it impossible to render the
required explanation in 24 hours
- June 19, 1969 defendant Jose D. Santos went to Cebu City and
served plaintiff with the letter of defendant Salvador D. Tenorio,
dated June 18, 1969, suspending the plaintiff;
- July 22, 1969 plaintiff was served with the order of his
termination signed by defendant Clarencio S. Yujuico, dated July
18, 1969."
- CFI found the dismissal of plaintiff as without just cause or
otherwise illegal arbitrary, oppressive and malicious, and
ordering defendants to pay to the plaintiff, jointly and severally,
the following sums: (a) P1,000.00 a month, as consequential
damages for the loss of his salaries and allowances, from the
date of his dismissal until the judgment shall have become final
and executory; (b) P2,500.00 as termination pay; (c) P106.63
representing unpaid salaries from the 16th to 19th of June 1969;
(d) P200,000.00 in concept of moral damages; (e) P50,000.00 as
exemplary or corrective damages; (f) P15,000.00 as attorney's
fees; and to pay the costs of the suit."

The Court of Appeals affirmed the decision of the lower

court but modified the judgment by reducing moral
damages to P150,000.00 and exemplary damages to
P30,000.00.
ISSUES
1. WON the dismissal of Manuel E. Batucan was justified on the
ground that he repeatedly failed to uphold the interests of the
bank thus leading to his employer's loss of confidence on him
2. WON the award of moral and exemplary damages is proper
HELD
1. NO
- There was no error in the finding of the CA that Mr. Batucan
was indeed illegally dismissed.
- There is no question that managerial employees should enjoy
the confidence of top management. This is especially true in
banks where officials handle big sums of money and engage in
confidential or fiduciary transactions. However, loss of
confidence should not be simulated. It should not be used as a
subterfuge for causes which are improper, illegal, or unjustified.
Loss of confidence may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary. It must be genuine, not
a mere afterthought to justify earlier action taken in bad faith.
- All the privileges, commendations, and salary increases negate
the allegation that the management had lost confidence in Mr.
Batucan. Moreover, there is no evidence that Mr. Batucan
granted unauthorized credit accommodations because after the
last three exhibits were sent, an internal audit examination was
conducted on February 11, 1969 by petitioner Santos together
with the Internal Auditor, Mr. Rosauro Macalagay. In this
examination, no unauthorized credit accommodations were
found and brought to the attention of Mr. Batucan. The
management's alleged loss of confidence in Mr. Batucan cannot
be reconciled with the latter's commendations for efficient
performance, his having been given an increase in salary and his
being asked to speak to other colleagues on effective banking
techniques shortly after the supposed loss of confidence.
- The only reason for his dismissal found in the records is his
failure to follow top-management orders with regards to the
transfer of the three tellers. Petitioners alleged it to be
insubordination. Nevertheless, insubordination must be proven
to justify dismissal (St. Luke's Hospital v. Ministry of Labor and
Employment, 116 SCRA 240). His earnest efforts in making
representations to retain the three tellers do not warrant his
dismissal. A manager or supervisor must stand up for his
subordinates unless the latter are guilty of wrongdoing or some
conduct prejudicial to the employer. Only after his
representations was Mr. Batucan questioned on the several
"unauthorized credit accommodations." His failure to explain
within 24 hours which, in the light of the circumstances, was too

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short, caused his suspension and later, his dismissal retroactive

to the date of suspension.
- There was no valid reason for his dismissal, much less for all
the charges and accusations made against him. The dismissal
followed by the efforts to justify it was tainted by bad faith or
malice on the part of the petitioners who wanted Mr. Batucan
removed from his post.
2. YES
- Moral damages may be justly awarded. Moral damages being
justified, exemplary damages may also be awarded.
- Mr. Batucan left a stable job with a reputable bank to join the
petitioner bank. He had been an employee of the First National
City Bank of New York for eighteen (18) years. Undoubtedly,
before he accepted petitioner Tenorio's invitation, he must have
thought the matter over several times. And from the time he
joined the petitioner bank, the records show that Mr. Batucan
has indeed worked his way up from accountant to permanent
branch manager of the bank. During his term as manager, he
was able to increase the income and resources of the bank. He
raised the image of petitioner bank in the business and banking
community and placed its operations on a good and competitive
basis. His peremptory dismissal from the bank was certainly a
shock to him and damaged his moral feelings and personal pride
after all the loyalty and hard work he had dedicated to the bank.
Disposition The decision appealed from is MODIFIED to read as
follows:
The petitioners are hereby ordered to pay to the private
respondent, jointly and severally, the following sums TWO
THOUSAND FIVE HUNDRED PESOS (P2,500.00) termination pay;
ONE HUNDRED SIX PESOS AND SIXTY THREE CENTAVOS
(P106.63) unpaid salaries; TWELVE THOUSAND PESOS
(P12,000.00) in compensatory damages; TWENTY THOUSAND
PESOS (P20,000.00) in moral and exemplary damages; and FIVE
THOUSAND PESOS (P5,000.00) attorney's fees.

STAR PAPER CORP. V SIMBOL

PUNO; April 12, 2006
NATURE
Petition for review on certiorari of a decision of CA
FACTS
- Ronaldo Simbol, Wilfreda Comia and Lorna Estrella were all
regular employees of Star Paper Corp. Simbol and Comia each
got married to a co-employee and due to a company policy
banning spouses (and relatives up to the 3rd degree) from
working in the same company, they resigned from their jobs.
Estrella was impregnated by a married co-employee. She
likewise lost her job (company said she resigned, Estrella said
she was dismissed for immoral conduct).
- Respondents allege that they did not resign voluntarily and
they filed a compliant for unfair labor practices, constructive
dismissal, separation pay, and they averred that the company
policy is illegal and contravenes ART 136 of the Labor Code.
- CA declared their dismissal as illegal, ordering the company to
reinstate them to their former positions and to pay attorneys
fees and cost of the suit.
ISSUES
1.
WON the policy is violative of the constitutional rights
towards marriage and the family of employees and of ART 136 of
the Labor Code
2. WON respondents resignations were voluntary
HELD
1. YES
- The questioned policy may not facially violate Article 136 of the
Labor Code but it creates a disproportionate effect and under the
disparate impact theory, the only way it could pass judicial
scrutiny is a showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect. The failure of
petitioners to prove a legitimate business concern in imposing
the questioned policy cannot prejudice the employees right to

Labor Law 1
be free from arbitrary discrimination based upon stereotypes of
married persons working together in one company.
-The absence of a statute expressly prohibiting marital
discrimination in our jurisdiction cannot benefit the petitioners.
The protection given to labor in our jurisdiction is vast and
extensive that we cannot prudently draw inferences from the
legislatures silence that married persons are not protected
under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present
undisputed proof of a reasonable business necessity, we rule
that the questioned policy is an invalid exercise of management
prerogative.
2. Simbol and Comia MOOT and ACADEMIC
Estrella - NO
- Questioned policy is an invalid exercise of management
prerogative. Corollarily, the issue as to whether respondents
Simbol and Comia resigned voluntarily has become moot and
academic.
-We have held that in voluntary resignation, the employee is
compelled by personal reason(s) to dissociate himself from
employment. It is done with the intention of relinquishing an
office, accompanied by the act of abandonment. Thus, it is
illogical for Estrella to resign and then file a complaint for illegal
dismissal. Given the lack of sufficient evidence on the part of
petitioners that the resignation was voluntary, Estrellas
dismissal is declared illegal.
Disposition Decision of the Court of Appeals in CA-G.R. SP No.
73477 dated August 3, 2004 is AFFIRMED.

FIRESTONE TIRE & RUBBER COMPANY V LARIOSA

FERNAN; February 27, 1987
NATURE
Petition for certiorari to review the decision of the National Labor
Relations Commission
FACTS
- Carlos Lariosa worked as a Firestone as a factory worker
(started January 3, 1972) and later as a tire builder.
- July 27, 1983 Lariosa was on his way out of the office so he
had to submit himself to the routine check by security guards
(Liao and Olvez) at the gate. In the course of the inspection, 16
wool flannel swabs were found inside his bag, tucked underneath
his soiled clothes. Said swabs were company property.
- Lariosa was terminated on the ground of stealing company
property and loss of trust. A criminal complaint was also filed
against him for theft.
- The Labor Arbiter initially found the dismissal to be justified but
on appeal, the NLRC reversed the decision and ordered Lariosas
reinstatement but backwages were not to be paid. The period
when he was out of work should be considered suspension.
Petitioners Claim
- Firestone claims that the NLRC erred in not dismissing Lariosas
appeal for being late, in finding that Lariosa was not accorded
due proms and in reversing the Labor Arbiter.
Respondents Comments
- Lariosa filed a suit against Firestone for illegal dismissal,
violation of BP Blg. 130 and its related rules and regulations.
- On reversal upon appeal, the NLRC said that termination was
too harsh a penalty.
ISSUE
WON the decision of the NLRC to reinstate Lariosa was rendered
with grave abuse of discretion amounting to lack of jurisdiction
HELD
(1) The particular procedural lapse may be overlooked.
Ratio The shortened period for appeal is principally intended for
the employees benefit rather than that of the employer.
Reasoning
- Lariosas appeal was filed on June 7, 1984 or after the lapse of
fourteen days from notice of the decision of the Labor Arbiter.
The Labor Code provide for a reglementary period of ten

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calendar days within which to appeal a decision of the Labor

Arbiter to the NLRC.
- However the Notice of Decision received by Lariosas lawer
advised that an appeal should be taken to the NLRC within ten
working days from receipt of said decision.
(2) Records show that Lariosa was involved in the attempted
theft of fannel swabs.
Ratio There is no gainsaying that theft committed by an
employee constitutes a valid reason for his dismissal by the
employer. Although as a rule this Court leans over backwards to
help workers and employees continue with their employment or
to mitigate the penalties imposed on them acts of dishonesty in
the handling of company property are a different matter. If
there is sufficient evidence that an employee has been guilty of
a breach of trust or that his employer has ample reasons to
distrust him, the labor tribunal cannot justly deny to the
employer the authority to dismiss such an employee.
Reasoning
- As a tire builder, Lariosa was entrusted with certain materials
for use in his job. On the day in question, he was given two
bundles of wool flannel swabs [ten pieces per bundle] for
cleaning disks.
- He used four swabs from one pack and kept the rest [sixteen
pieces].
- If Lariosa, by his own wrongdoing, could no longer be trusted, it
would be an act of oppression to compel the company to retain
him, fully aware that such an employee could, in the long run,
endanger its very viability.
- Firestone had valid grounds to dispense with the services of
Lariosa and that the NLRC acted with grave abuse of discretion
in ordering his reinstatement. However, considering that Lariosa
had worked with the company for eleven years with no known
previous bad record, the ends of social and compassionate
justice would be served if he is paid full separation pay but not
reinstatement without backages as decreed by the NLRC.
Disposition petition is granted. The decision of the National
Labor Relations Commission dated December 28, 1984 is
reversed and set aside. Petitioner Firestone Tire and Rubber
Company of the Philippines is directed to pay its dismissed
worker Carlos Lariosa the separation pay to which he may be
entitled under the law, or any collective bargaining agreement or
company rules or practice, whichever is higher.

STAR PAPER CORP. V SIMBOL

PUNO; April 12, 2006
[PAGE 28]
SARMIENTO V TUICO
CRUZ; June 27, 1988
FACTS
- Petitioner Asian Transmission Corporation terminated the
services of Catalino Sarmiento, vice-president of the Bisig ng
Asian Transmission Labor Union (BATU), for allegedly carrying a
deadly weapon in the company premises.
- BATU filed a notice of strike, claiming that the ATC had
committed an unfair labor practice.
- The ATC then filed a petition asking the Ministry of Labor and
Employment to assume jurisdiction over the matter or certify the
same to the NLRC for compulsory arbitration.
- MOLE issued an order certifying the labor dispute to the NLRC.
At the same time, it enjoined the management from locking out
its employees and the union from declaring a strike or similar
concerted action.
- Proceedings could not continue in the NLRC, however, because
of the acceptance by President Aquino of the resignations of
eight of its members, leaving only the vice-chairman in office.
- MOLE, set aside the previous orders and directly assumed
jurisdiction of the dispute, at the same time enjoining the
company to accept all returning workers.

Labor Law 1
- This order was later set aside upon motion of both the BATU
and the ATC in view of the appointment of new commissioners in
the NLRC. The MOLE then returned the case to the respondent
NLRC and directed it to expeditiously resolve all issues relating
to the dispute.
- Conformably, the NLRC issued on January 13, 1987 a
resolution, which it affirmed in its resolution of February 12,
1987, denying the motion for reconsideration.
- Three criminal complaints filed against the petitioning workers,
two by the personnel administrative officer of the ATC and the
third by the Philippine Constabulary.
- The first two complaints, were for "Violation of Article 265, par.
1, in relation to Article 273 of the Labor Code of the Philippines."
The third, was for coercion.
In all three complaints, the
defendants were charged with staging an illegal strike,
barricading the gates of the ATC plant and preventing the
workers through intimidation, harassment and force from
reporting for work.
- Judge Orlando Tuico issued a warrant of arrest against the
petitioners and committed 72 of them to jail although he later
ordered the release of 61 of them to the custody of the
municipal mayor of Calamba, Laguna.
- The petitioners had earlier moved for the lifting of the warrant
of arrest and the referral of the coercion charge to the NLRC and,
later, for the dismissal of Criminal Cases on the ground that they
came under the primary jurisdiction of the NLRC.
ISSUES
1. WON a return-to-work order may be validly issued by the
National Labor Relations Commission pending determination of
the legality of the strike
2. WON, pending such determination, the criminal prosecution of
certain persons involved in the said strike may be validly
restrained
HELD
1. YES
- The question of competence is easily resolved. The authority
for the order is found in Article 264(g) of the Labor Code, as
amended by B.P. Blg. 227, which provides as follows: - When in
his opinion there exists a labor dispute causing or likely to cause
strikes or lockouts adversely affecting the national interest, such
as may occur in but not limited to public utilities, companies
engaged in the generation or distribution of energy, banks,
hospitals, and export- oriented industries, including those within
export processing zones, the Minister of Labor and Employment
shall assume jurisdiction over the dispute and decide it or certify
the same to the Commission for compulsory arbitration. Such
assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as
specified in the assumption order. If one has already taken place
at the time of assumption or certification, all striking or locked
out employees shall immediately return to work and the
employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before
the strike or lockout. The Minister may seek the assistance of
law-enforcement agencies to ensure compliance with this
provision as well as such orders as he may issue to enforce the
same.
- There can be no question that the MOLE acted correctly in
certifying the labor dispute to the NLRC, given the predictable
prejudice the strike might cause not only to the parties but more
especially to the national interest. Affirming this fact, we
conclude that the return-to-work order was equally valid as a
statutory part and parcel of the certification order issued by the
MOLE on November 24, 1986. The challenged order of the NLRC
was actually only an implementation of the above provision of
the Labor Code and a reiteration of the directive earlier issued
by the MOLE in its own assumption order of September 9, 1986.
- It must be stressed that while one purpose of the return-towork order is to protect the workers who might otherwise be
locked out by the employer for threatening or waging the strike,
the more important reason is to prevent impairment of the
national interest in case the operations of the company are

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disrupted by a refusal of the strikers to return to work as

directed. More particularly, it is the national economy that will
suffer because of the resultant reduction in our export earnings
and our dollar reserves, not to mention possible cancellation of
the contracts of the company with foreign importers.
- It is also important to emphasize that the return-to-work order
not so much confers a right as it imposes a duty; and while as a
right it may be waived, it must be discharged as a duty even
against the worker's will. Returning to work in this situation is
not a matter of option or voluntariness but of obligation
2. YES
- The Court held that while as a general rule the prosecution of
criminal offenses is not subject to injunction, the exception must
apply in the case at bar. The suspension of proceedings in the
criminal complaints filed is justified on the ground of prematurity
as there is no question that the acts complained of are
connected with the compulsory arbitration proceedings still
pending in the NLRC.
- The three criminal cases should be suspended until the
completion of the compulsory arbitration proceedings in the
NLRC, conformably to the policy embodied in Circular No. 15,
series of 1982, and Circular No. 9, series of 1986, issued by the
Ministry of Justice in connection with the implementation of B.P.
Blg. 227. These circulars, briefly stated, require fiscals and other
government prosecutors to first secure the clearance of the
Ministry of Labor and/or the Office of the President "before
taking cognizance of complaints for preliminary investigation
and the filing in court of the corresponding informations of cases
arising out of or related to a labor dispute," including
"allegations of violence, coercion, physical injuries, assault upon
a person in authority and other similar acts of intimidation
obstructing the free ingress to and egress from a factory or place
of operation of the machines of such factory, or the employer's
premises."
- It does not appear from the record that such clearance was
obtained, conformably to the procedure laid down "to attain the
industrial peace which is the primordial objectives of this law,"
before the three criminal cases were filed.

PCIB V JACINTO
GANCAYCO; May 6, 1991
FACTS
- Nilda S. Jacinto is a PCI Bank (NAIA branch) customer relation
assistant (CRA) who acts as alternate FX Clerk or Teller.
- 1 May 1984: PCIB discovered the loss of some travelers checks
amounting to P 25,325.00 in peso equivalent transacted 30 April
1984. As Jacinto acted as FX clerk on said day, an investigation
was conducted by PCIB allowing Jacinto and other personnel to
explain their side.
- Jacinto was found guilty of gross negligence, meted a 10-day
suspension w/o pay (7-20 May 1984), and required to pay the
loss by way of salary deductions (P200/month + 50% of mid-year
& Xmas bonus and profit sharing). She was transferred to the
Baclaran branch, 21 May 1984.
- 14 Aug 1986: Jacinto filed a complaint with NLRC questioning
her suspension, penalty and transfer of assignment.
- 19 Feb 1988: The labor arbiter found the 10day suspension and
the deductions to be unjustified and ordered PCIB to erase from
Jacinto's 201 file said suspension and to return to her the
amount so far deducted from her salary, bonuses and 13th
month pay. PCIB was further directed to return Jacinto to her
former assignment at MIA branch, if she so prefers. PCIB
appealed.
- 23 Oct 1989: NLRC affirmed the appealed decision with the
only modification that the transfer of Jacinto was found to be an
appropriate prerogative of management. Hence, this petition for
certiorari with a prayer for the issuance of a writ of preliminary
injunction.
ISSUE
[responsibility of a bank employee for the loss of certain funds of
the bank]

Labor Law 1
WON NLRC gravely abused its discretion in holding that gross
negligence cannot be attributed to Jacinto as she was not
formally designated to perform the functions of an FX clerk
HELD
1. YES
Ratio Any employee who is entrusted with responsibility by his
employer should perform the task assigned to him with care and
dedication. The lack of a written or formal designation should not
be an excuse to disclaim any responsibility for any damage
suffered by the employer due to his negligence. The measure of
the responsibility of an employee is that if he performed his
assigned task efficiently and according to the usual standards,
then he may not be held personally liable for any damage arising
therefrom. Failing in this, the employee must suffer the
consequences of his negligence if not lack of due care in the
performance of his duties.
- NAIA branch OIC, Mr. Gilberto C. Marquez, verbally requested
Jacinto to assume the duties of the FX Clerk who was on leave
(no written memo of assignment). Jacinto accepted the request;
she herself stated that she received the travellers checks, made
the proof sheet thereof, and thereafter pllaced the checks and
proof sheet in the FX cash box. The following day, she reported
the loss of said travellers checks from the FX cash box.
- Although she claimed to have prepared the proof sheet, none
was found in the box. She did not microfilm the checks as a
matter of course. She did not formally endorse the FX box to the
night shift FX clerk or to the cashier. More so, considering that
she knew the lock of the box was defective. By and large, the
finding of PCIB that Jacinto was grossly negligent is well-taken.
- Jacinto's 10-day suspension w/o pay is a proper penalty in
accordance with the prescribed rules of PCIB. But, since PCIB is
guilty of contributory negligence in failing to have the lock of FX
box fixed and to have taken other security measures in the bank
premises, the penalty of reimbursement of the full value of the
loss is mitigated by requiring Jacinto to reimburse the petitioner
only 1/2 of the loss by way of salary deduction.
Disposition Petition GRANTED. NLRC decision reversed and set
aside. Jacinto's complaint dismissed. Pebalty modified: Jacinto is
required to indemnify PCIB the amount of P 12,600.00 through
regular payroll deductions.

GTE DIRECTORIES CORP. V SANCHEZ

NARVASA; May 27, 1991
NATURE
Petition for certiorari to review the order of the Department of
Labor and Employment.
FACTS
- GTE Directories Corporation (GTE) is a foreign corporation
engaged in the Philippines in the business of publishing the PLDT
telephone directories for Metro Manila and several provinces.
- The practice was for its sales representatives to be given work
assignments within specific territories by the so-called "draw
method." These sales territories were so plotted or mapped out
to have an equal number of advertisers as well as revenue.
Within these territories, the sales representatives therein
assigned were given quotas.
- Increments were given by the so-called "Grid System," grids
within each territory usually numbering five. Each grid was
assigned a fixed closing date. At such closing date, a
salesperson should have achieved a certain amount of the
revenue target designated for his grid; otherwise, he loses the
forthcoming grid or forfeits the remaining grids not yet received.
- June, 1984: GTE realized that competition among media for a
share of the advertising revenue had stepped up. GTE launched
an aggressive campaign to get what it considered to be its
rightful share of the advertising budget of its clientele before it
could be allocated to other media. Among the actions taken
were:
1. If the cancelled revenue accounts were not
renewed within the assigned period, said accounts were

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declaredOPEN TERRITORY to all sales representatives

including the one who reported the cancellation;
2. If not renewed during said open territory period,
said cancelled accounts were deemed no longer "open
territory," and the same could be referred for handling
to contractual salespersons and/or outside agencies.
- A new "Sales Evaluation and Production Policy" was thereafter
drawn up. GTE informed all its sales representatives of the new
policy in a Memorandum dated October 12, 1984.
- The new policy did not sit well with the union. The Union
demanded that it be given 15 days to raise questions or
objections. This, GTE granted, and by letter dated October 26,
1984, the union submitted its proposals for "revisions,
corrections and deletions of some policies incorporated in the
Sales Administrative Practices issued on June 14, 1984 including
the new policies recently promulgated by Management."
- GTE next formulated a new set of "Sales Administrative
Practices," pursuant to which it issued on July 9, 1985, a
memorandum requiring all Premise Sales Representatives (PSRs)
to submit individual reports reflecting target revenues as of
deadlines, set at August 2, 1985. This was superseded by
another memorandum dated July 16, 1985, revising the previous
schedules on the basis of "the consensus reached after several
discussions with your DSMs, as well as, most of you," The
amount required initially (P30K) was reduced to P20K
Following
this
requirement,
some
Premise
Sales
Representatives (members of the union) omitted to submit
reports regarding the P20K revenue. GTE again demanded for
the said reports in another Memorandum, but as before the PSR
refused to comply.
- August 6, 1985: the union filed in behalf of the sales
representatives, a notice of strike grounded on alleged
unfair labor practices of GTE consisting of the following:
1. Refusal to bargain on unjust sales policies;
2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer;
4. Non-payment of eight days suspension pay increase.
- On the same day GTE sent another Memorandum to 16 PSRs.
No compliance was made. GTE thereupon suspended its sales
representatives "without pay effective August 12, 1985 for five
(5) working days" and warned them that their failure to submit
the requisite reports by August 19, 1985 would merit "more
drastic disciplinary actions." Still, no sales representative
complied with the requirement to submit the reports. So, by
memorandum of the Marketing Director dated August 19, 1985,
all the sales representatives concerned were suspended anew
effective August 20, 1985 until the submitted the report.
- GTE gave its sales representatives an ultimatum. By
memorandum dated August 23, 1985, GTE required them for the
last time, to submit the required reports within twenty-four (24)
hours from receipt of the memorandum; otherwise they would
be terminated "for cause.
- August 29, 1985: GTE terminated the employment of the
recalcitrant sales representatives (14), with the undertaking to
give them "separation pay, upon proper clearance and
submission of company documents, material etc., in . . . (their)
possession." On September 2, 1985, the union declared a strike
in which about 60 employees participated.
Petitioners Claim
GTE should have been commanded: (a) to pay all striking
employees their usual salaries, allowances, commission and
other emoluments corresponding to the period of their strike; (b)
to release to its employees the 8-days pay increase unlawfully
withheld from them; (c) to lift the suspension imposed on Brian
Pineda and restore to him the pay withheld corresponding to the
suspension period; (d) to pay the sales representatives all their
lost income corresponding to the period of their suspensions,
and dismissal, including commissions that they might have
earned corresponding to their one-week forced leave.
Respondents Comment
The termination of the employment of its fourteen (14) premise
sales representatives prior to the strike should have been
upheld. It also filed an opposition to the union's motion for
reconsideration.

Labor Law 1
ISSUE
WON the union's objections to, or request for reconsideration of
those regulations or policies automatically suspend enforcement
thereof and excuse the employees' refusal to comply with the
same
HELD
Ratio So long as a company's management prerogatives are
exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws or under valid
agreements, this Court will uphold them7
Reasoning
- Even as the law is solicitous of the welfare of the employees, it
must also protect the right of an employer to exercise what are
clearly management prerogatives. The free will of management
to conduct its own business affairs to achieve its purpose cannot
be denied.
- Except as limited by special laws, an employer is free
to regulate, according to his own discretion and
judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work,
tools to be used, processes to be followed, supervision of
workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and
recall of work. . . .
- In the case of GTE, it must thus be conceded that its adoption
of a new "Sales Evaluation and Production Policy" was within its
management prerogative to regulate, according to its own
discretion and judgment, all aspects of employment, including
the manner, procedure and processes by which particular work
activities should be done. There were, to be sure, objections
presented by the union, i.e., that the schedule had not been
"drawn (up) as a result of an agreement of all concerned," that
the new policy was incomprehensible, discriminatory and
whimsical, and "would result to further reduction" of the sales
representatives' compensation.
- The Court failed to see how the objections and accusations
justify the deliberate and stubborn refusal of the sales
representatives to obey the management's simple requirement
for submission by all PSRs of individual reports or memoranda
requiring reflecting target revenues which it addressed to the
employees concerned no less than six (6) times.
- To sanction disregard or disobedience by employees of a rule
or order laid down by management, on the pleaded theory that
the rule or order is unreasonable, illegal, or otherwise irregular
for one reason or another, would be disastrous to the discipline
and order that it is in the interest of both the employer and his
employees. Deliberate disregard or disobedience of rules,
defiance of management authority cannot be countenanced.
- Minister Sanchez however found GTE to have "acted evidently
in bad faith" in firing its 14 salespersons "for alleged violations of
the reportorial requirements of its sales policies which was then
the subject of conciliation proceedings between them;" while the
company, in merely implementing its challenged sales policies
did not ipso facto commit an unfair labor practice, it did so when
it in mala fide dismissed the fourteen salesmen, all union
members, while conciliation proceedings were being conducted
Disposition Petition is granted, and the order of the public
respondent is nullified and set aside.

GUSTILO V WYETH PHILIPPINES INC.

SANDOVAL-GUTIERREZ; October 4, 2004
[PAGE 10]
LAGNITON V NLRC
CRUZ; February 5, 1993
NATURE
7

LVN, Pictures Workers vs. LVN, 35 SCRA 147

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Petition for Review on Certiorari of the Decision of the National

Labor Relations Commission
FACTS
- On August 18, 1986, the private respondents filed with the
MOLE a complaint for illegal dismissal against petitioner Arturo
S. Lagniton, Sr., proprietor of a company manufacturing shoes
and other leather products.
- In his defense, Lagniton argued that complainant Generoso
Ambrosio was not employed by the company but a mere subcontractor. Even if considered a regular employee, he was
nevertheless validly dismissed because of his poor workmanship,
which amounted to serious misconduct or gross and habitual
neglect. The other complainants, although concededly
employees, were not dismissed but simply discontinued
reporting for work beginning August 11, 1986, and thus
abandoned their employment.
- Labor Arbiter Isabel P. Ortiguerra rendered a decision holding
that Ambrosio was an employee of the company because his
work as a sole-stitcher was necessary to its business and that he
worked regular hours under its supervision and control. He and
the other complainants, whose status as regular employees was
not questioned, had indeed not abandoned their work but were
in fact illegally dismissed by Lagniton. This decision was affirmed
in toto by the NLRC in a resolution dated September 14, 1988. It
is contended that the NLRC and the Labor Arbiter committed
grave abuse of discretion in the finding that the private
respondents were illegally dismissed and were entitled to
separation pay and the ECOLA.
ISSUE
1. WON the complainants were illegally dismissed
2. WON the complainants are entitled to the ECOLA
HELD
1. NO
Ratio The complaint for illegal dismissal was filed only seven
days after the complainants allegedly abandoned their work on
August 11, 1986. Such dispatch in protesting their separation
belies the claimed abandonment. We also agree that given the
hardship of the times, the complainants would not simply have
left their work unless they were transferring to other
employment offering better terms and conditions. There is no
evidence of such transfer. As it has been established that the
workers did not abandon their work, it follows that their
dismissal was illegal for lack of notice and hearing.
2. YES
Ratio The position of the petitioner is that the complainants
(who did not have fixed salaries and were paid by the piece) are
not entitled to this benefit because it is available only to workers
earning less than P1,500.00 a month. Since, by the
complainants' own admission, they were earning an average of
P1,000.00 a week, they are clearly not covered by P.D. 1634.
Under that decree, only workers earning a monthly salary of not
more than P1,500.00 may claim payment of the ECOLA.
However, the figure cited by the petitioner represents only the
peak income of the workers and does not reflect their monthly
pay during the lean seasons, when they did not produce as much
and so earned less, at about P350.00 a week or P55.00 a day. On
the average, as the NLRC determined, the complainants were
receiving less than P1,500.00 a month and so came under the
provision of the decree.
Disposition Petition dismissed.

MANEJA V NLRC
MARTINEZ; 1998
NATURE
Petition for certiorari
FACTS
- Petitioner Rosario Maneja. Worked with private respondent
Manila Midtown Hotel as a telephone operator. She was also a

Labor Law 1
member of the National Union of Workers, Restaurants and
Allied Industries (NUWHRAIN) with an existing CBA with the
private respondent.
- ON Feb. 13, 1990, Rowena Loleng, a telephone operator,
received a Request for Long Distance Call (RLDC) form and a
deposit of P500 from a pageboy for a Japanese guest Hirota Ieda.
The call was unanswered and the P500 was forwarded to the
cashier. Later, Ieda again made an RLDC and the P500 deposit
was collected and given to Loleng. It was also unanswered
- On feb 15, the cashier inquired about the P1000 deposit made.
After a search, the first one was found in the guest folio while
the other in te folder for cancelled calls. Petitioner saw that the
2nd RLDC form was not time stamped and placed it the machine
to stamp it with the date of Feb 15. But after realizing that the
call was made 2 days before, she wrote on it and changed it to
Feb 13.
- On Mar 7, the chief telephone operator asked the petitioner
and Loleng to explain the Feb 15 incident. They submitted their
written explanation.
- On Mar 20, a written report was submitted, saying that their
actions were covered violations of the Offenses Subject to
Disciplinary Action as 1)forging falsifying official documents
2)culpable carelessness and negligence or failure to follow
established procedure. On march 23, petitioner was then served
notice of dismissal effective on April 1. She refused to sign and
wrote therein under protest
- Criminal charges for falsification was charged against her.
However, the resolution recommending the filing of the case was
reversed by the 2nd asst. city prosecutor.
- On Oct 2,1990, petitioner filed a complaint for illegal dismissal
against the respondent before the labor arbiter. The Labor
arbiter found that the petitioner was illegally dismissed, stating
that even though the case revolves on the matter of
implementation and interpretation of company policies and is
thus within the jurisidictional ambit of the grievance procedure
under the CBA, Art 217 of the Labor Code confers original and
exclusive jurisidiction of all termination cases to the Labor
Arbiter.
- Respndent appealed the decision to the NLRC. The NLRC
dismissed the case for lack of jurisdiction of the Labor arbiter
because the same should have been instead subject to voluntary
arbitration.
ISSUES
1. WON the Labor Arbiter had jurisdiction to decide the case
2. WON the petitioner was illegally dismissed
HELD
1. YES
- The NLRCs interpretation of Art 217c of the Labor Code is
erroneous. Even though such provision provides that labor
arbiters have no jurisidiction over cases arising from
interpretation and implementation of CBAs (must be submitted
to the grievance machine or voluntary arbitration), it must be
read in conjuction with Art 261 which grants voluntary
arbitrators original and exclusive jurisdiction to hear and decide
all unresolved grievances arising from the interpretation or
implementation of the collective bargaining agreement and
those arising from the interpretation or enforcement of company
personnel policies. Note the phrase unresolved grievances. In
the case at bar, the termination of petitioner is not an
unresolved grievance.
- According to the Sanyo case, there is the dismissal does not
involve an interpretation or implementation of a Collective
Bargaining Agreement or interpretation or enforcement of
company personnel policies but involves termination. Where
the dispute is just in the interpretation, implementation or
enforcement stage, it may be referred to the grievance
machinery set up in the Collective Bargaining Agreement or by
voluntary arbitration.
Where there was already actual
termination, i.e., violation of rights, it is already cognizable by
the Labor Arbiter.
- Also, from article 260, it can be deduced that only disputes
involving the union and the company shall be referred to the

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grievance machinery or voluntary arbitrators. In the case at bar,

the union does not come into the picture, as the practice in said
Hotel in cases of termination is that they are not referred
anymore to the grievance committee; and that the terminated
employee who wishes to question the legality of his termination
usually goes to the Labor Arbiter for arbitration, whether the
termination arose from the interpretation or enforcement of the
company personnel policies or otherwise.
- The petitioner also points out that respondent NLRC should
have ruled that private respondent is estopped in questioning
the jurisdiction of the Labor Arbiter, since there as active
participation of the private respondent, coupled with his failure
to object to the jurisdiction of the court.
2. NO
- The requisites of a valid dismissal are (1) the dismissal must be
for any of the causes expressed in Article 282 of the Labor Code,
and (2) the employee must be given an opportunity to be heard
and to defend himself.
- petitioner blames respondent for failure to abide by the
established procedure. etitioner, however, explained that the
usual or established procedures are not followed by the
operators and hotel employees when circumstances warrant.
For instance, the RLDC forms and the deposits are brought by
the page boy directly to the operators instead of the cashiers if
the latter are busy and cannot attend to the same. Furthermore,
she avers that the telephone operators are not conscious of the
serial numbers in the RLDCs and at times, the used RLDCs are
recycled. Even the page boys do not actually check the serial
numbers of all RLDCs in one batch, except for the first and the
last.
- On the charge of taking money, it to be noted that the second
deposit was found in the folder for cancelled calls, thus there is
no basis for personal appropriation by the petitioner.
- On the tampering of the RLDC form, it was only done to reflect
the true date of the transaction. Also, under the OSDA,
infractions of this sort is not without qualifications must result to
loss or damage to company property. There was no proof
whatsoever in the case at bar, except the general allegations
made in the companys position paper and other pleadings. In
the same tenor, the respondents charge under OSDA 1.11 on
the alleged falsification of private document is also with a
qualification, in that the alleged act of falsification must have
been done in such a way as to mislead the users thereof.
Again, based on the facts of the complained act, there appeared
no one to have been misled on the change of date from RLDC
form 15 to 13 February 1990.
- An examination of the record reveals that no hearing was ever
conducted by private respondent before petitioner was
dismissed. While it may be true that petitioner submitted a
written explanation, no hearing was actually conducted before
her employment was terminated. She was not accorded the
opportunity to fully defend herself. Petitioners right to due
process was clearly violated.
Disposition Decision of the NLRC reversed. Decision of the
labor arbiter is reinstated.

SPECIAL STEEL PRODUCTS, INC. V VILLAREAL

SANDOVAL-GUTIERREZ; July 8, 2004
NATURE
Petition for review on certiorari
FACTS
- Special Steel Products, Inc., petitioner, is a domestic
corporation engaged in the principal business of importation,
sale, and marketing of BOHLER steel products. Lutgardo C.
Villareal and Frederick G. So, respondents, worked for petitioner
as assistant sales manager and salesman, respectively.
- Sometime in May 1993, respondent Villareal obtained a car
loan from the Bank of Commerce, with petitioner as surety, as
shown by a continuing suretyship agreement and promissory
note wherein they jointly and severally agreed to pay the bank
P786,611.60 in 72 monthly installments. On January 15, 1997,

Labor Law 1
respondent Villareal resigned and thereafter joined Hi-Grade
Industrial and Technical Products, Inc. as executive vicepresident.
- Sometime in August 1994, petitioner sponsored respondent
Frederick So to attend a training course in Kapfenberg, Austria
conducted by BOHLER, petitioners principal company.
This
training was a reward for respondent Sos outstanding sales
performance.
When respondent returned nine months
thereafter, petitioner directed him to sign a memorandum
providing that BOHLER requires trainees from Kapfenberg to
continue working with petitioner for a period of three (3) years
after the training. Otherwise, each trainee shall refund to
BOHLER $6,000.00 (US dollars) by way of set-off or
compensation. On January 16, 1997 or 2 years and 4 months
after attending the training, respondent resigned from petitioner.
- Immediately, petitioner ordered respondents to render an
accounting of its various Christmas giveaways they received.
These were intended for distribution to petitioners customers.
- In protest, respondents demanded from petitioner payment of
their separation benefits, commissions, vacation and sick leave
benefits, and proportionate 13th month pay. But petitioner
refused and instead, withheld their 13th month pay and other
benefits.
- On April 16, 1997, respondents filed with the Labor Arbiter a
complaint for payment of their monetary benefits against
petitioner and its president, Augusto Pardo, docketed as NLRC
NCR Case No. 04-02820-97.
- In due course, the Labor Arbiter rendered a Decision IN FAVOR
OF So and Villareal. Petitioner filed a motion for reconsideration
but was denied Hence, petitioner filed with the Court of Appeals
a petition for certiorari.
- On October 29, 1999, the Court of Appeals rendered a Decision
dismissing the petition and affirming the assailed NLRC Decision.
Petitioner filed a motion for reconsideration but was denied by
the Appellate Court in a Resolution dated May 8, 2000.
ISSUES
1. WON Petitioner may legally withhold respondent Villareals
monetary benefits as a preliminary remedy pursuant to Article
2071 of the Civil Code, as amended
2. WON Petitioner could withhold his monetary benefits being
authorized by the memorandum he signed, the benefits acting
as compensation
HELD
1. NO. It cannot. Article 116 of the Labor Code, as amended,
provides:
ART. 116. Withholding of wages and kickbacks prohibited.
It shall be unlawful for any person, directly or indirectly,
to withhold any amount from the wages (and benefits) of a
worker or induce him to give up any part of his wages by
force, stealth, intimidation, threat or by any other means
whatsoever without the workers consent.
- The above provision is clear and needs no further elucidation.
Indeed, petitioner has no legal authority to withhold
respondents 13th month pay and other benefits.
What an
employee has worked for, his employer must pay. Thus, an
employer cannot simply refuse to pay the wages or benefits of
its employee because he has either defaulted in paying a loan
guaranteed by his employer; or violated their memorandum of
agreement; or failed to render an accounting of his employers
property.
- Nonetheless, petitioner, relying on Article 2071 (earlier cited),
contends that the right to demand security and obtain release
from the guaranty it executed in favor of respondent Villareal
may be exercised even without initiating a separate and distinct
action.
- There is no guaranty involved herein and, therefore, the
provision of Article 2071 does not apply.
- A guaranty is distinguished from a surety in that a guarantor is
the insurer of the solvency of the debtor and thus binds himself
to pay if the principal is unable to pay, while a surety is the
insurer of the debt, and he obligates himself to pay if the
principal does not pay.

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- Based on the above distinction, it appears that the contract

executed by petitioner and respondent Villareal (in favor of the
Bank of Commerce) is a contract of surety. In fact, it is
denominated as a continuing suretyship agreement. Hence,
petitioner could not just unilaterally withhold respondents
wages or benefits as a preliminary remedy under Article 2071. It
must file an action against respondent Villareal. Thus, the
Appellate Court aptly ruled that petitioner may only protect its
right as surety by instituting an action to demand a security.
2. NO, compensation may not be used. For legal compensation
to take place, the requirements set forth in Articles 1278 and
1279 of the Civil Code, quoted below, must be present.
"ARTICLE 1278.
Compensation shall take place when two
persons, in their own right, are creditors and debtors of each
other.
"ARTICLE 1279. In order that compensation may be proper, it is
necessary:
(1)
That each one of the obligors be bound principally, and
that he be at the same time a principal creditor of the other;
(2)
That both debts consist in a sum of money, or if the
things due are consumable, they be of the same kind, and also
of the same quality if the latter has been stated;
(3)
That the two debts be due;
(4)
That they be liquidated and demandable;
(5)
That over neither of them there be any retention or
controversy, commenced by third persons and communicated in
due time to the debtor."
- In the present case, set-off or legal compensation cannot take
place between petitioner and respondent So because they are
not mutually creditor and debtor of each other.
- A careful reading of the Memorandum dated August 22, 1994
reveals that the lump sum compensation of not less than US
$6,000.00 will have to be refunded by each trainee to BOHLER,
not to petitioner.
T petitioner has no legal right to withhold respondents 13th
month pay and other benefits to recompense for whatever
amount it paid as security for respondent Villareals car loan;
and for the expenses incurred by respondent So in his training
abroad.
Disposition petition is DENIED. The Decision dated October
29, 1999 and Resolution dated May 8, 2000 of the Court of
Appeals in CA-G.R. SP No. 50957 are hereby AFFIRMED.

INTERNATIONAL SCHOOL ALLIANCE OF

EDUCATORS V QUISUMBING
KAPUNAN; June 1, 2000
NATURE
Petition for Review
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 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 grants foreign-hires certain benefits not accorded
local-hires. These include housing, transportation, shipping
costs, taxes, and home leave travel allowance. Foreign-hires are
also paid a salary rate 25% more than local-hires. The School
justifies
the
difference
on
2
"significant
economic
disadvantages" foreign-hires have to endure, namely: (a) the
"dislocation factor" and (b) limited tenure.
- At the negotiations for a new CBA, petitioner International
School Alliance of Educators, 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, and the question of whether
foreign-hires should be included in the appropriate bargaining
unit, eventually caused a deadlock between the parties.
- Petitioners filed notice of strike. The failure to bring parties to a
compromise prompted the DOLE to assume jurisdiction over the

Labor Law 1
dispute. DOLE issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Sec.
Quisumbing denied petitioner's MFR. Petitioner now seeks relief
in this Court.
- Petitioner claims that the point-of-hire classification employed
by the School is discriminatory to Filipinos and that the grant of
higher salaries to foreign-hires constitutes racial discrimination.
- The School disputes these claims and gives a breakdown of its
faculty members, numbering 38 in all, with nationalities other
than Filipino, who have been hired locally and classified as local
hires. Also foreign hires have limited contract of employment
unlike the local hires who enjoy security of tenure
ISSUES
1. WON the International Schools point-of-hire classification for
the distinction in salary rates between foreign-hires and localhires is discriminatory and an invalid classification under the law.
2. WON foreign-hires should belong to the same bargaining unit
as the local-hires
HELD
1. YES
Ratio The Constitution, Labor Code and the International
Covenant on Economic, Social, and Cultural Rights 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.
Reasoning
- The International Covenant on Economic, Social, and Cultural
Rights in Art.7 provides that: The States Parties to the present
Covenant recognize the right of everyone to the enjoyment of
just and favorable conditions of work, which ensure, in particular,
fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by
men, with equal pay for equal work. The Philippines, through its
Constitution, has incorporated this principle as part of its
national laws.
- The Constitution specifically provides that labor is entitled to
"humane conditions of work." The Constitution also directs the
State to promote "equality of employment opportunities for all."
Similarly, the Labor Code provides that the State shall "ensure
equal work opportunities regardless of sex, race or creed.
Discrimination, particularly in terms of wages, is frowned upon
by the Labor Code (Art.135)
- The dislocation factor and limited tenure affecting foreign-hires
are adequately compensated by certain benefits accorded them
which are not enjoyed by local-hires, such as housing,
transportation, shipping costs, taxes and home leave travel
allowances. Hence, the "dislocation factor" and the foreign-hires'
limited tenure also cannot serve as valid bases for the distinction
in salary rates.
2. NO
- 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 localhires. These benefits, such as housing, transportation, shipping
costs, taxes, and home leave travel allowance, are reasonably
related to their status as foreign-hires, and justify the exclusion
of the former from the latter.
Disposition Petition GRANTED IN PART. The Orders of the Sec.
of Labor and Employment are REVERSED and SET ASIDE insofar
as they uphold the practice of respondent School of according
foreign-hires higher salaries than local-hires.

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Labor Law 1

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offense is misappropriation of the receipts of his sales. Such

conduct is not simply inept but rather depraved and immoral,
thus making him undeserving of such assistance.
-Our Constitution is replete with positive commands for the
promotion of social justice, and particularly the protection of the
rights of the workers. However, social justice is not intended to
countenance wrongdoing simply because it is committed by the
underprivileged. Compassion for the poor is an imperative in
every humane society, but only when the recipient is not a
rascal claiming an undeserved privilege. Hence, it may only be
invoked by those whose hands are clean and whose motives are
blameless.
-Applying these considerations, the awarding of financial
assistance is unjustified.
Disposition Petition is GRANTED

SEPARATE OPINION
PADILLA [concur]

-I concur. However, in cases were separation pay is awarded, the

amount to be granted should be left to the judgment of the NLRC
(rather than the 1 month of pay for each year of service rule)
and should not be disturbed by the Court in absence of evidence
of grave abuse of discretion on the part of the NLRC.

PLDT V NLRC (ABUCAY)

164 SCRA 671
CRUZ; August 23, 1988
FACTS
-Private respondent Marliyn Abucay, a traffic operator for PLDT,
was accused by 2 complainants of having demanded and
received from them Php3,800 in consideration of her promise to
facilitate the approval of their applications for phone
installations. Investigated and heard, she was found guilty and
dismissed from service.
-Respondent filed a complaint for illegal removal with the
Ministry of Labor and Employment. The complaint was
dismissed, but the Labor Arbiter granted her severance of one
month pay for every year of service. Hence this petition,
claiming the granting of financial assistance was made with
grave abuse of discretion.
-Petitioner contends that although Art 279 if the Labor Code
entitles an employee to reinstatement and backwages if
dismissed without just cause, one dismissed in accordance with
law is not allowed any relief at all as this would be tantamount to
rewarding the dissolute worker.
-Respondent NLRC claims that dismissal was sufficient
punishment and that the grant of financial assistance was
intended to help her for the loss of employment after working
faithfully for 10 years. Similarly in the cases of Firestone Co. v
Lariosa and Filipino, Inc. v NLRC, employees who were validly
dismissed on grounds of violation of company policies were still
awarded financial assistance on the ground of social and
compassionate justice. These cases ostensibly constitute the
exception to Art 279, based on considerations of equity.
ISSUE
WON it is legal to award financial assistance to an employee who
had been dismissed with just cause
HELD
NO. Separation pay shall only be allowed as a measure of social
justice when the employee is validly dismissed for causes other
than serious misconduct and not involving moral turpitude.
Reasoning
-There is no doubt it is compassionate to give separation pay
when the cause is not iniquitous as when a salesman is
dismissed for his inability to fill his quota. His company cannot
be compelled to maintain him at the expense of the efficiency of
their operations but the awarding of financial assistance would
be sustainable under the policy of social justice. However, the
same salesman surely does not deserve such generosity if his

FERNAN [dissent]

-Providing a rigid mathematical formula for computing the

amounts of separation pay defies the spirit of the constitutional
mandate that those who have less in life should have more in
law. These fixed rates would not favor the low-salaried
employee as he would encounter difficulty in finding another job.

GRINO-AQUINO [dissent]

-We should not rationalize compassion.

EMPLOYERS CONFEDERATION OF THE PHILIPPINES

V NWPC
201 SCRA 759
SARMIENTO; September 24,1991
NATURE
Appeal
FACTS
- Employers Confederation of the Philippines is questioning the
validity of the wage order issued by the Regional Board of NCR
which increased the minimum wage by P17.00 daily including
those already receiving wages above the statutory minimum
wage up to P125.00 per day alleging that it was done in excess
of the boards authority, and alleges that under the Republic Act
No. 6727, the boards may only prescribe "minimum wages," not
determine "salary ceilings."
- The said order was promulgated pursuant to the authority of
Republic Act No. 6727, which aside from providing new wage
rates, also provides, among other things, for various Regional
Tripartite Wages and Productivity Boards in charge of prescribing
minimum wage rates for all workers in the various regions, and
for a National Wages and Productivity Commission to review,
among other functions, wage levels determined by the boards.
- The Solicitor General was of the opinion that the Board in
prescribing an across-the-board hike did not, in reality, "grant
additional or other benefits to workers and employees, such as
the extension of wage increases to employees and workers
already receiving more than minimum wages . . ." but rather,
fixed minimum wages according to the "salary-ceiling method."
ECOP in its reply insisted that wage-fixing is a legislative
function, and Republic Act No. 6727 delegated to the regional
boards no more "than the power to grant minimum wage

Labor Law 1
adjustments" and "in the absence of clear statutory authority,"
the boards may no more than adjust "floor wages."
ISSUES
1. WON the regional board of NCR performed an unlawful act of
legislation in decreeing an across the board hike
2. WON RA6727 intended to deregulate the relation between
labor and capital
HELD
1. NO
- The National Capital Region, in decreeing an across-the-board
hike did not performed an unlawful act of legislation. It is true
that wage-firing, like rate-fixing, constitutes an act Congress; it
is also true, however, that Congress may delegate the power to
fix rates provided that, as in all delegations cases, Congress
leaves sufficient standards. As this Court has indicated, it is
impressed that the law provides standards which are sufficient,
and in the light of the floor-wage method's failure, the Court
believes that the Commission correctly upheld the Regional
Board of the National Capital Region.
- RA 6727 was intended to rationalize wages, first, by providing
for full-time boards to police wages round-the-clock, and second,
by giving the boards enough powers to achieve this objective.
Congress meant the boards to be creative in resolving the
annual question of wages without labor and management
knocking on the legislature's door at every turn.
2. NO
- Apparently, ECOP is of the mistaken impression that Republic
Act No. 6727 is meant to "get the Government out of the
industry" and leave labor and management alone in deciding
wages. The Court does not think that the law intended to
deregulate the relation between labor and capital for several
reasons: (1 ) The Constitution calls upon the State to protect the
rights of workers and promote their welfare; (2) the Constitution
also makes it a duty of the State "to intervene when the
common goal so demands" in regulating property and property
relations; (3) the Charter urges Congress to give priority to the
enactment of measures, among other things, to diffuse the
wealth of the nation and to regulate the use of property; (4) the
Charter recognizes the "just share of labor in the fruits of
production;" (5) under the Labor Code, the State shall regulate
the relations between labor and management; (6) under
Republic Act No. 6727 itself, the State is interested in seeing that
workers receive fair and euitable wages;
and (7) the
Constitution is primarily a document of social justice, and
although it has recognized the importance of the private sector,
it has not embraced fully the concept of laissez faire or
otherwise, relied on pure market forces to govern the economy;
We can not give to the Act a meaning or intent that will conflict
with these basic principles.

AGABON V NATIONAL LABOR RELATIONS

442 SCRA 573
YNARES-SANTIAGO; November 17, 2004
NATURE
Petition for review on certiorari
FACTS
- On January 2, 1992, petitioners Jenny Agabon and Virgilio
Agabon were hired as gypsum board and cornice installers by
respondent Riviera Home Improvements, Inc., a corporation
engaged in the business of selling and installing ornamental and
construction materials. Seven (7) years later, on February 23,
1999, their services were terminated on the ground of
abandonment of work.
Apparently, petitioners were

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subcontracting installation jobs for another company and were

frequently absent from work. Thus, when petitioners reported
for work on February 23, 1999, respondent company refused to
reemploy them unless they agree to work on a pakyaw basis.
Petitioners demurred since this would mean losing their benefits.
They were given their walking papers without according them
the twin requirements of notice and hearing.
Respondent
company stated that they abandon their jobs. Hence, petitioners
filed a complaint for illegal dismissal and payment of money
claims against respondent company.
- On December 28, 1999, the Labor Arbiter held that the
dismissal of petitioners was illegal and ordered respondent
company to pay them backwages, holidy and service incentive
leave pay, and separation pay in lieu of reinstatement. On
appeal, the NLRC reversed the decision of the Labor Arbiter and
ruled that the latter erred in awarding backwages and separation
pay to petitioners who deliberately abandoned their work. On
certiorari, the Court of Appeals affirmed the findings of the NLRC
but ordered respondent company to pay petitioners their money
claims.
ISSUES
1. WON petitioners were illegally dismissed from the service
2. WON private respondent should be held liable for noncompliance with the procedural requirements of due process
HELD
1. NO
Ratio To dismiss an employee, the law requires not only the
existence of a just and valid cause but also enjoins the employer
to give the employee the opportunity to be heard and to defend
himself. Article 282 of the Labor Code enumerates the just
causes for termination by the employer: (a) serious misconduct
or willful disobedience by the employee of the lawful orders of
his employer or the latters representative in connection with the
employees work; (b) gross and habitual neglect by the
employee of his duties; (c) fraud or willful breach by the
employee of the trust reposed in him by his employer or his duly
authorized representative; (d) commission of a crime or offense
by the employee against the person of his employer or any
immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
- In this case, Agabon abandoned their job. Abandonment is the
deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just cause
for termination of employment by the employer.
For a valid
finding of abandonment, these two factors should be present:
(1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employeremployee relationship, with the second as the more
determinative factor which is manifested by overt acts from
which it may be deduced that the employees has no more
intention to work. The intent to discontinue the employment
must be shown by clear proof that it was deliberate and
unjustified.
2. YES
- 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.
* It is worth noting that this ruling has evolved through
times.
> Prior to 1989 - the rule was that a dismissal or termination is
illegal if the employee was not given any notice.
> In the 1989 case of Wenphil Corp. v. National Labor Relations
Commission - where the employer had a valid reason to dismiss
an employee but did not follow the due process requirement, the
dismissal may be upheld but the employer will be penalized to
pay an indemnity to the employee. This became known as the
Wenphil or Belated Due Process Rule.
> On January 27, 2000, in Serrano - violation by the employer of
the notice requirement in termination for just or authorized
causes was not a denial of due process that will nullify the
termination.
However, the dismissal is ineffectual and the

Labor Law 1
employer must pay full backwages from the time of termination
until it is judicially declared that the dismissal was for a just or
authorized cause.
Reasoning
a. Constitutional due process is different from statutory due
process.
The former 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.
b. 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.
Disposition DENIED. But the private respondent is ORDERED to
pay each of the petitioners the amount of P30,000.00 as nominal
damages for non-compliance with statutory due process.

SPEARATE OPINION
PUNO [dissent]

- He maintains his view that the workingmans right ot job

security and due process cannot be measured with a reduced
price tag.
He is unwilling to diminish petitioners right to
procedural due process which is necessary to protect their
security of tenure. He proffers the following precepts:
1. Our Constitution is an ode to social justice.
- Here, Puno defines what social justice is. It is that virtue by
which individuals and groups fulfil their obligations to human
society by contributing positively to the complete well-being of
their fellowmen considered as members of that society, and
hence their actions accordingly.
- Then Justice Puno enumerated the litany of constitutional
provisions regarding social justice starting from 1935
Constitution up to the present, giving emphasis that provisions
on protection to labor have long been embedded in all our
Constitutions, and thus at the very least should be respected
and protected by our courts.
2. Courts at all times should give meaning and substance to
constitutional postulates in favour of the workingman.
- He emphasized that these substantive rights are not to be
weakened by a diminish procedural right. For in weakening the
procedure, we weaken the substantive right.
3. The Constitution puts the employee on equal footing with his
employer.
- As between an employee, usually poor and unlettered, and the
employer, who has resources to secure legal advice, the law has
reason to demand from the latter stricter compliance. For, social
justice in these cases is not equality but protection.
4. This Court has long extended constitutional due process in
labor cases involving private action.
- Here, Justice Puno enumerated cases that hold that dismissal
of employee without notice constitute an infringement of his
constitutional right which must be safeguarded at all times. It
debunks the argument of the majority that it is only statutory
due process that was violated and not the employees
constitutional right as the case involves private individuals and
not the State. However, Puno stressed out that the posture that
the constitutional due processs requirement limits government
action alone and does not apply to private action is already
pass.
5. An employee who is denied procedural due process is entitled
to reinstatement. Nothing less.
6. Compliance with procedural due process is not a burden on
employers.
7. In the hierarchy of rights of an employee, the right to security
of tenure is high, if not the highest.
All other complementary rights (i.e. right to collective
bargaining and negotiations, the right to strike, etc) are
meaningless to an unemployed Juan dela Cruz. It is the policy of

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the State to assure the rights of workers to security of tenure.

The guarantee is an act of social justice.
8. Workers need more work than anything else.
- Work is a defining feature of human existence.
9. To simply allow payment of nominal damages for violation of
employers right to due process is to give undue advantage to
employers.
- The deprivation of the right to security of tenure and due
process is beyond monetary valuation.
- This Court should protect labor and it should walk the talk.

PANGANIBAN [dissent]

- I believe that even if there was just or authorized cause for

termination of employment, but due process was not afforded
the employee, the dismissal proceedings must be declared null
and void. Consequently, the employee must be reinstated and
given full back wages and accruing benefits. Depending on the
facts of each case, damages as provided under applicable
articles of the Civil Code may additionally be awarded.
- An exception may be entertained if the employer could
adequately prove that under the peculiar circumstances of the
case, there was no opportunity to comply with due process
requirements; or doing so would have been impractical or
gravely adverse to the employer, as when the employee was
caught in flagrante delicto. Under such circumstance, dismissal
would not be illegal and no award may properly granted.
Nevertheless, as a measure of compassion in this specific
instance, the employee may be given a nominal sum depending
on the circumstances, pursuant to Article 2221 of the Civil Code.

TINGA [concur in the result]

1. The Abandonment Dimension - Agabon abandoned his work.

They failed to report for work or absence without valid or
justifiable reason, and a clear intention to sever the employeremployee relationship.
2. Compliance with Notice Requirement 2 letters sent by
private respondent sufficiently complied with the notice rule.
However, the actual violation of the notice requirement by
Riviera Homes lies in its failure to serve on the Agabons the
second notice which should inform them of termination. But this
not invalidate the the Agabons dismissal for just cause.
3. The So-Called Constitutional Law Dimension - The first is that
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. The scope and reach of authority of an employer
pales in comparison with that of the State.
4. Constitutional Protection of Labor - As manifested by several
framers of the 1987 Constitution, the provisions on social
justice
require
legislative
enactments
for
their
enforceability.
5. The Effect of Statutory Violation - Based on reading Section
279 of the Labor Code, the existence of just cause by itself is
sufficient to validate the termination.
Neither the Labor Code nor its implementing rules states that a
termination for just cause is voided because the requirement of
notice and hearing was not observed.
6. The Damages Dimensions - Award for Damages Must Have
Statutory Basis
- The Impropriety of Award for Separation Pay - separation pay
is warranted only for dismissals for authorized causes, as
enumerated in Article 283 and 284 of the Labor Code.
- The Impropriety of Equity Awards -Social justice should be
the aspiration of all that we do, yet I think it the more
mature attitude to consider that it ebbs and flows within
our statutes, rather than view it as an independent
source of funding.
- Article 288 of the Labor Code as a Source of Liability
Rule on Damages:

failure to comply with the statutory requirement of

notice automatically gives rise to nominal damages, at
the very least, even if the dismissal was sustained for
just cause.

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Actual or compensatory damages employee

dismissed for just cause but denied statutory due
process.

pecuniary loss arising temperate or moderate

damages under Article 2224 of the Civil Code.

Moral and exemplary damages - dismissal of the

employee was attended by bad faith, fraud, or was
done in a manner contrary to morals, good customs or
public policy, or the employer committed an act
oppressive to labor. Exemplary damages - dismissal
was effected in a wanton, oppressive or malevolent
manner.
Appropriate Award of Damages to the Agabons
- the only appropriate award of damages is nominal damages.

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