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 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

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(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.
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 employer-employee
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.

Labor Law 1
- 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.
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

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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.
- 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.

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

CHICO-NAZARIO; April 19, 2006
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.
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.

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

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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 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. 1791-MC-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

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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-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-theboard basis.
- The union (SM) requested the implementation of said wage orders. But they demanded
that the increase be on an across-the-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 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

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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. 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 governmentmandated 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

Labor Law 1
- 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 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

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- 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 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 CBA-mandated
increases. Respondents isolated act could hardly be 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.

Labor Law 1
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-oftown 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 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.

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- 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.
- 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.

Labor Law 1
- 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
- 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
such a stage that it cannot be cured within a period of six (6) months even with proper

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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-in-charge 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 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

Labor Law 1
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 employer-employee relationship between it
and the petitioner. The private respondent is an independent/job contractor 1 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.
- 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
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 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. . . .

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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
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 vendor-vendee. The Kasunduan did not extinguish the
employer-employee relationship of the parties extant before the execution of said deed.

Labor Law 1
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 well-settled
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
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, Daugdaug 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

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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 self-organization, 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
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."

Labor Law 1
- 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 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, 13 th 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 pre-dated 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.

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> Nov. 28, 1994- W sent a notice reprimanding G for the late submission of weekly
expense report
> 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 decision- ordered 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 LC-gross 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 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.

Labor Law 1
- 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-towork 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
- Nov 27, 1998 Motions for Reconsideration were filed and denied in its 2 nd 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

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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:
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-towork 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

Labor Law 1
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 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 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

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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 PreColor 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.
- 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

Labor Law 1
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 near-impossible. 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 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 so-called "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 foreign-based 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.

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- 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 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
- 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

Labor Law 1
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 five-year 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.
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 MedArbiter, 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

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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
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.

Labor Law 1
- 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
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)
- 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

"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."

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.

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- 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
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

Labor Law 1
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 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 company-designated 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

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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 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 companydesignated 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 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.

Labor Law 1
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
- 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)
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.

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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-incharge 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.
- 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 above-mentioned 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

Labor Law 1
- 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 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

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tampered with the line, the 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 1991-1992. 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 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

Labor Law 1
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.
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
6

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

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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 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, 40-day 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

Labor Law 1
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 one-month 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
> 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.

AGABON V NLRC
SAROCAM V INTERORIENT MARITIME ENT. INC. AND
DEMACO UNITED LTD.
CALLEJO, SR.; June 27 2006
[PAGE 16]
ASUNCION V NLRC
KAPUNAN; July 31, 2001
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 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

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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.

EXECUTIVE SECRETARY V CA
CALLEJO, SR.; May 25, 2004
NATURE
Appeal from a decision of the Court of Appeals
FACTS
- The Asian Recruitment Council Philippine Chapter, Inc. (ARCO-Phil) 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 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-ininterest 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

Labor Law 1
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 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

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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 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.
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 far-reaching 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

Labor Law 1
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 (DTS-35). On May 28 1968, the Board issued its Resolution No. 139 (68),
approving DTS-35 for a period of 30 days, effective June 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

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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
- 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

Labor Law 1
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 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 (Php5-Php10), 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 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).

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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 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

Labor Law 1
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
-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

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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.
- 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.

Labor Law 1
- The lower court, in a decision of January 30, 1965, sustained the validity and
constitutionality of the challenged provision, hence this appeal.
Petitioners Claims
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.
- 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

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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 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

Labor Law 1
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 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.

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- the NLRC modified the Labor Arbiter's decision and held that complainants dismissal
was invalid for the following reasons:
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 complainant-appellant 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 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

Labor Law 1
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 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

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- 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
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.

Labor Law 1
- The only reason for his dismissal found in the records is his failure to follow topmanagement 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 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 coemployee. 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 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

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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 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

Labor Law 1
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 vicechairman 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.
- 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

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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-towork 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-to-work 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 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]
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

Labor Law 1
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 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

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- 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 twentyfour (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.
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.
7

LVN, Pictures Workers vs. LVN, 35 SCRA 147

Labor Law 1
- 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
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 sub-contractor. 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.

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- 31 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 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 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

Labor Law 1
- 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, respondent Villareal
resigned and thereafter joined Hi-Grade Industrial and Technical Products, Inc. as
executive vice-president.
- 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 13 th 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

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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 13 th 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.
- 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 13 th 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. Foreignhires are also paid a salary rate 25% more than local-hires. The School justifies the

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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 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 local-hires 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 local-hires. 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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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.

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
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.

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-theboard 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 "salaryceiling 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
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

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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 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 non-compliance 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.

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> 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 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
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.

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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
employer-employee 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.

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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