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FIRST DIVISION

[G.R. No. 47800. December 2, 1940.]

MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF
PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. The provisions of section 1 of
Commonwealth Act No. 648 do not confer legislative power upon the Director of Public Works and the Secretary of Public Works and Communications. The authority
therein conferred upon them and under which they promulgated the rules and regulations now complained of is not to determine what public policy demands but merely to
carry out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon, and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines" and to close them temporarily to any or all
classes of traffic "whenever the condition of the road or the traffic thereon makes such action necessary or advisable in the public convenience and interest." The
delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the
application of said law is to be predicated. To promulgate rules and regulations on the use of national roads and to determine when and how long a national road should
be closed to traffic, in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative function which
cannot be directly discharged by the National Assembly. It must depend on the discretion of some other government official to whom is confided the duty of determining
whether the proper occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. Commonwealth Act No. 548 was passed by the National Assembly in the
exercise of the paramount police power of the state. Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit
upon and avoid obstructions on national roads, in the interest and convenience of the public. 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 (U.S. v. Gomer Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing
without which life is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither should authority be made to
prevail over liberty because then the individual will fall into slavery. The citizen should achieve the required balance of liberty and authority in his mind through education
and, personal discipline, so that there may be established the resultant equilibrium, which means peace and order and happiness for all. The moment greater authority is
conferred upon the government, logically so much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its preservation.

3. ID.; ID.; SOCIAL JUSTICE. Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion
of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema
lex. Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society and of the protection
that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of
the state of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."

DECISION

LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court this petition for a writ of prohibition against the respondents, A.
D. Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and
Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to the Director of Public Works and to the
Secretary of Public Works and Communications that animal-drawn vehicles be prohibited from passing along Rosario Street extending from Plaza Calderon de la Barca to
Dasmarias Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo Street to
Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic
Commission, on July 18, 1940 recommended to the Director of Public Works the adoption of the measure proposed in the resolution aforementioned, in pursuance of the
provisions of Commonwealth Act No. 548 which authorizes said Director of Public Works, with the approval of the Secretary of Public Works and Communications, to
promulgate rules and regulations to regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director of Public Works, in his first
indorsement to the Secretary of Public Works and Communications, recommended to the latter the approval of the recommendation made by the Chairman of the
National Traffic Commission as aforesaid, with the modification that the closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the portion thereof
extending from the railroad crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public Works and Communications, in his second
indorsement addressed to the Director of Public Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-
drawn vehicles, between the points and during the hours as above indicated, for a period of one year from the date of the opening of the Colgante Bridge to traffic; that
the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulations thus adopted; that as a consequence of
such enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places above-mentioned to the detriment not only of their owners but
of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works, with the approval of the Secretary of Public Works and
Communications, is authorized to promulgate rules and regulations for the regulation and control of the use of and traffic on national roads and streets is unconstitutional
because it constitutes an undue delegation of legislative power. This contention is untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro (39
Phil, 660, 700), "The rule has nowhere been better stated than in the early Ohio case decided by Judge Ranney, and since followed in a multitude of cases, namely: The
true distinction therefore is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or
discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made. (Cincinnati, W. &
Z. R. Co. v. Commrs. Clinton County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the
Legislature to an executive department or official. The Legislature may make decisions of executive departments or subordinate officials thereof, to whom it has
committed the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give prominence to the
necessity of the case."cralaw virtua1aw library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive
orders of the President of the Philippines, the Director of Public Works, with the approval of the Secretary of Public Works and Communications, shall promulgate the
necessary rules and regulations to regulate and control the use of and traffic on such roads and streets. Such rules and regulations, with the approval of the President,
may contain provisions controlling or regulating the construction of buildings or other structures within a reasonable distance from along the national roads. Such roads
may be temporarily closed to any or all classes of traffic by the Director of Public Works and his duly authorized representatives whenever the condition of the road or the
traffic thereon makes such action necessary or advisable in the public convenience and interest, or for a specified period, with the approval of the Secretary of Public
Works and Communications."cralaw virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public Works and the Secretary of Public Works and Communications. The authority
therein conferred upon them and under which they promulgated the rules and regulations now complained of is not to determine what public policy demands but merely to
carry out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and streets
designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines" and to close them temporarily to any or all
classes of traffic "whenever the condition of the road or the traffic makes such action necessary or advisable in the public convenience and interest." The delegated
power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the application of said
law is to be predicated. To promulgate rules and regulations on the use of national roads and to determine when and how long a national road should be closed to traffic,
in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the discretion of some other government official to whom is confided the duty of determining whether the proper
occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the making of the law. As was said in Lockes Appeal (72 Pa. 491): "To
assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the power to act wisely for the public welfare
whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know." The proper distinction the court said was this:
"The Legislature cannot delegate its power to make the law; but it can make a law to delegate a power to determine some fact or state of things upon which the law
makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation
must depend which cannot be known to the law-making power, and, must, therefore, be a subject of inquiry and determination outside of the halls of legislation." (Field v.
Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmea, G.R. Nos. 46076 and 46077, promulgated June 12, 1939, and in Pangasinan Transportation v. The Public Service
Commission, G.R. No. 47065, promulgated June 26, 1940, this Court had occasion to observe that the principle of separation of powers has been made to adapt itself to
the complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of "subordinate legislation," not only in the United States and
England but in practically all modern governments. Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental regulations,
and the increased difficulty of administering the laws, the rigidity of the theory of separation of governmental powers has, to a large extent, been relaxed by permitting the
delegation of greater powers by the legislative and vesting a larger amount of discretion in administrative and executive officials, not only in the execution of the laws, but
also in the promulgation of certain rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an
unlawful interference with legitimate business or trade and abridge the right to personal liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the
National Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the
interest and convenience of the public. 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 (U.S. v. Gomez Jesus, 31 Phil., 218). To this
fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made to
prevail over authority because then society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual will fall into slavery.
The citizen should achieve the required balance of liberty and authority in his mind through education and personal discipline, so that there may be established the
resultant equilibrium, which means peace and order and happiness for all. The moment greater authority is conferred upon the government, logically so much is
withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of
insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to
exercise the police power is a continuing one, and a business lawful today may in the future, because of the changed situation, the growth of population or other causes,
become a menace to the public health and welfare, and be required to yield to the public good." And in People v. Pomar (46 Phil., 440), it was observed that "advancing
civilization is bringing within the police power of the state today things which were not thought of as being within such power yesterday. The development of civilization,
the rapidly increasing population, the growth of public opinion, with an increasing desire on the part of the masses and of the government to look after and care for the
interests of the individuals of the state, have brought within the police power many questions for regulation which formerly were not so considered."cralaw virtua1aw
library

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional precept regarding the promotion of social justice to insure the well-
being and economic security of all the people. The promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given group.
Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic forces by the
State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the
adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic
and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the
state of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."cralaw virtua1aw library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the petitioner. So ordered.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 81958 June 30, 1988

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,


vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas Employment
Administration, respondents.

SARMIENTO, J.:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, 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
"GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC 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. It is held likewise to be an invalid exercise of the lawmaking power, police
power being legislative, and not executive, in character.

In its supplement to the petition, PASEI invokes Section 3, of Article XIII, 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. It is claimed,
finally, to be in violation of the Charter's non-impairment clause, in addition to the "great and irreparable injury" that PASEI 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 Iraq, Jordan, Qatar, Canada, Hongkong,
United States, Italy, Norway, Austria, and Switzerland. * In submitting the validity of the challenged "guidelines," the Solicitor General invokes the police power of the
Philippine State.

It 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. It 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.
It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive embrace.

"Its 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

It 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. It 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." It 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

It 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 It 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

In the light of the foregoing, the petition must be dismissed.

As a general rule, official acts enjoy a presumed vahdity. 13 In 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. It is well-settled that "equality before the law" under the Constitution 15 does
not import a perfect Identity of rights among all men and women. It 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. In fulfilling that duty, the Court sustains the Government's efforts.

The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps for isolated instances, our men abroad have been
afflicted with an Identical 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. It 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. In 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. LIFTING OF SUSPENSION. 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,

19
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers.

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. It would be a classic case of what Chase refers to as a law that "takes property from
A and gives it to B." 21 It 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. If such be the case, it would be
difficult to refute the assertion of denial of equal protection." 23 In the case at bar, the assailed Order clearly accords protection to certain women workers, and not the
contrary.)

It 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. AUTHORIZED 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. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--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. LIFTING OF SUSPENSION-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,

24
2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers.

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," 26pursuant 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. It 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. It 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. In 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. It 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. In 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 DISMISSED. No costs.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 155109 September 29, 2010

C. ALCANTARA & SONS, INC., Petitioner,


vs.
COURT OF APPEALS, LABOR ARBITER ANTONIO M. VILLANUEVA, LABOR ARBITER ARTURO L. GAMOLO, SHERIFF OF NLRC RAB-XI-DAVAO CITY,
NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY,
EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO,
RUDY ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO
TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO
LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO
ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO
INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO
MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO
ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO
NATIVIDAD, ROLANDO CAPUYAN, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO COMPRADO,
JESUS PATOC, RAMON CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO
DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO
SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO
TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA, Respondents.

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

G.R. No. 155135

NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY,
EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO,
RUDY ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO
TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO
LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO
ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO
INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO
MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO
ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO
NATIVIDAD, ROLANDO CAPUYAN, JUANITO NISNISAN, AURELIO CARIN, PRIMO OPLIMO, ANGELITO CASTANEDA, EDGARDO ORDIZ, LEONARDO
CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, MANUEL PIAPE, ROY
CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO
RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON, ERNESTO ESTILO,
BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE
TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA,Petitioners,
vs.
C. ALCANTARA & SONS, INC., EDITHA I. ALCANTARA, ATTY. NELIA A. CLAUDIO, CORNELIO E. CAGUIAT, JESUS S. DELA CRUZ, ROLANDO Z. ANDRES and
JOSE MA. MANUEL YRASUEGUI, Respondents.

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

G.R. No. 179220


NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), and its members whose names are listed below, Petitioners,
vs.
C. ALCANTARA & SONS, INC., Respondent.

DECISION

ABAD, J.:

This case is about a) the consequences of an illegally staged strike upon the employment status of the union officers and its ordinary members and b) the right of
reinstated union members to go back to work pending the companys appeal from the order reinstating them.

The Facts and the Case

C. Alcantara & Sons, Inc., (the Company) is a domestic corporation engaged in the manufacture and processing of plywood. Nagkahiusang Mamumuo sa Alsons-SPFL
(the Union) is the exclusive bargaining agent of the Companys rank and file employees. The other parties to these cases are the Union officers 1 and their striking
members.2

The Company and the Union entered into a Collective Bargaining Agreement (CBA) that bound them to hold no strike and no lockout in the course of its life. At some point
the parties began negotiating the economic provisions of their CBA but this ended in a deadlock, prompting the Union to file a notice of strike. After efforts at conciliation
by the Department of Labor and Employment (DOLE) failed, the Union conducted a strike vote that resulted in an overwhelming majority of its members favoring it. The
Union reported the strike vote to the DOLE and, after the observance of the mandatory cooling-off period, went on strike.

During the strike, the Company filed a petition for the issuance of a writ of preliminary injunction with prayer for the issuance of a temporary restraining order (TRO) Ex
Parte3 with the National Labor Relations Commission (NLRC) to enjoin the strikers from intimidating, threatening, molesting, and impeding by barricade the entry of non-
striking employees at the Companys premises. The NLRC first issued a 20-day TRO and, after hearing, a writ of preliminary injunction, enjoining the Union and its officers
and members from performing the acts complained of. But several attempts to implement the writ failed. Only the intervention of law enforcement units made such
implementation possible. Meantime, the Union filed a petition 4 with the Court of Appeals (CA), questioning the preliminary injunction order. On February 8, 1999 the latter
court dismissed the petition. The Union did not appeal from such dismissal.

The Company, on the other hand, filed a petition with the Regional Arbitration Board to declare the Unions strike illegal, 5 citing its violation of the no strike, no lockout,
provision of their CBA. Subsequently, the Company amended its petition to implead the named Union members who allegedly committed prohibited acts during the strike.
For their part, the Union, its officers, and its affected members filed against the Company a counterclaim for unfair labor practices, illegal dismissal, and damages. The
Union also assailed as invalid the service of summons on the individual Union members included in the amended petition.

On June 29, 1999 the Labor Arbiter rendered a decision, 6 declaring the Unions strike illegal for violating the CBAs no strike, no lockout, provision. As a consequence, the
Labor Arbiter held that the Union officers should be deemed to have forfeited their employment with the Company and that they should pay actual damages
of P3,825,000.00 plus 10% interest and attorneys fees. With respect to the striking Union members, finding no proof that they actually committed illegal acts during the
strike, the Labor Arbiter ordered their reinstatement without backwages. The Labor Arbiter denied the Unions counterclaim for lack of merit.

On June 29, 1999 the terminated Union members promptly filed a motion for their immediate reinstatement but the Labor Arbiter did not act on the same. At any rate, the
Company did not reinstate them. Both parties appealed 7 the Labor Arbiters decision to the NLRC. The Company impugned the Labor Arbiters decision insofar as it
ordered the reinstatement of the terminated Union members. The Union, on the other hand, questioned the declaration of illegality of the strike as well as the dismissal of
its officers and the order for them to pay damages.

On November 8, 1999 the NLRC rendered a decision,8 affirming that of the Labor Arbiter insofar as the latter declared the strike illegal, ordered the Union officers
terminated, and directed them to pay damages to the Company. The NLRC ruled, however, that the Union members involved, who were identified in the proceedings held
in the case, should also be terminated for having committed prohibited and illegal acts. The Union filed a petition for certiorari 9 with the CA, questioning the NLRC
decision. Finding merit in the petition, the CA rendered a decision on March 20, 2002, 10 annulling the NLRC decision and reinstating that of the Labor Arbiter. The
Company and the Union with its officers and members filed separate petitions for review of the CA decision in G.R. 155109 and 155135, respectively.

During the pendency of these cases, the affected Union members filed with the Labor Arbiter a motion for reinstatement pending appeal by the parties and the
computation of their backwages based on the CA decision. After hearing, the Labor Arbiter issued a resolution dated November 21, 2002, 11 holding that due to the delay in
the resolution of the dispute and the impracticability of reinstatement owing to the fact that the relations between the terminated Union members and the Company had
been severely strained by the prolonged litigation, payment of separation pay to such Union members was in order. The Labor Arbiter thus approved the computation and
payment of their separation pay and denied all their other claims.

Both parties appealed the Labor Arbiters resolution 12 to the NLRC. Initially, in its resolution dated April 30, 2003, 13 the NLRC declared the Labor Arbiters resolution of
November 21, 2002 void for lack of factual and legal basis but ordered the Company to pay the affected employees accrued wages and 13th month pay considering the
Companys refusal to reinstate them pending appeal. On motion for reconsideration by both parties, however, the NLRC issued a resolution on August 29,
2003,14 modifying its earlier resolution by deleting the grant of accrued wages and 13th month pay to the subject employees, thus denying their motion for computation.

Upon the Unions petition for certiorari 15 with the CA, questioning the NLRCs denial of the terminated Union members claim for separation pay, accrued wages, and other
benefits, the CA rendered a decision on February 24, 2005, 16 dismissing the petition. The CA ruled that the reinstatement pending appeal provided under Article 223 of the
Labor Code contemplated illegal dismissal or termination cases and not cases under Article 263. Thus, the CA ruled that the resolution ordering the reinstatement of the
terminated Union members and the payment of their wages and other benefits had no basis. Aggrieved, the Union sought intervention by this Court.

The Issues Presented


The issues presented in these cases are:

1. Whether or not the NLRC properly acquired jurisdiction over the persons of the individual Union members impleaded in the case;

2. Whether or not the Union staged an illegal strike;

3. Assuming the strike to be illegal, whether or not the impleaded Union members committed illegal acts during the strike, justifying their termination from
employment;

4. Whether or not the terminated Union members are entitled to the payment of backwages on account of the Companys refusal to reinstate them, pending
appeal by the parties, from the Labor Arbiters decision of June 29, 1999; and

5. Whether or not the terminated Union members are entitled to accrued backwages and separation pay.

The Rulings of the Court

One. The NLRC acquires jurisdiction over parties in cases before it either by summons served on them or by their voluntary appearance before its Labor Arbiter. Here,
while the Union insists that summons were not properly served on the impleaded Union members with respect to the Companys amended petition that sought to declare
the strike illegal, the records show that they were so served. The Return of Service of Summons 17 indicated that 74 out of the 8118 impleaded Union members were served
with summons. But they refused either to accept the summons or to acknowledge receipt of the same. Such refusal cannot of course frustrate the NLRCs acquisition of
jurisdiction over them. Besides, the affected Union members voluntarily entered their appearance in the case when they sought affirmative relief in the course of the
proceedings like an award of damages in their favor.

Two. A strike may be regarded as invalid although the labor union has complied with the strict requirements for staging one as provided in Article 263 of the Labor Code
when the same is held contrary to an existing agreement, such as a no strike clause or conclusive arbitration clause. 19 Here, the CBA between the parties contained a "no
strike, no lockout" provision that enjoined both the Union and the Company from resorting to the use of economic weapons available to them under the law and to instead
take recourse to voluntary arbitration in settling their disputes.

No law or public policy prohibits the Union and the Company from mutually waiving the strike and lockout maces available to them to give way to voluntary arbitration.
Indeed, no less than the 1987 Constitution recognizes in Section 3, Article XIII, preferential use of voluntary means to settle disputes. Thus

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 Court finds no compelling reason to depart from the findings of the Labor
Arbiter, the NLRC, and the CA regarding the illegality of the strike. Social justice is not one-sided. It cannot be used as a badge for not complying with a lawful agreement.

Three. Since the Unions strike has been declared illegal, the Union officers can, in accordance with law be terminated from employment for their actions. This includes
the shop stewards. They cannot be shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as such and placed them in positions of
leadership and power over the men in their respective work units.

As regards the rank and file Union members, Article 264 of the Labor Code provides that termination from employment is not warranted by the mere fact that a union
member has taken part in an illegal strike. It must be shown that such a union member, clearly identified, performed an illegal act or acts during the strike. 201avvphi1

Here, although the Labor Arbiter found no proof that the dismissed rank and file Union members committed illegal acts, the NLRC found following the injunction hearing in
NLRC IC M-000126-98 that the Union members concerned committed such acts, for which they had in fact been criminally charged before various courts and the
prosecutors office in Davao City. Since the CA held that the existence of criminal complaints against the Union members did not warrant their dismissal, it becomes
necessary for the Court to go into the records to settle the issue.

The striking Union members allegedly committed the following prohibited acts:

a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers;

b. They obstructed the free ingress to and egress from the company premises; and

c. They resisted and defied the implementation of the writ of preliminary injunction issued against the strikers.

Cornelio Caguiat, Ruben Tungapalan, and Eufracio Rabusa depicted the above prohibited acts in their affidavits and testimonies. The Sheriff of the NLRC said in his
Report21 that, in the course of his implementation of the writ of injunction, he observed that the striking employees blocked the exit lane of the Alson drive with their tent.
Tungapalan, a non-striking employee, identified the Union members who threatened and coerced him. Indeed, he filed criminal actions against them. Lastly, the photos
taken of the strike show the strikers, properly identified, committing the acts complained of. These constitute substantial evidence in support of the termination of the
subject Union members.

The mere fact that the criminal complaints against the terminated Union members were subsequently dismissed for one reason or another does not extinguish their
liability under the Labor Code. Nor does such dismissal bar the admission of the affidavits, documents, and photos presented to establish their identity and guilt during the
hearing of the petition to declare the strike illegal. The technical grounds that the Union interposed for denying admission of the photos are also not binding on the
NLRC.22
Four. The terminated Union members contend that, since the Company refused to reinstate them after the Labor Arbiter rendered a decision in their favor, the Company
should be ordered to pay them their wages during the pendency of the appeals from the Labor Arbiters decision.

It will be recalled that after the Labor Arbiter rendered his decision on June 29, 1999, which decision ordered the reinstatement of the terminated Union members, the
latter promptly filed a motion for their reinstatement pending appeal. But the Labor Arbiter did not for some reason act on the motion. As it happened, after about four
months or on November 8, 1999, the NLRC reversed the Labor Arbiters reinstatement order. It cannot be said, therefore, that the Company had resisted a standing order
of reinstatement directed at it at this point.

Of course, on March 20, 2002 the CA restored the Labor Arbiters reinstatement order. And this prompted the affected Union members to again file with the Labor Arbiter a
motion for their reinstatement pending appeal. But, acting on the motion, the Labor Arbiter resolved at this point that reinstatement was no longer practicable because of
the severely strained relation between the company and the terminated Union members. In place of reinstatement, the Labor Arbiter ordered the Company to pay them
their separation pays.

Both parties appealed the Labor Arbiters above ruling 23 to the NLRC. But, as it turned out the NLRC did not also favor reinstatement. It instead ordered the Company to
pay the terminated Union members their accrued wages and 13th month pay considering its refusal to reinstate them pending appeal. On motion for reconsideration,
however, the NLRC reconsidered and deleted altogether the grant of accrued wages and 13th month pay. The Union appealed the NLRC ruling to the CA on behalf of its
terminated members but the CA denied their appeal.

The CA denied reinstatement for the reason that the reinstatement pending appeal provided under Article 223 of the Labor Code contemplated illegal dismissal or
termination cases and not cases under Article 264. But this perceived distinction does not find support in the provisions of the Labor Code.

The grounds for termination under Article 264 are based on prohibited acts that employees could commit during a strike. On the other hand, the grounds for termination
under Articles 282 to 284 are based on the employees conduct in connection with his assigned work. Still, Article 217, which defines the powers of Labor Arbiters, vests in
the latter jurisdiction over all termination cases, whatever be the grounds given for the termination of employment. Consequently, Article 223, which provides that the
decision of the Labor Arbiter reinstating a dismissed employee shall immediately be executory pending appeal, cannot but apply to all terminations irrespective of the
grounds on which they are based.

Here, although the Labor Arbiter failed to act on the terminated Union members motion for reinstatement pending appeal, the Company had the duty under Article 223 to
immediately reinstate the affected employees even if it intended to appeal from the decision ordaining such reinstatement. The Companys failure to do so makes it liable
for accrued backwages until the eventual reversal of the order of reinstatement by the NLRC on November 8, 1999, 24 a period of four months and nine days.1avvphi1

Five. While it is true that generally the grant of separation pay is not available to employees who are validly dismissed, there are, in furtherance of the laws policy of
compassionate justice, certain circumstances that warrant the grant of some relief in favor of the terminated Union members based on equity.

Bitter labor disputes, especially strikes, always generate a throng of odium and abhorrence that sometimes result in unpleasant, although unwanted,
consequences.25 Considering this, the striking employees breach of certain restrictions imposed on their concerted actions at their employers doorsteps cannot be
regarded as so inherently wicked that the employer can totally disregard their long years of service prior to such breach. 26 The records also fail to disclose any past
infractions committed by the dismissed Union members. Taking these circumstances in consideration, the Court regards the award of financial assistance to these Union
members in the form of one-half month salary for every year of service to the company up to the date of their termination as equitable and reasonable.

WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and its officers and members in G.R. 155135 for lack of merit, and
REVERSES and SETS ASIDE the decision of the Court of Appeals in CA-G.R. SP 59604 dated March 20, 2002. The Court, on the other hand, GRANTS the petition of C.
Alcantara & Sons, Inc. in G.R. 155109 and REINSTATES the decision of the National Labor Relations Commission in NLRC CA M-004996-99 dated November 8, 1999.

Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and their dismissed members in G.R. 179220 and ORDERS C.
Alcantara & Sons, Inc. to pay the terminated Union members backwages for four (4) months and nine (9) days and separation pays equivalent to one-half month salary
for every year of service to the company up to the date of their termination, with interest of 12% per annum from the time this decision becomes final and executory until
such backwages and separation pays are paid. The Court DENIES all other claims. SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 164913 September 8, 2010

St. MARY'S ACADEMY of Dipolog City, Petitioner,


vs.
TERESITA PALACIO, MARIGEN CALIBOD, LEVIE LAQUIO, ELAINE MARIE SANTANDER, ELIZA SAILE, AND MA. DOLORES MONTEDERAMOS, Respondents.

DECISION

DEL CASTILLO, J.:

The Court will not hesitate to defend the workers constitutional right to security of tenure. After all, the interest of the workers is paramount as they are regarded with
compassion under the policy of social justice.
By this Petition for Review on Certiorari,1 petitioner St. Marys Academy of Dipolog City (petitioner) assails the Decision 2 dated September 24, 2003 and Resolution 3 dated
August 16, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 67691, which affirmed with modification the Resolution 4 of the National Labor Relations Commission
(NLRC), dated April 30, 2001 holding the dismissal of respondents Teresita Palacio (Palacio), Marigen Calibod (Calibod), Levie Laquio (Laquio), Elaine Marie Santander
(Santander), Eliza Saile (Saile), and Ma. Dolores Montederamos (Montederamos) as illegal, as well as the Resolution 5 dated August 31, 2001 denying the motion for
reconsideration.

Factual Antecedents

On different dates in the late 1990s, petitioner hired respondents Calibod, Laquio, Santander, Saile and Montederamos, as classroom teachers, and respondent Palacio,
as guidance counselor. In separate letters dated March 31, 2000, 6 however, petitioner informed them that their re-application for school year 2000-2001 could not be
accepted because they failed to pass the Licensure Examination for Teachers (LET). According to petitioner, as non-board passers, respondents could not continue
practicing their teaching profession pursuant to the Department of Education, Culture and Sports (DECS) Memorandum No. 10, S. 1998 7 which requires incumbent
teachers to register as professional teachers pursuant to Section 27 8 of Republic Act (RA) No. 7836, otherwise known as the Philippine Teachers Professionalization Act
of 1994.9

Together with four other classroom teachers namely Gail Josephine Padilla (Padilla), Virgilio Andalahao (Andalahao), Alma Decipulo (Decipulo), 10 and Marlynn
Palacio,11 who were similarly dismissed by petitioner on the same ground, respondents filed a complaint contesting their termination as highly irregular and premature.
They admitted that they are indeed non-board passers, however, they also argued that their security of tenure could not simply be trampled upon for their failure to
register with the Professional Regulation Commission (PRC) or to pass the LET prior to the deadline set by RA 7836. Further, as the aforesaid law provides for exceptions
to the taking of examination, they opined that their outright dismissal was illegal because some of them possessed civil service eligibilities and special permits to teach.
Furthermore, petitioners retention and acceptance of other teachers who do not also possess the required eligibility showed evident bad faith in terminating respondents.

Petitioner, on the other hand, maintained that it had repeatedly informed respondents of their obligation to comply with the mandate of the Memorandum issued by DECS
by passing the LET to be eligible as a registered professional teacher. While the DECS Memorandum, pursuant to PRC Resolution No. 600, S. 1997, 12 fixed the deadline
for teachers to register on September 19, 2000, 13 petitioner claimed that it decided to terminate their services as early as March 31, 2000 because it would be prejudicial
to the school if their services will be terminated in the middle of the school year.

Ruling of the Labor Arbiter

On September 22, 2000, the Labor Arbiter adjudged petitioner guilty of illegal dismissal because it terminated the services of the respondents on March 31, 2000 which
was clearly prior to the September 19, 2000 deadline fixed by PRC for the registration of teachers as professional teachers, in violation of the doctrine regarding the
prospective application of laws. Thus, petitioner was ordered to reinstate the respondents or to pay them separation pay at the rate of month wage for every year of
service, plus limited backwages covering the period from March 31, 2000 to September 30, 2000. The dispositive portion of the Labor Arbiters Decision reads as follows:

WHEREFORE, anchored on the foregoing premises, judgment is hereby rendered:

1.) that respondents act of having terminated the complainants employment is in fact and in law illegal, as it is not founded on any of the restricted just and
authorized causes provided for by law[,] hence, entitling complainants to the right of reinstatement and backwages in accordance with the mandate of Article
279 of the Labor Code of the Philippines. In this case, however, separation pay is hereby directed against respondent together with the payment of limited
backwages, as particularly reflected in paragraph "2" hereof;

2.) ordering respondent St. Marys Academy to pay complainants their separation pay and limited backwages, particularly indicated as follows:

A.) Teresita Palacio:

a.) Separation pay . . . . . . . . . P 11,250.90;


b.) Limited backwages . . . . . 27,002.16;

Total . . . . . . . . . . . . . . . . . P 38,253.06;

B.) Gail Josephine Padilla:

a.) Separation pay . . . . . . . . . P 15,456.45;


b.) Limited backwages . . . . . 26,512.20;

Total . . . . . . . . . . . . . . . . . P 41,977.65;

C.) Marigen Calibod:

a.) Separation pay . . . . . . . . . P 8,837.40;


b.) Limited backwages . . . . . 26,512.20

Total . . . . . . . . . . . . . . . . . P 35,349.60;

D.) Levei Laquio:

a.) Separation pay . . . . . . . . . P 11,378.15;


b.) Limited backwages . . . . . 27,307.56;

Total . . . . . . . . . . . . . . . . . P 38,685.71;

E.) Elaine Marie Santander:

a.) Separation pay . . . . . . . . . P 8,837.40;


b.) Limited backwages . . . . . 26,512.20;

Total . . . . . . . . . . . . . . . . . P 35,349.60;

F.) Virgilio Andalahao:

a.) Separation pay . . . . . . . . . P 6,435.00;


b.) Limited backwages . . . . . 25,740.00;

Total . . . . . . . . . . . . . . . . . P 32,175.00;

G.) Alma Decipulo:

a.) Separation pay . . . . . . . . . P 6,435.00;


b.) Limited backwages . . . . . 25,740.00;

Total . . . . . . . . . . . . . . . . . P 32,175.00;

H.) Eliza Saile:

a.) Separation pay . . . . . . . . . P 19,313.72;


b.) Limited backwages . . . . . 28,970.58;

Total . . . . . . . . . . . . . . . . . P 48,284.30;

I.) Marlynn Palacio:

a.) Separation pay . . . . . . . . . P 4,290.00;


b.) Limited backwages . . . . . 25,740.00;

Total . . . . . . . . . . . . . . . . . P 30,030.00 and

J.) Ma. Dolores Montederamos:

a.) Separation pay . . . . . . . . .

P 18,205.04;

b.) Limited backwages . . . . . 27,307.56;

Total . . . . . . . . . . . . . . . . . P 45,512.60; and

3.) dismissing all other money claims of complainants for lack of merit.

SO ORDERED.14

Ruling of the National Labor Relations Commission


Both parties appealed to the NLRC. In its Memorandum of Appeal, 15 petitioner insisted on the validity of respondents termination from service, such act being in
compliance with RA 7836 and in accordance with DECS Memorandum No. 10, S. 1998. Respondents, for their part, did not question the merits of the Labor Arbiters
Decision but prayed for the refund of their retirement contribution and payment of attorneys fees.

The NLRC, in its Resolution16 dated April 30, 2001, denied both appeals. In affirming the Labor Arbiters Decision, it held that the grounds relied upon by petitioner to
dismiss respondents are not among those enumerated by the Labor Code and that respondents are regular employees, thus cannot be removed unless for cause. The
NLRC did not grant respondents demand for the refund of their retirement contribution because this was not alleged in the original complaint as well as their prayer for
attorneys fees since this case is not one for collection of unlawfully withheld wages.

In a subsequent Resolution dated August 31, 2001, 17 the NLRC likewise denied petitioners Motion for Reconsideration, 18 reiterating that it cannot sustain petitioners
premature implementation of relevant laws and regulations.

Ruling of the Court of Appeals

Petitioner, then, elevated the case to the CA via a petition for certiorari.19 The CA agreed with the findings of both the Labor Arbiter and the NLRC that the dismissal was
effected prematurely in violation of existing laws, noting that respondents still had until September 19, 2000 within which to pass the LET. A contingency plan, according to
the CA, should have instead been adopted by petitioner in the event respondents termination from the service in the middle of the school year becomes inevitable. The
CA also observed that petitioners ulterior motive for the termination may have been the result of a confrontation between petitioners principal and respondents. The CA
also found petitioners acts of retaining and hiring other equally unqualified teachers who do not possess the required eligibility and allowing them to teach for the school
year 2000-2001 as badges of bad faith.

As regards Padilla, Marlynn Palacio, Andalahao and Decipulo, the CA found them to be mere probationary, and not regular, employees. Their employment contracts
merely expired and since the petitioner did not wish to renew their contracts, then there is no illegal dismissal to speak of.

Accordingly, the dispositive portion of the CA Decision reads:

WHEREFORE, the assailed Resolutions of the NLRC, Fifth Division dated April 30, 2001, [is] hereby affirmed with modification. The monetary awards adjudged in favor of
private respondents Gail Josephine Padilla, Virgilio Andalahao, Alma Decipolo and Merlyn Palacio whose services were legally terminated, are hereby DELETED for lack
of basis.

SO ORDERED.20

Petitioner moved to partially reconsider the Decision insofar as it found the dismissal of herein respondents to be premature and prayed that respondents be declared
legally dismissed from the service. The CA, however, denied the motion.

Hence, this petition.

Issues

I. THE COURT OF APPEALS COMMITTED GRIEVOUS ERROR IN HOLDING THAT THE DISMISSAL OF TERESITA PALACIO, MARIGEN CALIBOD,
LEVIE LAQUIO, ELAINE MARIE SANTANDER, ELIZA SAILE, AND DOLORES MONTEDERAMOS, WAS PREMATURE BECAUSE IT WAS EFFECTED
ON MARCH 31, 2000 PRIOR TO SEPTEMBER 20, 2000,21 THE DEADLINE SET BY THE PROFESSIONAL [REGULATION] COMMISSION FOR
TEACHERS TO ACQUIRE THEIR LICENSE.

II. THE COURT OF APPEALS GRAVELY ERRED IN FAILING TO CONSIDER THAT ASSUMING THAT RESPONDENTS WERE "PREMATURELY"
TERMINATED IN MARCH 2000, AT THE MOST, RESPONDENTS ARE ENTITLED TO BACKWAGES UP TO SEPTEMBER 19, 2000 ONLY BECAUSE ON
SUCH DATE, THEY WERE ALREADY DISMISSIBLE FOR CAUSE FOR NOT HAVING OBTAINED THEIR TEACHERS LICENSE.22

Petitioner insists that it has the right to terminate respondents services as early as March 2000 without waiting for the September 19, 2000 deadline set by law for
respondents to register as professional teachers due to the need to fix the school organization prior to the applicable school year. Petitioner justifies respondents
termination by advancing that it would be difficult to hire licensed teachers in the middle of the school year as respondents replacements. Also, the termination of
respondents in the middle of the school year might result in compromising the education of the students as well as the school operation. Petitioner further argues that it
cannot hire respondents for the period covering only June to September as it would contravene the DECSs policy requiring written contracts of at least one years
duration for teachers.

Our Ruling

The petition is devoid of merit.

The dismissal of Teresita Palacio, Calibod, Laquio, Santander, and Montederamos was premature and defeated their right to security of tenure. Sailes dismissal has legal
basis for lack of the required qualification needed for continued practice of teaching.

Pertinent provisions of RA 7836 provide:

SEC. 13. Examination, Registration and License Required. Except as otherwise specifically allowed under the provisions of this Act, all applicants for registration as
professional teachers shall be required to undergo a written examination which shall be given at least once a year in such places and dates as the Board may determine
upon approval by the Commission. A valid certificate of registration and a valid professional license from the Commission are required before any person is allowed to
practice as a professional teacher in the Philippines, except as otherwise allowed under this Act.

xxxx
SEC. 26. Registration and Exception. Two (2) years after the effectivity of this Act, no person shall engage in teaching and/or act as a professional teacher as defined in
this Act, whether in the preschool, elementary or secondary level, unless he is a duly registered professional teacher, and a holder of a valid certificate of registration and
a valid professional license or a holder of a valid special/temporary permit.

Upon approval of the application and payment of the prescribed fees, the certificate of registration and professional license as a professional teacher shall be issued
without examination as required in this Act to a qualified applicant, who at the time of the approval of this Act, is:

(a) A holder of a certificate of eligibility as a teacher issued by the Civil Service Commission and the Department of Education, Culture and Sports; or

(b) A registered professional teacher with the National Board for Teachers under the Department of Education, Culture and Sports (DECS) pursuant to
Presidential Decree No. 1006; or

(c) Not qualified under paragraphs one and two but with any of the following qualifications, to wit:

(1) An elementary or secondary teacher for five (5) years in good standing and a holder of a Bachelor of Science in Education or its equivalent; or

(2) An elementary or secondary teacher for three (3) years in good standing and a holder of a masters degree in education or its equivalent.

Provided, That they shall be given two (2) years from the organization of the Board for professional teachers within which to register and be included in the roster of
professional teachers: Provided, further, That those incumbent teachers who are not qualified to register without examination under this Act or who, albeit qualified, were
unable to register within the two-year period shall be issued a five-year temporary or special permit from the time the Board is organized within which to register after
passing the examination and complying with the requirements provided in this Act and be included in the roster of professional teachers: Provided, furthermore, That
those who have failed the licensure examination for professional teachers shall be eligible as para-teachers and as such, shall be issued by the Board a special or
temporary permit, and shall be assigned by the Department of Education, Culture and Sports (DECS) to schools as it may determine under the circumstances.

xxxx

SEC. 27. Inhibition Against the Practice of the Teaching Profession. Except as otherwise allowed under this Act, no person shall practice or offer to practice the teaching
profession in the Philippines or be appointed as teacher to any position without having previously obtained a valid certificate of registration and a valid professional license
from the Commission.

xxxx

SEC. 31. Transitory Provision. All incumbent teachers in both the public and private sector not otherwise certified as professional teachers by virtue of this Act, shall be
given five (5) years temporary certificates from the time the Board for Professional Teachers is organized within which to qualify as required by this Act and be included in
the roster of professionals.

Pursuant to RA 7836, the PRC formulated certain rules and regulations relative to the registration of teachers and their continued practice of the teaching profession.
Specific periods and deadlines were fixed within which incumbent teachers must register as professional teachers in consonance with the essential purpose of the law in
promoting good quality education by ensuring that those who practice the teaching profession are duly licensed and are registered as professional teachers.

Under DECS Memorandum No. 10, S. 1998, the Board for Professional Teachers (BPT), created under the general supervision and administrative control of the PRC,
was organized on September 20, 1995 so that, in the implementation of Sections 26, 27 and 31 of RA 7836, incumbent teachers as of December 16, 1994 have until
September 19, 1997 to register as professional teachers. The Memorandum further stated that a Memorandum of Agreement (MOA) was subsequently entered into by
the PRC, Civil Service Commission (CSC) and DECS to further allow those teachers who failed to register by September 19, 1997 to continue their service and register.
BPT Resolution No. 600, s. 1997 was thereafter passed to provide the guidelines 23 to govern teacher registration beyond September 19, 1997. Consequently, the deadline
was moved to September 19, 2000.

Pursuant to the aforestated law, resolution and memorandum, effective September 20, 2000, only holders of valid certificates of registration, valid professional licenses
and valid special/temporary permits can engage in teaching in both public and private schools. 24 Clearly, respondents, in the case at bar, had until September 19, 2000 to
comply with the mandatory requirement to register as professional teachers. As respondents are categorized as those not qualified to register without examination, the
law requires them to register by taking and passing the licensure examination.

It is undisputed that respondents were all non-board passers when they were dismissed by petitioner on March 31, 2000. Based on the certification issued by the PRC on
October 23, 2000,25 only respondent Santander passed the LET but only for the elementary level. Thus, she is still unqualified to teach in the high school level. All the
others, except respondent Saile who is not qualified to take the LET, failed the examination. Petitioner harps on the fact that even if respondents were to take the LET in
August of 2000, the results could not be known in time to meet the September 19, 2000 deadline. However, it is to be noted that the law still allows those who failed the
licensure examination between 1996 and 2000 to continue teaching if they obtain temporary or special permits as para-teachers. 26 In other words, as the law has provided
a specific timeframe within which respondents could comply, petitioner has no right to deny them of this privilege accorded to them by law. As correctly pointed out by the
Labor Arbiter and affirmed by the NLRC and the CA, the dismissal from service of respondents Palacio, Calibod, Laquio, Santander and Montederamos on March 31,
2000 was quite premature.

Petitioner claims that it terminated respondents employment as early as March 2000 because it would be highly difficult to hire professional teachers in the middle of the
school year as replacements for respondents without compromising the operation of the school and education of the students. Also, petitioner reasons out that it could not
enter into written contracts with respondents for the period June 2000 to September 19, 2000 without violating the DECSs policy requiring contracts of yearly duration for
elementary and high school teachers.

Petitioners contentions are not tenable. First, even if respondents contracts stipulate for a period of one year in compliance with DECSs directive, such stipulation could
not be given effect for being violative of the law. Provisions in a contract must be read in conjunction with statutory and administrative regulations. This finds basis on the
principle "that an existing law enters into and forms part of a valid contract without the need for the parties expressly making reference to it." 27 Settled is the rule that
stipulations made upon the convenience of the parties are valid only if they are not contrary to law. 28 Hence, mere reliance on the policy of DECS requiring yearly
contracts for teachers should not prevent petitioner from retaining the services of respondents until and unless the law provides for cause for respondents dismissal.

Petitioners intention and desire not to put the students education and school operation in jeopardy is neither a decisive consideration for respondents termination prior to
the deadline set by law. Again, by setting a deadline for registration as professional teachers, the law has allowed incumbent teachers to practice their teaching profession
until September 19, 2000, despite being unregistered and unlicensed. The prejudice that respondents retention would cause to the schools operation is only trivial if not
speculative as compared to the consequences of respondents unemployment. Because of petitioners predicament, it should have adopted measures to protect the
interest of its teachers as regular employees. As correctly observed by the CA, petitioner should have earlier drawn a contingency plan in the event there is need to
terminate respondents services in the middle of the school year. Incidentally, petitioner did not dispute that it hired and retained other teachers who do not likewise
possess the qualification and eligibility and even allowed them to teach during the school year 2000-2001. This indicates petitioners ulterior motive in hastily dismissing
respondents.1awphi1

It is incumbent upon this Court to afford full protection to labor. Thus, while we take cognizance of the employers right to protect its interest, the same should be exercised
in a manner which does not infringe on the workers right to security of tenure. "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 privilege in life should have more in law." 29

To reiterate, this Court will not hesitate to defend respondents right to security of tenure. The premature dismissal from the service of respondents Palacio, Calibod,
Laquio, Santander and Montederamos is unwarranted. However, we take exception to the case of respondent Saile who, as alleged by petitioner, was not qualified to take
the LET as she only had three out of the minimum 10 required educational units to be admitted to take the LET pursuant to Section 15 of RA 7836, 30 which fact
respondent Saile did not refute. Not being qualified to take the examination to become a duly licensed professional teacher, petitioner cannot be compelled to retain her
services as she cannot possibly obtain the needed prerequisite to allow her to continue practicing the teaching profession. Thus, we find her termination just and legal.

Limited backwages computed from March 31, 2000 to September 30, 2000 awarded in favor of Palacio, Calibod, Laquio, Santander and Montederamos are sustained.

Petitioner questions the amount of separation pay awarded to respondents contending that assuming respondents were illegally dismissed, they are only entitled to an
amount computed from the time of dismissal up to September 19, 2000 only. After September 19, 2000, respondents, according to petitioner, are already dismissible for
cause for lack of the necessary license to teach.

This contention deserves no merit. Petitioner cannot possibly presume that respondents could not timely comply with the requirements of the law. At any rate, we note that
petitioner only assailed the amount of backwages for the first time in its motion for reconsideration of the Decision of the CA. Thus, the Court cannot entertain the issue for
being belatedly raised. Hence, the award of limited backwages covering the period from March 31, 2000 to September 30, 2000 as ruled by the Labor Arbiter and affirmed
by both the NLRC and CA is in order.

WHEREFORE, the petition is partially GRANTED. The Decision of the Court of Appeals dated September 24, 2003 in CA-G.R. SP No. 67691 finding respondents Teresita
Palacio, Marigen Calibod, Levie Laquio, Elaine Marie Santander and Ma. Dolores Montederamos to have been illegally dismissed and awarding them separation pay and
limited backwages is AFFIRMED. As regards respondent Eliza Saile, we find her termination valid and legal. Consequently, the awards of separation pay and limited
backwages in her favor are DELETED.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC
G.R. No. 78909 June 30, 1989

MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO, President, petitioner,


vs.
THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR OF LABOR, REGION X, respondents.

MEDIALDEA, J.:

This is a petition for certiorari seeking the annulment of the Decision of the respondent Secretary of Labor dated September 24, 1986, affirming with modification the
Order of respondent Regional Director of Labor, Region X, dated August 4, 1986, awarding salary differentials and emergency cost of living allowances (ECOLAS) to
employees of petitioner, and the Order denying petitioner's motion for reconsideration dated May 13, 1987, on the ground of grave abuse of discretion.

Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro Women's Club and Puericulture Center, headed by Mrs. Antera
Dorado, as holdover President. The hospital derives its finances from the club itself as well as from paying patients, averaging 130 per month. It is also partly subsidized
by the Philippine Charity Sweepstakes Office and the Cagayan De Oro City government.

Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are given food, but the amount spent therefor is deducted from their
respective salaries (pp. 77-78, Rollo).

On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a complaint with the Office of the Regional Director of Labor and
Employment, Region X, for underpayment of their salaries and ECOLAS, which was docketed as ROX Case No. CW-71-86.

On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to inspect the records of the petitioner to ascertain the truth of the
allegations in the complaints (p. 98, Rollo). Payrolls covering the periods of May, 1974, January, 1985, November, 1985 and May, 1986, were duly submitted for
inspection.

On July 17, 1986, the Labor Standard and Welfare Officers submitted their report confirming that there was underpayment of wages and ECOLAs of all the employees by
the petitioner, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING, deficiency on wage and ecola as verified and confirmed per review of the respondent payrolls and interviews with
the complainant workers and all other information gathered by the team, it is respectfully recommended to the Honorable Regional Director, this
office, that Antera Dorado, President be ORDERED to pay the amount of SIX HUNDRED FIFTY FOUR THOUSAND SEVEN HUNDRED FIFTY
SIX & 01/100 (P654,756.01), representing underpayment of wages and ecola to the THIRTY SIX (36) employees of the said hospital as appearing
in the attached Annex "F" worksheets and/or whatever action equitable under the premises. (p. 99, Rollo)

Based on this inspection report and recommendation, the Regional Director issued an Order dated August 4, 1986, directing the payment of P723,888.58, representing
underpayment of wages and ECOLAs to all the petitioner's employees, the dispositive portion of which reads:

WHEREFORE, premises considered, respondent Maternity and Children Hospital is hereby ordered to pay the above-listed complainants the total
amount indicated opposite each name, thru this Office within ten (10) days from receipt thereof. Thenceforth, the respondent hospital is also
ordered to pay its employees/workers the prevailing statutory minimum wage and allowance.

SO ORDERED. (p. 34, Rollo)

Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez, who rendered a Decision on September 24, 1986, modifying the
said Order in that deficiency wages and ECOLAs should be computed only from May 23, 1983 to May 23, 1986, the dispositive portion of which reads:

WHEREFORE, the August 29, 1986 order is hereby MODIFIED in that the deficiency wages and ECOLAs should only be computed from May 23,
1983 to May 23, 1986. The case is remanded to the Regional Director, Region X, for recomputation specifying the amounts due each the
complainants under each of the applicable Presidential Decrees. (p. 40, Rollo)

On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the Secretary of Labor in his Order dated May 13, 1987, for lack of merit (p.
43 Rollo).

The instant petition questions the all-embracing applicability of the award involving salary differentials and ECOLAS, in that it covers not only the hospital employees who
signed the complaints, but also those (a) who are not signatories to the complaint, and (b) those who were no longer in the service of the hospital at the time the
complaints were filed.

Petitioner likewise maintains that the Order of the respondent Regional Director of Labor, as affirmed with modifications by respondent Secretary of Labor, does not
clearly and distinctly state the facts and the law on which the award was based. In its "Rejoinder to Comment", petitioner further questions the authority of the Regional
Director to award salary differentials and ECOLAs to private respondents, (relying on the case of Encarnacion vs. Baltazar, G.R. No. L-16883, March 27, 1961, 1 SCRA
860, as authority for raising the additional issue of lack of jurisdiction at any stage of the proceedings, p. 52, Rollo), alleging that the original and exclusive jurisdiction over
money claims is properly lodged in the Labor Arbiter, based on Article 217, paragraph 3 of the Labor Code.

The primary issue here is whether or not the Regional Director had jurisdiction over the case and if so, the extent of coverage of any award that should be forthcoming,
arising from his visitorial and enforcement powers under Article 128 of the Labor Code. The matter of whether or not the decision states clearly and distinctly statement of
facts as well as the law upon which it is based, becomes relevant after the issue on jurisdiction has been resolved.

This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by E.O. No. 111. Labor standards refer to the minimum requirements
prescribed by existing laws, rules, and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including
occupational, safety, and health standards (Section 7, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September 16,
1987). 1 Under the present rules, a Regional Director exercises both visitorial and enforcement power over labor standards cases, and is therefore empowered to
adjudicate money claims, provided there still exists an employer-employee relationship, and the findings of the regional office is not contested by the employer concerned.

Prior to the promulgation of E.O. No. 111 on December 24, 1986, the Regional Director's authority over money claims was unclear. The complaint in the present case was
filed on May 23, 1986 when E.O. No. 111 was not yet in effect, and the prevailing view was that stated in the case of Antonio Ong, Sr. vs. Henry M. Parel, et al., G.R. No.
76710, dated December 21, 1987, thus:

. . . the Regional Director, in the exercise of his visitorial and enforcement powers under Article 128 of the Labor Code, has no authority to award
money claims, properly falling within the jurisdiction of the labor arbiter. . . .

. . . If the inspection results in a finding that the employer has violated certain labor standard laws, then the regional director must order the
necessary rectifications. However, this does not include adjudication of money claims, clearly within the ambit of the labor arbiter's authority under
Article 217 of the Code.

The Ong case relied on the ruling laid down in Zambales Base Metals Inc. vs. The Minister of Labor, et al., (G.R. Nos. 73184-88, November 26, 1986, 146 SCRA 50) that
the "Regional Director was not empowered to share in the original and exclusive jurisdiction conferred on Labor Arbiters by Article 217."

We believe, however, that even in the absence of E. O. No. 111, Regional Directors already had enforcement powers over money claims, effective under P.D. No. 850,
issued on December 16, 1975, which transferred labor standards cases from the arbitration system to the enforcement system.

To clarify matters, it is necessary to enumerate a series of rules and provisions of law on the disposition of labor standards cases.

Prior to the promulgation of PD 850, labor standards cases were an exclusive function of labor arbiters, under Article 216 of the then Labor Code (PD No. 442, as
amended by PD 570-a), which read in part:

Art. 216. Jurisdiction of the Commission. The Commission shall have exclusive appellate jurisdiction over all cases decided by the Labor
Arbiters and compulsory arbitrators.

The Labor Arbiters shall have exclusive jurisdiction to hear and decide the following cases involving all workers whether agricultural or non-
agricultural.

xxx xxx xxx

(c) All money claims of workers, involving non-payment or underpayment of wages, overtime compensation, separation
pay, maternity leave and other money claims arising from employee-employer relations, except claims for workmen's
compensation, social security and medicare benefits;

(d) Violations of labor standard laws;

xxx xxx xxx

(Emphasis supplied)

The Regional Director exercised visitorial rights only under then Article 127 of the Code as follows:

ART. 127. Visitorial Powers. The Secretary of Labor or his duly authorized representatives, including, but not restricted, to the labor
inspectorate, shall have access to employers' records and premises at any time of the day or night whenever work is being undertaken therein,
and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine
violations or in aid in the enforcement of this Title and of any Wage Order or regulation issued pursuant to this Code.

With the promulgation of PD 850, Regional Directors were given enforcement powers, in addition to visitorial powers. Article 127, as amended, provided in part:

SEC. 10. Article 127 of the Code is hereby amended to read as follows:

Art. 127. Visitorial and enforcement powers.

xxx xxx xxx

(b) The Secretary of Labor or his duly authorized representatives shall have the power to order and
administer, after due notice and hearing, compliance with the labor standards provisions of this
Code based on the findings of labor regulation officers or industrial safety engineers made in the
course of inspection, and to issue writs of execution to the appropriate authority for the enforcement
of their order.

xxx xxx xxx

Labor Arbiters, on the other hand, lost jurisdiction over labor standards cases. Article 216, as then amended by PD 850, provided in part:

SEC. 22. Article 216 of the Code is hereby amended to read as follows:
Art. 216. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have exclusive jurisdiction to
hear and decide the following cases involving all workers, whether agricultural or non-agricultural:

xxx xxx xxx

(3) All money claims of workers involving non-payment or underpayment of wages, overtime or
premium compensation, maternity or service incentive leave, separation pay and other money
claims arising from employer-employee relations, except claims for employee's compensation,
social security and medicare benefits and as otherwise provided in Article 127 of this Code.

xxx xxx xxx

(Emphasis supplied)

Under the then Labor Code therefore (PD 442 as amended by PD 570-a, as further amended by PD 850), there were three adjudicatory units: The Regional Director, the
Bureau of Labor Relations and the Labor Arbiter. It became necessary to clarify and consolidate all governing provisions on jurisdiction into one document. 2 On April 23,
1976, MOLE Policy Instructions No. 6 was issued, and provides in part (on labor standards cases) as follows:

POLICY INSTRUCTIONS NO. 6

TO: All Concerned

SUBJECT: DISTRIBUTION OF JURISDICTION OVER LABOR CASES

xxx xxx xxx

1. The following cases are under the exclusive original jurisdiction of the Regional Director.

a) Labor standards cases arising from violations of labor standard laws discovered in the course of
inspection or complaints where employer-employee relations still exist;

xxx xxx xxx

2. The following cases are under the exclusive original jurisdiction of the Conciliation Section of the Regional Office:

a) Labor standards cases where employer-employee relations no longer exist;

xxx xxx xxx

6. The following cases are certifiable to the Labor Arbiters:

a) Cases not settled by the Conciliation Section of the Regional Office, namely:

1) labor standard cases where employer-employee relations no longer exist;

xxx xxx xxx

(Emphasis supplied)

MOLE Policy Instructions No. 7 (undated) was likewise subsequently issued, enunciating the rationale for, and the scope of, the enforcement power of the Regional
Director, the first and second paragraphs of which provide as follows:

POLICY INSTRUCTIONS NO. 7

TO: All Regional Directors

SUBJECT: LABOR STANDARDS CASES

Under PD 850, labor standards cases have been taken from the arbitration system and placed under the enforcement system, except where a)
questions of law are involved as determined by the Regional Director, b) the amount involved exceeds P100,000.00 or over 40% of the equity of
the employer, whichever is lower, c) the case requires evidentiary matters not disclosed or verified in the normal course of inspection, or d) there is
no more employer-employee relationship.

The purpose is clear: to assure the worker the rights and benefits due to him under labor standards laws without having to go through arbitration.
The worker need not litigate to get what legally belongs to him. The whole enforcement machinery of the Department of Labor exists to insure its
expeditious delivery to him free of charge. (Emphasis supplied)
Under the foregoing, a complaining employee who was denied his rights and benefits due him under labor standards law need not litigate. The Regional Director, by virtue
of his enforcement power, assured "expeditious delivery to him of his rights and benefits free of charge", provided of course, he was still in the employ of the firm.

After PD 850, Article 216 underwent a series of amendments (aside from being re-numbered as Article 217) and with it a corresponding change in the jurisdiction of, and
supervision over, the Labor Arbiters:

1. PD 1367 (5-1-78) gave Labor Arbiters exclusive jurisdiction over unresolved issues in collective bargaining, etc., and
those cases arising from employer-employee relations duly indorsed by the Regional Directors. (It also removed his
jurisdiction over moral or other damages) In other words, the Labor Arbiter entertained cases certified to him. (Article 228,
1978 Labor Code.)

2. PD 1391 (5-29-78) all regional units of the National Labor Relations Commission (NLRC) were integrated into the
Regional Offices Proper of the Ministry of Labor; effectively transferring direct administrative control and supervision over
the Arbitration Branch to the Director of the Regional Office of the Ministry of Labor. "Conciliable cases" which were thus
previously under the jurisdiction of the defunct Conciliation Section of the Regional Office for purposes of conciliation or
amicable settlement, became immediately assignable to the Arbitration Branch for joint conciliation and compulsory
arbitration. In addition, the Labor Arbiter had jurisdiction even over termination and labor-standards cases that may be
assigned to them for compulsory arbitration by the Director of the Regional Office. PD 1391 merged conciliation and
compulsory arbitration functions in the person of the Labor Arbiter. The procedure governing the disposition of cases at the
Arbitration Branch paralleled those in the Special Task Force and Field Services Division, with one major exception: the
Labor Arbiter exercised full and untrammelled authority in the disposition of the case, particularly in the substantive aspect,
his decisions and orders subject to review only on appeal to the NLRC. 3

3. MOLE Policy Instructions No. 37 Because of the seemingly overlapping functions as a result of PD 1391, MOLE
Policy Instructions No. 37 was issued on October 7, 1978, and provided in part:

POLICY INSTRUCTIONS NO. 37

TO: All Concerned

SUBJECT: ASSIGNMENT OF CASES TO LABOR ARBITERS

Pursuant to the provisions of Presidential Decree No. 1391 and to insure speedy disposition of labor cases, the following
guidelines are hereby established for the information and guidance of all concerned.

1. Conciliable Cases.

Cases which are conciliable per se i.e., (a) labor standards cases where employer-employee relationship no longer exists;
(b) cases involving deadlock in collective bargaining, except those falling under P.D. 823, as amended; (c) unfair labor
practice cases; and (d) overseas employment cases, except those involving overseas seamen, shall be assigned by the
Regional Director to the Labor Arbiter for conciliation and arbitration without coursing them through the conciliation section
of the Regional Office.

2. Labor Standards Cases.

Cases involving violation of labor standards laws where employer- employee relationship still exists shall be assigned to the
Labor Arbiters where:

a) intricate questions of law are involved; or

b) evidentiary matters not disclosed or verified in the normal course of inspection by labor
regulations officers are required for their proper disposition.

3. Disposition of Cases.

When a case is assigned to a Labor Arbiter, all issues raised therein shall be resolved by him including those which are
originally cognizable by the Regional Director to avoid multiplicity of proceedings. In other words, the whole case, and not
merely issues involved therein, shall be assigned to and resolved by him.

xxx xxx xxx

(Emphasis supplied)

4. PD 1691(5-1-80) original and exclusive jurisdiction over unresolved issues in collective bargaining and money claims,
which includes moral or other damages.

Despite the original and exclusive jurisdiction of labor arbiters over money claims, however, the Regional Director nonetheless retained his
enforcement power, and remained empowered to adjudicate uncontested money claims.

5. BP 130 (8-21-8l) strengthened voluntary arbitration. The decree also returned the Labor Arbiters as part of the NLRC,
operating as Arbitration Branch thereof.
6. BP 227(6-1- 82) original and exclusive jurisdiction over questions involving legality of strikes and lock-outs.

The present petition questions the authority of the Regional Director to issue the Order, dated August 4, 1986, on the basis of his visitorial and enforcement powers under
Article 128 (formerly Article 127) of the present Labor Code. It is contended that based on the rulings in the Ong vs. Parel (supra) and the Zambales Base Metals, Inc. vs.
The Minister of Labor (supra) cases, a Regional Director is precluded from adjudicating money claims on the ground that this is an exclusive function of the Labor Arbiter
under Article 217 of the present Code.

On August 4, 1986, when the order was issued, Article 128(b) 4 read as follows:

(b) The Minister of Labor or his duly authorized representatives shall have the power to order and administer, after due
notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation
officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate
authority for the enforcement of their order, except in cases where the employer contests the findings of the labor
regulations officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable
in the normal course of inspection. (Emphasis supplied)

On the other hand, Article 217 of the Labor Code as amended by P.D. 1691, effective May 1, 1980; Batas Pambansa Blg. 130, effective August 21, 1981; and Batas
Pambansa Blg. 227, effective June 1, 1982, inter alia, provides:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and
decide within thirty (30) working days after submission of the case by the parties for decision, the following cases involving all workers, whether
agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Those that workers may file involving wages, hours of work and other terms and conditions of employment;

3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation,
separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation,
social security, medicare and maternity benefits;

4. Cases involving household services; and

5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lock-
outs. (Emphasis supplied)

The Ong and Zambales cases involved workers who were still connected with the company. However, in the Ong case, the employer disputed the adequacy of the
evidentiary foundation (employees' affidavits) of the findings of the labor standards inspectors while in the Zambales case, the money claims which arose from alleged
violations of labor standards provisions were not discovered in the course of normal inspection. Thus, the provisions of MOLE Policy Instructions Nos. 6, (Distribution of
Jurisdiction Over Labor Cases) and 37 (Assignment of Cases to Labor Arbiters) giving Regional Directors adjudicatory powers over uncontested money claims discovered
in the course of normal inspection, provided an employer-employee relationship still exists, are inapplicable.

In the present case, petitioner admitted the charge of underpayment of wages to workers still in its employ; in fact, it pleaded for time to raise funds to satisfy its obligation.
There was thus no contest against the findings of the labor inspectors.

Barely less than a month after the promulgation on November 26, 1986 of the Zambales Base Metals case, Executive Order No. 111 was issued on December 24,
1986, 5 amending Article 128(b) of the Labor Code, to read as follows:

(b) THE PROVISIONS OF ARTICLE 217 OF THIS CODE TO THE CONTRARY NOTWITHSTANDING AND IN CASES
WHERE THE RELATIONSHIP OF EMPLOYER-EMPLOYEE STILL EXISTS, the Minister of Labor and Employment or his
duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with
the labor standards provisions of this Code AND OTHER LABOR LEGISLATION based on the findings of labor regulation
officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor
regulation officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable
in the normal course of inspection. (Emphasis supplied)

As seen from the foregoing, EO 111 authorizes a Regional Director to order compliance by an employer with labor standards provisions of the Labor Code and other
legislation. It is Our considered opinion however, that the inclusion of the phrase, " The provisions of Article 217 of this Code to the contrary notwithstanding and in cases
where the relationship of employer-employee still exists" ... in Article 128(b), as amended, above-cited, merely confirms/reiterates the enforcement adjudication authority
of the Regional Director over uncontested money claims in cases where an employer-employee relationship still exists. 6

Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos. 6, 7 and 37, it is clear that it has always been the intention of our labor
authorities to provide our workers immediate access (when still feasible, as where an employer-employee relationship still exists) to their rights and benefits, without being
inconvenienced by arbitration/litigation processes that prove to be not only nerve-wracking, but financially burdensome in the long run.

Note further the second paragraph of Policy Instructions No. 7 indicating that the transfer of labor standards cases from the arbitration system to the enforcement system
is

. . to assure the workers the rights and benefits due to him under labor standard laws, without having to go through arbitration. . .

so that
. . the workers would not litigate to get what legally belongs to him. .. ensuring delivery . . free of charge.

Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by long-winded arbitration and litigation. Rights
must be asserted and benefits received with the least inconvenience. Labor laws are meant to promote, not defeat, social justice.

This view is in consonance with the present "Rules on the Disposition of Labor Standard Cases in the Regional Offices " 7 issued by the Secretary of Labor, Franklin M.
Drilon on September 16, 1987.

Thus, Sections 2 and 3 of Rule II on "Money Claims Arising from Complaint Routine Inspection", provide as follows:

Section 2. Complaint inspection. All such complaints shall immediately be forwarded to the Regional Director who shall refer the case to the
appropriate unit in the Regional Office for assignment to a Labor Standards and Welfare Officer (LSWO) for field inspection. When the field
inspection does not produce the desired results, the Regional Director shall summon the parties for summary investigation to expedite the
disposition of the case. . . .

Section 3. Complaints where no employer-employee relationship actually exists. Where employer-employee relationship no longer exists by
reason of the fact that it has already been severed, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the
labor arbiters. . . . (Emphasis supplied)

Likewise, it is also clear that the limitation embodied in MOLE Policy Instructions No. 7 to amounts not exceeding P100,000.00 has been dispensed with, in view of the
following provisions of pars. (b) and (c), Section 7 on "Restitution", the same Rules, thus:

xxx xxx xxx

(b) Plant-level restitutions may be effected for money claims not exceeding Fifty Thousand (P50,000.00). . . .

(c) Restitutions in excess of the aforementioned amount shall be effected at the Regional Office or at the worksite subject to
the prior approval of the Regional Director.

which indicate the intention to empower the Regional Director to award money claims in excess of P100,000.00; provided of course the employer does not contest the
findings made, based on the provisions of Section 8 thereof:

Section 8. Compromise agreement. Should the parties arrive at an agreement as to the whole or part of the dispute, said agreement shall be
reduced in writing and signed by the parties in the presence of the Regional Director or his duly authorized representative.

E.O. No. 111 was issued on December 24, 1986 or three (3) months after the promulgation of the Secretary of Labor's decision upholding private respondents' salary
differentials and ECOLAs on September 24, 1986. The amendment of the visitorial and enforcement powers of the Regional Director (Article 128-b) by said E.O. 111
reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to empower the Regional Directors to resolve uncontested money claims in cases where an
employer-employee relationship still exists. This intention must be given weight and entitled to great respect. As held in Progressive Workers' Union, et. al. vs. F.P. Aguas,
et. al. G.R. No. 59711-12, May 29, 1985, 150 SCRA 429:

. . The interpretation by officers of laws which are entrusted to their administration is entitled to great respect. We see no reason to detract from this
rudimentary rule in administrative law, particularly when later events have proved said interpretation to be in accord with the legislative intent. ..

The proceedings before the Regional Director must, perforce, be upheld on the basis of Article 128(b) as amended by E.O. No. 111, dated December 24, 1986, this
executive order "to be considered in the nature of a curative statute with retrospective application." (Progressive Workers' Union, et al. vs. Hon. F.P. Aguas, et al. ( Supra);
M. Garcia vs. Judge A. Martinez, et al., G.R. No. L- 47629, May 28, 1979, 90 SCRA 331).

We now come to the question of whether or not the Regional Director erred in extending the award to all hospital employees. We answer in the affirmative.

The Regional Director correctly applied the award with respect to those employees who signed the complaint, as well as those who did not sign the complaint, but were
still connected with the hospital at the time the complaint was filed (See Order, p. 33 dated August 4, 1986 of the Regional Director, Pedrito de Susi, p. 33, Rollo).

The justification for the award to this group of employees who were not signatories to the complaint is that the visitorial and enforcement powers given to the Secretary of
Labor is relevant to, and exercisable over establishments, not over the individual members/employees, because what is sought to be achieved by its exercise is the
observance of, and/or compliance by, such firm/establishment with the labor standards regulations. Necessarily, in case of an award resulting from a violation of labor
legislation by such establishment, the entire members/employees should benefit therefrom. As aptly stated by then Minister of Labor Augusto S. Sanchez:

. . It would be highly derogatory to the rights of the workers, if after categorically finding the respondent hospital guilty of underpayment of wages
and ECOLAs, we limit the award to only those who signed the complaint to the exclusion of the majority of the workers who are similarly situated.
Indeed, this would be not only render the enforcement power of the Minister of Labor and Employment nugatory, but would be the pinnacle of
injustice considering that it would not only discriminate but also deprive them of legislated benefits.

. . . (pp. 38-39, Rollo).

This view is further bolstered by the provisions of Sec. 6, Rule II of the "Rules on the Disposition of Labor Standards cases in the Regional Offices" ( supra) presently
enforced, viz:

SECTION 6. Coverage of complaint inspection. A complaint inspection shall not be limited to the specific allegations or violations raised by the
complainants/workers but shall be a thorough inquiry into and verification of the compliance by employer with existing labor standards and shall
cover all workers similarly situated. (Emphasis supplied)
However, there is no legal justification for the award in favor of those employees who were no longer connected with the hospital at the time the complaint was filed,
having resigned therefrom in 1984, viz:

1. Jean (Joan) Venzon (See Order, p. 33, Rollo)

2. Rosario Paclijan

3. Adela Peralta

4. Mauricio Nagales

5. Consesa Bautista

6. Teresita Agcopra

7. Felix Monleon

8. Teresita Salvador

9. Edgar Cataluna; and

10. Raymond Manija ( p.7, Rollo)

The enforcement power of the Regional Director cannot legally be upheld in cases of separated employees. Article 129 of the Labor Code, cited by petitioner (p. 54, Rollo)
is not applicable as said article is in aid of the enforcement power of the Regional Director; hence, not applicable where the employee seeking to be paid underpayment of
wages is already separated from the service. His claim is purely a money claim that has to be the subject of arbitration proceedings and therefore within the original and
exclusive jurisdiction of the Labor Arbiter.

Petitioner has likewise questioned the order dated August 4, 1986 of the Regional Director in that it does not clearly and distinctly state the facts and the law on which the
award is based.

We invite attention to the Minister of Labor's ruling thereon, as follows:

Finally, the respondent hospital assails the order under appeal as null and void because it does not clearly and distinctly state the facts and the law
on which the awards were based. Contrary to the pretensions of the respondent hospital, we have carefully reviewed the order on appeal and we
found that the same contains a brief statement of the (a) facts of the case; (b) issues involved; (c) applicable laws; (d) conclusions and the reasons
therefor; (e) specific remedy granted (amount awarded). (p. 40, Rollo)

ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all persons still employed in the Hospital at the time of the filing of the
complaint, but GRANTED as regards those employees no longer employed at that time.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

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.

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. Individual 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. In 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. It 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. IV, 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 It 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 IV 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. If 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. If the division head's decision is not appealed to Step II, 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 IV 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.

It 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
It 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." It 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. In 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. It 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. It 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.

If 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. If 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.

ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed decision of respondent National Labor Relations Commission is
AFFIRMED. This judgment is immediately executory.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 167614 March 24, 2009

ANTONIO M. SERRANO, Petitioner,


vs.
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

For decades, the toil of solitary migrants has helped lift entire families and communities out of poverty. Their earnings have built houses, provided health care, equipped
schools and planted the seeds of businesses. They have woven together the world by transmitting ideas and knowledge from country to country. They have provided the
dynamic human link between cultures, societies and economies. Yet, only recently have we begun to understand not only how much international migration impacts
development, but how smart public policies can magnify this effect.

United Nations Secretary-General Ban Ki-Moon


Global Forum on Migration and Development
Brussels, July 10, 20071

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042, 2 to wit:

Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be
entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment
contract or for three (3) months for every year of the unexpired term, whichever is less.

x x x x (Emphasis and underscoring supplied)

does not magnify the contributions of overseas Filipino workers (OFWs) to national development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired portion of their employment contract "or for three months for every year of the
unexpired term, whichever is less" (subject clause). Petitioner claims that the last clause violates the OFWs' constitutional rights in that it impairs the terms of their
contract, deprives them of equal protection and denies them due process.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the December 8, 2004 Decision 3 and April 1, 2005 Resolution4 of the Court of Appeals
(CA), which applied the subject clause, entreating this Court to declare the subject clause unconstitutional.

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a Philippine Overseas Employment Administration (POEA)-
approved Contract of Employment with the following terms and conditions:

Duration of contract 12 months


Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month5

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly
salary of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer by the end of April 1998. 6

Respondents did not deliver on their promise to make petitioner Chief Officer. 7 Hence, petitioner refused to stay on as Second Officer and was repatriated to the
Philippines on May 26, 1998.8

Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had
served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for constructive dismissal and for payment of his money claims in the total amount of
US$26,442.73, broken down as follows:

May 27/31, 1998 (5 days) incl. US$ 413.90


Leave pay

June 01/30, 1998 2,590.00

July 01/31, 1998 2,590.00

August 01/31, 1998 2,590.00

Sept. 01/30, 1998 2,590.00

Oct. 01/31, 1998 2,590.00

Nov. 01/30, 1998 2,590.00

Dec. 01/31, 1998 2,590.00

Jan. 01/31, 1999 2,590.00

Feb. 01/28, 1999 2,590.00

Mar. 1/19, 1999 (19 days) incl. 1,640.00


leave pay

--------------------------------------------------------------------------------

25,382.23

Amount adjusted to chief mate's


salary

(March 19/31, 1998 to April 1/30, 1,060.5010


1998) +

---------------------------------------------------------------------------------------------
-

TOTAL CLAIM US$ 26,442.7311

as well as moral and exemplary damages and attorney's fees.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant (petitioner) by the respondents in the
above-entitled case was illegal and the respondents are hereby ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based
on the rate of exchange prevailing at the time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00),
representing the complainants salary for three (3) months of the unexpired portion of the aforesaid contract of employment.1avvphi1

The respondents are likewise ordered to pay the complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange prevailing
at the time of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00), 12 representing the complainants claim for a salary differential. In addition,
the respondents are hereby ordered to pay the complainant, jointly and severally, in Philippine Currency, at the exchange rate prevailing at the time of
payment, the complainants (petitioner's) claim for attorneys fees equivalent to ten percent (10%) of the total amount awarded to the aforesaid employee
under this Decision.

The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.

All other claims are hereby DISMISSED.


SO ORDERED.13 (Emphasis supplied)

In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire
unexpired portion of nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of
US$2,590.00, consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay =
US$2,590.00/compensation per month." 14

Respondents appealed15 to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed.

Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National
Labor Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts. 18

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:

WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are hereby ordered to pay complainant, jointly and severally, in Philippine
currency, at the prevailing rate of exchange at the time of payment the following:

1. Three (3) months salary

$1,400 x 3 US$

2. Salary differential

US$4,245.00

3. 10% Attorneys fees

TOTAL US$

The other findings are affirmed.

SO ORDERED.19

The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00
because R.A. No. 8042 "does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay." 20

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause. 21 The NLRC denied the motion.22

Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge against the subject clause. 24 After initially dismissing the petition on a
technicality, the CA eventually gave due course to it, as directed by this Court in its Resolution dated August 7, 2003 which granted the petition for certiorari, docketed as
G.R. No. 151833, filed by petitioner.

In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional issue
raised by petitioner.25

His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause to this Court on the following grounds:

The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the Supreme Court involving similar issue of
granting unto the migrant worker back wages equal to the unexpired portion of his contract of employment instead of limiting it to three (3) months

II

In the alternative that the Court of Appeals and the Labor Tribunals were merely applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the
Court of Appeals gravely erred in law when it failed to discharge its judicial duty to decide questions of substance not theretofore determined by the Honorable Supreme
Court, particularly, the constitutional issues raised by the petitioner on the constitutionality of said law, which unreasonably, unfairly and arbitrarily limits payment of the
award for back wages of overseas workers to three (3) months.

III

Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals gravely erred in law in excluding from petitioners award
the overtime pay and vacation pay provided in his contract since under the contract they form part of his salary. 28

On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old and sickly, and he intends to make use of the monetary award for his
medical treatment and medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to allow partial execution of the undisputed monetary
award and, at the same time, praying that the constitutional question be resolved. 30

Considering that the parties have filed their respective memoranda, the Court now takes up the full merit of the petition mindful of the extreme importance of the
constitutional question raised therein.
On the first and second issues

The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not disputed is the salary differential of US$45.00
awarded to petitioner in all three fora. What remains disputed is only the computation of the lump-sum salary to be awarded to petitioner by reason of his illegal dismissal.

Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of US$1,400.00 covering the period of three months out
of the unexpired portion of nine months and 23 days of his employment contract or a total of US$4,200.00.

Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to
US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment contract, computed at the monthly
rate of US$2,590.00.31

The Arguments of Petitioner

Petitioner contends that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to negotiate for and stipulate in their overseas employment
contracts a determinate employment period and a fixed salary package. 32 It also impinges on the equal protection clause, for it treats OFWs differently from local Filipino
workers (local workers) by putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to the same
monetary award for local workers when their dismissal is declared illegal; that the disparate treatment is not reasonable as there is no substantial distinction between the
two groups;33 and that it defeats Section 18,34 Article II of the Constitution which guarantees the protection of the rights and welfare of all Filipino workers, whether
deployed locally or overseas.35

Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line with existing jurisprudence on the issue of money claims of illegally
dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the Court to sort them out for the guidance of affected OFWs. 36

Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no other purpose but to benefit local placement agencies. He marks the
statement made by the Solicitor General in his Memorandum, viz.:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by
the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily
penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money
claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis supplied)

Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause sacrifices the well-being of OFWs. Not only that, the provision makes
foreign employers better off than local employers because in cases involving the illegal dismissal of employees, foreign employers are liable for salaries covering a
maximum of only three months of the unexpired employment contract while local employers are liable for the full lump-sum salaries of their employees. As petitioner puts
it:

In terms of practical application, the local employers are not limited to the amount of backwages they have to give their employees they have illegally dismissed, following
well-entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be limited to giving the illegally dismissed migrant workers
the maximum of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that can be more than three (3) months. 38

Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of the salaries and other emoluments he is entitled to under his fixed-
period employment contract.39

The Arguments of Respondents

In their Comment and Memorandum, respondents contend that the constitutional issue should not be entertained, for this was belatedly interposed by petitioner in his
appeal before the CA, and not at the earliest opportunity, which was when he filed an appeal before the NLRC. 40

The Arguments of the Solicitor General

The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not have impaired petitioner's 1998 employment contract.
Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms of petitioner's employment, especially on the
matter of money claims, as this was not stipulated upon by the parties. 42

Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of their employment, such that their rights to monetary benefits must
necessarily be treated differently. The OSG enumerates the essential elements that distinguish OFWs from local workers: first, while local workers perform their jobs
within Philippine territory, OFWs perform their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost
impossible to enforce judgment; and second, as held in Coyoca v. National Labor Relations Commission 43 and Millares v. National Labor Relations Commission,44 OFWs
are contractual employees who can never acquire regular employment status, unlike local workers who are or can become regular employees. Hence, the OSG posits
that there are rights and privileges exclusive to local workers, but not available to OFWs; that these peculiarities make for a reasonable and valid basis for the
differentiated treatment under the subject clause of the money claims of OFWs who are illegally dismissed. Thus, the provision does not violate the equal protection
clause nor Section 18, Article II of the Constitution. 45

Lastly, the OSG defends the rationale behind the subject clause as a police power measure adopted to mitigate the solidary liability of placement agencies for this
"redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under decent and humane conditions." 46

The Court's Ruling

The Court sustains petitioner on the first and second issues.


When the Court is called upon to exercise its power of judicial review of the acts of its co-equals, such as the Congress, it does so only when these conditions obtain: (1)
that there is an actual case or controversy involving a conflict of rights susceptible of judicial determination; 47 (2) that the constitutional question is raised by a proper
party48 and at the earliest opportunity; 49 and (3) that the constitutional question is the very lis mota of the case, 50otherwise the Court will dismiss the case or decide the
same on some other ground.51

Without a doubt, there exists in this case an actual controversy directly involving petitioner who is personally aggrieved that the labor tribunals and the CA computed his
monetary award based on the salary period of three months only as provided under the subject clause.

The constitutional challenge is also timely. It should be borne in mind that the requirement that a constitutional issue be raised at the earliest opportunity entails the
interposition of the issue in the pleadings before a competent court, such that, if the issue is not raised in the pleadings before that competent court, it cannot be
considered at the trial and, if not considered in the trial, it cannot be considered on appeal. 52 Records disclose that the issue on the constitutionality of the subject clause
was first raised, not in petitioner's appeal with the NLRC, but in his Motion for Partial Reconsideration with said labor tribunal, 53 and reiterated in his Petition
for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial function its function in the present case is limited to determining questions of fact
to which the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in accordance with the standards laid down by the law itself; 55 thus, its
foremost function is to administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions. The CA, on the other hand, is vested with the power of
judicial review or the power to declare unconstitutional a law or a provision thereof, such as the subject clause. 56Petitioner's interposition of the constitutional issue before
the CA was undoubtedly seasonable. The CA was therefore remiss in failing to take up the issue in its decision.

The third condition that the constitutional issue be critical to the resolution of the case likewise obtains because the monetary claim of petitioner to his lump-sum salary for
the entire unexpired portion of his 12-month employment contract, and not just for a period of three months, strikes at the very core of the subject clause.

Thus, the stage is all set for the determination of the constitutionality of the subject clause.

Does the subject clause violate Section 10,


Article III of the Constitution on non-impairment
of contracts?

The answer is in the negative.

Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will
receive57 is not tenable.

Section 10, Article III of the Constitution provides:

No law impairing the obligation of contracts shall be passed.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation, 58and cannot affect acts or contracts already
perfected;59 however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof. 60 Thus, the non-impairment clause under Section
10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner
changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in 1998.
Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties executed their
1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A. No. 8042.

But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for
the law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs,
with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed. 61 Police power legislations adopted by the State to
promote the health, morals, peace, education, good order, safety, and general welfare of the people are generally applicable not only to future contracts but even to those
already in existence, for all private contracts must yield to the superior and legitimate measures taken by the State to promote public welfare. 62

Does the subject clause violate Section 1,


Article III of the Constitution, and Section 18,
Article II and Section 3, Article XIII on labor
as a protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

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 law.

Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector, without distinction as to place of deployment, full protection of their rights and
welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary benefits should be equally
enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws which is
enjoyed by, or spared the burden imposed on, others in like circumstances. 65

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its legislation; however, to be
valid, the classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to
existing conditions only; and 4) it applies equally to all members of the class. 66
There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or rational basis scrutiny in which
the challenged classification needs only be shown to be rationally related to serving a legitimate state interest; 67 b) the middle-tier or intermediate scrutiny in which the
government must show that the challenged classification serves an important state interest and that the classification is at least substantially related to serving that
interest;68 and c) strict judicial scrutiny69 in which a legislative classification which impermissibly interferes with the exercise of a fundamental right 70 or operates to the
peculiar disadvantage of a suspect class71 is presumed unconstitutional, and the burden is upon the government to prove that the classification is necessary to achieve
a compelling state interest and that it is the least restrictive means to protect such interest.72

Under American jurisprudence, strict judicial scrutiny is triggered by suspect classifications 73 based on race74 or gender75 but not when the classification is drawn along
income categories.76

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas, 77 the constitutionality
of a provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial institution (GFI), was challenged for maintaining its rank-and-file employees
under the Salary Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been exempted from the SSL by their respective charters. Finding
that the disputed provision contained a suspect classification based on salary grade, the Court deliberately employed the standard of strict judicial scrutiny in its review of
the constitutionality of said provision. More significantly, it was in this case that the Court revealed the broad outlines of its judicial philosophy, to wit:

Congress retains its wide discretion in providing for a valid classification, and its policies should be accorded recognition and respect by the courts of justice except when
they run afoul of the Constitution. The deference stops where the classification violates a fundamental right, or prejudices persons accorded special protection by the
Constitution. When these violations arise, this Court must discharge its primary role as the vanguard of constitutional guaranties, and require a stricter and more
exacting adherence to constitutional limitations. Rational basis should not suffice.

Admittedly, the view that prejudice to persons accorded special protection by the Constitution requires a stricter judicial scrutiny finds no support in American or English
jurisprudence. Nevertheless, these foreign decisions and authorities are not per se controlling in this jurisdiction. At best, they are persuasive and have been used to
support many of our decisions. We should not place undue and fawning reliance upon them and regard them as indispensable mental crutches without which we cannot
come to our own decisions through the employment of our own endowments. We live in a different ambience and must decide our own problems in the light of our own
interests and needs, and of our qualities and even idiosyncrasies as a people, and always with our own concept of law and justice. Our laws must be construed in
accordance with the intention of our own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related
thereto. More importantly, they must be construed to serve our own public interest which is the be-all and the end-all of all our laws. And it need not be stressed that our
public interest is distinct and different from others.

xxxx

Further, the quest for a better and more "equal" world calls for the use of equal protection as a tool of effective judicial intervention.

Equality is one ideal which cries out for bold attention and action in the Constitution. The Preamble proclaims "equality" as an ideal precisely in protest against crushing
inequities in Philippine society. The command to promote social justice in Article II, Section 10, in "all phases of national development," further explicitated in Article XIII,
are clear commands to the State to take affirmative action in the direction of greater equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal support
for a more vigorous state effort towards achieving a reasonable measure of equality.

Our present Constitution has gone further in guaranteeing vital social and economic rights to marginalized groups of society, including labor. 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 privilege in life should have more
in law. And the obligation to afford protection to labor is incumbent not only on the legislative and executive branches but also on the judiciary to translate this pledge into
a living reality. Social justice calls for the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively
secular conception may at least be approximated.

xxxx

Under most circumstances, the Court will exercise judicial restraint in deciding questions of constitutionality, recognizing the broad discretion given to Congress in
exercising its legislative power. Judicial scrutiny would be based on the "rational basis" test, and the legislative discretion would be given deferential treatment.

But if the challenge to the statute is premised on the denial of a fundamental right, or the perpetuation of prejudice against persons favored by the Constitution with
special protection, judicial scrutiny ought to be more strict. A weak and watered down view would call for the abdication of this Courts solemn duty to strike down
any law repugnant to the Constitution and the rights it enshrines. This is true whether the actor committing the unconstitutional act is a private person or the government
itself or one of its instrumentalities. Oppressive acts will be struck down regardless of the character or nature of the actor.

xxxx

In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-employee status. It is akin to a distinction based on economic class and
status, with the higher grades as recipients of a benefit specifically withheld from the lower grades. Officers of the BSP now receive higher compensation packages that
are competitive with the industry, while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The implications are quite disturbing: BSP rank-
and-file employees are paid the strictly regimented rates of the SSL while employees higher in rank - possessing higher and better education and opportunities for career
advancement - are given higher compensation packages to entice them to stay. Considering that majority, if not all, the rank-and-file employees consist of people whose
status and rank in life are less and limited, especially in terms of job marketability, it is they - and not the officers - who have the real economic and financial need for the
adjustment . This is in accord with the policy of the Constitution "to free the people from poverty, provide adequate social services, extend to them a decent standard of
living, and improve the quality of life for all." Any act of Congress that runs counter to this constitutional desideratum deserves strict scrutiny by this Court before it can
pass muster. (Emphasis supplied)

Imbued with the same sense of "obligation to afford protection to labor," the Court in the present case also employs the standard of strict judicial scrutiny, for it perceives in
the subject clause a suspect classification prejudicial to OFWs.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on, OFWs at two levels:

First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and

Third, OFWs vis--vis local workers with fixed-period employment;

OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or more

As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor Relations Commission 79 (Second Division, 1999) that the Court laid down the
following rules on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries
for the unexpired portion of his employment contract or three (3) months salary for every year of the unexpired term, whichever is less, comes into play only
when the employment contract concerned has a term of at least one (1) year or more. This is evident from the words "for every year of the unexpired term"
which follows the words "salaries x x x for three months." To follow petitioners thinking that private respondent is entitled to three (3) months salary only simply
because it is the lesser amount is to completely disregard and overlook some words used in the statute while giving effect to some. This is contrary to the well-established
rule in legal hermeneutics that in interpreting a statute, care should be taken that every part or word thereof be given effect since the law-making body is presumed to
know the meaning of the words employed in the statue and to have used them advisedly. Ut res magis valeat quam pereat. 80 (Emphasis supplied)

In Marsaman, the OFW involved was illegally dismissed two months into his 10-month contract, but was awarded his salaries for the remaining 8 months and 6 days of
his contract.

Prior to Marsaman, however, there were two cases in which the Court made conflicting rulings on Section 10(5). One was Asian Center for Career and Employment
System and Services v. National Labor Relations Commission (Second Division, October 1998),81 which involved an OFW who was awarded a two-year employment
contract, but was dismissed after working for one year and two months. The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum salary covering
eight months, the unexpired portion of his contract. On appeal, the Court reduced the award to SR3,600.00 equivalent to his three months salary, this being the lesser
value, to wit:

Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without just, valid or authorized cause is entitled to his salary for the unexpired portion
of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

In the case at bar, the unexpired portion of private respondents employment contract is eight (8) months. Private respondent should therefore be paid his basic salary
corresponding to three (3) months or a total of SR3,600. 82

Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations Commission (Third Division, December 1998),83 which involved an OFW (therein
respondent Erlinda Osdana) who was originally granted a 12-month contract, which was deemed renewed for another 12 months. After serving for one year and seven-
and-a-half months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for the entire unexpired portion of four and one-half months of her
contract.

The Marsaman interpretation of Section 10(5) has since been adopted in the following cases:

Case Title Contract Period Period of Service Unexpired Period Period Applied in the
Computation of the
Monetary Award

Skippers v. Maguad84 6 months 2 months 4 months 4 months

Bahia Shipping v. 9 months 8 months 4 months 4 months


Reynaldo Chua 85

Centennial 9 months 4 months 5 months 5 months


Transmarine v. dela
Cruz l86

Talidano v. Falcon87 12 months 3 months 9 months 3 months

Univan v. CA 88 12 months 3 months 9 months 3 months

Oriental v. CA 89 12 months more than 2 months 10 months 3 months

PCL v. NLRC90 12 months more than 2 months more or less 9 months 3 months

Olarte v. Nayona91 12 months 21 days 11 months and 9 days 3 months

JSS v.Ferrer92 12 months 16 days 11 months and 24 days 3 months

Pentagon v. Adelantar93 12 months 9 months and 7 days 2 months and 23 days 2 months and 23 days

Phil. Employ v. 12 months 10 months 2 months Unexpired portion


Paramio, et al.94

Flourish Maritime v. 2 years 26 days 23 months and 4 days 6 months or 3 months for
Almanzor 95 each year of contract

Athenna Manpower v. 1 year, 10 months 1 month 1 year, 9 months and 28 6 months or 3 months for
Villanos 96 and 28 days days each year of contract
As the foregoing matrix readily shows, the subject clause classifies OFWs into two categories. The first category includes OFWs with fixed-period employment contracts
of less than one year; in case of illegal dismissal, they are entitled to their salaries for the entire unexpired portion of their contract. The second category consists of OFWs
with fixed-period employment contracts of one year or more; in case of illegal dismissal, they are entitled to monetary award equivalent to only 3 months of the unexpired
portion of their contracts.

The disparity in the treatment of these two groups cannot be discounted. In Skippers, the respondent OFW worked for only 2 months out of his 6-month contract, but was
awarded his salaries for the remaining 4 months. In contrast, the respondent OFWs in Oriental and PCL who had also worked for about 2 months out of their 12-month
contracts were awarded their salaries for only 3 months of the unexpired portion of their contracts. Even the OFWs involved in Talidano and Univan who had worked for a
longer period of 3 months out of their 12-month contracts before being illegally dismissed were awarded their salaries for only 3 months.

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an employment contract of 10 months at a monthly salary rate of US$1,000.00
and a hypothetical OFW-B with an employment contract of 15 months with the same monthly salary rate of US$1,000.00. Both commenced work on the same day and
under the same employer, and were illegally dismissed after one month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00, equivalent to his
salaries for the remaining 9 months of his contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portion of
his contract, instead of US$14,000.00 for the unexpired portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.

The disparity becomes more aggravating when the Court takes into account jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14, 1995, 97 illegally
dismissed OFWs, no matter how long the period of their employment contracts, were entitled to their salaries for the entire unexpired portions of their contracts. The
matrix below speaks for itself:

Case Title Contract Period Period of Service Unexpired Period Period Applied in the
Computation of the Monetary
Award

ATCI v. CA, et al.98 2 years 2 months 22 months 22 months

Phil. Integrated v. 2 years 7 days 23 months and 23 23 months and 23 days


NLRC99 days

JGB v. NLC100 2 years 9 months 15 months 15 months

Agoy v. NLRC101 2 years 2 months 22 months 22 months

EDI v. NLRC, et al.102 2 years 5 months 19 months 19 months

Barros v. NLRC, et 12 months 4 months 8 months 8 months


al.103

Philippine Transmarine 12 months 6 months and 22 5 months and 18 5 months and 18 days
v. Carilla104 days days

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were treated alike in terms of the computation of their
monetary benefits in case of illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion
of their employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category whose contracts have an unexpired portion of one year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while sparing the
other category from such prejudice, simply because the latter's unexpired contracts fall short of one year.

Among OFWs With Employment Contracts of More Than One Year

Upon closer examination of the terminology employed in the subject clause, the Court now has misgivings on the accuracy of the Marsaman interpretation.

The Court notes that the subject clause "or for three (3) months for every year of the unexpired term, whichever is less" contains the qualifying phrases "every year" and
"unexpired term." By its ordinary meaning, the word "term" means a limited or definite extent of time. 105 Corollarily, that "every year" is but part of an "unexpired term" is
significant in many ways: first, the unexpired term must be at least one year, for if it were any shorter, there would be no occasion for such unexpired term to be measured
by every year; and second, the original term must be more than one year, for otherwise, whatever would be the unexpired term thereof will not reach even a year.
Consequently, the more decisive factor in the determination of when the subject clause "for three (3) months for every year of the unexpired term, whichever is less" shall
apply is not the length of the original contract period as held in Marsaman,106 but the length of the unexpired portion of the contract period -- the subject clause applies in
cases when the unexpired portion of the contract period is at least one year, which arithmetically requires that the original contract period be more than one year.

Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof, while those who are illegally dismissed
with one year or more remaining in their contracts shall be covered by the subject clause, and their monetary benefits limited to their salaries for three months only.

To concretely illustrate the application of the foregoing interpretation of the subject clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24-
month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and OFW-D, on the 13th month. Considering that there is at
least 12 months remaining in the contract period of OFW-C, the subject clause applies to the computation of the latter's monetary benefits. Thus, OFW-C will be entitled,
not to US$12,000,00 or the latter's total salaries for the 12 months unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the latter's salaries for 3
months out of the 12-month unexpired term of the contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there are only 11 months left in
the latter's contract period. Thus, OFW-D will be entitled to US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired portion.

OFWs vis--vis Local Workers


With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in place. This uniform system was
applicable even to local workers with fixed-term employment. 107

The earliest rule prescribing a uniform system of computation was actually Article 299 of the Code of Commerce (1888), 108 to wit:

Article 299. If the contracts between the merchants and their shop clerks and employees should have been made of a fixed period, none of the contracting parties, without
the consent of the other, may withdraw from the fulfillment of said contract until the termination of the period agreed upon.

Persons violating this clause shall be subject to indemnify the loss and damage suffered, with the exception of the provisions contained in the following articles.

In Reyes v. The Compaia Maritima,109 the Court applied the foregoing provision to determine the liability of a shipping company for the illegal discharge of its managers
prior to the expiration of their fixed-term employment. The Court therein held the shipping company liable for the salaries of its managers for the remainder of their fixed-
term employment.

There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of Commerce which provides:

Article 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they cannot be discharged until the fulfillment
of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by
malice or manifest or proven negligence.

Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie, 110 in

which the Court held the shipping company liable for the salaries and subsistence allowance of its illegally dismissed employees for the entire unexpired portion of their
employment contracts.

While Article 605 has remained good law up to the present, 111 Article 299 of the Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:

Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and for a certain work cannot leave or be dismissed without sufficient cause,
before the fulfillment of the contract. (Emphasis supplied.)

Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a conjunctive "and" so as to apply the provision to local workers who are
employed for a time certain although for no particular skill. This interpretation of Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company. 113 And in both
Lemoine and Palomar, the Court adopted the general principle that in actions for wrongful discharge founded on Article 1586, local workers are entitled to recover
damages to the extent of the amount stipulated to be paid to them by the terms of their contract. On the computation of the amount of such damages, the Court in Aldaz v.
Gay114 held:

The doctrine is well-established in American jurisprudence, and nothing has been brought to our attention to the contrary under Spanish jurisprudence, that when an
employee is wrongfully discharged it is his duty to seek other employment of the same kind in the same community, for the purpose of reducing the damages resulting
from such wrongful discharge. However, while this is the general rule, the burden of showing that he failed to make an effort to secure other employment of a like nature,
and that other employment of a like nature was obtainable, is upon the defendant. When an employee is wrongfully discharged under a contract of employment his prima
facie damage is the amount which he would be entitled to had he continued in such employment until the termination of the period . (Howard vs. Daly, 61 N. Y., 362; Allen
vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich., 43.) 115 (Emphasis supplied)

On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections
2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil
Code do not expressly provide for the remedies available to a fixed-term worker who is illegally discharged. However, it is noted that in Mackay Radio & Telegraph Co.,
Inc. v. Rich,117 the Court carried over the principles on the payment of damages underlying Article 1586 of the Civil Code of 1889 and applied the same to a case involving
the illegal discharge of a local worker whose fixed-period employment contract was entered into in 1952, when the new Civil Code was already in effect. 118

More significantly, the same principles were applied to cases involving overseas Filipino workers whose fixed-term employment contracts were illegally terminated, such
as in First Asian Trans & Shipping Agency, Inc. v. Ople, 119involving seafarers who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National Labor
Relations Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period employment contract as a baby sitter, was awarded salaries
corresponding to the unexpired portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor Relations Commission, 121 which involved a
foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but who was illegally dismissed after only nine months on the job -- the Court awarded him salaries
corresponding to 15 months, the unexpired portion of his contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission, 122 a Filipino working as a
security officer in 1989 in Angola was awarded his salaries for the remaining period of his 12-month contract after he was wrongfully discharged. Finally, in Vinta Maritime
Co., Inc. v. National Labor Relations Commission, 123 an OFW whose 12-month contract was illegally cut short in the second month was declared entitled to his salaries for
the remaining 10 months of his contract.

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

The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees
who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the
claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar
disadvantage.

There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive means.

What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by history. 124 It is akin to the paramount
interest of the state125 for which some individual liberties must give way, such as the public interest in safeguarding health or maintaining medical standards, 126 or in
maintaining access to information on matters of public concern. 127
In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve.

The OSG defends the subject clause as a police power measure "designed to protect the employment of Filipino seafarers overseas x x x. By limiting the liability to three
months [sic], Filipino seafarers have better chance of getting hired by foreign employers." The limitation also protects the interest of local placement agencies, which
otherwise may be made to shoulder millions of pesos in "termination pay." 128

The OSG explained further:

Often, placement agencies, their liability being solidary, shoulder the payment of money claims in the event that jurisdiction over the foreign employer is not acquired by
the court or if the foreign employer reneges on its obligation. Hence, placement agencies that are in good faith and which fulfill their obligations are unnecessarily
penalized for the acts of the foreign employer. To protect them and to promote their continued helpful contribution in deploying Filipino migrant workers, liability for money
are reduced under Section 10 of RA 8042.

This measure redounds to the benefit of the migrant workers whose welfare the government seeks to promote. The survival of legitimate placement agencies helps
[assure] the government that migrant workers are properly deployed and are employed under decent and humane conditions. 129 (Emphasis supplied)

However, nowhere in the Comment or Memorandum does the OSG cite the source of its perception of the state interest sought to be served by the subject clause.

The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law
originated;130 but the speech makes no reference to the underlying reason for the adoption of the subject clause. That is only natural for none of the 29 provisions in HB
14314 resembles the subject clause.

On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to wit:

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 the complaint, the claim arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas employment including claims for actual, moral, exemplary and other forms of damages.

The liability of the principal and the recruitment/placement agency or any and all claims under this Section shall be joint and several.

Any compromise/amicable settlement or voluntary agreement on any money claims exclusive of damages under this Section shall not be less than fifty percent (50%) of
such money claims: Provided, That any installment payments, if applicable, to satisfy any such compromise or voluntary settlement shall not be more than two (2) months.
Any compromise/voluntary agreement in violation of this paragraph shall be null and void.

Non-compliance with the mandatory period for resolutions of cases provided under this Section shall subject the responsible officials to any or all of the following
penalties:

(1) The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be, withheld until the said
official complies therewith;

(2) Suspension for not more than ninety (90) days; or

(3) Dismissal from the service with disqualification to hold any appointive public office for five (5) years.

Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may have incurred under other existing laws or
rules and regulations as a consequence of violating the provisions of this paragraph.

But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of money claims.

A rule on the computation of money claims containing the subject clause was inserted and eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The
Court examined the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee (Conference Committee) Meetings on the Magna Carta on
OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible state interest, let alone a compelling one, that
is sought to be protected or advanced by the adoption of the subject clause.

In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest that would justify the perpetuation of the discrimination
against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary liability of placement
agencies, such callous and cavalier rationale will have to be rejected. There can never be a justification for any form of government action that alleviates the burden of
one sector, but imposes the same burden on another sector, especially when the favored sector is composed of private businesses such as placement agencies, while the
disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands. The idea that private business interest can be elevated to the
level of a compelling state interest is odious.

Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vis their foreign principals, there are mechanisms already
in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs.

The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers, dated February 4, 2002, imposes administrative
disciplinary measures on erring foreign employers who default on their contractual obligations to migrant workers and/or their Philippine agents. These disciplinary
measures range from temporary disqualification to preventive suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers,
dated May 23, 2003, contains similar administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement agencies in enforcing the solidary liability of their foreign
principals.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal protection. 1avvphi1

Further, there would be certain misgivings if one is to approach the declaration of the unconstitutionality of the subject clause from the lone perspective that the clause
directly violates state policy on labor under Section 3, 131Article XIII of the Constitution.

While all the provisions of the 1987 Constitution are presumed self-executing, 132 there are some which this Court has declared not judicially enforceable, Article XIII
being one,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National Labor Relations Commission, 134 has described to be not self-actuating:

Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-executing in the sense that these are automatically acknowledged
and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of
being overbroad and exaggerated. The guarantees of "full protection to labor" and "security of tenure", when examined in isolation, are facially unqualified, and the
broadest interpretation possible suggests a blanket shield in favor of labor against any form of removal regardless of circumstance. This interpretation implies an
unimpeachable right to continued employment-a utopian notion, doubtless-but still hardly within the contemplation of the framers. Subsequent legislation is still needed to
define the parameters of these guaranteed rights to ensure the protection and promotion, not only the rights of the labor sector, but of the employers' as well. Without
specific and pertinent legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the Constitution.

Ultimately, therefore, Section 3 of Article XIII 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.135 (Emphasis added)

Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable rights, for the violation of which the questioned clause may be declared
unconstitutional. It may unwittingly risk opening the floodgates of litigation to every worker or union over every conceivable violation of so broad a concept as social justice
for labor.

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

The view that the concepts of suspect classification and strict judicial scrutiny formulated in Central Bank Employee Association exaggerate the significance of Section 3,
Article XIII is a groundless apprehension. Central Bank applied Article XIII in conjunction with the equal protection clause. Article XIII, by itself, without the application of
the equal protection clause, has no life or force of its own as elucidated in Agabon.

Along the same line of reasoning, the Court further holds that the subject clause violates petitioner's right to substantive due process, for it deprives him of property,
consisting of monetary benefits, without any existing valid governmental purpose. 136

The argument of the Solicitor General, that the actual purpose of the subject clause of limiting the entitlement of OFWs to their three-month salary in case of illegal
dismissal, is to give them a better chance of getting hired by foreign employers. This is plain speculation. As earlier discussed, there is nothing in the text of the law or the
records of the deliberations leading to its enactment or the pleadings of respondent that would indicate that there is an existing governmental purpose for the subject
clause, or even just a pretext of one.

The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the clause violates not just petitioner's right to equal
protection, but also her right to substantive due process under Section 1, 137 Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

On the Third Issue

Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary award, because these are fixed benefits that
have been stipulated into his contract.

Petitioner is mistaken.

The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay
is compensation for all work "performed" in excess of the regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days and
holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's monetary award, unless there
is evidence that he performed work during those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,138

However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in Cagampan v. National Labor Relations Commission, to wit:

The rendition of overtime work and the submission of sufficient proof that said was actually performed are conditions to be satisfied before a seaman could be entitled to
overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted since the same is given during the actual service of the
seamen.

WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year of the unexpired term, whichever is less" in the 5th paragraph of
Section 10 of Republic Act No. 8042 is DECLAREDUNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals
are MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days
computed at the rate of US$1,400.00 per month.

No costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

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.

LAUREL, J.:

The Solicitor-General in behalf of the respondent Court of Industrial 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, Inc., 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 Industrial 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 TIBAY making it necessary for him to temporarily lay
off the members of the National Labor Union Inc., 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 TIBAY 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, Inc., 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 Industrial 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, Inc.

In 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, Inc., 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 Industrial 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 Industrial 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. It is evident that these statements and expressions of views of counsel have no evidentiary value.

The Court of Industrial Relations is a special court whose functions are specifically stated in the law of its creation (Commonwealth Act No. 103). It is more an
administrative than a part of the integrated judicial system of the nation. It 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
Industrial Relations, as will appear from perusal of its organic law, is more active, affirmative and dynamic. It 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. It 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). It 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.) It 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.) In 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.

In 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 Industrial
Relations et al., G. R. No. 46673, promulgated September 13, 1939, we had occasion to point out that the Court of Industrial 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.) It 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 Industrial 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. In 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.) In 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,
XXXVI 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.) It 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. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed. 860; Interstate 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.
(Interstate 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. It 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 Industrial 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 Industrial 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 Industrial 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. It may be that the volume of work is such that it is literally Relations
personally to decide all controversies coming before them. In 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 Industrial 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.

In 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, Inc., 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 Inc., 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 Industrial 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 Industrial 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 Industrial 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.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 174585 October 19, 2007

FEDERICO M. LEDESMA, JR., Petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC-SECOND DIVISION) HONS. RAUL T. AQUINO, VICTORIANO R. CALAYCAY and ANGELITA A. GACUTAN
ARE THE COMMISSIONERS, PHILIPPINE NAUTICAL TRAINING INC., ATTY. HERNANI FABIA, RICKY TY, PABLO MANOLO, C. DE LEON and TREENA
CUEVA, Respondents.

DECISION

CHICO-NAZARIO, J.:

This a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, filed by petitioner Federico Ledesma, Jr., seeking to reverse and set aside the
Decision,1 dated 28 May 2005, and the Resolution,2 dated 7 September 2006, of the Court of Appeals in CA-G.R. SP No. 79724. The appellate court, in its assailed
Decision and Resolution, affirmed the Decision dated 15 April 2003, and Resolution dated 9 June 2003, of the National Labor Relations Commission (NLRC), dismissing
petitioners complaint for illegal dismissal and ordering the private respondent Philippine National Training Institute (PNTI) to reinstate petitioner to his former position
without loss of seniority rights.
The factual and procedural antecedents of the instant petition are as follows:

On 4 December 1998, petitioner was employed as a bus/service driver by the private respondent on probationary basis, as evidenced by his appointment. 3 As such, he
was required to report at private respondents training site in Dasmarias, Cavite, under the direct supervision of its site administrator, Pablo Manolo de Leon (de Leon). 4

On 11 November 2000, petitioner filed a complaint against de Leon for allegedly abusing his authority as site administrator by using the private respondents vehicles and
other facilities for personal ends. In the same complaint, petitioner also accused de Leon of immoral conduct allegedly carried out within the private respondents
premises. A copy of the complaint was duly received by private respondents Chief Accountant, Nita Azarcon (Azarcon). 5

On 27 November 2000, de Leon filed a written report against the petitioner addressed to private respondents Vice-President for Administration, Ricky Ty (Ty), citing his
suspected drug use.

In view of de Leons report, private respondents Human Resource Manager, Trina Cueva (HR Manager Cueva), on 29 November 2000, served a copy of a Notice to
petitioner requiring him to explain within 24 hours why no disciplinary action should be imposed on him for allegedly violating Section 14, Article IV of the private
respondents Code of Conduct.6

On 3 December 2000, petitioner filed a complaint for illegal dismissal against private respondent before the Labor Arbiter.

In his Position Paper,7 petitioner averred that in view of the complaint he filed against de Leon for his abusive conduct as site administrator, the latter retaliated by falsely
accusing petitioner as a drug user. VP for Administration Ty, however, instead of verifying the veracity of de Leons report, readily believed his allegations and together
with HR Manager Cueva, verbally dismissed petitioner from service on 29 November 2000.

Petitioner alleged that he was asked to report at private respondents main office in Espaa, Manila, on 29 November 2000. There, petitioner was served by HR Manager
Cueva a copy of the Notice to Explain together with the copy of de Leons report citing his suspected drug use. After he was made to receive the copies of the said notice
and report, HR Manager Cueva went inside the office of VP for Administration Ty. After a while, HR Manager Cueva came out of the office with VP for Administration Ty. To
petitioners surprise, HR Manager Cueva took back the earlier Notice to Explain given to him and flatly declared that there was no more need for the petitioner to explain
since his drug test result revealed that he was positive for drugs. When petitioner, however, asked for a copy of the said drug test result, HR Manager Cueva told him that
it was with the companys president, but she would also later claim that the drug test result was already with the proper authorities at Camp Crame. 8

Petitioner was then asked by HR Manager Cueva to sign a resignation letter and also remarked that whether or not petitioner would resign willingly, he was no longer
considered an employee of private respondent. All these events transpired in the presence of VP for Administration Ty, who even convinced petitioner to just voluntarily
resign with the assurance that he would still be given separation pay. Petitioner did not yet sign the resignation letter replying that he needed time to think over the offers.
When petitioner went back to private respondents training site in Dasmarias, Cavite, to get his bicycle, he was no longer allowed by the guard to enter the premises. 9

On the following day, petitioner immediately went to St. Dominic Medical Center for a drug test and he was found negative for any drug substance. With his drug result on
hand, petitioner went back to private respondents main office in Manila to talk to VP for Administration Ty and HR Manager Cueva and to show to them his drug test
result. Petitioner then told VP for Administration Ty and HR Manager Cueva that since his drug test proved that he was not guilty of the drug use charge against him, he
decided to continue to work for the private respondent. 10

On 2 December 2000, petitioner reported for work but he was no longer allowed to enter the training site for he was allegedly banned therefrom according to the guard on
duty. This incident prompted the petitioner to file the complaint for illegal dismissal against the private respondent before the Labor Arbiter.

For its part, private respondent countered that petitioner was never dismissed from employment but merely served a Notice to Explain why no disciplinary action should
be filed against him in view of his superiors report that he was suspected of using illegal drugs. Instead of filing an answer to the said notice, however, petitioner
prematurely lodged a complaint for illegal dismissal against private respondent before the Labor Arbiter. 11

Private respondent likewise denied petitioners allegations that it banned the latter from entering private respondents premises. Rather, it was petitioner who failed or
refused to report to work after he was made to explain his alleged drug use. Indeed, on 3 December 2000, petitioner was able to claim at the training site his salary for the
period of 16-30 November 2000, as evidenced by a copy of the pay voucher bearing petitioners signature. Petitioners accusation that he was no longer allowed to enter
the training site was further belied by the fact that he was able to claim his 13th month pay thereat on 9 December 2000, supported by a copy of the pay voucher signed
by petitioner.12

On 26 July 2002, the Labor Arbiter rendered a Decision,13 in favor of the petitioner declaring illegal his separation from employment. The Labor Arbiter, however, did not
order petitioners reinstatement for the same was no longer practical, and only directed private respondent to pay petitioner backwages. The dispositive portion of the
Labor Arbiters Decision reads:

WHEREFORE, premises considered, the dismissal of the [petitioner] is herein declared to be illegal. [Private respondent] is directed to pay the complainant backwages
and separation pay in the total amount of One Hundred Eighty Four Thousand Eight Hundred Sixty One Pesos and Fifty Three Centavos ( P184, 861.53).14

Both parties questioned the Labor Arbiters Decision before the NLRC. Petitioner assailed the portion of the Labor Arbiters Decision denying his prayer for reinstatement,
and arguing that the doctrine of strained relations is applied only to confidential employees and his position as a driver was not covered by such prohibition. 15 On the other
hand, private respondent controverted the Labor Arbiters finding that petitioner was illegally dismissed from employment, and insisted that petitioner was never dismissed
from his job but failed to report to work after he was asked to explain regarding his suspected drug use. 161wphi1

On 15 April 2003, the NLRC granted the appeal raised by both parties and reversed the Labor Arbiters Decision. 17 The NLRC declared that petitioner failed to establish
the fact of dismissal for his claim that he was banned from entering the training site was rendered impossible by the fact that he was able to subsequently claim his salary
and 13th month pay. Petitioners claim for reinstatement was, however, granted by the NLRC. The decretal part of the NLRC Decision reads:
WHEREFORE, premises considered, the decision under review is, hereby REVERSED and SET ASIDE, and another entered, DISMISSING the complaint for lack of
merit.

[Petitioner] is however, ordered REINSTATED to his former position without loss of seniority rights, but WITHOUT BACKWAGES. 18

The Motion for Reconsideration filed by petitioner was likewise denied by the NLRC in its Resolution dated 29 August 2003. 19

The Court of Appeals dismissed petitioners Petition for Certiorari under Rule 65 of the Revised Rules of Court, and affirmed the NLRC Decision giving more credence to
private respondents stance that petitioner was not dismissed from employment, as it is more in accord with the evidence on record and the attendant circumstances of
the instant case.20 Similarly ill-fated was petitioners Motion for Reconsideration, which was denied by the Court of Appeals in its Resolution issued on 7 September
2006. 21

Hence, this instant Petition for Review on Certiorari22 under Rule 45 of the Revised Rules of Court, filed by petitioner assailing the foregoing Court of Appeals Decision
and Resolution on the following grounds:

I.

WHETHER, THE HON. COURT OF APPEALS COMMITTED A MISAPPREHENSION OF FACTS, AND THE ASSAILED DECISION IS NOT SUPPORTED BY
THE EVIDENCE ON RECORD. PETITIONERS DISMISSAL WAS ESTABLISHED BY THE UNCONTRADICTED EVIDENCES ON RECORD, WHICH WERE
MISAPPRECIATED BY PUBLIC RESPONDENT NLRC, AND HAD THESE BEEN CONSIDERED THE INEVITABLE CONCLUSION WOULD BE THE
AFFIRMATION OF THE LABOR ARBITERS DECISION FINDING ILLEGAL DISMISSAL

II.

WHETHER, THE HON. COURT OF APPEALS SUBVERTED DUE PROCESS OF LAW WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD
SHOWING THAT THERE WAS NO JUST CAUSE FOR DISMISSAL AS PETITIONER IS NOT A DRUG USER AND THERE IS NO EVIDENCE TO SUPPORT
THIS GROUND FOR DISMISSAL.

III.

WHETHER, THE HON. COURT OF APPEALS COMMITTED REVERSIBLE ERROR OF LAW IN NOT FINDING THAT RESPONDENTS SUBVERTED
PETITIONERS RIGHT TO DUE PROCESS OF THE LAW.23

Before we delve into the merits of this case, it is best to stress that the issues raised by petitioner in this instant petition are factual in nature which is not within the office
of a Petition for Review.24 The raison detre for this rule is that, this Court is not a trier of facts and does not routinely undertake the re-examination of the evidence
presented by the contending parties for the factual findings of the labor officials who have acquired expertise in their own fields are accorded not only respect but even
finality, and are binding upon this Court.25

However, when the findings of the Labor Arbiter contradict those of the NLRC, departure from the general rule is warranted, and this Court must of necessity make an
infinitesimal scrunity and examine the records all over again including the evidence presented by the opposing parties to determine which findings should be preferred as
more conformable with evidentiary facts.26

The primordial issue in the petition at bar is whether the petitioner was illegally dismissed from employment.

The Labor Arbiter found that the petitioner was illegally dismissed from employment warranting the payment of his backwages. The NLRC and the Court of Appeals found
otherwise.

In reversing the Labor Arbiters Decision, the NLRC underscored the settled evidentiary rule that before the burden of proof shifts to the employer to prove the validity of
the employees dismissal, the employee must first sufficiently establish that he was indeed dismissed from employment. The petitioner, in the present case, failed to
establish the fact of his dismissal. The NLRC did not give credence to petitioners allegation that he was banned by the private respondent from entering the workplace,
opining that had it been true that petitioner was no longer allowed to enter the training site when he reported for work thereat on 2 December 2000, it is quite a wonder he
was able to do so the very next day, on 3 December 2000, to claim his salary.27

The Court of Appeals validated the above conclusion reached by the NLRC and further rationated that petitioners positive allegations that he was dismissed from service
was negated by substantial evidence to the contrary. Petitioners averments of what transpired inside private respondents main office on 29 November 2000, when he
was allegedly already dismissed from service, and his claim that he was effectively banned from private respondents premises are belied by the fact that he was able to
claim his salary for the period of 16-30 November 2000 at private respondents training site.

Petitioner, therefore, is now before this Court assailing the Decisions handed down by the NLRC and the Court of Appeals, and insisting that he was illegally dismissed
from his employment. Petitioner argues that his receipt of his earned salary for the period of 16-30 November 2000, and his 13th month pay, is neither inconsistent with
nor a negation of his allegation of illegal dismissal. Petitioner maintains that he received his salary and benefit only from the guardhouse, for he was already banned from
the work premises.

We are not persuaded.


Well-entrenched is the principle that in order to establish a case before judicial and quasi-administrative bodies, it is necessary that allegations must be supported by
substantial evidence.28 Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.29

In the present case, there is hardly any evidence on record so as to meet the quantum of evidence required, i.e., substantial evidence. Petitioners claim of illegal
dismissal is supported by no other than his own bare, uncorroborated and, thus, self-serving allegations, which are also incoherent, inconsistent and contradictory.

Petitioner himself narrated that when his presence was requested on 29 November 2000 at the private respondents main office where he was served with the Notice to
Explain his superiors report on his suspected drug use, VP for Administration Ty offered him separation pay if he will just voluntarily resign from employment. While we do
not condone such an offer, neither can we construe that petitioner was dismissed at that instance. Petitioner was only being given the option to either resign and receive
his separation pay or not to resign but face the possible disciplinary charges against him. The final decision, therefore, whether to voluntarily resign or to continue working
still, ultimately rests with the petitioner. In fact, by petitoners own admission, he requested from VP for Administration Ty more time to think over the offer.

Moreover, the petitioner alleged that he was not allowed to enter the training site by the guard on duty who told him that he was already banned from the premises.
Subsequently, however, petitioner admitted in his Supplemental Affidavit that he was able to return to the said site on 3 December 2000, to claim his 16-30 November
2000 salary, and again on 9 December 2000, to receive his 13th month pay. The fact alone that he was able to return to the training site to claim his salary and benefits
raises doubt as to his purported ban from the premises.

Finally, petitioners stance that he was dismissed by private respondent was further weakened with the presentation of private respondents payroll bearing petitioners
name proving that petitioner remained as private respondents employee up to December 2000. Again, petitioners assertion that the payroll was merely fabricated for the
purpose of supporting private respondents case before the NLRC cannot be given credence. Entries in the payroll, being entries in the course of business, enjoy the
presumption of regularity under Rule 130, Section 43 of the Rules of Court. It is therefore incumbent upon the petitioner to adduce clear and convincing evidence in
support of his claim of fabrication and to overcome such presumption of regularity.30 Unfortunately, petitioner again failed in such endeavor.

On these scores, there is a dearth of evidence to establish the fact of petitioners dismissal. We have scrupulously examined the records and we found no evidence
presented by petitioner, other than his own contentions that he was indeed dismissed by private respondent.

While this Court is not unmindful of the rule that in cases of illegal dismissal, the employer bears the burden of proof to prove that the termination was for a valid or
authorized cause in the case at bar, however, the facts and the evidence did not establish a prima facie case that the petitioner was dismissed from employment. 31 Before
the private respondent must bear the burden of proving that the dismissal was legal, petitioner must first establish by substantial evidence the fact of his dismissal from
service. Logically, if there is no dismissal, then there can be no question as to the legality or illegality thereof.

In Machica v. Roosevelt Services Center, Inc.,32 we had underscored that the burden of proving the allegations rest upon the party alleging, to wit:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove their allegation that respondents dismissed them from
their employment. It must be stressed that the evidence to prove this fact must be clear, positive and convincing. The rule that the employer bears the burden of
proof in illegal dismissal cases finds no application here because the respondents deny having dismissed the petitioners. 33

In Rufina Patis Factory v. Alusitain,34 this Court took the occasion to emphasize:

It is a basic rule in evidence, however, that the burden of proof is on the part of the party who makes the allegations ei incumbit probatio, qui dicit, non qui negat. If he
claims a right granted by law, he must prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness of that
of his opponent.35

It is true that the Constitution affords full protection to labor, and that in light of this Constitutional mandate, we must be vigilant in striking down any attempt of the
management to exploit or oppress the working class. However, it does not mean that we are bound to uphold the working class in every labor dispute brought before this
Court for our resolution.

The law in protecting the rights of the employees, authorizes neither oppression nor self-destruction of the employer. It should be made clear that when the law tilts the
scales of justice in favor of labor, it is in recognition of the inherent economic inequality between labor and management. The intent is to balance the scales of justice; to
put the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of management but never should
the scale be so tilted if the result is an injustice to the employer. Justitia nemini neganda est -- justice is to be denied to none.36

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated 28 May 2005 and its Resolution dated 7 September 2006 in
CA-G.R. SP No. 79724 are hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION
G.R. No. L-49280 February 26, 1981

LUZ G. CRISTOBAL, petitioner,


vs.
EMPLOYEES COMPENSATION COMMISSION and GOVERNMENT SERVICE INSURANCE SYSTEM (National Science Development Board), respondents.

MAKASIAR, J.:

On April 30, 1980, We rendered a decision in this case finding that petitioner Luz G. Cristobal, widow of the deceased Fortunato Cristobal, has shown by clear and
convincing evidence that her husband contracted rectal cancer or at least the risk of contracting the same had been increased by the conditions under which he was
working and accordingly ordered respondent G SI S:

1) to pay the petitioner the sum of P12,000.00 as death benefits;

2) to reimburse petitioner medical, surginal and hospital expenses duly supported by proper receipts;

3) to pay petitioner the sum of P700.00 as funeral expenses; and

4) to pay the petitioner attorney's fees equivalent to 10% of the death benefits.

On June 5, 1980, respondent GSIS filed a motion for reconsideration based on the following grounds:

I As the ailment of the deceased is not a listed occupational disease, proof should have been shown that the cause of the ailment was the working
conditions. This Honorable Court only found a case of aggravation which is different from proof of increased risk of contracting the ailment.

II. Assuming that the ailment is compensable under the new law, the benefits awarded to petitioner are not in accordance with said law.

III. The grant of attorney's fees in the sum equivalent to ten (10%) percent of the death benefits is not proper.

On June 14, 1980, respondent ECC likewise filed a motion for reconsideration based essentially on the same grounds, to wit:

I. The illness of rectal malignancy which caused the death of Fortunato S. Cristobal is not compensable under the theory of increased risk as
provided in PD 626, as amended.

II. The amounts awarded as death benefits, funeral expenses and attorney's fees are not in accordance with law.

III. The cause of death not being a compensable illness, the order for reimbursement of medical, surgical and hospital expenses has no basis.

WE cannot sustain respondents' views.

The main issue raised by respondents as to whether or not the illness of the deceased, rectal cancer, is compensable, actually boils down to the question of sufficiency of
evidence. Respondents took note of the following evidence submitted by petitioner:

a) The affidavit of Angel Peres, a co-employee to the deceased, to this effect

I know personally Fortunato Cristobal because he was my Supervisor in the Bureau of Printing:

During the employment to Fortunato Cristobal at the Bureau of Printing; he contracted sickness which was later diagnosed as anorectal
cancer which caused his death;

Fortunato Cristobal continued working at the aforementioned Bureau of Printing even when he was already suffering from a rectal illness and he
had been complaining to me that said illness became more painful whenever he performs his job in the Bureau;

I also noticed that he oftentimes eat food in the Bureau without washing his hands;

The place where Fortunato Cristobal was assigned in the Bureau of Printing is very hygienic and polluted with chemicals and he oftentimes
complain to me that the odor of the chemicals make him feel dizzy always.

Fortunato Cristobal always handled chemicals in the Bureau of Printing while in the performance of his duties ( Annex C, Petition).
b) The medical certificate issued by Dr. Rufo A. Guzman stating that "the illness may be aggravated by the unhygienic conditions in the Bureau of
Printing where he works. handling of chemicals for printing. eating without proper washing of hands, tension due to the pressure of work, plus
neglected personal necessity which may be attributed to the inadequate facilities in the Bureau of Printing [Annex D, Petition].

As correctly observed by the respondents herein, these evidence were considered in the light of the foregoing facts:

1. The deceased entered the government service in 1964 free from any kind of disease;

2. He was assigned to the printing department of the NSDB as supervising information officer where he was exposed to various chemicals and
intense heat.

3. The deceased's ailment supervened in the course of his employment with said agency.

Respondents however refuse to appreciate these facts in relation to other equally compelling considerations.

The deceased died of rectal cancer on May 27, 1977. Concededly, the exact cause or etiology of this disease is still unknown. Even respondent ECC's own medical
officer, Dr. Mercia C. Abrenica, certified that "the cause of rectal carzinoma as of any other malignancies is still unknown" (p. 9, ECC rec.). Its cause and development are
insidious, imperceptible to the naked eye, and defies expert analysis. Therefore, whether or not the disease rectal cancer was caused or the risk of contracting the same
was increased by the decedent's working conditions remains uncertain. This uncertainty, of course, cannot eliminate the probability that the ailment was work connected
as it had been established that the deceased was exposed to unhygienic "Forking conditions, various chemicals and intense heat which are generally considered as
predisposing factors of cancer. At this point, there is need to reiterate that when the deceased started working in 1964, he was free from any kind of disease.

In ruling on the claim, this Court also applied the theory of increased risk under Section 1(b) Rule Ill of PD 626 which states that:

For the sickness and the resulting disability or death to be compensable, the sickness must be the result of an occupational disease listed under
Annex 'A' of these Rules with the conditions set therein satisfied; otherwise, proof must be shown that the risk of contracting the disease is
increased by the working conditions (emphasis supplied),

aside from the possibility that the disease might have been contracted even prior to the effectivity of the new Labor Code. To establish compensability of the claim under
the said theory, the claimant must show proof of work-connection. Impliedly, the degree of proof required is merely substantial evidence, which means "such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion" (Ang Tibay vs. The Court of Industrial Relations and National Labor Union, Inc., 69
Phil. 635) or clear and convincing evidence. In this connection, it must be pointed out that the strict rules of evidence are not applicable in claims for compensation.
Respondents however insist on evidence which would establish direct causal relation between the disease rectal cancer and the employment of the deceased. Such a
strict requirement which even medical experts in the field cannot support considering the uncertainty of the nature of the disease would negate the principle of liberality in
the matter of evidence. Apparently, what the law merely requires is a reasonable work-connection and not a direct causal relation. This kind of interpretation gives
meaning and substance to the liberal and compassionate spirit of the law as embodied in Article 4 of the new Labor Code which states that "all doubts in the
implementation and interpretation of the provisions of this Code, including its implementing rules and regulations shall be resolved in favor of labor. "

In urging that the disease rectal cancer is not compensable since its nature or cause is unknown and petitioner was not able to show proof of direct causal relation,
respondents would instruct us to ignore the above provision of law and the policy of the State of giving maximum aid and protection to labor as We have stated earlier in
the main decision. As the agents charged by the law to implement the social justice guarantee secured by both the 1935 and 1973 Constitutions, respondents should
adopt a more liberal attitude in deciding claims for compensation especially when there is some basis in the facts for inferring a work-connection. This should not be
confused with the presumption of compensability and theory of aggravation under the Workmen's Compensation Act. While these doctrines may have been abandoned
under the new Labor Code (the constitutionality of such abrogation may still be challenged), it is significant that the liberality of the law, in general, still subsists. All these
factual and legal grounds' were considered in relation to each other constituting substantial evidence clearly convincing Us to resolve that rectal cancer is compensable.

With respect to the award of death benefits in the amount of P12,000.00, respondents argue that the same is not in consonance with Articles 193 (a) and 191(a) of the
Labor Code, as amended by PD 891, which provide as follows:

Art. 193. Death (a) Under such regulations as the Com mission may approve the System shall pay to the primary beneficiaries upon the death
of the covered employee under this Title a monthly income benefit equivalent to the monthly income for permanent total disability plus ten percent
of the basic benefit for each dependent child but not exceeding five, beginning with the youngest and without substitution: Provided, That the
monthly income benefit shall not be paid for more than five years, but the portion corresponding to the monthly income benefit for permanent total
disability shall be guaranteed for five years: Provided, however, That total payments shag in no case exceed twelve thousand pesos; Provided,
further, that if he has no primary beneficiary, the System shall pay to his secondary beneficiaries a lump sum benefit equivalent to the lesser or
thirty-five times the monthly income benefit for permanent total disability and six thousand pesos.

Art. 191 (a) Under such regulations as the Commission may approve, any employee under this Title who contracts sickness or sustains an
injury resulting in permanent total disability shall, for each month until his death but not exceeding five years, be paid by the System during such
disability an income benefit equivalent to one hundred fifteen percent of the basic benefit which shall be computed as follows:

Forty-five percent of the first three hundred pesos of average monthly salary credit or fraction thereof, plus

Twenty-five percent of the next three hundred pesos of average, monthly salary credit for each month or fraction thereof;
plus

Nine percent of each succeeding one hundred pesos of average monthly salary credit or fraction thereof; plus
One-tenth of one percent of the average monthly salary credit for each month of paid coverage in the System in excess of
one hundred twenty months of paid coverage prior to the semester of disability: Provided, That the monthly income benefit
shall not less than forty-five pesos.

This argument is untenable A computation of the death benefits in accordance with the underlined procedure would disclose that the amount, awarded by this Court is well
within the limitations provided therein. To illustrate:

The husband of petitioner received an annual salary of P11,904.00. His average monthly salary, therefore, is P992.00.

The monthly income benefit is 115% of the basic benefit which is computed as follows:

45%, of the first P300


of the P992..................................................... P125.00
25% of the next P300.................................................. 75.00
9% of each succeeding P100....................... 9.00
9% of P100..................................................... 9.00
9% of Pl00....................................................... 9.00
9% of P 92 (refraction of P100)................... 8.28

Basic Benefit.................................................................. P235.28

Consequently, the monthly income benefit (115 % of P235.28) would amount to P270.57.

In addition, the law grants an additional 10%, of the basic benefit (P235.28) for each dependent child not exceeding 5. The deceased left, at the time of his death, 7
dependent children. Petitioner would therefore be entitled to an additional grant of P23.53 (rounded) for each child or a total of P117.65 for 5 dependent children,
observing the limitation. ln summation, petitioner should be receiving a monthly income benefit of P270.57 plus P117.65 or a total of P388.22. In a year's time, this would
amount to P4,658.64 and in 5 years time, the total would be P23,293.20. This Court in compliance with the proviso set forth in Article 193 (a) " that total payment shall in
no case excedd twelve thousand pesos [P12,000.000]" limited its award to P12,000.00.

Respondent likwise question the award of attorney's fees equivalent to 10% of the death benefits. Its objection is based primarily on article 203 of the Code which
provides that :

No agent , attorney or other person pursuing or in charge of the preparation or filing of any claim for benefit under this title shall demand or charge
for his service any fee, and any stipulation to the contrary shall be null and void. the retention or deduction of any amount from any benefit
gramated under this title for the payment of fees of such services is prohibited. Violation of any provisions of this Article shall be punished by a fine
of not less than five thousand pesos (P5,000.00), or imprisonment for not less than six (6) months nor more than one (1) year, or both, at the
descretion of the court.

A close examination of the aforequoted provision reveals that the intent of the law is to free the awrad from any liability or charge so that the claimaint who is exempt from
liabitity for attorney's fees. The defaulting employer or governement agency remains libale for attorney's fees; because it compelled the claimant to employ the services of
counsel by unjustly refusing to recognize the validity of the claim of peitioner. This actually is the rationale behind the prohibition. Nothing is wrong with the court's award
of attorney's fees which is separate and distinct from the other benefits awarded. Besides, in the instant case, the participation of petitioner's counsel was not limited to
the preparation or filling of the claim but in appealling petitioner's case before this Court necessitating submission of pleadings to establish his cause of action and to rebut
or refute the arguments of herein respondents. Fairness dictates that the counsel should receive compensation for his services; otherwise, it would be entirely difficult for
claimants, majority of whom are notlearned in the intrecacies of the law, to get good legal service. To deny counsel compensation for his professional services, would
amount to deprivation of property without due process of law.

Petitioner appealed to this Court in forma pauperis. Respondents are of the mistaken belief that such manner of appeal is incompatible with the award of attorney's fees. It
must be pointed out that Section 22, Rule 3 of the Rules of Court merely exempts a pauper litigant from the payment of legal fees and from the filing of appeal bond,
printed record and printed brief, but does not exempt him from the payment of attorney's fees. Therefore, the award of attorney's fees in the instant case is proper.

With respect to the award of medical benefits, suffice it to say that Article 166 of the Labor Code provides that:

Policy The State shall promote and develop a tax-exempt employees' compensation program whereby employees and their dependents in the
event of work-connected disability or death may promptly secure adequate income benefit and medical or related benefits.

In line with this provision, this Court ordered the reimbursement of medical, surgical and hospital expenses duly supported by proper receipts. On the award of funeral
benefits in the amount of P700.00, We find that the same should be increased to Pl,000.00 pursuant to PD 1146, Section 19 in relation to Section 45, and PD 1641,
Section 6(d), which took effect on May 31, 1977. This is also consistent with this Court's award in the cases of Mitra vs. Employees' Compensation Commission (96 SCRA
284 119801); Vda. de Torbela vs. ECC (96 SCRA 260 119801); and Tuquero vs. ECC (96 SCRA 291 [19801).

WHEREFORE, THE DECISION DATED APRIL 30, 1980 IS HEREBY MODIFIED TO READ AS FOLLOWS:

1) TO PAY THE PETITIONER THE SUM OF Pl2,000.00 AS DEATH BENEFITS;

2) TO REIMBURSE PETITIONER MEDICAL SURGICAL AND HOSPITAL EXPENSES DULY SUPPORTED BY PROPER RECEIPTS;
3) TO PAY PETITIONER THE SUM OF ONE THOUSAND (Pl,000.00) PESOS AS FUNERAL EXPENSES; AND

4) TO PAY PETITIONER ATTORNEY'S FEES EQUIVALENT TO 10% OF THE DEATH BENEFITS.

THUS MODIFIED, THE JUDGMENT APPEALED FROM IS AFFIRMED IN ALL OTHER RESPECTS. THE MOTIONS FOR RECONSIDERATION ARE HEREBY DENIED
FOR LACK OF MERIT; AND THIS DENIAL IS FINAL AND EXECUTORY.

SO ORDERED.