39. PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC v.
Issue: Whether the employer’s prerogative right to dismiss was validly
NLRC
G.R. No. 95449 August 18, 1997
Facts: In Nov. 24 1987 Philippine-Singapore Transport Services, Inc.
(PSTS, for brevity), a manning agency, hired private respondent
Estrada as master of the vessel Sea Carrier I for its foreign principal,
Intra-Oil. Intra-Oil had a charter agreement, then, with a company,
which was engaged in a project of oil drilling in the high seas of
Bombay, India. Barely two months into his deployment he was
informed that he would be relieved from his employment. He was not
given any explanation or reason for his relief. On that same day,
someone took over as captain of Sea Carrier I, which prompted Estrada
to relinquish his post. Upon arriving in Manila PSTS informed him that
his employment was terminated because of his incompetence and
denied all his claim for money. PSTS averred that Estrada was
incompetent in handling the vessel for any tow or even approaching
the oil drilling platforms and due to his lack of foresight to anticipate
the number of mooring ropes to be used
Estrada contends that he was removed because of a justified refusal to
obey the order of the charterer's to tow another of its vessel. He
explained that during the voyage from Singapore to Bombay, in the
course of maneuvering the charterer's barge, specifically alongside
jetties, quays and in navigational channels, all the ropes on board the
Sea Carrier I suffered extreme wear and tear, that when the charterer
ordered him to tow its barge, he refused to do so since the ropes were
worn out and inadequate to maneuver a barge in close water situation
and, in his professional opinion, damage would result from using
inadequate ropes. This shortage of ropes was made known to Mr. Bala
of Essar Shipping, who was asked by the private respondent to supply
additional mooring ropes. According to the private respondent, the
relationship between him and the charterer degenerated rapidly
following this particular incident.
POEA ruled in favour of Estrada
NLRC affirmed the decision
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exercised in this case.
Held: NO. Petitioner's imputation of incompetence on the part of the
private respondent due to his lack of foresight to anticipate the number
of mooring ropes to be used is unworthy of being given credence. As
explained by private respondent, the Sea Carrier I was sufficiently
furnished with mooring ropes prior to the voyage. It so happened that
the ropes would later on "suffered extreme wear and tear" during its
voyage from Singapore to Bombay especially along jetties and quays,
and in navigational channels. Faced by such problem, he immediately
reported the situation to, and at the same time, requested for new
mooring ropes from, Mr. Bala of Essar Shipping, a person whom the
private respondent alleged to be connected with the petitioner and its
principal. No new ropes came, however. So, when the charterer
ordered private respondent to tow its barge, he explained that the
ropes were worn out and, in his professional opinion, inadequate for
maneuvering a barge in close water situation, hence, damage would
result if towing of tile barge would proceed. Evidently, as called for by
the circumstances of the situation, the private respondent complied
with his responsibility as master of the vessel.
To our mind, respondent's charge of incompetence is rather sweeping.
Complainant's refusal to carry out the towing order on the basis of his
professional opinion that there was a shortage in towing ropes, a
situation which was known to a certain "Mr. Bala of Essar Shipping", or
that they were inadequate and that it might result in an accident or
cause damage certainly does not prove that he was incompetent. On
the other hand, it would even show that he was very professional in his
job as Master, regardless of the intrusions of the charterer into his area
of responsibility. It would have been a different story had complainant
refused the towing order simply because he didn't know how to, in
which case he could be said to be incompetent in that area of expertise.
Before an employee can be dismissed, the Labor Code, as amended,
requires the employer to furnish the employee a written notice
containing a statement of the causes for termination and to
afford said employee ample opportunity to be heard and to
defend himself with the assistance of his representative if he
so desires. If the employer decides to terminate the services
of the employee, the employer must notify the worker in
writing of the decision to dismiss him, stating clearly the
reasons therefor. Estrada was caught by surprise when on January
21, 1988 he was told by the agent of the principal that he would be
replaces as master of the vessel and would be repatriated to the
Philippines. He was not given any explanation or reason for his
dismissal. His replacement as master of the vessel came in the
afternoon of the same day he was informed of his repatriation.

The power to dismiss an employee is a recognized prerogative that is

inherent in the employer's right to freely manage and regulate his
business. Corollarily, an employer cannot rationally be expected to
retain the employment of a person whose lack of morals, respect and
loyalty to his employer, regard for his employer's rules and appreciation
of the dignity and responsibility of his office, has so plainly and
completely been bared.9 He may not be compelled to continue to
employ such person whose continuance in the service will patently be
inimical to his employer's interest. The right of the company to dismiss
an employee is a measure of self-protection. Such right, however, is
subject
to regulation by the State, basically in the exercise of its paramount
police power. Thus, the dismissal of employees must be made
within the parameters of the law and pursuant to the basic
tenets of equity, justice and fairplay. It must not be done
arbitrarily and without just cause.

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40. PHILIPPINE TELEGRAPH AND TELEPHONE CORPORATION
v. ALICIA LAPLANA et al.
G.R. No. 76645 July 23, 1991
Facts: Alicia Laplana was the cashier of the Baguio City Branch Office
of the Philippine Telegraph and Telephone Corporation (hereafter,
simply PT & T). Sometime in March 1984, PT & T's treasurer, Mrs. Alicia
A. Arogo, directed Laplana to transfer to the company's branch office
at Laoag City. Laplana refused the reassignment and proposed instead
that qualified clerks in the Baguio Branch be trained for the purpose.
She set out her reasons therefor in her letter to Mrs. Arogo dated March
27, 1984, wit:
1. I have established Baguio City as my permanent residence. Working
in Laoag will involve additional expenses like for my board and
lodgingly, fare, and other miscellaneous expenses. My salary alone will
not be enough — there will be no savings and my family will spend
more on account of my transfer.
2. I will be away from my family. A far assignment would be a big
sacrifice on my part keeping me away from my husband and family
which might affect my efficiency.
3. Since I have been with PT & T for more than six years already, I
have learned to work with my co-employees here more effectively.
Working in another place with entirely different environment will
require long adjustment period, thereby affecting performance of my
job.
On April 12, 1984, Mrs. Arogo reiterated her directive for Laplana's
transfer to the Laoag Branch effective April 16 and ordering her to turn
over her accountabilities to the cashier replacing her. When April 16,
1984 came she was no longer allowed to resume work in Baguio
branch. Mrs. Arogo wrote another telegram to Laplana informing her of
another work assignment in Manila and her refusal to abide by it would
constitute abandonment hence dismissal from employment. In reply,
Laplana still refused and replied “RETRENCH ME INSTEAD”
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Laplana employment was terminated and on July 4, 1984, Laplana
signed the quitclaim and received the check representing her 13th
month and separation pay.
Oct 9, 1984 Laplana filed a complaint against PT&T alleging that “when
she insisted on her right of refusing to be transferred she was forced
to be terminated and that there was no ground at all for the
retrenchment;" that the company's "act of transferring is not only
without any valid ground but also arbitrary and without any purpose
but to harass and force . . . (her) to eventually resign.”
Labor Arbiter ruled in favour of Laplana
NLRC affirmed the decision
Issue: Whether PT&T validly exercised its prerogative of making
transfers and reassignment of employees.
Held: YES. In Philippine Japan Active Carbon Corp. v. NLRC,
promulgated on March 8, 1989 this Court made the following
pronouncement, to wit:
It is the employer's prerogative, based on its assessment and
perception of its employees' qualifications, aptitudes, and competence,
to move them around in the various areas of its business operations in
order to ascertain where they will function with maximum benefit to
the company. An employee's right to security of tenure does not
give him such a vested right in his position as would deprive
the company of its prerogative to change his assignment or
transfer him where he will be most useful. When his transfer
is not unreasonable, nor inconvenient, nor prejudicial to him,
and it does not involve a demotion in rank or diminution of his
salaries, benefits, and other privileges, the employee may not
complain that it amounts to a constructive dismissal.
In this case, the employee (Laplana) had to all intents and purposes
resigned from her position. She had unequivocally asked that she be
considered dismissed, herself suggesting the reason therefor ––
retrenchment. When so dismissed, she accepted separation pay. On
the other hand, the employer has not been shown to be acting
otherwise than in good faith, and in the legitimate pursuit of
what it considered its best interests, in deciding to transfer her
to another office. There is no showing whatever that the
employer was transferring Laplana to another work place, not
because she would be more useful there, but merely "as a
subterfuge to rid (itself) of an undesirable worker," or "to
penalize an employee for union activities” The employer was
moreover not unmindful of Laplana's initial plea for reconsideration of
the directive for her transfer to Laoag; in fact, in response to that plea
not to be moved to the Laoag Office, the employer opted instead to
transfer her to Manila, the main office, offering at the same time the
normal benefits attendant upon transfers from an office to another.

The situation here presented is of an employer transferring an

employee to another office in the exercise of what it took to be sound
business judgment and in accordance with pre-determined and
established office policy and practice, and of the latter having what was
believed to be legitimate reasons for declining that transfer, rooted in
considerations of personal convenience and difficulties for the family.
Under these circumstances, the solution proposed by the employee
herself, of her voluntary termination of her employment and the
delivery to her of corresponding separation pay, would appear to be
the most equitable.

4|Page
41. YUCO CHEMICAL INDUSTRIES, INC v. MINISTRY OF
LABOR AND EMPLOYMENT
G.R. No. L-75656 May 28, 1990
Facts: In 1978, George Halili and Amado Magno both working students
were employed by petitioner company which is engaged in the
manufacture/assembly of ice boxes in Barangay Matatalaib, Tarlac,
Tarlac. They were assigned to make aluminum handles for the ice
boxes. On 1981 after getting a favourable opinion from MOLE Tarlac to
transfer its production of aluminum handles from Tarlac to Sta. Cruz,
Manila. Petitioner addressed a memorandum to private
respondents directing them to report for work within one
week from notice at their new place of work at Felix Huertas
Street, Sta. Cruz, Manila. The memorandum further stated that
private respondents would be paid with a salary of P27.00 and an
additional allowance of P2.00 "to meet the higher cost of living in
Manila.
Instead of reporting to work, Halili and Magno filed a complaint with
the provincial labor office for illegal dismissal, 13th month pay and
service incentive leave pay. Contending among others that “that they
were discriminated against because of their union activities
and their refusal to disaffiliate from the union.”
Tarlac Labor office ruled in favour of the workers
MOLE Deputy Minister Leogardo, Jr. upheld the decision
Issue: Whether the company validly exercised its management
prerogative in transfering its employees from Tarlac to Manila.
Held: NO. The managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion and putting to mind the
basic elements of justice and fair play. Having the right should not be
confused with the manner in which that right must be exercised. Thus
it cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. Nor when the real reason is to penalize an
employee for his union activities and thereby defeat his right to self-
organization. But the transfer can be upheld when there is no showing
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that it is unnecessary, inconvenient and prejudicial to the displaced
employee.
The reassignment of Halili and Magno to Manila is legally indefensible
on several grounds. Firstly, it was grossly inconvenient to private
respondents. They are working students. When they received the
transfer memorandum directing their relocation to Manila within seven
days from notice, classes had already started. The move from Tarlac to
Manila at such time would mean a disruption of their studies. Secondly,
there appears to be no genuine business urgency that necessitated
their transfer. As well pointed out by private respondents' counsel, the
fabrication of aluminum handles for ice boxes does not require special
dexterity. Many workers could be contracted right in Manila to perform
that particular line of work.
Altogether, there is a strong basis for public respondent's
conclusion that the controversial transfer was not prompted
by legitimate reasons. Petitioner company had indeed
discriminated against Magno and Halili when the duo was
selected for reassignment to Manila. The transfer was timed at
the height of union concerted activities in the firm,
deliberately calculated to demoralize the other union
members. Under such questionable circumstances, private
respondents had a valid reason to refuse the Manila re-
assignment. Public respondent did not err or abuse his discretion in
upholding the employees' cause.
42. FARLE P. ALMODIEL vs NLRC
G.R. No. 100641 June 14, 1993
Doctrine:
It is a well-settled rule that labor laws do not authorize interference
with the employer's judgment in the conduct of his business. The
determination of the qualification and fitness of workers for hiring and
firing, promotion or reassignment are exclusive prerogatives of
management. The employer is free to determine, using his own
discretion and business judgment, all elements of employment, "from
hiring to firing" except in cases of unlawful discrimination or those
which may be provided by law. There is none in the instant case.
Facts:
Petitioner Farle P. Almodiel is a CPA who was hired in October, 1987 as
Cost Accounting Manager of respondent Raytheon Philippines, Inc.
through a reputable placement firm, John Clements Consultants, Inc.
He started as a probationary or temporary employee. As Cost
Accounting Manager, his major duties were: (1) plan, coordinate and
carry out year and physical inventory; (2) formulate and issue out hard
copies of Standard Product costing and other cost/pricing analysis if
needed and required and (3) set up the written Cost Accounting System
for the whole company.
In the meantime, the standard cost accounting system was installed
and used at the Raytheon plants and subsidiaries worldwide. It was
likewise adopted and installed in the Philippine operations. As a
consequence, the services of a Cost Accounting Manager allegedly
entailed only the submission of periodic reports that would use
computerized forms prescribed and designed by the international head
office of the Raytheon Company in California, USA.
On January 27, 1989, petitioner was summoned by his immediate boss
and in the presence of IRD Manager, he was told of the abolition of his
position on the ground of redundancy. He pleaded with management
to defer its action or transfer him to another department, but he was
told that the decision of management was final and that the same has
been conveyed to the Department of Labor and Employment. Thus, he
6|Page
was constrained to file the complaint for illegal dismissal before the
Arbitration Branch of the National Capital Region, NLRC, Department of
Labor and Employment.
Issue:
Whether bad faith, malice and irregularity crept in the abolition of
petitioner's position of Cost Accounting Manager on the ground of
redundancy.
Held:
An employer has no legal obligation to keep more employees than are
necessary for the operation of its business. Petitioner does not dispute
the fact that a cost accounting system was installed and used at
Raytheon subsidiaries and plants worldwide; and that the functions of
his position involve the submission of periodic reports utilizing
computerized forms designed and prescribed by the head office with
the installation of said accounting system. Petitioner attempts to
controvert these realities by alleging that some of the functions of his
position were still indispensable and were actually dispersed to another
department. What these indispensable functions that were dispersed,
he failed however, to specify and point out. Besides, the fact that the
functions of a position were simply added to the duties of another does
not affect the legitimacy of the employer's right to abolish a position
when done in the normal exercise of its prerogative to adopt sound
business practices in the management of its affairs.
Considering further that petitioner herein held a position which was
definitely managerial in character, Raytheon had a broad latitude of
discretion in abolishing his position. An employer has a much wider
discretion in terminating employment relationship of managerial
personnel compared to rank and file employees.7 The reason obviously
is that officers in such key positions perform not only functions which
by nature require the employer's full trust and confidence but also
functions that spell the success or failure of an enterprise.
43. CALTEX REFINERY EMPLOYEES ASSOCIATION (CREA) and
ARNELIO M. CLARETE vs. NLRC
G.R. No. 102993 July 14, 1995
Doctrine:
A valid exercise of management prerogative encompasses hiring, work
assignments, working methods, time, place and manner of work, tools
to be used, procedure to be followed, supervision of workers, working
regulations, transfer of employees, discipline, dismissal and recall of
workers. This prerogative must, however, be exercised in good faith for
the advancement of the employer's interest and not for the purpose of
defeating the rights of the employees granted by law or contract.
Facts:
Petitioner Clarete was hired by respondent Caltex Mechanic C on
November 3, 1981. He was later promoted to the position of Mechanic
B and assigned to the Mechanical/Metal Grades Section of respondent
Caltex's refinery in Batangas.
Petitioner’s version:
According to Clarete, at about 4:00 p.m. on April 13, 1989, on his way
to the refinery's main gate after completing a day's work at the
Maintenance Area IV, he saw on a pile of rubbish a bottle of lighter
fluid, which mechanics use to remove grease from their hands. He
picked up the bottle and placed it in the basket attached to the
handlebar of his bicycle with the intention of asking the security guard
at the gate to allow him to bring it home.
Upon reaching the gate, he took the bottle of lighter fluid from the
basket, punched out his time card at the bundy clock and then asked
Juan de Villa, the security guard on duty, permission to take home the
bottle. Replying that he was not authorized to grant the permission
sought, de Villa referred Clarete to Dominador Castillo, the security
supervisor. When so approached, however, Castillo told Clarete to leave
the bottle in his office. Clarete complied and left for home.
Respondent’s Version:
7|Page
On said date, de Villa noticed a black bag which Clarete did not submit
for inspection. When requested by de Villa to open the same for
inspection, Clarete retorted that it was not necessary to inspect the bag
as it contained only dirty clothes. Unconvinced, de Villa opened the bag
and found a one-liter sample bottle filled with lighter fluid
surreptitiously hidden inside in the sleeves of Clarete's working clothes,
which, in turn, were covered by other clothes. When asked if he had a
gate pass to bring the bottle out of the premises, Clarete replied that
he did not secure a gate pass as the lighter fluid was for his personal
use.xxx
On April 18, 1989, Clarete received a letter from his immediate
supervisor, requiring him to explain in writing why he should not be
subjected to disciplinary action for violation of company rules and
regulations. In his written explanation of April 20, 1989, Clarete stated:
(1) that he had no intention of bringing the bottle of lighter fluid out of
the company premises without the guard's permission; (2) that he did
seek permission but was denied; and (3) that he left the bottle behind
with the guard when told to do so.
Later that year, he was charge with the crime of theft and was filed in
the MTC Batangas.
In the meantime, on April 19, 1990, a decision was rendered in Criminal
Case No. 3331, acquitting Clarete of the crime charged based on the
insufficiency of the evidence to establish his guilt beyond reasonable
doubt.
Subsequently, he received a letter Section Head, Mechanical/Metal
Section, requiring him to explain why his services should not be
terminated for cause in view of Criminal Case. On August 20, 1990,
Clarete was informed that his services were being terminated effective
August 24, 1990 for "serious misconduct and loss of trust and
confidence resulting from your having violated a lawful order of the
Company.
Issue
Whether his dismissal was without valid cause as there was no violation
of company rules

Ruling:
While Clarete may be guilty of violation of company rules, we find the
penalty of dismissal imposed upon him by respondent Caltex too harsh
and unreasonable. Such a penalty of dismissal must be commensurate
with the act, conduct or omission imputed to the employee and
imposed in connection with the employer's disciplinary authority. Even
when there exist some rules agreed upon between the employer and
employee on the subject of dismissal the same cannot preclude the
State from inquiring on whether its rigid application would work too
harshly on the employee.

Considering that Clarete has no previous record in his eight years of

service; that the value of the lighter fluid, placed at P8.00, is very
minimal compared to his salary of P325.00 a day; that after his
dismissal, he has undergone mental torture; that respondent Caltex did
not lose anything as the bottle of lighter fluid was retrieved on time;
and that there was no showing that Clarete's retention in the service
would work undue prejudice to the viability of employer's operations or
is patently inimical to its interest, we hold that the penalty of dismissal
imposed on Clarete is unduly harsh and grossly disproportionate to the
reason for terminating his employment. Hence, we find that the
preventive suspension imposed upon private respondent is a sufficient
penalty for the misdemeanor committed by petitioner.

8|Page
44. FIRESTONE TIRE AND RUBBER COMPANY OF THE
PHILIPPINES vs. CARLOS LARIOSA
G.R. No. 70479 February 27, 1987
Doctrine:
The employer's obligation to give his workers just compensation and
treatment carries with it the corollary right to expect from the workers
adequate work, diligence and good conduct.
Facts:
Carlos Lariosa started working with Firestone on January 3, 1972 as a
factory worker. At the time of his dismissal, he was a tire builder.
At around 2:00 o'clock in the afternoon of July 27, 1983, as he was
about to leave the company premises Lariosa submitted himself to a
routine check by the security guards at the west gate. He was frisked
by Security Guard Ambrosio Liso [Lizo] while his personal bag was
inspected by Security Guard Virgilio Olvez. In the course of the
inspection, sixteen [16] wool flannel swabs, all belonging to the
company, were found inside his bag, tucked underneath his soiled
clothes.
As a result of the incident, Firestone terminated Lariosa's services on
August 2, 1983, citing as grounds therefor: "stealing company property
and loss of trust.
Lariosa, sued Firestone before the Ministry of Labor and Employment
for illegal dismissal. The Labor Arbiter found Lariosa's dismissal
justified. However, on appeal, the National Labor Relations
Commission reversed the decision of the Labor Arbiter and held that
the dismissal of Lariosa was too severe a penalty.
Issue:
Whether NLRC erred in reversing the Labor Arbiter’s decision
Ruling:
Yes. it is likewise clear that Firestone did not act arbitrarily in
terminating Lariosa's services. On the contrary, there are transcripts to
9|Page
prove that an investigation of the incident was promptly conducted in
the presence of the employee concerned, the union president and the
security guards who witnessed the attempted asportation. Records also
belie the allegation that Lariosa was shown his walking papers on the
very day of the incident. The letter of Ms. Villavicencio to Lariosa dated
August 1, 1983 informing the latter of his dismissal effective August 2,
1983 conclusively shows that he was discharged only on August 2,
1983, after an investigation was held to ventilate the truth about the
July 27 incident. Thus, we cannot agree with the NLRC's conclusion that
even if Firestone had found substantial proof of Lariosa's misconduct,
it did not observe the statutory requirements of due process.
As a tire builder, Lariosa was entrusted with certain materials for use
in his job. On the day in question, he was given two bundles of wool
flannel swabs [ten pieces per bundle] for cleaning disks. He used four
swabs from one pack and kept the rest [sixteen pieces] in his "blue
travelling bag." 10 Why he placed the swabs in his personal bag, which
is not the usual receptacle for company property, has not been
satisfactorily explained.
If Lariosa, by his own wrong-doing, could no longer be trusted, it would
be an act of oppression to compel the company to retain him, fully
aware that such an employee could, in the long run, endanger its very
viability.
The employer's obligation to give his workers just compensation and
treatment carries with it the corollary right to expect from the workers
adequate work, diligence and good conduct.
45. WENIFREDO FARROLVS. THE HONORABLE COURT OF
APPEALS
G.R. No. 133259, February 10, 2000
Doctrine:
Although the employer has the prerogative to discipline or dismiss its
employee, such prerogative cannot be exercised wantonly, but must be
controlled by substantive due process and tempered by the
fundamental policy of protection to labor enshrined in the Constitution.
Facts:
Petitioner Wenifredo Farrol was employed as station cashier at
respondent RCPI’s Cotabato City station. On 1993, respondent RCPI’s
district manager in Cotabato City informed their main office that
"Peragram funds" from said branch were used for the payment of
retirement benefits of five employees. On the same year, petitioner
verified as correct RCPI’s Field Auditor’s report that there was a
shortage of P50,985.37 in their branch’s Peragram, Petty and General
Cash Funds. Consequently, petitioner was required by the Field Auditor
to explain the cash shortage within 24 hours from notice. The next day,
petitioner paid to RCPI P25,000.00 of the cash shortage.
On October 16, 1993, RCPI required petitioner to explain why he should
not be dismissed from employment. Two days thereafter, petitioner
wrote a letter to the Field Auditor stating that the missing funds were
used for the payment of the retirement benefits earlier referred to by
the branch manager and that he had already paid P25,000.00 to RCPI.
After making two more payments of the cash shortage to RCPI,
petitioner was informed by the district manager that he is being placed
under preventive suspension. Thereafter, he again paid two more sums
on different dates to RCPI leaving a balance of P6,995.37 of the
shortage.
Respondent RCPI sent a letter to petitioner on November 22, 1993
informing him of the termination of his services as of November 20,
1993.
10 | P a g e
Voluntary Arbitrator ruled that petitioner was illegally dismissed from
employment.
CPI filed a petition for certiorari before the Court of Appeals (CA), which
reversed the ruling of the arbitrator and dismissed the complaint for
illegal dismissal.
Issue:
Whether the dismissal was done with abuse of discretion
Ruling:
A perusal of RCPI’s dismissal notice reveals that it merely stated a
conclusion to the effect that the withholding was deliberately done to
hide alleged malversation or misappropriation without, however,
stating the facts and circumstances in support thereof. It further
mentioned that the position of cashier requires utmost trust and
confidence but failed to allege the breach of trust on the part of
petitioner and how the alleged breach was committed. On the
assumption that there was indeed a breach, there is no evidence that
petitioner was a managerial employee of respondent RCPI. It should
be noted that the term "trust and confidence" is restricted to
managerial employees. It may not even be presumed that when there
is a shortage, there is also a corresponding breach of trust. Cash
shortages in a cashier’s work may happen, and when there is no proof
that the same was deliberately done for a fraudulent or wrongful
purpose, it cannot constitute breach of trust so as to render the
dismissal from work invalid.
Assuming further that there was breach of trust and confidence, it
appears that this is the first infraction committed by petitioner.
Although the employer has the prerogative to discipline or dismiss its
employee, such prerogative cannot be exercised wantonly, but must be
controlled by substantive due process and tempered by the
fundamental policy of protection to labor enshrined in the
Constitution. Infractions committed by an employee should merit only
the corresponding sanction demanded by the circumstances. The
penalty must be commensurate with the act, conduct or omission
imputed to the employee and imposed in connection with the
employer’s disciplinary authority.

11 | P a g e
46. PHILIPPINE AIRLINES, INC vs. NATIONAL LABOR
RELATIONS COMMISSION
G.R. No. 85985 August 13, 1993
Doctrine:
the exercise of managerial prerogatives is not unlimited. It is
circumscribed by limitations found in law, a collective bargaining
agreement, or the general principles of fair play and justice. Moreover,
it must be duly established that the prerogative being invoked is clearly
a managerial one.
Facts:
On March 15, 1985, PAL completely revised its 1966 Code of Discipline.
The Code was circulated among the employees and was immediately
implemented, and some employees were forthwith subjected to the
disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association
(PALEA) filed a complaint before the NLRC for unfair labor practice with
the following remarks: "ULP with arbitrary implementation of PAL's
Code of Discipline without notice and prior discussion with Union by
Management". In its position paper, PALEA contended that PAL, by its
unilateral implementation of the Code, was guilty of unfair labor
practice. PALEA alleged that copies of the Code had been circulated in
limited numbers; that being penal in nature the Code must conform
with the requirements of sufficient publication, and that the Code was
arbitrary, oppressive, and prejudicial to the rights of the employees. It
prayed that implementation of the Code be held in abeyance; that PAL
should discuss the substance of the Code with PALEA; that employees
dismissed under the Code be reinstated and their cases subjected to
further hearing; and that PAL be declared guilty of unfair labor practice
and be ordered to pay damages.
PAL filed a motion to dismiss the complaint, asserting its prerogative as
an employer to prescribe rules and regulations regarding employees'
conduct in carrying out their duties and functions, and alleging that by
implementing the Code, it had not violated the CBA or any provision of
the Labor Code.
12 | P a g e
LA: rendered finding no bad faith on the part of PAL in adopting the
Code and ruling that no unfair labor practice had been committed.
The NLRC found no evidence of unfair labor practice committed by PAL
and affirmed the dismissal of PALEA's charge.
Issue:
Whether or not the formulation of a Code of Discipline among
employees is a shared responsibility of the employer and the
employees.
Ruling:
Industrial peace cannot be achieved if the employees are denied their
just participation in the discussion of matters affecting their rights.
Thus, even before Article 211 of the labor Code (P.D. 442) was
amended by Republic Act No. 6715, it was already declared a policy of
the State, "(d) To promote the enlightenment of workers concerning
their rights and obligations . . . as employees." This was, of course,
amplified by Republic Act No 6715 when it decreed the "participation
of workers in decision and policy making processes affecting their
rights, duties and welfare." PAL's position that it cannot be saddled with
the "obligation" of sharing management prerogatives as during the
formulation of the Code, Republic Act No. 6715 had not yet been
enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot thus
be sustained. While such "obligation" was not yet founded in law when
the Code was formulated, the attainment of a harmonious labor-
management relationship and the then already existing state policy of
enlightening workers concerning their rights as employees demand no
less than the observance of transparency in managerial moves affecting
employees' rights.
Petitioner's assertion that it needed the implementation of a new Code
of Discipline considering the nature of its business cannot be
overemphasized. In fact, its being a local monopoly in the business
demands the most stringent of measures to attain safe travel for its
patrons. Nonetheless, whatever disciplinary measures are adopted
cannot be properly implemented in the absence of full cooperation of
the employees. Such cooperation cannot be attained if the employees
are restive on account, of their being left out in the determination of
cardinal and fundamental matters affecting their employment.

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57. BENGUET ELECTRIC COOPERATIVE, INC vs. HON. PURA
FERRER-CALLEJA,
FACTS
Beneco Worker's Labor Union-Association of Democratic Labor
Organizations (hereinafter referred to as BWLU- ADLO) filed a petition
for direct certification as the sole and exclusive bargaining
representative of all the rank and file employees of Benguet Electric
Cooperative, Inc. (hereinafter referred to as BENECO) at La Trinidad,
Benguet alleging: BENECO has in its employ (214) rank and file
employees; that(198) or 92.5% of these employees have supported
the filing of the petition; that no certification election has been
conducted for the last 12 months; that there is no existing collective
bargaining representative of the rank and file employees sought to
represented by BWLU- ADLO; and, that there is no collective bargaining
agreement in the cooperative.
Beneco Employees Labor Union (hereinafter referred to as BELU)
opposed on the ground that it was certified as the sole and exclusive
bargaining representative of the subject workers pursuant to an order
issued by the med-arbiter; that pending resolution by the NLRC are two
cases it filed against BENECO involving bargaining deadlock and unfair
labor practice; and, that the pendency of these cases bars any
representation question.
BENECO, on the other hand, filed a motion to dismiss the petition
claiming that it is a non-profit electric cooperative engaged in providing
electric services to its members and patron-consumers in the City of
Baguio and Benguet Province; and, that the employees sought to be
represented by BWLU-ADLO are not eligible to form, join or assist labor
organizations of their own choosing because they are members and
joint owners of the cooperative.
med-arbiter: gave due course to the petition for certification election
between BWLU-ALDO and BELU, limiting the election among the rank
and file employees of petitioner who are non-members; BELU won the
election.
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BENECO however protested that 4 employees were the only ones who
were non-members, hence only they should be allowed to vote, but the
med-arbiter dismissed the protest. Bureau of Labor Relations (BLR)
affirmed the med-arbiter's order and certified BELU as the sole and
exclusive bargaining agent of all the rank and file employees of
BENECO.
Issue
WON members-employees of petitioner cooperative are eligible to form
and join a labor union, and consequently has the right to participate in
the certification elections.
RULING
NO. The right to collective bargaining is not available to an employee
of a cooperative who at the same time is a member and co-owner
thereof. With respect, however, to employees who are neither
members nor co-owners of the cooperative they are entitled to exercise
the rights to self-organization, collective bargaining and negotiation as
mandated by the 1987 Constitution and applicable statutes.
The fact that the members-employees of petitioner do not participate
in the actual management of the cooperative still does not make them
eligible to form, assist or join a labor organization for the purpose of
collective bargaining with petitioner. Members of cooperative cannot
join a labor union for purposes of collective bargaining was based on
the fact that as members of the cooperative they are co-owners
thereof. As such, they cannot invoke the right to collective bargaining
for "certainly an owner cannot bargain with himself or his co-owners.".
It is the fact of ownership of the cooperative, and not involvement in
the management thereof, which disqualifies a member from joining any
labor organization within the cooperative. Thus, irrespective of the
degree of their participation in the actual management of the
cooperative, all members thereof cannot form, assist or join a labor
organization for the purpose of collective bargaining.
A cooperative ... is by its nature different from an ordinary business
concern being run either by persons, partnerships, or corporations. Its
owners and/or members are the ones who run and operate the
business while the others are its employees. As above stated,
irrespective of the number of shares owned by each member they are
entitled to cast one vote each in deciding upon the affairs of the
cooperative. Their share capital earn limited interest. They enjoy
special privileges as-exemption from income tax and sales taxes,
preferential right to supply their products to State agencies and even
exemption from the minimum wage laws.

An employee therefore of such a cooperative who is a member and co-

owner thereof cannot invoke the right to collective bargaining for
certainly an owner cannot bargain with himself or his co-owners.

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58. INTERNATIONAL CATHOLIC IMMIGRATION
COMMISSION, vs HON. PURA CALLEJA IN HER CAPACITY AS
DIRECTOR OF THE BUREAU OF LABOR RELATIONS AND TRADE
UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS)
WFTU
Facts
Two consolidated cases, due to similarity of issues.
International Catholic Migration Commission (ICMC) Case.
ICMC was one of those accredited by the Philippine Government to
operate the refugee processing center in Morong, Bataan in the advent
of the Vietnam War. As an international organization rendering
voluntary and humanitarian services in the Philippines, its activities are
parallel to those of the International Committee for Migration (ICM) and
the International Committee of the Red Cross (ICRC). Trade Unions of
the Philippines and Allied Services (TUPAS) filed with the then Ministry
of Labor and Employment a Petition for Certification Election among
the rank and file members employed by ICMC. The latter opposed the
petition on the ground that it is an international organization registered
with the United Nations and, hence, enjoys diplomatic immunity.
Med-Arbiter: dismissed the petition for lack of jurisdiction.
BLR: reversed the Med-Arbiter's Decision.
Subsequently, however, the Philippine Government, granted ICMC the
status of a specialized agency with corresponding diplomatic privileges
and immunities, prompting ICMC to seek the immediate dismissal of
the TUPAS Petition for Certification Election invoking the immunity
expressly granted but the same was denied by respondent BLR
Director.
The International Rice Research Institute [IRRI] Case
Philippine Government and the Ford and Rockefeller Foundations
signed a Memorandum of Understanding establishing the International
Rice Research Institute (IRRI) at Los Baños, Laguna. It was intended
to be an autonomous, philanthropic, tax-free, non-profit, non-stock
organization designed to carry out the principal objective of conducting
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"basic research on the rice plant”. By virtue of Pres. Decree No. 1620,
IRRI was granted the status, prerogatives, privileges and immunities of
an international organization.
The Organized Labor Association in Line Industries and Agriculture
(OLALIA), is a legitimate labor organization with an existing local union,
the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, for short)
in respondent IRRI. The Kapisanan filed a Petition for Direct
Certification Election with Regional Office of the Department of Labor
and Employment (DOLE). IRRI opposed the petition invoking Pres.
Decree No. 1620 conferring upon it the status of an international
organization and granting it immunity.
Med-Arbiter: dismissed.
BLR Director: authorized the calling of a certification election among
the rank-and-file employees of IRRI.
Secretary of Labor: dismissed the Petition for Certification Election,
Issue
Won the grant of diplomatic privileges and immunites to ICMC/ IRRI
extends to immunity from the application of Philippine labor laws.
Ruling
YES.
There can be no question that diplomatic immunity has, in fact, been
granted ICMC and IRRI. There constitutes a categorical recognition by
the Executive Branch of the Government that ICMC and IRRI enjoy
immunities accorded to international organizations, which
determination has been held to be a political question conclusive upon
the Courts in order not to embarrass a political department of
Government. The exercise of jurisdiction by the Department of Labor
in these instances would defeat the very purpose of immunity, which is
to shield the affairs of international organizations, in accordance with
international practice, from political pressure or control by the host
country to the prejudice of member States of the organization, and to
ensure the unhampered performance of their functions.
However, ICMC's and IRRI's immunity from local jurisdiction by no
means deprives labor of its basic rights, which are guaranteed by the
1987 Constitution; as well as in each international organization’s
internal rules:

For ICMC employees are not without recourse whenever there are
disputes to be settled. Section 31 of the Convention on the Privileges
and Immunities of the Specialized Agencies of the United Nations 17
provides that "each specialized agency shall make provision for
appropriate modes of settlement of: (a) disputes arising out of
contracts or other disputes of private character to which the specialized
agency is a party." Moreover, pursuant to Article IV of the
Memorandum of Agreement between ICMC the the Philippine
Government, whenever there is any abuse of privilege by ICMC, the
Government is free to withdraw the privileges and immunities
accorded.

Neither are the employees of IRRI without remedy in case of dispute

with management as, in fact, there had been organized a forum for
better management-employee relationship as evidenced by the
formation of the Council of IRRI Employees and Management (CIEM)
wherein "both management and employees were and still are
represented for purposes of maintaining mutual and beneficial
cooperation between IRRI and its employees." The existence of this
Union factually and tellingly belies the argument that Pres. Decree No.
1620, which grants to IRRI the status, privileges and immunities of an
international organization, deprives its employees of the right to self-
organization.

Moreover, a certification election cannot be viewed as an independent

or isolated process. It could tugger off a series of events in the
collective bargaining process together with related incidents and/or
concerted activities, which could inevitably involve ICMC in the "legal
process," which includes "any penal, civil and administrative
proceedings." The eventuality of Court litigation is neither remote and
from which international organizations are precisely shielded to
safeguard them from the disruption of their functions.

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59. GOLDEN FARMS, INC. vs. THE HONORABLE SECRETARY OF
LABOR
FACTS
Progressive Federation of Labor (PFL) filed a petition before the Med-
Arbiter praying for the holding of a certification election among the
monthly paid office and technical rank-and-file employees of petitioner
Golden Farms(Banana farm). Petitioner moved to dismiss the petition
on (3) grounds: First, respondent PFL failed to show that it was
organized as a chapter within petitioner's establishment; Second, there
was already an existing collective bargaining agreement between the
rank-and-file employees represented by the National Federation of
Labor (NFL) and petitioner; and third, employees represented by PFL
had allegedly been disqualified by this Court from bargaining with
management in Golden Farms, Inc., vs. Honorable Director Pura Ferrer-
Calleja.PFL opposed as the monthly paid office and technical employees
should be allowed to form a separate bargaining unit because they
were expressly excluded from coverage in the Collecting Bargaining
Agreement (CBA) between petitioner and NFL.
Med-Arbiter: granted the petition and ordered that a certification
election be conducted. Secretary of Labor affirmed.
Issue
WON petitioner's monthly paid rank-and file employees can constitute
a bargaining unit separate from the existing bargaining unit of its daily
paid rank-and-file employees.
Ruling
Yes. The monthly paid office and technical rank-and-file employees of
petitioner Golden Farms enjoy the constitutional right to self-
organization and collective bargaining. A "bargaining unit" has been
defined as a group of employees of a given employer, comprised of all
or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights and duties
of the parties under the collective bargaining provisions of the law.
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In the case at bench, the evidence established that the monthly paid
rank-and-file employees of petitioner primarily perform administrative
or clerical work. In contradistinction, the petitioner's daily paid rank-
and-file employees mainly work in the cultivation of bananas in the
fields. It is crystal clear the monthly paid rank-and-file employees of
petitioner have very little in common with its daily paid rank-and-file
employees in terms of duties and obligations, working conditions,
salary rates, and skills. To be sure, the said monthly paid rank-and-file
employees have even been excluded from the bargaining unit of the
daily paid rank-and-file employees. This dissimilarity of interests
warrants the formation of a separate and distinct bargaining unit for
the monthly paid rank-and-file employees of the petitioner. To rule
otherwise would deny this distinct class of employees the right to self-
organization for purposes of collective bargaining. Without the shield
of an organization, it will also expose them to the exploitations of
management.
Finally, we note that it was petitioner company that filed the motion to
dismiss the petition for election. The general rule is that an employer
has no standing to question a certification election since this is the sole
concern of the workers. Law and policy demand that employers take a
strick, hands-off stance in certification elections. The bargaining
representative of employees should be chosen free from any
extraneous influence of management. A labor bargaining
representative, to be effective, must owe its loyalty to the employees
alone and to no other.
58. PAFLU v. Secretary of Labor in which labor organizations, associations an union of workers are
G.R. No. 22228, 1969 engaged affect public interest which should be protected. Furthermore,
the obligation to submit financial statement, as a condition for the non-
FACTS: cancellation of a certificate of registration, is a reasonable regulation
for the benefit of the members of the organization, considering that the
Registration of Labor Organization issued a notice of hearing for the same generally solicits funds or membership, as well as oftentimes
cancellation of the registration SSSEA because of failure to furnish the collects, on behalf of its members, huge amounts of money due to them
Bureau of Labor Relations with copies of the the report on the finances or to the organization.
and failure to submit the names, postal address and non-subersive
affidavits of the officers of the union within 60 days of their election.
The Registrar rendered decision canceling the SSSEA’s Registation
certificate. Fajardo, the president of SSSEA moved for reconsideration
of the said decision. Registrar issued an order declaring the SSSEA had
failed to submit the requirements and granted SSSEA 15 days from
notice to comply with the requirements. Pending such resolution,
PAFLU, the SSSEA, Fajardo and all the officers and members of SSSEA
commenced the present action on the ground that Sec. 23 of R.A. No.
875 violates their freedom of assembly and association, and is
inconsistent with the Universal Declaration of Human Rights.

ISSUE:

Whether Sec. 23 of R.A. No. 875 violates the right of SSSEA and PAFLU
to self-organization.

RULING:

No. The registration prescribed in paragraph (B) of the said section is

not a limitation to the right of assembly or association, which may be
exercised with or without said registration. The latter merely a condition
sine qua non for thee acquisition of legal personality by labor
organizations, associations, or unions and the possession of the rights
and privileges granted by law to legitimate labor organizations. The
Constitution does not guarantee these rights and privileges, much less
said personality which are merely statutory creations, for the
possession and exercise of which organizers, although not truly
accredited agents of the union they purport to represent. Such
requirements is a valid exercise of police power, because the activities
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59. Progressive Development v. Secretary of Labor
G.R. No. 96425, 1992
FACTS:
Pambansang Kilusan ng Paggawa (KILUSAN) filed with DOLE a petition
for certification election among the rank-and-file employees of the
petitioner alleging that it is a legitimate labor federation and its local
chapter , Progressive Development was issued a charter certificate.
Kilusan claimed that there was no existing collective bargaining
agreement and that no other legitimate labor organization existed in
the bargaining unit. Petitioner filed its motion to dismiss contending
that the local union failed to comply with Rule II Sec. 3, Book V of the
Rules Implementing Labor Code which requires the constitution and by-
laws; names, addresses and list of officers and/or members; and books
of accounts. Kilusan alleged that it already submitted the requirements
and averred that no books of account could be submitted as the local
union was only recently organized. Med Arbiter held that there was
substantial compliance stating that mere issuance of the charter
certificate by the federation was sufficient compliance with the rules.
PDC appealed to the Office of the Secretary which dismissed the
appeal.
ISSUE:
Whether Kilusan a legitimate labor federation.
RULING:
No. In one case, the court held that the theory to the effect that Section
23 of Republic Act No. 875 unduly curtails the freedom of assembly and
association guaranteed in the Bill of Rights is devoid of factual basis.
The registration prescribed in Paragraph (b) of said section is not a
limitation to the right of assembly or association, which may be
exercised with or without said registration. The latter is merely a
condition sine qua non for the acquisition of legal personality by the
labor organizations, associations or unions and the possession of the
"rights and privileges granted by law to legitimate labor organizations."
The Constitution does not guarantee these rights and the privileges,
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much less said personality, which are mere statutory creations, for the
possession and exercise of which registration is required to protect both
labor and the public against abuses, fraud or impostors who pose as
organizers, although not truly accredited agents of the union they
purport to represent. Such requirement is a valid exercise of the police
power, because the activities in which labor organizations, associations
and unions of workers are engaged affect public interest, which should
be protected. Furthermore, the obligation to submit financial
statements, as a condition for the non-cancellation of a certificate of
registration, is a reasonable regulation for the benefit of the members
of the organization, considering that the same generally solicits funds
or membership, as well as oftentimes collects, on behalf of its
members, huge amounts of money due to them or to the organization.
A local or chapter therefore becomes a legitimate labor organization
only upon submission of the following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor
federation or national union, and
2) The constitution and by-laws, a statement on the set of officers, and
the books of accounts all of which are certified under oath by the
secretary or treasurer, as the case may be, of such local or chapter,
and attested to by its president.
Absent compliance with these mandatory requirements, the local or
chapter does not become a legitimate labor organization.
the failure of the secretary of PDEU-Kilusan to certify the required
documents under oath is fatal to its acquisition of a legitimate status.
60.Pagpalain Haulers Inc. V. Trajano
R. No. 133215, 1999

FACTS:

Respondent in this case, Integrated Labor Organization - Pagpalain

Haulers Workers Union filed a petition for certification election with the
DOLE. ILO-PHILS attached to the petition copies of its charter
certificate, its constitution and by-laws; its books of account, and a list
of its officers and their respective addresses. Pagpalain filed a motion
to dismiss the petition on the ground that the books of account
submitted by ILO-PHILS were not verified under oath.

ISSUE:

Whether respondent union a legitimate union federation.

RULING:

Yes, under the Labor Code, the requirement for registration of a labor
organization are as follows:
) P 50.00 registration fee;
) Names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meeting and the
list of the workers who participated in such meeting;
) The names of all its members comprising at least 20% of all the
employees in the bargaining unit where it seeks to operate;
) If the application union has been in existence for one or more years,
copies of its annual financial reports; and
) 4 copies of its constitution and by-laws of the applicant union, minutes
of its adoption or ratification, and the list of the members who
participated in it.

The Labor Code does not require the submission of books of account
in order to be registered as a legitimate labor organization.

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