LABOR LAW LECTURE - 31/08/2019

ALILEM vs. BANDIOLA, JR.

G.R. No. 173489, February 25, 2013

FACTS:
Respondent was employed by petitioner as bookkeeper. Petitioner's Board of Directors (the Board)
received a letter from a certain Napoleon Gao-ay (Napoleon) reporting the alleged immoral conduct
and unbecoming behavior of respondent by having an illicit relationship with Napoleon sister, Thelma
G. Palma (Thelma). This prompted the Board to conduct a preliminary investigation. During the
preliminary investigation, the Board received evidence of respondent alleged extramarital affair.

Respondent, on the other hand, denied the accusation against him. He, instead, claimed that the
accusation was a result of the insecurity felt by some members of the cooperative and of the Board
because of his growing popularity owing to his exemplary record as an employee.Thelma executed an
affidavit likewise denying the allegations of extra-marital affair.

Meanwhile, on June 7, 1997, the Board received a petition from about fifty members of the
cooperative asking the relief of respondent due to his illicit affair with Thelma.

In its Summary Investigation Report, the Ad Hoc Committee of petitioner concluded that respondent
was involved in an extra-marital affair with Thelma. On July 10, 1997, the Chairman of the Board sent
a letterto respondent informing him of the existence of a prima facie case against him for "illicit
marital affair, an act that brings discredit to the cooperative organization and a cause for termination
per AMPC (Alilem Multi-Purpose Cooperative) Personnel Policy. Respondent was directed to appear
and be present at the AMPC office for a hearing. He was likewise advised of his right to be assisted by
counsel.

On the day of the hearing, respondent requested for postponement on the ground that his lawyer
was not available. The request was, however, denied and the hearing proceeded as scheduled.

In a Memorandum dated July 16, 1997, respondent was informed of Board Resolution No. 05, series
of 1997 embodying the Board decision to terminate his services as bookkeeper of petitioner, effective
July 31, 1997, without any compensation or benefit except the unpaid balance of his regular salary for
services actually rendered.

Aggrieved, respondent filed a Complaint for Illegal Dismissal against petitioner before the Regional
Arbitration Branch of the NLRC.

On April 30, 1998, the Labor Arbiter (LA) dismissed respondent complaint for lack of merit. The LA
concluded that respondent had been or might still be carrying on an affair with a married woman. The
LA found it unforgiving in the case of a married employee who sleeps with or has illicit relations with
another married person for in such case, the employee sullies not only the reputation of his spouse
and his family but the reputation as well of the spouse of his paramour and the latter family. As
opposed to respondent claim that the accusation is a mere fabrication of some of the directors or
cooperative members who were allegedly envious of his growing popularity, the LA gave more
credence to the testimonies of petitioner witnesses who were relatives of Thelma and who had no
motive to falsely testify because their family reputation was likewise at a risk of being tarnished. The
LA, thus, found respondent to have been validly dismissed from employment for violation of the
cooperative Personnel Policy. The LA also found no violation of respondent right to due process as he
was given ample opportunity to defend himself from the accusation against him.

On appeal, the NLRC set aside the LA decision. The NLRC found petitioner Personnel Policy to be of

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questionable existence and validity because it was unnumbered. It held that even assuming that
respondent had an extra-marital affair with a married woman, the latter is not his fellow worker in
petitioner business establishment.It, thus, concluded that respondent dismissal was not founded on
any of the just causes for termination of employment under Article 282 of the Labor Code, as
amended.

Petitioner elevated the matter to the CA, but it failed to obtain a favorable decision. Petitioner now
comes before the Court in this petition for review on certiorari insisting on the validity of respondent
dismissal from employment.

ISSUE:
Whether or not petitioner illegally dismissed respondent.

HELD:
The Court of Appeals decision is reversed and set aside.

It is undisputed that respondent was dismissed from employment for engaging in extramarital affairs,
a ground for termination of employment stated in petitioner Personnel Policy. This basis of
termination was made known to respondent as early as the first communication made by petitioner.
In its June 20, 1997 letter, petitioner directed respondent to explain in writing or personal
confrontation why he should not be terminated for violation of Section 4.1.4 of the Personnel Policy.
Respondent merely denied the accusation against him and did not question the basis of such
termination. When the LA was called upon to decide the illegal dismissal case, it ruled in favor of
petitioner and upheld the basis of such dismissal which is the cited Personnel Policy. The NLRC,
however, refused to recognize the existence and validity of petitioner Personnel Policy on which the
ground for termination was embodied.

The existence of the Personnel Policy containing provisions on the grounds for termination of
employees was not questioned by respondent. In his position paper, respondent only assailed the
effectivity of the policy, as for him as it was amended on the same date as the letter-complaints
against him. In other words, he claimed that the policy was amended in order to include therein the
ground for his termination to make sure that he is removed from his position.

Contrary to respondent claim, with the amendment of the Personnel Policy, petitioner did not create
a new ground for the termination of employment to make sure that respondent is removed from his
position. The ground under the old policy is similar to that provided for in the new policy. The
enumeration containing the specific act of "illicit marital affairs" is not an additional ground, but an
example of an act that brings discredit to the cooperative. It is merely an interpretation of what
petitioner considers as such. It is, thus, clear from the foregoing that engaging in extra-marital affairs
is a ground for termination of employment not only under the new but even under the old Personnel
Policy of petitioner. The effectivity of the policy as to respondent cannot, therefore, be questioned.

To be sure, an employer is free to regulate all aspects of employment.It may make reasonable rules
and regulations for the government of its employees which become part of the contract of
employment provided they are made known to the employee.In the event of a violation, an employee
may be validly terminated from employment on the ground that an employer cannot rationally be
expected to retain the employment of a person whose lack of morals, respect and loyalty to his
employer, regard for his employer rules and application of the dignity and responsibility, has so
plainly and completely been bared.

Applying now the above-discussed ground for termination, we now determine whether respondent
was properly dismissed from employment. In other words, did petitioner adequately prove that
respondent indeed engaged in extra-marital affairs, an act which petitioner considers as would bring
discredit to the cooperative?

We answer in the affirmative.

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The employer evidence consists of sworn statements of either relatives or friends of Thelma and
respondent. They either had direct personal knowledge of the illicit relationship or revealed
circumstances indicating the existence of such relationship.

There is also no reason to doubt the statement of Melanie Gao-ay, the wife of Napoleon, who
witnessed the embarrassing "encounter", to borrow the term she used, between [respondent] and
Thelma in her own boarding house.

While respondent act of engaging in extra--marital affairs may be considered personal to him and
does not directly affect the performance of his assigned task as bookkeeper, aside from the fact that
the act was specifically provided for by petitioner Personnel Policy as one of the grounds for
termination of employment, said act raised concerns to petitioner as the Board received numerous
complaints and petitions from the cooperative members themselves asking for the removal of
respondent because of his immoral conduct.

The next question is whether procedural due process was observed in the termination of respondent
services. "Before the services of an employee can be validly terminated, the employer must furnish
him two written notices: (a) a written notice served on the employee specifying the ground or
grounds for termination, and giving the employee reasonable opportunity to explain his side; and (b)
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."The employer must
inform the employee of the charges against him and to hear his defenses. A full adversarial
proceeding is not necessary as the parties may be heard through pleadings, written explanations,
position papers, memorandum or oral argument.

In this case, respondent was adequately afforded the opportunity to defend himself and explain the
accusation against him. Upon receipt of the complaint, petitioner conducted a preliminary
investigation and even created an Ad Hoc Committee to investigate the matter. Respondent was
directed to explain either in writing or by a personal confrontation with the Board why he should not
be terminated for engaging in illicit affair. Not only did petitioner give him the opportunity but
respondent in fact informed petitioner that he opted to present his side orally and did so as promised
when he specifically denied such allegations. Moreover, respondent was also allowed to peruse the
investigation report prepared by the Ad Hoc Committee and was advised that he was entitled to
assistance of counsel. After which, hearing was conducted. It was only after thorough investigation
and proper notice and hearing to respondent that petitioner decided whether to dismiss the former
or not. The decision to terminate respondent from employment was embodied in Board Resolution
No. 05, series of 1997 a copy of which was furnished respondent. With this resolution, respondent
was adequately notified of petitioner decision to remove him from his position. Respondent cannot
now claim that his right to due process was infringed upon.

BPI vs. BPI EMPLOYEES UNION

G.R. No. 175678, August 22, 2012

FACTS:
Respondent Union, a legitimate labor organization and the sole and exclusive bargaining
representative of all the regular rank-and-file employees of petitioner BPI in Metro Manila and
petitioner BPI have an existing Collective Bargaining Agreement (CBA which took effect on April 1,
2001. The CBA provides for loan benefits and relatively low interest rates.

Thereafter, petitioner issued a "no negative data bank policy" for the implementation/availment of
the manpower loans which the respondent objected to, thus, resulting into labor-management
dialogues. Unsatisfied with the result of those dialogues, respondent brought the matter to the
grievance machinery and afterwards, the issue, not having been resolved, the parties raised it to the
Voluntary Arbitrator.

In his decision, the Voluntary Arbitrator found merit in the respondent's cause. It ruled that the

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imposition of the NO NEGATIVE DATA BANK as a new condition for the implementation and availment
of the manpower loan benefits by the employees evidently violates the CBA.

Aggrieved, petitioner appealed the case to the CA, but the latter affirmed the decision of the
Voluntary Arbitrator. Hence, the present petition.

ISSUE:
Wether or not the No Negative Data Bank Policy violates the CBA

HELD:
The petition lacks merit.

A CBA refers to the negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of employment in a bargaining
unit, including mandatory provisions for grievances and arbitration machineries. As in all other
contracts, there must be clear indications that the parties reached a meeting of the minds. Therefore,
the terms and conditions of a CBA constitute the law between the parties.

The CBA in this case contains no provision on the "no negative data bank policy" as a prerequisite in
the entitlement of the benefits it set forth for the employees. In fact, a close reading of the CBA
would show that the terms and conditions contained therein relative to the availment of the loans are
plain and clear, thus, all they need is the proper implementation in order to reach their objective. The
CA was, therefore, correct when it ruled that, although it can be said that petitioner is authorized to
issue rules and regulations pertinent to the availment and administration of the loans under the CBA,
the additional rules and regulations, however, must not impose new conditions which are not
contemplated in the CBA and should be within the realm of reasonableness. The "no negative data
bank policy" is a new condition which is never contemplated in the CBA and at some points,
unreasonable to the employees because it provides that before an employee or his/her spouse can
avail of the loan benefits under the CBA, the said employee or his/her spouse must not be listed in
the negative data bank, or if previously listed therein, must obtain a clearance at least one year or six
months as the case may be, prior to a loan application.

It must be remembered that negotiations between an employer and a union transpire before they
agree on the terms and conditions contained in the CBA. If the petitioner, indeed, intended to include
a "no negative data bank policy" in the CBA, it should have presented such proposal to the union
during the negotiations. To include such policy after the effectivity of the CBA is deceptive and goes
beyond the original agreement between the contracting parties.

This Court also notes petitioner's argument that the "no negative data bank policy" is intended to
exact a high standard of conduct from its employees. However, the terms and conditions of the CBA
must prevail. Petitioner can propose the inclusion of the said policy upon the expiration of the CBA,
during the negotiations for a new CBA, but in the meantime, it has to honor the provisions of the
existing CBA.

Article 1702 of the New Civil Code provides that, in case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living of the laborer. Thus, this Court
has ruled that any doubt or ambiguity in the contract between management and the union members
should be resolved in favor of the latter. Therefore, there is no doubt, in this case, that the welfare of
the laborers stands supreme.

PHILIPPINE JOURNALISTS, INC. vs. JOURNAL EMPLOYEES UNION

G.R. No. 192601, June 3, 2013

The coverage of the term legal dependent as used in a stipulation in a collective bargaining agreement
(CBA) granting funeral or bereavement benefit to a regular employee for the death of a legal
dependent, if the CBA is silent about it, is to be construed as similar to the meaning that

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contemporaneous social legislations have set. This is because the terms of such social legislations are
deemed incorporated in or adopted by the CBA.

FACTS:
The second complainant Michael L. Alfante alleged that he started to work with respondents as
computer technician at Management Information System under manager Neri Torrecampo on 16 May
2000; that on 15 July 2001, he was regularized receiving a monthly salary of P9,070.00 plus other
monetary benefits; that sometime in 2001, Rico Pagkalinawan replaced Torrecampo, which was
opposed by complainant and three other co-employees; that Pagkalinawan took offense of their
objection; that on 22 October 2002, complainant Alfante received a memorandum from Pagkalinawan
regarding his excessive tardiness; that on 10 June 2003, complainant Alfante received a memorandum
from Executive Vice-President Arnold Banares, requiring him to explain his side on the evaluation of
his performance submitted by manager Pagkalinawan; that one week after complainant submitted his
explanation, he was handed his notice of dismissal on the ground of “poor performance”; and that
complainant was dismissed effective 28 July 2003. Complainant Alfante submitted that he was
dismissed without just cause. With respect to the alleged non-adjustment of longevity pay and burial
aid, respondent PJI pointed out that it complies with the provisions of the CBA and that both
complainants have not claimed for the burial aid.

ISSUE:
Whether or not petitioner’s denial of respondents’ claims for funeral and bereavement aid granted
under Section 4, Article XIII of their CBA constituted a diminution of benefits in violation of Article 100
of the Labor Code.

HELD:
Yes. A collective bargaining agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient provided these are not
contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties and compliance therewith is mandated by the
express policy of the law.

Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the law between the
parties, must be complied with by them. The literal meaning of the stipulations of the CBA, as with
every other contract, control if they are clear and leave no doubt upon the intention of the
contracting parties.

Here, a conflict has arisen regarding the interpretation of the term legal dependent in connection
with the grant of funeral and bereavement aid to a regular employee under Section 4, Article XIII of
the CBA,23 which stipulates as follows:

SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to grant a funeral/bereavement aid

in the following instances:

a. Death of a regular employee in line of duty – ₱50,000

b. Death of a regular employee not in line of duty – ₱40,000
c. Death of legal dependent of a regular employee – ₱15,000.

Petitioner insists that notwithstanding the silence of the CBA, the term legal dependent should follow
the definition of it under the Social Security Law, so that in the case of a married regular employee,
his or her legal dependents include only his or her spouse and children, and in the case of a single
regular employee, his or her legal dependents include only his or her parents and siblings, 18 years
old and below; and that the term dependents has the same meaning as beneficiaries as used in
Section 5, Article XIII of the CBA.

We cannot agree with petitioner’s insistence.

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Social legislations contemporaneous with the execution of the CBA have given a meaning to the term
legal dependent.

It is clear from these statutory definitions of dependent that the civil status of the employee as either
married or single is not the controlling consideration in order that a person may qualify as the
employee’s legal dependent. What is rather decidedly controlling is the fact that the spouse, child, or
parent is actually dependent for support upon the employee.

Considering that existing laws always form part of any contract, and are deemed incorporated in each
and every contract, the definition of legal dependents under the aforecited social legislations applies
herein in the absence of a contrary or different definition mutually intended and adopted by the
parties in the CBA. Accordingly, the concurrence of a legitimate spouse does not disqualify a child or a
parent of the employee from being a legal dependent provided substantial evidence is adduced to
prove the actual dependency of the child or parent on the support of the employee.

In this regard, the differentiation among the legal dependents is significant only in the event the CBA
has prescribed a hierarchy among them for the granting of a benefit; hence, the use of the terms
primary beneficiaries and secondary beneficiaries for that purpose. But considering that Section 4,
Article XIII of the CBA has not included that differentiation, petitioner had no basis to deny the claim
for funeral and bereavement aid of Alfante for the death of his parent whose death and fact of legal
dependency on him could be substantially proved.

It is further worthy to note that petitioner granted claims for funeral and bereavement aid as early as
1999, then issued a memorandum in 2000 to correct its erroneous interpretation of legal dependent
under Section 4, Article XIII of the CBA. This notwithstanding, the 2001-2004 CBA35 still contained the
same provision granting funeral or bereavement aid in case of the death of a legal dependent of a
regular employee without differentiating the legal dependents according to the employee’s civil
status as married or single. The continuity in the grant of the funeral and bereavement aid to regular
employees for the death of their legal dependents has undoubtedly ripened into a company policy.
With that, the denial of Alfante’s qualified claim for such benefit pursuant to Section 4, Article XIII of
the CBA violated the law prohibiting the diminution of benefits.

NATIONAL UNION OF WORKERS IN HOTEL RESTAURANT AND ALLIED INDUSTRIES

(NUWHRAIN-APL-IUF), PHILIPPINE PLAZA CHAPTER vs. PHILIPPINE PLAZA HOLDINGS, INC.
G.R. No. 177524, July 23, 2014

FACTS:
The Union is the collective bargaining agent of the rank-and-file employees of respondent Philippine
Plaza.

On November 24, 1998, the PPHI and the Union executed the CB which provided, among others, for
the collection, by the PPHI, of a ten percent (10%) service charge on the sale of food, beverage,
transportation, laundry and rooms.

The distributable amount will be shared equally by all HOTEL employees, including managerial
employees but excluding expatriates, with three shares to be given to PPHI Staff and three shares to
the UNION (one for the national and two for the local funds) that may be utilized by them for
purposes for which the UNION may decide.

On February 25, 1999, the Union’s Service Charge Committee informed the Union President, through
an audit report, of uncollected service charges for the last quarter of 1998 amounting to
P2,952,467.61. Specifically, the audit report referred to the service charges from the following items:
(1) "Journal Vouchers;" (2) "Banquet Other Revenue;" and (3) "Staff and Promo." The Union
presented this audit report to the PPHI management during the February 26, 1999 Labor
Management Cooperation Meeting.

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PPHI admitted liability for ₱80,063.88 out of the ₱2,952,467.61 that the Union claimed as uncollected
service charges. The PPHI denied the rest of the Union’s claims because: (1) they were exempted from
the service charge being revenues from "special promotions" (revenue from the Westin Gold Card
sales) or "negotiated contracts" (alleged revenue from the Maxi-Media contract); (2) the revenues did
not belong to the PPHI but to third-party suppliers; and (3) no revenue was realized from these
transactions as they were actually expenses incurred for the benefit of executives or by way of
good-will to clients and government officials.

When the parties failed to reach an agreement, the Union filed before the Labor Arbiter a
complaint for non-payment of specified service charges. The Union additionally charged the PPHI with
unfair labor practice (ULP) under Article 248 of the Labor Code, i.e., for violation of their collective
bargaining agreement.

The LA dismissed the Union’s complaint for lack of merit. The LA declared that the Union failed to
show, by law, contract and practice, its entitlement to the payment of service charges from the
entries specified in its audit reports.

The LA pointed out that Section 68 of the CBA explicitly requires, as a precondition for the distribution
of service charges in favor of the covered employees, the collection of the 10% service charge on the
"sale of food, beverage, transportation, laundry and rooms;" at the same time, the provision exempts
from its coverage "negotiated contracts" and "special rates" that the LA deemed as non-revenue
generating transactions involving "food, beverage, transportation, laundry and rooms." The Union
failed to prove that the PPHI collected 10% service charges on the specified entries/transactions that
could have triggered the PPHI’s obligation under this provision.

The NLRC reversed the LA’s decision and considered the specified entries/transactions as "service
chargeable."

The PHHI went to the CA, and its petition was granted. It affirmed the LA’s decision but ordered the
PPHI to pay the Union the amount of ₱80,063.88 as service charges that it found was due under the
circumstances. The CA declared that no service charges were due from the specified
entries/transactions; either these constituted "negotiated contracts" and "special rates" that Section
68 of the CBA explicitly excludes from the coverage of service charges, or they were cited bases that
the Union failed to sufficiently prove.

The CA pointed out that: one, the "Westin Gold Card Revenues" entry involved the sale, not of food,
beverage, transportation, laundry and rooms, but of a "contractual right" to be charged a lesser rate
for the products and services that the Hotel and the stores within it provide. Hence this petition.

ISSUE:
Whether or not the specified entries/transactions are revenue based transactions which, per Section
68 and 69 of the CBA, called for the collection and distribution of a 10% service charge in favor of the
covered employees.

HELD:
The petition is unmeritorious. The CA is legally correct as it correctly reversed the NLRC decision for
grave abuse of discretion.

A collective bargaining agreement, as used in Article 252 (now Article 262) of the Labor Code, is a
contract executed at the request of either the employer or the employees’ exclusive bargaining
representative with respect to wages, hours of work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions under such agreement.
Jurisprudence settles that a CBA is the law between the contracting parties who are obliged under the
law to comply with its provisions.

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As a contract and the governing law between the parties, the general rules of statutory construction
apply in the interpretation of its provisions. Thus, if the terms of the CBA are plain, clear and leave no
doubt on the intention of the contracting parties, the literal meaning of its stipulations, as they
appear on the face of the contract, shall prevail. Only when the words used are ambiguous and
doubtful or leading to several interpretations of the parties’ agreement that a resort to interpretation
and construction is called for.

No service charges were due from the specified entries/transactions; they either fall within the
CBA-excepted "Negotiated Contracts" and "Special Rates" or did not involve "a sale of food, beverage,
etc."

The Union anchors its claim for services charges on Sections 68 and 69 of the CBA, in relation with
Article 96 of the Labor Code. Section 68 states that the sale of food, beverage, transportation, laundry
and rooms are subject to service charge at the rate of ten percent (10%). Excepted from the coverage
of the 10% service charge are the so-called "negotiated contracts" and "special rates."

Following the wordings of Section 68 of the CBA, three requisites must be present for the provisions
on service charges to operate: (1) the transaction from which service charge is sought to be collected
is a sale; (2) the sale transaction covers food, beverage, transportation, laundry and rooms; and (3)
the sale does not result from negotiated contracts and/or at special rates.

In plain terms, all transactions involving a "sale of food, beverage, transportation, laundry and rooms"
are generally covered. Excepted from the coverage are, first, non-sale transactions or transactions
that do not involve any sale even though they involve "food, beverage, etc." Second, transactions that
involve a sale but do not involve "food, beverage, etc." And third, transactions involving "negotiated
contracts" and "special rates" i.e., a "sale of food, beverage, etc." resulting from "negotiated
contracts" or at "special rates;" non-sale transactions involving "food, beverage, etc." resulting from
"negotiated contracts" and/or "special rates;" and sale transactions, but not involving "food, beverage,
etc.," resulting from "negotiated contracts" and "special rates." Notably, the CBA does not specifically
define the terms "negotiated contracts" and "special rates." Nonetheless, the CBA likewise does not
explicitly limit the use of these terms to specified transactions. With particular reference to
"negotiated contracts," the CBA does not confine its application to "airline contracts" as argued by
the Union. Thus, as correctly declared by the CA, the term "negotiated contracts" should be read as
applying to all types of negotiated contracts and not to "airlines contracts" only. This is in line with the
basic rule of construction that when the terms are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall prevail. A constricted interpretation of
this term, i.e., as applicable to "airlines contracts" only, must be positively shown either by the
wordings of the CBA or by sufficient evidence of the parties’ intention to limit its application. The
Union completely failed to provide support for its constricted reading of the term "negotiated
contracts," either from the wordings of the CBA or from the evidence.

MITSUBISHI MOTORS PHILIPPINES SALARIED EMPLOYEES UNION vs. MITSUBISHI MOTORS

G.R. No. 175773, June 17, 2013

FACTS:
The Collective Bargaining Agreement of the parties in this case provides that the company shoulder
the hospitalization expenses of the dependents of covered employees subject to certain limitations
and restrictions. Accordingly, covered employees pay part of the hospitalization insurance premium
through monthly salary deduction while the company, upon hospitalization of the covered
employees' dependents, shall pay the hospitalization expenses incurred for the same. The conflict
arose when a portion of the hospitalization expenses of the covered employees' dependents were
paid/shouldered by the dependent's own health insurance. While the company refused to pay the
portion of the hospital expenses already shouldered by the dependents' own health insurance, the
union insists that the covered employees are entitled to the whole and undiminished amount of said
hospital expenses.

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On separate occasions, three members of MMPSEU filed claims for reimbursement of hospitalization
expenses of their dependents. MMPC paid only a portion of their hospitalization insurance claims, not
the full amount. Claiming that under the CBA, they are entitled to hospital benefits which should not
be reduced by the amounts paid by MEDICard and by Prosper, Calida, Oabel and Martin asked for
reimbursement from MMPC. However, MMPC denied the claims contending that double insurance
would result if the said employees would receive from the company the full amount of hospitalization
expenses despite having already received payment of portions thereof from other health insurance
providers.

The case was referred to a Voluntary Arbitrator for resolution of the issue involving the interpretation
of the subject CBA provision. MMPSEU alleged that there is nothing in the CBA which prohibits an
employee from obtaining other insurance or declares that medical expenses can be reimbursed only
upon presentation of original official receipts. It stressed that the hospitalization benefits should be
computed based on the formula indicated in the CBA without deducting the benefits derived from
other insurance providers. Besides, if reduction is permitted, MMPC would be unjustly benefited from
the monthly premium contributed by the employees through salary deduction. MMPSEU added that
its members had legitimate claims under the CBA and that any doubt as to any of its provisions should
be resolved in favor of its members. Moreover, any ambiguity should be resolved in favor of labor.

On the other hand, MMPC argued that the reimbursement of the entire amounts being claimed by
the covered employees, including those already paid by other insurance companies, would constitute
double indemnity or double insurance, which is circumscribed under the Insurance Code. Moreover, a
contract of insurance is a contract of indemnity and the employees cannot be allowed to profit from
their dependents’ loss.

The Voluntary Arbitrator rendered a decision finding MMPC liable to pay or reimburse the amount of
hospitalization expenses already paid by other health insurance companies. The Voluntary Arbitrator
held that the employees may demand simultaneous payment from both the CBA and their
dependents’ separate health insurance without resulting to double insurance, since separate
premiums were paid for each contract. He also noted that the CBA does not prohibit reimbursement
in case there are other health insurers.

The CA reversed the VA decision. Hence, this Petition.

ISSUE:
Whether or not, under the CBA, member-employees are entitled to full reimbursement of medical
expenses incurred by their dependents regardless of any amounts paid by the latter’s health
insurance provider.

HELD:
The Petition has no merit.

As part of American personal injury law, the collateral source rule was originally applied to tort cases
wherein the defendant is prevented from benefiting from the plaintiff’s receipt of money from other
sources. Under this rule, if an injured person receives compensation for his injuries from a source
wholly independent of the tortfeasor, the payment should not be deducted from the damages which
he would otherwise collect from the tortfeasor. In a recent Decision by the Illinois Supreme Court, the
rule has been described as "an established exception to the general rule that damages in negligence
actions must be compensatory." The Court went on to explain that although the rule appears to allow
a double recovery, the collateral source will have a lien or subrogation right to prevent such a double
recovery. In Mitchell v. Haldar, the collateral source rule was rationalized by the Supreme Court of
Delaware:

The collateral source rule is ‘predicated on the theory that a tortfeasor has no interest in, and
therefore no right to benefit from monies received by the injured person from sources unconnected
with the defendant’. According to the collateral source rule, ‘a tortfeasor has no right to any
mitigation of damages because of payments or compensation received by the injured person from an

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independent source.’ The rationale for the collateral source rule is based upon the quasi-punitive
nature of tort law liability. It has been explained as follows:

The collateral source rule is designed to strike a balance between two competing principles of tort law:
(1) a plaintiff is entitled to compensation sufficient to make him whole, but no more; and (2) a
defendant is liable for all damages that proximately result from his wrong. A plaintiff who receives a
double recovery for a single tort enjoys a windfall; a defendant who escapes, in whole or in part,
liability for his wrong enjoys a windfall. Because the law must sanction one windfall and deny the
other, it favors the victim of the wrong rather than the wrongdoer.

Thus, the tortfeasor is required to bear the cost for the full value of his or her negligent conduct even
if it results in a windfall for the innocent plaintiff.

As seen, the collateral source rule applies in order to place the responsibility for losses on the party
causing them. Its application is justified so that "'the wrongdoer should not benefit from the
expenditures made by the injured party or take advantage of contracts or other relations that may
exist between the injured party and third persons." Thus, it finds no application to cases involving
no-fault insurances under which the insured is indemnified for losses by insurance companies,
regardless of who was at fault in the incident generating the losses. Here, it is clear that MMPC is a
no-fault insurer. Hence, it cannot be obliged to pay the hospitalization expenses of the dependents of
its employees which had already been paid by separate health insurance providers of said
dependents.

The Voluntary Arbitrator therefore erred in adopting Atty. Funk’s view that the covered employees
are entitled to full payment of the hospital expenses incurred by their dependents, including the
amounts already paid by other health insurance companies based on the theory of collateral source
rule.

The conditions set forth in the CBA provision indicate an intention to limit MMPC’s liability only to
actual expenses incurred by the employees’ dependents, that is, excluding the amounts paid by
dependents’ other health insurance providers.

The Voluntary Arbitrator ruled that the CBA has no express provision barring claims for hospitalization
expenses already paid by other insurers. Hence, the covered employees can recover from both. The
CA did not agree, saying that the conditions set forth in the CBA implied an intention of the parties to
limit MMPC’s liability only to the extent of the expenses actually incurred by their dependents which
excludes the amounts shouldered by other health insurance companies.

The CA is correct. The condition that payment should be direct to the hospital and doctor implies that
MMPC is only liable to pay medical expenses actually shouldered by the employees’ dependents. It
follows that MMPC’s liability is limited, that is, it does not include the amounts paid by other health
insurance providers. This condition is obviously intended to thwart not only fraudulent claims but also
double claims for the same loss of the dependents of covered employees.

It is well to note at this point that the CBA constitutes a contract between the parties and as such, it
should be strictly construed for the purpose of limiting the amount of the employer’s liability. The
terms of the subject provision are clear and provide no room for any other interpretation. As there is
no ambiguity, the terms must be taken in their plain, ordinary and popular sense. Consequently,
MMPSEU cannot rely on the rule that a contract of insurance is to be liberally construed in favor of
the insured. Neither can it rely on the theory that any doubt must be resolved in favor of labor.

MMPSEU cannot rely on Samsel v. Allstate Insurance Co. where the Supreme Court of Arizona allowed
the insured to enjoy medical benefits under an automobile policy insurance despite being able to also
recover from a separate health insurer. In that case, the Allstate automobile policy does not contain
any clause restricting medical payment coverage to expenses actually paid by the insured nor does it
specifically provide for reduction of medical payments benefits by a coordination of
benefits. However, in the case before us, the dependents’ group hospitalization insurance provision in

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the CBA specifically contains a condition which limits MMPC’s liability only up to the extent of the
expenses that should be paid by the covered employee’s dependent to the hospital and doctor. This is
evident from the portion which states that "payment by MMPC shall be direct to the hospital and
doctor." In contrast, the Allstate automobile policy expressly gives Allstate the authority to pay
directly to the insured person or on the latter’s behalf all reasonable expenses actually incurred.
Therefore, reliance on Samsel is unavailing because the facts therein are different and not decisive of
the issues in the present case.

To allow reimbursement of amounts paid under other insurance policies shall constitute double
recovery which is not sanctioned by law.

BEST WEAR GARMENTS vs. DE LEMOS

G. R. No. 191281, December 5, 2012

FACTS:
Respondents Adelaida De Lemos and Cecile Ocubillo were employees of Best Wear Garments (Best
Wear) owned by Warren Pardilla. In 2004, De Lemos and Ocubillo filed a case for illegal dismissal.
Both alleged that they were arbitrarily transferred to other areas of operation of Pardilla’s garments
company, which they said amounted to constructive dismissal as it resulted in less earnings for them.
They also claimed that the reason for their transfer is their refusal to render overtime work until 7:00
p.m.

Best wear countered that De Lemos and Ocubillo are piece-rate workers and hence they are not paid
according to the number of hours worked. Best Wear also averred that the two were not illegally
terminated; rather, they were the ones who resigned.

The Labor Arbiter ruled that De Lemos and Ocubillo were constructively dismissed from employment.
On appeal, the NLRC found no basis for the charge of constructive dismissal. Aggrieved, De Lemos and
Ocubillo appealed to the Court of Appeals. The CA reinstated the LA’s decision. Hence, this instant
petition.

ISSUE:
Whether or not the Court of Appeals erred in ruling that De Lemos and Ocubillo were constructively
dismissed.

HELD:
De Lemos and Ocubillo were not constructively dismissed.

The right of employees to security of tenure does not give them vested rights to their positions to the
extent of depriving management of its prerogative to change their assignments or to transfer them.
Thus, an employer may transfer or assign employees from one office or area of operation to another,
provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the
action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause.

Being piece-rate workers assigned to individual sewing machines, their earnings depended on the
quality and quantity of finished products. That their work output might have been affected by the
change in their specific work assignments does not necessarily imply that any resulting reduction in
pay is tantamount to constructive dismissal. Workers under piece-rate employment have no fixed
salaries and their compensation is computed on the basis of accomplished tasks. The constitutional
policy of providing full protection to labor is not intended to oppress or destroy management. While
the Constitution is committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will be automatically decided in favor of labor.
Management also has its rights which are entitled to respect and enforcement in the interest of
simple fair play. Thus, where management prerogative to transfer employees is validly exercised, as in

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this case, courts will decline to interfere.

MOYA vs. FIRST SOLID RUBBER INDUSTRIES INC.

G.R. 184011, September 18, 2013

FACTS:
Reynaldo Moya was hired by respondent First Solid, a business engaged in manufacturing of tires and
rubbers, as a machine operator. He was promoted as head of the Tire Curing Department of the
company. He reported an incident about under curing of tires within his department which led to the
damage of five tires. The incident was investigated by the company which he was later required to
explain. Upon explanation he stated that the damage was caused by machine failure and the incident
was without any fault of the operator. His employment was then terminated by the company. As a
result, he filed a complaint before the NLRC for illegal dismissal against First Solid Rubber Industries,
Inc. And its President Edward Lee Sumulong. The company insisted on its right to validly dismiss an
employee in good faith if it has a reasonable ground to believe that its employee is responsible of
misconduct, and the nature of his participation therein renders him absolutely unworthy of the trust
and confidence demanded by his position.

ISSUE:
Whether or not the termination from employment of Moya was valid on the ground of loss of trust
and confidence.

HELD:
Yes. The termination from employment of Moya was valid.

Moya was not an ordinary rank-and-file employee. He was holding a supervisory rank being an
Officer-in-Charge of the Tire Curing Department. The position, naturally one of trust, required of him
abiding honesty as compared to ordinary rank-and-file employees. When he made a false report
attributing the damage of five tires to machine failure, he breached the trust and confidence reposed
upon him by the company.

It is a general principle of labor law to discourage interference with an employer’s judgment in the
conduct of his business. As already noted, even as the law is solicitous of the welfare of the
employees, it also recognizes employer’s exercise of management prerogatives. As long as the
company’s exercise of judgment is in good faith to advance its interest and not for the purpose of
defeating or circumventing the rights of employees under the laws or valid agreements, such exercise
will be upheld.

In a number of cases, this Court put emphasis on the right of an employer to exercise its management
prerogative in dealing with its company’s affairs including its right to dismiss its erring employees. We
recognized the right of the employer to regulate all aspects of employment, such as the freedom to
prescribe work assignments, working methods, processes to be followed, regulation regarding
transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of
workers. It is a general principle of labor law to discourage interference with an employer’s judgment
in the conduct of his business. As already noted, even as the law is solicitous of the welfare of the
employees, it also recognizes employer’s exercise of management prerogatives. As long as the
company’s exercise of judgment is in good faith to advance its interest and not for the purpose of
defeating or circumventing the rights of employees under the laws or valid agreements, such exercise
will be upheld.

Following the ruling in The Coca-Cola Export Corporation v. Gacayan, the employers have a right to
impose a penalty of dismissal on employees by reason of loss of trust and confidence. More so, in the
case of supervisors or personnel occupying positions of responsibility, does loss of trust justify
termination. Loss of confidence as a just cause for termination of employment is premised on the fact
that an employee concerned holds a position of trust and confidence. This situation holds where a
person is entrusted with confidence on delicate matters, such as the custody, handling, or care and

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protection of the employer’s property. But, in order to constitute a just cause for dismissal, the act
complained of must be "work-related" such as would show the employee concerned to be unfit to
continue working for the employer.

The foregoing as viewpoint, the right of First Solid to handle its own affairs in managing its business
must be respected. The clear consequence is the denial of the grant of separation pay in favor of
Moya.

As pronounced in the recent case of Unilever Philippines, Inc., v. Rivera, an employee who has been
dismissed for any of the just causes enumerated under Article 28240 of the Labor Code, including
breach of trust, is not entitled to separation pay.

However, this Court also provides exceptions to the rule based on "social justice" or on "equitable
grounds" following the ruling in Philippine Long Distance Telephone Co. v. NLRC, stating that
separation pay shall be allowed as a measure of social justice only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an
offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed employee separation pay, or financial assistance,
or whatever other name it is called, on the ground of social justice.

The PLDT case further elucidates why an erring employee could not benefit under the cloak of social
justice in the award of separation pay, we quote:

“The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so only if their hands are clean
and their motives blameless and not simply because they happen to be poor. This great policy of
our Constitution is not meant for the protection of those who have proved they are not worthy of
it, like the workers who have tainted the cause of labor with the blemishes of their own
character.”

Moya’s dismissal is based on one of the grounds under Art. 282 of the Labor Code which is willful
breach by the employee of the trust reposed in him by his employer. Also, he is outside the protective
mantle of the principle of social justice as his act of concealing the truth from the company is clear
disloyalty to the company which has long employed him.

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