Basic Concepts/Principles

Date of Effectivity:

 PASEI VS. TORRES, ET AL G.R. No. 101279 August 6, 1992

- This petition for prohibition with temporary restraining order was filed by the Philippine Association of Service
Exporters (PASEI, for short), to prohibit and enjoin the Secretary of the Department of Labor and Employment
(DOLE) and the Administrator of the Philippine Overseas Employment Administration (or POEA) from
enforcing and implementing DOLE Department Order No. 16, Series of 1991 and POEA Memorandum Circulars
Nos. 30 and 37, Series of 1991, temporarily suspending the recruitment by private employment agencies of
Filipino domestic helpers for Hong Kong and vesting in the DOLE, through the facilities of the POEA, the
task of processing and deploying such workers.
- PASEI is the largest national organization of private employment and recruitment agencies duly licensed and
authorized by the POEA, to engage in the business of obtaining overseas employment for Filipino landbased
workers, including domestic helpers.
- On June 1, 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids employed in
Hong Kong, DOLE Secretary Ruben D. Torres issued Department Order No. 16, Series of 1991, temporarily
suspending the recruitment by private employment agencies of "Filipino domestic helpers going to Hong Kong" (p.
30, Rollo). The DOLE itself, through the POEA took over the business of deploying such Hong Kong-bound workers.
- The POEA issued Memorandum Circular No. 30, Series of 1991, dated July 10, 1991, providing GUIDELINES on
the Government processing and deployment of Filipino domestic helpers to Hong Kong and the accreditation of
Hong Kong recruitment agencies intending to hire Filipino domestic helpers.
- On August 1, 1991, the POEA Administrator also issued Memorandum Circular No. 37, Series of 1991, on the
processing of employment contracts of domestic workers for Hong Kong:

XXX

Effective 16 August 1991, all Hong Kong recruitment agent/s hiring DHs from the Philippines
shall recruit under the new scheme which requires prior accreditation which the POEA.

Recruitment agencies in Hong Kong may apply for accreditation at the Office of the Labor
Attache, Philippine Consulate General where a POEA team is posted until 31 August 1991.
Thereafter, those who failed to have themselves accredited in Hong Kong may proceed to the
POEA-OWWA Household Workers Placement Unit in Manila for accreditation before their
recruitment and processing of DHs shall be allowed.

- On September 2, 1991, the petitioner, PASEI, filed this petition for prohibition to annul the aforementioned DOLE and
POEA circulars and to prohibit their implementation for the following reasons:
 1. that the respondents acted with grave abuse of discretion and/or in excess of their rule-
making authority in issuing said circulars;
 2. that the assailed DOLE and POEA circulars are contrary to the Constitution, are
unreasonable, unfair and oppressive; and
 3. that the requirements of publication and filing with the Office of the National Administrative
Register were not complied with.
- There is no merit in the first and second grounds of the petition.
- The questioned circulars are therefore a valid exercise of the police power as delegated to the executive branch of
Government.
- Nevertheless, they are legally invalid, defective and unenforceable for lack of power publication and filing in
the Office of the National Administrative Register as required in Article 2 of the Civil Code, Article 5 of the
Labor Code and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 which provide:

Art. 2. Laws shall take effect after fifteen (15) days following the completion of their publication
in the Official Gazatte, unless it is otherwise provided. . . . (Civil Code.)

Art. 5. Rules and Regulations. — The Department of Labor and other government agencies
charged with the administration and enforcement of this Code or any of its parts shall promulgate the
necessary implementing rules and regulations. Such rules and regulations shall become effective
 fifteen (15) days after announcement of their adoption in newspapers of general circulation.
(Emphasis supplied, Labor Code, as amended.)

Sec. 3. Filing. — (1) Every agency shall file with the University of the Philippines Law Center, three
(3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code
which are not filed within three (3) months shall not thereafter be the basis of any sanction against
any party or persons. (Emphasis supplied, Chapter 2, Book VII of the Administrative Code of 1987.)

Sec. 4. Effectivity. — In addition to other rule-making requirements provided by law not inconsistent
with this Book, each rule shall become effective fifteen (15) days from the date of filing as
above provided unless a different date is fixed by law, or specified in the rule in cases of
imminent danger to public health, safety and welfare, the existence of which must be
expressed in a statement accompanying the rule. The agency shall take appropriate measures to
make emergency rules known to persons who may be affected by them. (Emphasis supplied, Chapter
2, Book VII of the Administrative Code of 1987).

- Once, more we advert to our ruling in Tañada vs. Tuvera, 146 SCRA 446 that:

. . . Administrative rules and regulations must also be published if their purpose is to enforce or
implement existing law pursuant also to a valid delegation. (p. 447.)

Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the
administrative agency and not the public, need not be published. Neither is publication required of the so-
called letters of instructions issued by administrative superiors concerning the rules or guidelines to be
followed by their subordinates in the performance of their duties. (p. 448.)

We agree that publication must be in full or it is no publication at all since its purpose is to inform
the public of the content of the laws. (p. 448.)

- For lack of proper publication, the administrative circulars in question may not be enforced and
implemented.
- WHEREFORE, the writ of prohibition is GRANTED. The implementation of DOLE Department Order No. 16,
Series of 1991, and POEA Memorandum Circulars Nos. 30 and 37, Series of 1991, by the public respondents
is hereby SUSPENDED pending compliance with the statutory requirements of publication and filing under
the aforementioned laws of the land.

 Arco Metal Products vs. Samahan ng mga Manggagawa sa Arco Metal –NAFLU 554 SCRA 111 (2008)

- Petition for review of resolution and decision of the CA in CA-G.R. SP No. 85089 entitled Samahan ng mga
Manggagawa sa Arco Metal-NAFLU (SAMARM-NAFLU) v. Arco Metal Products Co., Inc. and/or Mr. Salvador
Uy/Accredited Voluntary Arbitrator Apron M. Mangabat,[4] which ruled that the 13th month pay, vacation leave and
sick leave conversion to cash shall be paid in full to the employees of petitioner regardless of the actual
service they rendered within a year.
- Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of
petitioner’s rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and
leave encashment of three union members in amounts proportional to the service they actually rendered in a year,
which is less than a full twelve (12) months.
- Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the
payment of the same benefits to seven (7) employees who had not served for the full 12 months. The payments
were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004. According to respondent, the prorated payment
violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint
before the National Conciliation and Mediation Board (NCMB).
- The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that the giving of the
contested benefits in full, irrespective of the actual service rendered within one year has not ripened into a
practice. xxx He also interpreted the phrase “for each year of service” found in the pertinent CBA provisions to
mean that an employee must have rendered one year of service in order to be entitled to the full benefits provided in
the CBA.[5]
- Unsatisfied, respondent filed a Petition for Review[6] under Rule 43 before the Court of Appeals, imputing serious
error to Mangabat’s conclusion. The Court of Appeals ruled that the CBA did not intend to foreclose the
application of prorated payments of leave benefits to covered employees. The appellate court found that
petitioner, however, had an existing voluntary practice of paying the aforesaid benefits in full to its
employees; thereby rejecting the claim that petitioner erred in paying full benefits to its seven employees.
- Petitioner moved for the reconsideration of the decision but its motion was denied, hence this petition.
- Petitioner submits that the Court of Appeals erred when it ruled that the grant of 13th month pay, bonus, and
leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and,
consequently, the prorated payment of the said benefits does not constitute diminution of benefits under Article 100
of the Labor Code.[8]
- The petition ultimately fails.
- First, we determine whether the intent of the CBA provisions is to grant full benefits regardless of service
actually rendered by an employee to the company. According to petitioner, there is a one-year cutoff in the
entitlement to the benefits provided in the CBA which is evident from the wording of its pertinent provisions
as well as of the existing law.
- We agree with petitioner on the first issue.
- The applicable CBA provisions read:
 ARTICLE XIV-VACATION LEAVE
Section 1. Employees/workers covered by this agreement who have rendered at
least one (1) year of service shall be entitled to sixteen (16) days vacation
leave with pay for each year of service. Unused leaves shall not be cumulative
but shall be converted into its cash equivalent and shall become due and payable
every 1st Saturday of December of each year.
 ARTICLE XV-SICK LEAVE
Section 1. Employees/workers covered by this agreement who have rendered at
least one (1) year of service shall be entitled to sixteen (16) days of sick
leave with pay for each year of service. Unused sick leave shall not be
cumulative but shall be converted into its cash equivalent and shall become due
and payable every 1st Saturday of December of each year.
 ARTICLE XVI – EMERGENCY LEAVE, ETC.
Section 2. Employees/workers covered by this agreement who have rendered at
least one (1) year of service shall be entitled to seven (7) days of Paternity
Leave with pay in case the married employee’s legitimate spouse gave
birth. Said benefit shall be non-cumulative and non-commutative and shall be
deemed in compliance with the law on the same.
 ARTICLE XVIII- 13TH MONTH PAY & BONUS
Section 1. The Company shall grant 13th Month Pay to all employees covered
by this agreement. The basis of computing such pay shall be the basic salary per
day of the employee multiplied by 30 and shall become due and payable every
1st Saturday of December.

- There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick
leave, one must have rendered at least one year of service. The clear wording of the provisions does not allow
any other interpretation. Anent the 13th month pay and bonus, we agree with the findings of Mangabat that
the CBA provisions did not give any meaning different from that given by the law, thus it should be computed
at 1/12 of the total compensation which an employee receives for the whole calendar year. The bonus is also
equivalent to the amount of the 13th month pay given, or in proportion to the actual service rendered by an employee
within the year.
- On the second issue, however, petitioner founders (fails).
- As a general rule, in petitions for review under Rule 45, the Court, not being a trier of facts, does not normally
embark on a re-examination of the evidence presented by the contending parties during the trial of the case
considering that the findings of facts of the Court of Appeals are conclusive and binding on the Court. [10] The rule,
however, admits of several exceptions, one of which is when the findings of the Court of Appeals are contrary to that
of the lower tribunals. Such is the case here, as the factual conclusions of the Court of Appeals differ from that of the
voluntary arbitrator. (RULES OF COURT)
- Petitioner claims that its full payment of benefits regardless of the length of service to the company does not
constitute voluntary employer practice. Petitioner tries to make a case out of the fact that the CBA has not been
modified to incorporate the giving of full benefits regardless of the length of service, proof that the grant
has not ripened into company practice. We disagree.
- Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or
eliminated by the employer.[14] The principle of non-diminution of benefits is founded on the Constitutional
 mandate to "protect the rights of workers and promote their welfare,” [15] and “to afford labor full
protection.”[16] Said mandate in turn is the basis of Article 4 of the Labor Code which states that “all doubts in
the implementation and interpretation of this Code, including its implementing rules and regulations shall be
rendered in favor of labor.” Jurisprudence is replete with cases which recognize the right of employees to benefits
which were voluntarily given by the employer and which ripened into company practice.
- Thus in Davao Fruits Corporation v. Associated Labor Unions, et al.[17] where an employer had freely and
continuously included in the computation of the 13th month pay those items that were expressly excluded by the law,
we held that the act which was favorable to the employees though not conforming to law had thus ripened
into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated.
- In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees regardless of the length of service rendered. True, there were
only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless.
Jurisprudence has not laid down any rule specifying a minimum number of years within which a company
practice must be exercised in order to constitute voluntary company practice.[20]
- In cases involving money claims of employees, the employer has the
burden of proving that the employees did receive the wages and benefits and that the same were paid in
accordance with law.[25]
- IN VIEW HEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No.
85089 dated 29 September 2005 is and its Resolution dated 9 December 2005 are hereby AFFIRMED.

Police Power:
 St. Luke’s Medical Center Employee’s Foundation-AFW vs. NLRC 517 SCRA 677 (2007)

- Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of private
respondent St. Luke's Medical Center, Inc. (SLMC) on October 13, 1984. She is a graduate of Associate in
Radiologic Technology from The Family Clinic Incorporated School of Radiologic Technology.
- On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the "Radiologic Technology Act
of 1992." Said law requires that no person shall practice or offer to practice as a radiology and/or x-ray
technologist in the Philippines without having obtained the proper certificate of registration from the Board
of Radiologic Technology.
- On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner Maribel S. Santos
requiring the latter to comply with Republic Act. No. 7431 by taking and passing the forthcoming
examination scheduled in June 1997; otherwise, private respondent SLMC may be compelled to retire her from
employment should there be no other position available where she may be absorbed.
- On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to petitioner Maribel S.
Santos advising her that only a license can assure her of her continued employment at the Institute of
Radiology of the private respondent SLMC and that the latter is giving her the last chance to take and pass
the forthcoming board examination scheduled in June 1998; otherwise, private respondent SLMC shall be
constrained to take action which may include her separation from employment.
- On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner Maribel S. Santos
informing the latter that the management of private respondent SLMC has approved her retirement in lieu of
separation pay.
- On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent SLMC for illegal
dismissal and non-payment of salaries, allowances and other monetary benefits. She likewise prayed for the
award of moral and exemplary damages plus attorney's fees.
- In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal Counsel, in a
letter dated September 22, 1999 addressed to Ms. Rita Marasigan, Human Resources Director of private respondent
SLMC, requested the latter to accommodate petitioner Maribel S. Santos and assign her to the vacant
position of CSS Aide in the hospital arising from the death of an employee more than two (2) months earlier.
- On September 5, 2000, the Labor Arbiter came out with a Decision ordering private respondent SLMC to pay
petitioner Maribel S. Santos the amount of One Hundred Fifteen Thousand Five Hundred Pesos (P115,500.00)
representing her separation pay. All other claims of petitioner were dismissed for lack of merit.
- Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent NLRC.
- On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision of the Labor
Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its Resolution promulgated on
December 27, 2002.
- Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned, affirmed the decision of
the NLRC.
- Hence, this petition raising the following issues:
  I. Whether the CA overlooked certain material facts and circumstances on petitioners' legal claim
in relation to the complaint for illegal dismissal.
 II. Whether the CA committed grave abuse of discretion and erred in not resolving with clarity the
issues on the merit of petitioner's constitutional right of security of tenure. 3
- The petition lacks merit.
- Generally, the Court has always accorded respect and finality to the findings of fact of the CA particularly if they
coincide with those of the Labor Arbiter and the NLRC and are supported by substantial evidence. 5 True this rule
admits of certain exceptions as, for example, when the judgment is based on a misapprehension of facts, or the
findings of fact are not supported by the evidence on record6 or are so glaringly erroneous as to constitute grave
abuse of discretion.7 None of these exceptions, however, has been convincingly shown by petitioners to apply in the
present case. Hence, the Court sees no reason to disturb such findings of fact of the CA.
- Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally dismissed by
private respondent SLMC on the basis of her inability to secure a certificate of registration from the Board of
Radiologic Technology.
- The requirement for a certificate of registration is set forth under R.A. No. 7431.
- Petitioners contend that her non-compliance of the requirement does not constitute a just cause for her termination
as it violated her constitutional right to security of tenure. This contention is not tenable.
- While the right of workers to security of tenure is guaranteed by the Constitution, its exercise may be
reasonably regulated pursuant to the police power of the State to safeguard health, morals, peace,
education, order, safety, and the general welfare of the people. Consequently, persons who desire to engage
in the learned professions requiring scientific or technical knowledge may be required to take an
examination as a prerequisite to engaging in their chosen careers.9
- In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its decision dated August
23, 2002:

The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State's inherent
police power. It should be noted that the police power embraces the power to prescribe regulations
to promote the health, morals, educations, good order, safety or general welfare of the people. The
state is justified in prescribing the specific requirements for x-ray technicians and/or any other professions
connected with the health and safety of its citizens. Respondent-appellee being engaged in the hospital
and health care business is a proper subject of the cited law; thus, having in mind the legal requirements of
these laws, the latter cannot close its eyes and [let] complainant-appellant's private interest override public
interest.

- No malice or ill-will can be imputed upon private respondent as the separation of petitioner Santos was undertaken
by it conformably to an existing statute. It is undeniable that her continued employment without the required Board
certification exposed the hospital to possible sanctions and even to a revocation of its license to operate.
- Petitioner Santos is not in the position to demand that she be given a different work assignment when what
necessitated her transfer in the first place was her own fault or failing. The prerogative to determine the place or
station where an employee is best qualified to serve the interests of the company on the basis of the his or
her qualifications, training and performance belongs solely to the employer.14
- While our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does
not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that
management has rights which are also entitled to respect and enforcement in the interest of fair
play.16 Labor laws, to be sure, do not authorize interference with the employer's judgment in the conduct of
the latter's business. Private respondent is free to determine, using its own discretion and business judgment, all
elements of employment, "from hiring to firing" except in cases of unlawful discrimination or those which may be
provided by law. None of these exceptions is present in the instant case.
- The fact that another employee, who likewise failed to pass the required exam, was allowed by private respondent to
apply for and transfer to another position with the hospital does not constitute unlawful discrimination. This was a
valid exercise of management prerogative, petitioners not having alleged nor proven that the reassigned employee
did not qualify for the position where she was transferred. In the past, the Court has ruled that an objection founded
on the ground that one has better credentials over the appointee is frowned upon so long as the latter possesses the
minimum qualifications for the position.17 Furthermore, the records show that Ms. Santos did not even seriously apply
for another position in the company.
- WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.

 JJM Promotion vs. CA, August 5, 1996

- Assailed is the government's power to control deployment of female entertainers to Japan by requiring an
Artist Record Book (ARB) as a precondition to the processing by the POEA of any contract for overseas
employment. By contending that the right to overseas employment, is a property right within the meaning of the
Constitution, petitioners vigorously aver that deprivation thereof allegedly through the onerous requirement of an
ARB violates the due process clause and constitutes an invalid exercise of the police power.
- Following the much-publicized death of Maricris Sioson in 1991, former President Corazon C. Aquino ordered a total
ban against the deployment of performing artists to Japan and other foreign destinations.

- The government, through the Secretary of Labor and Employment, subsequently issued Department Order No. 28,
creating the Entertainment Industry Advisory Council (EIAC), which was tasked with issuing guidelines on the
training, testing certification and deployment of performing artists abroad.

- Pursuant to the EIAC's recommendations,[1] the Secretary of Labor, on January 6, 1994, issued Department
Order No. 3 establishing various procedures and requirements for screening performing artists under a new
system of training, testing, certification and deployment of the former. Performing artists successfully hurdling
the test, training and certification requirement were to be issued an Artist's Record Book (ARB), a necessary
prerequisite to processing of any contract of employment by the POEA. Upon request of the industry, implementation
of the process, originally scheduled for April 1, 1994, was moved to October 1, 1994.

- In Civil Case No. 95-72750, the Federation of Entertainment Talent Managers of the Philippines (FETMOP), on
January 27, 1995 filed a class suit assailing these department orders, principally contending that said orders
1) violated the constitutional right to travel; 2) abridged existing contracts for employment; and 3) deprived
individual artists of their licenses without due process of law. FETMOP, likewise, averred that the issuance of
the Artist Record Book (ARB) was discriminatory and illegal and "in gross violation of the constitutional
right... to life liberty and property." Said Federation consequently prayed for the issuance of a writ of preliminary
injunction against the aforestated orders.

- On February 2, 1992, JMM Promotion and Management, Inc. and Kary International, Inc., herein petitioners, filed a
Motion for Intervention in said civil case, which was granted by the trial court in an Order dated 15 February, 1995.

- However, on February 21, 1995, the trial court issued an Order denying petitioners' prayer for a writ of preliminary
injunction and dismissed the complaint.

- On appeal from the trial court's Order, respondent court, in CA G.R. SP No. 36713 dismissed the
same. Tracing the circumstances which led to the issuance of the ARB requirement and the assailed Department
Order, respondent court concluded that the issuances constituted a valid exercise by the state of the police
power.

- We agree.

- The latin maxim salus populi est suprema lex embodies the character of the entire spectrum of public laws aimed at
promoting the general welfare of the people under the State's police power. As an inherent attribute of
sovereignty which virtually "extends to all public needs,"[2] this "least limitable"[3] of governmental powers grants a
wide panoply of instruments through which the state, as parens patriae gives effect to a host of its regulatory powers.

- Thus, police power concerns government enactments which precisely interfere with personal liberty or
property in order to promote the general welfare or the common good. As the assailed Department Order
enjoys a presumed validity, it follows that the burden rests upon petitioners to demonstrate that the said order,
particularly, its ARB requirement, does not enhance the public welfare or was exercised arbitrarily or unreasonably.

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

- In any event, apart from the State's police power, the Constitution itself mandates government to extend the fullest
protection to our overseas workers. The basic constitutional statement on labor, embodied in Section 18 of Article II
of the Constitution provides:

Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers
and promote their welfare.

- We now go to petitioners' assertion that the police power cannot, nevertheless, abridge the right of our performing
workers to return to work abroad after having earlier qualified under the old process, because, having previously
 been accredited, their accreditation became a property right," protected by the due process clause. We find this
contention untenable.

- A profession, trade or calling is a property right within the meaning of our constitutional guarantees. One cannot be
deprived of the right to work and the right to make a living because these rights are property rights, the arbitrary and
unwarranted deprivation of which normally constitutes an actionable wrong. [12]

- Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade has
always been upheld as a legitimate subject of a valid exercise of the police power by the state particularly
when their conduct affects either the execution of legitimate governmental functions, the preservation of the
State, the public health and welfare and public morals. According to the maxim, sic utere tuo ut alienum non
laedas, it must of course be within the legitimate range of legislative action to define the mode and manner in which
every one may so use his own property so as not to pose injury to himself or others. [13]

- The equal protection clause is directed principally against undue favor and individual or class privilege. It is not
intended to prohibit legislation which is limited to the object to which it is directed or by the territory in which it is to
operate. It does not require absolute equality, but merely that all persons be treated alike under like conditions both
as to privileges conferred and liabilities imposed.[16] We have held, time and again, that the equal protection clause of
the Constitution does not forbid classification for so long as such classification is based on real and substantial
differences having a reasonable relation to the subject of the particular legislation. [17] If classification is germane to
the purpose of the law, concerns all members of the class, and applies equally to present and future conditions, the
classification does not violate the equal protection guarantee.

- WHEREFORE, finding no reversible error in the decision sought to be reviewed, petition is hereby DENIED.

Article 255:

Art. 255. Exclusive bargaining representation and workers’ participation in policy and decision-making. The labor
organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be
the exclusive representative of the employees in such unit for the purpose of collective bargaining. However, an individual
employee or group of employees shall have the right at any time to present grievances to their employer.

Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as
the Secretary of Labor and Employment may promulgate, to participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For
this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the
workers in such labor-management councils shall be elected by at least the majority of all employees in said
establishment. (As amended by Section 22, Republic Act No. 6715, March 21, 1989)

 Philippine Airlines (PAL) vs. NLRC, August 13, 1993

- In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation of a Code of
Discipline among employees is a shared responsibility of the employer and the employees.
- On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of Discipline. The Code was
circulated among the employees and was immediately implemented, and some employees were forthwith subjected
to the disciplinary measures embodied therein.
- Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint before the
National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-7-2051-85) with the following
remarks: "ULP with arbitrary implementation of PAL’s Code of Discipline without notice and prior discussion with
Union by Management" (Rollo, p. 41).
- PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescribe rules and
regulations regarding employees’ conduct in carrying out their duties and functions, and alleging that by
implementing the Code, it had not violated the collective bargaining agreement (CBA) or any provision of the Labor
Code.
- Labor Arbiter, on November 7, 1986, a decision was rendered finding no bad faith on the part of PAL in adopting the
Code and ruling that no unfair labor practice had been committed. However, the arbiter held that PAL was "not totally
fault free" considering that while the issuance of rules and regulations governing the conduct of employees is a
"legitimate management prerogative" such rules and regulations must meet the test of "reasonableness, propriety
and fairness."
- The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated." Noting that PAL’s
assertion that it had furnished all its employees copies of the Code is unsupported by documentary evidence, she
 stated that such "failure" on the part of PAL resulted in the imposition of penalties on employees who thought all the
while that the 1966 Code was still being followed.
- PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with Presiding
Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no evidence of unfair labor practice
committed by PAL and affirmed the dismissal of PALEA’s charge.
- As stated above, the principal issue submitted for resolution in the instant petition is whether management may be
compelled to share with the union or its employees its prerogative of formulating a code of discipline.
- PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the sharing of
responsibility therefor between employer and employee.
- Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211 of the
Labor Code, that the law explicitly considered it a State policy" (t)o ensure the participation of workers in
decision and policy-making processes affecting their rights, duties and welfare." However, even in the
absence of said clear provision of law, the exercise of management prerogatives was never considered boundless.
Thus, in Cruz v. Medina (177 SCRA 565 [1989]), it was held that management’s prerogatives must be without
abuse of discretion.
- In San Miguel Brewery Sales Force Union (PTGWO) v. Ople (170 SCRA 25 [1989], we upheld the company’s
right to implement a new system of distributing its products, but gave the following caveat:
So long as a company’s management prerogatives are exercised in good faith for the advancement of
the employer’s interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold them. (at p. 28.)

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is
circumscribed by limitations found in law, a collective bargaining agreement, or the general
principles of fair play and justice (University of Sto. Tomas v. NLRC, 190 SCRA 758 [1990]). Moreover,
as enunciated in Abbott Laboratories (Phil.), Inc. v. NLRC (154 SCRA 713 [1987]), it must be duly
established that the prerogative being invoked is clearly a managerial one.

- Verily, a line must be drawn between management prerogatives regarding business operations per se and those
which affect the rights of the employees. In treating the latter, management should see to it that its employees
are at least properly informed of its decisions or modes of action. PAL asserts that all its employees have been
furnished copies of the Code. Public respondents found to the contrary, which finding, to say the least is entitled to
great respect.
- The exercise by management of its prerogative shall be done in a just, reasonable, humane and/or lawful
manner.
- WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED.

Constitutional Mandates:
 Gandara Mill Supply vs. NLRC 300 SCRA 702

- Petition assailing the resolution of the NLRC.

- Milagros Sy, owner of Gandara Mill Supply, at No. 708 Gandara St., Binondo, Manila, was the respondent in NLRC
Case No. 02-01653-94 instituted by Silvestre Germano (now the private respondent).

- On February 6, 1995, the private respondent, without notifying his employer, Milagros Sy, did not report for
work until February 11, 1995. Like any expectant father, he chose to be near his wife who was then about to
deliver. The wife gave birth on February 12, 1995. Upon private respondents request, Milagros Sy extended some
financial assistance to the Germano couple.

- The petition avers inter alia that Gandara Mill Supply is a small business enterprise with only
two (2) employees, including the herein private respondent, to do manual work. With inadequate manpower,
the absence of just one worker can spell untold difficulties in its operations. Matters became even worse when
private respondent, without informing his employer, was absent for a long time, so much so that the former incurred
the ire of the latter. Two (2) weeks after, private respondent returned to duty, and to his surprise, he was met by his
employer to personally tell him that someone had been hired to take his place. He was advised, however, that he
was to be re-admitted in June 1996.

- On February 27, 1995, a case of illegal dismissal was commenced by the private respondent with the
Department of Labor and Employment.
- Labor Arbiter directed the parties to submit their position papers. Petitioner, however, despite final notice, failed to
comply which was deemed to be a waiver of right to be heard. Labor Arbiter made a decision ordering Gandara to
pay to Germano P 65,685.90, representing separation pay, backwages, SLIP, and attorneys fees.

- On March 4, 1996, petitioner appealed said decision to the NLRC. To the appeal, an Opposition was interposed
on March 15, 1996.

- On May 22, 1996, the NLRC dismissed petitioners appeal for failure to post a cash or surety bond.

- The issues posited for resolution :

 FIRST, did the public respondent act with grave abuse of discretion in dismissing petitioners
appeal and in not giving petitioner a chance to prove that the private respondent was not illegally
dismissed but was merely suspended for abandoning his job?; and

 SECOND, did the public respondent act with grave abuse of discretion in awarding to the private
respondent the amount of SIXTY-FIVE THOUSAND SIX HUNDRED EIGHTY-FIVE AND
90/00 (P65,685.90), which amount petitioner assails as excessive?

- To be sure, the petitioner was afforded a chance to show that the private respondent was not illegally
dismissed. Unfortunately, petitioner failed to discharge its burden of proof.

- After a careful study, and a thorough examination of the pleadings and supporting documents, it appears decisively
clear that private respondent Silvestre Germano was illegally dismissed. While a prolonged absence without
leave may constitute as a just cause of dismissal, its illegality stems from the non-observance of due process.
Applying the WenPhil Doctrine by analogy, where dismissal was not preceded by the twin requirement of
notice and hearing, the legality of the dismissal in question, is under heavy clouds and therefore
illegal. While it cannot be deduced unerringly from the records on hand that private respondent was really
dismissed, there is no clear indication that the latter was to be reinstated. In fact, since the inception of the case,
what petitioner merely endeavored was to compromise for a measly sum of P5,000.00, and no mention of taking
respondent back to his job was ever offered as part of the deal to end the controversy. What can be surmised from
petitioners offer to re-admit the private respondent, was nothing but a polite gesture couched in words intended to
make the impact of his so-called suspension less severe. Invoking the plight of a working man, where no work, no
pay is the rule of thumb, the court cannot sanction an over extended suspension. The Labor Code explicitly provides,
that :

 No preventive suspension shall last longer than thirty (30) days. The employer shall
thereafter reinstate the worker to his former or substantially equivalent position or the employer
may extend the period of suspension provided that during the period of extension, he pays the
wages and other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides
after completion of the hearing to dismiss the worker.[5]

- In this case, the supposed suspension was expected to last for more than the period allowed by law, thus
making the suspension constitutive of an illegal dismissal. Therefore, the Labor Arbiters contention is
upheld by the Court.

- Granting arguendo that private respondents absence engendered undue difficulty to the smooth operations of
petitioners business, considering the predicament of respondent Silvestre Germano, his dismissal is unwarranted. In
holding the constitutional mandate of protection to labor, the rigid rules of procedure may sometimes be
dispensed with to give room for compassion. The doctrine of compassionate justice is applicable under the
premises, private respondent being the breadwinner of his family. The Social Justice policy mandates a
compassionate attitude toward the working class in its relation to management. In calling for the protection
to labor, the Constitution does not condone wrongdoing by the employee, it nevertheless urges a
moderation of the sanctions that may be applied to him in the light of the many disadvantages that weigh
heavily on him like an albatross on his neck.[6]

- WHEREFORE, the Petition for Certiorari under consideration is hereby DISMISSED on the grounds, that : (1)
It was filed out of time; (2) It is devoid of merit; and (3) it was interposed for purposes of delay.

Accordingly, the NLRC Resolution of July 23, 1996 is AFFIRMED in toto; the writ of execution issued on
September 13, 1996 upheld; and petitioners prayer for a restraining order DENIED.
 Marcoper Mining Corp. vs. NLRC G.R. No. 103525 March 29, 1996

- The case at bench provides yet another example of harmonizing and balancing the right of labor to its just share in
the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and
growth.[1]

- On 23 August 1984, Marcopper Mining Corporation, a corporation duly organized and existing under the laws of the
Philippines, engaged in the business of mineral prospecting, exploration and extraction, and private respondent
NAMAWU-MIF, a labor federation duly organized and registered with the Department of Labor and Employment
(DOLE), to which the Marcopper Employees Union (the exclusive bargaining agent of all rank-and-file workers of
petitioner) is affiliated, entered into a Collective Bargaining Agreement (CBA) effective from 1 May 1984 until
30 April 1987.

- Sec. 1, Art. V of the said Collective Bargaining Agreement provides:

- Section 1. The COMPANY agrees to grant general wage increase to all employees within the bargaining unit as
follows:
Effectivity Increase per day on the Basic Wage
May 1,1985 5%
May 1,1986 5%
- It is expressly understood that this wage increase shall be exclusive of any increase in the minimum wage
and/or mandatory living allowance that may be promulgated during the life of this Agreement.[2]

- Prior to the expiration of the aforestated Agreement, on 25 July 1986, petitioner and private respondent executed a
Memorandum of Agreement (MOA) wherein the terms of the CBA, specifically on matters of wage increase
and facilities allowance, were modified as follows:

- 1. The COMPANY hereby grants a wage increase of 10% of the basic rate to all employees and workers
within the bargaining units (sic) as follows:
 (a) 5% effective May 1,1986.
This will mean that the members of the bargaining unit will get an effective increase of 10%
from May 1, 1986.
 (b) 5% effective May 1,1987.
- 2. The COMPANY hereby grants an increase of the facilities allowance from P50.00 to P100.00 per month
effective May 1, 1986.[3]
- In compliance with the amended CBA, petitioner implemented the initial 5% wage increase due on 1 May 1986.[4]

- On 1 June 1987, Executive Order (E.O.) No. 178 was promulgated mandating the integration of the cost of
living allowance under Wage Orders Nos. 1, 2, 3, 5 and 6 into the basic wage of workers, its effectivity
retroactive to 1 May 1987.[5] Consequently, effective on 1 May 1987, the basic wage rate of petitioners laborers
categorized as non-agricultural workers was increased by P9.00 per day.[6]

- Petitioner implemented the second five percent (5%) wage increase due on 1 May 1987 and thereafter added
the integrated COLA.[7]

- Private respondent, however, assailed the manner in which the second wage increase was effected. It
argued that the COLA should first be integrated into the basic wage before the 5% wage increase is
computed.[8]

- Consequently, on 15 December 1988, the union filed a complaint for underpayment of wages before the
Regional Arbitration Branch IV, Quezon City.

- On 24 July 1989, the Labor Arbiter promulgated a decision in favor of the union.

- Petitioner appealed the Labor Arbiters decision and on 18 November 1991 the NLRC rendered its decision
sustaining the Labor Arbiters ruling.

- Stripped of the non-essentials, the question for our resolution is what should be the basis for the computation of
the CBA increase, the basic wage without the COLA or the so-called integrated basic wage which, by
mandate of E.O. No. 178, includes the COLA.

- It is petitioners contention that the basic wage referred to in the CBA pertains to the unintegrated basic
wage. Petitioner maintains that the rules on interpretation of contracts, particularly Art. 1371 of the New Civil Code
which states that:
 Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts
shall be principally considered.
should govern.

- We rule for the respondents.

- The principle that the CBA is the law between the contracting parties stands strong and true. [17] However, the present
controversy involves not merely an interpretation of CBA provisions. More importantly, it requires a determination
of the effect of an executive order on the terms and the conditions of the CBA. This is, and should be, the
focus of the instant case.

- Integration of monetary benefits into the basic pay of workers is not a new method of increasing the minimum
wage.[18] But even so, we are still guided by our ruling in Davao Integrated Port Stevedoring Services v.
Abarquez,[19] which we herein reiterate:

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

- Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that when the pendulum
of judgment swings to and fro and the forces are equal on both sides, the same must be stilled in favor of labor.
While petitioner acknowledges that all doubts in the interpretation of the Labor Code shall be resolved in favor of
labor,[20] it insists that what is involved-here is the amended CBA which is essentially a contract between private
persons. What petitioner has lost sight of is the avowed policy of the State, enshrined in our Constitution, to accord
utmost protection and justice to labor, a policy, we are, likewise, sworn to uphold.

- In Philippine Telegraph & Telephone Corporation v. NLRC,[21] we categorically stated that:

When conflicting interests of labor and capital are to be weighed on the scales of social justice, the
heavier influence of the latter should be counter-balanced by sympathy and compassion the law
must accord the underprivileged worker.

- Likewise, in Terminal Facilities and Services Corporation v. NLRC,[22] we declared:

Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social
justice policy.

- The purpose of E.O. No. 178 is to improve the lot of the workers covered by the said statute. We are bound to
ensure its fruition.

- WHEREFORE, premises considered, the petition is hereby DISMISSED.

 NFSW vs. Ovejera GR L-59743 May 31, 1982

- This is a petition for prohibition seeking to annul the decision dated February 20, 1982 of Labor Arbiter Ethelwoldo R.
Ovejera of the National Labor Relations Commission (NLRC) which, among others, declared illegal the ongoing
strike of the National Federation of Sugar Workers (NFSW) at the Central Azucarera de la Carlota (CAC), and
to restrain the implementation thereof.
- FACTS:
1. NFSW has been the bargaining agent of CAC rank and file employees (about 1200 of more than 2000
personnel) and has concluded with CAC a collective bargaining agreement effective February 16, 1981 —
February 15, 1984. Under Art. VII, Sec. 5 of the said CBA —
Bonuses — The parties also agree to maintain the present practice on the grant of Christmas bonus,
milling bonus, and amelioration bonus to the extent as the latter is required by law.
The Christmas and milling bonuses amount to 1-½ months' salary.
2. On November 28, 1981, NFSW struck allegedly to compel the payment of the 13th month pay under PD
851, in addition to the Christmas, milling and amelioration bonuses being enjoyed by CAC workers.
 3. To settle the strike, a compromise agreement was concluded between CAC and NFSW on November
30,1981. Under paragraph 4 thereof —
The parties agree to abide by the final decision of the Supreme Court in any case involving the
13th Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay
separate and distinct from the bonuses already given.
4. Petition for certiorari and Prohibition) was still pending in the Supreme Court. The Petition had been
dismissed on June 11, 1981 on the vote of seven Justices. 1
5. After the Marcopper decision had become final, NFSW renewed its demand that CAC give the 13th
month pay. CAC refused.
6. On January 22, 1982, NFSW filed with the Ministry of Labor and Employment (MOLE) Regional Office in
Bacolod City a notice to strike based on non-payment of the 13th month pay. Six days after, NFSW struck.

- Labor Arbiter declared the strike to be illegal.

- ISSUES:
 1. Whether the strike declared by NFSW is illegal, the resolution of which mainly depends on the
mandatory or directory character of the cooling-off period and the 7-day strike ban after report to
MOLE of the result of a strike-vote, as prescribed in the Labor Code.
 2. Whether under Presidential Decree 851 (13th Month Pay Law), CAC is obliged to give its
workers a 13th month salary in addition to Christmas, milling and amelioration bonuses,
the aggregate of which admittedly exceeds by far the disputed 13th month pay. (See
petitioner's memorandum of April 12, 1982, p. 2; CAC memorandum of April 2, 1982, pp. 3-4.)
Resolution of this issue requires an examination of the thrusts and application of PD 851.
- RULING:

(2) The Second Issue. — At bottom, the NFSW strike arose from a dispute on the meaning and application of PD
851, with NFSW claiming entitlement to a 13th month pay on top of bonuses given by CAC to its workers, as against
the diametrically opposite stance of CAC. Since the strike was just an offshoot of the said dispute, a simple decision
on the legality or illegality of the strike would not spell the end of the NFSW-CAC labor dispute. And considering
further that there are other disputes and strikes — actual and impending — involving the interpretation and
application of PD 851, it is important for this Court to definitively resolve the problem: whether under PD 851, CAC
is obliged to give its workers a 13th month salary in addition to Christmas, milling and amelioration bonuses
stipulated in a collective bargaining agreement amounting to more than a month's pay.

- Keenly sensitive to the needs of the workingmen, yet mindful of the mounting production cost that are the woe of
capital which provides employment to labor, President Ferdinand E. Marcos issued Presidential Decree No. 851 on
16 December 1975. Thereunder, "all employers are hereby required to pay salary of not more than all their
employees receiving a basic P1,000 a month, regardless of the nature of their employment, a 13th month pay
not later than December 24 of every year." Exempted from the obligation however are:

Employers already paying their employees a 13th month pay or its equivalent ... (Section 2.)

- The evident intention of the law, as revealed by the law itself, was to grant an additional income in the form of a
13th month pay to employees not already receiving the same. Otherwise put, the intention was to grant some
relief — not to all workers — but only to the unfortunate ones not actually paid a 13th month salary or what amounts
to it, by whatever name called; but it was not envisioned that a double burden would be imposed on the employer
already paying his employees a 13th month pay or its equivalent — whether out of pure generosity or on the basis of
a binding agreement and, in the latter ease, regardless of the conditional character of the grant (such as making the
payment dependent on profit), so long as there is actual payment. Otherwise, what was conceived to be a 13th
month salary would in effect become a 14th or possibly 15th month pay.
- This view is justified by the law itself which makes no distinction in the grant of exemption: "Employers already
paying their employees a 13th month pay or its equivalent are not covered by this Decree." (P.D. 851.)
- Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual bonuses for the
purpose of determining liability for the 13th month pay. To require employers (already giving their employees a
13th month salary or its equivalent) to give a second 13th month pay would be unfair and productive of
undesirable results. To the employer who had acceded and is already bound to give bonuses to his
employees, the additional burden of a 13th month pay would amount to a penalty for his munificence or
liberality. The probable reaction of one so circumstance would be to withdraw the bonuses or resist further voluntary
grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given
due credit; and this negative attitude would have an adverse impact on the employees.
 - In the case at bar, the NFSW-CAC collective bargaining agreement provides for the grant to CAC workers of
Christmas bonus, milling bonus and amelioration bonus, the aggregate of which is very much more than a worker's
monthly pay. When a dispute arose last year as to whether CAC workers receiving the stipulated bonuses
would additionally be entitled to a 13th month pay, NFSW and CAC concluded a compromise agreement by which
they —

agree(d) to abide by the final decision of the Supreme Court in any case involving the 13th Month Pay Law
if it is clearly held that the employer is liable to pay a 13th month pay separate and distinct from the
bonuses already given.

- The Marcopper decision is therefore a Court decision but without the necessary eight votes to be doctrinal. This
being so, it cannot be said that the Marcopper decision "clearly held" that "the employer is liable to pay a 13th
month pay separate and distinct from the bonuses already given," within the meaning of the NFSW-CAC
compromise agreement. At any rate, in view of the rulings made herein, NFSW cannot insist on its claim that its
members are entitled to a 13th month pay in addition to the bonuses already paid by CAC.
- WHEREFORE, the petition is dismissed for lack of merit.

 Sarocam vs. Interrorient Maritime Ent., G.R. No. 167813 June 27, 2006

- Petition for review for the CA’s decision to affirm the NLRC’s decision.
- On June 27, 2000 petitioner Benjamin L. Sarocam was hired by Interorient Maritime Ent., Inc. and Demaco
United Ltd., for a twelve-month contract as 'bosun on board M/V Despina. His basic monthly salary was
US$450.00 on a 48-hour work week, with a fixed overtime pay of US$180.00 per month for 105 hours,
supplementary wage of US$70.00, and vacation leave with pay of 2.5 days. 4
- While the vessel was navigating to China, petitioner suffered lumbar sprain when he accidentally fell from a
ladder.5On November 15, 2000, he was examined and found to have neuromyositis with the waist and diabetes. The
examining physician prescribed medicine and recommended the signing off and hospitalization of petitioner. 6 His
employers agreed to repatriate him on November 30, 2000.
- On December 5, 2000, petitioner was referred to the company-designated physician, Dr. Teodoro F. Pidlaoan,
Medical Director of the Our Lady of Fatima Medical Clinic.
- Petitioner was given Alaxan tablet for his back pain and Euglocon for his elevated blood sugar. He was also advised
to return for follow-up evaluation. On December 13, 2000, he returned to the clinic with no more complaints of back
pains. His sugar examination likewise revealed normal results. Petitioner was then declared 'fit for duty effective
on that day.7
- On March 20, 2001, or barely three months from being pronounced fit to work, petitioner executed a release and
quitclaim8 in favor of his employers where he acknowledged the receipt of US$405.00 as his sickwages and
freed his employers from further liability.
- However, on November 27, 2001, petitioner filed a complaint with the labor arbitration branch of the NLRC for
disability benefit, illness allowance/reimbursement of medical expenses, damages and attorney's fees.9
- On July 11, 2003, Labor Arbiter Antonio R. Macam rendered a Decision 13 dismissing the complaint, holding
that petitioner was not entitled to disability benefits because he was declared 'fit for duty. The Labor Arbiter
noted that petitioner had previously executed a release and quitclaim in favor of his employers and already received
his sickness allowance. Thus, he could not claim for reimbursement for medical expenses due to lack of pertinent
substantiation. Petitioner's claim for moral damages and attorney's fees were, likewise, not awarded on the Labor
Arbiter's ruling that there was no evidence of bad faith and malice on the part of the employers.
- Petitioner appealed the Decision15 to the NLRC onJuly 31, 2003 which issued its Resolution16 dated February
19, 2004, affirming the decision of the Labor Arbiter, with the modification that petitioner was entitled to
US$1,350.00 or its peso equivalent, representing his salary for three (3) months. The NLRC ruled that petitioner
should have been reinstated by respondents considering that when the former was declared 'fit for duty, his
employment contract had not yet expired. Thus, respondents were liable for his salary corresponding to the
unexpired portion of the employment contract or three months' salary for every year of the unexpired term
whichever is less, pursuant to Section 10 of Republic Act No. 8042.
- Petitioner filed a Motion for Reconsideration which the NLRC denied on April 27, 2004. 18 He forthwith filed a Petition
for Certiorari19 with the CA, assailing the ruling of the labor tribunal.
- On January 25, 2005, the CA rendered judgment dismissing the petition.
- Petitioner thus filed the instant petition, raising the following issues:
 IN LIGHT OF THE DECISION OF THIS HONORABLE COURT IN 'GERMAN MARINE
AGENCIES, INC. VS. NLRC, ET AL., 350 SCRA 629, CAN THE RESPONDENTS' COMPANY-
DESIGNATED DOCTOR BE CONSIDERED COMPETENT AND RELIABLE ENOUGH TO
 DECLARE PETITIONER AS FIT TO WORK CONTRARY TO THE DECLARATIONS OF THREE
(3) INDEPENDENT PHYSICIANS SIMILARLY FINDING HIM OTHERWISE?
 DOES THE EXECUTION BY PETITIONER OF A RELEASE AND QUITCLAIM ESTOP HIM
FROM CLAIMING DISABILITY BENEFITS UNDER THE POEA STANDARD EMPLOYMENT
CONTRACT?22
- The Court's Ruling:
- Prescinding from the foregoing, the Court finds and so rules that under the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessel or the POEA Standard Employment
Contract issued pursuant to DOLE Department Order No. 4, and POEA Memorandum Circular No. 9, both Series of
2000, petitioner is not entitled to disability benefits. Section 20-B, paragraph 2 of the POEA Standard Employment
Contract provides:
SECTION 20. COMPENSATION AND BENEFITS
xxxx
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his
contract are as follows:
xxxx
2. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall be
liable for the full cost of such medical, serious dental, surgical and hospital treatment as well as board and
lodging until the seafarer is declared fit to work or to be repatriated.

However, if after repatriation, the seafarer still requires medical attention arising from said injury or
illness, he shall be so provided at cost to the employer until such time he is declared fit or the degree of
his disability has been established by the company-designated physician.

- Since he was declared fit for work, petitioner has no more right to claim disability benefits under the
contractual provisions of the POEA Standard Employment Contract.
- Under Section 20-B, paragraph 3 of the said contract, petitioner is obliged to submit himself to a post-
employment medical examination by a company-designated physician within three working days upon his
return, except when he is physically incapacitated to do so, in which case, a written notice to the agency
within the same period is deemed as compliance. Failure to comply with this mandatory reporting
requirement shall result in forfeiture of the right to claim the above benefits. It is likewise provided that if a
doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly
between the employer and the seafarer whose decision shall be final and binding on both parties.
- Petitioner did not question the findings of Dr. Pidlaoan and his recommendation. He questioned the doctor's
competency and the correctness of his findings only when he filed the complaint against respondents before the
Labor Arbiter, roughly 11 months after petitioner was examined by the doctor. Petitioner consulted his personal
doctors only in July and August 2001, long after he had been examined by the company-designated physician.
- Petitioner's invocation of this Court's ruling in German Marine Agencies v. NLRC25 militates against his claim for
disability benefits. As explicitly laid in the said case, it is the company-designated physician who should
determine the degree of disability of the seaman or his fitness to work, thus:
 x x x In order to claim disability benefits under the Standard Employment Contract, it is the
company-designated physician who must proclaim that the seaman suffered a permanent
disability, whether total or partial, due to either injury or illness, during the term of the latter's
employment. x x x It is a cardinal rule in the interpretation of contracts that if the terms of a
contract are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall control. There is no ambiguity in the wording of the Standard
Employment Contract ' the only qualification prescribed for the physician entrusted with the task
of assessing the seaman's disability is that he be company-designated.26
- The only requirement stated in the POEA Standard Employment Contract, as explained in the German Marine case,
is that the doctor be company-designated, and no other. Though it is prudent and advisable to have a doctor
specialized in his field to examine the seafarer's condition ordegree of illness, the contractual provisions of the
parties only require that the doctor be 'company-designated.
- Additionally, petitioner, instead of questioning the assessment of the company-designated doctor, executed a
release and quitclaim in favor of respondents, around three months after the assessment. In executing the said
document, petitioner thus impliedly admitted the correctness of the assessment of the company-designated
physician, and acknowledged that he could no longer claim for disability benefits.
- As a final note, let it be emphasized that the constitutional policy to provide full protection to labor is not meant to be
a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us from
sustaining the employer when it is in the right.34
 - WHEREFORE, premises considered, the petition is hereby DENIED for lack of merit. The Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 84883 are AFFIRMED.

 NS Transport Employees Association (NSTEA) vs. NS Transport Service, Inc. G.R. No. 164049 October 30, 2006

- Petition for review filed by NSTEA assailing the decision of the CA which found grave abuse of discretion on the
part of the National Labor Relations Commission (NLRC).
- In April of 1997, the union filed a petition for certification election for the rank and file employees of NS
Transport Services, Inc. (the company), a public utility transport corporation. [2] The petition was denied by the
Department of Labor and Employment (DOLE), prompting the union to appeal the denial to the DOLE Secretary.
- On 20 May 1997, the Union filed a Notice of Strike before the National Conciliation and Mediation Board
(NCMB), alleging illegal dismissal of its officers and members, as well as discrimination and coercion of
employees. However, despite the mediation conducted by the NCMB, the parties failed to amicably settle their
differences, thus the Union pushed through with its strike.[3]
- The DOLE Secretary, upon the companys petition,[4] assumed jurisdiction over the dispute and issued a Return-to-
Work Order and certified the dispute to the NLRC for compulsory arbitration. Likewise, upon motion of the company,
the DOLE Secretary deputized police authorities to assist in the peaceful and orderly enforcement of the DOLEs
orders.[5]
- Thereafter, the company filed a complaint for declaration of illegality of strike and damages before the NLRC,
alleging that while mediation was in progress, the Union staged a strike, and that during the strike, the Union
members resorted to threats, intimidation and coercion upon their co-employees. They also allegedly blocked the
ingress and egress of the company and caused damage to company property. On the other hand, the Union sought
to hold the company for contempt for allegedly refusing to accept its returning members. The cases were then
consolidated by the NLRC.[6]
- The NLRC held that the strike staged by the Union was legal and ordered the reinstatement of the individual
complainants with full backwages.[11]
- The company sought reconsideration of the resolution, claiming that it was denied due process when they were
not allowed to adduce evidence on the illegality of the strike and the violation of the Return-to-Work
Order. The NLRC dismissed the motion without resolving the companys protest on the lack of notice of the
hearings.[12]
- The Court of Appeals ruled in favor of the company and remanded the case to the NLRC for further proceedings.
- Petitioners now claim that the NLRC did not violate the companys right to due process since its resolutions were
based on the parties respective pleadings and on the records of the case.
- For their part, respondents[21] maintain that the company was deprived of its constitutional right to due process when
the NLRC disallowed it to present its evidence due to the conceived failure to attend the three (3) scheduled
hearings, when in fact the company and its counsel were not notified of the hearings since the NLRC sent the notice
of said hearings to a wrong address.
- Respondents point out that petitioners misled the NLRC in their motion submitting the case for resolution when they
alleged that the company failed to attend the scheduled hearings despite due notice, when in fact the notice was
sent to the wrong address.
- The petition must be denied.
- It is well-settled that the essence of due process in administrative proceedings is the opportunity to explain
ones side or a chance to seek reconsideration of the action or ruling complained of. [26] In labor cases, it has
been held that due process is simply an opportunity to be heard and not that an actual hearing should always
and indispensably be held[27] since a formal type or trial-type hearing is not at all times and in all instances
essential to due process the requirements of which are satisfied where the parties are afforded fair and
reasonable opportunity to explain their side of controversy.[28]
- Indeed, a formal hearing is not necessary in labor cases. However, when such a formal hearing is allowed
but a party is not informed thereof, as a consequence of which he is unable to attend the same, such failure
to attend should not be taken against him. As the labor arbiter allowed the holding of a formal hearing, he must
accord the parties the opportunity to participate therein and allow the formal hearing to proceed its natural course, if
due process and the elements of fair play are to be observed.
- In the instant case, the labor arbiter has granted his imprimatur on the holding of a formal hearing, as agreed upon
by the parties.[32] In fact, the hearing has commenced and petitioners were given the opportunity to present their
side. However, the company was not given the chance to exercise the same privilege, since the case was submitted
for decision even before it was able to adduce its evidence during the formal hearing. Worse, the labor arbiter did not
even deign to address the issues posed by the company in its opposition to submit the case for resolution,
particularly the claim that it was not notified of the 14, 21, and 28 June 2001 hearings. While the labor arbiter has the
discretion to conduct a formal hearing, such discretion does not permit him to arbitrarily allow and/or prevent a party
from presenting its case once the formal hearing has commenced.
 - The companys failure to appear in the 14, 21, and 28 June 2001 hearings are not the only instances when it did not
attend the proceedings before the NLRC. Indeed, the records are replete with constancias showing and noting such
absences. However, the company is not the only one guilty of absences. As observed by the Court of Appeals,
petitioners equally contributed to the delay in the resolution of the consolidated cases.
- The law, in protecting the rights of the employee, authorizes neither oppression nor self-destruction of the
employer.[33] Contrary to petitioners claim, remand of the case to the NLRC is proper since the company has yet to
present its evidence during the formal hearing. It is true that both parties have been provided the opportunity to prove
their cases through the pleadings submitted before the NLRC; however, only petitioners were given the chance to
present its side in the formal hearing.
- Until both parties are able to adduce their respective evidence in a formal hearing, no resolution of the issues
concerning the legality of the Unions strike or the allegations of unfair labor practices can be safely arrived at. The
resulting delay, if any, in the disposition of the cases a quo due to the remand to the NLRC is regrettable to say the
least.
- WHEREFORE, the petition is DENIED and the Decision dated 30 July 2003 of the Court of Appeals in CA-G.R.
Sp No. 75155 is AFFIRMED.

Due Process:
 Serrano vs. NLRC ( G.R. No. 117040, January 27, 2000

- Petition for review of the National Labor Relations Commission (NLRC) which reversed the decision of the Labor
Arbiter and dismissed petitioner Ruben Serranos complaint for illegal dismissal and denied his motion for
reconsideration.
- Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend shoplifters
and prevent pilferage of merchandise.[1] Initially hired on October 4, 1984 on contractual basis, petitioner eventually
became a regular employee on April 4, 1985. In 1988, he became head of the Security Checkers Section of
private respondent.[2]
- Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security section and
engage the services of an independent security agency. For this reason, it wrote petitioner the following
memorandum:[3]
- The loss of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal dismissal, illegal
layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and overtime pay.[4]
- Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision finding petitioner to
have been illegally dismissed.
- Private respondent appealed to the NLRC which, in its resolution of March 30, 1994, reversed the decision of
the Labor Arbiter and ordered petitioner to be given separation pay equivalent to one month pay for every
year of service, unpaid salary, and proportionate 13th month pay. Petitioner filed a motion for reconsideration,
but his motion was denied.
- Hence this petition. Petitioner raises the following issue:
 IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE
RESPONDENT TO REPLACE ITS CURRENT SECURITY SECTION A VALID GROUND FOR
THE DISMISSAL OF THE EMPLOYEES CLASSED UNDER THE LATTER?[7]
- Petitioner contends that abolition of private respondents Security Checkers Section and the employment of an
independent security agency do not fall under any of the authorized causes for dismissal under Art. 283 of the Labor
Code.
- Petitioners contention has no merit. Art. 283 provides:

Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operations of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Department of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to
at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations
of establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
as one (1) whole year.
- In De Ocampo v. National Labor Relations Commission,[8] this Court upheld the termination of employment of
three mechanics in a transportation company and their replacement by a company rendering maintenance and repair
services. It held:
 In contracting the services of Gemac Machineries, as part of the companys cost-saving program,
the services rendered by the mechanics became redundant and superfluous, and therefore
properly terminable. The company merely exercised its business judgment or management
prerogative. And in the absence of any proof that the management abused its discretion or acted
in a malicious or arbitrary manner, the court will not interfere with the exercise of such
prerogative.[9]
- In Asian Alcohol Corporation v. National Labor Relations Commission,[10] the Court likewise upheld the
termination of employment of water pump tenders and their replacement by independent contractors. It ruled that an
employer’s good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the
services of an independent contractor to replace the services of the terminated employees to promote economy and
efficiency.
- Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the faculty of
promoting efficiency and attaining economy by a study of what units are essential for its operation. To it
belongs the ultimate determination of whether services should be performed by its personnel or contracted
to outside agencies . . . [While there] should be mutual consultation, eventually deference is to be paid to what
management decides."[11] Consequently, absent proof that management acted in a malicious or arbitrary manner, the
Court will not interfere with the exercise of judgment by an employer. [12]
- In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private
respondents real purpose was to avoid payment to the security checkers of the wage increases provided in the
collective bargaining agreement approved in 1990.[13] Such an assertion is not a sufficient basis for concluding
that the termination of petitioners employment was not a bona fide decision of management to obtain
reasonable return from its investment, which is a right guaranteed to employers under the
Constitution.[14] Indeed, that the phase-out of the security section constituted a "legitimate business decision" is a
factual finding of an administrative agency which must be accorded respect and even finality by this Court since
nothing can be found in the record which fairly detracts from such finding.[15]
- Accordingly, we hold that the termination of petitioners services was for an authorized
cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation
pay at the rate of one month pay for every year of service.
- Art. 283 also provides that to terminate the employment of an employee for any of the authorized causes the
employer must serve "a written notice on the workers and the Department of Labor and Employment at least
one (1) month before the intended date thereof." In the case at bar, petitioner was given a notice of termination
on October 11, 1991. On the same day, his services were terminated. He was thus denied his right to be given
written notice before the termination of his employment, and the question is the appropriate sanction for the
violation of petitioners right.
- As this Court said: "It is now settled that where the dismissal of one employee is in fact for a just and valid
cause and is so proven to be but he is not accorded his right to due process, i.e., he was not furnished the
twin requirements of notice and opportunity to be heard, the dismissal shall be upheld but the employer
must be sanctioned for non-compliance with the requirements of, or for failure to observe, due process."[19]
- The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a just
cause or the termination of employment is for an authorized cause, the dismissal or termination is illegal if
effected without notice to the employee. The shift in doctrine took place in 1989 in Wenphil Corp. v. NLRC.[20] In
announcing the change, this Court said:[21]
 The Court holds that the policy of ordering the reinstatement to the service of an employee
without loss of seniority and the payment of his wages during the period of his separation until
his actual reinstatement but not exceeding three (3) years without qualification or deduction,
when it appears he was not afforded due process, although his dismissal was found to be for
just and authorized cause in an appropriate proceeding in the Ministry of Labor and
Employment, should be re-examined. It will be highly prejudicial to the interests of the employer
to impose on him the services of an employee who has been shown to be guilty of the charges
that warranted his dismissal from employment. Indeed, it will demoralize the rank and file if the
undeserving, if not undesirable, remains in the service.

....

 However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as
above discussed. The dismissal of an employee must be for just or authorized cause and after
 due process. Petitioner committed an infraction of the second requirement. Thus, it must be
imposed a sanction for its failure to give a formal notice and conduct an investigation as required
by law before dismissing petitioner from employment. Considering the circumstances of this
case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of
this award depends on the facts of each case and the gravity of the omission committed by the
employer.
- We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the sanction of fine
for an employer’s disregard of the notice requirement. We do not agree, however, that disregard of this
requirement by an employer renders the dismissal or termination of employment null and void. Such a stance
is actually a reversion to the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid
backwages when it is shown that he has not been given notice and hearing although his dismissal or layoff is later
found to be for a just or authorized cause. Such rule was abandoned in Wenphil because it is really unjust to
require an employer to keep in his service one who is guilty, for example, of an attempt on the life of the
employer or the latters family, or when the employer is precisely retrenching in order to prevent losses.
- The need is for a rule which, while recognizing the employees right to notice before he is dismissed or laid off, at the
same time acknowledges the right of the employer to dismiss for any of the just causes enumerated in Art. 282 or to
terminate employment for any of the authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a
fine on an employer who is found to have dismissed an employee for cause without prior notice is deemed ineffective
in deterring employer violations of the notice requirement, the remedy is not to declare the dismissal void if there are
just or valid grounds for such dismissal or if the termination is for an authorized cause. That would be to uphold the
right of the employee but deny the right of the employer to dismiss for cause. Rather, the remedy is to order the
payment to the employee of full backwages from the time of his dismissal until the court finds that the
dismissal was for a just cause. But, otherwise, his dismissal must be upheld and he should not be
reinstated. This is because his dismissal is ineffectual.
- Justice Puno argues that an employer’s failure to comply with the notice requirement constitutes a denial of the
employees right to due process.
- Violation of Notice Requirement Not a Denial of Due Process
 The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due
process by the State, which is not the case here. There are three reasons why, on the other
hand, violation by the employer of the notice requirement cannot be considered a denial
of due process resulting in the nullity of the employees dismissal or layoff.
 The first is that the Due Process Clause of the Constitution is a limitation on governmental
powers. It does not apply to the exercise of private power, such as the termination of
employment under the Labor Code. This is plain from the text of Art. III, 1 of the
Constitution, viz.: "No person shall be deprived of life, liberty, or property without due process of
law. . . ." The reason is simple: Only the State has authority to take the life, liberty, or property of
the individual. The purpose of the Due Process Clause is to ensure that the exercise of this
power is consistent with what are considered civilized methods.
 The second reason is that notice and hearing are required under the Due Process Clause
before the power of organized society are brought to bear upon the individual. This is
obviously not the case of termination of employment under Art. 283. Here the employee is not
faced with an aspect of the adversary system. The purpose for requiring a 30-day written notice
before an employee is laid off is not to afford him an opportunity to be heard on any charge
against him, for there is none. The purpose rather is to give him time to prepare for the eventual
loss of his job and the DOLE an opportunity to determine whether economic causes do exist
justifying the termination of his employment.
 Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and
hearing is not to comply with Due Process Clause of the Constitution. The time for notice
and hearing is at the trial stage. Then that is the time we speak of notice and hearing as the
essence of procedural due process. Thus, compliance by the employer with the notice
requirement before he dismisses an employee does not foreclose the right of the latter to
question the legality of his dismissal. As Art. 277(b) provides, "Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity or legality of
his dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission."
 The third reason why the notice requirement under Art. 283 cannot be considered a
requirement of the Due Process Clause is that the employer cannot really be expected to be
entirely an impartial judge of his own cause. This is also the case in termination of
employment for a just cause under Art. 282 (i.e., serious misconduct or willful disobedience by
the employee of the lawful orders of the employer, gross and habitual neglect of duties, fraud or
 willful breach of trust of the employer, commission of crime against the employer or the latters
immediate family or duly authorized representatives, or other analogous cases).
- Lack of Notice Only Makes Termination Ineffectual
 We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employers failure
to comply with the notice requirement does not constitute a denial of due process but a
mere failure to observe a procedure for the termination of employment which makes the
termination of employment merely ineffectual.
 Indeed, under the Labor Code, only the absence of a just cause for the termination of
employment can make the dismissal of an employee illegal.
 Thus, only if the termination of employment is not for any of the causes provided by law is it
illegal and, therefore, the employee should be reinstated and paid backwages.
 Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice
is the payment of backwages for the period when the employee is considered not to have been
effectively dismissed or his employment terminated. The sanction is not the payment alone of
nominal damages as Justice Vitug contends.
- Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal
 In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the
termination of employment was due to an authorized cause, then the employee
concerned should NOT be ordered reinstated even though there is failure to comply with
the 30-day notice requirement. Instead, he must be granted separation pay in accordance
with Art. 283.
 If the employee’s separation is without cause, instead of being given separation pay, he should
be reinstated. In either case, whether he is reinstated or only granted separation pay, he should
be paid full backwages if he has been laid off without written notice at least 30 days in advance.
- On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was
dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he
should not be reinstated. However, he must be paid backwages from the time his employment was terminated
until it is determined that the termination of employment is for a just cause because the failure to hear him
before he is dismissed renders the termination of his employment without legal effect.
- WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is
MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation pay equivalent
to one (1) month pay for every year of service, his unpaid salary, and his proportionate 13th month pay and, in
addition, full backwages from the time his employment was terminated on October 11, 1991 up to the time the
decision herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for computation of the
separation pay, backwages, and other monetary awards to petitioner.

 Agabon vs. NLRC (G.R. No. 158693, November 17, 2004

- Petition for review seeking to reverse the decision of the CA, modifying the decision of the NLRC.
- Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental
and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 1992[2] until February 23, 1999 when they were dismissed for abandonment of work.
- Petitioners then filed a complaint for illegal dismissal and payment of money claims [3] and on December 28, 1999, the
Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the
monetary claims.
- On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work,
and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were
also denied for lack of evidence.[5]
- Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals.
- The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had
abandoned their employment but ordered the payment of money claims.
- Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners dismissal was for a
just cause. They had abandoned their employment and were already working for another employer.
- To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins
the employer to give the employee the opportunity to be heard and to defend himself.[13]
- Article 282 of the Labor Code enumerates the just causes for termination by the employer:
 (a) serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or the latters representative in connection with the employees work;
 (b) gross and habitual neglect by the employee of his duties;
  (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly
authorized representative;
 (d) commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
 (e) other causes analogous to the foregoing.
- Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. [14] It is a
form of neglect of duty, hence, a just cause for termination of employment by the employer.[15] For a valid finding
of abandonment, these two factors should be present:
 (1) the failure to report for work or absence without valid or justifiable reason; and
 (2) a clear intention to sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be deduced that the
employees has no more intention to work. The intent to discontinue the employment must be
shown by clear proof that it was deliberate and unjustified.[16]
- In February 1999, petitioners were frequently absent having subcontracted for an installation work for another
company. Subcontracting for another company clearly showed the intention to sever the employer-employee
relationship with private respondent.
- In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work without
leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have
abandoned his job. We should apply that rule with more reason here where petitioners were absent because they
were already working in another company.
- The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules
Implementing the Labor Code:
- Standards of due process: requirements of notice. In all cases of termination of employment, the
following standards of due process shall be substantially observed:
- I. For termination of employment based on just causes as defined in Article 282 of the Code:
 (a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
 (b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond to
the charge, present his evidence or rebut the evidence presented against him; and
 (c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
- In case of termination, the foregoing notices shall be served on the employees last known
address.
- Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals
based on authorized causes involve grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of separation pay. When the termination of
employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is
no longer possible where the dismissal was unjust, separation pay may be granted.
- Procedurally,
 (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the
employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and
 (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer
must give the employee and the Department of Labor and Employment written notices 30 days
prior to the effectivity of his separation.
- From the foregoing rules four possible situations may be derived:
 (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause
under Article 283, or for health reasons under Article 284, and due process was observed;
 (2) the dismissal is without just or authorized cause but due process was observed;
 (3) the dismissal is without just or authorized cause and there was no due process; and
 (4) the dismissal is for just or authorized cause but due process was not observed.
- In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.
- In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is
entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid
up to the time of actual reinstatement.
- In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not
invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural
requirements of due process.
- The present case squarely falls under the fourth situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work for another company. Private respondent,
however, did not follow the notice requirements and instead argued that sending notices to the last known addresses
would have been useless because they did not reside there anymore. Unfortunately for the private respondent,
this is not a valid excuse because the law mandates the twin notice requirements to the employees last
known address.[21] Thus, it should be held liable for non-compliance with the procedural requirements of due
process.
- The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due
process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the
employee. This became known as the Wenphil or Belated Due Process Rule.
- On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by
the employer of the notice requirement in termination for just or authorized causes was not a denial of due process
that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages from
the time of termination until it is judicially declared that the dismissal was for a just or authorized cause.
- The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving
dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of
the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the
time of dismissal until the time the Court finds the dismissal was for a just or authorized cause.
- This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law.
Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly
dismissed.
- The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to
revisit the doctrine.
- To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on
moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a
civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of
what is fair and right and just.[26] It is a constitutional restraint on the legislative as well as on the executive and
judicial powers of the government provided by the Bill of Rights.
- Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the
valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the
manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of
P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as
amended by Department Order Nos. 9 and 10.[27] Breaches of these due process requirements violate the Labor
Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due
process.
- Constitutional due process protects the individual from the government and assures him of his rights in criminal,
civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules
protects employees from being unjustly terminated without just cause after notice and hearing.
- After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we
believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and
hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was
for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed
in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees,
but to employers as well.
- It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if
the requirements of due process were complied with, would undoubtedly result in a valid dismissal.
- An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice
Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the
eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and economic life, consistent with the fundamental
and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about
the greatest good to the greatest number.[34]
- This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related
cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and
circumstances.
 - Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the
dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of
his statutory rights, as ruled in Reta v. National Labor Relations Commission.[36]
- The violation of the petitioners right to statutory due process by the private respondent warrants the payment of
indemnity in the form of nominal damages.
- We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for petitioners
holiday pay, service incentive leave pay and 13th month pay without deductions.
- As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-
payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to
prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and
other similar documents which will show that overtime, differentials, service incentive leave and other claims of
workers have been paid are not in the possession of the worker but in the custody and absolute control of the
employer.[41]
- In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave pay, it could
have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it
did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the
benefit in the years disputed.[42] Allegations by private respondent that it does not operate during holidays and that it
allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment.
Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners.
- WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January
23, 2003, in CA-G.R. SP No. 63017, finding that petitioners Jenny and Virgilio Agabon abandoned their work, and
ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in
the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the
balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with
the MODIFICATION that private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each of
the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process.

Equal Protection:
 Duncan Association of Detailman-PTGWO vs. Glaxo Welcome Philippines, Inc. (G.R. No. 162994, September 17,
2004)

- Petition involving the validity of the policy of a pharmaceutical company prohibiting its employees from
marrying employees of any competitor company.

- Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as medical
representative on October 24, 1995, after Tecson had undergone training and orientation.

- The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management
of any existing or future relationship by consanguinity or affinity with co-employees or employees of
competing drug companies. If management perceives a conflict of interest or a potential conflict between such
relationship and the employees employment with the company, the management and the employee will explore the
possibility of a transfer to another department in a non-counterchecking position or preparation for employment
outside the company after six months.

- Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals[3] (Astra), a competitor of Glaxo.

- Even before they got married, Tecson received several reminders from his District Manager regarding the conflict of
interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in
September 1998.

- In August 1999, Tecson again requested for more time resolve the problem. In September 1999, Tecson applied for
a transfer in Glaxos milk division, thinking that since Astra did not have a milk division, the potential conflict of
interest would be eliminated. His application was denied in view of Glaxos least-movement-possible policy.

- Tecson sought Glaxos reconsideration regarding his transfer and brought the matter to Glaxos Grievance
Committee. Glaxo, however, remained firm in its decision and gave Tescon until February 7, 2000 to comply with the
transfer order. Tecson defied the transfer order and continued acting as medical representative in the Camarines
Sur-Camarines Norte sales area.

- Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for
voluntary arbitration. Glaxo offered Tecson a separation pay of one-half () month pay for every year of service, or a
 total of P50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation and Mediation
Board (NCMB) rendered its Decision declaring as valid Glaxos policy on relationships between its
employees and persons employed with competitor companies, and affirming Glaxos right to transfer Tecson
to another sales territory.

- Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB Decision.

- On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for Review on the ground that
the NCMB did not err in rendering its Decision. The appellate court held that Glaxos policy prohibiting its employees
from having personal relationships with employees of competitor companies is a valid exercise of its management
prerogatives.[4]

- Petitioners filed the instant petition.

- Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it has a genuine
interest in ensuring that its employees avoid any activity, relationship or interest that may conflict with their
responsibilities to the company. Thus, it expects its employees to avoid having personal or family interests in any
competitor company which may influence their actions and decisions and consequently deprive Glaxo of legitimate
profits. The policy is also aimed at preventing a competitor company from gaining access to its secrets, procedures
and policies.[10]

- It likewise asserts that the policy does not prohibit marriage per se but only proscribes (bans) existing or future
relationships with employees of competitor companies, and is therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the prohibition is based on valid grounds. [11]

- The Court is tasked to resolve the following issues:

 (1) Whether the Court of Appeals erred in ruling that Glaxos policy against its employees
marrying employees from competitor companies is valid, and in not holding that said policy
violates the equal protection clause of the Constitution;

 (2) Whether Tecson was constructively dismissed.

- The Court finds no merit in the petition.

- No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy prohibiting an
employee from having a relationship with an employee of a competitor company is a valid exercise of management
prerogative.

- Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors, especially so that it and Astra are rival companies in
the highly competitive pharmaceutical industry.

- The prohibition against personal or marital relationships with employees of competitor companies upon
Glaxos employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect
its interests against the possibility that a competitor company will gain access to its secrets and
procedures.

- That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the
Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to
reasonable returns on investments and to expansion and growth.[20] Indeed, while our laws endeavor to give life
to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will
be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to
respect and enforcement in the interest of fair play.[21]

- The challenged company policy does not violate the equal protection clause of the Constitution as petitioners
erroneously suggest. It is a settled principle that the commands of the equal protection clause are addressed
only to the state or those acting under color of its authority.[24] Corollarily, it has been held in a long array of U.S.
Supreme Court decisions that the equal protection clause erects no shield against merely private conduct, however,
discriminatory or wrongful.[25] The only exception occurs when the state[26] in any of its manifestations or
actions has been found to have become entwined or involved in the wrongful private conduct.[27] Obviously,
however, the exception is not present in this case. Significantly, the company actually enforced the policy after
repeated requests to the employee to comply with the policy. Indeed, the application of the policy was made in an
impartial and even-handed manner, with due regard for the lot of the employee.
 - The Court of Appeals also correctly noted that the assailed company policy which forms part of respondents
Employee Code of Conduct and of its contracts with its employees, such as that signed by Tecson, was made known
to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his employment
contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a
contract of employment with Glaxo, the stipulations therein have the force of law between them and, thus, should be
complied with in good faith.[29] He is therefore estopped from questioning said policy.

- The Court finds no merit in petitioners contention that Tecson was constructively dismissed when he was
transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur
sales area, and when he was excluded from attending the companys seminar on new products which were directly
competing with similar products manufactured by Astra. Constructive dismissal is defined as a quitting, an
involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely;
when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee.[30] None of these conditions are present in the instant case. The
record does not show that Tecson was demoted or unduly discriminated upon by reason of such transfer. As found
by the appellate court, Glaxo properly exercised its management prerogative in reassigning Tecson to
the Butuan City sales area:

- WHEREFORE, the Petition is DENIED for lack of merit.

Right to counsel:
 Manuel vs. N.C. Construction Supply (G.R. No. 127553, November 28, 1997)

- Petitioners Eddie Manuel, Romeo Bana, Rogelio Pagtama, Jr. and Joel Rea were employed as drivers at N.C.
Construction Supply owned by private respondents Johnny Lim (a.k.a. Lao Ching Eng) and Anita Sy.

- On June 3, 1995, the security guards of respondent company caught Aurelio Guevara, a company driver, and Jay
Calso, his helper ("pahinante"), taking out from the company premises two rolls of electrical wire worth P500.00
without authority. Calso was brought to the Pasig Police station for questioning. During the investigation, Calso
named seven other employees who were allegedly involved in a series of thefts at respondent company, among
them petitioners Manuel, Bana, Pagtama, Jr. and Rea.[2]

- Petitioners Bana and Rea filed separate resignation letters while petitioners Manuel and Pagtama, Jr. tendered their
resignations orally.

- On July 17, 1995, petitioners filed a complaint against private respondents for illegal dismissal. Petitioners alleged
that they were not informed of the charge against them nor were they given an opportunity to dispute the same. They
also alleged that their admission made at the Pasig police station regarding their involvement in the theft as well as
their resignation were not voluntary but were obtained by private respondents' lawyer by means of threat and
intimidation.

- Labor Arbiter Manuel R. Caday ruled in favor of petitioners and found their dismissal to be illegal. He held that
private respondents failed to show a just cause for the termination of petitioners' services. He declared that
petitioners' admission regarding their involvement in the theft was inadmissible in evidence as it was taken without
the assistance of counsel, in violation of Section 12 Article III of the 1987 Constitution.[6] He also held that petitioners
were not afforded due process before their services were terminated. Hence, Labor Arbiter Caday ordered private
respondents to reinstate petitioners to their former position without loss of seniority rights and to pay them full
backwages. He also ordered private respondents to pay petitioners their service incentive leave benefits plus
attorney's fees.[7]

- On appeal, the NLRC reversed the decision of the Labor Arbiter. It ruled that petitioners were dismissed for a just
cause.

- Petitioners filed the instant petition.

- We affirm the decision of the NLRC.

- An employer has a right to terminate the services of an employee subject to both substantive and
procedural limitations. This means that

 (1) the dismissal must be for a just or authorized cause provided in the Labor Code, [10] and
  (2) the employee must be accorded due process before his employment is terminated. The
validity of the dismissal hinges on the employer's compliance with these two requirements.[11]

- In the case at bar, petitioners who were employed as drivers at respondent company were found guilty of stealing
company property consisting of electrical wire, welding rod, G.I. sheet, steel bar and plywood. Article 282 of the
Labor Code authorizes an employer to terminate the services of an employee for loss of trust and confidence,
provided that the loss of confidence arises from particular proven facts. The law does not require proof beyond
reasonable doubt of the employee's misconduct. Substantial evidence is sufficient.[12] Substantial evidence has been
defined as such relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. [13]

- We also reject petitioners' argument that said admission is inadmissible as evidence against them under Section 12
Article III of the 1987 Constitution. The right to counsel under Section 12 of the Bill of Rights is meant to
protect a suspect in a criminal case under custodial investigation. Custodial investigation is the stage where the
police investigation is no longer a general inquiry into an unsolved crime but has begun to focus on a particular
suspect who had been taken into custody by the police to carry out a process of interrogation that lends itself to elicit
incriminating statements. It is when questions are initiated by law enforcement officers after a person has been taken
into custody or otherwise deprived of his freedom of action in any significant way. The right to counsel attaches
only upon the start of such investigation.[14] Therefore, the exclusionary rule under paragraph (3) Section 12
of the Bill of Rights applies only to admissions made in a criminal investigation but not to those made in an
administrative investigation.

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

- Private respondents, however, failed to observe due process in terminating the employment of
petitioners. Due process demands that the employer should furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the cause(s) for termination and afford him ample opportunity to
be heard and to defend himself with the assistance of a representative if he so desires. Specifically, the employer
must furnish the worker with two written notices before termination of employment can be legally effected: (1)
notice which apprises the employee of the particular acts or omissions for which his dismissal is sought, and (2) the
subsequent notice which informs the employee of the employer's decision to dismiss him. [15] There is no showing in
this case that private respondents furnished petitioners with such notices.

- IN VIEW WHEREOF, the petition is DISMISSED. The assailed decision is hereby AFFIRMED.

 Punzal vs. ETSI Technologies Inc. (G.R. Nos. 170384-85, March 9, 2007)

- Petitioner, Lorna Dising Punzal, had been working for respondent, ETSI Technologies, Inc. (ETSI), for 12 years
prior to the termination of her services on November 26, 2001 on which date she was holding the position of
Department Secretary.
- On October 30, 2001, petitioner sent an electronic mail (e-mail) message to her officemates announcing the holding
of a Halloween party that was to be held in the office the following day.
- Petitioners immediate superior, respondent Carmelo Remudaro (Remudaro), who was one of those to whom the e-
mail message was sent, advised petitioner to first secure the approval of the Senior Vice President, respondent
Werner Geisert (Geisert), for the holding of the party in the office.
- Petitioner soon learned that Geisert did not approve of the plan to hold a party in the office. She thereupon
sent also on October 30, 2001 another e-mail message to her officemates, reading:

He was so unfair para bang palagi siyang iniisahan sa trabaho bakit most of the parents na mag-
joined ang anak ay naka-VL naman. Anyway, solohin na lang niya bukas ang office.

- Petitioner received a letter requiring her explanation on why she should not receive any disciplinary action for her
act.
- Petitioner replied by letter of November 14, 2001 that she had no malicious intention in sending the second e-mail
message and that she never expected such kind of words can be called as acts of discourtesy or disrespect. [4]
- David and Remudaro subsequently sent petitioner a letter on November 26, 2001, finding her explanation not
acceptable and terminating her services, effective immediately, for committing Article IV, No[s]. 5 & 8, Improper
conduct or act of discourtesy or disrespect and making malicious statements concerning company officer. [6]
- On February 11, 2002, petitioner filed before the National Labor Relations Commission (NLRC) a complaint[7] for
illegal dismissal against ETSI, Geisert, and Remudaro.
- By Order of November 26, 2002, the Labor Arbiter dismissed petitioners complaint, finding that she was legally
dismissed for serious misconduct, and that she was afforded due process.[8]
- On petitioners appeal, the NLRC, by Resolution[9] dated October 27, 2003, found that while she was indeed
guilty of misconduct, the penalty of dismissal was disproportionate to her infraction. [10] The NLRC thus
ordered that petitioner was entitled to reinstatement which, however, was no longer feasible due to strained
relations. The NLRC thus ordered that petitioner be awarded separation pay equivalent to one month pay for every
year of service, a period of at least six months to be considered one whole year. [11]
- Contrary to petitioners contention, the Court of Appeals also found that due process was observed in her
dismissal.[23]
- In Philippines Today, Inc. v. NLRC,[29] this Court, passing on the attitude or respect that an employee is expected to
observe towards an employer, held:
 Alegres choice of words and way of expression betray his allegation that the memorandum was
simply an opportunity to open the eyes of (Petitioner) Belmonte to the work environment in
petitioners newspaper with the end in view of persuading (her) to take a hand at improving said
environment. Apprising his employer (or top-level management) of his frustrations in his job and
differences with his immediate superior is certainly not done in an abrasive, offensive, and
disrespectful manner. A cordial or, at the very least, civil attitude, according due deference
to ones superiors, is still observed, especially among high-ranking management
officers. The Court takes judicial notice of the Filipino values of pakikisama and paggalang which
are not only prevalent among members of a family and community but within organizations as
well, including work sites. An employee is expected to extend due respect to management, the
employer being the proverbial hen that lays the golden egg, so to speak. An aggrieved employee
who wants to unburden himself of his disappointments and frustrations in his job or relations with
his immediate superior would normally approach said superior directly or otherwise ask some
other officer possibly to mediate and discuss the problem with the end in view of settling their
differences without causing ferocious conflicts. No matter how [much] the employee dislikes the
employer professionally, and even if he is in a confrontational disposition, he cannot afford to be
disrespectful and dare to talk with an unguarded tongue and/or with a bileful
pen.[30] (Underscoring supplied)
- A scrutiny of petitioners second e-mail message shows that her remarks were not merely an expression of her opinion
about Geiserts decision; they were directed against Geisert himself, viz: He was so unfair . . . para bang palagi
siyang iniisahan sa trabaho. . . Anyway, solohin na lang niya bukas ang office. (Emphasis supplied)[31]
- In the case at bar, the disapproval of the plan to hold the Halloween party on October 31, 2001 may not be
considered to have been actuated by bad faith.
- Given the reasonableness of Geiserts decision that provoked petitioner to send the second e-mail message, the
observations of the Court of Appeals that the message x x x resounds of subversion and undermines the authority
and credibility of management[37] and that petitioner displayed a tendency to act without managements approval, and
even against managements will are well taken.[38]
- Moreover, in circulating the second e-mail message, petitioner violated Articles III (8) and IV (5) of ETSIs Code of
Conduct on making false or malicious statements concerning the Company, its officers and employees or its
products and services[39] and improper conduct or acts of discourtesy or disrespect to fellow employees, visitors,
guests, clients, at any time.[40]
- In petitioner’s case, her assailed conduct was related to her work. It reflects an unwillingness to comply with
reasonable management directives.
- In fine, petitioner, having been dismissed for just cause, is neither entitled to reinstatement nor to backwages.
- Petitioners contention that she was denied due process is well-taken however, as the records do not show that she
was informed of her right to be represented by counsel during the conference with Geisert and Remudaro.
- The protestations of ETSI, et al. that the right to be informed of the right to counsel does not apply to investigations
before administrative bodies and that law and jurisprudence merely give the employee the option to secure the
services of counsel in a hearing or conference[53] fall in light of the clear provision of Article 277 (b) of the Labor Code
that
the employer xxx shall afford [the worker whose employment is sought to be terminated] ample
opportunity to be heard and to defend himself with the assistance of his representatives if he so
desires in accordance with company rules and regulations pursuant to guidelines set by the
Department of Labor and Employment,
 and this Courts explicit pronouncement that [a]mple opportunity connotes every kind of assistance that
management must accord the employee to enable him to prepare adequately for his defense including
legal representation.[54]
- WHEREFORE, the petition is in part GRANTED. The questioned decision is AFFIRMED with
the MODIFICATION that respondent ETSI Technologies, Inc. is ordered to pay petitioner, Lorna Punzal,
nominal damages in the amount of P30,000.

Declaration of Basic Policy:

 Magallanes vs. Sun Yat Sen Elementary School 542 SCRA 79 (2008)

- Azucena Magallanes, Evelyn Bacolod, Judith Cotecson (represented by her heirs), petitioners, Grace Gonzales,
and Bella Gonzales were all employed as teachers in the Sun Yat Sen Elementary School in Surigao City.
- Paz Go and Elena Cubillan are principals of the said school. Willy Ang Gan Teng and Benito Ang are its directors,
while Teotimo Tan is the school treasurer. They are all respondents herein.
- On May 22, 1994, respondents terminated the services of petitioners. Thus, on August 3, 1994, they filed with
the Sub-Regional Arbitration Branch No. X, National Labor Relations Commission (NLRC), Butuan City, complaints
against respondents for illegal dismissal, underpayment of wages, payment of backwages, 13th month pay, ECOLA,
separation pay, moral damages, and attorney’s fees. Likewise, on August 22, 1994, petitioner Cotecson filed a
separate complaint praying for the same reliefs.
- On June 3, 1995, Labor Arbiter Rogelio P. Legaspi rendered a Decision declaring that petitioners were illegally
dismissed from the service and ordering respondents to reinstate them to their former or equivalent positions…
- On appeal by respondents, the NLRC, in its Decision dated February 20, 1996, reversed the Arbiter’s judgment,
holding that petitioners are contractual employees and that respondents merely allowed their contracts to lapse.
- The Court of Appeals (Special Sixteenth Division) ruled that in lieu of reinstatement, petitioners Cotecson, Bacolod,
and Magallanes "shall be entitled to separation pay equivalent to one month salary and backwages computed
from the time of their illegal dismissal up to the time of the promulgation of its Decision." With respect to Bella
Gonzales and Grace Gonzales, the Court of Appeals found that that they have not acquired the status of regular
employees having rendered only two years of service. Consequently, their dismissal from the service is valid.
Under the Manual of Regulations for Private Schools, only full-time teachers who have rendered three (3)
years of consecutive service shall be considered permanent.
- We shall then address these two issues:
 (1) whether the Court of Appeals (Seventh Division) erred in holding that affixing a wrong docket
number on a motion renders it "non-existent;" and
 (2) whether the issuance by the NLRC of the Order dated March 30, 2001, amending the
amounts of separation pay and backwages, awarded by the Court of Appeals (Sixteenth
Division) to petitioners and computed by the Labor Arbiter, is tantamount to grave abuse of
discretion amounting to lack or excess of jurisdiction.
- RULING:
- On the first issue, the Court of Appeals (Seventh Division) is correct when it ruled that petitioners’ motion for
reconsideration of its Resolution dated October 29, 2001 in CA-G.R. SP No. 67068 is "non-existent." In Llantero v.
Court of Appeals,2 we ruled that where a pleading bears an erroneous docket number and thus "could not be
attached to the correct case," the said pleading is, for all intents and purposes, "non-existent." As aptly
stated by the Special Sixteenth Division, it has neither the duty nor the obligation to correct the error or to transfer the
case to the Seventh Division.
- Clearly, the Decision in CA-G.R. SP No. 50531 had long become final and executory. The Labor Arbiter computed
the monetary awards due to petitioners corresponding to the period from June 1994 to October 28, 1999, in
accordance with the Decision of the Court of Appeals (Special Sixteenth Division). The award for backwages and
money claims is in the total sum of P912,086.15.
- It does not escape our attention that upon respondents’ appeal from the Labor Arbiter’s Order computing the benefits
due to petitioners, the NLRC modified the final and executory Decision of the Court of Appeals (Special
Sixteenth Division) when it decreed that the monetary award due to petitioners should be computed up to
June 20, 1995 only (not October 28, 1999), thus, amounting to a lesser amount of P147,673.16.
- We sustain petitioners’ contention that the NLRC, in modifying the award of the Court of Appeals, committed
grave abuse of discretion amounting to lack or excess of jurisdiction. Quasi-judicial agencies have neither
business nor power to modify or amend the final and executory Decisions of the appellate courts. Under the
principle of immutability of judgments, any alteration or amendment which substantially affects a final and executory
judgment is void for lack of jurisdiction.8 We thus rule that the Order dated March 30, 2001 of the NLRC
directing that the monetary award should be computed from June 1994, the date petitioners were dismissed
from the service, up to June 20, 1995 only, is void.
 - WHEREFORE, we GRANT the petition. The challenged Resolutions dated October 29, 2001, May 8, 2003, and
October 10, 2003 in CA-G.R. SP No. 67068 are REVERSED. The Order of the NLRC dated March 30, 2001 in
NLRC Case No. M-006176-2001 is SET ASIDE. The Order of the Labor Arbiter dated January 8, 2001
is REINSTATED.

Art. 1700-1702, New Civil Code

SECTION 2 Contract of Labor (n)

Article 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that
labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

Article 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the
public.

Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent
living for the laborer.

Cases:
 Acuna vs. Court of Appeals G.R. No. 159832, May 5, 2006

- Petitioners are Filipino overseas workers deployed by private respondent Join International Corporation (JIC), a
licensed recruitment agency, to its principal, 3D Pre-Color Plastic, Inc., (3D) in Taiwan, Republic of China, under a
uniformly-worded employment contract for a period of two years. Herein private respondent Elizabeth Alaon is the
president of Join International Corporation.
- Sometime in September 1999, petitioners filed with private respondents applications for employment abroad. They
submitted their passports, NBI clearances, medical clearances and other requirements and each paid a placement
fee of P14,850, evidenced by official receipts[2] issued by private respondents.
- After their papers were processed, petitioners claimed they signed a uniformly-worded employment contract[3] with
private respondents which stipulated that they were to work as machine operators with a monthly salary of
NT$15,840.00, exclusive of overtime, for a period of two years.
- On December 9, 1999, with 18 other contract workers they left for Taiwan. Upon arriving at the job site, a
factory owned by 3D, they were made to sign another contract which stated that their salary was only
NT$11,840.00.[4] They were likewise informed that the dormitory which would serve as their living quarters was still
under construction.
- Petitioners had experienced unbearable work situations.
- The petitioners averred that on December 16, 1999, due to unbearable working conditions, they were
constrained to inform management that they were leaving. They booked a flight home, at their own
expense. Before they left, they were made to sign a written waiver.[7] In addition, petitioners were not paid any
salary for work rendered on December 11-15, 1999.[8]
- Immediately upon arrival in the Philippines, petitioners went to private respondents office, narrated what happened,
and demanded the return of their placement fees and plane fare. Private respondents refused.
- On January 14, 2000, petitioners Acua and Mendez invoking Republic Act No. 8042,[13] filed a complaint for illegal
dismissal and non-payment/underpayment of salaries or wages, overtime pay, refund of transportation fare, payment
of salaries/wages for 3 months, moral and exemplary damages, and refund of placement fee before the National
Labor Relations Commission (NLRC).
- The Labor Arbiter ruled in favor of petitioners, declaring that Myrna Ramones, Juliet Mendez and Mercedita
Acua did not resign voluntarily from their jobs. Thus, private respondents were ordered to pay jointly and
severally, in Philippine Peso, at the rate of exchange prevailing at the time of payment.
- Private respondents thereafter appealed the decision to the National Labor Relations Commission. The NLRC ruled
that the inclusion of Alaon as party respondent in this case had no basis since respondent JIC, being a juridical
person, has a legal personality, separate and distinct from its officers. [16] It partially granted the appeal and ordered
that the amounts of P15,080, P13,640 and P16,200 received under the quitclaim by Mendez, Acua and Ramones,
respectively, be deducted from their respective awards.
- On appeal, the Court of Appeals ruled for private respondents. It set aside the resolutions dated February 26,
2002 and December 10, 2001 of the NLRC and dismissed the complaint of petitioners.[18]
- In this petition the issue left for resolution is whether petitioners were illegally dismissed under Rep. Act No.
8042, thus entitling them to benefits plus damages.
 - As we have held previously, constructive dismissal covers the involuntary resignation resorted to when
continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.[24]
- In this case, the appellate court found that petitioners did not deny that the accommodations were not as homely as
expected. In the petitioners memorandum, they admitted that they were told by the principal, upon their arrival, that
the dormitory was still under construction and were requested to bear with the temporary inconvenience and the
dormitory would soon be finished. We likewise note that petitioners did not refute private respondents assertion that
they had deployed approximately sixty other workers to their principal, and to the best of their knowledge, no other
worker assigned to the same principal has resigned, much less, filed a case for illegal dismissal.[25]
- To our mind these cited circumstances do not reflect malice by private respondents nor do they show the principals
intention to subject petitioners to unhealthy accommodations. Under these facts, we cannot rule that there was
constructive dismissal.
- Private respondents also claim that petitioners were not entitled to overtime pay, since they had offered no proof that
they actually rendered overtime work. Petitioners, on the other hand, say that they could not show any
documentary proof since their employment records were all in the custody of the principal employer. It was
sufficient, they claim, that they alleged the same with particularity.
- On this matter, we rule for the petitioners. The claim for overtime pay should not have been disallowed
because of the failure of the petitioners to substantiate them.[26]The claim of overseas workers against foreign
employers could not be subjected to same rules of evidence and procedure easily obtained by complainants whose
employers are locally based.[27] While normally we would require the presentation of payrolls, daily time records and
similar documents before allowing claims for overtime pay, in this case, that would be requiring the near-impossible.
- It is a time-honored rule that in controversies between a worker and his employer, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writing should be resolved in the workers
favor.[28] The policy is to extend the applicability of the decree to a greater number of employees who can
avail of the benefits under the law, which is in consonance with the avowed policy of the State to give
maximum aid and protection to labor.[29] Accordingly, we rule that private respondents are solidarily liable
with the foreign principal for the overtime pay claims of petitioners.
- Quitclaims executed by the employees are commonly frowned upon as contrary to public policy and
ineffective to bar claims for the full measure of the workers legal rights, considering the economic disadvantage of
the employee and the inevitable pressure upon him by financial necessity. [35] Nonetheless, the so-called economic
difficulties and financial crises allegedly confronting the employee is not an acceptable ground to annul the
compromise agreement [36] unless it is accompanied by a gross disparity between the actual claim and the amount of
the settlement.[37]
- WHEREFORE, the petition is DISMISSED, without prejudice to the filing of illegal recruitment complaint
against the respondents pursuant to Section 6(i) of The Migrant Workers and Overseas Filipino Act of 1995
(Rep. Act No. 8042).

 G and M Philippines, Inc. vs. Cuambot, G.R. No. 162308, November 22, 2006

 Navarro vs. Coca-cola Bottlers Philippines, Inc. G.R. No. 162583, June 8, 2007
-

 De Castro vs. Liberty Broadcasting Network Inc. G.R. No. 165153 September 23, 2008

 Arco Metal Products Co., vs. Samahan ng mga Manggagaw sa Acro Metal-NAFLU G.R. No. 170734, March 14,
2008, supra.

Applicability of Labor Code:

 LRTA vs. Venus G.R. No. 163782, March 24, 2006

-
  Juco vs. NLRC 277 SCRA 528

 Caberra vs. NLREC 198 SCRA 573

Before 1987 Constitution:

 NASECO vs. NLRC November 29, 1988

 Paloma vs. PAL July 14, 2008