G.R. No.

L-46892 June 28, 1940

ANTAMOK GOLDFIELDS MINING COMPANY, recurrente, vs.COURT OF
INDUSTRIAL RELATIONS, and NATIONAL LABOR UNION, INC.,
recurridos.
Sres. DeWitt, Perkins y Ponce Enrile en representacionde la recurrente.
Sres. Paguia y Lerum en represetacion de la recurrida, National Labor
Union.
IMPERIAL, J.:
Esta es una apelacion mediante certiorari interpuesta por la recurrente
contra la orden dictada por el Tribunal de Relaciones ndustriales el 6 de
mayo de 1939 que le obligo a que reponga en sus anteriores trabajos o en
otros substancialmente equivalentes a los 45 obreros enumerados en la
peticion del 31 de marzo de 1939 y a los 10 obreros encabezados por A.
Haber que fueron excluidos indefinidamente, dentro de 10 dias desde que
reciba copia de la orden; que pague a estos 55 obreros los jornales que
debieron haber percibido desde la fecha de su suspension o separacion
hasta la de su reposicion; y que pendiente de resolucion las otras
cuestiones que las partes han sometido, la recurrente se abstenga, bajo
pena de desacato, de despedir o excluir, sin permiso previo del tribunal, a
cualquier obrero o empleado que se hallaba bajo su servicio en la epoca
en que surgio la disputa que este actualmente trabajando en las minas o
que sea repuesto en su trabajo de conformidad con la orden; y contra la
resolucion del mismo tribunal del 17 de agosto de 1939 que denego la
mocion de reconsideracion de la recurrente presentada el 26 de mayo de
1939.
El 12 de diciembrre de 1938 la recurrida National Labor union, nc., en
representacion de los obreros y empleados de la recurrente que eran
miembros de dicha union obrera, dirigio una carta a la recurrente
solicitando 21 reclamaciones en favor de sus afiliados. La carta fue
recibida por la oficina de la recurrente en Manila en un sobre timbrado por
la estafeta de Baguio el 30 de mismo mes. Los funcionarios de la
recurrente convocaron a un meeting a sus empleados el 2 de enero de
1939 y en el informaron a todos sus obreros que algunad de las
demandas se habian aceptado y se habian puesto ya en practica, otras
serian consideradas y las restantes iban a ser rechazadas por ser
irrazonables, y se les aconsejo que no recurrieran a la violencia y
observaran metodos legales en el arreglo de sus diferencias con la
recurrentes. En la noche del mismo dia los obreros y empleados de la
recurrente se declararon en huelga y abandonaron sus trabajos. La
recurrnte dio cuenta inmediatamente de esta huelga al Departamento del
Trabajo y solicito su intervencion con el fin de solucionarla. El Secretario
del Trabajo designo a Adolfo Umengan, nvestigador Especial del
Departamento, y a Eladio C. Leao, Defensor Publico de la Provincia
Montaosa, para que intervinieran y vieran la manera de solucionar la
huelga. Estos funcionarios convocaron una conferencia a la que acudieron
funcionarios de la recurrente, representante de los huelguistas y Luis
Lardizabal, Jefe de la Baguio Federation of Labor, una organizacion
obrera afiliada a National Labor Union, nc. Como resultado de la
conferencia las partes convinieron en el siguiente arreglo amistoso:
AMCABLE SETTLEMENT
n order to have the present strike of the contractors and laborers of the
respondent company who staged a walkout on January 3, 1939, amicably
settled, the parties hereby mutually agree to end the said strike under the
condition that all laborers will be readmitted upon the execution of this
agreement; provided, that all laborers whose services should be dispensed
with due to lack of work in those tunnels where they are no longer needed
will be given not less than fifteen days employment from the date of this
settlement or resumption of work, and provided, further, that as soon as
the stopes in 1360 and 1460 levels are opened and the services of men
are needed, the company will give preference to efficient laborers when
reducing the personnel as above mentioned in those working places and
may transfer them to other division to replace inefficient men.
n witness hereof, the laborers represented by a committee composed of
Messrs. Luis Lardizabal, Tomas Dirige, Victoriano Madayag, Maximo
Conaoi, Daniel Lambinicio, and Juan Cerilo and the Antamok Goldfields
Mining Co. as represented by its President, Mr. Andres Soriano, have
hereunto placed their signatures this 4th day of January, 1939.
El convenio fue firmado por las partes el 4 de enero de 1939, pero los
obreros no se presentaron sino a las 9 de la maana del 6 del mismo mes.
La gerencia de la recurrente no permitio, sin embargo, a ningun obrero
que entrara en la seccion subterranea conocida como "830 level" por la
razon de que el aire se habia viciado con motivo de la huelga y era
necesario renovarlo con aire puro con el fin de evitar desgracias
personales. Esta precaucion la tomaron los obreros como uan negativa de
la recurrente a que ellos trabajaran de nuevo, por lo que se declararon
otra vez en huelga. A los huelguistas se unieron por simpatia los obreros
que trabajaban en la mina denominada "680 division," que es otra mina
separada y situada a 3 kilometros de la fabrica. Otra vez internivo el
Departamento del Trabajo y por la mediacion de Eladio C. Leao los
obreros volvieron al trabajo en la noche del 6 de enero de 1939 en que los
trabajos de mina se reanudaron paulatinamente.
El 9 de enero de 1939 el Departamento del Trabajo endoso la disputa al
Tribunal de Relaciones ndustriales de conformidad con el articulo 4 de la
Ley No. 103 del Commonwealth y dicho Tribunal celebro la primera vista
del asunto el 13 del mismo mes en la Ciudad De Baguio. En esta vista se
discutieron una por una las 21 reclamaciones de la recurrida National
Labor Union, nc., y se llego por las partes a un acuerdo sobre algunas de
ellas, se sometieron otras a la decision del Triunal y las demas se dejaron
pendientes para ser vistas y resueltas mas tarde.
El 31 de marzo de 1939, hallandose pendiente aun de decision la mayor
parte de las reclamaciones antes mencionadas, la recurrida National
Labor Union, nc., presento una mocion en que alego que el capataz A.
Haber y otros 9 obreros de la recurrente habian sido indefinidamente
suspendidos el 29 del mismo mes; que estos obreros habian sido
transferidos anteriormente a trabajos exteriores con el fin de proporcionar
a la recurrente una excusa para separarles mas tarde del servicio; que
otro grupo de cerca de 30 obreros fueron despedidos por la compaia sin
motivo alguno y sin autorizacion del tribunal; y que las suspensiones y
separaciones que asi se hicieron eran actos de venganza y
discriminatorios para los obreros, por cuya razon se pidio que los
funcinarios de la recurrente responsables de dichos actos sean castigados
por desacato y que la recurrente sea obligada a reponer a los obreros en
sus primitivos trabajos dentro de las minas y a pagarles sus salarios
correspondientes al periodo en que fueron separados del sevicio. La
recurrente contesto la mocion negando los hechos imputados y alego que
Haber y sus 9 compaeros fueron suspendidos por su continua
holgazaneria durante las horas de trabajo y por haberse negado
constantemente a trabajar, y que los 45 obreros encabezados por el
capataz Victoriano Madayag fueron despedidos por haber rehusado
sealar a los responsables del maltrato del capataz Juan Moldero en la
maana del 30 de marzo de 1939. La mocion se vio el 3 de abril de 1939
y en la vista las partes presentaron sus testigos. El tribunal designo a uno
de sus agentes especiales para que se constituya en las minas de la
recurrente y practicara una investigacion con el fin de suplementar los
hechos que se probarondurante la vista. Despues de considerar las
pruebas presentadas ante el y los hechos hallados por el comisionado
nombrado, el tribunal en su orden del 6 de mayo de 1939 declaro
probados los hechos siguientes:
1. The discharges and indefinite suspensions alleged in the motion were
made by the respondent without first securing the consent of the Court in
violation of the order of this Court of January 23, 1939.
2. The discharges and indefinite suspensions were made by the
respondent without just cause.
El la misma orden el Tribunal de Relaciones ndustriales hace las
siguientes consideraciones que apoyan las conclusiones a que la llegado:
n the order of January 23, 1939, the respondent was enjoined to refrain
from discharging any laborer involved in the dispute without just cause and
without previous authority of the Court. t appears and no denial of the fact
is made by the respondent that the dismissal is one case and alleged
suspension for an indefinite time in the other, which has all the effects of a
discharge, were made without seeking the authority of the Court.
The charge that Haber and the group of nine laborers were indefinitely
suspended of continuous loafing and refusal to work was not established.
The real motive behind the lay was the completion of their work "outside."
Under the circumstances, the provision of the order of March 21, to the
effect that these men should be returned to their work underground after
the completion of their work "outside" should have been observed. The
respondent instead of complying with the order laid off the men.
The discharge of Victoriano Madayag and his forty-four companions as a
result of the Moldero incident also lacks justification. n the case of
Madayag, although he was present with Haber when Moldero was
attacked, neither one is accused of the aggression. The two of them were
conversing with Moldero with the latter was stoned from behind without
anybody apparently being able to point out the aggressor. Less justification
can be found for the discharge of the forty-four men as a result of the
incident. The investigation disclosed that at the time of the assault, they
were at the Creek busy with their work. Both the distance and the
topographical situation of the place where the men were working, which is
far and well below the bank of the place of the incident, precluded their
hearing of seeing clearly what transpired above them in the place where
Moldero was assaulted. An ocular inspection of the premises made by the
investigator confirmed this view. So far as is known, despite the
investigations conducted by the officials of the company and the policeman
of the camp and by the constabulary authorities in Baguio, the person or
persons responsible for the stoning has not been determined. The
precipitate and unwarranted dismissal of the forty-five men after the
incident seems to have been spurred by an over anxious desire on the part
of the company to get rid of these men.
As previously found, in the order of this Court of March 21, 1939, about
134 underground laborers of the respondent were transferred and made to
work 'outside of the mines' or surface work. The majority of these men
were muckers, miners, timbermen, trammers, and mine helpers and had to
their favor from 6 months to 5 years service in the mines of the company
and not a few of them have done underground work in several capacities
and in different tunnels and divisions of the mine. Among them are found
leaders of the movement of the laborers for higher pay and better working
conditions which culminated in the strike called on January 3, 1939. These
leaders have been prominent in the formation of the union its activities and
in connection with the strike. The temporary transfer of these men to
"outside" work was authorized by the Court in said order on the strength of
the assurance of the respondent that no more work suited for them inside
the mines existed. t was directed, however, in the aforesaid order that as
soon as their outside was completed the laborers should be immediately
returned to their respective work inside the mines. Subsequent events and
acts of the officials of the respondent in charge of the mines have
convinced the Court work existed and exists for the men inside the tunnels
and their transfers were made to provide an opportunity to the company to
dispense with their services as soon as the work is completed. The
unwarranted discharges of Haber and nine others and those of Victoriano
Madayag and his forty-four companions amply demonstrated this
conclusion. Upon the company's own admission, as shown in its reports in
the records and upon the findings of the investigator of the Court, more
than four hundred (400) workers of different classes among them,
muckers, miners, timbermen, trammers and capataces coming from
different mines in the region have been employed by the respondent as
fresh laborers. Almost all, if not all, of these men are not members of the
petitioner, the National Laborer Union, nc.
At the same time the work in different tunnels and division in the mines are
allegedly being completed, the old workers are being laid off. Although a
small number of the men found transfer to other divisions being operated,
the majority are being left without work. nstead of laying hands on the old
men laid off and making them work in the tunnels needing hands and
reinstating in the tunnel work those laborers transferred to the 'outside'
department, the respondent preferred to take in and hire other workers
coming from different places because evidently they are not members of
the union.
There is no doubt in the mind of the Court that a good number of the
position given of the men who were employed after the strike numbering
more than four hundred to date could have been offered to the strikes who
are now doing work "outside" and other who have been laid off on the
allegation that the underground work in which they were engaged had
been completed. To believe that not a single man or say a few among the
latter could have met the requirements set by the technical men of the
company to perform the different classes of work for which the fresh men
were engaged because they lack the required efficiency, experience,
physique. intelligence and skill of the four hundred fresh laborers would be
shutting the eyes of the court to realities. These men prior to the
occurence of the dispute, had worked for months and many for years in
the mines of the respondent and it can not be easily accepted that their
experience gained in their particular lines in the very property of the
respondent would be inferior to that attained by the other workmen in other
mines in the district for an equal period of time. Their inefficiency as a
whole group can not be successfully sustained now because they were not
transferred to surface work for this reason but because of the alleged lack
of work or completion of their work underground. Had any of them been
inefficient in the past, it can not be explained why the company laborer
continued in the service as the records of the company abound with
instance of discharges made in the past of laborers who were found either
inefficient or incompetent or whose services were unsatisfactory.
The company asserts ignorance of the union affiliations of the men in the
mine but the evidence stands uncontradicted that before the strike was
called a petition was presented by the men to the management carrying
the signatures of about eight hundred (800) worker demanding higher pay
and better working conditions. When the men struck, the operation of the
mine was completely paralyzed and there is a strong indication that a great
majority of the workers joined openly the strike. t would not have been
difficult for the respondent, with the means at its command, to find for itself
the employees and laborers who remained loyal to the company and to
consider those who struck as either members of the union or its
sympathizer.
The respondent's claim as to the motive for the suspension and
discharges lacks substance and support in the evidence and the
inferences to be drawn from it. From all what appears, it is inferred that the
respondent desire to discourage membership in the union and to rout it if
possible. The wholesale discharges were the expression of such desire.
The acts in the mind of the Court, are calculated to have two effects. They
will not only immediately affect the discharged laborers but would also
discourage other laborers from joining or remaining members of the union.
The allegation that it has always been policy to consider the laborer's
connection with the company terminated upon termination of the working
place in which he is employed is not supported by the facts. t has been
shown that as a general rule when work in a place is completed, workers
are transferred to another working place in one level or to another level,
although in some instances days may elapse before all the men in a bunch
can be absorbed in different levels.
t is alleged that mining operations in the property vary and involve several
types, and that a miner, for example, may be good in one type, but that it
does not necessarily follow that he can do good work in another type. And
that the employment of men in particular jobs not suitable for them
increased the cost of production as a result of lower output. Consequently,
the respondent vehemently insists in its right of selecting the men that it
should employ and that in the exercise of this right it should not be
restrained or interfered with by the Court. t contends that as to fitness of a
laborer to do a particular type of work the opinion of the management or its
technical men should be respected. But all these arguments are
meaningless in the face of the finding of the Court that the underground
laborers transferred to the 'outside' work are not wanting in experience,
efficiency and other conditions alleged to be found among the fresh
laborers. The special qualifications to do particular work can not rightly be
invoked in favor of the employment of new laborers most specially in those
cases of common or unskilled labor like muckers, trammers, helpers, etc.
Under normal circumstances, the exercise of judgment of the employer in
selecting men he is to employ should not be interfered with. But when such
judgment is arbitrarily exercised to the prejudice of members of a labor
union whose rights should be safeguarded in consonance with the policies
of the law, the Court not only feels it justified but rightly its duty to interfere
to afford protection to the laborers affected.
La recurrente presento una extensa mocion de reconsideracion de la
indicada orden, mocion que fue denegada por la resolucion del 17 de
agosto de 1939. La orden del 6 de mayo de 1939 y la resolucion del 17 de
agosto del mismo ao son las que dieron lugar a la apelacion interpuesta
por la recurrente.
La recurrente sostiene que la Ley No. 103 del Commonwealth, conforme
ha sido enmendada por las leyes Nos. 254 y 355, es anticonstitucional (1)
porque infringe el principio de separacion de poderes; (2) porque por ella
la Asamblea Nacional abdico de su facultad legislativa violando la doctrina
sobre delegacion de poderes; (3) porque las facultades judiciales que la
ley confiere al Tribunal de Relaciones ndustriales, consideradas
separadamente, son arbitrarias e irrazonables y permiten la privacion de la
libertad y propiedad sin el debido proceso de ley; y (4) porque suponiendo
que la ley es valida y constitucional en su totalidad, la porcion, por lo
menos, del articulo 20 que dispone que el Tribunal de Relaciones
ndustriales "adoptara sus reglamentos de procedimiento" debe declararse
nula e invalida porque infringe el articulo 13 del Titulo V de la
Constitucion de Filipinas que obliga al Tribunal de Relaciones ndustriales
a observar las reglas generales de procedimiento aplicables a los
tribunales de justicia. La recurrente alega en este respecto que como a
ella se le ha sometido a un procedimiento arbitrario y distinto del que se
aplica a los demas litigantes en los tribunales de Filipinas, se le ha negado
el debido proceso de ley y el principio de igual proteccion ante las leyes.
La Ley No. 103 del Commonwealth que, como su titulo indica, provee a la
proteccion del obrero, creando un Tribunal de Relaciones ndustriales
facultado para fijar un jornal minimo para los obreros y la renta maxima
que se ha de pagar por los inquilinos; para poner en vigor el arbitraje
obligatorio entre patronos o propietarios y empleados o inquilinos,
respectivamente, y prescribe penas por la infraccion de sus decretos, se
ha promulgado por la Asamblea Nacional en virtud de los preceptos
contenidos en el articulo 5, Titulo ; articulo 6, Titulo X; y articulos 1 y 2,
Titulo V, de la Constitucion de Filipinas que disponen:
ART. 5. El Estado cuidara de promover la justicia social a fin de asegurar
el bienestar y la estabilidad economica de todo el pueblo.
ART. 6. El Estado debera proteger a todos los trabajadores,
especialmente a las mujeres y a los menores de edad, y debera regular
las relaciones entre propietarios e inquilinos, y entre el trabajo y el capital
en la industria y la agricultura. El Estado podra establecer el arbitraje
obligatorio.
ART. 1. El Poder Judicial estara investido en un Tribunal Supremo y en
otros tribunales inferiores que se establezcan por ley.
ART. 2. La Asamblea Nacional tendra la facultad de definir, prescribir y
distribuir la jurisdiccion de los varios tribunales, . . .
En cumplimiento de los preceptos constitucionales transcritos, la
Asamblea Nacional promulgo la Ley No. 103 del Commonwealth que crea
el Tribunal de Relaciones ndustriales que es un tribunal especial con
facultades judiciales (Pambusco Employees Union vs. Court of ndustrial
Relations et al., G.R. No. 46727; Ang Tibay et al. vs. Court of ndustrial
Relations et al., G.R. No. 46496, opinion concurrente del Magistrado Jose
P. Laurel). El articulo 1 de dicha ley provee que el Tribunal de Relaciones
ndustriales ejercera jurisdiccion para considerar, investigar, decidir y
zanjar toda cuestion, asunto, conflicto o disputa que afecte o surja entre
patronos y empleados u obreros, y entre propietarios e inquilinos o
aparceros, y para regular las relaciones entre los mismos, con arreglo y
sujecion a las disposiciones de la ley. El articulo 4 dispone que el tribunal
tomara conocimiento, para fines de prevencion, arbitraje, decision y
ajuste, de cualquier conflicto agrario o industrial que motive o de lugar a
una huelga o paro a causa de diferencias que surjan en la cuestion de
jornales, participacion o compensacion, horas de trabajo o condiciones de
aparceria o empleo, entre patronos y empleados u obreros, y entre
propietarios e inquilinos o aparceros, siempre que el numero de
empleados, obreros, inquilinos o aparceros afectados exceda de treinta, y
que el conflicto agrario o industrial se someta al tribunal por el Secretario
del Trabajo, o por una o ambas partes interesadas, cuando el referido
Secretario del Trabajo certifique en cuanto a su existencia y la
conveniencia de la intervencion del tribunal en bien del interes publico. Y
el articulo 20 preceptua que en la vista, investigacion y resolucion de
cualquier cuestion o conflicto, y en el ejercicio de cualquiera de sus
deberes y facultades, el tribunal actuara de acuerdo con la justicia y la
equidad y los meritos substanciales de la causa, sin consideracion a los
tecnicismos y formulismos legales, y no estara sujeto a cualesquier reglas
tecnicas de prueba legal, sino que formara juicio de la manera que crea
justa y equitativo. La Ley No. 103 confiere al Tribunal de Relaciones
ndustriales plena facultad disrecional para resolver y decidir las disputas
agrarias e industriales de la manera que crea justo e equitativo,
prescindiendo de los tecnicismos y formulismos legales, y la facultad asi
concedida es judicial y no legislativa, por lo que no infringe el principio de
separacion de poderes, la prohibicion sobre delegacion de facultades
legislativas ni la proteccion igualitaria ante la ley. Como se ha dicho en el
asunto de Cincinnati, W. & Z. R. Co. vs. Comm'rs, of Clinton County
'1852), 1 Ohio St., 88, citado en el asunto de Rubi et al. contra La Junta
Provincial de Mindoro, 39 Jur. Fil., 675, "Existe una verdadera diferencia
entre delegar la facultad para dictar leyes, lo cual supone necesariamente
discrecion en cuanto a lo que hayan de ser aquellas, y conferir atribucion
o discrecion para hacerlas cumplir, discrecion que debe ejecitarse con
arreglo a la ley. La primera no puede hacerse en modo alguno; contra la
segunda no cabe interponer objecion alguna."
Para reforzar los argumentos en favor de la anticonstitucionalidad de la
Ley No. 103 la recurrente hace hincapie en lo resuelto en el asunto de
Schechter vs. United States (1935), 295 U. S., 496, 79 Law. ed. 270, en
que el Tribunal Supremo de los Estados Unidos declaro anticonstitucional
la National Recovery Act. Existe, sin embargo, una marcada diferencia
entre dicho asunto y el que se considera porque la National Recovery Act
en vez de crear un tribunal de justicia, creo juntas con facultades
legislativas y autorizo al Presidente de los Estados Unidos a promulgar
codigos que prescriban las reglas de precedimiento con el fin de realizar
los propositos de la ley.
El ultimo fundamento que se alega en contra de la validez de la Ley No.
103 se hace consistir en que las facultades judiciales que concede al
Tribunal de Relaciones ndustriales son tan artibrarias e irrazonables que
permiten la privacion de la libertad y la propiedad sin el debido proceso de
ley; y que se articulo 20, por lo menos, adolece de este defecto
fundamental porque confiere al Tribunal de Relaciones ndustriales la
facultad de dictar sus propias reglas de procedimiento, lo cual contraviene
el articulo 13, Titulo V, de la Constitucion que prescribe que el Tribunal
Supremo dictara reglas concernientes a los escritos de alegaciones,
practica y procedimiento uniformes para todos los tribunales de la misma
categoria.
El articulo 20 de la Ley No. 103 se lee asi:
ART. 20. Reglamentos del Tribunal. El Tribunal de Relaciones
ndustriales promulgara sus reglas de procedimiento y tendra las demas
atribuciones que en general corresponden a un tribunal de justicia:
Entendiendose, sin embargo, Que en la vista, investigacion y resolucion
de cualquier cuestion o conflicto, y en el ejercicio de cualquier de sus
deberes y faculades en virtud de esta Ley, el Tribunal actuara de acuerdo
con la justicia y la equidad y los meritos substanciales de la causa, sin
consideracion a los tecnicismos o formulismos legales, y no estara sujeto
a cualquiera reglas, tecnicas de prueba legal, sino que formara juicio de la
manera que crea justo y equitativo.
Una simple lectura de dicho articulo demuestra que la ley no ha facultado
al Tribunal de Relaciones ndustriales a investigar y resolver las
cuestiones y conflictos entre obreros y patronos, e inquilinos y
propietarios, de una manera arbitraria y caprichosa sin someterse a una
norma de conducta determinada. El articulo dispone claramente que las
reglas de procedimiento que adopte, a las cuales debera ajustarse el
tribunal, deberan insperarse en la justicia y la equidad, y prescribe que el
criterio que se forma debera fundarse en los meritos substanciales de la
causa sin consideracion a los tecnicismos o formulismos legales. La Ley
No. 103 que crea un tribunal especial denominado Tribunal de Relaciones
ndustriales con facultad para dictar sus propios reglamentos y para
resolver y decidir los conflictos agrarios e industriales de acuerdo con los
dictados de la justicia y equidad, no puede ser impugnada bajo el
fundamento de que auoriza la privacion de la libertad y propiedad sin el
debido proceso de ley; ni pugna con el precepto del articulo 13, Titulo V,
de la Constitucion porque el Tribunal de Relacines ndustriales no es de la
misma categoria que los juzgados municipales, juzgados de paz y
juzgados de primera instancia para los cuales se han dictado los
reglamenos de los tribunales por el Tribunal Supremo.
En relacion con la validez y constitucionalidad de la Ley No. 103 y sus
enmiendas, insertamos a continuacion la opinion concurrente del
Magistrado Lauren en el asunto de Ang Tibay, supra, cuyas observaciones
serviran para rebustecer la proposicion sentada de que la referida ley y
sus enmiendas es valida y no infringe la Constitucion.
t should be observed at the outset that our Constitutionwas adopted in the
midst of surging unrest and dissatisfaction resulting from economic and
social distresswhich was threatening the stability of governments theworld
over. Alive to the social and economic forces atwork, the farmers of our
Constitution boldly met the problems and difficulties which faced them and
endeavored to crystallize, with more or less fidelity, the political, social; and
economic proposition of their age, and this they did, with the
consciousness that the political and philosophicalaphorism of their
generation will, in the language of a great jurist, "be doubted by the next
and perhaps entirely discarded by the third." (Chief Justice Winslow in
Gorgnis v. Falk Co., 147 Wis., 327; 133 N. W., 209.) Embodying the spirit
of the present epoch, general provisions were inserted in the Constitution
which are intended to bring about the needed social and economic
equilibrium between component elements of society through the
application of what may be termed as the justitia communis advocated by
Grotius and Leibnits many years ago to be secured through the
counterbalancing of economic and social forces and opportunities which
should be regulated, if not controlled, by the State or placed, as it were, in
custodia societatis. "The promotion of social justice to insure the well-
being and economic security of all the people' was thus inserted as vital
principle in our Constitution. (Sec. 5, Art. , Constitution.) And in order that
this declaration of principle may not just be an empty medley of words, the
Constitution in various sections thereof has provided the means towards
its realization. For instance, section 6 of Articles X declares that the State
"shall afford protection to labor, especially to working women and minors,
and shall regulated the relations between landowner and tenant, and
between labor and capital in industry and in agriculture." The same section
also states that "the State may provide for compulsory arbitration." n
extraordinary cases mentioned in section 16, Articles V, of the
Constitution, the President of the Philippines may be authorized by law, for
a limited period and subject to such restrictions as the National Assembly
may prescribed, to "promulgate rules and regulations to carry out a
declared national policy." Albeit, almost at the same time the Congress of
the United States approved the National Labor Regulations Act (49 Stat.,
449) on July 5, 1935, commonly known as the Wagner Act, we were in the
Philippines headway towards the adoption of our fundamental law,
pursuant to congressional authority given in the Tydings-McDuffie
ndependence Act, approved March 24, 1934. n our Bill of Rights we now
find the following provision "The right to form associations or societies for
purposes not contrary to law shall not be abridged." (Par. 6, section 1, art.
, Constitution.) What was an agitation in the United States which brought
about the recommendation by the Commission on ndustrial Relations
created by an Act of Congress in 1912 for the adoption of a Labor Bill of
Rights as an amendment to the United States Constitution is, in our case,
virtually an accepted principle, which may be expanded and vitalized by
legislation to keep pace with the development of time and circumstances.
By and large, these provisions in our Constitution all evince and express
the need of shifting emphasis to community interest with a view to
affirmative enhancement of human values. n conformity with the
constitutional objective and cognizant of the historical fact that industrial
and agricultural disputes had given rise to disquietude, bloodshed and
revolution in our country, the National Assembly enacted Commonwealth
Act No. 103, entitled "An Act to afford protection of labor by creating a
Court of ndustrial Relations empowered to fix minimum wages for laborers
and maximum rental to be paid tenants, and to enforce compulsory
arbitration between employers or landlords, and employees or tenants,
respectively; and by prescribing penalties for the violation of the orders"
and, later, Commonwealth Act. No. 213, entitled, "An Act to define and
regulate legitimate labor organizations." (Asto this last act, vide "finding
and policy," preamble [sec. 1]of the Wagner Act [49 Sta., 449]).
Commonwealth Act No. 103, approved October 29, 1936, was originally
Bill No. 700 of the National Assembly. More light is shed by the
explanatory statement of the Bill than by what transpired in the course of
the deliberation of the measure in the legislative chamber. "El presente
proyecto de ley," thus the explanatory statement of Bill No. 700, 'crea una
Junta de Relaciones ndustriales . . . y provee el arbitraje obligatorio. . . de
acuerdo con el Articulo 6, Titulo X de la Constitucion, el provee que "El
Estado podrs establacerel arbitraje obligatorio." "ncorporating the
conclusion reached by a committee appointed, a year or so before it was
observed that 'bajo la legislacion actual' " evidently referring to Act No.
4055 "no existe instrumento adecuado para evitar las huelgas. El
Departamentode Trabajo desempea maramente el papel de
pacificadorentre las partes en controversia y sus decisiones no
sonobligatorias ni para los patronos ni para los obreros. El pueblo la
allegado a un grado de desarrollo industrial, quehace imperiosa el que la
intervencion del gobierno en estosconflictos sea mas efectiva . . . ." The
creation of a Court of ndustrial Relations was thus proposed, endowed
"no solamente del poder de arbitrar sino tambien del deberde investigar,
decidir, y hacer recomendaciones sobre las cuestiones en conflicto y los
problem as que afectan al Capitaly al Trabajo en la ndustria y la
Agricultuta bajola direccion del Presidente de la Mancomunidad de
Filipinaso a peticion del Secretario del Trabajo.
x x x x x x x x x
From what has been stated, it appears that the legislation which are now
called upon to construe was enacted in pursuance of what appears to be
deliberate embodiment of a new social policy, founded on the conception
of a society integrated not by independent individuals dealing at arms'
length, but by interdependent members of a consolidated whole whose
interests must be protected against mutual aggression and warfare among
and between divers and diverse units which are impelled by counter vailing
and opposite individual and group interests, and this is particularly true in
the relationship between labor and capital. Social and industrial
disturbances which fifty years ago were feudal-like and of isolated
importance may now well result in a serious strain upon the entire
economic organism of the nation . n the United States labor legislation
has undergone a long process of development too long to nature here,
culminating in the enactments of what were commonly known as the
Clayton Act, the Norris-La Guardia Act, and finally, the Wagner Act and the
Fair Labor Standards Act of 1938. The Wagner Act created the National
Labor Relations Board as an instrumentality of the Federal Government in
the settlement of labor disputes, which device is aimed at the avoidance of
unnecessary friction between labor and capital and the establishment of
industrial peace. Scrutiny of legislation in that country and of
pronouncement made by its Supreme Court reveals a continuous
renovation and change made necessary by the impact of changing needs
and economic pressure brought about by the irresistible momentum of new
social and economic forces developed there. n the light of changes that
have occured, it is doubted if the pronouncement made by the said
Supreme Court in 1905 (Lochner v. New York, 198, U.S., 45) or in 1908
(Adair v. U.S., 52 Law. ed. 430, 208 U.S., 161, and Coppage v. Kansas,
236 U.S., 1) cases which are relied upon by the petitioner in its printed
memorandum still retain their virtuality at the present time. n the
Philippines, social legislation has had a similar development although of
course to a much smaller degree and of different adaptation giving rise to
several attempts at meeting and solving our peculiar social and economic
problems. (See Commonwealth to the National Assembly, September
2,1936; Executive Order No. 49, S. 1936). The system of voluntary
arbitration devised by Act No. 4055 of the defunct Philippine Legislature
has apparently been abandoned by the enactment of the aforementioned
Commonwealth Acts Nos. 103 and 213. n the midst of changes that have
taken place, it may likewise be doubted if the pronouncement made by this
court in the case of People vs. Pomar (46 Phil., 440) also relied upon by
the petitioner in its printed memorandum still retains its virtually as a
living principle. The policy of laissez faire has to some extent given way
the assumption by the government of the right of intervention even in
contractual relations affected with public interests.
x x x x x x x x x
n Commonwealth Act No. 103, and it, our Government no longer performs
the role of a mere mediator or intervenor but that of the supreme arbiter.
En su siguiente senalmiento de error la recurrentealega que la conducta
del investigador, la investigacion quepracticio y la manera como conocio
del asunto el Tribunalde Relaciobes ndustriales le privaron de una vista
i,parcialy justa, y constituyen privacion de supropiedad sinel debido
proceso de ley. Para demostrar la carencia de fundamento del
senalmiento de error, creemos suficientereproducir a continuacion la forma
como se practicio la investigacion por el comisionado nombrado por el
Tribunal de Relacionbes ndustriales y la manera como secelebro la vista
por dicho tribunal, tal como se expone en laorden del 6 de mayo de 1939.
Hearing was held on April 3, 1939, where witnessesfor both the petitioners
and the respondent testified. To supplement the facts brought out at the
hearing, the Court ordered one of its Special Agents to proceed to the
premises of the mines to conduct a further investigation.
El comisionado fue nombrado por el Tribumal de Relacionesndustriales
en el su facultad conferidapor el articulo 10 de la ley No. 103 de
Commonwealth yel la inspeccion y vistas que celebraron el comisionado y
eltribunal, respectivamente, las partes estuvieron
representadasdebidamente, fueron oidas y presentaron las pruebasque
tenian disponibles y creyeron conveniente ofrecerTales inspeccion y vistas
tenian el caracter de una vistajudicial imparcial y justa y constituyen el
debido procesode ley que garantiza la Constitucion.
Sostiene igualmente la recurrente que la orden del 6 demayo de 1939 es
arbitraria porque no existen pruebassubstanciales ni competentes que la
sostengan. Sobre esteextremo, las conclusiones de hecho que ha sentado
el Tribunalde Relaciones ndustriales demuestran que la ordenimpugnada
esta sostenida por el resultado de la investigacion practicada por el
comisionado y las pruebas que laspartes presentaron directamente ante el
Tribunal. Endichas conclusiones se han considerado y analizado por
elTribunal de Relaciones ndustriales todas las pruebas quelas partes
presentaron y resulta inevitable la conclusionde que la orden no es
arbitraria y esta justificada y sotenida por los hechos probados.
El ultimo senalmiento de error guarda relacion conla parte de la orden del
6 mayo de 1939 que disponeque la recurrente pague a los 55 obreros
repustos losjornales que dejaron de percibir durante su separaciondel
servicio. La recurrente sostiene que esta parte dela orden equivale a una
sentencia por danos y perjuiciosque el Tribunal de Relaciones ndustriales
no puede pronunciar por carecer de jurisdiccion. La pretension noes
meritoria. El Tribunal de Relaciones ndustriales,conforme ya se ha dicho,
es un tribunal especial y comotal tiene facultad para disponer que la
recurrente paguelos jornales de sus empleados y obreros que han sido
repuestos.Los articulos 1 y 4 de la Ley No. 103 de Commonwealth,segun
ha sido enmendado el primero por elarticulo 1 de la Ley No. 254,
confieren facultad y jurisdiccion al tribunal de Relaciones nbdustriales
para conocer, resolver y decidir todas las cuestiones, controversiasy
disputas entre patronos y obreros y propietarios y terratenientes, y los
jornales de los obreros repuestos, duranteel tiempo en que fueron
separados del servicio,esteban incluidos en las controverias y disputas
sometidasal Departamento del Trabajo y certificados por este al Tribunal
de Relaciones ndustriales.
Se deniega el recurso de certiorari y se confiman laorden del 6 de mayo
de 1939 y la resolucion del 17 deagosto del mismo ano, con las costas a
la recurrente. Asise ordena.
Avancea, Diaz, Laurel y Moran, MM., estan conformes.
G.R. No. 77875 February 4, 1993
PHILIPPINE AIRLINES, INC., petitioner, vs.ALBERTO SANTOS, JR.,
HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO DURAN,
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION, and THE
NATIONAL LABOR RELATIONS COMMISSION, respondents.
Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T.
Jamoralin, jr. and Paulino D. Ungos, Jr. for petitioner.
Adolpho M. Guerzon for private respondents.

REGALADO, J.:
The instant petition for certiorari seeks to set aside the decision of The
National Labor Relations Commission (NLRC) in NLRC Case No. 4-1206-
85, promulgated on December 11, 1986,
1
containing the following
disposition:
WHEREFORE, in view of the foregoing consideration, the Decision
appealed from is set aside and another one entered, declaring the
suspension of complainants to be illegal and consequently, respondent
PAL is directed to pay complainants their salaries corresponding to the
respective period(s) of their suspension, and to delete the disciplinary
action from complainants' service records.
2
These material facts recited in the basic petition are virtually undisputed
and we reproduce the same hereunder:
1. ndividual respondents are all Port Stewards of Catering Sub-
Department, Passenger Services Department of petitioner. Their duties
and responsibilities, among others, are:
Prepares meal orders and checklists, setting up standard equipment in
accordance with the requirements of the type of service for each flight;
skiing, binning, and inventorying of Commissary supplies and equipment.
2. On various occasions, several deductions were made from their salary.
The deductions represented losses of inventoried items charged to them
for mishandling of company properties . . . which respondents resented.
Such that on August 21, 1984, individual respondents, represented by the
union, made a formal notice regarding the deductions to petitioner thru Mr.
Reynaldo Abad, Manager for Catering. . . .
3. As there was no action taken on said representation, private
respondents filed a formal grievance on November 4, 1984 pursuant to the
grievance machinery Step 1 of the Collective Bargaining Agreement
between petitioner and the union. . . . The topics which the union wanted
to be discussed in the said grievance were the illegal/questionable salary
deductions and inventory of bonded goods and merchandise being done
by catering service personnel which they believed should not be their duty.
4. The said grievance was submitted on November 21, 1984 to the office
of Mr. Reynaldo Abad, Manager for Catering, who at the time was on
vacation leave. . . .
5. Subsequently, the grievants (individual respondents) thru the shop
steward wrote a letter on December 5, 1984 addressed to the office of Mr.
Abad, who was still on leave at the time, that inasmuch as no reply was
made to their grievance which "was duly received by your secretary" and
considering that petitioner had only five days to resolve the grievance as
provided for in the CBA, said grievance as believed by them (private
respondents) was deemed resolved in their favor. . . .
6. Upon Mr. Abad's return on December 7, 1984, he immediately informed
the grievants and scheduled a meeting on December 12, 1984. . . .
7. Thereafter, the individual respondents refused to conduct inventory
works. Alberto Santos, Jr. did not conduct ramp inventory on December 7,
10 and 12. Gilbert Antonio did not conduct ramp inventory on December
10. n like manner, Regino Duran and Houdiel Magadia did not conduct the
same on December 10 and 12.
8. At the grievance meeting which was attended by some union
representatives, Mr. Abad resolved the grievance by denying the petition of
individual respondents and adopted the position that inventory of bonded
goods is part of their duty as catering service personnel, and as for the
salary deductions for losses, he rationalized:
1. t was only proper that employees are charged for the amount due to
mishandling of company property which resulted to losses. However, loss
may be cost price 1/10 selling price.
9. As there was no ramp inventory conducted on the mentioned dates, Mr.
Abad, on January 3, 1985 wrote by an inter-office memorandum
addressed to the grievants, individual respondents herein, for them to
explain on (sic) why no disciplinary action should be taken against them for
not conducting ramp inventory. . . .
10. The directive was complied with . . . . The reason for not conducting
ramp inventory was put forth as:
4. Since the grievance step 1 was not decided and no action was done by
your office within 5 days from November 21, 1984, per provision of the
PAL-PALEA CBA, Art. V, Sec. 2, the grievance is deemed resolved in
PALEA's favor.
11. Going over the explanation, Mr. Abad found the same unsatisfactory.
Thus, a penalty of suspension ranging from 7 days to 30 days were (sic)
imposed depending on the number of infractions committed. *
12. After the penalty of suspension was meted down, PALEA filed another
grievance asking for lifting of, or at least, holding in abeyance the
execution of said penalty. The said grievance was forthwith denied but the
penalty of suspension with respect to respondent Ramos was modified,
such that his suspension which was originally from January 15, 1985 to
April 5, 1985 was shortened by one month and was lifted on March 5,
1985. The union, however, made a demand for the reimbursement of the
salaries of individual respondents during the period of their suspension.
13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a
complaint for illegal suspension was filed before the Arbitration Branch of
the Commission, . . . Labor Arbiter Ceferina J. Diosana, on March 17,
1986, ruled in favor of petitioner by dismissing the complaint. . . .
3
Private respondents appealed the decision of the labor arbiter to
respondent commission which rendered the aforequoted decision setting
aside the labor arbiter's order of dismissal. Petitioner's motion for
reconsideration having been denied, it interposed the present petition.
The Court is accordingly called upon to resolve the issue of whether or not
public respondent NLRC acted with grave abuse of discretion amounting
to lack of jurisdiction in rendering the aforementioned decision.
Evidently basic and firmly settled is the rule that judicial review by this
Court in labor cases does not go so far as to evaluate the sufficiency of the
evidence upon which the labor officer or office based his or its
determination, but is limited to issues of jurisdiction and grave abuse of
discretion.
4
t has not been shown that respondent NLRC has unlawfully
neglected the performance of an act which the law specifically enjoins it to
perform as a duty or has otherwise unlawfully excluded petitioner from the
exercise of a right to which it is entitled.
The instant case hinges on the interpretation of Section 2, Article V of the
PAL-PALEA Collective Bargaining Agreement, (hereinafter, CBA), to wit:
Sec. 2 Processing of Grievances
xxx xxx xxx
STEP 1 Any employee who believes that he has a justifiable grievance
shall take the matter up with his shop steward. f the shop steward feels
there is justification for taking the matter up with the Company, he shall
record the grievance on the grievance form heretofore agreed upon by the
parties. Two (2) copies of the grievance form properly filled, accepted, and
signed shall then be presented to and discussed by the shop steward with
the division head. The division head shall answer the grievance within five
(5) days from the date of presentation by inserting his decision on the
grievance form, signing and dating same, and returning one copy to the
shop steward. If the division head fails to act within the five (5)-day
regl(e)mentary period, the grievance must be resolved in favor of the
aggrieved party. f the division head's decision is not appealed to Step ,
the grievance shall be considered settled on the basis of the decision
made, and shall not be eligible for further appeal.
5
(Emphasis ours.)
Petitioner submits that since the grievance machinery was established for
both labor and management as a vehicle to thresh out whatever problems
may arise in the course of their relationship, every employee is duty bound
to present the matter before management and give the latter an
opportunity to impose whatever corrective measure is possible. Under
normal circumstances, an employee should not preempt the resolution of
his grievance; rather, he has the duty to observe the status quo.
6
Citing Section 1, Article V of the CBA, petitioner further argues that
respondent employees have the obligation, just as management has, to
settle all labor disputes through friendly negotiations. Thus, Section 2 of
the CBA should not be narrowly interpreted.
7
Before the prescriptive
period of five days begins to run, two concurrent requirements must be
met, i.e., presentment of the grievance and its discussion between the
shop steward and the division head who in this case is Mr. Abad. Section 2
is not self-executing; the mere filing of the grievance does not trigger the
tolling of the prescriptive period.
8
Petitioner has sorely missed the point.
t is a fact that the sympathy of the Court is on the side of the laboring
classes, not only because the Constitution imposes such sympathy, but
because of the one-sided relation between labor and capital.
9
The
constitutional mandate for the promotion of labor is as explicit as it is
demanding. The purpose is to place the workingman on an equal plane
with management with all its power and influence in negotiating for
the advancement of his interests and the defense of his rights.
10
Under the
policy of social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those with
less privileges in life should have more privileges in law.
11
t is clear that the grievance was filed with Mr. Abad's secretary during his
absence.
12
Under Section 2 of the CBA aforequoted, the division head
shall act on the grievance within five (5) days from the date of presentation
thereof, otherwise "the grievance must be resolved in favor of the
aggrieved party." t is not disputed that the grievants knew that division
head Reynaldo Abad was then "on leave" when they filed their grievance
which was received by Abad's secretary.
13
This knowledge, however,
should not prevent the application of the CBA.
On this score, respondent NLRC aptly ruled:
. . . Based on the facts heretofore narrated, division head Reynaldo Abad
had to act on the grievance of complainants within five days from 21
November 1984. Therefore, when Reynaldo Abad, failed to act within the
reglementary period, complainants, believing in good faith that the effect of
the CBA had already set in, cannot be blamed if they did not conduct ramp
inventory for the days thereafter. n this regard, respondent PAL argued
that Reynaldo Abad was on leave at the time the grievance was presented.
This, however, is of no moment, for it is hard to believe that everything
under Abad's authority would have to stand still during his absence from
office. To be sure, it is to be expected that someone has to be left to attend
to Abad's duties. Of course, this may be a product of inadvertence on the
part of PAL management, but certainly, complainants should not be made
to suffer the consequences.
14
Contrary to petitioner's submission,
15
the grievance of employees is not a
matter which requires the personal act of Mr. Abad and thus could not be
delegated. Petitioner could at least have assigned an officer-in-charge to
look into the grievance and possibly make his recommendation to Mr.
Abad. t is of no moment that Mr. Abad immediately looked into the
grievance upon returning to work, for it must be remembered that the
grievants are workingmen who suffered salary deductions and who rely so
much on their meager income for their daily subsistence and survival.
Besides, it is noteworthy that when these employees first presented their
complaint on August 21, 1984, petitioner failed to act on it. t was only after
a formal grievance was filed and after Mr. Abad returned to work on
December 7, 1984 that petitioner decided to turn an ear to their plaints.
As respondent NLRC has pointed out, Abad's failure to act on the matter
may have been due to petitioner's inadvertence,
16
but it is clearly too much
of an injustice if the employees be made to bear the dire effects thereof.
Much as the latter were willing to discuss their grievance with their
employer, the latter closed the door to this possibility by not assigning
someone else to look into the matter during Abad's absence. Thus, private
respondents should not be faulted for believing that the effects of the CBA
in their favor had already stepped into the controversy.
f the Court were to follow petitioner's line of reasoning, it would be easy
for management to delay the resolution of labor problems, the complaints
of the workers in particular, and hide under the cloak of its officers being
"on leave" to avoid being caught by the 5-day deadline under the CBA. f
this should be allowed, the workingmen will suffer great injustice for they
will necessarily be at the mercy of their employer. That could not have
been the intendment of the pertinent provision of the CBA, much less the
benevolent policy underlying our labor laws.
ACCORDNGLY, on the foregoing premises, the instant petition is hereby
DENED and the assailed decision of respondent National Labor Relations
Commission is AFFRMED. This judgment is immediately executory.
SO ORDERED.
Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.

# Footnotes
1 Per Presiding Commissioner Edna Bonto-Perez and Commissioners
Daniel M. Lucas, Jr. and Mirasol V. Corleto.
2 Original Record, 119.
* Private respondents were meted the penalty of suspension without pay
as follows: Alberto Santos, Jr., from January 15 to April 5, 1985 (Exh. H,
Original Record, 45); Regino Duran, from January 15 to February 4, 1985
(Exh. , ibid., 46); Gilbert Antonio, from January 15 to 21, 1985 (Exh. J,
ibid., 47); and Houdiel Magadia, from January 15 to February 4, 1985
(Exh. K, ibid., 48).
3 Petition, 2-5; Rollo, 3-6.
4 Pan Pacific ndustrial Sales, nc. vs. NLRC, et al., 194 SCRA 633 (1991).
5 Exhibit S; Original Record, 57.
6 Petition, 8; Rollo, 9.
7 Ibid., 8-9; Rollo, 9-10.
8 Ibid., 9, Rollo, 10.
9 Reliance Surety and nsurance Co., nc. vs. NLRC, et al., 193 SCRA 365
(1991).
10 Dagupan Bus Company, nc. vs. NLRC, et al., 191 SCRA 328 (1990).
11 Ditan vs. POEA, et al., 191 SCRA 823 (1990).
12 Exhibit E; Original Record, 42.
13 Original Record, 105.
14 Ibid., 118-119.
15 Petition, 9-10; Rollo, 10-11.
16 Original Record, 119
G.R. No. 154472 June 30, 2005
ALEXANDER R. LOPEZ, HERMINIO D. PEA, SALVADOR T. ABUEL,
GEORGE F. CABRERA, JOEL M. CARREON, DAMASO M.
CERVANTEX, JR., RICARDO V. CUEVAS, ROBERTO S. DAGDAG,
IRENEO V. DURAY, OMER S. ESPIRIDION, MANOLO V. FORONDA,
RONITO R. FRIAS, ANGEL C. GARCIA, VICTORINO A. ILAGAN,
DENNIS S. LEGADOS, MIGUEL J. LOPEZ, EMMANUEL R. MERILLO,
EDGAR E. NATARTE, MAMERTO S. NEPOMUCENO, MARVIN R.
PADURA, ROMEO C. RAMILO, ALBERTO R. RAMOS, JR., RONALDO
A. SARMIENTO, ARMANDO S. SIONGCO, JOSE TEODY P. VELASCO,
RICO P. VILLANUEVA, SAMUEL L. ZAPATERO, EDGARDO D. AGUDO,
ROBERTO A. ARAA, BENJAMIN ASUNCION, JULIAN C. BACOD,
EDWIN N. BORROMEO, ALBERTO T. BULAONG, DANIEL CADAOM,
ROBERTO S. CAYETANO, ALFREDO C. CLAVIO, EDGARDO A.
DABUET, NEIL DAVID, ALEXANDER B. ESTORES, NOEL GUILLEN,
RODOLFO MAGNO, REY MANLEGRO, ROMEO V. MORALES,
ROSAURO NADORA, EUGENIO M. ORITO, RONILO P. PAREDES,
ADGARDO R. PINEDA, CARLITO SAMARTINO, ARTURO C. SARAOS,
JR., JOHNEL L. TORRIBIO, ANTONIO A. VERGARA, JIMMY C.
UNGSON, NOEL D. AMOYO, VIRGILIO L. AZARCON, RICARDO M.
BROTONEL, EMERALDO C. CABAYA, JULIE G. CHAN, LUIS C.
CLAVIO, LUIS T. CANIZO, ERNESTO F. DAVID, EDGAR B. DE VERA,
REYNALDO A. DUMLAO, ARTURO R. DYCHITAN, ROMAN S.
FAJARDO, BERNARDINO B. MACALDO, ROMEO D. MANASIS, JR.,
MARIO R. MANGALINDAN, VICTORIANO C. MARTINEZ, LEONARDO
D. MIRALLES, ROGELIO E. PACER, ROSENDO L. PANGILINAN, NOLI
H. POLINAG, DIOSDADO M. PUNZALAN, REYNALDO C. GATPO,
CIRILO M. SANTOS, RAMON A. ZAMBRANA, PIO L. ASTORGA,
ROLANDO G. CAGALINGAN, ANGELITO A. CAUDAL, FRANCISCO S.
DELOS SANTOS, CARLOS E. LOMIBAO, ROMEO S. MALABANAN,
LIBERATO B. MANGENTE, JULIAN M. MARTINEZ, BERNARDO S.
MEDINA, MELVIN R. MENDEZ, ALBERT C. MIRADOR, RENEE S.
OCAMPO, DAVID J. PASCUA, AMORSOLO M. PILARTA, ROLANDO C.
REYES, GAVINO SAN GABRIEL, JR., PERCON F. SISON, PLARIDEL L.
TANGLAO, RUBEN R. TAEDO, JR., RENATO G. TARUC, RONALDO
D.C. VENTURA, ANGEL L. VERTUCIO, ERWIN T. VIDAD, WILLIAM M.
AGANAON, ALEX P. MANABAT, FRANCISCO ALMONTE, RODRIGO C.
ANTONIO, DOUGLAS R. AQUINO, REMEGIO R. ATIENZA, ABRAHAM
C. BALICANTE, MELENCIO M. BAGNGUIS, JR., GERARDO T.
BULAONG, MELITANTE I. CASTRO, MEDARDO S. CATACUTAN,
VIRGILIO T. CATUBIG, JOSE S. CHIONG, NEL T. COLOBONG, FELIPE
C. COLLADO, RANDY T. CORTIGUERRA, ANTONIO D. DELA CRUZ,
JESUS C. DINGLE, EDGARDO N. GARCIA, CELSO Z. GOLFO,
NONITO V. FERNANDEZ, LARRY HIDALGO, FRANCISCO B. JAO, JR.,
CARLOS P. LAGLIVA, RICO L. LARRACAS, PEDRO V. ABARIDES,
RUDY S. AGUINALDO, REGINALD F. ALCANTARA, SERAFIN
ALCANTAR, JR., FELIX H. ALEJANDRO, MIGUEL ALTONAGA, JOSE
T. AGUILAR, PEDRO AGUILAR, JR., NOEL A. ALIPIO, WILLIAM A.
ALMAZAR, REYNALDO S.D. ALVAREZ, FLORIZEL M. AMBROCIO,
JOSE A. ASPE, ROBERTO J. ARCEO, ERNESTO V. ARUTA,
MILLARDO DL. ATENCIO, ERNESTO G. AVELINO, WENCESLAO C.
BABEJAS, ARNOLD F. BALINGIT, HEBERT F. BARCELON, MARLON
D. BORROZO, FLORENTINO BAS, JR., LEARNED A. BAUTISTA,
ARMAN N. BORROMEO, CARLITO F. BARTOLO, CARLOS M.
CABERTO, ARTURO S. CAJUCOM, DIEGO CALDERON, JR., WILLIAM
A. CAMPOS, JORGE CANONIGO, JR., ANGELITO M. CAPARAC,
EMMANUEL L. CAPIT, LAURO S. CASTRO, TOMEO B. CASTALONE,
VERZNEV S. CATUBIG, ARMANDO CERVANTES, CALIXTO P.
COLADA, JR., JONATHAN P. CORONEL, JOE NOEL P. CRUZ,
FRANCISCO CRUZ, JR., MARIANO B. CRUZ, JR., JOSE J.
DALUMPINES, SANITO S. DE JESUS, JOSE G. DE LEON, CRISANTO
DE LOS REYES, EMMANUEL C. DE VERA, RODOLFO DE VERA, JR.,
HERMAN C. DE VILLAR, IKE S. DELFIN, PEDRO E. DESIPEDA,
ERAO A. DIONISIO, ALFREDO L. DUGAYO, REYNALDO V. DURAY,
EUGENIO C. ELEAZAR, RAFAEL U. ENCINA, ORLANDO C.
ESCOLAR, ALLAN P. ESPINA, LAURO S. ESPINA, ISRAEL F.
FALLURIN, ORIEL A. FESTEJO, EDGARDO V. FIGUEROA, RALPH
FLORES, FERDINAND B. FUGGAN, NOEL Z. GABOT, EDUARDO M.
GALANG, VICENTE D. GALLARDO, FRESCO B. GALO, ROSAURO G.
GAMBOA, MARIO S. GABRIEL, ROBERTO C. GAPASIN III,
ROMUALDO GAPASIN, JR., DANILO C. GARCIA, RESTITUTO S.
GARCIA, NOEL B. GATDULA, BENJIE S. GERONIMO, ARTURO R.
GLORIOSO, ISIDRO S. GOMED, JR., MEDEL P. GREGORIO, REY T.
HECHANOVA, VONREQUITO HERBUELA, CELSO F. IGNACIO, JR.,
CHARLIE S. IGNACIO, ILDEFONSO F. ILDEFONSO, GAUDENICO M.
INTAL, RIZALITO M. INTAL, RENATO HERRERO, BIENVENIDO L. JAO,
JR., FERDINAND P. LAGMAN, RENEIL M. LAREZA, ALMARIO M.
LAXA, ARTHUR G. LEVISTE, ESTEBAN T. LEGARTO, RAMON G.
LIWANAG, ELISEO A. LU, RAYMUNDO LUSTICA, JR., FERNANDO D.
MABANTA, NESTOR F. MAGALLANES, EDWIN A. MAGPAYO,
MICHAEL I. MAGRIA, ARIEL M. MALAPAD, RAMON O. MAMUCOD,
FERDINAND P. MANINGAS, RONALD D.R. MANUEL, ROLANDO F.
MAPUE, CHITO C. MARCO, ERNESTO S. MARCHAN, JOSEPH B.
MARIANO, FRANCIS J. MARIMON, JOHN L. MARTEJA, JOSE E.
MASE, JR., BERNARDO S. MEDINA, JOEREY B. MERIDOR, SUSANO
S. MIRANDA, EDGARDO C. MONTOYA, MARLON B. MORADA,
ROMEO R. DEL MUNDO, REYNALDO C. NAREDO, EDGARDO R.
NEPOMUCENO, RODEL S. NEPOMUCENO, ROMMEL NIYO, ROMULO
P. OLARTE, GEORGE N. OLAVERE, EDUARDO ONG, MARIO S.
PAGSANJAN, RENALD C. PALAD, GAUDENCIO G. PEDROCHE,
RONALDO DELA CRUZ PEREA, EDILBERTO C. PIGUL, ERNESTO
PINGUL, AGNESIO D. QUEBRAL, JAMES M. QUINTO, RICARDO R.
RAMOS, GENEROSO REGALADO, JR., EDUARDO L. REYES, RAMON
C. REYES, LARRY S. RECAMADAS, ANTONIO B. REDONDO,
FEDERICO M. RIVERA, ROBERTO I. ROCOMORA, FERNANDO P.
RODRIGUEZ, HERNANDO S. RODRIGUEZ, ROMMEL D. ROXAS,
CHRISTOPHER R. RUSTIA, ARNULFO T. JAMISON, MARIO G. SAN
PEDRO, ELMER B. SANTOS, LEONARDO SEBASTIAN, JR.,
CARMENCITO M. SEXON, JOSE STA. ANA SIERRA, LLOYD Z.
SINADJAN, RAMON S. SISIO, RAMIRO M. SOLIS, MANUEL C.
SUAREZ, BENJAMIN TALAVERA, JR., OSCAR U. TAN, RICARDO S.
TAN, AUGUSTUS V. TANDOC, ROBERTO L. TAEDO, ERNESTO R.
TIBAY, CHARLIE P. TICSAY, REY DE VERE TIONGCO, VIVENCIO B.
TOLENTINO, OSMUNDO S. TORRES, HILARIO L. VALDEZ,
LEONARDO C. VALDEZ, PASTOR M. VALENCIA, EFREN VELASCO,
EDMUNDO D. VICTA, FERDINAND VILLANUEVA, JOSE C.
VILLANUEVA, JOSE ROMMEL VILLAMOR, OLIVER P. VILLANUEVA,
VICTOR P. ZAFARALLA, HORACIO L. ZAPATERO, COENE C.
ZAPITER, THE HEIRS OF ESTEBAN BALDOZA, RUBEN GALANG,
FAUSTO S. CRUZ, REYNALDO BORJA, CRISANTO CAGALINGAN
and ADRIANO VICTORIA, petitioners, vs.METROPOLITAN
WATERWORKS AND SEWERAGE SYSTEM, respondents.
D E C S O N
TINGA, J.:
Take not from the mouth of labor the bread it has earned.
Thomas Jefferson
The constitutional protection to labor, a uniform feature of the last three
Constitutions including the present one, is outstanding in its uniqueness
and as a mandate for judicial activism.
This petition asks for the review of the Court of Appeals' D E C I S I O N
1
in
C.A.-G.R. SP NO. 55263 entitled Alexander R. Lopez, et al. v.
Metropolitan Waterworks and Sewerage System, which affirmed in toto the
Civil Service Commission's Resolutions
2
denying petitioners' claim for
severance, retirement and terminal leave pay.
By virtue of an Agreement,
3
petitioners were engaged by the Metropolitan
Waterworks and Sewerage System (MWSS) as collectors-contractors,
wherein the former agreed to collect from the concessionaires of MWSS,
charges, fees, assessments of rents for water, sewer and/or plumbing
services which the MWSS bills from time to time.
4
n 1997, MWSS entered into a Concession Agreement with Manila Water
Service, nc. and Benpress-Lyonnaise, wherein the collection of bills was
transferred to said private concessionaires, effectively terminating the
contracts of service between petitioners and MWSS. Regular employees
of the MWSS, except those who had retired or opted to remain with the
latter, were absorbed by the concessionaires. Regular employees of the
MWSS were paid their retirement benefits, but not petitioners. nstead,
they were refused said benefits, MWSS relying on a resolution
5
of the Civil
Service Commission (CSC) that contract-collectors of the MWSS are not
its employees and therefore not entitled to the benefits due regular
government employees.
Petitioners filed a complaint with the CSC. n its Resolution dated 1 July
1999,
6
the CSC denied their claims, stating that petitioners were engaged
by MWSS through a contract of service, which explicitly provides that a bill
collector-contractor is not an MWSS employee.
7
Relying on Part V of CSC
Memorandum Circular No. 38, Series of 1993, the CSC stated that
contract services/job orders are not considered government services,
which do not have to be submitted to the CSC for approval, unlike
contractual and plantilla appointments.
8
Moreover, it found that petitioners
were unable to show that they have contractual appointments duly attested
by the CSC.
9
n addition, the CSC stated that petitioners, not being
permanent employees of MWSS and not included in the list .submitted to
the concessionaire, are not entitled to severance pay.
10
Petitioners' claims
for retirement benefits and terminal leave pay were likewise denied.
Petitioners sought reconsideration of the CSC Resolution, which was
however denied by the CSC on 17 September 1999.
11
According to the
CSC, petitioners failed to present any proof that their appointments were
contractual appointments submitted to the CSC for its approval.
12
The CSC
held, thus:
WHEREFORE, the motion for Reconsideration of Alexander Lopez, et al.
is hereby denied. Accordingly, CSC Resolution No. 99-1384 dated July 1,
1999 stands. However, this is not without prejudice to whatever rights and
benefits they may have under the New Labor Code and other laws, if
any.
13
Aggrieved, petitioners filed a petition for review under Rule 43 of the Rules
of Court with the Court of Appeals.
14
n its D E C I S I O N, the Court of
Appeals narrowed down the issues presented by petitioners as follows:
Whether or not the CSC erred in finding that petitioners are not contractual
employees of the government and, hence, are not entitled to retirement
and separation benefits.
15
Affirming and generally reiterating the ruling of the CSC, the Court of
Appeals held that the Agreement entered into by petitioners and MWSS
was clear and unambiguous, and should be read and interpreted
according to its literal sense.
16
Hence, as per the terms of the agreement,
petitioners were not MWSS employees. The Court of Appeals held that no
other evidence was adduced by petitioners to substantiate their claim that
their papers were forwarded to the CSC for attestation and approval.
17
t
added that in any event, as early as 26 June 1996, the CSC specifically
stated that "contract collectors are not MWSS employees and therefore
not entitled to severance pay."
18
The Court of Appeals held that petitioners are not similarly situated as the
petitioner in the case of Chua v. Civil Service Commission
19
since the
contractual appointment was submitted to and approved by the CSC, while
the former were not.
20
Further, petitioners do not have creditable service
for purposes of retirement, since their services were not supported by duly
approved appointments.
21
Lastly, the Court of Appeals held that petitioners
were exempt from compulsory membership in the GSS. Having made no
monthly contributions remitted to the said office, petitioners are not entitled
to the separation and/or retirement benefits that they are claiming.
22
Petitioners now assert that the Court of Appeals rendered a decision not in
accord with law and applicable jurisprudence, based on misapprehension
of facts, and/or contrary to the evidence on record.
23
Petitioners allege that while their hiring was made to appear to be on
contractual basis, the contracts evidencing such hiring were submitted to
and approved by the CSC. Later contracts, however, do not appear to
have been submitted to the CSC for approval. To support its claim,
petitioners presented two (2) sample agreements,
24
both stamped
"approved" and signed by CSC Regional Directors. While styled as
individual contracts/agreements, petitioners insist that the same were
actually treated by the MWSS as appointment papers.
25
Petitioners claim that they were employees of the MWSS, and that the
latter exercised control over them. They cite as manifestations of control
the training requirements, the mandated procedures to be followed in
making collections, MWSS' close monitoring of their performance, as well
as the latter's power to transfer collectors from one branch to another.
26
Moreover, they add that with the nature and extent of their work at the
MWSS, they served as collectors of MWSS only.
27
They stress that they
have never provided collection services to customers as an independent
business. n fact, they applied individually and were hired by MWSS one
by one.
28
They were provided with uniforms and identification cards, and
received basic pay termed as "commissions" from which MWSS deducted
withholding tax.
29
The "commissions" were determined or computed by
MWSS and paid to the collectors by payroll every fifteenth (15th) and last
day of every month. n addition to the commission, collectors were given,
among others, performance, mid-year and anniversary bonuses, hazard
pay, thirteenth (13th) month pay, traveling allowance, cash gift, meal
allowance and productivity pay.
30
Petitioners claim that bill collectors were historically regarded as
employees of National Waterworks and Sewerage Authority (NAWASA),
the forerunner of MWSS.
31
They cite the case of National Waterworks and
Sewerage Authority v. NWSA Consolidated Labor Unions, et al.,
32
wherein
this Court supposedly declared the bill collectors of NAWASA as its
employees and the commissions received by said collectors as salary.
33
Likewise, they claim that by MWSS' own acts, petitioners were its
employees. To support this contention, they point to the identification cards
(.D.s) and certifications of employment issued by MWSS in their favor.
34
There were also "Records of Appointment", which referred to the contract-
collectors as employees with corresponding service records.
35
n view of the cited documents, petitioners assert that MWSS is estopped
from denying their employment with the agency.
36
Should there be doubt
as to their status as employees, petitioners invoke the rule of liberal
construction in favor of labor, and the constitutional policy of protection to
labor.
37
To further strengthen their case, petitioners refer to CSC Resolution 92-
2008 dated 8 December 1992, which states in part:
. . . . The fact that they were being hired directly and paid on commission
basis by MWSS itself is indicative that they are government employees
and should be entitled to the incentive awards.
WHEREFORE, foregoing premises considered, the Commission resolves
to rule that the Contractual-Collectors of the Metropolitan Waterworks and
Sewerage System (MWSS) are entitled to loyalty awards.
38
The same resolution was made the basis of the MWSS' memorandum
declaring contract-collectors government employees or personnel entitled
to salary increases pursuant to the Salary Standardization Law & .
39
Thus, petitioners claim that by MWSS' and CSC's own acts and
declarations, they were made to believe that they were employees of
MWSS and as such were government employees.
40
Petitioners invoke the case of Chua v. Civil Service Commission, et al.
41
wherein Chua, a co-terminus employee of the National rrigation
Administration, sought to recover early retirement benefits but was denied
the same. This Court, having observed that Chua was hired and re-hired in
four (4) successive projects during a span of fifteen (15) years, was
deemed a regular employee for purposes of retirement pay. Petitioners
argue that in the same manner, in view of their considerable length of
service to MWSS, they are entitled to their claimed benefits.
42
n addition to the retirement/separation/terminal leave pay prayed for,
petitioners claim moral damages for the alleged serious disturbance they
suffered as a result of the denial of their claims. They also pray for the
award of attorney's fees.
43
For its part, the MWSS avers that the Court of Appeals did not err in
sustaining the resolutions of the CSC denying petitioners' claim for
entitlement to severance, retirement and terminal leave pay.
MWSS denies the existence of employer-employee relationship between
itself and petitioners. Citing CSC Memorandum Circular No. 38 Series of
1993, MWSS avers that it has the authority to contract the services of
another who is considered not its employee.
44
With respect to the matter of
payment of wages, MWSS states that the commission given to petitioners
does not fall within the definition of compensation as provided in
Presidential Degree No. 1146 (P.D. 1146),
45
or in the definition of the term
under the Revised Administrative Code either.
46
t adds that the issuance of .D.s., certificates of recognition and loyalty
awards as well as the grounds for termination of the Agreement could
hardly be considered as control as the same had no relation to the means
and methods to be employed by petitioners in collecting payments for
MWSS.
47
As for the training and orientation undergone by petitioners,
MWSS claims that it is but logical for any entity which has contracted the
services of another to orient the latter before actual performance of the
service, more so if the entity's function is impressed with public service.
The fact that collectors were given a regular time for remittance should
likewise not be considered as a form of control. MWSS states that none of
these requirements invades the collector's prerogative to adopt their own
method/strategy in the matter of collection.
48
On the grant of thirteenth (13th) month pay and other benefits to
petitioners, MWSS claims that these were mere acts of benevolence and
generosity.
49
Pertinently, therefore, the issue to be resolved is whether or not petitioners
were employees of the MWSS and, consequently, entitled to the benefits
they claim.
We find for the petitioners.
The Court has invariably affirmed that it will not hesitate to tilt the scales of
justice to the labor class for no less than the Constitution dictates that "the
State . . . shall protect the rights of workers and promote their welfare."
50
t
is committed to this policy and has always been quick to rise to defense in
the rights of labor, as in this case.
51
Protection to labor, it has been said, extends to all of laborlocal and
overseas, organized and unorganized, in the public and private sectors.
52
Besides, there is no reason not to apply this principle in favor of workers in
the government. The government, including government-owned and
controlled corporations, as employers, should set the example in upholding
the rights and interests of the working class.
The MWSS is a government owned and controlled corporation with its own
charter, Republic Act No. 6234.
53
As such, it is covered by the civil
service
54
and falls under the jurisdiction of the Civil Service Commission.
55
CSC Memorandum Circular No. 38, Series of 1993, categorically made the
distinction between contract of services/job orders and contractual and
plantilla appointment, declaring that services rendered under contracts of
services and job orders are non-government services which do not have to
be submitted to the CSC for approval. This was followed by CSC
Memorandum Circular No. 4, Series of 1994, which allowed the crediting
of services for purposes of retirement only for such services supported by
duly approved appointments. Subsequently, the CSC issued other
resolutions applying the above-mentioned circulars, stating that while
some functions may have been contracted out by a government agency,
the persons contracted are not entitled to the benefits due to regular
government employees.
56
For purposes of determining the existence of employer-employee
relationship, the Court has consistently adhered to the four-fold test,
namely: (1) whether the alleged employer has the power of selection and
engagement of an employee; (2) whether he has control of the employee
with respect to the means and methods by which work is to be
accomplished; (3) whether he has the power to dismiss; and (4) whether
the employee was paid wages.
57
Of the four, the control test is the most
important element.
A review of the circumstances surrounding the case reveals that
petitioners are employees of MWSS. Despite the obvious attempt of
MWSS to categorize petitioners as mere service providers, not employees,
by entering into contracts for services, its actuations show that they are its
employees, pure and simple. MWSS wielded its power of selection when it
contracted with the individual petitioners, undertaking separate contracts
or agreements. The same goes true for the power to dismiss. Although
termed as causes for termination of the Agreement, a review of the same
shows that the grounds indicated therein can similarly be grounds for
termination of employment.
Under the Agreement, MWSS may terminate it if the "Collector-Contractor"
does or fails to do any of the following:
Article V Duration, Termination and Penal Clauses.
. . . .
(a) Fails to collect at least eighty percent (80%) of bills issued within three
(3) months from commencement of this Agreement or ninety percent
(90%) within six (6) months after effectivity of this Agreement;
(b) Erases, alters, or changes any figure on the bills or remittance receipt
for purposes of defrauding either the concessioner or the MWSS. n case
of termination of his services for any irregularity, there shall be no
prejudice against any criminal action for which he may be liable;
(c) s discourteous, dishonest, arrogant or his conduct is inimial [sic] to the
good name or image of the MWSS;
(d) Fails to remit collections daily or to return uncollected bills daily; and
(e) Fails to comply with any of the undertakings as provided for in this
Agreement, and the Manual of Procedures mentioned in Article hereof.
58
(Emphasis Supplied)
On the other hand, the Labor Code enumerates the just causes for
termination of employment, thus:
Art.282. Termination by Employer. An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his 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 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.
Obviously, failure to collect the payments of customers or remit the
collections constitutes neglect of duty. Making erasures, alterations or
changing of figures in the fees or collection receipts amounts to fraud.
Lack of courtesy, dishonesty and arrogance are practically the same as
misconduct.
On the issue of remuneration, MWSS claims that the compensation
received by petitioners does not fall under the definition of wages as
provided in Section 2(i) of P.D. 1146,
59
which is "the basic pay or salary
received by an employee, pursuant to his employment appointments,
excluding per diems, bonuses, overtime pay and allowances;" thus
petitioners are not its employees. This assertion, however, simply begs the
question. The provision is a simple statement of meaning, operating on the
a priori premise or presumption that the recipient is already classified as
an employee, and does not lay down any basis or standard for determining
who are employees and who are not.
On the other hand, relevant and appropriate is the definition of wages in
the Labor Code, namely, that it is the remuneration, however designated,
for work done or to be done, or for services rendered or to be rendered.
60
The "commissions" due petitioners were based on the bills collected as per
the schedule indicated in the Agreement.
61
Significantly, MWSS granted
petitioners benefits usually given to employees, to wit: COLA, meal,
emergency, and traveling allowances, hazard pay, cash gift, and other
bonuses.
62
n an unabashed bid to claim credit for itself, MWSS professes
that these additional benefits were its acts of benevolence and
generosity.
63
We are not impressed.
Petitioners rendered services to MWSS for which they were paid and given
similar benefits due the other employees of MWSS. t is hard to imagine
that MWSS was simply moved by the spirit of benevolence and generosity
when it granted liberal benefits to petitioners. More so since MWSS is a
government owned and controlled corporation created for the "proper
operation and maintenance of waterworks system to insure an
uninterrupted and adequate supply and distribution of potable water for
domestic and other purposes and the proper operation and maintenance
of sewerage systems."
64
ts main function is to provide basic services to
the public. The disposition of MWSS' income is limited to the payment of
its contractual and statutory obligations, expansion and development, and
for the enhancement of its efficient operation.
65
t was not in a position to
distribute hard-earned income of the State merely to give expression to its
supposed altruistic impulse, or to disburse funds not otherwise authorized
by law or its charter. f MWSS was impelled by some force to give the
benefits to petitioners, it must have been the force of good business
sense. Obviously, the additional benefits were granted with the same
motivation as good managers anywhere else haveto foster a good
working relationship with the bill-collectors and incentivize them to raise
the high level of their performance even higher.
Now the aspect of control. MWSS makes an issue out of the proviso in the
Agreement that specifically denies the existence of employer-employee
relationship between it and petitioners. t is axiomatic that the existence of
an employer-employee relationship cannot be negated by expressly
repudiating it in an agreement and providing therein that the employee is
"not an MWSS employee"
66
when the terms of the agreement and the
surrounding circumstances show otherwise. The employment status of a
person is defined and prescribed by law and not by what the parties say it
should be.
67
n addition, the control test merely calls for the existence of the right to
control, and not the exercise thereof. t is not essential for the employer to
actually supervise the performance of duties of the employee, it is enough
that the former has a right to wield the power.
68
While petitioners were
contract-collectors of MWSS, they were under the latter's direction as to
where and how to perform their collection and were even subject to
disciplinary measures. Trainings were in fact conducted to ensure that
petitioners are conversant of the procedures of the MWSS.
Contrary to MWSS' assertion that petitioners were "free to adopt (their)
own method/strategy in the matter of collection",
69
the Agreement clearly
provided that the procedure and/or manner of the collection of bills to be
followed shall be in accordance with the provisions of the Manual of
Procedures. Art. V of the Agreement states:
Art. - Procedure of Collection
The procedure and/or manner of the collection of bills to be followed shall
be in accordance with Provisions of the Manual of Procedures adopted on
November 1, 1968, which is made an integral part of this Agreement as
Annex "A."
70
Other manifestations of control are evident from the records. The power to
transfer or reassign employees is a management prerogative exclusively
enjoyed by employers. n this case, MWSS had free reign over the transfer
of bill collectors from one branch to another.
71
MWSS also monitored the
performance of the petitioners and determined their efficiency ratings.
72
MWSS contends that petitioners were free to engage in other occupations
and were not limited by the Agreement. Suffice it to say, however, that the
control measures installed by MWSS were restrictive enough to limit or
even render illusory the other employment options of petitioners as their
tasks took up most of their time, they being required to report and remit to
MWSS almost twice daily. nterestingly in that regard, under the
Agreement petitioners were "allowed" to render overtime work, and were
given additional "incentive commission" for work so rendered as long as
the same was authorized.
73
Verily, the need to secure MWSS' authorization
before petitioners can render overtime work debunks its claim that they
were allowed to work as and when they please. All these indicate that
MWSS controlled the working hours of petitioners.
Furthermore, petitioners did not have their own offices nor their own
supplies and equipment. MWSS provides them with company stationeries,
office space and equipment.
74
Likewise, MWSS comported itself as the
employer of petitioners, providing them with .D.s. and certifications which
declared them as employees of MWSS.
75
t also deducted and remitted
petitioners' withholding taxes and Medicare contributions.
76
Presaging and lending precedental lift to the present adjudication is the
recent ruling in Manila Water Company, Inc. v. Pea.
77
n that case, Manila
Water Company (Manila Water), a concessionaire of MWSS, individually
hired some of the former MWSS bill collectors to perform collection
services for three (3) months. Subsequently, the bill collectors formed a
corporation, Association Collectors Group, nc. (ACG) which was
contracted by Manila Water to collect charges. Later, Manila Water asked
the collectors to transfer to a newly formed corporation, First Classic
Courier Services. Manila Water later terminated its contract with ACG, as
a result of which collectors who opted to remain with ACG became
unemployed. These bill collectors filed a complaint for illegal dismissal and
money claims against Manila Water, claiming that they were its employees
since all the methods and procedures of their collection were controlled by
the latter. On the other hand, Manila Water contended that the bill
collectors were employees of AGC, an independent contractor.
78
The Court ruled that the bill collectors were regular employees of Manila
Water, debunking the latter's claim that they worked for an independent
contractor corporation, thus:
First, ACG does not have substantial capitalization or investment in the
form of tools, equipment, machineries, work premises, and other materials,
to qualify as an independent contractor. While it has an authorized capital
stock of P1,000,000.00, only P62,500.00 is actually paid-in, which cannot
be considered substantial capitalization. The 121 collectors subscribed to
four shares each and paid only the amount of P625.00 in order to comply
with the incorporation requirements. Further, private respondents reported
daily to the branch office of the petitioner because ACG has no office or
work premises. n fact, the corporate address of ACG was the residence
of its president, Mr. Herminio D. Pea. Moreover, in dealing with the
consumers, private respondents used the receipts and identification cards
issued by petitioner.
Second, the work of the private respondents was directly related to the
principal business or operation of the petitioner. Being in the business of
providing water to the consumers in the East Zone, the collection of the
charges therefor by private respondents for the petitioner can only be
categorized as clearly related to, and in the pursuit of the latter's business.
Lastly, ACG did not carry on an independent business or undertake the
performance of its service contract according to its own manner and
method, free from the control and supervision of its principal, petitioner.
Prior to private respondents' alleged employment with ACG, they were
already working for petitioner, subject to its rules and regulations in regard
to the manner and method of performing their tasks. This form of control
and supervision never changed although they were already under the
seeming employ of ACG. Petitioner issued memoranda regarding the
billing methods and distribution of books to the collectors; it required
private respondents to report daily and to remit their collections on the
same day to the branch office or to deposit them with Bank of the
Philippine slands; it monitored strictly their attendance as when a collector
cannot perform his daily collection, he must notify petitioner or the branch
office in the morning of the day that he will be absent; and although it was
ACG which ultimately disciplined private respondents, the penalty to be
imposed was dictated by petitioner as shown in the letters it sent to ACG
specifying the penalties to be meted on the erring private respondents.
These are indications that ACG was not left alone in the supervision and
control of its alleged employees. Consequently, it can be concluded that
ACG was not an independent contractor since it did not carry a distinct
business free from the control and supervision of petitioner.
79
Even under the "four-fold test", the bill collectors proved to be employees
of Manila Water. Thus, the Court held that:
Even the "four-fold test" will show that petitioner is the employer of private
respondents. The elements to determine the existence of an employment
relationship are: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's
power to control the employee's conduct. The most important element is
the employer's control of the employee's conduct, not only as to the result
of the work to be done, but also as to the means and methods to
accomplish it.
We agree with the Labor Arbiter that in the three stages of private
respondents' services with the petitioner, i.e., (1) from August 1, 1997 to
August 31, 1997; (2) from September 1, 1997 to November 30, 1997; and
(3) from December 1, 1997 to February 8, 1999, the latter exercised
control and supervision over the formers' conduct.
Petitioner contends that the employment of private respondents from
August 1, 1997 to August 30, 1997 was only temporary and done to
accommodate their request to be absorbed since petitioner was still
undergoing a transition period. t was only when its business became
settled that petitioner employed private respondents for a fixed term of
three months.
Although petitioner was not obliged to absorb the private respondents, by
engaging their services, paying their wages in the form of commission,
subjecting them to its rules and imposing punishment in case of breach
thereof, and controlling not only the end result but the manner of achieving
the same as well, an employment relationship existed between them.
Notably, private respondents performed activities which were necessary or
desirable to its principal trade or business. Thus, they were regular
employees of petitioner, regardless of whether the engagement was
merely an accommodation of their request..
80
(Emphasis Ours)
n fine, the Court found that the so-called independent contractor did not
have substantial capitalization or investment in the form of tools,
equipment, machineries, work premises and other material to qualify as an
independent contractor. Moreover, respondents therein reported daily to
the Manila Water branch office and dealt with the consumers through
receipts and .D.s. issued by the latter. Likewise, their work was directly
related to and in the pursuit of Manila Water's principal business. More
importantly, the Court noted that ACG did not carry a distinct business free
from the control and supervision of Manila Water.
The similarity between this case and the instant petition cannot be denied.
For one, the respondents in said case are petitioners in this case.
81
Second, the work set-up was essentially the same. While the bill collectors
were individually hired, or eventually engaged through ACG, they were
under the direct control and supervision of the concessionaire, much like
the arrangement between herein petitioners and MWSS. Third, they
performed the same vital function of collection in both cases. Fourth, they
worked exclusively for their employers. Hence, the bill collectors in the
Manila Water case were declared employees of Manila Water despite the
existence of a sham labor contractor. n the present case, petitioners were
directly and individually hired by MWSS, the latter not resoting to the
intermediary labor contractor artifice, but a mere a scrap of paper
impudently declaring the bill collectors to be not employees of MWSS.
With greater reason, therefore, should the actuality of the employer-
employee relationship between MWSS and petitioners be recognized.
The CSC, as well as the Court of Appeals, makes much of CSC
Memorandum Circular No. 38, Series of 1993, which distinguishes
between contract of services/job services and contractual appointment.
The Circular provides:
Contract of Services and Job Orders are different from Contractual
appointment and Plantilla appointment of casual employees, respectively,
which are required to be submitted to CSC for approval.
Contracts of Services and Job Orders refer to employment described as
follows:
1. The contract covers lump sum work or services such as janitorial,
security or consultancy services where no employer-employee relationship
exist;
2. The job order covers piece of work or intermittent job of short duration
not exceeding six months on a daily basis;
3. The contract of services and job orders are not covered by Civil Service
Law, Rules and Regulations; [sic] but covered by COA rules;
4. The employees involved in the contracts or job orders do not enjoy the
benefits enjoined by government employees, such as PERA, COLA and
RATA.
5. As the services rendered under contracts of services and job orders are
not considered government services, they do not have to be submitted to
the Civil Service Commission for approval.
82
Clinging to its tenuous denial of petitioners' employee status, the CSC
avers that contractual employees are those with contractual appointment
submitted to and attested by the CSC, unlike petitioners who failed to
show that their appointments were duly attested by the CSC. The Court
recognizes the authority of the CSC in promulgating circulars and
memoranda concerning the civil service sector in line with its function as
the central personnel agency of the Government.
83
Nevertheless, it cannot
turn a blind eye to a rather haphazard application and interpretation by the
CSC of its own issuance, such as in this case.
A careful review of the above-quoted circular shows that the relationship
defined by the Agreement cannot fall within the purview of contract of
services or job orders. Payments made by MWSS' subscribers are the
lifeblood of the company. Viewed in that context the work rendered by the
petitioners is essential to the company's survival and growth. Alongside its
public service thrust, the MWSS is an income-generating entity for the
Government. t relies for the most part on the bill collections in order to
sustain its operations. The task of collecting payments for the water
supplied by the MWSS to its consumers does not deserve to be compared
with mere janitorial, security or even consultancy work. t is not intermittent
and seasonal, but rather continuous and increasing by reason of its
indisputable essentiality. To lump petitioners with the run-of-the-mill service
providers is to ignore the vital role they perform for the MWSS. Rightly so,
as clearly indicated in the circular, employees involved in the contracts or
job orders do not enjoy the benefits enjoyed by the petitioners which are
the same benefits given to government employees.
Petitioners are indeed regular employees of the MWSS. The primary
standard of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The connection can be
determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety.
Likewise, the repeated and continuing need for the performance of the job
has been deemed sufficient evidence of the necessity, if not
indispensability of the activity to the business.
84
Some of the petitioners
had rendered more than two decades of service to the MWSS. The
continuous and repeated rehiring of these bill collectors indicate the
necessity and desirability of their services, as well as the importance of the
role of bill collectors in the MWSS.
We agree with the CSC when it stated that the authority of government
agencies to contract services is an authority recognized under civil service
rules.
85
However, said authority cannot be used to circumvent the laws and
deprive employees of such agencies from receiving what is due them.
The CSC goes further to say that petitioners were unable to present proof
that their appointments were contractual in nature and submitted to the
CSC for its approval, and that submission to and approval of the CSC are
important as these show that their services had been credited as
government service.
86
The point is of no moment. Petitioners were able to
attach only two of such Agreements which bore the stamp of approval by
the CSC and these are simply inadequate to prove that the other
agreements were similarly approved. Even petitioners admit that
subsequently such Agreements were no longer submitted to the CSC for
its approval. Still, the failure to submit the documents for approval of the
CSC cannot militate against the existence of employer-employee
relationship between petitioners and MWSS. MWSS cannot raise its own
inaction to buttress its adverse position.
MWSS committed itself to pay severance and terminal leave pay to its
regular employees.
87
The guidelines
88
thereof states that regular
employees who have rendered at least a year of service and not eligible
for retirement are entitled to severance pay equivalent to one (1) month
basic pay for every full year of service.
89
n view of the Court's finding that
petitioners were employees of MWSS, the corresponding severance pay,
in accordance with the guidelines, should be given to them. Terminal leave
pay are likewise due petitioners, provided they meet the requirements
therefor.
However, petitioners in this case cannot avail of retirement benefits from
the GSS. When their services were engaged by MWSS, they were not
reported as its employees and hence no deductions were made against
them for purpose of the GSS contributions. t would be unjust to grant
petitioners retirement benefits when there was no remittance of the
employees' or the employer's share of contributions.
The case of Chua v. Civil Service Commission
90
relied upon by petitioners
is not in point. There was no question that Chua was an employee,
specifically a contractual/project employee of the National rrigation
Administration (NA). The CSC's denial of her request for early retirement
benefits was based on the CSC's conclusion that contractual employees
are not covered by the Early Retirement Law.
91
This Court held that co-
terminus employees who have rendered years of continuous service such
as Chua -who was continuously hired and rehired for four (4) successive
times in a span of fifteen (15) years-should be included in the coverage of
the Early Retirement Law as long as they comply with CSC regulations
promulgated for such purpose. Underlying this grant of retirement benefits
to Chua is the finding that her work with the NA was recognized and
accredited by the CSC as government service, that she paid her GSS
contributions throughout her service, and the fact that she applied for the
benefit within the prescribed period.
92
The differences between Chua and petitioners are readily apparent. The
ruling in Chua concerns claims based on the Early Retirement Law. On the
other hand, this case involves bill collectors who were hired by virtue of
individual agreements, and who are now claiming payment of retirement,
separation and terminal leave benefits. Petitioners' services, admittedly,
were not credited/recognized by the CSC. Likewise, the parties still dispute
the nature of their relationship when petitioners made the claim for the
benefits, unlike in the case of Chua where there was no question as to her
status as an employee of the NA. Moreover, unlike Chua, petitioners in
this case did not give any contribution for GSS coverage, especially since
retirement benefits come from the monthly contributions of GSS
members.
Petitioner's claim for damages and attorney's fees are similarly untenable.
MWSS cannot be made liable for moral damages for the "serious moral
disturbance"
93
petitioners allegedly suffered as a result of the denial of the
requested benefits because it was merely following the earlier resolution
94
of the CSC. MWSS' adherence to the position of the CSC is but logical. t
is after all, the central personnel agency of the government, and its
resolution at the time was valid and binding on MWSS.
WHEREFORE, the petition is GRANTED N PART. The D E C I S I O N of
the Court of Appeals in C.A.G.R. SP No. 55263, as well as the Civil
Service Commission's Resolutions Nos. 991384 and 992074, are hereby
REVERSED and SET ASDE. MWSS is ordered to pay terminal leave pay
and separation pay and/or severance pay to each of herein petitioners on
the basis of remunerations/commissions, allowances and bonuses each
were actually receiving at the time of termination of their employment as
contract collectors of MWSS. Let the case be remanded to the Civil
Service Commission for the computation of the above awards and the
appropriate disposition in accordance with the pronouncements in this D E
C I S I O N.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales,
Callejo, Sr., Azcuna, Chico-Nazario, and Garcia, JJ., concur.
Footnotes
1
Promulgated on 26 July 2002 by the Special Third Division, Penned by
Justice Josefina Guevara-Salonga, JJ. Bernardo P. Abesamis and Amelita
G. Tolentino, concurring; Rollo, pp. 59-72.
2
Resolution No. 991384 dated 1 July 1999 and Resolution No.992074
dated 17 September 1999; id. at 118-146.
3
Id. at 248-265.
4
Art. of the Agreement, id. at 249.
5
CSC Resolution No. 981668, 26 June 1996, id. at 291-294
6
Resolution No. 991384, id. at 118-141.
7
Id. at 134-135.
8
Id. at 135-136.
9
Id. at 136.
10
Id. at 138.
11
CSC Resolution No. 992074, id. at 143-146.
12
Id. at 145.
13
Id. at 146.
14
Id. at 74-114.
15
Id. at 65.
16
Id. at 67.
17
Id. at 66-67.
18
Citing CSC Resolution No. 981668, id. at 69.
19
G.R. No. 88979, 7 February 1992, 206 SCRA 65.
20
Id. at 70.
21
As per Memorandum Circular 04, Series of 1994.
22
Rollo, p. 71.
23
Id. at 10.
24
Agreement dated 2 May 1983 in the name of Edgardo N. Garcia, id. at
248-258; Agreement dated 24 August 1979 in the name of Edilberto C.
Pingul, id. at 264-271.
25
Id. at 14.
26
Id. at 15-16, 39.
27
Id. at 34-A.
28
Id. at 34.
29
Id. at 16-17.
30
Per certification of one branch manager dated 20 June 1996, id. at 18.
31
Id. at 18.
32
128 Phil. 225 (1967).
33
Rollo, p. 40.
34
Id. at 16-17.
35
Id. at 288.
36
Id. at 42.
37
Id. at 43.
38
Id. at 304.
39
Id. at 232.
40
Id. at 46.
41
Supra note 19.
42
Rollo pp. 52-55.
43
Id at 55.
44
Id at 578.
45
Revised Government Service nsurance Act of 1977. Sec. 2(i) thereof
provides: "Compensation- the basic pay or salary received by an
employee, pursuant to his employment appointments excluding per diems,
bonuses, overtime pay and allowances."
46
Sec 4, Chapter 1 (Title 1), Book V, Executive Order No. 292.
47
Rollo p. 580.
48
Id at 580.
49
Id at 582.
50
Bataan Shipyard and Engineering Corporation v. National Labor
Relations Commission, 336 Phil. 193, 205 (1997); Sec. 18, Article , 1987
Constitution.
51
Holiday nn Manila v. National Labor Relations Commission, G.R. No.
109114, 14 September 1993, 226 SCRA 417, 423.
52
Bernas, The 1987 Constitution of the Republic of the Philippines, A
Commentary, (2003), p. 1194, citing RECORD 614, 693, 748-749; Sec.
3, Article X, 1987 Constitution.
53
An Act Creating the Metropolitan Waterworks and Sewerage System and
Dissolving the National Waterworks and Sewerage Authority; and for Other
Purposes.
54
Sec. 2 (1), Article X, 1987 Constitution.
55
Corsiga v. Defensor, 439 Phil. 875, 883 (2002).
56
Rollo, pp. 136-137.
57
Tanv. Lagrama, 436 Phil. 191, 201 (2002).
58
Rollo, pp. 255-256.
59
See note 45.
60
Art 97(f), Labor Code.
61
Rollo pp. 252-253.
62
Id at 263.
63
Id at 582.
64
Section 1, Republic Act No. 6234.
65
Section 13, id.
66
Rollo p. 134.
67
nsular Life Assurance Co. Ltd. V. NLRC, 350 Phil. 919, 926 (1998),
citing ndustrial Timber Corporation v. NLRC, 169 SCRA 341.
68
MAM Realty Development Corporation v. NLRC, 314 Phil. 838, 842
(1995).
69
Rollo p. 580.
70
Id at 249.
71
Id at 302.
72
Id at 268-275.
73
Id at 254.
74
Id at 264.
75
Id at 203-206
76
Id at 288.
77
G.R.No.158255, 8 July 2004, 434 SCRA 53.
78
Id. at 55-56.
79
Id at 60-61.
80
Id at 62.
81
Private respondents in the case are all petitioners in the present petition,
to wit: Herminio D. Pena, Esteban B. Baldoza, Jorge D. Canonigo, Jr., ke
S. Delfin, Rizalino M. ntal, Rey T. Manlegro, John L. Marteja, Marlon B.
Morada, Allan D. Espina, Eduardo Ong, Agnesio D. Quebral, Edmundo B.
Victa, Victor C. Zafaralla, Edilberto C. Pingul, and Federico M. Rivera.
82
Quoted in CSC Resolution No. 991384, Rollo, pp. 135-136.
83
Sec. 3, Article X, 1987 Constitution.
84
De Leon v. NLRC, G.R. No. 70705, 21 August 1989, 176 SCRA 615,
621.
85
Rollo p. 140.
86
Id at 145.
87
CSC Resolution No. 991384, quoting the Concession Agreements, id. at
119.
88
Guidelines in the Payment of the Mandatory Severance Pay Pursuant to
Article 6.1 of the Concession Agreement issued by MWSS on 31 July
1997, id. at 401.
89
Guidelines in the Payment of the Mandatory Severance Pay Pursuant to
Article 6.1 of the Concession Agreement issued by MWSS on 31 July
1997, id. at 402.
90
G.R. No. 88979, 7 February 1992, 206 SCRA 65.
91
Republic Act No. 6683.
92
Supra note 85.
93
Rollo p. 55.
94
CSC Resolution No. 981668, Supra note 5.
AMELIA R. ENRIQUEZ and REMO SIA, Petitioners, vs.
BANK OF THE PHILIPPINE ISLANDS and LUIS A.
PUENTEVELLA, AVP, Respondents.
D E C I S I O N
TINGA, J,:
In this petition for review on certiorari, petitioners Amelia R.
Enriquez (Enriquez) and Remo L. Sia (Sia) assail the Decision
[1]
of the Court of Appeals dated 30 November 2005 affirming in
toto the Decision
[2]
of the Fourth Division of the National Labor
Relations Commission (NLRC), Cebu City which dismissed their
complaint for illegal dismissal and money claims. The NLRC had
earlier reversed and set aside the decision of Executive Labor
Arbiter Danilo C. Acosta finding that petitioners were illegally
dismissed by respondent Bank of the Philippine Islands (BPI).
The antecedents, as culled from the records, are as follows:
Enriquez and Sia were the branch manager and assistant branch
manager, respectively, of the BPI-Bacolod Singcang Branch.
Enriquez was first employed by respondent bank in 1971 and had
been an employee thereof for 32 years at the time of her
termination,
[3]
whereas Sia had been in respondent bankCs
employ since 1974, or for a total of 29 years at the time of his
dismissal.
[4]
Respondent Luis A. Puentevella (Puentevella) is one
of respondentCs principal officers and was impleaded in his
personal capacity.
Petitioners maintain that on 27 December 2002, their branch
experienced a heavy volume of transactions owing to the fact
that it was the last banking day of the year. When banking hours
came to a close, teller Geraldine Descartin (Descartin)
purportedly discovered that she had a cash shortage of
P36,000.00 and informed Sia about it. Sia, in turn, informed
Enriquez of the problem and was directed to review the dayCs
transactions to trace its cause.
[5]
Descartin claimed that the discrepancy was due to an innocent
oversight and recalled that the unaccounted shortage was due to
the failure of her mother-in-law, Remedios Descartin (Remedios),
to sign the withdrawal slip when the latter withdrew P36,000.00
earlier that day. With that explanation, Enriquez directed
Descartin and her co-teller Evelyn Fregil (Fregil) to submit their
written memorandum of the incident. Descartin was permitted to
leave the bank to look for Remedios so that the latter could sign
the withdrawal slip. At around 7:00 p.m., she returned to the
bank with the signed withdrawal slip and debited the amount
from the clientCs account. Thus, petitioners aver, the
transaction was regularized before the end of the day.
[6]
It is the position of petitioners that as there was neither shortage
nor loss to the bank because the initial discrepancy was
accounted for and that it was due to a mere oversight, they put
the matter to rest. In the meantime, Sia began to wind up his
affairs as 27 December 2002 was his last working day with the
bank before going on terminal leave prior to his optional
retirement.
Respondents, however, have a different version of what
transpired on 27 December 2002. According to them, teller
DescartinCs shortage of P36,000.00, which she confided to
her co-teller Fregil, was incurred because she had temporarily
borrowed the money that week to pay her financial obligations
but intended to return the same on the first week of January.
Teller Fregil reported the matter to Sia and Enriquez, both of
whom suggested that teller Descartin fill the shortage with a loan
from her family. Teller Descartin replied that her family did not
have the money, she instead borrowed the amount from her in-
laws. Thus, at 5:21 p.m., teller Descartin posted the unsigned
withdrawal slip for the amount of P36,000.00 against the joint
account of her parents-in-law. As the amount exceeded the floor
limit for tellers which would require the approval of a superior
officer, either Enriquez or Sia approved the transaction at 5:22
p.m. as reflected on the account records. Teller Descartin
thereafter left the bank to secure the signature of her mother-in-
law Remedios and returned at past 7:00 p.m. with the signed
withdrawal slip.
[7]
On 28 December 2002, teller Fregil was allegedly informed that
teller Descartin was going to prepare a Cwhite lieCl report,
to be signed by both of them, stating that teller Descartin had
inadvertently misplaced the withdrawal slip of her mother-in-law
and that the transaction was regularized within the same day. On
2 January 2003, teller Fregil signed the report. However, in
February 2003, teller Fregil bumped into a colleague assigned to
the BPI-Bacolod Main Branch and confided to the latter her
uneasiness about the 27 December 2002 incident. The matter
was reported and ultimately brought to the attention of
respondent Puentevella.
[8]
Thus, sometime in February 2003, respondent Puentevella
initiated further investigation on the incident. Later, on 3 March
2003, teller Fregil retracted her original statement and instead
executed another letter claiming that there was a cover-up of the
shortage on the day in question. Respondents assert that the
investigation conducted by the Auditing Division of BPI bolstered
teller FregilCs claims of irregularity as the audit report
disclosed that petitioners failed to make the necessary report on
the shortage and instead assisted in covering-up teller
DescartinCs wrongdoing.
On 25 April 2003, petitioners were instructed to report to the BPI
head office for polygraph testing. While they expressed their
willingness to be interviewed, petitioners objected to the
polygraph test. On 27 June 2003, petitioners received show-
cause memos directing them to explain in writing why they
should not be sanctioned for conflict of interest and breach of
trust. Petitioners submitted their respective replies in which they
denied the charges against them. On 14 July 2003, a committee
of respondent bank conducted a hearing of the case and as part
of the investigation, separately interviewed petitioners and tellers
Descartin and Fregil. On 3 September 2003, petitioners were
dismissed from employment on grounds of breach of trust and
confidence and dishonesty.
Hence, on 4 September 2003, petitioners filed their respective
Complaints
[9]
for illegal dismissal against respondents and prayed
for reinstatement or, in lieu thereof, payment of separation pay.
Additionally, they sought backwages, retirement pay,
attorneyCs fees and moral and exemplary damages in the
amount of P10,000,000.00.
After the submission by the parties of their position papers,
Labor Arbiter Acosta rendered a Decision
[10]
on 29 March 2004
finding that petitioners had been illegally dismissed. The
dispositive portion of the decision states:
WHEREFORE, premises considered, judgment is hereby rendered
as follows:
1. DECLARING that complainants were illegally dismissed by
respondents;
2. ORDERING respondents to reinstate complainants to their
former position without loss of seniority rights and to pay them
their corresponding full back wages inclusive of allowances and
other benefits as computed, in the sum of Pesos: ONE MILLION
ONE HUNDRED SEVENTY-THREE THOUSAND, FOUR
HUNDRED THIRTY-FOUR AND 50/100 ONLY
(P1,173,434.50);
3. ORDERING respondents to jointly and severally pay
complainants moral and exemplary damages in the amount of
P3,000,000.00 each or a total of P6,000,000.00;
4. ORDERING respondents to jointly and severally pay
attorneyCs fees in the amount of P717,343.45 which is
equivalent to 10% of the total judgment award, thereby making
a total of SEVEN MILLION EIGHT HUNDRED NINETY
THOUSAND, SEVEN HUNDRED SEVENTY-SEVEN AND
95/100 ONLY (P7,890,777.95), the same to be deposited
with the Cashier of this Office within ten (10) calendar days from
receipt of this Decision;
5. ORDERING respondents to jointly and severally pay
complainants in case they reach the compulsory retirement age
of 60 years old pending final resolution of this case, their
Retirement pay equivalent to two (2) months latest salary for
every year of service and their Separation pay equivalent to one
(1) month salary for every year of service computed from the
time they were hired up to their retirement period.
[11]
Aggrieved, respondents appealed to the NLRC. Finding that the
records substantiated the conclusion that petitioners tried to
cover up teller DescartinCs infraction instead of taking the
appropriate action thereon, the NLRC ruled that respondents had
just cause to terminate their employment. Hence, the NLRC
reversed and set aside the challenged decision and although it
dismissed the complaint, it ordered respondents to give
petitioners financial assistance equivalent to one-half monthCs
pay for every year of service.
[12]
Petitioners thereafter elevated the case to the Court of Appeals.
The appellate court, agreeing with the NLRC, denied
petitionersC appeal and affirmed in toto the latterCs
assailed decision.
Before us, petitioners raise the following assignment of errors:
THE COURT OF APPEALS ERRED IN NOT DECLARING THAT
RESPONDENTSC APPEAL TO THE NLRC WAS DEFECTIVE FOR
FAILING TO COMPLY WITH RULE VI, SECTION 4 OF THE NLRC
RULES OF PROCEDURE.
THE APPEALED DECISION AND RESOLUTION OF THE COURT OF
APPEALS ARE MANIFESTLY ERRONEOUS AND RENDERED IN
DISREGARD OF THE EVIDENCE IN RECORD AND EXISTING
JURISPRUDENCE.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
CONCLUDING THAT PETITIONERS WERE VALIDLY TERMINATED
FROM EMPLOYMENT.
THE COURT OF APPEALS ERRED IN AFFIRMING THE NLRCCS
DECISION AND RESOLUTION THAT ARE IRREGULAR AND
ANOMALOUS.
[13]
The petition should be denied.
Petitioners maintain that the Memorandum of Appeal
[14]
filed by
respondents before the NLRC should have been dismissed due to
a defect in its verification. In particular, petitioners assert that
the document was signed by Puentevella alone, who did not
show any board resolution authorizing him to represent the
corporation on appeal, in violation of Rule VI, Section 4 of the
NLRC Rules of Procedure which provides:
Section 4. REQUISITES FOR PERFECTION OF APPEAL. A) The
appeal shall be filed within the reglementary period as provided
in Section 1 of this Rules, shall be verified by appellant himself in
accordance with Section 4, Rule 7 of the Rules of Court x x x.
For their part, respondents argue that the board of directors of a
corporation, in vesting authority to another person or body, does
not necessarily have to be express and in writing at all times.
They cited the following excerpt from the case of PeopleCs
Aircargo and Warehousing Co., Inc. v. Court of Appeals
[15]
to
support their contention:
The general rule is that, in the absence of authority from the
board of directors, no person, not even its officers, can validly
bind a corporation. A corporation is a juridical person, separate
and distinct from its stockholders and members, Chaving xxx
powers, attributes and properties expressly authorized by law or
incident to its existence.Cl
Being a juridical entity, a corporation may act through its board
of directors, which exercises almost all corporate powers, lays
down all corporate business policies and is responsible for the
efficiency of management, as provided in Section 23 of the
Corporation Code of the Philippines:
x x x
Under this provision, the power and the responsibility to decide
whether the corporation should enter into a contract that will
bind the corporation is lodged in the board, subject to the articles
of incorporation, bylaws, or relevant provisions of law. However,
just as a natural person may authorize another to do certain acts
for and on his behalf, the board of directors may validly delegate
some of its functions and powers to officers, committees or
agents. The authority of such individuals to bind the
corporation is generally derived from law, corporate bylaws or
authorization from the board, either expressly or impliedly by
habit, custom or acquiescence in the general course of
business, viz.:
CA corporate officer or agent may represent and bind the
corporation in transactions with third persons to the extent that
[the] authority to do so has been conferred upon him, and this
includes powers which have been intentionally conferred, and
also such powers as, in the usual course of the particular
business, are incidental to, or may be implied from, the powers
intentionally conferred, powers added by custom and usage, as
usually pertaining to the particular officer or agent, and such
apparent powers as the corporation has caused persons dealing
with the officer or agent to believe that it has conferred.Cl
x x x Apparent authority is derived not merely from practice.
Its existence may be ascertained through (1) the general manner
in which the corporation holds out an officer or agent as having
the power to act or, in other words, the apparent authority to act
in general, with which it clothes him; or (2) the acquiescence
in his acts of a particular nature, with actual or
constructive knowledge thereof, whether within or beyond
the scope of his ordinary powers. x x x
[16]
Therefore, according to respondents, there was acquiescence on
the part of BPI which amounted to a valid authority as it never
showed any indication that it had not given its authority to
respondent Puentevella to act on its behalf in the filing of the
appeal with the NLRC.
After assiduously weighing the arguments of the parties, we find
that a liberal construction of the rules is in order. To serve the
interest of justice, compelling reason obtains to address
respondentsC arguments and brush aside technicality. The
Court frowns upon the practice of dismissing cases purely on
procedural grounds.
[17]
Instructive is our pronouncement in the
case of Bank of the Philippine Islands v. Court of Appeals,
[18]
thus:
Verification is simply intended to secure an assurance that the
allegations in the pleading are true and correct and not the
product of the imagination or a matter of speculation, and that
the pleading is filed in good faith. x x x We see no
circumvention of these objectives by the vice
presidentC"s signing the verification and certification
without express authorization from any existing board
resolution.
As explained in BPICs Motion for Reconsideration, he was
actually authorized to sign the verification and the certification,
as shown by the written confirmation attached to the Motion.
Furthermore, he is presumed to know the requirements for
validly signing those documents. (Emphasis supplied)
[19]
While it is true that rules of procedure are intended to promote
rather than frustrate the ends of justice, and the swift unclogging
of court dockets is a laudable objective, it nevertheless must not
be met at the expense of substantial justice.
[20]
This Court has
time and again reiterated the doctrine that the rules of procedure
are mere tools aimed at facilitating the attainment of justice,
rather than its frustration. A strict and rigid application of the
rules must always be eschewed when it would subvert the
primary objective of the rules, that is, to enhance fair trials and
expedite justice. Technicalities should never be used to defeat
the substantive rights of the other party. Every party-litigant
must be afforded the amplest opportunity for the proper and just
determination of his cause, free from the constraints of
technicalities.
[21]
Considering that there was substantial
compliance, a liberal interpretation of procedural rules in this
labor case is more in keeping with the constitutional mandate to
secure social justice.
[22]
Having disposed of the procedural matter raised by petitioners,
we now address the merits of the petition. There is no denying
that loss of trust and confidence is a valid ground for termination
of employment.
[23]
Hence, the basic requisite for dismissal on the
ground of loss of confidence is that the employee concerned
holds a position of trust and confidence
[24]
or is routinely charged
with the care and custody of the employerCs money or
property.
[25]
Moreover, the breach must be related to the
performance of the employeeCs function.
[26]
Also, it must be
shown that the employee is a managerial employee, since the
term Ctrust and confidenceCl is restricted to said class of
employees.
[27]
In reviewing this petition, we have fully taken into
account the foregoing considerations.
Petitioners challenge the reliance of the assailed decisions on the
letters and affidavits executed by Teller Fregil, which retracted
her original statement dated 28 December 2002 consistent with
petitionersC version of the facts. While retractions are
generally looked upon with disfavor by the courts, there may
exist instances, as in the case at bar, when a retraction may be
accepted. Before doing so, it is necessary to examine the
circumstances surrounding it and the possible motives for
reversing the previous declaration.
We find sufficient basis in evidence to accord full probative value
to Teller FregilCs retraction letter which she later affirmed
through subsequent affidavits. The independent audit conducted
by the auditing division of BPI notably supports her claim that
the wrongdoing was concealed by petitioners from respondent
bank. Moreover, a review of the tellerCs transaction
summary
[28]
of teller Descartin reinforces the conclusion that the
shortage in her pico box was due to a Ctemporary
borrowing,Cl the cover-up of which was sanctioned by
petitioners.
It is likewise asserted by petitioners that under BPICs bank
policy, failure to report a shortage is not a ground to terminate
employment. The argument is short-sighted.
BPICs policy on tellersC shortages is unambiguous. It
requires that all shortages be declared properly and booked
accordingly on the same day they are incurred.
[29]
Furthermore,
the same must be reported by the branch head to the designated
bank officers and departments not later than the second banking
day from the date of booking.
[30]
The pertinent provisions of BPICs Personnel Policies and
Benefits Manual, in Chapter IV, Section 20 (B) thereof, provides:
2.1 Breach of Trust and Confidence; Dishonesty
x x x
2.1.2 Misappropriation, malversation or withholding of funds.
1
st
offense C" dismissal
x x x
2.2 Violation of Operating Procedures
2.2.1 Willful non-observance of standard operating procedures in
the handling of any transaction or work assignment for purposes
of personal gain, profit, or advantage of another person.
1
st
offense C" dismissal
x x x
3.5 Any employee who knowingly aids, abets, or conceals or
otherwise deliberately permits the commission of any irregular or
fraudulent act directed against the Unibank will be considered
equally guilty as the principal perpetuators of the fraud or
irregularity, and will be dealt with accordingly.
3.5.1 Management will not tolerate violations of banking and/or
established procedures by an employee where there is a conflict-
of-interest situation and where the irregular transaction or
omission is intended to benefit the officer concerned or a related
interest, at the UnibankCs expense or risk. x x x
[31]
Taken together with the attending circumstances of the case, the
failure of petitioners to report the cash shortage of teller
Descartin, even if done in good faith, nonetheless resulted in
their abetting the dishonesty committed by the latter. Under the
personnel policies of respondent bank, this act of petitioners
justifies their dismissal even on the first offense. Even assuming
the version of petitioners as the truth, the fact remains that they
willfully decided against reporting the shortage that occurred. As
a result, in either situation, petitionersC acts have caused
respondents to have a legitimate reason to lose the trust reposed
in them as senior managerial employees. Their participation in
the cover-up of the misconduct of teller Descartin makes them
unworthy of the trust and confidence demanded by their
positions.
It is well-settled that the power to dismiss an employee is a
recognized prerogative that is inherent in the employerCs
right to freely manage and regulate his business. An employer
cannot be expected to retain an employee whose lack of morals,
respect and loyalty to his employer or regard for his
employerCs rules and appreciation of the dignity and
responsibility of his office has so plainly and completely been
bared.
[32]
Thus, to compel respondent bank to keep petitioners in
its employ after the latter have betrayed the confidence given to
them would be unjust to respondent bank. The expectation of
trust is more so magnified in the instant case in light of the
nature of respondent bankCs business. The banking industry
is imbued with public interest and is mandated by law to serve its
clients with extraordinary care and diligence. To be able to fulfill
this duty, it in turn must rely on the honesty and loyalty of its
employees.
[33]
As a final challenge to the decision of the appellate court,
petitioners maintain that irregularity and anomaly attended the
disposition of respondentsC appeal before the NLRC. In
particular, petitioners bewail the alleged Cbreakneck
speedCl at which the appeal was resolved by Commissioner
Oscar Uy who, they claim, took an unusual interest in the case.
PetitionersC counsel even filed a complaint against
Commissioner Uy before the Ombudsman.
We must sustain the appellate court in treating such suppositions
as mere allegations pending the result of the formal investigation
by the Ombudsman. Absent a definitive finding on the
accusations of irregularity, we cannot in this case consider
petitionersC arguments on the matter. It is a separate matter
in itself which has to be addressed first by the Ombudsman in
the case pending before it. At all events, the assailed decision at
bar is basically sound, aligned with law and jurisprudence, and
supported by the evidence on record.
Besides, the province of the instant Rule 45 petition for review is
to correct errors of law committed by the Court of Appeals. After
a judicious and meticulous review of the records of the case, we
are convinced that the Court of Appeals did not err in finding that
petitioners were validly terminated from employment.
Clearly, as a measure of self-preservation against acts patently
inimical to its interests, respondent bank had every right to
dismiss petitioners for breach of trust, loss of confidence and
dishonesty. Indeed, in cases of this nature, the fact that
petitioners had been employees of BPI for a long time, if it is to
be considered at all, should be taken against them. Their
manifest condonation and even concealment of an offense
prejudicial to their employerCs interest committed by a
subordinate under their supervision reflect a regrettable lack of
loyalty which they should have reinforced, instead of betrayed.
[34]
So Sosito v. Aguinaldo Development Corporation
[35]
prescribes:
While the Constitution is committed to the policy of social justice
and the protection of the working class, it should not be
supposed that every labor dispute will be automatically decided
in favor of labor. Management also has its own rights which, as
such, are entitled to respect and enforcement in the interest of
simple fair play. Out of its concern for those with less privileges
in life, this Court has inclined more often than not toward the
worker and upheld his cause in his conflicts with the employer.
Such favoritism, however, has not blinded us to the rule that
justice is in every case for the deserving, to be dispensed in the
light of the established facts and the applicable law and doctrine.
[36]
WHEREFORE, finding no reversible error, the instant petition is
DENIED.
SO ORDERED.
Quisumbing, (Chairperson), Carpio, Carpio-Morales, and Velasco,
Jr., JJ., concur.
[1]
Rollo, pp. 40-49; penned by Associate Justice Enrico A.
Lanzanas and concurred in by Associate Justices Mercedes Gozo-
Dadole and Pampio A. Abarintos.
[2]
Id. at 305-313; penned by Commissioner Oscar S. Uy and
concurred in by Presiding Commissioner Gerardo C. Nograles,
dated 7 October 2004.
[3]
Id. at 86.
[4]
Id. at 108.
[5]
Id. at 5.
[6]
Id. at 5-6.
[7]
Id. at 432-436.
[8]
Id. at 437-438.
[9]
CA rollo, pp. 73-76.
[10]
Id. at 191-207.
[11]
Id. at 206-207.
[12]
Rollo, p. 313.
[13]
Id. at 14.
[14]
Id. at 469-470.
[15]
357 Phil. 850 (1998).
[16]
Id. at 862-864.
[17]
Penaranda v. Baganga Plywood Corporation and Chua, G.R.
No. 159577, 3 May 2006, 489 SCRA 94, 101, citing Pacific Life
Assurance Corporation v. Sison, 359 Phil. 332; Empire Insurance
Company v. National Labor Relations Commission, 355 Phil. 694,
14 August 1998; People Security Inc. v. National Labor Relations
Commission, 226 SCRA 146, 8 September 1993; Tamargo v.
Court of Appeals, 209 SCRA 518, 3 June 1992.
[18]
450 Phil. 532 (2003).
[19]
Id. at 540, citing Shipside Incorporated v. Court of Appeals,
352 SCRA 334, 346, 20 February 2001. Emphasis ours.
[20]
Philippine Amusement and Gaming Corporation v. Angara,
G.R. No. 142937, 15 November 2005, 475 SCRA 41, citing Wack
Wack Golf and Country Club v. NLRC, G.R. No.149793, 15 April
2005, 456 SCRA 280; General Milling Corporation v. NLRC, G.R.
No. 153199, 17 December 2002, 394 SCRA 207.
[21]
Id. citing Reyes v. Court of Appeals, G.R. No. 149580, 16
March 2005, 453 SCRA 498; Development Bank of the
Philippines v. Court of Appeals, G.R. No. 139034, 6 June 2001,
358 SCRA 501.
[22]
Penaranda v. Baganga Plywood Corporation and Chua, supra;
citing CONST., Art. II, Sec. 18 and Art. XIII, Sec. 3 and Ablaza v.
Court of Industrial Relations, 126 SCRA 247, 21 December 1983.
[23]
Villanueva v. NLRC (Third Division), 354 Phil. 1056, 1060,
citing Madlos v. NLRC, 254 SCRA 248 (1996); Zamboanga City
Electric Cooperative v. Buat, 243 SCRA 47 (1997).
[24]
Id. at 1061, citing NASUREFCO v. NLRC, G.R. No. 122277, 24
February 1998.
[25]
Id., citing Mabeza v. NLRC, 271 SCRA 670 (1997).
[26]
Id., citing Quezon Electric Cooperative v. NLRC, 172 SCRA 94
(1989).
[27]
Id., citing De la Cruz v. NLRC, 268 SCRA 458 (1997).
[28]
CA rollo, pp. 377-380.
[29]
USC Policy No. 94/029 with date last revised 09/02/94. See
rollo, p. 167.
[30]
Id.
[31]
Rollo, pp. 171-172.
[32]
See Perez v. The Medical City General Hospital, G.R. No.
150198, 6 March 2006, 484 SCRA 138, 145.
[33]
Villanueva v. Citytrust Banking Corporation, 413 Phil. 776,
785 (2001).
[34]
See Salvador v. Philippine Mining Service Corporation, 443
Phil. 878, 893 (2003), citing Flores v. National Labor Relations
Commission, 219 SCRA 350 (1993).
[35]
No. L-48926, 14 December 1987, 156 SCRA 392.
[36]
Id. at 396.
PHILIPPINE LONG DISTANCEG.R. No. 159701
TELEPHONE COMPANY,
Petitioner,Present:
QUISUMBING, J.,
Chairperson,
CARPIO,
- versus -CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.cralaw
THE LATE ROMEO F. BOLSO,Promulgated:
represented by his heirs,
Respondent.August 17, 2007

x-------------------------------------------------------------------
----------------------x


D E C I S I O N


CARPIO, J.:


The Case


cralawBefore the Court is a petition for review[1] of the 27
November 2002 Decision[2]and the 19 August 2003
Resolution[3]of the Court of Appeals in CA-G.R. SP No.
53911.The Court of Appeals dismissed the petition of Philippine
Long Distance Telephone Company (PLDT) and affirmed the 26
March 1999 Decision of the National Labor Relations Commission
(NLRC)

finding the dismissal of Romeo F. Bolso (Bolso) illegal.
[4]chanroblesvirtuallawlibrary


The Facts

cralawBolso was an Installer/Repairman II of PLDT since
February 1982 until PLDT dismissed him on 20 July 1997.

cralawOn 5 February 1996, Samuel Mabunga (Mabunga), a PLDT
subscriber, sold the rights to his telephone line to Ismael Salazar
(Salazar) for P20,000.Mabunga received P15,000 for the transfer.
Then, for the installation of this telephone line, Salazar paid
P2,500 to a PLDT installer who introduced himself as Boy Negro
and the remaining P2,500 to Boy Negros two companions.
cralaw
cralawOn 20 May 1996, Salazar wrote PLDT complaining about
Mabungas continued usage of the telephone line through an
extension, despite the transfer. Salazar requested PLDT tocheck
out the problem and immediately cut-off the extension line.
[5]chanroblesvirtuallawlibrary

cralawOn 28 June 1996, Salazar went to PLDTs Quality Control
and Inspection Division (QCID) office where he affirmed having
paid P2,500 to Boy Negro and another P2,500 to Boy Negros two
companions for installing the telephone line at his
residence.During the investigation, Salazar positively identified a
photograph of Bolso as that of Boy Negro.Salazar voluntarily
executed a Sinumpaang Salaysay[6] narrating the circumstances
surrounding the installation of the illegal extension line and a
Certification[7] that the man he had identified in the photograph
was the one who actually went to his residence and installed the
telephone line.

cralawOn 29 June 1996, the QCID personnel inspected the
telephone installation at Salazars residence and confirmed that
Mabunga was using the telephone line through an outside
extension installed at Salazars house. PLDT informed Salazar and
Mabunga that it was an unofficial installation, and invited them to
its QCID office to enlighten it on the matter.

cralawOn 23 July 1996, PLDT issued an Inter-Office Memo
requesting the appearance of Bolso, together with his immediate
supervisor or union council representative, at PLDTs Sampaloc
Office for the investigation of his alleged participation in the
illegal installation.

cralawOn 26 July 1996, both Salazar and Bolso appeared at the
QCID investigation.Salazar reaffirmed his earlier Sinumpaang
Salaysay and Certification, and at the same time, positively
picked out and identified Bolso from among those present as the
installer of the unofficial telephone line.Bolso denied the
allegations against him.

cralawSubsequently, Bolso submitted to PLDT what appears to be
a recantation of Salazars previous statements, alleging that he
did not personally know Bolso and that Bolso was not Boy
Negro.The letter dated 5 August 1996 reads:

cralawQUALITY CONTROL
INSPECTION DIVISION PLDT

SA KINAUUKULAN,

cralawSA NAGANAP PONG IMBISTIGASYON NI G. FERNANDO R.
ARAMBULO, IMBISTIGADOR NG (Q.C.I.D.) QUALITY CONTROL
AND INSPECTION DIVISION PLDT NOONG IKA-26 NG HULYO,
1996 GANAP NA ALA UNA Y MEDYA NG HAPON, ARAW NG
BIYERNES.

cralawNA ANG BUONG KATOTOHANAN AY HINDI KO KILALA SI
ROMEO BOLSO AT SIYA AY NAITURO KO LAMANG NOONG
MAGHARAP-HARAP KAMI NOONG IKA-26 NG HULYO, 1996 DAHIL
NGA SA KABIGLAAN KO AT INIT NG ULO AT SA TOTOO IYON BOY
NEGRO NA SINASABI AY HINDI SIYA.

cralawAKO PO AY BINABAGABAG NG AKING KONSENSIYA AT
DAMDAMIN SA PAGTUTURO NG ISANG TAONG WALA NA MANG
KINALAMAN AY MALAKI PO ANG NAGAWANG KASALANAN.
cralaw
cralawANG SA INYO AY LUBOS NA GUMAGALANG NA SANA AKO
AY INYONG MAUNAWAAN.

Sgd.
ISMAEL G. SALAZAR[8]
cralaw

cralawOn 20 January 1997, the Manggagawang Komunikasyon
ng Pilipinas, Bolsos union, requested the withdrawal of the
complaint against Bolso since the complainant [sic] failed to
satisfy the standard basis for it to merit further investigation x x
x.[9]chanroblesvirtuallawlibrary

cralawOn 10 July 1997, Bolsos counsel demanded the immediate
dismissal of the administrative case against Bolso based on
Salazars retraction andthe release of Bolsos benefits under PLDTs
early retirement/redundancy program.
[10]chanroblesvirtuallawlibrary

cralawGiving no credence to the recantation letter and finding
that Salazars previous statements established Bolsos culpability,
PLDT, through an Inter-Office Memo, terminated Bolso effective
20 June 1997 for serious misconduct.

cralawOn 15 August 1997, Bolso filed with the Labor Arbiter a
complaint against PLDT for illegal dismissal, backwages, and
damages, docketedas NLRC NCR Case No. 00-08-05842-97.

cralawOn 6 August 1998, the Labor Arbiter[11] issued his
decision dismissing the case for lack of merit.[12]The Labor
Arbiter found Bolsos evidence too speculative and
conjectural.Bolsos denial of the charges of serious misconduct,
fraud, and breach of trust was not supported by convincing
evidence except the retraction made by Salazar of his previous
statement pointing to Bolso as the one who installed the illegal
extension line. The Labor Arbiter further held that while there is
no direct evidence that Bolso exacted money from Salazar in
consideration of the installation of the unofficial extension line,
there is substantial evidence against him for serious misconduct.

cralawOn 28 September 1998, Bolso appealed to the NLRC.

cralawRuling in favor of Bolso, the NLRC held that PLDT failed to
prove that Bolso committed the infraction imputed against
him.The recantation of Salazar of his previous statement
regarding Bolsos installation of the illegal extension line totally
established Bolsos innocence.The NLRC also stated that this was
the first time PLDT charged Bolso with an offense and that it
would have been foolhardy on the part of Bolso to risk and lose
his only source of livelihood at the cost of a measly amount of
P2,500.The NLRC further noted that Salazar voluntarily gave his
recantation letter, and he did it in his own handwriting and in a
language very well known to him. The NLRC also found that
Bolso was denied of his right to due process.

cralawThe NLRC disposed of the case as follows:

cralawWHEREFORE, in the light of the foregoing, the appeal is
hereby GRANTED. The assailed Decision dated August 6, 1998 is
hereby VACATED and SET ASIDE and a new one is herebyentered
ordering respondent Philippine Long Distance Telephone Co. to
reinstate complainant Romeo F. Bolso to his former position as
Installer/Repairman II without loss of seniority rights and other
employee benefits with full backwages counted from the time of
his dismissal on June 20, 1997 up to the time of actual
reinstatement.

All other reliefs herein sought and prayed for are hereby DENIED
for lack of merit.

SO ORDERED.[13]



On 26 April 1999, PLDT filed a motion for reconsideration, which
the NLRC denied in its 30 April 1999 Resolution.

On 23 July 1999,PLDTfiled with the Court of Appeals a petition
for certiorari to nullify the NLRC decision and resolution.

On 27 November 2002, the Court of Appeals issued a Decision
dismissing the petition for certiorari.

PLDT filed a motion for reconsiderationon 22 January 2003,
which the Court of Appeals denied in itsResolution of19 August
2003.

Hence, this petition.


The Ruling of the Court of Appeals

cralawSustaining the NLRC, the Court of Appeals ruled that
special circumstances exist which raise serious doubt as to the
accountability of Bolso.Salazars recantation letter rendered some
truth to Bolsos innocence.Salazar reasoned out that confusion
coupled with indignation drove him to implicate an innocent
person, which bothered his conscience.The Court of Appeals held
that Salazars retraction was a declaration against his own
interest under Section 38, Rule 130 of the Rules of Court.[14]The
Court of Appeals also found no evidence that Bolso committed
the breach attributed to him.Other than Salazars inadvertence,
the alleged incident involving Bolso was unsupported by relevant
and convincing evidence.[15]chanroblesvirtuallawlibrary

cralawThe Court of Appeals went on to say that assuming the
recantation was invalid and that Bolso did commit serious
misconduct, dismissal is too harsh a penalty considering the
length of his service in PLDT and the infraction was his first
offense.

cralawThe Court of Appeals likewise ruled that there was no
hearing where Bolso had a reasonable opportunity to air his side
and confront his accuser.If there was any, it was surely not the
kind of investigation that would suffice to comply with the
procedural requirement.Hence, Bolso was denied of his right to
due process, rendering his dismissal illegal.


The Issue

cralawThe issue in this case boils down to whether Bolsos
dismissal for serious misconduct was lawful.


The Ruling of this Court

cralawThe petition is meritorious.

On the issue of just cause

cralawThe Labor Code provides that an employer may terminate
the services of an employee for a just cause.[16] 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.Such misconduct, however serious, must
nevertheless be in connection with the employees work to
constitute just cause for his separation.
[17]chanroblesvirtuallawlibrary

cralawAn employees dismissal due to serious misconduct must
be supported by substantial evidence.[18]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.
[19]chanroblesvirtuallawlibrary
cralawIn this case, there is no question that PLDT installers, such
as Bolso, repairmen, and linemen provide services but cannot
collect or receive any personal fees for such services.Violating
this company rule constitutes serious misconduct.[20]Did Bolso
accept payment for the installation of an unauthorized PLDT
telephone line, which would constitute serious misconduct
warranting his dismissal?

cralawBased on the records, Salazars initial statements given to
PLDT QCID narrated how he gave Bolso P2,500 for the
installation of the telephone line which he purchased from
Mabunga. The telephone line turned out to be an illegal
extension line. Salazar gave separate but similar statements in
the course of the investigation, the first was on 28 June 1996
and another was on 26 July 1996.During the first instance he
went to PLDT QCIDs office, Salazar easily, immediately, and
unhesitatingly identified Bolsos photograph as the man who went
to his house to install the extension line.During the 26 July 1996
investigation, while Salazar was facing Bolso, Salazar pointed to
him as the installer of the illegal extension line.

cralawThere was also evidence that Bolso received money in
exchange for the installation of the extension line.Salazar added
during the 26 July 1996 investigation the following statements:

cralawT25cralaw:cralawAno ang gusto ninyong idagdag, ibawas o
baguhin?
cralawS:cralawHindi ko talaga siya kilala dahil iyong dalawang
taong nauna sa kanya ang talagang may kilala sa kanya.Kilala ko
lang siya sa alyas niyang BOY NEGRO.At nung nagbayad ako ng
pera, ay siya talaga ang pinagbigyan ko, doon sa loob ng bahay
ko, kasama iyong dalawa.[21] (Emphasis supplied)


cralawThe standard of substantial evidence is met where the
employer, as in this case, has reasonable ground to believe that
the employee is responsible for the misconduct and his
participation in such misconduct makes him unworthy of the
trust and confidence demanded by his position.
[22]chanroblesvirtuallawlibrary

cralawHowever, Salazar retracted his statement pointing to Bolso
as Boy Negro who installed the illegal extension line.Salazars
recantation, Bolso now claims, clearly established his innocence
of the offense charged.Hence, Bolsos fate as a PLDT employee
lies solely on Salazars statements.Does Salazars subsequent
retraction of his previous statement convincingly prove Bolsos
non-participation in the offense charged?

cralawWe rule in the negative.
cralaw
cralawIn a similar case involving PLDT and one of its installers,
[23] the Court held that it was more reasonable to believe that
the affidavits of retraction were, as claimed by petitioner, a mere
afterthought, executed out of compassion to enable private
respondent to extricate himself from the consequence ofhis
malfeasance.As such, the affidavits had no probative value.

cralawMoreover, a retraction does not necessarily negate an
earlier declaration. For this reason, courts look with disfavor
upon retractions.Hence, when confronted with a recanting
witness, in this case the complainant, courts must not
automatically exclude the original statement based solely on the
recantation. Courts should determine which statement should be
given credence through a comparison of the original and the new
statements, applying the general rules of evidence.
[24]chanroblesvirtuallawlibrary
cralaw


cralawIn this case, Salazar did not expressly repudiate his earlier
statement that he paid Bolso P2,500 for the installation of the
illegal telephone line.What Salazar stated in his recantation letter
wasthat Bolso was not Boy Negro.Therefore, only Bolsos identity
as Boy Negro was retracted.Salazars original statement that
Bolso received P2,500 for the installation of the outside
extension line remains undisputed.

cralawEven assuming that Salazar retracted fully his original
statements given during the PLDT investigation,Salazar did not
swear or subscribe to his recantation letter.Salazar never
identified it himself or affirmed its veracity.Bolso also submitted
the letter to PLDT.

cralawFurther, Bolso did not offer any reason for Salazars initial
imputation against him.In fact, Bolso stated during the 26 July
1996 investigation that he did not know of any motive on the
part of Salazar for accusing and pointing him as the installer of
the illegal extension line.

cralawT22cralaw: cralawSa iyong pagkakaalam, ano ang
maaaring motibo ni G. Salazar para paratangan ka niya ng
ganito?
cralawScralaw:cralawWala akong alam na dahilan dahil, unang-
una hindi ko siya kilala at nakikita.Pangalawa, ay hindi ko area
iyong lugar na iyan, at hindi ako nagagawi roon.
cralawT23cralaw:cralawKung gayon, ano sa palagay mo ang
malaking dahilan kung bakit sa dinami-dami ng empleyado sa
PLDT Sampaloc ay ikaw pa ang naituro ni G. Salazar na isa sa
mga nagkabit sa kanyang tirahan ng telepono bilang 742-5015?
cralawScralaw:cralawHindi ko alam talaga.[25]


cralawThe Court is mindful that Bolsos employment with PLDT
was his main source of income and that the infraction imputed on
him was his first offense in his 15 years of service to PLDT.
However, the Court cannot close its eyes to the fact that Salazar
positively identified Bolso as the installer of the illegal extension
line for which he was paid P2,500.The Court has held 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.
[26] An employees length of service with the company even
aggravates his offense.[27]Bolso should have been more loyal to
PLDT from which he had derived his income for 15 years.

cralawUpholding the employees interest in disregard of the
employers right to dismiss and discipline does not serve the
cause of social justice. Social justice ceases to be an effective
instrument for the equalization of the social and economic forces
by the State when it is used to shield wrongdoing.
[28]chanroblesvirtuallawlibrary

cralawMoreover, it is worthy to note that Bolso applied for
benefits under PLDTs early retirement/redundancy
program.Bolsos counsel even wrote PLDT for the withdrawal of
the administrative complaint against Bolso and for the release of
the benefits under this program.Therefore, Bolsos plea for
reinstatement in this case conflicts with his application for early
retirement, which PLDT denied due to the then pending
complaint against him.Reinstatement is plainly irreconcilable with
retirement.

cralawAt any rate, since Bolso was dismissed for a just cause,
neither he nor his heirs can avail of the retirement benefits.


On the issue of due process
cralawBolsos claim that he was denied of his right to due process
when PLDT dismissed him is untenable.

cralawThe essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, an
opportunity to explain ones side or an opportunity to seek a
reconsideration of the action or ruling complained of.[29]A formal
or trial-type hearing is not at all times and in all circumstances
essential.[30]chanroblesvirtuallawlibrary

cralawInthe present case, Bolso was notified by way of an Inter-
Office Memo[31] dated 23 July 1996 of an investigation,
specifically, on his alleged participation in the installation of an
illegal outside extension found on telephone number 742-
5015.He was advised to appear at the investigation to be
conducted on 26 July 1996 with his immediate supervisor or
union council representative.

cralawAt the investigation conducted on 26 July 1996, Bolso did
appearduring which he was apprised of the charges against him,
as well as his rights:

cralawTanong 16:Ginoong Bolso, narinig mo ba ang mga sinabi ni
G. Salazar laban sa iyo.Ngunit bago ka sumagot, nais ko munang
ipaalam sa iyo ang mga karapatan mo sa ilalim ng Bagong
Saligang Batas.Una, ikaw ay may karapatan hindi sumagot o
magsawalang kibo sa mga katanungan ko. May karapatan ka
ring sumangguni muna sa isang abogado o Union Council rep na
siyang pili mo upang makatulong sa pagsisiyasat na ito.Dahil
lahat ng sasabihin mo ay maaari naming gamitin ebidensya laban
o pabor sa iyo sa lahat ng hukuman dito sa
Philipinas.Naiintindihan mo ba ang iyong mga nabanggit na
karapatan?

cralawS: Oo.[32]



cralawDuring this investigation, Bolso was allowed to confront his
accuser Salazar face-to-face, and was given adequate
opportunity to immediately respond to the charges against him.
Thereafter, Bolsos union, Manggagawang Komunikasyon ng
Pilipinas, interceded on his behalf.Bolsos counsel also moved for
the immediate dismissal of the pending administrative case
against Bolso.Clearly, Bolso was afforded ample opportunity to
air his side and defend himself.Hence, there was no denial ofhis
right to due process.cralaw

cralawWHEREFORE, we GRANT the petition.We REINSTATE the
Decision of the Labor Arbiter dated 6 August 1998.

cralawSO ORDERED.


ANTONIO T. CARPIO
Associate Justice

WE CONCUR:


LEONARDO A. QUISUMBING
Associate Justice
Chairperson






CONCHITA CARPIO MORALESDANTE O. TINGA
Associate JusticecralawcralawAssociate Justice


PRESBITERO J. VELASCO, JR.
Associate Justice

ATTESTATION
cralawI attest that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION
cralawPursuant to Section 13, Article VIII of the Constitution,
and the Division Chairpersons Attestation, I certify that the
conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the
opinion of the Courts Division.



REYNATO S. PUNO
Chief Justice





Endnotes:
[1]cralawUnder Rule 45 of the Rules of Court.
[2]cralawRollo, pp. 55-65.Penned by Associate Justice Conrado
M. Vasquez, Jr. with Associate Justices cralawElvi John S.
Asuncion and Sergio L. Pestao, concurring.
[3]cralawId. at 68.
[4]cralawId. at 126-140. Penned by Commissioner Ireneo B.
Bernardo with Presiding Commissioner cralawLourdes C. Javier
and Commissioner Tito F. Genilo, concurring.
[5]cralawId. at 176.
[6]cralawId. at 177 and 182.
[7]cralawId. at 178.
[8]cralawId. at 218.
[9]cralawId. at 219.
[10]cralawId. at 220.
[11]cralawVicente R. Layawen.
[12]cralawRollo, p. 195.
[13]cralawId. at 139-140.
[14]cralawSec. 38.Declaration against interest. The declaration
made by a person deceased, or unable to testify, against the
interest of the declarant, if the fact asserted in the declaration
was at the time it was made so far contrary to declarants own
interest, that a reasonable man in his position would cralawnot
have made the declaration unless he believed it to be true, may
be received in evidence against cralawhimself or his successors
in interest and against third persons.
[15]cralawRollo, p. 63.
[16]cralawArticle 282 of the Labor Code provides:

Art. 282.Termination by employer. An employer may terminate
an employment for cralawany of the following causes:
cralaw(a)cralawSerious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative
in connection with his work;
cralaw(b)cralawGross and habitual neglect by the employee of
his duties;
cralaw(c)Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
cralaw(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
cralaw(e)Other causes analogous to the foregoing.
[17]cralawDept. of Labor Manual, Sec. 4343.01, cited in C.A.
AZUCENA, THE LABOR CODE WITH COMMENTS CRALAWAND
CASES, Volume Two, (Fifth Edition, 2004) p. 604.
[18]cralawSee Salvador v. Philippine Mining Service Corp., 443
Phil. 878, 888 (2003) citing Pili v. National cralawLabor Relations
Commission, G.R. No. 96895, 21 January 1993, 217 SCRA 338.
[19]cralawId. at 888-889 citing In the Matter of the Petition for
Habeas Corpus of Lansang, et al., 149 Phil. cralaw547 (1971)
and Ang Tibay v. CIR, 69 Phil. 635 (1940). See also
Caurdanetaan Piece Workers cralawUnion v. Laguesma, G.R. No.
113542, 24 February 1998, 286 SCRA 401.
[20]cralawSee records, p. 61.
[21]cralawRollo, p. 158.
[22]cralawReyno v. Manila Electric Company, G.R. No. 148105,
22 July 2004, 434 SCRA 660.
[23]cralawPhilippine Long Distance Telephone Company v.
National Labor Relations Commission, No. L-cralaw74562, 31 July
1987, 152 SCRA 702.
[24]cralawSee People v. Ballabare, 332 Phil. 384 (1996).
[25]cralawRollo, p. 157.
[26]cralawSupra note 22 at 668-669cralawciting Central
Pangasinan Electric Cooperative, Inc. v. Macaraeg, 443
cralawPhil. 866 (2003).
[27]cralawId. at 669 citing United South Dockhandlers, Inc. v.
NLRC, G.R. No. 119935, 3 February 1997,cralaw267 SCRA 401,
407.
[28]cralawJamer v. NLRC, 344 Phil. 181, 201 (1997).
[29]cralawId. at 205-206.
[30]cralawSee Philippine Savings Bank v. NLRC, G.R. No.
111173, 4 September 1996, 261 SCRA 409.
[31]cralawRollo, p. 154.
[32]cralawId. at 156-157.
SLPRIMI COLRT IIRST IVISION
MAXIMO CALALANG, Petitioner,
-oersus-
A. . WILLIAMS, IT AL.,
Respondents.
x--------------------------------------------------x ICISION
G.R. No. ASoo ecember , 1nAo
LALRIL, J.:
MuxImo CuIuIung, In IIs cupucILv us u prIvuLe cILIzen und us u Luxpuver oI
MunIIu, brougIL beIore LIIs courL LIIs peLILIon Ior u wrIL oI proIIbILIon
uguInsL LIe respondenLs, A. D. WIIIIums, us CIuIrmun oI LIe NuLIonuI
TruIIIc CommIssIon; VIcenLe rugunLe, us DIrecLor oI PubIIc Works; SergIo
Buvun, us AcLIng SecreLurv oI PubIIc Works und CommunIcuLIons; EuIogIo
RodrIguez, us Muvor oI LIe CILv oI MunIIu; und Juun DomInguez, us AcLIng
CIIeI oI PoIIce oI MunIIu. cIunrobIespubIIsIIngcompunv
L Is uIIeged In LIe peLILIon LIuL LIe NuLIonuI TruIIIc CommIssIon, In ILs
resoIuLIon oI JuIv 1;, 1qo, resoIved Lo recommend Lo LIe DIrecLor oI
PubIIc Works und Lo LIe SecreLurv oI PubIIc Works und CommunIcuLIons
LIuL unImuI-druwn veIIcIes be proIIbILed Irom pussIng uIong RosurIo
SLreeL exLendIng Irom PIuzu CuIderon de IuBurcu Lo DusmurIus SLreeL,
Irom ;:o u.m. Lo 1z:o p.m. und Irom 1:o p.m. Lo =:o p.m.; und uIong
RIzuI Avenue exLendIng Irom LIe ruIIroud crossIng uL AnLIpoIo SLreeL Lo
EcIugue SLreeL, Irom ; u.m. Lo 11 p.m., Irom u perIod oI one veur Irom LIe
duLe oI LIe openIng oI LIe CoIgunLe BrIdge Lo LruIIIc; LIuL LIe CIuIrmun oI
LIe NuLIonuI TruIIIc CommIssIon, on JuIv 18, 1qo recommended Lo LIe
DIrecLor oI PubIIc Works LIe udopLIon oI LIe meusure proposed In LIe
resoIuLIon uIoremenLIoned, In pursuunce oI LIe provIsIons oI
CommonweuILI AcL No. =q8 wIIcI uuLIorIzes suId DIrecLor oI PubIIc
Works, wILI LIe upprovuI oI LIe SecreLurv oI PubIIc Works und
CommunIcuLIons, Lo promuIguLe ruIes und reguIuLIons Lo reguIuLe und
conLroI LIe use oI und LruIIIc on nuLIonuI rouds; LIuL on AugusL z, 1qo, LIe
DIrecLor oI PubIIc Works, In IIs IIrsL IndorsemenL Lo LIe SecreLurv oI PubIIc
Works und CommunIcuLIons, recommended Lo LIe IuLLer LIe upprovuI oI
LIe recommenduLIon mude bv LIe CIuIrmun oI LIe NuLIonuI TruIIIc
CommIssIon us uIoresuId, wILI LIe modIIIcuLIon LIuL LIe cIosIng oI RIzuI
Avenue Lo LruIIIc Lo unImuI-druwn veIIcIes be IImILed Lo LIe porLIon LIereoI
exLendIng Irom LIe ruIIroud crossIng uL AnLIpoIo SLreeL Lo Azcurrugu SLreeL;
LIuL on AugusL 1o, 1qo, LIe SecreLurv oI PubIIc Works und
CommunIcuLIons, In IIs second IndorsemenL uddressed Lo LIe DIrecLor oI
PubIIc Works, upproved LIe recommenduLIon oI LIe IuLLer LIuL RosurIo
SLreeL und RIzuI Avenue be cIosed Lo LruIIIc oI unImuI-druwn veIIcIes,
beLween LIe poInLs und durIng LIe Iours us ubove IndIcuLed, Ior u perIod oI
one veur Irom LIe duLe oI LIe openIng oI LIe CoIgunLe BrIdge Lo LruIIIc; LIuL
LIe Muvor oI MunIIu und LIe AcLIng CIIeI oI PoIIce oI MunIIu Iuve enIorced
und cuused Lo be enIorced LIe ruIes und reguIuLIons LIus udopLed; LIuL us u
consequence oI sucI enIorcemenL, uII unImuI-druwn veIIcIes ure noL
uIIowed Lo puss und pIck up pussengers In LIe pIuces ubove- menLIoned Lo
LIe deLrImenL noL onIv oI LIeIr owners buL oI LIe rIdIng pubIIc us weII.
cIunrobIespubIIsIIngcompunv
L Is conLended bv LIe peLILIoner LIuL CommonweuILI AcL No. =q8 bv wIIcI
LIe DIrecLor oI PubIIc Works, wILI LIe upprovuI oI LIe SecreLurv oI PubIIc
Works und CommunIcuLIons, Is uuLIorIzed Lo promuIguLe ruIes und
reguIuLIons Ior LIe reguIuLIon und conLroI oI LIe use oI und LruIIIc on
nuLIonuI rouds und sLreeLs Is unconsLILuLIonuI becuuse IL consLILuLes un
undue deIeguLIon oI IegIsIuLIve power. TIIs conLenLIon Is unLenubIe. As wus
observed bv LIIs courL In RubI vs. ProvIncIuI Bourd oI MIndoro ( PIII,
66o, ;oo), TIe ruIe Ius
nowIere been beLLer sLuLed LIun In LIe eurIv OIIo cuse decIded bv Judge
Runnev, und sInce IoIIowed In u muILILude oI cuses, numeIv: 'TIe Lrue
dIsLIncLIon LIereIore Is beLween LIe deIeguLIon oI power Lo muke LIe Iuw,
wIIcI necessurIIv InvoIves u dIscreLIon us Lo wIuL IL sIuII be, und
conIerrIng un uuLIorILv or dIscreLIon us Lo ILs execuLIon, Lo be exercIsed
under und In pursuunce oI LIe Iuw. TIe IIrsL cunnoL be done; Lo LIe IuLLer
no vuIId objecLIon cun be mude.` (CIncInnuLI, W. & Z. R. Co. vs. Comm`rs.
CIInLon CounLv, 1 OIIo SL., 88.) DIscreLIon, us IeId bv CIIeI JusLIce
MursIuII In Wuvmun vs. SouLIurd (1o WIeuL., 1) muv be commILLed bv LIe
egIsIuLure Lo un execuLIve depurLmenL or oIIIcIuI. TIe egIsIuLure muv
muke decIsIons oI execuLIve depurLmenLs or subordInuLe oIIIcIuIs LIereoI,
Lo wIom IL Ius commILLed LIe execuLIon oI cerLuIn ucLs, IInuI on quesLIons
oI IucL. (U.S. vs. KInkeud, zq8 ed., 1q1.) TIe growIng Lendencv In LIe
decIsIons Is Lo gIve promInence Lo LIe 'necessILv` oI LIe cuse.
cIunrobIespubIIsIIngcompunv
SecLIon 1 oI CommonweuILI AcL No. =q8 reuds us IoIIows:
SECTON1. To promoLe suIe LrunsIL upon, und uvoId obsLrucLIons on,
rouds und sLreeLs desIgnuLed us nuLIonuI rouds bv ucLs oI LIe NuLIonuI
AssembIv or bv execuLIve orders oI LIe PresIdenL oI LIe PIIIIppInes, LIe
DIrecLor oI PubIIc Works, wILI LIe upprovuI oI LIe SecreLurv oI PubIIc
Works und CommunIcuLIons, sIuII promuIguLe LIe necessurv ruIes und
reguIuLIons Lo reguIuLe und conLroI LIe use oI und LruIIIc on sucI rouds und
sLreeLs. SucI ruIes und reguIuLIons, wILI LIe upprovuI oI LIe PresIdenL, muv
conLuIn provIsIons conLroIIIng or reguIuLIng LIe consLrucLIon oI buIIdIngs
or oLIer sLrucLures wILIIn u reusonubIe dIsLunce Irom uIong LIe nuLIonuI
rouds. SucI rouds muv be LemporurIIv cIosed Lo unv or uII cIusses oI LruIIIc
bv LIe DIrecLor oI PubIIc Works und IIs duIv uuLIorIzed represenLuLIves
wIenever LIe condILIon oI LIe roud or LIe LruIIIc LIereon mukes sucI
ucLIon necessurv or udvIsubIe In LIe pubIIc convenIence und InLeresL, or Ior
u specIIIed perIod, wILI LIe upprovuI oI LIe SecreLurv oI
PubIIcWorks und CommunIcuLIons.
cIunrobIespubIIsIIngcompunv
TIe ubove provIsIons oI Iuw do noL conIer IegIsIuLIve power upon LIe
DIrecLor oI PubIIc Works und LIe SecreLurv oI PubIIc Works und
CommunIcuLIons. TIe uuLIorILv LIereIn conIerred upon LIem und
under wIIcI LIev promuIguLed LIe ruIes und reguIuLIons now compIuIned
oI Is noL Lo deLermIne wIuL pubIIc poIIcv demunds buL mereIv Lo currv ouL
LIe IegIsIuLIve poIIcv IuId down bv LIe NuLIonuI AssembIv In suId AcL, Lo
wIL, Lo promoLe suIe LrunsIL upon und uvoId obsLrucLIons on, rouds und
sLreeLs desIgnuLed us nuLIonuI rouds bv ucLs oI LIe NuLIonuI AssembIv or bv
execuLIve orders oI LIe PresIdenL oI LIe PIIIIppInes und Lo cIose LIem
LemporurIIv Lo unv or uII cIusses oI LruIIIc wIenever LIe condILIon oI LIe
roud or LIe LruIIIc mukes sucI ucLIon necessurv or udvIsubIe In LIe pubIIc
convenIence und InLeresL. TIe deIeguLed power, II uL uII, LIereIore, Is noL
LIe deLermInuLIon oI wIuL LIe Iuw sIuII be, buL mereIv LIe uscerLuInmenL oI
LIe IucLs und cIrcumsLunces upon wIIcI LIe uppIIcuLIon oI suId Iuw Is Lo be
predIcuLed. To promuIguLe ruIes und reguIuLIons on LIe use oI nuLIonuI
rouds und Lo deLermIne wIen und Iow Iong u nuLIonuI roud sIouId be
cIosed Lo LruIIIc, In vIew oI LIe condILIon oI LIe roud or LIe LruIIIc LIereon
und LIe requIremenLs oI pubIIc convenIence und InLeresL, Is un
udmInIsLruLIve IuncLIon wIIcI cunnoL be dIrecLIv dIscIurged bv LIe
NuLIonuI AssembIv. L musL depend on LIe dIscreLIon oI some oLIer
governmenL oIIIcIuI Lo wIom Is conIIded LIe duLv oI deLermInIng wIeLIer
LIe proper occusIon exIsLs Ior execuLIng LIe Iuw. BuL IL cunnoL be suId LIuL
LIe exercIse oI sucI dIscreLIon Is LIe mukIng oI LIe Iuw. As wus suId In
ocke`s AppeuI (;z Pu. q1): To usserL LIuL u Iuw Is Iess LIun u Iuw,
becuuse IL Is mude Lo depend on u IuLure evenL or ucL, Is Lo rob LIe
egIsIuLure oI LIe power Lo ucL wIseIv Ior LIe pubIIc weIIure wIenever u Iuw
Is pussed reIuLIng Lo u sLuLe oI uIIuIrs noL veL deveIoped, or Lo LIIngs IuLure
und ImpossIbIe Lo IuIIv know. TIe proper dIsLIncLIon LIe courL suId wus
LIIs: TIe egIsIuLure cunnoL deIeguLe ILs power Lo muke LIe Iuw; buL IL cun
muke u Iuw Lo deIeguLe u power Lo deLermIne some IucL or sLuLe oI LIIngs
upon wIIcI LIe Iuw mukes, or InLends Lo muke, ILs own ucLIon depend. To
denv LIIs wouId be Lo sLop LIe wIeeIs oI governmenL. TIere ure munv
LIIngs upon wIIcI wIse und useIuI IegIsIuLIon musL depend wIIcI cunnoL
be known Lo LIe Iuw-mukIng power, und, musL, LIereIore, be u subjecL oI
InquIrv und deLermInuLIon ouLsIde oI LIe IuIIs oI IegIsIuLIon. (IeId vs.
CIurk, 1q U. S. 6q, 6q; 6 . Ed. zq.)
n LIe cuse oI PeopIe vs. RosenLIuI und Osmeu, G.R. Nos. q6o;6 und
q6o;;, promuIguLed June 1z, 1, und In PungusInun TrunsporLuLIon vs.
TIe PubIIc ServIce CommIssIon, G.R. No. q;o6=, promuIguLed
June z6, 1qo, LIIs CourL Iud occusIon Lo observe LIuL LIe prIncIpIe oI
sepuruLIon oI powers Ius been mude Lo udupL ILseII Lo LIe compIexILIes oI
modern governmenLs, gIvIng rIse Lo LIe udopLIon, wILIIn cerLuIn IImILs, oI
LIe prIncIpIe oI subordInuLe IegIsIuLIon, noL onIv In LIe UnILed SLuLes und
EngIund buL In prucLIcuIIv uII modern governmenLs. AccordIngIv, wILI LIe
growIng compIexILv oI modern IIIe, LIe muILIpIIcuLIon oI LIe subjecLs oI
governmenLuI reguIuLIons, und LIe Increused dIIIIcuILv oI udmInIsLerIng LIe
Iuws, LIe rIgIdILv oI LIe LIeorv oI sepuruLIon oI governmenLuI powers Ius,
Lo u Iurge exLenL, been reIuxed bv permILLIng LIe deIeguLIon oI greuLer
powers bv LIe IegIsIuLIve und vesLIng u Iurger umounL oI dIscreLIon In
udmInIsLruLIve und execuLIve oIIIcIuIs, noL onIv In LIe execuLIon oI LIe Iuws,
buL uIso In LIe promuIguLIon oI cerLuIn ruIes und reguIuLIons cuIcuIuLed Lo
promoLe pubIIc InLeresL. cIunrobIespubIIsIIngcompunv
TIe peLILIoner IurLIer conLends LIuL LIe ruIes und reguIuLIons promuIguLed
bv LIe respondenLs pursuunL Lo LIe provIsIons oI CommonweuILI AcL No.
=q8 consLILuLe un unIuwIuI InLerIerence wILI IegILImuLe busIness or Lrude
und ubrIdge LIe rIgIL Lo personuI IIberLv und Ireedom oI IocomoLIon.
CommonweuILI AcL No. =q8 wus pussed bv LIe NuLIonuI AssembIv In LIe
exercIse oI LIe purumounL poIIce power oI LIe sLuLe.
cIunrobIespubIIsIIngcompunv
SuId AcL, bv vIrLue oI wIIcI LIe ruIes und reguIuLIons compIuIned oI were
promuIguLed, uIms Lo promoLe suIe LrunsIL upon und uvoId obsLrucLIons on
nuLIonuI rouds, In LIe InLeresL und convenIence oI LIe pubIIc. n enucLIng
suId Iuw, LIereIore, LIe NuLIonuI AssembIv wus prompLed bv
consIderuLIons oI pubIIc convenIence und weIIure. L wus InspIred bv u
desIre Lo reIIeve congesLIon oI LruIIIc. wIIcI Is, Lo suv LIe IeusL, u menuce Lo
pubIIc suIeLv. PubIIc weIIure, LIen, IIes uL LIe boLLom oI LIe enucLmenL oI
suId Iuw, und LIe sLuLe In order Lo promoLe LIe generuI weIIure muv
InLerIere wILI personuI IIberLv, wILI properLv, und wILI busIness und
occupuLIons. Persons und properLv muv be subjecLed Lo uII kInds oI
resLruInLs und burdens, In order Lo secure LIe generuI comIorL, IeuILI, und
prosperILv oI LIe sLuLe (U.S. vs. Gomez Jesus, 1 PIII., z18). To LIIs
IundumenLuI uIm oI our GovernmenL LIe rIgILs oI LIe IndIvIduuI ure
subordInuLed. IberLv Is u bIessIng wILIouL wIIcI IIIe Is u mIserv, buL
IIberLv sIouId noL be mude Lo prevuII over uuLIorILv becuuse LIen socIeLv
wIII IuII InLo unurcIv. NeILIer sIouId uuLIorILv be mude Lo prevuII over
IIberLv becuuse LIen
LIe IndIvIduuI wIII IuII InLo sIuverv. TIe cILIzen sIouId ucIIeve LIe requIred
buIunce oI IIberLv und uuLIorILv In IIs mInd LIrougI educuLIon und
personuI dIscIpIIne, so LIuL LIere muv be esLubIIsIed LIe resuILunL
equIIIbrIum, wIIcI meuns peuce und order und IuppIness Ior uII. TIe
momenL greuLer uuLIorILv Is conIerred upon LIe governmenL, IogIcuIIv so
mucI Is wILIdruwn Irom LIe resIduum oI IIberLv wIIcI resIdes In LIe
peopIe. TIe purudox IIes In LIe IucL LIuL LIe uppurenL curLuIImenL oI IIberLv
Is precIseIv LIe verv meuns oI InsurIng ILs preservuLIon.
cIunrobIespubIIsIIngcompunv
TIe scope oI poIIce power keeps expundIng us cIvIIIzuLIon udvunces. As wus
suId In LIe cuse oI DobbIns vs. os AngeIes (1= U.S. zz, z8; q . ed.
16), LIe rIgIL Lo exercIse LIe poIIce power Is u conLInuIng one, und u
busIness IuwIuI Loduv muv In LIe IuLure, becuuse oI LIe cIunged sILuuLIon,
LIe growLI oI popuIuLIon or oLIer cuuses, become u menuce Lo LIe pubIIc
IeuILI und weIIure, und be requIred Lo vIeId Lo LIe pubIIc good. And In
PeopIe vs. Pomur (q6 PIII., qqo), IL wus observed LIuL udvuncIng
cIvIIIzuLIon Is brIngIng wILIIn LIe poIIce power oI LIe sLuLe Loduv LIIngs
wIIcI were noL LIougIL oI us beIng wILIIn sucI power vesLerduv. TIe
deveIopmenL oI cIvIIIzuLIon, LIe rupIdIv IncreusIng popuIuLIon, LIe growLI
oI pubIIc opInIon, wILI un IncreusIng desIre on LIe purL oI LIe musses und
oI LIe governmenL Lo Iook uILer und cure Ior LIe InLeresLs oI LIe IndIvIduuIs
oI LIe sLuLe, Iuve brougIL wILIIn LIe poIIce power munv quesLIons Ior
reguIuLIon wIIcI IormerIv were noL so consIdered.
cIunrobIespubIIsIIngcompunv
TIe peLILIoner IInuIIv uvers LIuL LIe ruIes und reguIuLIons compIuIned oI
InIrInge upon LIe consLILuLIonuI precepL regurdIng LIe promoLIon oI socIuI
jusLIce Lo Insure LIe weII-beIng und economIc securILv oI uII LIe peopIe. TIe
promoLIon oI socIuI jusLIce, Iowever, Is Lo be ucIIeved noL LIrougI u
mIsLuken svmpuLIv Lowurds unv gIven group. SocIuI jusLIce Is neILIer
communIsm, nor despoLIsm, nor uLomIsm, nor unurcIv, buL LIe
IumunIzuLIon oI Iuws und LIe equuIIzuLIon oI socIuI und economIc Iorces bv
LIe SLuLe so LIuL jusLIce In ILs ruLIonuI und objecLIveIv secuIur concepLIon
muv uL IeusL be upproxImuLed. SocIuI jusLIce meuns LIe promoLIon oI LIe
weIIure oI uII LIe peopIe, LIe udopLIon bv LIe GovernmenL oI meusures
cuIcuIuLed Lo Insure economIc sLubIIILv oI uII LIe compeLenL eIemenLs oI
socIeLv, LIrougI LIe muInLenunce oI u proper economIc und socIuI
equIIIbrIum In LIe InLerreIuLIons oI LIe members oI LIe communILv,
consLILuLIonuIIv,
LIrougI LIe udopLIon oI meusures IeguIIv jusLIIIubIe, or exLru-
consLILuLIonuIIv, LIrougI LIe exercIse oI powers underIvIng LIe exIsLence oI
uII governmenLs on LIe LIme-Ionored prIncIpIe oI sclus populi est
supremc lex. cIunrobIespubIIsIIngcompunv
SocIuI jusLIce, LIereIore, musL be Iounded on LIe recognILIon oI LIe
necessILv oI InLerdependence umong dIvers und dIverse unILs oI u socIeLv
und oI LIe proLecLIon LIuL sIouId be equuIIv und evenIv exLended Lo uII
groups us u combIned Iorce In our socIuI und economIc IIIe, consIsLenL wILI
LIe IundumenLuI und purumounL objecLIve oI LIe sLuLe oI promoLIng LIe
IeuILI, comIorL, und quIeL oI uII persons, und oI brIngIng ubouL LIe
greuLesL good Lo LIe greuLesL number. cIunrobIespubIIsIIngcompunv
IN VIIW OI THI IORIGOING, LIe WrIL oI ProIIbILIon Pruved Ior Is
Ierebv denIed, wILI cosLs uguInsL LIe peLILIoner. So ordered.
Avunceu, C.J., Imperiul, iuz und Horrilleno, JJ., concor.
CIunrobIespubIIsIIngcompunv
G.R. No. 170346 March 12, 2007
HEIRS OF NICOLAS JUGALBOT, Represented by LEONILA B.
JUGALBOT, Petitioners, vs.COURT OF APPEALS and HEIRS OF
VIRGINIA A. ROA, Represented by LOLITA R. GOROSPE,
Administratrix, Respondents.
D E C S O N
YNARES-SANTIAGO, J.:
Petitioners, Heirs of Nicolas Jugalbot, represented by their attorney-in-fact
Leonila Jugalbot, assail the Decision
1
of the Court of Appeals dated
October 19, 2005 in CA-G.R. SP No. 81823 where the petitioners' title to
the disputed property, as evidenced by Transfer Certificate of Title (TCT)
No. E-103, was cancelled and the previous title, TCT No. T-11543, was
reinstated in the name of Virginia A. Roa. The appellate court reversed the
Decision
2
and Resolution
3
of the Department of Agrarian Reform
Adjudication Board (DARAB) Central Office in DARAB Case No. 7966,
affirming the Decision
4
of the Provincial Adjudicator and the Order
5
denying
the motion for reconsideration in DARAB Case No. X (06-1358) filed in
Misamis Oriental, for Cancellation of TCT No. E-103, Recovery of
Possession and Damages.
On September 28, 1997, an Emancipation Patent (EP) was issued to
Nicolas Jugalbot based on the latter's claim that he was the tenant of Lot
2180-C of the Subdivision plan (LRC) TSD-10465, subject property of the
case at bar, with an area of 6,229 square meters, located at Barangay
Lapasan, Cagayan de Oro City. The subject property was registered in the
name of Virginia A. Roa under Transfer Certificate of Title (TCT) No. T-
11543, the same being issued on April 1, 1970 in the name of "Virginia A.
Roa married to Pedro N. Roa." The property was originally registered in
the name of Marcelino Cabili from whom Virginia A. Roa purchased the
same sometime in 1966.
6
Nicolas Jugalbot alleged that he was a tenant of the property continuously
since the 1950s. On a Certification dated January 8, 1988 and issued by
Department of Agrarian Reform (DAR) Team Leader Eduardo Maandig,
the subject property was declared to be tenanted as of October 21, 1972
and primarily devoted to rice and corn. On March 1, 1988, the
Emancipation Patent was registered with the Register of Deeds and
Nicolas Jugalbot was issued TCT No. E-103.
7
On August 10, 1998, the heirs of Virginia A. Roa, herein private
respondents, filed before the DARAB Provincial Office of Misamis Oriental
a Complaint for Cancellation of Title (TCT No. E-103), Recovery of
Possession and Damages against Nicolas Jugalbot, docketed as DARAB
Case No. X (06-1358).
8
On October 23, 1998, a Decision was rendered by the DARAB Provincial
Adjudicator dismissing private respondents' complaint and upholding the
validity of the Emancipation Patent. Private respondents' motion for
reconsideration was denied.
9
On appeal, the DARAB Central Office affirmed the Provincial Adjudicator's
decision on the sole ground that private respondents' right to contest the
validity of Nicolas Jugalbot's title was barred by prescription. t held that an
action to invalidate a certificate of title on the ground of fraud prescribes
after the expiration of one year from the decree of registration.
10
On November 10, 2003, the DARAB denied private respondents' motion
for reconsideration,
11
hence they filed a petition for review before the Court
of Appeals which was granted. The appellate court reversed the Decision
and Resolution of the DARAB Central Office on four grounds: (1) the
absence of a tenancy relationship; (2) lack of notice to Virginia Roa by the
DAR; (3) the area of the property which was less than one hectare and
deemed swampy, rainfed and kangkong-producing; and (4) the
classification of the subject property as residential, which is outside the
coverage of Presidential Decree No. 27.
Hence, this petition for review on certiorari under Rule 45.
The sole issue for determination is whether a tenancy relationship exists
between petitioners Heirs of Nicolas Jugalbot, and private respondents,
Heirs of Virginia A. Roa, under Presidential Decree No. 27. Simply stated,
are petitioners de jure tenants of private respondents?
As clearly laid down in Qua v. Court of Appeals
12
and subsequently in
Benavidez v. Court of Appeals,
13
the doctrine is well-settled that the
allegation that an agricultural tenant tilled the land in question does not
automatically make the case an agrarian dispute. t is necessary to first
establish the existence of a tenancy relationship between the party
litigants. The following essential requisites must concur in order to
establish a tenancy relationship: (a) the parties are the landowner and the
tenant; (b) the subject matter is agricultural land; (c) there is consent; (d)
the purpose is agricultural production; (e) there is personal cultivation by
the tenant; and (f) there is a sharing of harvests between the parties.
14
Valencia v. Court of Appeals
15
further affirms the doctrine that a tenancy
relationship cannot be presumed. Claims that one is a tenant do not
automatically give rise to security of tenure. The elements of tenancy must
first be proved in order to entitle the claimant to security of tenure. There
must be evidence to prove the allegation that an agricultural tenant tilled
the land in question. Hence, a perusal of the records and documents is in
order to determine whether there is substantial evidence to prove the
allegation that a tenancy relationship does exist between petitioner and
private respondents. The principal factor in determining whether a tenancy
relationship exists is intent.
16
Tenancy is not a purely factual relationship dependent on what the alleged
tenant does upon the land. t is also a legal relationship, as ruled in Isidro
v. Court of Appeals.
17
The intent of the parties, the understanding when the
farmer is installed, and their written agreements, provided these are
complied with and are not contrary to law, are even more important.
18
Petitioners allege that they are bona fide tenants of private respondents
under Presidential Decree No. 27. Private respondents deny this, citing
inter alia, that Virginia A. Roa was not given a notice of coverage of the
property subject matter of this case; that Virginia A. Roa and the private
respondents did not have any tenant on the same property; that the
property allegedly covered by Presidential Decree No. 27 was residential
land; that the lot was paraphernal property of Virginia A. Roa; and the
landholding was less than seven (7) hectares.
The petition is devoid of merit.
The petitioners are not de jure tenants of private respondents under
Presidential Decree No. 27 due to the absence of the essential requisites
that establish a tenancy relationship between them.
Firstly, the taking of subject property was done in violation of constitutional
due process. The Court of Appeals was correct in pointing out that Virginia
A. Roa was denied due process because the DAR failed to send notice of
the impending land reform coverage to the proper party. The records show
that notices were erroneously addressed and sent in the name of Pedro N.
Roa who was not the owner, hence, not the proper party in the instant
case. The ownership of the property, as can be gleaned from the records,
pertains to Virginia A. Roa. Notice should have been therefore served on
her, and not Pedro N. Roa.
Spouses Estonina v. Court of Appeals
19
held that the presumption under
civil law that all property of the marriage belongs to the conjugal
partnership applies only when there is proof that the property was acquired
during the marriage. Otherwise stated, proof of acquisition during the
marriage is a condition sine qua non for the operation of the presumption
in favor of the conjugal partnership.
20
n Spouses Estonina, petitioners
were unable to present any proof that the property in question was
acquired during the marriage of Santiago and Consuelo Garcia. The fact
that when the title over the land in question was issued, Santiago Garcia
was already married to Consuelo as evidenced by the registration in the
name of "Santiago Garcia married to Consuelo Gaza," does not suffice to
establish the conjugal nature of the property.
21
n the instant case, the Court of Appeals correctly held that the phrase
"married to" appearing in certificates of title is no proof that the properties
were acquired during the spouses' coverture and are merely descriptive of
the marital status of the person indicated therein. The clear import from the
certificate of title is that Virginia is the owner of the property, the same
having been registered in her name alone, and being "married to Pedro N.
Roa" was merely descriptive of her civil status.
22
Since no proof was
adduced that the property was acquired during the marriage of Pedro and
Virginia Roa, the fact that when the title over the land in question was
issued, Virginia Roa was already married to Pedro N. Roa as evidenced by
the registration in the name of "Virginia A. Roa married to Pedro N. Roa,"
does not suffice to establish the conjugal nature of the property.
n addition, the defective notice sent to Pedro N. Roa was followed by a
DAR certification signed by team leader Eduardo Maandig on January 8,
1988 stating that the subject property was tenanted as of October 21, 1972
and primarily devoted to rice and corn despite the fact that there was no
ocular inspection or any on-site fact-finding investigation and report to
verify the truth of the allegations of Nicolas Jugalbot that he was a tenant
of the property. The absence of such ocular inspection or on-site fact-
finding investigation and report likewise deprives Virginia A. Roa of her
right to property through the denial of due process.
By analogy, Roxas & Co., Inc. v. Court of Appeals
23
applies to the case at
bar since there was likewise a violation of due process in the
implementation of the Comprehensive Agrarian Reform Law when the
petitioner was not notified of any ocular inspection and investigation to be
conducted by the DAR before acquisition of the property was to be
undertaken. Neither was there proof that petitioner was given the
opportunity to at least choose and identify its retention area in those
portions to be acquired.
24
Both in the Comprehensive Agrarian Reform Law
and Presidential Decree No. 27, the right of retention and how this right is
exercised, is guaranteed by law.
Since land acquisition under either Presidential Decree No. 27 and the
Comprehensive Agrarian Reform Law govern the extraordinary method of
expropriating private property, the law must be strictly construed. Faithful
compliance with legal provisions, especially those which relate to the
procedure for acquisition of expropriated lands should therefore be
observed. n the instant case, no proper notice was given to Virginia A.
Roa by the DAR. Neither did the DAR conduct an ocular inspection and
investigation. Hence, any act committed by the DAR or any of its agencies
that results from its failure to comply with the proper procedure for
expropriation of land is a violation of constitutional due process and should
be deemed arbitrary, capricious, whimsical and tainted with grave abuse of
discretion.
Secondly, there is no concrete evidence on record sufficient to establish
that Nicolas Jugalbot or the petitioners personally cultivated the property
under question or that there was sharing of harvests, except for their self-
serving statements. Clearly, there is no showing that Nicolas Jugalbot or
any of his farm household cultivated the land in question. No proof was
presented except for their self-serving statements that they were tenants of
Virginia A. Roa. ndependent evidence, aside from their self-serving
statements, is needed to prove personal cultivation, sharing of harvests, or
consent of the landowner, and establish a tenancy relationship.
Furthermore, in the findings of fact of the Court of Appeals, it was
undisputed that Nicolas Jugalbot was a soldier in the United States Army
from June 15, 1946 to April 27, 1949
25
and upon retirement, migrated to
the United States and returned to the Philippines sometime in 1998.
26
t
was established that Jugalbot's wife Miguela and daughter Lilia P. Jugalbot
are residents of 17623 Grayland Avenue, Artesia, California, U.S.A., where
Nicolas Jugalbot spent his retirement.
27
Thus, the DAR, in particular its
team leader Eduardo Maandig, haphazardly issued a certification dated
January 8, 1988 that the subject property was tenanted as of October 21,
1972 by Nicolas Jugalbot and primarily devoted to rice and corn without
the benefit of any on-site fact-finding investigation and report. This
certification became the basis of the emancipation patent and
subsequently, TCT No. E-103 issued on March 1, 1988, which was less
than two months from the issuance of the unsubstantiated DAR
certification. Coincidentally, October 21, 1972 is the date Presidential
Decree No. 27 was signed into law.
Neither was there any evidence that the landowner, Virginia A. Roa, freely
gave her consent, whether expressly or impliedly, to establish a tenancy
relationship over her paraphernal property.
As declared in Castillo v. Court of Appeals,
28
absent the element of
personal cultivation, one cannot be a tenant even if he is so designated in
the written agreement of the parties.
29
n Berenguer, Jr. v. Court of Appeals,
30
we ruled that the respondents' self-
serving statements regarding their tenancy relations could not establish
the claimed relationship. The fact alone of working on another's
landholding does not raise a presumption of the existence of agricultural
tenancy. Substantial evidence does not only entail the presence of a mere
scintilla of evidence in order that the fact of sharing can be established;
there must be concrete evidence on record adequate enough to prove the
element of sharing.
31
We further observed in Berenguer, Jr.:
With respect to the assertion made by respondent Mamerto Venasquez
that he is not only a tenant of a portion of the petitioner's landholding but
also an overseer of the entire property subject of this controversy, there is
no evidence on record except his own claim in support thereof. The
witnesses who were presented in court in an effort to bolster Mamerto's
claim merely testified that they saw him working on the petitioner's
landholding. More importantly, his own witnesses even categorically stated
that they did not know the relationship of Mamerto and the petitioner in
relation to the said landholding. x x x The fact aIone of working on
another's IandhoIding does not raise a presumption of the existence
of agricuIturaI tenancy. Other factors must be taken into
consideration Iike compensation in the form of Iease rentaIs or a
share in the produce of the IandhoIding invoIved. (Underscoring
supplied)
x x x x
n the absence of any substantial evidence from which it can be
satisfactorily inferred that a sharing arrangement is present between the
contending parties, we, as a court of last resort, are duty-bound to correct
inferences made by the courts below which are manifestly mistaken or
absurd. x x x
Without the essentiaI eIements of consent and sharing, no tenancy
reIationship can exist between the petitioner and the private
respondents. (Underscoring supplied)
32
Bejasa v. Court of Appeals
33
likewise held that to prove sharing of
harvests, a receipt or any other evidence must be presented as self-
serving statements are deemed inadequate. Proof must always be
adduced.
34
n addition
The Bejasas admit that prior to 1984, they had no contact with Candelaria.
They acknowledge that Candelaria could argue that she did not know of
Malabanan's arrangement with them. True enough Candelaria disavowed
any knowledge that the Bejasas during Malabanan's lease possessed the
land. However, the Bejasas claim that this defect was cured when
Candelaria agreed to lease the land to the Bejasas for P20,000.00 per
annum, when Malabanan died in 1983. We do not agree. n a tenancy
agreement, consideration should be in the form of harvest sharing. Even
assuming that Candelaria agreed to lease it out to the Bejasas for P20,000
per year, such agreement did not create a tenancy relationship, but a mere
civil law lease.
35
Thirdly, the fact of sharing alone is not sufficient to establish a tenancy
relationship. n Caballes v. Department of Agrarian Reform,
36
we restated
the well-settled rule that all the requisites must concur in order to create a
tenancy relationship between the parties and the absence of one or more
requisites does not make the alleged tenant a de facto tenant as
contradistinguished from a de jure tenant. This is so because unless a
person has established his status as a de jure tenant he is not entitled to
security of tenure nor is he covered by the Land Reform Program of the
Government under existing tenancy laws.
37
The security of tenure
guaranteed by our tenancy laws may be invoked only by tenants de jure,
not by those who are not true and lawful tenants.
38
As reiterated in Qua,
39
the fact that the source of livelihood of the alleged
tenants is not derived from the lots they are allegedly tenanting is
indicative of non-agricultural tenancy relationship.
40
Finally, it is readily apparent in this case that the property under dispute is
residential property and not agricultural property. Zoning Certification No.
98-084 issued on September 3, 1998 clearly shows that the subject
property Lot 2180-C covered by TCT No. T-11543 with an area of 6,229
square meters and owned by Virginia A. Roa is located within the
Residential 2 District in accordance with paragraph (b), Section 9, Article
V of Zoning Ordinance No. 880, Series of 1979 issued by the City
Planning and Development Office of Cagayan de Oro City.
41
To bolster the
residential nature of the property, it must also be noted that no Barangay
Agrarian Reform Council was organized or appointed by the DAR existed
in Barangay Lapasan, Cagayan de Oro City, as all lands have been
classified as residential or commercial, as certified by Barangay Captain of
Lapasan.
42
n Gonzales v. Court of Appeals,
43
we held that an agricultural leasehold
cannot be established on land which has ceased to be devoted to
cultivation or farming because of its conversion into a residential
subdivision. Petitioners were not agricultural lessees or tenants of the land
before its conversion into a residential subdivision in 1955. Not having
been dispossessed by the conversion of the land into a residential
subdivision, they may not claim a right to reinstatement.
44
This Court in Spouses Tiongson v. Court of Appeals
45
succinctly ruled that
the land surrounded by a residential zone is always classified as
residential. The areas surrounding the disputed six hectares are now
dotted with residences and, apparently, only this case has kept the
property in question from being developed together with the rest of the lot
to which it belongs. The fact that a caretaker plants rice or corn on a
residential lot in the middle of a residential subdivision in the heart of a
metropolitan area cannot by any strained interpretation of law convert it
into agricultural land and subject it to the agrarian reform program.
46
Despite the apparent lack of evidence establishing a tenancy relationship
between petitioners and private respondents, the DARAB improperly
recognized the existence of such a relationship in complete disregard of
the essential requisites under Presidential Decree No. 27. DARAB
committed grave abuse of discretion amounting to lack of jurisdiction in
issuing an Emancipation Patent to Nicolas Jugalbot.
Once again, Benavidez v. Court of Appeals
47
is illustrative in its
pronouncement that an alleged agricultural tenant tilling the land does not
automatically make the case an agrarian dispute which calls for the
application of the Agricultural Tenancy Act and the assumption of
jurisdiction by the DARAB. t is absolutely necessary to first establish the
existence of a tenancy relationship between the party litigants. n
Benavidez, there was no showing that there existed any tenancy
relationship between petitioner and private respondent. Thus, the case fell
outside the coverage of the Agricultural Tenancy Act; consequently, it was
the Municipal Trial Court and not the DARAB which had jurisdiction over
the controversy between petitioner and private respondent.
48
Verily, Morta, Sr. v. Occidental
49
ruled that for DARAB to have jurisdiction
over a case, there must exist a tenancy relationship between the parties.
n order for a tenancy agreement to take hold over a dispute, it would be
essential to establish all the indispensable elements of a landlord-tenant
relationship:
The regional trial court ruled that the issue involved is tenancy-related that
falls within the exclusive jurisdiction of the DARAB. t relied on the findings
in DARAB Case No. 2413 that Josefina Opiana-Baraclan appears to be
the lawful owner of the land and Jaime Occidental was her recognized
tenant. However, petitioner Morta claimed that he is the owner of the land.
Thus, there is even a dispute as to who is the rightful owner of the land,
Josefina Opiana-Baraclan or petitioner Morta. The issue of ownership
cannot be settled by the DARAB since it is definitely outside its jurisdiction.
Whatever findings made by the DARAB regarding the ownership of the
land are not conclusive to settle the matter. The issue of ownership shall
be resolved in a separate proceeding before the appropriate trial court
between the claimants thereof.
50
At any rate, whoever is declared to be the rightful owner of the land, the
case cannot be considered as tenancy-related for it still fails to comply with
the other requirements. Assuming arguendo that Josefina Opiana-
Baraclan is the owner, then the case is not between the landowner and
tenant. f, however, Morta is the landowner, Occidental cannot claim that
there is consent to a landowner-tenant relationship between him and
Morta. Thus, for failure to comply with the above requisites, we conclude
that the issue involved is not tenancy-related cognizable by the DARAB.
51
n Vda. de Tangub v. Court of Appeals,
52
the jurisdiction of the Department
of Agrarian Reform is limited to the following: (a) adjudication of all matters
involving implementation of agrarian reform; (b) resolution of agrarian
conflicts and land tenure related problems; and (c) approval and
disapproval of the conversion, restructuring or readjustment of agricultural
lands into residential, commercial, industrial and other non-agricultural
uses.
53
To recapitulate, petitioners are not de jure tenants of Virginia A. Roa, to
which Presidential Decree No. 27 is found to be inapplicable; hence, the
DARAB has no jurisdiction over this case. The DARAB not only committed
a serious error in judgment, which the Court of Appeals properly corrected,
but the former likewise committed a palpable error in jurisdiction which is
contrary to law and jurisprudence. For all the foregoing reasons, we affirm
the appellate court decision and likewise hold that the DARAB gravely
abused its discretion amounting to lack of jurisdiction on the grounds that
the subject matter of the present action is residential, and not agricultural,
land, and that all the essential requisites of a tenancy relationship were
sorely lacking in the case at bar.
On one final note, it may not be amiss to stress that laws which have for
their object the preservation and maintenance of social justice are not only
meant to favor the poor and underprivileged. They apply with equal force
to those who, notwithstanding their more comfortable position in life, are
equally deserving of protection from the courts. Social justice is not a
license to trample on the rights of the rich in the guise of defending the
poor, where no act of injustice or abuse is being committed against them.
54
As the court of last resort, our bounden duty to protect the less privileged
should not be carried out to such an extent as to deny justice to
landowners whenever truth and justice happen to be on their side. For in
the eyes of the Constitution and the statutes, EQUAL JUSTCE UNDER
THE LAW remains the bedrock principle by which our Republic abides.
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP No. 81823 promulgated on October 19, 2005 is
AFFIRMED. The Register of Deeds of Cagayan de Oro City is ordered to
CANCEL Transfer Certificate of Title No. E-103 for having been issued
without factual and legal basis, and REINSTATE Transfer Certificate of
Title No. T-11543 in the name of Virginia A. Roa. The city Assessor's Office
of Cagayan de Oro is likewise directed to CANCEL Tax Declaration No.
80551 issued to Nicolas Jugalbot and RESTORE Tax Declaration No.
270922 in the name of Virginia Angcod Roa. The heirs of Nicolas Jugalbot,
represented by Leonila B. Jugalbot or any other person claiming a right or
interest to the disputed lot through the latter's title are directed to VACATE
the premises thereof and peaceably turn over its possession to petitioners
Heirs of Virginia A. Roa, represented by Lolita R. Gorospe. No
pronouncement as to costs.
SO ORDERED.
CONSUELO YNARES-SANTIAGOAssociate Justice
WE CONCUR:
MA. ALICIA AUSTRIA-MARTINEZAssociate Justice
ROMEO J. CALLEJO, SR.
Associate Justice
ANTONIO EDUARDO B. NACHURAAssociate Justice
A T T E S T A T O N
attest that the conclusions in the above decision were reached in
consultation before the case was assigned to the writer of the opinion of
the Court's Division.
CONSUELO YNARES-SANTIAGOAssociate Justice Chairperson, Third
Division
C E R T F C A T O N
Pursuant to Section 13, Article V of the Constitution and the Division
Chairperson's Attestation, it is hereby certified that the conclusions in the
above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.
REYNATO S. PUNOChief Justice
Footnotes
1
Rollo, pp. 28-41. Penned by Associate Justice Rodrigo F. Lim, Jr. and
concurred in by Associate Justices Teresita Dy-Liacco Flores and Ramon
R. Garcia.
2
d. at 44-49. Penned by DAR Assistant Secretary Lorenzo R. Reyes,
DARAB Vice-Chairman, and concurred in by Undersecretary Federico A.
Poblete, Assistant Secretary Augusto P. Quijano, Assistant Secretary
Wilfredo M. Peaflor and Assistant Secretary Edwin C. Sales, Members.
DAR Secretary Horacio R. Morales, Jr., Chairman and Undersecretary
Conrado S. Navarro, Member, did not take part.
3
d. at 60-61. Penned by DAR Assistant Secretary Lorenzo R. Reyes,
DARAB Vice-Chairman, and concurred in by Undersecretary Rolando G.
Mangulabnan, Assistant Secretary Augusto P. Quijano, Assistant Secretary
Edgar A. gano, and Assistant Secretary Rustico T. de Belen, Members.
DAR Secretary Roberto M. Pagdanganan, Chairman and Undersecretary
Ricardo S. Arlanza, Member, did not take part.
4
d. at 55-58. Penned by Provincial Adjudicator Leandricia M. Monsanto.
5
d. at 59. Penned by Adjudicator Abeto A. Salcedo, Jr.
6
d. at 29-30.
7
Id. at 30.
8
Id.
9
Id. at 31.
10
Id.
11
Id.
12
G.R. No. 95318, June 11, 1991, 198 SCRA 236.
13
G.R. No. 125848, September 6, 1999, 313 SCRA 714.
14
Id. at 719.
15
449 Phil. 711 (2003).
16
Id. at 736.
17
G.R. No. 105586, December 15, 1993, 228 SCRA 503.
18
Id. at 511.
19
334 Phil. 577 (1997).
20
Id. at 586.
21
Id.
22
Rollo, p. 39.
23
G.R. No. 127876, December 17, 1999, 321 SCRA 106.
24
Id. at 147.
25
Rollo, p. 102.
26
Id. at 37.
27
Id.
28
G.R. No. 98028, January 27, 1992, 205 SCRA 529.
29
Id. at 536.
30
G.R. No. L-60287, August 17, 1988, 164 SCRA 431.
31
Id. at 439.
32
Id. at 439-440.
33
G.R. No. 108941, July 6, 2000, 335 SCRA 190.
34
Id. at 199.
35
Id.
36
G.R. No. L-78214, December 5, 1998, 168 SCRA 247.
37
Id. at 254.
38
Philippine National Railways v. Del Valle, G.R. No. L-29381, September
30, 1969, 29 SCRA 573, 580.
39
Supra note 13.
40
Id. at 239-240.
41
Rollo, p. 143.
42
Id. at 145.
43
G.R. No. 36213, June 29, 1989, 174 SCRA 398.
44
Id. at 401.
45
215 Phil. 430 (1984).
46
Id. at 438.
47
Supra note 14.
48
Id. at 719-720.
49
367 Phil. 438 (1999).
50
Id. at 446.
51
Id. at 447.
52
UDK No. 9864, December 3, 1990, 191 SCRA 885.
53
d. at 889.
54
Roxas & Co., nc. v. Court of Appeals, supra note 24 at 176. Ynares-
Santiago, J., concurring and dissenting.
G.R. No. 158693 November 17, 2004
JENNY M. AGABON and VIRGILIO C. AGABON, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA
HOME IMPROVEMENTS, INC. and VICENTE ANGELES, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review seeks to reverse the decision
1
of the Court of
Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the
decision of National Labor Relations Commission (NLRC) in NLRC-NCR
Case No. 023442-00.
Private respondent Riviera Home mprovements, nc. is engaged in the
business of selling and installing ornamental and construction materials. t
employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board
and cornice installers on January 2, 1992
2
until February 23, 1999 when
they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of
money claims
3
and on December 28, 1999, the Labor Arbiter rendered a
decision declaring the dismissals illegal and ordered private respondent to
pay the monetary claims. The dispositive portion of the decision states:
WHEREFORE, premises considered, We find the termination of the
complainants illegal. Accordingly, respondent is hereby ordered to pay
them their backwages up to November 29, 1999 in the sum of:
1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93
and, in lieu of reinstatement to pay them their separation pay of one (1)
month for every year of service from date of hiring up to November 29,
1999.
Respondent is further ordered to pay the complainants their holiday pay
and service incentive leave pay for the years 1996, 1997 and 1998 as well
as their premium pay for holidays and rest days and Virgilio Agabon's 13th
month pay differential amounting to TWO THOUSAND ONE HUNDRED
FFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED
TWENTY ONE THOUSAND SX HUNDRED SEVENTY EGHT & 93/100
(P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY
THREE THOUSAND EGHT HUNDRED TWENTY EGHT & 93/100
(P123,828.93) Pesos for Virgilio Agabon, as per attached computation of
Julieta C. Nicolas, OC, Research and Computation Unit, NCR.
SO ORDERED.
4
On appeal, the NLRC reversed the Labor Arbiter because it found that the
petitioners had abandoned their work, and were not entitled to backwages
and separation pay. The other money claims awarded by the Labor Arbiter
were also denied for lack of evidence.
5
Upon denial of their motion for reconsideration, petitioners filed a petition
for certiorari with the Court of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was
not illegal because they had abandoned their employment but ordered the
payment of money claims. The dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations Commission
is REVERSED only insofar as it dismissed petitioner's money claims.
Private respondents are ordered to pay petitioners holiday pay for four (4)
regular holidays in 1996, 1997, and 1998, as well as their service incentive
leave pay for said years, and to pay the balance of petitioner Virgilio
Agabon's 13th month pay for 1998 in the amount of P2,150.00.
SO ORDERED.
6
Hence, this petition for review on the sole issue of whether petitioners
were illegally dismissed.
7
Petitioners assert that they were dismissed because the private
respondent refused to give them assignments unless they agreed to work
on a "pakyaw" basis when they reported for duty on February 23, 1999.
They did not agree on this arrangement because it would mean losing
benefits as Social Security System (SSS) members. Petitioners also claim
that private respondent did not comply with the twin requirements of notice
and hearing.
8
Private respondent, on the other hand, maintained that petitioners were
not dismissed but had abandoned their work.
9
n fact, private respondent
sent two letters to the last known addresses of the petitioners advising
them to report for work. Private respondent's manager even talked to
petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him
about the new assignment at Pacific Plaza Towers involving 40,000 square
meters of cornice installation work. However, petitioners did not report for
work because they had subcontracted to perform installation work for
another company. Petitioners also demanded for an increase in their wage
to P280.00 per day. When this was not granted, petitioners stopped
reporting for work and filed the illegal dismissal case.
10
t is well-settled that findings of fact of quasi-judicial agencies like the
NLRC are accorded not only respect but even finality if the findings are
supported by substantial evidence. This is especially so when such
findings were affirmed by the Court of Appeals.
11
However, if the factual
findings of the NLRC and the Labor Arbiter are conflicting, as in this case,
the reviewing court may delve into the records and examine for itself the
questioned findings.
12
Accordingly, the Court of Appeals, after a careful review of the facts, ruled
that petitioners' dismissal was for a just cause. They had abandoned their
employment and were already working for another employer.
To dismiss an employee, the law requires not only the existence of a just
and valid cause but also enjoins the employer to give the employee the
opportunity to be heard and to defend himself.
13
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.
Abandonment is the deliberate and unjustified refusal of an employee to
resume his employment.
14
t is a form of neglect of duty, hence, a just
cause for termination of employment by the employer.
15
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.
16
n 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. n 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.
17
n Sandoval Shipyard v. Clave,
18
we held that an employee who
deliberately absented from work without leave or permission from his
employer, for the purpose of looking for a job elsewhere, is considered to
have abandoned his job. We should apply that rule with more reason here
where petitioners were absent because they were already working in
another company.
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
19
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.
20
After establishing that the terminations were for a just and valid cause, we
now determine if the procedures for dismissal were observed.
The procedure for terminating an employee is found in Book V, Rule ,
Section 2(d) of the Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. n all cases of
termination of employment, the following standards of due process shall be
substantially observed:
. For termination of employment based on just causes as defined in Article
282 of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given opportunity
to respond to the charge, present his evidence or rebut the evidence
presented against him; and
(c) A written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been
established to justify his termination.
n case of termination, the foregoing notices shall be served on the
employee's last known address.
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. f reinstatement is no longer possible where the dismissal was
unjust, separation pay may be granted.
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.
n the first situation, the dismissal is undoubtedly valid and the employer
will not suffer any liability.
n 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.
n 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.
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.
21
Thus, it
should be held liable for non-compliance with the procedural requirements
of due process.
A review and re-examination of the relevant legal principles is appropriate
and timely to clarify the various rulings on employment termination in the
light of Serrano v. National Labor Relations Commission.
22
Prior to 1989, the rule was that a dismissal or termination is illegal if the
employee was not given any notice. n the 1989 case of Wenphil Corp. v.
National Labor Relations Commission,
23
we reversed this long-standing
rule and held that the dismissed employee, although not given any notice
and hearing, was not entitled to reinstatement and backwages because
the dismissal was for grave misconduct and insubordination, a just ground
for termination under Article 282. The employee had a violent temper and
caused trouble during office hours, defying superiors who tried to pacify
him. We concluded that reinstating the employee and awarding
backwages "may encourage him to do even worse and will render a
mockery of the rules of discipline that employees are required to
observe."
24
We further held that:
Under the circumstances, the dismissal of the private respondent for just
cause should be maintained. He has no right to return to his former
employment.
However, the petitioner must nevertheless be held to account for failure to
extend to private respondent his right to an investigation before causing
his dismissal. The rule is explicit as above discussed. The dismissal of an
employee must be for just or authorized cause and after due process.
Petitioner committed an infraction of the second requirement. Thus, it must
be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing petitioner from
employment. Considering the circumstances of this case petitioner must
indemnify the private respondent the amount of P1,000.00. The measure
of this award depends on the facts of each case and the gravity of the
omission committed by the employer.
25
The rule thus evolved: where the employer had a valid reason to dismiss
an employee but did not follow the due process requirement, the dismissal
may be upheld but the employer will be penalized to pay an indemnity to
the employee. This became known as the Wenphil or Belated Due
Process Rule.
On January 27, 2000, in Serrano, the rule on the extent of the sanction
was changed. We held that the violation by the employer of the notice
requirement in termination for just or authorized causes was not a denial of
due process that will nullify the termination. However, the dismissal is
ineffectual and the employer must pay full backwages from the time of
termination until it is judicially declared that the dismissal was for a just or
authorized cause.
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. n 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.
To be sure, the Due Process Clause in Article , 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.
26
t 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.
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 mplementing Rules of P.D. 442, as amended, otherwise
known as the Labor Code of the Philippines in Book V, Rule , Sec. 2, as
amended by Department Order Nos. 9 and 10.
27
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
mplementing Rules protects employees from being unjustly terminated
without just cause after notice and hearing.
n Sebuguero v. National Labor Relations Commission,
28
the dismissal was
for a just and valid cause but the employee was not accorded due process.
The dismissal was upheld by the Court but the employer was sanctioned.
The sanction should be in the nature of indemnification or penalty, and
depends on the facts of each case and the gravity of the omission
committed by the employer.
n Nath v. National Labor Relations Commission,
29
it was ruled that even if
the employee was not given due process, the failure did not operate to
eradicate the just causes for dismissal. The dismissal being for just cause,
albeit without due process, did not entitle the employee to reinstatement,
backwages, damages and attorney's fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services,
Inc. v. National Labor Relations Commission,
30
which opinion he reiterated
in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been
properly observed by an employer, it would not be right to order either the
reinstatement of the dismissed employee or the payment of backwages to
him. n failing, however, to comply with the procedure prescribed by law in
terminating the services of the employee, the employer must be deemed to
have opted or, in any case, should be made liable, for the payment of
separation pay. t might be pointed out that the notice to be given and the
hearing to be conducted generally constitute the two-part due process
requirement of law to be accorded to the employee by the employer.
Nevertheless, peculiar circumstances might obtain in certain situations
where to undertake the above steps would be no more than a useless
formality and where, accordingly, it would not be imprudent to apply the
res ipsa loquitur rule and award, in lieu of separation pay, nominal
damages to the employee. x x x.
31
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.
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. nvalidating the dismissal
would not serve public interest. t 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.
32
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.
33
t must be stressed that in the present case, the petitioners committed a
grave offense, i.e., abandonment, which, if the requirements of due
process were complied with, would undoubtedly result in a valid dismissal.
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."
34
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. t has to allow for changing times and
circumstances.
Justice sagani Cruz strongly asserts the need to apply a balanced
approach to labor-management relations and dispense justice with an
even hand in every case:
We have repeatedly stressed that social justice or any justice for that
matter is for the deserving, whether he be a millionaire in his mansion or
a pauper in his hovel. t is true that, in case of reasonable doubt, we are to
tilt the balance in favor of the poor to whom the Constitution fittingly
extends its sympathy and compassion. But never is it justified to give
preference to the poor simply because they are poor, or reject the rich
simply because they are rich, for justice must always be served for the
poor and the rich alike, according to the mandate of the law.
35
Justice in every case should only be for the deserving party. t should not
be presumed that every case of illegal dismissal would automatically be
decided in favor of labor, as management has rights that should be fully
respected and enforced by this Court. As interdependent and
indispensable partners in nation-building, labor and management need
each other to foster productivity and economic growth; hence, the need to
weigh and balance the rights and welfare of both the employee and
employer.
Where the dismissal is for a just cause, as in the instant case, the lack of
statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights, as ruled in Reta v. National Labor Relations
Commission.
36
The indemnity to be imposed should be stiffer to
discourage the abhorrent practice of "dismiss now, pay later," which we
sought to deter in the Serrano ruling. The sanction should be in the nature
of indemnification or penalty and should depend on the facts of each case,
taking into special consideration the gravity of the due process violation of
the employer.
Under the Civil Code, nominal damages is adjudicated in order that a right
of the plaintiff, which has been violated or invaded by the defendant, may
be vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.
37
As enunciated by this Court in Viernes v. National Labor Relations
Commissions,
38
an employer is liable to pay indemnity in the form of
nominal damages to an employee who has been dismissed if, in effecting
such dismissal, the employer fails to comply with the requirements of due
process. The Court, after considering the circumstances therein, fixed the
indemnity at P2,590.50, which was equivalent to the employee's one
month salary. This indemnity is intended not to penalize the employer but
to vindicate or recognize the employee's right to statutory due process
which was violated by the employer.
39
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.
40
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 mplementing Rules.
Private respondent claims that the Court of Appeals erred in holding that it
failed to pay petitioners' holiday pay, service incentive leave pay and 13th
month pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners' money claims.
Private respondent is liable for petitioners' holiday pay, service incentive
leave pay and 13th month pay without deductions.
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. The reason for the rule is that the
pertinent personnel files, payrolls, records, remittances and other similar
documents which will show that overtime, differentials, service incentive
leave and other claims of workers have been paid are not in the
possession of the worker but in the custody and absolute control of the
employer.
41
n the case at bar, if private respondent indeed paid petitioners' holiday
pay and service incentive leave pay, it could have easily presented
documentary proofs of such monetary benefits to disprove the claims of
the petitioners. But it did not, except with respect to the 13th month pay
wherein it presented cash vouchers showing payments of the benefit in the
years disputed.
42
Allegations by private respondent that it does not operate
during holidays and that it allows its employees 10 days leave with pay,
other than being self-serving, do not constitute proof of payment.
Consequently, it failed to discharge the onus probandi thereby making it
liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner
Virgilio Agabon's 13th month pay, we find the same to be unauthorized.
The evident intention of Presidential Decree No. 851 is to grant an
additional income in the form of the 13th month pay to employees not
already receiving the same
43
so as "to further protect the level of real
wages from the ravages of world-wide inflation."
44
Clearly, as additional
income, the 13th month pay is included in the definition of wage under
Article 97(f) of the Labor Code, to wit:
(f) "Wage" paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece , or commission basis,
or other method of calculating the same, which is payable by an employer
to an employee under a written or unwritten contract of employment for
work done or to be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by the Secretary of
Labor, of board, lodging, or other facilities customarily furnished by the
employer to the employee."
from which an employer is prohibited under Article 113
45
of the same Code
from making any deductions without the employee's knowledge and
consent. n the instant case, private respondent failed to show that the
deduction of the SSS loan and the value of the shoes from petitioner
Virgilio Agabon's 13th month pay was authorized by the latter. The lack of
authority to deduct is further bolstered by the fact that petitioner Virgilio
Agabon included the same as one of his money claims against private
respondent.
The Court of Appeals properly reinstated the monetary claims awarded by
the Labor Arbiter ordering the private respondent to pay each of the
petitioners holiday pay for four regular holidays from 1996 to 1998, in the
amount of P6,520.00, service incentive leave pay for the same period in
the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth
month pay for 1998 in the amount of P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The
decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP
No. 63017, finding that petitioners' Jenny and Virgilio Agabon abandoned
their work, and ordering private respondent to pay each of the petitioners
holiday pay for four regular holidays from 1996 to 1998, in the amount of
P6,520.00, service incentive leave pay for the same period in the amount
of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for
1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION
that private respondent Riviera Home mprovements, nc. is further
ORDERED to pay each of the petitioners the amount of P30,000.00 as
nominal damages for non-compliance with statutory due process.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez,
Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna,
Tinga, Chico-Nazario, and Garcia, JJ., concur.
SEPARATE OPINION
TINGA, J:
concur in the result, the final disposition of the petition being correct.
There is no denying the importance of the Court's ruling today, which
should be considered as definitive as to the effect of the failure to render
the notice and hearing required under the Labor Code when an employee
is being dismissed for just causes, as defined under the same law. The
Court emphatically reaffirms the rule that dismissals for just cause are not
invalidated due to the failure of the employer to observe the proper notice
and hearing requirements under the Labor Code. At the same time, The
Decision likewise establishes that the Civil Code provisions on damages
serve as the proper framework for the appropriate relief to the employee
dismissed for just cause if the notice-hearing requirement is not met.
Serrano v. NLRC,
1
insofar as it is controlling in dismissals for unauthorized
causes, is no longer the controlling precedent. Any and all previous rulings
and statements of the Court inconsistent with these determinations are
now deemed inoperative.
My views on the questions raised in this petition are comprehensive, if
may so in all modesty. offer this opinion to discuss the reasoning behind
my conclusions, pertaining as they do to questions of fundamental
importance.
Prologue
The factual backdrop of the present Petition for Review is not novel.
Petitioners claim that they were illegally dismissed by the respondents,
who allege in turn that petitioners had actually abandoned their
employment. There is little difficulty in upholding the findings of the NRLC
and the Court of Appeals that petitioners are guilty of abandonment, one of
the just causes for termination under the Labor Code. Yet, the records also
show that the employer was remiss in not giving the notice required by the
Labor Code; hence, the resultant controversy as to the legal effect of such
failure vis--vis the warranted dismissal.
Ostensibly, the matter has been settled by our decision in Serrano
2
,
wherein the Court ruled that the failure to properly observe the notice
requirement did not render the dismissal, whether for just or authorized
causes, null and void, for such violation was not a denial of the
constitutional right to due process, and that the measure of appropriate
damages in such cases ought to be the amount of wages the employee
should have received were it not for the termination of his employment
without prior notice.
3
Still, the Court has, for good reason, opted to
reexamine the so-called Serrano doctrine through the present petition
Antecedent Facts
Respondent Riviera Home mprovements, nc (Riviera Home) is engaged
in the manufacture and installation of gypsum board and cornice. n
January of 1992, the Agabons were hired in January of 1992 as cornice
installers by Riviera Home. According to their personnel file with Riviera
Home, the Agabon given address was 3RDS Tailoring, E. Rodriguez Ave.,
Moonwalk Subdivision, P- Paraaque City, Metro Manila.
4
t is not disputed that sometime around February 1999, the Agabons
stopped rendering services for Riviera Home. The Agabons allege that
beginning on 23 February 1999, they stopped receiving assignments from
Riviera Home.
5
When they demanded an explanation, the manager of
Riviera Homes, Marivic Ventura, informed them that they would be hired
again, but on a "pakyaw" (piece-work) basis. When the Agabons spurned
this proposal, Riviera Homes refused to continue their employment under
the original terms and agreement.
6
Taking affront, the Agabons filed a
complaint for illegal dismissal with the National Labor Relations
Commission ("NLRC").
Riviera Homes adverts to a different version of events leading to the filing
of the complaint for illegal dismissal. t alleged that in the early quarter of
1999, the Agabons stopped reporting for work with Riviera. Two separate
letters dated 10 March 1999, were sent to the Agabons at the address
indicated in their personnel file. n these notices, the Agabons were
directed to report for work immediately.
7
However, these notices were
returned unserved with the notation "RTS Moved." Then, in June of 1999,
Virgilio Agabon informed Riviera Homes by telephone that he and Jenny
Agabon were ready to return to work for Riviera Homes, on the condition
that their wages be first adjusted. On 18 June 1999, the Agabons went to
Riviera Homes, and in a meeting with management, requested a wage
increase of up to Two Hundred Eighty Pesos (P280.00) a day. When no
affirmative response was offered by Riviera Homes, the Agabons initiated
the complaint before the NLRC.
8
n their Position Paper, the Agabons likewise alleged that they were
required to work even on holidays and rest days, but were never paid the
legal holiday pay or the premium pay for holiday or rest day. They also
asserted that they were denied Service ncentive Leave pay, and that
Virgilio Agabon was not given his thirteenth (13th) month pay for the year
1998.
9
After due deliberation, Labor Arbiter Daisy G. Cauton-Barcelona rendered
a Decision dated 28 December 1999, finding the termination of the
Agabons illegal, and ordering Riviera Homes to pay backwages in the sum
of Fifty Six Thousand Two Hundred Thirty One Pesos and Ninety Three
Centavos (P56,231.93) each. The Labor Arbiter likewise ordered, in lieu of
reinstatement, the payment of separation pay of one (1) month pay for
every year of service from date of hiring up to 29 November 1999, as well
as the payment of holiday pay, service incentive leave pay, and premium
pay for holiday and restday, plus thirteenth (13
th
) month differential to
Virgilio Agabon.
10
n so ruling, the Labor Arbiter declared that Riviera Homes was unable to
satisfactorily refute the Agabons' claim that they were no longer given work
to do after 23 February 1999 and that their rehiring was only on "pakyaw"
basis. The Labor Arbiter also held that Riviera Homes failed to comply with
the notice requirement, noting that Riviera Homes well knew of the change
of address of the Agabons, considering that the identification cards it
issued stated a different address from that on the personnel file.
11
The
Labor Arbiter asserted the principle that in all termination cases, strict
compliance by the employer with the demands of procedural and
substantive due process is a condition sine qua non for the same to be
declared valid.
12
On appeal, the NLRC Second Division set aside the Labor Arbiter's
Decision and ordered the dismissal of the complaint for lack of merit.
13
The
NLRC held that the Agabons were not able to refute the assertion that for
the payroll period ending on 15 February 1999, Virgilio and Jenny Agabon
worked for only two and one-half (2) and three (3) days, respectively. t
disputed the earlier finding that Riviera Homes had known of the change in
address, noting that the address indicated in the
identification cards was not the Agabons, but that of the persons who
should be notified in case of emergency concerning the employee.
14
Thus,
proper service of the notice was deemed to have been accomplished.
Further, the notices evinced good reason to believe that the Agabons had
not been dismissed, but had instead abandoned their jobs by refusing to
report for work.
n support of its conclusion that the Agabons had abandoned their work,
the NLRC also observed that the Agabons did not seek reinstatement, but
only separation pay. While the choice of relief was premised by the
Agabons on their purported strained relations with Riviera Homes, the
NLRC pointed out that such claim was amply belied by the fact that the
Agabons had actually sought a conference with Riviera Homes in June of
1999. The NLRC likewise found that the failure of the Labor Arbiter to
justify the award of extraneous money claims, such as holiday and service
incentive leave pay, confirmed that there was no proof to justify such
claims.
A Petition for Certiorari was promptly filed with the Court of Appeals by the
Agabons, imputing grave abuse of discretion on the part of the NLRC in
dismissing their complaint for illegal dismissal. n a Decision
15
dated 23
January 2003, the Court of Appeals affirmed the finding that the Agabons
had abandoned their employment. t noted that the two elements
constituting abandonment had been established, to wit: the failure to report
for work or absence without valid justifiable reason, and; a clear intention
to sever the employer-employee relationship. The intent to sever the
employer-employee relationship was buttressed by the Agabon's choice to
seek not reinstatement, but separation pay. The Court of Appeals likewise
found that the service of the notices were valid, as the Agabons did not
notify Riviera Homes of their change of address, and thus the failure to
return to work despite notice amounted to abandonment of work.
However, the Court of Appeals reversed the NLRC as regards the denial of
the claims for holiday pay, service incentive leave pay, and the balance of
Virgilio Agabon's thirteenth (13th) month pay. t ruled that the failure to
adduce proof in support thereof was not fatal and that the burden of
proving that such benefits had already been paid rested on Riviera
Homes.
16
Given that Riviera Homes failed to present proof of payment to
the Agabons of their holiday pay and service incentive leave pay for the
years 1996, 1997 and 1998, the Court of Appeals chose to believe that
such benefits had not actually been received by the employees. t also
ruled that the apparent deductions made by Riviera Homes on the
thirteenth (13th) month pay of Virgilio Agabon violated Section 10 of the
Rules and Regulations mplementing Presidential Decree No. 851.
17
Accordingly, Riviera Homes was ordered to pay the Agabons holiday for
four (4) regular holidays in 1996, 1997 and 1998, as well as their service
incentive leave pay for said years, and the balance of Virgilio Agabon's
thirteenth (13th) month pay for 1998 in the amount of Two Thousand One
Hundred Fifty Pesos (P2,150.00).
18
n their Petition for Review, the Agabons claim that they had been illegally
dismissed, reasserting their version of events, thus: (1) that they had not
been given new assignments since 23 February 1999; (2) that they were
told that they would only be re-hired on a "pakyaw" basis, and; (3) that
Riviera Homes had knowingly sent the notices to their old address despite
its knowledge of their change of address as indicated in the identification
cards.
19
Further, the Agabons note that only one notice was sent to each of
them, in violation of the rule that the employer must furnish two written
notices before termination the first to apprise the employee of the cause
for which dismissal is sought, and the second to notify the employee of the
decision of dismissal.
20
The Agabons likewise maintain that they did not
seek reinstatement owing to the strained relations between them and
Riviera Homes.
The Agabons present to this Court only one issue, i.e.: whether or not they
were illegally dismissed from their employment.
21
There are several
dimensions though to this issue which warrant full consideration.
The Abandonment Dimension
Review of Factual Finding of Abandonment
As the Decision points out, abandonment is characterized by the failure to
report for work or absence without valid or justifiable reason, and a clear
intention to sever the employer-employee relationship. The question of
whether or not an employee has abandoned employment is essentially a
factual issue.
22
The NLRC and the Court of Appeals, both appropriate triers
of fact, concluded that the Agabons had actually abandoned their
employment, thus there is little need for deep inquiry into the correctness
of this factual finding. There is no doubt that the Agabons stopped
reporting for work sometime in February of 1999. And there is no evidence
to support their assertion that such absence was due to the deliberate
failure of Riviera Homes to give them work. There is also the fact, as noted
by the NLRC and the Court of Appeals, that the Agabons did not pray for
reinstatement, but only for separation
pay and money claims.
23
This failure indicates their disinterest in
maintaining the employer-employee relationship and their unabated
avowed intent to sever it. Their excuse that strained relations between
them and Riviera Homes rendered reinstatement no longer feasible was
hardly given credence by the NLRC and the Court of Appeals.
24
The contrary conclusion arrived at by the Labor Arbiter as regards
abandonment is of little bearing to the case. All that the Labor Arbiter said
on that point was that Riviera Homes was not able to refute the Agabons'
claim that they were terminated on 23 February 1999.
25
The Labor Arbiter
did not explain why or how such finding was reachhy or how such finding
was reachhe Agabons was more credible than that of Riviera Homes'.
Being bereft of reasoning, the conclusion deserves scant consideration.
Compliance with Notice Requirement
At the same time, both the NLRC and the Court of Appeals failed to
consider the apparent fact that the rules governing notice of termination
were not complied with by Riviera Homes. Section 2, Book V, Rule XX of
the Omnibus Rules mplementing the Labor Code (mplementing Rules)
specifically provides that for termination of employment based on just
causes as defined in Article 282, there must be: (1) written notice served
on the employee specifying the grounds for termination and giving
employee reasonable opportunity to explain his/her side; (2) a hearing or
conference wherein the employee, with the assistance of counsel if so
desired, is given opportunity to respond to the charge, present his
evidence or rebut evidence presented against him/her; and (3) written
notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to
justify termination.
At the same time, Section 2, Book V, Rule XX of the mplementing Rules
does not require strict compliance with the above procedure, but only that
the same be "substantially observed."
Riviera Homes maintains that the letters it sent on 10 March 1999 to the
Agabons sufficiently complied with the notice rule. These identically
worded letters noted that the Agabons had stopped working without
permission that they failed to return for work despite having been
repeatedly told to report to the office and resume their employment.
26
The
letters ended with an invitation to the Agabons to report back to the office
and return to work.
27
The apparent purpose of these letters was to advise the Agabons that they
were welcome to return back to work, and not to notify them of the grounds
of termination. Still, considering that only substantial compliance with the
notice requirement is required, am prepared to say that the letters
sufficiently conform to the first notice required under the mplementing
Rules. The purpose of the first notice is to duly inform the employee that a
particular transgression is being considered against him or her, and that an
opportunity is being offered for him or her to respond to the charges. The
letters served the purpose of informing the Agabons of the pending matters
beclouding their employment, and extending them the opportunity to clear
the air.
Contrary to the Agabons' claim, the letter-notice was correctly sent to the
employee's last known address, in compliance with the mplementing
Rules. There is no dispute that these letters were not actually received by
the Agabons, as they had apparently moved out of the address indicated
therein. Still, the letters were sent to what Riviera Homes knew to be the
Agabons' last known address, as indicated in their personnel file. The
Agabons insist that Riviera Homes had known of the change of address,
offering as proof their company Ds which purportedly print out their correct
new address. Yet, as pointed out by the NLRC and the Court of Appeals,
the addresses indicated in the Ds are not the Agabons, but that of the
person who is to be notified in case on emergency involve either or both of
the Agabons.
The actual violation of the notice requirement by Riviera Homes lies in its
failure to serve on the Agabons the second notice which should inform
them of termination. As the Decision notes, Riviera Homes' argument that
sending the second notice was useless due to the change of address is
inutile, since the mplementing Rules plainly require that the notice of
termination should be served at the employee's last known address.
The importance of sending the notice of termination should not be
trivialized. The termination letter serves as indubitable proof of loss of
employment, and its receipt compels the employee to evaluate his or her
next options. Without such notice, the employee may be left uncertain of
his fate; thus, its service is mandated by the mplementing Rules. Non-
compliance with the notice rule, as evident in this case, contravenes the
mplementing Rules. But does the vioIation serve to invaIidate the
Agabons' dismissaI for just cause?
The So-Called Constitutional Law Dimension
Justices Puno and Panganiban opine that the Agabons should be
reinstated as a consequence of the violation of the notice requirement.
respectfully disagree, for the reasons expounded below.
Constitutional Considerations Of Due Process and the Notice-Hearing
Requirement in Labor Termination Cases
Justice Puno proposes that the failure to render due notice and hearing
prior to dismissal for just cause constitutes a violation of the constitutional
right to due process. This view, as acknowledged by Justice Puno himself,
runs contrary to the Court's pronouncement in Serrano v. NLRC
28
that the
absence of due notice and hearing prior to dismissal, if for just cause,
violates statutory due process.
The ponencia of Justice Vicente V. Mendoza in Serrano provides this
cogent overview of the history of the doctrine:
ndeed, to contend that the notice requirement in the Labor Code is an
aspect of due process is to overlook the fact that Art. 283 had its origin in
Art. 302 of the Spanish Code of Commerce of 1882 which gave either
party to the employer-employee relationship the right to terminate their
relationship by giving notice to the other one month in advance. n lieu of
notice, an employee could be laid off by paying him a mesada equivalent
to his salary for one month. This provision was repealed by Art. 2270 of the
Civil Code, which took effect on August 30, 1950. But on June 12, 1954,
R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted
reviving the mesada. On June 21, 1957, the law was amended by R.A. No.
1787 providing for the giving of advance notice for every year of service.
29
Under Section 1 of the Termination Pay Law, an employer could dismiss
an employee without just cause by serving written notice on the employee
at least one month in advance or one-half month for every year of service
of the employee, whichever was longer.
30
Failure to serve such written
notice entitled the employee to compensation equivalent to his salaries or
wages corresponding to the required period of notice from the date of
termination of his employment.
However, there was no similar written notice requirement under the
Termination Pay Law if the dismissal of the employee was for just cause.
The Court, speaking through Justice JBL Reyes, ruled in Phil. Refining Co.
v. Garcia:
31
[Republic] Act 1052, as amended by Republic Act 1787, impliedly
recognizes the right of the employer to dismiss his employees (hired
without definite period) whether for just case, as therein defined or
enumerated, or without it. If there be just cause, the empIoyer is not
required to serve any notice of discharge nor to disburse termination
pay to the empIoyee. xxx
32
Clearly, the Court, prior to the enactment of the Labor Code, was ill-
receptive to the notion that termination for just cause without notice or
hearing violated the constitutional right to due process. Nonetheless, the
Court recognized an award of damages as the appropriate remedy. n
Galsim v. PNB,
33
the Court held:
Of course, the employer's prerogative to dismiss employees hired without
a definite period may be with or without cause. But if the manner in which
such right is exercised is abusive, the employer stands to answer to the
dismissed employee for damages.
34
The Termination Pay Law was among the repealed laws with the
enactment of the Labor Code in 1974. Significantly, the Labor Code, in its
inception, did not require notice or hearing before an employer could
terminate an employee for just cause. As Justice Mendoza explained:
Where the termination of employment was for a just cause, no notice was
required to be given to the employee. t was only on September 4, 1981
that notice was required to be given even where the dismissal or
termination of an employee was for cause. This was made in the rules
issued by the then Minister of Labor and Employment to implement B.P.
Blg. 130 which amended the Labor Code. And it was still much later when
the notice requirement was embodied in the law with the amendment of
Art. 277(b) by R.A. No. 6715 on March 2, 1989.
35
t cannot be denied though that the thinking that absence of notice or
hearing prior to termination constituted a constitutional violation has gained
a jurisprudential foothold with the Court. Justice Puno, in his Dissenting
Opinion, cites several cases in support of this theory, beginning with
Batangas Laguna Tayabas Bus Co. v. Court of Appeals
36
wherein we held
that "the failure of petitioner to give the private respondent the benefit of a
hearing before he was dismissed constitutes an infringement on his
constitutional right to due process of law.
37
Still, this theory has been refuted, pellucidly and effectively to my mind, by
Justice Mendoza's disquisition in Serrano, thus:
xxx There are three reasons why, on the other hand, violation by the
employer of the notice requirement cannot be considered a denial of due
process resulting in the nullity of the employee's dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation
on governmental powers. t does not apply to the exercise of private
power, such as the termination of employment under the Labor Code. This
is plain from the text of Art. , 1 of the Constitution, viz.: "No person shall
be deprived of life, liberty, or property without due process of law. . . ." The
reason is simple: Only the State has authority to take the life, liberty, or
property of the individual. The purpose of the Due Process Clause is to
ensure that the exercise of this power is consistent with what are
considered civilized methods.
The second reason is that notice and hearing are required under the Due
Process Clause before the power of organized society are brought to bear
upon the individual. This is obviously not the case of termination of
employment under Art. 283. Here the employee is not faced with an aspect
of the adversary system. The purpose for requiring a 30-day written notice
before an employee is laid off is not to afford him an opportunity to be
heard on any charge against him, for there is none. The purpose rather is
to give him time to prepare for the eventual loss of his job and the DOLE
an opportunity to determine whether economic causes do exist justifying
the termination of his employment.
xxx
The third reason why the notice requirement under Art. 283 can not be
considered a requirement of the Due Process Clause is that the employer
cannot really be expected to be entirely an impartial judge of his own
cause. This is also the case in termination of employment for a just cause
under Art. 282 (i.e., serious misconduct or willful disobedience by the
employee of the lawful orders of the employer, gross and habitual neglect
of duties, fraud or willful breach of trust of the employer, commission of
crime against the employer or the latter's immediate family or duly
authorized representatives, or other analogous cases).
38
The Court in the landmark case of People v. Marti
39
clarified the proper
dimensions of the Bill of Rights.
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. ts 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;
talics supplied)
40
do not doubt that requiring notice and hearing prior to termination for just
cause is an admirable sentiment borne out of basic equity and fairness.
Still, it is not a constitutional requirement that can impose itself on the
relations of private persons and entities. Simply put, the Bill of Rights
affords protection against possible State oppression against its citizens,
but not against an unjust or repressive conduct by a private party towards
another.
Justice Puno characterizes the notion that constitutional due process limits
government action alone as "pass ," and adverts to nouvelle vague
theories which assert that private conduct may be restrained by
constitutional due process. His dissent alludes to the American experience
making references to the post-Civil War/pre-World War era when the US
Supreme Court seemed overly solicitous to the rights of big business over
those of the workers.
Theories, no matter how entrancing, remain theoretical unless adopted by
legislation, or more controversially, by judicial opinion. There were a few
decisions of the US Supreme Court that, ostensibly, imposed on private
persons the values of the constitutional guarantees. However, in deciding
the cases, the American High Court found it necessary to link the actors to
adequate elements of the "State" since the Fourteenth Amendment plainly
begins with the words "No State shall."
41
More crucially to the American experience, it had become necessary to
pass legislation in order to compel private persons to observe
constitutional values. While the equal protection clause was deemed
sufficient by the Warren Court to bar racial segregation in public facilities, it
necessitated enactment of the Civil Rights Acts of 1964 to prohibit
segregation as enforced by private persons within their property. n this
jurisdiction, have trust in the statutory regime that governs the correction
of private wrongs. There are thousands of statutes, some penal or
regulatory in nature, that are the source of actionable claims against
private persons. There is even no stopping the State, through the
legislative cauldron, from compelling private individuals, under pain of
legal sanction, into observing the norms ordained in the Bill of Rights.
Justice Panganiban's Separate Opinion asserts that corporate behemoths
and even individuals may now be sources of abuses and threats to human
rights and liberties.
42
The concern is not unfounded, but appropriate
remedies exist within our statutes, and so resort to the constitutional trump
card is not necessary. Even if we were to engage the premise, the proper
juristic exercise should be to examine whether an employer has taken the
attributes of the State so that it could be compelled by the Constitution to
observe the proscriptions of the Bill of Rights. But the strained analogy
simply does not square since the attributes of an employer are starkly
incongruous with those of the State. Employers plainly do not possess the
awesome powers and the tremendous resources which the State has at its
command.
The differences between the State and employers are not merely literal,
but extend to their very essences. Unlike the State, the raison d'etre of
employers in business is to accumulate profits. Perhaps the State and the
employer are similarly capacitated to inflict injury or discomfort on persons
under their control, but the same power is also possessed by a school
principal, hospital administrator, or a religious leader, among many others.
ndeed, the scope and reach of authority of an employer pales in
comparison with that of the State. There is no basis to conclude that an
employer, or even the employer class, may be deemed a de facto state
and on that premise, compelled to observe the Bill of Rights. There is
simply no nexus in their functions, distaff as they are, that renders it
necessary to accord the same jurisprudential treatment.
t may be so, as alluded in the dissent of Justice Puno, that a conservative
court system overly solicitous to the concerns of business may consciously
gut away at rights or privileges owing to the labor sector. This certainly
happened before in the United States in the early part of the twentieth
century, when the progressive labor legislation such as that enacted during
President Roosevelt's New Deal regime most of them addressing
problems of labor were struck down by an arch-conservative Court.
43
The preferred rationale then was to enshrine within the constitutional order
business prerogatives, rendering them superior to the express legislative
intent. Curiously, following its judicial philosophy at the time the U. S.
Supreme Court made due process guarantee towards employers prevail
over the police power to defeat the cause of labor.
44
Of course, this Court should not be insensate to the means and methods
by which the entrenched powerful class may maneuver the socio-political
system to ensure self-preservation. However, the remedy to rightward
judicial bias is not leftward judicial bias. The more proper judicial attitude is
to give due respect to legislative prerogatives, regardless of the ideological
sauce they are dipped in.
While the Bill of Rights maintains a position of primacy in the constitutional
hierarchy,
45
it has scope and limitations that must be respected and
asserted by the Court, even though they may at times serve somewhat
bitter ends. The dissenting opinions are palpably distressed at the effect of
the Decision, which will undoubtedly provoke those reflexively sympathetic
to the labor class. But haphazard legal theory cannot be used to justify the
obverse result. The adoption of the dissenting views would give rise to all
sorts of absurd constitutional claims. An excommunicated Catholic might
demand his/her reinstatement into the good graces of the Church and into
communion on the ground that excommunication was violative of the
constitutional right to due process. A celebrity contracted to endorse Pepsi
Cola might sue in court to void a stipulation that prevents him/her from
singing the praises of Coca Cola once in a while, on the ground that such
stipulation violates the constitutional right to free speech. An employee
might sue to prevent the employer from reading outgoing e-mail sent
through the company server using the company e-mail address, on the
ground that the constitutional right to privacy of communication would be
breached.
The above concerns do not in anyway serve to trivialize the interests of
labor. But we must avoid overarching declarations in order to justify an end
result beneficial to labor. dread the doctrinal acceptance of the notion that
the Bill of Rights, on its own, affords protection and sanctuary not just from
the acts of State but also from the conduct of private persons. Natural and
juridical persons would hesitate to interact for fear that a misstep could
lead to their being charged in court as a constitutional violator. Private
institutions that thrive on their exclusivity, such as churches or cliquish
groups, could be forced to renege on their traditional tenets, including
vows of secrecy and the like, if deemed by the Court as inconsistent with
the Bill of Rights. ndeed, that fundamental right of all private persons to be
let alone would be forever diminished because of a questionable notion
that contravenes with centuries of political thought.
t is not difficult to be enraptured by novel legal ideas. Their
characterization is susceptible to the same marketing traps that hook
consumers to new products. With the help of unique wrapping, a catchy
label, and testimonials from professed experts from exotic lands, a
malodorous idea may gain wide acceptance, even among those self-
possessed with their own heightened senses of perception. Yet before we
join the mad rush in order to proclaim a theory as "brilliant," a rigorous test
must first be employed to determine whether it complements or contradicts
our own system of laws and juristic thought. Without such analysis, we run
the risk of abnegating the doctrines we have fostered for decades and the
protections they may have implanted into our way of life.
Should the Court adopt the view that the Bill of Rights may be invoked to
invalidate actions by private entities against private individuals, the Court
would open the floodgates to, and the docket would be swamped with,
litigations of the scurrilous sort. Just as patriotism is the last refuge of
scoundrels, the broad constitutional claim is the final resort of the
desperate litigant.
Constitutional Protection of Labor
The provisions of the 1987 Constitution affirm the primacy of labor and
advocate a multi-faceted state policy that affords, among others, full
protection to labor. Section 18, Article thereof provides:
The State affirms labor as a primary social economic force. t shall protect
the rights of workers and promote their welfare.
Further, Section 3, Article X states:
The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equal employment
opportunities for all.
t shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. They shall be entitled to security
to tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns on investments, and to
expansion and growth.
The constitutional enshrinement of the guarantee of full protection of labor
is not novel to the 1987 Constitution. Section 6, Article XV of the 1935
Constitution reads:
The State shall afford protection to labor, especially to working women,
and minors, and shall regulate the relations between the landowner and
tenant, and between labor and capital in industry and in agriculture. The
State may provide for compulsory arbitration.
Similarly, among the principles and state policies declared in the 1973
Constitution, is that provided in Section 9, Article thereof:
The State shall afford full protection to labor, promote full employment and
equality in employment, ensure equal work opportunities regardless of sex,
race or creed, and regulate the relations between workers and employers.
The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work.
The State may provide for compulsory arbitration.
On the other hand, prior to the 1973 Constitution, the right to security of
tenure could only be found in legislative enactments and their respective
implementing rules and regulations. t was only in the 1973 Constitution
that security of tenure was elevated as a constitutional right. The
development of the concept of security of tenure as a constitutionally
recognized right was discussed by this Court in BPI Credit Corporation v.
NLRC,
46
to wit:
The enthronement of the worker's right to security or tenure in our
fundamental law was not achieved overnight. For all its liberality towards
labor, our 1935 Constitution did not elevate the right as a constitutional
right. For a long time, the worker's security of tenure had only the
protective mantle of statutes and their interpretative rules and regulations.
t was as uncertain protection that sometimes yielded to the political
permutations of the times. t took labor nearly four decades of sweat and
tears to persuade our people thru their leaders, to exalt the worker's right
to security of tenure as a sacrosanct constitutional right. t was Article ,
section 2 [9] of our 1973 Constitution that declared as a policy that the
State shall assure the right of worker's to security tenure. The 1987
Constitution is even more solicitous of the welfare of labor. Section 3 of its
Article X mandates that the State shall afford full protection to labor and
declares that all workers shall be entitled to security of tenure. Among the
enunciated State policies are the
promotion of social justice and a just and dynamic social order. n contrast,
the prerogative of management to dismiss a worker, as an aspect of
property right, has never been endowed with a constitutional status.
The unequivocal constitutional declaration that all workers shall be entitled
to security of tenure spurred our lawmakers to strengthen the protective
walls around this hard earned right. The right was protected from undue
infringement both by our substantive and procedural laws. Thus, the
causes for dismissing employees were more defined and restricted; on the
other hand, the procedure of termination was also more clearly delineated.
These substantive and procedural laws must be strictly complied with
before a worker can be dismissed from his employment.
47
t is quite apparent that the constitutional protection of labor was
entrenched more than eight decades ago, yet such did not prevent this
Court in the past from affirming dismissals for just cause without valid
notice. Nor was there any pretense made that this constitutional maxim
afforded a laborer a positive right against dismissal for just cause on the
ground of lack of valid prior notice. As demonstrated earlier, it was only
after the enactment of the Labor Code that the doctrine relied upon by the
dissenting opinions became en vogue. This point highlights my position
that the violation of the notice requirement has statutory moorings, not
constitutional.
t should be also noted that the 1987 Constitution also recognizes the
principle of shared responsibility between workers and employers, and the
right of enterprise to reasonable returns, expansion, and growth. Whatever
perceived imbalance there might have been under previous incarnations of
the provision have been obviated by Section 3, Article X.
n the case of Manila Prince Hotel v. GSIS,
48
we affirmed the presumption
that all constitutional provisions are self-executing. We reasoned that to
declare otherwise would result in the pernicious situation wherein by mere
inaction and disregard by the legislature, constitutional mandates would be
rendered ineffectual. Thus, we held:
As against constitutions of the past, modern constitutions have been
generally ed upon a different principle and have often become in effect
extensive codes of laws intended to operate directly upon the people in a
manner similar to that of statutory enactments, and the function of
constitutional conventions has evolved into one more like that of a
legislative body. Hence, unless it is expressly provided that a legislative act
is necessary to enforce a constitutional mandate, the presumption now is
that all provisions of the constitution are self-executing. f the constitutional
provisions are treated as requiring legislation instead of self-executing, the
legislature would have the power to ignore and practically nullify the
mandate of the fundamental law. This can be cataclysmic. That is why the
prevailing view is, as it has always been, that
. . . in case of doubt, the Constitution should be considered self-executing
rather than non-self-executing. . . . Unless the contrary is clearly intended,
the provisions of the Constitution should be considered self-executing, as
a contrary rule would give the legislature discretion to determine when, or
whether, they shall be effective. These provisions would be subordinated
to the will of the lawmaking body, which could make them entirely
meaningless by simply refusing to pass the needed implementing statute.
49
n further discussing self-executing provisions, this Court stated that:
n self-executing constitutional provisions, the legislature may still enact
legislation to facilitate the exercise of powers directly granted by the
constitution, further the operation of such a provision, prescribe a practice
to be used for its enforcement, provide a convenient remedy for the
protection of the rights secured or the determination thereof, or place
reasonable safeguards around the exercise of the right. The mere fact that
legislation may supplement and add to or prescribe a penalty for the
violation of a self-executing constitutional provision does not render such a
provision ineffective in the absence of such legislation. The omission from
a constitution of any express provision for a remedy for enforcing a right or
liability is not necessarily an indication that it was not intended to be self-
executing. The rule is that a self-executing provision of the constitution
does not necessarily exhaust legislative power on the subject, but any
legislation must be in harmony with the constitution, further the exercise of
constitutional right and make it more available. Subsequent legislation
however does not necessarily mean that the subject constitutional
provision is not, by itself, fully enforceable.
50
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.
Ultimately, therefore, Section 3 of Article X cannot, on its own, be a
source of a positive enforceable right to stave off the dismissal of an
employee for just cause owing to the failure to serve proper notice or
hearing. As manifested by several framers of the 1987 Constitution, the
provisions on social justice require legislative enactments for their
enforceability. This is reflected in the record of debates on the social
justice provisions of the Constitution:
MS. [FELCTAS S.] AQUNO: We appreciate the concern of the
Commissioner. But this Committee [on Social Justice] has actually become
the forum aIready of a Iot of specific grievances and specific
demands, such that understandabIy, we may have been, at one time
or another, dangerousIy treading into the functions of IegisIation. Our
only plea to the Commission is to focus our perspective on the matter of
social justice and its rightful place in the Constitution. What we envision
here is a mandate specific enough that wouId give impetus for
statutory impIementation. We wouId caution ourseIves in terms of the
judicious exercise of seIf-censorship against treading into the
functions of IegisIation. (emphasis supplied)
51
xxx
[FLORENZ D.] REGALADO: notice that the 1935 Constitution had only
one section on social justice; the same is true with the 1973 Constitution.
But they seem to have stood us in good stead; and I am a IittIe surprised
why, despite that attempt at seIf-censorship, there are certain
provisions here which are properIy for IegisIation.
52
xxx
BSHOP [TEODORO S.] BACAN: [] think the distinction that was given
during the presentation of the provisions on the Bill of Rights by
Commissioner Bernas is very apropos here. He spoke of seIf-executing
rights which beIong properIy to the BiII of Rights, and then he spoke
of a new body of rights which are more of cIaims and that these have
come about IargeIy through the works of sociaI phiIosophers and
then the teaching of the Popes. They focus on the common good and
hence, it is not as easy to pinpoint preciseIy these rights nor the
situs of the rights. And yet, they exist in relation to the common good.
53
xxx
MS. [MNDA LUZ M.] QUESADA: I think the nitty-gritty of this kind of
coIIaboration wiII be Ieft to IegisIation but the important thing now is the
conservation, utilization or maximization of the very limited resources. xxx
[RCARDO J.] ROMULO: The other problem is that, by and large,
government services are inefficient. So, this is a problem all by itself. On
Section 19, where the report says that people's organizations as a
principal means of empowering the people to pursue and protect through
peaceful means., I do not suppose that the Committee wouId Iike to
either preempt or excIude the IegisIature, because the concept of a
representative and democratic system reaIIy is that the IegisIature is
normaIIy the principaI means.
[EDMUNDO G.] GARCA: That is correct. In fact, peopIe cannot even
dream of infIuencing the composition or the membership of the
IegisIature, if they do not get organized. t is, in fact, a recognition of the
principle that unless a citizenry is organized and mobilized to pursue its
ends peacefully, then it cannot really participate effectively.
54
There is no pretense on the part of the framers that the provisions on
Social Justice, particularly Section 3 of Article X, are self-executory. Still,
considering the rule that provisions should be deemed self-executing if
enforceable without further legislative action, an examination of Section 3
of Article X is warranted to determine whether it is complete in itself as a
definitive law, or if it needs future legislation for completion and
enforcement.
55
Particularly, we should inquire whether or not the provision
voids the dismissal of a laborer for just cause if no valid notice or hearing
is attendant.
Constitutional Commissioner Fr. Joaquin G. Bernas makes a significant
comment on Section 3, Article X of the 1987 Constitution:
The [cluster] of rights guaranteed in the second paragraph are the right "to
security of tenure, humane conditions of work, and a living wage." Again,
although these have been set apart by a period (.) from the next sentence
and are therefore not modified by the final phrase "as may be provided by
law," it is not the intention to pIace these beyond the reach of vaIid
Iaws. xxx (emphasis supplied)
56
At present, the Labor Code is the primary mechanism to carry out the
Constitution's directives. This is clear from Article 3
57
under Chapter 1
thereof which essentially restates the policy on the protection of labor as
worded in the 1973 Constitution, which was in force at the time of
enactment of the Labor Code. t crystallizes the fundamental law's policies
on labor, defines the parameters of the rights granted to labor such as the
right to security of tenure, and prescribes the standards for the
enforcement of such rights in concrete terms. While not infallible, the
measures provided therein tend to ensure the achievement of the
constitutional aims.
The necessity for laws concretizing the constitutional principles on the
protection of labor is evident in the reliance placed upon such laws by the
Court in resolving the issue of the validity of a worker's dismissal. n cases
where that was the issue confronting the Court, it consistently recognized
the constitutional right to security of tenure and employed the standards
laid down by prevailing laws in determining whether such right was
violated.
58
The Court's reference to laws other than the Constitution in
resolving the issue of dismissal is an implicit acknowledgment that the right
to security of tenure, while recognized in the Constitution, cannot be
implemented uniformly absent a law prescribing concrete standards for its
enforcement.
As discussed earlier, the validity of an employee's dismissal in previous
cases was examined by the Court in accordance with the standards laid
down by Congress in the Termination Pay Law, and subsequently, the
Labor Code and the amendments thereto. At present, the validity of an
employee's dismissal is weighed against the standards laid down in Article
279, as well as Article 282 in relation to Article 277(b) of the Labor Code,
for a dismissal for just cause, and Article 283 for a dismissal for an
authorized cause.
The Effect of Statutory Violation
Of Notice and Hearing
There is no doubt that the dismissal of an employee even for just cause,
without prior notice or hearing, violates the Labor Code. However, does
such violation necessarily void the dismissal?
Before proceed with my discussion on dismissals for just causes, a brief
comment regarding dismissals for authorized cause under Article 283 of
the Labor Code. While the justiciable question in Serrano pertained to a
dismissal for unauthorized cause, the ruling therein was crafted as
definitive to dismissals for just cause. Happily, the Decision today does not
adopt the same unwise tack. t should be recognized that dismissals for
just cause and dismissals for authorized cause are governed by different
provisions, entail divergent requisites, and animated by distinct rationales.
The language of Article 283 expressly effects the termination for
authorized cause to the service of written notice on the workers and the
Ministry of Labor at least one (1) month before the intended date of
termination. This constitutes an eminent difference than dismissals for just
cause, wherein the causal relation between the notice and the dismissal is
not expressly stipulated. The circumstances distinguishing just and
authorized causes are too markedly different to be subjected to the same
rules and reasoning in interpretation.
Since the present petition is limited to a question arising from a dismissal
for just cause, there is no reason for making any pronouncement regarding
authorized causes. Such declaration would be merely obiter, since they
are neither the law of the case nor dispositive of the present petition. When
the question becomes justiciable before this Court, we will be confronted
with an appropriate factual milieu on which we can render a more judicious
disposition of this admittedly important question.
B. Dismissal for Just Cause
There is no express provision in the Labor Code that voids a dismissal for
just cause on the ground that there was no notice or hearing. Under
Section 279, the employer is precluded from dismissing an employee
except for a just cause as provided in Section 282, or an authorized cause
under Sections 283 and 284. Based on reading Section 279 alone, the
existence of just cause by itself is sufficient to validate the termination.
Just cause is defined by Article 282, which unlike Article 283, does not
condition the termination on the service of written notices. Still, the
dissenting opinions propound that even if there is just cause, a termination
may be invalidated due to the absence of notice or hearing. This view is
anchored mainly on constitutional moorings, the basis of which had
argued against earlier. For determination now is whether there is statutory
basis under the Labor Code to void a dismissal for just cause due to the
absence of notice or hearing.
As pointed out by Justice Mendoza in Serrano, it was only in 1989 that the
Labor Code was amended to enshrine into statute the twin requirements of
notice and hearing.
59
Such requirements are found in Article 277 of the
Labor Code, under the heading "Miscellaneous Provisions." Prior to the
amendment, the notice-hearing requirement was found under the
implementing rules issued by the then Minister of Labor in 1981. The
present-day implementing rules likewise mandate that the standards of
due process, including the requirement of written notice and hearing, "be
substantially observed."
60
ndubitably, the failure to substantially comply with the standards of due
process, including the notice and hearing requirement, may give rise to an
actionable claim against the employer. Under Article 288, penalties may
arise from violations of any provision of the Labor Code. The Secretary of
Labor likewise enjoys broad powers to inquire into existing relations
between employers and employees. Systematic violations by management
of the statutory right to due process would fall under the broad grant of
power to the Secretary of Labor to investigate under Article 273.
However, the remedy of reinstatement despite termination for just cause is
simply not authorized by the Labor Code. Neither the Labor Code nor its
implementing rules states that a termination for just cause is voided
because the requirement of notice and hearing was not observed. This is
not simply an inadvertent semantic failure, but a conscious effort to protect
the prerogatives of the employer to dismiss an employee for just cause.
Notably, despite the several pronouncements by this Court in the past
equating the notice-hearing requirement in labor cases to a constitutional
maxim, neither the legislature nor the executive has adopted the same
tack, even gutting the protection to provide that substantial compliance
with due process suffices.
The Labor Code significantly eroded management prerogatives in the
hiring and firing of employees. Whereas employees could be dismissed
even without just cause under the Termination Pay Law
61
, the Labor Code
affords workers broad security of tenure. Still, the law recognizes the right
of the employer to terminate for just cause. The just causes enumerated
under the Labor Code serious misconduct or willful disobedience, gross
and habitual neglect, fraud or willful breach of trust, commission of a crime
by the employee against the employer, and other analogous causes are
characterized by the harmful behavior of an employee against the
business or the person of the employer.
These just causes for termination are not negated by the absence of notice
or hearing. An employee who tries to kill the employer cannot be magically
absolved of trespasses just because the employer forgot to serve due
notice. Or a less extreme example, the gross and habitual neglect of an
employee will not be improved upon just because the employer failed to
conduct a hearing prior to termination.
n fact, the practical purpose of requiring notice and hearing is to afford the
employee the opportunity to dispute the contention that there was just
cause in the dismissal. Yet it must be understood if a dismissed
empIoyee is deprived of the right to notice and hearing, and thus
denied the opportunity to present countervaiIing evidence that
disputes the finding of just cause, reinstatement wiII be vaIid not
because the notice and hearing requirement was not observed, but
because there was no just cause in the dismissaI. The opportunity to
dispute the finding of the just cause is readily available before the Labor
Arbiter, and the subsequent levels of appellate review. Again, as held in
Serrano:
Even in cases of dismissal under Art. 282, the purpose for the requirement
of notice and hearing is not to comply with the Due Process Clause of the
Constitution. The time for notice and hearing is at the trial stage. Then that
is the time we speak of notice and hearing as the essence of procedural
due process. Thus, compliance by the employer with the notice
requirement before he dismisses an employee does not foreclose the right
of the latter to question the legality of his dismissal. As Art. 277(b)
provides, "Any decision taken by the employer shall be without prejudice to
the right of the worker to contest the validity or legality of his dismissal by
filing a complaint with the regional branch of the National Labor Relations
Commission.
62
The Labor Code presents no textually demonstrable commitment to
invalidate a dismissal for just cause due to the absence of notice or
hearing. This is not surprising, as such remedy will not restore the
employer or employee into equity. Absent a showing of integral causation,
the mutual infliction of wrongs does not negate either injury, but instead
enforces two independent rights of relief.
The Damages' Dimensions
Award for Damages Must Have Statutory Basis
The Court has grappled with the problem of what should be the proper
remedial relief of an employee dismissed with just cause, but not afforded
either notice or hearing. n a long line of cases, beginning with Wenphil
Corp. v. NLRC
63
and up until Serrano in 2000, the Court had deemed an
indemnification award as sufficient to answer for the violation by the
employer against the employee. However, the doctrine was modified in
Serrano.
disagree with Serrano insofar as it held that employees terminated for
just cause are to be paid backwages from the time employment was
terminated "until it is determined that the termination is for just cause
because the failure to hear him before he is dismissed renders the
termination of his employment without legal effect."
64
Article 279 of the
Labor Code clearly authorizes the payment of backwages only if an
employee is unjustly dismissed. A dismissal for just cause is obviously
antithetical to an unjust dismissal. An award for backwages is not clearly
warranted by the law.
The Impropriety of Award for Separation Pay
The formula of one month's pay for every year served does have statutory
basis. t is found though in the Labor Code though, not the Civil Code.
Even then, such computation is made for separation pay under the Labor
Code. But separation pay is not an appropriate as a remedy in this case,
or in any case wherein an employee is terminated for just cause. As
Justice Vitug noted in his separate opinion in Serrano, an employee whose
employment is terminated for a just cause is not entitled to the payment of
separation benefits.
65
Separation pay is traditionally a monetary award
paid as an alternative to reinstatement which can no longer be effected in
view of the long passage of time or because of the realities of the
situation.
66
However, under Section 7, Rule 1, Book V of the Omnibus
Rules mplementing the Labor Code, "[t]he separation from work of an
employee for a just cause does not entitle him to the termination pay
provided in the Code."
67
Neither does the Labor Code itself provide
instances wherein separation pay is warranted for dismissals with just
cause. Separation pay is warranted only for dismissals for authorized
causes, as enumerated in Article 283 and 284 of the Labor Code.
The Impropriety of Equity Awards
Admittedly, the Court has in the past authorized the award of separation
pay for duly terminated employees as a measure of social justice, provided
that the employee is not guilty of serious misconduct reflecting on moral
character.
68
This doctrine is inapplicable in this case, as the Agabons are
guilty of abandonment, which is the deliberate and unjustified refusal of an
employee to resume his employment. Abandonment is tantamount to
serious misconduct, as it constitutes a willful breach of the employer-
employee relationship without cause.
The award of separation pay as a measure of social justice has no
statutory basis, but clearly emanates from the Court's so-called "equity
jurisdiction." The Court's equity jurisdiction as a basis for award, no matter
what form it may take, is likewise unwarranted in this case. Easy resort to
equity should be avoided, as it should yield to positive rules which pre-
empt and prevail over such persuasions.
69
Abstract as the concept is, it
does not admit to definite and objective standards.
consider the pronouncement regarding the proper monetary awards in
such cases as Wenphil Corp. v. NLRC,
70
Reta,
71
and to a degree, even
Serrano as premised in part on equity. This decision is premised in part
due to the absence of cited statutory basis for these awards. n these
cases, the Court deemed an indemnity award proper without exactly
saying where in statute could such award be derived at. Perhaps, equity or
social justice can be invoked as basis for the award. However, this sort of
arbitrariness, indeterminacy and judicial usurpation of legislative
prerogatives is precisely the source of my discontent. Social justice should
be the aspiration of all that we do, yet think it the more mature attitude to
consider that it ebbs and flows within our statutes, rather than view it as an
independent source of funding.
Article 288 of the Labor Code as a Source of Liability
Another putative source of liability for failure to render the notice
requirement is Article 288 of the Labor Code, which states:
Article 288 states:
Penalties. Except as otherwise provided in this Code, or unless the acts
complained of hinges on a question of interpretation or implementation of
ambiguous provisions of an existing collective bargaining agreement, any
violation of the provisions of this Code declared to be unlawful or penal in
nature shall be punished with a fine of not less than One Thousand Pesos
(P1,000.00) nor more than Ten Thousand Pesos (P10,000.00), or
imprisonment of not less than three months nor more than three years, or
both such fine and imprisonment at the discretion of the court.
t is apparent from the provision that the penalty arises due to
contraventions of the provisions of the Labor Code. t is also clear that the
provision comes into play regardless of who the violator may be. Either the
employer or the employee may be penalized, or perhaps even officials
tasked with implementing the Labor Code.
However, it is apparent that Article 288 is a penal provision; hence, the
prescription for penalties such as fine and imprisonment. The Article is also
explicit that the imposition of fine or imprisonment is at the "discretion of
the court." Thus, the proceedings under the provision is penal in character.
The criminal case has to be instituted before the proper courts, and the
Labor Code violation subject thereof duly proven in an adversarial
proceeding. Hence, Article 288 cannot apply in this case and serve as
basis to impose a penalty on Riviera Homes.
also maintain that under Article 288 the penalty should be paid to the
State, and not to the person or persons who may have suffered injury as a
result of the violation. A penalty is a sum of money which the law requires
to be paid by way of punishment for doing some act which is prohibited or
for not doing some act which is required to be done.
72
A penalty should be
distinguished from damages which is the pecuniary compensation or
indemnity to a person who has suffered loss, detriment, or injury, whether
to his person, property, or rights, on account of the unlawful act or
omission or negligence of another. Article 288 clearly serves as a punitive
fine, rather than a compensatory measure, since the provision penalizes
an act that violates the Labor Code even if such act does not cause actual
injury to any private person.
ndependent of the employee's interests protected by the Labor Code is
the interest of the State in seeing to it that its regulatory laws are complied
with. Article 288 is intended to satiate the latter interest. Nothing in the
language of Article 288 indicates an intention to compensate or
remunerate a private person for injury he may have sustained.
t should be noted though that in Serrano, the Court observed that since
the promulgation of Wenphil Corp. v. NLRC
73
in 1989, "fines imposed for
violations of the notice requirement have varied from P1,000.00 to
P2,000.00 to P5,000.00 to P10,000.00."
74
nterestingly, this range is the
same range of the penalties imposed by Article 288. These "fines"
adverted to in Serrano were paid to the dismissed employee. The use of
the term "fines," as well as the terminology employed a few other cases,
75
may have left an erroneous impression that the award implemented
beginning with Wenphil was based on Article 288 of the Labor Code. Yet,
an examination of Wenphil reveals that what the Court actually awarded to
the employee was an "indemnity", dependent on the facts of each case
and the gravity of the omission committed by the employer. There is no
mention in Wenphil of Article 288 of the Labor Code, or indeed, of any
statutory basis for the award.
The Proper Basis: Employer's Liability under the Civil Code
As earlier stated, Wenphil allowed the payment of indemnity to the
employee dismissed for just cause is dependent on the facts of each case
and the gravity of the omission committed by the employer. However,
considered Wenphil flawed insofar as it is silent as to the statutory basis
for the indemnity award. This failure, to my mind, renders it unwise for to
reinstate the Wenphil rule, and foster the impression that it is the judicial
business to invent awards for damages without clear statutory basis.
The proper IegaI basis for hoIding the empIoyer IiabIe for monetary
damages to the empIoyee dismissed for just cause is the CiviI Code.
The award of damages shouId be measured against the Ioss or injury
suffered by the empIoyee by reason of the empIoyer's vioIation or, in
case of nominaI damages, the right vindicated by the award. This is
the proper paradigm authorized by our Iaw, and designed to obtain
the fairest possibIe reIief.
Under Section 217(4) of the Labor Code, the Labor Arbiter has jurisdiction
over claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations. t is thus the duty of Labor
Arbiters to adjudicate claims for damages, and they should disabuse
themselves of any inhibitions if it does appear that an award for damages
is warranted. As triers of facts in a specialized field, they should attune
themselves to the particular conditions or problems attendant to employer-
employee relationships, and thus be in the best possible position as to the
nature and amount of damages that may be warranted in this case.
The damages referred under Section 217(4) of the Labor Code are those
available under the Civil Code. t is but proper that the Civil Code serve as
the basis for the indemnity, it being the law that regulates the private
relations of the members of civil society, determining their respective rights
and obligations with reference to persons, things, and civil acts.
76
No
matter how impressed with the public interest the relationship between a
private employer and employee is, it still is ultimately a relationship
between private individuals. Notably, even though the Labor Code could
very well have provided set rules for damages arising from the employer-
employee relationship, referral was instead made to the concept of
damages as enumerated and defined under the Civil Code.
Given the long controversy that has dogged this present issue regarding
dismissals for just cause, it is wise to lay down standards that would guide
the proper award of damages under the Civil Code in cases wherein the
employer failed to comply with statutory due process in dismissals for just
cause.
First. believe that it can be maintained as a general rule, that failure to
comply with the statutory requirement of notice automatically gives rise to
nominal damages, at the very least, even if the dismissal was sustained for
just cause.
Nominal damages are adjudicated in order that a right of a plaintiff which
has been violated or invaded by another may be vindicated or recognized
without having to indemnify the plaintiff for any loss suffered by him.
77
Nominal damages may likewise be awarded in every obligation arising
from law, contracts, quasi-contracts, acts or omissions punished by law,
and quasi-delicts, or where any property right has been invaded.
Clearly, the bare act of failing to observe the notice requirement gives rise
to nominal damages assessable against the employer and due the
employee. The Labor Code indubitably entitles the employee to notice
even if dismissal is for just cause, even if there is no apparent intent to
void such dismissals deficiently implemented. t has also been held that
one's employment, profession, trade, or calling is a "property right" and the
wrongful interference therewith gives rise to an actionable wrong.
78
n Better Buildings, Inc. v. NLRC,
79
the Court ruled that the while the
termination therein was for just and valid cause, the manner of termination
was done in complete disregard of the necessary procedural safeguards.
80
The Court found nominal damages as the proper form of award, as it was
purposed to vindicate the right to procedural due process violated by the
employer.
81
A similar holding was maintained in Iran v. NLRC
82
and Malaya
Shipping v. NLRC.
83
The doctrine has express statutory basis, duly
recognizes the existence of the right to notice, and vindicates the violation
of such right. t is sound, logical, and should be adopted as a general rule.
The assessment of nominal damages is left to the discretion of the court,
84
or in labor cases, of the Labor Arbiter and the successive appellate levels.
The authority to nominate standards governing the award of nominal
damages has clearly been delegated to the judicial branch, and it will
serve good purpose for this Court to provide such guidelines. Considering
that the affected right is a property right, there is justification in basing the
amount of nominal damages on the particular characteristics attaching to
the claimant's employment. Factors such as length of service, positions
held, and received salary may be considered to obtain the proper measure
of nominal damages. After all, the degree by which a property right should
be vindicated is affected by the estimable value of such right.
At the same time, it should be recognized that nominal damages are not
meant to be compensatory, and should not be computed through a formula
based on actual losses. Consequently, nominal damages usually limited in
pecuniary value.
85
This fact should be impressed upon the prospective
claimant, especially one who is contemplating seeking
actual/compensatory damages.
Second. Actual or compensatory damages are not available as a matter of
right to an employee dismissed for just cause but denied statutory due
process. They must be based on clear factual and legal bases,
86
and
correspond to such pecuniary loss suffered by the employee as duly
proven.
87
Evidently, there is less degree of discretion to award actual or
compensatory damages.
recognize some inherent difficulties in establishing actual damages in
cases for terminations validated for just cause. The dismissed employee
retains no right to continued employment from the moment just cause for
termination exists, and such time most likely would have arrived even
before the employer is liable to send the first notice. As a result, an award
of backwages disguised as actual damages would almost never be
justified if the employee was dismissed for just cause. The possible
exception would be if it can be proven the ground for just cause came into
being only after the dismissed employee had stopped receiving wages
from the employer.
Yet it is not impossible to establish a case for actual damages if dismissal
was for just cause. Particularly actionable, for example, is if the notices are
not served on the employee, thus hampering his/her opportunities to
obtain new employment. For as long as it can be demonstrated that the
failure of the employer to observe procedural due process mandated by
the Labor Code is the proximate cause of pecuniary loss or injury to the
dismissed employee, then actual or compensatory damages may be
awarded.
Third. f there is a finding of pecuniary loss arising from the employer
violation, but the amount cannot be proved with certainty, then temperate
or moderate damages are available under Article 2224 of the Civil Code.
Again, sufficient discretion is afforded to the adjudicator as regards the
proper award, and the award must be reasonable under the
circumstances.
88
Temperate or nominal damages may yet prove to be a
plausible remedy, especially when common sense dictates that pecuniary
loss was suffered, but incapable of precise definition.
Fourth. Moral and exemplary damages may also be awarded in the
appropriate circumstances. As pointed out by the Decision, moral
damages are recoverable where the dismissal of the employee was
attended by bad faith, fraud, or was done in a manner contrary to morals,
good customs or public policy, or the employer committed an act
oppressive to labor.
89
Exemplary damages may avail if the dismissal was
effected in a wanton, oppressive or malevolent manner.
Appropriate Award of Damages to the Agabons
The records indicate no proof exists to justify the award of actual or
compensatory damages, as it has not been established that the failure to
serve the second notice on the Agabons was the proximate cause to any
loss or injury. n fact, there is not even any showing that such violation
caused any sort of injury or discomfort to the Agabons. Nor do they assert
such causal relation. Thus, the only appropriate award of damages is
nominal damages. Considering the circumstances, agree that an award
of Fifteen Thousand Pesos (P15,000.00) each for the Agabons is
sufficient.
All premises considered, VOTE to:
(1) DENY the PETTON for lack of merit, and AFFRM the Decision of the
Court of Appeals dated 23 January 2003, with the MODFCATON that in
addition, Riviera Homes be
ORDERED to pay the petitioners the sum of Fifteen Thousand Pesos
(P15,000.00) each, as nominal damages.
(2) HOLD that henceforth, dismissals for just cause may not be invalidated
due to the failure to observe the due process requirements under the
Labor Code, and that the only indemnity award available to the employee
dismissed for just cause are damages under the Civil Code as duly
proven. Any and all previous rulings and statements of the Court
inconsistent with this holding are now deemed NOPERATVE.
DANTE O. TINGA
D
Associate Justice
Footnotes
1
Penned by Associate Justice Marina L. Buzon and concurred in by
Associate Justices Josefina Guevara-Salonga and Danilo B. Pine.
2
Rollo, p. 41.
3
d., pp. 13-14.
4
d., p. 92.
5
d., p. 131.
6
d., p. 173.
7
d., p. 20.
8
d., pp. 21-23.
9
d., p. 45.
10
d., pp. 42-43.
11
Rosario v. Victory Ricemill, G.R. No. 147572, 19 February 2003, 397
SCRA 760, 767.
12
Reyes v. Maxim's Tea House, G.R. No. 140853, 27 February 2003, 398
SCRA 288, 298.
13
Santos v. San Miguel Corporation, G.R. No. 149416, 14 March 2003,
399 SCRA 172, 182.
14
Columbus Philippine Bus Corporation v. NLRC, 417 Phil. 81, 100 (2001).
15
De Paul/King Philip Customs Tailor v. NLRC, 364 Phil. 91, 102 (1999).
16
Sta. Catalina College v. NLRC, G.R. No. 144483, 19 November 2003.
17
Cosmos Bottling Corporation v. NLRC, G.R. No. 111155, 23 October
1997, 281 SCRA 146, 153-154.
18
G.R. No. L-49875, 21 November 1979, 94 SCRA 472, 478.
19
Judy Philippines, nc. v. NLRC, 352 Phil. 593, 606 (1998).
20
Philippine-Singapore Transport Services, nc. v. NLRC, 343 Phil. 284,
291 (1997).
21
See Stolt-Nielsen Marine Services, nc. v. NLRC, G.R. No. 128395, 29
December 1998, 300 SCRA 713, 720.
22
G.R. No. 117040, 27 January 2000, 323 SCRA 445.
23
G.R. No. 80587, 8 February 1989, 170 SCRA 69.
24
d. at 76.
25
d.
26
Solesbee v. Balkcom, 339 U.S. 9, 16 (1950) (Frankfurter, J., dissenting).
Due process is violated if a practice or rule "offends some principle of
justice so rooted in the traditions and conscience of our people as to be
ranked as fundamental;" Snyder v. Massachusetts, 291 U.S. 97, 105
(1934).
27
Department Order No. 9 took effect on 21 June 1997. Department Order
No. 10 took effect on 22 June 1997.
28
G.R. No. 115394, 27 September 1995, 248 SCRA 535.
29
G.R. No. 122666, 19 June 1997, 274 SCRA 386.
30
G.R. No. 114313, 29 July 1996, 259 SCRA 699, 700.
31
Serrano, supra, Vitug, J., Separate (Concurring and Dissenting) Opinion,
323 SCRA 524, 529-530 (2000).
32
Capili v. NLRC, G.R. No. 117378, 26 March 1997, 270 SCRA 488, 495.
33
Filipro, nc. v. NLRC, G.R. No. L-70546, 16 October 1986, 145 SCRA
123.
34
Calalang v. Williams, 70 Phil. 726, 735 (1940).
35
Gelos v. Court of Appeals, G.R. No. 86186, 8 May 1992, 208 SCRA 608,
616.
36
G.R. No. 112100, 27 May 1994, 232 SCRA 613, 618.
37
Art. 2221, Civil Code.
38
G.R. No. 108405. April 4, 2003 citing Kwikway Engineering Works v.
NLRC, G.R. No. 85014, 22 March 1991, 195 SCRA 526, 532; Aurelio v.
NLRC, G.R. No. 99034, 12 April 1993, 221 SCRA 432, 443; and
Sampaguita Garments Corporation v. NLRC, G.R. No. 102406, 17 June
1994, 233 SCRA 260, 265.
39
d. citing Better Buildings, nc. v. NLRC, G.R. No. 109714, 15 December
1997, 283 SCRA 242, 251; ran v. NLRC, G.R. No. 121927, 22 April 1998,
289 SCRA 433, 442.
40
Savellano v. Northwest Airlines, G.R. No. 151783, 8 July 2003.
41
Villar v. NLRC, G.R. No. 130935, 11 May 2000.
42
Rollo, pp. 60-71.
43
UST Faculty Union v. NLRC, G.R. No. 90445, 2 October 1990.
44
"Whereas" clauses, P.D. No. 851.
45
"Art. 113. Wage deduction. - No employer, in his own behalf or in behalf
of any person, shall make any deduction from the wages of his employees
except:
(a) n cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by
him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to
check off has been recognized by the employer or authorized in writing by
the individual worker concerned; and
(c) n cases where the employer is authorized by law or regulations issued
by the Secretary of Labor and Employment.
TINGA, J:
1
380 Phil. 416 (2000).
2
Id.
3
Id. at 443, 445, 448.
4
Rollo, p. 42.
5
Id. at 32.
6
Ibid.
7
Id. at 59-60.
8
Id. at 15.
9
Id. at 34.
10
Id. at 92.
11
Id. at 91. The address indicated in the identification cards was "V 6 Cruz
ron Works, E. Rodriguez Paraaque City."
12
Ibid citing PAL v. NLRC, 279 SCRA 533.
13
n a Decision dated 21 August 2000, penned by Commissioner V.R.
Calaycay, and concurred in by Presiding Commissioner R. Aquino and
Commissioner A. Gacutan.
14
Rollo, p. 127.
15
Penned by Associate Justice M. Buzon, concurred in by Associate
Justices J. Guevara-Salonga and D. Pine.
16
n their Petition for Certiorari before the Court of Appeals, the Agabons
particularly claimed that they were required to work on four holidays,
namely, Araw Ng Kagitingan, National Heroes Day, Bonifacio Day, and
Rizal Day. See Rollo, p. 154.
17
Deducted from Virgilio Agabon's thirteenth (13th) month pay were his
SSS loan and expenses for shoes. Rollo, pp. 171-172.
18
Rollo, p. 173.
19
Id. at 22.
20
Id. at 23 citing Kingsize Manufacturing Corporation v. NLRC, 238 SCRA
349.
21
Rollo, p. 20.
22
Palencia v. NLRC, G.R. No. L-75763, 21 August 1987; Pure Blue
ndustries v. NLRC, G.R. No. 115879, 16 April 1997.
23
Rollo, pp. 129, 170.
24
Both the NLRC and the Court of Appeals noted that the 10 June 1999
conference between the Agabons and Riviera Homes was at the behest of
the Agabons, thus countering the claim of strained relations. Rollo, pp.
130, 170-171.
25
Rollo, p. 91.
26
Supra note 6.
27
Id.
28
Supra note 1.
29
Supra note 1 at 446.
30
See Section 1, Republic Act No. 1052, which states:
Sec. 1. n cases of employment, without a definite period, in a commercial,
industrial, or agricultural establishment or enterprise, the employer or the
employee may terminate at any time the employment with just cause; or
without just cause in the case of an employee by serving written notice on
the employer at least one month in advance, or in the case of an employer,
by serving such notice to the employee at least one month in advance or
one-half month for every year of service of the employee, whichever is
longer, a fraction of at least six months being considered as one whole
year.
The employee, upon whom no such notice was served in case of
termination of employment without just cause shall be entitled to
compensation from the date of termination of his employment in an
amount equivalent to his salaries or wages corresponding to the required
period of notice.
31
124 Phil. 698 (1966).
32
Id. at 703.
33
139 Phil. 747 (1969).
34
Id. at 754.
35
Serrano v. NLRC, supra note 1 at 447.
36
G.R. No. L-38482, 18 June 1976, 71 SCRA 470.
37
Serrano v. NLRC, supra note 1 at 480.
38
Serrano, supra note 1 at 445-446.
39
G.R. No. 81561, 18 January 1991, 193 SCRA 57.
40
Id. at 67.
41
See G. Gunther and K. Sullivan, Constitutional Law (14th ed.) at 867.
42
Separate Opinion of Justice Panganiban, p. 12.
43
See e.g., Morehead v. State of New York, 298 U.S. 587 (1936), which
affirmed the invalidity of minimum wage laws as previously declared in
Adkins v. Children's Hospital, 261 U.S. 525 (1923).
44
Famously justified by the Supreme Court as an assertion of the "liberty
of contract", or "the right to contract about one's affairs", as contained in
the Fourteenth Amendment. Adkins v. Children's Hospital, 261 U.S. 525,
545. (1923). But as Justice Holmes famously critiqued: "Contract is not
specially mentioned in the text (of the Fourteenth Amendment) that we
have to construe. t is merely an example of doing what you want to do,
embodied in the word liberty. But pretty much all law consists in forbidding
men to do some things that they want to do, and contract is no more
exempt from law than other acts." Adkins v. Children's Hospital. Id. at 568.
45
See People v. Tudtud, G.R. No. 144037, 26 September 2003.
46
G.R. No. 106027, 234 SCRA 441, 25 July 1994.
47
Id. at 451-452.
48
335 Phil. 82 (1997). The Court therein was divided, with twelve voting
for, and three against the decision. nterestingly, both Justices Puno and
Panganiban adopted the dissenting position that the provisions of Article
X of the Constitution alone were insufficient to accord the Filipino bidder a
preferential right to obtain the winning bid for Manila Hotel. Their
concession as to the enforceability of paragraph 2, Section 10, Article X
of the Constitution without enabling legislation was in a situation wherein if
the bids of the Filipino and the foreign entity were tied. Id. at 154 (J. Puno,
dissenting) and 154 (J. Panganiban, dissenting).
49
Id. at 102 citing 16 Am Jur. 2d 281.
50
Id. at 103-104 citing 16 Am Jur 2d 283-284.
51
Record of the Constitutional Commission: Proceedings and Debates
613.
52
Id. at 617.
53
Id. at 626.
54
Id. at 644.
55
The test suggested by Justice Puno in the Manila Hotel case, supra note
47, is as definitive as any proposed method of analysis could ever be. "A
searching inquiry should be made to find out if the provision is intended as
a present enactment, complete in itself as a definitive law, or if it needs
future legislation for completion and enforcement. The inquiry demands a
micro-analysis and the context of the provision in question." J. Puno,
dissenting, id. at 141-142. See also Rev. Pamatong v. COMELEC, G.R.
No. 161872, 13 April 2004.
56
J. Bernas, The 1987 Constitution of the Republic of the Philippines: A
Commentary (1996), at 1064.
57
Article 3, Chapter of the Labor Code declares:
Declaration of basic policy.The State shall afford full protection to labor,
promote full employment, ensure equal work opportunities regardless of
sex, race or creed, and regulate the relations between workers and
employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure and just and humane
conditions of work.
58
See Phil. Aeolus Automotive United Corp. v. NLRC, 387 Phil 250 (2000);
Gonzales v. National Labor Relations Commission, 372 Phil 39 (1999);
Jardine Davies v. National Labor Relations Commission, 370 Phil 310
(1999); Pearl S. Buck Foundation v. National Labor Relations Commission,
G.R. No. 80728, February 21, 1990, 182 SCRA 446; Bagong Bayan
Corporation, Realty nvestors & Developers v. National Labor Relations
Commission, G.R. No. 61272, September 29, 1989, 178 SCRA 107;
Labajo v. Alejandro, et al., G.R. No/ L-80383, September 26, 1988, 165
SCRA 747; D.M. Consunji, nc. v. Pucan, et al., G.R. No. L-71413, March
21, 1988; 159 SCRA 107; Santos v. National Labor Relations Commission,
G.R. No. L-76271,September 21, 1987, 154 SCRA 166; People's Bank &
Trust Co. v. People's Bank & Trust Co. Employees Union, 161 Phil 15
(1976); Philippine Movie Pictures Association v. Premiere Productions, 92
Phil. 843 (1953); Phil. Refining Co. v. Garcia, supra.
59
Serrano v. NLRC, supra note 1.
60
Section 2, Rule XX, Book V, Omnibus Rules mplementing the Labor
Code.
61
Supra note 2.
62
Serrano v. NLRC, supra note 1 at 445.
63
G.R. No. 80587, 8 February 1989, 170 SCRA 69.
64
Serrano, supra note 1 at 453.
65
Serrano, supra note 1 at 485; J. Vitug, separate concurring and
dissenting.
66
Balaquezon EWTU v. Zamora, G.R. No. L-46766-7, 1 April 1980, 97
SCRA 5, 8.
67
"xxx without prejudice, however, to whatever rights, benefits, and
privileges he may have under the applicable individual or collective
bargaining agreement with the employer or voluntary employer policy or
practice". Section 7, Rule 1, Book V, Omnibus Rules mplementing the
Labor Code.
68
See Philippine Rabbit Bus Lines, nc. v. NLRC, G.R. No. 98137, 15
September 1997, 279 SCRA 106, 115, citing cases.
69
Aguila v. CF, G.R. No. L-48335, 15 April 1988, 160 SCRA 352, 360.
"For all its conceded merits, equity is available only in the absence of law
and not as its replacement. Equity is described as justice outside legality,
which simply means that it cannot supplant although it may, as often
happens, supplement the law." Id.
70
170 SCRA 69 (1989).
71
G.R. No. 112100, May 27, 1994, 232 SCRA 613.
72
Black's Law Dictionary, 1990 ed., p. 1133; citing Hidden Hollow Ranch v.
Collins, 146 Mont. 321, 406 P.2d 365, 368.
73
170 SCRA 69 (1989).
74
Serrano v. NLRC, supra note 1 at 442.
75
See e.g., Reta v. NLRC, G.R. No. 112100, 27 May 1994, 232 SCRA 613,
wherein the Court held that "private respondents should pay petitioner
P10,000.00 as penalty for failure to comply with the due process
requirement." Id. at 618.
76
A. Tolentino, Civil Code of the Philippines (1990 ed.), at 11; citing 9
Fabres 10.
77
Article 2221, Civil Code.
78
Ferrer v. NLRC, G.R. No. 100898, 5 July 1993; citing Callanta vs.
Carnation Philippines, nc., 145 SCRA 268.
79
347 Phil. 521, 531 (1997).
80
Id. at 531.
81
Id.
82
G.R. No. 121927, 22 April 1998.
83
G.R. No. 121698, 26 March 1998. The ponente in all three cases was
Justice Flerida Ruth Romero.
84
See Article 2216, Civil Code. See also Saludo v. Court of Appeals, G.R.
No. 95536, 23 March 1992.
85
n relation to Article 2224 of the Civil Code, nominal damages are less
than temperate/moderate damages or compensatory damages.
86
See De la Paz, Jr. v. AC, 154 SCRA 65; Chavez v. Gonzales, 32 SCRA
547.
87
See Art. 2199, Civil Code.
88
Art. 2225, Civil Code.
89
Page 16, Decision, citing jurisprudence
G.R. No. 80609 August 23, 1988
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN
ABUCAY, respondents.
Nicanor G. Nuevas for petitioner.

CRUZ, J.:
The only issue presented in the case at bar is the legality of the award of
financial assistance to an employee who had been dismissed for cause as
found by the public respondent.
Marilyn Abucay, a traffic operator of the Philippine Long Distance
Telephone Company, was accused by two complainants of having
demanded and received from them the total amount of P3,800.00 in
consideration of her promise to facilitate approval of their applications for
telephone installation.
1
nvestigated and heard, she was found guilty as
charged and accordingly separated from the service.
2
She went to the
Ministry of Labor and Employment claiming she had been illegally
removed. After consideration of the evidence and arguments of the parties,
the company was sustained and the complaint was dismissed for lack of
merit. Nevertheless, the dispositive portion of labor arbiter's decision
declared:
WHEREFORE, the instant complaint is dismissed for lack of merit.
Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are
not totally blameless in the light of the fact that the deal happened outhide
the premises of respondent company and that their act of giving P3,800.00
without any receipt is tantamount to corruption of public officers,
complainant must be given one month pay for every year of service as
financial assistance.
3
Both the petitioner and the private respondent appealed to the National
Labor Relations Board, which upheld the said decision in toto and
dismissed the appeals.
4
The private respondent took no further action,
thereby impliedly accepting the validity of her dismissal. The petitioner,
however, is now before us to question the affirmance of the above- quoted
award as having been made with grave abuse of discretion.
n its challenged resolution of September 22, 1987, the NLRC said:
... Anent the award of separation pay as financial assistance in
complainant's favor, We find the same to be equitable, taking into
consideration her long years of service to the company whereby she had
undoubtedly contributed to the success of respondent. While we do not in
any way approve of complainants (private respondent) mal feasance, for
which she is to suffer the penalty of dismissal, it is for reasons of equity
and compassion that we resolve to uphold the award of financial
assistance in her favor.
5
The position of the petitioner is simply stated: t is conceded that an
employee illegally dismissed is entitled to reinstatement and backwages
as required by the labor laws. However, an employee dismissed for cause
is entitled to neither reinstatement nor backwages and is not allowed any
relief at all because his dismissal is in accordance with law. n the case of
the private respondent, she has been awarded financial assistance
equivalent to ten months pay corresponding to her 10 year service in the
company despite her removal for cause. She is, therefore, in effect
rewarded rather than punished for her dishonesty, and without any legal
authorization or justification. The award is made on the ground of equity
and compassion, which cannot be a substitute for law. Moreover, such
award puts a premium on dishonesty and encourages instead of deterring
corruption.
For its part, the public respondent claims that the employee is sufficiently
punished with her dismissal. The grant of financial assistance is not
intended as a reward for her offense but merely to help her for the loss of
her employment after working faithfully with the company for ten years. n
support of this position, the Solicitor General cites the cases of Firestone
Tire and Rubber Company of the Philippines v. Lariosa
6
and Soco v.
Mercantile Corporation of Davao,
7
where the employees were dismissed
for cause but were nevertheless allowed separation pay on grounds of
social and compassionate justice. As the Court put it in the Firestone case:
n view of the foregoing, We rule that Firestone had valid grounds to
dispense with the services of Lariosa and that the NLRC acted with grave
abuse of discretion in ordering his reinstatement. However, considering
that Lariosa had worked with the company for eleven years with no known
previous bad record, the ends of social and compassionate justice would
be served if he is paid full separation pay but not reinstatement without
backwages by the NLRC.
n the said case, the employee was validly dismissed for theft but the
NLRC nevertheless awarded him full separation pay for his 11 years of
service with the company. n Soco, the employee was also legally
separated for unauthorized use of a company vehicle and refusal to attend
the grievance proceedings but he was just the same granted one-half
month separation pay for every year of his 18-year service.
Similar action was taken in Filipro, nc. v. NLRC,
8
where the employee
was validly dismissed for preferring certain dealers in violation of company
policy but was allowed separation pay for his 2 years of service. n Metro
Drug Corporation v. NLRC,
9
the employee was validly removed for loss of
confidence because of her failure to account for certain funds but she was
awarded separation pay equivalent to one-half month's salary for every
year of her service of 15 years. n Engineering Equipment, nc. v. NLRC,
10
the dismissal of the employee was justified because he had instigated
labor unrest among the workers and had serious differences with them,
among other grounds, but he was still granted three months separation
pay corresponding to his 3-year service. n New Frontier Mines, nc. v.
NLRC,
11
the employee's 3- year service was held validly terminated for
lack of confidence and abandonment of work but he was nonetheless
granted three months separation pay. And in San Miguel Corporation v.
Deputy Minister of Labor and Employment, et al .,
12
full separation pay for
6, 10, and 16 years service, respectively, was also allowed three
employees who had been dismissed after they were found guilty of
misappropriating company funds.
The rule embodied in the Labor Code is that a person dismissed for cause
as defined therein is not entitled to separation pay.
13
The cases above
cited constitute the exception, based upon considerations of equity. Equity
has been defined as justice outside law,
14
being ethical rather than jural
and belonging to the sphere of morals than of law.
15
t is grounded on the
precepts of conscience and not on any sanction of positive law.
16
Hence, it
cannot prevail against the expressed provision of the labor laws allowing
dismissal of employees for cause and without any provision for separation
pay.
Strictly speaking, however, it is not correct to say that there is no express
justification for the grant of separation pay to lawfully dismissed employees
other than the abstract consideration of equity. The reason is that our
Constitution is replete with positive commands for the promotion of social
justice, and particularly the protection of the rights of the workers. The
enhancement of their welfare is one of the primary concerns of the present
charter. n fact, instead of confining itself to the general commitment to the
cause of labor in Article on the Declaration of Principles of State Policies,
the new Constitution contains a separate article devoted to the promotion
of social justice and human rights with a separate sub- topic for labor.
Article X expressly recognizes the vital role of labor, hand in hand with
management, in the advancement of the national economy and the welfare
of the people in general. The categorical mandates in the Constitution for
the improvement of the lot of the workers are more than sufficient basis to
justify the award of separation pay in proper cases even if the dismissal be
for cause.
The Court notes, however, that where the exception has been applied, the
decisions have not been consistent as to the justification for the grant of
separation pay and the amount or rate of such award. Thus, the
employees dismissed for theft in the Firestone case and for animosities
with fellow workers in the Engineering Equipment case were both awarded
separation pay notnvithstanding that the first cause was certainly more
serious than the second. No less curiously, the employee in the Soco case
was allowed only one-half month pay for every year of his 18 years of
service, but in Filipro the award was two months separation pay for 2 years
service. n Firestone, the emplovee was allowed full separation pay
corresponding to his 11 years of service, but in Metro, the employee was
granted only one-half month separation pay for every year of her 15year
service. t would seem then that length of service is not necessarily a
criterion for the grant of separation pay and neither apparently is the
reason for the dismissal.
The Court feels that distinctions are in order. We note that heretofore the
separation pay, when it was considered warranted, was required
regardless of the nature or degree of the ground proved, be it mere
inefficiency or something graver like immorality or dishonesty. The
benediction of compassion was made to cover a multitude of sins, as it
were, and to justify the helping hand to the validly dismissed employee
whatever the reason for his dismissal. This policy should be re-examined.
t is time we rationalized the exception, to make it fair to both labor and
management, especially to labor.
There should be no question that where it comes to such valid but not
iniquitous causes as failure to comply with work standards, the grant of
separation pay to the dismissed employee may be both just and
compassionate, particularly if he has worked for some time with the
company. For example, a subordinate who has irreconcilable policy or
personal differences with his employer may be validly dismissed for
demonstrated loss of confidence, which is an allowable ground. A working
mother who has to be frequently absent because she has also to take care
of her child may also be removed because of her poor attendance, this
being another authorized ground. t is not the employee's fault if he does
not have the necessary aptitude for his work but on the other hand the
company cannot be required to maintain him just the same at the expense
of the efficiency of its operations. He too may be validly replaced. Under
these and similar circumstances, however, the award to the employee of
separation pay would be sustainable under the social justice policy even if
the separation is for cause.
But where the cause of the separation is more serious than mere
inefficiency, the generosity of the law must be more discerning. There is no
doubt it is compassionate to give separation pay to a salesman if he is
dismissed for his inability to fill his quota but surely he does not deserve
such generosity if his offense is misappropriation of the receipts of his
sales. This is no longer mere incompetence but clear dishonesty. A
security guard found sleeping on the job is doubtless subject to dismissal
but may be allowed separation pay since his conduct, while inept, is not
depraved. But if he was in fact not really sleeping but sleeping with a
prostitute during his tour of duty and in the company premises, the
situation is changed completely. This is not only inefficiency but immorality
and the grant of separation pay would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of
social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on
his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude, like
theft or illicit sexual relations with a fellow worker, the employer may not be
required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social
justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of
rewarding rather than punishing the erring employee for his offense. And
we do not agree that the punishment is his dismissal only and that the
separation pay has nothing to do with the wrong he has committed. Of
course it has. ndeed, if the employee who steals from the company is
granted separation pay even as he is validly dismissed, it is not unlikely
that he will commit a similar offense in his next employment because he
thinks he can expect a like leniency if he is again found out. This kind of
misplaced compassion is not going to do labor in general any good as it
will encourage the infiltration of its ranks by those who do not deserve the
protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing
simply because it is committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone the offense.
Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. Social
justice cannot be permitted to be refuge of scoundrels any more than can
equity be an impediment to the punishment of the guilty. Those who invoke
social justice may do so only if their hands are clean and their motives
blameless and not simply because they happen to be poor. This great
policy of our Constitution is not meant for the protection of those who have
proved they are not worthy of it, like the workers who have tainted the
cause of labor with the blemishes of their own character.
Applying the above considerations, we hold that the grant of separation
pay in the case at bar is unjustified. The private respondent has been
dismissed for dishonesty, as found by the labor arbiter and affirmed by the
NLRC and as she herself has impliedly admitted. The fact that she has
worked with the PLDT for more than a decade, if it is to be considered at
all, should be taken against her as it reflects a regrettable lack of loyalty
that she should have strengthened instead of betraying during all of her 10
years of service with the company. f regarded as a justification for
moderating the penalty of dismissal, it will actually become a prize for
disloyalty, perverting the meaning of social justice and undermining the
efforts of labor to cleanse its ranks of all undesirables.
The Court also rules that the separation pay, if found due under the
circumstances of each case, should be computed at the rate of one month
salary for every year of service, assuming the length of such service is
deemed material. This is without prejudice to the application of special
agreements between the employer and the employee stipulating a higher
rate of computation and providing for more benefits to the discharged
employee.
17
WHEREFORE, the petition is GRANTED. The challenged resolution of
September 22,1987, is AFFRMED in toto except for the grant of
separation pay in the form of financial assistance, which is hereby
DSALLOWED. The temporary restraining order dated March 23, 1988, is
LFTED. t is so ordered.
Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco,
Bidin, Sarmiento, Cortes and Medialdea, JJ., concur.


Separate Opinions

FERNAN, C.J., dissenting:
The majority opinion itself declares that the reason for granting separation
pay to lawfully dismissed employees is that "our Constitution is replete with
positive commands for the promotion of social justice, and particularly the
protection of the rights of the workers."
1
t is my firm belief that providing a rigid mathematical formula for
determining the amounts of such separation pay will not be in keeping with
these constitutional directives. By computing the allowable financial
assistance on the formula suggested, we shall be closing our eyes to the
spirit underlying these constitutional mandates that "those who have less
in life should have more in law." t cannot be denied that a low salaried
employee who is separated from work would suffer more hardship than a
well-compensated one. Yet, if we follow the formula suggested, we would
in effect be favoring the latter instead of the former, as it would be the low-
salaried employee who would encounter difficulty finding another job.
am in accord with the opinion of Justice Sarmiento that we should not
rationalize compassion and that of Justice Padilla that the awards of
financial assistance should be left to the discretion of the National Labor
Relations Commission as may be warranted by the "environmental facts"
of the case.
PADILIA, J., separate opinion
concur in the decision penned by Mr. Justice Cruz when it disallows
separation pay, as financial assistance, to the private respondent, since
the ground for termination of employment is dishonesty in the performance
of her duties.
do not, however, subscribe to the view that "the separation pay, if found
due under the circumstances of each case, should be computed at the rate
of one month salary for every year of service, assuming the length of such
service is deemed material." (p.11, Decision). t is my considered view that,
except for terminations based on dishonesty and serious misconduct
involving moral turpitude-where no separation pay should be allowed--in
other cases, the grant of separation pay, i.e. the amount thereof, as
financial assistance to the terminated employee, should be left to the
judgment of the administrative agency concemed which is the NLRC. t is
in such cases- where the termination of employment is for a valid cause
without, however, involving dishonesty or serious misconduct involving
moral turpitude-that the Constitutional policy of affording protection to labor
should be allowed full play; and this is achieved by leaving to the NLRC
the primary jurisdiction and judgment to determine the amount of
separation pay that should be awarded to the terminated employee in
accordance with the "environmental facts" of each case.
t is further my view that the Court should not, as a rule, disturb or alter the
amount of separation pay awarded by the NLRC in such cases of valid
termination of employment but with the financial assistance, in the
absence of a demonstrated grave abuse of discretion on the part of the
NLRC.
GRIO AQUINO, J., dissent:
We should not rationalize compassion. vote to affirm the grant of financial
assistance.


Separate Opinions
FERNAN, C.J., dissenting:
The majority opinion itself declares that the reason for granting separation
pay to lawfully dismissed employees is that "our Constitution is replete with
positive commands for the promotion of social justice, and particularly the
protection of the rights of the workers."
1
t is my firm belief that providing a rigid mathematical formula for
determining the amounts of such separation pay will not be in keeping with
these constitutional directives. By computing the allowable financial
assistance on the formula suggested, we shall be closing our eyes to the
spirit underlying these constitutional mandates that "those who have less
in life should have more in law." t cannot be denied that a low salaried
employee who is separated from work would suffer more hardship than a
well-compensated one. Yet, if we follow the formula suggested, we would
in effect be favoring the latter instead of the former, as it would be the low-
salaried employee who would encounter difficulty finding another job.
am in accord with the opinion of Justice Sarmiento that we should not
rationalize compassion and that of Justice Padilla that the awards of
financial assistance should be left to the discretion of the National Labor
Relations Commission as may be warranted by the "environmental facts"
of the case.
PADILIA, J., separate opinion
concur in the decision penned by Mr. Justice Cruz when it disallows
separation pay, as financial assistance, to the private respondent, since
the ground for termination of employment is dishonesty in the performance
of her duties.
do not, however, subscribe to the view that "the separation pay, if found
due under the circumstances of each case, should be computed at the rate
of one month salary for every year of service, assuming the length of such
service is deemed material." (p.11, Decision). t is my considered view that,
except for terminations based on dishonesty and serious misconduct
involving moral turpitude-where no separation pay should be allowed--in
other cases, the grant of separation pay, i.e. the amount thereof, as
financial assistance to the terminated employee, should be left to the
judgment of the administrative agency concemed which is the NLRC. t is
in such cases- where the termination of employment is for a valid cause
without, however, involving dishonesty or serious misconduct involving
moral turpitude-that the Constitutional policy of affording protection to labor
should be allowed full play; and this is achieved by leaving to the NLRC
the primary jurisdiction and judgment to determine the amount of
separation pay that should be awarded to the terminated employee in
accordance with the "environmental facts" of each case.
t is further my view that the Court should not, as a rule, disturb or alter the
amount of separation pay awarded by the NLRC in such cases of valid
termination of employment but with the financial assistance, in the
absence of a demonstrated grave abuse of discretion on the part of the
NLRC.
GRIO AQUINO, J., dissent:
We should not rationalize compassion. vote to affirm the grant of financial
assistance.
Footnotes
1 Rollo, p. 15.
2 Ibid., pp. 15-16.
3 Id., p. 17.
4 Id., p. 22.
5 Id., p. 21-22.
6 148 SCRA 187.
7 148 SCRA 526.
8 145 SCRA 123.
9 143 SCRA 132.
10 133 SCRA 752.
11 129 SCRA 502.
12 145 SCRA 196.
13 Omnibus Rules mplementing the Labor Code, Book V, Rule 1, Section
7.
14 Black's Law Dictionary, Revised 4th Edition, 1968, p. 634.
15 Ibid.
16 Id.
17 See Footnote No. 13.
1 p. 6, Decision.
BENJAMIN L. SAROCAM, PETITIONER, VS. INTERORIENT
MARITIME ENT., INC., AND DEMACO UNITED LTD.,
RESPONDENTS.
D E C I S I O N
CALLEJO, SR., J.:
Before the Court is a Petition for Review on certiorari under Rule
45 of the Rules of Court of the Decision
[1]
of the Court of Appeals
(CA) in CA-G.R. SP No. 84883, which affirmed the February 19,
2004
[2]
and April 27, 2004
[3]
Resolutions of the National Labor
Relations Commission (NLRC) in NCR Case No. 01-11-2492-00.
The Antecedents
On June 27, 2000 petitioner Benjamin L. Sarocam was hired by
Interorient Maritime Ent., Inc. and Demaco United Ltd., for a
twelve-month contract as "bosun" on board M/V Despina. His
basic monthly salary was US$450.00 on a 48-hour work week,
with a fixed overtime pay of US$180.00 per month for 105
hours, supplementary wage of US$70.00, and vacation leave
with pay of 2.5 days.
[4]
While the vessel was navigating to China, petitioner suffered
lumbar sprain when he accidentally fell from a ladder.
[5]
On
November 15, 2000, he was examined and found to have
neuromyositis with the waist and diabetes. The examining
physician prescribed medicine and recommended the signing off
and hospitalization of petitioner.
[6]
His employers agreed to
repatriate him on November 30, 2000.
On December 5, 2000, petitioner was referred to the company-
designated physician, Dr. Teodoro F. Pidlaoan, Medical Director of
the Our Lady of Fatima Medical Clinic. The x-ray of his
lumbosacral spine revealed normal results and his Fasting Blood
Sugar test revealed 9.1 (NV 4.1-6.1 umol/l). Petitioner was
given Alaxan tablet for his back pain and Euglocon for his
elevated blood sugar. He was also advised to return for follow-up
evaluation. On December 13, 2000, he returned to the clinic with
no more complaints of back pains. His sugar examination
likewise revealed normal results. Petitioner was then declared "fit
for duty" effective on that day.
[7]
On March 20, 2001, or barely three months from being
pronounced fit to work, petitioner executed a release and
quitclaim
[8]
in favor of his employers where he acknowledged the
receipt of US$405.00 as his sickwages and freed his employers
from further liability.
However, on November 27, 2001, petitioner filed a complaint
with the labor arbitration branch of the NLRC for disability
benefit, illness allowance/reimbursement of medical expenses,
damages and attorney's fees.
[9]
To support his claim, he
presented the following: (1) a medical certificate
[10]
dated July
25, 2001 issued by Dr. Rimando C. Saguin recommending a
Grade VIII disability under the POEA schedule of disability
grading; (2) a medical certificate
[11]
dated July 27, 2001 issued
by Dr. Antonio A. Pobre, recommending the same Grade VIII
disability; and (3) a medical certificate
[12]
dated August 2, 2001
issued by Dr. Efren R. Vicaldo recommending a Grade VI
disability.
On July 11, 2003, Labor Arbiter Antonio R. Macam rendered a
Decision
[13]
dismissing the complaint, holding that petitioner was
not entitled to disability benefits because he was declared "fit for
duty." The Labor Arbiter noted that petitioner had previously
executed a release and quitclaim in favor of his employers and
already received his sickness allowance. Thus, he could not claim
for reimbursement for medical expenses due to lack of pertinent
substantiation. Petitioner's claim for moral damages and
attorney's fees were, likewise, not awarded on the Labor
Arbiter's ruling that there was no evidence of bad faith and
malice on the part of the employers.
The fallo of the Labor Arbiter's decision reads:
WHEREFORE, all the foregoing premises considered, judgment is
hereby rendered dismissing the complaint for lack of merit.
SO ORDERED.
[14]
Petitioner appealed the Decision
[15]
to the NLRC on July 31, 2003
which issued its Resolution
[16]
dated February 19, 2004, affirming
the decision of the Labor Arbiter, with the modification that
petitioner was entitled to US$1,350.00 or its peso equivalent,
representing his salary for three (3) months. The NLRC ruled
that petitioner should have been reinstated by respondents
considering that when the former was declared "fit for duty," his
employment contract had not yet expired. Thus, respondents
were liable for his salary corresponding to the unexpired portion
of the employment contract or three months' salary for every
year of the unexpired term whichever is less, pursuant to Section
10 of Republic Act No. 8042. The fallo of the Resolution reads:
WHEREFORE, premises considered, the Appeal is DENIED.
However, for reasons stated above, the Decision dated 11 July
2003 is hereby MODIFIED, ordering respondents-appellees to
indemnify complainant-appellant in the amount of US$1,350.00
or its peso equivalent at time of payment.
SO ORDERED.
[17]
Petitioner filed a Motion for Reconsideration which the NLRC
denied on April 27, 2004.
[18]
He forthwith filed a Petition for
Certiorari
[19]
with the CA, assailing the ruling of the labor tribunal.
On January 25, 2005, the CA rendered judgment dismissing the
petition. The appellate court declared that the issues raised by
petitioner relating to the credibility and probative weight of the
evidence presented were factual in nature, hence, proscribed
under Rule 65 of the Rules of Court. The CA noted that petitioner
did not even contest the due execution, voluntariness and
veracity of his own handwritten quitclaim. Thus, he was
estopped from assailing the Deed of Release and Quitclaim he
executed after receiving US$405.00 from respondents.
Considering that petitioner was examined by the company-
designated physician and did not protest the findings thereon
and later received sickwages, the appellate court concluded that
the NLRC was correct in its ruling. The dispositive portion of the
CA decision states:
IN VIEW OF ALL THE FOREGOING, the instant petition is ordered
DISMISSED. No pronouncements as to costs.
SO ORDERED.
[20]
Petitioner's motion for reconsideration was denied by the CA in
its Resolution
[21]
dated April 19, 2005.
Petitioner thus filed the instant petition, raising the following
issues:
I.
IN LIGHT OF THE DECISION OF THIS HONORABLE COURT IN
"GERMAN MARINE AGENCIES, INC. VS. NLRC, ET AL.," 350 SCRA
629, CAN THE RESPONDENTS' COMPANY-DESIGNATED DOCTOR
BE CONSIDERED COMPETENT AND RELIABLE ENOUGH TO
DECLARE PETITIONER AS FIT TO WORK CONTRARY TO THE
DECLARATIONS OF THREE (3) INDEPENDENT PHYSICIANS
SIMILARLY FINDING HIM OTHERWISE?
II.
DOES THE EXECUTION BY PETITIONER OF A RELEASE AND
QUITCLAIM ESTOP HIM FROM CLAIMING DISABILITY BENEFITS
UNDER THE POEA STANDARD EMPLOYMENT CONTRACT?
[22]
The Court's Ruling
As in the CA, the issues raised by the petitioner are factual. He
maintains that the diagnosis of his three (3) personal doctors
declaring him unfit to work is more accurate and reliable than
that of Dr. Pidlaoan, the company-designated physician. These
three physicians, two of whom are orthopedic surgeons, are
likewise in a better position to determine his fitness or unfitness
for work, unlike Dr. Pidlaoan whose expertise cannot be
ascertained from the medical certificate he issued. Petitioner thus
assails the competence of Dr. Pidlaoan to assess his fitness to
work.
Petitioner avers that the quitclaim he executed is invalid, as the
amount he received as consideration therefor was much lower
than what he should have received under the POEA Standard
Employment Contract. He went on to argue that quitclaims are
frowned upon by this Court as they are contrary to public
policy.
It must be stressed that in a petition for review on certiorari
under Rule 45 of the Rules of Court, only questions of law may
be raised.
[23]
The Court is not a trier of facts and is not to
reassess the credibility and probative weight of the evidence of
the parties and the findings and conclusions of the Labor Arbiter
and the NLRC as affirmed by the appellate court. Moreover, the
factual findings of the Labor Arbiter and the NLRC are accorded
respect and finality when supported by substantial evidence,
which means such evidence as that which a reasonable mind
might accept as adequate to support a conclusion. The Court
does not substitute its own judgment for that of the tribunal in
determining where the weight of evidence lies or what evidence
is credible.
[24]
In the instant case, the CA, the NLRC and the Labor Arbiter are
one in their findings that based on the evidence on record,
petitioner is not entitled to disability benefits.
Prescinding from the foregoing, the Court finds and so rules that
under the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers On-Board Ocean-Going Vessel
or the POEA Standard Employment Contract issued pursuant to
DOLE Department Order No. 4, and POEA Memorandum Circular
No. 9, both Series of 2000, petitioner is not entitled to disability
benefits. Section 20-B, paragraph 2 of the POEA Standard
Employment Contract provides:
SECTION 20. COMPENSATION AND BENEFITS
x x x x
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
The liabilities of the employer when the seafarer suffers work-
related injury or illness during the term of his contract are as
follows:
x x x x
If the injury or illness requires medical and/or dental treatment
in a foreign port, the employer shall be liable for the full cost of
such medical, serious dental, surgical and hospital treatment as
well as board and lodging until the seafarer is declared fit to
work or to be repatriated.However, if after repatriation, the
seafarer still requires medical attention arising from said injury
or illness, he shall be so provided at cost to the employer until
such time he is declared fit or the degree of his disability has
been established by the company-designated physician.
In the instant case, Dr. Pidlaoan diagnosed petitioner as "fit for
duty" as gleaned from his December 13, 2000 Medical Report, to
wit:
x x x x
Referred and consulted our medical clinic on December 05, 2000
still complaining of on-and-off low back pain aggravated by
movements. X-ray of the lumbosacral spine revealed normal
findings, Fasting Blood Sugar revealed 9.1 (NV 4.1 - 6.1 umol/l).
Patient was given Alaxan tablet 2-3x a day for his back pain and
Eugoclon 1 tablet daily for his elevated blood sugar and advised
to come back regularly for repeat blood sugar and for follow-up
evaluation on his back pain.
Today, December 13, 2000, he came back with no more
complaints of back pain and repeat sugar examination revealed
already normal results.
DIAGNOSIS: Lumbar Strain
Diabetes Mellitus
RECOMMENDATION: Fit for duty effective today, December 13,
2000.
x x x x
Since he was declared fit for work, petitioner has no more right
to claim disability benefits under the contractual provisions of the
POEA Standard Employment Contract.
Under Section 20-B, paragraph 3 of the said contract, petitioner
is obliged to submit himself to a post-employment medical
examination by a company-designated physician within three
working days upon his return, except when he is physically
incapacitated to do so, in which case, a written notice to the
agency within the same period is deemed as compliance. Failure
to comply with this mandatory reporting requirement shall result
in forfeiture of the right to claim the above benefits. It is
likewise provided that if a doctor appointed by the seafarer
disagrees with the assessment, a third doctor may be agreed
jointly between the employer and the seafarer whose decision
shall be final and binding on both parties.
Petitioner did not question the findings of Dr. Pidlaoan and his
recommendation. He questioned the doctor's competency and
the correctness of his findings only when he filed the complaint
against respondents before the Labor Arbiter, roughly 11 months
after petitioner was examined by the doctor. Petitioner consulted
his personal doctors only in July and August 2001, long after he
had been examined by the company-designated physician.
Petitioner's invocation of this Court's ruling in German Marine
Agencies v. NLRC
[25]
militates against his claim for disability
benefits. As explicitly laid in the said case, it is the company-
designated physician who should determine the degree of
disability of the seaman or his fitness to work, thus:
x x x In order to claim disability benefits under the Standard
Employment Contract, it is the "company-designated" physician
who must proclaim that the seaman suffered a permanent
disability, whether total or partial, due to either injury or illness,
during the term of the latter's employment. x x x It is a cardinal
rule in the interpretation of contracts that if the terms of a
contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall
control. There is no ambiguity in the wording of the Standard
Employment Contract C" the only qualification prescribed for the
physician entrusted with the task of assessing the seaman's
disability is that he be "company-designated."
[26]
Dr. Pidlaoan examined and treated petitioner from the time he
was repatriated up to his recovery and subsequent assessment
as fit for duty on December 13, 2000. As in the German Marine
case, the extensive medical attention extended by Dr. Pidlaoan
enabled the latter to acquire familiarity, if not detailed
knowledge, of petitioner's medical condition. No doubt such
specialized knowledge enabled Dr. Pidlaoan to arrive at a much
more accurate appraisal of petitioner's condition, as compared to
another physician not privy to petitioner's case from the very
beginning.
[27]
Indeed, the assessment of the three other personal
doctors of petitioner could not have been that reliable
considering that they based their conclusions on the prior
findings of Dr. Pidlaoan; moreover, they examined petitioner 7 or
8 months after he was assessed as fit to work and treated him
for only one day.
The only requirement stated in the POEA Standard Employment
Contract, as explained in the German Marine case, is that the
doctor be company-designated, and no other. Though it is
prudent and advisable to have a doctor specialized in his field to
examine the seafarer's condition or degree of illness, the
contractual provisions of the parties only require that the doctor
be "company-designated." When the language of the contract is
explicit, as in the case at bar, leaving no doubt as to the intention
of the drafters thereof, the courts may not read into it any other
intention that would contradict its plain import.
[28]
Furthermore and most importantly, petitioner did not question
the competency of Dr. Pidlaoan and his assessment when the
latter declared him as fit for duty or fit to work.
Additionally, petitioner, instead of questioning the assessment of
the company-designated doctor, executed a release and quitclaim
in favor of respondents, around three months after the
assessment. In executing the said document, petitioner thus
impliedly admitted the correctness of the assessment of the
company-designated physician, and acknowledged that he could
no longer claim for disability benefits.
While petitioner may be correct in stating that quitclaims are
frowned upon for being contrary to public policy, the Court has,
likewise, recognized legitimate waivers that represent a
voluntary and reasonable settlement of a worker's claim which
should be respected as the law between the parties. Where the
person making the waiver has done so voluntarily, with a full
understanding thereof, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as
being a valid and binding undertaking.
[29]
In the instant case, petitioner, by his own hand, wrote the
following in the March 20, 2001 release and quitclaim:
That I have read this paper from beginning to and [sic] and
understand the contents thereof.
That I know this paper that I am signing.
That I know that signing this paper settles and ends every right
or claim I have for all damages including but not limited to loss
of earning capacity [sic] of past and future maintenance. [sic]
support [sic] suffering [sic] mental anguish. [sic] serious anxiety
and similar injury.
That I have received the amount of US$405 or P18,630.
That I know that upon receipt of the above amount I waive all
claims I may have for damage against the vessel's owners and
her agents, insurers, charterers, operators [sic] underwriters, p.i.
clube [sic], shipper and all other persons in interest therein or
thereon, under all and all other countries.
[30]
From the document itself, the element of voluntariness in its
execution is evident. Petitioner also appears to have fully
understood the contents of the document he was signing, as the
important provision thereof had been relayed to him in Filipino.
Thus, the document also states:
Na alam ko na pagkatanggap ko nang halagang ito ay
pinawawalang bisa at iniuurong ko nang lahat [ng] aking interes,
karapatan, at anumang reklamo o damyos laban sa barko, may-
ari nito, mga ahente, seguro at lahat-lahat ng may kinalaman sa
barkong ito maging dito sa Pilipinas o anumang bansa.
[31]
Likewise, the US$405.00 which he received in consideration of
the quitclaim is a credible and reasonable amount. He was truly
entitled thereto, no more and no less, given that he was sick for
only less than a month or from November 15, 2000 to December
13, 2000. The same would not, therefore, invalidate the said
quitclaim. As we held in Periquet v. National Labor Relations
Commission:
[32]
Not all waivers and quitclaims are invalid as against public
policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of
mind. It is only where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law will step
in to annul the questionable transaction. But where it is shown
that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for
the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.
[33]
As a final note, let it be emphasized that the constitutional policy
to provide full protection to labor is not meant to be a sword to
oppress employers. The commitment of this Court to the cause
of labor does not prevent us from sustaining the employer when
it is in the right.
[34]
WHEREFORE, premises considered, the petition is hereby
DENIED for lack of merit. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 84883 are AFFIRMED.
Costs against the petitioner.
SO ORDERED.
Panganiban, C.J., (Chairperson), Ynares-Santiago, Austria-
Martinez, and Chico-Nazario, JJ., concur.
[1]
Penned by Associate Justice Conrado M. Vasquez, Jr., with
Associate Justices Josefina Guevara-Salonga and Fernanda
Lampas-Peralta, concurring; rollo, pp. 151-158.
[2]
Rollo, p. 100.
[3]
Id. at 109.
[4]
Id. at 213.
[5]
Id. at 152.
[6]
Id. at 31.
[7]
Id. at 32.
[8]
Id. at 215-218.
[9]
Id. at 41.
[10]
Id. at 37.
[11]
Id. at 35.
[12]
Id. at 38.
[13]
Id. at 78-83.
[14]
Id. at 83.
[15]
Id. at 84.
[16]
Id. at 100-107.
[17]
Id. at 106-107.
[18]
Id. at 109-110.
[19]
Id. at 111-127.
[20]
Id. at 158.
[21]
Id. at 160.
[22]
Id. at 16-17.
[23]
Telefunken Semiconductors Employees Union v. Court of
Appeals, 401 Phil. 776, 791 (2000).
[24]
Sonza v. ABS-CBN Broadcasting Corporation, G.R. No.
138051, June 10, 2004, 431 SCRA 583, 594.
[25]
403 Phil. 572, 588 (2001).
[26]
Id. at 588-589.
[27]
Id. at 590.
[28]
Id.
[29]
Mendoza, Jr. v. San Miguel Foods, Inc., G.R. No. 158684, May
16, 2005, 458 SCRA 664, 680.
[30]
Rollo, p. 216.
[31]
Id. at 217.
[32]
G.R. No. 91298, June 22, 1990, 186 SCRA 724.
[33]
Id. at 730-731.
[34]
Agabon v. National Labor Relations Commission, G.R. No.
158693, November 17, 2004, 442 SCRA 573, 614.
.R. No. 140692 November 20, 2001
ROGELIO C. DAYAN, petitioner, vs.BANK OF THE PHILIPPINE
ISLANDS, XAVIER LOINAZ, OSCAR CONTRERAS, and GERLANDA
DE CASTRO, respondents.
VITUG, J.:
The petition for review seeks the reversal of the decision and resolution
dated 30 April 1999 and 30 August 1999, respectively, of the Court of
Appeals in CA-G.R. SP No. 51421 reversing the resolution of 30 August
1996 of the National Labor Relations Commission ("NLRC').
Petitioner Rogelio C. Dayan started his employment on 30 June 1956 with
the Commercial Bank and Trust Company. He rose from the ranks from
that of a mere clerk to FX clerk in 1957, FX Bookkeeper in 1959, Chief
Bookkeeper in 1964, Supervisor of the Administrative Department in 1969,
and Supervisor of the Reconciliation Department in 1978, which latter
position he continuously occupied until respondent Bank of the Philippine
slands acquired and absorbed the Commercial Bank and Trust Company.
n 1981, Dayan was promoted Administrative Assistant by respondent
bank in its centralized accounting office. He held several positions
thereafter Assistant Manager of nternal Operations in 1983, Assistant
Manager of Correspondent Bank in 1988, Assistant Manager of Branch
Operations in 1990, Assistant Manager of the Supplies nventory in 1991,
and then Senior Assistant Manager of the Supplies nventory in 1991-
1992. n addition to the series of promotions, Dayan was the recipient of
various commendations.
Sometime in December 1991, the post of Purchasing Officer became
vacant as its former occupant had retired. The vacated position was
offered to Dayan which he initially declined but, due to the insistence of his
superiors, he later accepted on a temporary basis in February 1993.
On 10 June 1993, Assistant Vice President Gerlanda E. De Castro of the
bank, in a memorandum of even date, placed petitioner under suspension.
The full text of the communication read:
"Date : June 10, 1993
For : SAM Rogelio C. Dayan
RE : SUSPENSION
'This is to advice that you are placed under suspension effective
immediately, until further notice, due to matters/issues presented to you
during our meeting this morning with SVP OL Contreras, VP EO Adre, SM
Guillermo and myself."
1
t would appear that respondent bank had earlier conducted interviews and
took statements given by bank suppliers, forwarders and bank employees
regarding certain supposed malpractices committed by petitioner during
his term as a purchasing officer of the bank. The report,
2
dated 07 July
1993, signed and noted by Rodolfo D. Bernejo and Victor M. Guillermo,
Manager and Senior Manager, respectively, contained the alleged
misconduct committed by petitioner, such as in asking for a 5%
commission on purchase orders, "donations totaling P5K" to pay off his
medical bills, and a bottle of cognac from Alta Printing Services, as well as
for overpricing the BP Family Bank's passbook, soliciting a gift
(refrigerator) for his daughter's wedding from Bind Master Enterprises and
JL Transport, and obtaining gifts from suppliers on the occasion of his
birthday in March 1993. The report also made negative findings and
observations about his work performance.
On 14 June 1993, petitioner wrote a memorandum to the bank narrating
what had transpired in his meeting with the bank on 10 June 1993 where
he denied all the accusations against him and contested his preventive
suspension. n another 11-page letter of 20 August 1993 to the Bank, he
refuted, point by point, the charges leveled against him. His denials and
plea for compassion notwithstanding, petitioner was dismissed by
respondent bank via a notice of termination, dated 25 October 1993,
signed by AVP Gerlanda de Castro.
3
n a letter of confession, dated 28
October 1993, petitioner ultimately admitted his infractions and instead
asked for financial assistance.
4
He, at the same time, executed an undated
"Release Waiver and Quitclaim" acknowledging receipt of P400,000.00
financial assistance from the bank and thereby releasing and discharging
it, as well as its officers, stockholders and directors, including the bank
"Retirement Plan," from any action or claim arising from his employment
with the bank and membership in the retirement plan.
5
Subsequently, however, petitioner claimed that the letter and the quitclaim
were signed by him under duress. On 14 February 1994, he filed a case
for llegal Dismissal and llegal Suspension, with a prayer for an award of
retirement benefits, before the Labor Arbiter.
n his decision of 30 June 1995, the Labor Arbiter upheld the validity of the
dismissal of petitioner based on loss of trust and confidence and denied
his claim for retirement benefits and damages; thus:
"All told, in the light of a justifiable cause for dismissal, complainant as
supervisory/managerial employee, having breached the trust and
confidence reposed on him by respondent and substantial compliance to
due process, complainant's dismissal is deemed valid and legal.
"Consequently, his claim for retirement benefits and damages having no
factual or legal leg to stand on, must and is hereby DENED.
"ACCORDNGLY, premises considered, the instant case is hereby
DSMSSED for lack of merit."
6
On appeal, the NLRC reversed the decision of the labor arbiter and
declared Fe dismissal to be illegal on the ground that petitioner was denied
due process ratiocinating that a hearing should have been afforded
petitioner for a chance to confront the witnesses against him. n its ruling of
30 August 1996, Use NLRC concluded:
"N VEW OF THE FOREGONG, respondent is hereby ordered to
reinstate complainant Rogelio Dayan to his former position without loss of
seniority rights and other privileges appurtenant thereto with full
backwages from the time his salary was withheld from him up to [the] time
of his retirement, less the amount already received by him."
7
Respondent bank filed with this Court, docketed G.R. No. 127115, a
petition for certiorari questioning the NLRC decision. The Court referred
the petition to the Court of Appeals. The appellate court rendered its
decision on 30 April 1999 and resolution of 30 August 1999, reversing the
judgment of the NLRC.
n its petition for review before this Court, petitioner argues that the Court
of Appeals has wrongly relied on unsworn statements taken by the bank
from its contractual employees. Petitioner believes that the factual
conclusions of the NLRC which has acquired expertise on the matters
entrusted to it should have instead been respected by the appellate court.
The Court is not convinced that the Court of Appeals has committed an
error in holding to be justifiable the dismissal of petitioner from respondent
bank. The pieces of evidence on the malpractices attributed to petitioner
are simply too numerous to be ignored.
Contrary to petitioners claim, the suppliers who complained about the
mulcting activities did, in fact, execute affidavits, such as the sworn
statements of Alberto Tadeo, owner of Alta Printing Service, and Jesus be,
owner of JL Transport, which formed part of the records of his case.
8
Alfredo Baldonado, an employee under the supervision of petitioner,
himself affirmed under oath the veracity of the suppliers' complaint and
narrated still other incidents of irregularities which had come to his
personal knowledge during the time he worked as a purchasing clerk
under petitioner. The charges against petitioner were supported and
backed up by an audit report conducted by the bank's audit team.
Petitioner bewails his preventive suspension. The policy of preventively
suspending an employee under investigation for charges involving
dishonesty is an acceptable precautionary measure in order to preserve
the integrity of vital papers and documents that may be material and
relevant to the case and to which he, otherwise, would have access by
virtue of his position.
9
t would appear that it was only after an exhaustive investigation that
respondent bank finally decided to terminate the services of petitioner on
25 October 1993 via a "Notice of Termination."
The Court of Appeals was convinced that petitioners dismissal had been
justified under Article 282 of the Labor Code. t held:
"(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative.'
xxx xxx xxx
"The statements of witnesses against respondent amply established that
respondent was guilty of malfeasance against his employer. Thus, Alberto
Tadeo, a supplier of printing materials for the company, attested that
respondent demanded a 5% commission, a 'donation' of P2,000.00 and a
bottle of cognac for his birthday. Witness Jesus be further testified that
respondent demanded a refrigerator for his daughters wedding and that
when be declined, respondent offered to shoulder half of the cost which
he proposed to pay in installments to be. Witness George Chee, another
supplier, testified that respondent also asked for a refrigerator for his
daughters wedding. These statements are apart from the verbal
complaints of other suppliers against respondent for extortion of a
P5,000.00 to P7,000.00 commission.
"The suppliers' accounts have been substantially corroborated by
respondent's own subordinates who directly observed his dealings with
petitioner's suppliers. Among these are petitioner's purchasing clerk,
Alfredo Baldonado, respondent's own secretary Sharon Lopez, and typist
Joel Lim, all of whom testified that respondent asked for gifts from
suppliers. The bank's janitor also testified that respondent deliberately
delayed the facilitation of the documents of suppliers, by among others,
asking for a massage while suppliers waited for the signing of vouchers.
"These sworn statements are replete with details, which to the mind of this
court, are clear indications of the veracity of the witness' statements. They
evince substantive and reasonable causes that would justify dismissal on
the ground of loss of trust and confidence.
"Juxtaposed with respondent's sweeping denials and imputations of evil
motives against these witnesses' on the theory that the suppliers, his
subordinates and even the audit team which conducted the investigation
were all engaged in a grand conspiracy to bring him down, the witnesses'
statements are certainly more believable. Viewed together with
respondent's own letter admitting his liability, it is easy to see that
petitioner had reasonable basis to lose confidence in respondent."
10
Petitioner was not just a rank and file employee. He held the critical posts
of Senior Assistant Manager of the Supplies nventory and Purchasing
Officer of the bank at the time of his dismissal, handling fiduciary accounts
and transactions and dealing with the bank's suppliers. His positions
carried authority for the exercise of independent judgment and discretion
11
characteristic of sensitive posts in corporate hierarchy where a wide
latitude could be supposed in setting up stringent standards for continued
employment.
A bank, its operation being essentially imbued with public interest, owes
great fidelity to the public it deals with. n turn, it cannot be compelled to
continue in its employ a person in whom it has lost trust and confidence
and whose continued employment would patently be inimical to the bank
interest. The law, in protecting the rights of labor, authorized neither
oppression nor self-destruction of an employer company which itself is
possessed of rights that must be entitled to recognition and respect.
12
The Court of Appeals, in addressing the issue of lack of due process
raised by petitioner, ruled:
"nstead, what he vigorously protests is the alleged lack of due process
which attended his dismissal. He asserts that he was not fully given the
chance to air his side.
"We rule in favor of respondent on this point.
"The law requires that the employer must furnish the worker sought to be
dismissed with two written notices before termination of an employee 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 employers decision to dismiss
him. (International Pharmaceuticals, Inc. v. National Labor Relations
Commission, 287 SCRA 213 [1998]) Apart from this, a hearing where the
employee can explain his side is also necessary.
"n the case at bench, it may be recalled that after complaints were
received by the management, respondent was called to a meeting on June
10, 1993, where he denied charges against him. Right after the meeting,
he was given a notice of preventive suspension. During the period of his
suspension, the bank's audit team conducted an investigation and took
statements of witnesses against respondent. Respondent also filed his
written explanation. After the investigation, respondent was given a notice
of dismissal.
"From this sequence of events, it is clear that petitioner failed to comply
with the notice and hearing requirement of the law. The preliminary
meeting between respondent and his superiors is not sufficient compliance
with these requirements, as it was, as observed by the NLRC, merely
exploratory and no witnesses were presented against him. t is doctrinal
that a consultation or conference with the employee is not a substitute for
the actual observance of notice and hearing. (Pepsi Cola Bottling Co. v.
National Labor Relations Commission, 210 SCRA 276 119921; Equitable
Banking Corporation v. National Labor Relations Commission, supra.)
Moreover, where the employee denies charges against him, a hearing is
necessary to thresh out any doubt. (Roche [Philippines] v. National Labor
Relations Commission, 178 SCRA 386 [1989]
"Settled is the rule that the twin requirements of notice and hearing are
indispensable for a dismissal to be validly effected. (Falguera v.
Linsangan, 251 SCRA 365 11995] However, when the dismissal is
effected for a just and valid cause. as in this case. the failure to observe
procedural requirements does not invalidate or nullify the dismissal of an
employee. Hence, if the dismissal of an employee is for a just and valid
cause but he is not accorded due process, the dismissal shall be upheld
but the employer must be sanctioned for noncompliance with the
requirements of due process. (Agao v. National Labor Relations
Commission, supra.)
"The dismissal of an employee must be for a just or authorized cause and
after due process. Petitioner failed to comply with the second requirement.
For such omission, an appropriate sanction should be imposed which
generally varies depending upon the facts of each case and gravity of the
omission. (Mabaylan v. National Labor Relations Commission, 203 SCRA
570 [1991]; Wenphil Corporation v. National Labor Relations Commission,
170 SCRA 69 [1994] n the case at bench, we rule that the amount of
P5,000.00 is ample indemnity under the circumstances."
13
The now prevailing rub has recently been handed down in Ruben Serrano
vs. NLRC.
14
The Court has there clarified that
"Even in cases of dismissal under Art. 282, the purpose for the
requirement of notice and hearing is not to comply with Due Process
Clause of the Constitution. The time for notice and hearing is at the trial
stage. Then that is the time we speak of notice and hearing as the
essence of procedural due process. Thus, compliance by the employer
with the notice requirement before he dismisses an employee does not
foreclose the right of the latter to question the legally of his dismissal. As
Art. 277(b) provides, 'Any decision taken by the employer shall be without
prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National
Labor Relations Commission.'
"ndeed, to contend that the notice requirement in the Labor Code is an
aspect of due process is to overlook the fact that Art. 283 had its origin in
Art. 302 of the Spanish Code of Commerce of 1882 which gave either
party to the employer employee relationship the right to terminate their
relationship by giving notice to the other one month in advance. n lieu of
notice, an employee could be laid off by paying him a mesada equivalent
to his salary for one month. This provision was repealed by Art. 2270 of the
Civil Code, which took effect on August 30, 1950. But on June 12, 1954,
RA No. 1052, otherwise known as the Termination Pay Law, was enacted
reviving the mesada. On June 21, 1957, the law was amended by R.A. No.
1787 providing for the giving of advance notice or the payment of
compensation at the rate of one half month for every year of service.
"The Termination Pay Law was held not to be a substantive law but a
regulatory measure, the purpose of which was to give the employer the
opportunity to find a replacement or substitute, and the employee the
equal opportunity to look for another job or source of employment. Where
the termination of employment was for a just cause, no notice was
required to be given to the employee. t was only on September 4, 1981
that notice was required to be given even where the dismissal or
termination of an employee was for cause. This was made in the rules
issued by the then Minister of Labor and Employment to implement B.P.
Blg. 130 which amended the Labor Code. And it was still much later when
the notice requirement was embodied in the law with the amendment of
Art. 277(b) by R.A, No. 6715 on March 2, 1989. t cannot be that the
former regime denied due process to the employee. Otherwise, there
should now likewise be a rule that, in case an employee leaves his job
without cause and without prior notice to his employer, his act should be
void instead of simply making him liable for damages.
"The third reason why the notice requirement under Art. 283 can not be
considered a requirement of the Due Process Clause is that the employer
cannot really be expected to be entirely an impartial judge of his own
cause. This is also the case in termination of employment for a just cause
under Art 282 (i.e., serious misconduct or willful disobedience by the
employee of the lawful orders of the employer, gross and habitual neglect
of duties, fraud or willful breach of trust of the employer, commission of
crime against the employer or the latter's immediate family or duly
authorized representatives, or other analogous cases)."
15
n fine, the lack of notice and hearing is considered as being a mere failure
to observe a procedure for the termination of employment which makes
the dismissal ineffectual but not necessarily illegal. The procedural infirmity
is then remedied by ordering the payment to the employee his full
backwages from the of his dismissal until the court finally rules that the
dismissal has been for a valid cause. Re examining the Wenphil doctrine,
the Court has concluded:
"Not all notice requirements are requirements of due process. Some are
simply part of a procedure to be followed before a right granted to a party
can be exercised. Others are simply an application of the Justinian
precept, embodied in the Civil Code, to act with justice, give everyone his
due, and observe honesty and good faith toward one's fellowmen. Such is
the notice requirement in Arts. 282-283. The consequence of the failure
either of the employer or the employee to live up to this precept is to make
him liable in damages, not to render his act (dismissal or resignation, as
the case may be) void. The measure of damages is the amount of wages
the employee should have received were it not for the termination of his
employment without prior notice. f warranted, nominal and moral damages
may also be awarded.
xxx xxx xxx
"n sum, we hold that if in proceedings for reinstatement under Art. 283, it
is shown that the termination of employment was due to an authorized
cause, then the employee concerned should not be ordered reinstated
even though there is failure to comply with the 30 day notice requirement.
nstead, he must be granted separation pay in accordance with Art. 283, to
wit:
"n case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one month
for every year of service, whichever is higher. n case of retrenchment to
prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month
pay or at least one half () month pay for every year of service, whichever
is higher. A fraction of at least six months shall be considered one (1)
whole year.
"f the employee's separation is without cause, instead of being given
separation pay, he should be reinstated. n either case, whether he is
reinstated or only granted separation pay, he should be paid full
backwages if he has been laid off without written notice at least 30 days in
advance.
"On the other hand, with respect to dismissals for cause under Art. 282, if it
is shown that the employee was dismissed for any of the just causes
mentioned in said Art. 282, then, in accordance with that article, he should
not be reinstated. However, he must be paid backwages from the time his
employment was terminated until it is determined that the termination of
employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect.
WHEREFORE, the petition is GRANTED and the resolution of the National
Labor Relations Commission is MODFED by ordering private respondent
setann Department Store, nc. to pay petitioner separation pay equivalent
to one (1) month pay for every year of service, his unpaid salary, and his
proportionate 13th month pay, in addition, full backwages from the time his
employment was terminated on October 11, 1991 up to the the decision
herein become final. For this purpose, this case is REMANDED to the
Labor Arbiter for computation of the separation pay, backwages, and other
monetary awards to petitioner."
16
Although his reinstatement would then be out of the question, petitioner
could have been entitled, nevertheless, to backwages from the time of his
termination on 25 October 1993 until his retirement on 24 March 1994 or a
period of five (5) months had it not been for his duly executed letter of 28
October 1993 and "Release, Waiver and Quitclaim," acknowledging
receipt of P400,000.00 from the bank, hereby releasing and discharging it,
as well as its officers, stockholders, directors and the Bank Retirement
Plan, from any action or claim arising from his employment with the bank
and membership in the Retirement Plan. The documents read:
"Dear Sir/Madam:
" received your letter dated 25 October 1993 terminating my employment
for the reason stated herein. admit the fault attributed to me and accept
all the consequences of my infraction, including the forfeiture of whatever
benefits and interests may have under the Bank's Retirement Plan and
policies, without any reservation.
" however appeal for humanitarian considerations and request
Management to grant me financial assistance to help me endure these
difficult times. understand that whatever amount Management might
grant me will be purely out of its generosity and not because of any legal
obligation.
"Thank you."
17
The document of "Release, Waiver and Quitclaim" reads:
"THAT , ROGELO C. DAYAN, of legal age, Filipino citizen and a resident
of 50 Bulusan Street, Quezon City, Metro Manila, acknowledge that my
employment with Bank of the Philippine slands (hereinafter called the
'Bank) validly ceased effective 25 October 1993, and that have received a
financial assistance from the Bank in the amount of Four Hundred
Thousand Pesos (P400,000.00), Philippine currency.
"Furthermore, and in consideration of the foregoing
"1. acknowledge the value of the opportunity afforded to me to be of
service to the Bank.
"2. release, remise and forever discharge the Bank, its stockholders,
officers, directors, agents or employees, and the Bank's Retirement Plan
and its trustee, from any action, claim for sum of money, or other
obligations arising from all incidents of my employment with the Bank and
membership in the aforesaid Retirement Plan or the cessation of such
employment or membership.
"3. acknowledge that have received all amounts that are now or in the
future may be due me from the Bank.
"4. will not at any time, in any manner whatsoever, directly or indirectly
engage in any activity prejudicial to the interest of the Bank, its
stockholders, officers, directors, agents or employees, and will not disclose
any confidential information concerning the business of the Bank.
"5. acknowledge that have no cause of action, compliant, caw or
grievance whatsoever against the Bank, its stockholders, officers,
directors, agents or employees, nor against the Bank's Retirement Plan
and its trustee, in respect of any matter incident to or arising out of my
employment with the Bank or membership in the aforesaid Retirement
Plan, or the cessation of such employment or membership. further
warrant that will institute no action against the Bank, its stockholders,
officers, directors, agents or employees nor against the Bank's Retirement
Plan and its trustee, and will not continue to prosecute any pending action
which may have filed or which may have been filed on my behalf against
them.
"6. manifest that the grant to me by the Bank of the financial assistance
herein before stated shall not be taken by me, my heirs or assigns as a
confession or admission of liability on the part of the Bank, its
stockholders, officers, directors, agents or employees for any matter,
cause, demand or claim for damage which may have against any or all of
them. confirm that the Bank has given to me the aforesaid financial
assistance not as a matter of legal obligation, but as a pure act of
generosity.
"7. agree that the Bank may bring action to seek an award for damages
reassuring from my breach of this release, waiver and quitclaim. Such
award shall include but not be limited to the return of the financial
assistance given to me by the Bank.
"8. finally declare that have read this entire document, the contents of
which have been explained to me and which acknowledge to understand,
and that the entire release, waiver and quitclaim hereby given are made by
me willingly, voluntarily and with full knowledge of my rights under the
law."
18
Petitioner would now claim that the letter and quitclaim, aforequoted, were
obtained through deception and coercion.
The contention hardly persuades.
Far from having been pressured into executing the documents, it would
appear that petitioner even haggled and pled for some consideration from
respondent bank invoking his longevity of service in the company.
Sicangco vs. NLRC
19
explained
"Quitclaims executed by employees are commonly frowned upon as
contrary to public policy and ineffective to bar claims for the full measure of
the workers legal right. Neither does acceptance of benefits estop the
employee from prosecuting his employer for unfair labor practice acts. The
reason is plain. Employer and employee obviously do not stand on the
same footing.
"Nevertheless, the above rule is not without exception, as this Court held
in Periquet v. NLRC:
"Not all waivers and quitclaim are invalid as against public policy. f the
agreement was voluntarily entered into and represents a reasonable
settlement, it is binding on the parties and may not later be disowned
simply because of a change of mind. t is only where there is clear proof
that the waiver was wangled from an unsuspecting or gullible person, or
the terms of settlement are unconscionable on its face, that the law will
step in to annul the questionable transaction. But where it is shown that
the person making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding
undertaking."
20
Petitioner was a managerial employee and held the rank of Senior
Assistant Manager with a vast experience behind him. As so aptly
observed by the Labor Arbiter
"Moreover, we do not believe that a person such as complainant
occupying a sensitive position after rising from the ranks would be willing
to compromise his future by agreeing to execute a document highly
prejudicial to his interest. t was simply not a question of choosing between
the devil and the deep blue sea, but more of a case of one making the
most of worse situation. Complainant knew and was well aware of the
consequences of his act hence, his act of repentance at the last moment
to save his lost 37 years of service.
21
Surely, petitioner cannot now be allowed to renege on the voluntary
settlement of his claim with the bank.
WHEREFORE, the decision of the Court of Appeals reinstating the
decision of the Labor Arbiter and setting aside the NLRC's decision is
AFFRMED.
SO ORDERED.
Melo, Panganiban, Sandoval-Gutierrez and Carpio, JJ., concur.
Footnotes
1
Rollo, p. 193
2
Rollo, pp 225-229, Annex "D" of Respondent Memorandum.
3
Rollo, p. 248.
4
Rollo, p. 249, Annex "G" of Respondent Memorandum.
5
Rollo, pp. 250-251, Annex "H" of Respondents' Memorandum.
6
Rollo, pp. 174-175.
7
Rollo, p. 41.
8
See Rollo, pp. 219-220; 223-224, Annex A and C to respondent's
Memorandum.
9
Annex "E' to Respondent Memorandum Rollo, pp. 242-247.
10
Rollo, pp. 47-49
11
Magos vs. NLRC, 300 SCRA 484; Villuga vs. NLRC, 225 SCRA 537;
Franklin Baker Co. vs. Trajano, 157 SCRA 416.
12
Ruben Serrano vs. NLRC, 323 SCRA 445.
13
Rollo, pp. 50-51.
14
323 SCRA 445. The case was penned by Justice Vicente V. Mendoza,
concurred in by Chief Justice Hilario G. Davide, Jr., Justices Jose A. R.
Melo, Santiago M. Kapunan, Leonardo A Quisumbing, Fidel P. Purisima,
Bernardo P. Pardo, Arturo B. Buena, Minerva P. Gonzaga-Reyes and
Sabino R. de Leon, Jr. Separate opinions were filed by Justices Josue N.
Bellosillo, Reynato S. Puno, Jose C. Vitug, and Artemio V. Panganiban.
Justice Puno was joined by Justice Consuelo Ynares-Santiago.
15
At pp. 468-470.
16
At pp. 471-476.
18
Rollo, pp. 250-251.
19
235 SCRA 96.
20
At pp. 101-102.
21
Rollo, p. 173.
G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO, Petitioner, vs.NATIONAL LABOR RELATIONS
COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI,
TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD
LIZA and RAMON ESCUETA, Respondents.

D E C S O N
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court
seeks to annul and set aside the Decision and Resolution of the Court of
Appeals dated October 29, 2004
1
and October 7, 2005,
2
respectively, in
CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal
filed by herein petitioner Angelina Francisco. The appellate court reversed
and set aside the Decision of the National Labor Relations Commission
(NLRC) dated April 15, 2003,
3
in NLRC NCR CA No. 032766-02 which
affirmed with modification the decision of the Labor Arbiter dated July 31,
2002,
4
in NLRC-NCR Case No. 30-10-0-489-01, finding that private
respondents were liable for constructive dismissal.
n 1995, petitioner was hired by Kasei Corporation during its incorporation
stage. She was designated as Accountant and Corporate Secretary and
was assigned to handle all the accounting needs of the company. She was
also designated as Liaison Officer to the City of Makati to secure business
permits, construction permits and other licenses for the initial operation of
the company.
5
Although she was designated as Corporate Secretary, she was not
entrusted with the corporate documents; neither did she attend any board
meeting nor required to do so. She never prepared any legal document
and never represented the company as its Corporate Secretary. However,
on some occasions, she was prevailed upon to sign documentation for the
company.
6
n 1996, petitioner was designated Acting Manager. The corporation also
hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager,
petitioner was assigned to handle recruitment of all employees and
perform management administration functions; represent the company in
all dealings with government agencies, especially with the Bureau of
nternal Revenue (BR), Social Security System (SSS) and in the city
government of Makati; and to administer all other matters pertaining to the
operation of Kasei Restaurant which is owned and operated by Kasei
Corporation.
7
For five years, petitioner performed the duties of Acting Manager. As of
December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing
allowance and a 10% share in the profit of Kasei Corporation.
8
n January 2001, petitioner was replaced by Liza R. Fuentes as Manager.
Petitioner alleged that she was required to sign a prepared resolution for
her replacement but she was assured that she would still be connected
with Kasei Corporation. Timoteo Acedo, the designated Treasurer,
convened a meeting of all employees of Kasei Corporation and announced
that nothing had changed and that petitioner was still connected with Kasei
Corporation as Technical Assistant to Seiji Kamura and in charge of all BR
matters.
9
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month
beginning January up to September 2001 for a total reduction of
P22,500.00 as of September 2001. Petitioner was not paid her mid-year
bonus allegedly because the company was not earning well. On October
2001, petitioner did not receive her salary from the company. She made
repeated follow-ups with the company cashier but she was advised that
the company was not earning well.
10
On October 15, 2001, petitioner asked for her salary from Acedo and the
rest of the officers but she was informed that she is no longer connected
with the company.
11
Since she was no longer paid her salary, petitioner did not report for work
and filed an action for constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei
Corporation. They alleged that petitioner was hired in 1995 as one of its
technical consultants on accounting matters and act concurrently as
Corporate Secretary. As technical consultant, petitioner performed her
work at her own discretion without control and supervision of Kasei
Corporation. Petitioner had no daily time record and she came to the office
any time she wanted. The company never interfered with her work except
that from time to time, the management would ask her opinion on matters
relating to her profession. Petitioner did not go through the usual
procedure of selection of employees, but her services were engaged
through a Board Resolution designating her as technical consultant. The
money received by petitioner from the corporation was her professional fee
subject to the 10% expanded withholding tax on professionals, and that
she was not one of those reported to the BR or SSS as one of the
company's employees.
12
Petitioner's designation as technical consultant depended solely upon the
will of management. As such, her consultancy may be terminated any time
considering that her services were only temporary in nature and
dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private
respondents submitted a list of employees for the years 1999 and 2000
duly received by the BR showing that petitioner was not among the
employees reported to the BR, as well as a list of payees subject to
expanded withholding tax which included petitioner. SSS records were
also submitted showing that petitioner's latest employer was Seiji
Corporation.
13
The Labor Arbiter found that petitioner was illegally dismissed, thus:
WHEREFORE, premises considered, judgment is hereby rendered as
follows:
1. finding complainant an employee of respondent corporation;
2. declaring complainant's dismissal as illegal;
3. ordering respondents to reinstate complainant to her former position
without loss of seniority rights and jointly and severally pay complainant
her money claims in accordance with the following computation:
a. Backwages 10/2001 07/2002 275,000.00
(27,500 x 10 mos.)
b. Salary Differentials (01/2001 09/2001) 22,500.00
c. Housing Allowance (01/2001 07/2002) 57,000.00
d. Midyear Bonus 2001 27,500.00
e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei
Corp. from 1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10% Attorney's fees 87,076.50
P957,742.50
f reinstatement is no longer feasible, respondents are ordered to pay
complainant separation pay with additional backwages that would accrue
up to actual payment of separation pay.
SO ORDERED.
14
On April 15, 2003, the NLRC affirmed with modification the Decision of the
Labor Arbiter, the dispositive portion of which reads:
PREMSES CONSDERED, the Decision of July 31, 2002 is hereby
MODFED as follows:
1) Respondents are directed to pay complainant separation pay computed
at one month per year of service in addition to full backwages from
October 2001 to July 31, 2002;
2) The awards representing moral and exemplary damages and 10%
share in profit in the respective accounts of P100,000.00 and P361,175.00
are deleted;
3) The award of 10% attorney's fees shall be based on salary differential
award only;
4) The awards representing salary differentials, housing allowance, mid
year bonus and 13th month pay are AFFRMED.
SO ORDERED.
15
On appeal, the Court of Appeals reversed the NLRC decision, thus:
WHEREFORE, the instant petition is hereby GRANTED. The decision of
the National Labor Relations Commissions dated April 15, 2003 is hereby
REVERSED and SET ASDE and a new one is hereby rendered
dismissing the complaint filed by private respondent against Kasei
Corporation, et al. for constructive dismissal.
SO ORDERED.
16
The appellate court denied petitioner's motion for reconsideration, hence,
the present recourse.
The core issues to be resolved in this case are (1) whether there was an
employer-employee relationship between petitioner and private respondent
Kasei Corporation; and if in the affirmative, (2) whether petitioner was
illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and the National
Labor Relations Commission on one hand, and the Court of Appeals on
the other, there is a need to reexamine the records to determine which of
the propositions espoused by the contending parties is supported by
substantial evidence.
17
We held in Sevilla v. Court of Appeals
18
that in this jurisdiction, there has
been no uniform test to determine the existence of an employer-employee
relation. Generally, courts have relied on the so-called right of control test
where the person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be used in
reaching such end. n addition to the standard of right-of-control, the
existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the
existence of an employer-employee relationship.
However, in certain cases the control test is not sufficient to give a
complete picture of the relationship between the parties, owing to the
complexity of such a relationship where several positions have been held
by the worker. There are instances when, aside from the employer's power
to control the employee with respect to the means and methods by which
the work is to be accomplished, economic realities of the employment
relations help provide a comprehensive analysis of the true classification of
the individual, whether as employee, independent contractor, corporate
officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test
involving: (1) the putative employer's power to control the employee with
respect to the means and methods by which the work is to be
accomplished; and (2) the underlying economic realities of the activity or
relationship.
This two-tiered test would provide us with a framework of analysis, which
would take into consideration the totality of circumstances surrounding the
true nature of the relationship between the parties. This is especially
appropriate in this case where there is no written agreement or terms of
reference to base the relationship on; and due to the complexity of the
relationship based on the various positions and responsibilities given to the
worker over the period of the latter's employment.
The control test initially found application in the case of Viaa v. Al-
Lagadan and Piga,
19
and lately in Leonardo v. Court of Appeals,
20
where
we held that there is an employer-employee relationship when the person
for whom the services are performed reserves the right to control not only
the end achieved but also the manner and means used to achieve that
end.
n Sevilla v. Court of Appeals,
21
we observed the need to consider the
existing economic conditions prevailing between the parties, in addition to
the standard of right-of-control like the inclusion of the employee in the
payrolls, to give a clearer picture in determining the existence of an
employer-employee relationship based on an analysis of the totality of
economic circumstances of the worker.
Thus, the determination of the relationship between employer and
employee depends upon the circumstances of the whole economic activity,
22
such as: (1) the extent to which the services performed are an integral
part of the employer's business; (2) the extent of the worker's investment
in equipment and facilities; (3) the nature and degree of control exercised
by the employer; (4) the worker's opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of
the claimed independent enterprise; (6) the permanency and duration of
the relationship between the worker and the employer; and (7) the degree
of dependency of the worker upon the employer for his continued
employment in that line of business.
23
The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that
line of business.
24
n the United States, the touchstone of economic reality
in analyzing possible employment relationships for purposes of the Federal
Labor Standards Act is dependency.
25
By analogy, the benchmark of
economic reality in analyzing possible employment relationships for
purposes of the Labor Code ought to be the economic dependence of the
worker on his employer.
By applying the control test, there is no doubt that petitioner is an
employee of Kasei Corporation because she was under the direct control
and supervision of Seiji Kamura, the corporation's Technical Consultant.
She reported for work regularly and served in various capacities as
Accountant, Liaison Officer, Technical Consultant, Acting Manager and
Corporate Secretary, with substantially the same job functions, that is,
rendering accounting and tax services to the company and performing
functions necessary and desirable for the proper operation of the
corporation such as securing business permits and other licenses over an
indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said
to be an employee of respondent corporation because she had served the
company for six years before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions from
August 1, 1999 to December 18, 2000.
26
When petitioner was designated
General Manager, respondent corporation made a report to the SSS
signed by rene Ballesteros. Petitioner's membership in the SSS as
manifested by a copy of the SSS specimen signature card which was
signed by the President of Kasei Corporation and the inclusion of her
name in the on-line inquiry system of the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent
corporation.
27
t is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latter's line of
business.
n Domasig v. National Labor Relations Commission,
28
we held that in a
business establishment, an identification card is provided not only as a
security measure but mainly to identify the holder thereof as a bona fide
employee of the firm that issues it. Together with the cash vouchers
covering petitioner's salaries for the months stated therein, these matters
constitute substantial evidence adequate to support a conclusion that
petitioner was an employee of private respondent.
We likewise ruled in Flores v. Nuestro
29
that a corporation who registers its
workers with the SSS is proof that the latter were the former's employees.
The coverage of Social Security Law is predicated on the existence of an
employer-employee relationship.
Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has
clearly established that petitioner never acted as Corporate Secretary and
that her designation as such was only for convenience. The actual nature
of petitioner's job was as Kamura's direct assistant with the duty of acting
as Liaison Officer in representing the company to secure construction
permits, license to operate and other requirements imposed by
government agencies. Petitioner was never entrusted with corporate
documents of the company, nor required to attend the meeting of the
corporation. She was never privy to the preparation of any document for
the corporation, although once in a while she was required to sign
prepared documentation for the company.
30
The second affidavit of Kamura dated March 7, 2002 which repudiated the
December 5, 2001 affidavit has been allegedly withdrawn by Kamura
himself from the records of the case.
31
Regardless of this fact, we are
convinced that the allegations in the first affidavit are sufficient to establish
that petitioner is an employee of Kasei Corporation.
Granting arguendo, that the second affidavit validly repudiated the first
one, courts do not generally look with favor on any retraction or recanted
testimony, for it could have been secured by considerations other than to
tell the truth and would make solemn trials a mockery and place the
investigation of the truth at the mercy of unscrupulous witnesses.
32
A
recantation does not necessarily cancel an earlier declaration, but like any
other testimony the same is subject to the test of credibility and should be
received with caution.
33
Based on the foregoing, there can be no other conclusion that petitioner is
an employee of respondent Kasei Corporation. She was selected and
engaged by the company for compensation, and is economically
dependent upon respondent for her continued employment in that line of
business. Her main job function involved accounting and tax services
rendered to respondent corporation on a regular basis over an indefinite
period of engagement. Respondent corporation hired and engaged
petitioner for compensation, with the power to dismiss her for cause. More
importantly, respondent corporation had the power to control petitioner with
the means and methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it reduced her
salary by P2,500 a month from January to September 2001. This amounts
to an illegal termination of employment, where the petitioner is entitled to
full backwages. Since the position of petitioner as accountant is one of
trust and confidence, and under the principle of strained relations,
petitioner is further entitled to separation pay, in lieu of reinstatement.
34
A diminution of pay is prejudicial to the employee and amounts to
constructive dismissal. Constructive dismissal is an involuntary resignation
resulting in cessation of work resorted to when continued employment
becomes impossible, unreasonable or unlikely; when there is a demotion
in rank or a diminution in pay; or when a clear discrimination, insensibility
or disdain by an employer becomes unbearable to an employee.
35
n
Globe Telecom, Inc. v. Florendo-Flores,
36
we ruled that where an
employee ceases to work due to a demotion of rank or a diminution of pay,
an unreasonable situation arises which creates an adverse working
environment rendering it impossible for such employee to continue working
for her employer. Hence, her severance from the company was not of her
own making and therefore amounted to an illegal termination of
employment.
n affording full protection to labor, this Court must ensure equal work
opportunities regardless of sex, race or creed. Even as we, in every case,
attempt to carefully balance the fragile relationship between employees
and employers, we are mindful of the fact that the policy of the law is to
apply the Labor Code to a greater number of employees. This would
enable employees to avail of the benefits accorded to them by law, in line
with the constitutional mandate giving maximum aid and protection to
labor, promoting their welfare and reaffirming it as a primary social
economic force in furtherance of social justice and national development.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of
the Court of Appeals dated October 29, 2004 and October 7, 2005,
respectively, in CA-G.R. SP No. 78515 are ANNULLED and SET ASIDE.
The Decision of the National Labor Relations Commission dated April 15,
2003 in NLRC NCR CA No. 032766-02, is REINSTATED. The case is
REMANDED to the Labor Arbiter for the recomputation of petitioner
Angelina Francisco's full backwages from the time she was illegally
terminated until the date of finality of this decision, and separation pay
representing one-half month pay for every year of service, where a fraction
of at least six months shall be considered as one whole year.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Chief JusticeChairperson
MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.
Associate Justice Associate Justice
MINITA V. CHICO-NAZARIOAssociate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article V of the Constitution, it is hereby certified
that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.
ARTEMIO V. PANGANIBAN
Chief Justice
Footnotes
1
Rollo, pp. 9-22. Penned by Associate Justice Eloy R. Bello, Jr. and
concurred in by Associate Justices Regalado E. Maambong and Lucenito
N. Tagle.
2
d. at 24-25.
3
d. at 193-198. Penned by Presiding Commissioner Lourdes C. Javier
and concurred in by Commissioner Tito F. Genilo.
4
d. at 164-173. Penned by Labor Arbiter Eduardo J. Carpio.
5
d. at 89.
6
Id. at 89-90.
7
Id. at 90.
8
Id.
9
Id. at 91.
10
Id.
11
Id. at 91-92.
12
Id. at 92-93.
13
Id. at 94.
14
Id. at 172-173.
15
Id. at 197-198.
16
Id. at 100.
17
Abante, Jr. v. Lamadrid Bearing & Parts Corporation, G.R. No. 159890,
May 28, 2004, 430 SCRA 368, 379.
18
G.R. Nos. L-41182-3, April 15, 1988, 160 SCRA 171, 179-180, citing
Visayan Stevedore Transportation Company v. Court of ndustrial
Relations, 125 Phil. 817, 820 (1967).
19
99 Phil. 408 (1956).
20
G.R. No. 152459, June 15, 2006.
21
Supra note 18.
22
Rutherford Food Corporation v. McComb, 331 U.S. 722, 727 (1947); 91
L.Ed. 1772, 1777 (1946).
23
See Brock v. Lauritzen, 624 F.Supp. 966 (E.D. Wisc. 1985); Real v.
Driscoll Strawberry Associates, nc., 603 F.2d 748 (9th Cir. 1979);
Goldberg v. Whitaker House Cooperative, nc., 366 U.S. 28, 81 S.Ct. 933,
6 L.Ed.2d 100 (1961); Bartels v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547,
91 L.Ed. 1947 (1947).
24
Halferty v. Pulse Drug Company, 821 F.2d 261 (5th Cir. 1987).
25
Weisel v. Singapore Joint Venture, nc., 602 F.2d. 1185 (5th Cir. 1979).
26
Rollo, pp. 305-321.
27
Id. at 264-265.
28
330 Phil. 518, 524 (1996).
29
G.R. No. 66890, April 15, 1988, 160 SCRA 568, 571.
30
Rollo, pp. 120-121.
31
Id. at 57.
32
People v. Joya, G.R. No. 79090, October 1, 1993, 227 SCRA 9, 26-27.
33
People v. Davatos, G.R. No. 93322, February 4, 1994, 229 SCRA 647,
651.
34
Globe-Mackay Cable and Radio Corporation v. National Labor Relations
Commission, G.R. No. 82511, March 3, 1992, 206 SCRA 701, 711-712.
35
Leonardo v. National Labor Relations Commission, 389 Phil. 118, 126
(2000).
36
438 Phil. 756 (2002).
G.R. No. 164774 April 12, 2006
STAR PAPER CORPORATON, JOSEPHNE ONGSTCO & SEBASTAN
CHUA, Petitioners,
vs.
RONALDO D. SMBOL, WLFREDA N. COMA & LORNA E. ESTRELLA,
Respondents.
D E C S O N
PUNO, J.:
We are called to decide an issue of first impression: whether the policy of
the employer banning spouses from working in the same company violates
the rights of the employee under the Constitution and the Labor Code or is
a valid exercise of management prerogative.
At bar is a Petition for Review on Certiorari of the Decision of the Court of
Appeals dated August 3, 2004 in CA-G.R. SP No. 73477 reversing the
decision of the National Labor Relations Commission (NLRC) which
affirmed the ruling of the Labor Arbiter.
Petitioner Star Paper Corporation (the company) is a corporation engaged
in trading principally of paper products. Josephine Ongsitco is its
Manager of the Personnel and Administration Department while Sebastian
Chua is its Managing Director.
The evidence for the petitioners show that respondents Ronaldo D. Simbol
(Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were
all regular employees of the company.1
Simbol was employed by the company on October 27, 1993. He met Alma
Dayrit, also an employee of the company, whom he married on June 27,
1998. Prior to the marriage, Ongsitco advised the couple that should they
decide to get married, one of them should resign pursuant to a company
policy promulgated in 1995,2 viz.:
1. New applicants will not be allowed to be hired if in case he/she has [a]
relative, up to [the] 3rd degree of relationship, already employed by the
company.
2. n case of two of our employees (both singles [sic], one male and
another female) developed a friendly relationship during the course of their
employment and then decided to get married, one of them should resign to
preserve the policy stated above.3
Simbol resigned on June 20, 1998 pursuant to the company policy.4
Comia was hired by the company on February 5, 1997. She met Howard
Comia, a co-employee, whom she married on June 1, 2000. Ongsitco
likewise reminded them that pursuant to company policy, one must resign
should they decide to get married. Comia resigned on June 30, 2000.5
Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also
a co-worker. Petitioners stated that Zuiga, a married man, got Estrella
pregnant. The company allegedly could have terminated her services due
to immorality but she opted to resign on December 21, 1999.6
The respondents each signed a Release and Confirmation Agreement.
They stated therein that they have no money and property accountabilities
in the company and that they release the latter of any claim or demand of
whatever nature.7
Respondents offer a different version of their dismissal. Simbol and Comia
allege that they did not resign voluntarily; they were compelled to resign in
view of an illegal company policy. As to respondent Estrella, she alleges
that she had a relationship with co-worker Zuiga who misrepresented
himself as a married but separated man. After he got her pregnant, she
discovered that he was not separated. Thus, she severed her relationship
with him to avoid dismissal due to the company policy. On November 30,
1999, she met an accident and was advised by the doctor at the
Orthopedic Hospital to recuperate for twenty-one (21) days. She returned
to work on December 21, 1999 but she found out that her name was on-
hold at the gate. She was denied entry. She was directed to proceed to the
personnel office where one of the staff handed her a memorandum. The
memorandum stated that she was being dismissed for immoral conduct.
She refused to sign the memorandum because she was on leave for
twenty-one (21) days and has not been given a chance to explain. The
management asked her to write an explanation. However, after submission
of the explanation, she was nonetheless dismissed by the company. Due
to her urgent need for money, she later submitted a letter of resignation in
exchange for her thirteenth month pay.8
Respondents later filed a complaint for unfair labor practice, constructive
dismissal, separation pay and attorney's fees. They averred that the
aforementioned company policy is illegal and contravenes Article 136 of
the Labor Code. They also contended that they were dismissed due to
their union membership.
On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the
complaint for lack of merit, viz.:
[T]his company policy was decreed pursuant to what the respondent
corporation perceived as management prerogative. This management
prerogative is quite broad and encompassing for it covers hiring, work
assignment, working method, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers
and the discipline, dismissal and recall of workers. Except as provided for
or limited by special law, an employer is free to regulate, according to his
own discretion and judgment all the aspects of employment.9 (Citations
omitted.)
On appeal to the NLRC, the Commission affirmed the decision of the
Labor Arbiter on January 11, 2002. 10
Respondents filed a Motion for Reconsideration but was denied by the
NLRC in a Resolution11 dated August 8, 2002. They appealed to
respondent court via Petition for Certiorari.
n its assailed Decision dated August 3, 2004, the Court of Appeals
reversed the NLRC decision, viz.:
WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of
the National Labor Relations Commission is hereby REVERSED and SET
ASDE and a new one is entered as follows:
(1) Declaring illegal, the petitioners' dismissal from employment and
ordering private respondents to reinstate petitioners to their former
positions without loss of seniority rights with full backwages from the time
of their dismissal until actual reinstatement; and
(2) Ordering private respondents to pay petitioners attorney's fees
amounting to 10% of the award and the cost of this suit.13
On appeal to this Court, petitioners contend that the Court of Appeals
erred in holding that:
1. x x x the subject 1995 policy/regulation is violative of the constitutional
rights towards marriage and the family of employees and of Article 136 of
the Labor Code; and
2. x x x respondents' resignations were far from voluntary.14
We affirm.
The 1987 Constitution15 states our policy towards the protection of labor
under the following provisions, viz.:
Article , Section 18. The State affirms labor as a primary social economic
force. t shall protect the rights of workers and promote their welfare.
x x x
Article X, Sec. 3. 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.
t shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. They shall be entitled to security
of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers, recognizing the right of labor to its just share in
the fruits of production and the right of enterprises to reasonable returns
on investments, and to expansion and growth.
The Civil Code likewise protects labor with the following provisions:
Art. 1700. The relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good. Therefore, such contracts are subject to
the special laws on labor unions, collective bargaining, strikes and
lockouts, closed shop, wages, working conditions, hours of labor and
similar subjects.
Art. 1702. n 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 Labor Code is the most comprehensive piece of legislation protecting
labor. The case at bar involves Article 136 of the Labor Code which
provides:
Art. 136. t shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall
not get married, or to stipulate expressly or tacitly that upon getting
married a woman employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.
Respondents submit that their dismissal violates the above provision.
Petitioners allege that its policy "may appear to be contrary to Article 136
of the Labor Code" but it assumes a new meaning if read together with the
first paragraph of the rule. The rule does not require the woman employee
to resign. The employee spouses have the right to choose who between
them should resign. Further, they are free to marry persons other than co-
employees. Hence, it is not the marital status of the employee, per se, that
is being discriminated. t is only intended to carry out its no-employment-
for-relatives-within-the-third-degree-policy which is within the ambit of the
prerogatives of management.16
t is true that the policy of petitioners prohibiting close relatives from
working in the same company takes the nature of an anti-nepotism
employment policy. Companies adopt these policies to prevent the hiring
of unqualified persons based on their status as a relative, rather than upon
their ability.17 These policies focus upon the potential employment
problems arising from the perception of favoritism exhibited towards
relatives.
With more women entering the workforce, employers are also enacting
employment policies specifically prohibiting spouses from working for the
same company. We note that two types of employment policies involve
spouses: policies banning only spouses from working in the same
company (no-spouse employment policies), and those banning all
immediate family members, including spouses, from working in the same
company (anti-nepotism employment policies).18
Unlike in our jurisdiction where there is no express prohibition on marital
discrimination,19 there are twenty state statutes20 in the United States
prohibiting marital discrimination. Some state courts21 have been
confronted with the issue of whether no-spouse policies violate their laws
prohibiting both marital status and sex discrimination.
n challenging the anti-nepotism employment policies in the United States,
complainants utilize two theories of employment discrimination: the
disparate treatment and the disparate impact. Under the disparate
treatment analysis, the plaintiff must prove that an employment policy is
discriminatory on its face. No-spouse employment policies requiring an
employee of a particular sex to either quit, transfer, or be fired are facially
discriminatory. For example, an employment policy prohibiting the
employer from hiring wives of male employees, but not husbands of
female employees, is discriminatory on its face.22
On the other hand, to establish disparate impact, the complainants must
prove that a facially neutral policy has a disproportionate effect on a
particular class. For example, although most employment policies do not
expressly indicate which spouse will be required to transfer or leave the
company, the policy often disproportionately affects one sex.23
The state courts' rulings on the issue depend on their interpretation of the
scope of marital status discrimination within the meaning of their
respective civil rights acts. Though they agree that the term "marital status"
encompasses discrimination based on a person's status as either married,
single, divorced, or widowed, they are divided on whether the term has a
broader meaning. Thus, their decisions vary.24
The courts narrowly25 interpreting marital status to refer only to a person's
status as married, single, divorced, or widowed reason that if the
legislature intended a broader definition it would have either chosen
different language or specified its intent. They hold that the relevant inquiry
is if one is married rather than to whom one is married. They construe
marital status discrimination to include only whether a person is single,
married, divorced, or widowed and not the "identity, occupation, and place
of employment of one's spouse." These courts have upheld the questioned
policies and ruled that they did not violate the marital status discrimination
provision of their respective state statutes.
The courts that have broadly26 construed the term "marital status" rule
that it encompassed the identity, occupation and employment of one's
spouse. They strike down the no-spouse employment policies based on
the broad legislative intent of the state statute. They reason that the no-
spouse employment policy violate the marital status provision because it
arbitrarily discriminates against all spouses of present employees without
regard to the actual effect on the individual's qualifications or work
performance.27 These courts also find the no-spouse employment policy
invalid for failure of the employer to present any evidence of business
necessity other than the general perception that spouses in the same
workplace might adversely affect the business.28 They hold that the
absence of such a bona fide occupational qualification29 invalidates a rule
denying employment to one spouse due to the current employment of the
other spouse in the same office.30 Thus, they rule that unless the
employer can prove that the reasonable demands of the business require
a distinction based on marital status and there is no better available or
acceptable policy which would better accomplish the business purpose, an
employer may not discriminate against an employee based on the identity
of the employee's spouse.31 This is known as the bona fide occupational
qualification exception.
We note that since the finding of a bona fide occupational qualification
justifies an employer's no-spouse rule, the exception is interpreted strictly
and narrowly by these state courts. There must be a compelling business
necessity for which no alternative exists other than the discriminatory
practice.32 To justify a bona fide occupational qualification, the employer
must prove two factors: (1) that the employment qualification is reasonably
related to the essential operation of the job involved; and, (2) that there is
a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.33
The concept of a bona fide occupational qualification is not foreign in our
jurisdiction. We employ the standard of reasonableness of the company
policy which is parallel to the bona fide occupational qualification
requirement. n the recent case of Duncan Association of Detailman-
PTGWO and Pedro Tecson v. Glaxo Wellcome Philippines, nc.,34 we
passed on the validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees of any competitor
company. We held that Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential
programs and information from competitors. We considered the prohibition
against personal or marital relationships with employees of competitor
companies upon Glaxo's employees reasonable under the circumstances
because relationships of that nature might compromise the interests of
Glaxo. n laying down the assailed company policy, we recognized that
Glaxo only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.35
The requirement that a company policy must be reasonable under the
circumstances to qualify as a valid exercise of management prerogative
was also at issue in the 1997 case of Philippine Telegraph and Telephone
Company v. NLRC.36 n said case, the employee was dismissed in
violation of petitioner's policy of disqualifying from work any woman worker
who contracts marriage. We held that the company policy violates the right
against discrimination afforded all women workers under Article 136 of the
Labor Code, but established a permissible exception, viz.:
[A] requirement that a woman employee must remain unmarried could be
justified as a "bona fide occupational qualification," or BFOQ, where the
particular requirements of the job would justify the same, but not on the
ground of a general principle, such as the desirability of spreading work in
the workplace. A requirement of that nature would be valid provided it
reflects an inherent quality reasonably necessary for satisfactory job
performance.37 (Emphases supplied.)
The cases of Duncan and PT&T instruct us that the requirement of
reasonableness must be clearly established to uphold the questioned
employment policy. The employer has the burden to prove the existence of
a reasonable business necessity. The burden was successfully discharged
in Duncan but not in PT&T.
We do not find a reasonable business necessity in the case at bar.
Petitioners' sole contention that "the company did not just want to have two
(2) or more of its employees related between the third degree by affinity
and/or consanguinity"38 is lame. That the second paragraph was meant to
give teeth to the first paragraph of the questioned rule39 is evidently not
the valid reasonable business necessity required by the law.
t is significant to note that in the case at bar, respondents were hired after
they were found fit for the job, but were asked to resign when they married
a co-employee. Petitioners failed to show how the marriage of Simbol,
then a Sheeting Machine Operator, to Alma Dayrit, then an employee of
the Repacking Section, could be detrimental to its business operations.
Neither did petitioners explain how this detriment will happen in the case of
Wilfreda Comia, then a Production Helper in the Selecting Department,
who married Howard Comia, then a helper in the cutter-machine. The
policy is premised on the mere fear that employees married to each other
will be less efficient. f we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven
presumption of a perceived danger at the expense of an employee's right
to security of tenure.
Petitioners contend that their policy will apply only when one employee
marries a co-employee, but they are free to marry persons other than co-
employees. The questioned policy may not facially violate Article 136 of
the Labor Code but it creates a disproportionate effect and under the
disparate impact theory, the only way it could pass judicial scrutiny is a
showing that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy cannot prejudice the
employee's right to be free from arbitrary discrimination based upon
stereotypes of married persons working together in one company.40
Lastly, the absence of a statute expressly prohibiting marital discrimination
in our jurisdiction cannot benefit the petitioners. The protection given to
labor in our jurisdiction is vast and extensive that we cannot prudently
draw inferences from the legislature's silence41 that married persons are
not protected under our Constitution and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of petitioners to present
undisputed proof of a reasonable business necessity, we rule that the
questioned policy is an invalid exercise of management prerogative.
Corollarily, the issue as to whether respondents Simbol and Comia
resigned voluntarily has become moot and academic.
As to respondent Estrella, the Labor Arbiter and the NLRC based their
ruling on the singular fact that her resignation letter was written in her own
handwriting. Both ruled that her resignation was voluntary and thus valid.
The respondent court failed to categorically rule whether Estrella
voluntarily resigned but ordered that she be reinstated along with Simbol
and Comia.
Estrella claims that she was pressured to submit a resignation letter
because she was in dire need of money. We examined the records of the
case and find Estrella's contention to be more in accord with the evidence.
While findings of fact by administrative tribunals like the NLRC are
generally given not only respect but, at times, finality, this rule admits of
exceptions,42 as in the case at bar.
Estrella avers that she went back to work on December 21, 1999 but was
dismissed due to her alleged immoral conduct. At first, she did not want to
sign the termination papers but she was forced to tender her resignation
letter in exchange for her thirteenth month pay.
The contention of petitioners that Estrella was pressured to resign because
she got impregnated by a married man and she could not stand being
looked upon or talked about as immoral43 is incredulous. f she really
wanted to avoid embarrassment and humiliation, she would not have gone
back to work at all. Nor would she have filed a suit for illegal dismissal and
pleaded for reinstatement. We have held that in voluntary resignation, the
employee is compelled by personal reason(s) to dissociate himself from
employment. t is done with the intention of relinquishing an office,
accompanied by the act of abandonment. 44 Thus, it is illogical for Estrella
to resign and then file a complaint for illegal dismissal. Given the lack of
sufficient evidence on the part of petitioners that the resignation was
voluntary, Estrella's dismissal is declared illegal.
N VEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP
No. 73477 dated August 3, 2004 is AFFRMED.1avvphil.net
SO ORDERED.
REYNATO S. PUNO
Associate Justice
WE CONCUR:
ANGELNA SANDOVAL-GUTERREZ
Associate Justice
RENATO C. CORONA
Associate Justice ADOLFO S. AZCUNA
Asscociate Justice
CANCO C. GARCA
Associate Justice
A T T E S T A T O N
attest that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of
the Court's Division.
REYNATO S. PUNO
Associate Justice
Chairman
C E R T F C A T O N
Pursuant to Section 13, Article V of the Constitution, and the Division
Chairman's Attestation, it is hereby certified that the conclusions in the
above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.
ARTEMO V. PANGANBAN
Chief Justice
Footnotes
1 Petition for Review on Certiorari, 2; rollo, p. 9.
2 The records do not state the exact date when the policy in question was
promulgated. The date of reference is "sometime in 1995."
3 Petition for Review on Certiorari, p. 3; rollo, p. 10.
4 d. at 4; d. at 11.
5 bid.
6 bid.
7 Petition for Review on Certiorari, pp. 4-5; rollo, pp. 11-12. See CA rollo,
pp. 40-49.
8 CA Decision, p. 4; rollo, p. 29.
9 Decision of Labor Arbiter Melquiades Sol del Rosario; CA rollo, pp. 40-
49.
10 Resolution, p. 7; CA rollo, p. 36.
11 Resolution; d. at 37.
12 Should be January 11, 2002.
13 CA Decision, p. 11; rollo, p. 36.
14 Petition, p. 7; rollo, p. 14. Lower case in the original.
15 The questioned Decision also invokes Article , Section 12. The State
recognizes the sanctity of family life and shall protect and strengthen the
family as a basic autonomous social institution. t shall equally protect the
life of the mother and the life of the unborn from conception. The natural
and primary right and duty of parents in the rearing of the youth for civic
efficiency and the development of moral character shall receive the
support of the Government.
16 Memorandum [for Petitioners], p. 11; rollo, p. 73.
17 A. Giattina, Challenging No-Spouse Employment Policies As Marital
Status Discrimination: A Balancing Approach, 33 Wayne L. Rev. 1111
(Spring, 1987).
18 bid.
19 See Note 23, Duncan Association of Detailman-PTGWO and Pedro
Tecson v. Glaxo Wellcome Philippines, nc., G.R. No. 162994, September
17, 2004.
20 ALASKA STAT. 18.80.200 (1986); CAL. GOV'T CODE 12940 (West
1980 & Supp. 1987); CONN. GEN. STAT. 46a-60 (1986); DEL. CODE
ANN. tit. 19, 711 (1985); D.C. CODE ANN. 1-2512 (1981); FLA. STAT.
760.01 (1986); HAWA REV. STAT. 378-2 (1985); LL. REV. STAT. ch.
68, 1- 103, 2-102 (Supp. 1986); MD. ANN. CODE art. 49B, 16 (1986);
MCH. COMP. LAWS ANN. 37.2202 (West 1985); MNN. STAT. ANN.
363.03 (West Supp. 1987); MONT. CODE ANN. 49-2-303 (1986); NEB.
REV. STAT. 48-1104 (1984); N.H. REV. STAT. ANN. 354-A:2 (1984);
N.J. REV. STAT. 10:5-12 (1981 & Supp. 1986); N.Y. EXEC. LAW 296
(McKinney 1982 & Supp. 1987); N.D. CENT. CODE 14-02.4-03 (1981 &
Supp. 1985); OR. REV. STAT. 659.030 (1985); WASH. REV. CODE
49.60.180 (Supp. 1987); WS. STAT. 111.321 (Supp. 1986). Cited in Note
34, A. Giattina, supra note 18.
21 State courts in Michigan, Minnesota, Montana, New York, and
Washington have interpreted the marital status provision of their respective
state statutes. See Note 10, A. Giattina, supra note 18.
22 Supra note 18.
23 bid.
24 bid.
25 Whirlpool Corp. v. Michigan Civil Rights Comm'n, 425 Mich. 527, 390
N.W.2d 625 (1986); Maryland Comm'n on Human Relations v. Greenbelt
Homes, nc., 300 Md. 75, 475 A.2d 1192 (1984); Manhattan Pizza Hut, nc.
v. New York State Human Rights Appeal Bd., 51 N.Y.2d 506, 434 N.Y.S.2d
961, 415 N.E.2d 950 (1980); Thompson v. Sanborn's Motor Express nc.,
154 N.J. Super. 555, 382 A.2d 53 (1977).
26 Ross v. Stouffer Hotel Co., 72 Haw. 350, 816 P.2d 302 (1991);
Thompson v. Board of Trustees, 192 Mont. 266, 627 P.2d 1229 (1981);
Kraft, nc. v. State, 284 N.W.2d 386 (Minn.1979); Washington Water Power
Co. v. Washington State Human Rights Comm'n, 91 Wash.2d 62, 586 P.2d
1149 (1978).
27 See note 55, A. Giattina, supra note 18.
28 See note 56, ibid.
29 Also referred to as BFOQ.
30 See note 67, A. Giattina, supra note 18.
31 See Muller v. BP Exploration (Alaska) nc., 923 P.2d 783, 73 Fair
Empl.Prac.Cas. (BNA) 579, 69.
32 See note 117, A. Giattina, supra note 18.
33 Richard G. Flood and Kelly A. Cahill, The River Bend Decision and How
t Affects Municipalities' Personnel Rule and Regulations, llinois Municipal
Review, June 1993, p. 7.
34 G.R. No. 162994, September 17, 2004.
35 bid.
36 G.R. No. 118978, May 23, 1997.
37 bid.
38 Petition, p. 9; rollo, p. 16.
39 bid.
40 See A. Giattina, supra note 18.
41 See dissenting opinion of Chief Justice Compton in Muller v. BP
Exploration (Alaska) nc., 923 P.2d 783 (1996).
42 n Employees Association of the Philippine American Life nsurance Co.
v. NLRC (G.R. No. 82976, July 26, 1991), the established exceptions are
as follows:
a) the conclusion is a finding of fact grounded on speculations, surmises
and conjectures;
b) the inferences made are manifestly mistaken, absurd or impossible;
c) there is a grave abuse of discretion;
d) there is misappreciation of facts; and
e) the court, in arriving in its findings, went beyond the issues of the case
and the same are contrary to the admission of the parties or the evidence
presented.
43 Petition, p. 11; rollo, p. 18.
44 Great Southern Maritime Services Corporation v. Acua, et al., G.R.
No. 140189, February 28, 2005.
GR. No. 131719 May 25, 2004
THE EXECUTIVE SECRETARY, THE SECRETARY OF JUSTICE, THE
SECRETARY OF LABOR AND EMPLOYMENT, AND THE SECRETARY
OF FOREIGN AFFAIRS, OWWA PUNO, ADMINISTRATOR, and POEA
ADMINISTRATOR, petitioners, vs.THE HON. COURT OF APPEALS and
ASIAN RECRUITMENT COUNCIL PHILIPPINE CHAPTER (ARCO-
PHIL.), INC., representing its members: WorIdcare Services
InternationaIe, Inc., SteadfastInternationaI Recruitment Corporation,
Dragon InternationaI Manpower Services Corporation, Verdant
Manpower MobiIization Corporation, Brent Overseas PersonneI, Inc.,
ARL Manpower Services, Inc., DahIzhen InternationaI Services, Inc.,
InterworId PIacement Center, Inc., Lakas Tao Contract Services, Ltd.
Co., and SSC MuItiservices, respondents.
D E C S O N
CALLEJO, SR., J.:
n this petition for review on certiorari, the Executive Secretary of the
President of the Philippines, the Secretary of Justice, the Secretary of
Foreign Affairs, the Secretary of Labor and Employment, the POEA
Administrator and the OWWA Administrator, through the Office of the
Solicitor General, assail the Decision
1
of the Court of Appeals in CA-G.R.
SP No. 38815 affirming the Order
2
of the Regional Trial Court of Quezon
City dated August 21, 1995 in Civil Case No. Q-95-24401, granting the
plea of the petitioners therein for a writ of preliminary injunction and of the
writ of preliminary injunction issued by the trial court on August 24, 1995.
The Antecedents
Republic Act No. 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, took effect on July 15, 1995. The Omnibus
Rules and Regulations mplementing the Migrant Workers and Overseas
Filipino Act of 1995 was, thereafter, published in the April 7, 1996 issue of
the Manila Bulletin. However, even before the law took effect, the Asian
Recruitment Council Philippine Chapter, nc. (ARCO-Phil.) filed, on July
17, 1995, a petition for declaratory relief under Rule 63 of the Rules of
Court with the Regional Trial Court of Quezon City to declare as
unconstitutional Section 2, paragraph (g), Section 6, paragraphs (a) to (j),
(l) and (m), Section 7, paragraphs (a) and (b), and Sections 9 and 10 of
the law, with a plea for the issuance of a temporary restraining order
and/or writ of preliminary injunction enjoining the respondents therein from
enforcing the assailed provisions of the law.
n a supplement to its petition, the ARCO-Phil. alleged that Rep. Act No.
8042 was self-executory and that no implementing rules were needed. t
prayed that the court issue a temporary restraining order to enjoin the
enforcement of Section 6, paragraphs (a) to (m) on illegal recruitment,
Section 7 on penalties for illegal recruitment, and Section 9 on venue of
criminal actions for illegal recruitments, viz:
Viewed in the light of the foregoing discussions, there appears to be urgent
an imperative need for this Honorable Court to maintain the status quo by
enjoining the implementation or effectivity of the questioned provisions of
RA 8042, by way of a restraining order otherwise, the member recruitment
agencies of the petitioner will suffer grave or irreparable damage or injury.
With the effectivity of RA 8042, a great majority of the duly licensed
recruitment agencies have stopped or suspended their operations for fear
of being prosecuted under the provisions of a law that are unjust and
unconstitutional. This Honorable Court may take judicial notice of the fact
that processing of deployment papers of overseas workers for the past
weeks have come to a standstill at the POEA and this has affected
thousands of workers everyday just because of the enactment of RA 8042.
ndeed, this has far reaching effects not only to survival of the overseas
manpower supply industry and the active participating recruitment
agencies, the country's economy which has survived mainly due to the
dollar remittances of the overseas workers but more importantly, to the
poor and the needy who are in dire need of income-generating jobs which
can only be obtained from abroad. The loss or injury that the recruitment
agencies will suffer will then be immeasurable and irreparable. As of now,
even foreign employers have already reduced their manpower
requirements from the Philippines due to their knowledge that RA 8042
prejudiced and adversely affected the local recruitment agencies.
3
On August 1, 1995, the trial court issued a temporary restraining order
effective for a period of only twenty (20) days therefrom.
After the petitioners filed their comment on the petition, the ARCO-Phil.
filed an amended petition, the amendments consisting in the inclusion in
the caption thereof eleven (11) other corporations which it alleged were its
members and which it represented in the suit, and a plea for a temporary
restraining order enjoining the respondents from enforcing Section 6
subsection (i), Section 6 subsection (k) and paragraphs 15 and 16 thereof,
Section 8, Section 10, paragraphs 1 and 2, and Sections 11 and 40 of
Rep. Act No. 8042.
The respondent ARCO-Phil. assailed Section 2(g) and (i), Section 6
subsection (a) to (m), Section 7(a) to (b), and Section 10 paragraphs (1)
and (2), quoted as follows:
(g) THE STATE RECOGNZES THAT THE ULTMATE PROTECTON TO
ALL MGRANT WORKERS S THE POSSESSON OF SKLLS.
PURSUANT TO THS AND AS SOON AS PRACTCABLE, THE
GOVERNMENT SHALL DEPLOY AND/OR ALLOW THE DEPLOYMENT
ONLY OF SKLLED FLPNO WORKERS.
4
Sec. 2 subsection (i, 2nd par.)
Nonetheless, the deployment of Filipino overseas workers, whether land-
based or sea-based, by local service contractors and manning agents
employing them shall be encourages (sic). Appropriate incentives may be
extended to them.
.
. LLEGAL RECRUTMENT
SEC. 6. Definition. For purposes of this Act, illegal recruitment shall
mean any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring, or procuring workers and includes referring, contract services,
promising or advertising for employment abroad, whether for profit or not,
when undertaken by a non-licensee or non-holder of authority
contemplated under Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines:
Provided, That any such non-licensee or non-holder who, in any manner,
offers or promises for a fee employment abroad to two or more persons
shall be deemed so engaged. t shall, likewise, include the following acts,
whether committed by any person, whether a non-licensee, non-holder,
licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary of
Labor and Employment, or to make a worker pay any amount greater than
that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in
relation to recruitment or employment;
(c) To give any false notice, testimony, information or document or commit
any act of misrepresentation for the purpose of securing a license or
authority under the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit his
employment in order to offer him another unless the transfer is designed to
liberate a worker from oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or entity not to employ
any worker who has not applied for employment through his agency;
(f) To engage in the recruitment or placement of workers in jobs harmful to
public health or morality or to the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor
and Employment or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, separation from jobs,
departures and such other matters or information as may be required by
the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the Department of Labor and
Employment from the time of actual signing thereof by the parties up to
and including the period of the expiration of the same without the approval
of the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement agency to become
an officer or member of the Board of any corporation engaged in travel
agency or to be engaged directly or indirectly in the management of a
travel agency;
(k) To withhold or deny travel documents from applicant workers before
departure for monetary or financial considerations other than those
authorized under the Labor Code and its implementing rules and
regulations;
(l) Failure to actually deploy without valid reason as determined by the
Department of Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection
with his documentation and processing for purposes of deployment, in
cases where the deployment does not actually take place without the
worker's fault. llegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic sabotage.
llegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring or confederating with one
another. t is deemed committed in large scale if committed against three
(3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals,
accomplices and accessories. n case of juridical persons, the officers
having control, management or direction of their business shall be liable.
.
SEC. 7. Penalties.
(a) Any person found guilty of illegal recruitment shall suffer the penalty of
imprisonment of not less than six (6) years and one (1) day but not more
than twelve (12) years and a fine of not less than two hundred thousand
pesos (P200,000.00) nor more than five hundred thousand pesos
(P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than five
hundred thousand pesos (P500,000.00) nor more than one million pesos
(P1,000,000.00) shall be imposed if illegal recruitment constitutes
economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the
person illegally recruited is less than eighteen (18) years of age or
committed by a non-licensee or non-holder of authority.
Sec. 8.
Prohibition on Officials and Employees. t shall be unlawful for any
official or employee of the Department of Labor and Employment, the
Philippine Overseas Employment Administration (POEA), or the Overseas
Workers Welfare Administration (OWWA), or the Department of Foreign
Affairs, or other government agencies involved in the implementation of
this Act, or their relatives within the fourth civil degree of consanguinity or
affinity, to engage, directly or indirectly, in the business of recruiting
migrant workers as defined in this Act. The penalties provided in the
immediate preceding paragraph shall be imposed upon them.
(underscoring supplied)
.
Sec. 10, pars. 1 & 2.
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.
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and several.
This provision shall be incorporated in the contract for overseas
employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement agency, as
provided by law, shall be answerable for all money claims or damages that
may be awarded to the workers. f 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.
.
SEC. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases.
The preliminary investigations of cases under this Act shall be terminated
within a period of thirty (30) calendar days from the date of their filing.
Where the preliminary investigation is conducted by a prosecution officer
and a prima facie case is established, the corresponding information shall
be filed in court within twenty-four (24) hours from the termination of the
investigation. f the preliminary investigation is conducted by a judge and a
prima facie case is found to exist, the corresponding information shall be
filed by the proper prosecution officer within forty-eight (48) hours from the
date of receipt of the records of the case.
The respondent averred that the aforequoted provisions of Rep. Act No.
8042 violate Section 1, Article of the Constitution.
5
According to the
respondent, Section 6(g) and (i) discriminated against unskilled workers
and their families and, as such, violated the equal protection clause, as
well as Article , Section 12
6
and Article XV, Sections 1
7
and 3(3) of the
Constitution.
8
As the law encouraged the deployment of skilled Filipino
workers, only overseas skilled workers are granted rights. The respondent
stressed that unskilled workers also have the right to seek employment
abroad. According to the respondent, the right of unskilled workers to due
process is violated because they are prevented from finding employment
and earning a living abroad. t cannot be argued that skilled workers are
immune from abuses by employers, while unskilled workers are merely
prone to such abuses. t was pointed out that both skilled and unskilled
workers are subjected to abuses by foreign employers. Furthermore, the
prohibition of the deployment of unskilled workers abroad would only
encourage fly-by-night illegal recruiters.
According to the respondent, the grant of incentives to service contractors
and manning agencies to the exclusion of all other licensed and authorized
recruiters is an invalid classification. Licensed and authorized recruiters
are thus deprived of their right to property and due process and to the
"equality of the person." t is understandable for the law to prohibit illegal
recruiters, but to discriminate against licensed and registered recruiters is
unconstitutional.
The respondent, likewise, alleged that Section 6, subsections (a) to (m) is
unconstitutional because licensed and authorized recruitment agencies are
placed on equal footing with illegal recruiters. t contended that while the
Labor Code distinguished between recruiters who are holders of licenses
and non-holders thereof in the imposition of penalties, Rep. Act No. 8042
does not make any distinction. The penalties in Section 7(a) and (b) being
based on an invalid classification are, therefore, repugnant to the equal
protection clause, besides being excessive; hence, such penalties are
violative of Section 19(1), Article of the Constitution.
9
t was also pointed
out that the penalty for officers/officials/employees of recruitment agencies
who are found guilty of economic sabotage or large-scale illegal
recruitment under Rep. Act No. 8042 is life imprisonment. Since
recruitment agencies usually operate with a manpower of more than three
persons, such agencies are forced to shut down, lest their officers and/or
employees be charged with large scale illegal recruitment or economic
sabotage and sentenced to life imprisonment. Thus, the penalty imposed
by law, being disproportionate to the prohibited acts, discourages the
business of licensed and registered recruitment agencies.
The respondent also posited that Section 6(m) and paragraphs (15) and
(16), Sections 8, 9 and 10, paragraph 2 of the law violate Section 22,
Article of the Constitution
10
prohibiting ex-post facto laws and bills of
attainder. This is because the provisions presume that a licensed and
registered recruitment agency is guilty of illegal recruitment involving
economic sabotage, upon a finding that it committed any of the prohibited
acts under the law. Furthermore, officials, employees and their relatives
are presumed guilty of illegal recruitment involving economic sabotage
upon such finding that they committed any of the said prohibited acts.
The respondent further argued that the 90-day period in Section 10,
paragraph (1) within which a labor arbiter should decide a money claim is
relatively short, and could deprive licensed and registered recruiters of
their right to due process. The period within which the summons and the
complaint would be served on foreign employees and, thereafter, the filing
of the answer to the complaint would take more than 90 days. This would
thereby shift on local licensed and authorized recruiters the burden of
proving the defense of foreign employers. Furthermore, the respondent
asserted, Section 10, paragraph 2 of the law, which provides for the joint
and several liability of the officers and employees, is a bill of attainder and
a violation of the right of the said corporate officers and employees to due
process. Considering that such corporate officers and employees act with
prior approval of the board of directors of such corporation, they should not
be liable, jointly and severally, for such corporate acts.
The respondent asserted that the following provisions of the law are
unconstitutional:
SEC. 9. Venue. A criminal action arising from illegal recruitment as
defined herein shall be filed with the Regional Trial Court of the province or
city where the offense was committed or where the offended party actually
resides at the time of the commission of the offense: Provided, That the
court where the criminal action is first filed shall acquire jurisdiction to the
exclusion of other courts: Provided, however, That the aforestated
provisions shall also apply to those criminal actions that have already been
filed in court at the time of the effectivity of this Act.
.
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.
Sec. 40.
The departments and agencies charged with carrying out the provisions of
this Act shall, within ninety (90) days after the effectiviy of this Act,
formulate the necessary rules and regulations for its effective
implementation.
According to the respondent, the said provisions violate Section 5(5),
Article V of the Constitution
11
because they impair the power of the
Supreme Court to promulgate rules of procedure.
n their answer to the petition, the petitioners alleged, inter alia, that (a) the
respondent has no cause of action for a declaratory relief; (b) the petition
was premature as the rules implementing Rep. Act No. 8042 not having
been released as yet; (c) the assailed provisions do not violate any
provisions of the Constitution; and, (d) the law was approved by Congress
in the exercise of the police power of the State. n opposition to the
respondent's plea for injunctive relief, the petitioners averred that:
As earlier shown, the amended petition for declaratory relief is devoid of
merit for failure of petitioner to demonstrate convincingly that the assailed
law is unconstitutional, apart from the defect and impropriety of the
petition. One who attacks a statute, alleging unconstitutionality must prove
its invalidity beyond reasonable doubt (Caleon v. Agus Development
Corporation, 207 SCRA 748). All reasonable doubts should be resolved in
favor of the constitutionality of a statute (People v. Vera, 65 Phil. 56). This
presumption of constitutionality is based on the doctrine of separation of
powers which enjoin upon each department a becoming respect for the
acts of the other departments (Garcia vs. Executive Secretary, 204 SCRA
516 [1991]). Necessarily, the ancillary remedy of a temporary restraining
order and/or a writ of preliminary injunction prayed for must fall. Besides,
an act of legislature approved by the executive is presumed to be within
constitutional bounds (National Press Club v. Commission on Elections,
207 SCRA 1).
12
After the respective counsels of the parties were heard on oral arguments,
the trial court issued on August 21, 1995, an order granting the petitioner's
plea for a writ of preliminary injunction upon a bond of P50,000. The
petitioner posted the requisite bond and on August 24, 1995, the trial court
issued a writ of preliminary injunction enjoining the enforcement of the
following provisions of Rep. Act No. 8042 pending the termination of the
proceedings:
. Section 2, subsections (g) and (i, 2nd par.); Section 6, subsections (a)
to (m), and pars. 15 & 16; Section 7, subsections (a) & (b); Section 8;
Section 9; Section 10; pars. 1 & 2; Section 11; and Section 40 of Republic
Act No. 8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995. .
13
The petitioners filed a petition for certiorari with the Court of Appeals
assailing the order and the writ of preliminary injunction issued by the trial
court on the following grounds:
1. Respondent ARCO-PHL. had utterly failed to show its clear right/s or
that of its member-agencies to be protected by the injunctive relief and/or
violation of said rights by the enforcement of the assailed sections of R.A.
8042;
2. Respondent Judge fixed a P50,000 injunction bond which is grossly
inadequate to answer for the damage which petitioner-officials may
sustain, should respondent ARCO-PHL. be finally adjudged as not being
entitled thereto.
14
The petitioners asserted that the respondent is not the real party-in-interest
as petitioner in the trial court. t is inconceivable how the respondent, a
non-stock and non-profit corporation, could sustain direct injury as a result
of the enforcement of the law. They argued that if, at all, any damage
would result in the implementation of the law, it is the licensed and
registered recruitment agencies and/or the unskilled Filipino migrant
workers discriminated against who would sustain the said injury or
damage, not the respondent. The respondent, as petitioner in the trial
court, was burdened to adduce preponderant evidence of such irreparable
injury, but failed to do so. The petitioners further insisted that the petition a
quo was premature since the rules and regulations implementing the law
had yet to be promulgated when such petition was filed. Finally, the
petitioners averred that the respondent failed to establish the requisites for
the issuance of a writ of preliminary injunction against the enforcement of
the law and the rules and regulations issued implementing the same.
On December 5, 1997, the appellate court came out with a four-page
decision dismissing the petition and affirming the assailed order and writ of
preliminary injunction issued by the trial court. The appellate court,
likewise, denied the petitioners' motion for reconsideration of the said
decision.
The petitioners now come to this Court in a petition for review on certiorari
on the following grounds:
1. Private respondent ARCO-PHL. had utterly failed to show its clear
right/s or that of its member-agencies to be protected by the injunctive
relief and/or violation of said rights by the enforcement of the assailed
sections of R.A. 8042;
2. The P50,000 injunction bond fixed by the court a quo and sustained by
the Court of Appeals is grossly inadequate to answer for the damage
which petitioners-officials may sustain, should private respondent ARCO-
PHL. be finally adjudged as not being entitled thereto.
15
On February 16, 1998, this Court issued a temporary restraining order
enjoining the respondents from enforcing the assailed order and writ of
preliminary injunction.
The Issues
The core issue in this case is whether or not the trial court committed
grave abuse of its discretion amounting to excess or lack of jurisdiction in
issuing the assailed order and the writ of preliminary injunction on a bond
of only P50,000 and whether or not the appellate court erred in affirming
the trial court's order and the writ of preliminary injunction issued by it.
The petitioners contend that the respondent has no locus standi. t is a
non-stock, non-profit organization; hence, not the real party-in-interest as
petitioner in the action. Although the respondent filed the petition in the
Regional Trial Court in behalf of licensed and registered recruitment
agencies, it failed to adduce in evidence a certified copy of its Articles of
ncorporation and the resolutions of the said members authorizing it to
represent the said agencies in the proceedings. Neither is the suit of the
respondent a class suit so as to vest in it a personality to assail Rep. Act
No. 8042; the respondent is service-oriented while the recruitment
agencies it purports to represent are profit-oriented. The petitioners assert
that the law is presumed constitutional and, as such, the respondent was
burdened to make a case strong enough to overcome such presumption
and establish a clear right to injunctive relief.
The petitioners bewail the P50,000 bond fixed by the trial court for the
issuance of a writ of preliminary injunction and affirmed by the appellate
court. They assert that the amount is grossly inadequate to answer for any
damages that the general public may suffer by reason of the non-
enforcement of the assailed provisions of the law. The trial court committed
a grave abuse of its discretion in granting the respondent's plea for
injunctive relief, and the appellate court erred in affirming the order and the
writ of preliminary injunction issued by the trial court.
The respondent, for its part, asserts that it has duly established its locus
standi and its right to injunctive relief as gleaned from its pleadings and the
appendages thereto. Under Section 5, Rule 58 of the Rules of Court, it
was incumbent on the petitioners, as respondents in the RTC, to show
cause why no injunction should issue. t avers that the injunction bond
posted by the respondent was more than adequate to answer for any
injury or damage the petitioners may suffer, if any, by reason of the writ of
preliminary injunction issued by the RTC. n any event, the assailed
provisions of Rep. Act No. 8042 exposed its members to the immediate
and irreparable damage of being deprived of their right to a livelihood
without due process, a property right protected under the Constitution.
The respondent contends that the commendable purpose of the law to
eradicate illegal recruiters should not be done at the expense and to the
prejudice of licensed and authorized recruitment agencies. The writ of
preliminary injunction was necessitated by the great number of duly
licensed recruitment agencies that had stopped or suspended their
business operations for fear that their officers and employees would be
indicted and prosecuted under the assailed oppressive penal provisions of
the law, and meted excessive penalties. The respondent, likewise, urges
that the Court should take judicial notice that the processing of deployment
papers of overseas workers have come to a virtual standstill at the POEA.
The Court's RuIing
The petition is meritorious.
The Respondent Has Locus Standi
To File the Petition in the RTC in Representation of the Eleven Licensed
and Registered Recruitment Agencies Impleaded in the Amended Petition
The modern view is that an association has standing to complain of
injuries to its members. This view fuses the legal identity of an association
with that of its members.
16
An association has standing to file suit for its
workers despite its lack of direct interest if its members are affected by the
action. An organization has standing to assert the concerns of its
constituents.
17
n Telecommunications and Broadcast Attorneys of the Philippines v.
Commission on Elections,
18
we held that standing jus tertii would be
recognized only if it can be shown that the party suing has some
substantial relation to the third party, or that the right of the third party
would be diluted unless the party in court is allowed to espouse the third
party's constitutional claims.
n this case, the respondent filed the petition for declaratory relief under
Rule 64 of the Rules of Court for and in behalf of its eleven (11) licensed
and registered recruitment agencies which are its members, and which
approved separate resolutions expressly authorizing the respondent to file
the said suit for and in their behalf. We note that, under its Articles of
ncorporation, the respondent was organized for the purposes inter alia of
promoting and supporting the growth and development of the manpower
recruitment industry, both in the local and international levels; providing,
creating and exploring employment opportunities for the exclusive benefit
of its general membership; enhancing and promoting the general welfare
and protection of Filipino workers; and, to act as the representative of any
individual, company, entity or association on matters related to the
manpower recruitment industry, and to perform other acts and activities
necessary to accomplish the purposes embodied therein. The respondent
is, thus, the appropriate party to assert the rights of its members, because
it and its members are in every practical sense identical. The respondent
asserts that the assailed provisions violate the constitutional rights of its
members and the officers and employees thereof. The respondent is but
the medium through which its individual members seek to make more
effective the expression of their voices and the redress of their
grievances.
19
However, the respondent has no locus standi to file the petition for and in
behalf of unskilled workers. We note that it even failed to implead any
unskilled workers in its petition. Furthermore, in failing to implead, as
parties-petitioners, the eleven licensed and registered recruitment
agencies it claimed to represent, the respondent failed to comply with
Section 2 of Rule 63
20
of the Rules of Court. Nevertheless, since the
eleven licensed and registered recruitment agencies for which the
respondent filed the suit are specifically named in the petition, the
amended petition is deemed amended to avoid multiplicity of suits.
21
The Assailed Order and Writ of
Preliminary Injunction Is Mooted
By Case Law
The respondent justified its plea for injunctive relief on the allegation in its
amended petition that its members are exposed to the immediate and
irreparable danger of being deprived of their right to a livelihood and other
constitutional rights without due process, on its claim that a great number
of duly licensed recruitment agencies have stopped or suspended their
operations for fear that (a) their officers and employees would be
prosecuted under the unjust and unconstitutional penal provisions of Rep.
Act No. 8042 and meted equally unjust and excessive penalties, including
life imprisonment, for illegal recruitment and large scale illegal recruitment
without regard to whether the recruitment agencies involved are licensed
and/or authorized; and, (b) if the members of the respondent, which are
licensed and authorized, decide to continue with their businesses, they
face the stigma and the curse of being labeled "illegal recruiters." n
granting the respondent's plea for a writ of preliminary injunction, the trial
court held, without stating the factual and legal basis therefor, that the
enforcement of Rep. Act No. 8042, pendente lite, would cause grave and
irreparable injury to the respondent until the case is decided on its merits.
We note, however, that since Rep. Act No. 8042 took effect on July 15,
1995, the Court had, in a catena of cases, applied the penal provisions in
Section 6, including paragraph (m) thereof, and the last two paragraphs
therein defining large scale illegal recruitment committed by officers and/or
employees of recruitment agencies by themselves and in connivance with
private individuals, and imposed the penalties provided in Section 7
thereof, including the penalty of life imprisonment.
22
The nformations
therein were filed after preliminary investigations as provided for in Section
11 of Rep. Act No. 8042 and in venues as provided for in Section 9 of the
said act. n People v. Chowdury,
23
we held that illegal recruitment is a
crime of economic sabotage and must be enforced.
n People v. Diaz,
24
we held that Rep. Act No. 8042 is but an amendment
of the Labor Code of the Philippines and is not an ex-post facto law
because it is not applied retroactively. n JMM Promotion and
Management, Inc. v. Court of Appeals,
25
the issue of the extent of the
police power of the State to regulate a business, profession or calling vis-
-vis the equal protection clause and the non-impairment clause of the
Constitution were raised and we held, thus:
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.
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.
n any case, where the liberty curtailed affects at most the rights of
property, the permissible scope of regulatory measures is certainly much
wider. To pretend that licensing or accreditation requirements violates the
due process clause is to ignore the settled practice, under the mantle of
the police power, of regulating entry to the practice of various trades or
professions. Professionals leaving for abroad are required to pass rigid
written and practical exams before they are deemed fit to practice their
trade. Seamen are required to take tests determining their seamanship.
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. t 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.
Finally, it is a futile gesture on the part of petitioners to invoke the non-
impairment clause of the Constitution to support their argument that the
government cannot enact the assailed regulatory measures because they
abridge the freedom to contract. n Philippine Association of Service
Exporters, Inc. vs. Drilon, we held that "[t]he non-impairment clause of the
Constitution . must yield to the loftier purposes targeted by the
government." Equally important, into every contract is read provisions of
existing law, and always, a reservation of the police power for so long as
the agreement deals with a subject impressed with the public welfare.
A last point. Petitioners suggest that the singling out of entertainers and
performing artists under the assailed department orders constitutes class
legislation which violates the equal protection clause of the Constitution.
We do not agree.
The equal protection clause is directed principally against undue favor and
individual or class privilege. t 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. t 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. f
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.
26
The validity of Section 6 of R.A. No. 8042 which provides that employees
of recruitment agencies may be criminally liable for illegal recruitment has
been upheld in People v. Chowdury:
27
As stated in the first sentence of Section 6 of RA 8042, the persons who
may be held liable for illegal recruitment are the principals, accomplices
and accessories. An employee of a company or corporation engaged in
illegal recruitment may be held liable as principal, together with his
employer, if it is shown that he actively and consciously participated in
illegal recruitment. t has been held that the existence of the corporate
entity does not shield from prosecution the corporate agent who knowingly
and intentionally causes the corporation to commit a crime. The
corporation obviously acts, and can act, only by and through its human
agents, and it is their conduct which the law must deter. The employee or
agent of a corporation engaged in unlawful business naturally aids and
abets in the carrying on of such business and will be prosecuted as
principal if, with knowledge of the business, its purpose and effect, he
consciously contributes his efforts to its conduct and promotion, however
slight his contribution may be. .
28
By its rulings, the Court thereby affirmed the validity of the assailed penal
and procedural provisions of Rep. Act No. 8042, including the imposable
penalties therefor. Until the Court, by final judgment, declares that the said
provisions are unconstitutional, the enforcement of the said provisions
cannot be enjoined.
The RTC Committed Grave Abuse of Its Discretion Amounting to Excess
or Lack of Jurisdiction in Issuing the Assailed Order and the Writ of
Preliminary Injunction
The matter of whether to issue a writ of preliminary injunction or not is
addressed to the sound discretion of the trial court. However, if the court
commits grave abuse of its discretion in issuing the said writ amounting to
excess or lack of jurisdiction, the same may be nullified via a writ of
certiorari and prohibition.
n Social Security Commission v. Judge Bayona,
29
we ruled that a law is
presumed constitutional until otherwise declared by judicial interpretation.
The suspension of the operation of the law is a matter of extreme delicacy
because it is an interference with the official acts not only of the duly
elected representatives of the people but also of the highest magistrate of
the land.
n Younger v. Harris, Jr.,
30
the Supreme Court of the United States
emphasized, thus:
Federal injunctions against state criminal statutes, either in their entirety or
with respect to their separate and distinct prohibitions, are not to be
granted as a matter of course, even if such statutes are unconstitutional.
No citizen or member of the community is immune from prosecution, in
good faith, for his alleged criminal acts. The imminence of such a
prosecution even though alleged to be unauthorized and, hence, unlawful
is not alone ground for relief in equity which exerts its extraordinary powers
only to prevent irreparable injury to the plaintiff who seeks its aid. 752 Beal
v. Missouri Pacific Railroad Corp., 312 U.S. 45, 49, 61 S.Ct. 418, 420, 85
L.Ed. 577.
And similarly, in Douglas, supra, we made clear, after reaffirming this rule,
that:
"t does not appear from the record that petitioners have been threatened
with any injury other than that incidental to every criminal proceeding
brought lawfully and in good faith ." 319 U.S., at 164, 63 S.Ct., at 881.
31
The possible unconstitutionality of a statute, on its face, does not of itself
justify an injunction against good faith attempts to enforce it, unless there
is a showing of bad faith, harassment, or any other unusual circumstance
that would call for equitable relief.
32
The "on its face" invalidation of
statutes has been described as "manifestly strong medicine," to be
employed "sparingly and only as a last resort," and is generally
disfavored.
33
To be entitled to a preliminary injunction to enjoin the enforcement of a law
assailed to be unconstitutional, the party must establish that it will suffer
irreparable harm in the absence of injunctive relief and must demonstrate
that it is likely to succeed on the merits, or that there are sufficiently
serious questions going to the merits and the balance of hardships tips
decidedly in its favor.
34
The higher standard reflects judicial deference
toward "legislation or regulations developed through presumptively
reasoned democratic processes." Moreover, an injunction will alter, rather
than maintain, the status quo, or will provide the movant with substantially
all the relief sought and that relief cannot be undone even if the defendant
prevails at a trial on the merits.
35
Considering that injunction is an exercise
of equitable relief and authority, in assessing whether to issue a
preliminary injunction, the courts must sensitively assess all the equities of
the situation, including the public interest.
36
n litigations between
governmental and private parties, courts go much further both to give and
withhold relief in furtherance of public interest than they are accustomed to
go when only private interests are involved.
37
Before the plaintiff may be
entitled to injunction against future enforcement, he is burdened to show
some substantial hardship.
38
The fear or chilling-effect of the assailed penal provisions of the law on the
members of the respondent does not by itself justify prohibiting the State
from enforcing them against those whom the State believes in good faith to
be punishable under the laws:
. Just as the incidental "chilling effect" of such statutes does not
automatically render them unconstitutional, so the chilling effect that
admittedly can result from the very existence of certain laws on the statute
books does not in itself justify prohibiting the State from carrying out the
important and necessary task of enforcing these laws against socially
harmful conduct that the State believes in good faith to be punishable
under its laws and the Constitution.
39
t must be borne in mind that subject to constitutional limitations, Congress
is empowered to define what acts or omissions shall constitute a crime and
to prescribe punishments therefor.
40
The power is inherent in Congress
and is part of the sovereign power of the State to maintain peace and
order. Whatever views may be entertained regarding the severity of
punishment, whether one believes in its efficiency or its futility, these are
peculiarly questions of legislative policy.
41
The comparative gravity of
crimes and whether their consequences are more or less injurious are
matters for the State and Congress itself to determine.
42
Specification of
penalties involves questions of legislative policy.
43
Due process prohibits criminal stability from shifting the burden of proof to
the accused, punishing wholly passive conduct, defining crimes in vague
or overbroad language and failing to grant fair warning of illegal conduct.
44
Class legislation is such legislation which denies rights to one which are
accorded to others, or inflicts upon one individual a more severe penalty
than is imposed upon another in like case offending.
45
Bills of attainder are
legislative acts which inflict punishment on individuals or members of a
particular group without a judicial trial. Essential to a bill of attainder are a
specification of certain individuals or a group of individuals, the imposition
of a punishment, penal or otherwise, and the lack of judicial trial.
46
Penalizing unlicensed and licensed recruitment agencies and their officers
and employees and their relatives employed in government agencies
charged with the enforcement of the law for illegal recruitment and
imposing life imprisonment for those who commit large scale illegal
recruitment is not offensive to the Constitution. The accused may be
convicted of illegal recruitment and large scale illegal recruitment only if,
after trial, the prosecution is able to prove all the elements of the crime
charged.
47
The possibility that the officers and employees of the recruitment agencies,
which are members of the respondent, and their relatives who are
employed in the government agencies charged in the enforcement of the
law, would be indicted for illegal recruitment and, if convicted sentenced to
life imprisonment for large scale illegal recruitment, absent proof of
irreparable injury, is not sufficient on which to base the issuance of a writ of
preliminary injunction to suspend the enforcement of the penal provisions
of Rep. Act No. 8042 and avert any indictments under the law.
48
The
normal course of criminal prosecutions cannot be blocked on the basis of
allegations which amount to speculations about the future.
49
There is no allegation in the amended petition or evidence adduced by the
respondent that the officers and/or employees of its members had been
threatened with any indictments for violations of the penal provisions of
Rep. Act No. 8042. Neither is there any allegation therein that any of its
members and/or their officers and employees committed any of the acts
enumerated in Section 6(a) to (m) of the law for which they could be
indicted. Neither did the respondent adduce any evidence in the RTC that
any or all of its members or a great number of other duly licensed and
registered recruitment agencies had to stop their business operations
because of fear of indictments under Sections 6 and 7 of Rep. Act No.
8042. The respondent merely speculated and surmised that licensed and
registered recruitment agencies would close shop and stop business
operations because of the assailed penal provisions of the law. A writ of
preliminary injunction to enjoin the enforcement of penal laws cannot be
based on such conjectures or speculations. The Court cannot take judicial
notice that the processing of deployment papers of overseas workers have
come to a virtual standstill at the POEA because of the assailed provisions
of Rep. Act No. 8042. The respondent must adduce evidence to prove its
allegation, and the petitioners accorded a chance to adduce controverting
evidence.
The respondent even failed to adduce any evidence to prove irreparable
injury because of the enforcement of Section 10(1)(2) of Rep. Act No.
8042. ts fear or apprehension that, because of time constraints, its
members would have to defend foreign employees in cases before the
Labor Arbiter is based on speculations. Even if true, such inconvenience or
difficulty is hardly irreparable injury.
The trial court even ignored the public interest involved in suspending the
enforcement of Rep. Act No. 8042 vis--vis the eleven licensed and
registered recruitment agencies represented by the respondent. n People
v. Gamboa,
50
we emphasized the primary aim of Rep. Act No. 8042:
Preliminarily, the proliferation of illegal job recruiters and syndicates
preying on innocent people anxious to obtain employment abroad is one of
the primary considerations that led to the enactment of The Migrant
Workers and Overseas Filipinos Act of 1995. Aimed at affording greater
protection to overseas Filipino workers, it is a significant improvement on
existing laws in the recruitment and placement of workers for overseas
employment. Otherwise known as the Magna Carta of OFWs, it broadened
the concept of illegal recruitment under the Labor Code and provided
stiffer penalties thereto, especially those that constitute economic
sabotage, i.e., Illegal Recruitment in Large Scale and Illegal Recruitment
Committed by a Syndicate.
51
By issuing the writ of preliminary injunction against the petitioners sans
any evidence, the trial court frustrated, albeit temporarily, the prosecution
of illegal recruiters and allowed them to continue victimizing hapless and
innocent people desiring to obtain employment abroad as overseas
workers, and blocked the attainment of the salutary policies
52
embedded in
Rep. Act No. 8042. t bears stressing that overseas workers, land-based
and sea-based, had been remitting to the Philippines billions of dollars
which over the years had propped the economy.
n issuing the writ of preliminary injunction, the trial court considered
paramount the interests of the eleven licensed and registered recruitment
agencies represented by the respondent, and capriciously overturned the
presumption of the constitutionality of the assailed provisions on the
barefaced claim of the respondent that the assailed provisions of Rep. Act
No. 8042 are unconstitutional. The trial court committed a grave abuse of
its discretion amounting to excess or lack of jurisdiction in issuing the
assailed order and writ of preliminary injunction. t is for this reason that
the Court issued a temporary restraining order enjoining the enforcement
of the writ of preliminary injunction issued by the trial court.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
assailed decision of the appellate court is REVERSED AND SET ASIDE.
The Order of the Regional Trial Court dated August 21, 1995 in Civil Case
No. Q-95-24401 and the Writ of Preliminary njunction issued by it in the
said case on August 24, 1995 are NULLIFIED. No costs.
SO ORDERED.
Puno
*
, Quisumbing
**
, Austria-Martinez, and Tinga, JJ., concur.
Footnotes
*
On official leave.
**
Acting Chairman.
1
Penned by Associate Justice Jesus M. Elbinias with Associate Justices
Hector L. Hofilea and Omar U. Amin concurring.
2
Penned by Judge Teodoro P. Regino, who was later promoted Associate
Justice of the Court of Appeals.
3
Records, Vol. , pp. 86-87.
4
Section 2, paragraph (g).
5
Section 1. No person shall be deprived of life, liberty or property without
due process of law, nor shall any person be denied the equal protection of
the laws.
6
Sec. 12. The State recognizes the sanctity of family life and shall protect
and strengthen the family as a basic autonomous social institution. t shall
equally protect the life of the mother and the life of the unborn from
conception.
The natural and primary right and duty of parents in the rearing of the
youth for civic efficiency and the development of moral character shall
receive the support of the Government.
7
Section 1. The State recognizes the Filipino family as the foundation of
the nation. Accordingly, it shall strengthen its solidarity and actively
promote its total development.
8
Sec. 3. The State shall defend the following:
.
(3) The right of the family to a family living wage and income.
9
Sec. 19. (1) Excessive fines shall not be imposed, nor cruel, degrading or
inhuman punishment inflicted. Neither shall death penalty be imposed,
unless, for compelling reasons involving heinous crimes, the Congress
hereafter provides for it. Any death penalty already imposed shall be
reduced to reclusion perpetua. (Section 19, Article of the Constitution.)
10
Sec. 22. No ex-post facto law or bill of attainder shall be enacted.
11
(5) Promulgate rules concerning the protection and enforcement of
constitutional rights, pleading, practice, and procedure in all courts, the
admission to the practice of law, the ntegrated Bar, and legal assistance to
the underprivileged. Such rules shall provide a simplified and inexpensive
procedure for the speedy disposition of cases, shall be uniform for all
courts of the same grade, and shall not diminish, increase, or modify
substantive rights. Rules of procedure of special courts and quasi-judicial
bodies shall remain effective unless disapproved by the Supreme Court.
12
Records, Vol. , p. 223.
13
Id. at 235.
14
CA Rollo, p. 10.
15
Rollo, p. 19.
16
W.C.M. Winston Co., Inc. v. Bernardi, 730 F2d 486 (1984), citing
NACCP v. Alabama, 2 L.ed.2d 1488 (1958).
17
Maite v. Chicago Board of Education, 415 NE2d 1034 (1980), cited in
DeWitt County Taxpayers Association v. The County Board of Deliot
County, 445 NE2d 509 (1983).
18
289 SCRA 337 (1998).
19
National Associates for the Advancement of Colored People v. State of
Alabama, 2 L.Ed.2d 1488 (1958).
20
SEC. 2. Parties. All persons who have or claim any interest which
would be affected by the declaration shall be made parties; and no
declaration shall, except as otherwise provided in these Rules, prejudice
the rights of persons not parties to the action.
21
SEC. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor
non-joinder of parties is ground for dismissal of an action. Parties may be
dropped or added by order of the court on motion of any party or on its
own initiative at any stage of the action and on such terms as are just. Any
claim against a misjoined party may be severed and proceeded with
separately.
22
People v. Navarra, 352 SCRA 84 (2001); People v. Fajardo, 345 SCRA
395 (2000); People v. Saulo, 344 SCRA 605 (2000); People v. Gamboa,
341 SCRA 451 (2000); People v. Banzales, 336 SCRA 64 (2000); People
v. Ordoo, 335 SCRA 331 (2000); People v. Mercado de Arabia, 332
SCRA 49 (2000); People v. Moreno, 314 SCRA 556 (1999); People v.
Castillon, 306 SCRA 271 (1999); People v. Mercado, 304 SCRA 504
(1999); People v. Peralta, 283 SCRA 81 (1997); People v. Ortiz-Miyake,
279 SCRA 180 (1997); People v. Villas, 277 SCRA 391 (1997); People v.
Santos, 276 SCRA 329 (1997); People v. Tan Tiong Meng, 271 SCRA 125
(1997); People v. Maozca, 269 SCRA 513 (1997); People v. Seoron,
267 SCRA 278 (1997); People v. De Leon, 267 SCRA 644 (1997); People
v. Benemerito, 264 SCRA 677 (1996); People v. Pabalan, 262 SCRA 574
(1996); People v. Calonzo, 262 SCRA 534 (1996).
23
325 SCRA 572 (2000).
24
259 SCRA 441 (1996).
25
260 SCRA 319 (1996).
26
d. at 330-332.
27
Supra at note 23.
28
Supra.
29
5 SCRA 126 (1962).
30
27 L.Ed.2d 669 (1971).
31
Ibid.
32
Id.; Fieger v. Thomas, 74 F.3d 740 (1996).
33
Broaderick v. Oklahoma, 37 L.Ed.2d 841.
34
Latino Officers Association v. Safir, 170 F.3d 167 (1999).
35
Forest City Daly Housing, Inc. v. Town of North Hempstead, 175 F.3d
144 (1999).
36
Beal v. Stern, 184 F.3d 117 (1999).
37
Maryland Commission on Human Relations v. Downey
Communications, Inc., 110 Md.App. 493, 678 A.2d 55 (1996).
38
Croselto v. State Bar of Wisconsin, 12 F.3d 396 (1993).
39
Younger v. Harris, Jr., supra.
40
U.S. v. Schnell, 982 F.2d 216 (1992); United States v. Bogle, 689
F.Supp. 1121 (1988).
41
United States v. Bogle, supra.
42
Collins v. Joluston, 59 L.Ed. 1071 (1915).
43
Gore v. United States, 62 L.Ed.2d 1405 (1958).
44
U.S. v. Schnell, supra.
45
State v. Murray, 175 NE 666 (1919).
46
Misolas v. Panga, 181 SCRA 648 (1990).
47
The essential elements for illegal recruitment are:
(1) the offender undertakes either any activity within the meaning of
"recruitment and placement" defined under Art. 13(b), or any of the
prohibited practices enumerated under Article 34 of the Labor Code; and
(2) he has no valid license or authority required by law to enable one to
lawfully engage in recruitment and placement of workers. [People v.
Pascua, 366 SCRA 505 (2001)].
The essential elements for large scale illegal recruitment are:
(1) the accused engages in the recruitment and placement of workers, as
defined under Article 13(b) or in any prohibited activities under Article 34 of
the Labor Code;
(2) accused has not complied with the guidelines issued by the Secretary
of Labor and Employment, particularly with respect to the securing of a
license or an authority to recruit and deploy workers, whether locally or
overseas; and
(3) accused commits the same against three (3) or more persons,
individually or as a group. [People v. Saulo, 344 SCRA 605 (2000)].
48
See Beal v. Pacific Railroad Corporation, 85 L.Ed. 577, cited in Younger
v. Harris, Jr., supra.
49
Boyle v. Landry, 27 L.Ed.2d 696 (1971).
50
341 SCRA 451 (2000).
51
d. at 456-458.
52
(a) n the pursuit of an independent foreign policy and while considering
national sovereignty, territorial integrity, national interest and the right to
self-determination paramount in its relations with other states, 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.
(b) 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. Towards this end, the State shall provide
adequate and timely social, economic and legal services to Filipino
migrant workers.
(c) While recognizing the significant contribution of Filipino migrant workers
to the national economy through their foreign exchange remittances, the
State does not promote overseas employment as a means to sustain
economic growth and achieve national development. The existence of the
overseas employment program rests solely on the assurance that the
dignity and fundamental human rights and freedoms of the Filipino citizen
shall not, at any time, be compromised or violated. The State, therefore,
shall continuously create local employment opportunities and promote the
equitable distribution of wealth and the benefits of development.
(d) The State affirms the fundamental equality before the law of women
and men and the significant role of women in nation-building. Recognizing
the contribution of overseas migrant women workers and their particular
vulnerabilities, the State shall apply gender sensitive criteria in the
formulation and implementation of policies and programs affecting migrant
workers and the composition of bodies tasked for the welfare of migrant
workers.
(e) Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty. n this
regard, it is imperative that an effective mechanism be instituted to ensure
that the rights and interest of distressed overseas Filipinos, in general, and
Filipino migrant workers, in particular, documented or undocumented, are
adequately protected and safeguarded.
(f) The right of Filipino migrant workers and all overseas Filipinos to
participate in the democratic decision-making processes of the State and
to be represented in institutions relevant to overseas employment is
recognized and guaranteed.
(g) The State recognizes that the ultimate protection to all migrant workers
is the possession of skills. Pursuant to this and as soon as practicable, the
government shall deploy and/or allow the deployment only of skilled
Filipino workers.
(h) Non-governmental organizations, duly recognized as legitimate, are
partners of the State in the protection of Filipino migrant workers and in the
promotion of their welfare. The State shall cooperate with them in a spirit
of trust and mutual respect.
(i) Government fees and other administrative costs of recruitment,
introduction, placement and assistance to migrant workers shall be
rendered free without prejudice to the provision of Section 36 hereof.
Nonetheless, the deployment of Filipino overseas workers, whether land-
based or sea-based, by local service contractors and manning agencies
employing them shall be encouraged. Appropriate incentives may be
extended to them. (Records, Vol. , p. 35.)
G.R. No. 129329 JuIy 31, 2001
ESTER M. ASUNCION, petitioner, vs.NATIONAL LABOR RELATIONS
COMMISSION, Second Division, MABINI MEDICAL CLINIC and DR.
WILFRIDO JUCO, respondents.
KAPUNAN, J.:
n her petition filed before this Court, Ester Asuncion prays that the
Decision, dated November 29, 1996, and the Resolution, dated February
20,1997, of the public respondent National Labor Relations Commission,
Second Division, in NLRC CA. 011188 which reversed the Decision of the
Labor Arbiter, dated May 15, 1996 be set aside.
The antecedents of this case are as follows:
On August 16, 1993, petitioner Ester M. Asuncion was employed as an
accountant/bookkeeper by the respondent Mabini Medical Clinic.
Sometime in May 1994, certain officials of the NCR-ndustrial Relations
Division of the Department of Labor and Employment conducted a routine
inspection of the premises of the respondent company and discovered
upon the disclosure of the petitioner of (documents) violations of the labor
standards law such as the non-coverage from the SSS of the employees.
Consequently, respondent Company was made to correct these violations.
On August 9, 1994, the private respondent, Medical Director Wilfrido Juco,
issued a memorandum to petitioner charging her with the following
offenses:
1. Chronic Absentism (sic) You have incurred since Aug. 1993 up to the
present 35 absences and 23 half-days.
2. Habitual tardiness You have late (sic) for 108 times. As shown on the
record book.
3. Loitering and wasting of company time on several occasions and
witnessed by several employees.
4. Getting salary of an absent employee without acknowledging or signing
for it.
5. Disobedience and insubordination - continued refusal to sign memos
given to you.
1
Petitioner was required to explain within two (2) days why she should not
be terminated based on the above charges.
Three days later, in the morning of August 12, 1994, petitioner submitted
her response to the memorandum. On the same day, respondent Dr. Juco,
through a letter dated August 12, 1994, dismissed the petitioner on the
ground of disobedience of lawful orders and for her failure to submit her
reply within the two-day period.
This prompted petitioner to file a case for illegal termination before the
NLRC.
n a Decision, dated May 15, 1996, Labor Arbiter Manuel Caday rendered
judgment declaring that the petitioner was illegally dismissed. The Labor
Arbiter found that the private respondents were unable to prove the
allegation of chronic absenteeism as it failed to present in evidence the
time cards, logbooks or record book which complainant signed recording
her time in reporting for work. These documents, according to the Labor
Arbiter, were in the possession of the private respondents. n fact, the
record book was mentioned in the notice of termination. Hence, the non-
presentation of these documents gives rise to the presumption that these
documents were intentionally suppressed since they would be adverse to
private respondent's claim. Moreover, the Labor Arbiter ruled that the
petitioner's absences were with the conformity of the private respondents
as both parties had agreed beforehand that petitioner would not report to
work on Saturdays. The handwritten listing of the days when complainant
was absent from work or late in reporting for work and even the
computerized print-out, do not suffice to prove that petitioner's absences
were unauthorized as they could easily be manufactured.
2
Accordingly, the
dispositive portion of the decision states, to wit:
WHEREFORE, Premises Considered, judgment is hereby rendered
declaring the dismissal of the complainant as illegal and ordering the
respondent company to immediately reinstate her to her former position
without loss of seniority rights and to pay the complainant's backwages
and other benefits, as follows:
1) P73,500.00 representing backwages as of the date of this decision until
she is actually reinstated in the service;
2) P20,000.00 by way of moral damages and another P20,000.00
representing exemplary damages; and
3) 10% of the recoverable award in this case representing attorney's fees.
SO ORDERED.
3
On appeal, public respondent NLRC rendered the assailed decision which
set aside the Labor Arbiter's ruling. nsofar as finding the private
respondents as having failed to present evidence relative to petitioner's
absences and tardiness, the NLRC agrees with the Labor Arbiter.
However, the NLRC ruled that petitioner had admitted the tardiness and
absences though offering justifications for the infractions. The decretal
portion of the assailed decision reads:
WHEREFORE, premises considered, the appealed decision is hereby
VACATED and SET ASDE and a NEW ONE entered dismissing the
complaint for illegal dismissal for lack of merit.
However, respondents Mabini Medical Clinic and Dr. Wilfrido Juco are
jointly and solidarily ordered to pay complainant Ester Asuncion the
equivalent of her three (3) months salary for and as a penalty for
respondents' non-observance of complainant's right to due process.
SO ORDERED.
4
Petitioner filed a motion for reconsideration which the public respondent
denied in its Resolution, dated February 19, 1997. Hence, petitioner
through a petition for certiorari under Rule 65 of the Rules of Court seeks
recourse to this Court and raises the following issue:
THE PUBLC RESPONDENT ERRED N FNDNG THAT THE
PETTONER WAS DSMSSED BY THE PRVATE RESPONDENT FOR A
JUST OR AUTHORZED CAUSE.
The petition is impressed with merit.
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.
5
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.
6
t bears stressing that a worker's employment is property in the
constitutional sense. He cannot be deprived of his work without due
process. n order for the dismissal to be valid, not only must it be based on
just cause supported by clear and convincing evidence,
7
the employee
must also be given an opportunity to be heard and defend himself.
8
t is
the employer who has the burden of proving that the dismissal was with
just or authorized cause.
9
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.
10
n 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.
11
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. For this reason, we find the findings of the Labor Arbiter to be
correct. On this point, the Labor Arbiter ruled, to wit:
x x x n the instant case, while the Notice of Termination served on the
complainant clearly mentions the record book upon which her tardiness
(and absences) was based, the respondent (company) failed to establish
(through) any of these documents and the handwritten listing,
notwithstanding, of (sic) the days when complainant was absent from work
or late in reporting for work and even the computerized print-outs, do not
suffice to prove the complainant's absences were unauthorized as they
could easily be manufactured. x x x
12
n IBM Philippines, Inc. v. NLRC,
13
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." More specifically, as held in
Uichico v. NLRC:
"t is true that administrative and quasi-judicial bodies like the NLRC are
not bound by the technical rules of procedure in the adjudication of cases.
However, this procedural rule should not be construed as a license to
disregard certain fundamental evidentiary rules. While the rules of
evidence prevailing in the courts of law or equity are not controlling in
proceedings before the NLRC, the evidence presented before it must at
least have a modicum of admissibility for it to be given some probative
value. The Statement of Profit and Losses submitted by Crispa, nc. to
prove its alleged losses, without the accompanying signature of a certified
public accountant or audited by an independent auditor, are nothing but
self-serving documents which ought to be treated as a mere scrap of
paper devoid of any probative value."
The computer print-outs, which constitute the only evidence of petitioners,
afford no assurance of their authenticity because they are unsigned. The
decisions of this Court, while adhering to a liberal view in the conduct of
proceedings before administrative agencies, have nonetheless
consistently required some proof of authenticity or reliability as condition
for the admission of documents.
n Jarcia Machine Shop and Auto Supply, Inc. v. NLRC,
14
this Court held as
incompetent unsigned daily time records presented to prove that the
employee was neglectful of his duties:
ndeed, the DTRs annexed to the present petition would tend to establish
private respondent's neglectful attitude towards his work duties as shown
by repeated and habitual absences and tardiness and propensity for
working undertime for the year 1992. But the problem with these DTRs is
that they are neither originals nor certified true copies. They are plain
photocopies of the originals, if the latter do exist. More importantly, they
are not even signed by private respondent nor by any of the employer's
representatives. x x x.
n the case at bar, both the handwritten listing and computer print-outs
being unsigned, the authenticity thereof is highly suspect and devoid of
any rational probative value especially in the light of the existence of the
official record book of the petitioner's alleged absences and tardiness in
the possession of the employer company.
ronically, 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. nterestingly, 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.
15
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.
We find that private respondents failed to present a single piece of credible
evidence to serve as the basis for their charges against petitioner and
consequently, failed to fulfill their burden of proving the facts which
constitute the just cause for the dismissal of the petitioner. However, the
NLRC ruled that despite such absence of evidence, there was an
admission on the part of petitioner in her Letter dated August 11, 1994
wherein she wrote:
am quite surprised why have incurred 35 absences since August 1993
up to the present. can only surmise that Saturdays were not included in
my work week at your clinic. f you will please recall, per agreement with
you, my work days at your clinic is from Monday to Friday without Saturday
work. As to my other supposed absences, believe that said absences
were authorized and therefore cannot be considered as absences which
need not be explained (sic). t is also extremely difficult to understand why
it is only now that am charged to explain alleged absences incurred way
back August 1993.
16
n reversing the decision of the Labor Arbiter, public respondent NLRC
relied upon the supposed admission of the petitioner of her habitual
absenteeism and chronic tardiness.
We do not subscribe to the findings of the NLRC that the above quoted
letter of petitioner amounted to an admission of her alleged absences. As
explained by petitioner, her alleged absences were incurred on Saturdays.
According to petitioner, these should not be considered as absences as
there was an arrangement between her and the private respondents that
she would not be required to work on Saturdays. Private respondents have
failed to deny the existence of this arrangement. Hence, the decision of the
NLRC that private respondent had sufficient grounds to terminate
petitioner as she admitted the charges of habitual absences has no leg to
stand on.
Neither have the private respondents shown by competent evidence that
the petitioner was given any warning or reprimanded for her alleged
absences and tardiness. Private respondents claimed that they sent
several notices to the petitioner warning her of her absences, however,
petitioner refused to receive the same. On this point, the Labor Arbiter
succinctly observed:
The record is bereft of any showing that complainant was ever warned of
her absences prior to her dismissal on August 9, 1994. The alleged notices
of her absences from August 17, until September 30, 1993, from October
until November 27, 1993, from December 1, 1993 up to February 26, 1994
and the notice dated 31 May 1994 reminding complainant of her five (5)
days absences, four (4) half-days and tardiness for 582 minutes (Annex
"1" to "1-D" attached to respondent' Rejoinder), fail to show that the
notices were received by the complainant. The allegation of the
respondents that the complainant refused to received (sic) the same is
self-serving and merits scant consideration. xxx
17
The Court, likewise, takes note of the fact that the two-day period given to
petitioner to explain and answer the charges against her was most
unreasonable, considering that she was charged with several offenses and
infractions (35 absences, 23 half-days and 108 tardiness), some of which
were allegedly committed almost a year before, not to mention the fact that
the charges leveled against her lacked particularity.
Apart from chronic absenteeism and habitual tardiness, petitioner was also
made to answer for loitering and wasting of company time, getting salary
of an absent employee without acknowledging or signing for it and
disobedience and insubordination.
18
Thus, the Labor Arbiter found that
actually petitioner tried to submit her explanation on August 11, 1994 or
within the two-day period given her, but private respondents prevented her
from doing so by instructing their staff not to accept complainant's
explanation, which was the reason why her explanation was submitted a
day later.
19
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.
20
n Ruffy v. NLRC,
21
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." n the
case at bar, private respondents cannot be gainsaid to have given
petitioner the ample opportunity to answer the charges leveled against her.
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.
22
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.
23
Not having satisfied its burden
of proof, we conclude that the employer dismissed the petitioner without
any just cause. Hence, the termination is illegal.
Having found that the petitioner has been illegally terminated, she is
necessarily entitled to reinstatement to her former previous position
without loss of seniority and the payment of backwages.
24
WHEREFORE, the Decision of the National Labor Relations Commission,
dated November 29, 1996 and the Resolution, dated February 20, 1997
are hereby REVERSED and SET ASDE, and the Decision of the Labor
Arbiter, dated May 15, 1996 RENSTATED.
SO ORDERED.
Puno, Pardo, and Ynares-Santiago, JJ., concur.Davide, Jr., C.J.,
(Chairman), on official leave.
Footnotes
1
Letter from Medical Director Wilfrido S. Juco to herein petitioner, dated
August 9, 1994; Rollo, p. 104.
2
Decision, Labor Arbiter, p. 19; Id., at 78.
3
Id., at 24-25; Id., at 83-84.
4
NLRC Decision, p. 17; Id., at 55.
5
Manila Electric Company v. NLRC and Jeremias Cortez, 263 SCRA 531
(1996).
6
Manila Mandarin Employees Union v. NLRC, 264 SCRA 320 (1996).
7
Nagusara v. National Labor Relations Commission, 290 SCRA 245, 254
(1998) citing Philippine Long Distance Telephone Co. v. NLRC, July 31,
1997.
8
RDS Trucking v. National Labor Relations Commission, 294 SCRA 623,
629 (1998); Maneja v. National Labor Relations Commission, 290 SCRA
603, 620 (1998); Santos v. National Labor Relations Commission, 287
SCRA 117, 122 (1998).
9
Id., at 623; Lopez v. National Labor Relations Commission, 297 SCRA
508, 516 (1998); Caurdanetaan Piece Workers Union v. Laguesma, 286
SCRA 401, 434 (1998); Del Monte Philippines, Inc. v. NLRC, 287 SCRA
71, 77 (1998).
10
Paguio Transport Corporation v. National Labor Relations Commission,
294 SCRA 657, 665-666 (1998).
11
Rollo, p. 122.
12
Id., at 78.
13
305 SCRA 592 (1999).
14
266 SCRA 97 (1997); Ibid.
15
IBM, Inc. v. NLRC, supra.
16
Rollo, p. 105.
17
Id., at 75-76.
18
Rollo, p. 124.
19
See note 3.
20
IBM, Inc. V. NLRC, supra; Maneja v. National Labor Relations
Commission, supra.
21
182 SCRA 365, 369-370 (1990).
22
These policies are embodied in Articles 3 and 4 of the Labor Code,
which read:
ART. 3. Declaration of basic policy. The State shall 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. x x x [Emphasis supplied].
ART. 4. Construction in favor of labor. 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.
23
Dizon v. NLRC, 180 SCRA 52 (1989).
24
LABOR CODE, Art. 279.
G.R. No. L-46496 February 27, 1940
ANG TIBAY, represented by TORIBIO TEODORO, manager and
propietor, and NATIONAL WORKERS BROTHERHOOD, petitioners, vs.
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR
UNION, INC., respondents.
Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for
the Court of Industrial Relations.Antonio D. Paguia for National Labor
Unon.Claro M. Recto for petitioner "Ang Tibay".Jose M. Casal for National
Workers' Brotherhood.
LAUREL, J.:
The Solicitor-General in behalf of the respondent Court of ndustrial
Relations in the above-entitled case has filed a motion for reconsideration
and moves that, for the reasons stated in his motion, we reconsider the
following legal conclusions of the majority opinion of this Court:
1. Que un contrato de trabajo, asi individual como colectivo, sin termino
fijo de duracion o que no sea para una determinada, termina o bien por
voluntad de cualquiera de las partes o cada vez que ilega el plazo fijado
para el pago de los salarios segun costumbre en la localidad o cunado se
termine la obra;
2. Que los obreros de una empresa fabril, que han celebrado contrato, ya
individual ya colectivamente, con ell, sin tiempo fijo, y que se han visto
obligados a cesar en sus tarbajos por haberse declarando paro forzoso en
la fabrica en la cual tarbajan, dejan de ser empleados u obreros de la
misma;
3. Que un patrono o sociedad que ha celebrado un contrato colectivo de
trabajo con sus osbreros sin tiempo fijo de duracion y sin ser para una
obra determiminada y que se niega a readmitir a dichos obreros que
cesaron como consecuencia de un paro forzoso, no es culpable de
practica injusta in incurre en la sancion penal del articulo 5 de la Ley No.
213 del Commonwealth, aunque su negativa a readmitir se deba a que
dichos obreros pertenecen a un determinado organismo obrero, puesto
que tales ya han dejado deser empleados suyos por terminacion del
contrato en virtud del paro.
The respondent National Labor Union, nc., on the other hand, prays for
the vacation of the judgement rendered by the majority of this Court and
the remanding of the case to the Court of ndustrial Relations for a new
trial, and avers:
1. That Toribio Teodoro's claim that on September 26, 1938, there was
shortage of leather soles in ANG TBAY making it necessary for him to
temporarily lay off the members of the National Labor Union nc., is entirely
false and unsupported by the records of the Bureau of Customs and the
Books of Accounts of native dealers in leather.
2. That the supposed lack of leather materials claimed by Toribio Teodoro
was but a scheme to systematically prevent the forfeiture of this bond
despite the breach of his CONTRACT with the Philippine Army.
3. That Toribio Teodoro's letter to the Philippine Army dated September 29,
1938, (re supposed delay of leather soles from the States) was but a
scheme to systematically prevent the forfeiture of this bond despite the
breach of his CONTRACT with the Philippine Army.
4. That the National Worker's Brotherhood of ANG TBAY is a company or
employer union dominated by Toribio Teodoro, the existence and functions
of which are illegal. (281 U.S., 548, petitioner's printed memorandum, p.
25.)
5. That in the exercise by the laborers of their rights to collective
bargaining, majority rule and elective representation are highly essential
and indispensable. (Sections 2 and 5, Commonwealth Act No. 213.)
6. That the century provisions of the Civil Code which had been (the)
principal source of dissensions and continuous civil war in Spain cannot
and should not be made applicable in interpreting and applying the
salutary provisions of a modern labor legislation of American origin where
the industrial peace has always been the rule.
7. That the employer Toribio Teodoro was guilty of unfair labor practice for
discriminating against the National Labor Union, nc., and unjustly favoring
the National Workers' Brotherhood.
8. That the exhibits hereto attached are so inaccessible to the respondents
that even with the exercise of due diligence they could not be expected to
have obtained them and offered as evidence in the Court of ndustrial
Relations.
9. That the attached documents and exhibits are of such far-reaching
importance and effect that their admission would necessarily mean the
modification and reversal of the judgment rendered herein.
The petitioner, Ang Tibay, has filed an opposition both to the motion for
reconsideration of the respondent National Labor Union, nc.
n view of the conclusion reached by us and to be herein after stead with
reference to the motion for a new trial of the respondent National Labor
Union, nc., we are of the opinion that it is not necessary to pass upon the
motion for reconsideration of the Solicitor-General. We shall proceed to
dispose of the motion for new trial of the respondent labor union. Before
doing this, however, we deem it necessary, in the interest of orderly
procedure in cases of this nature, in interest of orderly procedure in cases
of this nature, to make several observations regarding the nature of the
powers of the Court of ndustrial Relations and emphasize certain guiding
principles which should be observed in the trial of cases brought before it.
We have re-examined the entire record of the proceedings had before the
Court of ndustrial Relations in this case, and we have found no substantial
evidence that the exclusion of the 89 laborers here was due to their union
affiliation or activity. The whole transcript taken contains what transpired
during the hearing and is more of a record of contradictory and conflicting
statements of opposing counsel, with sporadic conclusion drawn to suit
their own views. t is evident that these statements and expressions of
views of counsel have no evidentiary value.
The Court of ndustrial Relations is a special court whose functions are
specifically stated in the law of its creation (Commonwealth Act No. 103). t
is more an administrative than a part of the integrated judicial system of
the nation. t is not intended to be a mere receptive organ of the
Government. Unlike a court of justice which is essentially passive, acting
only when its jurisdiction is invoked and deciding only cases that are
presented to it by the parties litigant, the function of the Court of ndustrial
Relations, as will appear from perusal of its organic law, is more active,
affirmative and dynamic. t not only exercises judicial or quasi-judicial
functions in the determination of disputes between employers and
employees but its functions in the determination of disputes between
employers and employees but its functions are far more comprehensive
and expensive. t has jurisdiction over the entire Philippines, to consider,
investigate, decide, and settle any question, matter controversy or dispute
arising between, and/or affecting employers and employees or laborers,
and regulate the relations between them, subject to, and in accordance
with, the provisions of Commonwealth Act No. 103 (section 1). t shall take
cognizance or purposes of prevention, arbitration, decision and settlement,
of any industrial or agricultural dispute causing or likely to cause a strike or
lockout, arising from differences as regards wages, shares or
compensation, hours of labor or conditions of tenancy or employment,
between landlords and tenants or farm-laborers, provided that the number
of employees, laborers or tenants of farm-laborers involved exceeds thirty,
and such industrial or agricultural dispute is submitted to the Court by the
Secretary of Labor or by any or both of the parties to the controversy and
certified by the Secretary of labor as existing and proper to be by the
Secretary of Labor as existing and proper to be dealth with by the Court for
the sake of public interest. (Section 4, ibid.) t shall, before hearing the
dispute and in the course of such hearing, endeavor to reconcile the
parties and induce them to settle the dispute by amicable agreement.
(Paragraph 2, section 4, ibid.) When directed by the President of the
Philippines, it shall investigate and study all industries established in a
designated locality, with a view to determinating the necessity and fairness
of fixing and adopting for such industry or locality a minimum wage or
share of laborers or tenants, or a maximum "canon" or rental to be paid by
the "inquilinos" or tenants or less to landowners. (Section 5, ibid.) n fine, it
may appeal to voluntary arbitration in the settlement of industrial disputes;
may employ mediation or conciliation for that purpose, or recur to the more
effective system of official investigation and compulsory arbitration in order
to determine specific controversies between labor and capital industry and
in agriculture. There is in reality here a mingling of executive and judicial
functions, which is a departure from the rigid doctrine of the separation of
governmental powers.
n the case of Goseco vs. Court of Industrial Relations et al., G.R. No.
46673, promulgated September 13, 1939, we had occasion to joint out that
the Court of ndustrial Relations et al., G. R. No. 46673, promulgated
September 13, 1939, we had occasion to point out that the Court of
ndustrial Relations is not narrowly constrained by technical rules of
procedure, and the Act requires it to "act according to justice and equity
and substantial merits of the case, without regard to technicalities or legal
forms and shall not be bound by any technicalities or legal forms and shall
not be bound by any technical rules of legal evidence but may inform its
mind in such manner as it may deem just and equitable." (Section 20,
Commonwealth Act No. 103.) t shall not be restricted to the specific relief
claimed or demands made by the parties to the industrial or agricultural
dispute, but may include in the award, order or decision any matter or
determination which may be deemed necessary or expedient for the
purpose of settling the dispute or of preventing further industrial or
agricultural disputes. (section 13, ibid.) And in the light of this legislative
policy, appeals to this Court have been especially regulated by the rules
recently promulgated by the rules recently promulgated by this Court to
carry into the effect the avowed legislative purpose. The fact, however, that
the Court of ndustrial Relations may be said to be free from the rigidity of
certain procedural requirements does not mean that it can, in justifiable
cases before it, entirely ignore or disregard the fundamental and essential
requirements of due process in trials and investigations of an
administrative character. There are primary rights which must be respected
even in proceedings of this character:
(1) The first of these rights is the right to a hearing, which includes the right
of the party interested or affected to present his own case and submit
evidence in support thereof. n the language of Chief Hughes, in Morgan v.
U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129, "the liberty and
property of the citizen shall be protected by the rudimentary requirements
of fair play.
(2) Not only must the party be given an opportunity to present his case and
to adduce evidence tending to establish the rights which he asserts but the
tribunal must consider the evidence presented. (Chief Justice Hughes in
Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906, 80 law. ed. 1288.) n the
language of this court in Edwards vs. McCoy, 22 Phil., 598, "the right to
adduce evidence, without the corresponding duty on the part of the board
to consider it, is vain. Such right is conspicuously futile if the person or
persons to whom the evidence is presented can thrust it aside without
notice or consideration."
(3) "While the duty to deliberate does not impose the obligation to decide
right, it does imply a necessity which cannot be disregarded, namely, that
of having something to support it is a nullity, a place when directly
attached." (Edwards vs. McCoy, supra.) This principle emanates from the
more fundamental is contrary to the vesting of unlimited power anywhere.
Law is both a grant and a limitation upon power.
(4) Not only must there be some evidence to support a finding or
conclusion (City of Manila vs. Agustin, G.R. No. 45844, promulgated
November 29, 1937, XXXV O. G. 1335), but the evidence must be
"substantial." (Washington, Virginia and Maryland Coach Co. v. national
labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed.
965.) t means such relevant evidence as a reasonable mind accept as
adequate to support a conclusion." (Appalachian Electric Power v. National
Labor Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations
Board v. Thompson Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater
Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758,
760.) . . . The statute provides that "the rules of evidence prevailing in
courts of law and equity shall not be controlling.' The obvious purpose of
this and similar provisions is to free administrative boards from the
compulsion of technical rules so that the mere admission of matter which
would be deemed incompetent inn judicial proceedings would not
invalidate the administrative order. (nterstate Commerce Commission v.
Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860; nterstate
Commerce Commission v. Louisville and Nashville R. Co., 227 U.S. 88, 93
33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene and Southern
Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a
desirable flexibility in administrative procedure does not go far as to justify
orders without a basis in evidence having rational probative force. Mere
uncorroborated hearsay or rumor does not constitute substantial evidence.
(Consolidated Edison Co. v. National Labor Relations Board, 59 S. Ct.
206, 83 Law. ed. No. 4, Adv. Op., p. 131.)"
(5) The decision must be rendered on the evidence presented at the
hearing, or at least contained in the record and disclosed to the parties
affected. (nterstate Commence Commission vs. L. & N. R. Co., 227 U.S.
88, 33 S. Ct. 185, 57 Law. ed. 431.) Only by confining the administrative
tribunal to the evidence disclosed to the parties, can the latter be protected
in their right to know and meet the case against them. t should not,
however, detract from their duty actively to see that the law is enforced,
and for that purpose, to use the authorized legal methods of securing
evidence and informing itself of facts material and relevant to the
controversy. Boards of inquiry may be appointed for the purpose of
investigating and determining the facts in any given case, but their report
and decision are only advisory. (Section 9, Commonwealth Act No. 103.)
The Court of ndustrial Relations may refer any industrial or agricultural
dispute or any matter under its consideration or advisement to a local
board of inquiry, a provincial fiscal. a justice of the peace or any public
official in any part of the Philippines for investigation, report and
recommendation, and may delegate to such board or public official such
powers and functions as the said Court of ndustrial Relations may deem
necessary, but such delegation shall not affect the exercise of the Court
itself of any of its powers. (Section 10, ibid.)
(6) The Court of ndustrial Relations or any of its judges, therefore, must
act on its or his own independent consideration of the law and facts of the
controversy, and not simply accept the views of a subordinate in arriving at
a decision. t may be that the volume of work is such that it is literally
Relations personally to decide all controversies coming before them. n the
United States the difficulty is solved with the enactment of statutory
authority authorizing examiners or other subordinates to render final
decision, with the right to appeal to board or commission, but in our case
there is no such statutory authority.
(7) The Court of ndustrial Relations should, in all controversial questions,
render its decision in such a manner that the parties to the proceeding can
know the various issues involved, and the reasons for the decision
rendered. The performance of this duty is inseparable from the authority
conferred upon it.
n the right of the foregoing fundamental principles, it is sufficient to
observe here that, except as to the alleged agreement between the Ang
Tibay and the National Worker's Brotherhood (appendix A), the record is
barren and does not satisfy the thirst for a factual basis upon which to
predicate, in a national way, a conclusion of law.
This result, however, does not now preclude the concession of a new trial
prayed for the by respondent National Labor Union, nc., it is alleged that
"the supposed lack of material claimed by Toribio Teodoro was but a
scheme adopted to systematically discharged all the members of the
National Labor Union nc., from work" and this avernment is desired to be
proved by the petitioner with the "records of the Bureau of Customs and
the Books of Accounts of native dealers in leather"; that "the National
Workers Brotherhood Union of Ang Tibay is a company or employer union
dominated by Toribio Teodoro, the existence and functions of which are
illegal." Petitioner further alleges under oath that the exhibits attached to
the petition to prove his substantial avernments" are so inaccessible to the
respondents that even within the exercise of due diligence they could not
be expected to have obtained them and offered as evidence in the Court of
ndustrial Relations", and that the documents attached to the petition "are
of such far reaching importance and effect that their admission would
necessarily mean the modification and reversal of the judgment rendered
herein." We have considered the reply of Ang Tibay and its arguments
against the petition. By and large, after considerable discussions, we have
come to the conclusion that the interest of justice would be better served if
the movant is given opportunity to present at the hearing the documents
referred to in his motion and such other evidence as may be relevant to
the main issue involved. The legislation which created the Court of
ndustrial Relations and under which it acts is new. The failure to grasp the
fundamental issue involved is not entirely attributable to the parties
adversely affected by the result. Accordingly, the motion for a new trial
should be and the same is hereby granted, and the entire record of this
case shall be remanded to the Court of ndustrial Relations, with
instruction that it reopen the case, receive all such evidence as may be
relevant and otherwise proceed in accordance with the requirements set
forth hereinabove. So ordered.
Avancea, C. J., Villa-Real, Imperial, Diaz, Concepcion and Moran, JJ.,
concur.
G.R. No. L-29064 ApriI 29, 1971
AIR MANILA, INC., petitioner, vs.HON. MARCELO S. BALATBAT,
DIRECTOR NILO DE GUIA, DR. GREGORIO Y. ZARA, and COL. JUAN
B. GUEVARRA as members of the CIVIL AERONAUTICS BOARD and
PHILIPPINE AIR LINES, INC., respondents.
Bautista Angelo, Antonio, Lopez and Associates and Santos, Buted and
Associates for petitioner.
Crispin D. Baizas and Cenon Cervantes, Jr. for respondent Philippine Air
Lines, Inc.
Office of the Solicitor General Antonio P. Barredo and Solicitor Bernardo P.
Pardo for respondent Civil Aeronautics Board.

REYES, J.B.L., J.:
This is a petition for certiorari filed by Air Manila, nc., to determine the
validity of Resolution No. 139 (68) of the Civil Aeronautics Board in CAB
Case No. 1414, allegedly issued without or in excess of jurisdiction.
There is no dispute as to the facts of this case.
On 1 April 1968, the Philippine Air Lines, hereafter referred to as PAL,
petitioned the Civil Aeronautics Board, referred to hereafter as the Board,
for approval of a proposed schedule introducing seven nights - F515/516,
F555/556, F561/562, F531/532, F591/338, F527/528, and F211/212 - and
the adjustment of the flight schedule that may thus be affected (CAB Case
No. 1414). On 15 April 1968, action on the petition was deferred for further
study.
On 22 April 1968, the Board passed Resolution No. 109 (68), referring
PAL's petition to a hearing examiner for economic justification. Accordingly,
the designated hearing officer set the initial hearing thereof for 30 April
1968.
On 29 April 1968, PAL moved for reconsideration of Resolution No. 109
(68). By resolution of 6 May 1968, the Board deferred action on this later
motion, until PAL shall have resumed its DC-3 services in certain airports
named therein.
On 9 May 1968, PAL filed another motion, this time for reconsideration of
the Board resolution of 6 May 1968, on the ground that the new flights
which it was proposing to operate in Case No. EP-1414 will be serviced by
jet-prop or pure jet equipment only, thus, the order for resumption of DC-3
services in said resolution was improper and should be deleted. n its
Resolution No. 131 (68) of 20 May 1968, the Board deferred action on this
motion for reconsideration.
t appears, however, that on 15 May 1968, PAL filed an Urgent Petition for
approval of a consolidated schedule of jet and jet prop flights, with an
interim DC-3 schedule to different secondary and feeder points (DTS-35).
On 28 May 1968, the Board issued its Resolution No. 139 (68), approving
DTS-35 for a period of 30 days, effective 1 June 1968, subject to the
conditions that (a) the flight between Manila and San Fernando, La Union,
F210/211 of the same timetable, be operated daily instead of twice a week
as proposed and (b) that all schedules under DTS-35, for which no
previous approval has been granted by the Board, are to be referred to a
hearing examiner for reception of evidence on its economic justification.
After the examiner's report, several of the proposed flights were approved
for 30 days from 31 July 1968.
On 31 May 1968, Air Manila, nc., filed the instant petition claiming that the
respondent Board acted without or in excess of jurisdiction and/or with
abuse of discretion in issuing its Resolution No. 139 (68). t is petitioner's
allegation that the proposed new schedule, involving an increase of
frequencies, would not only saturate the routes served also by petitioner,
but would also affect its schedule; that the Board's approval of said
Domestic Traffic Schedule without receiving the evidence of the parties
constituted a deprivation of petitioner's right to be heard; and that such
authorization to PAL to operate the proposed schedule without economic
justification amounted to a capricious and whimsical exercise by the Board
of its power amounting to lack of jurisdiction.
There is no merit to the contention of petitioner. t has been correctly said
that administrative proceedings are not exempt from the operation of
certain basic and fundamental procedural principles, such as the due
process requirements in investigations and trials.
1
And this administrative
due process is recognized to include (a) the right to notice, be it actual or
constructive, of the institution of the proceedings that may affect a person's
legal rights; (b) reasonable opportunity to appear and defend his rights,
introduce witnesses and relevant evidence in his favor, (c) a tribunal so
constituted as to give him reasonable assurance of honesty and
impartiality, and one of competent Jurisdiction; and (4) a finding or decision
by that tribunal supported by substantial evidence presented at the
hearing, or at least contained in the records or disclosed to the parties
affected.
2
n the present case, it can not truthfully be said that the provisional
approval by the Board of PAL's proposed DTS-35 violates the requisites of
administrative due process. Admittedly, after PAL's proposal to introduce
new Mercury night flights (in CAB Case No. EP-1414) had been referred to
a hearing examiner for economic justification, PAL submitted a so-called
consolidated schedule of flights, DTS-35, that included the same Mercury
night flights involved in Case EP-1414, and this was allowed by Board
Resolution No. 139 (68). According to respondents, however, the Board's
action was impelled by the circumstance that at the time, the
authorizations of certain flight schedules previously allowed but were
incorporated in DTS-35 were about to expire; thus, the consolidated
schedule had to be approved temporarily if the operations of the flights
referred to were not to be suspended. n short, the temporary y permit was
issued to prevent the stoppage or cessation of services in the affected
areas. This point petitioner has failed to refute.
Neither can the provisional authorization of DTS-35 be said to have done
away with the requisite hearing and investigation of the new flight
schedules and, consequently, to have deprived the petitioner of its right to
be heard. Note that in allowing the operation or effectivity of PAL's
consolidated flight schedule, it was precisely prescribed that "all schedules
under the DTS-35 for which no previous approval has been granted by the
Board, are hereby referred to a hearing examiner for reception of evidence
on its economic justification."
3
t has not been denied that such hearings
were actually conducted by the hearing examiner and a report on the
result thereof was submitted to the Board. And the Board, considering the
report of the hearing examiner, passed Resolution No. 190 (68)
4
approving, for a period of 30 days starting 31 July 1968, only three or four
frequencies of the seven proposed new flights (F338, F591, F531/532,
F555/556, F527/528, F561/562, and F515/516). There is no proof, not
even allegation, that in all those bearings petitioner was not notified or
given opportunity to adduce evidence in support of its opposition.
t may be true that the temporary approval of DTS-35 resulted in the
immediate operation of the opposed flights before the existence of
economic justification therefor has been finally determined. But this fact
alone would not work against the validity of the provisional authorization
thus issued. For, under the law, the Civil Aeronautics Board is not only
empowered to grant certificates of public convenience and necessity; it
can also issue, deny, revise, alter, modify, cancel, suspend or revoke, in
whole or in part, any temporary operating permit, upon petition or
complaint of another or even at its own initiative.
5
The exercise of the
power, of course, is supposed to be conditioned upon the paramount
consideration of public convenience and necessity, and nothing has been
presented in this case to prove that the disputed action by the Board has
been prompted by a cause other than the good of the service.
t may be also pointed out that the new schedule objected to by petitioner
will affect its services in six routes in the following manner:
(a) Route MANLA-MACTAN-MANLAF515/516 Seven (7) additional
flights a weekand vice-versa; schedule is timed just ahead of Air Manila's
schedule.
(b) Route MANLA-DAVAO-MANLAF555/556 Seven (7) additional
flights a weekand vice-versa; schedule is timed just ahead of Air Manilas
schedule.
(c) Route MANLA-BACOLOD-MANLAF531/532 Seven (7)
additional flights a weekand vice-versa; timed just ahead of Air Manila's
schedule.
(d) Route MACTAN-TACLOBAN-MACTANF527/528 Seven (7)
additional flights a weekand vice-versa.
(e) Route TACLOBAN-MACTAN-TACLOBANF391/392 Flight
schedule revised as to make itjust ahead of Air Manila's schedule.
(f) Route MACTAN-DAVAO-MACTANF579/580 PAL's old schedule
revised to adverse-ly affect Air Manila's schedule in this route.
Respondents disclosed, however, and this has not been denied by
petitioner, that the schedule of flights provisionally approved in Resolution
No. 139(68) was subsequently readjusted by the Board in order to conform
with its established policy on separation time between flights.
6
While the
aforementioned readjustment of the schedule was secured by the Filipinas
Orient Airways and, therefore, may not particularly improve petitioner's
situation, the resolution indicated that relief can still be obtained from the
Board, thus precluding resort at once to the relief afforded by a certiorari
proceeding in this Tribunal.
7
Likewise, the records show that by Resolution
No. 190 (68) in the same Case No. EP-1414, the Board allowed only three
or four frequencies of the proposed seven new flights, such authorization
terminating after 30 days from 31 July 1968.
t is evident from the foregoing facts that not only has the resolution
subject of the present petition been modified, but its effectivity had been
fixed up to 30 September 1968. There being no proof that the situation
existing when Resolution No. 139 (68) was issued still persists, the issue
herein presented apparently has become moot and academic.
FOR THE FOREGONG CONSDERATONS, the petition in this case is
hereby dismissed, with costs against the petitioner.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando,
Teehankee, Barredo, Villamor and Makasiar, JJ., concur.

Footnotes
1 Asprec vs. tchon, L-21695, 30 April 1966, 16 SCRA 921.
2 Garcia vs. Executive Secretary, 1, 19748, 13 September 1962, 6 SCRA
1. Concurring Opinion; also Ang Tibay vs. CR, 69 Phil. 635.
3 Annex R, Petition for Certiorari.
4 Respondent Board's Answer, page 8.
5 Section 10 (C) (1), Republic Act No. 776.
6&7 Editor's Note: No corresponding footnotes in the manuscript.
G.R. No. 77859 May 25, 1988
CENTURY TEXTILE MILLS, INC. and ALFREDO T. ESCAO,
petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, HON.
LABOR ARBITER FELIPE P. PATI, and EDUARDO CALANGI,
respondents.
Melanio L. Zoreta for petitioners.
The Solicitor General for public respondent.
Alfonso P. Ancheta, Jr. for private respondent.

FELICIANO, J.:
Since 13 December 1974, private respondent Eduardo Calangi had been
employed at the factory of petitioner Century Textile Mills, nc. where he
worked initially as an apprentice and later on as a machine operator in the
Finishing Department. Effective 10 June 1983, however, petitioner
Corporation, acting through its company officers,
1
placed him under
preventive suspension and, on 27 July 1983, completely terminated his
services with the company. Private respondent Calangi was accused of
having masterminded a criminal plot against Melchor Meliton and Antonio
Santos, two of his supervisors at his place of work.
The events that led to private respondent's dismissal are as follows:
According to Rodolfo Marin (a factory co-worker of private respondent
Calangi), at around 12:15 a.m. on 4 June 1983 and within company
premises, he chanced upon "Gatchie" Torrena (a machine operator at
petitioner's factory) and noticed the latter mixing some substance with the
drinking water contained in a pitcher from which Meliton and Santos
regularly drank. Before anyone could take a drink from the pitcher, Marin
reported what he had observed to Meliton who, in turn, informed Santos of
the same. Soon after, Meliton and Santos took possession of the pitcher of
water and filed a formal report of the incident with company management.
2
The contents of the pitcher were subsequently brought to and analyzed
by chemists at the Philippine Constabulary Crime Laboratory at Camp
Crame, Quezon City who found the presence of a toxic chemical
(formaldehyde) therein.
3
n the police investigation that followed, Torrena confessed that private
respondent Calangi personally instructed him, and he agreed, to place
formaldehyde in the pitcher of water. Torrena also admitted that he and
private respondent were then motivated by a desire to avenge themselves
upon Meliton and Santos, both of whom had instigated their (i.e., Torrena's
and private respondent's) suspension from work several times in the past.
4
These circumstances moved petitioner Corporation preventively to
suspend Torrena and private respondent Calangi, and eventually to
dismiss them from its employ. Additionally, criminal charges for attempted
murder were filed against these two employees with the Office of the
Provincial Fiscal of Rizal.
On 11 October 1983, private respondent Calangi filed a Complaint
5
for
illegal dismissal (docketed as Case No. NLRC-NCR-10-4518-83) with the
Arbitration Branch, National Capital Region, of the then Ministry of Labor
and Employment. Among other things, private respondent alleged in his
complaint that "[p]rior to his preventive suspension neither the company
nor any of its officers furnished him [with] a copy of their charges, if any,
nor afforded him the opportunity to answer the same and defend himself."
Hence, private respondent claimed entitlement to the following:
A. Moral damages P50,000.00
Actual damages
a) Wages for 3 years P6,520.80
b) ECOLA for 3 years 3, 841.60
c) 13th month pay for
3 years 903.60
d) Vacation and Sick
Leave of 15 days each 627.00 11,893.00
Exemplary damages 25,000.00
Attorney's fees 17,398.60
TOTAL P104,291.60
A prayer for "such other reliefs and remedies consequent upon the
premises" was likewise set out in the complaint.
n a Decision
6
dated 16 August 1984, the Labor Arbiter dismissed private
respondent's Complaint. The Labor Arbiter found that not only was the
evidence against private respondent Calangi "so overwhelming" and
"sufficient enough" to justify his dismissal, but that private respondent had
himself failed inexplicably to deny or controvert the charges against him.
An appeal was brought by private respondent Calangi before the public
respondent National Labor Relations Commission, which agency, on 3
December 1985, rendered a Decision,
7
the dispositive portion of which
reads:
WHEREFORE, with all the foregoing considerations, let the appealed
decision dated 27 August 1984 be, as it is hereby REVERSED.
Accordingly, complainant's dismissal is hereby declared to be illegal, and
consequently, respondents [petitioners] are hereby ordered to reinstate
Eduardo Calangi to his former or equivalent position without loss of
seniority and other benefits, with full backwages from 27 July 1983 until he
is actually reinstated.
SO ORDERED.
Petitioner Corporations' Motion for Reconsideration was denied on 4 April
1986. Sometime in November of 1986, the Labor Arbiter issued a writ of
execution directing petitioners to pay private respondent Calangi the
amount of P54,747.74 representing the latter's backwages, 13th month
pay, living allowance, and vacation and sick leave i.e., actual damages.
The present Petition for certiorari with Preliminary njunction or Restraining
Order was filed with this Court on 3 April 1987. The Court issued a
Temporary Restraining Orders
8
on 8 April 1987 and, on 24 August 1987,
issued a Resolution
9
giving due course to the Petition and directing the
parties to submit their respective memoranda.
The Petition at bar raises the following issues for consideration: (1)
whether or not private respondent Calangi was illegally dismissed from his
job as machine operator; and (2) assuming he was illegally dismissed,
whether or not petitioner Corporation can be ordered legally (a) to reinstate
private respondent Calangi to his former position in the company, with full
backwages and without loss of seniority rights and other benefits,
considering that such relief had not been sought by private respondent in
his complaint, and (b) to pay private respondent an amount for actual
damages in excess of what had been claimed by the latter in his
Complaint.
We sustain the ruling of public respondent Commission that private
respondent Calangi had been dismissed without just cause from his
employment by petitioner Corporation.
Public respondent Commission found that private respondent Calangi was
effectively denied his right to due process in that, prior to his preventive
suspension and the termination of his services, he had not been given the
opportunity either to affirm or refute the charges proferred against him by
petitioner Corporation. Petitioners allege however that private respondent
Calangi had been previously informed of and given the chance to answer
the company's accusations against him, but that he had "kept silent" all the
while. The following Memorandum issued by petitioner's Personnel
Manager on 10 June 1983 (Calangi's first day of preventive suspension)
was cited in this connection:
MEMO: TO ALL CONCERNED
SUBJ.: Under Preventive Suspension Employees. Please be advised that
the following employees are under preventive suspension (indefinite)
namely:
1. Eduardo Calangi--effective June 10, 1983
2. Gatchie Torrena--effective June 10, 1983
GROUND
Policy nstruction No. 10 of the New Labor Code of the Philippines,
Revised Edition 1982.
NOTE: Decision about the indebtedness suspension of concerned
employees was reached after the meeting between the union and the
management.
Be guided accordingly.
MANAGEMENT
(SGD.) Jovencio G. Tolentino
Personnel Manager
Petitioners contend that the above Memorandum "clearly shows that prior
investigation and consultation with the union was made," and "will
therefore negate the theory of respondents that respondent Calangi was
not afforded the chance to present his side for the memo itself speaks
otherwise."
The procedure that an employer wishing to terminate the services of an
employee must follow, is spelled out in the Labor Code:
ART. 278. Miscellaneous provisions.
xxx xxx xxx
However, the employer shall fumish the worker whose employment is
sought to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample opportunity to be
heard and to defend himself with the assistance of his representative if he
so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the [Department] of Labor and Employment.
Any decision taken by the employer shall be without prejudice to the right
of the worker to contest the validity and legality of his dismissing by filing a
complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer. The [Department] may
suspend the effects of the termination pending resolution of the case in the
event of a prima facie finding by the Ministry that the termination may
cause a serious labor dispute or is in implementation of a mass lay-off.
xxx xxx xxx
(Emphasis supplied)
Rule XV, Book V of the Rules and Regulations mplementing the Labor
Code reiterates the above requirements:
xxx xxx xxx
Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a
worker shall furnish him a written notice stating the particular acts or
omission constituting the grounds for his dismissal. n case of
abandomment of work, the notice shall be served at the worker's last
known address.
xxx xxx xxx
Sec. 5. Answer and hearing. The worker may answer the allegations
stated against him in the notice of dismissal within a reasonable period
from receipt of such notice. 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.
SEC. 6. Decision to dismiss. The employer shall immediately notify a
worker in writing of a decision to dismiss him stating clearly the reasons
therefor.
xxx xxx xxx
(Emphasis supplied)
The twin requirements of notice and hearing constitute essential elements
of due process in cases of employee dismissal: the requirement of notice
is intended to inform the employee concerned of the employer's intent to
dismiss and the reason for the proposed dismissal; upon the other hand,
the requirement of hearing affords the employee an opportunity to answer
his employer's charges against him and accordingly to defend himself
therefrom before dismissal is effected. Neither of these two requirements
can be dispensed with without running afoul of the due process
requirement of the 1987 Constitution.
The record of this case is bereft of any indication that a hearing or other
gathering was in fact held where private respondent Calangi was given a
reasonable opportunity to confront his accuser(s) and to defend against
the charges made by the latter. Petitioner Corporation's "prior consultation"
with the labor union with which private respondent Calangi was affiliated,
was legally insufficient. So far as the record shows, neither petitioner nor
the labor union actually advised Calangi of the matters at issue. The
Memorandum of petitioner's Personnel Manager certainly offered no
helpful particulars. t is important to stress that the rights of an employee
whose services are sought to be terminated to be informed beforehand of
his proposed dismissal (or suspension) as well as of the reasons therefor,
and to be afforded an adequate opportunity to defend himself from the
charges levelled against him, are rights personal to the employee. Those
rights were not satisfied by petitioner Corporation's obtaining the consent
of or consulting with the labor union; such consultation or consent was not
a substitute for actual observance of those rights of private respondent
Calangi. The employee can waive those rights, if he so chooses, but the
union cannot waive them for him. That the private respondent simply 'kept
silent" all the while, is not adequate to show an effective waiver of his
rights. Notice and opportunity to be heard must be accorded by an
employer even though the employee does not affirmatively demand them.
nvestigation of the alleged attempt to poison the drinking water of the two
(2) supervisors of the private respondent was conducted by the Cainta
police authorities. These authorities interrogated and took the sworn
statements of Messrs. Marin, Torrena, Meliton and Santos who, in one way
or another, had been involved in such incident. Petitioners argue that the
decision to place private respondent Calangi under preventive suspension
and subsequently to terminate his services was arrived at only after the
incident complained of, and Mr. Calangi, had been investigated by the
company. There is, once again, nothing in the record to show that private
respondent Calangi been interrogated by the Cainta police authorities or
by anyone else; indeed, it appears that practically everybody, save
Calangi, was so interrogated by the police. f petitioner Corporation did
notify and investigate private respondent and did hold a hearing,
petitioners have succeeded in keeping such facts off the record. t needs
no documentation, but perhaps it should be stressed, that this Court can
act only on the basis of matters which have been submitted in evidence
and made part of the record.
Additionally, the Court notes that the application filed by petitioner
Corporation with the Ministry of Labor and Employment for clearance to
suspend or terminate the services of Mr. Calangi, cited as ground therefor
"[Calangi's] frustrated plan to poison Mr. Antonio Santos and Mr. Melchor
Meliton last June 5, 1983." This ground, so far as can be gathered from the
allegations of petitioners in their pleadings and from the evidence of
record, both in the public respondent Commission and in this Court, is
anchored mainly, if not wholly on Mr. Torrena's sworn statement, given to
the Cainta police authorities, that both he (Torrena) and private respondent
had conspired with each other to inflict physical harm upon the persons of
Messrs. Meliton and Santos. A finding of private respondent's participation
in the alleged criminal conspiracy cannot, however, be made to rest solely
on the unilateral declaration of Mr. Torrena himself a confirmed "co-
conspirator." Such declaration must be corroborated by other competent
and convincing evidence. n. the absence of such other evidence, Mr.
Torrena's "confession" implicating Mr. Calangi must be received with
considerable caution. The very least that petitioner Corporation should
have done was to confront private respondent with Torrena's sworn
statement; the record does not show that petitioner Corporation did so.
The burden of showing the existence of a just cause for terminating the
services of private respondent Calangi lay on the petitioners. Petitioners
have not discharged that burden.
t remains only to note that the criminal complaint for attempted murder
against Mr. Calangi was dismissed by the Provincial Fiscal of Rizal.
10
Coming now to the second issue raised by petitioners in their Pleadings,
Article 280 of the Labor Code, as amended states:
Art. 280. -Security of Tenure. n case 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 to his backwages computed from the time his
compensation was withheld from him up to the time of his reinstatement.
(Emphasis supplied)
We have held in the past that both reinstatement, without loss of seniority
rights, and payment of backwages are the normal consequences of a
finding that an employee has been illegaly dismissed, and which remedies
together make the dismissed employee whole.
11
A finding of illegal
dismissal having been correctly made in this case by public respondent
Commission, private respondent is, as a matter of right, entitled to receive
both types of relief made available in Article 280 of the Labor Code, as
amended. t matters not that private respondent Calangi had omitted in his
complaint filed in Case No. NLRC-NCR-10-4518-83 a claim for
reinstatement without loss of seniority rights for he is entitled to such relief
as the facts alleged and proved warrant.
12
n view of the finding of illegal dismissal in this case, petitioner Corporation
is liable to private respondent Calangi for payment of the latter's
backwages for three (3) years, without qualification and deduction.
Considering the circumstances of this case, however, the Court beheves
that reinstatement of private respondent to his former positionor to any
other equivalent position in the company will not serve the best interests
of the parties involved. Petitioner Corporation should not be compelled to
take back in its fold an employee who, at least in the minds of his
employers, poses a significant threat to the lives and safety of company
workers. Consequently, we hold that private respondent should be given
his separation pay in lieu of such reinstatement. The amount of separation
pay shall be equal to private respondent's one-half (1/2) month's salary for
every year of service, to be computed from 13 December 1974 (date of
first employment) until 10 June 1986 (three years after date of illegal
dismissal).
13
WHEREFORE, the Petition for certiorari is DSMSSED. The Temporary
Restraining Order and the Resolutions issued on 8 April 1987 and 24
August 1987, respectively, by the Court in this case are WTHDRAWN.
The Decision of public rAshville respondent Commission in Case No.
NLRC-NCR-10-4518-83 is hereby AFFRMED, subject the the
modifications that petitioners shall pay private respondent Calangi: (a)
three (3) years backwages without qualification or deduction, and (b)
separation pay, computed as above indicated, in lieu of reinstatement. No
pronouncement as to costs.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Footnotes
1 Petitioner Alfredo T. Escao is the President and General Manager of
Century Textile Mills, nc.
2 Affidavit dated 8 June 1983, p. 61, Rollo, Annex "" of Petition.
3 Report, p. 46, Rollo, Annex "E" of Petition.
4 Affidavit dated 8 June 1983, p. 64, Rollo, Annex "L" of Petition.
5 Rollo, pp. 24-26, Annex "A" of Petition.
6 Id., pp. 33-35, Annex "C" of Petition.
7 Id., pp. 47-49, Annex "F" of Petition.
8 Id., pp. 67-68.
9 Id., p. 100.
10 See Decision of NLRC, Rollo, p. 49.
11 Santos vs. National Labor Relations Commission, G.R. No. 76721 [21
September 1987]; and Alzosa v. National Labor Relations Commission,
120 SCRA 611 [1983].
12 See Baguioro vs. Barrios and Tupas Vda. de Atas, 77 Phil. 120 [1946];
Aguilar vs. Rubiato and Gonzales Vila, 40 Phil. 570 [1919]; and Rosales
vs. Reyes and Ordoveza, 25 Phil. 495 [1913].
13 The amount of separation pay includes allowances regularly paid by the
employer: Manila Midtown Commercial Corporation vs. NUWHRAIN, G.R.
No. 75510 [27 October 1987]; and Santos vs. National Labor Relations
Commission, G.R. No. 76721 [21 September 1987].
G.R. No. 81958 June 30, 1988
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
vs.HON. FRANKLIN M. DRILON as Secretary of Labor and
EmpIoyment, and TOMAS D. ACHACOSO, as Administrator of the
PhiIippine Overseas EmpIoyment Administration, respondents.
Gutierrez & Alo Law Offices for petitioner.

SARMIENTO, J.:
The petitioner, Philippine Association of Service Exporters, nc. (PASE, for
short), a firm "engaged principally in the recruitment of Filipino workers,
male and female, for overseas placement,"
1
challenges the Constitutional
validity of Department Order No. 1, Series of 1988, of the Department of
Labor and Employment, in the character of "GUDELNES GOVERNNG
THE TEMPORARY SUSPENSON OF DEPLOYMENT OF FLPNO
DOMESTC AND HOUSEHOLD WORKERS," in this petition for certiorari
and prohibition. Specifically, the measure is assailed for "discrimination
against males or females;"
2
that it "does not apply to all Filipino workers
but only to domestic helpers and females with similar skills;"
3
and that it is
violative of the right to travel. t is held likewise to be an invalid exercise of
the lawmaking power, police power being legislative, and not executive, in
character.
n its supplement to the petition, PASE invokes Section 3, of Article X, of
the Constitution, providing for worker participation "in policy and decision-
making processes affecting their rights and benefits as may be provided by
law."
4
Department Order No. 1, it is contended, was passed in the
absence of prior consultations. t is claimed, finally, to be in violation of the
Charter's non-impairment clause, in addition to the "great and irreparable
injury" that PASE members face should the Order be further enforced.
On May 25, 1988, the Solicitor General, on behalf of the respondents
Secretary of Labor and Administrator of the Philippine Overseas
Employment Administration, filed a Comment informing the Court that on
March 8, 1988, the respondent Labor Secretary lifted the deployment ban
in the states of raq, Jordan, Qatar, Canada, Hongkong, United States,
taly, Norway, Austria, and Switzerland. * n submitting the validity of the
challenged "guidelines," the Solicitor General invokes the police power of
the Philippine State.
t is admitted that Department Order No. 1 is in the nature of a police
power measure. The only question is whether or not it is valid under the
Constitution.
The concept of police power is well-established in this jurisdiction. t has
been defined as the "state authority to enact legislation that may interfere
with personal liberty or property in order to promote the general welfare."
5
As defined, it consists of (1) an imposition of restraint upon liberty or
property, (2) in order to foster the common good. t is not capable of an
exact definition but has been, purposely, veiled in general terms to
underscore its all-comprehensive embrace.
"ts scope, ever-expanding to meet the exigencies of the times, even to
anticipate the future where it could be done, provides enough room for an
efficient and flexible response to conditions and circumstances thus
assuring the greatest benefits."
6
t finds no specific Constitutional grant for the plain reason that it does not
owe its origin to the Charter. Along with the taxing power and eminent
domain, it is inborn in the very fact of statehood and sovereignty. t is a
fundamental attribute of government that has enabled it to perform the
most vital functions of governance. Marshall, to whom the expression has
been credited,
7
refers to it succinctly as the plenary power of the State "to
govern its citizens."
8
"The police power of the State ... is a power coextensive with self-
protection, and it is not inaptly termed the "law of overwhelming necessity."
t may be said to be that inherent and plenary power in the State which
enables it to prohibit all things hurtful to the comfort, safety, and welfare of
society."
9
t constitutes an implied limitation on the Bill of Rights. According to
Fernando, it is "rooted in the conception that men in organizing the state
and imposing upon its government limitations to safeguard constitutional
rights did not intend thereby to enable an individual citizen or a group of
citizens to obstruct unreasonably the enactment of such salutary measures
calculated to ensure communal peace, safety, good order, and welfare."
10
Significantly, the Bill of Rights itself does not purport to be an absolute
guaranty of individual rights and liberties "Even liberty itself, the greatest of
all rights, is not unrestricted license to act according to one's will."
11
t is
subject to the far more overriding demands and requirements of the
greater number.
Notwithstanding its extensive sweep, police power is not without its own
limitations. For all its awesome consequences, it may not be exercised
arbitrarily or unreasonably. Otherwise, and in that event, it defeats the
purpose for which it is exercised, that is, to advance the public good. Thus,
when the power is used to further private interests at the expense of the
citizenry, there is a clear misuse of the power.
12
n the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity.
13
n the absence
of clear and convincing evidence to the contrary, the presumption logically
stands.
The petitioner has shown no satisfactory reason why the contested
measure should be nullified. There is no question that Department Order
No. 1 applies only to "female contract workers,"
14
but it does not thereby
make an undue discrimination between the sexes. t is well-settled that
"equality before the law" under the Constitution
15
does not import a perfect
dentity of rights among all men and women. t admits of classifications,
provided that (1) such classifications rest on substantial distinctions; (2)
they are germane to the purposes of the law; (3) they are not confined to
existing conditions; and (4) they apply equally to all members of the same
class.
16
The Court is satisfied that the classification made-the preference for
female workers rests on substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy plight
that has befallen our female labor force abroad, especially domestic
servants, amid exploitative working conditions marked by, in not a few
cases, physical and personal abuse. The sordid tales of maltreatment
suffered by migrant Filipina workers, even rape and various forms of
torture, confirmed by testimonies of returning workers, are compelling
motives for urgent Government action. As precisely the caretaker of
Constitutional rights, the Court is called upon to protect victims of
exploitation. n fulfilling that duty, the Court sustains the Government's
efforts.
The same, however, cannot be said of our male workers. n the first place,
there is no evidence that, except perhaps for isolated instances, our men
abroad have been afflicted with an dentical predicament. The petitioner
has proffered no argument that the Government should act similarly with
respect to male workers. The Court, of course, is not impressing some
male chauvinistic notion that men are superior to women. What the Court
is saying is that it was largely a matter of evidence (that women domestic
workers are being ill-treated abroad in massive instances) and not upon
some fanciful or arbitrary yardstick that the Government acted in this case.
t is evidence capable indeed of unquestionable demonstration and
evidence this Court accepts. The Court cannot, however, say the same
thing as far as men are concerned. There is simply no evidence to justify
such an inference. Suffice it to state, then, that insofar as classifications
are concerned, this Court is content that distinctions are borne by the
evidence. Discrimination in this case is justified.
As we have furthermore indicated, executive determinations are generally
final on the Court. Under a republican regime, it is the executive branch
that enforces policy. For their part, the courts decide, in the proper cases,
whether that policy, or the manner by which it is implemented, agrees with
the Constitution or the laws, but it is not for them to question its wisdom.
As a co-equal body, the judiciary has great respect for determinations of
the Chief Executive or his subalterns, especially when the legislature itself
has specifically given them enough room on how the law should be
effectively enforced. n the case at bar, there is no gainsaying the fact, and
the Court will deal with this at greater length shortly, that Department Order
No. 1 implements the rule-making powers granted by the Labor Code. But
what should be noted is the fact that in spite of such a fiction of finality, the
Court is on its own persuaded that prevailing conditions indeed call for a
deployment ban.
There is likewise no doubt that such a classification is germane to the
purpose behind the measure. Unquestionably, it is the avowed objective of
Department Order No. 1 to "enhance the protection for Filipino female
overseas workers"
17
this Court has no quarrel that in the midst of the
terrible mistreatment Filipina workers have suffered abroad, a ban on
deployment will be for their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is
intended to apply indefinitely so long as those conditions exist. This is
clear from the Order itself ("Pending review of the administrative and legal
measures, in the Philippines and in the host countries . . ."
18
), meaning to
say that should the authorities arrive at a means impressed with a greater
degree of permanency, the ban shall be lifted. As a stop-gap measure, it is
possessed of a necessary malleability, depending on the circumstances of
each case. Accordingly, it provides:
9. LFTNG OF SUSPENSON. The Secretary of Labor and
Employment (DOLE) may, upon recommendation of the Philippine
Overseas Employment Administration (POEA), lift the suspension in
countries where there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the
welfare and protection of Filipino workers.
19
The Court finds, finally, the impugned guidelines to be applicable to all
female domestic overseas workers. That it does not apply to "all Filipina
workers"
20
is not an argument for unconstitutionality. Had the ban been
given universal applicability, then it would have been unreasonable and
arbitrary. For obvious reasons, not all of them are similarly circumstanced.
What the Constitution prohibits is the singling out of a select person or
group of persons within an existing class, to the prejudice of such a person
or group or resulting in an unfair advantage to another person or group of
persons. To apply the ban, say exclusively to workers deployed by A, but
not to those recruited by B, would obviously clash with the equal protection
clause of the Charter. t would be a classic case of what Chase refers to as
a law that "takes property from A and gives it to B."
21
t would be an
unlawful invasion of property rights and freedom of contract and needless
to state, an invalid act.
22
(Fernando says: "Where the classification is
based on such distinctions that make a real difference as infancy, sex, and
stage of civilization of minority groups, the better rule, it would seem, is to
recognize its validity only if the young, the women, and the cultural
minorities are singled out for favorable treatment. There would be an
element of unreasonableness if on the contrary their status that calls for
the law ministering to their needs is made the basis of discriminatory
legislation against them. f such be the case, it would be difficult to refute
the assertion of denial of equal protection."
23
n the case at bar, the
assailed Order clearly accords protection to certain women workers, and
not the contrary.)
t is incorrect to say that Department Order No. 1 prescribes a total ban on
overseas deployment. From scattered provisions of the Order, it is evident
that such a total ban has hot been contemplated. We quote:
5. AUTHORZED DEPLOYMENT-The deployment of domestic helpers and
workers of similar skills defined herein to the following [sic] are authorized
under these guidelines and are exempted from the suspension.
5.1 Hirings by immediate members of the family of Heads of State and
Government;
5.2 Hirings by Minister, Deputy Minister and the other senior government
officials; and
5.3 Hirings by senior officials of the diplomatic corps and duly accredited
international organizations.
5.4 Hirings by employers in countries with whom the Philippines have [sic]
bilateral labor agreements or understanding.
xxx xxx xxx
7. VACATONNG DOMESTC HELPERS AND WORKERS OF SMLAR
SKLLS--Vacationing domestic helpers and/or workers of similar skills shall
be allowed to process with the POEA and leave for worksite only if they
are returning to the same employer to finish an existing or partially served
employment contract. Those workers returning to worksite to serve a new
employer shall be covered by the suspension and the provision of these
guidelines.
xxx xxx xxx
9. LFTNG OF SUSPENSON-The Secretary of Labor and Employment
(DOLE) may, upon recommendation of the Philippine Overseas
Employment Administration (POEA), lift the suspension in countries where
there are:
1. Bilateral agreements or understanding with the Philippines, and/or,
2. Existing mechanisms providing for sufficient safeguards to ensure the
welfare and protection of Filipino workers.
24
xxx xxx xxx
The consequence the deployment ban has on the right to travel does not
impair the right. The right to travel is subject, among other things, to the
requirements of "public safety," "as may be provided by law."
25
Department Order No. 1 is a valid implementation of the Labor Code, in
particular, its basic policy to "afford protection to labor,"
26
pursuant to the
respondent Department of Labor's rule-making authority vested in it by the
Labor Code.
27
The petitioner assumes that it is unreasonable simply
because of its impact on the right to travel, but as we have stated, the right
itself is not absolute. The disputed Order is a valid qualification thereto.
Neither is there merit in the contention that Department Order No. 1
constitutes an invalid exercise of legislative power. t is true that police
power is the domain of the legislature, but it does not mean that such an
authority may not be lawfully delegated. As we have mentioned, the Labor
Code itself vests the Department of Labor and Employment with
rulemaking powers in the enforcement whereof.
28
The petitioners's reliance on the Constitutional guaranty of worker
participation "in policy and decision-making processes affecting their rights
and benefits"
29
is not well-taken. The right granted by this provision, again,
must submit to the demands and necessities of the State's power of
regulation.
The Constitution declares that:
Sec. 3. 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.
30
"Protection to labor" does not signify the promotion of employment alone.
What concerns the Constitution more paramountly is that such an
employment be above all, decent, just, and humane. t is bad enough that
the country has to send its sons and daughters to strange lands because it
cannot satisfy their employment needs at home. Under these
circumstances, the Government is duty-bound to insure that our toiling
expatriates have adequate protection, personally and economically, while
away from home. n this case, the Government has evidence, an evidence
the petitioner cannot seriously dispute, of the lack or inadequacy of such
protection, and as part of its duty, it has precisely ordered an indefinite ban
on deployment.
The Court finds furthermore that the Government has not indiscriminately
made use of its authority. t is not contested that it has in fact removed the
prohibition with respect to certain countries as manifested by the Solicitor
General.
The non-impairment clause of the Constitution, invoked by the petitioner,
must yield to the loftier purposes targetted by the Government.
31
Freedom
of contract and enterprise, like all other freedoms, is not free from
restrictions, more so in this jurisdiction, where laissez faire has never been
fully accepted as a controlling economic way of life.
This Court understands the grave implications the questioned Order has
on the business of recruitment. The concern of the Government, however,
is not necessarily to maintain profits of business firms. n the ordinary
sequence of events, it is profits that suffer as a result of Government
regulation. The interest of the State is to provide a decent living to its
citizens. The Government has convinced the Court in this case that this is
its intent. We do not find the impugned Order to be tainted with a grave
abuse of discretion to warrant the extraordinary relief prayed for.
WHEREFORE, the petition is DSMSSED. No costs.
SO ORDERED.
Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano,
Gancayco, Padilla, Bidin, Cortes and Grio-Aquino, JJ., concur.
Gutierrez, Jr. and Medialdea, JJ., are on leave.

Footnotes
1 Rollo, 3.
2 Id., 12.
3 Id., 13.
4 CONST., Art X, Sec. 3.
* Per reports, on June 14, 1988, the Government is said to have lifted the
ban on five more countries: New Zealand Australia, Sweden, Spain, and
West Germany. ("Maid export ban lifted in 5 states," The Manila Chronicle,
June 14, 1988, p. 17, col. 2.)
5 Edu v. Ericta, No. L-32096, October 24, 1970, 35 SCRA 481, 487.
6 Supra, 488.
7 TRBE, AMERCAN CONSTTUTONAL LAW, 323 (1978).
8 Id.
9 Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708 (1919).
10 Edu v. Ericta, supra.
11 Rubi v. Provincial Board of Mindoro, supra, 704.
12 t is generally presumed, notwithstanding the plenary character of the
lawmaking power, that the legislature must act for public purposes. n
Pascual v. Secretary of Public Works [110 Phil. 331 (1960)], the Court
nullified an act of Congress appropriating funds for a private purpose. The
prohibition was not embodied in the Constitution then in force, however, it
was presumed that Congress could not do it.
13 Ermita-Malate Hotel and Motel Operators Association, nc. v. City
Mayor of Manila, No. L-24693, July 31, 1967, 20 SCRA 849.
14 Dept. Order No. 1 (DOLE), February 10, 1988.
15 CONST., supra, Art. , Sec. 1.
16 People v. Cayat, 68 Phil. 12 (1939).
17 Dept. Order No. 1, supra.
18 Supra.
19 Supra.
20 Rollo, d., 13.
21 See TRBE, d., citing Calder v. Bull, 3 U.S. 386 (1798).
22 Id.
23 FERNANDO, THE CONSTTUTON OF THE PHLPPNES 549-550
(1977).
24 Dept. Order No. 1, supra.
25 CONST., supra, Art. ll, Sec. 6.
26 Pres. Decree No. 442, Art. 3.
27 Supra, Art. 5.
28 Supra.
29 CONST., supra, Art. X, Sec. 3.
30 Supra.
31 Heirs of Juancho Ardona v. Reyes, Nos. L-60549, 60553-60555,
October 26, 1983, 125 SCRA 220.
G.R. No. L-1377 May 12, 1948
LEYTE LAND TRANSPORTATION COMPANY, INC., petitioners, vs.
LEYTE FARMER'S and LABORER'S UNION, respondents.
Mateo Canonoy for petitioner.Arsenio I. Martinez for Court of Industrial
Relations.
PARAS, J.:
This is an appeal by certiorari from a decision of the Court of ndustrial
Relations in which the petitioner (appellant), Leyte Land Transportation
Company, nc., was ordered, among other directives not here assailed,
(1) to grant its various employees, drivers, conductors, and laborers
increase in salaries and wages at average rates of five and ten pesos,
representing an annual total of some P14,940; (2) to grant, under certain
conditions, its other employers; (3) to grant, under certain conditions, its
employees and laborers 15 days vacation with pay and 15 days sick leave
with pay.
The petitioner contends that the Court of ndustrial Relations made a
mistake in conceding salary or wage increases, after being "convinced that
the basic salary of P100 for drivers and P80 for conductors is just taking
into consideration the financial condition of the corporation just now," and
merely because such increases will enable the workers "to meet the high
cost of living now in Tacloban in order to help them buy the necessities for
a decent livelihood." t is intimated in this connection that the total amount
of the increases, "if added to the crippling losses will throw the Company
into bankruptcy."
There can be no doubt about the propriety of the action of the Court of
ndustrial Relations in taking into account the "high cost of living" as a
factor for determining the reasonableness of any salary or wage raise,
since said court is impliedly empowered to do so under section 20 of
Commonwealth Act No. 103 which provides that "in the hearing,
investigation and determination of any question or controversy and in
exercising any duties and power under this Act, the Court shall act
according to justice and equity and substantial merits of the case, without
regard to technicalities or legal forms," not to mention section 5 which
provides, in connection with minimum wages for a given industry or in a
given locality, that the court shall fix the same at a rate that "would give the
workingmen a just compensation, for their labor and an adequate income
to meet essential necessities of civilized life, and at the same time allow
the capital a fair return on its investment." t cannot be supposed that the
Court of ndustrial Relations is powerless to adopt the latter criterion,
simply because it is called upon to fix a minimum wage to be paid by a
specific employer, and not by all employers engaged in the transportation
business.
Whether or not the ruling of the Court of ndustrial Relations will allow the
petitioner a fair return on its investments or result in its bankruptcy is a
factual inquiry which we are not authorized to make. (Commonwealth Act
No. 103, section 15, as amended by Commonwealth Act No. 559, section
2; Rules of Court 44; National Labor Union vs. Philippine Match Co., 40
Off. Gaz., 8th Supp., p. 134; Bardwell Brothers vs. Philippine Labor Union,
39 Off. Gaz., p. 1032; Pasumil Worker's Union vs. Court of ndustrial
Relations, 40 Off. Gaz., 6th Supp., p. 71; Kaisahan ng mga Manggagawa
Sa Kahoy sa Pilipinas vs. Gotamco Saw Mill, G. R. No. L-1573, March 29,
1948.) Even so, it is not amiss to point out, by way of preserving
petitioner's peace of mind, that the increases in question are, under the
express terms of the appealed decision, merely temporary, with the result
that the petitioner may reopen the question at any proper time.
The Court has already upheld the constitutionality of the power of Court of
ndustrial Relations to determine and fix minimum wages for workers
(Antamok Goldfields Mining Company vs. Court of ndustrial Relations, 40
Off. Gaz., 8th Supp., p. 173; nternational Hardwood and Veneer Company
vs. Pagil Federation of Labor, 40 Off. Gaz., 9th Supp., p. 118; Central
Azucarrera de Tarlac vs. Court of ndustrial Relations, 40 Off. Gaz., 9th
Supp., p. 146), thereby making it unnecessary for us to discuss at length
the arguments of the petitioner on the point. ndeed, the power in question
was said to have been granted to the Court of ndustrial Relations in virtue
of the constitutional mandates that "the promotion of social justice to
insure the well-being and economic security of all the people should be the
concern of the State" (Constitution, Article , section 5); "the State shall
afford protection to labor, especially to working women and minors, and
shall regulate the relations between the landowner and tenant, and
between labor and capital and capital in industry and in agriculture" (Id.,
Article XV, section 6); "the State may provide for compulsory arbitration."
(Id.)
The authority of the Court of ndustrial Relations to order the petitioner to
grant its employees and laborers vacation and sick leaves with pay is
clearly included or implied from its general jurisdictions to consider,
investigate, decide and settle all questions, mattes, controversies, or
disputes arising between, and/affecting employers and employees or
laborers, and regulate the relations between them (Commonwealth Act No.
103, section 1, as amended by Commonwealth Act No. 559, and to take
cognizance of any industrial dispute causing or likely to cause a strike or
lockout, arising from differences as regards, among others, wages or
conditions of employment. t is needless to remind all employers that the
concession of vacation and sick leaves in the long run redounds to their
benefit, foe as well remarked by professors Watkins and Dood in "Labor
Problems" (1940), pages 330-331, quoted in the memorandum of the
respondent of the respondent Court of ndustrial Relations, "when there is
an assurance of holidays and vacations, workers to take up their tasks with
greater efficiency and tend to sustain their productiveness for longer
periods."
n answer to the contention of the petitioner that the doctrine laid down in
the appealed decision on effect "has deprived the company of its rights to
enter into contract of employment as it and the employee may agree," it is
sufficient to quote the following pronouncements of the United States
Supreme Court: :The fact that both parties are of full age and competent to
contract does not necessarily deprive the State of the power to interfere
where the parties do not stand upon an equality, or where the public health
demands that one party to the contract shall be protected against himself.
The State still retains an interest in his welfare, however reckless he may
be. The whole is no greater than the sum of all the parts, and where the
individual health, safety and welfare are sacrificed or neglected, the State
must suffer." (West Coast Hotel Company vs. Parrish, 300 U. S., 379, 394;
81 Law ed., 703, 710, quoting Holden vs. Hardy, 169 U. S., 366; 42 Law
ed., 780. The former, by the way, expressly overrules the case of Adkins
vs. Children's Hospital, 261 U. S., 525; 67 Law ed., 785, cited by the
petitioner.) With respect to the decision in People vs. Pomar, 46 Phil., 440,
also invoked in petitioner's behalf, we merely recall what Mr. Justice Laurel
stated in his concurring opinion in the case of ang Tibay vs. Court of
Industrial Relations et al., G. R. No. 46496, quoted in Antamok Goldfields
Mining Company vs. Court of Industrial Relations, 40 Off. Gaz., 8th Supp.,
pages 173, 193: "n the midst of the changes that have taken place, it may
likewise be doubted if the pronouncement made by this Court in the case
People vs. Pomar (46 Phil., 440) also relied upon the petitioner in its
printed memorandum still retains its virtuality as a living principle. The
policy of laissez faire has to some extent given way to the assumption by
the government of the right of intervention even in contractual relations
affected with public interest."
Criticism is addressed to the extension of the increases and other benefits
in question to employees and laborers who were not made parties hereto
and who did not join the seventy-six drivers and conductors who had made
corresponding demands upon and declared a strike against the petitioner.
Aside from the fact that the Court of ndustrial Relations is authorized to
act according to justice and equity without regard to technicalities or legal
forms (Commonwealth Act No. 103, section 20), the criticism is answered
in the decision of this Court in Parsons Hardware Co., Inc. vs. Court of
Industrial Relations , G. R. No. 48215, wherein it was held: "Even
assuming that the eighteen laborers were not members of the union at the
time its petition for a general increase in salaries was submitted, we are of
the opinion and so hold that as they are laborers of the company, they are
entitled to the increase. ... t has to be so, because to accord such
increase only to members of the union would constitute an unjust and
unwarranted discrimination against non-members."
The petitioner alleges that the lower court erred in fixing a scale of
salaries, wages and per diems higher than that adopted by the National
Government and its subdivisions. The comparison is rather sad because,
the Government, unlike the petitioner, is not established for profit and
mainly derives it income from the taxes paid by the people. Moreover, we
can take judicial notice of the fact that the Government, within the limits of
the finances, has already striven and is still striving to raise and
standardize the salaries and wages of its employees and laborers,
especially those on the lower brackets.
The decision appealed from is, therefore, hereby affirmed, with costs
against the petitioner. So ordered.
Feria, Pablo, Perfecto, Bengzon, and Tuason, JJ., concur.
G.R. No. L-24396 July 29, 1968
SANTIAGO P. ALALAYAN, ET AL., suing in his behalf and
for the benefit of all other persons having common or
general interest with him in accordance with Sec. 12, Rule
3, Rules of Court, petitioners-appellants, vs. NATIONAL
POWER CORPORATION and ADMINISTRATOR OF
ECONOMIC COORDINATION, respondents-appellees.
FERNANDO, J.: chanrobles virtual law library
This declaratory relief proceeding was started in the lower court
by petitioners, Alalayan and Philippine Power and Development
Company, both franchise holders of electric plants in Laguna, to
test the validity of a section of an amendatory act,
1
empowering
respondent National Power Corporation "in any contract for the
supply of electric power to a franchise holder," receiving at least
50% of its electric power and energy from it to require as a
condition that such franchise holder "shall not realize a net profit
of more than twelve percent annually of its investments plus
two-month operating expenses." Respondent, under such
provision, could likewise "renew all existing contracts with
franchise holders for the supply of electric power and energy," so
that the provisions of the Act could be given effect.
2
This
statutory provision was assailed on the ground that, being a
rider, it is violative of the constitutional provision requiring that a
bill, which may be enacted into law, cannot embrace more than
one subject, which shall be expressed in its title,
3
as well as the
due process guarantee, the liberty to contract of petitioners
being infringed upon. The lower court sustained its validity. We
sustain the lower court in this appeal.chanroblesvirtualawlibrary
chanrobles virtual law library
In the petition for declaratory relief, after the usual allegations as
to parties, it was stated that respondent National Power
Corporation "has for some years now been, and still is, by virtue
of similar, valid and existing contracts entered into by it with one
hundred and thirty seven (137) natural persons and corporations
distributed all over the country, supplying, distributing, servicing
and selling electric power and energy at fixed rites schedules to
the latter who have for some years now been and still are, legally
engaged in resupplying, redistributing, reservicing and reselling
the said electric power and energy to individual customers within
the coverage of their respective franchises."
4
Petitioners are
included among the said 197 natural persons and entities.
5
Then,
reference was made to the particular contracts petitioners
entered into with respondent, the contracts to continue
indefinitely unless and until either party would give to the other
two years previous notice in writing of its intention to terminate
the same.
6
After which, it was noted that on June 18, 1960, an
act authorizing the increase of the capital stock of the National
Power Corporation to P100 million took effect.
7
A year later, on
June 17, 1961, it was alleged that the challenged legislation
became a law, purportedly to increase further the authorized
capital stock, but including the alleged rider referred to above,
which, in the opinion of petitioners, transgressed the
constitutional provision on the subject matter and title of bills as
well as the due process clause.
8
Mention was then made of the
National Power Corporation approving a rate increase of at least
17.5%, the effectivity of which, was at first deferred to
November 1, 1962, then subsequently to January 15, 1963, with
the threat that in case petitioners would fail to sign the revised
contract providing for the increased rate, respondent National
Power Corporation would then cease "to supply, distribute and
service electric power and energy to them."
9
chanrobles virtual
law library
That would be, in the opinion of petitioners, violative of their
rights, proceeding from legislation suffering from constitutional
infirmities.
10
A declaration of unconstitutionality was therefore
sought by them. It was prayed: "(1) To give due course to this
petition; (2) To issue a writ of preliminary injunction, upon the
posting of the requisite bond, enjoining respondent NPC from
carrying or prosecuting its threat to enforce the provisions of the
rider or Section 3 of Republic Act No. 3043 ... in the manner
stated in paragraph 18 of this petition until this Honorable Court
shall have finally decided or disposed, by final judgment, of the
issues raised in this petition; (3) After due hearing, to declare
the rider or Section 3 of Republic Act No. 3043 null and void for
being illegal and unconstitutional, and to issue a permanent
injunction requiring respondent NPC to refrain from enforcing or
implementing the provisions of the same law."
11
chanrobles
virtual law library
Soon after, petitioner Philippine Power and Development
Company moved that insofar as it was concerned, the case be
dismissed, which motion was granted by the lower court on
January 25, 1963.
12
The sole petitioner is therefore Santiago P.
Alalayan, suing in his behalf and for the benefit of all other
persons having common or general interest with him.
Respondent National Power Corporation filed an opposition on
February 15, 1963, opposing the issuance of a writ for
preliminary injunction.
13
On March 21, 1963, the lower court,
considering that there was "no sufficient ground for the issuance
of the writ for preliminary injunction," denied the same.
14
chanrobles virtual law library
There was in the answer, dated March 29, 1963, an admission of
the main facts alleged, with a denial of the legal conclusion which
petitioner would deduce therefrom, respondent National Power
Corporation upholding the validity of the challenged provision.
Then, came a partial stipulation of facts submitted on October 1,
1964, consisting of a resolution of the Philippine Electric Plant
Owners Association to take the necessary steps to stop
respondent National Power Corporation from enforcing its
announced increase, samples of contracts between electric plant
operators on the one hand and respondent National Power
Corporation on the other, the contract with petitioner Alalayan,
dated May 26, 1956, showing that he did purchase and take
power and energy as follows: "Sixty (60) kilowatts and of not
less than 140,000 kilowatt-hours in any contract year at the rate
of P120.00 per kilowatt per year" payable in twelve equal
monthly installments, "plus an energy charge of P0.013 per
kilowatt hour, payable on the basis of monthly delivery"; a letter
of June 22, 1962 of respondent National Power Corporation to
petitioner approving his 17.5% rate increase of power so that
beginning July 1, 1962, the demand charge would be P10.00 per
kilowatt per month and the energy charge would be P0.02 per
kilowatt hour; a letter of August 15, 1962, wherein respondent
National Power Corporation notified petitioner that it deferred the
effectivity of the new rates, but it will be enforced on November
1, 1962; a letter of June 25, 1963 enforcing respondent National
Power Corporation deferring once again the effectivity of the new
rates until January 1, 1964; as well as the congressional
transcripts on House Bill No. 5377 and Senate Bill No. 613, now
Republic Act No. 3043.
15
chanrobles virtual law library
In an order of November 5, 1964, the lower court gave the
parties a period of twenty days within which to submit
simultaneously their respective memoranda. After the submission
thereof, the lower court, in a decision of January 30, 1965,
sustained the validity and constitutionality of the challenged
provision. Hence, this appeal.chanroblesvirtualawlibrary
chanrobles virtual law library
As was set forth earlier, this appeal cannot prosper. We share the
view of the lower court that the provision in question cannot be
impugned either on the ground of its being violative of the
constitutional requirement that a bill cannot embrace more than
one subject to be expressed in its title or by virtue of its alleged
failure to satisfy the due process
criterion.chanroblesvirtualawlibrary chanrobles virtual law library
1. We consider first the objection that the statute in question is
violative of the constitutional provision that no bill "which may be
enacted into law shall embrace more than one subject which
shall be expressed in [its] title ... "
16
This provision is similar to
those found in many American State Constitutions. It is aimed
against the evils of the so-called omnibus bills and log-rolling
legislation as well as surreptitious or unconsidered enactments.
17
Where the subject of a bill is limited to a particular matter, the
lawmakers along with the people should be informed of the
subject of proposed legislative measures. This constitutional
provision thus precludes the insertion of riders in legislation, a
rider being a provision not germane to the subject matter of the
bill. Petitioner Alalayan asserts that the provision objected to is
such a rider.chanroblesvirtualawlibrary chanrobles virtual law
library
To lend approval to such a plea is to construe the above
constitutional provision as to cripple or impede proper legislation.
To impart to it a meaning which is reasonable and not unduly
technical, it must be deemed sufficient that the title be
comprehensive enough reasonably to include the general object
which the statute seeks to effect without expressing each and
every end and means necessary for its accomplishment. Thus,
mere details need not be set forth. The legislature is not required
to make the title of the act a complete index of its contents. The
provision merely calls for all parts of an act relating to its subject
finding expression in its title.
18
More specifically, if the law
amends a section or part of a statute, it suffices if reference be
made to the legislation to be amended, there being no need to
state the precise nature of the amendment.
19
chanrobles virtual
law library
It was in 1938, in Government v. Hongkong & Shanghai Bank,
20
where, for the first time after the inauguration of the
Commonwealth, this Court passed upon a provision of that
character. We held there that the Reorganization Law,
21
providing
for the mode in which the total annual expenses of the Bureau of
Banking could be reimbursed through assessment levied upon all
banking institutions subject to inspection by the Bank
Commissioner was not violative of such a requirement in the
Jones Law, the previous organic act. Justice Laurel, however,
vigorously dissented, his view being that while the main subject
of the act was reorganization, the provision assailed did not deal
with reorganization but with taxation. This case of Government
v. Hongkong & Shanghai Bank was decided by a bare majority of
four justices against three. Thereafter, it would appear that the
constitutional requirement is to be given the liberal test as
indicated in the majority opinion penned by Justice Abad Santos,
and not the strict test as desired by the minority headed by
Justice Laurel.chanroblesvirtualawlibrary chanrobles virtual law
library
Such a trend is made manifest in the cases beginning with
Sumulong v. Commission on Elections,
22
up to and including
Felwa v. Salas,
23
a 1966 decision, the opinion coming from Chief
Justice Concepcion. There is nothing in Lidasan v. Commission
on Elections,
24
where a statute
25
was annulled on this ground, to
indicate the contrary. As aptly expressed by Justice Sanchez: "Of
course, the Constitution does not require Congress to employ in
the title of an enactment, language of such precision as to mirror,
fully index or catalogue all the contents and the minute details
therein. It suffices if the title should serve the purpose of the
constitutional demand that it inform the legislators, the persons
interested in the subject of the bill, and the public, of the nature,
scope and consequences of the proposed law and its operation.
And this, to lead them to inquire into the body of the bill, study
and discuss the same, take appropriate action thereon, and,
thus, prevent surprise or fraud upon the legislators." chanrobles
virtual law library
We thus hold that there is no violation of the constitutional
provision which requires that any bill enacted into law shall
embrace only one subject to be expressed in the title
thereof.chanroblesvirtualawlibrary chanrobles virtual law library
2. Nor is petitioner anymore successful in his plea for the
nullification of the challenged provision on the ground of his
being deprived of the liberty to contract without due process of
law.chanroblesvirtualawlibrary chanrobles virtual law library
It is to be admitted of course that property rights find shelter in
specific constitutional provisions, one of which is the due process
clause. It is equally certain that our fundamental law framed at a
time of "surging unrest and dissatisfaction",
26
when there was
the fear expressed in many quarters that a constitutional
democracy, in view of its commitment to the claims of property,
would not be able to cope effectively with the problems of
poverty and misery that unfortunately afflict so many of our
people, is not susceptible to the indictment that the government
therein established is impotent to take the necessary remedial
measures. The framers saw to that. The welfare state concept is
not alien to the philosophy of our Constitution.
27
It is implicit in
quite a few of its provisions. It suffices to mention
two.chanroblesvirtualawlibrary chanrobles virtual law library
There is the clause on the promotion of social justice to ensure
the well-being and economic security of all the people,
28
as well
as the pledge of protection to labor with the specific authority to
regulate the relations between landowners and tenants and
between labor and capital.
29
This particularized reference to the
rights of working men whether in industry and agriculture
certainly cannot preclude attention to and concern for the rights
of consumers, who are the objects of solicitude in the legislation
now complained of. The police power as an attribute to promote
the common weal would be diluted considerably of its reach and
effectiveness if on the mere plea that the liberty to contract
would be restricted, the statute complained of may be
characterized as a denial of due process. The right to property
cannot be pressed to such an unreasonable
extreme.chanroblesvirtualawlibrary chanrobles virtual law library
It is understandable though why business enterprises, not
unnaturally evincing lack of enthusiasm for police power
legislation that affect them adversely and restrict their profits
could predicate alleged violation of their rights on the due
process clause, which as interpreted by them is a bar to
regulatory measures. Invariably, the response from this Court,
from the time the Constitution was enacted, has been far from
sympathetic. Thus, during the Commonwealth, we sustained
legislation providing for collective bargaining,
30
security of
tenure,
31
minimum wages,
32
compulsory arbitration,
33
and
tenancy regulation.
34
Neither did the objections as to the validity
of measures regulating the issuance of securities
35
and public
services
36
prevail.chanroblesvirtualawlibrary chanrobles virtual
law library
For it is to be remembered that the liberty relied upon is not
freedom of the mind, which occupies a preferred position, nor
freedom of the person, but the liberty to contract, associated
with business activities, which, as has been so repeatedly
announced, may be subjected, in the interest of the general
welfare under the police power, to restrictions varied in character
and wide ranging in scope as long as due process is observed. In
Calalang v. Williams,
37
this Court found no objection to an
enactment limiting the use of and traffic in the national roads
and streets as against the assertion that the exercise of such an
authority amounted to an unlawful interference with legitimate
business and abridgment of personal liberty. The opinion by
Justice Laurel explains why such an argument was far from
persuasive. Thus: "In enacting said law, therefore, the National
Assembly was prompted by considerations of public convenience
and welfare. It was inspired by a desire to relieve congestion of
traffic, which is, to say the least, a menace to public safety.
Public welfare, then, lies at the bottom of the enactment of said
law, and the state in order to promote the general welfare may
interfere with personal liberty, with property, and with business
and occupations. Persons and property may be subjected to all
kinds of restraints and burdens, in order to secure the general
comfort, health, and prosperity of the state ... "
38
The above
doctrine, valid then and equally valid now, constituted more than
sufficient justification for statutes curtailing the liberty enjoyed
by business enterprises, whether conducted by natural or
juridical persons, to satisfy the needs of public
welfare.chanroblesvirtualawlibrary chanrobles virtual law library
So it continues to be under the Republic. This Court has
invariably given the seal of approval to statutes intended to
improve the lot of tenants,
39
who thereafter were given the
option to transform their relationship with landowners to one of
lease, which grant of authority was sustained in 1964.
40
Retail
trade was nationalized, the measure receiving judicial approval
as against due process objection,
41
a decision foreshadowed
earlier with the favorable action taken on legislation granting
preference to Filipino citizens in the lease of public market
stalls.
42
It is easily understandable why the regulation of practice
of medicine;
43
limitation of the hours of labor;
44
imposition of
price control;
45
requirement of separation pay for one month
46
as
well as a social security scheme
47
cannot be impugned as
unconstitutional. While not exhaustive, the above decisions
manifest in no certain terms the inherent difficulty of assailing
regulatory legislation based on alleged denial of due
process.chanroblesvirtualawlibrary chanrobles virtual law library
It would thus appear that unless this Court is prepared to
overturn a doctrine so firmly adhered to in a number of cases
notable for the unanimity of their response to an objection
similar to the one here raised, petitioner Alalayan cannot prevail.
Certainly, this Court is not prepared to take that step. For in the
face of a constitutional provision that allows deprivation of
liberty, including liberty of contract, as long as due process is
observed, the alleged nullity of a legislative act of this character
can only be shown if in fact there is such a denial. The relevant
question then is, what does due process require? chanrobles
virtual law library
The holding of this Court in Ermita-Malate Hotel and Motel
Operators Asso. v. City Mayor,
48
sheds some light. Thus: "There
is no controlling and precise definition of due process. It
furnishes though a standard to which governmental action should
conform in order that deprivation of life, liberty or property, in
each appropriate case, be valid. What then is the standard of due
process which must exist both as a procedural and as
substantive requisite to free the challenged ordinance, or any
governmental action for that matter, from the imputation of legal
infirmity sufficient to spell its doom? It is responsiveness to the
supremacy of reason, obedience to the dictates of justice.
Negatively put, arbitrariness is ruled out and unfairness avoided.
To satisfy the due process requirement, official action, to
paraphrase Cardozo, must not outrun the bounds of reason and
result in sheer oppression. Due process is thus hostile to any
official action marred by lack of reasonableness. Correctly has it
been identified as freedom from arbitrariness. It is the
embodiment of the sporting idea of fair play. It exacts fealty "to
those strivings for justice" and judges the act of officialdom of
whatever branch "in the light of reason drawn from
considerations of fairness that reflect [democratic] traditions of
legal and political thought." It is not a narrow or "technical
conception with fixed content unrelated to time, place and
circumstances," decisions based on such a clause requiring a
"close and perceptive inquiry into fundamental principles of our
society." Questions of due process are not to be treated narrowly
or pedantically in slavery to form or
phrases." .chanroblesvirtualawlibrary chanrobles virtual law
library
The due process objection is sought to be bolstered by an
allegation that such power conferred in the challenged legislation
to limit the net profits to "12% annually of [petitioner's]
investments plus two-month operating expenses" has a
confiscatory aspect. This argument has the ring of futility.
Precisely, in Manila Electric Co. v. Public Service Commission,
49
this Court in an opinion by the present Chief Justice upheld such
a figure as against the contention that it was rather too generous
to the public utility. To speak of it as confiscatory then is to
employ the language by hyperbole. Moreover, in the absence any
evidence to demonstrate the alleged confiscatory effect of the
provision in question, there would be no basis for its nullification,
in view of the well-known presumption of validity that every
statute has in its favor.
50
chanrobles virtual law library
In the light of the above, there is thus clearly no occasion for
yielding assent to the claim of petitioner that the legislation
assailed contravenes the due process
clause.chanroblesvirtualawlibrary chanrobles virtual law library
3. While not explicitly avowed by petitioner, there is the
intimation that to apply the challenged legislation to contracts
then in existence would be an infringement of the constitutional
prohibition against any law impairing the obligation of
contracts.
51
No such fear need be entertained. A citation from a
1940 decision of this Court, in Pangasinan Transportation Co. v.
Public Service Commission,
52
is particularly relevant. In the
language of Justice Laurel, speaking for the Court: "Upon the
other hand, statutes enacted for the regulation of public utilities,
being a proper exercise by the state of its police power, are
applicable not only to those public utilities coming into existence
after its passage, but likewise to those already, existence
established and in operation."
53
Such a doctrine was followed in
the case of a tenancy legislation, the Congress undoubtedly
having in mind and not having failed to take notice "of the
existence of contracts" which stipulated a division of the crops on
a 50-50 basis and therefore must have intended to regulate the
same. There was thus no impairment of an obligation of contract,
such an enactment under the police power being remedial in
nature, the non-applicability of which to existing conditions would
be self-defeating in character.
54
chanrobles virtual law library
In Abe v. Foster Wheeler Corp.,
55
Justice Barrera, speaking for
the Court, took note of the contention "that as the contracts of
employment were entered into at a time when there was no law
granting the workers said right, the application as to them of the
subsequent enactment restoring the same right constitutes an
impairment of their contractual obligations." Then he, made clear
why the Court was of a contrary view as, "the constitutional
guaranty of non-impairment ... is limited by the exercise of the
police power of the State, in the interest of public health, safe,
morals and general welfare." Thus was reaffirmed what
previously had been announced as the rule. Such a doctrine was
reiterated early this year in Philippine American Life Insurance
Co. v. Auditor General,
56
where this Court found no objection to
the applicability of the Margin Law,
57
even if it be assumed that a
reinsurance treaty was already in existence and had imposed the
corresponding obligation on the parties prior to its
enactment.chanroblesvirtualawlibrary chanrobles virtual law
library
This is not to say that in each and every case the invocation of
the protection of the non-impairment clause would be unavailing
once the legislation complained of is shown to be an exercise of
the police power. Otherwise, that would render nugatory the
constitutional guarantee of non-impairment, and for that matter
both the equal protection and due process clauses which equally
serve to protect property rights. Here, as in other cases where
governmental authority may trench upon property rights, the
process of balancing, adjustment or harmonization is called
for.chanroblesvirtualawlibrary chanrobles virtual law library
Rutter v. Esteban
58
lends support to such an approach. In that
leading case, the continued operation and enforcement of the
Moratorium Act
59
which allowed an eight-year period of grace for
the payment of pre-war obligations on the part of debtors who
suffered as a consequence of World War II was, in a 1953
decision, held "unreasonable and oppressive, and should not be
prolonged a minute longer" for being violative of the
constitutional provision prohibiting the impairment of the
obligation of the contracts "and, therefore, ... should be declared
null and void and without effect."
60
As of the date of its
enactment in 1948, the police power could be relied upon to
sustain its validity, in view of the serious economic condition
faced by the country upon liberation and the state of penury that
then afflicted a greater portion of the Filipino people. By 1953
however, the Moratorium Act could be rightfully considered as an
infringement of the non-impairment clause, as the economy had
in the meanwhile considerably changed for the
better.chanroblesvirtualawlibrary chanrobles virtual law library
There is no clearer instance then of the process of harmonization
and balancing which is incumbent upon the judiciary to
undertake whenever a regulatory measure under the police
power is assailed as violative of constitucess or equal protection,
all of which are intended to safeguard property rights. Three
leading decisions of the United States Supreme Court, Home
Building & Loan Astional guarantees, whether of non-impairment,
due prosociation v. Blaisdell,
61
Nebbia v. New York,
62
and
Norman v. Baltimore and Ohio Railroad Co.,
63
speak
similarly.chanroblesvirtualawlibrary chanrobles virtual law library
Even if, therefore, reliance be had on the non-impairment clause
by petitioner and the process of adjustment or harmonization be
undertaken to ascertain whether the applicability of the statutory
provision assailed to existing contracts would run counter to such
a guarantee, still the same conclusion emerges. There is a failure
to make out a case for its invalidity.chanroblesvirtualawlibrary
chanrobles virtual law library
WHEREFORE, there being no showing that Section 3 of Republic
Act No. 3043 is unconstitutional, the decision of the lower court,
dismissing the petition, is affirmed. With costs against petitioner
Alalayan.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,
Sanchez, Castro and Angeles, JJ., concur.
Endnotes:
1
Section 3, Republic Act No. 3043, approved June 17, 1961,
entitled "An Act to Further Amend Commonwealth Act Numbered
One Hundred Twenty, as Amended by Republic Act Numbered
Twenty Six Hundred and Forty One."
2
Section 3 of Republic Act No. 3043 reads thus;
"SEC. 3. The National Power Corporation is hereby authorized to
represent and transact for the benefit and in behalf of the public
consumers, and it shall in any contract for the supply of electric
power to a franchise holder require as a condition that the
franchise holder, if it receives at least fifty percent of its electric
power and energy from the National Power Corporation, shall not
realize a net profit of more than twelve percent annually of its
investments plus two-month operating expenses. The National
Power Corporation shall renew all existing contracts with
franchise holder for the supply of electric power and energy, in
order to give effect to the provisions hereof. In the event that the
net profit as verified by the Public Service Commission should
exceed the said twelve percent, the public Service Commission
shall order such excess to be returned pro rata to the customers
either in cash or as credit for future electric bills."
3
Article VI, Section 21, par. 1, Constitution of the Philippines.
The constitutional provision reads thus: "No bill which may be
enacted into law shall embrace more than one subject which
shall be expressed in the title of the bill."
4
Petition, Record on Appeal, par. 4, pp. 3-4.
5
Ibid, par. 5, p. 4.
6
Ibid, pars. 6, 7 and 8, pp. 4-6.
7
Ibid, par. 9, pp. 6-8.
8
Ibid, par. 10, pp. 8-9.
9
Ibid, pars. 11, 12 and 13, pp. 9-11.
10
Ibid, pars. 15, 16, 17 and 18, pp. 12-18.
11
Ibid, p. 25.
12
Ibid, pp. 143-144.
13
Ibid, pp. 161-172.
14
Ibid, p. 229.
15
Ibid, pp. 243-248.
16
Art. VI, Sec. 21, par. 1, Constitution of the Philippines.
17
Government v. Hongkong & Shanghai Bank, 66 Phil. 483
(1938) .
18
People v. Carlos, 78 Phil. 535 (1947) .
19
People v. Buenviaje, 47 Phil. 536 (1925).
20
66 Phil. 483.
21
Act No. 4007.
22
73 Phil. 288 (1941).chanroblesvirtualawlibrary chanrobles
virtual law library
23
L-26511, October 29, 1966. The other cases that may be cited
follows People v. Carlos, 78 Phil. 535 (1947); Nuval v. de la
Fuente, 92 Phil. 1074 (1953); Ichong v. Hernandez, 101 Phil.
1155 (1957); Cordero v. Cabatuando, L-14542, Oct. 31, 1962;
Phil. Air Lines Employees Asso. v. Phil. Air Lines, Inc., L-18559,
June 30, 1964; Municipality of Jose Panganiban v. Shell Co., L-
18349, July 30, 1966.
24
L-28089, October 25, 1967.
25
Act No. 4790.chanroblesvirtualawlibrary chanrobles virtual law
library
26
The phrase is Justice Laurel's, appearing in his concurring
opinion in Ang Tibay v. Court, cited with approval in Antamok
Goldfields Mining Co. v. Court, 70 Phil. 340
(1940).chanroblesvirtualawlibrary chanrobles virtual law library
27
Cf. "Private property does not constitute for anyone an
absolute and unconditioned right. .. All men are equal in their
right to a decent life... It is not a system of justice where one
man is very wealthy and another very poor. Where such a
situation exists on a national scale, it becomes a matter of social
justice... [In the Philippines, while] a few have far more than
they need, the vast majority lack even the barest essentials of
life." Pastoral Letter of the Catholic Hierarchy, May 1, 1968.
28
Art. 11, Sec. 5, Constitution of the Philippines.
29
Art. XIV, Sec. 6, id.
30
Pampanga Bus Co. v. Pambusco Employees' Union (1939) 68
Phil. 541.
31
Manila Trading and Supply Co. v. Zulueta, 69 Phil. 485 (1940).
32
International Hardwood and Veneer Company v. The Pangil
Federation of Labor, 70 Phil. 602 (1940).
33
Antamok Goldfields Mining Company v. Court of Industrial
Relations, 70 Phil. 340 (1940).
34
Tapang v. Court of Industrial Relations, 72 Phil. 79 (1941).
35
People v. Rosenthal, 68 Phil. 328 (1939).
36
Pangasinan Trans. Co., Inc. v. Public Service Com., 70 Phil. 221
(1940).
37
70 Phil. 726 (1940).
38
Ibid, p. 733.
39
Camacho v. Court of Industrial Relations, 80 Phil. 848 (1948);
Ongsiaco v. Gamboa, 86 Phil. 50 (1950).
40
De Ramas v. Court of Agrarian Relations, L-19555, May 29,
1964. Cf. Del Rosario v. De los Santos, L-20589-90, March 21,
1968.
41
Ichong v. Hernandez, 101 Phil. 1155 (1957).
42
Co Chiong v. Cuaderno, 83 Phil. 242 (1949).
43
People v. Ventura, L-15079, Jan. 31, 1962.
44
Phil. Air Lines Employees' Asso. v. Phil. Air Lines, Inc., L-18559,
June 30, 1964.
45
People v. Chu Chi, 92 Phil. 977 (1953).
46
Abe v. Foster Wheeler Corp., L-14785, Nov. 29, 1960.
47
Roman Catholic Archbishop of Manila v. Social Security Com., L-
15045, Jan. 20, 1961. Cf. Director of Forestry v. Muoz, L-
24796, June 28, 1968.
48
L-24693, July 31, 1967. See also Morfe v. Mutuc, L-20387,
January 31, 1968.
49
L-24762, Nov. 14, 1966.
50
Cf. Ermita-Malate Hotel and Motel Operators Asso. v. City
Mayor, L-24693, July 31, 1967.
51
Art. III, Sec. 1, Par. 11 of the Constitution provides "No law
impairing the obligations of contracts shall be passed.
52
70 Phil. 221 (.1940).
53
Ibid, p. 232.
54
Ongsiako v. Gamboa, 86 Phil. 50 (1950).
55
L-14785, November 29, 1960.
56
L-19255, January 18, 1968.
57
Republic Act No. 2609.
58
93 Phil. 68 (1953).
59
Republic Act No. 342.
60
93 Phil. 68, 82 (1953).
61
290 US 398 (1934).
62
291 US 502 (1934).
63
294 US 240 (1935).
G.R. No. 85985 August 13, 1993
PHILIPPINE AIRLINES, INC. (PAL), petitioner, vs.NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER ISABEL P.
ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION
(PALEA), respondents.
Solon Garcia for petitioner.
Adolpho M. Guerzon for respondent PALEA.

MELO, J.:
n the instant petition for certiorari, the Court is presented the issue of
whether or not the formulation of a Code of Discipline among employees is
a shared responsibility of the employer and the employees.
On March 15, 1985, the Philippine Airlines, nc. (PAL) completely revised
its 1966 Code of Discipline. The Code was circulated among the
employees and was immediately implemented, and some employees were
forthwith subjected to the disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association
(PALEA) filed a complaint before the National Labor Relations Commission
(NLRC) for unfair labor practice (Case No. NCR-7-2051-85) with the
following remarks: "ULP with arbitrary implementation of PAL's Code of
Discipline without notice and prior discussion with Union by Management"
(Rollo, p. 41). n its position paper, PALEA contended that PAL, by its
unilateral implementation of the Code, was guilty of unfair labor practice,
specifically Paragraphs E and G of Article 249 and Article 253 of the Labor
Code. PALEA alleged that copies of the Code had been circulated in
limited numbers; that being penal in nature the Code must conform with
the requirements of sufficient publication, and that the Code was arbitrary,
oppressive, and prejudicial to the rights of the employees. t prayed that
implementation of the Code be held in abeyance; that PAL should discuss
the substance of the Code with PALEA; that employees dismissed under
the Code be reinstated and their cases subjected to further hearing; and
that PAL be declared guilty of unfair labor practice and be ordered to pay
damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an
employer to prescibe rules and regulations regarding employess' conduct
in carrying out their duties and functions, and alleging that by
implementing the Code, it had not violated the collective bargaining
agreement (CBA) or any provision of the Labor Code. Assailing the
complaint as unsupported by evidence, PAL maintained that Article 253 of
the Labor Code cited by PALEA reffered to the requirements for
negotiating a CBA which was inapplicable as indeed the current CBA had
been negotiated.
n its reply to PAL's position paper, PALEA maintained that Article 249 (E)
of the Labor Code was violated when PAL unilaterally implemented the
Code, and cited provisions of Articles V and of Chapter of the Code as
defective for, respectively, running counter to the construction of penal
laws and making punishable any offense within PAL's contemplation.
These provisions are the following:
Sec. 2. Non-exclusivity. This Code does not contain the entirety of the
rules and regulations of the company. Every employee is bound to comply
with all applicable rules, regulations, policies, procedures and standards,
including standards of quality, productivity and behaviour, as issued and
promulgated by the company through its duly authorized officials. Any
violations thereof shall be punishable with a penalty to be determined by
the gravity and/or frequency of the offense.
Sec. 7. Cumulative Record. An employee's record of offenses shall be
cumulative. The penalty for an offense shall be determined on the basis of
his past record of offenses of any nature or the absence thereof. The more
habitual an offender has been, the greater shall be the penalty for the
latest offense. Thus, an employee may be dismissed if the number of his
past offenses warrants such penalty in the judgment of management even
if each offense considered separately may not warrant dismissal. Habitual
offenders or recidivists have no place in PAL. On the other hand, due
regard shall be given to the length of time between commission of
individual offenses to determine whether the employee's conduct may
indicate occasional lapses (which may nevertheless require sterner
disciplinary action) or a pattern of incorrigibility.
Labor Arbiter sabel P. Ortiguerra handling the case called the parties to a
conference but they failed to appear at the scheduled date. nterpreting
such failure as a waiver of the parties' right to present evidence, the labor
arbiter considered the case submitted for decision. On November 7, 1986,
a decision was rendered finding no bad faith on the part of PAL in adopting
the Code and ruling that no unfair labor practice had been committed.
However, the arbiter held that PAL was "not totally fault free" considering
that while the issuance of rules and regulations governing the conduct of
employees is a "legitimate management prerogative" such rules and
regulations must meet the test of "reasonableness, propriety and fairness."
She found Section 1 of the Code aforequoted as "an all embracing and all
encompassing provision that makes punishable any offense one can think
of in the company"; while Section 7, likewise quoted above, is
"objectionable for it violates the rule against double jeopardy thereby
ushering in two or more punishment for the same misdemeanor." (pp. 38-
39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code
was amply circulated." Noting that PAL's assertion that it had furnished all
its employees copies of the Code is unsupported by documentary
evidence, she stated that such "failure" on the part of PAL resulted in the
imposition of penalties on employees who thought all the while that the
1966 Code was still being followed. Thus, the arbiter concluded that "(t)he
phrase ignorance of the law excuses no one from compliance . . . finds
application only after it has been conclusively shown that the law was
circulated to all the parties concerned and efforts to disseminate
information regarding the new law have been exerted. (p. 39, Rollo.) She
thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby ordered
as follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under the New
Code of Discipline and remand the same for further hearing; and
3. Discuss with PALEA the objectionable provisions specifically tackled in
the body of the decision.
All other claims of the complainant union (is) [are] hereby, dismissed for
lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through
Commissioner Encarnacion, with Presiding Commissioner Bonto-Perez
and Commissioner Maglaya concurring, found no evidence of unfair labor
practice committed by PAL and affirmed the dismissal of PALEA's charge.
Nonetheless, the NLRC made the following observations:
ndeed, failure of management to discuss the provisions of a contemplated
code of discipline which shall govern the conduct of its employees would
result in the erosion and deterioration of an otherwise harmonious and
smooth relationship between them as did happen in the instant case.
There is no dispute that adoption of rules of conduct or discipline is a
prerogative of management and is imperative and essential if an industry,
has to survive in a competitive world. But labor climate has progressed,
too. n the Philippine scene, at no time in our contemporary history is the
need for a cooperative, supportive and smooth relationship between labor
and management more keenly felt if we are to survive economically.
Management can no longer exclude labor in the deliberation and adoption
of rules and regulations that will affect them.
The complainant union in this case has the right to feel isolated in the
adoption of the New Code of Discipline. The Code of Discipline involves
security of tenure and loss of employment a property right! t is time that
management realizes that to attain effectiveness in its conduct rules, there
should be candidness and openness by Management and participation by
the union, representing its members. n fact, our Constitution has
recognized the principle of "shared responsibility" between employers and
workers and has likewise recognized the right of workers to participate in
"policy and decision-making process affecting their rights . . ." The latter
provision was interpreted by the Constitutional Commissioners to mean
participation in "management"' (Record of the Constitutional Commission,
Vol. ).
n a sense, participation by the union in the adoption of the code if conduct
could have accelerated and enhanced their feelings of belonging and
would have resulted in cooperation rather than resistance to the Code. n
fact, labor-management cooperation is now "the thing." (pp. 3-4, NLRC
Decision ff. p. 149, Original Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed decision in
the sense that the New Code of Discipline should be reviewed and
discussed with complainant union, particularly the disputed provisions [.]
(T)hereafter, respondent is directed to furnish each employee with a copy
of the appealed Code of Discipline. The pending cases adverted to in the
appealed decision if still in the arbitral level, should be reconsidered by the
respondent Philippine Air Lines. Other dispositions of the Labor Arbiter are
sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents
with grave abuse of discretion in: (a) directing PAL "to share its
management prerogative of formulating a Code of Discipline"; (b)
engaging in quasi-judicial legislation in ordering PAL to share said
prerogative with the union; (c) deciding beyond the issue of unfair labor
practice, and (d) requiring PAL to reconsider pending cases still in the
arbitral level (p. 7, Petition; p. 8, Rollo.)
As stated above, the Principal issue submitted for resolution in the instant
petition is whether management may be compelled to share with the union
or its employees its prerogative of formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no
law which mandated the sharing of responsibility therefor between
employer and employee.
ndeed, it was only on March 2, 1989, with the approval of Republic Act
No. 6715, amending Article 211 of the Labor Code, that the law explicitly
considered it a State policy "(t)o ensure the participation of workers in
decision and policy-making processes affecting the rights, duties and
welfare." However, even in the absence of said clear provision of law, the
exercise of management prerogatives was never considered boundless.
Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held that
management's prerogatives must be without abuse of discretion.
n San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA
25 [1989]), we upheld the company's right to implement a new system of
distributing its products, but gave the following caveat:
So long as a company's management prerogatives are exercised in good
faith for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under
special laws or under valid agreements, this Court will uphold them. (at p.
28.)
All this points to the conclusion that the exercise of managerial
prerogatives is not unlimited. t is circumscribed by limitations found in law,
a collective bargaining agreement, or the general principles of fair play and
justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713
[1987]), it must be duly established that the prerogative being invoked is
clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that
they are not purely business-oriented nor do they concern the
management aspect of the business of the company as in the San Miguel
case. The provisions of the Code clearly have repercusions on the
employee's right to security of tenure. The implementation of the
provisions may result in the deprivation of an employee's means of
livelihood which, as correctly pointed out by the NLRC, is a property right
(Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). n view of
these aspects of the case which border on infringement of constitutional
rights, we must uphold the constitutional requirements for the protection of
labor and the promotion of social justice, for these factors, according to
Justice sagani Cruz, tilt "the scales of justice when there is doubt, in favor
of the worker" (Employees Association of the Philippine American Life
Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).
Verily, a line must be drawn between management prerogatives regarding
business operations per se and those which affect the rights of the
employees. n treating the latter, management should see to it that its
employees are at least properly informed of its decisions or modes action.
PAL asserts that all its employees have been furnished copies of the Code.
Public respondents found to the contrary, which finding, to say the least is
entitled to great respect.
PAL posits the view that by signing the 1989-1991 collective bargaining
agreement, on June 27, 1990, PALEA in effect, recognized PAL's
"exclusive right to make and enforce company rules and regulations to
carry out the functions of management without having to discuss the same
with PALEA and much less, obtain the latter's conformity thereto" (pp. 11-
12, Petitioner's Memorandum; pp 180-181, Rollo.) Petitioner's view is
based on the following provision of the agreement:
The Association recognizes the right of the Company to determine matters
of management it policy and Company operations and to direct its
manpower. Management of the Company includes the right to organize,
plan, direct and control operations, to hire, assign employees to work,
transfer employees from one department, to another, to promote, demote,
discipline, suspend or discharge employees for just cause; to lay-off
employees for valid and legal causes, to introduce new or improved
methods or facilities or to change existing methods or facilities and the
right to make and enforce Company rules and regulations to carry out the
functions of management.
The exercise by management of its prerogative shall be done in a just
reasonable, humane and/or lawful manner.
Such provision in the collective bargaining agreement may not be
interpreted as cession of employees' rights to participate in the deliberation
of matters which may affect their rights and the formulation of policies
relative thereto. And one such mater is the formulation of a code of
discipline.
ndeed, 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. n 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.
WHEREFORE, the petition is DSMSSED and the questioned decision
AFFRMED. No special pronouncement is made as to costs.
SO ORDERED.
Feliciano, Bidin, Romero and Vitug, JJ., concur.