PHILIPPINE ELECTRIC CORPORATION v.

COURT OF APPEALS
G.R. No. 168612, December 10, 2014
FACTS:
Philippine Electric Corporation (PHILEC) is a domestic corporation engaged in the manufacture
and repairs of high voltage transformers. Among PWU members were selected for promotion, therefore
ordering them to undergo training, eventually shall receive allowance until the training is completed. PWU
is a legitimate labor organization and the exclusive bargaining representative of PHILECs rank-and-file
employees. PHILEC and its rank-and-file employees were governed by collective bargaining agreement
providing for the steps in increasing the employees basic salary in case of promotion. PWU members
claimed that schedule of training allowance did not conform to Article X of their CBA. PWU and PHILEC
decided to settle their grievance to voluntary arbitration. PHILEC contends that they applied Modified
SGV pay grades to avoid salary distortion. However, Voluntary Arbitrator held that PHILEC violated its
CBA with PWU, therefore ordering the PHILEC to pay the PWU members allowance based on their CBA.
PHILEC filed a petition for certiorari on Court of Appeals (CA), alleging that Voluntary Arbitrator gravely
abused its discretion in rendering his decision, but the CA affirmed the decision of Voluntary Arbitrator.
PHILEC filed its petition before the SC for review on certiorari insisting that they did not violate their CBA
with PWU.
ISSUE:
Whether or not Voluntary Arbitrator gravely abuse its discretion in directing PHILEC to pay the
training allowance based on CBA with PWU.
RULING:
No, the Voluntary Arbitrator did not gravely abuse its discretion. The Voluntary Arbitrator correctly
awarded training allowances based on the amounts and formula of the CBA. A Collective Bargaining
Agreement is a contract executed upon the request of either the employer or the exclusive bargaining
representative of the employees incorporating the agreement reached after the negotiations with respect
to wages, hours of work and all other terms and conditions of employment, including proposals for
adjusting any grievances or questions arising under such agreement. A collective bargaining agreement
being a contract, its provisions constitute the law between the parties and must be complied with in good
faith. Therefore, the allowance of the members of the PWU must be computed based on Article X of their
CBA. Moreover, PHILEC allegedly applied the Modified SGV pay grade scale to prevent any salary
distortion within PHILECs enterprise. This, however, does not justify PHILECs non-compliance with the
collective bargaining agreement. This pay grade scale is not provided in the collective bargaining
agreement. It could have invoked Article 252 of the Labor Code, to incorporate the Modified SGV pay
grade scale in its collective bargaining agreement with PWU. But it did not. Therefore PHILEC cannot
insist on the Modified SGV pay grade scales application.
PATRICIA HALAGUEA et,al. v. PAL
G.R. No. 172013, October 2, 2009
FACTS:

Petitioners were employed as flight attendants of Philippine Airlines on different dates prior to
November 1996. They were members of Flight Attendants and Stewards Association of the Philippines
(FASAP) union, the exclusive bargaining organization of the flight attendants, flight stewards and pursers.
On July 2001, respondent and FASAP entered into a CBA incorporating the terms and conditions of their
agreement for the years 2000 to 2005 (compulsory retirement of 55 for females and 60 for males). In July
2003, petitioner and several female cabin crews, in a letter, manifested that the provision in CBA on
compulsory retirement is discriminatory. On July 2004, FASAP president submitted their willingness to
commence the collective bargaining negotiations at the soonest possible time. On the same month,
petitioners filed a special civil action for declaratory relief with issuance of temporary restraining order
(TRO) with the RTC Makati. The RTC issued a TRO. After the denial of the respondent on its motion for
reconsideration for the TRO, it filed a petition with the Court of Appeals. The CA granted respondents
petition and ordered the lower court to dismiss the case. Hence, the petitioners filed a petition before the
SC.
ISSUE:
Whether or not, the provision on compulsory retirement in CBA is unlawful and unconstitutional.
RULING:
The petitioners primary relief is the annulment of the

part of the CBA, which allegedly

discriminates against them for being female flight attendants. The subject of the litigation is incapable of
pecuniary estimation, exclusively cognizable by the RTC. Being an ordinary civil action, the same is
beyond the jurisdiction of Labor Tribunals. The said issue cannot be resolved by solely by applying the
Labor Code. Rather it requires the application of the Constitution, Labor statutes, Law on Contracts and
the Convention on the elimination of All Forms of Discrimination Against Women, and the power to apply
and interpret the constitutional CEDAW is within the jurisdiction of trial courts, a court of general
jurisdiction. In Georg Grotjahn GMBH & Co. v. Isnani, the Court held that not every dispute between an
employer and employee involves matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC
under Article 217 of the Labor Code is limited to dispute arising from an employer-employee relationship
which can only be resolved by reference to the Labor Code, other labor statutes, ot their collective
bargaining agreement.

ANSELMO FERRAZZINI v. CARLOS GSELL

G.R. No. L- 10712, August 10, 1916
FACTS:
Respondent Carlos Gsell is engaged in the manufacture of umbrellas, matches and hats.
Petitioner Anselmo Ferrazzini was employed by Gsell as foreman in the factory owned by the respondent.
At some point, he was discharged by the respondent, so he filed a case to recover damages for an
alleged wrongful discharge. Respondent Gsell, for his part admitted he discharged petitioner Ferrazzini
without written advice of six months in advance as provided in the their contract. But he contends that the

discharge was lawful on the account of absence, unfaithfulness and disobedience of orders. Therefore
the respondent sought a counterclaim for further alleged breach of plaintiff by engaging in business in the
Philippine Islands since leaving the service of the defendant and without defendants request or consent,
in violation of his contract with the defendant; wherefore, the defendant demands judgment against the
plaintiff for a sum of money. The plaintiff admits that he entered the employment in the Philippine Islands
as a foreman on some construction work without the consent either written or verbal , of the defendant.
ISSUE:
Whether or not, the part of the contract preventing the petitioner to enter into employment of any
enterprise in the Philippines is against public policy.
RULING:
Yes, the Court ruled that the part of the contract preventing the petitioner to enter into
employment of any enterprise in the Philippines is against public policy. Manresa defined public policy as
which does not here signify the material keeping of public order represents in the law of persons the
public, social and legal interest, that which is permanent and essential of the institutions, that which, even
if favouring an individual in whom the right lies, cannot be left to his own will. By public policy, as defined
by the courts in the United States and England, is intended that principle of the law which holds that no
subject or citizen can lawfully do that which has the tendency to be injurious to the public or against the
public good, which may be termed the policy of the law, or public policy in relation to the administration of
the law. The foregoing is sufficient to show that there is no difference in principle between the public policy
in the two jurisdictions as determined by the Constitution, laws, and judicial decisions. The contract under
consideration, tested by the law, rules and principles set forth, is clearly one in undue or unreasonable
restraint of trade and therefore against public policy. It is limited as to time and space but not as to trade.
It is not necessary for the protection of the defendant, as this is provided for in another part of the clause.
It would force the plaintiff to leave the Philippine Islands in order to obtain a livelihood in case the
defendant declined to give him the written permission to work elsewhere in this country.
G. MARTINI (LTD.) v. J.M. GLAISERMAN
G.R. No. L-13699, November 12, 1918
FACTS:
The plaintiff and defendant entered into a contract under the terms of which defendant agreed to
enter the service of plaintiff for the period of three years. The contract does not specify the character of
the services to be rendered by the defendant to plaintiff. The agreement is that he will serve the plaintiff or
his successors exclusively for a period of three years and promises to carry out his employers
instructions to the best of his ability, and go wherever his employers interest should require him to go.
Second clause of the contract provided that when such three years are over, he shall not engage in any
business either for himself or others similar to the business carried on by his present employer, or in
which his employer may be engage at that time, for one year at least, or without first having secured the
consent of his previous employer in writing. Eventually, the defendant left plaintiff employ, and shortly after

entered the employ of the firm of Dyogi & Co. the reason of the defendant is that he was unable to endure
the insulting treatment of the managing director of the plaintiff. In which the lower court ruled in favour of
the defendant.
ISSUE:
Whether or not the contract, under which the defendant is forbidden to engage in any business in
which plaintiff was engaged during the term of his employment, can be upheld.
RULING:
The Court ruled that the contract that forbids the defendant to engage in any business which
plaintiff was engaged during the term of his employment cannot be upheld. The Court contemplates to the
question Can it be said that such limitation upon the future activities of the employee was reasonably
necessary to the protection of the employer? We think not. Under its express terms plaintiff, after treating
defendant in such a way that his self-respect would compel him to resign under the sixth clause of the
contract, is nevertheless empowered to prevent defendant, for a year, from engaging in any business
similar to that of plaintiff, although defendants experience in plaintiffs employ may have been limited to
only one-well defined branch of its multifarious commercial activities. The scope of his prohibition is
clearly shown by the testimony of plaintiffs witness, who states that the plaintiff corporation is engaged in
the business of importing a great many different lines and the export of Philippine products in general.
Therefore, of the opinion that the agreement contained in paragraph two of the contract of employment
does void constituting an unreasonable restraint of trade.

ALFONSO DEL CASTILLO v. SHANNON RICHMOND

G.R. No. L-21127, February 9, 1924
FACTS:
This case was instituted to declare the contract of services entered into by petitioner Alfonso del
Castillo as null and void. Del Castillo alleges that the provisions and conditions contained in the third
paragraph of said contract constitute an illegal and unreasonable restriction upon his liberty to contract,
are contrary to public policy, and are unnecessary in order to constitute a just and reasonable protection
to the defendant and asked that the same be declared null and void and no effect. The said contract
constituted an illegal and unreasonable restriction upon the right of the plaintiff to contract and was
contrary to public policy. It will be noted that the restrictions placed upon the plaintiff are strictly limited (a)
to a limited district or districts, and (b) during the time while the defendant or his heirs may own or have
open a drugstore, or have an interest in any other one within said limited district.
ISSUE:
Whether or not the said restriction contrary to public policy.
RULING:
The Court ruled that said restriction is not contrary to public policy. The law concerning contracts
which tend to restrain business or trade has gone through a long series of changes from time to time with

the changing conditions of trade and commerce. With trifling exceptions, said changes have been
continuous development of general rule. The early cases show plainly a disposition to avoid and annul all
contract which prohibited or restrained anyone from using lawful trade at any time or any place, as being
against the benefit of the state. Later, however, the rule became well established that if the restraint was
limited to a certain place, such contracts were valid and not against the benefit of the state. Later cases,
and SC states that, we think the rule is now well established, have held that the contract in restraint of
trade is valid providing there is a limitation upon either time or place. A contract, however, which restrains
a man entering into a business or trade without either a limitation as to time or place will be held in valid.