CASE DOCTRINES IN LABOR LAW REVIEW

FUNDAMENTAL PRINCIPLES; ILLEGAL RECRUITMENT

Prepared by: Glenn Rey Anino
University of Cebu

Central Bank Employees Association, Inc. vs. Bangko Sentral ng Pilipinas, 446 SCRA 299 ,
December 15, 2004
Constitutional Law; Equal Protection Clause; The “ equal protection ” clause does not
prevent the Legislature from establishing classes of individuals or objects upon which
different rules shall operate—so long as the classification is not unreasonable.—It is settled
in constitutional law that the “ equal protection ” clause does not prevent the Legislature
from establishing classes of individuals or objects upon which different rules shall
operate—so long as the classification is not unreasonable. As held in Victoriano v. Elizalde
Rope Workers’ Union, and reiterated in a long line of cases: The guaranty of equal protection
of the laws is not a guaranty of equality in the application of the laws upon all citizens of the
state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition
against inequality, that every man, woman and child should be affected alike by a statute.
Equality of operation of statutes does not mean indiscriminate operation on persons merely
as such, but on persons according to the circumstances surrounding them. It guarantees
equality, not identity of rights. The Constitution does not require that things which are
different in fact be treated in law as though they were the same. The equal protection clause
does not forbid discrimination as to things that are different. It does not prohibit legislation
which is limited either in the object to which it is directed or by the territory within which it is
to operate.

Same; In the case at bar, it is clear in the legislative deliberations that the exemption of
officers (SG 20 and above) from the SSL was intended to address the BSP’s lack of
competitiveness in terms of attracting competent officers and executives—it was not
intended to discriminate against the rank-and-file, and the resulting discrimination or
distinction has a rational basis and is not palpably, purely, and entirely arbitrary in the
legislative sense.—Congress is allowed a Constitutional Law; Equal Protection Clause; The
“ equal protection ” clause does not prevent the Legislature from establishing classes of
individuals or objects upon which different rules shall operate—so long as the classification
is not unreasonable.—It is settled in constitutional law that the “ equal protection ” clause
does not prevent the Legislature from establishing classes of individuals or objects upon
which different rules shall operate—so long as the classification is not unreasonable. As
held in Victoriano v. Elizalde Rope Workers’ Union, and reiterated in a long line of cases: The
guaranty of equal protection of the laws is not a guaranty of equality in the application of the
laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the
constitutional prohibition against inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of statutes does not mean indiscriminate
operation on persons merely as such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as though they were the
same. The equal protection clause does not forbid discrimination as to things that are
different. It does not prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.

Same; In the case at bar, it is clear in the legislative deliberations that the exemption of
officers (SG 20 and above) from the SSL was intended to address the BSP’s lack of
competitiveness in terms of attracting competent officers and executives—it was not
intended to discriminate against the rank-and-file, and the resulting discrimination or
distinction has a rational basis and is not palpably, purely, and entirely arbitrary in the
legislative sense.—Congress is allowed a Constitutional Law; Equal Protection Clause; The
“ equal protection ” clause does not prevent the Legislature from establishing classes of
individuals or objects upon which different rules shall operate—so long as the classification
is not unreasonable.—It is settled in constitutional law that the “ equal protection ” clause
does not prevent the Legislature from establishing classes of individuals or objects upon
which different rules shall operate—so long as the classification is not unreasonable. As
held in Victoriano v. Elizalde Rope Workers’ Union, and reiterated in a long line of cases: The
guaranty of equal protection of the laws is not a guaranty of equality in the application of the
laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the
constitutional prohibition against inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of statutes does not mean indiscriminate
operation on persons merely as such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity of rights. The Constitution does not
require that things which are different in fact be treated in law as though they were the
same. The equal protection clause does not forbid discrimination as to things that are
different. It does not prohibit legislation which is limited either in the object to which it is
directed or by the territory within which it is to operate.

Same; Same; Same; Same; Same; Same; Same; As regards the exemption from the
coverage of the SSL, there exists no substantial distinctions so as to differentiate the BSP
rank-and-file from the other rank-and-file of the seven GFIs—our legal history shows that
GFIs have long been recognized as comprising one distinct class, separate from other
government entities.—It is against this standard that the disparate treatment of the BSP
rank-and-file from the other GFIs cannot stand judicial scrutiny. For as regards the
exemption from the coverage of the SSL, there exist no substantial distinctions so as to
differentiate, the BSP rank-and-file from the other rank-and-file of the seven GFIs. On the
contrary, our legal history shows that GFIs have long been recognized as comprising one
distinct class, separate from other governmental entities.

Same; Same; Same; Same; Same; Same; The argument that the rank-and-file employees of
the seven GFIs were exempted because of the importance of their institution’s mandate
cannot stand any more than an empty sack can stand.—It has been proffered that legislative
deliberations justify the grant or withdrawal of exemption from the SSL, based on the
perceived need “ to fulfill the mandate of the institution concerned considering, among
others, that: (1) the GOCC or GFI is essentially proprietary in character; (2) the GOCC or GFI
is in direct competition with their [sic] counterparts in the private sector, not only in terms of
the provisions of goods or services, but also in terms of hiring and retaining competent
personnel; and (3) the GOCC or GFI are or were [sic] experiencing difficulties filling up
plantilla positions with competent personnel and/or retaining these personnel. The need for
the scope of exemption necessarily varies with the particular circumstances of each
institution, and the corresponding variance in the benefits received by the employees is
merely incidental. ” The fragility of this argument is manifest. First, the BSP is the central
monetary authority, and the banker of the government and all its political subdivisions. It has
the sole power and authority to issue currency; provide policy directions in the areas of
money, banking, and credit; and supervise banks and regulate finance companies and
non-bank financial institutions performing quasi-banking functions, including the exempted
GFIs. Hence, the argument that the rank-and-file employees of the seven GFIs were
exempted because of the importance of their institution’s mandate cannot stand any more
than an empty sack can stand.

Same; Same; Same; Same; Same; Same; It is patent that the classification made between
the BSP rank-and-file and those of the other seven GFIs was inadvertent, and not intended,
i.e., it was not based on any substantial distinction vis-à-vis the particular circumstances of
each GFI.—It is certainly misleading to say that “ the need for the scope of exemption
necessarily varies with the particular circumstances of each institution. ” Nowhere in the
deliberations is there a cogent basis for the exclusion of the BSP rank-and-file from the
exemption which was granted to the rank-and-file of the other GFIs and the SEC. As point in
fact, the BSP and the seven GFIs are similarly situated in so far as Congress deemed it
necessary for these institutions to be exempted from the SSL. True, the SSL-exemption of
the BSP and the seven GFIs was granted in the amended charters of each GFI, enacted
separately and over a period of time. But it bears emphasis that, while each GFI has a
mandate different and distinct from that of another, the deliberations show that the raison
d’être of the SSL-exemption was inextricably linked to and for the most part based on factors
common to the eight GFIs, i.e., (1) the pivotal role they play in the economy; (2) the necessity
of hiring and retaining qualified and effective personnel to carry out the GFI’s mandate; and
(3) the recognition that the compensation package of these GFIs is not competitive, and fall
substantially below industry standards. Considering further that (a) the BSP was the first
GFI granted SSL exemption; and (b) the subsequent exemptions of other GFIs did not
distinguish between the officers and the rank-and-file; it is patent that the classification
made between the BSP rank-and-file and those of the other seven GFIs was inadvertent, and
NOT intended, i.e., it was not based on any substantial distinction vis-à-vis the particular
circumstances of each GFI. Moreover, the exemption granted to two GFIs makes express
reference to allowance and fringe benefits similar to those extended to and currently
enjoyed by the employees and personnel of other GFIs, underscoring that GFIs are a
particular class within the realm of government entities.

Same; Same; Same; Same; Same; Same; It is precisely the unpremeditated discrepancy in
treatment of the rank-and-file of the BSP—made manifest and glaring with each and every
consequential grant of blanket exemption from the SSL to the other GFIs—that cannot be
rationalized or justified. If Congress had enacted a law for the sole purpose of exempting the
eight GFIs from the coverage of the SSL, the exclusion of the BSP rank-and-file employees
would have Same; Same; Same; Same; Same; Same; It is patent that the classification made
between the BSP rank-and-file and those of the other seven GFIs was inadvertent, and not
intended, i.e., it was not based on any substantial distinction vis-à-vis the particular
circumstances of each GFI.—It is certainly misleading to say that “the need for the scope of
exemption necessarily varies with the particular circumstances of each institution. ”
Nowhere in the deliberations is there a cogent basis for the exclusion of the BSP
rank-and-file from the exemption which was granted to the rank-and-file of the other GFIs
and the SEC. As point in fact, the BSP and the seven GFIs are similarly situated in so far as
Congress deemed it necessary for these institutions to be exempted from the SSL. True, the
SSL-exemption of the BSP and the seven GFIs was granted in the amended charters of each
GFI, enacted separately and over a period of time. But it bears emphasis that, while each GFI
has a mandate different and distinct from that of another, the deliberations show that the
raison d’être of the SSL-exemption was inextricably linked to and for the most part based on
factors common to the eight GFIs, i.e., (1) the pivotal role they play in the economy; (2) the
necessity of hiring and retaining qualified and effective personnel to carry out the GFI’s
mandate; and (3) the recognition that the compensation package of these GFIs is not
competitive, and fall substantially below industry standards. Considering further that (a) the
BSP was the first GFI granted SSL exemption; and (b) the subsequent exemptions of other
GFIs did not distinguish between the officers and the rank-and-file; it is patent that the
classification made between the BSP rank-and-file and those of the other seven GFIs was
inadvertent, and NOT intended, i.e., it was not based on any substantial distinction vis-à-vis
the particular circumstances of each GFI. Moreover, the exemption granted to two GFIs
makes express reference to allowance and fringe benefits similar to those extended to and
currently enjoyed by the employees and personnel of other GFIs, underscoring that GFIs are
a particular class within the realm of government entities.

Same; Same; Same; Same; Same; Same; As regards the exemption from the SSL, there are
no characteristics peculiar only to the seven GFIs or their rank-and-file so as to justify the
exemption which BSP rank-and-file employees were denied—the distinction made by the law
is not only superficial, but also arbitrary.—In the case at bar, it is precisely the fact that as
regards the exemption from the SSL, there are no characteristics peculiar only to the seven
GFIs or their rank-and-file so as to justify the exemption which BSP rank-and-file employees
were denied (not to mention the anomaly of the SEC getting one). The distinction made by
the law is not only superficial, but also arbitrary. It is not based on substantial distinctions
that make real differences between the BSP rank-and-file and the seven other GFIs.
Same; Same; Same; Same; Same; Same; Separation of Powers; While the granting of a
privilege per se is a matter of policy exclusively within the domain and prerogative of
Congress, the validity or legality of the exercise of this prerogative is subject to judicial
review; The disparity in treatment between BSP rank-and-file and the rank-and-file of the
other seven GFIs definitely bear the unmistakable badge of invidious discrimination.—It
bears stressing that the exemption from the SSL is a “privilege” fully within the legislative
prerogative to give or deny. However, its subsequent grant to the rank-and-file of the seven
other GFIs and continued denial to the BSP rank-and-file employees breached the latter’s
right to equal protection. In other words, while the granting of a privilege per se is a matter of
policy exclusively within the domain and prerogative of Congress, the validity or legality of
the exercise of this prerogative is subject to judicial review. So when the distinction made is
superficial, and not based on substantial distinctions that make real differences between
those included and excluded, it becomes a matter of arbitrariness that this Court has the
duty and the power to correct. As held in the United Kingdom case of Hooper v. Secretary of
State for Work and Pensions, once the State has chosen to confer benefits, “discrimination”
contrary to law may occur where favorable treatment already afforded to one group is
refused to another, even though the State is under no obligation to provide that favorable
treatment. The disparity of treatment between BSP rank-and-file and the rank-and-file of the
other seven GFIs definitely bears the unmistakable badge of invidious discrimination—no
one can, with candor and fairness, deny the discriminatory character of the subsequent
blanket and total exemption of the seven other GFIs from the SSL when such was withheld
from the BSP. Alikes are being treated as unalikes without any rational basis.

Same; Standards of Review; In our jurisdiction, the standard and analysis of equal protection
challenges in the main have followed the “ rational basis ” test, coupled with a deferential
attitude to legislative classifications.—In our jurisdiction, the standard and analysis of equal
protection challenges in the main have followed the “ rational basis ” test, coupled with a
deferential attitude to legislative classifications and a reluctance to invalidate a law unless
there is a showing of a clear and unequivocal breach of the Constitution.

Same; Same; International Law; The equality provisions in the international instruments do
not merely function as traditional “first generation” rights, commonly viewed as concerned
only with constraining rather than requiring State action—they imposed a measure of
positive obligation on States Parties to take steps to eradicate discrimination.—Most, if not
all, international human rights instruments include some prohibition on discrimination
and/or provisions about equality. The general international provisions pertinent to

Same; Same; Same; Two-Tier Analysis; The two-tier analysis made in the case at bar of the
challenged provision, and its conclusion of unconstitutionality by subsequent operation, are
in cadence and in consonance with the progressive trend of other jurisdictions and in
international law.—Thus, the two-tier analysis made in the case at bar of the challenged
provision, and its conclusion of unconstitutionality by subsequent operation, are in cadence
and in consonance with the progressive trend of other jurisdictions and in international law.

Same; Same; Separation of Powers; The deference to Congressional discretion stops where
the classification violates a fundamental right, or prejudices persons accorded special
protection by the Constitution, and when these violations arise, the Supreme Court must
discharge its primary role as the vanguard of constitutional guaranties, and require a stricter
and more exacting adherence to constitutional limitations—rational basis should not
suffice.—

Same; Same; Separation of Powers; The deference to Congressional discretion stops where
the classification violates a fundamental right, or prejudices persons accorded special
protection by the Constitution, and when these violations arise, the Supreme Court must
discharge its primary role as the vanguard of constitutional guaranties, and require a stricter
and more exacting adherence to constitutional limitations—rational basis should not suffice.

Philippine National Bank vs. Padao, G.R. Nos. 180849 and 187143, November 16, 2011
Gross negligence connotes want of care in the performance of ones duties, while habitual
neglect implies repeated failure to perform ones duties for a period of time, depending on
the circumstances. Gross negligence has been defined as the want or absence of or failure
to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them.

Padaos repeated failure to discharge his duties as a credit investigator of the bank
amounted to gross and habitual neglect of duties under Article 282 (b) of the Labor Code. He
not only failed to perform what he was employed to do, but also did so repetitively and
habitually, causing millions of pesos in damage to PNB. Thus, PNB acted within the bounds
of the law by meting out the penalty of dismissal, which it deemed appropriate given the
circumstances.

In Toyota Motor Phils. Corp. Workers Association v. NLRC,[52] the Court reaffirmed the
general rule that 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, willful disobedience, gross and habitual neglect of duty, fraud or willful breach
of trust, commission of a crime against the employer or his family, or those reflecting on his
moral character. These five grounds are just causes for dismissal as provided in Article 282
of the Labor Code.
 Agabon vs. National Labor Relations Commission, 442 SCRA 573 , November 17, 2004
Labor Law; Administrative Law; If the factual findings of the NLRC and the Labor Arbiter are
conflicting, the reviewing court may delve into the records and examine for itself the
questioned findings.

Same; Dismissal of Employees; 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.—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 latter’s
representative in connection with the employee’s 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.

Same; Same; Abandonment; Words and Phrases; 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.—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
employer-employee 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.

Same; Same; Same; Moonlighting; Subcontracting for another company clearly shows the
intention to sever the employer-employee relationship; The record of an employee is a
relevant consideration in determining the penalty that should be meted out to him.—In
February 1999, petitioners were frequently absent having subcontracted for an installation
work for another company. Subcontracting for another company clearly showed the
intention to sever the employer-employee relationship with private respondent. This was not
the first time they did this. In January 1996, they did not report for work because they were
working for another company. Private respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners disregarded the warning and
exhibited a clear intention to sever their employer-employee relationship. The record of an
employee is a relevant consideration in determining the penalty that should be meted out to
him.
Same; Same; The employer may not be compelled to continue to employ such persons
whose continuance in the service will patently be inimical to his interests.—The law imposes
many obligations on the employer such as providing just compensation to workers,
observance of the procedural requirements of notice and hearing in the termination of
employment. On the other hand, the law also recognizes the right of the employer to expect
from its workers not only good performance, adequate work and diligence, but also good
conduct and loyalty. The employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be inimical to his interests.

Same; Same; Dismissals based on just causes contemplate acts or omissions attributable
to the employee while dismissals based on authorized causes involve grounds under the
Labor Code which allow the employer to terminate employees.—Dismissals based on just
causes contemplate acts or omissions attributable to the employee while dismissals based
on authorized causes involve grounds under the Labor Code which allow the employer to
terminate employees. A termination for an authorized cause requires payment of separation
pay. When the termination of employment is declared illegal, reinstatement and full
backwages are mandated under Article 279. If reinstatement is no longer possible where the
dismissal was unjust, separation pay may be granted.

Same; Same; Due Process; Notice Requirement; Procedurally, (1) if the dismissal is based
on a just cause under Article 282 of the Labor Code, 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, 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;
Failure to observe due process in a dismissal for just or authorized cause does not
invalidate the dismissal but makes the employer liable for non-compliance with the
procedural requirements of due process.—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 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. In the first situation, the dismissal is
undoubtedly valid and the employer will not suffer any liability. In the second and third
situations where the dismissals are illegal, Article 279 mandates that the employee is
entitled to reinstatement without loss of seniority rights and other privileges and full
backwages, inclusive of allowances, and other benefits or their monetary equivalent
computed from the time the compensation was not paid up to the time of actual
reinstatement. In the fourth situation, the dismissal should be upheld. While the procedural
infirmity cannot be cured, it should not invalidate the dismissal. However, the employer
should be held liable for non-compliance with the procedural requirements of due process.

Same; Same; Same; Same; The fact that the employee may not be residing in the address
indicated in the employer’s records does not excuse the employer from sending the notices
to the employee’s last known address.—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.

Same; Same; Same; Same; The Court believes that the ruling in Serrano v. National Labor
Relations Commission, 323 SCRA 445 (2000), did not consider the full meaning of Article
279 of the Labor Code which provision means that the termination is illegal only if it is not
for any of the justified or authorized causes provided by law and that payment of backwages
and other benefits, including reinstatement, is justified only if the employee was unjustly
dismissed; The fact that the Serrano ruling can cause unfairness and injustice which elicited
strong dissent has prompted the Court to revisit the doctrine.—The rationale for the
re-examination of the Wenphil doctrine in Serrano was the significant number of cases
involving dismissals without requisite notices. We concluded that the imposition of penalty
by way of damages for violation of the notice requirement was not serving as a deterrent.
Hence, we now required payment of full backwages from the time of dismissal until the time
the Court finds the dismissal was for a just or authorized cause. Serrano was confronting
the practice of employers to “dismiss now and pay later” by imposing full backwages. We
believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of
the Labor Code which states: ART. 279. Security of Tenure.—In cases of regular
employment, the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. This means that the termination is illegal only if it is not for any
of the justified or authorized causes provided by law. Payment of backwages and other
benefits, including reinstatement, is justified only if the employee was unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice which elicited strong
dissent has prompted us to revisit the doctrine.

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

Same; Same; Same; Same; Statutory due process should be differentiated from failure to
comply with constitutional due process—constitutional due process protects the individual
from the government and assures him of his rights in criminal, civil or administrative
proceedings while statutory due process found in the Labor Code and Implementing Rules
protects employees from being unjustly terminated without just cause after notice and
hearing.—Due process under the Labor Code, like Constitutional due process, has two
aspects: substantive, i.e., the valid and authorized causes of employment termination under
the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process
requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended
by Department Order Nos. 9 and 10. Breaches of these due process requirements violate the
Labor Code. Therefore statutory due process should be differentiated from failure to comply
with constitutional due process. Constitutional due process protects the individual from the
government and assures him of his rights in criminal, civil or administrative proceedings;
while statutory due process found in the Labor Code and Implementing Rules protects
employees from being unjustly terminated without just cause after notice and hearing.

Same; Same; Same; The better rule is to abandon the Serrano doctrine and to follow Wenphil
v. National Labor Relations Commission, 170 SCRA 69 (1989), by holding that the dismissal
was for just cause but imposing sanctions on the employer, which sanctions, however, must
be stiffer than that imposed in Wenphil.—After carefully analyzing the consequences of the
divergent doctrines in the law on employment termination, we believe that in cases involving
dismissals for cause but without observance of the twin requirements of notice and hearing,
the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the
dismissal was for just cause but imposing sanctions on the employer. Such sanctions,
however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able
to achieve a fair result by dispensing justice not just to employees, but to employers as well.

Same; Same; Same; 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 it from sustaining the employer when it is in the right.—The unfairness of
declaring illegal or ineffectual dismissals for valid or authorized causes but not complying
with statutory due process may have far-reaching consequences. This would encourage
frivolous suits, where even the most notorious violators of company policy are rewarded by
invoking due process. This also creates absurd situations where there is a just or authorized
cause for dismissal but a procedural infirmity invalidates the termination. Let us take for
example a case where the employee is caught stealing or threatens the lives of his
co-employees or has become a criminal, who has fled and cannot be found, or where
serious business losses demand that operations be ceased in less than a month.
Invalidating the dismissal would not serve public interest. It could also discourage
investments that can generate employment in the local economy. The constitutional policy
to provide full protection to labor is not meant to be a sword to oppress employers. The
commitment of this Court to the cause of labor does not prevent us from sustaining the
employer when it is in the right, as in this case. Certainly, an employer should not be
compelled to pay employees for work not actually performed and in fact abandoned. The
employer should not be compelled to continue employing a person who is admittedly guilty
of misfeasance or malfeasance and whose continued employment is patently inimical to the
employer. The law protecting the rights of the laborer authorizes neither oppression nor
self-destruction of the employer.

Same; Same; Social Justice; An employee who is clearly guilty of conduct violative of Article
282 should not be protected by the Social Justice Clause of the Constitution—social justice
must be founded on the recognition of the necessity of interdependence among diverse
units of a society and of the protection that should be equally and evenly extended to all
groups as a combined force in our social and economic life; Social justice is not based on
rigid formulas set in stone—it has to allow for changing times and circumstances.—An
employee who is clearly guilty of conduct violative of Article 282 should not be protected by
the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be
used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social
justice must be founded on the recognition of the necessity of interdependence among
diverse units of a society and of the protection that should be equally and evenly extended
to all groups as a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health, comfort, and
quiet of all persons, and of bringing about “the greatest good to the greatest number.” This
is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and
related cases. Social justice is not based on rigid formulas set in stone. It has to allow for
changing times and circumstances.

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

Same; Evidence; Payment; Burden of Proof; As a general rule, one who pleads payment has
the burden of proving it—even where the employee must allege non-payment, the general
rule is that the burden rests on the employer to prove payment, rather than on the employee
to prove non-payment.—

Same; Evidence; Payment; Burden of Proof; As a general rule, one who pleads payment has
the burden of proving it—even where the employee must allege non-payment, the general
rule is that the burden rests on the employer to prove payment, rather than on the employee
to prove non-payment

Phinco Industries, Inc. vs. Phimco Industries Labor Association (PILA), 628 SCRA 119 ,
August 11, 2010
Same; Strikes; A strike is the most powerful weapon of workers in their struggle with
management in the course of setting their terms and conditions of employment; To be
legitimate, a strike should not be antithetical to public welfare, and must be pursued within
legal bounds; The right to strike as a means of attaining social justice is never meant to
oppress or destroy anyone, least of all, the employer.-- A strike is the most powerful weapon
of workers in their struggle with management in the course of setting their terms and
conditions of employment. Because it is premised on the concept of economic war between
labor and management, it is a weapon that can either breathe life to or destroy the union and
its members, and one that must also necessarily affect management and its members. In
light of these effects, the decision to declare a strike must be exercised responsibly and
must always rest on rational basis, free from emotionalism, and unswayed by the tempers
and tantrums of hot heads; it must focus on legitimate union interests. To be legitimate, a
strike should not be antithetical to public welfare, and must be pursued within legal bounds.
The right to strike as a means of attaining social justice is never meant to oppress or
destroy anyone, least of all, the employer. Since strikes affect not only the relationship
between labor and management but also the general peace and progress of the community,
the law has provided limitations on the right to strike. Procedurally, for a strike to be valid, it
must comply with Article 263 of the Labor Code, which requires that: (a) a notice of strike be
filed with the Department of Labor and Employment (DOLE) 30 days before the intended
date thereof, or 15 days in case of unfair labor practice; (b) a strike vote be approved by a
majority of the total union membership in the bargaining unit concerned, obtained by secret
ballot in a meeting called for that purpose; and (c) a notice be given to the DOLE of the
results of the voting at least seven days before the intended strike.

Same; Same; Appeals; Despite the validity of the purpose of a strike and compliance with
the procedural requirements, a strike may still be held illegal where the means employed are
illegal; In the instant case, the Court intervenes and rules even on the evidentiary and factual
issues of this case as both the National Labor Relations Commission (NLRC) and the Court
of Appeals (CA) grossly misread the evidence, leading them to inordinately incorrect
conclusions, both factual and legal.—Despite the validity of the purpose of a strike and
compliance with the procedural requirements, a strike may still be held illegal where the
means employed are illegal. The means become illegal when they come within the
prohibitions under Article 264(e) of the Labor Code which provides: “No person engaged in
picketing shall commit any act of violence, coercion or intimidation or obstruct the free
ingress to or egress from the employer’s premises for lawful purposes, or obstruct public
thoroughfares.” Based on our examination of the evidence which the LA viewed differently
from the NLRC and the CA, we find the Phimco Industries Labor Association (PILA) strike
illegal. We intervene and rule even on the evidentiary and factual issues of this case as both
the NLRC and the CA grossly misread the evidence, leading them to inordinately incorrect
conclusions, both factual and legal. While the strike undisputably had not been marred by
actual violence and patent intimidation, the picketing that respondent PILA officers and
members undertook as part of their strike activities effectively blocked the free ingress to
and egress from PHIMCO’s premises, thus preventing non-striking employees and company
vehicles from entering the Phimco Industries, Inc. (PHIMCO) compound. In this manner, the
picketers violated Article 264(e) of the Labor Code.

Same; Same; Picketing; Words and Phrases; To strike is to withhold or to stop work by the
concerted action of employees as a result of an industrial or labor dispute, which work
stoppage may be accompanied by picketing by the striking employees outside of the
company compound; While a strike focuses on stoppage of work, picketing focuses on
publicizing the labor dispute and its incidents to inform the public of what is happening in
the company struck against; Protected picketing does not extend to blocking ingress to and
egress from the company premises, and, the fact that the picket was moving, was peaceful
and was not attended by actual violence may not free it from taints of illegality if the picket
effectively blocked entry to and exit from the company premises.—We disagree with this
finding as the purported “peaceful moving picket” upon which the National Labor Relations
Commission (NLRC) resolution was anchored was not an innocuous picket, contrary to what
the NLRC said it was; the picket, under the evidence presented, did effectively obstruct the
entry and exit points of the company premises on various occasions. To strike is to withhold
or to stop work by the concerted action of employees as a result of an industrial or labor
dispute. The work stoppage may be accompanied by picketing by the striking employees
outside of the company compound. While a strike focuses on stoppage of work, picketing
focuses on publicizing the labor dispute and its incidents to inform the public of what is
happening in the company struck against. A picket simply means to march to and from the
employer’s premises, usually accompanied by the display of placards and other signs
making known the facts involved in a labor dispute. It is a strike activity separate and
different from the actual stoppage of work. While the right of employees to publicize their
dispute falls within the protection of freedom of expression and the right to peaceably
assemble to air grievances, these rights are by no means absolute. Protected picketing does
not extend to blocking ingress to and egress from the company premises. That the picket
was moving, was peaceful and was not attended by actual violence may not free it from
taints of illegality if the picket effectively blocked entry to and exit from the company
premises.

Same; Same; Same; Pickets may not aggressively interfere with the right of peaceful ingress
to and egress from the employer’s shop or obstruct public thoroughfares—picketing is not
peaceful where the sidewalk or entrance to a place of business is obstructed by picketers
parading around in a circle or lying on the sidewalk.—With a virtual human blockade and real
physical obstructions (benches and makeshift structures both outside and inside the gates),
it was pure conjecture on the part of the National Labor Relations Commission (NLRC) to
say that “ [t]he non-strikers and their vehicles were x x x free to get in and out of the
company compound undisturbed by the picket line.” Notably, aside from non-strikers who
wished to report for work, company vehicles likewise could not enter and get out of the
factory because of the picket and the physical obstructions the respondents installed. The
blockade went to the point of causing the build up of traffic in the immediate vicinity of the
strike area, as shown by photographs. This, by itself, renders the picket a prohibited activity.
Pickets may not aggressively interfere with the right of peaceful ingress to and egress from
the employer’s shop or obstruct public thoroughfares; picketing is not peaceful where the
sidewalk or entrance to a place of business is obstructed by picketers parading around in a
circle or lying on the sidewalk.
Same; Same; Same; According to American jurisprudence, what constitutes unlawful
intimidation depends on the totality of the circumstances; Force threatened is the equivalent
of force exercised.—Article 264(e) of the Labor Code tells us that picketing carried on with
violence, coercion or intimidation is unlawful. According to American jurisprudence, what
constitutes unlawful intimidation depends on the totality of the circumstances. Force
threatened is the equivalent of force exercised. There may be unlawful intimidation without
direct threats or overt acts of violence. Words or acts which are calculated and intended to
cause an ordinary person to fear an injury to his person, business or property are equivalent
to threats. The manner in which the respondent union officers and members conducted the
picket in the present case had created such an intimidating atmosphere that non-striking
employees and even company vehicles did not dare cross the picket line, even with police
intervention. Those who dared cross the picket line were stopped. The compulsory
arbitration hearings bear this out.
Same; Same; Same; The services of an ordinary striking worker cannot be terminated for
mere participation in an illegal strike—proof must be adduced showing that he or she
committed illegal acts during the strike; The services of a participating union officer, on the
other hand, may be terminated, not only when he actually commits an illegal act during a
strike, but also if he knowingly participates in an illegal strike; In all cases, the striker must
be identified.—We explained in Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v.
Sulpicio Lines, Inc., 426 SCRA 319 (2004), that the effects of illegal strikes, outlined in Article
264 of the Labor Code, make a distinction between participating workers and union officers.
The services of an ordinary striking worker cannot be terminated for mere participation in an
illegal strike; proof must be adduced showing that he or she committed illegal acts during
the strike. The services of a participating union officer, on the other hand, may be
terminated, not only when he actually commits an illegal act during a strike, but also if he
knowingly participates in an illegal strike. In all cases, the striker must be identified. But
proof beyond reasonable doubt is not required; substantial evidence, available under the
attendant circumstances, suffices to justify the imposition of the penalty of dismissal on
participating workers and union officers as above described.
Same; Same; Same; Termination of Employment; Due Process; Article 277(b), in relation to
Article 264(a) and (e) of the Labor Code recognizes the right to due process of all workers,
without distinction as to the cause of their termination, even if the cause was their supposed
involvement in strike-related violence prohibited under Article 264(a) and (e) of the Labor
Code.—Under Article 277(b) of the Labor Code, the employer must send the employee, who
is about to be terminated, a written notice stating the cause/s for termination and must give
the employee the opportunity to be heard and to defend himself. We explained in Suico v.
National Labor Relations Commission, 423 SCRA 633 (2004), that Article 277(b), in relation
to Article 264(a) and (e) of the Labor Code recognizes the right to due process of all workers,
without distinction as to the cause of their termination, even if the cause was their supposed
involvement in strike-related violence prohibited under Article 264(a) and (e) of the Labor
Code. To meet the requirements of due process in the dismissal of an employee, an
employer must furnish him or her with two (2) written notices: (1) a written notice specifying
the grounds for termination and giving the employee a reasonable opportunity to explain his
side and (2) another written notice indicating that, upon due consideration of all
circumstances, grounds have been established to justify the employer’s decision to dismiss
the employee.

Same; Same; Same; Same; Same; Where the notice given the union officers did not
specifically inform them of the charges against them and did not give them the chance to
explain and present their side, as well as notice to the union members which did not give
them an ample opportunity to be heard and to defend themselves, the same is not sufficient
compliance with the due process requirements that the law guards zealously—such
constituted mere token recognition of the due process requirements was made, indicating
the company’s intent to dismiss the union members involved, without any meaningful resort
to the guarantees accorded them by law.—In the present case, Phimco Industries, Inc.
(PHIMCO) sent a letter, on June 23, 1995, to thirty-six (36) union members, generally
directing them to explain within twenty-four (24) hours why they should not be dismissed for
the illegal acts they committed during the strike; three days later, or on June 26, 1995, the
thirty-six (36) union members were informed of their dismissal from employment. We do not
find this company procedure to be sufficient compliance with the due process requirements
that the law guards zealously. It does not appear from the evidence that the union officers
were specifically informed of the charges against them and given the chance to explain and
present their side. Without the specifications they had to respond to, they were arbitrarily
separated from work in total disregard of their rights to due process and security of tenure.
As to the union members, only thirty-six (36) of the thirty-seven (37) union members
included in this case were notified of the charges against them thru the letters dated June
23, 1995, but they were not given an ample opportunity to be heard and to defend
themselves; the notice of termination came on June 26, 1995, only three (3) days from the
first notice—a perfunctory and superficial attempt to comply with the notice requirement
under the Labor Code. The short interval of time between the first and second notice speaks
for itself under the circumstances of this case; mere token recognition of the due process
requirements was made, indicating the company’s intent to dismiss the union members
involved, without any meaningful resort to the guarantees accorded them by law.

Same; Same; Same; Same; Same; Where evidence sufficient to justify the penalty of
dismissal has been adduced but the workers concerned were not accorded their essential
due process rights, the employer must pay the dismissed workers nominal damages as
indemnity for the violation of the workers’ right to statutory due pro¬cess.—Under the
circumstances, where evidence sufficient to justify the penalty of dismissal has been
adduced but the workers concerned were not accorded their essential due process rights,
our ruling in Agabon v. National Labor Relations Commission, 442 SCRA 573 (2004), finds
full application; the employer, despite the just cause for dismissal, must pay the dismissed
workers nominal damages as indemnity for the violation of the workers’ right to statutory
due process. Prevailing jurisprudence sets the amount of nominal damages at P30,000.00,
which same amount we find sufficient and appropriate in the present case.

Anucension vs. National Labor Union, 80 SCRA 350, November 29, 1977
Courts of Agrarian Relations; Jurisdiction; Claim of agricultural workers relative to unfair
labor practice falls within the exclusive jurisdiction of the Courts of Agrarian Relations.—The
respondent Hacienda is an agricultural enterprise. No less than the respondent court arrived
at this finding in its decision under review. Respondent Union never denied such finding of
fact by respondent court. Petitioners, including members of the respondent Union, are all
agricultural workers. This fact had likewise been admitted and established. There is no
showing, whether from the records of the case or from the briefs of the parties, much less
from the appealed decision, that the tasks assigned to petitioners were totally unconnected
with agricultural operations. Hence, there is complete absence of any showing that said
petitioners do no agricultural work of any kind at all. Under the circumstances, the conflict
was not within the competence of the Court of Industrial Relations but in that of the Court of
Agrarian Relations created by Republic Act 1267 (Sec. 7).
Same; Same; Same; Same; Reasons.—An agricultural laborer does not come within the
purview of the word employee defined in Section 2(d) of Republic Act No. 875. Any matter
that may pertain to the relation of tenant and landlord comes under the Agricultural Tenancy
Act (Republic Act No. 1199, as amended by Republic Act No. 2263), and any controversy
that may arise between them as an incident of their relationship comes under the exclusive
jurisdiction of the Court of Agrarian Relations created by Republic Act No. 1267.
Constitutional law; Labor relations; Associations; Rights of employee to join, or not join a
labor union.—Both the Constitution and Republic Act No. 875 recognized freedom of
association. Section 1(6) of Article III of the Constitution of 1935, as well as Section 7 of
Article IV of the Constitution of 1973 provide that the right to form associations or societies
for purposes not contrary to law shall not be abridged. Section 3 of Republic Act No. 875
provide that employees shall have the right to self-organization and to form, join or assist
labor organizations of their own choosing for the purpose of collective bargaining and other
mutual aid or protection. What the Constitution and the Industrial Peace Act recognize and
guarantee is the ‘right’ to form or join associations. A right comprehends at least two broad
notions, namely; first, liberty or freedom, i.e., the absence of legal restraint, whereby an
employee may, as he pleases, join or refrain from joining an association. It is, therefore, the
employee who should decide for himself whether he should join or not an association, and
should he choose to join, he himself makes up his mind as to which association he would
join; and even after he has joined, he still retains the liberty and the power to leave and
cancel his membership with said organization at any time. It is clear, therefore, that the right
to join a union includes the right to abstain from joining any union.

Same; Same; Same; Right of employee to refrain from joining a labor union limited by
provisions of Industrial Peace Act.—The right to refrain from joining labor organizations
recognized by Section 3 of the Industrial Peace Act is limited. The legal protection granted to
such right to refrain from joining is withdrawn by operation of law, where a labor union and
an employer have agreed on a closed shop, by virtue of the collective bargaining union, and
the employees must continue to be members of the union for the duration of the contract in
order to keep their jobs.

Same; Same; Same; Closed-shop agreement; Effect on the right of employee not to join a
labor union.—Section 4 [a] (4) of the Industrial Peace Act No. 3350, provides that although it
would be an unfair labor practice for an employer “to discriminate in regard to hire or tenure
of employment or any term or condition of employment to encourage or discourage
membership in any labor organization the employer is, however, not precluded ” from
making an agreement with a labor organization to require as a condition of employment
membership therein, if such labor organization is the representative of the employees”. By
virtue, therefore, of a closed shop agreement, before the enactment of Republic Act No.
3350, if any person, regardless of his religious beliefs, wishes to be employed or to keep his
employment, he must become a member of the collective bargaining union. Hence, the right
of said employee not to join the labor union is curtailed and withdrawn.
Same; Same; Same; Employees belonging to religious sects which prohibit affiliation of their
members with any labor organization excluded from application and coverage of
closed-shop agreement.—To that all-embracing coverage of the closed shop arrangement,
Republic Act No. 3350 introduced an exception, when it added to Section 4 [a] (4) of the
Industrial Peace Act the following proviso: “but such agreement shall not cover members of
any religious sects which prohibit affiliation of their members in any such labor
organization. ” Republic Act No. 3350 merely excludes ipso jure from the application and
coverage of the closed shop agreement the employees belonging to any religious sects
which prohibit affiliation of their members with any labor organization. The exception
provides that members of said religious sects cannot be compelled or coerced to join labor
unions even when said unions have closed shop agreements with the employers; that in
spite of any closed shop agreement, members of said religious sects cannot be refused
employment or dismissed from their jobs on the sole ground that they are not members of
the collective bargaining union.

Same; Same; Same; Provisions of Industrial Peace Act excluding employees belonging to
religious sects which prohibit affiliation of their members with any labor organization from
the application and coverage of a closed-shop agreement not unconstitutional for abridging
the right of employees to form associations for purposes not contrary to law; Reasons.—The
assailed Act, far from infringing the constitutional provision on freedom of association,
upholds and reinforces it. It does not prohibit the members of said religious sects from
affiliating with labor unions. It still leaves to said members the liberty and the power to
affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the
members of said religious sects prefer to sign up with the labor union, they can do so. If in
deference and fealty to their religious faith, they refuse to sign up, they can do so; the law
does not coerce them to join; neither does the law prohibit them from joining; and neither
may the employer or labor union compel them to join. Republic Act No. 3350, therefore, does
not violate the constitutional provision on freedom of association.

Same; Same; Impairment of contracts; Prohibition against the impairment of the obligation
of contracts not absolute and unqualified.—The prohibition to impair obligation of contracts
is not absolute and unqualified. The prohibition is general, affording a broad outline and
requiring construction to fill in the details. The prohibition is not to be read with literal
exactness like a mathematical formula, for it prohibits unreasonable impairment only. In
spite of the constitutional prohibition, the State continues to possess authority to safeguard
the vital interests of its people. Legislation appropriate to safeguard said interests may
modify or abrogate contracts already in effect. For not only are existing laws read into
contracts in order to fix the obligations as between the parties, but the reservation of
essential attributes of sovereign power is also read into contracts as a postulate of the legal
order. All contracts made with reference to any matter that is subject to regulation under the
police power must be understood as made in reference to the possible exercise of that
power. Otherwise, important and valuable reforms may be precluded by the simple device of
entering into contracts for the purpose of doing that which otherwise may be prohibited.

Same; Same; Same; Whether or not legislation unconstitutionally impairs the obligation of
contracts depends upon the circumstances.—In order to determine whether legislation
un-constitutionality impairs contract obligations, no unchanging yardstick, applicable at all
times and under all circumstances, by which the validity of each statute may be measured
or determined, has been fashioned, but every case must be determined upon its own
circumstances. Legislation impairing the obligation of contracts can be sustained when it is
enacted for the promotion of the general good of the people, and when the means adopted
to secure that end are reasonable. Both the ended sought and the means adopted must be
legitimate, i.e., within the scope of the reserved power of the state construed in harmony
with the constitutional limitation of that power.

Same; Same; Same; Provisions of Industrial Peace Act excluding employees belonging to
religious sects which prohibit affiliation of their members with any labor organization from
the application and coverage of a closed-shop agreement not unconstitutional for impairing
the obligation of contracts; Reasons.—The policy of protecting contracts against impairment
presupposes the maintenance of a government by virtue of which contractual relations are
worthwhile—a government which retains adequate authority to secure the peace and good
order of society. The contract clause of the Constitution must, therefore, be not only in
harmony with, but also in subordination to, in appropriate instances, the reserved power of
the state to safeguard the vital interests of the people. It follows that not all legislations,
which have the effect of impairing a contract are obnoxious to the constitutional prohibition
as to impairment, and a statute passed in the legitimate exercise of police power, although it
incidentally destroys existing contract rights, must be upheld by the courts. This has special
application to contracts regulating relations between capital and labor which are not merely
contractual, and said labor contracts, for being impressed with public interest, must yield to
the common good.
Same; Same; Religion; Free exercise of religious profession or belief superior to contract
rights; When infringement of religious freedom justified.—The free exercise of religious
profession or belief is superior to contract rights. In case of conflict, the latter must,
therefore, yield to the former. The Supreme Court of the United States has also declared on
several occasions that the rights in the First Amendment, which include freedom of religion,
enjoy a preferred position in the constitutional system. Religious freedom, although not
unlimited, is a fundamental personal right and liberty, and has a preferred position in the
heirarchy of values. Contractual rights, therefore, must yield to freedom of religion. It is only
where unavoidably necessary to prevent an immediate and grave danger to the security and
welfare of the community that infringement of religious freedom may be justified, and only
to the smallest extent necessary to avoid the danger.
Same; Same; Purpose of religion clause.—The constitutional provision not only prohibits
legislation for the support of any religious tenets or the modes of worship of any sect, thus
forestalling compulsion by law of the acceptance of any creed or the practice of any form of
worship but also assures the free exercise of one’s chosen form of religion within the limits
of utmost amplitude. The religion clauses of the Constitution are all designed to protect the
broadest possible liberty of conscience, to allow each man to believe as his conscience
directs, to profess his beliefs, and to live as he believes he ought to live, consistent with the
liberty of others and with the common good. Any legislation whose effect or purpose is to
impede the observance of one or all religions, or to discriminate invidiously between the
religions, is invalid, even though the burden may be characterized as being only indirect. But
if the state regulates conduct by enacting, within its power, a general law which has for its
purpose and effect to advance the state’s secular goals, the statute is valid despite its
indirect burden on religious observance, unless the state can accomplish its purpose
without imposing such burden.
Same; Same; Provisions of Industrial Peace Act excluding employees belonging to religious
sects which prohibit affiliation of their members with any labor organization from the
application and coverage of a closed-shop agreement not unconstitutional for violating the
constitutional provision prohibiting legislation for the support of any religious sect;
Reasons.—The primary effects of the exemption from closed shop agreements in favor of
members of religious sects that prohibit their members from affiliating with a labor
organization, is the protection of said employees against the aggregate force of the
collective bargaining agreement, and relieving certain citizens of a burden on their religious
beliefs; and by eliminating to a certain extent economic insecurity due to unemployment,
which is a serious menace to the health, morals, and welfare of the people of the State, the
Act also promotes the well-being of society. The exemption from the effects of closed shop
agreement does not directly advance, or diminish, the interests of any particular religion.
Although the exemption may benefit those who are members of religious sects that prohibit
their members from joining labor unions, the benefit upon the religious sects is merely
incidental and indirect. The “establishment clause” (of religion) does not ban regulation on
conduct whose reason or affect merely happens to coincide or harmonize with the tenets of
some or all religions. The free exercise clause of the Constitution has been interpreted to
require that religious exercise be preferentially aided.

Same; Same; Equal protection of law; Meaning and scope of the equal-protection-of-laws
clause.—The guaranty of equal protection of the laws is not a guaranty of equality in the
application of the laws upon all citizens of the State. It is not, therefore, a requirement, in
order to avoid the constitutional prohibition against inequality, that every man, woman and
child should be affected alike by a statute. Equality of operation of statutes does not mean
indiscriminate operation on persons merely as such, but on persons according to the
circumstances surrounding them. It guarantees equality, not identity of rights. The
Constitution does not require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not forbid discrimination as to
things that are different. It does not prohibit legislation which is limited either in the object to
which it is directed or by the territory within which it is to operate.

Same; Same; Same; Valid classification; Classification should be based on substantial

distinctions.—The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of knowledge or practice, is
the grouping of things in speculation or practice because they agree with one another in
certain particulars. A law is not invalid because of simple inequality. The very idea of
classification is that of inequality, so that it goes without saying that the mere fact of
inequality in no manner determines the matter of constitutionality. All that is required of a
valid classification is that it be reasonable, which means that the classification should be
based on substantial distinctions which make for real differences; that it must not be limited
to existing conditions only; and that it must apply equally to each member of the class. The
standard is satisfied if the classification or distinction is based on a reasonable foundation
or rational basis and is not palpably arbitrary.

Same; Same; Same; Classification by Industrial Peace Act of employees as to the

application and coverage of a closed-shop agreement rests on substantial
distinctions.—Republic Act No. 3350 satisfies the requirements. The Act classifies
employees and workers, as to the effect and coverage of union shop security agreements,
into those who by reason of their religious beliefs and convictions cannot sign up with a
labor union, and those whose religion does not prohibit membership in labor unions. The
classification rests on real or substantial, not merely imaginary or whimsical, distinctions.
There is such real distinction in the beliefs, feelings and sentiments of employees.
Employees do not believe in the same religious faith and different religions differ in their
dogmas and canons. Religious beliefs, manifestations and practices, though they are found
in all places, and in all times, take so many varied forms as to be almost beyond
imagination. There are diverse manners in which beliefs, equally paramount in the lives of
their possessors, may be articulated. Today the country is far more heterogenous in religion
than before, differences in religion do exist, and these differences are important and should
not be ignored.

Same; Same; Same; Classification by Industrial Peace Act of employees as to the

application and coverage of a closed-shop agreement germane to the purposes of the
law.—The classification introduced by said Act is also germane to its purpose. 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 and from being dismissed from their work
because of union ship security agreement.
 Abella vs. National Labor Relations Commission, 152 SCRA 140, July 20, 1987
Labor; Illegal Dismissal; Purpose of Art 284 of the Labor Code providing for the rights of
employees in case of termination due to closure of establishment and reduction of
personnel.—The purpose of Article 284 as amended is obvious—the protection of the
workers whose employment is terminated because of the closure of establishment and
reduction of personnel. Without said law, employees like private respondents in the case at
bar will lose the benefits to which they are entitled—for the thirty three years of service in the
case of Dionele and fourteen years in the case of Quitco. Although they were absorbed by
the new management of the hacienda, in the absence of any showing that the latter has
assumed the responsibilities of the former employer, they will be considered as new
employees and the years of service behind them would amount to nothing.

Same; Same; Same; Constitutional Law; Non-impairment of obligations and contracts; To

come under the constitutional prohibition the law must effect a change in the rights of the
parties with reference to each other and not with reference to non-parties; Contract in case
at bar cannot have the effect of annulling subsequent legislation for the protection of the
workers.—Moreover, to come under the constitutional prohibition, the law must effect a
change in the rights of the parties with reference to each other and not with reference to
non-parties. As correctly observed by the Solicitor General, Article 284 as amended refers to
employment benefits to farm hands who were not parties to petitioner's lease contract with
the owner of Hacienda Danao-Ramona. That contract cannot have the effect of annulling
subsequent legislation designed to protect the interest of the working class.

Same; Same; Interpretation; Doubts in implementation and interpretation of the provisions

of the Labor Code and their implementing regulations resolved in favor of labor; Reason.—In
any event, it is well-settled that in the implementation and interpretation of the provisions of
the Labor Code and its implementing regulations, the working man's welfare should be the
primordial and paramount consideration. (Volshel Labor Union v. Bureau of Labor Relations,
137 SCRA 43 [1985]). It is the kind of interpretation which gives meaning and substance to
the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor
Code which states that 'all doubts in the implementation and interpretation of the provisions
of this Code including its implementing rules and regulations shall be resolved in favor of
labor." The policy is to extend the applicability of the decree to a greater number of
employees who can avail of the benefits under the law, which is in consonance with the
avowed policy of the State to give maximum aid and protection to labor. (Sarmiento v.
Employees Compensation Commission, 144 SCRA 422 [1986] citing Cristobal v. Employees
Compensation Commission, 103 SCRA 329; Acosta v. Employees Compensation
Commission, 109 SCRA 209). [Abella vs. National Labor Relations Commission, 152 SCRA
140(1987)]
 Serrano vs. Gallant Maritime Services, Inc., 582 SCRA 254 , March 24, 2009
Constitutional Law; Non-impairment of Contracts; The non-impairment clause under Section
10, Article II of the Constitution is limited in application to laws about to be enacted that
would in any way derogate from existing acts or contracts by enlarging, abridging or in any
manner changing the intention of the parties thereto.—

Same; Same; Police Power; Police power legislations adopted by the State to promote the
health, morals, peace, education, good order, safety, and general welfare of the people are
generally applicable not only to the future contracts but even to those already in existence,
for all private contracts must yield to the superior and legitimate measures taken by the
State to promote public welfare.—

Same; Labor Law; Section 18, Article II and Section 3, Article XIII accord all members of the
labor sector, without distinction as to place of deployment, full protection of their rights and
welfare.—Section 18, Article II and Section 3, Article XIII accord all members of the labor
sector, without distinction as to place of deployment, full protection of their rights and
welfare. To Filipino workers, the rights guaranteed under the foregoing constitutional
provisions translate to economic security and parity: all monetary benefits should be equally
enjoyed by workers of similar category, while all monetary obligations should be borne by
them in equal degree; none should be denied the protection of the laws which is enjoyed by,
or spared the burden imposed on, others in like circumstances.
Same; Same; Republic Act No. 8042; Prior to Republic Act 8042, all Overseas Filipino
workers (OFWs), regardless of contract periods or the unexpired portions thereof, were
treated alike in terms of the computation of their monetary benefits in case of illegal
dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries
multiplied by the entire unexpired portion of their employment contracts.—It is plain that
prior to R.A. No. 8042, all Overseas Filipino workers (OFWs), regardless of contract periods
or the unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule
of computation: their basic salaries multiplied by the entire unexpired portion of their
employment contracts. The enactment of the subject clause in R.A. No. 8042 introduced a
differentiated rule of computation of the money claims of illegally dismissed OFWs based
on their employment periods, in the process singling out one category whose contracts have
an unexpired portion of one year or more and subjecting them to the peculiar disadvantage
of having their monetary awards limited to their salaries for 3 months or for the unexpired
portion thereof, whichever is less, but all the while sparing the other category from such
prejudice, simply because the latter’s unexpired contracts fall short of one year.

Same; Same; Same; With the enactment of Republic Act 8042, specifically the adoption of
the subject clause, illegally dismissed Overseas Filipino Workers (OFWs), with an unexpired
portion of one year or more in their employment contract have since been differently treated
in that their money claims are subject to a 3-month cap, whereas no such limitation is
imposed on local workers with fixed term employment.—Prior to R.A. No. 8042, OFWs and
local workers with fixed-term employment who were illegally discharged were treated alike
in terms of the computation of their money claims: they were uniformly entitled to their
salaries for the entire unexpired portions of their contracts. But with the enactment of R.A.
No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an
unexpired portion of one year or more in their employment contract have since been
differently treated in that their money claims are subject to a 3-month cap, whereas no such
limitation is imposed on local workers with fixed-term employment.

Same; Same; Same; The Supreme Court concludes that the subject clause contains a
suspect classification in that, in the computation of the monetary benefits of fixed-term
employees who are illegally discharged, it imposes a 3-month cap on the claim of Overseas
Filipino Workers (OFWs), with an unexpired portion of one year or more in their contracts,
but none on the claims of other OFWs or local workers with fixed-term employment. The
subject clause singles out one classification of Overseas Filipino Workers (OFWs), and
burdens it with a peculiar disadvantage.—The Court concludes that the subject clause
contains a suspect classification in that, in the computation of the monetary benefits of
fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of
OFWs with an unexpired portion of one year or more in their contracts, but none on the
claims of other OFWs or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar disadvantage. There
being a suspect classification involving a vulnerable sector protected by the Constitution,
the Court now subjects the classification to a strict judicial scrutiny, and determines whether
it serves a compelling state interest through the least restrictive means.

Same; Same; Same; While all the provisions of the 1987 Constitution are presumed
self-executing, there are some which this Court has declared not judicially enforceable,
Article XIII, being one.—While all the provisions of the 1987 Constitution are presumed
self-executing, there are some which this Court has declared not judicially enforceable,
Article XIII being one, particularly Section 3 thereof, the nature of which, this Court, in
Agabon v. National Labor Relations Commission, 442 SCRA 573 (2004), has described to be
not self-actuating: Thus, the constitutional mandates of protection to labor and security of
tenure may be deemed as self-executing in the sense that these are automatically
acknowledged and observed without need for any enabling legislation. However, to declare
that the constitutional provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed, would be impractical, if not
unrealistic. The espousal of such view presents the dangerous tendency of being overbroad
and exaggerated. The guarantees of “ full protection to labor ” and “ security of tenure, ”
when examined in isolation, are facially unqualified, and the broadest interpretation possible
suggests a blanket shield in favor of labor against any form of removal regardless of
circumstance. This interpretation implies an unimpeachable right to continued
employment—a utopian notion, doubtless—but still hardly within the contemplation of the
framers. Subsequent legislation is still needed to define the parameters of these guaranteed
rights to ensure the protection and promotion, not only the rights of the labor sector, but of
the employers’ as well. Without specific and pertinent legislation, judicial bodies will be at a
loss, formulating their own conclusion to approximate at least the aims of the Constitution.

Same; Same; Same; Section 3, Article XIII of the Constitution does not directly bestow on the
working class any actual enforceable right, but merely clothes it with the status of a sector
for whom the Constitution urges protection through executive or legislative action and
judicial recognition; Its utility is best limited to being an impetus not just for the executive
and legislative departments, but for the judiciary as well, to protect the welfare of the
working class.—It must be stressed that Section 3, Article XIII does not directly bestow on
the working class any actual enforceable right, but merely clothes it with the status of a
sector for whom the Constitution urges protection through executive or legislative action
and judicial recognition. Its utility is best limited to being an impetus not just for the
executive and legislative departments, but for the judiciary as well, to protect the welfare of
the working class. And it was in fact consistent with that constitutional agenda that the
Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v.
Bangko Sentral ng Pilipinas, 446 SCRA 299 (2004), penned by then Associate Justice now
Chief Justice Reynato S. Puno, formulated the judicial precept that when the challenge to a
statute is premised on the perpetuation of prejudice against persons favored by the
Constitution with special protection—such as the working class or a section thereof—the
Court may recognize the existence of a suspect classification and subject the same to strict
judicial scrutiny.

Same; Same; Same; The Supreme Court further holds that the subject clause violates
petitioner’s right to substantive due process, for it deprives him of property, consisting of
monetary benefits, without any existing valid governmental purpose.—The view that the
concepts of suspect classification and strict judicial scrutiny formulated in Central Bank
Employee Association exaggerate the significance of Section 3, Article XIII is a groundless
apprehension. Central Bank applied Article XIII in conjunction with the equal protection
clause. Article XIII, by itself, without the application of the equal protection clause, has no
life or force of its own as elucidated in Agabon. Along the same line of reasoning, the Court
further holds that the subject clause violates petitioner’s right to substantive due process,
for it deprives him of property, consisting of monetary benefits, without any existing valid
governmental purpose.

Same; Same; Same; The subject clause being unconstitutional, petitioner is entitled to his
salaries for the entire enexpired period of nine months and 23 days of his employment
contract, pursuant to law and jurisprudence prior to the enactment of Republic Act (RA)
8042.—The subject clause does not state or imply any definitive governmental purpose; and
it is for that precise reason that the clause violates not just petitioner’s right to equal
protection, but also her right to substantive due process under Section 1, Article III of the
Constitution. The subject clause being unconstitutional, petitioner is entitled to his salaries
for the entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

Philippine National Bank vs. Remigio, 231 SCRA 362 , March 21, 1994
Civil Law; Mortgage; Right of Redemption; In the foreclosure of real property by banking
institutions as well as in the extrajudicial foreclosure by any other mortgagee, the mortgagor
could redeem the property within one year from date of registration of the deed of sale in the
appropriate Registry of Deeds.—When Presidential Decree No. 27, “ Decreeing the
Emancipation of Tenants from the Bondage of the Soil, Transferring to them the Ownership
of the Land They Till and Providing the Instruments and Mechanism therefor,” was enacted
on 21 October 1972, the parcels of land in dispute were clearly still subject to private
respondent’s right of redemption. In the foreclosure of real property by banking institutions,
as well as in the extrajudicial foreclosure by any other mortgagee, the mortgagor could
redeem the property within one year from date of registration of the deed of sale in the
appropriate Registry of Deeds (Santos v. Register of Deeds of Manila, 38 SCRA 42; Reyes
vs. Noblejas, 21 SCRA 1027). In Medida vs. Court of Appeals (208 SCRA 887), we ruled that
the “title to the land sold under a mortgage foreclosure remains with the mortgagor or his
grantee until the expiration of the redemption period x x x. ” Constitutional Law;
Non-impairment of Contracts; Police Power; The Constitutional guaranty of non-impairment
of obligations of contract is limited by the exercise of the police power of the state; The
reason being that public welfare is superior to private rights.—In passing, the Secretary of
the Department of Justice has himself opined thus: “ I am aware that a ruling that lands
covered by P.D. No. 27 may not be the object of the foreclosure proceedings after the
promulgation of said decree on October 21, 1972, would concede that P.D. No. 27 had the
effect of impairing the obligation of the duly executed mortgage contracts affecting said
lands. There is no question, however, that the land reform program of the government as
accelerated under P.D. No. 27 and mandated by the Constitution itself (Art. XIV, Sec. 12),
was undertaken in the exercise of the police power of the state. It is settled in a long line of
decisions of the Supreme Court that the Constitutional guaranty of non-impairment of
obligations of contract is limited by the exercise of the police power of the state (citations
omitted). One limitation on the contract clause arises from the police power, the reason
being that public welfare is superior to private rights (citation omitted). The situation here, is
like that in eminent domain proceedings, where the state expropriates private property for
public use, and the only condition to be complied with is the payment of just compensation.
Technically, the condemnation proceedings do not impair the contract to destroy its
obligations, but merely appropriate or take for public use (citation omitted). As the Land
Bank is obliged to settle the obligations secured by the mortgage, the mortgagee is not left
without any compensation.” (Opinion No. 92, Series of 1978; Rollo, pp. 88-89.)
Same; Same; Same; Police power subordinates the non-impairment clause of the
Constitution.—The opinion deserves respect (42 Am. Jur. p. 421; Cagayan Valley
Enterprises, Inc. vs. Court of Appeals, 179 SCRA 218; Ramon Salaria vs. Hon. Carlos R.
Buenviaje, et al., 81 SCRA 722). This Court, likewise, in a number of cases has expressed the
dictum that police power subordinates the non-impairment clause of the Constitution
(Ortigas & Co. Ltd. Partnership vs. Feati Bank and Trust Co., 94 SCRA 533; Kabiling vs.
National Housing Authority, 156 SCRA 623; Anglo-Fil Trading Corporation vs. Lazaro, 124
SCRA 494). Civil Law; Mortgage; Right of Redemption; Right of redemption by the mortgagor
could be exercised by paying to the creditor bank all the amounts owing to the latter, “on the
date of the sale, with interest on the total indebtedness at the rate agreed upon in the
obligation from said date.—In Development Bank of the Philippines vs. Mirang, 66 SCRA
141, we have ruled that the right of redemption by the mortgagor could be exercised by
paying to the creditor bank all the amounts owing to the latter “on the date of the sale, with
interest on the total indebtedness at the rate agreed upon in the obligation from said date.”
[Philippine National Bank vs. Remigio, 231 SCRA 362(1994)]

The Conference of Maritime Manning Agencies, Inc. vs. Philippine Overseas Employment
Administration, 243 SCRA 666 , April 21, 1995
Constitutional Law; Delegation of Powers; The Congress may constitutionally delegate the
authority to promulgate rules and regulations to the administrative agency.—It is, of course,
well established in our jurisdiction that, while the making of laws is a non-delegable power
that pertains exclusively to Congress, nevertheless, the latter may constitutionally delegate
the authority to promulgate rules and regulations to implement a given legislation and
effectuate its policies, for the reason that the legislature finds it impracticable, if not
impossible, to anticipate situations that may be met in carrying the law into effect. All that is
required is that the regulation should be germane to the objects and purposes of the law;
that the regulation be not in contradiction to but in conformity with the standards prescribed
by the law.

Same; The guaranty of equal protection of the laws is not violated by legislation based on
reasonable classification.—It is an established principle of constitutional law that the
guaranty of equal protection of the laws is not violated by legislation based on reasonable
classification. And for the classification to be reasonable, it (1) must rest on substantial
distinctions; (2) must be germane to the purpose of the law; (3) must not be limited to
existing conditions only; and (4) must apply equally to all members of the same class. There
can be no dispute about the dissimilarities between land-based and sea-based Filipino
overseas workers in terms of, among other things, work environment, safety, dangers and
risks to life and limb, and accessibility to social, civic, and spiritual activities.Nor is there
merit in the claim that the resolution and memorandum circular violate the contract clause
of the Bill of Rights.
Same; Police Power; Social justice is identified with the broad scope of the police power of
the state.—The executive order creating the POEA was enacted to further implement the
social justice provisions of the 1973 Constitution, which have been greatly enhanced and
expanded in the 1987 Constitution by placing them under a separate Article. The Article on
Social Justice was aptly described as the “heart of the new Charter” by the President of
the 1986 Constitutional Commission, retired Justice Cecilia Muñoz-Palma. Social justice is
identified with the broad scope of the police power of the state and requires the extensive
use of such power.

Same; Same; The constitutional prohibition against impairing contractual obligations is not
absolute.—The constitutional prohibition against impairing contractual obligations is not
absolute and is not to be read with literal exactness. It is restricted to contracts with respect
to property or some object of value and which confer rights that may be asserted in a court
of justice; it has no application to statutes relating to public subjects within the domain of
the general legislative powers of the State and involving the public rights and public welfare
of the entire community affected by it. It does not prevent a proper exercise by the State of
its police power by enacting regulations reasonably necessary to secure the health, safety,
morals, comfort, or general welfare of the community, even though contracts may thereby
be affected, for such matters cannot be placed by contract beyond the power of the State to
regulate and control them.

Same; Same; Same; The freedom to contract is not absolute.—Verily, the freedom to
contract is not absolute; all contracts and all rights are subject to the police power of the
State and not only may regulations which affect them be established by the State, but all
such regulations must be subject to change from time to time, as the general well-being of
the community may require, or as the circumstances may change, or as experience may
demonstrate the necessity. 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.

Maynilad Water Supervisors Association vs. Maynilad Water Services, Inc., 711 SCRA 110 ,
November 27, 2013
Government Employees; Cost of Living Allowance (COLA); Compensation and Position
Classification Act of 1989 (R.A. No. 6758); The enactment of Republic Act (R.A.) No. 6758 or
the Compensation and Position Classification Act of 1989 integrated the Cost of Living
Allowance into the standardized salary rate.—As far as their employment relationship with
Maynilad is concerned, the same is not affected by the De Jesus ruling because it is
governed by a separate compensation package provided for under the Concession
Agreement. It would be erroneous to presume that had the COLA been received during the
time of the execution of the contract, the benefit would have been included in Exhibit “ F. ”
First of all, we note that the Court’s ruling in the De Jesus case applies only to
government-owned and controlled corporations and not to private entities. Secondly, the
parties to the Concession Agreement could not have thought of including the COLA in
Exhibit “F” because as early as 1989, the government already resolved to remove the COLA,
among others, from the list of allowances being received by government employees. Hence,
the enactment of Republic Act (R.A.) No. 6758 or the Compensation and Position
Classification Act of 1989 which integrated the COLA into the standardized salary rate.

Same; Same; Same; Cost of Living Allowance (COLA), not being an enumerated exclusion,
was deemed already incorporated in the standardized salary rates of government
employees under the general rule of integration.—In Gutierrez v. DBM, 616 SCRA 1 (2010),
which is a consolidated case involving over 20 government-owned and controlled
corporations, the Court found proper the inclusion of COLA in the standardized salary rates.
It settled that COLA, not being an enumerated exclusion, was deemed already incorporated
in the standardized salary rates of government employees under the general rule of
integration. In explaining its inclusion in the standardized salary rates, the Court cited its
ruling in National Tobacco Administration v. COA, 311 SCRA 755 (1999), in that the
enumerated fringe benefits in items (1) to (6) have one thing in common — they belong to
one category of privilege called allowances which are usually granted to officials and
employees of the government to defray or reimburse the expenses incurred in the
performance of their official functions. Consequently, if these allowances are consolidated
with the standardized salary rates, then the government official or employee will be
compelled to spend his personal funds in attending to his duties. On the other hand, item (7)
is a “catch-all proviso” for benefits in the nature of allowances similar to those enumerated

Same; Same; Same; Cost of Living Allowance (COLA) is not in the nature of an allowance
intended to reimburse expenses incurred by officials and employees of the government in
the performance of their official functions; COLA is a benefit intended to cover increases in
the cost of living.—Clearly, COLA is not in the nature of an allowance intended to reimburse
expenses incurred by officials and employees of the government in the performance of their
official functions. It is not payment in consideration of the fulfillment of official duty. As
defined, cost of living refers to “the level of prices relating to a range of everyday items” or
“ the cost of purchasing those goods and services which are included in an accepted
standard level of consumption.” Based on this premise, COLA is a benefit intended to cover
increases in the cost of living. Thus, it is and should be integrated into the standardized
salary rates.
Labor Law; Labor Contracts; The Supreme Court has ruled that unless expressly assumed,
labor contracts such as employment contracts and collective bargaining agreements are not
enforceable against a transferee of an enterprise, labor contracts being in personam, thus
binding only between the parties.—This Court has ruled that unless expressly assumed,
labor contracts such as employment contracts and collective bargaining agreements are not
enforceable against a transferee of an enterprise, labor contracts being in personam, thus
binding only between the parties. In the instant case, the only commitment of Maynilad
under the Concession Agreement it entered with MWSS was to provide the absorbed
employees with a compensation package “no less favorable than those granted to [them] by
the MWSS at the time of their separation from MWSS, particularly those set forth in Exhibit
‘F’ x x x. ” It is undisputed that Maynilad complied with such commitment. It cannot,
however, be compelled to assume the payment of an allowance which was not agreed upon.
Such would not only be unreasonable but also unfair for Maynilad. MWSS and Maynilad
could not have presumed that the COLA was part of the agreement when it was no longer
being received by the employees at the time of the execution of the contract, which is the
reckoning point of their new employment.

Same; Appeal Bonds; The bond requirement on appeals involving monetary awards has
been and may be relaxed in meritorious cases.—In University Plans v. Solano, 652 SCRA 492
(2011), this Court reiterated the guidelines which the NLRC must exercise in considering the
motions for reduction of bond: The bond requirement on appeals involving monetary awards
has been and may be relaxed in meritorious cases. These cases include instances in which
(1) there was substantial compliance with the Rules, (2) surrounding facts and
circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation
of the requirement of an appeal bond would serve the desired objective of resolving
controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness
and/or good faith by posting a partial bond during the reglementary period. It is evident that
the aforesaid instances are present in the instant case.

Habana vs. National Labor Relations Commission, 314 SCRA 187 , September 10, 1999
Labor Law; Due Process; Where sufficient opportunity to be heard either through oral
arguments or position paper and other pleadings is not accorded a party to a case, there is
undoubtedly a denial of due process.—It is clear from the foregoing that there was an utter
absence of opportunity to be heard at the arbitration level, as the procedure adopted by the
Labor Arbiter virtually prevented private respondents from explaining matters fully and
presenting their side of the controversy. They had no chance whatsoever to at least acquaint
the Labor Arbiter with whatever defenses they might have to the charge that they illegally
dismissed petitioner. In fact, private respondents presented their position paper and
documentary evidence only for the first time on appeal to the NLRC. The essence of due
process is that a party be afforded a reasonable opportunity to be heard and to submit any
evidence he may have in support of his defense. Where, as in this case, sufficient
opportunity to be heard either through oral arguments or position paper and other pleadings
is not accorded a party to a case, there is undoubtedly a denial of due process.

Same; Same; The manner by which Arbiters dispose of cases before them is concededly a
matter of discretion but that discretion must be exercised regularly, legally and within the
confines of due process.—It is true that Labor Arbiters are not bound by strict rules of
evidence and of procedure. The manner by which Arbiters dispose of cases before them is
concededly a matter of discretion. However, that discretion must be exercised regularly,
legally and within the confines of due process. They are mandated to use every reasonable
means to ascertain the facts of each case, speedily, objectively and without regard to
technicalities of law or procedure, all in the interest of justice and for the purpose of
accuracy and correctness in adjudicating the monetary awards.

Same; Same; What due process contemplates is freedom from arbitrariness, the substance
rather than the form being paramount.—Official action must be responsive to the supremacy
of reason and the dictates of justice. What due process contemplates is freedom from
arbitrariness, the substance rather than the form being paramount. Surely, employers are
equally entitled as the employees to due process.

Same; Same; Where there were pending motions which the parties mutually and expressly
agreed to submit for resolution by the Labor Arbiter, and both of them were advised by the
Arbiter’s staff to await further orders and notices from the Labor Arbiter in connection
therewith, the employer was justified in following instructions and should not be faulted for
his inaction regarding the case.—It may be true that petitioner eventually submitted his bill
of particulars, and thus impliedly abandoned his motion to declare private respondents in
default. But failure of private respondents to file their answer or comment within a
reasonable time from receipt of the bill of particulars could not fairly be taken against them.
There were pending motions which the parties mutually and expressly agreed to submit for
resolution by the Labor Arbiter, and both of them were advised by Labor Arbitration
Associate Gloria Vivar to await further orders and notices from the Labor Arbiter in
connection therewith. Under these circumstances, private respondents were just following
instructions and should not be faulted for their inaction regarding the case.

Same; Same; Actions; Pleadings and Practice; A party as a mere litigant should not be
allowed to dictate the tempo of the pro-ceedings.—To subscribe to petitioner’s
argument—i.e., the bill of particulars rendered “moot and academic petitioner’s motion and
the resolution thereof x x x x [and] should have alerted respondents into taking appropriate
steps on the pending case”—would be to put him in control of the proceedings. Petitioner as
a mere litigant should not be allowed to dictate the tempo of the proceedings. He could not
obstinately insist on a prior resolution of his motion to declare private respondents in
default, only to abandon it impliedly later with the expectation that the other party would take
such implicit abandonment as having the effect of automatically divesting the Labor Arbiter
of the authority to act on the submitted motions.

Same; Same; Speedy Disposition of Cases; While the speedy disposition of labor cases may
be the policy of the law, it must be emphasized that speed alone is not the chief objective of
a trial.—While the speedy disposition of labor cases may be the policy of the law, it must be
emphasized that speed alone is not the chief objective of a trial. It is the careful and
deliberate consideration for the administration of justice, a genuine respect for the rights of
all parties and the requirements of procedural due process, and an adherence to this Court’s
standing admonition that the disposition of cases should always be predicated on the
consideration that more than the mere convenience of the courts and of the parties in the
case, the ends of justice and fairness would be served thereby. These are more important
than a race to end the trial.

Same; Same; Same; One may fairly say of the Bill of Rights in general, and the Due Process
Clause in particular, that they were designed to protect the fragile values of a vulnerable
citizenry from the overbearing concern for efficiency and efficacy that may characterize
government officials.—As eloquently expressed by the US Supreme Court in one case,
which, although not legally controlling in this jurisdiction, nevertheless has persuasive
effect—The establishment of prompt efficacious procedures to achieve legitimate state
ends is a proper state interest worthy of cognizance in constitutional adjudication. But the
Constitution recognizes higher values than speed and efficiency. Indeed, one may fairly say
of the Bill of Rights in general, and the Due Process Clause in particular, that they were
designed to protect the fragile values of a vulnerable citizenry from the overbearing concern
for efficiency and efficacy that may characterize x x x government officials [Habana vs.
National Labor Relations Commission, 314 SCRA 187(1999)]

Bank of the Philippine Island vs. BPI Employees Union-Davao Chapter-Federation of Union in
BPI UniBank, 627 SCRA 590 , August 10, 2010
Labor Law; Labor Unions; Union Security Clauses; Words and Phrases; “ Union Security, ”
“ Closed Shop, ” “ Union Shop, ” and “ Maintenance of Membership, ” Explained.— “ Union
security ” is a generic term which is applied to and comprehends “ closed shop, ” “ union
shop,” “maintenance of membership” or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular employees are required to join the
union within a certain period for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the
bargaining unit or the agreement is terminated. A closed-shop, on the other hand, may be
defined as an enterprise in which, by agreement between the employer and his employees or
their representatives, no person may be employed in any or certain agreed departments of
the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains
a member in good standing of a union entirely comprised of or of which the employees in
interest are a part.
Same; Same; Same; It is the policy of the State to promote unionism to enable the workers
to negotiate with management on the same level and with more persuasiveness than if they
were to individually and independently bargain for the improvement of their respective
conditions—the purpose of a union shop or other union security arrangement is to guarantee
the continued existence of the union through enforced membership for the benefit of the
workers.—In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., 180 SCRA
668 (1989), we ruled that: It is the policy of the State to promote unionism to enable the
workers to negotiate with management on the same level and with more persuasiveness
than if they were to individually and independently bargain for the improvement of their
respective conditions. To this end, the Constitution guarantees to them the rights “ to
self-organization, collective bargaining and negotiations and peaceful concerted actions
including the right to strike in accordance with law. ” There is no question that these
purposes could be thwarted if every worker were to choose to go his own separate way
instead of joining his co-employees in planning collective action and presenting a united
front when they sit down to bargain with their employers. It is for this reason that the law
has sanctioned stipulations for the union shop and the closed shop as a means of
encouraging the workers to join and support the labor union of their own choice as their
representative in the negotiation of their demands and the protection of their interest
vis-à-vis the employer. (Emphasis ours.) In other words, the purpose of a union shop or other
union security arrangement is to guarantee the continued existence of the union through
enforced membership for the benefit of the workers.

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

Same; Same; Same; Right of Association; When certain employees are obliged to join a
particular union as a requisite for continued employment, as in the case of Union Security
Clauses, this condition is a valid restriction of the freedom or right not to join any labor
organization because it is in favor of unionism.—When certain employees are obliged to join
a particular union as a requisite for continued employment, as in the case of Union Security
Clauses, this condition is a valid restriction of the freedom or right not to join any labor
organization because it is in favor of unionism. This Court, on occasion, has even held that a
union security clause in a CBA is not a restriction of the right of freedom of association
guaranteed by the Constitution. Moreover, a closed shop agreement is an agreement
whereby an employer binds himself to hire only members of the contracting union who must
continue to remain members in good standing to keep their jobs. It is “ the most prized
achievement of unionism. ” It adds membership and compulsory dues. By holding out to
loyal members a promise of employment in the closed shop, it wields group solidarity.

Same; Corporation Law; Corporate Mergers; Words and Phrases; In legal parlance, human
beings are never embraced in the term “assets and liabilities”; The Corporation Code does
not mandate the absorption of the employees of the non-surviving corporation by the
surviving corporation in the case of a merger.—In legal parlance, however, human beings are
never embraced in the term “ assets and liabilities. ” Moreover, BPI’s absorption of former
FEBTC employees was neither by operation of law nor by legal consequence of contract.
There was no government regulation or law that compelled the merger of the two banks or
the absorption of the employees of the dissolved corporation by the surviving corporation.
Had there been such law or regulation, the absorption of employees of the non-surviving
entities of the merger would have been mandatory on the surviving corporation. In the
present case, the merger was voluntarily entered into by both banks presumably for some
mutually acceptable consideration. In fact, the Corporation Code does not also mandate the
absorption of the employees of the non-surviving corporation by the surviving corporation in
the case of a merger.

Same; Same; Same; The rule is that unless expressly assumed, labor contracts such as
employment contracts and collective bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in personam, thus binding only between
the parties.—The Articles of Merger and Plan of Merger dated April 7, 2000 did not contain
any specific stipulation with respect to the employment contracts of existing personnel of
the non-surviving entity which is FEBTC. Unlike the Voluntary Arbitrator, this Court cannot
uphold the reasoning that the general stipulation regarding transfer of FEBTC assets and
liabilities to BPI as set forth in the Articles of Merger necessarily includes the transfer of all
FEBTC employees into the employ of BPI and neither BPI nor the FEBTC employees
allegedly could do anything about it. Even if it is so, it does not follow that the absorbed
employees should not be subject to the terms and conditions of employment obtaining in
the surviving corporation. The rule is that unless expressly assumed, labor contracts such
as employment contracts and collective bargaining agreements are not enforceable against
a transferee of an enterprise, labor contracts being in personam, thus binding only between
the parties. A labor contract merely creates an action in personam and does not create any
real right which should be respected by third parties. This conclusion draws its force from
the right of an employer to select his employees and to decide when to engage them as
protected under our Constitution, and the same can only be restricted by law through the
exercise of the police power.
Same; Same; Same; Involuntary Servitude; The Court believes that it is contrary to public
policy to declare the former employees of the absorbed bank as forming part of the assets
or liabilities that were transferred and absorbed by the other bank in the Articles of
Merger—assets and liabilities, in this instance, should be deemed to refer only to property
rights and obligations of the absorbed bank and do not include the employment contracts of
its personnel; The employees of the absorbed bank retained the prerogative to allow
themselves to be absorbed or not, otherwise, that would be tantamount to involuntary
servitude.—This Court believes that it is contrary to public policy to declare the former
FEBTC employees as forming part of the assets or liabilities of FEBTC that were transferred
and absorbed by BPI in the Articles of Merger. Assets and liabilities, in this instance, should
be deemed to refer only to property rights and obligations of FEBTC and do not include the
employment contracts of its personnel. A corporation cannot unilaterally transfer its
employees to another employer like chattel. Certainly, if BPI as an employer had the right to
choose who to retain among FEBTC’s employees, FEBTC employees had the concomitant
right to choose not to be absorbed by BPI. Even though FEBTC employees had no choice or
control over the merger of their employer with BPI, they had a choice whether or not they
would allow themselves to be absorbed by BPI. Certainly nothing prevented the FEBTC’s
employees from resigning or retiring and seeking employment elsewhere instead of going
along with the proposed absorption. Employment is a personal consensual contract and
absorption by BPI of a former FEBTC employee without the consent of the employee is in
violation of an individual’s freedom to contract. It would have been a different matter if there
was an express provision in the articles of merger that as a condition for the merger, BPI
was being required to assume all the employment contracts of all existing FEBTC
employees with the conformity of the employees. In the absence of such a provision in the
articles of merger, then BPI clearly had the business management decision as to whether or
not employ FEBTC’s employees. FEBTC employees likewise retained the prerogative to allow
themselves to be absorbed or not; otherwise, that would be tantamount to involuntary
servitude.

Same; Same; Same; From the tenor of local and foreign authorities, in voluntary mergers,
absorption of the dissolved corporation’s employees or the recognition of the absorbed
employees’ service with their previous employer may be demanded from the surviving
corporation if required by provision of law or contract.—From the tenor of local and foreign
authorities, in voluntary mergers, absorption of the dissolved corporation’s employees or the
recognition of the absorbed employees’ service with their previous employer may be
demanded from the surviving corporation if required by provision of law or contract. The
dissent of Justice Arturo D. Brion tries to make a distinction as to the terms and conditions
of employment of the absorbed employees in the case of a corporate merger or
consolidation which will, in effect, take away from corporate management the prerogative to
make purely business decisions on the hiring of employees or will give it an excuse not to
apply the CBA in force to the prejudice of its own employees and their recognized collective
bargaining agent. In this regard, we disagree with Justice Brion.

Same; Same; Same; Although in a merger it is as if there is no change in the personality of

the employer, there is in reality a change in the situation of the employee—once an employee
is absorbed, there are presumably changes in his condition of employment even if his
previous tenure and salary rate is recognized by the absorbing company.—That BPI is the
same entity as FEBTC after the merger is but a legal fiction intended as a tool to adjudicate
rights and obligations between and among the merged corporations and the persons that
deal with them. Although in a merger it is as if there is no change in the personality of the
employer, there is in reality a change in the situation of the employee. Once an FEBTC
employee is absorbed, there are presumably changes in his condition of employment even if
his previous tenure and salary rate is recognized by BPI. It is reasonable to assume that BPI
would have different rules and regulations and company practices than FEBTC and it is
incumbent upon the former FEBTC employees to obey these new rules and adapt to their
new environment. Not the least of the changes in employment condition that the absorbed
FEBTC employees must face is the fact that prior to the merger they were employees of an
unorganized establishment and after the merger they became employees of a unionized
company that had an existing collective bargaining agreement with the certified union. This
presupposes that the union who is party to the collective bargaining agreement is the
certified union that has, in the appropriate certification election, been shown to represent a
majority of the members of the bargaining unit.

Same; Same; Same; Labor Unions; Union Security Clauses; Words and Phrases; The Court
should not uphold an interpretation of the term “new employee” based on the general and
extraneous provisions of the Corporation Code on merger that would defeat, rather than
fulfill, the purpose of the union shop clause—the provision of the Article 248(e) of the Labor
Code in point mandates that nothing in the said Code or any other law should stop the
parties from requiring membership in a recognized collective bargaining agent as a
condition of employment.—Justice Brion himself points out that there is no clear, categorical
definition of “new employee” in the CBA. In other words, the term “new employee” as used
in the union shop clause is used broadly without any qualification or distinction. However,
the Court should not uphold an interpretation of the term “ new employee ” based on the
general and extraneous provisions of the Corporation Code on merger that would defeat,
rather than fulfill, the purpose of the union shop clause. To reiterate, the provision of the
Article 248(e) of the Labor Code in point mandates that nothing in the said Code or any other
law should stop the parties from requiring membership in a recognized collective bargaining
agent as a condition of employment.

Same; Same; Same; Same; By law and jurisprudence, a merger only becomes effective upon
approval by the Securities and Exchange Commission (SEC) of the articles of merger.—By
law and jurisprudence, a merger only becomes effective upon approval by the Securities and
Exchange Commission (SEC) of the articles of merger. In Associated Bank v. Court of
Appeals, 291 SCRA 511 (1998), we held: The procedure to be followed is prescribed under
the Corporation Code. Section 79 of said Code requires the approval by the Securities and
Exchange Commission (SEC) of the articles of merger which, in turn, must have been duly
approved by a majority of the respective stockholders of the constituent corporations. The
same provision further states that the merger shall be effective only upon the issuance by
the SEC of a certificate of merger. The effectivity date of the merger is crucial for
determining when the merged or absorbed corporation ceases to exist; and when its rights,
privileges, properties as well as liabilities pass on to the surviving corporation.

Same; Same; Same; Same; Union Shop Clause; Words and Phrases; In law or even under the
express terms of the Collective Bargaining Agreement (CBA), there is no special class of
employees called “ absorbed employees ” —in order for the Court to apply or not apply the
Union Shop Clause, it can only classify the employees of the absorbed bank as either “old”
or “new.”—Petitioner limited itself to the argument that its absorbed employees do not fall
within the term “ new employees ” contemplated under the Union Shop Clause with the
apparent objective of excluding all, and not just some, of the former FEBTC employees from
the application of the Union Shop Clause. However, in law or even under the express terms
of the CBA, there is no special class of employees called “absorbed employees.” In order
for the Court to apply or not apply the Union Shop Clause, we can only classify the former
FEBTC employees as either “ old ” or “ new. ” If they are not “ old ” employees, they are
necessarily “ new ” employees. If they are new employees, the Union Shop Clause did not
distinguish between new employees who are non-regular at their hiring but who
subsequently become regular and new employees who are “ absorbed ” as regular and
permanent from the beginning of their employment. The Union Shop Clause did not so
distinguish, and so neither must we.

Same; Same; Same; Same; Same; The effect or consequence of BPI’s so-called “absorption”
of former Far East Bank and Trust Company (FEBTC) employees should be limited to what
they actually agreed to, i.e. recognition of the FEBTC employees’ years of service, salary
rate and other benefits with their previous employer—the effect should not be stretched so
far as to exempt former FEBTC employees from the existing Collective Bargaining
Agreement (CBA) terms, company policies and rules which apply to employees similarly
situated.—We agree with the Court of Appeals that there are no substantial differences
between a newly hired non-regular employee who was regularized weeks or months after his
hiring and a new employee who was absorbed from another bank as a regular employee
pursuant to a merger, for purposes of applying the Union Shop Clause. Both employees were
hired/employed only after the CBA was signed. At the time they are being required to join the
Union, they are both already regular rank and file employees of BPI. They belong to the same
bargaining unit being represented by the Union. They both enjoy benefits that the Union was
able to secure for them under the CBA. When they both entered the employ of BPI, the CBA
and the Union Shop Clause therein were already in effect and neither of them had the
opportunity to express their preference for unionism or not. We see no cogent reason why
the Union Shop Clause should not be applied equally to these two types of new employees,
for they are undeniably similarly situated. The effect or consequence of BPI’s so-called
“absorption” of former FEBTC employees should be limited to what they actually agreed to,
i.e. recognition of the FEBTC employees’ years of service, salary rate and other benefits with
their previous employer. The effect should not be stretched so far as to exempt former
FEBTC employees from the existing CBA terms, company policies and rules which apply to
employees similarly situated. If the Union Shop Clause is valid as to other new regular BPI
employees, there is no reason why the same clause would be a violation of the “absorbed”
employees’ freedom of association.

Same; Same; Same; Same; Same; It is but fair that similarly situated employees who enjoy
the same privileges of a Collective Bargaining Agreement (CBA) should be likewise subject
to the same obligations the CBA imposes upon them—a contrary interpretation of the Union
Shop Clause will be inimical to industrial peace and workers’ solidarity.—It is but fair that
similarly situated employees who enjoy the same privileges of a CBA should be likewise
subject to the same obligations the CBA imposes upon them. A contrary interpretation of the
Union Shop Clause will be inimical to industrial peace and workers’ solidarity. This
unfavorable situation will not be sufficiently addressed by asking the former FEBTC
employees to simply pay agency fees to the Union in lieu of union membership, as the
dissent of Justice Carpio suggests. The fact remains that other new regular employees, to
whom the “absorbed employees” should be compared, do not have the option to simply pay
the agency fees and they must join the Union or face termination.

Same; Same; Same; Same; Same; A certified union whose membership falls below twenty
percent (20%) of the total members of the collective bargaining unit may lose its status as a
legitimate labor organization altogether, even in a situation where there is no competing
union, in which case, an interested party may file for the cancellation of the union’s
certificate of registration with the Bureau of Labor Relations.—Without the union shop
clause or with the restrictive interpretation thereof as proposed in the dissenting opinions,
the company can jeopardize the majority status of the certified union by excluding from
union membership all new regular employees whom the Company will “ absorb ” in future
mergers and all new regular employees whom the Company hires as regular from the
beginning of their employment without undergoing a probationary period. In this manner, the
Company can increase the number of members of the collective bargaining unit and if this
increase is not accompanied by a corresponding increase in union membership, the certified
union may lose its majority status and render it vulnerable to attack by another union who
wishes to represent the same bargaining unit. Or worse, a certified union whose
membership falls below twenty percent (20%) of the total members of the collective
bargaining unit may lose its status as a legitimate labor organization altogether, even in a
situation where there is no competing union. In such a case, an interested party may file for
the cancellation of the union’s certificate of registration with the Bureau of Labor Relations.
Plainly, the restrictive interpretation of the union shop clause would place the certified
union’s very existence at the mercy and control of the employer. Relevantly, only BPI, the
employer appears to be interested in pursuing this case. The former FEBTC employees have
not joined BPI in this appeal.

Same; Labor Unions; Union Security Clauses; Social Justice; The constitutional guarantee
given the right to form unions and the State policy to promote unionism have social justice
considerations.—It is unsurprising that significant provisions on labor protection of the 1987
Constitution are found in Article XIII on Social Justice. The constitutional guarantee given
the right to form unions and the State policy to promote unionism have social justice
considerations. In People’s Industrial and Commercial Employees and Workers Organization
v. People’s Industrial and Commercial Corporation, 112 SCRA 440 (1982), we recognized
that “ [l]abor, being the weaker in economic power and resources than capital, deserve
protection that is actually substantial and material.”

Same; Same; Same; Right of Association; The rationale for upholding the validity of union
shop clauses in a Collective Bargaining Agreement (CBA), even if they impinge upon the
individual employee’s right or freedom of association, is not to protect the union for the
union’s sake—a strong and effective union presumably benefits all employees in the
bargaining unit since such a union would be in a better position to demand improved
benefits and conditions of work from the employer.—The rationale for upholding the validity
of union shop clauses in a CBA, even if they impinge upon the individual employee’s right or
freedom of association, is not to protect the union for the union’s sake. Laws and
jurisprudence promote unionism and afford certain protections to the certified bargaining
agent in a unionized company because a strong and effective union presumably benefits all
employees in the bargaining unit since such a union would be in a better position to demand
improved benefits and conditions of work from the employer. This is the rationale behind the
State policy to promote unionism declared in the Constitution, which was elucidated in the
above-cited case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., 180 SCRA 668
(1989).

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

International School Alliance of Educators vs. Quisumbing, 333 SCRA 13 , June 01, 2000
Labor Law; Constitutional Law; That public policy abhors inequality and discrimination is
beyond contention.—That public policy abhors inequality and discrimination is beyond
contention. Our Constitution and laws reflect the policy against these evils. The Constitution
in the Article on Social Justice and Human Rights exhorts Congress to “give highest priority
to the enactment of measures that protect and enhance the right of all people to human
dignity, reduce social, economic, and political inequalities.” The very broad Article 19 of the
Civil Code requires every person, “in the exercise of his rights and in the performance of his
duties, [to] act with justice, give everyone his due, and observe honesty and good faith.”

Same; Same; International law, which springs from general principles of law, likewise
proscribes discrimination.—International law, which springs from general principles of law,
likewise proscribes discrimination. General principles of law include principles of equity, i.e.,
the general principles of fairness and justice, based on the test of what is reasonable. The
Universal Declaration of Human Rights, the International Covenant on Economic, Social, and
Cultural Rights, the International Convention on the Elimination of All Forms of Racial
Discrimination, the Convention against Discrimination in Education, the Convention (No.
111) Concerning Discrimination in Respect of Employment and Occupation—all embody the
general principle against discrimination, the very antithesis of fairness and justice. The
Philippines, through its Constitution, has incorporated this principle as part of its national
laws.

Same; Same; State directed to promote “equality of employment opportunities for all.”—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.” It would be an affront to both the spirit and letter of these
provisions if the State, in spite of its primordial obligation to promote and ensure equal
employment opportunities, closes its eyes to unequal and discriminatory terms and
conditions of employment.

Same; Same; Discrimination, particularly in terms of wages, is frowned upon by the Labor
Code.—Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.
Article 135, for example, prohibits and penalizes the payment of lesser compensation to a
female employee as against a male employee for work of equal value. Article 248 declares it
an unfair labor practice for an employer to discriminate in regard to wages in order to
encourage or discourage membership in any labor organization.

Same; Same; If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work.—The School contends that
petitioner has not adduced evidence that local-hires perform work equal to that of
foreign-hires. The Court finds this argument a little cavalier. If an employer accords
employees the same position and rank, the presumption is that these employees perform
equal work. This presumption is borne by logic and human experience. If the employer pays
one employee less than the rest, it is not for that employee to explain why he receives less or
why the others receive more. That would be adding insult to injury. The employer has
discriminated against that employee; it is for the employer to explain why the employee is
treated unfairly.

Same; Same; The State has the right and duty to regulate the relations between labor and
capital.—The Constitution enjoins the State to “ protect the rights of workers and promote
their welfare,” “to afford labor full protection.” The State, therefore, has the right and duty to
regulate the relations between labor and capital. These relations are not merely contractual
but are so impressed with public interest that labor contracts, collective bargaining
agreements included, must yield to the common good. Should such contracts contain
stipulations that are contrary to public policy, courts will not hesitate to strike down these
stipulations.

Basco vs. Phil. Amusements and Gaming Corporation, 197 SCRA 52 , May 14, 1991
Constitutional Law; Taxation; Municipal Corporations; Municipal corporations have no
inherent power to tax; their power to tax must always yield to a legislative act.—The City of
Manila, being a mere Municipal corporation has no inherent right to impose taxes (Icard v.
City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v. Municipality
of Caloocan, 7 SCRA 643). Thus, “ the Charter or statute must plainly show an intent to
confer that power or the municipality cannot assume it” (Medina v. City of Baguio, 12 SCRA
62). Its “ power to tax ” therefore must always yield to a legislative act which is superior
having been passed upon by the state itself which has the “inherent power to tax” (Bernas,
the Revised [1973] Philippine Constitution, Vol. 1, 1983 ed. p. 445).

Same; Same; Same; Same; Congress has the power of control over local governments; if
Congress can grant a municipal corporation the power to tax certain matters, it can also
provide for exemptions or even take back the power.—The Charter of the City of Manila is
subject to control by Congress. It should be stressed that “municipal corporations are mere
creatures of Congress” (Unson v. Lacson, G.R. No. 7909, January 18, 1957) which has the
power to “create and abolish municipal corporations” due to its “general legislative power
s ” (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v. Orandia, 5 SCRA 541). Congress,
therefore, has the power of control over local governments (Hebron v. Reyes, G.R. No. 9124,
July 2, 1950). And if Congress can grant the City of Manila the power to tax certain matters,
it can also provide for exemptions or even take back the power.

Same; Same; Same; License Fees; The power of local governments to regulate gambling
thru the grant of franchises, licenses or permits was withdrawn by PD 771, it is now vested
exclusively on the National Government.—The City of Manila’s power to impose license fees
on gambling, has long been revoked. As early as 1975, the power of local governments to
regulate gambling thru the grant of “franchise, licenses or permits” was withdrawn by P.D.
No. 771 and was vested exclusively on the National Government. xxx xxx Therefore, only the
National Government has the power to issue “ licenses or permits ” for the operation of
gambling. Necessarily, the power to demand or collect license fees which is a consequence
of the issuance of “licenses or permits” is no longer vested in the City of Manila.

Same; Same; Same; Same; Local governments have no power to tax instrumentalities of the
National Government; PAGCOR, being an instrumentality of the Government, is therefore
exempt from local taxes.—Local governments have no power to tax instrumentalities of the
National Government. PAGCOR is a government owned or controlled corporation with an
original charter, PD 1869. All of its shares of stocks are owned by the National Government.
xxx xxx PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role
is governmental, which places it in the category of an agency or instrumentality of the
Government. Being an instrumentality of the Government, PAGCOR should be and actually is
exempt from local taxes. Otherwise, its operation might be burdened, impeded or subjected
to control by a mere Local government. “The states have no power by taxation or otherwise,
to retard, impede, burden or in any manner control the operation of constitutional laws
enacted by Congress to carry into execution the powers vested in the federal government.”
(MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579) This doctrine emanates from the
“ supremacy ” of the National Government over local governments. “ Justice Holmes,
speaking for the Supreme Court, made reference to the entire absence of power on the part
of the States to touch, in that way (taxation) at least, the instrumentalities of the United
States (Johnson v. Maryland, 254 US 51) and it can be agreed that no state or political
subdivision can regulate a federal instrumentality in such a way as to prevent it from
consummating its federal responsibilities, or even to seriously burden it in the
accomplishment of them. ” (Antieau, Modern Constitutional Law, Vol. 2, p. 140, italics
supplied). Otherwise, mere creatures of the State can defeat National policies thru
extermination of what local authorities may perceive to be undesirable activities or
enterprise using the power to tax as “ a tool for regulation ” (U.S. v. Sanchez, 340 US 42).
The power to tax which was called by Justice Marshall as the “ power to destroy ” (Mc
Culloch v. Maryland, supra) cannot be allowed to defeat an instrumentality or creation of the
very entity which has the inherent power to wield it.

Same; Same; Same; Same; The power of local government to impose taxes and fees is
always subject to limitations which Congress may provide by law.—The power of local
government to “impose taxes and fees” is always subject to “limitations” which Congress
may provide by law. Since PD 1869 remains an “operative” law until “amended, repealed or
revoked ” (Sec. 3, Art. XVIII, 1987 Constitution), its “ exemption clause ” remains as an
exception to the exercise of the power of local governments to impose taxes and fees. It
cannot therefore be violative but rather is consistent with the principle of local autonomy.

Same; Same; Same; Local Autonomy; The principle of local autonomy does not make local
governments sovereign within the state, it simply means decentralization.—Besides, the
principle of local autonomy under the 1987 Constitution simply means “ decentralization ”
(III Records of the 1987 Constitutional Commission, pp. 435-436, as cited in Bernas, the
Constitution of the Republic of the Philippines, Vol. II, First Ed., 1988, p. 374). It does not
make local governments sovereign within the state or an “ imperium in imperio. ” Local
Government has been described as a political subdivision of a nation or state which is
constituted by law and has substantial control of local affairs. In a unitary system of
government, such as the government under the Philippine Constitution, local governments
can only be an intra sovereign subdivision of one sovereign nation, it cannot be an imperium
in imperio. Local government in such a system can only mean a measure of decentralization
of the function of government. (italics supplied)

Same; Equal Protection Clause; The “ equal protection ” clause does not preclude
classification of individuals who may be accorded different treatment under the law as long
as the classification is not unreasonable or arbitrary.—Petitioners next contend that P.D.
1869 violates the equal protection clause of the Constitution, because “ it legalized
PAGCOR—conducted gambling, while most gambling are outlawed together with
prostitution, drug trafficking and other vices ” (p. 82, Rollo). We, likewise, find no valid
ground to sustain this contention. The petitioners’ posture ignores the well-accepted
meaning of the clause “ equal protection of the laws. ” The clause does not preclude
classification of individuals who may be accorded different treatment under the law as long
as the classification is not unreasonable or arbitrary (Itchong v. Hernandez, 101 Phil. 1155).
A law does not have to operate in equal force on all persons or things to be conformable to
Article III, Section 1 of the Constitution (DECS v. San Diego, G.R. No. 89572, December 21,
1989). The “ equal protection clause ” does not prohibit the Legislature from establishing
classes of individuals or objects upon which different rules shall operate (Laurel v. Misa, 43
O.G. 2847). The Constitution does not require situations which are different in fact or opinion
to be treated in law as though they were the same (Gomez v. Palomar, 25 SCRA 827). Just
how P.D. 1869 in legalizing gambling conducted by PAGCOR is violative of the equal
protection is not clearly explained in the petition. The mere fact that some gambling
activities like cockfighting (P.D. 449) horse racing (R.A. 306 as amended by RA 983),
sweepstakes, lotteries and races (RA 1169 as amended by B.P. 42) are legalized under
certain conditions, while others are prohibited, does not render the applicable laws, P.D.
1869 for one, unconstitutional. “If the law presumably hits the evil where it is most felt, it is
not to be overthrown because there are other instances to which it might have been applie
d.” (Gomez v. Palomar, 25 SCRA 827) “The equal protection clause of the 14 th Amendment
does not mean that all occupations called by the same name must be treated the same way;
the state may do what it can to prevent which is deemed as evil and stop short of those
cases in which harm to the few concerned is not less than the harm to the public that would
insure if the rule laid down were made mathematically exact.” (Dominican Hotel v. Arizana,
249 U.S. 2651).

Same; Statutes; Every law has in its favor the presumption of constitutionality, for a law to
be nullified, it must be shown that there is a clear and unequivocal breach of the
Constitution.—Every law has in its favor the presumption of constitutionality (Yu Cong Eng v.
Trinidad, 47 Phil. 387; Salas v. Jarencio, 48 SCRA 734; Peralta v. Comelec, 82 SCRA 30;
Abbas v. Comelec, 179 SCRA 287). Therefore, for PD 1869 to be nullified, it must be shown
that there is a clear and unequivocal breach of the Constitution, not merely a doubtful and
equivocal one. In other words, the grounds for nullity must be clear and beyond reasonable
doubt. (Peralta v. Comelec, supra) Those who petition this Court to declare a law, or parts
thereof, unconstitutional must clearly establish the basis for such a declaration. Otherwise,
their petition must fail. Based on the grounds raised by petitioners to challenge the
constitutionality of P.D. 1869, the Court finds that petitioners have failed to overcome the
presumption. The dismissal of this petition is therefore, inevitable. But as to whether P.D.
1869 remains a wise legislation considering the issues of “morality, monopoly, trend to free
enterprise, privatization as well as the state principles on social justice, role of youth and
educational values” being raised, is up for Congress to determine.

Abott Laboratories, Philippines vs. Alcaraz, 701 SCRA 682 , July 23, 2013
Same; Same; Same; Forum shopping takes place when a litigant files multiple suits
involving the same parties, either simultaneously or successively, to secure a favorable
judgment.—Forum shopping takes place when a litigant files multiple suits involving the
same parties, either simultaneously or successively, to secure a favorable judgment. It
exists where the elements of litis pendentia are present, namely: (a) identity of parties, or at
least such parties who represent the same interests in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity
with respect to the two preceding particulars in the two (2) cases is such that any judgment
that may be rendered in the pending case, regardless of which party is successful, would
amount to res judicata in the other case.

Same; Same; Same; Section 5(b), Rule 7 of the Rules of Court requires that a plaintiff who
files a case should provide a complete statement of the present status of any pending case
if the latter involves the same issues as the one that was filed.—Section 5(b), Rule 7 of the
Rules of Court requires that a plaintiff who files a case should provide a complete statement
of the present status of any pending case if the latter involves the same issues as the one
that was filed. If there is no such similar pending case, Section 5(a) of the same rule
provides that the plaintiff is obliged to declare under oath that to the best of his knowledge,
no such other action or claim is pending.

Labor Law; Probationary Employees; A probationary employee, like a regular employee,

enjoys security of tenure. However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under Article 295 of the
Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a
regular employee in accordance with the reasonable standards made known by the
employer to the employee at the time of the engagement.—A probationary employee, like a
regular employee, enjoys security of tenure. However, in cases of probationary employment,
aside from just or authorized causes of termination, an additional ground is provided under
Article 295 of the Labor Code, i.e., the probationary employee may also be terminated for
failure to qualify as a regular employee in accordance with the reasonable standards made
known by the employer to the employee at the time of the engagement. Thus, the services of
an employee who has been engaged on probationary basis may be terminated for any of the
following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular
employee in accordance with reasonable standards prescribed by the employer.

Same; Same; If the employer fails to inform the probationary employee of the reasonable
standards upon which the regularization would be based on at the time of the engagement,
then the said employee shall be deemed a regular employee.—Section 6(d), Rule I, Book VI of
the Implementing Rules of the Labor Code provides that if the employer fails to inform the
probationary employee of the reasonable standards upon which the regularization would be
based on at the time of the engagement, then the said employee shall be deemed a regular
employee, viz.: (d) In all cases of probationary employment, the employer shall make known
to the employee the standards under which he will qualify as a regular employee at the time
of his engagement. Where no standards are made known to the employee at that time, he
shall be deemed a regular employee. In other words, the employer is made to comply with
two (2) requirements when dealing with a probationary employee: first, the employer must
communicate the regularization standards to the probationary employee; and second, the
employer must make such communication at the time of the probationary employee’s
engagement. If the employer fails to comply with either, the employee is deemed as a
regular and not a probationary employee.

Same; Same; An employer is deemed to have made known the standards that would qualify
a probationary employee to be a regular employee when it has exerted reasonable efforts to
apprise the employee of what he is expected to do or accomplish during the trial period of
probation.—An employer is deemed to have made known the standards that would qualify a
probationary employee to be a regular employee when it has exerted reasonable efforts to
apprise the employee of what he is expected to do or accomplish during the trial period of
probation. This goes without saying that the employee is sufficiently made aware of his
probationary status as well as the length of time of the probation. The exception to the
foregoing is when the job is self-descriptive in nature, for instance, in the case of maids,
cooks, drivers, or messengers. Also, in Aberdeen Court, Inc. v. Agustin, 456 SCRA 32 (2005),
it has been held that the rule on notifying a probationary employee of the standards of
regularization should not be used to exculpate an employee who acts in a manner contrary
to basic knowledge and common sense in regard to which there is no need to spell out a
policy or standard to be met. In the same light, an employee’s failure to perform the duties
and responsibilities which have been clearly made known to him constitutes a justifiable
basis for a probationary employee’s nonregularization.

Same; Same; Basic knowledge and common sense dictate that the adequate performance of
one’s duties is, by and of itself, an inherent and implied standard for a probationary
employee to be regularized; such is a regularization standard which need not be literally
spelled out or mapped into technical indicators in every case.—Verily, basic knowledge and
common sense dictate that the adequate performance of one’s duties is, by and of itself, an
inherent and implied standard for a probationary employee to be regularized; such is a
regularization standard which need not be literally spelled out or mapped into technical
indicators in every case. In this regard, it must be observed that the assessment of adequate
duty performance is in the nature of a management prerogative which when reasonably
exercised — as Abbott did in this case — should be respected. This is especially true of a
managerial employee like Alcaraz who was tasked with the vital responsibility of handling
the personnel and important matters of her department.

Same; Same; If the termination is brought about by the failure of an employee to meet the
standards of the employer in case of probationary employment, it shall be sufficient that a
written notice is served the employee, within a reasonable time from the effective date of
termination.—A different procedure is applied when terminating a probationary employee;
the usual two-notice rule does not govern. Section 2, Rule I, Book VI of the Implementing
Rules of the Labor Code states that “[i]f the termination is brought about by the x x x failure
of an employee to meet the standards of the employer in case of probationary employment,
it shall be sufficient that a written notice is served the employee, within a reasonable time
from the effective date of termination.”

Same; Company Policy; A company policy partakes of the nature of an implied contract
between the employer and employee.— A company policy partakes of the nature of an
implied contract between the employer and employee. In Parts Depot, Inc. v. Beiswenger,
170 S.W.3d 354 (Ky. 2005), it has been held that: [E]mployer statements of policy . . . can
give rise to contractual rights in employees without evidence that the parties mutually
agreed that the policy statements would create contractual rights in the employee, and,
hence, although the statement of policy is signed by neither party, can be unilaterally
amended by the employer without notice to the employee, and contains no reference to a
specific employee, his job description or compensation, and although no reference was
made to the policy statement in pre-employment interviews and the employee does not learn
of its existence until after his hiring. Toussaint, 292 N.W.2d at 892. The principle is akin to
estoppel. Once an employer establishes an express personnel policy and the employee
continues to work while the policy remains in effect, the policy is deemed an implied
contract for so long as it remains in effect. If the employer unilaterally changes the policy,
the terms of the implied contract are also thereby changed.

Same; Termination of Employment; Nominal Damages; Case law has settled that an
employer who terminates an employee for a valid cause but does so through invalid
procedure is liable to pay the latter nominal damages.—Case law has settled that an
employer who terminates an employee for a valid cause but does so through invalid
procedure is liable to pay the latter nominal damages. In Agabon v. NLRC (Agabon), 442
SCRA 573 (2004), the Court pronounced that where the dismissal is for a just cause, 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. Thus, in Agabon, the employer was ordered to pay the employee nominal damages in
the amount of P30,000.00.

Same; Same; If the dismissal is based on a just cause under Article 282 of the Labor Code
(now Article 296) but the employer failed to comply with the notice requirement, the sanction
to be imposed upon him should be tempered because the dismissal process was, in effect,
initiated by an act imputable to the employee; if the dismissal is based on an authorized
cause under Article 283 (now Article 297) but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal process was initiated by
the employer’s exercise of his management prerogative.—It was explained that if the
dismissal is based on a just cause under Article 282 of the Labor Code (now Article 296) but
the employer failed to comply with the notice requirement, the sanction to be imposed upon
him should be tempered because the dismissal process was, in effect, initiated by an act
imputable to the employee; if the dismissal is based on an authorized cause under Article
283 (now Article 297) but the employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was initiated by the employer’s
exercise of his management prerogative. Hence, in Jaka, where the employee was
dismissed for an authorized cause of retrenchment — as contradistinguished from the
employee in Agabon who was dismissed for a just cause of neglect of duty — the Court
ordered the employer to pay the employee nominal damages at the higher amount of
P50,000.00.

Corporation Law; Liability of Corporate Directors; Requisites to Hold Corporate Directors,

Trustees or Officers Personally Liable for Corporate Acts.—It is hornbook principle that
personal liability of corporate directors, trustees or officers attaches only when: (a) they
assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or
gross negligence in directing its affairs, or when there is a conflict of interest resulting in
damages to the corporation, its stockholders or other persons; (b) they consent to the
issuance of watered down stocks or when, having knowledge of such issuance, do not
forthwith file with the corporate secretary their written objection; (c) they agree to hold
themselves personally and solidarily liable with the corporation; or (d) they are made by
specific provision of law personally answerable for their corporate action.

Civil Law; Bad Faith; It is a well-settled rule that bad faith cannot be presumed and he who
alleges bad faith has the onus of proving it.—A judicious perusal of the records show that
other than her unfounded assertions on the matter, there is no evidence to support the fact
that the individual petitioners herein, in their capacity as Abbott’s officers and employees,
acted in bad faith or were motivated by ill will in terminating Alcaraz’s services. The fact that
Alcaraz was made to resign and not allowed to enter the workplace does not necessarily
indicate bad faith on Abbott’s part since a sufficient ground existed for the latter to actually
proceed with her termination. On the alleged loss of her personal belongings, records are
bereft of any showing that the same could be attributed to Abbott or any of its officers. It is a
well-settled rule that bad faith cannot be presumed and he who alleges bad faith has the
onus of proving it. All told, since Alcaraz failed to prove any malicious act on the part of
Abbott or any of its officers, the Court finds the award of moral or exemplary damages
unwarranted.

Opinaldo vs. Ravina, 707 SCRA 545 , October 16, 2013

Labor Law; National Labor Relations Commission; The National Labor Relations
Commission is not bound by the technical rules of procedure and is allowed to be liberal in
the application of its rules in deciding labor cases.―We are not, however, unmindful that the
NLRC is not bound by the technical rules of procedure and is allowed to be liberal in the
application of its rules in deciding labor cases. Thus, under Section 2, Rule I of the 2005
Revised Rules of Procedure of the National Labor Relations Commission it is stated: Section
2. Construction.—These Rules shall be liberally construed to carry out the objectives of the
Constitution, the Labor Code of the Philippines and other relevant legislations, and to assist
the parties in obtaining just, expeditious and inexpensive resolution and settlement of labor
disputes. It is significant that the 2011 NLRC Rules of Procedure, under Section 2, Rule I
thereof, also carries exactly the same provision. Further, the 2005 Revised Rules and the
2011 Rules carry identical provisions appearing under Section 10, Rule VII of both laws:
Section 10. Technical rules not binding.—The rules of procedure and evidence prevailing in
courts of law and equity shall not be controlling and the Commission shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure, all in the interest of due process. In any
proceeding before the Commission, the parties may be represented by legal counsel but it
shall be the duty of the Chairman, any Presiding Commissioner or Commissioner to exercise
complete control of the proceedings at all stages.

Same; Management Prerogative; Jurisprudence is replete with cases recognizing the right of
the employer to have free reign and enjoy sufficient discretion to regulate all aspects of
employment, including the prerogative to instill discipline in its employees and to impose
penalties, including dismissal, upon erring employees.―Jurisprudence is replete with cases
recognizing the right of the employer to have free reign and enjoy sufficient discretion to
regulate all aspects of employment, including the prerogative to instill discipline in its
employees and to impose penalties, including dismissal, upon erring employees. This is a
management prerogative where the free will of management to conduct its own affairs to
achieve its purpose takes form. Even labor laws discourage interference with the exercise of
such prerogative and the Court often declines to interfere in legitimate business decisions of
employers. However, the exercise of management prerogative is not unlimited. Managerial
prerogatives are subject to limitations provided by law, collective bargaining agreements,
and general principles of fair play and justice. Hence, in the exercise of its management
prerogative, an employer must ensure that the policies, rules and regulations on work-related
activities of the employees must always be fair and reasonable and the corresponding
penalties, when prescribed, commensurate to the offense involved and to the degree of the
infraction.

Same; Same; Due Process; While it is a management prerogative to require petitioner to

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

Same; Same; Same; The due process requirement in the deprivation of one’s employment is
transcendental that it limits the exercise of the management prerogative of the employer to
control and regulate the affairs of the business.―All said, what behooves the Court is the
lack of evidence on record which establishes that respondent informed petitioner that his
failure to submit the required medical certificate will result in his lack of work assignment. It
is a basic principle of labor protection in this jurisdiction that a worker cannot be deprived of
his job without satisfying the requirements of due process. Labor is property and the right to
make it available is next in importance to the rights of life and liberty. As enshrined under
the Bill of Rights, no person shall be deprived of life, liberty or property without due process
of law. The due process requirement in the deprivation of one’s employment is
transcendental that it limits the exercise of the management prerogative of the employer to
control and regulate the affairs of the business. In the case at bar, all that respondent
employer needed to prove was that petitioner employee was notified that his failure to
submit the required medical certificate will result in his lack of work assignment — and
eventually the termination of his employment — as a security guard. There is no iota of
evidence in the records, save for the bare allegations of respondent, that petitioner was
notified of such consequence for non-submission.
Same; Termination of Employment; Abandonment; Abandonment is the deliberate and
unjustified refusal of an employee to resume his employment.―Abandonment is the
deliberate and unjustified refusal of an employee to resume his employment. To constitute
abandonment of work, two elements must concur: (1) the employee must have failed to
report for work or must have been absent without valid or justifiable reason; and, (2) there
must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act. None of these elements is
present in the case at bar.

Same; Same; Burden of Proof; It is a time-honored legal principle that the employer has the
onus probandi to show that the dismissal or termination was for a just and authorized cause
under the Labor Code.―We need not reiterate that respondent did not properly exercise her
management prerogative when she withheld petitioner’s employment without due process.
Respondent failed to prove that she has notified petitioner that her continuous refusal to
provide him any work assignment was due to his non-submission of the medical certificate.
Had respondent exercised the rules of fair play, petitioner would have had the option of
complying or not complying with the medical certificate requirement — having full
knowledge of the consequences of his actions. Respondent failed to do so and she cannot
now hide behind the defense that there was no illegal termination because petitioner cannot
show proof that he had been illegally dismissed. It is a time-honored legal principle that the
employer has the onus probandi to show that the dismissal or termination was for a just and
authorized cause under the Labor Code. Respondent failed to show that the termination was
justified and authorized, nor was it done as a valid exercise of management prerogative.

Duncan Association of Detailman-PTGWO vs. Glaxo Wellcome Philippines, Inc., 438 SCRA
343 , September 17, 2004
Labor Law; Dismissals; Glaxo’s policy prohibiting an employee from having a relationship
with an employee of a competitior company is a valid exercise of management
prerogative.—No reversible error can be ascribed to the Court of Appeals when it ruled that
Glaxo’s policy prohibiting an employee from having a relationship with an employee of a
competitor company is a valid exercise of management prerogative. Glaxo has a right to
guard its trade secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors, especially so that it and Astra are rival
companies in the highly competitive pharmaceutical industry.

Same; Same; While our laws endeavor to give life to the constitutional policy on social
justice and the protection of labor, it does not mean that every labor dispute will be decided
in favor of the workers; The law also recognizes that management has rights which are also
entitled to respect and enforcement in the interest of fair play.—That Glaxo possesses the
right to protect its economic interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce such a policy to protect its right to
reasonable returns on investments and to expansion and growth. Indeed, while our laws
endeavor to give life to the constitutional policy on social justice and the protection of labor,
it does not mean that every labor dispute will be decided in favor of the workers. The law
also recognizes that management has rights which are also entitled to respect and
enforcement in the interest of fair play.

Same; Same; The challenged company policy does not violate the equal protection clause of
the Constitution.—The challenged company policy does not violate the equal protection
clause of the Constitution as petitioners erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only to the state or those acting
under color of its authority. Corollarily, it has been held in a long array of U.S. Supreme Court
decisions that the equal protection clause erects no shield against merely private conduct,
however, discriminatory or wrongful. The only exception occurs when the state in any of its
manifestations or actions has been found to have become entwined or involved in the
wrongful private conduct. Obviously, however, the exception is not present in this case.

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

Same; Same; Constructive Dismissal; Definition of Constructive Dismissal.—The Court finds

no merit in petitioners’ contention that Tecson was constructively dismissed when he was
transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao
City-Agusan del Sur sales area, and when he was excluded from attending the company’s
seminar on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary
resignation resorted to when continued employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to the employee.
None of these conditions are present in the instant case. The record does not show that
Tecson was demoted or unduly discriminated upon by reason of such transfer.

Yrasuegui vs. Philippine Airlines, Inc., 569 SCRA 467 , October 17, 2008
Labor Law; Termination of Employment; Common Carriers; Air Transportation; Weight
Standards; Obesity; An employee may be dismissed the moment he is unable to comply with
his ideal weight as prescribed by the weight standards—the dismissal would fall under
Article 282(e) of the Labor Code.—A reading of the weight standards of PAL would lead to no
other conclusion than that they constitute a continuing qualification of an employee in order
to keep the job. Tersely put, an employee may be dismissed the moment he is unable to
comply with his ideal weight as prescribed by the weight standards. The dismissal of the
employee would thus fall under Article 282(e) of the Labor Code. As explained by the CA:
x x x [T]he standards violated in this case were not mere “ orders ” of the employer; they
were the “prescribed weights” that a cabin crew must maintain in order to qualify for and
keep his or her position in the company. In other words, they were standards that establish
continuing qualifications for an employee’s position. In this sense, the failure to maintain
these standards does not fall under Article 282(a) whose express terms require the element
of willfulness in order to be a ground for dismissal. The failure to meet the employer’s
qualifying standards is in fact a ground that does not squarely fall under grounds (a) to (d)
and is therefore one that falls under Article 282(e)—the “ other causes analogous to the
foregoing. ” By its nature, these “ qualifying standards ” are norms that apply prior to and
after an employee is hired. They apply prior to employment because these are the standards
a job applicant must initially meet in order to be hired. They apply after hiring because an
employee must continue to meet these standards while on the job in order to keep his job.
Under this perspective, a violation is not one of the faults for which an employee can be
dismissed pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed simply
because he no longer “ qualifies ” for his job irrespective of whether or not the failure to
qualify was willful or intentional. x x x

Same; Same; Same; Same; Same; Same; The obesity of a cabin crew, when placed in the
context of his work as flight attendant, becomes an analogous cause under Article 282(e) of
the Labor Code that justifies his dismissal from the service—his obesity may not be
unintended, but is nonetheless voluntary.—In fine, We hold that the obesity of petitioner,
when placed in the context of his work as flight attendant, becomes an analogous cause
under Article 282(e) of the Labor Code that justifies his dismissal from the service. His
obesity may not be unintended, but is nonetheless voluntary. As the CA correctly puts it,
“ [v]oluntariness basically means that the just cause is solely attributable to the employee
without any external force influencing or controlling his actions. This element runs through
all just causes under Article 282, whether they be in the nature of a wrongful action or
omission. Gross and habitual neglect, a recognized just cause, is considered voluntary
although it lacks the element of intent found in Article 282(a), (c), and (d).”

Same; Same; Same; Same; Same; Same; Bona Fide Occupational Qualification (BFOQ)
Defense; Words and Phrases; Employment in particular jobs may not be limited to persons
of a particular sex, religion, or national origin unless the employer can show that sex,
religion, or national origin is an actual qualification for performing the job—qualification
referred to as bona fide occupational qualification (BFOQ).—Employment in particular jobs
may not be limited to persons of a particular sex, religion, or national origin unless the
employer can show that sex, religion, or national origin is an actual qualification for
performing the job. The qualification is called a bona fide occupational qualification (BFOQ).
In the United States, there are a few federal and many state job discrimination laws that
contain an exception allowing an employer to engage in an otherwise unlawful form of
prohibited discrimination when the action is based on a BFOQ necessary to the normal
operation of a business or enterprise.

Same; Same; Same; Same; Same; Same; Same; Same; “Meiorin Test”; The Constitution, the
Labor Code, and RA No. 7277 or the Magna Carta for Disabled Persons contain provisions
similar to Bona Fide Occupational Qualification (BFOQ); The test of reasonableness of the
company policy is used because it is parallel to Bona Fide Occupational Qualification
(BFOQ)—Bona Fide Occupational Qualification (BFOQ) is valid “ provided it reflects an
inherent quality reasonably necessary for satisfactory job performance; Under the “Meiorin
Test, ” (1) the employer must show that it adopted the standard for a purpose rationally
connected to the performance of the job, (2) the employer must establish that the standard
is reasonably necessary to the accomplishment of that work-related purpose, and, (3) the
employer must establish that the standard is reasonably necessary in order to accomplish
the legitimate work-related purpose.—Petitioner contends that BFOQ is a statutory defense.
It does not exist if there is no statute providing for it. Further, there is no existing BFOQ
statute that could justify his dismissal. Both arguments must fail. First, the Constitution, the
Labor Code, and RA No. 7277 or the Magna Carta for Disabled Persons contain provisions
similar to BFOQ. Second, in British Columbia Public Service Employee Commission
(BSPSERC) v. The British Columbia Government and Service Employee’s Union (BCGSEU), 3
SCRA 3 (1999), the Supreme Court of Canada adopted the so-called “ Meiorin Test ” in
determining whether an employment policy is justified. Under this test, (1) the employer
must show that it adopted the standard for a purpose rationally connected to the
performance of the job; (2) the employer must establish that the standard is reasonably
necessary to the accomplishment of that work-related purpose; and (3) the employer must
establish that the standard is reasonably necessary in order to accomplish the legitimate
work-related purpose. Similarly, in Star Paper Corporation v. Simbol, 487 SCRA 228 (2006),
this Court held that in order to justify a BFOQ, the employer must prove that (1) the
employment qualification is reasonably related to the essential operation of the job involved;
and (2) that there is factual basis for believing that all or substantially all persons meeting
the qualification would be unable to properly perform the duties of the job. In short, the test
of reasonableness of the company policy is used because it is parallel to BFOQ. BFOQ is
valid “ provided it reflects an inherent quality reasonably necessary for satisfactory job
performance.”

Same; Same; Same; Civil Law; A common carrier, from the nature of its business and for
reasons of public policy, is bound to observe extraordinary diligence for the safety of the
passengers it transports.—There is no merit to the argument that BFOQ cannot be applied if
it has no supporting statute. Too, the Labor Arbiter, NLRC, and CA are one in holding that the
weight standards of PAL are reasonable. A common carrier, from the nature of its business
and for reasons of public policy, is bound to observe extraordinary diligence for the safety of
the passengers it transports. It is bound to carry its passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances. The law leaves no room for mistake or oversight on the
part of a common carrier. Thus, it is only logical to hold that the weight standards of PAL
show its effort to comply with the exacting obligations imposed upon it by law by virtue of
being a common carrier.
Same; Same; Same; Same; The weight standards of an airline should be viewed as imposing
strict norms of discipline upon its employees—the primary objective of said airline in the
imposition of the weight standards for cabin crew is flight safety, for it cannot be gainsaid
that cabin attendants must maintain agility at all times in order to inspire passenger
confidence on their ability to care for the passengers when something goes wrong.—The
business of PAL is air transportation. As such, it has committed itself to safely transport its
passengers. In order to achieve this, it must necessarily rely on its employees, most
particularly the cabin flight deck crew who are on board the aircraft. The weight standards of
PAL should be viewed as imposing strict norms of discipline upon its employees. In other
words, the primary objective of PAL in the imposition of the weight standards for cabin crew
is flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times
in order to inspire passenger confidence on their ability to care for the passengers when
something goes wrong. It is not farfetched to say that airline companies, just like all
common carriers, thrive due to public confidence on their safety records. People, especially
the riding public, expect no less than that airline companies transport their passengers to
their respective destinations safely and soundly. A lesser performance is unacceptable.

Same; Same; Same; Same; The task of a cabin crew or flight attendant is not limited to
serving meals or attending to the whims and caprices of the passengers—passenger safety
goes to the core of the job of a cabin attendant; On board an aircraft, the body weight and
size of a cabin attendant are important factors to consider in case of emergency—aircrafts
have constricted cabin space, and narrow aisles and exit doors.—The task of a cabin crew or
flight attendant is not limited to serving meals or attending to the whims and caprices of the
passengers. The most important activity of the cabin crew is to care for the safety of
passengers and the evacuation of the aircraft when an emergency occurs. Passenger safety
goes to the core of the job of a cabin attendant. Truly, airlines need cabin attendants who
have the necessary strength to open emergency doors, the agility to attend to passengers in
cramped working conditions, and the stamina to withstand grueling flight schedules. On
board an aircraft, the body weight and size of a cabin attendant are important factors to
consider in case of emergency. Aircrafts have constricted cabin space, and narrow aisles
and exit doors. Thus, the arguments of respondent that “ [w]hether the airline’s flight
attendants are overweight or not has no direct relation to its mission of transporting
passengers to their destination ” ; and that the weight standards “ has nothing to do with
airworthiness of respondent’s airlines,” must fail.

Same; Same; Same; Same; Judicial Notice; That an obese cabin attendant occupies more
space than a slim one is an unquestionable fact which courts can judicially recognize
without introduction of evidence—it would also be absurd to require airline companies to
reconfigure the aircraft in order to widen the aisles and exit doors just to accommodate
overweight cabin attendants; The biggest problem with an overweight cabin attendant is the
possibility of impeding passengers from evacuating the aircraft, should the occasion call for
it—being overweight necessarily impedes mobility.—There is no need to individually evaluate
their ability to perform their task. That an obese cabin attendant occupies more space than a
slim one is an unquestionable fact which courts can judicially recognize without
introduction of evidence. It would also be absurd to require airline companies to reconfigure
the aircraft in order to widen the aisles and exit doors just to accommodate overweight
cabin attendants like petitioner. The biggest problem with an overweight cabin attendant is
the possibility of impeding passengers from evacuating the aircraft, should the occasion call
for it. The job of a cabin attendant during emergencies is to speedily get the passengers out
of the aircraft safely. Being overweight necessarily impedes mobility. Indeed, in an
emergency situation, seconds are what cabin attendants are dealing with, not minutes.
Three lost seconds can translate into three lost lives. Evacuation might slow down just
because a wide-bodied cabin attendant is blocking the narrow aisles. These possibilities are
not remote.
Estoppel; Good faith demands that what is agreed upon shall be done.—Petitioner is also in
estoppel. He does not dispute that the weight standards of PAL were made known to him
prior to his employment. He is presumed to know the weight limit that he must maintain at
all times. In fact, never did he question the authority of PAL when he was repeatedly asked
to trim down his weight. Bona fides exigit ut quod convenit fiat. Good faith demands that
what is agreed upon shall be done. Kung ang tao ay tapat kanyang tutuparin ang
napagkasunduan.

Administrative Law; Appeals; Factual findings of administrative agencies do not have

infallibility and must be set aside when they fail the test of arbitrariness.—We are not
unmindful that findings of facts of administrative agencies, like the Labor Arbiter and the
NLRC, are accorded respect, even finality. The reason is simple: administrative agencies are
experts in matters within their specific and specialized jurisdiction. But the principle is not a
hard and fast rule. It only applies if the findings of facts are duly supported by substantial
evidence. If it can be shown that administrative bodies grossly misappreciated evidence of
such nature so as to compel a conclusion to the contrary, their findings of facts must
necessarily be reversed. Factual findings of administrative agencies do not have infallibility
and must be set aside when they fail the test of arbitrariness.

Bill of Rights; Equal Protection Clause; In the absence of governmental interference, the
liberties guaranteed by the Constitution cannot be invoked—the Bill of Rights is not meant to
be invoked against acts of private individuals.—To make his claim more believable,
petitioner invokes the equal protection clause guaranty of the Constitution. However, in the
absence of governmental interference, the liberties guaranteed by the Constitution cannot
be invoked. Put differently, the Bill of Rights is not meant to be invoked against acts of
private individuals. Indeed, the United States Supreme Court, in interpreting the Fourteenth
Amendment, which is the source of our equal protection guarantee, is consistent in saying
that the equal protection erects no shield against private conduct, however discriminatory or
wrongful. Private actions, no matter how egregious, cannot violate the equal protection
guarantee.

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

Same; Separation Pay; Exceptionally, separation pay is granted to a legally dismissed

employee as an act “social justice,” or based on “equity” —in both instances, it is required
that the dismissal (1) was not for serious misconduct, and (2) does not reflect on the moral
character of the employee.—A legally dismissed employee is not entitled to separation pay.
This may be deduced from the language of Article 279 of the Labor Code that “ [a]n
employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement. ”
Luckily for petitioner, this is not an ironclad rule. Exceptionally, separation pay is granted to
a legally dismissed employee as an act “ social justice, ” or based on “ equity. ” In both
instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does
not reflect on the moral character of the employee. Here, We grant petitioner separation pay
equivalent to one-half (1/2) month’s pay for every year of service. It should include regular
allowances which he might have been receiving. We are not blind to the fact that he was not
dismissed for any serious misconduct or to any act which would reflect on his moral
character. We also recognize that his employment with PAL lasted for more or less a
decade.

People vs. Ayson, 175 SCRA 216 , July 07, 1989

Constitutional Law; Bill of Rights; 2 sets of Rights under Sec. 20, Art. IV of 1973
Constitution.—It should at once be apparent that there are two (2) rights, or sets of rights,
dealt with in the section, namely: 1) the right against self-incrimination—i.e., the right of a
person not to be compelled to be a witness against himself—set out in the first sentence,
which is a verbatim reproduction of Section 18, Article III of the 1935 Constitution, and is
similar to that accorded by the Fifth Amendment of the American Constitution, and 2) the
rights of a person in custodial interrogation, i.e., the rights of every suspect “ under
investigation for the commission of an offense.”
Same; Same; Same; Right against self-incrimination; Rights in custodial interrogation; The
1987 Constitution more clearly indicates the disparateness of these rights.—Parenthetically,
the 1987 Constitution indicates much more clearly the individuality and disparateness of
these rights. It has placed the rights in separate sections. The right against
self-incrimination, “No person shall be compelled to be a witness against himself,” is now
embodied in Section 17, Article III of the 1987 Constitution. The rights of a person in
custodial interrogation, which have been made more explicit, are now contained in Section
12 of the same Article III.

Same; Same; Same; Same; Subpoena; Meaning of rights against self-incrimination.—The

first right, against self-incrimination, mentioned in Section 20, Article IV of the 1973
Constitution, is accorded to every person who gives evidence, whether voluntarily or under
compulsion of subpoena, in any civil, criminal, or administrative proceeding. The right is
NOT to “ be compelled to be a witness against himself. ” The precept set out in that first
sentence has a settled meaning. It prescribes an “option of refusal to answer incriminating
questions and not a prohibition of inquiry.” It simply secures to a witness, whether he be a
party or not, the right to refuse to answer any particular incriminatory question, i.e., one the
answer to which has a tendency to incriminate him for some crime. However, the right can
be claimed only when the specific question, incriminatory in character, is actually put to the
witness. It cannot be claimed at any other time. It does not give a witness the right to
disregard a subpoena, to decline to appear before the court at the time appointed, or to
refuse to testify altogether. The witness receiving a subpoena must obey it, appear as
required, take the stand, be sworn and answer questions. It is only when a particular
question is addressed to him, the answer to which may incriminate him for some offense,
that he may refuse to answer on the strength of the constitutional guaranty.

Same; Same; Same; Same; Nature of right against self-incrimination; Must be claimed by or
in behalf of the witness.—The right against self-incrimination is not self-executing or
automatically operational. It must be claimed. If not claimed by or in behalf of the witness,
the protection does not come into play. It follows that the right may be waived, expressly, or
impliedly, as by a failure to claim it at the appropriate time.

Same; Same; Same; Same; Right in custodial investigation; Miranda rule summarized the
procedural safeguards laid down for a person “in-custody interrogation”, Objectives of.—In
Miranda, Chief Justice Warren summarized the procedural safeguards laid down for a
person in police custody, “in-custody interrogation” being regarded as the commencement
of an adversary proceeding against the suspect. He must be warned prior to any questioning
that he has the right to remain silent, that anything he says can be used against him in a
court of law, that he has the right to the presence of an attorney, and that if he cannot afford
an attorney one will be appointed for him prior to any questioning if he so desires.
Opportunity to exercise those rights must be afforded to him throughout the interrogation.
After such warnings have been given, and such opportunity afforded him, the individual may
knowingly and intelligently waive these rights and agree to answer or make a statement. But
unless and until such warnings and waivers are demonstrated by the prosecution at the trial,
no evidence obtained as a result of interrogation can be used against him. The objective is
to prohibit “incommunicado interrogation of individuals in a police-dominated atmosphere,
resulting in self-incriminating statements without full warnings of constitutional rights.”

Same; Same; Same; Same; Custodial interrogation, meaning of.—The rights above specified,
to repeat, exist only in “ custodial interrogations,” or “ in-custody interrogation of accused
persons. ” And, as this Court has already stated, by custodial interrogation is meant
“ questioning initiated by law enforcement officers after a person has been taken into
custody or otherwise deprived of his freedom of action in any significant way. ” The
situation contemplated has also been more precisely described by this Court. x x After a
person is arrested and his custodial investigation begins a confrontation arises which at
best may be termed unequal. The detainee is brought to an army camp or police
headquarters and there questioned and “ cross-examined ” not only by one but as many
investigators as may be necessary to break down his morale. He finds himself in strange
and unfamiliar surroundings, and every person he meets he considers hostile to him. The
investigators are well-trained and seasoned in their work. They employ all the methods and
means that experience and study have taught them to extract the truth, or what may pass for
it, out of the detainee. Most detainees are unlettered and are not aware of their constitutional
rights. And even if they were, the intimidating and coercive presence of the officers of the
law in such an atmosphere overwhelms them into silence. Section 20 of the Bill of Rights
seeks to remedy this imbalance.”

Same; Same; Same; Same; A defendant on trial or under preliminary investigation is not
under custodial interrogation.—It seems quite evident that a defendant on trial or under
preliminary investigation is not under custodial interrogation. His interrogation by the police,
if any there had been, would already have been ended at the time of the filing of the criminal
case in court (or the public prosecutors’ office). Hence, with respect to a defendant in a
criminal case already pending in court (or the public prosecutor’s office), there is no
occasion to speak of his rights while under “ custodial interrogation ” laid down by the
second and subsequent sentences of Section 20, Article IV of the 1973 Constitution, for the
obvious reason that he is no longer under “custodial interrogation.”

Same; Same; Same; Same; Right of an accused in court or undergoing preliminary

investigation before the public prosecutor.—But unquestionably, the accused in court (or
undergoing preliminary investigation before the public prosecutor), in common with all other
persons, possesses the right against self-incrimination set out in the first sentence of
Section 20 Article IV of the 1973 Constitution, i.e., the right to refuse to answer a specific
incriminatory question at the time that it is put to him. Additionally, the accused in a criminal
case in court has other rights in the matter of giving testimony or refusing to do so. An
accused “occupies a different tier of protection from an ordinary witness.” Under the Rules
of Court, in all criminal prosecutions the defendant is entitled, among others—1) to be
exempt from being a witness against himself, and 2) to testify as witness in his own behalf;
but if he offers himself as a witness he may be cross-examined as any other witness;
however, his neglect or refusal to be a witness shall not in any manner prejudice or be used
against him.

Same; Same; Same; Same; Witnesses; Accused cannot be compelled to testify or produce
evidence in the criminal case against him.—The right of the defendant in a criminal case “to
be exempt from being a witness against himself” signifies that he cannot be compelled to
testify or produce evidence in the criminal case in which he is the accused, or one of the
accused. He cannot be compelled to do so even by subpoena or other process or order of
the court. He cannot be required to be a witness either for the prosecution, or for a
co-accused, or even for himself. In other words—unlike an ordinary witness (or a party in a
civil action) who may be compelled to testify by subpoena, having only the right to refuse to
answer a particular incriminatory question at the time it is put to him—the defendant in a
criminal action can refuse to testify altogether. He can refuse to take the witnesss stand, be
sworn, answer any question. And, as the law categorically states, “his neglect or refusal to
be a witness shall not in any manner prejudice or be used against him.”

Same; Same; Same; Same; Rights of a person suspected of having committed a crime and
subsequently charged with its commission in court.—In fine, a person suspected of having
committed a crime and subsequently charged with its commission in court, has the
following rights in the matter of his testifying or producing eveidence, to wit: 1) BEFORE THE
CASE IS FILED IN COURT (or with the public prosecutor, for preliminary investigation), but
after having been taken into custody or otherwise deprived of his liberty in some significant
way, and on being interrogated by the police: the continuing right to remain silent and to
counsel, and to be informed thereof, not to be subjected to force, violence, threat,
intimidation or any other means which vitiates, the free will; and to have evidence obtained
in violation of these rights rejected; and 2) AFTER THE CASE IS FILED IN COURT—a) to
refuse to be a witness; b) not to have any prejudice whatsoever result to him by such
refusal; c) to testify in his own behalf, subject to cross-examination by the prosecution; d)
WHILE TESTIFYING, to refuse to an answer a specific question which tends to incriminate
him for some crime othen than that for which he is then prosecuted.

Same; Same; Same; Same; Judges; Respondent judge misapprehended the nature and
import of the disparate rights set forth in Sec. 20, Art. IV of the 1973 Constitution; Case at
bar.—It should by now be abundantly apparent that respondent Judge has misapprehended
the nature and import of the disparate rights set forth in Section 20, Article IV of the 1973
Constitution. He has taken them as applying to the same juridical situation, equating one
with the other. In so doing, he has grossly erred. To be sure, His Honor sought to
substantiate his thesis by arguments he took to be cogent and logical. The thesis was
however so far divorced from the actual and correct state of the constitutional and legal
principles involved as to make application of said thesis to the case before him tantamount
to totally unfounded, whimsical or capricious exercise of power. His orders were thus,
rendered with grave abuse of discretion. They should be as they are hereby, annulled and
set aside.

Rosete vs. Lim, 490 SCRA 125 , June 08, 2006

Criminal Procedure; Rights of the Accused; Self-Incrimination; The right against
self-incrimination is accorded to every person who gives evidence, whether voluntary or
under compulsion of subpoena, in any civil, criminal or administrative proceeding.—The right
against self-incrimination is accorded to every person who gives evidence, whether
voluntary or under compulsion of subpoena, in any civil, criminal or administrative
proceeding. The right is not to be compelled to be a witness against himself. It secures to a
witness, whether he be a party or not, the right to refuse to answer any particular
incriminatory question, i.e., one the answer to which has a tendency to incriminate him for
some crime. However, the right can be claimed only when the specific question,
incriminatory in character, is actually put to the witness. It cannot be claimed at any other
time. It does not give a witness the right to disregard a subpoena, decline to appear before
the court at the time appointed, or to refuse to testify altogether. The witness receiving a
subpoena must obey it, appear as required, take the stand, be sworn and answer questions.
It is only when a particular question is addressed to which may incriminate himself for some
offense that he may refuse to answer on the strength of the constitutional guaranty.

Same; Same; Same; Under the Rules of Court, in all criminal prosecutions the defendant is
entitled among others, to the following.—An accused “occupies a different tier of protection
from an ordinary witness. ” Under the Rules of Court, in all criminal prosecutions the
defendant is entitled among others—1) to be exempt from being a witness against himself,
and 2) to testify as witness in his own behalf; but if he offers himself as a witness he may be
cross-examined as any other witness; however, his neglect or refusal to be a witness shall
not in any manner prejudice or be used against him.

Same; Same; Same; As long as the suit is criminal in nature, the party thereto can altogether
decline to take the witness stand—it is not the character of the suit involved but the nature of
the proceedings that controls.—It is clear, therefore, that only an accused in a criminal case
can refuse to take the witness stand. The right to refuse to take the stand does not generally
apply to parties in administrative cases or proceedings. The parties thereto can only refuse
to answer if incriminating questions are propounded. This Court applied the exception—a
party who is not an accused in a criminal case is allowed not to take the witness stand—in
administrative cases/ proceedings that partook of the nature of a criminal proceeding or
analogous to a criminal proceeding. It is likewise the opinion of the Court that said exception
applies to parties in civil actions which are criminal in nature. As long as the suit is criminal
in nature, the party thereto can altogether decline to take the witness stand. It is not the
character of the suit involved but the nature of the proceedings that controls.

Actions; Pleadings and Practice; Issues; Issues are joined when all the parties have pleaded
their respective theories and the terms of the dispute are plain before the court.—Issues are
joined when all the parties have pleaded their respective theories and the terms of the
dispute are plain before the court. In the present case, the issues have, indeed, been joined
when petitioners, as well as the other defendants, filed their answers. The respective claims
and defenses of the parties have been defined and the issues to be decided by the trial court
have been laid down.

Manuel vs. N.C. Construction Supply, 282 SCRA 326 , November 28, 1997
Labor Law; Dismissal; An employer has a right to terminate the services of an employee
subject to both substantive and procedural limitations.—An employer has a right to
terminate the services of an employee subject to both substantive and procedural
limitations. This means that (1) the dismissal must be for a just or authorized cause
provided in the Labor Code, and (2) the employee must be accorded due process before his
employment is terminated. The validity of the dismissal hinges on the employer’s
compliance with these two requirements.

Same; Same; Article 282 of the Labor Code authorizes an employer to terminate the services
of an employee for loss of trust and confidence, provided that the loss of confidence arises
from particular proven facts; Meaning of substantial evidence.—In the case at bar,
petitioners who were employed as drivers at respondent company were found guilty of
stealing company property consisting of electrical wire, welding rod, G.I. sheet, steel bar and
plywood. Article 282 of the Labor Code authorizes an employer to terminate the services of
an employee for loss of trust and confidence, provided that the loss of confidence arises
from particular proven facts. The law does not require proof beyond reasonable doubt of the
employee’s misconduct. Substantial evidence is sufficient. Substantial evidence has been
defined as such relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion.
Same; Same; Constitutional Law; Bill of Rights; The exclusionary rule under paragraph (3),
Section 12 of the Bill of Rights applies only to admissions made in a criminal investigation
but not to those made in an administrative investigation.—We also reject petitioners’
argument that said admission is inadmissible as evidence against them under Section 12,
Article III of the 1987 Constitution. The right to counsel under Section 12 of the Bill of Rights
is meant to protect a suspect in a criminal case under custodial investigation. Custodial
investigation is the stage where the police investigation is no longer a general inquiry into an
unsolved crime but has begun to focus on a particular suspect who had been taken into
custody by the police to carry out a process of interrogation that lends itself to elicit
incriminating statements. It is when questions are initiated by law enforcement officers after
a person has been taken into custody or otherwise deprived of his freedom of action in any
significant way. The right to counsel attaches only upon the start of such investigation.
Therefore, the exclusionary rule under paragraph (3), Section 12 of the Bill of Rights applies
only to admissions made in a criminal investigation but not to those made in an
administrative investigation.

Same; Same; Same; Same; The investigation was merely an administrative investigation
conducted by the employer, not a criminal investigation.—In the case at bar, the admission
was made by petitioners during the course of the investigation conducted by private
respondents’ counsel to determine whether there is sufficient ground to terminate their
employment. Petitioners were not under custodial investigation as they were not yet
accused by the police of committing a crime. The investigation was merely an
administrative investigation conducted by the employer, not a criminal investigation. The
questions were propounded by the employer’s lawyer, not by police officers. The fact that
the investigation was conducted at the police station did not necessarily put petitioners
under custodial investigation as the venue of the investigation was merely incidental. Hence,
the admissions made by petitioners during such investigation may be used as evidence to
justify their dismissal.

Same; Same; Due Process; Private respondents failed to observe due process in terminating
the employment of petitioners.—Private respondents, however, failed to observe due
process in terminating the employment of petitioners. Due process demands that the
employer should furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the cause(s) for termination and afford him ample
opportunity to be heard and to defend himself with the assistance of a representative if he
so desires. Specifically, the employer must furnish the worker with two written notices
before termination of employment can be legally effected: (1) notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought, and (2) the
subsequent notice which informs the employee of the employer’s decision to dismiss him.
There is no showing in this case that private respondents furnished petitioners with such
notices.

Punzal vs. ETSI Technologies, Inc., 518 SCRA 66, March 09, 2007
Labor Law; Management Prerogative; It is settled that it is the prerogative of management to
regulate, according to its discretion and judgment, all aspects of employment.—Petitioner
sent the e-mail message in reaction to Geisert’s decision which he had all the right to make.
That it has been a tradition in ETSI to celebrate occasions such as Christmas, birthdays,
Halloween, and others does not remove Geisert’s prerogative to approve or disapprove plans
to hold such celebrations in office premises and during company time. It is settled that x x x
it is the prerogative of management to regulate, according to its discretion and judgment, all
aspects of employment. This flows from the established rule that labor law does not
authorize the substitution of the judgment of the employer in the conduct of its business.
Such management prerogative may be availed of without fear of any liability so long as it is
exercised in good faith for the advancement of the employers’ interest and not for the
purpose of defeating or circumventing the rights of employees under special laws or valid
agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton
manner or out of malice or spite.

Same; Same; Given the reasonableness of Geisert’s decision that provoked petitioner to
send the second e-mail message, the observations of the Court of Appeals that the
“ message resounds of subversion and undermines the authority and credibility of
management ” and that petitioner “ displayed a tendency to act without management’s
approval, and even against management’s will” are well taken.—Given the reasonableness
of Geisert’s decision that provoked petitioner to send the second e-mail message, the
observations of the Court of Appeals that “the message x x x resounds of subversion and
undermines the authority and credibility of management” and that petitioner “displayed a
tendency to act without management’s approval, and even against management’s will” are
well taken.

Same; Employer-Employee Relationship; This Court found that the misconduct committed
was not related with the employee’s work as the offensive remarks were verbally made
during an informal Christmas gathering of the employees, an occasion “where tongues are
more often that not loosened by liquor or other alcoholic beverages ” and “ it is to be
expected that employees freely express their grievances and gripes against their employer
s.”—Petitioner’s reliance on Samson is misplaced. First, in that case, this Court found that
the misconduct committed was not related with the employee’s work as the offensive
remarks were verbally made during an informal Christmas gathering of the employees, an
occasion “ where tongues are more often than not loosened by liquor or other alcoholic
beverages” and “it is to be expected x x x that employees freely express their grievances
and gripes against their employers.”

Same; Same; Dismissal of Employees; In Autobus Worker’s Union (AWU) v. NLRC [291
SCRA 219 (1998)], where dismissal was held to be an appropriate penalty for uttering
insulting remarks to the supervisor.—In Samson, this Court found that unlike in Autobus
Workers’ Union (AWU) v. NLRC, 291 SCRA 219 (1998), where dismissal was held to be an
appropriate penalty for uttering insulting remarks to the supervisor, Samson uttered the
insulting words against EDT in the latter’s absence. In the case at bar, while petitioner did
not address her e-mail message to Geisert, she circulated it knowing—or at least, with
reason to know—hat it would reach him. As ETSI notes, “ [t]hat [petitioner] circulated this
e-mail message with the knowledge that it would reach the eyes of management may be
reasonably concluded given that the first e-mail message reached her immediate
supervisor’s attention.”
Same; Same; Same; Lack of urgency on the part of the respondent company in taking any
disciplinary action against [the employee] negates its charge that the latter’s misbehavior
constituted serious misconduct.—In Samson, this Court found that the “lack of urgency on
the part of the respondent company in taking any disciplinary action against [the employee]
negates its charge that the latter’s misbehavior constituted serious misconduct. ” In the
case at bar, the management acted 14 days after petitioner circulated the quoted e-mail
message.

Same; Same; This Court has held, however, that the longer an employee stays in the service
of the company, the greater is his responsibility for knowledge and compliance with the
norms of conduct and the code of discipline in the company.—Petitioner asks that her 12
years of service to ETSI during which, so she claims, she committed no other offense be
taken as a mitigating circumstance. This Court has held, however, that “ the longer an
employee stays in the service of the company, the greater is his responsibility for knowledge
and compliance with the norms of conduct and the code of discipline in the company.”

Same; Dismissal of Employees; Reinstatement; Petitioner, having been dismissed for just
cause, is neither entitled to reinstatement nor to backwages.—In fine, petitioner, having been
dismissed for just cause, is neither entitled to reinstatement nor to backwages.

Same; Same; Damages; Following Agabon, et al. v. National Labor Relations Commission
[442 SCRA 240 (2004)], the violation of petitioner’s statutory due process right entitles her to
an award of nominal damage, which this Court fixes at P30,000.—Following Agabon, et al. v.
National Labor Relations Commission, 442 SCRA 240 (2004), the violation of petitioner’s
statutory due process right entitles her to an award of nominal damage, which this Court
fixes at P30,000.

Waterous Drug Corporation vs. NLRC, 280 SCRA 735 , October 16, 1997
Labor Law; Illegal Dismissal; Due Process; Procedural due process requires that an
employee be apprised of the charge against him, given reasonable time to answer the
charge, allowed ample opportunity to be heard and defend himself, and assisted by a
representative if the employee so desires.—Concededly, Catolico was denied due process.
Procedural due process requires that an employee be apprised of the charge against him,
given reasonable time to answer the charge, allowed ample opportunity to be heard and
defend himself, and assisted by a representative if the employee so desires. Ample
opportunity connotes every kind of assistance that management must accord the employee
to enable him to prepare adequately for his defense, including legal representation.

Same; Same; Same; Evidence; The burden is on the employer to prove just and valid cause
for dismissing an employee.—In the case at bar, although Catolico was given an opportunity
to explain her side, she was dismissed from the service in the memorandum of 5 March
1990 issued by her Supervisor after receipt of her letter and that of her counsel. No hearing
was ever conducted after the issues were joined through said letters. The Supervisor’s
memorandum spoke of “ evidences [sic] in [WATEROUS] possession, ” which were not,
however, submitted. What the “evidences” [sic] other than the sales invoice and the check
were, only the Supervisor knew. Catolico was also unjustly dismissed. It is settled that the
burden is on the employer to prove just and valid cause for dismissing an employee, and its
failure to discharge that burden would result in a finding that the dismissal is unjustified.
Here, WATEROUS proved unequal to the task.

Same; Same; Same; Same; Hearsay evidence carries no probative value.—It clearly appears
then that Catolico’s dismissal was based on hearsay information. Estelita Reyes never
testified nor executed an affidavit relative to this case; thus, we have to reject the
statements attributed to her by Valdez. Hearsay evidence carries no probative value.

Same; Same; Suspicion in no case can justify an employee’s dismissal.—Catolico’s

dismissal then was obviously grounded on mere suspicion, which in no case can justify an
employee’s dismissal. Suspicion is not among the valid causes provided by the Labor Code
for the termination of employment; and even the dismissal of an employee for loss of trust
and confidence must rest on substantial grounds and not on the employer’s arbitrariness,
whims, caprices, or suspicion. Besides, Catolico was not shown to be a managerial
employee, to which class of employees the term “trust and confidence” is restricted.

Constitutional Law; Searches and Seizures; Privacy of Communications and

Correspondence; The Supreme Court finds no reason to revise the doctrine laid down in
People vs. Marti that the Bill of Rights does not protect citizens from unreasonable searches
and seizures perpetrated by private individuals.—As regards the constitutional violation
upon which the NLRC anchored its decision, we find no reason to revise the doctrine laid
down in People vs. Marti that the Bill of Rights does not protect citizens from unreasonable
searches and seizures perpetrated by private individuals. It is not true, as counsel for
Catolico claims, that the citizens have no recourse against such assaults. On the contrary,
and as said counsel admits, such an invasion gives rise to both criminal and civil liabilities.

People vs. Marti, 193 SCRA 57 , January 18, 1991

Constitutional Law; Bill of Rights; Searches and Seizures; Evidence; The constitutional
protection against unreasonable searches and seizures refers to the immunity of one’s
person from interference by government; it cannot be extended to acts committed by private
individuals so as to bring it within the ambit of alleged unlawful intrusion by the
government.—In the absence of governmental interference, the liberties guaranteed by the
Constitution cannot be invoked against the State. As this Court held in Villanueva v.
Querubin (48 SCRA 345 [1972]: “ 1. This constitutional right (against unreasonable search
and seizure) refers to the immunity of one’s person, whether citizen or alien, from
interference by government, included in which is his residence, his papers, and other
possessions. xxx “xxx There the state, however powerful, does not as such have the access
except under the circumstances above noted, for in the traditional formulation, his house,
however humble, is his castle. Thus is outlawed any unwarranted intrusion by government,
which is called upon to refrain from any invasion of his dwelling and to respect the privacies
of his life. xxx” (Cf. Schermerber v. California, 384 US 757 [1966] and Boyd v. United States,
116 US 616 [1886]; Italics supplied). In Bureau v. McDowell (256 US 465 (1921), 41 S Ct.
574; 65 L.Ed. 1048), the Court there in construing the right against unreasonable searches
and seizures declared that: “ (t)he Fourth Amendment gives protection against unlawful
searches and seizures, and as shown in previous cases, its protection applies to
governmental action. Its origin and history clearly show that it was intended as a restraint
upon the activities of sovereign authority, and was not intended to be a limitation upon other
than governmental agencies: as against such authority it was the purpose of the Fourth
Amendment to secure the citizen in the right of unmolested occupation of his dwelling and
the possession of his property, subject to the right of seizure by process duly served.” The
above ruling was reiterated in State v. Bryan (457 P.2d 661 [1968]) where a parking
attendant who searched the automobile to ascertain the owner thereof found marijuana
instead, without the knowledge and participation of police authorities, was declared
admissible in prosecution for illegal possession of narcotics. And again in the 1969 case of
seizure clauses are restraints upon the government and its agents, not upon private
individuals, (citing People v. Potter, 240 Cal. App. 2d 621, 49 Cap. Rptr. 892 (1966): State v.
Brown, Mo., 391 S.W. 2d 903 (1965): State v. Olsen, Or., 317 P.2d 938 (1957). x x x The
contraband in the case at bar having come into possession of the Government without the
latter trangressing appellant’s rights against unreasonable search and seizure, the Court
sees no cogent reason why the same should not be admitted against him in the prosecution
of the offense charged.

Same; Same; Same; Where the contraband articles are identified without a trespass on the
part of the arresting officer, there is not a search that is prohibited by the
constitution.—Second, the mere presence of the NBI agents did not convert the reasonable
search effected by Reyes into a warrantless search and seizure proscribed by the
Constitution. Merely to observe and look at that which is in plain sight is not a search.
Having observed that which is open, where no tresspass has been committed in aid thereof,
is not search (Chadwick v. State, 429 SW2d 135). Where the contraband articles are
identified without a trespass on the part of the arresting officer, there is not the search that
is prohibited by the constitution (US v. Lee 274 US 559., 71 L.Ed. 1202 [1927]; Ker v. State of
California 374 US 23, 10 L.Ed.2d. 726 [1963]; Moore v. State, 429 SW2d 122 [1968]).

Same; Same; Same; The Bill of Rights embodied in the Constitution is not meant to be
invoked against act of private individuals, it is directed only against the government and its
agencies tasked with the enforcement of the law.—That the Bill of Rights embodied in the
Constitution is not meant to be invoked against acts of private individuals finds support in
the deliberations of the Constitutional Commission. True, the liberties guaranteed by the
fundamental law of the land must always be subject to protection. But protection against
whom? Commissioner Bernas in his sponsorship speech in the Bill of Rights answers the
query which he himself posed, as follows: “First, the general reflections. The protection of
fundamental liberties in the essence of constitutional democracy. Protection against whom?
Protection against the state. The Bill of Rights governs the relationship between the
individual and the state. Its concern is not the relation between individuals, between a
private individual and other individuals. What the Bill of Rights does is to declare some
forbidden zones in the private sphere inaccessible to any power holder. ” (Sponsorship
Speech of Commissioner Bernas; Record of the Constitutional Commission, Vol. 1, p. 674;
July 17, 1986; Italics supplied) The constitutional proscription against unlawful searches
and seizures therefore applies as a restraint directed only against the government and its
agencies tasked with the enforcement of the law. Thus, it could only be invoked against the
State to whom the restraint against arbitrary and unreasonable exercise of power is
imposed.
Criminal Law; Evidence; Denials of unsubstantiated by clear and convincing evidence, are
negative, self-serving evidence which deserves no weight in law and cannot be given greater
evidentiary weight than the testimony of credible witnesses who testify on affirmative
matters.—Rather than give the appearance of veracity, we find appellant’s disclaimer as
incredulous, self-serving and contrary to human experience. It can easily be fabricated. An
acquaintance with a complete stranger struck in half an hour could not have pushed a man
to entrust the shipment of four (4) parcels and shell out P2,000.00 for the purpose and for
appellant to readily accede to comply with the undertaking without first ascertaining its
contents. As stated by the trial court, “(a) person would not simply entrust contraband and
of considerable value at that as the marijuana flowering tops, and the cash amount of
P2,000.00 to a complete stranger like the Accused. The Accused, on the other hand, would
not simply accept such undertaking to take custody of the packages and ship the same from
a complete stranger on his mere say-so” (Decision, p. 19, Rollo, p. 91). As to why he readily
agreed to do the errand, appellant failed to explain. Denials, if unsubstantiated by clear and
convincing evidence, are negative self-serving evidence which deserve no weight in law and
cannot be given greater evidentiary weight than the testimony of credible witnesses who
testify on affirmative matters (People v. Esquillo, 171 SCRA 571 (1989): People v. Sariol, 174
SCRA 237 [1989]).

Same; Same; Witnesses; Evidence to be believed, must not only proceed from the mouth of
a credible witness, but it must be credible in itself.—Evidence, to be believed, must not only
proceed from the mouth of a credible witness, but it must be credible in itself such as the
common experience and observation of mankind can approve as probable under the
circumstances (People v. Alto, 26 SCRA 342 [1968], citing Daggers v. Van Dyke, 37 N.J. Eg.
130; see also People v. Sarda, 172 SCRA 651 [1989]; People v. Sunga, 123 SCRA 327
[1983]); Castañares v. CA, 92 SCRA 567 [1979]). As records further show, appellant did not
even bother to ask Michael’s full name, his complete address or passport number.
Furthermore, if indeed, the German national was the owner of the merchandise, appellant
should have so indicated in the contract of shipment (Exh. “B”, Original Records, p. 40). On
the contrary, appellant signed the contract as the owner and which a person possesses, or
exercises acts of ownership over, are owned by him (Sec. 5 [j], Rule 131). At this point,
appellant is therefore estopped to claim otherwise.

Mata vs. Agravante, 561 SCRA 66 , August 06, 2008

Administrative Law; The act of furnishing copies to seven (7) other executive offices,
including that of the Office of the President, was merely to inform said offices of the fact of
filing of such complaint, as is usually done by individual complainants seeking official
government action to address their problems or grievances.—Section 8 of Republic Act No.
5487, otherwise known as the “Private Security Agency Law,” empowered the Chief of the
former Philippine Constabulary (PC) at any time “ to suspend or cancel the licenses of
private watchman or security guard agency found violating any of the provisions of this Act
or of the rules and regulations promulgated by the Chief of Constabulary pursuant thereto.”
With the enactment of Republic Act No. 6975 ( “ Department of the Interior and Local
Government Act of 1990”), the PC-INP was abolished and in its place, a new police force was
established, the Philippine National Police (PNP). Among the administrative support units of
the PNP under the new law is the Civil Security Unit which shall provide administrative
services and general supervision over the organization, business operation and activities of
all organized private detectives, watchmen, security guard agencies and company guard
houses. It was thus but logical for defendants-appellants, as advised by their counsel, to
also communicate their grievances against their employer security guard agency with the
PNP. The act of furnishing copies to seven (7) other executive offices, including that of the
Office of the President, was merely to inform said offices of the fact of filing of such
complaint, as is usually done by individual complainants seeking official government action
to address their problems or grievances. Their pending case with the NLRC would not
preclude them from seeking assistance from the PNP as said agency is the national body
that exercises general supervision over all security guard agencies in the country, the
defendants-appellants were of the honest belief that the violation of labor laws committed
by their employer will elicit proper action from said body, providing them with a relief
(cancellation of license) distinct from those reliefs sought by them from the NLRC (payment
of backwages and benefits). Certainly, defendants-appellants had good reason to believe
that bringing the matter to PNP is justified as no private security agency found to be
violating labor laws should remain in good standing with or [be] tolerated by the PNP.
Despite the pendency of the NLRC case, such request for investigation of plaintiff-appellee
could not in any way be tainted with malice and bad faith where the same was made by the
very individuals who suffered from the illegal labor practices of plaintiff-appellee. Moreover,
no liability could arise from defendants-appellants’ act of filing of the labor case with the
NLRC which plaintiff-appellee claimed to have resulted in the agency’s not being able to
secure contracts because of such pending labor case, defendants-appellants merely
exercised a right granted to them by our labor laws.

Abuse of Rights; It has been held that Article 19, known to contain what is commonly
referred to as the principle of abuse of rights, is not a panacea for all human hurts and social
grievances.—It has been held that Article 19, known to contain what is commonly referred to
as the principle of abuse of rights, is not a panacea for all human hurts and social
grievances. The object of this article is to set certain standards which must be observed not
only in the exercise of one’s rights but also in the performance of one’s duties. These
standards are the following: act with justice, give everyone his due, and observe honesty and
good faith. Its antithesis is any act evincing bad faith or intent to injure. Article 21 refers to
acts contra bonos mores and has the following elements: (1) an act which is legal; (2) but
which is contrary to morals, good custom, public order or public policy; and (3) is done with
intent to injure. The common element under Articles 19 and 21 is that the act complained of
must be intentional, and attended with malice or bad faith. There is no hard and fast rule
which can be applied to determine whether or not the principle of abuse of rights may be
invoked. The question of whether or not this principle has been violated, resulting in
damages under Articles 20 and 21, or other applicable provision of law, depends on the
circumstances of each case. In the case before us, as correctly pointed out by the CA, the
circumstances do not warrant an award of damages. Thus, the award of P1,000,000.00 as
moral damages is quite preposterous. We agree with the appellate court that in the action of
the respondents, there was no malicious intent to injure petitioner’s good name and
reputation. The respondents merely wanted to call the attention of responsible government
agencies in order to secure appropriate action upon an erring private security agency and
obtain redress for their grievances. So, we reiterate the basic postulate that in the absence
of proof that there was malice or bad faith on the part of the respondents, no damages can
be awarded.

Divine Word University of Tacloban vs. Secretary of Labor and Employment, 213 SCRA 759 ,
September 11, 1992
Labor Laws; Bargaining Representatives; Certification election; Role of employer.—xxx
[Petitioner’s undue interest in the resolution of the DWU-IFEU’s motion for intervention
becomes significant since a certification election is the sole concern of employees except
where the employer itself has to file a petition for certification election. But once an
employer has filed said petition, as the petitioner did in this case, its active role ceases and it
becomes a mere bystander. Any uncalled-for concern on the part of the employer may give
rise to the suspicion that it is batting for a company union.
Same; Same; Same; Same; Bargaining deadlock presupposes reasonable effort at good faith
bargaining.—xxx [A]n employer who is requested to bargain collectively may file a petition
for certification election any time except upon a clear showing that one of these two
instances exists: (a) the petition is filed within one year from the date of issuance of a final
certification election result or (b) when a bargaining deadlock had been submitted to
conciliation or arbitration or had become the subject of a valid notice of strike or lockout.
While there is no question that the petition for certification election was filed by the herein
petitioner after almost four years from the time of the certification election and, therefore,
there is no question as to the timeliness of the petition, the problem appears to lie in the fact
that the Secretary of Labor had found that a bargaining deadlock exists. A “ deadlock ” is
defined as the “counteraction of things producing entire stoppage: a state of inaction or of
neutralization caused by the opposition of persons or of factions (as in government or a
voting body): standstill. ” There is a deadlock when there is a “ complete blocking or
stoppage resulting from the action of equal and opposed forces; as, the deadlock of a jury or
legislature.” The word is synonymous with the word impasse which, within the meaning of
the American federal labor laws, “ presupposes reasonable effort at good faith bargaining
which, despite noble intentions, does not conclude in agreement between the parties. ” A
thorough study of the records reveals that there was no “ reasonable effort at good faith
bargaining” specially on the part of the University. Its indifferent attitude towards collective
bargaining inevitably resulted in the failure of the parties to arrive at an agreement.

Malvar vs. Kraft Food Phils., Inc., 705 SCRA 242 , September 09, 2013
Civil Law; Compromise Agreements; Words and Phrases; A compromise agreement is a
contract, whereby the parties undertake reciprocal obligations to avoid litigation, or put an
end to one already commenced.―A compromise agreement is a contract, whereby the
parties undertake reciprocal obligations to avoid litigation, or put an end to one already
commenced. The client may enter into a compromise agreement with the adverse party to
terminate the litigation before a judgment is rendered therein. If the compromise agreement
is found to be in order and not contrary to law, morals, good customs and public policy, its
judicial approval is in order. A compromise agreement, once approved by final order of the
court, has the force of res judicata between the parties and will not be disturbed except for
vices of consent or forgery.

Same; Same; A client has an undoubted right to settle her litigation without the intervention
of the attorney, for the former is generally conceded to have exclusive control over the
subject matter of the litigation and may at any time, if acting in good faith, settle and adjust
the cause of action out of court before judgment, even without the attorney’s
intervention.―A client has an undoubted right to settle her litigation without the intervention
of the attorney, for the former is generally conceded to have exclusive control over the
subject matter of the litigation and may at any time, if acting in good faith, settle and adjust
the cause of action out of court before judgment, even without the attorney’s intervention. It
is important for the client to show, however, that the compromise agreement does not
adversely affect third persons who are not parties to the agreement.

Attorney-Client Relationship; A client has the absolute right to terminate the attorney-client
relationship at any time with or without cause.―By the same token, a client has the absolute
right to terminate the attorney-client relationship at any time with or without cause. But this
right of the client is not unlimited because good faith is required in terminating the
relationship. The limitation is based on Article 19 of the Civil Code, which mandates that
“[e]very person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.” The right is also
subject to the right of the attorney to be compensated.
Attorneys Fees; It is basic that an attorney is entitled to have and to receive a just and
reasonable compensation for services performed at the special instance and request of his
client.―In fine, it is basic that an attorney is entitled to have and to receive a just and
reasonable compensation for services performed at the special instance and request of his
client. The attorney who has acted in good faith and honesty in representing and serving the
interests of the client should be reasonably compensated for his service.

Civil Law; Compromise Agreements; On considerations of equity and fairness, the Supreme
Court disapproves of the tendencies of clients compromising their cases behind the backs
of their attorneys for the purpose of unreasonably reducing or completely setting to naught
the stipulated contingent fees.―On considerations of equity and fairness, the Court
disapproves of the tendencies of clients compromising their cases behind the backs of their
attorneys for the purpose of unreasonably reducing or completely setting to naught the
stipulated contingent fees. Thus, the Court grants the Intervenor’s Motion for Intervention to
Protect Attorney’s Rights as a measure of protecting the Intervenor’s right to its stipulated
professional fees that would be denied under the compromise agreement. The Court does
so in the interest of protecting the rights of the practicing Bar rendering professional
services on contingent fee basis.

Attorney’s Fees; The duty of the Supreme Court is not only to ensure that the attorney acts in
a proper and lawful manner, but also to see to it that the attorney is paid his just fees.―The
duty of the Court is not only to ensure that the attorney acts in a proper and lawful manner,
but also to see to it that the attorney is paid his just fees. Even if the compensation of the
attorney is dependent only on winning the litigation, the subsequent withdrawal of the case
upon the client’s initiative would not deprive the attorney of the legitimate compensation for
professional services rendered.

Same; In the absence of the lawyer’s fault, consent or waiver, a client cannot deprive the
lawyer of his just fees already earned in the guise of a justifiable reason.―In the absence of
the lawyer’s fault, consent or waiver, a client cannot deprive the lawyer of his just fees
already earned in the guise of a justifiable reason. Here, Malvar not only downplayed the
worth of the Intervenor’s legal service to her but also attempted to camouflage her intent to
defraud her lawyer by offering excuses that were not only inconsistent with her actions but,
most importantly, fell short of being justifiable.

Attorney-Client Relationship; A client who employs a law firm engages the entire law firm;
hence, the resignation, retirement or separation from the law firm of the handling lawyer
does not terminate the relationship, because the law firm is bound to provide a
replacement.―The letter Malvar addressed to Retired Justice Bellosillo, who represented the
Intervenor, debunked her allegations of unsatisfactory legal service because she thereby
lavishly lauded the Intervenor for its dedication and devotion to the prosecution of her case
and to the protection of her interests. Also significant was that the attorney-client
relationship between her and the Intervenor was not severed upon Atty. Dasal’s appointment
to public office and Atty. Llasos’ resignation from the law firm. In other words, the
Intervenor remained as her counsel of record, for, as we held in Rilloraza, Africa, De Ocampo
and Africa v. Eastern Telecommunication Philippines, Inc., 309 SCRA 566 (1999), a client
who employs a law firm engages the entire law firm; hence, the resignation, retirement or
separation from the law firm of the handling lawyer does not terminate the relationship,
because the law firm is bound to provide a replacement.

Civil Law; Quasi-Delicts; Joint Tort-feasors; Solidary Liability; Joint tort-feasors are those
who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet
the commission of a tort, or who approve of it after it is done, if done for their benefit; Under
Article 2194 of the Civil Code, joint tort-feasors are solidarily liable for the resulting
damage.―Joint tort-feasors are those who command, instigate, promote, encourage, advise,
countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it
is done, if done for their benefit. They are also referred to as those who act together in
committing wrong or whose acts, if independent of each other, unite in causing a single
injury. Under Article 2194 of the Civil Code, joint tort-feasors are solidarily liable for the
resulting damage.

Same; Same; Same; Same; Joint tort-feasors are each liable as principals, to the same
extent and in the same manner as if they had performed the wrongful act themselves; They
are jointly and severally liable for the whole amount.―Joint tort-feasors are each liable as
principals, to the same extent and in the same manner as if they had performed the wrongful
act themselves. It is likewise not an excuse for any of the joint tortfeasors that individual
participation in the tort was insignificant as compared to that of the other. To stress, joint
tort-feasors are not liable pro rata. The damages cannot be apportioned among them, except
by themselves. They cannot insist upon an apportionment, for the purpose of each paying
an aliquot part. They are jointly and severally liable for the whole amount. Thus, as joint
tort-feasors, Malvar and the respondents should be held solidarily liable to the Intervenor.
There is no way of appreciating these circumstances except in this light.
Civil Law; Contracts; As a rule, the courts, whether trial or appellate, have no power to make
or modify contracts between the parties. Nor can the courts save the parties from
disadvantageous provisions.―It is necessary to state that no court can shirk from enforcing
the contractual stipulations in the manner they have agreed upon and written. As a rule, the
courts, whether trial or appellate, have no power to make or modify contracts between the
parties. Nor can the courts save the parties from disadvantageous provisions. The same
precepts hold sway when it comes to enforcing fee arrangements entered into in writing
between clients and attorneys. In the exercise of their supervisory authority over attorneys
as officers of the Court, the courts are bound to respect and protect the attorney’s lien as a
necessary means to preserve the decorum and respectability of the Law Profession. Hence,
the Court must thwart any and every effort of clients already served by their attorneys’
worthy services to deprive them of their hard-earned compensation. Truly, the duty of the
courts is not only to see to it that attorneys act in a proper and lawful manner, but also to
see to it that attorneys are paid their just and lawful fees.

Becmen Service Exporter and Promotion, Inc. vs. Cuaresma, 584 SCRA 690, April 07, 2009
Civil Law; Contracts; As a rule, stipulations in an employment contract not contrary to
statutes, public policy, public order or morals have the force of law between the contracting
parties.—The terms and conditions of Jasmin’s 1996 Employment Agreement which she
and her employer Rajab freely entered into constitute the law between them. As a rule,
stipulations in an employment contract not contrary to statutes, public policy, public order or
morals have the force of law between the contracting parties.

Same; Same; The agreement does not include provisions for insurance, or for accident,
death or other benefits that the Cuaresmas seek to recover.—The agreement does not
include provisions for insurance, or for accident, death or other benefits that the Cuaresmas
seek to recover, and which the labor tribunals and appellate court granted variably in the
guise of compensatory damages.

Same; Same; Damages; While the Court has emphasized the need to observe official work
time strictly, what an employee does on free time is beyond the employer’s sphere of
inquiry.—We cannot expect that the foreign employer should ensure her safety even while
she is not on duty. It is not fair to require employers to answer even for their employees’
personal time away from work, which the latter are free to spend of their own choosing.
Whether they choose to spend their free time in the pursuit of safe or perilous undertakings,
in the company of friends or strangers, lovers or enemies, this is not one area which their
employers should be made accountable for. While we have emphasized the need to observe
official work time strictly, what an employee does on free time is beyond the employer’s
sphere of inquiry.
Same; Same; Same; Court cannot subscribe to the idea that Jasmin committed suicide while
halfway into her employment contract.—The Court cannot subscribe to the idea that Jasmin
committed suicide while halfway into her employment contract. It is beyond human
comprehension that a 25-year old Filipina, in the prime of her life and working abroad with a
chance at making a decent living with a high-paying job which she could not find in her own
country, would simply commit suicide for no compelling reason.

Labor Law; Migrant Workers and Overseas Filipinos Act of 1995; Under Republic Act No.
8042, or the Migrant Workers and Overseas Filipinos Act of 1995, the State shall, at all times,
uphold the dignity of its citizens whether in country or overseas, in general, and Filipino
migrant workers, in particular.—Under Republic Act No. 8042 (R.A. 8042), or the Migrant
Workers and Overseas Filipinos Act of 1995, the State shall, at all times, uphold the dignity
of its citizens whether in country or overseas, in general, and Filipino migrant workers, in
particular. The State shall provide adequate and timely social, economic and legal services
to Filipino migrant workers. The rights and interest of distressed overseas Filipinos, in
general, and Filipino migrant workers, in particular, documented or undocumented, are
adequately protected and safeguarded.

Same; Same; Recruitment agencies are expected to extend assistance to their deployed
Overseas Filipino Workers (OFWs) especially those in distress.—Becmen and White Falcon,
as licensed local recruitment agencies, miserably failed to abide by the provisions of R.A.
8042. Recruitment agencies are expected to extend assistance to their deployed OFWs,
especially those in distress. Instead, they abandoned Jasmin’s case and allowed it to remain
unsolved to further their interests and avoid anticipated liability which parents or relatives of
Jasmin would certainly exact from them. They willfully refused to protect and tend to the
welfare of the deceased Jasmin, treating her case as just one of those unsolved crimes that
is not worth wasting their time and resources on.

Same; Same; More than just recruiting and deploying Overseas Filipino Workers (OFWs) to
their foreign principals, recruitment agencies have equally significant responsibilities.—More
than just recruiting and deploying OFWs to their foreign principals, recruitment agencies
have equally significant responsibilities. In a foreign land where OFWs are likely to
encounter uneven if not discriminatory treatment from the foreign government, and certainly
a delayed access to language interpretation, legal aid, and the Philippine consulate, the
recruitment agencies should be the first to come to the rescue of our distressed OFWs since
they know the employers and the addresses where they are deployed or stationed. Upon
them lies the primary obligation to protect the rights and ensure the welfare of our OFWs,
whether distressed or not. Who else is in a better position, if not these recruitment agencies,
to render immediate aid to their deployed OFWs abroad?

Same; Same; Same; Rajab, Becmen and White Falcon’s acts and omissions are against
public policy because they undermine and subvert the interest and general welfare of our
Overseas Filipino Workers (OFWs) abroad who are entitled to full protection under the
law.—Rajab, Becmen and White Falcon’s acts and omissions are against public policy
because they undermine and subvert the interest and general welfare of our OFWs abroad,
who are entitled to full protection under the law. They set an awful example of how foreign
employers and recruitment agencies should treat and act with respect to their distressed
employees and workers abroad. Their shabby and callous treatment of Jasmin’s case; their
uncaring attitude; their unjustified failure and refusal to assist in the determination of the
true circumstances surrounding her mysterious death, and instead finding satisfaction in
the unreasonable insistence that she committed suicide just so they can conveniently avoid
pecuniary liability; placing their own corporate interests above of the welfare of their
employee’s—all these are contrary to morals, good customs and public policy, and
constitute taking advantage of the poor employee and her family’s ignorance, helplessness,
indigence and lack of power and resources to seek the truth and obtain justice for the death
of a loved one.

Same; Same; Same; Whether employed locally or overseas, all Filipino workers enjoy the
protective mantle of Philippine labor and social legislation, contract stipulations to the
contrary notwithstanding.—Whether employed locally or overseas, all Filipino workers enjoy
the protective mantle of Philippine labor and social legislation, contract stipulations to the
contrary notwithstanding. This pronouncement is in keeping with the basic public policy of
the State to afford protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the relations between workers
and employers. This ruling is likewise rendered imperative by Article 17 of the Civil Code
which states that laws which have for their object public order, public policy and good
customs shall not be rendered ineffective by laws or judgments promulgated, or by
determinations or conventions agreed upon in a foreign country.

Same; Same; Same; In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.—The relations between
capital and labor are so impressed with public interest, and neither shall act oppressively
against the other, or impair the interest or convenience of the public. In case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the safety and decent
living for the laborer.

Same; Same; Same; Private employment agencies are held jointly and severally liable with
the foreign-based employer for any violation of the recruitment agreement or contract of
employment.—Private employment agencies are held jointly and severally liable with the
foreign-based employer for any violation of the recruitment agreement or contract of
employment. This joint and solidary liability imposed by law against recruitment agencies
and foreign employers is meant to assure the aggrieved worker of immediate and sufficient
payment of what is due him. If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be, shall themselves be jointly
and solidarily liable with the corporation or partnership for the aforesaid claims and
damages.

Innodata Philippines, Inc. vs. Quejada-Lopez, 504 SCRA 253 , October 12, 2006
Labor Law; Security of Tenure; Court has recognized the validity of fixed-term employment
contracts in a number of cases, but it has consistently emphasized that when the
circumstances of a case show that the periods were imposed to block the acquisition of
security of tenure, they should be struck down for being contrary to law, morals, good
customs, public order or public policy.—While this Court has recognized the validity of
fixed-term employment contracts in a number of cases, it has consistently emphasized that
when the circumstances of a case show that the periods were imposed to block the
acquisition of security of tenure, they should be struck down for being contrary to law,
morals, good customs, public order or public policy.

Same; Same; A close scrutiny of the provisions of the employment contracts show that the
double-bladed scheme to block the acquisition of tenurial security still exists.—In a feeble
attempt to conform to the earlier rulings of this Court in Villanueva and Servidad, petitioner
has reworded its present employment contracts. A close scrutiny of the provisions, however,
show that the double-bladed scheme to block the acquisition of tenurial security still exists.

Same; Civil Law; Contracts; In the interpretation of contracts, obscure words and provisions
shall not favor the party that caused the obscurity.—In the interpretation of contracts,
obscure words and provisions shall not favor the party that caused the obscurity.
Consequently, the terms of the present contract should be construed strictly against
petitioner, which prepared it.

Same; Same; Same; 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; In case
of doubt, the terms of a contract should be construed in favor of labor.—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.

Leyte Geothermal Power Progressive Employees Union-ALU-TUCP vs. Philippine National Oil
Company Energy Development Corporation, 646 SCRA 658 , March 30, 2011
Labor Law; Labor Contracts; Labor contracts are placed on a higher plane than ordinary
contracts; these are imbued with public interest and therefore subject to the police power of
the State.—Article 280 of the Labor Code, as worded, establishes that the nature of the
employment is determined by law, regardless of any contract expressing otherwise. The
supremacy of the law over the nomenclature of the contract and the stipulations contained
therein is to bring to life the policy enshrined in the Constitution to “afford full protection to
labor.” Thus, labor contracts are placed on a higher plane than ordinary contracts; these are
imbued with public interest and therefore subject to the police power of the State.

Same; Project Employees; The litmus test to determine whether an individual is a project
employee lies in setting a fixed period of employment involving a specific undertaking which
completion or termination has been determined at the time of the particular employee’s
engagement.—The litmus test to determine whether an individual is a project employee lies
in setting a fixed period of employment involving a specific undertaking which completion or
termination has been determined at the time of the particular employee’s engagement. In
this case, as previously adverted to, the officers and the members of petitioner Union were
specifically hired as project employees for respondent’s Leyte Geothermal Power Project
located at the Greater Tongonan Geothermal Reservation in Leyte. Consequently, upon the
completion of the project or substantial phase thereof, the officers and the members of
petitioner Union could be validly terminated.

Davao Integrated Port Stevedoring Services vs. Abarquez, 220 SCRA 197 , March 19, 1993
Labor Law; CBA defined.—A collective bargaining agreement (CBA), as used in Article 252 of
the Labor Code, refers to a contract executed upon request of either the employer or the
exclusive bargaining representative incorporating the agreement reached after negotiations
with respect to wages, hours of work and all other terms and conditions of employment,
including proposals for adjusting any grievances or questions arising under such
agreement.

Same; CBA not an ordinary contract.—While the terms and conditions of a CBA constitute
the law between the parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract within the
contemplation of Article 1700 of the Civil Code of the Philippines which governs the
relations between labor and capital, is not merely contractual in nature but impressed with
public interest, thus, it must yield to the common good. As such, it must be construed
liberally rather than narrowly and technically, and the courts musts place a practical and
realistic construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.

Same; Nature of sick leave benefits.—Sick leave benefits, like other economic benefits
stipulated in the CBA such as maternity leave and vacation leave benefits, among others, are
by their nature, intended to be replacements for regular income which otherwise would not
be earned because an employee is not working during the period of said leaves. They are
non-contributory in nature, in the sense that the employees contribute nothing to the
operation of the benefits. By their nature, upon agreement of the parties, they are intended to
alleviate the economic condition of the workers.

Same; Intermittent field workers who are members of a regular pool are entitled to sick leave
benefits under the CBA at bar.—After a careful examination of Section 1 in relation to
Section 3, Article VIII of the 1989 CBA in light of the facts and circumstances attendant in
the instant case, we find and so hold that the last sentence of Section 1, Article VIII of the
1989 CBA, invoked by petitioner-company does not bar the regular intermittent workers from
the privilege of commutation or conversion to cash of the unenjoyed portion of their sick
leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as used in
the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with
pay which, as mandated by Section 1, only the non-intermittent workers are entitled to. This
fixed 15-day sick leave with pay benefit should be distinguished from the variable number of
days of sick leave, not to exceed 15 days, extended to intermittent workers under Section 3
depending on the number of hours of service rendered to the company, including overtime
pursuant to the schedule provided therein. It is only fair and reasonable for
petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular
intermittent workers since, as the term "intermittent" implies, there is irregularity in their
work-days. Reasonable and practical interpretation must be placed on contractual
provisions. Interpretatio fienda est ut res magis valeat quam pereat. Such interpretation is to
be adopted, that the thing may continue to have efficacy rather than fail.

Same; An employer may not unilaterally withdraw benefits enjoyed for a long time by its
employees.—Whatever doubt there may have been early on was clearly obliterated when
petitioner-company recognized the said privilege and paid its intermittent workers the cash
equivalent of the unenjoyed portion of their sick leave with pay benefits during the lifetime of
the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989.
Well-settled is it that the said privilege of commutation or conversion to cash, being an
existing benefit, the petitioner-company may not unilaterally withdraw, or diminish such
benefits. It is a fact that petitioner-company had, on several instances in the past, granted
and paid the cash equivalent of the unenjoyed portion of the sick leave benefits of some
intermittent workers. Under the circumstances, these may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn.

Same; Voluntary arbitrator may order grant of benefits as part of his authority to interpret a
CBA.—Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator
to direct the commutation of the unenjoyed portion of the sick leave with pay benefits of
intermittent workers in his decision is misplaced. Article 261 of the Labor Code is clear. The
questioned directive of the herein public respondent is the necessary consequence of the
exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to
hear and decide all unresolved grievances arising from the interpretation or implementation
of the Collective Bargaining Agreement." We, therefore, find that no grave abuse of
discretion was committed by public respondent in issuing the award (decision). Moreover,
his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and
is absolutely correct.

Colegio de San Juan de Letran-Calamba vs. Villas, 399 SCRA 550 , March 26, 2003
Labor Law; Dismissals; Due Process; Requisites.—Under the Labor Code, there are twin
requirements to justify a valid dismissal from employment: (a) the dismissal must be for any
of the causes provided in Article 282 of the Labor Code (substantive aspect) and (b) the
employee must be given an opportunity to be heard and to defend himself (procedural
aspect). The procedural aspect requires that the employee be given two written notices
before she is terminated consisting of a notice which apprises the employee of the
particular acts/omissions for which the dismissal is sought and the subsequent notice
which informs the employee of the employer’s decision to dismiss him.

Same; Same; Misconduct; Words and Phrases; Misconduct is improper or wrongful conduct;
To be a just cause for termination, misconduct must be serious, i.e., it must be of such grave
and aggravated character and not merely trivial or unimportant.—Misconduct is improper or
wrongful conduct. It is the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error of judgment.Under Article 282 of the Labor Code, the misconduct, to be a just
cause for termination, must be serious. This implies that it must be of such grave and
aggravated character and not merely trivial or unimportant. Examples of serious misconduct
justifying termination, as held in some of our decisions, include: sexual harassment (the
manager’s act of fondling the hands, massaging the shoulder and caressing the nape of a
secretary); fighting within company premises;uttering obscene, insulting or offensive words
against a superior; misrepresenting that a student is his nephew and pressuring and
intimidating a co-teacher to change that student’s failing grade to passing.

Same; Same; Administrative Law; Findings of fact of administrative agencies and

quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to
specific matters are generally accorded not only great respect but even finality.—With regard
to respondent’s alleged failure to report for work on April 1, 1996 and failure to enroll during
the first semester, the Court of Appeals and the Voluntary Arbitrator found that she did in
fact report for work on April 1, 1996 and that she was in fact enrolled during the first
semester. Well-settled is the rule that the factual findings of the Court of Appeals are
conclusive on the parties and are not reviewable by the Supreme Court. And they carry even
more weight when the Court of Appeals affirms the factual findings of a lower fact-finding
body, in this case the Voluntary Arbitrator. Likewise, findings of fact of administrative
agencies and quasi-judicial bodies which have acquired expertise because their jurisdiction
is confined to specific matters, are generally accorded not only great respect but even
finality. They are binding upon this Court unless there is a showing of grave abuse of
discretion or where it is clearly shown that they were arrived at arbitrarily or in utter
disregard of the evidence on record.

Same; Same; Schools and Universities; Although the Court gives credence to respondent
school’s argument that a private high school teacher still has work at the end of the
schoolyear—to assist in the graduation preparations—and in the beginning of the school
year—to assist in the enrollment—such tasks cannot be considered a teacher’s main duties,
the failure to perform which would be tantamount to dereliction of duty or
abandonment.—Her alleged failure to report for work exactly on April 1, 1996 is not
equivalent to “failure to return for work,” a sanctionable offense under the Faculty Manual.
As correctly pointed out by the VA, petitioner failed to establish that there was a distinct and
definite assignment that needed to be done personally by respondent, and specifically on
April 1, 1996, which she failed to do on said date. Although we give credence to petitioner’s
argument that a private high school teacher still has work at the end of the schoolyear—to
assist in the graduation preparations—and in the beginning of the school year—to assist in
the enrollment—such tasks cannot be considered a teacher’s main duties, the failure to
perform which would be tantamount to dereliction of duty or abandonment. Besides, there is
no disagreement that respondent reported for work on May 15, 1996 at which time petitioner
School could have asked her to assist in the enrollment period. At most, respondent failed to
help out during the preparations for graduation and this, to us, was not a significant reason
for terminating or dismissing her from her job.

Same; Same; Same; Moonlighting; In the instant case, the act of a teacher in selling
insurance and cookware could not be the “employment” contemplated by the prohibition by
the Faculty Manual.—We find the provision of the Faculty Manual ambiguous as the term
“employment” connotes a number of meanings. Employment in its general sense connotes
any work or service rendered in exchange for money. The loose connotation of employment
may therefore cover jobs without an employer-employee relationship. However, inasmuch
as in this case, petitioner School drafted the said policy, the term “employment” should be
strictly construed against it. Moreover, it is a settled rule that in controversies between a
laborer and his master, doubts reasonably arising from the evidence, or in the interpretation
of agreements and writings should be resolved in the former’s favor. The act of respondent
in selling insurance and cookware was not the “ employment ” prohibited by the Faculty
Manual. The prohibition against outside employment was enacted to prevent the teacher
from using the study leave period for unsanctioned purposes since the School pays the
teacher while pursuing further studies. That rationale was not violated by respondent for the
reason that her part-time activity of selling insurance and cookware could not have
prevented her in any way from studying and, more importantly, she was not being paid by
the School while on leave. How did the school expect her and her family to survive without
any income for one whole year?

Same; Same; Labor Unions; The rights of an employee to be informed of his proposed
dismissal are personal to him and, therefore, notice to the union is not notice to the
employee.—These letters did not comply with the requirements of the law that the first
written notice must apprise the employee that his termination is being considered due to a
certain act or omission. These letters merely required petitioner to submit proof of her
studies and respondent could not have reasonably inferred from them that her dismissal
was being considered by the petitioner. The fact that there was a hearing conducted by the
grievance committee pursuant to the collective bargaining agreement did not work in
petitioner’s favor because this was done after petitioner had informed respondent that she
was already considered resigned from her teaching job. Besides, the rights of an employee
to be informed of his proposed dismissal are personal to him and, therefore, the notice to
the union was not notice to the employee.
Same; Same; Damages; Moral damages are recoverable only where the dismissal is
attended by bad faith or fraud, or constitutes an act oppressive to labor, or is done in a
manner contrary to morals, good customs or public policy.—We similarly affirm the
Voluntary Arbitrator’s decision that respondent is not entitled to moral and exemplary
damages and attorney’s fees because there is no evidence showing that bad faith or malice
attended the dismissal of respondent. Moral damages are recoverable only where the
dismissal is attended by bad faith or fraud, or constitutes an act oppressive to labor, or is
done in a manner contrary to morals, good customs or public policy. A dismissal may be
contrary to law but, by itself alone, it does not necessarily establish bad faith.

Naranjo vs. Biomedica Health Care, Inc., 681 SCRA 438 , September 19, 2012
Labor Law; Termination of Employment; The termination of employment must be based on a
just or authorized cause of dismissal and the dismissal must be effected after due notice
and hearing.―It bears pointing out that in the dismissal of an employee, the law requires
that due process be observed. Such due process requirement is two-fold, procedural and
substantive, that is, “the termination of employment must be based on a just or authorized
cause of dismissal and the dismissal must be effected after due notice and hearing.” In the
instant case, petitioners were not afforded both procedural and substantive due process.

Same; Same; Petitioners were charged with conducting an illegal strike, not a mass leave,
without specifying the exact acts that the company considers as constituting an illegal
strike or violative of company policies. Such allegation falls short of the requirement in King
of Kings Transport, Inc. of “ a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employees. ” ―Petitioners were charged with
conducting an illegal strike, not a mass leave, without specifying the exact acts that the
company considers as constituting an illegal strike or violative of company policies. Such
allegation falls short of the requirement in King of Kings Transport, Inc. of “ a detailed
narration of the facts and circumstances that will serve as basis for the charge against the
employees.” A bare mention of an “illegal strike” will not suffice.

Same; Same; It is incumbent upon respondent company to show that petitioners were duly
informed of said company policies at the time of their employment and were given copies of
these policies.―It is incumbent upon respondent company to show that petitioners were
duly informed of said company policies at the time of their employment and were given
copies of these policies. No such proof was presented by respondents. There was even no
mention at all that such requirement was met. Worse, respondent Biomedica did not even
quote or reproduce the company policies referred to in the notice as pointed out by the CA
stating: It must be noted that the company policy which the petitioner was referring to was
not quoted or reproduced in the petition, a copy of which is not also appended in the petition,
as such we cannot determine the veracity of the existence of said policy. Without a copy of
the company policy being presented in the CA or the contents of the pertinent policies being
quoted in the pleadings, there is no way by which one can determine whether or not there
was, indeed, a violation of said company policies.

Same; Same; Serious Misconduct; To justify the dismissal of an employee on the ground of
serious misconduct, the employer must first establish that the employee is guilty of
improper conduct, that the employee violated an existing and valid company rule or
regulation, or that the employee is guilty of a wrongdoing.―Clearly, to justify the dismissal of
an employee on the ground of serious misconduct, the employer must first establish that the
employee is guilty of improper conduct, that the employee violated an existing and valid
company rule or regulation, or that the employee is guilty of a wrongdoing. In the instant
case, Biomedica failed to even establish that petitioners indeed violated company rules,
failing to even present a copy of the rules and to prove that petitioners were made aware of
such regulations. In fact, from the records of the case, Biomedica has failed to prove that
petitioners are guilty of a wrongdoing that is punishable with termination from employment.
Same; Same; Mass Leave; Words and Phrases; The phrase “ mass leave ” may refer to a
simultaneous availment of authorized leave benefits by a large number of employees in a
company.―The term “Mass Leave” has been left undefined by the Labor Code. Plainly, the
legislature intended that the term’s ordinary sense be used. “ Mass ” is defined as
“participated in, attended by, or affecting a large number of individuals; having a large-scale
character.” While the term “Leave” is defined as “an authorized absence or vacation from
duty or employment usually with pay. ” Thus, the phrase “ mass leave ” may refer to a
simultaneous availment of authorized leave benefits by a large number of employees in a
company.

Same; Same; Same; It is undeniable that going on leave or absenting one’s self from work
for personal reasons when they have leave benefits available is an employee’s right.―It is
undeniable that going on leave or absenting one’s self from work for personal reasons when
they have leave benefits available is an employee’s right. In Davao Integrated Port
Stevedoring Services v. Abarquez, 220 SCRA 197 (1993), the Court acknowledged sick leave
benefits as a legitimate economic benefit of an employee, carrying a purpose that is at once
legal as it is practical: Sick leave benefits, like other economic benefits stipulated in the CBA
such as maternity leave and vacation leave benefits, among others, are by their nature,
intended to be replacements for regular income which otherwise would not be earned
because an employee is not working during the period of said leaves. They are
non-contributory in nature, in the sense that the employees contribute nothing to the
operation of the benefits. By their nature, upon agreement of the parties, they are intended to
alleviate the economic condition of the workers. In addition to sick leave, the company, as a
policy or practice or as agreed to in a CBA, grants vacation leave to employees. Lastly, even
the Labor Code grants a service incentive leave of 5 days to employees.

Same; Same; In case of doubt, a case should be resolved in favor of labor pursuant to the
social justice policy of labor laws and the Constitution.―It cannot be overemphasized that in
case of doubt, a case should be resolved in favor of labor. As aptly stated in Century
Canning Corporation v. Ramil, 627 SCRA 192 (2010): x x x Unsubstantiated suspicions,
accusations, and conclusions of employers do not provide for legal justification for
dismissing employees. In case of doubt, such cases should be resolved in favor of labor,
pursuant to the social justice policy of labor laws and the Constitution. Biomedica has failed
to adduce substantial evidence to prove that petitioners’ dismissal from their employment
was for a just or authorized cause. The conclusion is inescapable that petitioners were
illegally dismissed.

Same; Same; An ordinary striking worker cannot be terminated for mere participation in an
illegal strike.―It has not been shown that petitioners are officers of the Union. On this issue,
the NLRC correctly cited Gold City Integrated Port Service, Inc. v. NLRC, 245 SCRA 627
(1995), wherein We ruled that: “An ordinary striking worker cannot be terminated for mere
participation in an illegal strike. There must be proof that he committed illegal acts during a
strike.”

Same; Same; Reinstatement; Backwages; Given the illegality of their dismissal, petitioners
are entitled to reinstatement and backwages as provided in Article 279 of the Labor
Code.―Given the illegality of their dismissal, petitioners are entitled to reinstatement and
backwages as provided in Art. 279 of the Labor Code, which states: An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.

Same; Same; Separation Pay; Strained Relationship Doctrine; Petitioners were terminated in
swift fashion and in gross violation of their right to due process revealing that they are no
longer wanted in the company. The convergence of these facts coupled with the filing by
petitioners of their complaint with the Department of Labor and Employment (DOLE) shows
a relationship governed by antipathy and antagonism as to justify the award of separation
pay in lieu of reinstatement.―Respondent Motol, in the course of denying entry to them on
November 8, 2006, uttered harsh, degrading and bad words. Petitioners were terminated in
swift fashion and in gross violation of their right to due process revealing that they are no
longer wanted in the company. The convergence of these facts coupled with the filing by
petitioners of their complaint with the DOLE shows a relationship governed by antipathy and
antagonism as to justify the award of separation pay in lieu of reinstatement. Thus, in
addition to backwages, owing to the strained relations between the parties, separation pay in
lieu of reinstatement would be proper.

Price vs. Innodata Phils., Inc., 567 SCRA 269 , September 30, 2008
Labor Law; Regular Employees; Fixed-Term Employment; The employment status of a
person is defined and prescribed by law and not by what the parties say it should be.—After
a painstaking review of the arguments and evidences of the parties, the Court finds merit in
the present Petition. There were no valid fixed-term contracts and petitioners were regular
employees of the INNODATA who could not be dismissed except for just or authorized
cause. The employment status of a person is defined and prescribed by law and not by what
the parties say it should be. Equally important to consider is that a contract of employment
is impressed with public interest such that labor contracts must yield to the common good.
Thus, provisions of applicable statutes are deemed written into the contract, and 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.

Same; Same; Same; The applicable test to determine whether an employment should be
considered regular or non-regular is the reasonable connection between the particular
activity performed by the employee in relation to the usual business or trade of the
employer.—Under Article 280 of the Labor Code, the applicable test to determine whether an
employment should be considered regular or non-regular is the reasonable connection
between the particular activity performed by the employee in relation to the usual business
or trade of the employer. In the case at bar, petitioners were employed by INNODATA on 17
February 1999 as formatters. The primary business of INNODATA is data encoding, and the
formatting of the data entered into the computers is an essential part of the process of data
encoding. Formatting organizes the data encoded, making it easier to understand for the
clients and/or the intended end users thereof. Undeniably, the work performed by petitioners
was necessary or desirable in the business or trade of INNODATA.

Same; Same; Same; Under the Civil Code, fixed-term employment contracts are not limited,
as they are under the present Labor Code, to those by nature seasonal or for specific
projects with predetermined dates of completion; they also include those to which the
parties by free choice have assigned a specific date of termination—the decisive
determinant in term employment is the day certain agreed upon by the parties for the
commencement and termination of their employment relationship, a day certain being
understood to be that which must necessarily come, although it may not be known when.—It
is also true that while certain forms of employment require the performance of usual or
desirable functions and exceed one year, these do not necessarily result in regular
employment under Article 280 of the Labor Code. Under the Civil Code, fixed-term
employment contracts are not limited, as they are under the present Labor Code, to those by
nature seasonal or for specific projects with predetermined dates of completion; they also
include those to which the parties by free choice have assigned a specific date of
termination. The decisive determinant in term employment is the day certain agreed upon by
the parties for the commencement and termination of their employment relationship, a day
certain being understood to be that which must necessarily come, although it may not be
known when. Seasonal employment and employment for a particular project are instances
of employment in which a period, where not expressly set down, is necessarily implied.

Same; Same; Same; Fixed-term employment contracts are the exception rather than the
general rule.—While this Court has recognized the validity of fixed-term employment
contracts, it has consistently held that this is the exception rather than the general rule.
More importantly, a fixed-term employment is valid only under certain circumstances. In
Brent, the very same case invoked by respondents, the Court identified several
circumstances wherein a fixed-term is an essential and natural appurtenance, to wit: Some
familiar examples may be cited of employment contracts which may be neither for seasonal
work nor for specific projects, but to which a fixed term is an essential and natural
appurtenance: overseas employment contracts, for one, to which, whatever the nature of the
engagement, the concept of regular employment with all that it implies does not appear ever
to have been applied, Article 280 of the Labor Code notwithstanding; also appointments to
the positions of dean, assistant dean, college secretary, principal, and other administrative
offices in educational institutions, which are by practice or tradition rotated among the
faculty members, and where fixed terms are a necessity without which no reasonable
rotation would be possible. Similarly, despite the provisions of Article 280, Policy
Instructions No. 8 of the Minister of Labor implicitly recognize that certain company officials
may be elected for what would amount to fixed periods, at the expiration of which they
would have to stand down, in providing that these officials, “ x x may lose their jobs as
president, executive vice-president or vice president, etc. because the stockholders or the
board of directors for one reason or another did not reelect them.”

Same; Same; Same; Contracts of Adhesion; Where a contract of employment, being a

contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly
against the party who prepared it.—Even assuming that petitioners’ length of employment is
material, given respondents’ muddled assertions, this Court adheres to its pronouncement
in Villanueva v. National Labor Relations Commission, 295 SCRA 326 (1998), to the effect
that where a contract of employment, being a contract of adhesion, is ambiguous, any
ambiguity therein should be construed strictly against the party who prepared it. The Court
is, thus, compelled to conclude that petitioners’ contracts of employment became effective
on 16 February 1999, and that they were already working continuously for INNODATA for a
year.

Same; Same; Same; Project Employees; Words and Phrases; “Project employees” are those
workers hired (1) for a specific project or undertaking, and wherein (2) the completion or
termination of such project has been determined at the time of the engagement of the
employee.—Further attempting to exonerate itself from any liability for illegal dismissal,
INNODATA contends that petitioners were project employees whose employment ceased at
the end of a specific project or undertaking. This contention is specious and devoid of merit.
In Philex Mining Corp. v. National Labor Relations Commission, 312 SCRA 119 (1999), the
Court defined “ project employees ” as those workers hired (1) for a specific project or
undertaking, and wherein (2) the completion or termination of such project has been
determined at the time of the engagement of the employee.

Same; It is the policy of the State to assure the workers of security of tenure and free them
from the bondage of uncertainty of tenure woven by some employers into their contracts of
employment.—Under Section 3, Article XVI of the Constitution, it is the policy of the State to
assure the workers of security of tenure and free them from the bondage of uncertainty of
tenure woven by some employers into their contracts of employment. This was exactly the
purpose of the legislators in drafting Article 280 of the Labor Code—to prevent the
circumvention by unscrupulous employers of the employee’s right to be secure in his tenure
by indiscriminately and completely ruling out all written and oral agreements inconsistent
with the concept of regular employment.

Same; Corporation Law; Unless they have exceeded their authority, corporate officers are, as
a general rule, not personally liable for their official acts, because a corporation, by legal
fiction, has a personality separate and distinct from its officers, stockholders and
members.—Unless they have exceeded their authority, corporate officers are, as a general
rule, not personally liable for their official acts, because a corporation, by legal fiction, has a
personality separate and distinct from its officers, stockholders and members. Although as
an exception, corporate directors and officers are solidarily held liable with the corporation,
where terminations of employment are done with malice or in bad faith, in the absence of
evidence that they acted with malice or bad faith herein, the Court exempts the individual
respondents, Leo Rabang and Jane Navarette, from any personal liability for the illegal
dismissal of petitioners.

Marcopper Mining Corporation vs. NLRC, 255 SCRA 322 , March 29, 1996
Labor Standards; Collective Bargaining Agreements; The CBA is the law between the
contracting parties.—The principle that the CBA is the law between the contracting parties
stands strong and true. However, the present controversy involves not merely an
interpretation of CBA provisions. More importantly, it requires a determination of the effect
of an executive order on the terms and the conditions of the CBA. This is, and should be, the
focus of the instant case. It is unnecessary to delve too much on the intention of the parties
as to what they allegedly meant by the term “ basic wage ” at the time the CBA and MOA
were executed because there is no question that as of 1 May 1987, as mandated by E.O. No.
178, the basic wage of workers, or the statutory minimum wage, was increased with the
integration of the COLA. As of said date, then, the term “ basic wage ” includes the COLA.
This is what the law ordains and to which the collective bargaining agreement of the parties
must conform.

Same; Same; Computation of the CBA increase on the basis of the “integrated” wage does
not constitute a violation of the CBA.— Petitioner’s arguments eventually lose steam in the
light of the fact that compliance with the law is mandatory and beyond contractual
stipulation by and between the parties; consequently, whether or not petitioner intended the
basic wage to include the COLA becomes immaterial. There is evidently nothing to construe
and interpret because the law is clear and unambiguous. Unfortunately for petitioner, said
law, by some uncanny coincidence, retroactively took effect on the same date the CBA
increase became effective. Therefore, there cannot be any doubt that the computation of the
CBA increase on the basis of the “integrated” wage does not constitute a violation of the
CBA.

Same; Same; In the interpretation of contracts, like the CBA, the Constitutional policy of
according utmost protection and justice to labor should be upheld.—Finally, petitioner
misinterprets the declaration of the Labor Arbiter in the assailed decision that “ when the
pendulum of judgment swings to and fro and the forces are equal on both sides, the same
must be stilled in favor of labor. ” While petitioner acknowledges that all doubts in the
interpretation of the Labor Code shall be resolved in favor of labor, it insists that what is
involved here is the amended CBA which is essentially a contract between private persons.
What petitioner has lost sight of is the avowed policy of the State, enshrined in our
Constitution, to accord utmost protection and justice to labor, a policy, we are, likewise,
sworn to uphold.

Asuncion vs. National Labor Relations Commission, 362 SCRA 56 , July 31, 2001
Labor Law; Appeals; A disharmony between the factual findings of the Labor Arbiter and
those of the National Labor Relations Commission (NLRC) opens the door to a review
thereof by the Supreme Court.—Although, it is a legal tenet that factual findings of
administrative bodies are entitled to great weight and respect, we are constrained to take a
second look at the facts before us because of the diversity in the opinions of the Labor
Arbiter and the NLRC. A disharmony between the factual findings of the Labor Arbiter and
those of the NLRC opens the door to a review thereof by this Court.

Same; Illegal Dismissal; Due Process; A worker’s employment is property in the

constitutional sense—he cannot be deprived of his work without due process.—It bears
stressing that a worker’s 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.

Same; Same; Evidence; Administrative Law; Absenteeism and Tardiness; Handwritten listing
and unsigned computer print-outs which are unauthenticated are unreliable to establish
alleged absenteeism and tardiness of an employee—mere self-serving evidence should be
rejected as evidence without any rational probative value even in administrative
proceedings.—In the case at bar, there is a paucity of evidence to establish the charges of
absenteeism and tardiness. We note that the employer company submitted mere
handwritten listing and computer print-outs. The handwritten listing was not signed by the
one who made the same. As regards the print-outs, while the listing was computer
generated, the entries of time and other annotations were again handwritten and unsigned.
We find that the handwritten listing and unsigned computer print-outs were unauthenticated
and, hence, unreliable. Mere self-serving evidence of which the listing and print-outs are of
that nature should be rejected as evidence without any rational probative value even in
administrative proceedings.

Same; Same; Same; Same; Same; Evidence without any rational probative value may not be
made the basis of order or decision of administrative bodies.—In IBM Philippines, Inc. v.
NLRC, this Court clarified that the liberality of procedure in administrative actions is not
absolute and does not justify the total disregard of certain fundamental rules of evidence.
Such that evidence without any rational probative value may not be made the basis of order
or decision of administrative bodies. The Court’s ratiocination in that case is relevant to the
propriety of rejecting the unsigned handwritten listings and computer print-outs submitted
by private respondents which we quote, to wit: However, the liberality of procedure in
administrative actions is subject to limitations imposed by basic requirements of due
process. As this Court said in Ang Tibay v. CIR, the provision for flexibility in administrative
procedure “ does not go so far as to justify orders without a basis in evidence having
rational probative value.”

Same; Same; Same; Same; The purpose of the rule requiring the production of the best
evidence is the prevention of fraud, because if a party is in possession of such evidence and
withholds it, and seeks to substitute inferior evidence in its place, the presumption naturally
arises that the better evidence is withheld for fraudulent purposes which its production
would expose and defeat.—Ironically, in the memorandum charging petitioner and notice of
termination, private respondents referred to the record book as its basis for petitioner’s
alleged absenteeism and tardiness. Interestingly, however, the record book was never
presented in evidence. Private respondents had possession thereof and the opportunity to
present the same. Being the basis of the charges against the petitioner, it is without doubt
the best evidence available to substantiate the allegations. The purpose of the rule requiring
the production of the best evidence is the prevention of fraud, because if a party is in
possession of such evidence and withholds it, and seeks to substitute inferior evidence in
its place, the presumption naturally arises that the better evidence is withheld for fraudulent
purposes which its production would expose and defeat. Thus, private respondents’
unexplained and unjustified non-presentation of the record book, which is the best evidence
in its possession and control of the charges against the petitioner, casts serious doubts on
the factual basis of the charges of absenteeism and tardiness.

Same; Same; Due Process; What would qualify as sufficient or “ample opportunity,” for an
employee to enable him to prepare adequately for his defense, would be “ every kind of
assistance that management must accord to the employee to enable him to prepare
adequately for his defense.”—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. In Ruffy v. NLRC, the Court held that what would qualify as sufficient or “ample
opportunity,” as required by law, would be “every kind of assistance that management must
accord to the employee to enable him to prepare adequately for his defense.” In the case at
bar, private respondents cannot be gainsaid to have given petitioner the ample opportunity
to answer the charges leveled against her.

Same; Same; Same; 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.—From the foregoing, there are serious doubts in the evidence on record as to the
factual basis of the charges against petitioner. These doubts shall be resolved in her favor in
line with the policy under the Labor Code to afford protection to labor and construe doubts in
favor of labor. The consistent rule is that 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. Not having satisfied its burden of proof, we conclude that the employer
dismissed the petitioner without any just cause. Hence, the termination is illegal.

Peñaflor vs. Outdoor Clothing Manufacturing Corporation, 610 SCRA 497 , January 21, 2010
Labor Law; Termination of Employment; “ Constructive Dismissal, ” Defined; Words and
Phrases; The gauge for constructive dismissal is whether a reasonable person in the
employee’s position would feel compelled to give up his employment under the prevailing
circumstances.—While the letter states that Peñaflor’s resignation was irrevocable, it does
not necessarily signify that it was also voluntarily executed. Precisely because of the
attendant hostile and discriminatory working environment, Peñaflor decided to permanently
sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive
dismissal that jurisprudence defines, among others, as involuntarily resignation due to the
harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear
discrimination, insensibility, or disdain by an employer exists and has become unbearable to
the employee. The gauge for constructive dismissal is whether a reasonable person in the
employee’s position would feel compelled to give up his employment under the prevailing
circumstances. With the appointment of Buenaobra to the position he then still occupied,
Peñaflor felt that he was being eased out and this perception made him decide to leave the
company.

Same; Same; Same; The fact of filing a resignation letter alone does not shift the burden of
proving that the employee’s dismissal was for a just and valid cause from the employer to
the employee.—The fact of filing a resignation letter alone does not shift the burden of
proving that the employee’s dismissal was for a just and valid cause from the employer to
the employee. In Mora v. Avesco, 571 SCRA 226 (2008), we ruled that should the employer
interpose the defense of resignation, it is still incumbent upon the employer to prove that the
employee voluntarily resigned.

Same; Same; Same; Illegal Dismissals; Corporation Law; A corporation may act only through
its directors, officers and employees who are solidarily liable with the corporation for the
illegal termination of services of employees if they acted with malice or bad faith.—A
corporation, as a juridical entity, may act only through its directors, officers and employees.
Obligations incurred as a result of the directors’ and officers’ acts as corporate agents, are
not their personal liability but the direct responsibility of the corporation they represent. As a
rule, they are only solidarily liable with the corporation for the illegal termination of services
of employees if they acted with malice or bad faith.

Philippine National Construction Corporation vs. NLRC, 277 SCRA 91 , August 11, 1997
Labor Law; Actions; Certiorari; Pleadings and Practice; Motions for Reconsideration; A
petition for certiorari filed without a prior motion for reconsideration is a premature action
and constitutes a fatal infirmity.—Petitioner, as noted earlier, admitted that it did not file a
motion for reconsideration of the assailed NLRC Decision. This premature action constitutes
a fatal infirmity. In Interorient Maritime Enterprises vs. National Labor Relations
Commission, this Court, citing a catena of cases, categorically ruled that: “ x x x The
unquestioned rule in this jurisdiction is that certiorari will lie only if there is no appeal or any
other plain, speedy and adequate remedy in the ordinary course of law against the acts of
public respondent. In the instant case, the plain and adequate remedy expressly provided by
law was a motion for reconsideration of the assailed decision, based on palpable errors, to
be made under oath and filed within ten (10) calendar days from receipt of the questioned
decision. (T)he filing of such motion is intended to afford public respondent an opportunity
to correct any factual or fancied error attributed to it by way of a re-examination of the legal
and factual aspects of the case. Petitioner’s inaction or negligence under the circumstances
is tantamount to a deprivation of the right and opportunity of the respondent Commission to
cleanse itself of an error unwittingly committed or to vindicate itself of an act unfairly
imputed. x x x

Same; Same; Same; Same; A petitioner’s bare allegation that the same questions raised
before the public respondent were to be raised before the Supreme Court affords no excuse
for not filing a motion for reconsideration before instituting a petition for certiorari—it should
still comply with the procedural requirement.—The law is clear that a motion for
reconsideration is a mandatory requirement before one may resort to the special civil action
of certiorari. While there are recognized exceptions to this rule, petitioner has not convinced
us that this case is one of them. Petitioner’s bare allegation that the same questions raised
before the public respondent were to be raised before this Court affords no excuse.
Petitioner should have complied with the procedural requirement. On this ground alone, the
petition should be denied. There is, however, another cogent reason for dismissing it.

Same; Separation Benefits; When a conflicting interest of labor and capital are weighed on
the scales of social justice, the heavier influence of the latter must be counter-balanced by
the sympathy and compassion the law must accord the under-privileged worker.—Under the
separation program, an employee may qualify if he has rendered “ at least one year of
continuous service.” As public respondent has stated, the plain language of the program did
not require that continuous service be immediately prior to the employee’s separation. Thus,
private respondent’s other stints at PNCC prior to his last service in 1989 can properly be
considered in order to qualify him under the program. That the duration of private
respondent’s last stint was less than one year does not militate against his qualification
under the program. We grant this liberality in favor of private respondent in the light of the
rule in labor law that “ when a conflicting interest of labor and capital are weighed on the
scales of social justice, the heavier influence of the latter must be counter-balanced by the
sympathy and compassion the law must accord the underprivileged worker.”

Same; Same; In the interpretation of an employer’s program providing for separation

benefits, all doubts should be construed in favor of labor.—In the interpretation of an
employer’s program providing for separation benefits, all doubts should be construed in
favor of labor. After all, workers are the intended beneficiaries of such program and our
Constitution mandates a clear bias in favor of the working class.

Same; Project Employees; Work Pools; Project employees may or may not be members of a
work pool, and in turn, members of a work pool could be either project employees or regular
employees.—In view of the foregoing, there appears no need to address the question of
whether private respondent was part of a “work pool.” We should point out, however, that
the Solicitor General was inaccurate when he stated that petitioner had a “work pool” and
Respondent Mendoza was a part thereof. In Raycor Aircontrol Systems, Inc. vs. National
Labor Relations Commission, we clarified the status of project employees in a “work pool”
as recognized by Policy Instruction No. 20 thus: “x x x project employees may or may not be
members of a work pool, (that is, the employer may or may not have formed a work pool at
all), and in turn, members of a work pool could be either project employees or regular
employees. In the instant case, respondent NLRC did not indicate how private respondent
came to be considered members of a work pool as distinguished from ordinary (non-work
pool) employees. It did not establish that a work pool existed in the first place. Neither did it
make any finding as to whether the herein private respondents were indeed free to leave
anytime and offer their services to other employers, as vigorously contended by petitioner,
despite the fact that such a determination would have been critical in defining the precise
nature of private respondent’s employment. Clearly, the NLRC’s conclusion of regular
employment has no factual support and is thus unacceptable.”

Same; Attorney’s Fees; It is settled that in actions for recovery of wages or where an
employee was forced to litigate and, thus, incur expenses to protect his rights and interests,
the award of attorney’s fees is legally and morally justifiable.—We disagree with Respondent
NLRC’s disallowance of the award of attorney’s fees. Private respondent was evidently and
legally entitled to separation benefits in the paltry amount of P9,204.00 when he was
separated from service. But because of the unjustified stance of petitioner, he was
compelled to litigate to obtain what was legally due him, that is, to retain a lawyer and to
await for eight years for this case to be finally decided. It is settled that in actions for
recovery of wages or where an employee was forced to litigate and, thus, incur expenses to
protect his rights and interests, the award of attorney’s fees is legally and morally justifiable.

Gurango vs. Best Chemical and Plastics Inc., 629 SCRA 311 , August 25, 2010
Appeals; Among the exceptions to the rule that only questions of law may be raised in
petitions for certiorari under Rule 45 of the Rules of Court are when the findings of fact are
conflicting and when the findings are conclusions without citation of specific evidence on
which they are based.—As a general rule, only questions of law may be raised in petitions for
certiorari under Rule 45 of the Rules of Court. Section 1 of Rule 45 states that, “The petition
shall raise only questions of law. ” In Triumph International (Phils.), Inc. v. Apostol, 589
SCRA 185 (2009), the Court enumerated exceptions to the rule. Among the exceptions are
when the findings of fact are conflicting and when the findings are conclusions without
citation of specific evidence on which they are based. In the present case, the findings of
fact of the Court of Appeals conflict with the findings of fact of the NLRC and the Labor
Arbiter. Also, the finding of the Court of Appeals that Gurango engaged in a fistfight is a
conclusion without citation of specific evidence on which it is based.

Labor Law; Termination of Employment; Burden of Proof; In termination cases, the burden of
proof rests on the employer to show that the dismissal is for just cause.—In termination
cases, the employer has the burden of proving, by substantial evidence, that the dismissal is
for just cause. If the employer fails to discharge the burden of proof, the dismissal is
deemed illegal. In AMA Computer College-East Rizal v. Ignacio, 590 SCRA 633 (2009), the
Court held that: “ In termination cases, the burden of proof rests on the employer to show
that the dismissal is for just cause. When there is no showing of a clear, valid and legal
cause for the termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination was for a valid or
authorized cause. And the quantum of proof which the employer must discharge is
substantial evidence. An employee’s dismissal due to serious misconduct must be
supported by substantial evidence. Substantial evidence is that amount of relevant evidence
as a reasonable mind might accept as adequate to support a conclusion, even if other
minds, equally reasonable, might conceivably opine otherwise.”

Same; Same; Serious Misconduct; In order to constitute serious misconduct which will
warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code,
it is not sufficient that the act or conduct complained of has violated some established rules
or policies—it is equally important and required that the act or conduct must have been
performed with wrongful intent.—In the present case, aside from Albao’s statement, BCPI did
not present any evidence to show that Gurango engaged in a fistfight. Moreover, there is no
showing that Gurango’s actions were performed with wrongful intent. In AMA Computer
College-East Rizal, the Court held that: “ The Labor Code provides that an employer may
terminate the services of an employee for a just cause. Among the just causes in the Labor
Code is serious misconduct. Misconduct is improper or wrong conduct. It is the
transgression of some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error in judgment. The
misconduct to be serious within the meaning of the Labor Code must be of such a grave and
aggravated character and not merely trivial or unimportant. x x x In National Labor Relations
Commission v. Salgarino, the Court stressed that “ [i]n order to constitute serious
misconduct which will warrant the dismissal of an employee under paragraph (a) of Article
282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated
some established rules or policies. It is equally important and required that the act or
conduct must have been performed with wrongful intent.” [Gurango vs. Best Chemical and
Plastics Inc., 629 SCRA 311(2010)]

Labadan vs. Forest Hills Academy, 575 SCRA 262 , December 23, 2008
Labor Law; Illegal Dismissals; Burden of Proof; While in cases of illegal dismissal, the
employer bears the burden of proving that the dismissal is for a valid or authorized cause,
the employee must first establish by substantial evidence the fact of dismissal.—While in
cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for
a valid or authorized cause, the employee must first establish by substantial evidence the
fact of dismissal. The records do not show that petitioner was dismissed from the service.
They in fact show that despite petitioner’s absence from July 2001 to March 2002 which, by
her own admission, exceeded her approved leave, she was still considered a member of the
Forest Hills faculty which retained her in its payroll.

Same; Labor Standards; Holiday Pay; The provision that a worker is entitled to twice his
regular rate if he is required to work on a holiday implies that the provision entitling a worker
to his regular rate on holidays applies even if he does not work.—Respecting petitioner’s
claim for holiday pay, Forest Hills contends that petitioner failed to prove that she actually
worked during specific holidays. Article 94 of the Labor Code provides, however, that (a)
Every worker shall be paid his regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10) workers; (b) The employer
may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate[.] The provision that a worker is entitled to
twice his regular rate if he is required to work on a holiday implies that the provision entitling
a worker to his [Labadan vs. Forest Hills Academy, 575 SCRA 262(2008)]

People vs. Panis, 142 SCRA 664, July 11, 1986

Labor; Recruitment and placement; Interpretation; Article 13(b) of P.D. 442, interpreted;
Presumption that the individual or entity is engaged in recruitment and placement whenever
two or more persons are involved; Number of persons, not an essential ingredient of the act
of recruitment and placement of workers.—As we see it, the proviso was intended neither to
impose a condition on the basic rule nor to provide an exception thereto but merely to create
a presumption. The presumption is that the individual or entity is engaged in recruitment and
placement whenever he or it is dealing with two or more persons to whom, in consideration
of a fee, an offer or promise of employment is made in the course of the “ canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. ” The number
of persons dealt with is not an essential ingredient of the act of recruitment and placement
of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute
recruitment and placement even if only one prospective worker is involved. The proviso
merely lays down a rule of evidence that where a fee is collected in consideration of a
promise or offer of employment to two or more prospective workers, the individual or entity
dealing with them shall be deemed to be engaged in the act of recruitment and placement.
The words “shall be deemed” create that presumption.

Same; Same; Same; Same; Words “ shall be deemed ” in Art. 13(b) of P.D. 442, meaning
of.—In the instant case, the word “shall be deemed” should by the same token be given the
force of a disputable presumption or of prima facie evidence of engaging in recruitment and
placement.
 C.F. Sharp Crew Management, Inc. vs. Espanol, Jr., 533 SCRA 424 , September 14, 2007
Labor Law; Labor Code, Judgment; Appeals; A judgment debtor who acquiesces of and
voluntarily complies with the judgment is estopped from taking an appeal therefrom.

Same; Same; Illegal Recruitment; Definition of Recruitment and Placement; The conduct of
preparatory interviews is a recruitment activity.—Article 13(b) of the Labor Code defines
recruitment and placement as: any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad whether for profit or not: Provided, That any
person or entity which in any manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and placement. On the basis of this
definition—and contrary to what C.F. Sharp wants to portray—the conduct of preparatory
interviews is a recruitment activity.

Same; Same; Same; It is the lack of the necessary license or authority, not the fact of
payment, that renders the recruitment activity of LCL unlawful.—The fact that C.F. Sharp did
not receive any payment during the interviews is of no moment. From the language of Article
13(b), the act of recruitment may be “ for profit or not. ” Notably, it is the lack of the
necessary license or authority, not the fact of payment, that renders the recruitment activity
of LCL unlawful.

Same; Appeals; Due Process; The essence of due process lies in the reasonable opportunity
afforded a party to be heard and to submit any evidence in support of its defense; What is
vital is not the opportunity to cross-examine an adverse witness, but an opportunity to be
heard.—The claim of denial of due process on the part of C.F. Sharp must also be rejected.
The essence of due process lies in the reasonable opportunity afforded a party to be heard
and to submit any evidence in support of its defense. What is vital is not the opportunity to
cross-examine an adverse witness, but an opportunity to be heard. In this case, C.F. Sharp
was given ample opportunity to be heard, to adduce evidence in support of its version of the
material occurrences, and to controvert Rizal’s allegation and the Inspection Report. It
submitted its position paper with supporting affidavits and documents, and additionally
pleaded its causes on appeal before the Secretary of Labor. Under the circumstances, a
claim of denial of due process on C.F. Sharp’s part is completely unavailing.

Same; Same; Judicial review of labor cases does not go beyond the evaluation of the
sufficiency of the evidence upon which the labor officials’ findings rest.—C.F. Sharp would
have us re-evaluate the factual veracity and probative value of the evidence submitted in the
proceedings a quo. C.F. Sharp may well be reminded that it is not our function to review,
examine, and evaluate or weigh the evidence adduced by the parties. Elementary is the
principle that this Court is not a trier of facts. Judicial review of labor cases does not go
beyond the evaluation of the sufficiency of the evidence upon which the labor officials’
findings rest. Hence, where the factual findings of the labor tribunals or agencies conform
to, and are affirmed by, the CA, the same are accorded respect and finality, and are binding
upon this Court. It is only when the findings of the labor agencies and the appellate court are
in conflict that this Court will review the records to determine which findings should be
upheld as being more in conformity with the evidentiary facts. Where the CA affirms the
labor agencies on review and there is no showing whatsoever that said findings are patently
erroneous, this Court is bound by the said findings. [C.F. Sharp Crew Management, Inc. vs.
Espanol, Jr., 533 SCRA 424(2007)]

Santiago vs. CF Sharp Crew Management, Inc., 527 SCRA 165 , July 10, 2007
Labor Law; Employer-Employee Relationships; Seafarers; Considering that petitioner was
not able to depart from the airport or seaport in the point of hire, the employment contract
did not commence and no employer-employee relationship was created between the
parties.—There is no question that the parties entered into an employment contract on 3
February 1998, whereby petitioner was contracted by respondent to render services on
board “MSV Seaspread” for the consideration of US$515.00 per month for nine (9) months,
plus overtime pay. However, respondent failed to deploy petitioner from the port of Manila to
Canada. Considering that petitioner was not able to depart from the airport or seaport in the
point of hire, the employment contract did not commence, and no employer-employee
relationship was created between the parties.

Same; Same; Distinction must be made between the perfection of the employment contract
and the commencement of the employeremployee relationship; Even before the start of any
employer-employee relationship, contemporaneous with the perfection of the employment
contract was the birth of certain rights and obligations, the breach of which may give rise to
a cause of action against the erring party.—A distinction must be made between the
perfection of the employment contract and the commencement of the employer-employee
relationship. The perfection of the contract, which in this case coincided with the date of
execution thereof, occurred when petitioner and respondent agreed on the object and the
cause, as well as the rest of the terms and conditions therein. The commencement of the
employeremployee relationship, as earlier discussed, would have taken place had petitioner
been actually deployed from the point of hire. Thus, even before the start of any
employer-employee relationship, contemporaneous with the perfection of the employment
contract was the birth of certain rights and obligations, the breach of which may give rise to
a cause of action against the erring party. Thus, if the reverse had happened, that is the
seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.

Same; Same; Seafarers; Neither the manning agent nor the employer can simply prevent a
seafarer from being deployed without a valid reason; Respondent unilaterally and
unreasonably reneged on its obligation to deploy petitioner and must therefore answer for
the actual damages he suffered.—While the POEA Standard Contract must be recognized
and respected, neither the manning agent nor the employer can simply prevent a seafarer
from being deployed without a valid reason. Respondent’s act of preventing petitioner from
departing the port of Manila and boarding “ MSV Seaspread ” constitutes a breach of
contract, giving rise to petitioner’s cause of action. Respondent unilaterally and
unreasonably reneged on its obligation to deploy petitioner and must therefore answer for
the actual damages he suffered.

Same; Same; Same; The fact that the Philippine Overseas Employment Administration
(POEA) Rules are silent as to the payment of damages to the affected seafarer does not
mean that the seafarer is precluded from claiming the same.—We take exception to the
Court of Appeals’ conclusion that damages are not recoverable by a worker who was not
deployed by his agency. The fact that the POEA Rules are silent as to the payment of
damages to the affected seafarer does not mean that the seafarer is precluded from
claiming the same. The sanctions provided for non-deployment do not end with the
suspension or cancellation of license or fine and the return of all documents at no cost to
the worker. They do not forfend a seafarer from instituting an action for damages against
the employer or agency which has failed to deploy him.

Same; Same; Despite the absence of an employer-employee relationship between petitioner

and respondent, the Court rules that the National Labor Relations Commission (NLRC) has
jurisdiction over petitioner’s complaint.—Despite the absence of an employeremployee
relationship between petitioner and respondent, the Court rules that the NLRC has
jurisdiction over petitioner’s complaint. The jurisdiction of labor arbiters is not limited to
claims arising from employer-employee relationships. Section 10 of R.A. No. 8042 (Migrant
Workers Act), provides that: Sec.10.Money Claims.—Notwithstanding any provision of law to
the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar
days after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages. x x x
[Emphasis supplied] Since the present petition involves the employment contract entered
into by petitioner for overseas employment, his claims are cognizable by the labor arbiters
of the NLRC.

Same; Same; Seafarers; Respondent liable to pay petitioner actual damages in the form of
the loss of nine (9) months’ worth of salary as provided in the contract, petitioner is not
entitled to overtime pay.—Respondent is thus liable to pay petitioner actual damages in the
form of the loss of nine (9) months’ worth of salary as provided in the contract. He is not,
however, entitled to overtime pay. While the contract indicated a fixed overtime pay, it is not
a guarantee that he would receive said amount regardless of whether or not he rendered
overtime work. Even though petitioner was “prevented without valid reason from rendering
regular much less overtime service, ” the fact remains that there is no certainty that
petitioner will perform overtime work had he been allowed to board the vessel. The amount
of US$286.00 stipulated in the contract will be paid only if and when the employee rendered
overtime work. This has been the tenor of our rulings in the case of Stolt-Nielsen Marine
Services (Phils.), Inc. v. National Labor Relations Commission, 258 SCRA 643 (1996), where
we discussed the matter in this light: The contract provision means that the fixed overtime
pay of 30% would be the basis for computing the overtime pay if and when overtime work
would be rendered. Simply stated, the rendition of overtime. work and the submission of
sufficient proof that said work was actually performed are conditions to be satisfied before
a seaman could be entitled to overtime pay which should be computed on the basis of 30%
of the basic monthly salary. In short, the contract provision guarantees the right to overtime
pay but the entitlement to such benefit must first be established. Realistically speaking, a
seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular
eight-hour work schedule. For the employer to give him overtime pay for the extra hours
when he might be sleeping or attending to his personal chores or even just lulling away his
time would be extremely unfair and unreasonable.

Same; Same; Attorney’s Fees; Respondent’s failure to deploy petitioner is unfounded and
unreasonable, forcing petitioner to institute the suit below; Award of attorney’s fees is thus
warranted.—The Court also holds that petitioner is entitled to attorney’s fees in the concept
of damages and expenses of litigation. Attorney’s fees are recoverable when the defendant’s
act or omission has compelled the plaintiff to incur expenses to protect his interest. We note
that respondent’s basis for not deploying petitioner is the belief that he will jump ship just
like his brother, a mere suspicion that is based on alleged phone calls of several persons
whose identities were not even confirmed. Time and again, this Court has upheld
management prerogatives so long as they 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. Respondent’s failure to deploy
petitioner is unfounded and unreasonable, forcing petitioner to institute the suit below. The
award of attorney’s fees is thus warranted.

Same; Same; Seafarers; Nature of Employment; Seafarers are considered contractual

employees and cannot be considered as regular employees under the Labor Code.—We
likewise do not see respondent’s failure to deploy petitioner as an act designed to prevent
the latter from attaining the status of a regular employee. Even if petitioner was able to
depart the port of Manila, he still cannot be considered a regular employee, regardless of his
previous contracts of employment with respondent. In Millares v. National Labor Relations
Commission, 385 SCRA 306 (2002), the Court ruled that seafarers are considered
contractual employees and cannot be considered as regular employees under the Labor
Code. Their employment is governed by the contracts they sign every time they are rehired
and their employment is terminated when the contract expires. The exigencies of their work
necessitates that they be employed on a contractual basis.

Ambraque International Placement & Services vs. NLRC, 157 SCRA 431, January 28, 1988
Labor; NLRC; Overseas Employment; Illegal Dismissal; Dismissal of worker that he allegedly
exhibited disagreeable conduct when he was abroad, is a sweeping statement and without
any elaboration by the employer; Absence of details surrounding the charge of disagreeable
conduct of the worker casts veracity on the charge.—The allegation that the private
respondent exhibited disagreeable conduct when he was abroad thus paving the way for his
dismissal is a sweeping statement. The allegation is not even accompanied by any
elaboration on the matter. If the said allegation were true, then the petitioner would have
discussed in detail the circumstances surrounding such disagreeable conduct in order to
support its stand. The absence of such vital information casts suspicion on the veracity of
the allegation of the petitioner. As observed by the Solicitor General, the telex messages
relied upon by the petitioner do not establish that the private respondent was dismissed
from his employment for just cause. Both telex messages are general statements. There is
no record that the principal gave additional information on the dismissal. At the most, the
second telex message implies that the previous employment experience of the private
respondent in Saudi Arabia causes problems to the principal.

Same; Same; Same; Same; Recruitment agency, jointly and solidarity liable with its principal
to the worker corresponding to the entire remuneration covered by the employment
contract.—Finally, the petitioner recruitment agency should be jointly and solidarity liable
with its principal as far as this case is concerned. Pursuant to Section 10, Rule V of the
Implementing Regulations of the Labor Code, a recruitment agency can be sued solidarity
with its principal.

Interorient Maritime Enterprises, Inc. vs. NLRC, 261 SCRA 757 , September 16, 1996
Actions; Certiorari; Pleadings and Practice; Petitioners act prematurely when they
immediately bring a petition for certiorari without having filed any motion for reconsideration
with the respondent agency.

Same; Same; Same; A petition for certiorari under Rule 65 of the Rules of Court will lie only
in cases where a grave abuse of discretion or an act without or in excess of jurisdiction is
clearly shown to have been committed by the respondent Commission, and the Supreme
Court’s jurisdiction to review decisions or resolutions of the respondent NLRC does not
include a correction of its evaluation of the evidence.—But even if the aforesaid procedural
defect were to be overlooked, the instant petition nevertheless suffers from serious
substantive flaws. The petition assails the Resolution of the respondent Commission as
lacking factual and legal bases to support the same. A petition for certiorari under Rule 65 of
the Rules of Court will lie only in cases where a grave abuse of discretion or an act without
or in excess of jurisdiction is clearly shown to have been committed by the respondent
Commission, and this Court’s jurisdiction to review decisions or resolutions of the
respondent NLRC does not include a correction of its evaluation of the evidence. Moreover,
it is a fundamental rule that the factual findings of quasi-judicial agencies like the
respondent NLRC, if supported by substantial evidence, are generally accorded not only
great respect but even finality, and are binding upon this Court, unless the petitioner is able
to clearly demonstrate that respondent Commission had arbitrarily disregarded evidence
before it or had misapprehended evidence to such an extent as to compel a contrary
conclusion if such evidence had been properly appreciated.

Labor Law; Overseas Contract Workers; Evidence; Pleadings and Practice; Claims of
overseas workers against their foreign employers should not be subjected to the rules of
evidence and procedure that courts usually apply to other complainants who have more
facility in obtaining the required evidence to prove their demands.—First, a word about the
evidence supporting the findings of the POEA Administrator. We have held that claims of
overseas workers against their foreign employers should not be subjected to the rules of
evidence and procedure that courts usually apply to other complainants who have more
facility in obtaining the required evidence to prove their demands. Section 5, Rule 133 of the
Rules of Court provides that in cases filed before administrative or quasi-judicial bodies (like
the POEA), a fact may be deemed established if it is supported by substantial evidence, i.e.,
that amount of evidence which a reasonable mind might accept as adequate to justify a
conclusion.

Same; Same; Insanity; The mental disorder of a Filipino overseas contract worker became
evident when he failed to join his connecting flight to Hongkong, having during said stopover
wandered out of the Bangkok airport’s immigration area on his own, there being no sane and
sufficient reason for him to want to while away his time in a foreign land, when he is
presumably unfamiliar with its native tongue, with nothing to do and no source of income,
and after having been absent from kith and kin, hearth and home for almost an entire
year.—The circumstances prior to and surrounding his death, however, provide substantial
evidence of the existence of such mental defect or disorder. Such mental disorder became
evident when he failed to join his connecting flight to Hongkong, having during said stopover
wandered out of the Bangkok airport’s immigration area on his own. We can perceive no
sane and sufficient reason for a Pinoy overseas contract worker or seaman to want to while
away his time in a foreign land, when he is presumably unfamiliar with its native tongue, with
nothing to do and no source of income, and after having been absent from kith and kin,
hearth and home for almost an entire year. Nor can we find any plausible reason for him to
be wielding a knife and scaring away passersby, and even taking a stab at an armed
policeman, unless he is no longer in full possession of his sanity. To our mind, these
circumstances are sufficient in themselves to produce a firm conviction that the deceased
seaman in this case was no longer in full control of his senses when he left his work. To
reiterate, in this case, no more than substantial evidence is required.

Same; Same; Same; Where an overseas contract worker attacked a Thai policeman when he
was no longer in complete control of his mental faculties, the provisions of the Standard
Format Contract of Employment exempting the employer from liability does not apply.—The
POEA Administrator ruled, and this Court agrees, that since Pineda attacked the Thai
policeman when he was no longer in complete control of his mental faculties, the
aforequoted provision of the Standard Format Contract of Employment exempting the
employer from liability should not apply in the instant case. Firstly, the fact that the
deceased suffered from mental disorder at the time of his repatriation means that he must
have been deprived of the full use of his reason, and that thereby, his will must have been
impaired, at the very least. Thus, his attack on the policeman can in no wise be
characterized as a deliberate, willful or voluntary act on his part.

Same; Same; Same; The failure of a foreign employer to observe some precautionary
measures and in allowing an overseas worker with mental disorder to travel home alone
render it liable for the death of said worker.—Secondly, and apart from that, we also agree
that in light of the deceased’s mental condition, petitioners “ should have observed some
precautionary measures and should not have allowed said seaman to travel home alone, ”
and their failure to do so rendered them liable for the death of Pineda. Indeed, “ the
obligations and liabilities of the (herein petitioners) do not end upon the expiration of the
contracted period as (petitioners are) duty bound to repatriate the seaman to the point of
hire to effectively terminate the contract of employment.”

Same; Same; Even if the termination of the employment contract is duly effected in a foreign
country, still the responsibility of the foreign employer to see to it that the worker is duly
repatriated to the point of hiring subsists.—Petitioner’s reliance on De Jesus is misplaced, as
the death and burial benefits being claimed in this case are not payable by the Employees’
Compensation Commission and chargeable against the State Insurance Fund. These claims
arose from the responsibility of the foreign employer together with the local agency for the
safety of the employee during his repatriation and until his arrival in this country, i.e., the
point of hire. Though the termination of the employment contract was duly effected in Dubai,
still, the responsibility of the foreign employer to see to it that Pineda was duly repatriated to
the point of hiring subsisted. Section 4, Rule VIII of the Rules and Regulations Governing
Overseas Employment clearly provides for the duration of the mandatory personal accident
and life insurance covering accidental death, dismemberment and disability of overseas
workers: “ Section 4. Duration of Insurance Coverage.—The minimum coverage shall take
effect upon payment of the premium and shall be extended worldwide, on and off the job, for
the duration of the worker’s contract plus sixty (60) calendar days after termination of the
contract of employment; provided that in no case shall the duration of the insurance
coverage be less than one year.” (Italics supplied)

Same; Same; The foreign employer may not be obligated by its contract to provide a
companion for a returning employee but it cannot deny that it is expressly tasked by its
agreement to assure the safe return of said worker.—The foreign employer may not have
been obligated by its contract to provide a companion for a returning employee, but it cannot
deny that it was expressly tasked by its agreement to assure the safe return of said worker.
The uncaring attitude displayed by petitioners who, knowing fully well that its employee had
been suffering from some mental disorder, nevertheless still allowed him to travel home
alone, is appalling to say the least. Such attitude harks back to another time when the landed
gentry practically owned the serfs, and disposed of them when the latter had grown old, sick
or otherwise lost their usefulness. [Interorient Maritime Enterprises, Inc. vs. NLRC, 261
SCRA 757(1996)]

De Jesus vs. National Labor Relations Commission, 530 SCRA 489 , August 17, 2007
Labor Law; Appeals; Judicial review by this Court does not extend to a re-evaluation of the
sufficiency of the evidence upon which the proper labor tribunal has based its
determination—firm is the doctrine that this Court is not a trier of facts, and this applies with
greater force in labor cases.—It is a settled rule that under Rule 45 of the Rules of Court, only
questions of law may be raised before this Court. Judicial review by this Court does not
extend to a re-evaluation of the sufficiency of the evidence upon which the proper labor
tribunal has based its determination. Firm is the doctrine that this Court is not a trier of facts,
and this applies with greater force in labor cases. However, factual issues may be
considered and resolved when the findings of facts and conclusions of law of the Labor
Arbiter are inconsistent with those of the NLRC and the Court of Appeals, as in this case.

Same; Disease; The rule is that an ailment contracted by a worker even prior to his
employment, does not detract from the compensability of the disease.—The evidence shows
that De Jesus previously suffered from ulcer but he ticked “NO” in his medical history. De
Jesus, therefore, committed misrepresentation. Nonetheless, he passed the pre-employment
medical examination, was reported fit to work, and was suffered to work on board M/V
Author for more than two (2) months, until his repatriation on June 19, 1997. The rule is that
an ailment contracted even prior to his employment, does not detract from the
compensability of the disease. It is not required that the employment be the sole factor in
the growth, development or acceleration of the illness to entitle the claimant to the benefits
incident thereto. It is enough that the employment had contributed, even in a small measure,
to the development of the disease.

Same; Same; A worker’s misrepresentation cannot be made the basis by his employer for
the denial of his claims under the contract where he passed the required pre-medical
examination and was declared fit to work.—In OSM Shipping Philippines, Inc. v. Dela Cruz,
449 SCRA 525 (2005), this Court, in granting similar claims, held: Labor contracts are
impressed with public interest and the provisions of the POEA Standard Employment
Contract must be construed fairly, reasonably and liberally in favor of Filipino seamen in the
pursuit of their employment on board ocean-going vessels. Despite his misrepresentation,
Arbit underwent and passed the required pre-medical examination, was declared fit to work,
and was suffered to work by petitioner. Upon repatriation, he complied with the required
post-employment medical examination. Under the beneficent provisions of the Contract, it is
enough that the work has contributed, even in a small degree, to the development of the
disease and in bringing about his death. Strict proof of causation is not required. De Jesus’
misrepresentation cannot, therefore, be made basis by POMI for the denial of his claims
under the contract.

Same; Illegal Dismissals; Burden of Proof; Settled is the rule that in termination cases, the
burden of proof rests upon the employer to show that the dismissal is for a just and valid
cause.—Settled is the rule that in termination cases, the burden of proof rests upon the
employer to show that the dismissal is for a just and valid cause. The case of the employer
must stand or fall on its own merits and not on the weakness of the employee’s defense. In
this case, no convincing proof was offered to prove POMI’s allegation. All that we have is its
self-serving assertion that De Jesus violated his employment contract. There is no proof
that the prescribed disciplinary procedure was followed. We, therefore, agree with the Labor
Arbiter’s finding that POMI utterly failed to establish its claim of valid dismissal.
Accordingly, the NLRC and Court of Appeals erred in reversing the said finding. [De Jesus
vs. National Labor Relations Commission, 530 SCRA 489(2007)]

Seagull Shipmanagement and Transport, Inc. vs. NLRC, 333 SCRA 236 , June 08, 2000
Remedial Law; Certiorari; The filing of a motion for reconsideration is a condition sine qua
non to the institution of a special civil action for certiorari, subject to well-recognized
exceptions; Certiorari cannot be resorted to as a shield from the adverse consequences of
petitioners’ own omission to file the required motion for reconsideration.

Labor Law; Death Benefits; Under the contract, compensability of the illness or death of
seamen need not depend on whether the illness was work connected or not; It is sufficient
that the illness occurred during the term of the employment contract.—It will be noted that
the claim for sickness and permanent disability benefits of the private respondent arose
from the stipulations on the standard format contract of employment between him and
petitioner Seagull per Circular No. 2, Series of 1984 of POEA. This circular was intended for
all parties involved in the employment of Filipino seamen on board any ocean-going vessel.
Significantly, under the contract, compensability of the illness or death of seamen need not
depend on whether the illness was work connected or not. It is sufficient that the illness
occurred during the term of the employment contract. It will also be recalled that petitioners
admitted that private respondent’s work as a radio officer exposed him to different climates
and unpredictable weather, which could trigger a heart attack or heart failure.
Same; Same; It is not necessary, in order to recover compensation, that the employee must
have been in perfect health at the time he contracted the disease; If the disease is the
proximate cause of the employee’s death for which compensation is sought, the previous
physical condition of the employee is unimportant, and recovery may be had for said death,
independently of any pre-existing disease.—Even assuming that the ailment of the worker
was contracted prior to his employment, this still would not deprive him of compensation
benefits. For what matters is that his work had contributed, even in a small degree, to the
development of the disease and in bringing about his eventual death. Neither is it necessary,
in order to recover compensation, that the employee must have been in perfect health at the
time he contracted the disease. A worker brings with him possible infirmities in the course
of his employment, and while the employer is not the insurer of the health of the employees,
he takes them as he finds them and assumes the risk of liability. If the disease is the
proximate cause of the employee’s death for which compensation is sought, the previous
physical condition of the employee is unimportant, and recovery may be had for said death,
independently of any pre-existing disease. [Seagull Shipmanagement and Transport, Inc. vs.
NLRC, 333 SCRA 236(2000)]

Prudential Shipping and Management Corporation vs. Sta. Rita, 515 SCRA 157 , February 08,
2007
Labor Law; Seamen; The death of a seaman during the term of employment makes the
employer liable to his heirs for death compensation benefits, but if the seaman dies after the
termination of his contract of employment, his beneficiaries are not entitled to the death
benefits.—The death of a seaman during the term of employment makes the employer liable
to his heirs for death compensation benefits. Once it is established that the seaman died
during the effectivity of his employment contract, the employer is liable. However, if the
seaman dies after the termination of his contract of employment, his beneficiaries are not
entitled to the death benefits enumerated above. [Prudential Shipping and Management
Corporation vs. Sta. Rita, 515 SCRA 157(2007)]

People vs. Turda, 233 SCRA 702, July 06, 1994

Labor Law; Illegal Recruitment; Words and Phrases; Recruitment, defined.—Article 13, par.
(b), of the same Code defines recruitment as “any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not;
provided, that any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and
placement.”

Same; Same; Conspiracy; The appellant, his wife, and Manera were conspirators in the
illegal recruitment business by contributing acts in pursuance of the financial success of
their joint venture for their mutual benefit.—A review of the testimonies of complainants
leads us to no other conclusion than that appellant, his wife, and Manera were conspirators
in the illegal recruitment business by contributing acts in pursuance of the financial success
of their joint venture for their mutual benefit. All the complainants have testified that in every
recruitment transaction, appellant was always present with the other accused. With respect
to the recruitment of Rosales and Shirley Cabalu, both testified that the three (3) accused
went to their house to induce them to apply for overseas work for a fee, and that appellant
was likewise around when the amount of P70,000.00 was quoted by the other accused as
the recruitment service fee. For her part, complainant Celina Andan categorically testified
that appellant and his wife were together when the latter was paid the downpayment in
check for her trip to Canada. Celina further asserted that the Turdas were always together in
their recruitment transactions; in fact, all the complainants confirmed that appellant even
drove them to the airport for the supposed trip abroad not only once but thrice.

Same; Same; Evidence; A self-serving negative evidence cannot prevail over positive
identification.—Appellant’s explanation that his reason for driving the complainants to the
airport was because he himself was also scheduled to leave for abroad, is weak and
uncorroborated. It is a self-serving negative evidence which cannot prevail over his positive
identification by the complaining witnesses as one of those who actively participated in
recruiting them. Besides, how could he be driving his Volkswagen to the airport if he himself
was leaving for abroad, unless he was ready to abandon his car after taking off?

Same; Same; Same; Witnesses; The findings of the trial court on the credibility of witnesses
are entitled to the highest degree of respect and will not be disturbed on appeal in the
absence of any showing that said court overlooked, misunderstood, or misapplied some
facts or circumstances of weight and substance.—The findings of the trial court on the
credibility of witnesses are entitled to the highest degree of respect and will not be disturbed
on appeal in the absence of any showing that said court overlooked, misunderstood or
misapplied some facts or circumstances of weight and substance which do not obtain in the
present case. There is no doubt that the acts of appellant and his wife conclusively
established a common criminal design mutually deliberated upon and accomplished
through coordinated moves. Such acts constitute enlisting, contracting or procuring workers
or promising them overseas employment under Art. 13, par. (b), of the Labor Code. Since
appellant did not have the license or authority to recruit and yet recruited at least three (3)
persons, he is guilty of large-scale illegal recruitment under Art. 38, penalized under Art. 39,
of the Labor Code.

Same; Same; Constitutional Law; Bill of Rights; Ex Post Facto Laws; P.D. 2018, which
increased the penalty for illegal recruitment constitutive of economic sabotage, to life
imprisonment, took effect on 28 July 1986.—We are not persuaded by appellant’s argument
that the trial court erred in imposing upon him the penalty of life imprisonment because this
was imposed by a new law not in force when the offense was allegedly committed. P.D. No.
2018 has increased the penalty to life imprisonment if the illegal recruitment constitutes
economic sabotage. As defined in Art. 38, as amended, illegal recruitment constitutes
economic sabotage if undertaken by a group of three (3) or more persons conspiring and/or
confederating with one another in carrying out any unlawful or illegal transaction, enterprise
or scheme defined under the first paragraph of Art. 38. As correctly pointed out by the
Solicitor General, Sec. 2 of P.D. No. 2018, promulgated on 26 January 1986, has provided for
its immediate effectivity. It was published on 10 February 1986 in Vol. 82, No. 6, Page 922,
of the Official Gazette. Hence, when appellant committed the acts of illegal recruitment from
August 1986 to September 1987, the amendments to the law, which took effect on 28 July
1986, were already in force and effect.

Same; Same; Same; Same; Double Jeopardy; Where some other crimes or felonies are
committed in the process of illegal recruitment, conviction under the Labor Code does not
preclude punishment under other statutes.—The rule is settled that the recruitment of
persons for overseas employment without the necessary recruiting permit or authority from
the POEA constitutes illegal recruitment; however, where some other crimes or felonies are
committed in the process, conviction under the Labor Code does not preclude punishment
under other statutes.

Same; Same; Same; Same; Same; Estafa; Not all acts which constitute estafa necessarily
establish illegal recruitment, for estafa is wider in scope and covers deceits whether or not
related to recruitment activities.—Applying the foregoing principle, not all acts which
constitute estafa necessarily establish illegal recruitment, for estafa is wider in scope and
covers deceits whether or not related to recruitment activities. More importantly, the element
of damage, which is essential in estafa cases, is immaterial in illegal recruitment; and, while
estafa is malum in se, illegal recruitment is malum prohibitum. [People vs. Turda, 233 SCRA
702(1994)]

Prieto vs. National Labor Relations Commission, 226 SCRA 232 , September 10, 1993
Labor Law; Appeal; Factual findings of administrative bodies are as a rule binding on the
Court unless they come under the established exceptions.—The factual findings of
administrative bodies are as a rule binding on this Court, but this is true only when they do
not come under the established exceptions. One of these is where the findings of the POEA
and the NLRC are contrary to each other, as in this case, and there is a necessity to
determine which of them should be preferred as more conformable to the established facts.

Same; The claims of our overseas workers should be received with sympathy and allowed if
warranted conformably to the constitutional mandate for the protection of the working
class.—The private respondents point to the petitioners’ allegation in their complaint that
they were mere assistant cooks and argue that this belies their representation that they did
not apply for these positions. The argument has no merit. The petitioners were not assisted
by lawyers when they filed their complaint and must have had in mind the positions
stipulated in the second contract. In the amended complaint, this statement was rectified. At
any rate, the slight error must not be taken against the petitioners. As we held in Cuadra v.
NLRC, “ our overseas workers are mostly ordinary laborers not conversant with legal
principles and with the manner they can assert and protect rights. They have no compatriot
lawyers to consult and no labor unions to support them in the foreign land. x x x The claims
of our overseas workers should therefore be received with sympathy and allowed, if
warranted, conformably to the constitutional mandate for the protection of the working
class.”

Same; Same; Where the employer-employee relationship has been established, the burden
of proof in termination cases lies with the employer.—Where the employer-employee
relationship has been established, the burden of proof in termination cases lies with the
employer. This burden was not discharged by the private respondents.

Same; Labor Code; A private employment agency can be sued jointly and severally with the
principal or foreign-based employer for any violation of the recruitment agreement or the
contract of employment.—Rule V, Book I of the Omnibus Rules Implementing the Labor Code
defines the duties and obligations of a duly licensed placement and recruitment agency.
Section 2(e) requires a private employment agency to assume all responsibilities for the
implementation of the contract of employment of an overseas worker. Section 10(a)(2)
provides that a private employment agency can be sued jointly and severally with the
principal or foreign-based employer for any violation of the recruitment agreement or the
contract of employment.

Same; Same; Same; Book II, Rule II, Section 1(f) (3) of the New Rules and Regulations
Governing Overseas Employment, promulgated by the Governing Board of the POEA
substantially reiterates Rule II of Book II, Section 1(d) (3) of 1985 POEA Rules.—Book II, Rule
II, Section I(f) (3) of the new Rules and Regulations Governing Overseas Employment
promulgated by the Governing Board of the POEA substantially reiterates Rule II of Book II,
Section 1(d) (3) of 1985 POEA Rules, which governs this case. It provides that a private
employment agency shall assume joint and solidary liability with the employer for all claims
and liabilities that may arise in connection with the implementation of the contracts
including but not limited to payment of wages, health and disability compensation and
repatriation. There is no doubt that, under the facts established in this case, AR and Sons is
jointly and solidarily liable with overseas employer SAM for the claims of the petitioners.

JMM Promotion and Management, Inc. vs. Court of Appeals, 260 SCRA 319 , August 05,
1996
Same; Same; Police power concerns government enactments which precisely interfere with
personal liberty or property in order to promote the general welfare or the common
good.—Thus, police power concerns government enactments which precisely interfere with
personal liberty or property in order to promote the general welfare or the common good. As
the assailed Department Order enjoys a presumed validity, it follows that the burden rests
upon petitioners to demonstrate that the said order, particularly, its ARB requirement, does
not enhance the public welfare or was exercised arbitrarily or unreasonably.

Same; Same; The Artist Record Book requirement and the questioned Department Order
related to its issuance were issued by the Secretary of Labor pursuant to a valid exercise of
the police power.—A thorough review of the facts and circumstances leading to the
issuance of the assailed orders compels us to rule that the Artist Record Book requirement
and the questioned Department Order related to its issuance were issued by the Secretary of
Labor pursuant to a valid exercise of the police power.

Same; Same; The welfare of Filipino performing artists, particularly the women was
paramount in the issuance of Department Order No. 3.—Clearly, the welfare of Filipino
performing artists, particularly the women was paramount in the issuance of Department
Order No. 3. Short of a total and absolute ban against the deployment of performing artists
to “ high-risk ” destinations, a measure which would only drive recruitment further
underground, the new scheme at the very least rationalizes the method of screening
performing artists by requiring reasonable educational and artistic skills from them and
limits deployment to only those individuals adequately prepared for the unpredictable
demands of employment as artists abroad. It cannot be gainsaid that this scheme at least
lessens the room for exploitation by unscrupulous individuals and agencies.

Same; Same; Apart from the State’s police power, the Constitution itself mandates
government to extend the fullest protection to our overseas workers.—In any event, apart
from the State’s police power, the Constitution itself mandates government to extend the
fullest protection to our overseas workers. The basic constitutional statement on labor,
embodied in Section 18 of Article II of the Constitution provides: Sec. 18. The State affirms
labor as a primary social economic force. It shall protect the rights of workers and promote
their welfare. More emphatically, the social justice provision on labor of the 1987
Constitution in its first paragraph states: The State shall afford full protection to labor, local
and overseas, organized and unorganized and promote full employment and equality of
employment opportunities for all.

Same; Same; Protection to labor does not indicate promotion of employment

alone.—Obviously, protection to labor does not indicate promotion of employment alone.
Under the welfare and social justice provisions of the Constitution, the promotion of full
employment, while desirable, cannot take a backseat to the government’s constitutional duty
to provide mechanisms for the protection of our workforce, local or overseas.

Same; Same; A profession, trade or calling is a property right within the meaning of our
constitutional guarantees.—A profession, trade or calling is a property right within the
meaning of our constitutional guarantees. One cannot be deprived of the right to work and
the right to make a living because these rights are property rights, the arbitrary and
unwarranted deprivation of which normally constitutes an actionable wrong.

Same; Same; No right is absolute, and the proper regulation of a profession, calling,
business or trade has always been upheld as a legitimate subject of a valid exercise of the
police power by the state.— Nevertheless, no right is absolute, and the proper regulation of a
profession, calling, business or trade has always been upheld as a legitimate subject of a
valid exercise of the police power by the state particularly when their conduct affects either
the execution of legitimate governmental functions, the preservation of the State, the public
health and welfare and public morals. According to the maxim, sic utere tuo ut alienum non
laedas, it must of course be within the legitimate range of legislative action to define the
mode and manner in which every one may so use his own property so as not to pose injury
to himself or others.

Same; Same; So long as professionals and other workers meet reasonable regulatory
standards no such deprivation exists.—Locally, the Professional Regulation Commission
has begun to require previously licensed doctors and other professionals to furnish
documentary proof that they had either re-trained or had undertaken continuing education
courses as a requirement for renewal of their licenses. It is not claimed that these
requirements pose an unwarranted deprivation of a property right under the due process
clause. So long as professionals and other workers meet reasonable regulatory standards
no such deprivation exists.

Same; Same; The equal protection clause of the Constitution does not forbid classification
for so long as such classification is based on real and substantial differences having a
reasonable relation to the subject of the particular legislation.—The equal protection clause
is directed principally against undue favor and individual or class privilege. It is not intended
to prohibit legislation which is limited to the object to which it is directed or by the territory in
which it is to operate. It does not require absolute equality, but merely that all persons be
treated alike under like conditions both as to privileges conferred and liabilities imposed. We
have held, time and again, that the equal protection clause of the Constitution does not
forbid classification for so long as such classification is based on real and substantial
differences having a reasonable relation to the subject of the particular legislation. If
classification is germane to the purpose of the law, concerns all members of the class, and
applies equally to present and future conditions, the classification does not violate the equal
protection guarantee. [JMM Promotion and Management, Inc. vs. Court of Appeals, 260
SCRA 319(1996)]
 Cadalin vs. POEA's Administrator, 238 SCRA 721 , December 05, 1994
Conflict of Laws; As a general rule, a foreign procedural law will not be applied in the forum.

Same; Same; Actions; Words and Phrases; “ Borrowing Statute, ” Explained; One form of
“ borrowing statutes ” provides that an action barred by the laws of the place where it
accrued, will not be enforced in the forum even though the local statute has not run against
it.—However, the characterization of a statute into a procedural or substantive law becomes
irrelevant when the country of the forum has a “ borrowing statute. ” Said statute has the
practical effect of treating the foreign statute of limitation as one of substance (Goodrich,
Conflict of Laws 152-153 [1938]). A “ borrowing statute ” directs the state of the forum to
apply the foreign statute of limitations to the pending claims based on a foreign law (Siegel,
Conflicts 183 [1975]). While there are several kinds of “ borrowing statutes, ” one form
provides that an action barred by the laws of the place where it accrued, will not be enforced
in the forum even though the local statute has not run against it (Goodrich and Scoles,
Conflict of Laws, 152-153 [1938]). Section 48 of our Code of Civil Procedure is of this kind.
Said Section provides: “ If by the laws of the state or country where the cause of action
arose, the action is barred, it is also barred in the Philippine Islands.”

Same; Same; Same; Section 48 of the Code of Civil Procedure has not been repealed or
amended by the Civil Code.—Section 48 has not been repealed or amended by the Civil Code
of the Philippines. Article 2270 of said Code repealed only those provisions of the Code of
Civil Procedure as to which were inconsistent with it. There is no provision in the Civil Code
of the Philippines, which is inconsistent with or contradictory to Section 48 of the Code of
Civil Procedure (Paras, Philippine Conflict of Laws, 104 [7th ed.]).

Same; Same; Labor Law; The courts of the forum will not enforce any foreign claim
obnoxious to the forum’s public policy.—In the light of the 1987 Constitution, however,
Section 48 cannot be enforced ex proprio vigore insofar as it ordains the application in this
jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976. The courts of the forum will
not enforce any foreign claim obnoxious to the forum’s public policy (Canadian Northern
Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce the
one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in
question would contravene the public policy on the protection to labor.

Labor Law; Overseas Contract Workers; Prescription; Article 291 of the Labor Code applies
to money claims arising from employer-employee relations, including those arising from
application of foreign laws providing for greater employee benefits.—Section 7-a of the
Eight-Hour Labor Law provides the prescriptive period for filing “ actions to enforce any
cause of action under said law. ” On the other hand, Article 291 of the Labor Code of the
Philippines provides the prescriptive period for filing “ money claims arising from
employer-employee relations.” The claims in the cases at bench all arose from the employer
employee relations, which is broader in scope than claims arising from a specific law or
from the collective bargaining agreement. The contention of the POEA Administrator, that
the three-year prescriptive period under Article 291 of the Labor Code of the Philippines
applies only to money claims specifically recoverable under said Code, does not find
support in the plain language of the provision. Neither is the contention of the claimants in
G.R. No. 104911-14 that said Article refers only to claims “ arising from the employer’s
violation of the employee’s right, ” as provided by the Labor Code supported by the facial
reading of the provision.

Same; Same; Right to Speedy Disposition of Cases; “ Speedy disposition of cases ” is a

relative term, a flexible concept consistent with delays and depends upon the circumstances
of each case.—It is true that the constitutional right to “a speedy disposition of cases ” is
not limited to the accused in criminal proceedings but extends to all parties in all cases,
including civil and administrative cases, and in all proceedings, including judicial and
quasi-judicial hearings. Hence, under the Constitution, any party to a case may demand
expeditious action on all officials who are tasked with the administration of justice.
However, as held in Caballero v. Alfonso, Jr., 153 SCRA 153 (1987), “speedy disposition of
cases” is a relative term. Just like the constitutional guarantee of “speedy trial” accorded
to the accused in all criminal proceedings, “ speedy disposition of cases ” is a flexible
concept. It is consistent with delays and depends upon the circumstances of each case.
What the Constitution prohibits are unreasonable, arbitrary and oppressive delays which
render rights nugatory.

Same; Same; Same; Even if the cases took seven years to be disposed of in the
administrative level there is no violation of the constitutional right to speedy disposition of
cases where the cases are not of the run-of-the-mill variety, involve a total of 1,767
claimants hired on various dates, with claims totalling more than US$65 million.—The cases
at bench are not of the run-of-the-mill variety, such that their final disposition in the
administrative level after seven years from their inception, cannot be said to be attended by
unreasonable, arbitrary and oppressive delays as to violate the constitutional rights to a
speedy disposition of the cases of complainants. The amended complaint filed on June 6,
1984 involved a total of 1,767 claimants. Said complaint had undergone several
amendments, the first being on April 3, 1985. The claimants were hired on various dates
from 1975 to 1983. They were deployed in different areas, one group in and the other groups
outside of, Bahrain. The monetary claims totalled more than US$65 million.

Same; Same; Labor Law; The courts of the forum will not enforce any foreign claim
obnoxious to the forum’s public policy.—In the light of the 1987 Constitution, however,
Section 48 cannot be enforced ex proprio vigore insofar as it ordains the application in this
jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976. The courts of the forum will
not enforce any foreign claim obnoxious to the forum’s public policy (Canadian Northern
Railway Co. v. Eggen, 252 U.S. 553, 40 S. Ct. 402, 64 L. ed. 713 [1920]). To enforce the
one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in
question would contravene the public policy on the protection to labor.

Labor Law; Overseas Contract Workers; Prescription; Article 291 of the Labor Code applies
to money claims arising from employer-employee relations, including those arising from
application of foreign laws providing for greater employee benefits.—Section 7-a of the
Eight-Hour Labor Law provides the prescriptive period for filing “ actions to enforce any
cause of action under said law. ” On the other hand, Article 291 of the Labor Code of the
Philippines provides the prescriptive period for filing “ money claims arising from
employer-employee relations. ” The claims in the cases at bench all arose from the
employer- employee relations, which is broader in scope than claims arising from a specific
law or from the collective bargaining agreement. The contention of the POEA Administrator,
that the three-year prescriptive period under Article 291 of the Labor Code of the Philippines
applies only to money claims specifically recoverable under said Code, does not find
support in the plain language of the provision. Neither is the contention of the claimants in
G.R. No. 104911-14 that said Article refers only to claims “ arising from the employer’s
violation of the employee’s right, ” as provided by the Labor Code supported by the facial
reading of the provision.

Nitto Enterprises vs. National Labor Relations Commission, 248 SCRA 654 , September 29,
1995
Labor Law; Apprenticeship Agreements; Prior approval by the Department of Labor and
Employment of the proposed apprenticeship program is a condition sine qua non before an
apprenticeship agreement can be validly entered into.—In the case at bench, the
apprenticeship agreement between petitioner and private respondent was executed on May
28, 1990 allegedly employing the latter as an apprentice in the trade of “care maker/molde
r.” On the same date, an apprenticeship program was prepared by petitioner and submitted
to the Department of Labor and Employment. However, the apprenticeship Agreement was
filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of
Labor and Employment, the apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law.
It is mandated that apprenticeship agreements entered into by the employer and apprentice
shall be entered only in accordance with the apprenticeship program duly approved by the
Minister of Labor and Employment. Prior approval by the Department of Labor and
Employment of the proposed apprenticeship program is, therefore, a condition sine qua non
before an apprenticeship agreement can be validly entered into.

Same; Same; Where the apprenticeship agreement has no force and effect, the worker hired
as apprentice should be considered as a regular employee.—Hence, since the
apprenticeship agreement between petitioner and private respondent has no force and
effect in the absence of a valid apprenticeship program duly approved by the DOLE, private
respondent’s assertion that he was hired not as an apprentice but as a delivery boy
( “ kargador ” or “ pahinante ” ) deserves credence. He should rightly be considered as a
regular employee of petitioner as defined by Article 280 of the Labor Code.

Same; Dismissals; Due Process; The twin requirements of due process, substantive and
procedural, must be complied with before valid dismissal exists, otherwise the dismissal
becomes void.—There is an abundance of cases wherein the Court ruled that the twin
requirements of due process, substantive and procedural, must be complied with, before
valid dismissal exists. Without which, the dismissal becomes void. The twin requirements of
notice and hearing constitute the essential elements of due process. This simply means that
the employer shall afford the worker ample opportunity to be heard and to defend himself
with the assistance of his representative, if he so desires. Ample opportunity connotes every
kind of assistance that management must accord the employee to enable him to prepare
adequately for his defense including legal representation. [Nitto Enterprises vs. National
Labor Relations Commission, 248 SCRA 654(1995)]