CALALANG VS WILLIAMS
liberty, with property, and with business and occupations. Persons
Facts:
The National Traffic Commission, in its resolution of July 17, 1940,
resolved to recommend to the Director of the Public Works and to
the Secretary of Public Works and Communications that animal-
drawn vehicles be prohibited from passing along the following for a
period of one year from the date of the opening of the Colgante
Bridge to traffic:
1) Rosario Street extending from Plaza Calderon de la Barca to
Dasmariñas Street from 7:30Am to 12:30 pm and from 1:30 pm to
530 pm; and
2) along Rizal Avenue extending from the railroad crossing at
Antipolo Street to Echague Street from 7 am to 11pm
The Chairman of the National Traffic Commission on July 18, 1940
recommended to the Director of Public Works with the approval of
the Secretary of Public Works the adoption of thethemeasure
proposed in the resolution aforementioned in pursuance of the
provisions of theCommonwealth Act No. 548 which authorizes said
Director with the approval from the Secretary of the Public Works
and Communication to promulgate rules and regulations to
regulate and control the use of and traffic on national roads.
On August 2, 1940, the Director recommended to the Secretary the
approval of the recommendations made by the Chairman of the
National Traffic Commission with modifications. The Secretary of
Public Works approved the recommendations on August 10,1940.
The Mayor of Manila and the Acting Chief of Police of Manila have
enforced and caused to be enforced the rules and regulation. As a
consequence, 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.
Issues:
1) Whether the rules and regulations promulgated by the
respondents pursuant to the provisions of Commonwealth Act NO.
548 constitute an unlawful inference with legitimate business or
trade and abridged the right to personal liberty and freedom of
locomotion?
2) Whether the rules and regulations complained of infringe upon
the constitutional precept regarding the promotion of social justice
to insure the well-being and economic security of all the people?
Held:
1) No. The promulgation of the Act aims to promote safe transit
upon and avoid obstructions on national roads in the interest and
convenience of the public. In enacting said law, the National
Assembly was prompted by considerations of public convenience
and welfare. It was inspired by the desire to relieve congestion of
traffic, which is a menace to the public safety. Public welfare lies at
the bottom of the promulgation of the said law and the state in
LABOR STANDARDS
order to promote the general welfare may interfere with personal
and property may be subject to all kinds of restraints and burdens
in order to secure the general comfort, health, and prosperity of the
State. To this fundamental aims of the government, the rights of
the individual are subordinated. Liberty is a blessing which should
not be made to prevail over authority because society will fall into
anarchy. Neither should authority be made to prevail over liberty
because then the individual will fall into slavery. The paradox lies in
the fact that the apparent curtailment of liberty is precisely the very
means of insuring its preserving.
2) No. Social justice is “neither communism, nor despotism, nor
atomism, nor anarchy,” but the humanization of laws and the
equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at
least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the
competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption
of measures legally justifiable, or extra-constitutionally, through the
exercise of powers underlying the existence of all governments on
the time-honored principles of salus populi estsuprema lex.
Social justice must be founded on the recognition of the necessity
of interdependence among divers and diverse units of a society
and of the protection that should be equally and evenly extended
to all groups as a combined force in our social and economic life,
consistent with the fundamental and paramount objective of the
state of promoting health, comfort and quiet of all persons, and of
bringing about “the greatest good to the greatest number.”
ALALAYAN VS NATIONAL POWER CORPORATION
Facts:
In 1961, Republic Act No. 3043 (An Act to Further Amend
Commonwealth Act Numbered One Hundred Twenty, as Amended
by Republic Act Numbered Twenty Six Hundred and Forty One)
was passed. This law amended the charter of NAPOCOR
(National Power Corporation). Section 3 of RA 3043 provides that:
a. contractors being supplied by NAPOCOR shall not exceed an
annual profit of 12%;
b. if they do, they shall refund such excess to their customers;
c. that NAPOCOR has the power to renew all existing contracts
with franchise holders for the supply of energy.
Petitioners Santiago Alalayan and the Philippine Power and
Development Company (PPDC), one/ member of NAPOCOR’s
franchisee with existing and valid contract assailed that the said
provision deprived them from liberty to contract without due
process of law.
Issue:
Page1

Whether or not the Section 3 of RA 3043 violates the petitioner’s
liberty to contract?
Held:
No. I is to be admitted of course that property rights find shelter in
specific constitutional provisions, one of which is the due process
clause. It is equally certain that our fundamental law framed at a
time of “surging unrest and dissatisfaction”,26 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.
It is to be remembered that 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 restrictions varied in character and wide ranging in scope
as long as due process is observed.
In order to promote the general welfare the state may interfere with
personal liberty, with property, and with business and occupations.
Persons and property may be subjected to all kinds of restraints
and burdens, in order to secure the general comfort, health, and
prosperity of the state
AGABON VS NLRC
Facts:
Private respondent Riviera Home Improvements, Inc. is engaged
in the business of selling and installing ornamental and
construction materials. It employed petitioners Virgilio Agabon and
Jenny Agabon as gypsum board and cornice installers on January
2, 1992 until February 23, 1999 when they were dismissed for
abandonment of work. Thus, Petitioners then filed a complaint for
illegal dismissal and payment of money claims
Petitioners also claim that private respondent did not comply with
the twin requirements of notice and hearing. Private respondent,
on the other hand, maintained that petitioners were not dismissed
but had abandoned their work.NLRC ruled there was just cause
and petitioners were not entitled to backwages and separation pay.
The CA in turn ruled that the dismissal was not illegal because they
have abandoned their work but ordered the payment of money
claims.
Issue:
Whether or not petitioners were illegally dismissed.
LABOR STANDARDS
Held:
Accordingly, petitioners’ dismissal was for a just cause. They had
abandoned their employment and were already working for
another employer.
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.
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.
After establishing that the terminations were for a just and valid
cause, we now determine if the procedures for dismissal were
observed.
The procedure for terminating an employee is found in Book VI,
Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor
Code:
Standards of due process: requirements of notice. – In all cases of
termination of employment, the following standards of due process
shall be substantially observed:
For termination of employment based on just causes as defined in
Article 282 of the Code:
A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut
the evidence presented against him; and
(c) A written notice of termination served on the employee
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the
employee’s last known address.
Procedurally, (1) if the dismissal is based on a just cause under
Article 282, the employer must give the employee two written
notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice
specifying the grounds for which dismissal is sought a hearing or
an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is
based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of
his separation.
From the foregoing rules four possible situations may be derived:
(1) the dismissal is for a just cause under Article 282 of the Labor
Page2
Code, for an authorized cause under Article 283, or for health
reasons under Article 284, and due process was observed; (2) the
dismissal is without just or authorized cause but due process was
observed; (3) the dismissal is without just or authorized cause and
there was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.
The present case squarely falls under the fourth situation. The
dismissal should be upheld because it was established that the
petitioners abandoned their jobs to work for another company.
Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last
known addresses would have been useless because they did not
reside there anymore. Unfortunately for the private respondent,
this is not a valid excuse because the law mandates the twin notice
requirements to the employee’s last known address. Thus, it
should be held liable for non-compliance with the procedural
requirements of due process.
Petition denied. CA affirmed with modifications.
PAL VS NLRC
Facts:
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely
revised its 1966 Code of Discipline. The Code was circulated
among the employees and was immediately implemented, and
some employees were forthwith subjected to the disciplinary
measures embodied therein.
On August 20, 1985, the Philippine Airlines Employees Association
(PALEA) filed a complaint before the National Labor Relations
Commission (NLRC) for unfair labor practice with the following
remarks: “ULP with arbitrary implementation of PAL’s Code of
Discipline without notice and prior discussion with Union by
Management”. 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.
PAL filed a motion to dismiss the complaint, asserting its
prerogative as an employer to prescibe rules and regulations
regarding employess’ conduct in carrying out their duties and
functions, and alleging that by implementing the Code, it had not
violated the collective bargaining agreement (CBA) or any
provision of the Labor Code.
LABOR STANDARDS
Labor Arbiter Isabel P. Ortiguerra handling the case called the
parties to a conference but they failed to appear at the scheduled
date. Interpreting such failure as a waiver of the parties’ right to
present evidence, the labor arbiter considered the case submitted
for decision. On November 7, 1986, a decision was rendered
finding no bad faith on the part of PAL in adopting the Code and
ruling that no unfair labor practice had been committed. However,
the arbiter held that PAL was “not totally fault free” considering that
while the issuance of rules and regulations governing the conduct
of employees is a “legitimate management prerogative” such rules
and regulations must meet the test of “reasonableness, propriety
and fairness.”
PAL appealed to the NLRC. On August 19, 1988, the NLRC
through Commissioner Encarnacion, with Presiding Commissioner
Bonto-Perez and Commissioner Maglaya concurring, found no
evidence of unfair labor practice committed by PAL and affirmed
the dismissal of PALEA’s charge.
PAL then filed the instant petition for certiorari charging public
respondents with grave abuse of discretion
Issue:
Whether the management may be compelled to share with the
union or its employees its prerogative of formulating a code of
discipline.
Held:
It was only on March 2, 1989, with the approval of Republic Act No.
6715, amending Article 211 of the Labor Code, that the law
explicitly considered it a State policy “(t)o ensure the participation
of workers in decision and policy-making processes affecting the
rights, duties and welfare.” However, even in the absence of said
clear provision of law, the exercise of management prerogatives
was never considered boundless.
San Miguel Brewery vs Ople: 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
them.
UST vs NLRC: All this points to the conclusion that 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.
A line must be drawn between management prerogatives
regarding business operations per se and those which affect the
rights of the employees. In treating the latter, management should
see to it that its employees are at least properly informed of its
decisions or modes action. PAL asserts that all its employees have
been furnished copies of the Code. Public respondents found to
the contrary, which finding, to say the least is entitled to great
respect.
Page3

The collective bargaining agreement may not be interpreted as
cession of employees’ rights to participate in the deliberation of
matters which may affect their rights and the formulation of policies
relative thereto. And one such mater is the formulation of a code of
discipline.
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.
MANILA ELECTRIC VS SECRETARY OF LABOR
QUISUMBING
Facts:
The parties has a pending case before the Secretary of Labor who
rendered a decision ordering that they execute the CBA
incorporating the modifications made by the Secretary.
Some of the alleged members of the union filed an intervention
and reconsideration as well as the supervisors union. They were
ordered to file comments.Petitioner warns that if the wage increase
of P2,200.00 per month as ordered by the Secretary is allowed, it
would simply pass the cost covering such increase to the
consumers through an increase in the rate of electricity. This is a
non sequitur. The Court cannot be threatened with such a
misleading argument. An increase in the prices of electric current
needs the approval of the appropriate regulatory government
agency and does not automatically result from a mere increase in
the wages of petitioner’s employees.
An estimate by the All Asia financial analyst stated that petitioner’s
net operating income for the same year was about P5.7 billion, a
figure which the Union relies on to support its claim. Assuming
without admitting the truth thereof, the figure is higher than the
P4.171 billion allegedly suggested by petitioner as its projected net
operating income. The P5.7 billion which was the Secretary’s basis
for granting the P2,200.00 is higher than the actual net income of
P5.1 billion admitted by petitioner. It would be proper then to
increase this Court’s award of P1,900.00 to P2,000.00 for the two
years of the CBA award. For 1992, the agreed CBA wage increase
LABOR STANDARDS
for rank-and-file was P1,400.00 and was reduced to P1,350.00; for
1993; further reduced to P1,150.00 for 1994. For supervisory
employees, the agreed wage increase for the years 1992-1994 are
P1,742.50, P1,682.50 and P1,442.50, respectively. Based on the
foregoing figures, the P2,000.00 increase for the two-year period
awarded to the rank-and-file is much higher than the highest
increase granted to supervisory employees.
Issue:
W/N matters of salary are part of management prerogative
Held:
Yes. There is no need to consult the Secretary of Labor in cases
involving contracting out for 6 months or more as it is part of
management prerogative. However, a line must be drawn with
respect to management prerogatives on business operations per
se and those which affect the rights of the workers. Employers
must see to it that that employees are properly informed of its
decisions to attain harmonious labor relations and enlighten the
worker as to their rights.
The contracting out business or services is an exercise of business
judgment if it is for the promotion of efficiency and attainment of
economy. Management must be motivated by good faith and
contracting out should not be done to circumvent the law. Provided
there was no malice or that it was not done arbitrarily, the courts
will not interfere with the exercise of this judgment.
PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION VS
NLRC
Facts:
The private respondent (ANGEL ESQUEJO) used to be a security
guard under the employment of the petitioner company. He works
for 12 hours a day and is receiving a monthly salary. He was then
dismissed by the petitioner company. Because of this, the
respondent filed a complaint with the Labor Arbiter for the payment
of his overtime pay. The Labor Arbiter ruled that the respondent is
entitled to an overtime pay. The NLRC affirmed the decision of the
Labor Arbiter. Hence, the current petition.
The petitioner contends that the fact that the monthly salary of the
petitioner is higher than the minimum wage provided by law is
already compensatory of the excess of 4 hours of work rendered
by the said employee. It argues that the salary of the petitioner
already includes the payment for the excess of 4 hours of work
rendered by the respondent. It also contends that since there is a
meeting of the minds between the respondent and the petitioner,
there is already a perfected contract which means that the parties
are bound by their agreements.
Issue:
1. WON the contract (overtime pay for work rendered for
four (4) hours in excess of the eight (8) hour regular
Page4
 working period is already included in the P1,990.00 basic
salary), between the parties is binding.
2. WON Laches can be applied.
Held:
1. No. With regard to the petitioner’s second contention that there
is already a perfected contract (overtime pay for work rendered for
four (4) hours in excess of the eight (8) hour regular working period
is already included in the P1,990.00 basic salary), hence the terms
and conditions imposed therein binds the parties to the contract,
the Supreme Court held that while such contention has the weight
and force of law, it is still subject to certain exception. The general
right to contract is subject to a limitation that such terms and
conditions must not be contrary to law, public order, public policy,
morals and good customs. Employment contracts are imbued with
public interest and are therefore subject to the police power of the
state. The subject contract in the case at bar is contrary to labor
laws. Therefore, not binding to the parties of the case.
Generally speaking, contracts are respected as the law between
the contracting parties, and they may establish such stipulations,
clauses, terms and conditions as they may see fit; and for as long
as such agreements are not contrary to law, morals, good
customs, public policy or public order, they shall have the force of
law between them.[18] However, x x x, while it is the inherent and
inalienable right of every man to have the utmost liberty of
contracting, and agreements voluntarily and fairly made will be
held valid and enforced in the courts, the general right to contract
is subject to the limitation that the agreement must not be in
violation of the Constitution, the statute or some rule of law (12 Am.
Jur. pp. 641-642).[19] And under the Civil Code, contracts of labor
are explicitly subject to the police power of the State because they
are not ordinary contracts but are impressed with public interest.
[20] Inasmuch as in this particular instance the contract is question
would have been deemed in violation of pertinent labor laws, the
provisions of said laws would prevail over the terms of the contract,
and private respondent would still be entitled to overtime pay.
2. No. Petitioners allegation that private respondent is guilty of
laches is likewise devoid of merit. Laches is defined as failure or
neglect for an unreasonable and unexplained length of time to do
that which, by exercising due diligence, could or should have been
done earlier. It is negligence or omission to assert a right within an
unreasonable time, warranting the presumption that the party
entitled to assert it has either abandoned or declined to assert it.
[23] The question of laches is addressed to the sound discretion of
the court, and since it is an equitable doctrine, its application is
controlled by equitable considerations. It cannot work to defeat
justice or to perpetrate fraud and injustice.[24] Laches cannot be
charged against any worker when he has not incurred undue delay
in the assertion of his rights. Private respondent filed his complaint
within the three-year reglementary period. He did not sleep on his
rights for an unreasonable length of time.[25]
LABOR STANDARDS
INNODATA PHILIPPINES INC. VS QUIJADA-LOPEZ
Facts:
Innodata Philippines, Inc., is engaged in the encoding/data
conversion business. It employs encoders, indexers, formatters,
programmers, quality/quantity staff, and others, to maintain its
business and do the job orders of its clients.
Estrella G. Natividad and Jocelyn L. Quejada were employed as
formatters by Innodata Philippines, Inc. They [worked] from March
4, 1997, until their separation on March 3, 1998. They believed that
their job was necessary and desirable to the usual business of the
company which is data processing/conversion and that their
employment is regular pursuant to Article 280 of the Labor
Code,they filed a complaint for illegal dismissal and for damages
as well as for attorney’s fees against Innodata Phils., Incorporated.
Innodata contended that their employment contracts expired,
having a fixed period of one (1) year. Since the period expired,
their employment was likewise terminated applying the ruling in the
Brent School case.
Labor Arbiter Donato G. Quinto rendered a judgment in favor of
complainants holding complainants Estella G. Natividad and
Jocelyn Quejada to have been illegally dismissed by Innodata
Philippines Incorporated and Innodata Processing Corporation and
ordering reinstatement to their former position without loss of
seniority rights, or to a substantially equivalent position, and to pay
them jointly and severally, backwages computed from the time they
were illegally dismissed on March 3, 1998 up to the date of this
decision in the amount of P112,535.28 EACH, or in the total
amount of P225,070.56 for the two of them; and further ordered to
pay them attorney’s fees in the amount equivalent to 10% of their
respective awards.
Innodata appealed to NLRC which reversed and set aside the
Labor Arbiter’s decision declaring that the contract was for a fixed
term and therefore, the dismissal at the end of their one year term
agreed upon was valid. An MR was filed but was denied.
The CA ruled that respondents were regular employees in
accordance with Section 280 of the Labor Code. It said that the
fixed-term contract prepared by petitioner was a crude attempt to
circumvent respondents’ right to security of tenure.
The disputed contract reads, as follows:
“TERM/DURATION
The EMPLOYER hereby employs, engages and hires the
EMPLOYEE, and the EMPLOYEE hereby accepts such
appointment as FORMATTER effective March 04, 1997 to March
03, 1998, a period of one (1) year.
xxxxxxxxx
“TERMINATION
Page5

7.1 This Contract shall automatically terminate on March 03, 1998
without need of notice or demand.
xxxxxxxxx
7.4 The EMPLOYEE acknowledges that the EMPLOYER entered
into this Contract upon his express representation that he/she is
qualified and possesses the skills necessary and desirable for the
position indicated herein. Thus, the EMPLOYER is hereby granted
the right to pre-terminate this Contract within the first three (3)
months of its duration upon failure of the EMPLOYEE to meet and
pass the qualifications and standards set by the EMPLOYER and
made known to the EMPLOYEE prior to execution hereof. Failure
of the EMPLOYER to exercise its right hereunder shall be without
prejudice to the automatic termination of the EMPLOYEE’s
employment upon the expiration of this Contract or cancellation
thereof for other causes provided herein and by law.”
The contract provided two periods. Aside from the fixed one-year
term set in paragraph 1, paragraph 7.4 provides for a three-month
period during which petitioner has the right to pre-terminate the
employment for the “failure of the employees to meet and pass the
qualifications and standards set by the employer and made known
to the employee prior to” their employment. In effect, the paragraph
7.4 is a probationary period.
Innodata claims that it was constrained by the nature of its
business to enter into fixed-term employment contracts with
employees assigned to job orders. It relies on the availability of job
orders or undertakings from its clients. Thus, the continuity of work
cannot be ascertained.
Hence, this petition.
Issue:
Whether the alleged fixed-term employment contracts are valid.
Held:
No, “Art. 1700 of the Civil Code provides that the relations between
capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject to the special
laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar
subjects. Innodata’s contract of employment failed to comply with
the standards set by law and by this Court. “ A contract of
employment is impressed with public interest. For this reason,
provisions of applicable statutes are deemed written into the
contract. Hence, the “parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other.” Moreover,
in case of doubt, the terms of a contract should be construed in
favor of labor.”
LABOR STANDARDS
DISPOSITIVE: Petition is DENIED, and the assailed Decision and
Resolution are AFFIRMED. Costs against petitioner.
CIRTEX EMPLOYEES LABOR UNIONS- FFW VS CIRTEX
EMPLOYEES
Facts:
This resolves the motion for reconsideration and supplemental
motion for reconsideration filed by respondent, Cirtek Electronics,
Inc., of the Court’s Decision dated November 15, 2010.
Respondent-movant maintains that the Secretary of Labor cannot
insist on a ruling beyond the compromise agreement entered into
by the parties; and that, as early as February 5, 2010, petitioner
Union had already filed with the Department of Labor and
Employment (DOLE) a resolution of disaffiliation from the
Federation of Free Workers resulting in the latter’s lack of
personality to represent the workers in the present case.
Issue:
WON petitioner lost its personality to represent the workers
because of its disaffiliation from the Federation of Free Workers.
Held:
The issue of disaffiliation is an intra-union dispute which must be
resolved in a different forum in an action at the instance of either or
both the FFW and the Union or a rival labor organization, not the
employer.
Indeed, as respondent-movant itself argues, a local union may
disaffiliate at any time from its mother federation, absent any
showing that the same is prohibited under its constitution or rule.
Such, however, does not result in it losing its legal personality
altogether. Verily, Anglo-KMU v. Samahan Ng Mga Manggagawang
Nagkakaisa Sa Manila Bay Spinning Mills At J.P. Coats enlightens:
A local labor union is a separate and distinct unit primarily
designed to secure and maintain an equality of bargaining power
between the employer and their employee-members. A local union
does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association owing
its creation to the will of its members. The mere act of affiliation
does not divest the local union of its own personality, neither does
it give the mother federation the license to act independently of the
local union. It only gives rise to a contract of agency where the
former acts in representation of the latter. (emphasis and
underscoring supplied)
MR denied.
Page6
MISAMIS ORIENTAL II ELECTRIC SERVICE
COOPERATIVE VS VIRGILIO CAGALAWAN
Facts
- MORESCO II, a rural electric cooperative, hired Cagalawan as
a Disconnection Lineman on a probationary basis. On March 1,
1994 Cagalawan was appointed to the same post this time on a
permanent basis.
- July 17, 2001, he was designated as Acting Head of the
disconnection crew in one of the sub-office in Misamis Oriental.
In a Memorandum, MORESCO II General Manager Ke-e
transferred Cagalawan to another area as a member of the
disconnection crew.
- In a letter dated May 15, 2002, cagalawan assailed his transfer
claiming he was effectively demoted to his position as head of
the disconnection crew to a mere member. He also averted that
such transfer was inconvenient and prejudicial to him.
- In a memorandum dated May 16, 2002 the Ke-e explained that
said transfer was not a demotion since he was holding the
position only by mere designation and not appointment.
Meanwhile and in view of Cagalawan’s transfer, Ke-e issued an
order recalling the former’s previous designation as Acting
Head of the disconnection crew of the Balingasag sub-office.
- Cagalawan eventually stopped reporting for work. On July 1,
2002, he filed a complaint for constructive dismissal before the
Arbitration branch of the NLRC against MORESCO II and its
officers, Ke-e and Danilo Subrado, in their capacities as
General Manager and Board Chairman, respectively.
- In reply, Cagalawan claimed that was transferred because he
executed an Affidavit in support of his co-employee Jessie
Rances, who filed an illegal dismissal case against MORESCO
II.
Issues
(1) Was the respondent constructively dismissed by the
petitioner?
Ruling
The petition has no merit
MORESCO II’s belated submission of evidence cannot be
permitted.
Labor tribunals, such as the NLRC, are not precluded from
receiving evidence submitted on appeal as technical rules are not
binding in cases submitted before them. However, any delay in the
submission of evidence should be adequately explained and
should adequately prove the allegations sought to be proven.
In the present case, MORESCO II did not cite any reason why it
had failed to file its position paper or present its cause before the
Labor Arbiter despite sufficient notice and time given to do so. Only
after an adverse decision was rendered did it present its defense
and rebut the evidence of Cagalawan by alleging that his transfer
was made in response to the letter-request of the area manager of
the Gingoog sub-office asking for additional personnel to meet its
collection quota. To our mind, however, the belated submission of
LABOR STANDARDS
the said letter- request without any valid explanation casts doubt
on its credibility, specially so when the same is not a newly
discovered evidence. For one, the letter-request was dated May 8,
2002 or a day before the memorandum for Cagalawan’s transfer
was issued. MORESCO II could have easily presented the letter in
the proceedings before the Labor Arbiter for serious examination.
Why it was not presented at the earliest opportunity is a serious
question which lends credence to Cagalawan’s theory that it may
have just been fabricated for the purpose of appeal.
It should also be recalled that after Cagalawan received the
memorandum for his transfer to the Gingoog sub-office, he
immediately questioned the basis thereof through a letter
addressed to Ke-e. If at that time there was already a letter-
request from the Gingoog area manager, Ke-e could have easily
referred to or specified this in his subsequent memorandum of May
16, 2002 which served as his response to Cagalawan’s queries
about the transfer. However, the said memorandum was silent in
this respect. Nevertheless, Cagalawan, for his part, faithfully
complied with the transfer order but with the reservation to contest
its validity precisely because he was not adequately informed of its
real basis. The rule is that it is within the ambit of the employer’s
prerogative to transfer an employee for valid reasons and
according to the requirement of its business, provided that the
transfer does not result in demotion in rank or diminution of salary,
benefits and other privileges. This Court has always considered
the management’s prerogative to transfer its employees in pursuit
of its legitimate interests. But this prerogative should be exercised
without grave abuse of discretion and with due regard to the basic
elements of justice and fair play, such that if there is a showing that
the transfer was unnecessary or inconvenient and prejudicial to the
employee, it cannot be upheld. Here, while we find that the transfer
of Cagalawan neither entails any demotion in rank since he did not
have tenurial security over the position of head of the
disconnection crew, nor result to diminution in pay as this was not
sufficiently proven by him, MORESCO II’s evidence is
nevertheless not enough to show that said transfer was required
by the exigency of the electric cooperative’s business interest.
Simply stated, the evidence sought to be admitted by MORESCO
II is not substantial to prove that there was a genuine business
urgency that necessitated the transfer.
PEOPLE VS VERA REYES
Facts:
The defendant was charged with a violation of Act No. 2549, as
amended by Acts Nos. 3085 and 3958 The information alleged that
from September 9 to October 28, 1936, and for the some time
after, the accused, in his capacity as president and general
manager of the Consolidated Mines, having engaged the services
of Severa Velasco de Vera as stenographer, at an agreed salary of
P35 a month willfully and illegally refused to pay the salary of said
stenographer corresponding to the above-mentioned period of
time, which was long due and payable, in spite of her repeated
demands.
The accused interposed a demurrer on the ground that the facts
alleged in the information do not constitute any offense, and that
even if they did, the laws penalizing it are unconstitutional.
After the hearing, the court sustained the demurrer, declaring
unconstitutional the last part of section 1 of Act No. 2549 as last
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amended by Act No. 3958, which considers as an offense the facts
alleged in the information, for the reason that it violates the
constitutional prohibition against imprisonment for debt, and
dismissed the case, with costs de oficio.
Without this law, the laborers and employees who earn meager
salaries would be compelled to institute civil actions which, in the
majority of cases, would cost them more than that which they
would receive in case of a decision in their favor.

In this appeal the Solicitor-General contends that the court erred in

declaring Act No. 3958 unconstitutional.

Issue:

Whether the said constitutional provision is unconstitutional.

Held:

No. The last part of section 1 considers as illegal the refusal of an

employer to pay, when he can do so, the salaries of his employees
or laborers on the fifteenth or last day of every month or on
Saturday of every week, with only two days extension, and the
nonpayment of the salary within the periods specified is considered
as a violation of the law.

The same Act exempts from criminal responsibility the employer

who, having failed to pay the salary, should prove satisfactorily that
it was impossible to make such payment.

The court held that this provision is null because it violates the
provision of section 1 (12), Article III, of the Constitution, which
provides that no person shall be imprisoned for debt.

We do not believe that this constitutional provision has been

correctly applied in this case. A close perusal of the last part of
section 1 of Act No. 2549, as amended by section 1 of Act No.
3958, will show that its language refers only to the employer who,
being able to make payment, shall abstain or refuse to do so,
without justification and to the prejudice of the laborer or employee.
An employer so circumstanced is not unlike a person who defrauds
another, by refusing to pay his just debt. In both cases the deceit or
fraud is the essential element constituting the offense. The first
case is a violation of Act No. 3958, and the second isestafa
punished by the Revised Penal Code. In either case the offender
cannot certainly invoke the constitutional prohibition against
imprisonment for debt.

Another doctrine:

Police power is the power inherent in a government to enact laws,

within constitutional limits, to promote the order, safety, health,
morals, and general welfare of society. (12 C. J., p. 904.) In the
exercise of this power the Legislature has ample authority to
approve the disputed portion of Act No. 3958 which punishes the
employer who, being able to do so, refuses to pay the salaries of
his laborers or employers in the specified periods of time.

Undoubtedly, one of the purposes of the law is to suppress

possible abuses on the part of employers who hire laborers or
employees without paying them the salaries agreed upon for their
services, thus causing them financial difficulties.

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