1

G.R. No. 81958 June 30, 1988 Hongkong, United States, Italy, Norway, Austria, and
Switzerland. * In submitting the validity of the challenged
"guidelines," the Solicitor General invokes the police power of the
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS,
Philippine State.
INC., petitioner,
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and It is admitted that Department Order No. 1 is in the nature of a police
Employment, and TOMAS D. ACHACOSO, as Administrator of power measure. The only question is whether or not it is valid under
the Philippine Overseas Employment the Constitution.
Administration, respondents.
The concept of police power is well-established in this jurisdiction. It
Gutierrez & Alo Law Offices for petitioner. has been defined as the "state authority to enact legislation that may
interfere with personal liberty or property in order to promote the
general welfare." 5 As defined, it consists of (1) an imposition of
restraint upon liberty or property, (2) in order to foster the common
good. It is not capable of an exact definition but has been, purposely,
SARMIENTO, J.: veiled in general terms to underscore its all-comprehensive embrace.

The petitioner, Philippine Association of Service Exporters, Inc. "Its scope, ever-expanding to meet the exigencies of the times, even
(PASEI, for short), a firm "engaged principally in the recruitment of to anticipate the future where it could be done, provides enough room
Filipino workers, male and female, for overseas for an efficient and flexible response to conditions and circumstances
placement," 1 challenges the Constitutional validity of Department thus assuring the greatest benefits." 6
Order No. 1, Series of 1988, of the Department of Labor and
Employment, in the character of "GUIDELINES GOVERNING THE
It finds no specific Constitutional grant for the plain reason that it
TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC
does not owe its origin to the Charter. Along with the taxing power
AND HOUSEHOLD WORKERS," in this petition for certiorari and
and eminent domain, it is inborn in the very fact of statehood and
prohibition. Specifically, the measure is assailed for "discrimination
sovereignty. It is a fundamental attribute of government that has
against males or females;" 2 that it "does not apply to all Filipino
enabled it to perform the most vital functions of governance. Marshall,
workers but only to domestic helpers and females with similar
to whom the expression has been credited, 7 refers to it succinctly as
skills;" 3 and that it is violative of the right to travel. It is held likewise
the plenary power of the State "to govern its citizens." 8
to be an invalid exercise of the lawmaking power, police power being
legislative, and not executive, in character.
"The police power of the State ... is a power coextensive with self-
protection, and it is not inaptly termed the "law of overwhelming
In its supplement to the petition, PASEI invokes Section 3, of Article
necessity." It may be said to be that inherent and plenary power in
XIII, of the Constitution, providing for worker participation "in policy
the State which enables it to prohibit all things hurtful to the comfort,
and decision-making processes affecting their rights and benefits as
safety, and welfare of society." 9
may be provided by law." 4 Department Order No. 1, it is contended,
was passed in the absence of prior consultations. It is claimed, finally,
to be in violation of the Charter's non-impairment clause, in addition It constitutes an implied limitation on the Bill of Rights. According to
to the "great and irreparable injury" that PASEI members face should Fernando, it is "rooted in the conception that men in organizing the
the Order be further enforced. state and imposing upon its government limitations to safeguard
constitutional rights did not intend thereby to enable an individual
citizen or a group of citizens to obstruct unreasonably the enactment
On May 25, 1988, the Solicitor General, on behalf of the respondents
of such salutary measures calculated to ensure communal peace,
Secretary of Labor and Administrator of the Philippine Overseas
safety, good order, and welfare." 10 Significantly, the Bill of Rights
Employment Administration, filed a Comment informing the Court that
itself does not purport to be an absolute guaranty of individual rights
on March 8, 1988, the respondent Labor Secretary lifted the
and liberties "Even liberty itself, the greatest of all rights, is not
deployment ban in the states of Iraq, Jordan, Qatar, Canada,

unrestricted license to act according to one's will." 11 It is subject to
the far more overriding demands and requirements of the greater
number.
Notwithstanding its extensive sweep, police power is not without its
own limitations. For all its awesome consequences, it may not be
exercised arbitrarily or unreasonably. Otherwise, and in that event, it
defeats the purpose for which it is exercised, that is, to advance the
public good. Thus, when the power is used to further private interests
at the expense of the citizenry, there is a clear misuse of the power. 12
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed vahdity. 13 In the
absence of clear and convincing evidence to the contrary, the
presumption logically stands.
The petitioner has shown no satisfactory reason why the contested
measure should be nullified. There is no question that Department
Order No. 1 applies only to "female contract workers," 14 but it does
not thereby make an undue discrimination between the sexes. It is
well-settled that "equality before the law" under the
Constitution 15does not import a perfect Identity of rights among all
men and women. It admits of classifications, provided that (1) such
classifications rest on substantial distinctions; (2) they are germane to
the purposes of the law; (3) they are not confined to existing
conditions; and (4) they apply equally to all members of the same
class. 16
The Court is satisfied that the classification made-the preference for
female workers — rests on substantial distinctions.
As a matter of judicial notice, the Court is well aware of the unhappy
plight that has befallen our female labor force abroad, especially
domestic servants, amid exploitative working conditions marked by, in
not a few cases, physical and personal abuse. The sordid tales of
maltreatment suffered by migrant Filipina workers, even rape and
various forms of torture, confirmed by testimonies of returning
workers, are compelling motives for urgent Government action. As
precisely the caretaker of Constitutional rights, the Court is called
upon to protect victims of exploitation. In fulfilling that duty, the Court
sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first
place, there is no evidence that, except perhaps for isolated instances,
2
our men abroad have been afflicted with an Identical predicament.
The petitioner has proffered no argument that the Government should
act similarly with respect to male workers. The Court, of course, is not
impressing some male chauvinistic notion that men are superior to
women. What the Court is saying is that it was largely a matter of
evidence (that women domestic workers are being ill-treated abroad
in massive instances) and not upon some fanciful or arbitrary
yardstick that the Government acted in this case. It is evidence
capable indeed of unquestionable demonstration and evidence this
Court accepts. The Court cannot, however, say the same thing as far
as men are concerned. There is simply no evidence to justify such an
inference. Suffice it to state, then, that insofar as classifications are
concerned, this Court is content that distinctions are borne by the
evidence. Discrimination in this case is justified.
As we have furthermore indicated, executive determinations are
generally final on the Court. Under a republican regime, it is the
executive branch that enforces policy. For their part, the courts
decide, in the proper cases, whether that policy, or the manner by
which it is implemented, agrees with the Constitution or the laws, but
it is not for them to question its wisdom. As a co-equal body, the
judiciary has great respect for determinations of the Chief Executive
or his subalterns, especially when the legislature itself has specifically
given them enough room on how the law should be effectively
enforced. In the case at bar, there is no gainsaying the fact, and the
Court will deal with this at greater length shortly, that Department
Order No. 1 implements the rule-making powers granted by the Labor
Code. But what should be noted is the fact that in spite of such a
fiction of finality, the Court is on its own persuaded that prevailing
conditions indeed call for a deployment ban.
There is likewise no doubt that such a classification is germane to the
purpose behind the measure. Unquestionably, it is the avowed
objective of Department Order No. 1 to "enhance the protection for
Filipino female overseas workers" 17 this Court has no quarrel that in
the midst of the terrible mistreatment Filipina workers have suffered
abroad, a ban on deployment will be for their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is
intended to apply indefinitely so long as those conditions exist. This is
clear from the Order itself ("Pending review of the administrative and
legal measures, in the Philippines and in the host countries . . ."18),
meaning to say that should the authorities arrive at a means
impressed with a greater degree of permanency, the ban shall be
lifted. As a stop-gap measure, it is possessed of a necessary
malleability, depending on the circumstances of each case.
Accordingly, it provides:
 3

9. LIFTING OF SUSPENSION. — The Secretary of defined herein to the following [sic] are authorized
Labor and Employment (DOLE) may, upon under these guidelines and are exempted from the
recommendation of the Philippine Overseas suspension.
Employment Administration (POEA), lift the
suspension in countries where there are:
5.1 Hirings by immediate
members of the family of Heads of
1. Bilateral agreements or understanding with the State and Government;
Philippines, and/or,
5.2 Hirings by Minister, Deputy
2. Existing mechanisms providing for sufficient Minister and the other senior
safeguards to ensure the welfare and protection of government officials; and
Filipino workers. 19
5.3 Hirings by senior officials of
The Court finds, finally, the impugned guidelines to be applicable to all the diplomatic corps and duly
female domestic overseas workers. That it does not apply to "all accredited international
Filipina workers" 20 is not an argument for unconstitutionality. Had the organizations.
ban been given universal applicability, then it would have been
unreasonable and arbitrary. For obvious reasons, not all of them are
5.4 Hirings by employers in
similarly circumstanced. What the Constitution prohibits is the singling
countries with whom the
out of a select person or group of persons within an existing class, to
Philippines have [sic] bilateral
the prejudice of such a person or group or resulting in an unfair
labor agreements or
advantage to another person or group of persons. To apply the ban,
understanding.
say exclusively to workers deployed by A, but not to those recruited
by B, would obviously clash with the equal protection clause of the
Charter. It would be a classic case of what Chase refers to as a law xxx xxx xxx
that "takes property from A and gives it to B." 21 It would be an
unlawful invasion of property rights and freedom of contract and 7. VACATIONING DOMESTIC HELPERS AND
needless to state, an invalid act. 22 (Fernando says: "Where the WORKERS OF SIMILAR SKILLS--Vacationing
classification is based on such distinctions that make a real difference domestic helpers and/or workers of similar skills
as infancy, sex, and stage of civilization of minority groups, the better shall be allowed to process with the POEA and leave
rule, it would seem, is to recognize its validity only if the young, the for worksite only if they are returning to the same
women, and the cultural minorities are singled out for favorable employer to finish an existing or partially served
treatment. There would be an element of unreasonableness if on the employment contract. Those workers returning to
contrary their status that calls for the law ministering to their needs is worksite to serve a new employer shall be covered
made the basis of discriminatory legislation against them. If such be by the suspension and the provision of these
the case, it would be difficult to refute the assertion of denial of equal guidelines.
protection." 23 In the case at bar, the assailed Order clearly accords
protection to certain women workers, and not the contrary.)
xxx xxx xxx

It is incorrect to say that Department Order No. 1 prescribes a total

ban on overseas deployment. From scattered provisions of the Order,
it is evident that such a total ban has hot been contemplated. We
quote:
5. AUTHORIZED DEPLOYMENT-The deployment of
domestic helpers and workers of similar skills
9. LIFTING OF SUSPENSION-The Secretary of Labor
and Employment (DOLE) may, upon
recommendation of the Philippine Overseas
Employment Administration (POEA), lift the
suspension in countries where there are:
 4

1. Bilateral agreements or
understanding with the Philippines,
and/or,
2. Existing mechanisms providing
for sufficient safeguards to ensure
the welfare and protection of
Filipino workers. 24
an employment be above all, decent, just, and humane. It is bad
enough that the country has to send its sons and daughters to strange
lands because it cannot satisfy their employment needs at home.
Under these circumstances, the Government is duty-bound to insure
that our toiling expatriates have adequate protection, personally and
economically, while away from home. In this case, the Government
has evidence, an evidence the petitioner cannot seriously dispute, of
the lack or inadequacy of such protection, and as part of its duty, it
has precisely ordered an indefinite ban on deployment.

xxx xxx xxx

The Court finds furthermore that the Government has not
indiscriminately made use of its authority. It is not contested that it
The consequence the deployment ban has on the right to travel does has in fact removed the prohibition with respect to certain countries
not impair the right. The right to travel is subject, among other as manifested by the Solicitor General.
things, to the requirements of "public safety," "as may be provided by
law." 25 Department Order No. 1 is a valid implementation of the
The non-impairment clause of the Constitution, invoked by the
Labor Code, in particular, its basic policy to "afford protection to
petitioner, must yield to the loftier purposes targetted by the
labor," 26 pursuant to the respondent Department of Labor's rule-
Government. 31 Freedom of contract and enterprise, like all other
making authority vested in it by the Labor Code. 27 The petitioner
freedoms, is not free from restrictions, more so in this jurisdiction,
assumes that it is unreasonable simply because of its impact on the
where laissez faire has never been fully accepted as a controlling
right to travel, but as we have stated, the right itself is not absolute.
economic way of life.
The disputed Order is a valid qualification thereto.

This Court understands the grave implications the questioned Order

Neither is there merit in the contention that Department Order No. 1
has on the business of recruitment. The concern of the Government,
constitutes an invalid exercise of legislative power. It is true that
however, is not necessarily to maintain profits of business firms. In
police power is the domain of the legislature, but it does not mean
the ordinary sequence of events, it is profits that suffer as a result of
that such an authority may not be lawfully delegated. As we have
Government regulation. The interest of the State is to provide a
mentioned, the Labor Code itself vests the Department of Labor and
decent living to its citizens. The Government has convinced the Court
Employment with rulemaking powers in the enforcement whereof. 28
in this case that this is its intent. We do not find the impugned Order
to be tainted with a grave abuse of discretion to warrant the
The petitioners's reliance on the Constitutional guaranty of worker extraordinary relief prayed for.
participation "in policy and decision-making processes affecting their
rights and benefits" 29 is not well-taken. The right granted by this
WHEREFORE, the petition is DISMISSED. No costs.
provision, again, must submit to the demands and necessities of the
State's power of regulation.
SO ORDERED.
The Constitution declares that:
G.R. No. 81314 May 18, 1989
Sec. 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized, and EAGLE SECURITY AGENCY, INC., petitioner,
promote full employment and equality of vs.
employment opportunities for all. 30 NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
EDUARDO G. MAGNO, RODOLFO DEQUINA, AVELINO M.
NARVAEZ, JACULO J. JEROME, ROLANDO N. VALENCIA,
"Protection to labor" does not signify the promotion of employment
CLODUALDO N. ANGRA, JOSE SAMONTE, RUEL A. LAGASTOS,
alone. What concerns the Constitution more paramountly is that such
PRISCILO MALDO, JR., R.C. DELA CRUZ, JOSE AJEDA, JOSE

ANASTACIO, LAURO ROBERTO, ISMAEL SALACATA, ULDARICO
CAMU, JESUS CARILLO, and DIORITO BRAGA, respondents.
G.R. No. 81447 May 18,1989
PHILIPPINE TUBERCULOSIS SOCIETY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, EAGLE SECURITY
AGENCY, INC., RODOLFO V. DEQUINA, AVELINO M. NARVAEZ,
JACULO J. JEROME, ROLANDO N. VALENCIA, CLODUALDO M.
ANGRA, JOSE SAMONTE, RUEL A. LAGASTOS, PRISCILO MALDO,
JR., R.C. DELA CRUZ, JOSE AJEDA, HILARIO V. LLANES,
NAPOLEON SAPOLE, WILLIAM ESTOSANE and AMANTE
SOBRETODO, respondents.
Antonio G. Nalapo for Eagle Security Agency, Inc.
Quiason, Makalintal, Barot & Torres for petitioner in G.R. No. 81447.
Wilfredo Espiritu Taganas for private respondents.
CORTES, J.:
The core issue in these two consolidated cases is the liability of the
principal and the contractor for the payment of the minimum wage
and cost of living allowance increases to security guards under Wage
Order Nos. 2, 3, 5 and 6.
The antecedent facts are undisputed.
In 1980, petitioners Philippine Tuberculosis Society, Inc. (hereinafter
referred to as PTSI) and Eagle Security Agency, Inc. (hereinafter
referred to as EAGLE) entered into a "Contract for Security Services"
wherein the latter agreed to provide security services in the formers
premises. The contract covered the period from November 2, 1979 to
July 31, 1985. Pursuant to this agreement, private respondents were
assigned by EAGLE to PTSI as security guards.
Subsequently, on November 5, 1985, a complaint was filed by private
respondents Rodolfo Dequina, Avelino Narvaez, Jaculo Jerome,
Rolando Valencia, Clodualdo Angra Jose Samonte, Raul Lagastos,
5
Priscilo Maldo, Jr., R.C. dela Cruz, Jose Ajeda and others against PTSI
and EAGLE for unpaid wage and allowance increases under Wage
Order Nos. 2, 3, 5 and 6" ** with interest plus damages and
attorney's fees.
On September 30, 1986, while the case was still pending, ten (10)
additional complainants, namely: Jose Anastacio, Lauro Roberto,
Ismael Salacata, Uldarico Camu, Jesus Carrillo, Diorito Braga, Hilario
Llanes, Napoleon Sepole, William Estosane and Amante Sobretodo,
joined in the suit. However, the labor arbiter dropped the names of
Hilario Llanes, Napoleon Sapole, William Estosane and Amante
Sobretodo as complainants on the ground that only those who signed
the verified complaint and reply should be recognized. [Labor Arbiter's
Decision, p. 1; G.R. No. 81447, Rollo, p. 74.]
On April 6, 1987, the labor arbiter rendered a decision, the dispositive
portion of which reads as follows:
IN VIEW OF THE FOREGOING, respondent Eagle
Security Agency, Inc. and Philippine Tuberculosis
Society, Inc. are hereby ordered to pay jointly and
severally the sixteen (16) complainants of (sic) their
unpaid wages and allowances under Wage Order
Nos. 2, 3, 5 and 6. The office of the Socio-Economic
Analyst is hereby ordered to examine the records
and payrolls of the two (2) respondents to
determine their liabilities.
The claim for damages and attorney's fees are
hereby DISMISSED for lack of merit.
SO ORDERED. [Labor Arbiter's Decision , pp. G.R.
No. 81447, Rollo, pp. 79-80.]
PTSI, EAGLE and the four (4) security guards whose names where
dropped from the complaint filed their appeals to the National Labor
relations Commission (hereinafter referred to as NLRC).
The NLRC, on November 27, 1987, rendered its decision granting the
appeal as to the four (4) security guards whose names were dropped
and denying PTSI and EAGLE's appeals. The dispositive portion of its
decision reads as follows:

WHEREFORE, the premises considered, let the
appealed decision be, as it is hereby, Modified in
that respondent Eagle Security Agency, Inc. and yhe
Philippine Tuberculosis Society, In c. are hereby
ordered to pay jointly and severally the twenty (20)
complainants of (sic) their unpaid wages and
allowances under Wage Order Nos. 2, 3, 5 and 6. In
all other respects, the decision is affirmed.
SO ORDERED. [NLRC Decision, p. 8; G.R. No.
81447, Rollo, p. 27.]
Both PTSI and EAGLE filed their motions for reconsideration. In a
resolution dated December 29, 1987 , the NLRC denied these motions
for lack of merit.
PTSI and EAGLE filed separate petitions for certiorari with this Court.
PTSI's petition was docketed as G.R. No. 81447 while that of EAGLE,
G.R. No. 81314.
On motion of PTSI, the court, on april 6, 1988, resolved to consolidate
the two (2) petitions. Thereafter, on May 25, 1988, the Court, also
upon motion of PTSI, resolved to issue a temporary restraining order
enjoining the NLRC from enforcing and/or carrying out its decision
dated November 27, 1987 and resolution of December 29, 1987.
1 Petitioners PTSI and EAGLE, in this special civil action of certiorari,
impugn the decision of the NLRC as having been issued with grave
abuse of discretion amounting to lack or excess of jurisdiction.
Petitioners assail the decision of the NLRC finding them jointly and
severally liable to the security guards for payment of the minimum
wage and cost of living allowance increases under the wage orders.
Both PTSI and EAGLE point to the other as the one who should be
solely liable for paying the increases.
Petitioner PTSI alleges that payment of the wage and allowance
increases under Wage Order Nos. 2, 3, 5 and 6 should be borne
exclusively by EAGLE, pursuant to the following provision in the
"Contract for Security Services":
3 AGENCY hereby binds itself to pay its employees
in accordance with the provision of the New Labor
Code, as amended, Eight Hour Labor Law, the
Minimum Wage Law, and the other laws, and/or
decrees governing security agency. AGENCY shall be
6
solely responsible for the payment of all indemnities
to its employees which may arise under PD No. 442,
as amended, and shall comply with the provisions of
all other Philippine Laws relative to its employees....
[Article VII sec. 3 of the Contract for Security
Services; G.R. No. 81447, Rollo, p. 34; Emphasis
supplied].
Petitioner EAGLE, on the other hand, invokes the following provision
common to Wage Order Nos. 3, 5 and 6 to support its theory that it is
PTSI that should be held liable for the increases:
In case of contracts for construction projects and for
security, janitorial and similar services, the increase
in the minimum wage and allowance rates of the
workers shall be borne by the principal or client of
the construction/service contractor and the contract
shall be deemed amended accordingly...
The Court finds that the NLRC acted correctly in ordering the two
petitioners to jointly and severally pay the wage and allowance
increases to the security guards.
Petitioners' solidary liability for the amounts due the security guards
finds support in Articles 106,..107 and 109 of the Labor Code which
state that:
ART. 106. Contractor or subcontractor. — Whenever
an employer enters into a contract with another
person for the performance of the former's work,
the employees of the contractor and of the latter's
subcontractor, if any, shall be paid in accordance
with the provisions of this Code.
In the event that the contractor or subcontractor
fails to pay the wages his employees in accordance
with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor
to such employees to the extent that he is liable to
employees directly employed by him.
xxx

ART. 107. Indirect employer. — The provisions of
the immediately preceding Article shall likewise
apply to any person, partnership, association or
corporation which, not being an employer, contracts
with an independent contractor for the performance
of any work, task, job or project.
xxx
ART. 109. Solidary liability. — The provisions of
existing laws to the contrary not withstanding, every
employer or indirect employer shall be held
responsible with his contractor or subcontractor for
any violation of this Code. For purposes of
determining the extent of the civil liability under this
Chapter, they shall be considered as direct
employers.
This joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance of the provisions
therein including the statutory minimum wage [Article 99, Labor
Code]. The contractor is made Liable by virtue of his status as direct
employer. The principal, on the other hand, is made the indirect
employer of the contractor's employees for purposes of paying the
employees their wages should the contractor be unable to pay them.
This joint and several liability facilitates, if not guarantees, payment of
the workers' performance of any work, task, job or project, thus
giving the workers ample protection as mandated by the 1987
Constitution [See Article II Sec. 18 and Article XIII Sec. 3].
In the case at bar, it is beyond dispute that the security guards are
the employees of EAGLE [See Article VII Sec. 2 of the Contract for
Security Services; G.R. No. 81447, Rollo, p. 34]. That they were
assigned to guard the premises of PTSI pursuant to the latter's
contract with EAGLE and that neither of these two entities paid their
wage and allowance increases under the subject wage orders are also
admitted [See Labor Arbiter's Decision, p. 2; G.R. No. 81447, Rollo, p.
75]. Thus, the application of the aforecited provisions of the Labor
Code on joint and several liability of the principal and contractor is
appropriate [See Del Rosario & Sons Logging Enterprises, Inc. v.
NLRC, G. R. No. 64204, May 31, 1985, 136 SCRA 669].
The solidary liability of PTSI and EAGLE, however, does not preclude
the right of reimbursement from his co-debtor by the one who paid
[See Article 1217, Civil Code]. It is with respect to this right of
7
reimbursement that petitioners can find support in the aforecited
contractual stipulation and Wage Order provision.
The Wage Orders are explicit that payment of the increases are "to be
borne" by the principal or client. "To be borne however, does not
mean that the principal, PTSI in this case, would directly pay the
security guards the wage and allowance increases because there is no
privity of contract between them. The security guards' contractual
relationship is with their immediate employer, EAGLE. Eagle an
employer, EAGLE is tasked, among others, with the payment of their
wages [See Article VII Sec. 3 of the Contract for Security
Services, supra and Bautista v. Inciong, G.R. No. 52824, March 16,
1988, 158 SCRA 665].
On the other hand, there existed a contractual agreement between
PTSI and EAGLE wherein the former availed of the security services
provided by the latter. In return, the security agency collects from its
client payment for its security services. This payment covers the
wages for the security guards and also expenses for their supervision
and training, the guards' bonds, firearms with ammunitions, uniforms
and other equipments, accessories, tools, materials and supplies
necessary for the maintenance of a security force.
Premises considered, the security guards' immediate recourse for the
payment of the increases is with their direct employer, EAGLE.
However, in order for the security agency to comply with the new
wage and allowance rates it has to pay the security guards, the Wage
Orders made specific Provision to amend existing contracts for
security services by allowing the adjustment of the consideration paid
by the principal to the security agency concerned. What the Wage
Orders require, therefore, is the amendment of the contract as to the
consideration to cover the service contractor's payment of the
increases mandated. In the end, therefore, ultimate liability for the
payment of the increases rests with the principal.
In view of the foregoing, the security guards should claim the amount
of the increases from EAGLE. Under the Labor Code, in case the
agency fails to pay them the amounts claimed, PTSI should be held
solidarily liable with EAGLE [Articles 106,107 and 109]. Should EAGLE
pay, it can claim an adjustment from PTSI for an increase in
consideration to cover the increases payable to the security guards.
However, in the instant case, the contract for security services had
already expired without being amended consonant with the Wage
Orders. It is also apparent from a reading of a record that EAGLE does
not now demand from PTSI any adjustment in the contract price and
 8

its main concern is freeing itself from liability. Given these peculiar Firstly, EAGLE contends that the names of Rodolfo Dequina and R.C.
circumstances, if PTSI pays the security guards, it cannot claim dela Cruz should have been dropped from the complaint as they had
reimbursement from EAGLE. But in case it is EAGLE that pays them, already resigned from its employ and signed a quitclaim in favor of
the latter can claim reimbursement from PTSI in lieu of an the security agency [G.R. No. 81314, Petition, p. 6; Rollo, p. 7].
adjustment, considering that the contract, had expired and had not
been re-newed.
However, no grave abuse of discretion can be ascribed to the labor
arbiter for not dropping their names from the complaint it appearing
2. PTSI also alleges that it is exempt from payment under the subject that the alleged resignation letters are not of record [Labor Arbiter's
Wage Orders because it is a public sector employer while the Wage Decision, p. 6; G.R. No. 81314, Rollo, p. 18].
Orders cover only employers and employees in the private sector
[G.R. No. 81447, Petition, p. 9; Rollo, p. 10]. This is unmeritorious.
Secondly, EAGLE assails the NLRC's inclusion of the four (4) security
The definition of a public sector employer **** relied upon by PTSI is
guards whose names were dropped by the labor arbiter in the
relevant only for purposes of coverage under the Employees'
complaint. However, these four (4) security guards are part of the ten
Compensation. Moreover, the Labor Code provides that as used in
(10) additional complainants denominated as "and others" in the
Book Three, Title II on Wages, the term employer includes "the
complaint and who were identified in their Manifestation dated
Government and all its branches, subdivisions and instrumentalities,
September 30, 1986. Further, they submitted individual computations
all government-owned or controlled corporations and institutions . . .
in their "Reply to Separate Position Papers Filed by Respondents."
[Article 97 (b), Labor Code.]
Accordingly, the Court finds no grave abuse of discretion committed
by the NLRC in granting their appeal.
3. It is further contended by PTSI that to uphold the ruling of the
NLRC would be violative of the Constitutional prohibition against
WHEREFORE, in view of the foregoing, the petitions in G.R. No. 81314
impairment of the obligation of contracts [Article III sec. 10 of the
and G.R. No. 81447 are hereby DISMISSED and the decision and
1987 Constitution]. Time and again, this Court has rejected this line of
resolution of the NLRC in NLRC-NCR-11-3652-85 dated November 27,
reasoning in sustaining the validity and constitutionality of labor and
1987 and December 29, 1987, respectively, are AFFIRMED. The
social legislations like the Blue Sunday Law [Asia Bed Factory v.
temporary restraining order issued by the Court on June 20, 1988 is
National Bed and Kapok Industries Workers' union, et al., 100 Phil.
hereby LIFTED and SET ASIDE.
837 (1957)], compulsory coverage of private sector employees in the
Social Security System [Phil. Blooming Mills Co., Inc. v. Social
Security System, G.R. No. L-21223, August 31, 1966, 17 SCRA 1077], SO ORDERED.
and the abolition of share tenancy [Vda. de Genuino v. Court of
Agrarian Relations, G.R. No. L-25035, February 26, 1968, 22 SCRA G.R. No. 162053 March 7, 2007
792] enacted pursuant to the police power of the State.

ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW

The Wage Orders are no different from the aforecited laws. They are
labor standard legislations enacted to alleviate the plight of the
workers whose wages barely meet the spiralling costs of their basic
needs. The increase in the minimum wage and the cost of living
allowance was ordered precisely to ensure the workers' health,
efficiency and well-being towards achieving the country's goal of
ensuring increased productivity and viability of business and industry
[See Whereas Clause of the Wage Orders].
4. Petitioner EAGLE would moreover ascribe grave abuse of discretion
to both the Labor Arbiter and the NLRC for the inclusion of certain
security guards in the complaint.
(SLMCEA-AFW) AND MARIBEL S. SANTOS, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST.
LUKE'S MEDICAL CENTER, INC.,Respondents.
DECISION
AZCUNA, J.:
Challenged in this petition for review on certiorari is the Decision1 of
the Court of Appeals (CA) dated January 29, 2004 in CA-G.R. SP No.
75732 affirming the decision2 dated August 23, 2002 rendered by the
 9

National Labor Relations Commission (NLRC) in NLRC CA No. 026225- respondent SLMC shall be constrained to take action which may
00. include her separation from employment.

The antecedent facts are as follows: 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
Petitioner Maribel S. Santos was hired as X-Ray Technician in the
retirement in lieu of separation pay.
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 On November 26, 1998, the Personnel Manager of private respondent
Incorporated School of Radiologic Technology. SLMC issued a "Notice of Separation from the Company" to petitioner
Maribel S. Santos effective December 30, 1998 in view of the latter's
refusal to accept private respondent SLMC's offer for early retirement.
On April 22, 1992, Congress passed and enacted Republic Act No.
The notice also states that while said private respondent exerted its
7431 known as the "Radiologic Technology Act of 1992." Said law
efforts to transfer petitioner Maribel S. Santos to other position/s, her
requires that no person shall practice or offer to practice as a
qualifications do not fit with any of the present vacant positions in the
radiology and/or x-ray technologist in the Philippines without having
hospital.
obtained the proper certificate of registration from the Board of
Radiologic Technology.
In a letter dated December 18, 1998, a certain Jack C. Lappay,
President of the Philippine Association of Radiologic Technologists,
On September 12, 1995, the Assistant Executive Director-Ancillary
Inc., wrote Ms. Judith Betita, Personnel Manager of private respondent
Services and HR Director of private respondent SLMC issued a final
SLMC, requesting the latter to give "due consideration" to the
notice to all practitioners of Radiologic Technology to comply with the
organization's three (3) regular members of his organization
requirement of Republic Act No. 7431 by December 31, 1995;
(petitioner Maribel S. Santos included) "for not passing yet the Board
otherwise, the unlicensed employee will be transferred to an area
of Examination for X-ray Technology," "by giving them an assignment
which does not require a license to practice if a slot is available.
in any department of your hospital awaiting their chance to pass the
future Board Exam."
On March 4, 1997, the Director of the Institute of Radiology issued a
final notice to petitioner Maribel S. Santos requiring the latter to
On January 6, 1999, the Personnel Manager of private respondent
comply with Republic Act. No. 7431 by taking and passing the
SLMC again issued a "Notice of Separation from the Company" to
forthcoming examination scheduled in June 1997; otherwise, private
petitioner Maribel S. Santos effective February 5, 1999 after the latter
respondent SLMC may be compelled to retire her from employment
failed to present/ submit her appeal for rechecking to the Professional
should there be no other position available where she may be
Regulation Commission (PRC) of the recent board examination which
absorbed.
she took and failed.

On May 14, 1997, the Director of the Institute of Radiology, AED-

On March 2, 1999, petitioner Maribel S. Santos filed a complaint
Division of Ancillary Services issued a memorandum to petitioner
against private respondent SLMC for illegal dismissal and non-
Maribel S. Santos directing the latter to submit her PRC Registration
payment of salaries, allowances and other monetary benefits. She
form/Examination Permit per Memorandum dated March 4, 1997.
likewise prayed for the award of moral and exemplary damages plus
attorney's fees.
On March 13, 1998, the Director of the Institute of Radiology issued
another memorandum to petitioner Maribel S. Santos advising her
In the meantime, petitioner Alliance of Filipino Workers (AFW),
that only a license can assure her of her continued employment at the
through its President and Legal Counsel, in a letter dated September
Institute of Radiology of the private respondent SLMC and that the
22, 1999 addressed to Ms. Rita Marasigan, Human Resources Director
latter is giving her the last chance to take and pass the forthcoming
of private respondent SLMC, requested the latter to accommodate
board examination scheduled in June 1998; otherwise, private
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.
In a letter dated September 24, 1999, Ms. Rita Marasigan replied
thus:
Gentlemen:
Thank you for your letter of September 22, 1999 formally requesting
to fill up the vacant regular position of a CSS Aide in Ms. Maribel
Santos' behalf.
The position is indeed vacant. Please refer to our Recruitment Policy
for particulars especially on minimum requirements of the job and the
need to meet said requirements, as well as other pre-employment
requirements, in order to be considered for the vacant position. As a
matter of fact, Ms. Santos is welcome to apply for any vacant position
on the condition that she possesses the necessary qualifications.
As to the consensus referred to in your letter, may I correct you that
the agreement is, regardless of the vacant position Ms. Santos decides
to apply, she must go through the usual application procedures. The
formal letter, I am afraid, will not suffice for purposes of recruitment
processing. As you know, the managers requesting to fill any vacancy
has a say on the matter and correctly so. The manager's inputs are
necessarily factored into the standard recruitment procedures. Hence,
the need to undergo the prescribed steps.
Indeed we have gone through the mechanics to accommodate Ms.
Santos' transfer while she was employed with SLMC given the
prescribed period. She was given 30 days from issuance of the notice
of termination to look for appropriate openings which incidentally she
wittingly declined to utilize. She did this knowing fully well that the
consequences would be that her application beyond the 30-day period
or after the effective date of her termination from SLMC would be
considered a re-application with loss of seniority and shall be
subjected to the pertinent application procedures.
Needless to mention, one of the 3 X-ray Technologists in similar
circumstances as Ms. Santos at the time successfully managed to get
herself transferred to E.R. because she opted to apply for the
appropriate vacant position and qualified for it within the prescribed
30-day period. The other X-ray Technologist, on the other hand, as
you may recall, was eventually terminated not just for his failure to
10
comply with the licensure requirement of the law but for cause
(refusal to serve a customer).
Why Ms. Santos opted to file a complaint before the Labor Courts and
not to avail of the opportunity given her, or assuming she was not
qualified for any vacant position even if she tried to look for one
within the prescribed period, I simply cannot understand why she also
refused the separation pay offered by Management in an amount
beyond the minimum required by law only to re-apply at SLMC, which
option would be available to her anyway even (if she) chose to accept
the separation pay!
Well, here's hoping that our Union can timely influence our employees
to choose their options well as it has in the past.
(Signed)
RITA MARASIGAN
Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita,
Personnel Manager of private respondent SLMC wrote Mr. Angelito
Calderon, President of petitioner union as follows:
Dear Mr. Calderon:
This is with regard to the case of Ms. Maribel Santos. Please recall that
last Oct. 8, 1999, Ms. Rita Marasigan, HR Director, discussed with you
and Mr. Greg Del Prado the terms regarding the re-hiring of Ms.
Maribel Santos. Ms. Marasigan offered Ms. Santos the position of
Secretary at the Dietary Department. In that meeting, Ms. Santos
replied that she would think about the offer. To date, we still have no
definite reply from her. Again, during the conference held on Dec. 14,
1999, Atty. Martir promised to talk to Ms. Santos, and inform us of
her reply by Dec. 21, 1999. Again we failed to hear her reply through
him.
Please be informed that said position is in need of immediate staffing.
The Dietary Department has already been experiencing serious
backlog of work due to the said vacancy. Please note that more than 2
months has passed since Ms. Marasigan offered this compromise.
Management cannot afford to wait for her decision while the operation
of the said department suffers from vacancy.
Therefore, Management is giving Ms. Santos until the end of this
month to give her decision. If we fail to hear from her or from you as

her representatives by that time, we will consider it as a waiver and
we will be forced to offer the position to other applicants so as not to
jeopardize the Dietary Department's operation.
For your immediate action.
(Signed)
JUDITH BETITA
Personnel Manager
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
(₱115,500.00) 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
For its part, private respondent St. Luke's Medical Center, Inc. (SLMC)
argues in its comment4 that: 1) the petition should be dismissed for
failure of petitioners to file a motion for reconsideration; 2) the CA did
not commit grave abuse of discretion in upholding the NLRC and the
Labor Arbiter's ruling that petitioner was legally dismissed; 3)
petitioner was legally and validly terminated in accordance with
11
Republic Act Nos. 4226 and 7431; 4) private respondent's decision to
terminate petitioner Santos was made in good faith and was not the
result of unfair discrimination; and 5) petitioner Santos' non-transfer
to another position in the SLMC was a valid exercise of management
prerogative.
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. 74318 thus:
Sec. 15. Requirement for the Practice of Radiologic Technology and X-
ray Technology. - Unless exempt from the examinations under
Sections 16 and 17 hereof, no person shall practice or offer to practice
as a radiologic and/or x-ray technologist in the Philippines without
having obtained the proper certificate of registration from the Board.
It is significant to note that petitioners expressly concede that the sole
cause for petitioner Santos' separation from work is her failure to pass
the board licensure exam for X-ray technicians, a precondition for
obtaining the certificate of registration from the Board. It is argued,
though, that petitioner Santos' failure to comply with the certification
requirement did not constitute just cause for termination as it violated
her constitutional right to security of tenure. This contention is
untenable.
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 The most concrete example of this would be in the
field of medicine, the practice of which in all its branches has been
closely regulated by the State. It has long been recognized that the
regulation of this field is a reasonable method of protecting the health
and safety of the public to protect the public from the potentially
deadly effects of incompetence and ignorance among those who would
practice medicine.10 The same rationale applies in the regulation of
the practice of radiologic and x-ray technology. The clear and
unmistakable intention of the legislature in prescribing guidelines for
persons seeking to practice in this field is embodied in Section 2 of the
law:
Sec. 2. Statement of Policy. - It is the policy of the State to upgrade
the practice of radiologic technology in the Philippines for the purpose
of protecting the public from the hazards posed by radiation as well as
to ensure safe and proper diagnosis, treatment and research through
the application of machines and/or equipment using radiation.11
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.
Indeed, complainant-appellant cannot insist on her "sterling work
performance without any derogatory record" to make her qualify as an
x-ray technician in the absence of a proper certificate of Registration
from the Board of Radiologic Technology which can only be obtained
by passing the required examination. The law is clear that the
Certificate of Registration cannot be substituted by any other
requirement to allow a person to practice as a Radiologic Technologist
and/or X-ray Technologist (Technician).12
12
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.
Certainly, private respondent could not be expected to retain
petitioner Santos despite the inimical threat posed by the latter to its
business. This notwithstanding, the records bear out the fact that
petitioner Santos was given ample opportunity to qualify for the
position and was sufficiently warned that her failure to do so would
result in her separation from work in the event there were no other
vacant positions to which she could be transferred. Despite these
warnings, petitioner Santos was still unable to comply and pass the
required exam. To reiterate, the requirement for Board certification
was set by statute. Justice, fairness and due process demand that an
employer should not be penalized for situations where it had no
participation or control.13
It would be unreasonable to compel private respondent to wait until
its license is cancelled and it is materially injured before removing the
cause of the impending evil. Neither can the courts step in to force
private respondent to reassign or transfer petitioner Santos under
these circumstances. 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 The Labor Code and its implementing Rules do not
vest in the Labor Arbiters nor in the different Divisions of the NLRC
(nor in the courts) managerial authority.15
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.
SO ORDERED.
[G.R. No. 174833 : December 15, 2010]
MYRNA P. MAGANA, PETITIONER, VS. MEDICARD
PHILIPPINES, INC., AND COURT OF APPEALS, RESPONDENTS.
DECISION
CARPIO, J.:
The Case
This resolves the petition for review[1] of the rulings[2] of the Court of
Appeals absolving respondent Medicard Philippines, Inc. from liability
for reinstatement wages in an illegal dismissal suit.
The Facts
In June 1990, respondent Medicard Philippines, Inc. (respondent), a
health maintenance organization, hired petitioner Myrna P. Magana
(petitioner) as company nurse whom respondent detailed to its
corporate client, the Manila Pavilion Hotel (Hotel). Although
respondent initially hired petitioner on probation, respondent
converted petitioner's employment status to permanent in February
1993.
In October 1994, respondent was summarily replaced with another
nurse. In lieu of a nursing-related position, respondent offered
petitioner the position of liaison officer. Finding the offer unacceptable
and with her continued non-assignment, petitioner sued respondent
and the Hotel in the National Labor Relations Commission (NLRC) for
illegal dismissal and payment of benefits and damages.
13
The Ruling of the Labor Arbiter
The labor arbiter[3] ruled for petitioner.[4] The arbiter found respondent
to be a mere labor contractor for the Hotel which exercised control
and termination powers over petitioner. The arbiter considered the
Hotel's summary replacement of petitioner indicative of lack of cause
for her dismissal and of bad faith. Consequently, the arbiter ordered
the Hotel to reinstate petitioner and, with respondent, jointly and
severally pay petitioner backwages, 13th month pay, damages and
attorney's fees.[5]
Respondent and the Hotel appealed to the NLRC.
The Ruling of the NLRC
The NLRC affirmed the arbiter's ruling with modification.[6] It found
respondent, not the Hotel, as petitioner's employer and held
respondent liable for constructive illegal dismissal, and hence, for the
payment of separation pay, 13th month pay, attorney's fees, and
reinstatement wages.[7] The NLRC grounded its ruling on
uncontroverted documentary evidence showing petitioner as
respondent's regular employee whom respondent detailed to the Hotel
under a health maintenance contract. The NLRC considered
respondent's failure to assign petitioner to a suitable position within
six months as basis for its liability for constructive illegal dismissal.
The NLRC also awarded reinstatement wages to petitioner for
respondent's failure to reinstate her pending appeal as required under
the second paragraph of Article 223 of the Labor Code. However, for
lack of basis, the NLRC deleted the award of damages.
Respondent appealed to the Court of Appeals (CA) in a petition for
certiorari, alleging grave abuse of discretion on the part of the NLRC.
Ruling of the Court of Appeals
The CA partially granted respondent's appeal by deleting the award of
reinstatement wages. The CA found petitioner's dismissal with cause,
noting that respondent's failure to assign petitioner to a suitable
position within six months after her replacement is "analogous to a
suspension of operations of an enterprise" entitling the employee to
payment only of separation pay.[8]
In this petition, petitioner concedes the legality of her constructive
dismissal. She grounds her case on the narrow contention that the
Court of Appeals erred in deleting the reinstatement wages the NLRC
awarded in her favor.

Respondent seeks the petition's denial, noting that the CA's finding
that petitioner's dismissal was for cause precludes other remedies
other than the payment of separation pay.
The Issue
The question is whether an employee is entitled to draw wages under
an arbiter's ruling ordering her reinstatement even though such order
is subsequently reversed on appeal.
The Ruling of the Court
We hold in the affirmative and thus, grant the petition.
Article 223, Paragraph 2 of the Labor Code, a Police Power
Measure, is Mandatory and Immediately Executory
The requirement for employers to pay wages to employees obtaining
favorable rulings in illegal dismissal suits pending appeal is statutorily
mandated under the second paragraph of Article 223 of the Labor
Code, as amended:
Article 223. Appeal. - x x x x
In any event, the decision of the Labor Arbiter reinstating a dismissed
or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal The
employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for
reinstatement provided herein. (Emphasis supplied)
Article 223 gives employers two options, namely, to (1) actually
reinstate the dismissed employees or, (2) constructively reinstate
them in the payroll. Either way, this must be done immediately upon
the filing of their appeal, without need of any executory writ.
This unusual, mandatory order by law to execute reinstatement orders
pending appeal, unheard of in ordinary civil proceedings,[9] is a police
power measure, grounded on the theory -
[t]hat the preservation of the lives of the citizens is a basic duty of the
State, that is more vital than the preservation of corporate profits.
Then, by and pursuant to the same power, the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act is designed to
14
stop, although temporarily since the appeal may be decided in favor
of the appellant, a continuing threat or danger to the survival or even
the life of the dismissed or separated employee and its
family.[10] (Emphasis supplied)
Reversal of Reinstatement Order Does
not Preclude its Execution
The issue at bar explores an aspect of Article 223's implementation: if
the arbiter's order of reinstatement remains unexecuted, should its
subsequent reversal on appeal preclude execution? Respondent
expectedly holds the negative view, arguing that "there can be no
reinstatement by virtue of the fact that there is no illegal dismissal to
speak of."[11] A cursory search of this Court's jurisprudence belies the
cogency of this claim.
More than five years ago, the Court in Roquero v. Philippine Airlines,
Inc.[12] was confronted with the same question now posed and, as
respondent prays, was there asked to refuse payment of
reinstatement wages of the dismissed employee because of the
reversal on appeal of the reinstatement order. Speaking through
Justice, later Chief Justice, Reynato S. Puno, we rejected this
contention, holding that -
[t]echnicalities have no room in labor cases where the Rules of Court
are applied only in a suppletory manner and only to effectuate the
objectives of the Labor Code and not to defeat them. Hence, even if
the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the
period of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal period
and such reinstatement order is reversed with finality, the employee is
not required to reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered services during the
period.[13] (Emphasis supplied)
We reiterated Roquero/i> in our succeeding ruling in Air Philippines
Corporation v. Zamora.[14]
True, a Division of the Court in Genuino v. National Labor Relations
Commission[15] diverged from Roquero by requiring refund or set-off
of salaries received post-reversal of the reinstatement
order.[16]However, the Court en banc in Garcia v. Philippine Airlines,
Inc.,[17] nipped Genuino in the bud and reaffirmed the Roquero line of
jurisprudence:

[T]he Genuino ruling not only disregards the social justice principles
behind the rule [in Article 223], but also institutes a scheme unduly
favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in installment
by the employer. For in the event of a reversal of the Labor Arbiter's
decision ordering reinstatement, the employer gets back the same
amount without having to spend ordinarily for bond premiums. This
circumvents, if not directly contradicts, the proscription that the
"posting of a bond [even a cash bond] by the employer shall not stay
the execution for reinstatement."
In playing down the stray posture in i>Genuino requiring the
dismissed employee on payroll reinstatement to refund the salaries in
case a final decision upholds the validity of the dismissal, the Court
realigns the proper course of the prevailing doctrine on reinstatement
pending appeal vis-a-vis the effect of a reversal on appeal.
xxxx
The Court reaffirms the prevailing principle that even if the
order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the
period of appeal until reversal by the higher court. It settles the
view that the Labor Arbiter's order of reinstatement
is immediately executory and the employer has to either readmit
them to work under the same terms and conditions prevailing prior to
their dismissal, or to reinstate them in the payroll, and that failing to
exercise the options in the alternative, employer must pay the
employee's salaries.[18] (Underlining in the original; italicization and
boldfacing supplied)
Thus, respondent is not only bound to pay petitioner her
reinstatement wages, had it done so, it is precluded from recovering
the amount paid post-reversal of the arbiter's reinstatement order by
the Court of Appeals.
WHEREFORE, we GRANT the petition We REVERSE the Decision
dated 11 April 2006 and the Resolution dated 5 September 2006 of
the Court of Appeals insofar as they deleted the award of
reinstatement wages to petitioner Myrna P. Magana.
We ORDER respondent Medicard Philippines, Inc. to pay petitioner
reinstatement wages computed from the filing of respondent's appeal
of the labor arbiter's decision on 5 October 2000 until its receipt of the
Court of Appeals' Decision dated 11 April 2006.
SO ORDERED.
15
G.R. No. 120095 August 5, 1996
JMM PROMOTION AND MANAGEMENT, INC., and KARY
INTERNATIONAL, INC., petitioner,
vs.
HON. COURT OF APPEALS, HON. MA. NIEVES CONFESSOR, then
Secretary of the Department of Labor and Employment, HON.
JOSE BRILLANTES, in his capacity as acting Secretary of the
Department of Labor and Employment and HON. FELICISIMO
JOSON, in his capacity as Administrator of the Philippine
Overseas Employment Administration, respondents.
KAPUNAN, J.:p
The limits of government regulation under the State's police
power are once again at the vortex of the instant
controversy. 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.
The factual antecedents are undisputed.
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 ban was, however,
rescinded after leaders of the overseas employment industry
promised to extend full support for a program aimed at
removing kinks in the system of deployment. In its place, 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.
 16

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.
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.
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.

Thereafter, the Department of Labor, following the EIAC's

However, on February 21, 1995, the trial court issued an
recommendation, issued a series of orders fine-tuning and
Order denying petitioners' prayed for a writ of preliminary
implementing the new system. Prominent among these
injunction and dismissed the complaint.
orders were the following issuances:

On appeal from the trial court's Order, respondent court, in

1. Department Order No. 3-A, providing for
CA G.R. SP No. 36713 dismissed the same. Tracing the
additional guidelines on the training, testing,
circumstances which led to the issuance of the ARB
certification and deployment of performing artists.
requirement and the assailed Department Order, respondent
court concluded that the issuance constituted a valid exercise
2. Department Order No. 3-B, pertaining to the by the state of the police power.
Artist Record Book (ARB) requirement, which could
be processed only after the artist could show proof
We agree.
of academic and skills training and has passed the
required tests.
The latin maxim salus populi est surprema lex embodies the
character of the entire spectrum of public laws aimed at
3. Department Order No. 3-E, providing the
promoting the general welfare of the people under the
minimum salary a performing artist ought to
State's police power. As an inherent attribute of sovereignty
received (not less than US$600.00 for those bound
which virtually "extends to all public needs,"2 this "least
for Japan) and the authorized deductions therefrom.
limitable"3 of governmental powers grants a wide panoply of
instruments through which the state, as parens patriae gives
4. Department Order No. 3-F, providing for the effect to a host of its regulatory powers.
guidelines on the issuance and use of the ARB by
returning performing artists who, unlike new artists,
Describing the nature and scope of the police power, Justice
shall only undergo a Special Orientation Program
Malcolm, in the early case of Rubi v. Provincial Board of
(shorter than the basic program) although they
Mindoro4 wrote:
must pass the academic test.

"The police power of the State," one court has

In Civil Case No. 95-72750, the Federation of Entertainment
said... is a power coextensive with self-protection,
Talent Managers of the Philippines (FETMOP), on January 27,
and is not inaptly termed "the law of overruling
1995 filed a class suit assailing these department orders,
necessity." It may be said to be that inherent and
principally contending that said orders 1) violated the
plenary power in the state which enables it to
constitutional right to travel; 2) abridged existing contracts
prohibit all things hurtful to the comfort, safety and
for employment; and 3) deprived individual artists of their
welfare of society." Carried onward by the current of

legislature, the judiciary rarely attempts to dam the
onrushing power of legislative discretion, provided
the purposes of the law do not go beyond the great
principles that mean security for the public welfare
or do not arbitrarily interfere with the right of the
individual.5
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 1984, the Philippines emerged as the largest labor sending
country in Asia dwarfing the labor export of countries with
mammoth populations such as India and China. According to
the National Statistics Office, this diaspora was augmented
annually by over 450,000 documented and clandestine or
illegal (undocumented) workers who left the country for
various destinations abroad, lured by higher salaries, better
work opportunities and sometimes better living conditions.
Of the hundreds of thousands of workers who left the country
for greener pastures in the last few years, women composed
slightly close to half of those deployed, constituting 47%
between 1987-1991, exceeding this proportion (58%) by the
end of 1991,6 the year former President Aquino instituted the
ban on deployment of performing artists to Japan and other
countries as a result of the gruesome death of Filipino
entertainer Maricris Sioson.
It was during the same period that this Court took judicial
notice not only of the trend, but also of the fact that most of
our women, a large number employed as domestic helpers
and entertainers, worked under exploitative conditions
"marked by physical and personal abuse."7 Even then, we
17
noted that "[t]he sordid tales of maltreatment suffered by
migrant Filipina workers, even rape and various forms of
torture, confirmed by testimonies of returning workers"
compelled "urgent government action."8
Pursuant to the alarming number of reports that a significant
number of Filipina performing artists ended up as prostitutes
abroad (many of whom were beaten, drugged and forced into
prostitution), and following the deaths of number of these
women, the government began instituting measures aimed at
deploying only those individuals who met set standards which
would qualify them as legitimate performing artists. In spite
of these measures, however, a number of our countrymen
have nonetheless fallen victim to unscrupulous recruiters,
ending up as virtual slaves controlled by foreign crime
syndicates and forced into jobs other than those indicated in
their employment contracts. Worse, some of our women
have been forced into prostitution.
Thus, after a number of inadequate and failed accreditation
schemes, the Secretary of Labor issued on August 16, 1993,
D.O. No. 28, establishing the Entertainment Industry
Advisory Council (EIAC), the policy advisory body of DOLE on
entertainment industry matters.9 Acting on the
recommendations of the said body, the Secretary of Labor,
on January 6, 1994, issued the assailed orders. These orders
embodied EIAC's Resolution No. 1, which called for guidelines
on screening, testing and accrediting performing overseas
Filipino artists. Significantly, as the respondent court noted,
petitioners were duly represented in the EIAC,10which gave
the recommendations on which the ARB and other
requirements were based.
Clearly, the welfare of Filipino performing artists, particularly
the women was paramount in the issuance of Department
Order No. 3. Short of a total and absolute ban against the
deployment of performing artists to "high risk" destinations,
a measure which would only drive recruitment further
underground, the new scheme at the very least rationalizes
the method of screening performing artists by requiring
reasonable educational and artistic skills from them and
limits deployment to only those individuals adequately
prepared for the unpredictable demands of employment as
artists abroad. It cannot be gainsaid that this scheme at least
lessens the room for exploitation by unscrupulous individuals
and agencies.

Moreover, here or abroad, selection of performing artists is
usually accomplished by auditions, where those deemed unfit
are usually weeded out through a process which is inherently
subjective and vulnerable to bias and differences in taste.
The ARB requirement goes one step further, however,
attempting to minimize the subjectivity of the process by
defining the minimum skills required from entertainers and
performing artists. As the Solicitor General observed, this
should be easily met by experienced artists possessing
merely basic skills. The test are aimed at segregating real
artists or performers from those passing themselves off as
such, eager to accept any available job and therefore
exposing themselves to possible exploitation.
As to the other provisions of Department Order No. 3
questioned by petitioners, we see nothing wrong with the
requirements for document and booking confirmation (D.O.
3-C), a minimum salary scale (D.O. 3-E), or the requirement
for registration of returning performers. The requirement for
a venue certificate or other documents evidencing the place
and nature or work allows the government closer monitoring
of foreign employers and helps keep our entertainers away
from prostitution fronts and other worksites associated with
unsavory, immoral, illegal or exploitative practices.
Parenthetically, none of these issuances appear to us, by any
stretch of the imagination, even remotely unreasonable or
arbitrary. They address a felt need of according greater
protection for an oft-exploited segment of our OCW's. They
respond to the industry's demand for clearer and more
practicable rules and guidelines. Many of these provisions
were fleshed out following recommendations by, and after
consultations with, the affected sectors and non-government
organizations. On the whole, they are aimed at enhancing
the safety and security of entertainers and artists bound for
Japan and other destinations, without stifling the industry's
concerns for expansion and growth.
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.
18
More emphatically, the social justice provisions on labor of
the 1987 Constitution in its first paragraph states:
The State shall afford full protection to labor, local
and overseas, organized and unorganized and
promote full employment and equality of
employment opportunities for all.
Obviously, protection to labor does not indicate promotion of
employment alone. Under the welfare and social justice
provisions of the Constitution, the promotion of full
employment, while desirable, cannot take a backseat to the
government's constitutional duty to provide mechanisms for
the protection of our workforce, local or overseas. As this
Court explained in Philippine Association of Service Exporters
(PASEI) v. Drilon,11 in reference to the recurring problems
faced by our overseas workers:
What concerns the Constitution more paramountly is
that such an employment be above all, decent, just,
and humane. It is bad enough that the country has
to send its sons and daughters to strange lands
because it cannot satisfy their employment needs at
home. Under these circumstances, the Government
is duty-adequate protection, personally and
economically, while away from home.
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 of calling is a property right within the
meaning of our constitutional guarantees. One cannot be
deprived of the right to work and 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 of his own property
so as not to pose injury to himself or others.13
In any case, where the liberty curtailed affects at most the
rights of property, the permissible scope of regulatory
measures is certainly much
wider.14 To pretend that licensing or accreditation
requirements violates the due process clause is to ignore the
settled practice, under the mantle of the police power, of
regulating entry to the practice of various trades or
professions. Professionals leaving for abroad are required to
pass rigid written and practical exams before they are
deemed fit to practice their trade. Seamen are required to
take tests determining their seamanship. Locally, the
Professional Regulation Commission has began to require
previously licensed doctors and other professionals to furnish
documentary proof that they has either re-trained or had
undertaken continuing education courses as a requirement
for renewal of their licenses. It is not claimed that these
requirements pose an unwarranted deprivation of a property
right under the due process clause. So long as professionals
and other workers meet reasonable regulatory standards no
such deprivation exists.
Finally, it is a futile gesture on the part of petitioners to
invoke the non-impairment clause of the Constitution to
support their argument that the government cannot enact
the assailed regulatory measures because they abridge the
freedom to contract. In Philippine Association of Service
Exporters, Inc. vs. Drilon, we held that "[t]he non-
impairment clause of the Constitution... must yield to the
loftier purposes targeted by the government."15 Equally
important, into every contract is read provisions of existing
law, and always, a reservation of the police power for so long
as the agreement deals with a subject impressed with the
public welfare.
A last point. Petitioners suggest that the singling out of
entertainers and performing artists under the assailed
department orders constitutes class legislation which violates
19
the equal protection clause of the Constitution. We do not
agree.
The equal protection clause is directed principally against
undue favor and individual or class privilege. 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.
In the case at bar, the challenged Department Order clearly
applies to all performing artists and entertainers destined for
jobs abroad. These orders, we stressed hereinfore, further
the Constitutional mandate requiring government to protect
our workforce, particularly those who may be prone to abuse
and exploitation as they are beyond the physical reach of
government regulatory agencies. The tragic incidents must
somehow stop, but short of absolutely curtailing the right of
these performers and entertainers to work abroad, the
assailed measures enable our government to assume a
measure of control.
WHEREFORE, finding no reversible error in the decision
sought to be reviewed, petition is hereby DENIED.
SO ORDERED.
HFS PHILIPPINES, INC., G.R. No. 168716
RUBEN T. DEL ROSARIO and
IUM SHIPMANAGEMENT AS,
Petitioners, Present:
PUNO, C.J., Chairperson,
CARPIO,
- v e r s u s - CORONA,
LEONARDO-DE CASTRO and
BERSAMIN, JJ.
 20

RONALDO R. PILAR,
Respondent. Promulgated:
April 16,
2009 Respondent boarded the vessel on October 27, 2001.[5]

x---------------------------------------------
In March 2002 or roughly four months after he boarded M/V Hual
------x

Triumph, respondent complained of loss of appetite, nausea, vomiting

DECISION and severe nervousness. Despite being given medical treatment, his

CORONA, J.:
condition did not improve.

When the vessel reached Nagoya, Japan on April 3, 2002,

[1]
This petition seeks to reverse and set aside the November 22, 2004
respondent was brought to the Komatsu Hospital where he was
[2] [3]
decision and June 22, 2005 resolution of the Court of Appeals (CA)
diagnosed with depression and gastric ulcer.[6] The attending
in CA-G.R. SP No. 85197.
physician declared him unfit for work and recommended his

On October 4, 2001, respondent Ronaldo R. Pilar was engaged by hospitalization and repatriation.[7] Respondent returned to Manila on

petitioners IUM Shipmanagement AS and its Philippine manning the same day.

agent, HFS Philippines, Inc. (HFS), as a crew member of the Upon reaching Manila, respondent was met by a

Norwegian vessel M/V Hual Triumph under the following terms and representative of HFS who immediately brought him to the Medical

conditions: Center Manila. HFS-designated physician Dr. Nicomedes G. Cruz

Duration of the contract : 9 months

confirmed that respondent was suffering from major depression. Thus,
Position : Electrician
Basic monthly salary : US $981 per month
Hours of work : 44 hours per week he placed respondent under continuous medical treatment for several
Overtime : US $646 per month
Vacation leave with pay : 8 days per month months.[8]
Point of hire : Manila[4]
 21

On September 19, 2003, respondent was declared fit to (AMOSUP), the NLRC referred the complaint to the National

work.[9] Conciliation and Mediation Board (NCMB) on May 6, 2003.[15]

Meanwhile, respondent likewise sought the opinion of other In his position paper, respondent claimed that, while sleeping

physicians. during his rest hours on March 9, 2002, he was suddenly awakened by

his officer who hit him on the head. He was so traumatized by the
Dr. Anselmo T. Tronco of the Philippine General
incident that thereafter, he lost his appetite, vomited incessantly and
Hospital[10] and Dr. Raymond Jude L. Changco of the Mary Chiles
experienced severe nervousness. He claimed to be entitled to
Hospital[11] opined that respondent continued to suffer from major
disability compensation under Article 12 of the Collective Bargaining
depression.
Agreement (CBA) between AMOSUP and the Norwegian Shipowners

Dr. Arlito C. Veneracion of the Mary Chiles Hospital, on the

Association which provides:

other hand, evaluated the results of respondents ultrasound and ARTICLE 12

DISABILITY COMPENSATION
endoscopy. He revealed that respondent was suffering
If a seafarer due to no fault of his own, suffers
injury as a result of an accident while serving
cholecystolithiasis, mild fatty liver and chronic gastritis.[12] Thus, Dr. on board or while traveling to or from the vessel on
the companys business or due to marine peril, and
as a result his ability to work is permanently
Veneracion declared respondent unfit to work.[13]
reduced, totally or partially, the Company shall
pay him a disability compensation which
On November 27, 2002, respondent filed a complaint for including the amounts stipulated by the [Philippine
Overseas Employment Agencys] rules and regulation
underpayment of disability and medical benefits and for moral and shall be maximum:

Radio officers, chief stewards,

exemplary damages in the National Labor Relations Commission electricians, electro technicians US
$90,000
(NLRC).[14] Because respondent was a registered member of the
Ratings US $70,000

Associated Marine Officers and Seamans Union of the Philippines


The disability compensation shall be
calculated on the basis of the POEAs schedule of
disability or impediment for injuries at a percentage
recommended by a doctor authorized by the
Norwegian authorities for the medical examination
of seafarers.
The company shall take out the necessary insurance
to cover the benefits mentioned above. Coverage
arranged with P & I Club recognized by the
Norwegian authorities will meet these
requirements. (emphasis supplied)
Petitioners, on the other hand, asserted that in the absence
of proof his depression was caused by an accident, respondent was
not entitled to disability and medical benefits under Article 12 of the
CBA. Instead, he was only entitled to the 120-day sick pay provided
under Article 10 of the CBA which provides:
ARTICLE 10
SICKNESS AND INJURY
During the period of employment and at the time of
signing off, the officer shall submit to a medical
examination when requested by the company or its
representative, at the companys expense.
While serving on board, a sick or injured
officer is entitled to treatment at the companys
expense. The company is not responsible for
conservative denial treatment. If the officer is sick
or injured at the termination of the service period,
he has the same entitlement for a maximum period
of one hundred and twenty (120) days from the
date of signing off. In accordance with Part II,
Section C of the [Philippine Overseas Employment
Agencys (POEA)] rules and regulations, the officer
must submit to a post-employment medical
examination within three (3) working days after his
return to the Philippines to obtain these benefits. If
22
he should be unable by reason of physical incapacity
to do so, a written notice to the agency within the
same period is deemed as compliance provided the
incapacity is certified by the Master or an authorized
physician.
In the event of sickness or injury necessitating
signing-off, the officer is entitled to travel to
Manila at the companys expense.
The officer is entitled to sick pay (at the same
rate as basic wage) for up to 120 days after
signing off, provided the sickness or the injury
is verified by written statement from an
authorized physician. The sick pay will be in
addition to the vacation leave compensation
mentioned in Art. 8 but not in the addition to the
termination pay compensation mentioned in Art. 5
points a to c.
It is understood that an officer who is signed off by
reason of sickness or injury must return to the
Philippines within the usual period of travel from the
date and place of disembarkation indicated in
homeward bound ticket. On arrival in the
Philippines, he shall report to the companys
designated physician within three (3) working days
from the time of arrival for post employment
medical examination, otherwise, the employers
liability shall be deemed terminated. In case
however, of failure to report due to officers physical
incapacity, a written notice to the company within
three (3) working days from arrival is deemed as
compliance provided the incapacity is certified by
the Master or an authorized physician. (emphasis
supplied)[16]
Pursuant to this provision, Section 20(B) of the Standard Employment
Contract of the POEA between respondent and petitioners
(employment contract) stated:
 23

B. COMPENSATION AND BENEFITS FOR ILLNESS
AND INJURY
The liabilities of the employer when the seafarer
suffers injury or illness during the term of his
contract are as follows:
WHEREFORE, judgment is hereby rendered in favor
of [respondent]. [Petitioners], jointly and severally,
are hereby ordered to pay disability benefits claimed
by [respondent] in accordance with the [AMOSUP]-
CBA in the amount of US$90,000 and attorneys fees
equivalent to 10% of the total amount awarded.

xxxxxxxxx SO ORDERED.

3. Upon sign-off from the vessel for medical

treatment, the seafarer is entitled to sickness
allowance equivalent to his basic wage until he
is declared fit to work or of the degree of Aggrieved, petitioners assailed the NCMB decision in the CA
permanent disability has been assessed by the
company-designated physician, but in no case
via petition for certiorari[18] asserting that it committed grave abuse of
shall this period exceed one-hundred
twenty (120) days.
discretion in awarding disability compensation to respondent. The
For this purpose, the seafarer shall submit himself to
a post-employment medical examination by a NCMB erred in applying Article 12 of the CBA since the respondents
company designated physician within three working
days upon his return except when he is physically
incapacitated to do so, in which case, a written depression and gastric ulcer were not due to an accident.
notice to the agency within the same period is
deemed as compliance. Failure of the seafarer to
comply with the mandatory reporting requirement In a decision dated November 22, 2004, the CA held that
shall result in his forfeiture of the right to claim the
above benefits. (emphasis supplied)
Article 12 of the CBA applies when a seafarer suffers an injury (1) as
xxxxxxxxx
a consequence of an accident that took place on board the vessel or

(2) while traveling to and from the vessel on company business or (3)
The NCMB held that the nature of respondents occupation
due to a marine peril. Since respondents illnesses were not the result
significantly contributed to the deterioration of his psychological
of any of the said circumstances, he was not entitled to disability
condition. Respondents depression was therefore a compensable
compensation granted by the CBA. Nonetheless, because he proved
sickness since it arose out of his employment. In view of the principle
that his illnesses impaired him, he is entitled to disability benefits
of social justice (that those who have less in life should have more in
granted by Section 32[19] of the employment contract.[20]
[17]
the law), the NCMB awarded disability compensation to him:
 24

Unsatisfied with the decision of the CA, petitioners moved for It is undisputed that respondent fell ill while he was onboard M/V Hual

reconsideration but it was denied.[21] Triumph. This fact was confirmed not only by petitioners accredited

physicians but also by respondents own independent physicians.

The primordial issue in this petition is whether respondent is
In view thereof, respondent is clearly entitled to sick-pay. Article 10 of
entitled to disability pay.
the CBA and Section 20(B) of the employment contract apply when a

Petitioners contend that the CA erred in awarding disability

seafarer contracts an illness in the course of his employment. They

pay to respondent. Section 20(B) of the employment contract requires

provide that if, in the opinion of the employer-accredited physician,

that the seafarer should be declared unfit for work by the company
the nature of the seafarers illness, regardless of its cause, requires

physician. Respondent, in this instance, was declared fit for work by

a sign-off (or repatriation to Manila), the seafarer is entitled to sick-

Dr. Cruz.
pay equivalent to not more than 120-days worth of regular wage.

We deny the petition.

However, with regard to whether respondent is entitled to disability

compensation, we rule in the negative. Article 12 of the CBA requires:

Just like any other contract, a CBA is the law between the

contracting parties and compliance therewith in good faith is required

(a) the seafarer must suffer an injury;

by law.[22] Inasmuch as respondent was a registered member of the

(b) injury must have been the result of an accident while

AMOSUP, the present controversy should be decided in accordance

on board or while traveling to or from the vessel on

with the CBA.

companys business or it must have been due to

marine peril and

 25

(c) as a result of the injury, he becomes totally or In this case, the company-accredited doctor opined that

partially disabled. respondent was fit to work but respondents own physicians declared

otherwise.
This provision is limited to injuries. It does not cover all kinds of
We note that Section 20(B) of the employment contract
illnesses such as those suffered by respondent. Moreover, neither the
states that it is the company-designated physician who determines a
NCMB nor the CA found that respondents illnesses were the result of
seafarers fitness to work or his degree of disability. Nonetheless, a
an accident or a marine peril.
claimant may dispute the company-designated physicians report by

Nonetheless, while respondent is not entitled to disability

seasonably consulting another doctor. In such a case, the medical

compensation under the CBA, Section 20(B) of the Contract provides:

report issued by the latter shall be evaluated by the labor tribunal and
5. In case of permanent total or partial
disability of the seafarer during the term of the court, based on its inherent merit.[23]
employment caused by either injury or illness
the seafarer shall be compensated in accordance
with the schedule of benefits enumerated in Section
Dr. Tronco made the following observations about
[32] of this Contract. Computations arising from any
illness or disease shall be governed by the rates and
rules of compensation applicable at the time the respondent:
illness or disease was contracted. (emphasis
supplied) The [patient] started to feel weak, anxious,
depressed, with loss of interest and feeling of
hopelessness one month before consultation. These
symptoms interfered with work. He was thus
repatriated on the fifth month of work as a seaman.
Under this provision, a seafarer may be entitled to disability He was given anti-depressants which led to his
gradual improvement.
compensation if (1) he is shown to have contracted an illness or
Presently, [patient] is energetic and not anxious.

suffered an injury in the course of his employment and (2) such Impression: major depression

He will be maintained on Zoloft pills within the next

illness or injury resulted in his total or partial disability.
[six to nine] months. Prognosis is good.[24]
 26

However, Dr. Chango found that respondents depression persisted: employment contract affords the seaman the option to seek the

Patient is under medication but persists to

opinion of an independent physician.[28]
be depressed. In view of this, I recommend that in
the Schedule of Disability he be graded 6 (moderate
mental disorder) which limits worker to ADL with
some directed care.[25] The company-designated physician declared respondent as

having suffered a major depression but was already cured and

Dr. Veneracion, on the other hand, issued a certification to therefore fit to work. On the other hand, the independent physicians

the following effect: stated that respondents major depression persisted and constituted a

This is to certify that I have seen and examined Mr.

disability. More importantly, while the former totally ignored the
Ronaldo Pilar on September 22, 2003 at Mary Chiles
General Hospital. Ultrasound done at March 26,
2003 showed cholecystilithiasis and mild fatty liver. diagnosis of the Japanese doctor that respondent was also suffering
Endoscopy with gastric biopsy done April 2, 2003
revealed chronic gastritis. from gastric ulcer, the latter addressed this. The independent

Diagnosis: Cholecystilithiasis
Mild fatty liver physicians thus found that respondent was suffering from chronic
Chronic gastritis
gastritis and declared him unfit for work.
Remarks: POEA Disability Grade 7
Unfit to work

This certification was issued upon Mr. The bottomline is this: the certification of the company-
Rolando Pilars request for the purpose of claiming
disability benefits. [26] designated physician would defeat respondents claim while the

opinion of the independent physicians would uphold such claim. In

There was clearly a discrepancy between the certification of

such a situation, we adopt the findings favorable to respondent.

the company-designated physician and those of respondents chosen

The law looks tenderly on the laborer. Where the evidence

doctors. The company-designated physician expectedly downplayed

may be reasonably interpreted in two divergent ways, one prejudicial

his findings on the ratings.[27] It is for this reason that the
 27

Marilyn Abucay, a traffic operator of the Philippine Long Distance

Telephone Company, was accused by two complainants of having
and the other favorable to him, the balance must be tilted in his favor
demanded and received from them the total amount of P3,800.00 in
consideration of her promise to facilitate approval of their applications
consistent with the principle of social justice.[29] for telephone installation. 1 Investigated and heard, she was found
guilty as charged and accordingly separated from the service.2 She
went to the Ministry of Labor and Employment claiming she had been
illegally removed. After consideration of the evidence and arguments
WHEREFORE, the petition is hereby DENIED. The
of the parties, the company was sustained and the complaint was
dismissed for lack of merit. Nevertheless, the dispositive portion of
November 22, 2004 decision and June 22, 2005 resolution of the labor arbiter's decision declared:

Court of Appeals in CA-G.R. SP No. 85197 affirming the May 27, 2002
decision of the National Conciliation Mediation Board in NCMB Case
No. NCMB-NCR-CRN Case No. 06-007-03 are AFFIRMED.
Costs against petitioners.
WHEREFORE, the instant complaint is dismissed for
lack of merit.
Considering that Dr. Helen Bangayan and Mrs.
Consolacion Martinez are not totally blameless in the
light of the fact that the deal happened outhide the
premises of respondent company and that their act
of giving P3,800.00 without any receipt is
tantamount to corruption of public officers,
complainant must be given one month pay for every
year of service as financial assistance. 3

SO ORDERED. Both the petitioner and the private respondent appealed to the
National Labor Relations Board, which upheld the said decision in
G.R. No. 80609 August 23, 1988 toto and dismissed the appeals. 4 The private respondent took no
further action, thereby impliedly accepting the validity of her
dismissal. The petitioner, however, is now before us to question the
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, affirmance of the above- quoted award as having been made with
vs. grave abuse of discretion.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN
ABUCAY, respondents.
In its challenged resolution of September 22, 1987, the NLRC said:

Nicanor G. Nuevas for petitioner.

CRUZ, J.:
The only issue presented in the case at bar is the legality of the award
of financial assistance to an employee who had been dismissed for
cause as found by the public respondent.
... Anent the award of separation pay as financial
assistance in complainant's favor, We find the same
to be equitable, taking into consideration her long
years of service to the company whereby she had
undoubtedly contributed to the success of
respondent. While we do not in any way approve of
complainants (private respondent) mal feasance, for
which she is to suffer the penalty of dismissal, it is
for reasons of equity and compassion that we
resolve to uphold the award of financial assistance in
her favor. 5

The position of the petitioner is simply stated: It is conceded that an
employee illegally dismissed is entitled to reinstatement and
backwages as required by the labor laws. However, an employee
dismissed for cause is entitled to neither reinstatement nor backwages
and is not allowed any relief at all because his dismissal is in
accordance with law. In the case of the private respondent, she has
been awarded financial assistance equivalent to ten months pay
corresponding to her 10 year service in the company despite her
removal for cause. She is, therefore, in effect rewarded rather than
punished for her dishonesty, and without any legal authorization or
justification. The award is made on the ground of equity and
compassion, which cannot be a substitute for law. Moreover, such
award puts a premium on dishonesty and encourages instead of
deterring corruption.
For its part, the public respondent claims that the employee is
sufficiently punished with her dismissal. The grant of financial
assistance is not intended as a reward for her offense but merely to
help her for the loss of her employment after working faithfully with
the company for ten years. In support of this position, the Solicitor
General cites the cases of Firestone Tire and Rubber Company of the
Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of
Davao, 7 where the employees were dismissed for cause but were
nevertheless allowed separation pay on grounds of social and
compassionate justice. As the Court put it in the Firestone case:
In view of the foregoing, We rule that Firestone had
valid grounds to dispense with the services of
Lariosa and that the NLRC acted with grave abuse of
discretion in ordering his reinstatement. However,
considering that Lariosa had worked with the
company for eleven years with no known previous
bad record, the ends of social and compassionate
justice would be served if he is paid full separation
pay but not reinstatement without backwages by the
NLRC.
In the said case, the employee was validly dismissed for theft but the
NLRC nevertheless awarded him full separation pay for his 11 years of
service with the company. In Soco, the employee was also legally
separated for unauthorized use of a company vehicle and refusal to
attend the grievance proceedings but he was just the same granted
one-half month separation pay for every year of his 18-year service.
Similar action was taken in Filipro, Inc. v. NLRC, 8 where the
employee was validly dismissed for preferring certain dealers in
28
violation of company policy but was allowed separation pay for his 2
years of service. In Metro Drug Corporation v. NLRC, 9 the employee
was validly removed for loss of confidence because of her failure to
account for certain funds but she was awarded separation pay
equivalent to one-half month's salary for every year of her service of
15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of
the employee was justified because he had instigated labor unrest
among the workers and had serious differences with them, among
other grounds, but he was still granted three months separation pay
corresponding to his 3-year service. In New Frontier Mines, Inc. v.
NLRC, 11 the employee's 3- year service was held validly terminated
for lack of confidence and abandonment of work but he was
nonetheless granted three months separation pay. And in San Miguel
Corporation v. Deputy Minister of Labor and Employment, et al
., 12 full separation pay for 6, 10, and 16 years service, respectively,
was also allowed three employees who had been dismissed after they
were found guilty of misappropriating company funds.
The rule embodied in the Labor Code is that a person dismissed for
cause as defined therein is not entitled to separation pay. 13 The cases
above cited constitute the exception, based upon considerations of
equity. Equity has been defined as justice outside law, 14 being ethical
rather than jural and belonging to the sphere of morals than of
law. 15 It is grounded on the precepts of conscience and not on any
sanction of positive law. 16 Hence, it cannot prevail against the
expressed provision of the labor laws allowing dismissal of employees
for cause and without any provision for separation pay.
Strictly speaking, however, it is not correct to say that there is no
express justification for the grant of separation pay to lawfully
dismissed employees other than the abstract consideration of equity.
The reason is that our Constitution is replete with positive commands
for the promotion of social justice, and particularly the protection of
the rights of the workers. The enhancement of their welfare is one of
the primary concerns of the present charter. In fact, instead of
confining itself to the general commitment to the cause of labor in
Article II on the Declaration of Principles of State Policies, the new
Constitution contains a separate article devoted to the promotion of
social justice and human rights with a separate sub- topic for labor.
Article XIII expressly recognizes the vital role of labor, hand in hand
with management, in the advancement of the national economy and
the welfare of the people in general. The categorical mandates in the
Constitution for the improvement of the lot of the workers are more
than sufficient basis to justify the award of separation pay in proper
cases even if the dismissal be for cause.

The Court notes, however, that where the exception has been applied,
the decisions have not been consistent as to the justification for the
grant of separation pay and the amount or rate of such award. Thus,
the employees dismissed for theft in the Firestone case and for
animosities with fellow workers in the Engineering Equipment case
were both awarded separation pay notnvithstanding that the first
cause was certainly more serious than the second. No less curiously,
the employee in the Soco case was allowed only one-half month pay
for every year of his 18 years of service, but in Filipro the award was
two months separation pay for 2 years service. In Firestone, the
emplovee was allowed full separation pay corresponding to his 11
years of service, but in Metro, the employee was granted only one-
half month separation pay for every year of her 15year service. It
would seem then that length of service is not necessarily a criterion
for the grant of separation pay and neither apparently is the reason
for the dismissal.
The Court feels that distinctions are in order. We note that heretofore
the separation pay, when it was considered warranted, was required
regardless of the nature or degree of the ground proved, be it mere
inefficiency or something graver like immorality or dishonesty. The
benediction of compassion was made to cover a multitude of sins, as
it were, and to justify the helping hand to the validly dismissed
employee whatever the reason for his dismissal. This policy should be
re-examined. It is time we rationalized the exception, to make it fair
to both labor and management, especially to labor.
There should be no question that where it comes to such valid but not
iniquitous causes as failure to comply with work standards, the grant
of separation pay to the dismissed employee may be both just and
compassionate, particularly if he has worked for some time with the
company. For example, a subordinate who has irreconcilable policy or
personal differences with his employer may be validly dismissed for
demonstrated loss of confidence, which is an allowable ground. A
working mother who has to be frequently absent because she has also
to take care of her child may also be removed because of her poor
attendance, this being another authorized ground. It is not the
employee's fault if he does not have the necessary aptitude for his
work but on the other hand the company cannot be required to
maintain him just the same at the expense of the efficiency of its
operations. He too may be validly replaced. Under these and similar
circumstances, however, the award to the employee of separation pay
would be sustainable under the social justice policy even if the
separation is for cause.
But where the cause of the separation is more serious than mere
inefficiency, the generosity of the law must be more discerning. There
29
is no doubt it is compassionate to give separation pay to a salesman if
he is dismissed for his inability to fill his quota but surely he does not
deserve such generosity if his offense is misappropriation of the
receipts of his sales. This is no longer mere incompetence but clear
dishonesty. A security guard found sleeping on the job is doubtless
subject to dismissal but may be allowed separation pay since his
conduct, while inept, is not depraved. But if he was in fact not really
sleeping but sleeping with a prostitute during his tour of duty and in
the company premises, the situation is changed completely. This is
not only inefficiency but immorality and the grant of separation pay
would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure
of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting
on his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude,
like theft or illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee separation pay,
or financial assistance, or whatever other name it is called, on the
ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the
effect, of rewarding rather than punishing the erring employee for his
offense. And we do not agree that the punishment is his dismissal
only and that the separation pay has nothing to do with the wrong he
has committed. Of course it has. Indeed, if the employee who steals
from the company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar offense in his
next employment because he thinks he can expect a like leniency if he
is again found out. This kind of misplaced compassion is not going to
do labor in general any good as it will encourage the infiltration of its
ranks by those who do not deserve the protection and concern of the
Constitution.
The policy of social justice is not intended to countenance wrongdoing
simply because it is committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone the offense.
Compassion for the poor is an imperative of every humane society but
only when the recipient is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted to be refuge of scoundrels
any more than can equity be an impediment to the punishment of the
guilty. Those who invoke social justice may do so only if their hands
are clean and their motives blameless and not simply because they
happen to be poor. This great policy of our Constitution is not meant
for the protection of those who have proved they are not worthy of it,
 30

like the workers who have tainted the cause of labor with the Presen
blemishes of their own character. t:

QUISU
Applying the above considerations, we hold that the grant of
MBING
separation pay in the case at bar is unjustified. The private
, J.,
respondent has been dismissed for dishonesty, as found by the labor
Chairp
arbiter and affirmed by the NLRC and as she herself has impliedly
erson,
admitted. The fact that she has worked with the PLDT for more than a
CARPI
decade, if it is to be considered at all, should be taken against her as
O,
it reflects a regrettable lack of loyalty that she should have
CARPI
strengthened instead of betraying during all of her 10 years of service
O
with the company. If regarded as a justification for moderating the
MORA
penalty of dismissal, it will actually become a prize for disloyalty,
LES,
perverting the meaning of social justice and undermining the efforts of
TINGA
labor to cleanse its ranks of all undesirables.
, and
VELAS
The Court also rules that the separation pay, if found due under the CO,
circumstances of each case, should be computed at the rate of one JR., JJ
month salary for every year of service, assuming the length of such .
service is deemed material. This is without prejudice to the application
of special agreements between the employer and the employee
stipulating a higher rate of computation and providing for more
benefits to the discharged employee. 17

WHEREFORE, the petition is GRANTED. The challenged resolution of

September 22,1987, is AFFIRMED in toto except for the grant of
separation pay in the form of financial assistance, which is hereby
DISALLOWED. The temporary restraining order dated March 23, 1988,
is LIFTED. It is so ordered.

G.R. Nos. 158786 &158789

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 54

I
T
O G.R.
Nos.
H 1587
U 98-99
G
O
,

a
n Promu
d lgated
:
R
I Octob
C er 19,
K 2007
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 57

s E
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x---------------------- S
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-x A
TOYOTA MOTOR S
PHILIPPINES S
CORPORATION, O
Petitioner, C
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A M
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Respondent.
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I
L DECISION
I
P
P VELASCO, JR., J.:
I
N The Case
E
S

C In the instant petition under Rule 45 subject of G.R. Nos.

O
158786 and 158789, Toyota Motor Philippines Corporation Workers
R
P
Association (Union) and its dismissed officers and members seek to
.
set aside the February 27, 2003 Decision[1] of the Court of Appeals
W
O (CA) in CA-G.R. SP Nos. 67100 and 67561, which affirmed the August
R
K 9, 2001 Decision[2] and September 14, 2001 Resolution[3] of the
 58

National Labor Relations Commission (NLRC), declaring illegal the the largest motor vehicle manufacturers in the country employing

strikes staged by the Union and upholding the dismissal of the 227 around 1,400 workers for its plants in Bicutan and Sta. Rosa,

Union officers and members. Laguna. It is claimed that its assets amount to PhP 5.525 billion, with

net sales of PhP 14.646 billion and provisions for income tax of PhP

On the other hand, in the related cases docketed as G.R. Nos. 120.9 million.

158798-99, Toyota Motor Philippines Corporation (Toyota) prays for

the recall of the award of severance compensation to the 227 On February 14, 1999, the Union filed a petition for certification

dismissed employees, which was granted under the June 20, 2003 CA election among the Toyota rank and file employees with the National

Resolution[4] in CA-G.R. SP Nos. 67100 and 67561. Conciliation and Mediation Board (NCMB), which was docketed as

Case No. NCR-OD-M-9902-001. Med-Arbiter Ma. Zosima C. Lameyra

In view of the fact that the parties are petitioner/s and respondent/s denied the petition, but, on appeal, the DOLE Secretary granted

and vice-versa in the four (4) interrelated cases, they will be referred the Unions prayer, and, through the June 25, 1999 Order, directed the

to as simply the Union and Toyota hereafter. immediate holding of the certification election.[7]

The Facts After Toyotas plea for reconsideration was denied, the certification

election was conducted. Med-Arbiter Lameyras May 12, 2000 Order

The Union is a legitimate labor organization duly registered with the certified the Union as the sole and exclusive bargaining agent of all

Department of Labor and Employment (DOLE) and is the sole and the Toyota rank and file employees. Toyota challenged said Order via

exclusive bargaining agent of all Toyota rank and file employees.[5] an appeal to the DOLE Secretary.[8]

Toyota, on the other hand, is a domestic corporation In the meantime, the Union submitted its Collective Bargaining

engaged in the assembly and sale of vehicles and parts.[6] It is a Agreement (CBA) proposals to Toyota, but the latter refused to

Board of Investments (BOI) participant in the Car Development negotiate in view of its pending appeal. Consequently, the Union filed

Program and the Commercial Vehicle Development Program. It is a notice of strike on January 16, 2001 with the NCMB, docketed as

likewise a BOI-preferred non-pioneer export trader of automotive NCMB-NCR-NS-01-011-01, based on Toyotas refusal to bargain.

parts and is under the Special Economic Zone Act of 1995. It is one of On February 5, 2001, the NCMB-NCR converted the notice of strike
 59

into a preventive mediation case on the ground that the issue of

whether or not the Union is the exclusive bargaining agent of Soon thereafter, on February 27, 2001, Toyota sent individual letters

all Toyota rank and file employees was still unresolved by the DOLE to some 360 employees requiring them to explain within 24 hours why

Secretary. they should not be dismissed for their obstinate defiance of the

companys directive to render overtime work on February 21, 2001,

In connection with Toyotas appeal, Toyota and the Union were for their failure to report for work on February 22 and 23, 2001, and

required to attend a hearing on February 21, 2001 before the Bureau for their participation in the concerted actions which severely

of Labor Relations (BLR) in relation to the exclusion of the votes of disrupted and paralyzed the plants operations.[10] These letters

alleged supervisory employees from the votes cast during the specifically cited Section D, paragraph 6 of the Companys Code of

certification election. The February 21, 2001 hearing was cancelled Conduct, to wit:

and reset to February 22, 2001. On February 21, 2001, 135 Union
Inciting or participating in riots, disorders, alleged
officers and members failed to render the required overtime work, and strikes, or concerted actions detrimental to
[Toyotas] interest.
instead marched to and staged a picket in front of the BLR office in
1st offense dismissal.[11]
Intramuros, Manila.[9] The Union, in a letter of the same date, also

requested that its members be allowed to be absent on February 22,

2001 to attend the hearing and instead work on their next scheduled
Meanwhile, a February 27, 2001 Manifesto was circulated by
rest day. This request however was denied by Toyota.
the Union which urged its members to participate in a strike/picket

and to abandon their posts, the pertinent portion of which reads, as

Despite denial of the Unions request, more than 200 employees
follows:
staged mass actions on February 22 and 23, 2001 in front of the BLR

and the DOLE offices, to protest the partisan and anti-union stance YANIG sa kanyang komportableng upuan
ang management ng TOYOTA. And dating takot,
of Toyota. Due to the deliberate absence of a considerable number of kimi, at mahiyaing manggagawa ay walang takot na
nagmartsa at nagprotesta laban sa desperadong
employees on February 22 to 23, 2001, Toyotaexperienced acute lack pagtatangkang baguhin ang desisyon ng DOLE na
pabor sa UNYON. Sa tatlong araw na protesta,
of manpower in its manufacturing and production lines, and was mahigit sa tatlong daang manggagawa ang
lumahok.
unable to meet its production goals resulting in huge losses of PhP
xxxx
53,849,991.
 60

HANDA na tayong lumabas anumang

oras kung patuloy na ipagkakait
ng management ang CBA. Oo maari tayong Consequently, on March 2 and 5, 2001, Toyota issued two (2)
masaktan sa welga. Oo, maari tayong
memoranda to the concerned employees to clarify whether or not they
magutom sa piketlayn. Subalit may pagkakaiba
ba ito sa unti-unting pagpatay sa atin sa loob ng 12
are adopting the March 1, 2001 Unions explanation as their own. The
taong makabaling likod ng pagtatrabaho? Ilang taon
na lang ay magkakabutas na ang ating mga baga sa employees were also required to attend an investigative
mga alipato at usok ng welding. Ilang taon na lang
ay marupok na ang ating mga buto sa kabubuhat. interview,[14] but they refused to do so.
Kung dumating na ang panahong ito at wala pa
tayong CBA, paano na? Hahayaan ba nating ang
kumpanya lang ang makinabang sa yamang likha ng
higit sa isang dekadang pagpapagal natin? On March 16, 2001, Toyota terminated the employment of 227

HUWAG BIBITIW SA NASIMULANG TAGUMPAY!
PAIGTINGIN ANG PAKIKIBAKA PARA SA ISANG
MAKATARUNGANG CBA!
HIGIT PANG PATATAGIN ANG PAGKAKAISA NG MGA
MANGGAGAWA SA TOYOTA![12] (Emphasis supplied.)
On the next day, the Union filed with the NCMB another
notice of strike docketed as NCMB-NCR-NS-02-061-01 for union
busting amounting to unfair labor practice.
On March 1, 2001, the Union nonetheless submitted
explanation in compliance with the February 27, 2001 notices sent
by Toyota to the erring employees. The Union members explained
that their refusal to work on their scheduled work time for two
consecutive days was simply an exercise of their constitutional right to
peaceably assemble and to petition the government for redress of
grievances. It further argued that the demonstrations staged by the
employees on February 22 and 23, 2001 could not be classified as an
illegal strike or picket, and that Toyota had already condoned the
alleged acts when it accepted back the subject employees.[13]
employees[15] for participation in concerted actions in violation of its
Code of Conduct and for misconduct under Article 282 of the Labor
Code. The notice of termination reads:
After a careful evaluation of the evidence
on hand, and a thorough assessment of your
explanation, TMP has concluded that there are
overwhelming reasons to terminate your services
based on Article 282 of the Labor Code and TMPs
Code of Conduct.
Your repeated absences without permission
an on February 22 to 23, 2001 to participate in a
concerted action against TMP constitute
abandonment of work and/or very serious
misconduct under Article 282 of the Labor Code.
The degree of your offense is aggravated
by the following circumstances:
1. You expressed to management that
you will adopt the unions letter
dated March 1, 2001, as your own
explanation to the charges contained in the
Due Process Form dated February 27,
2001. It is evident from such explanation
that you did not come to work because you
deliberately participated together with
other Team Members in a plan to engage in
concerted actions detrimental to TMPs

interest. As a result of your participation in
the widespread abandonment of work by
Team Members from February 22 to 23,
2001, TMP suffered substantial damage.
It is significant that the absences you
incurred in order to attend the clarificatory
hearing conducted by the Bureau of Labor
Relations were unnecessary because the
union was amply represented in the said
hearings by its counsel and certain
members who sought and were granted
leave for the purpose. Your reason for
being absent is, therefore, not acceptable;
and
2. Your participation in the organized
work boycott by Team Members on
February 22 and 23 led to work disruptions
that prevented the Company from meeting
its production targets, resulting [in]
foregone sales of more than eighty (80)
vehicles, mostly new-model Revos, valued
at more than Fifty Million Pesos
(50,000,000.00).
The foregoing is also a violation of TMPs Code of
Conduct (Section D, Paragraph 6) to wit:
Inciting or participating in riots, disorders,
illegal strikes or concerted actions
detrimental to TMPs interest.
Based on the above, TMP Management is
left with no other recourse but to terminate your
employment effective upon your receipt thereof.
[Sgd.]
JOSE MARIA ALIGADA
Deputy Division Manager[16]
In reaction to the dismissal of its union members and
officers, the Union went on strike on March 17, 2001. Subsequently,
from March 28, 2001 to April 12, 2001, the Union intensified its strike
by barricading the gates of Toyotas Bicutan and Sta. Rosa plants. The
61
strikers prevented workers who reported for work from entering the
plants. In his Affidavit, Mr. Eduardo Nicolas III, Security Department
Head, stated that:
3. On March 17, 2001, members of the
Toyota Motor Philippines Corporation Workers
Association (TMPCWA), in response to the dismissal
of some two hundred twenty seven (227) leaders
and members of TMPCWA and without observing the
requirements mandated by the Labor Code, refused
to report for work and picketed TMPC premises
from 8:00 a.m. to 5:00 p.m. The strikers
badmouthed people coming in and hurled invectives
such as bakeru at Japanese officers of the company.
The strikers likewise pounded the officers vehicle as
they tried to enter the premises of the company.
4. On March 28, 2001, the strikers
intensified their picketing and barricaded the gates
of TMPCs Bicutan and Sta. Rosa plants, thus,
blocking the free ingress/egress to and from the
premises. Shuttle buses and cars containing TMPC
employees, suppliers, dealers, customers and other
people having business with the company, were
prevented by the strikers from entering the plants.
5. As a standard operating procedure, I
instructed my men to take photographs and video
footages of those who participated in the strike.
Seen on video footages taken on various dates
actively participating in the strike were union
officers Emilio C. Completo, Alexander Esteva, Joey
Javellonar and Lorenzo Caraqueo.
6. Based on the pictures, among those
identified to have participated in the March 28, 2001
strike were Grant Robert Toral, John Posadas, Alex
Sierra, Allan John Malabanan, Abel Bersos, Ernesto
Bonavente, Ariel Garcia, Pablito Adaya, Feliciano
Mercado, Charlie Oliveria, Philip Roxas, June
Lamberte, Manjolito Puno, Baldwin San Pablo,
Joseph Naguit, Federico Torres, Larry Gerola,
Roderick Bayani, Allan Oclarino, Reynaldo Cuevas,
Jorge Polutan, Arman Ercillo, Jimmy Hembra, Albert
 62

Mariquit, Ramil Gecale, Jimmy Palisoc, Normandy

Castalone, Joey Llanera, Greg Castro, Felicisimo Case No. 30-04-01775-01, and prayed that the erring Union officers,
Escrimadora, Rodolfo Bay, Ramon Clemente, Dante
Baclino, Allan Palomares, Arturo Murillo and Robert directors, and members be dismissed.[19]
Gonzales. Attached hereto as Annexes 1 to 18 are
the pictures taken on March 28, 2001 at the Bicutan
and Sta. Rosa plants.
On April 10, 2001, the DOLE Secretary assumed jurisdiction over the
7. From March 29 to 31, 2001, the strikers labor dispute and issued an Order[20] certifying the labor dispute to the
continued to barricade the entrances to TMPCs two
(2) plants. Once again, the strikers hurled nasty NLRC. In said Order, the DOLE Secretary directed all striking workers
remarks and prevented employees aboard shuttle
buses from entering the plants. Among the strikers to return to work at their regular shifts by April 16, 2001. On the
were Christopher Saldivar, Basilio Laqui, Sabas
Bernabise, Federico Torres, Freddie Olit, Josel other hand, it ordered Toyota to accept the returning employees
Agosto, Arthur Parilla, Richard Calalang, Ariel
Garcia, Edgar Hilaga, Charlie Oliveria, Ferdinand under the same terms and conditions obtaining prior to the strike or
Jaen, Wilfredo Tagle, Alejandro Imperial, Manjolito
at its option, put them under payroll reinstatement. The parties were
Puno, Delmar Espadilla, Domingo Javier, Apollo
Violeta and Elvis Tabinao.[17] also enjoined from committing acts that may worsen the situation.

The Union ended the strike on April 12, 2001. The union members and
On March 29, 2001, Toyota filed a petition for injunction with a prayer
officers tried to return to work on April 16, 2001 but were told
for the issuance of a temporary restraining order (TRO) with the
that Toyota opted for payroll-reinstatement authorized by the Order of
NLRC, which was docketed as NLRC NCR Case No. INJ-0001054-01. It
the DOLE Secretary.
sought free ingress to and egress from its Bicutan and Sta. Rosa

manufacturing plants. Acting on said petition, the NLRC, on April 5,

In the meantime, the Union filed a motion for reconsideration of the
2001, issued a TRO against the Union, ordering its leaders and
DOLE Secretarys April 10, 2001 certification Order, which, however,
members as well as its sympathizers to remove their barricades and
was denied by the DOLE Secretary in her May 25, 2001 Resolution.
all forms of obstruction to ensure free ingress to and egress from the
Consequently, a petition for certiorari was filed before the CA, which
companys premises. In addition, the NLRC rejected the Unions motion
was docketed as CA-G.R. SP No. 64998.
to dismiss based on lack of jurisdiction.[18]

In the intervening time, the NLRC, in compliance with the April 10,
Meanwhile, Toyota filed a petition to declare the strike illegal with the
2001 Order of the DOLE Secretary, docketed the case as Certified
NLRC arbitration branch, which was docketed as NLRC NCR (South)
Case No. 000203-01.
 63

Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating

Meanwhile, on May 23, 2001, at around 12:00 nn., despite the its previous order for both parties to submit their respective position

issuance of the DOLE Secretarys certification Order, several payroll- papers on or before June 2, 2001. The same Order also denied

reinstated members of the Union staged a protest rally in front of the Unions verbal motion to defer hearing on the certified cases.

Toyotas Bicutan Plant bearing placards and streamers in defiance of

the April 10, 2001 Order. On June 27, 2001, the Union filed a Motion for

Reconsideration of the NLRCs June 19, 2001 Order, praying for the

Then, on May 28, 2001, around forty-four (44) Union deferment of the submission of position papers until its petition for

members staged another protest action in front of the Bicutan certiorari is resolved by the CA.

Plant. At the same time, some twenty-nine (29) payroll-reinstated

employees picketed in front of the Santa Rosa Plants main entrance, On June 29, 2001, only Toyota submitted its position

and were later joined by other Union members. paper. On July 11, 2001, the NLRC again ordered the Union to submit

its position paper by July 19, 2001, with a warning that upon failure

On June 5, 2001, notwithstanding the certification Order, for it to do so, the case shall be considered submitted for decision.

the Union filed another notice of strike, which was docketed as NCMB-

NCR-NS-06-150-01. On June 18, 2001, the DOLE Secretary directed Meanwhile, on July 17, 2001, the CA dismissed the Unions

the second notice of strike to be subsumed in the April 10, petition for certiorari in CA-G.R. SP No. 64998, assailing the DOLE

2001 certification Order. Secretarys April 10, 2001 Order.

In the meantime, the NLRC, in Certified Case No. 000203-01, ordered Notwithstanding repeated orders to file its position paper,

both parties to submit their respective position papers on June 8, the Union still failed to submit its position paper on July 19, 2001.

2001. The union, however, requested for abeyance of the proceedings Consequently, the NLRC issued an Order directing the Union to submit

considering that there is a pending petition for certiorari with the CA its position paper on the scheduled August 3, 2001 hearing;

assailing the validity of the DOLE Secretarys Assumption of otherwise, the case shall be deemed submitted for resolution based on

Jurisdiction Order. the evidence on record.

 64

During the August 3, 2001 hearing, the Union, despite several The NLRC considered the mass actions staged on February 21 to 23,

accommodations, still failed to submit its position paper. Later that 2001 illegal as the Union failed to comply with the procedural

day, the Union claimed it filed its position paper by registered mail. requirements of a valid strike under Art. 263 of the Labor Code.

Subsequently, the NLRC, in its August 9, 2001 Decision, declared the After the DOLE Secretary assumed jurisdiction over

strikes staged by the Union on February 21 to 23, 2001 and May 23 the Toyota dispute on April 10, 2001, the Union again staged strikes

and 28, 2001 as illegal.The decretal portion reads: on May 23 and 28, 2001. The NLRC found the strikes illegal as they

violated Art. 264 of the Labor Code which proscribes any strike or

WHEREFORE, premises considered, it is hereby lockout after jurisdiction is assumed over the dispute by the President
ordered:
or the DOLE Secretary.
(1) Declaring the strikes staged by the Union to be
illegal.
The NLRC held that both parties must have maintained the
(2) Declared [sic] that the dismissal of the
227 who participated in the illegal strike on February status quo after the DOLE Secretary issued the
21-23, 2001 is legal.
assumption/certification Order, and ruled that the Union did not
(3) However, the Company is ordered to pay the
227 Union members, who participated in the illegal respect the DOLE Secretarys directive.
strike severance compensation in an amount
equivalent to one month salary for every year of
service, as an alternative relief to continued
employment. Accordingly, both Toyota and the Union filed Motions for

(4) Declared [sic] that the following Union officers Reconsideration, which the NLRC denied in its September 14,
and directors to have forfeited their employment
status for having led the illegal strikes on February 2001 Resolution.[23] Consequently, both parties questioned the August
21-23, 2001 and May 23 and 28, 2001: Ed Cubelo,
Maximino Cruz, Jr., Ricky Chavez, Joselito Hugo, 9, 2001 Decision[24] and September 14, 2001 Resolution of the NLRC
Virgilio Colandog, Rommel Digma, Federico Torres,
Emilio Completo, Alexander Esteva, Joey
in separate petitions for certiorari filed with the CA, which were
Javellonar, Lorenzo Caraqueo, Roderick Nieres,
Antonio Borsigue, Bayani Manguil, Jr., and
Mayo Mata.[21] docketed as CA-G.R. SP Nos. 67100 and 67561, respectively. The CA

SO ORDERED.[22] then consolidated the petitions.

 65

In its February 27, 2003 Decision,[25] the CA ruled that the However, in its June 20, 2003 Resolution,[28] the CA modified

Unions petition is defective in form for its failure to append a proper its February 27, 2003 Decision by reinstating severance compensation

verification and certificate of non-forum shopping, given that, out of to the dismissed employees based on social justice.

the 227 petitioners, only 159 signed the verification and certificate of

non-forum shopping. Despite the flaw, the CA proceeded to resolve The Issues

the petitions on the merits and affirmed the assailed NLRC Decision

and Resolution with a modification, however, of deleting the award of Petitioner Union now comes to this Court and raises the

severance compensation to the dismissed Union members. following issues for our consideration:

I. Whether the mere participation of

In justifying the recall of the severance compensation, the CA ordinary employees in an illegal strike is
enough reason to warrant their dismissal.
considered the participation in illegal strikes as serious misconduct. It
II. Whether the Union officers and
members act of holding the protest rallies
defined serious misconduct as a transgression of some established
in front of the BLR office and the Office of
the Secretary of Labor and Employment on
and definite rule of action, a forbidden act, a dereliction of duty, willful February 22 and 23, 2001 should be held
as illegal strikes. In relation hereto,
in character, and implies wrongful intent and not mere error in whether the protests committed on May 23
and 28, 2001, should be held as illegal
judgment. It cited Panay Electric Company, Inc. v. NLRC,[26] where we strikes. Lastly, whether the Union violated
the Assumption of Jurisdiction Order issued
revoked the grant of separation benefits to employees who lawfully by the Secretary of Labor and Employment.

participated in an illegal strike based on Art. 264 of the Labor Code, III. Whether the dismissal of 227 Union
officers and members constitutes unfair
labor practice.
which states that any union officer who knowingly participates in an
IV. Whether the CA erred in affirming the
illegal strike and any worker or union officer who knowingly
Decision of the NLRC which excluded
the Unions Position Paper which
participates in the commission of illegal acts during a strike may be the Union filed by mail. In the same vein,
whether the Unions right to due process
declared to have lost his employment status.[27] was violated when the NLRC excluded their
Position Paper.
 66

V. Whether the CA erred in dismissing

the Unions Petition for Certiorari. We rule otherwise.

Toyota, on the other hand, presents this sole issue for our It is entirely the Unions fault that its position paper was not

determination: considered by the NLRC. Records readily reveal that the NLRC was

even too generous in affording due process to the Union. It issued no

I. Whether the Court of Appeals erred
in issuing its Resolution dated June 20,
less than three (3) orders for the parties to submit its position papers,
2003, partially modifying its Decision
dated February 27, 2003, and awarding
severance compensation to the dismissed which the Union ignored until the last minute. No sufficient
Union members.
justification was offered why the Union belatedly filed its position

paper. In Datu Eduardo Ampo v. The Hon. Court of Appeals, it was

In sum, two main issues are brought to the fore:
explained that a party cannot complain of deprivation of due process if
(1) Whether the mass actions committed by the Union on
he was afforded an opportunity to participate in the proceedings but
different occasions are illegal strikes; and
failed to do so. If he does not avail himself of the chance to be heard,

then it is deemed waived or forfeited without violating the

(2) Whether separation pay should be awarded to the Union
constitutional guarantee.[29] Thus, there was no violation of the Unions
members who participated in the illegal strikes.
right to due process on the part of the NLRC.

The Courts Ruling

On a procedural aspect, the Union faults the CA for treating its

petition as an unsigned pleading and posits that the verification signed

The Union contends that the NLRC violated its right to due process
by 159 out of the 227 petitioners has already substantially complied
when it disregarded its position paper in deciding Toyotas petition to
with and satisfied the requirements under Secs. 4 and 5 of Rule 7 of
declare the strike illegal.
the Rules of Court.
 67

The Unions proposition is partly correct. executed the verification. Undeniably, the petition meets the

requirement on the verification with respect to the 159 petitioners

Sec. 4 of Rule 7 of the Rules of Court states: who executed the verification, attesting that they have sufficient

Sec. 4. Verification.Except when otherwise knowledge of the truth and correctness of the allegations of the
specifically required by law or rule, pleadings need
not be under oath, verified or accompanied by petition. However, their signatures cannot be considered as
affidavit.
A pleading is verified by an affidavit that the affiant
verification of the petition by the other 68 named petitioners unless
has read the pleading and that the allegations
therein are true and correct of his personal
knowledge or based on authentic records. the latter gave written authorization to the 159 petitioners to sign the

A pleading required to be verified which contains a verification on their behalf. Thus, in Loquias v. Office of the
verification based on information and belief or upon
knowledge, information and belief, or lacks a proper Ombudsman, we ruled that the petition satisfies the formal
verification, shall be treated as an unsigned
pleading. requirements only with regard to the petitioner who signed the

petition but not his co-petitioner who did not sign nor authorize the

other petitioner to sign it on his behalf.[32] The proper ruling in this

The verification requirement is significant, as it is intended to secure
situation is to consider the petition as compliant with the formal
an assurance that the allegations in the pleading are true and correct
requirements with respect to the parties who signed it and, therefore,
and not the product of the imagination or a matter of
can be given due course only with regard to them. The other
speculation.[30] This requirement is simply a condition affecting the
petitioners who did not sign the verification and certificate against
form of pleadings, and noncompliance with the requirement does not
forum shopping cannot be recognized as petitioners have no legal
necessarily render it fatally defective. Indeed, verification is only a
standing before the Court. The petition should be dismissed outright
formal and not a jurisdictional requirement.[31]
with respect to the non-conforming petitioners.

In this case, the problem is not the absence but the adequacy of

the Unions verification, since only 159 out of the 227 petitioners
 68

(6) [when it] is contrary to an

In the case at bench, however, the CA, in the exercise of sound existing agreement, such as a no-strike clause or
conclusive arbitration clause.[33]
discretion, did not strictly apply the ruling in Loquias and instead

proceeded to decide the case on the merits.

Petitioner Union contends that the protests or rallies

The alleged protest rallies in front of the offices of BLR and conducted on February 21 and 23, 2001 are not within the ambit of
DOLE Secretary and at the Toyota plants constituted illegal
strikes strikes as defined in the Labor Code, since they were legitimate

exercises of their right to peaceably assemble and petition the

When is a strike illegal? government for redress of grievances. Mainly relying on the doctrine

laid down in the case of Philippine Blooming Mills Employees

Noted authority on labor law, Ludwig Teller, lists six (6) Organization v. Philippine Blooming Mills Co., Inc.,[34] it argues that

categories of an illegal strike, viz: the protest was not directed at Toyota but towards the Government

(1) [when it] is contrary to a (DOLE and BLR). It explains that the protest is not a strike as
specific prohibition of law, such as strike by
employees performing governmental functions; or
contemplated in the Labor Code. The Union points out that
(2) [when it] violates a specific requirement
of law[, such as Article 263 of the Labor Code on the inPhilippine Blooming Mills Employees Organization, the mass action
requisites of a valid strike]; or
staged in Malacaang to petition the Chief Executive against the
(3) [when it] is declared for an
unlawful purpose, such as inducing the employer to abusive behavior of some police officers was a proper exercise of the
commit an unfair labor practice against non-union
employees; or employees right to speak out and to peaceably gather and ask

(4) [when it] employs unlawful means in government for redress of their grievances.
the pursuit of its objective, such as a widespread
terrorism of non-strikers [for example, prohibited
acts under Art. 264(e) of the Labor Code]; or
The Unions position fails to convince us.
(5) [when it] is declared in violation of an
existing injunction[, such as injunction, prohibition,
or order issued by the DOLE Secretary and the NLRC
under Art. 263 of the Labor Code]; or
While the facts in Philippine Blooming Mills Employees

Organization are similar in some respects to that of the present case,

 69

the Union fails to realize one major difference: there was no labor controlling.[36] The term strike has been elucidated to encompass not

dispute in Philippine Blooming Mills Employees Organization. In the only concerted work stoppages, but also slowdowns, mass leaves, sit-

present case, there was an on-going labor dispute arising downs, attempts to damage, destroy, or sabotage plant equipment

from Toyotas refusal to recognize and negotiate with the Union, which and facilities, and similar activities.[37]

was the subject of the notice of strike filed by the Union on January

16, 2001. Thus, the Unions reliance on Phililippine Blooming Applying pertinent legal provisions and jurisprudence, we rule that the

Mills Employees Organization is misplaced, as it cannot be considered protest actions undertaken by the Union officials and members

a precedent to the case at bar. on February 21 to 23, 2001are not valid and proper exercises of their

right to assemble and ask government for redress of their complaints,

A strike means any temporary stoppage of work by the but are illegal strikes in breach of the Labor Code. The Unions position

concerted action of employees as a result of an industrial or labor is weakened by the lack of permit from the City of Manila to hold

dispute. A labor dispute, in turn, includes any controversy or matter rallies. Shrouded as demonstrations, they were in reality temporary

concerning terms or conditions of employment or the association or stoppages of work perpetrated through the concerted action of the

representation of persons in negotiating, fixing, maintaining, employees who deliberately failed to report for work on the

changing, or arranging the terms and conditions of employment, convenient excuse that they will hold a rally at the BLR and DOLE

regardless of whether the disputants stand in the proximate relation offices in Intramuros, Manila, on February 21 to 23, 2001. The

of the employer and the employee.[35] purported reason for these protest actions was to safeguard their

rights against any abuse which the med-arbiter may commit against

In Bangalisan v. Court of Appeals, it was explained that [t]he fact that their cause. However, the Union failed to advance convincing proof

the conventional term strike was not used by the striking employees that the med-arbiter was biased against them. The acts of the med-

to describe their common course of action is inconsequential, since arbiter in the performance of his duties are presumed regular. Sans

the substance of the situation and not its appearance, will be deemed ample evidence to the contrary, the Union was unable to justify the
 70

wish to hold a demonstration in front of any

February 2001 mass actions. What comes to the fore is that the government agency. While we recognize the right
of every person or a group to peaceably assemble
decision not to work for two days was designed and calculated to and petition the government for redress of
grievances, the exercise of such right is governed by
existing laws, rules and regulations.
cripple the manufacturing arm of Toyota. It becomes obvious that the
Although the respondent union admittedly
real and ultimate goal of the Union is to coerce Toyota to finally made earnest representations with the company to
hold a mass protest before the BLR, together with
acknowledge the Union as the sole bargaining agent of the their officers and members, the denial of the request
by the management should have been heeded and
company. This is not a legal and valid exercise of the right of ended their insistence to hold the planned mass
demonstration. Verily, the violation of the company
assembly and to demand redress of grievance. rule cannot be dismissed as mere absences of two
days as being suggested by the union [are but]
concerted actions detrimental to Petitioner Toyotas
interest.[38](Emphasis supplied.)
We sustain the CAs affirmance of the NLRCs finding that the

It is obvious that the February 21 to 23, 2001 concerted

protest rallies staged on February 21 to 23, 2001 were actually illegal

actions were undertaken without satisfying the prerequisites for a

strikes. The illegality of the Unions mass actions was succinctly

valid strike under Art. 263 of the Labor Code. The Union failed to
elaborated by the labor tribunal, thus:

comply with the following requirements: (1) a notice of strike filed

We have stated in our questioned decision
that such mass actions staged before the Bureau of with the DOLE 30 days before the intended date of strike, or 15 days
Labor Relations on February 21-23, 2001 by the
union officers and members fall squarely within the in case of unfair labor practice;[39] (2) strike vote approved by a
definition of a strike (Article 212 (o), Labor Code).
These concerted actions resulted in the temporary majority of the total union membership in the bargaining unit
stoppage of work causing the latter substantial
losses. Thus, without the requirements for a valid concerned obtained by secret ballot in a meeting called for that
strike having been complied with, we were
constrained to consider the strike staged on such purpose; and (3) notice given to the DOLE of the results of the voting
dates as illegal and all employees who participated
in the concerted actions to have consequently lost
at least seven days before the intended strike. These requirements
their employment status.

If we are going to stamp a color of are mandatory and the failure of a union to comply with them renders
legality on the two (2) [day-] walk out/strike
of respondents without filing a notice of strike, the strike illegal.[40] The evident intention of the law in requiring the
in effect we are giving license to all the unions
in the country to paralyze the operations of strike notice and the strike-vote report is to reasonably regulate the
their companies/employers every time they
 71

right to strike, which is essential to the attainment of legitimate policy these strikes were illegal because unlawful means were

objectives embodied in the law.[41] As they failed to conform to the employed. The acts of the Union officers and members are in palpable

law, the strikes on February 21, 22, and 23, 2001 were illegal. violation of Art. 264(e), which proscribes acts of violence, coercion, or

intimidation, or which obstruct the free ingress to and egress from the

Moreover, the aforementioned February 2001 strikes are in company premises. Undeniably, the strikes from March 28 to April 12,

blatant violation of Sec. D, par. 6 of Toyotas Code of Conduct which 2001 were illegal.

prohibits inciting or participating in riots, disorders, alleged strikes or

concerted actions detrimental to [Toyotas] interest. The penalty for Petitioner Union also posits that strikes were not committed

the offense is dismissal. The Union and its members are bound by the on May 23 and 28, 2001. The Union asserts that the rallies held on

company rules, and the February 2001 mass actions and deliberate May 23 and 28, 2001 could not be considered strikes, as the

refusal to render regular and overtime work on said days violated participants were the dismissed employees who were on payroll

these rules. In sum, the February 2001 strikes and walk-outs were reinstatement. It concludes that there was no work stoppage.

illegal as these were in violation of specific requirements of the Labor

Code and a company rule against illegal strikes or concerted actions. This contention has no basis.

It is clear that once the DOLE Secretary assumes jurisdiction

With respect to the strikes committed from March 17 to April over the labor dispute and certifies the case for compulsory arbitration

12, 2001, those were initially legal as the legal requirements were with the NLRC, the parties have to revert to the status quo ante (the

met. However, on March 28 to April 12, 2001, the Union barricaded state of things as it was before). The intended normalcy of operations

the gates of the Bicutan and Sta. Rosa plants and blocked the free is apparent from the fallo of the April 10, 2001 Order of then DOLE

ingress to and egress from the company premises. Toyotaemployees, Secretary Patricia A. Sto. Tomas, which reads:

customers, and other people having business with the company were
WHEREFORE, PREMISES CONSIDERED,
intimidated and were refused entry to the plants. As earlier explained, this Office hereby CERTIFIES the labor dispute at
Toyota Motors Philippines Corporation to the [NLRC]
 72

pursuant to Article 263 (g) of the Labor Code, as

amended. This Certification covers the current labor This was not heeded by the Union and the individual
cases filed in relation with the Toyota strike,
particularly, the Petition for Injunction filed with the respondents who staged illegal concerted actions on May 23 and 28,
National Labor Relations Commission entitled Toyota
Motor Philippines Corporation vs. Toyota Motor
2001 in contravention of the Order of the DOLE Secretary that no acts
Philippines Corporation Workers Association
(TMPCWA), Ed Cubelo, et al., NLRC Injunction Case
No. 3401054-01; Toyota Motor Philippines should be undertaken by them to aggravate the already deteriorated
Corporation vs. Toyota Motor Philippines Corporation
Workers Association, et al., NLRC NCR Case No. situation.
3004-01775-01, and such other labor cases that the
parties may file relating to the strike and its effects
while this Certification is in effect.
While it may be conceded that there was no work disruption
As provided under Article 2634(g) of the
Labor Code, all striking workers are directed to in the two Toyota plants, the fact still remains that the Union and its
return to work at their regular shifts by April 16,
2001; the Company is in turn directed to accept
members picketed and performed concerted actions in front of the
them back to work under the same terms and
conditions obtaining prior to the work stoppage,
subject to the option of the company to merely Company premises. This is a patent violation of the assumption of
reinstate a worker or workers in the payroll in light
of the negative emotions that the strike has jurisdiction and certification Order of the DOLE Secretary, which
generated and the need to prevent the further
deterioration of the relationship between the ordered the parties to cease and desist from committing any act that
company and its workers.
might lead to the worsening of an already deteriorated situation.
Further, the parties are hereby ordered
to cease and desist from committing any act While there are no work stoppages, the pickets and concerted actions
that might lead to the worsening of an already
deteriorated situation.[42](Emphasis supplied.) outside the plants have a demoralizing and even chilling effect on the

workers inside the plants and can be considered as veiled threats of

possible trouble to the workers when they go out of the company

It is explicit from this directive that the Union and its
premises after work and of impending disruption of operations to
members shall refrain from engaging in any activity that might
company officials and even to customers in the days to come. The
exacerbate the tense labor situation in Toyota, which certainly
pictures presented by Toyota undoubtedly show that the company
includes concerted actions.
officials and employees are being intimidated and threatened by the

strikers. In short, the Union, by its mass actions, has inflamed an

 73

already volatile situation, which was explicitly proscribed by the DOLE Art. 264(a) sanctions the dismissal of a union officer who

Secretarys Order. We do not find any compelling reason to reverse knowingly participates in an illegal strike or who knowingly

the NLRC findings that the pickets on May 23 and 28, 2001 were participates in the commission of illegal acts during a lawful strike.

unlawful strikes.

It is clear that the responsibility of union officials is greater

From the foregoing discussion, we rule that the February 21 than that of the members. They are tasked with the duty to lead and

to 23, 2001 concerted actions, the March 17 to April 12, 2001 strikes, guide the membership in decision making on union activities in

and the May 23 and 28, 2001 mass actions were illegal strikes. accordance with the law, government rules and regulations, and

Union officers are liable for unlawful strikes or illegal acts established labor practices. The leaders are expected to recommend
during a strike
actions that are arrived at with circumspection and contemplation,

and always keep paramount the best interests of the members and
Art. 264 (a) of the Labor Code provides:
union within the bounds of law. If the implementation of an illegal

ART. 264. PROHIBITED ACTIVITIES

strike is recommended, then they would mislead and deceive the
(a) x x x

Any worker whose employment has been terminated membership and the supreme penalty of dismissal is appropriate. On
as a consequence of an unlawful lockout shall be
entitled to reinstatement with full backwages. Any the other hand, if the strike is legal at the beginning and the officials
union officer who knowingly participates in an illegal
strike and any worker or union officer who commit illegal acts during the duration of the strike, then they cannot
knowingly participates in the commission of illegal
acts during a strike may be declared to have lost his evade personal and individual liability for said acts.
employment status: Provided, That mere
participation of a worker in a lawful strike shall not
constitute sufficient ground for termination of his
employment, even if a replacement had been hired
The Union officials were in clear breach of Art. 264(a) when
by the employer during such lawful strike.
they knowingly participated in the illegal strikes held from February

21 to 23, 2001, from March 17 to April 12, 2001, and on May 23 and

28, 2001. We uphold the findings of fact of the NLRC on the

 74

involvement of said union officials in the unlawful concerted actions as bound to guide their members to respect the law.[46] Contrarily, if the

affirmed by the CA, thus: officers urge the members to violate the law and defy the duly

As regards to the Union officers and directors, there constituted authorities, their dismissal from the service is a just
is overwhelming justification to declare their
termination from service. Having instigated the penalty or sanction for their unlawful acts.[47]
Union members to stage and carry out all illegal
strikes from February 21-23, 2001, and May 23 and
28, 2001, the following Union officers are hereby
terminated for cause pursuant to Article 264(a) of
the Labor Code: Ed Cubelo, Maximino Cruz, Jr., Members liability depends on participation in illegal acts
Ricky Chavez, Joselito Hugo, Virgilio Colandog,
Rommel Digma, Federico Torres, Emilio Completo,
Alexander Esteva, Joey Javellonar, Lorenzo
Caraqueo, Roderick Nieres, Antonio Borsigue, Bayani Art. 264(a) of the Labor Code provides that a member is liable when
Manguil, Jr., and Mayo Mata.[43]
he knowingly participates in an illegal act during a strike. While the

provision is silent on whether the strike is legal or illegal, we find that

The rule is well entrenched in this jurisdiction that factual
the same is irrelevant. As long as the members commit illegal acts, in
findings of the labor tribunal, when affirmed by the appellate court,
a legal or illegal strike, then they can be terminated.[48] However,
are generally accorded great respect, even finality.[44]
when union members merely participate in an illegal strike without

committing any illegal act, are they liable?

Likewise, we are not duty-bound to delve into the accuracy of

the factual findings of the NLRC in the absence of clear showing that
This was squarely answered in Gold City Integrated Port
these were arbitrary and bereft of any rational basis.[45] In the case at
Service, Inc. v. NLRC,[49] where it was held that an ordinary striking
bench, the Union failed to convince us that the NLRC findings that the
worker cannot be terminated for mere participation in an illegal
Union officials instigated, led, and knowingly participated in the series
strike. This was an affirmation of the rulings in Bacus v.
of illegal strikes are not reinforced by substantial evidence. Verily,
Ople[50] and Progressive Workers Union v. Aguas,[51] where it was held
said findings have to be maintained and upheld. We reiterate, as a
that though the strike is illegal, the ordinary member who merely
reminder to labor leaders, the rule that [u]nion officers are duty
participates in the strike should not be meted loss of employment on
 75

Replacing the Industrial Peace Act, the

the considerations of compassion and good faith and in view of the Labor Code has not adopted the vicarious liability
rule.[53]
security of tenure provisions under the Constitution. In Esso

Philippines, Inc. v. Malayang Manggagawa sa Esso (MME), it was

Thus, the rule on vicarious liability of a union member was

explained that a member is not responsible for the unions illegal strike

abandoned and it is only when a striking worker knowingly

even if he voted for the holding of a strike which became illegal.[52]

participates in the commission of illegal acts during a strike that he

will be penalized with dismissal.

Noted labor law expert, Professor Cesario A. Azucena, Jr.,

traced the history relating to the liability of a union member in an

Now, what are considered illegal acts under Art. 264(a)?

illegal strike, starting with the rule of vicarious liability, thus:

Under [the rule of vicarious liability], mere

membership in a labor union serves as basis of No precise meaning was given to the phrase illegal acts. It
liability for acts of individuals, or for a labor activity,
done on behalf of the union. The union member is may encompass a number of acts that violate existing labor or
made liable on the theory that all the members are
engaged in a general conspiracy, and the unlawful criminal laws, such as the following:
acts of the particular members are viewed as
necessary incidents of the conspiracy. It has been
said that in the absence of statute providing
otherwise, the rule of vicarious liability applies. (1) Violation of Art. 264(e) of the Labor Code which provides

Even the Industrial Peace Act, however,

that [n]o person engaged in picketing shall commit any act of
which was in effect from 1953 to 1974, did not
adopt the vicarious liability concept. It expressly
provided that: violence, coercion or intimidation or obstruct the free ingress to or
No officer or member of any
association or organization, and no egress from the employers premises for lawful purposes, or obstruct
association or organization participating or
interested in a labor dispute shall be held public thoroughfares;
responsible or liable for the unlawful acts of
individual officers, members, or agents,
except upon proof of actual participation in,
or actual authorization of, such acts or of (2) Commission of crimes and other unlawful acts in carrying
ratifying of such acts after actual
knowledge thereof.
out the strike;[54] and

(3) Violation of any order, prohibition, or injunction issued by
the DOLE Secretary or NLRC in connection with the assumption of
jurisdiction/certification Order under Art. 263(g) of the Labor Code.
As earlier explained, this enumeration is not exclusive and it
may cover other breaches of existing laws.
In the cases at bench, the individual respondents participated
in several mass actions, viz:
(1) The rallies held at the DOLE and BLR offices on February
21, 22, and 23, 2001;
(2) The strikes held on March 17 to April 12, 2001; and
(3) The rallies and picketing on May 23 and 28, 2001 in front
of the Toyota Bicutan and Sta. Rosa plants.
Did they commit illegal acts during the illegal strikes
on February 21 to 23, 2001, from March 17 to April 12, 2001, and on
May 23 and 28, 2001?
76
The answer is in the affirmative.
As we have ruled that the strikes by the Union on the three
different occasions were illegal, we now proceed to determine the
individual liabilities of the affected union members for acts committed
during these forbidden concerted actions.
Our ruling in Association of Independent Unions in the
Philippines v. NLRC lays down the rule on the liability of the union
members:
Decisive on the matter is the pertinent provisions of
Article 264 (a) of the Labor Code that: [x x x] any
worker [x x x] who knowingly participates in the
commission of illegal acts during a strike may be
declared to have lost his employment status. [x x x]
It can be gleaned unerringly from the aforecited
provision of law in point, however, that an ordinary
striking employee can not be terminated for mere
participation in an illegal strike. There must be
proof that he committed illegal acts during the
strike and the striker who participated in the
commission of illegal act[s] must be identified.
But proof beyond reasonable doubt is not
required. Substantial evidence available under
the circumstances, which may justify the
imposition of the penalty of dismissal, may
suffice.
In the landmark case of Ang Tibay vs. CIR,
the court ruled Not only must there be some
evidence to support a finding or conclusion, but the
evidence must be substantial. Substantial
evidence is more than a mere scintilla. It
means such relevant evidence that a

reasonable mind might accept as sufficient to
support a conclusion.[55](Emphasis supplied.)
Thus, it is necessary for the company to adduce proof on the
participation of the striking employee in the commission of illegal acts
during the strikes.
After a scrutiny of the records, we find that the 227
employees indeed joined the February 21, 22, and 23, 2001 rallies
and refused to render overtime work or report for work. These rallies,
as we earlier ruled, are in reality illegal strikes, as the procedural
requirements for strikes under Art. 263 were not complied
with.Worse, said strikes were in violation of the company rule
prohibiting acts in citing or participating in riots, disorders, alleged
strikes or concerted action detrimental to Toyotas interest.
With respect to the February 21, 22, and 23, 2001 concerted
actions, Toyota submitted the list of employees who did not render
overtime work on February 21, 2001 and who did not report for work
on February 22 and 23, 2001 as shown by Annex I of Toyotas Position
Paper in NLRC Certified Case No. 000203-01 entitled In Re: Labor
Dispute at Toyota Motor Philippines Corp. The employees
participated in the illegal concerted actions were as follows:
77
1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio;
4. Alarana, Edwin; 5. Alejo, Alex; 6. Alfonso, Erwin;
7. Apolinario, Dennis; 8. Apostol, Melvin; 9. Arceta,
Romel; 10. Arellano, Ruel; 11. Ariate, Abraham; 12.
Arollado, Daniel; 13. Arriola, Dominador; 14. Atun,
Lester; 15. Bala, Rizalino; 16. Baluyut, Rolando; 17.
Banzuela, Tirso Jr.; 18. Bayani, Roderick; 19.
Benabise, Sabas Jr.; 20. Berces, Abel; 21. Bering,
Benny; 22. Birondo, Alberto; 23. Blanco, Melchor;
24. Bolanos, Dexter; 25. Bolocon, Jerry; 26.
Borebor, Rurel; 27. Borromeo, Jubert; 28. Borsigue,
Antonio; 29. Bulan, Elmer; 30. Busano, Freddie; 31.
Bustillo, Ernesto Jr.; 32. Caalim, Alexander; 33.
Cabahug, Nelson; 34. Cabatay, Jessie; 35. Cabezas,
Marcelo; 36. Calalang, Richard; 37. Candelario,
Roque Jr.; 38. Capate, Leo Nelson; 39. Carandang,
Resty; 40. Caraqueo, Lorenzo; 41. Caringal, Dennis;
42. Casaba, Gienell; 43. Catapusan, Christopher;
44. Catral, Rico; 45. Cecilio, Felipe; 46. Cinense,
Joey; 47. Cometa, Julius; 48. Completo, Emilio; 49.
Consignado, Randy; 50. Coral, Jay Antonio; 51.
Correa, Claudio Jr.; 52. Cuevas, Reynaldo; 53.
Dacalcap, Albert; 54. Dakay, Ryan; 55. Dalanon,
Herbert; 56. Dalisay, Rene; 57. David, Benigno Jr.;
58. De Guzman, Joey; 59. Dela Cruz, Basilio; 60.
Dela Cruz, Ferdinand; 61. Dela Torre, Heremo; 62.
De Leon, Leonardo; 63. Delos Santos, Rogelio; 64.
De Ocampo, Joselito; 65. De Silva, Leodegario; 66.
Del Mundo, Alex; 67. Del Rio, Rey; 68. Dela Ysla,
Alex; 69. Dia, Frank Manuel; 70. Dimayuga,
Antonio; 71. Dingcong, Jessiah; 72. Dumalag,
Jasper; 73. Duyag, Aldrin; 74. Ercillo, Armando; 75.
Espadilla, Delmar; 76. Espejo, Lionel; 77. Espeloa,
Dennis; 78. Esteva, Alexander; 79. Estole,
Francisco; 80. Fajardo, George; 81. Fajilagutan,
Jason; 82. Fajura, John; 83. Franco, Melencio; 84.
Franco, Nikko; 85. Fulgar, Dexter; 86. Fulo, Dante;
87. Gado, Eduardo; 88. Galang, Erwin; 89. Gamit,
Rodel; 90. Garces, Robin; 91. Garcia, Ariel; 92.
Gaspi, Ronald; 93. Gavarra, Angelo; 94. Gerola,
Genaro Jr.; 95. Gerola, Larry; 96. Gohilde, Michael;
97. Gojar, Regino; 98. Gojar, Reynaldo; 99.
Gonzales, Roberto; 100. Gutierrez, Bernabe; 101.
who Hilaga, Edgar; 102. Hilanga, Melchor; 103.
Hondrada, Eugene Jay; 104. Imperial, Alejandro;
105. Jaen, Ferdinand; 106. Jalea, Philip; 107.
 78

Javillonar, Joey; 108. Julve, Frederick; 109. Lalisan, Rommel; 211. Tolentino, Romulo Jr.; 212. Tomas,
Victorio; 110. Landicho, Danny; 111. Laqui, Basilio; Rolando; 213. Topaz, Arturo Sr.; 214. Toral, Grant
112. Lavide, Edgar; 113. Lazaro, Orlando; 114. Robert; 215. Torres, Dennis; 216. Torres, Federico;
Legaspi, Noel; 115. Lising, Reynaldo Jr.; 116. 217. Trazona, Jose Rommel; 218. Tulio, Emmanuel;
Llanera, Joey; 117. Lomboy, Alberto; 118. Lopez, 219. Umiten, Nestor Jr.; 220. Vargas, Joseph; 221.
Geronimo; 119. Lozada, Jude Jonobell; 120. Lucido, Vergara, Allan; 222. Vergara, Esdwin; 223. Violeta,
Johny; 121. Macalindong, Rommel; 122. Madrazo, Apollo Sr.; 224. Vistal, Alex; 225. Yangyon, Michael
Nixon; 123. Magbalita, Valentin; 124. Magistrado, Teddy; 226. Zaldevar, Christopher; and 227.
Rogelio Jr.; 125. Magnaye, Philip John; 126. Zamora, Dominador Jr.
Malabanan, Allan John; 127. Malabrigo, Angelito;
128. Malaluan, Rolando Jr.; 129. Malate, Leoncio
Jr.; 130. Maleon, Paulino; 131. Manaig, Roger; 132.
Manalang, Joseph Patrick; 133. Manalo, Manuel Jr.;
134. Manaog, Jonamar; 135. Manaog, Melchor; 136. Toyotas Position Paper containing the list of striking workers
Mandolado, Melvin; 137. Maneclang, Jovito; 138.
Manego, Ruel; 139. Manguil, Bayani Jr.; 140. was attested to as true and correct under oath by Mr. Jose Ma.
Manigbas, June; 141. Manjares, Alfred; 142.
Manzanilla, Edwin; 143. Marasigan, Carlito; 144.
Aligada, First Vice President of the Group Administration Division
Marcial, Nilo; 145. Mariano, Rommel; 146. Mata,
Mayo; 147. Mendoza, Bobit; 148. Mendoza,
Roberto; 149. Milan, Joseph; 150. Miranda, of Toyota. Mr. Emerito Dumaraos, Assistant Department Manager of
Eduardo; 151. Miranda, Luis; 152. Montero, Ericson;
153. Montero, Marlaw; 154. Montes, Ruel; 155. the Production Department of Toyota, likewise submitted a June 29,
Morales, Dennis; 156. Natividad, Kenneth; 157.
Nava, Ronaldo; 158. Nevalga, Alexander; 159. 2001 Affidavit[56] confirming the low attendance of employees on
Nicanor, Edwin; 160. Nierves, Roderick; 161. Nunez,
Alex; 162. Nunez, Lolito; 163. Obe, Victor; 164. February 21, 22, and 23, 2001, which resulted from the intentional
Oclarino, Alfonso; 165. Ojenal, Leo; 166. Olit,
Freddie; 167. Oliver, Rex; 168. Oliveria, Charlie; absences of the aforelisted striking workers. The Union, on the other
169. Operana, Danny; 170. Oriana, Allan; 171.
Ormilla, Larry; 172. Ortiz, Felimon; 173. Paniterce,
hand, did not refute Toyotas categorical assertions on the
Alvin; 174. Parallag, Gerald; 175. Pecayo, Edwin;
176. Pena, Erwin; 177. Penamante, Jowald; 178.
Piamonte, Melvin; 179. Piamonte, Rogelio; 180. participation of said workers in the mass actions and their deliberate
Platon, Cornelio; 181. Polutan, Jorge; 182. Posada,
John; 183. Puno, Manjolito; 184. Ramos, Eddie; refusal to perform their assigned work on February 21, 22, and 23,
185. Reyes, Rolando; 186. Roxas, Philip; 187. Sales,
Paul Arthur; 188. Sallan, David Jr.; 189. Salvador, 2001. More importantly, it did not deny the fact of absence of the
Bernardo; 190. Sampang, Alejandro; 191. San
Pablo, Baldwin; 192. Sangalang, Jeffrey; 193. employees on those days from the Toyota manufacturing plants and
Santiago, Eric; 194. Santos, Raymond; 195. Sapin,
Al Jose; 196. Saquilabon, Bernabe; 197. Serrano, their deliberate refusal to render work. Their admission that they
Ariel; 198. Sierra, Alex; 199. Simborio, Romualdo;
200. Sulit, Lauro; 201. Tabirao, Elvisanto; 202.
participated in the February 21 to 23, 2001mass actions necessarily
Tablizo, Edwin; 203. Taclan, Petronio; 204. Tagala,
Rommel; 205. Tagle, Wilfredo Jr.; 206. Tecson
means they were absent from their work on those days.
Alexander; 207. Templo, Christopher; 208. Tenorio,
Roderick; 209. Tolentino, Rodel; 210. Tolentino,
 79

Reynaldo Cuevas; 15. George Polutan; 16. Arman

Ercillo; 17. Joey Llanera; and 18. Roberto Gonzales

Anent the March 28 to April 12, 2001 strikes, evidence is

ample to show commission of illegal acts like acts of coercion or

Photographs were submitted by Toyota marked as Annexes 1
intimidation and obstructing free ingress to or egress from the
through 18 of its Position Paper, vividly showing the participation of
company premises. Mr. Eduardo Nicolas III, Toyotas Security Chief,
the aforelisted employees in illegal acts.[57]
attested in his affidavit that the strikers badmouthed people coming in

and shouted invectives such as bakeru at Japanese officers of the

To further aggravate the situation, a number of union
company. The strikers even pounded the vehicles
members committed illegal acts (blocking the ingress to and egress
of Toyota officials. More importantly, they prevented the ingress
from the plant) during the strike staged on March 29, 2001 at
of Toyota employees, customers, suppliers, and other persons who
the Toyota plant in Bicutan, to wit:
wanted to transact business with the company. These were patent

violations of Art. 264(e) of the Labor Code, and may even constitute 1. Basilio Laqui; 2. Sabas Benabise; 3. Federico
Torres; 4. Freddie Olit; and 5. Joel Agosto
crimes under the Revised Penal Code such as threats or coercion

among others.
Pictures marked as Annexes 21 to 22 of Toyotas Position

Paper reveal the illegal acts committed by the aforelisted workers.[58]

On March 28, 2001, the following have committed illegal

actsblocking the ingress to or egress from the two (2) Toyota plants
On the next day, March 30, 2001, several employees again

and preventing the ingress of Toyota employees on board the

committed illegal acts (blocking ingress to and egress from the plant)

company shuttle at the Bicutan and Sta. Rosa Plants, viz:

during the strike at the Bicutan plant, to wit:

1. Grant Robert Toral; 2. John Posadas; 3. Alex

1. Ariel Garcia; 2. Edgar Hilaga; 3. Charlie Oliveria;
Sierra; 4. Allan John Malabanan; 5. Abel Berces; 6.
4. Ferdinand Jaen; 5. Wilfredo Tagle; 6. Alejandro
Ariel Garcia; 7. Charlie Oliveria; 8. Manjolito Puno;
Imperial; 7. Manjolito Puno; 8. Delmar Espadilla; 9.
9. Baldwin San Pablo; 10. Federico Torres; 11. Larry
Apollo Violeta; and 10. Elvis Tabirao
Gerola; 12. Roderick Bayani; 13. Allan Oclarino; 14.
 80

strike at the Toyota Santa Rosa plant and were validly dismissed

by Toyota.
Pictures marked as Annexes 25 to 26 and 28 of Toyotas

Position Paper show the participation of these workers in unlawful

Lastly, the strikers, though on payroll reinstatement, staged
acts.[59]
protest rallies on May 23, 2001 and May 28, 2001 in front of the

Bicutan and Sta. Rosa plants.These workers acts in joining and

On April 5, 2001, seven (7) Toyota employees were identified
participating in the May 23 and 28, 2001 rallies or pickets were patent
to have committed illegal acts (blocking ingress to and egress from
violations of the April 10, 2001 assumption of jurisdiction/certification
the plant) during the strike held at the Bicutan plant, to wit:
Order issued by the DOLE Secretary, which proscribed the commission

1. Raymund Santos; 2. Elvis Tabirao; 3. Joseph of acts that might lead to the worsening of an already deteriorated
Vargas; 4. Bernardo Salvador; 5. Antonio
Dimayuga; 6. Rurel Borebor; and 7. Alberto Lomboy
situation. Art. 263(g) is clear that strikers who violate the

assumption/certification Order may suffer dismissal from work. This

was the situation in the May 23 and 28, 2001 pickets and concerted
The participations of the strikers in illegal acts are manifest in

actions, with the following employees who committed illegal acts:

the pictures marked as Annexes 32 and 33 of Toyotas Position

Paper.[60]

a. Strikers who joined the illegal pickets on May 23, 2001

were (1) Dennis Apolinario; (2) Abel Berces; (3) Benny Bering; (4)
On April 6, 2001, only Rogelio Piamonte was identified to

Dexter Bolaos; (5) Freddie Busano; (6) Ernesto Bustillo, Jr.; (7)
have committed illegal acts (blocking ingress to and egress from

Randy Consignado; (8) Herbert Dalanon; (9) Leodegario De Silva;

the Toyota plant) during the strike at the Toyota Santa Rosa

(10) Alexander Esteva; (11) Jason Fajilagutan; (12) Nikko Franco;

plant.[61] Then, on April 9, 2001, Alvin Paniterce, Dennis Apolinario,

(13) Genaro Gerola, Jr.; (14) Michael Gohilde; (15) Rogelio

and Eduardo Miranda[62] were identified to have committed illegal acts

Magistrado; (16) Rolando Malaluan, Jr.; (17) Leoncio Malate, Jr.; (18)
(blocking ingress to and egress from the Toyota plant) during the
 81

Edwin Manzanilla; (19) Nila Marcial; (20) Roderick Nierves; (21) Larry Lopez; (39) Rommel Macalindog; (40) Nixon Madrazo; (41) Valentin

Ormilla; (22) Filemon Ortiz; (23) Cornelio Platon; (24) Alejandro Magbalita; (42) Allan Jon Malabanan; (43) Jonamar Manaog; (44)

Sampang; (25) Eric Santiago; (26) Romualdo Simborio; (27) Lauro Bayani Manguil; (45) June Manigbas; (46) Alfred Manjares; (47)

Sulit; and (28) Rommel Tagala. Edwin Manzanilla; (48) Mayo Mata; (49) Leo Ojenal; (50) Allan

Oriana; (51) Rogelio Piamonte; (52) George Polutan; (53) Eric

Pictures show the illegal acts (participation in pickets/strikes Santiago; (54) Bernabe Saquilabon; (55) Alex Sierra; (56) Romualdo

despite the issuance of a return-to-work order) committed by the Simborio; (57) Lauro Sulit; (58) Elvisanto Tabirao; (59) Edwin

aforelisted strikers.[63] Tablizo; (60) Emmanuel Tulio; (61) Nestor Umiten; (62) Joseph

Vargas; (63) Edwin Vergara; and (64) Michael Teddy Yangyon.

b. Strikers who participated in the May 28, 2001 were

(1) Joel Agosto; (2) Alex Alejo; (3) Erwin Alfonso; (4) Dennis Toyota presented photographs which show said employees

Apolinario; (5) Melvin Apostol; (6) Rommel Arceta; (7) Lester Atun; conducting mass pickets and concerted actions.[64]

(8) Abel Berces; (9) Benny Bering; (10) Dexter Bolanos; (11) Marcelo

Cabezas; (12) Nelson Leo Capate; (13) Lorenzo Caraqueo; (14) Anent the grant of severance compensation to legally

Christopher Catapusan; (15) Ricky Chavez; (16) Virgilio Colandog; dismissed union members, Toyota assails the turn-around by the CA

(17) Claudio Correa; (18) Ed Cubelo; (19) Reynaldo Cuevas; (20) in granting separation pay in its June 20, 2003 Resolution after

Rene Dalisay; (21) Benigno David, Jr.; (22) Alex Del Mundo; (23) initially denying it in its February 27, 2003 Decision. The company

Basilio Dela Cruz; (24) Roel Digma; (25) Aldrin Duyag; (26) Armando asseverates that based on the CA finding that the illegal acts of said

Ercillo; (27) Delmar Espadilla; (28) Alexander Esteva; (29) Nikko union members constitute gross misconduct, not to mention the huge

Franco; (30) Dexter Fulgar; (31) Dante Fulo; (32) Eduardo Gado; losses it suffered, then the grant of separation pay was not proper.

(33) Michael Gohilde; (34) Eugene Jay Hondrada II; (35) Joey

Javillonar; (36) Basilio Laqui; (37) Alberto Lomboy; (38) Geronimo


The general rule is that when just causes for terminating the
services of an employee under Art. 282 of the Labor Code exist, the
employee is not entitled to separation pay. The apparent reason
behind the forfeiture of the right to termination pay is that
lawbreakers should not benefit from their illegal acts. The dismissed
employee, however, is entitled to whatever rights, benefits and
privileges [s/he] may have under the applicable individual or collective
bargaining agreement with the employer or voluntary employer policy
or practice[65] or under the Labor Code and other existing laws. This
means that the employee, despite the dismissal for a valid cause,
retains the right to receive from the employer benefits provided by
law, like accrued service incentive leaves. With respect to benefits
granted by the CBA provisions and voluntary management policy or
practice, the entitlement of the dismissed employees to the benefits
depends on the stipulations of the CBA or the company rules and
policies.
As in any rule, there are exceptions. One exception where
separation pay is given even though an employee is validly dismissed
is when the court finds justification in applying the principle of social
justice well entrenched in the 1987 Constitution. In Phil.
Distance Telephone Co. (PLDT) v. NLRC, the Court elucidated why
social justice can validate the grant of separation pay, thus:
82
The reason is that our Constitution is replete with
positive commands for the promotion of social
justice, and particularly the protection of the rights
of the workers. The enhancement of their welfare is
one of the primary concerns of the present
charter. In fact, instead of confining itself to the
general commitment to the cause of labor in Article
II on the Declaration of Principles of State Policies,
the new Constitution contains a separate article
devoted to the promotion of social justice and
human rights with a separate sub-topic for
labor. Article XIII expressly recognizes the vital role
of labor, hand in hand with management, in the
advancement of the national economy and the
welfare of the people in general. The categorical
mandates in the Constitution for the improvement of
the lot of the workers are more than sufficient basis
to justify the award of separation pay in proper
cases even if the dismissal be for cause.[66]
In the same case, the Court laid down the rule that
severance compensation shall be allowed only when the cause of the
dismissal is other than serious misconduct or that which reflects
adversely on the employees moral character. The Court succinctly
discussed the propriety of the grant of separation pay in this wise:
We hold that henceforth separation pay
shall be allowed as a measure of social justice only
in those instances where the employee is validly
dismissed for causes other than serious misconduct
or those reflecting on his moral character. Where
Long 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
 83

financial assistance, or whatever other name it is

called, on the ground of social justice. acts that reflect on the moral character of the employee. What is

A contrary rule would, as the petitioner unclear is whether the ruling likewise precludes the grant of
correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his
separation pay when the employee is validly terminated from work on
offense. And we do not agree that the punishment is
his dismissal only and that the separation pay has
nothing to do with the wrong he has committed. Of grounds laid down in Art. 282 of the Labor Code other than serious
course it has. Indeed, if the employee who steals
from the company is granted separation pay even as misconduct.
he is validly dismissed, it is not unlikely that he will
commit a similar offense in his next employment
because he thinks he can expect a like leniency if he
is again found out. This kind of misplaced A recall of recent cases decided bearing on the issue reveals
compassion is not going to do labor in general any
good as it will encourage the infiltration of its ranks that when the termination is legally justified on any of the grounds
by those who do not deserve the protection and
concern of the Constitution.
under Art. 282, separation pay was not allowed. In Ha Yuan
The policy of social justice is not intended
to countenance wrongdoing simply because it is Restaurant v. NLRC,[68] we deleted the award of separation pay to an
committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone employee who, while unprovoked, hit her co-workers face, causing
the offense. Compassion for the poor is an
imperative of every humane society but only when injuries, which then resulted in a series of fights and scuffles between
the recipient is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted to be them. We viewed her act as serious misconduct which did not warrant
refuge of scoundrels any more than can equity be an
impediment to the punishment of the guilty. Those the award of separation pay. In House of Sara Lee v. Rey,[69] this
who invoke social justice may do so only if their
hands are clean and their motives blameless and not Court deleted the award of separation pay to a branch supervisor who
simply because they happen to be poor. This great
policy of our Constitution is not meant for the
regularly, without authorization, extended the payment deadlines of
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 the companys sales agents. Since the cause for the supervisors
character.[67]
dismissal involved her integrity (which can be considered as breach of

trust), she was not worthy of compassion as to deserve separation

Explicit in PLDT are two exceptions when the NLRC or the
pay based on her length of service. In Gustilo v. Wyeth Phils.,
courts should not grant separation pay based on social justiceserious
Inc.,[70] this Court found no exceptional circumstance to warrant the
misconduct (which is the first ground for dismissal under Art. 282) or
grant of financial assistance to an employee who repeatedly violated
 84

the companys disciplinary rules and regulations and whose against the employer or his family, separation pay should not be

employment was thus terminated for gross and habitual neglect of his conceded to the dismissed employee.

duties. In the doctrinal case of San Miguel v. Lao,[71] this Court

reversed and set aside the ruling of the CA granting retirement In analogous causes for termination like inefficiency, drug

benefits or separation pay to an employee who was dismissed for use, and others, the NLRC or the courts may opt to grant separation

willful breach of trust and confidence by causing the delivery of raw pay anchored on social justice in consideration of the length of service

materials, which are needed for its glass production plant, to its of the employee, the amount involved, whether the act is the first

competitor. While a review of the case reports does not reveal a case offense, the performance of the employee and the like, using the

involving a termination by reason of the commission of a crime guideposts enunciated in PLDT on the propriety of the award of

against the employer or his/her family which dealt with the issue of separation pay.

separation pay, it would be adding insult to injury if the employer

would still be compelled to shell out money to the offender after the In the case at bench, are the 227 striking employees entitled

harm done. to separation pay?

In all of the foregoing situations, the Court declined to grant In the instant case, the CA concluded that the illegal strikes

termination pay because the causes for dismissal recognized under committed by the Union members constituted serious misconduct.[72]

Art. 282 of the Labor Code were serious or grave in nature and

attended by willful or wrongful intent or they reflected adversely on The CA ratiocinated in this manner:

the moral character of the employees. We therefore find that in

Neither can social justice justify the
addition to serious misconduct, in dismissals based on other grounds award to them of severance compensation or
any other form of financial assistance. x x x
under Art. 282 like willful disobedience, gross and habitual neglect of
xxxx
duty, fraud or willful breach of trust, and commission of a crime
 85

Considering that the dismissal of the

employees was due to their participation in the collectively and an abuse of valid exercise of management prerogative
illegal strikes as well as violation of the Code
of Conduct of the company, the same has not been substantiated by the evidence extant on record. There
constitutes serious misconduct. A serious
misconduct is a transgression of some established
can be no good faith in intentionally incurring absences in a collective
and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. In fashion from work on February 22 and 23, 2001 just to attend the
fact, in Panay Electric Company, Inc. v. NLRC,
the Supreme Court nullified the grant of separation DOLE hearings. The Unions strategy was plainly to cripple the
benefits to employees who unlawfully participated in
an illegal strike in light of Article 264, Title VIII, operations and bring Toyota to its knees by inflicting substantial
Book V of the Labor Code, that, any union officer
who knowingly participates in an illegal strike and financial damage to the latter to compel union recognition. The Union
any worker or union officer who knowingly
participates in the commission of illegal acts during officials and members are supposed to know through common sense
a strike may be declared to have lost his
employment status.
that huge losses would befall the company by the abandonment of
The constitutional guarantee on social
justice is not intended only for the poor but for their regular work. It was not disputed that Toyota lost more than PhP
the rich as well. It is a policy of fairness to
both labor and management.[73] (Emphasis 50 million because of the willful desertion of company operations in
supplied.)
February 2001 by the dismissed union members. In addition, further

damage was experienced by Toyota when the Union again resorted to

In disposing of the Unions plea for reconsideration of illegal strikes from March 28 to April 12, 2001, when the gates

its February 27, 2003 Decision, the CA however performed a volte- of Toyotawere blocked and barricaded, and the company officials,

face by reinstating the award of separation pay. employees, and customers were intimidated and harassed. Moreover,

they were fully aware of the company rule on prohibition against

The CAs grant of separation pay is an erroneous departure concerted action inimical to the interests of the company and hence,

from our ruling in Phil. Long Distance Telephone Co. v. NLRC that their resort to mass actions on several occasions in clear violation of

serious misconduct forecloses the award of separation pay. Secondly, the company regulation cannot be excused nor justified. Lastly, they

the advertence to the alleged honest belief on the part of the 227 blatantly violated the assumption/certification Order of the DOLE

employees that Toyota committed a breach of the duty to bargain

 86

Secretary, exhibiting their lack of obeisance to the rule of law. These during the strike, but again, without awarding separation pay or

acts indeed constituted serious misconduct. financial assistance to the erring employees. In Samahang

Manggagawa sa Sulpicio Lines, Inc. v. Sulpicio Lines,[77] this Court

A painstaking review of case law renders obtuse the Unions upheld the dismissal of union officers who participated in an illegal

claim for separation pay. In a slew of cases, this Court refrained from strike sans any award of separation pay. Earlier, in Grand Boulevard

awarding separation pay or financial assistance to union officers and Hotel v. Genuine Labor Organization of Workers in Hotel, Restaurant

members who were separated from service due to their participation and Allied Industries,[78] we affirmed the dismissal of the Unions

in or commission of illegal acts during strikes. In the recent case officers who participated in an illegal strike without awarding

of Pilipino Telephone Corporation v. Pilipino Telephone Employees separation pay, despite the NLRCs declaration urging the company to

Association (PILTEA),[74] this Court upheld the dismissal of union give financial assistance to the dismissed employees.[79] In Interphil

officers who participated and openly defied the return-to-work order Laboratories Union-FFW, et al. v. Interphil Laboratories, Inc.,[80] this

issued by the DOLE Secretary. No separation pay or financial Court affirmed the dismissal of the union officers who led the

assistance was granted. In Sukhothai Cuisine and Restaurant v. Court concerted action in refusing to render overtime work and causing

of Appeals,[75] this Court declared that the union officers who work slowdowns. However, no separation pay or financial assistance

participated in and the union members who committed illegal acts was allowed. In CCBPI Postmix Workers Union v. NLRC,[81] this Court

during the illegal strike have lost their employment status. In this affirmed the dismissal of union officers who participated in the strike

case, the strike was held illegal because it violated agreements and the union members who committed illegal acts while on strike,

providing for arbitration. Again, there was no award of separation pay without awarding them separation pay or financial assistance. In

nor financial assistance. In Philippine Diamond Hotel and Resort, Inc. 1996, in Allied Banking Corporation v. NLRC,[82] this Court affirmed

v. Manila Diamond Hotel Employees Union,[76] the strike was declared the dismissal of Union officers and members, who staged a strike

illegal because the means employed was illegal. We upheld the despite the DOLE Secretarys issuance of a return to work order but

validity of dismissing union members who committed illegal acts did not award separation pay. In the earlier but more relevant case
 87

of Chua v. NLRC,[83] this Court deleted the NLRCs award of separation the other. If this becomes a source of conflict, there are various, more

benefits to an employee who participated in an unlawful and violent amicable means of settling disputes and of balancing interests that do

strike, which strike resulted in multiple deaths and extensive property not add fuel to the fire, and instead open avenues for understanding

damage. In Chua, we viewed the infractions committed by the union and cooperation between the employer and the employee. Even

officers and members as a serious misconduct which resulted in the though strikes and lockouts have been recognized as effective

deletion of the award of separation pay in conformance to the ruling bargaining tools, it is an antiquated notion that they are truly

in PLDT. Based on existing jurisprudence, the award of separation pay beneficial, as they only provide short-term solutions by forcing

to the Union officials and members in the instant petitions cannot be concessions from one party; but staging such strikes would damage

sustained. the working relationship between employers and employees, thus

endangering the business that they both want to succeed.The more

One last point to considerit is high time that employer and progressive and truly effective means of dispute resolution lies in

employee cease to view each other as adversaries and instead mediation, conciliation, and arbitration, which do not increase tension

recognize that theirs is a symbiotic relationship, wherein they must but instead provide relief from them. In the end, an atmosphere of

rely on each other to ensure the success of the business. When they trust and understanding has much more to offer a business

consider only their own self-interests, and when they act only with relationship than the traditional enmity that has long divided the

their own benefit in mind, both parties suffer from short-sightedness, employer and the employee.

failing to realize that they both have a stake in the business. The

employer wants the business to succeed, considering the investment WHEREFORE, the petitions in G.R. Nos. 158786 and 158789

that has been made. The employee in turn, also wants the business to are DENIED while those in G.R. Nos. 158798-99 are GRANTED.

succeed, as continued employment means a living, and the chance to

better ones lot in life. It is clear then that they both have the same

goal, even if the benefit that results may be greater for one party than
 88

The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 Promulgated:

PHILIPPINE AIRLINES, INC.,
and 67561 restoring the grant of severance compensation Respondent. October 17, 2008

x-------------------------------------------
is ANNULLED and SET ASIDE.
-------x

DECISION

The February 27, 2003 CA Decision in CA-G.R. SP Nos.

REYES, R.T., J.:
67100 and 67561, which affirmed the August 9, 2001 Decision of the

NLRC but deleted the grant of severance compensation,

THIS case portrays the peculiar story of an international
is REINSTATED and AFFIRMED.
flight steward who was dismissed because of his failure to adhere to

the weight standards of the airline company.

No costs.

He is now before this Court via a petition for review

on certiorari claiming that he was illegally dismissed. To buttress his

SO ORDERED.
ARMANDO G. YRASUEGUI, G.R. No. 168081 stance, he argues that (1) his dismissal does not fall under 282(e) of
Petitioner,
Present: the Labor Code; (2) continuing adherence to the weight standards of
YNARES-SANTIAGO, J.,
C company is not a bona fide occupational qualification; and (3) he
the
h
a was discriminated against
i
r because other overweight employees were promoted instead of being
p
e disciplined.
r
s
o After a meticulous consideration of all
n
, arguments pro and con, We uphold the legality of
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO, dismissal. Separation pay, however, should be awarded in favor of the
NACHU
RA, and employee as an act of social justice or based on equity. This is so
REYES,
JJ.
 89

because his dismissal is not for serious misconduct. Neither is it formally requested to trim down to his ideal weight and report for

reflective of his moral character. weight checks on several dates. He was also told that he may avail

of the services of the company physician should he wish to do so. He

The Facts was advised that his case will be evaluated on July 3, 1989.[2]

Petitioner Armando G. Yrasuegui was a former international On February 25, 1989, petitioner underwent weight check. It

flight steward of Philippine Airlines, Inc. (PAL). He stands five feet and was discovered that he gained, instead of losing, weight. He was

eight inches (58) with a large body frame. The proper weight for a overweight at 215 pounds, which is 49 pounds beyond the

man of his height and body structure is from 147 to 166 pounds, the limit. Consequently, his off-duty status was retained.

ideal weight being 166 pounds, as mandated by the Cabin and Crew

Administration Manual[1] of PAL. On October 17, 1989, PAL Line Administrator

Gloria Dizon personally visited petitioner at his residence to check on

The weight problem of petitioner dates back to 1984. Back the progress of his effort to lose weight. Petitioner weighed 217

then, PAL advised him to go on an extended vacation leave pounds, gaining 2 pounds from his previous weight. After the visit,

from December 29, 1984 to March 4, 1985 to address his weight petitioner made a commitment[3] to reduce weight in a letter

concerns. Apparently, petitioner failed to meet the companys weight addressed to Cabin Crew Group Manager Augusto Barrios. The letter,

standards, prompting another leave without pay from March 5, 1985to in full, reads:

November 1985.
Dear Sir:

I would like to guaranty my commitment

After meeting the required weight, petitioner was allowed to towards a weight loss from 217 pounds to 200
pounds from today until 31 Dec. 1989.
return to work. But petitioners weight problem recurred. He again
From thereon, I promise to continue
went on leave without pay from October 17, 1988 to February 1989.
reducing at a reasonable percentage until such time
that my ideal weight is achieved.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds Likewise, I promise to personally report to
your office at the designated time schedule you will
over his ideal weight. In line with company policy, he was removed set for my weight check.

from flight duty effective May 6, 1989 to July 3, 1989. He was

 90

R
e Despite the lapse of a ninety-day period given him to reach
s
p his ideal weight, petitioner remained overweight. On January 3, 1990,
e
he was informed of the PALdecision for him to remain grounded until
c
t
such time that he satisfactorily complies with the weight
f
u standards. Again, he was directed to report every two weeks for
l
l weight checks.
y

Y
o
u
r
s
Petitioner failed to report for weight checks. Despite that, he
,
F was given one more month to comply with the weight requirement. As
/
S usual, he was asked to report for weight check on different dates. He

A was reminded that his grounding would continue pending satisfactory

r
m compliance with the weight standards.[5]
a
n
d
o Again, petitioner failed to report for weight checks, although

he was seen submitting his passport for processing at the PAL Staff
Y
r Service Division.
a
s
u
e On April 17, 1990, petitioner was formally warned that a
g
u repeated refusal to report for weight check would be dealt with
i
[ accordingly. He was given another set of weight check dates.[6] Again,
4

] petitioner ignored the directive and did not report for weight

checks. On June 26, 1990, petitioner was required to explain his

refusal to undergo weight checks.[7]

 91

When petitioner tipped the scale on July 30, 1990, he program to lose at least two (2) pounds per week so as to attain his

weighed at 212 pounds. Clearly, he was still way over his ideal weight ideal weight.[10]

of 166 pounds.

On June 15, 1993, petitioner was formally informed

From then on, nothing was heard from petitioner until he by PAL that due to his inability to attain his ideal weight, and

followed up his case requesting for leniency on the latter part of considering the utmost leniency extended to him which spanned a

1992. He weighed at 219 pounds on August 20, 1992 and 205 period covering a total of almost five (5) years, his services were

pounds on November 5, 1992. considered terminated effective immediately.[11]

On November 13, 1992, PAL finally served petitioner a Notice His motion for reconsideration having been

of Administrative Charge for violation of company standards on weight denied,[12] petitioner filed a complaint for illegal dismissal against PAL.

requirements. He was given ten (10) days from receipt of the charge

within which to file his answer and submit controverting evidence.[8] Labor Arbiter, NLRC and CA Dispositions

On November 18, 1998, Labor Arbiter Valentin C. Reyes

On December 7, 1992, petitioner submitted his ruled[13] that petitioner was illegally dismissed. The dispositive part of

Answer.[9] Notably, he did not deny being overweight. What he the Arbiter ruling runs as follows:

claimed, instead, is that his violation, if any, had already been

condoned by PAL since no action has been taken by the company
regarding his case since 1988. He also claimed that PAL discriminated
against him because the company has not been fair in treating the
WHEREFORE, in view of the foregoing,
judgment is hereby rendered, declaring the
complainants dismissal illegal, and ordering the
respondent to reinstate him to his former position or
substantially equivalent one, and to pay him:

cabin crew members who are similarly situated.

a. Backwages of Php10,500.00 per month
from his dismissal on June 15, 1993 until reinstated,
which for purposes of appeal is hereby set from June
On December 8, 1992, a clarificatory hearing was held where 15, 1993 up to August 15, 1998 at P651,000.00;

petitioner manifested that he was undergoing a weight reduction b. Attorneys fees of five percent (5%) of
the total award.
 92

SO ORDERED.[14]
On June 23, 2000, the NLRC rendered

judgment[24] in the following tenor:

The Labor Arbiter held that the weight standards of PAL are

reasonable in view of the nature of the job of petitioner.[15] However,
the weight standards need not be complied with under pain of
dismissal since his weight did not hamper the performance of his
duties.[16] Assuming that it did, petitioner could be transferred to other
positions where his weight would not be a negative factor.[17] Notably,
other overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr.
Barrios, were promoted instead of being disciplined.[18]
Both parties appealed to the National Labor Relations
Commission (NLRC).[19]
WHEREFORE, premises considered[,] the
Decision of the Arbiter dated 18 November 1998 as
modified by our findings herein, is hereby
AFFIRMED and that part of the dispositive portion
of said decision concerning complainants entitlement
to backwages shall be deemed to refer to
complainants entitlement to his
full backwages, inclusive of allowances and to his
other benefits or their monetary equivalent instead
of simply backwages, from date of dismissal until his
actual reinstatement or finality hereof. Respondent
is enjoined to manifests (sic) its choice of the form
of the reinstatement of complainant, whether
physical or through payroll within ten (10) days
from notice failing which, the same shall be deemed
as complainants reinstatement through payroll and
execution in case of non-payment shall accordingly
be issued by the Arbiter. Both appeals of respondent
thus, are DISMISSED for utter lack of merit.[25]

On October 8, 1999, the Labor Arbiter issued a writ of

According to the NLRC, obesity, or the tendency to gain
execution directing the reinstatement of petitioner without loss of
weight uncontrollably regardless of the amount of food intake, is a
seniority rights and other benefits.[20]
disease in itself.[26] As a consequence, there can be no intentional

defiance or serious misconduct by petitioner to the lawful order

On February 1, 2000, the Labor Arbiter denied[21] the Motion
of PAL for him to lose weight.[27]
to Quash Writ of Execution[22] of PAL.

Like the Labor Arbiter, the NLRC found the weight standards
On March 6, 2000, PAL appealed the denial of its motion to
of PAL to be reasonable. However, it found as unnecessary the Labor
quash to the NLRC.[23]
Arbiter holding that petitioner was not remiss in the performance of

his duties as flight steward despite being overweight. According to the

NLRC, the Labor Arbiter should have

 93

limited himself to the issue of whether the failure of petitioner to adhere to the weight standards is an analogous cause for the

attain his ideal weight constituted willful defiance of the weight dismissal of an employee under Article 282(e) of the Labor Code in

standards of PAL.[28] relation to Article 282(a).It is not willful disobedience as the NLRC

seemed to suggest.[35] Said the CA, the element of willfulness that the

NLRC decision cites is an irrelevant consideration in arriving at a

conclusion on whether the dismissal is legally proper.[36] In other

words, the relevant question to ask is not one of willfulness but one of

reasonableness of the standard and whether or not the employee

PAL moved for reconsideration to no qualifies or continues to qualify under this standard.[37]

avail.[29] Thus, PAL elevated the matter to the Court of Appeals (CA)

via a petition for certiorari under Rule 65 of the 1997 Rules of Civil

Procedure.[30]

Just like the Labor Arbiter and the NLRC, the CA held that the weight

By Decision dated August 31, 2004, the CA reversed[31] the standards of PAL are reasonable.[38] Thus, petitioner was legally

NLRC: dismissed because he repeatedly failed to meet the prescribed weight

standards.[39] It is obvious that the issue of discrimination was only

WHEREFORE, premises considered, we
hereby GRANT the petition. The assailed NLRC invoked by petitioner for purposes of escaping the result of his
decision is declared NULL and VOID and is hereby
SET ASIDE. The private respondents complaint is dismissal for being overweight.[40]
hereby DISMISSED. No costs.

SO ORDERED.[32]
On May 10, 2005, the CA denied petitioners motion for

reconsideration.[41] Elaborating on its earlier ruling, the CA held that

The CA opined that there was grave abuse of discretion on the weight standards of PALare a bona fide occupational
the part of the NLRC because it looked at wrong and irrelevant qualification which, in case of violation, justifies an employees
[33]
considerations in evaluating the evidence of the parties. Contrary to separation from the service.[42]
the NLRC ruling, the weight standards of PAL are meant to be

a continuing qualification for an employees position.[34] The failure to Issues

 94

A reading of the weight standards of PAL would lead to no other

In this Rule 45 petition for review, the following issues are posed for conclusion than that they constitute a continuing qualification of an

resolution: employee in order to keep the job. Tersely put, an employee may be

dismissed the moment he is unable to comply with his ideal weight as

I.
WHETHER OR NOT THE COURT OF APPEALS prescribed by the weight standards. The dismissal of the employee
GRAVELY ERRED IN HOLDING THAT PETITIONERS
OBESITY CAN BE A GROUND FOR DISMISSAL would thus fall under Article 282(e) of the Labor Code. As explained
UNDER PARAGRAPH (e) OF ARTICLE 282 OF THE
by the CA:
LABOR CODE OF THE PHILIPPINES;

II. x x x [T]he standards violated in this case were not

WHETHER OR NOT THE COURT OF APPEALS mere orders of the employer; they were the
GRAVELY ERRED IN HOLDING THAT PETITIONERS prescribed weights that a cabin crew must
DISMISSAL FOR OBESITY CAN BE PREDICATED ON maintain in order to qualify for and keep his or
THE BONA FIDE OCCUPATIONAL QUALIFICATION her position in the company. In other words,
(BFOQ) DEFENSE; they were standards that establish continuing
qualifications for an employees position. In this
III. sense, the failure to maintain these standards does
WHETHER OR NOT THE COURT OF APPEALS
not fall under Article 282(a) whose express terms
GRAVELY ERRED IN HOLDING THAT PETITIONER require the element of willfulness in order to be a
WAS NOT UNDULY DISCRIMINATED AGAINST WHEN
ground for dismissal. The failure to meet the
HE WAS DISMISSED WHILE OTHER OVERWEIGHT employers qualifying standards is in fact a ground
CABIN ATTENDANTS WERE EITHER GIVEN FLYING
that does not squarely fall under grounds (a) to (d)
DUTIES OR PROMOTED; and is therefore one that falls under Article 282(e)
the other causes analogous to the foregoing.
IV.
WHETHER OR NOT THE COURT OF APPEALS
By its nature, these qualifying standards are norms
GRAVELY ERRED WHEN IT BRUSHED ASIDE that apply prior to and after an employee is
PETITIONERS CLAIMS FOR REINSTATEMENT [AND]
hired. They apply prior to employment because
WAGES ALLEGEDLY FOR BEING these are the standards a job applicant must initially
MOOT AND ACADEMIC.[43] (Underscoring supplied)
meet in order to be hired. They apply after
hiring because an employee must continue to meet
these standards while on the job in order to keep his
Our Ruling job. Under this perspective, a violation is not one of
the faults for which an employee can be dismissed
pursuant to pars. (a) to (d) of Article 282; the
employee can be dismissed simply because he no
I. The obesity of petitioner is a ground for dismissal longer qualifies for his job irrespective of whether or
not the failure to qualify was willful or
under Article 282(e) [44] of the Labor Code. intentional. x x x[45]
 95

Petitioner, though, advances a very interesting argument. He claims to illness. Fourth, the issue in Nadura is whether or not the dismissed

that obesity is a physical abnormality and/or illness.[46] Relying employee is entitled to separation pay and damages. Here, the issue

on Nadura v. BenguetConsolidated, Inc.,[47] he says his dismissal is centers on the propriety of the dismissal of petitioner for his failure to

illegal: meet the weight standards of PAL. Fifth, in Nadura, the employee was

not accorded due process. Here, petitioner was accorded utmost

Conscious of the fact that Naduras case cannot be
made to fall squarely within the specific causes leniency. He was given more than four (4) years to comply with the
enumerated in subparagraphs 1(a) to
(e), Benguet invokes the provisions of subparagraph weight standards of PAL.
1(f) and says that Naduras illness occasional attacks
of asthma is a cause analogous to them.

Even a cursory reading of the legal provision under

consideration is sufficient to convince anyone that, In the case at bar, the evidence on record militates against
as the trial court said, illness cannot be included as
an analogous cause by any stretch of imagination. petitioners claims that obesity is a disease. That he was able to

It is clear that, except the just cause mentioned in reduce his weight from 1984 to 1992 clearly shows that it is possible
sub-paragraph 1(a), all the others expressly
enumerated in the law are due to the voluntary for him to lose weight given the proper attitude, determination, and
and/or willful act of the
employee. How Naduras illness could be considered self-discipline. Indeed, during the clarificatory hearing on December 8,
as analogous to any of them is beyond our
1992, petitioner himself claimed that [t]he issue is could I bring my
understanding, there being no claim or pretense
that the same was contracted through his own weight down to ideal weight which is 172, then the answer is yes. I
voluntary act.[48]
can do it now.[49]

The reliance on Nadura is off-tangent. The factual milieu in Nadura is

True, petitioner claims that reducing weight is costing him a
substantially different from the case at bar. First, Nadura was not
lot of expenses.[50] However, petitioner has only himself to blame. He
decided under the Labor Code. The law applied in that case was
could have easily availed the assistance of the company physician, per
Republic Act (RA) No. 1787. Second, the issue of flight safety is
the advice of PAL.[51] He chose to ignore the suggestion. In fact, he
absent in Nadura, thus, the rationale there cannot apply here. Third,
repeatedly failed to report when required to undergo weight checks,
in Nadura, the employee who was a miner, was laid off from work
without offering a valid explanation. Thus, his fluctuating weight
because of illness, i.e., asthma. Here, petitioner was dismissed for his
indicates absence of willpower rather than an illness.
failure to meet the weight standards of PAL. He was not dismissed due
 96

Petitioner cites Bonnie Cook v. State of Rhode Island, discriminated against Cook based on perceived disability. The

Department of Mental Health, Retardation and evidence included expert testimony that morbid obesity is a

Hospitals,[52] decided by the United States Court of Appeals (First physiological disorder. It involves a dysfunction of both the metabolic

Circuit). In that case, Cook worked from 1978 to 1980 and from 1981 system and the neurological appetite suppressing signal system,

to 1986 as an institutional attendant for the mentally retarded at the which is capable of causing adverse effects within the

Ladd Center that was being operated by respondent. She twice musculoskeletal, respiratory, and cardiovascular systems. Notably, the

resigned voluntarily with an unblemished record. Even respondent Court stated that mutability is relevant only in determining the

admitted that her performance met the Centers legitimate substantiality of the limitation flowing from a given impairment, thus

expectations. In 1988, Cook re-applied for a similar position. At that mutability only precludes those conditions that an individual can easily

time, she stood 52 tall and weighed over 320 pounds. Respondent and quickly reverse by behavioral alteration.

claimed that the morbid obesity of plaintiff compromised her ability to

evacuate patients in case of emergency and it also put her at greater Unlike Cook, however, petitioner is not morbidly obese. In

risk of serious diseases. the words of the District Court for the District of Rhode Island, Cook

was sometime before 1978 at least one hundred pounds more than

what is considered appropriate of her height. According to the Circuit

Cook contended that the action of respondent amounted to Judge, Cook weighed over 320 pounds in 1988. Clearly, that is not the

discrimination on the basis of a handicap. This was in direct violation case here. At his heaviest, petitioner was only less than 50 pounds

of Section 504(a) of the Rehabilitation Act of 1973,[53] which over his ideal weight.

incorporates the remedies contained in Title VI of the Civil Rights Act

of 1964. Respondent claimed, however, that morbid obesity could In fine, We hold that the obesity of petitioner, when placed in

never constitute a handicap within the purview of the Rehabilitation the context of his work as flight attendant, becomes an analogous

Act. Among others, obesity is a mutable condition, thus plaintiff could cause under Article 282(e) of the Labor Code that justifies his

simply lose weight and rid herself of concomitant disability. dismissal from the service. His obesity may not be unintended, but is

nonetheless voluntary. As the CA correctly puts it,

The appellate Court disagreed and held that morbid obesity is [v]oluntariness basically means that the just cause is solely

a disability under the Rehabilitation Act and that respondent attributable to the employee without any external force influencing or
 97

controlling his actions. This element runs through all just causes First, the Constitution,[59] the Labor Code,[60] and RA No.

under Article 282, whether they be in the nature of a wrongful action 7277[61] or the Magna Carta for Disabled Persons[62] contain provisions

or omission. Gross and habitual neglect, a recognized just cause, is similar to BFOQ.

considered voluntary although it lacks the element of intent found in

Article 282(a), (c), and (d).[54] Second, in British Columbia Public Service Employee Commission

(BSPSERC) v. The British Columbia Government and Service

II. The dismissal of petitioner can be predicated on the Employees Union (BCGSEU),[63]the Supreme Court of Canada adopted

bona fide occupational qualification defense. the so-called Meiorin Test in determining whether an employment

policy is justified. Under this test, (1) the employer must show that it

Employment in particular jobs may not be limited to persons of a adopted the standard for a purpose rationally connected to the

particular sex, religion, or national origin unless the employer can performance of the job;[64] (2) the employer must establish that the

show that sex, religion, or national origin is an actual qualification for standard is reasonably necessary[65] to the accomplishment of that

performing the job. The qualification is called a bona fide occupational work-related purpose; and (3) the employer must establish that the

qualification (BFOQ).[55] In the United States, there are a few federal standard is reasonably necessary in order to accomplish the legitimate

and many state job discrimination laws that contain an exception work-related purpose. Similarly, in Star Paper Corporation

allowing an employer to engage in an otherwise unlawful form of v. Simbol,[66] this Court held that in order to justify a BFOQ, the

prohibited discrimination when the action is based on a BFOQ employer must prove that (1) the employment qualification is

necessary to the normal operation of a business or enterprise.[56] reasonably related to the essential operation of the job involved; and

Petitioner contends that BFOQ is a statutory defense. It does (2) that there is factual basis for believing that all or substantially all

not exist if there is no statute providing for it.[57] Further, there is no persons meeting the qualification would be unable to properly perform

existing BFOQ statute that could justify his dismissal.[58] the duties of the job.[67]

Both arguments must fail.

In short, the test of reasonableness of the company policy is

used because it is parallel to BFOQ.[68] BFOQ is

valid provided it reflects an inherent quality reasonably necessary for

satisfactory job performance.[69]

 98

this, it must necessarily rely on its employees, most particularly the

In Duncan Association of Detailman-PTGWTO cabin flight deck crew who are on board the aircraft. The weight

v. Glaxo Wellcome Philippines, Inc.,[70] the Court did not hesitate to standards of PAL should be viewed as imposing strict norms of

pass upon the validity of a company policy which prohibits its discipline upon its employees.

employees from marrying employees of a rival company. It was held

that the company policy is reasonable considering that its purpose is In other words, the primary objective of PAL in the imposition

the protection of the interests of the company against possible of the weight standards for cabin crew is flight safety. It cannot be

competitor infiltration on its trade secrets and procedures. gainsaid that cabin attendants must maintain agility at all times in

order to inspire passenger confidence on their ability to care for the

Verily, there is no merit to the argument that BFOQ cannot passengers when something goes wrong. It is not farfetched to say

be applied if it has no supporting statute. Too, the Labor that airline companies, just like all common carriers, thrive due to

Arbiter,[71] NLRC,[72] and CA[73] are one in holding that the weight public confidence on their safety records. People, especially the riding

standards of PAL are reasonable. A common carrier, from the nature public, expect no less than that airline companies transport their

of its business and for reasons of public policy, is bound to observe passengers to their respective destinations safely and soundly. A

extraordinary diligence for the safety of the passengers it lesser performance is unacceptable.

transports.[74] It is bound to carry its passengers safely as far as

human care and foresight can provide, using the utmost diligence of The task of a cabin crew or flight attendant is not limited to

very cautious persons, with due regard for all the circumstances.[75] serving meals or attending to the whims and caprices of the

passengers. The most important activity of the cabin crew is to care

The law leaves no room for mistake or oversight on the part for the safety of passengers and the evacuation of the aircraft when

of a common carrier. Thus, it is only logical to hold that the weight an emergency occurs. Passenger safety goes to the core of the job of

standards of PAL show its effort to comply with the exacting a cabin attendant. Truly, airlines need cabin attendants who have the

obligations imposed upon it by law by virtue of being a common necessary strength to open emergency doors, the agility to attend to

carrier. passengers in cramped working conditions, and the stamina to

The business of PAL is air transportation. As such, it has withstand grueling flight schedules.

committed itself to safely transport its passengers. In order to achieve

 99

On board an aircraft, the body weight and size of a cabin be absurd to require airline companies to reconfigure the aircraft in

attendant are important factors to consider in case of order to widen the aisles and exit doors just to accommodate

emergency. Aircrafts have constricted cabin space, and narrow aisles overweight cabin attendants like petitioner.

and exit doors. Thus, the arguments of respondent that [w]hether the

airlines flight attendants are overweight or not has no direct relation The biggest problem with an overweight cabin attendant is

to its mission of transporting passengers to their destination; and that the possibility of impeding passengers from evacuating the aircraft,

the weight standards has nothing to do with airworthiness of should the occasion call for it. The job of a cabin attendant during

respondents airlines, must fail. emergencies is to speedily get the passengers out of the aircraft

safely. Being overweight necessarily impedes mobility. Indeed,in an

The rationale in Western Air Lines v. Criswell[76] relied upon emergency situation, seconds are what cabin attendants are dealing

by petitioner cannot apply to his case. What was involved there were with, not minutes. Three lost seconds can translate into three lost

two (2) airline pilots who were denied reassignment as flight lives. Evacuation might slow down just because a wide-bodied cabin

engineers upon reaching the age of 60, and a flight engineer who was attendant is blocking the narrow aisles. These possibilities are not

forced to retire at age 60. They sued the airline company, alleging remote.

that the age-60 retirement for flight engineers violated the Age

Discrimination in Employment Act of 1967. Age-based BFOQ and

being overweight are not the same. The case of overweight cabin

attendants is another matter. Given the cramped cabin space and Petitioner is also in estoppel. He does not dispute that the

narrow aisles and emergency exit doors of the airplane, any weight standards of PAL were made known to him prior to his

overweight cabin attendant would certainly have difficulty navigating employment. He is presumed to know the weight limit that he must

the cramped cabin area. maintain at all times.[78] In fact, never did he question the authority

of PAL when he was repeatedly asked to trim down his weight. Bona

In short, there is no need to individually evaluate their ability fides exigit ut quod convenit fiat. Good faith demands that what is

to perform their task. That an obese cabin attendant occupies more agreed upon shall be

space than a slim one is an unquestionable fact which courts can done. Kung ang tao ay tapat kanyang tutuparin angnapagkasun

judicially recognize without introduction of evidence.[77] It would also duan.

 100

discrimination by simply naming the supposed cabin attendants who

Too, the weight standards of PAL provide for separate weight are allegedly similarly situated with him. Substantial proof must be

limitations based on height and body frame for both male and female shown as to how and why they are similarly situated and the

cabin attendants. A progressive discipline is imposed to allow non- differential treatment petitioner got from PAL despite the similarity of

compliant cabin attendants sufficient opportunity to meet the weight his situation with other employees.

standards. Thus, the clear-cut rules obviate any

possibility for the commission of abuse or arbitrary action on the part Indeed, except for pointing out the names of the supposed overweight

of PAL. cabin attendants, petitioner miserably failed to indicate their

respective ideal weights; weights over their ideal weights; the periods

III. Petitioner failed to substantiate his claim that he they were allowed to fly despite their being overweight; the particular

was discriminated against by PAL. flights assigned to them; the discriminating treatment they got

from PAL; and other relevant data that could have adequately

Petitioner next claims that PAL is using passenger safety as a established a case of discriminatory treatment by PAL. In the words of

convenient excuse to discriminate against him.[79] We are constrained, the CA, PAL really had no substantial case of discrimination to

however, to hold otherwise. We agree with the CA that [t]he element meet.[82]

of discrimination came into play in this case as a secondary position

for the private respondent in order to escape the consequence of We are not unmindful that findings of facts of administrative

dismissal that being overweight entailed. It is a confession-and- agencies, like the Labor Arbiter and the NLRC, are accorded respect,

avoidance position that impliedly admitted the cause of dismissal, even finality.[83] The reason is simple: administrative agencies are

including the reasonableness of the applicable standard and the experts in matters within their specific and specialized

private respondents failure to comply.[80] It is a basic rule in jurisdiction.[84] But the principle is not a hard and fast rule. It only

evidence that each party must prove his affirmative allegation.[81] applies if the findings of facts are duly supported by substantial

Since the burden of evidence lies with the party who asserts evidence. If it can be shown that administrative bodies

an affirmative allegation, petitioner has to prove his allegation with grossly misappreciated evidence of such nature so as to compel a

particularity. There is nothing on the records which could support the conclusion to the contrary, their findings of facts must necessarily be

finding of discriminatory treatment. Petitioner cannot establish reversed. Factual findings of administrative agencies do not have

infallibility and must be set aside when they fail the test of
arbitrariness.[85]
Here, the Labor Arbiter and the NLRC
inexplicably misappreciated evidence. We thus annul their findings.
To make his claim more believable, petitioner invokes the
equal protection clause guaranty[86] of the Constitution. However, in
the absence of governmental interference, the liberties guaranteed by
the Constitution cannot be invoked.[87] Put differently, the Bill of
Rights is not meant to be invoked against acts of private
individuals.[88] Indeed, the United States Supreme Court, in
interpreting the Fourteenth Amendment,[89] which is the source of our
equal protection guarantee, is consistent in saying that
the equal protection erects no shield against private conduct, however
discriminatory or wrongful.[90] Private actions, no matter how
egregious, cannot violate the equal protection guarantee.[91]
IV. The claims of petitioner for reinstatement
wages are moot.
As his last contention, petitioner avers that his claims for
reinstatement and wages have not been mooted. He is entitled to
101
reinstatement and his full backwages, from the time he was illegally
dismissed up to the time that the NLRC was reversed by the CA.[92]
At this point, Article 223 of the Labor Code finds relevance:
In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned,
shall immediately be executory, even pending
appeal. The employee shall either be admitted back
to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall
not stay the execution for reinstatement provided
herein.
The law is very clear. Although an award or order of
reinstatement is self-executory and does not require a writ of
execution,[93] the option to exercise actual reinstatement or payroll
reinstatement belongs to the employer. It does not belong to the
employee, to the labor tribunals, or even to the courts.
Contrary to the allegation of petitioner that PAL did
everything under the sun to frustrate his immediate return to his
previous position,[94] there is evidence that PAL opted to physically
and reinstate him to a substantially equivalent position in accordance with
the order of the Labor
Arbiter.[95] In fact, petitioner duly received the return to work notice
on February 23, 2001, as shown by his signature.[96]
 102

Petitioner cannot take refuge in the pronouncements of the work shall be entitled to reinstatement without loss of seniority rights

Court in a case[97] that [t]he unjustified refusal of the employer to and other privileges and to his full backwages, inclusive of allowances,

reinstate the dismissed employee entitles him to payment of his and to his other benefits or their monetary equivalent computed from

salaries effective from the time the employer failed to reinstate him the time his compensation was withheld from him up to the time of

despite the issuance of a writ of execution[98] and even if the order of his actual reinstatement. Luckily for petitioner, this is not an ironclad

reinstatement of the Labor Arbiter is reversed on appeal, it is rule.

obligatory on the part of the employer to reinstate and pay the wages

of the employee during the period of appeal until reversal by the Exceptionally, separation pay is granted to a legally

higher court.[99] He failed to prove that he complied with the return to dismissed employee as an act social justice,[101] or based on

work order of PAL. Neither does it appear on record that he actually equity.[102] In both instances, it is required that the dismissal (1) was

rendered services for PAL from the moment he was dismissed, in not for serious misconduct; and (2) does not reflect on the moral

order to insist on the payment of his full backwages. character of the employee.[103]

In insisting that he be reinstated to his actual Here, We grant petitioner separation pay equivalent to one-

position despite being overweight, petitioner in effect wants to render half (1/2) months pay for every year of service.[104] It should include

the issues in the present case moot. He asks PAL to comply with the regular allowances which he might have been receiving.[105] We are

impossible. Time and again, the Court ruled that the law does not not blind to the fact that he was not dismissed for any serious

exact compliance with the impossible.[100] misconduct or to any act which would reflect on his moral

character. We also recognize that his employment with PAL lasted for

V. Petitioner is entitled to separation pay. more or less a decade.

Be that as it may, all is not lost for petitioner. WHEREFORE, the appealed Decision of the Court of Appeals

is AFFIRMED but MODIFIED in that petitioner Armando

Normally, a legally dismissed employee is not entitled to G. Yrasuegui is entitled to separation pay in an amount equivalent

separation pay. This may be deduced from the language of Article 279 to one-half (1/2) months pay for every year of service, which should

of the Labor Code that [a]n employee who is unjustly dismissed from include his regular allowances.

SO ORDERED.
G.R. No. 190187, September 28, 2016
THE PHILIPPINE GEOTHERMAL, INC. EMPLOYEES
UNION, Petitioner, v. UNOCAL PHILIPPINES, INC. (NOW KNOWN
AS CHEVRON GEOTHERMAL PHILIPPINES HOLDINGS,
INC.), Respondent.
DECISION
LEONEN, J.:
The merger of a corporation with another does not operate to dismiss
the employees of the corporation absorbed by the surviving
corporation. This is in keeping with the nature and effects of a merger
as provided under law and the constitutional policy protecting the
rights of labor. The employment of the absorbed employees subsists.
Necessarily, these absorbed employees are not entitled to separation
pay on account of such merger in the absence of any other ground for
its award.
This resolves a Petition for Review on Certiorari1 filed by Philippine
Geothermal, Inc. Employees Union (Union) assailing the
Decision2 dated July 23, 2009 and the Resolution3 dated November 9,
2009 of the Court of Appeals Eighth Division in Unocal Philippines, Inc.
(now known as Chevron Geothermal Philippines Holdings, inc.) v. The
Philippine Geothermal, Inc. Employees Union. The assailed Decision
granted Unocal Philippines, Inc.'s (Unocal Philippines) appeal and
reversed the Secretary of Labor's award of separation benefits to the
Union. The award was granted on the premise that the merger of
Unocal Philippines' parent corporation with another corporation
impliedly terminated the employment of the Union's members. The
assailed Resolution denied the Union's Motion for Reconsideration.
Philippine Geothermal, Inc. Employees Union is a legitimate labor
union that stands as the bargaining agent of the rank-and-file
employees of Unocal Philippines.4chanrobleslaw
103
Unocal Philippines, formerly known as Philippine Geothermal, Inc., is a
foreign corporation incorporated under the laws of the State of
California, United States of America, licensed to do business in the
Philippines for the "exploration and development of geothermal
resources as alternative sources of energy."5 It is a wholly owned
subsidiary of Union Oil Company of California (Unocal
California),6 which, in turn, is a wholly owned subsidiary of Union Oil
Corporation (Unocal Corporation).7 Unocal Philippines operates two (2)
geothermal steam fields in Tiwi, Albay and Makiling, Banahaw,
Laguna, owned by the National Power Corporation.8chanrobleslaw
On April 4, 2005, Unocal Corporation executed an Agreement and Plan
of Merger (Merger Agreement) with Chevron Texaco Corporation
(Chevron) and Blue Merger Sub, Inc. (Blue Merger).9 Blue Merger is a
wholly owned subsidiary of Chevron.10 Under the Merger Agreement,
Unocal Corporation merged with Blue Merger, and Blue Merger
became the surviving corporation.11 Chevron then became the parent
corporation of the merged corporations:12 After the merger, Blue
Merger, as the surviving corporation, changed its name to Unocal
Corporation.13chanrobleslaw
On January 31, 2006, Unocal Philippines executed a Collective
Bargaining Agreement with the Union.14chanrobleslaw
However, on October 20, 2006, the Union wrote Unocal Philippines
asking for the separation benefits provided for under the Collective
Bargaining Agreement. According to the Union, the Merger Agreement
of Unocal Corporation, Blue Merger, and Chevron resulted in the
closure and cessation of operations of Unocal Philippines and the
implied dismissal of its employees.15chanrobleslaw
Unocal Philippines refused the Union's request and asserted that the
employee-members were not terminated and that the merger did not
result in its closure or the cessation of its operations.16chanrobleslaw
As Unocal Philippines and the Union were unable to agree, they
decided to submit the matter to the Department of Labor and
Employment's Administrative Intervention for Dispute Avoidance
Program.17However, they were unable to arrive at "a mutually
acceptable agreement."18chanrobleslaw
On November 24, 2006, the Union claimed that Unocal Philippines was
guilty of unfair labor practice and filed a Notice of Strike.19 Later, the
Union withdrew its Notice of Strike.20chanrobleslaw
On February 5, 2007, the parties agreed to submit their dispute for
voluntary arbitration before the Department of Labor and
Employment, with the Secretary of Labor and Employment as
 104

Voluntary Arbitrator.21 The case, entitled In Re: Labor Dispute at remained undissolved and its employees were unaffected by the
Philippines, Inc./Chevron, was docketed as OS-VA-2007- merger.35 It found that this was evidenced by the Union's assumption
04.22chanrobleslaw of its role as the duly recognized bargaining representative of all rank-
and-file employees a few months after the merger.36chanrobleslaw
After the parties submitted their respective position papers, the
Secretary of Labor rendered the Decision23 on January 15, 2008 ruling Moreover, the Court of Appeals found that although Unocal
that the Union's members were impliedly terminated from Corporation became a part of Chevron, Unocal Philippines still
employment as a result of the Merger Agreement. The Secretary of remained as a wholly owned subsidiary of Unocal California after the
Labor found that the merger resulted in new contracts and a new merger.37 It ruled that in any case, the Collective Bargaining
employer for the Union's members. The new contracts allegedly Agreement only provided for the payment of separation pay if a
required the employees' consent; otherwise, there was no reduction in workforce results from redundancy, retrenchment or
employment contract to speak of.24 Thus, the Secretary of Labor installation of labor-saving devices, or closure and cessation of
awarded the Union separation pay under the Collective Bargaining operations, all of which did not occur in this case.38chanrobleslaw
Agreement.25cralawred The dispositive portion of the Decision
reads:ChanRoblesVirtualawlibrary The Court of Appeals also pointed out that the Union's members
merely wanted to discontinue their employment with Unocal
Philippines, but there was nothing in the Labor Code nor in the parties'
WHEREFORE, this Office rules that Unocal and Chevron merged into
Collective Bargaining Agreement that would sanction the payment of
one corporate entity and the employees were impliedly terminated
separation pay to those who no longer wanted to work for Unocal
from employment. Accordingly, they are entitled to the separation
Philippines as a result of the merger.39 The dispositive portion of the
benefits provided under ARTICLE XII, SECTION 2 and ANNEX
Decision reads:ChanRoblesVirtualawlibrary
"B" of the collective bargaining [agreement] between UNOCAL
WHEREFORE, premises considered, the Decision dated 15 January
PHILIPPINES, INC. and the PHILIPPINE GEOTHERMAL, INC.
2008, of the Department of Labor and Employment (DOLE) in OS-VA-
EMPLOYEES UNION.
2007-04 is hereby REVERSEDand SET ASIDE.
Pursuant to Section 7, Rule XIX of Department Order No. 40-03,
SO ORDERED.40 (Emphasis in the original)
series of 2003, this Decision shall be final and executory after ten (10)
On November 9, 2009, the Court of Appeals denied the Union's Motion
calendar days from receipt hereof and it shall not be subject of a
for Reconsideration.41chanrobleslaw
motion for reconsideration.
Hence, this Petition42 was filed.
SO ORDERED.26 (Emphasis in the original)
Unocal Philippines filed before the Court of Appeals a Petition for
Petitioner Philippine Geothermal, Inc. Employees Union claims that
Review27 questioning the Secretary of Labor's Decision. Unocal
respondent Unocal Philippines, Inc. changed its theory of the case
Philippines claimed that the Union was not entitled to separation
when, in the proceedings before the Secretary of Labor, it claimed
benefits given that Unocal Philippines was not a party to the
that it entered into a merger and not a sale, but later, in its appeal
merger,28 that it never closed nor ceased its business, and that it did
before the Court of Appeals, argued that it was not a party to the
not terminate its employees after the merger.29 It asserted that its
merger.43 Petitioner asserts that the Court of Appeals erred in allowing
operations continued in the same manner, and with the same
respondent to change its theory of the case on appeal and in deciding
manpower complement.30 Likewise, the employees kept their tenure
the case on the basis of this changed theory.44chanrobleslaw
intact and experienced no changes in their salaries and
benefits.31chanrobleslaw
Petitioner further claims that the Court of Appeals erred in reversing
the Decision of the Secretary of Labor, who properly ruled that
In the Decision32 dated July 23, 2009, the Court of Appeals granted
petitioner's members are entitled to separation pay.45 It claims that
the appeal of Unocal Philippines and reversed the Decision of the
the merger resulted in (a) "the severance of the juridical tie that
Secretary of Labor.33 It held that Unocal Philippines has a separate
existed between the employees and its original employer, Unocal
and distinct juridical personality from its parent company, Unocal
Corporation,"46 and (b) the implied termination of the employment of
Corporation, which was the party that entered into the Merger
the Union's members, who had the right to waive their continued
Agreement.34 The Court of Appeals ruled that Unocal Philippines
employment with the absorbing corporation.47 Petitioner insists that

the the "cessation of operations" contemplated in the Collective
Bargaining Agreement and the Memorandum of Agreement must be
liberally interpreted to include mergers,48 and that doubts must be
resolved in favor of labor.49chanrobleslaw
In the Resolution50 dated January 27, 2010, this Court directed
respondent to comment on the Petition.
Respondent filed its Comment51 on March 26, 2010. It argues that it
did not change its theory on appeal. It insists that it has been
consistent in arguing before the Secretary of Labor and the Court of
Appeals that it was never a party to the merger between Unocal
Corporation and Blue Merger as it has always stated that it was
Unocal Corporation who entered into the Merger
Agreement.52 Respondent argues that even assuming that it did
change its theory on appeal, it may do so as an exception to the rule
since "a party may change [its] legal theory when its factual bases
would not require the presentation of further evidence by the adverse
party in order to meet the issue raised in the new theory."53 It posits
that the alleged new theory would still be based on the evidence
presented before the Secretary of Labor, hence, petitioner was.not
placed at a disadvantage.54chanrobleslaw
Respondent further argues that in any case, petitioner's members still
did not lose their employment as to warrant the award of separation
pay.55 The Memorandum of Agreement, the Collective Bargaining
Agreement, and the contemporaenous acts of the parties show that
respondent shall pay separation pay only in case the employees
actually lose their jobs due to redundancy, retrenchment or
installation of labor-saving devices, or closure and cessation of
operation.56 As these circumstances did not occur, respondent cannot
grant petitioner's members separation pay.
Petitioner filed its Reply57 on July 6, 2010. It insists that respondent
never claimed before the Secretary of Labor that it was not covered
by the merger.58 It maintains that respondent only insisted on this
argument when it obtained the unfavorable decision from the
Secretary of Labor.59 Moreover, the Secretary of Labor was correct in
ruling that, indeed, there was a cessation of operations of respondent
when it merged with Chevron.60chanrobleslaw
We resolve the following issues:
chanRoblesvirtualLawlibraryFirst, whether respondent changed the
theory of its case on appeal;
Second, whether the Merger Agreement executed by Unocal
Corporation, Blue Merger, and Chevron resulted in the termination of
105
the employment of petitioner's members; and cralawlawlibrary
Lastly, whether petitioner's members are entitled to separation
benefits.
As regards the first issue, we rule that respondent did, indeed, change
the theory of its case on appeal.
In its Petition before the Court of Appeals, respondent asserted that it
was not a party to the merger as it was a subsidiary of Unocal
California and, thus, had a separate and distinct personality from
Unocal Corporation.
However, the following statement can be found in respondent's
Position Paper in the proceedings before the Secretary of
Labor:ChanRoblesVirtualawlibrary
3. . . . Following the merger, Blue Merger Sub Inc. which as above
stated is a wholly owned subsidiary of Chevron Corporation changed
its name to Unocal Corporation retaining Unocal Philippines, Inc. as its
Philippine Branch to continue to operate the aforenamed geothermal
plants as, in fact[.]61 (Emphasis supplied)
Respondent alleges that it is a branch of Unocal Coiporation. Claiming
that it is a branch is inconsistent with its allegation (on appeal) that it
is a subsidiary of another corporation. A branch and a subsidiary differ
in its corporate existence: a branch is not a legally independent unit,
while a subsidiary has a separate and distinct personality from its
parent corporation.
In Philippine Deposit Insurance Corp. v. Citibank:62
The Court begins by examining the manner by which a foreign
corporation can establish its presence in the Philippines. It may
choose to incorporate its own subsidiary as a domestic corporation, in
which case such subsidiary would have its own separate and
independent legal personality to conduct business in the country. In
the alternative, it may create a branch in the Philippines, which would
not be a legally independent unit, and simply obtain a license to do
business in the Philippines.63 (Emphasis supplied, citations omitted)
Respondent likewise made the following assertions in its Position
Paper in the proceedings before the Secretary of
Labor:ChanRoblesVirtualawlibrary
Based on the facts of this case, the Honorable Secretary of Labor
would certainly appreciate that the business transaction entered into
by respondent employer was in law and in fact, a merger. Hence,
there is no basis to the union's claim.
....
. . . In the present case, it is clear that the surviving corporation, i.e.

Unocal Philippines Inc. has continued the business and operations of
the absorbed corporation in an unchanged manner, and using the
same employees with their tenure intact and under the same terms
and conditions of employment.64 (Emphasis supplied)
These statements reveal that not only did respondent fail to assert
that it was not a party to the Merger Agreement, but it also referred
to itself as the party who entered into the transaction and became the
surviving corporation in the merger. Thus, the claim that respondent
is not a party to the merger is a new allegation raised for the first
time on appeal before the Court of Appeals.
Raising a factual question for the first time on appeal is not allowed.
In Tan v. Commission on Elections:65
The aforementioned issue is now raised only for the first time on
appeal before this Court. Settled is the rule that issues not raised in
the proceedings below (COMELEC en banc) cannot be raised for the
first time on appeal. Fairness and due process dictate that evidence
and issues not presented below cannot be taken up for the first time
on appeal.
Thus, in Matugas v. Commission on Elections, we reiterated this rule,
saying:ChanRoblesVirtualawlibrary
The rule in appellate procedure is that a factual question may not be
raised for the first time on appeal, and documents forming no part of
the proofs before the appellate court will not be considered in
disposing of the issues of" an action. This is true whether the decision
elevated for review originated from a regular court or an
administrative agency or quasi-judicial body, and whether it was
rendered in a civil case, a special proceeding, or a criminal case.
Piecemeal presentation of evidence is simply not in accord with
orderly justice.
Moreover, in Vda. De Gualberto v. Go, we also
held:ChanRoblesVirtualawlibrary
In Labor Congress of the Philippines v. NLRC, we have made it clear
that "to allow fresh issues on appeal is violative of the rudiments of
fair play, justice and due process." Likewise, in Orosa v. Court of
Appeals, the Court disallowed it because "it would be offensive to the
basic rule of fair play, justice and due process if it considered [the]
issue[s] raised for the first time on appeal." We cannot take an
opposite stance in the present case.66 (Citations omitted)
Respondent did state that Unocal Corporation was the party to the
Merger Agreement with Blue Merger and Chevron. Nonetheless, it did
not use this allegation to argue that it had a separate and distinct
personality from Unocal Corporation and is, thus, not a party to the
Merger Agreement. Respondent only raised this argument in its
appeal before the Court of Appeals.
106
Respondent's contention that it falls within the exception to the rule
likewise does not lie. Respondent cites Quasha Ancheta Pena and
Nolasco Law Office v. LCN Construction Corp.67 and claims that it falls
within the exception since it did not present any additional evidence
on the matter:ChanRoblesVirtualawlibrary
In the interest of justice and within the sound discretion of the
appellate court, a party may change his legal theory on appeal, only
when the factual bases thereof would not require presentation of any
further evidence by the adverse party in order to enable it to properly
meet the issue raised in the new theory.68chanroblesvirtuallawlibrary
However, this paragraph states that it is the adverse party that should
no longer be required to present additional evidence to contest the
new claim, and not the party presenting the new theory on appeal.
Thus, it does not matter that respondent no longer presented
additional evidence to support its new claim. The petitioner, as the
adverse party, should not have to present further evidence on the
matter before the new issue may be considered. However, the issue of
whether respondent is a party to the Merger Agreement may be
proven otherwise by petitioner, through the presentation of evidence
that respondent is merely a branch and not a subsidiary of Unocal
Corporation. Thus, respondent's new allegation does not fall under the
exception to the rule.
Petitioner was denied the opportunity to present evidence to disprove
respondent's new claim. Therefore, the Court of Appeals erred in
taking into consideration this argument.
As to the remaining issues, we rule in favor of respondent and dismiss
the Petition.
Both the Secretary of Labor and the Court of Appeals found that what
was entered into by Unocal Corporation, Blue Merger, and Chevron is
a merger. The primary issue is what the effects of this merger on
respondent's employees are.
We find that, whether or not respondent is a party to the Merger
Agreement, there is no implied dismissal of its employees as a
consequence of the merger.
A merger is a consolidation of two or more corporations, which results
in one or more corporations being absorbed into one surviving
corporation.69 The separate existence of the absorbed corporation
ceases, and the surviving corporation "retains its identity and takes
over the rights, privileges, franchises, properties, claims, liabilities and
obligations of the absorbed corporation(s)."70chanrobleslaw
If respondent is a subsidiary of Unocal California, which, in turn, is a
subsidiary of Unocal Corporation, then the merger of Unocal

Corporation with Blue Merger and Chevron does not affect respondent
or any of its employees. Respondent has a separate and distinct
personality from its parent corporation.
Nonetheless, if respondent is indeed a party to the merger, the
merger still does not result in the dismissal of its employees.
The effects of a merger are provided under Section 80 of the
Corporation Code:ChanRoblesVirtualawlibrary
SEC. 80. Effects of merger or consolidation. � The merger or
consolidation, as provided in the preceding sections shall have the
following effects:
chanRoblesvirtualLawlibrary
1. The constituent corporations shall become a single corporation
which, in case of merger, shall be the surviving corporation
designated in the plan of merger; and, in case of consolidation, shall
be the consolidated corporation designated in the plan of
consolidation;
2. The separate existence of the constituent corporations shall cease,
except that of the surviving or the consolidated corporation;
3. The surviving or the consolidated corporation shall possess all the
rights, privileges, immunities and powers and shall be subject to all
the duties and liabilities of a corporation organized under this Code;
4. The surviving or the consolidated corporation shall thereupon and
thereafter possess all the rights, privileges, immunities and franchises
of each of the constituent corporations; and all property, real or
personal, and all receivables due on whatever account, including
subscriptions to shares and other choses in action, and all and every
other interest of, or belonging to, or due to each constituent
corporation, shall be taken and deemed to be transferred to and
vested in such surviving or consolidated corporation without further
act or deed; and
5. The surviving or the consolidated corporation shall be responsible
and liable for all the liabilities and obligations of each of the
constituent corporations in the same manner as if such surviving or
consolidated corporation had itself incurred such liabilities or
obligations; and any claim, action or proceeding pending by or against
any of such constituent corporations may be prosecuted by or against
the surviving or consolidated corporation, as the case may be. Neither
the rights of creditors nor any lien upon the property of any of such
constituent corporations shall be impaired by such merger or
consolidation. (Emphasis supplied)
107
Although this provision does not explicitly state the merger's effect on
the employees of the absorbed corporation, Bank of the Philippine
Islands v. BPI Employees Union-Davao Chapter-Federation of Unions
in BPI Unibank71 has ruled that the surviving corporation automatically
assumes the employment contracts of the absorbed corporation, such
that the absorbed corporation's employees become part of the
manpower complement of the surviving corporation,
thus:ChanRoblesVirtualawlibrary
Taking a second look on this point, we have come to agree with
Justice Brion's view that it is more in keeping with the dictates of
social justice and the State policy of according full protection to labor
to deem employment contracts as automatically assumed by the
surviving corporation in a merger, even in the absence of an express
stipulation in the articles of merger or the merger plan. In his
dissenting opinion, Justice Brion reasoned
that:ChanRoblesVirtualawlibrary
To my mind, due consideration of Section 80 of the Corporation Code,
the constitutionally declared policies on work, labor and employment,
and the specific FEBTC-BPI situation � i.e., a merger with complete
"body and soul" transfer of all that FEBTC embodied and possessed
and where both participating banks were willing (albeit by deed, not
by their written agreement) to provide for the affected human
resources by recognizing continuity of employment � should point this
Court to a declaration that in a complete merger situation where there
is total takeover by one corporation over another and there is silence
in the merger agreement on what the fate of the human resource
complement shall be, the latter should not be left in legal limbo and
should be properly provided for, by compelling the surviving entity to
absorb these employees. This is what Section 80 of the Corporation
Code commands, as the surviving corporation has the legal obligation
to assume all the obligations and liabilities of the merged constituent
corporation.
Not to be forgotten is that the affected employees managed, operated
and worked on the transferred assets and properties as their means of
livelihood; they constituted a basic component of their corporation
during its existence. In a merger and consolidation situation, they
cannot be treated without consideration of the applicable
constitutional declarations and directives, or, worse, be simply
disregarded. If they are so treated, it is up to this Court to read and
interpret the law so that they are treated in accordance with the legal
requirements of mergers and consolidation, read in light of the social
justice, economic and social provisions of our Constitution. Hence,
there is a need for the surviving corporation to take responsibility for
the affected employees and to absorb them into its workforce where
no appropriate provision for the merged corporation's human
resources component is made in the Merger Plan.72 (Emphasis
supplied, citations omitted)

The rationale for this ruling is anchored on the nature and effects of a
merger as provided under Section 80 of the Corporation Code, as well
as the policies on work and labor enshrined in the
Constitution.73chanrobleslaw
To reiterate, Section 80 of the Corporation Code provides that the
surviving corporation shall possess all the rights, privileges,
properties, and receivables due of the absorbed corporation.
Moreover, all interests of, belonging to, or due to the absorbed
corporation "shall be taken and deemed to be transferred to and
vested in such surviving or consolidated corporation without further
act or deed."74 The surviving corporation likewise acquires all the
liabilities and obligations of the absorbed corporation as if it had itself
incurred these liabilities or obligations.75chanrobleslaw
This acquisition of all assets, interests, and liabilities of the absorbed
corporation necessarily includes the rights and obligations of the
absorbed corporation under its employment contracts. Consequently,
the surviving corporation becomes bound by the employment
contracts entered into by the absorbed corporation. These
employment contracts are not terminated. They subsist unless their
termination is allowed by law.
This interpretation is consistent with the consitutional provisions and
policies on work and labor, which provides:ChanRoblesVirtualawlibrary
ARTICLE II
....
State Policies
....
SECTION 18. The State affirms labor as a primary social economic
force. It shall protect the rights of workers and promote their welfare.
....
ARTICLE XIII
....
Labor
SECTION 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment
and equality of employment opportunities for all.
108
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work, and
a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by
law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the fruits
of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.
These constitutional provisions ensure that workers' rights are
protected as they are imbued with public interest. They likewise
prevent an interpretation of any law, rule, or agreement, which may
violate worker's rights acquired during their employment.
Associate Justice Arturo D. Brion's Dissenting Opinion in Bank of the
Philippine Islands v. BPI Employees Union-Davao Chapter-Federation
of Unions in BPI Unibank76 was similarly premised on the
constitutional protection afforded to labor and the public interest
carried by employment contracts:ChanRoblesVirtualawlibrary
An employment contract or contract of service essentially has value
because it embodies work � the means of adding value to basic raw
materials and the processes for producing goods, materials and
services that become the lifeblood of corporations and, ultimately, of
the nation. Viewed from this perspective, the employment contract or
contract of service is not an ordinary agreement that can be viewed in
strictly contractual sense. It embodies work and production and
carries with it a very significant element of public interest; thus, the
Constitution, no less, accords full recognition and protection to
workers and their contribution to production.
....
These constitutional statements and directives, aside from telling us
to consider work, labor and employment beyond
purely contractual terms, also provide us directions on how our
considerations should be made, i.e., with an eye on the interests they
represent � the individual, the corporate, and more importantly, the
national.77chanroblesvirtuallawlibrary

Associate Justice Brion likewise discussed the nature of a merger
agreement vis-a-vis the employment
contracts:ChanRoblesVirtualawlibrary
This recognition is not to objectify the workers as assets and liabilities,
but to recognize � using the spirit of the law and constitutional
standards � their necessary involvement and need to be provided for
in a merger situation. Neither does this step, directly impacting on the
employees' individual employment contracts, detract from the in
personam character of these contracts. For in a merger situation, no
change of employer is involved; the change is in the internal
personality of the employer rather than through the introduction of a
new employer which would have novated the contract. This conclusion
proceeds from the nature of a merger as a corporate development
regulated by law and the merger's implementation through the
parties' merger agreement.
....
In the BPI-FEBTC situation, these employment contracts are part of
the obligations that the merging parties have to account and make
provisions for under the Constitution and the Corporation Code; in the
absence of any clear agreement, these employment contracts subsist,
subject to the right of the employees to reject them as they cannot be
compelled to render service but can only be made to answer in
damages if the rejection constitutes a breach. In other words, in
mergers and consolidations, these contracts should be held to be
continuing, unless rejected by the employees themselves or declared
by the merging parties to be subject to the authorized causes for
termination of employment under Sections 282 and 283 of the Labor
Code. In this sense, the merging parties' control and business decision
on how employees shall be affected, in the same manner that the
affected employees' decision on whether to abide by the merger or to
opt out, remain unsullied.78 (Emphasis in the original)
Senior Associate Justice Antonio T. Carpio's Dissenting
Opinion79 likewise discusses the constitutional and legal right to
security of tenure as basis for ruling that the employment contracts of
the absorbed corporation subsist in case of a
merger:ChanRoblesVirtualawlibrary
Upon merger, BPI, as the surviving entity, absorbs FEBTC and
continues the combined business of the two banks. BPI assumes the
legal personality of FEBTC, and automatically acquires FEBTC s rights,
privileges and powers, as well as its liabilities and obligations.
....
Among the obligations and liabilities of FEBTC is to continue the
employment of FEBTC employees. These employees have already
acquired certain employment status, tenure, salary and benefits. They
109
are regular employees of FEBTC. Since after the merger, BPI has
continued the business of FEBTC, FEBTC's obligation to these
employees is assumed by BPI, and BPI becomes duty-bound to
continue the employment of these FEBTC employees.
Under Article 279 of the Labor Code, regular employees acquire
security of tenure, and hence, may not be terminated by the employer
except upon legal grounds. . . . Without any of these legal grounds,
the employer cannot validly terminate the employment of regular
employees; otherwise, the employees' right to security of tenure
would be violated.
The merger of two corporations does not authorize the surviving
corporation to terminate the employees of the absorbed corporation in
the absence of just or authorized causes as provided in Articles 282
and 283 of the Labor Code. . . . Once an employee becomes
permanent, he is protected by the security of tenure clause in the
Constitution, and he can be terminated only for just or authorized
causes as provided by law.80chanroblesvirtuallawlibrary
These theories were dissents to the Decision in Bank of the Philippine
Islands. However, in the Resolution resolving the Motion for
Reconsideration in that case, this Court found it necessary to interpret
Section 80 of the Corporation Code and the constitutional provisions
on labor as to strengthen the "judicial protection of the right to
security of tenure of employees affected by a merger and [avoid]
confusion regarding the status of various-benefits."81 Thus, this Court
ruled that the surviving corporation automatically assumes the
employment contracts of the absorbed corporation. The absorbed
corporation's employees are not impliedly dismissed, but become part
of the manpower complement of the surviving
corporation.82chanrobleslaw
The merger of Unocal Corporation with Blue Merger and Chevron does
not result in an implied termination of the employment of petitioner's
members. Assuming respondent is a party to the merger, its
employment contracts are deemed to subsist and continue by "the
combined operation of the Corporation Code and the Labor Code
under the backdrop of the labor and social justice provisions of the
Constitution."83chanrobleslaw
Petitioner insists that this is contrary to its freedom to contract,
considering its members did not enter into employment contracts with
the surviving corporation. However, petitioner is not precluded from
leaving the surviving corporation. Although the absorbed employees
are retained as employees of the merged corporation, the employer
retains the right to terminate their employment for a just or
authorized cause. Likewise, the employees are not precluded from
severing their employment through resignation or retirement. The

freedom to contract and the prohibition against involuntary servitude
is still, thus, preserved in this sense.84 This is the manner by which
the consent of the employees is considered by the law.
Hence, assuming respondent is a party to the merger, the merger still
does not operate to effect a termination of the employment of
respondent's employees. Should they be unhappy with the surviving
corporation, the employees may retire or resign from employment.
Given these considerations, we rule that petitioner is not entitled to
the separation benefits it claims from respondent.
Separation benefits are not granted to petitioner by law in case of
voluntary resignation,85 or by any contract it entered into with
respondent.
The Collective Bargaining Agreement86 between petitioner and
respondent provides:ChanRoblesVirtualawlibrary
Article XII
RESPONSIBILITIES OF THE PARTIES AND INDUSTRIAL PEACE
....
Section 2. ADDITIONAL RESPONSIBILITIES
....
In the event of closure, cessation of operations, retrenchment,
redundancy or installation of labor saving devices, the COMPANY will
pay just and fair compensation for those who will be separated from
the COMPANY. The separation benefit is covered under a
MEMORANDUM OF AGREEMENT as agreed upon by both parties and
shall serve as a part of this agreement (Annex
B).87chanroblesvirtuallawlibrary
Likewise, the Memorandum of Agreement88 dated November 1, 2005
betweeen petitioner and respondent
states:ChanRoblesVirtualawlibrary
WITHESSETH: That
WHEREAS, the COMPANY and the UNION recognize the possibility that
UNOCAL PHILIPPINES, INC. may undergo at its discretion reduction in
workforce as a result of redundancy, retrenchment or installation of
labor saving devices, or closure and cessation of operations.
WHEREAS, the COMPANY and the UNION agree that should any of the
above-cited conditions occur that may directly affect the tenure of
existing employees, the rights of the employees should be respected
110
and that the COMPANY will pay just and fair compensation for those
who will be separated from the COMPANY;
In view of the foregoing and in consideration of industrial peace and
this covenant, the parties hereby agree as follows:
chanRoblesvirtualLawlibrary. . . .
2. The COMPANY will provide the following separation benefits for all
regular and probationary employees in the event that they lose their
jobs as a result of the conditions cited above;��
a. Separation Pay: 2.5 months multiplied by the current
monthly base pay plus monthly equivalent of the 13th month
and 14th month pay multiplied by the number of years
service.89
Merger is not one of the circumstances where the employees may
claim separation pay. The only instances where separation pay may
be awarded to petitioner are: (a) reduction in workforce as a result of
redundancy; (b) retrenchment or installation of labor-saving devices;
or (c) closure and cessation of operations.
Redundancy has been defined by this Court as
follows:ChanRoblesVirtualawlibrary
[W]e believe that redundancy, for purposes of our Labor Code, exists
where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of
a position or positions may be the outcome of a number of factors,
such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. The employer has no
legal obligation to keep in its payroll more employees than are
necessary for the operation of its business.90 (Citations omitted)
Retrenchment, on the other hand, is the reduction of personnel to
save on costs on salaries and wages due to a considerable decline in
the volume of business.91chanrobleslaw
Cessation and closure of business contemplates the stopping of
business operations of the employer whether on the employer's
prerogative or on account of severe business losses.92chanrobleslaw
None of these instances are present here. The terms do not provide
that a merger is one of the instances where petitioner may claim
separation benefits for its members. Neither can these circumstances
be interpreted as to contemplate a merger with another corporation.

In any case, if title parties intended that petitioner ought to be
granted separation pay in case of a merger, it should have been
explicitly provided for in the contract. Absent this express intention,
petitioner cannot claim separation pay.
On the contention that petitioner must be awarded the separation pay
in the interest of social justice, this Court has held that this award is
granted only under the following exceptional cases: (1) the dismissal
of the employee was not for serious misconduct; and (2) it did not
reflect on the moral character of the employee.93chanrobleslaw
In this case, there is no dismissal of the employees on account of the
merger. Petitioner does not deny that respondent actually continued
its normal course of operations after the merger, and that its
members, as employees, resumed their work with their tenure,
salaries, wages, and other benefits intact. Petitioner was even able to
execute with respondent, after the merger, the Collective Bargaining
Agreement from which it anchors its claims.
Given these circumstances, petitioner is not entitled to separation
pay. Although the policy of the state is to rule in favor of labor in light
of the social justice provisions under the Constitution, this Court
cannot unduly trample upon the rights of management, which are
likewise entitled to respect in the interest of fair play.
WHEREFORE, the Decision dated July 23, 2009 and the Resolution
dated November 9, 2009 of the Court of Appeals in CA-G.R. SP No.
102184 are AFFIRMED. The Petition for Review
is DENIED considering that no reversible error was committed by the
Court of Appeals.
SO ORDERED.chanRoblesvirtualLawlibrary
G.R. No. 195614
DIGITAL TELECOMMUNICATIONS PHILS., INC./JOHN
GOKONGWEI, JR., Petitioner
vs.
NEILSON M. AYAPANA, Respondent
DECISION
MARTIRES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the 7 October 2010 Decision1and 4 February 2011
111
Resolution2 rendered by the Court of Appeals (CA) in CA-G.R. SP No.
112160. The CA affirmed with modification the 29 June 2009
Decision3 and 28 October 2009 Resolution4 of the National Labor
Relations Commission (NLRC) in NLRC LAC Case No. 05-001831-08,
which declared Neilson M. Ayapana (respondent) to have been illegally
dismissed.
THE FACTS
Digital Telecommunications Philippines,
Inc. (petitioner or company) hired respondent as Key Accounts
Manager for its telecommunication products and services in the areas
of Quezon, Marinduque, and Laguna provinces, with a monthly basic
pay of ₱13,100.00. Respondent was tasked, among others, to offer
and sell DIGITEL's foreign exchange (FEX) line to prospective
customers.
On 6 September 2006, respondent successfully offered two (2) FEX
lines for Atimonan, Quezon, to Estela Lim (Lim), the owner of Star
Lala Group of Companies (Star Lala). He received from Lim the total
amount of ₱7,000.00 (the subject amount) for the two lines, for which
he issued two (2) official receipts. Respondent, however, did not remit
the subject amount to petitioner on the same date.
On 7 September 2006, petitioner's sales team, which included
respondent, held a meeting during which respondent learned, from his
immediate superior, that there was no available FEX line in Atimonan,
Quezon; and that it was not possible to have a FEX line in the area
due to technical constraints. On the same day, respondent retrieved
from Lim the two (2) official receipts issued to the latter and replaced
them with an acknowledgment receipt.
On 23 November 2006, Teresita Cielo (Cielo), secretary of Lim, went
to petitioner's business office to pay bills and to ask for the refund of
the subject amount.1avvphi1 Upon verification by Myra
Santiago (Santiago), petitioner's customer representative, she found
that there was no existing application for the said service under the
name of Star Lala Group of Companies.
When Santiago found that respondent was the sales person handling
Lim's transaction, she informed respondent of Cielo's request for
refund on that same day; but it was only on 28 November 2006, or
five (5) days from said notice, that respondent was able to make the
refund.

On 29 November 2006, petitioner issued a Notice to Explain5 to
respondent, asking him to explain: why he offered an inexistent FEX
line; why he withdrew the official receipts issued to Lim and replaced
them with an acknowledgment receipt; why he did not immediately
remit the proceeds of the transaction to petitioner's business center;
and why he retained the subject amount for 84 days.
On 30 November 2006, respondent submitted a written response.6 He
explained that he was not aware of the unavailability of the Atimonan
line at the time he offered it to Lim; that he retrieved the official
receipts to avoid explaining the late remittance to the treasury
department because, at the time, Lim was still undecided whether to
take up respondent's alternative offer of subscribing to a FEX line in
Lucena until such time that an Atimonan line could become available;
that he issued the acknowledgment receipt as proof that the subject
amount is in his possession; that prior to 23 November 2006, he
made several attempts to obtain Cielo's advice as to the return of the
subject amount, to no avail; and that after being informed of Cielo's
request on 23 November 2006, he went to Star Lala's office, which
was closed, and thereafter tried to obtain Cielo's address in order to
return the money, to no avail. According to respondent, he handed
the subject amount to Santiago after she informed him that Cielo
would retrieve the money from her.
On 4 December 2006, petitioner sent a Notice of Offense7 to
respondent, scheduling his administrative hearing and requesting his
presence there.
On 19 January 2007, petitioner issued a Notice of Dismissal8 finding
respondent guilty of "breach by the employee of the trust and
confidence reposed in him by management or by a company
representative" under petitioner's disciplinary rules, which merited
dismissal for the first offense.
Aggrieved, respondent filed a complaint for illegal dismissal. The
Labor Arbiter dismissed the complaint, ruling that substantial evidence
exists that respondent was involved in an event that justified
petitioner's loss of trust and confidence in him, and therefore, he was
validly dismissed from employment.9 Respondent then appealed to the
NLRC.
The NLRC Ruling
The NLRC reversed and set aside the decision of the Labor Arbiter. It
ruled that respondent was merely guilty of imprudence and not of bad
112
faith or malice. The NLRC found that dismissal was too harsh a
penalty, especially since respondent appeared to have a clean record
except for the Notice of Final Warning10 issued to him by petitioner on
17 October 2005. The NLRC also considered in respondent's favor the
certificates of commendation issued to him for being the most
outstanding account manager in 2001 and 2002, as well as the
service award he received in 2006. Consequently, it ordered the
petitioner to pay respondent separation pay in the amount of
₱78,600.00 computed at one-month pay for every year of service, viz:
WHEREFORE, the appeal filed by complainant is GRANTED IN PART.
The Decision of Labor Arbiter Melchisedek A. Guan dated March 6,
2008 is REVERSED and SET ASIDE, and a NEW ONE rendered finding
dismissal a harsh penalty and ordering respondents to pay
complainant separation pay in the sum of ₱78,600.00 as computed
above.
SO ORDERED.11
Respondent thereafter filed a motion for reconsideration, which was
denied by the NLRC. Unsatisfied with the decision, respondent
appealed to the CA.
The CA Ruling
The CA affirmed the NLRC ruling with modification that petitioner was
further ordered to pay full back wages inclusive of allowances and
other benefits or their monetary equivalent, viz:
WHEREFORE, premises considered, the Decision dated June 29, 2009
of the National Labor Relations Commission (NLRC) in NLRC LAC Case
No. 05-001831-08 is AFFIRMED with MODIFICATION that private
respondent DIGITEL is ordered to pay petitioner separation pay and
full back wages inclusive of allowances and other benefits or their
monetary equivalent from January 19, 2007 up to the finality of this
Decision.
SO ORDERED.12
The CA held that respondent's dismissal was not valid because neglect
of duty, as a just cause for dismissal, must not only be gross but also
habitual. An isolated act of negligence cannot be ground for dismissal,
and respondent was found negligent in only one instance.

Aggrieved, petitioner filed a motion for reconsideration, which was
denied by the CA. Hence, this petition.
ISSUES
Petitioner raises the following issues:
I.
THE COURT OF APPEALS ERRED IN AFFIRMING THE NLRC'S FINDING
THAT NO JUST CAUSE EXISTS TO WARRANT RESPONDENT
AYAPANA'S DISMISSAL DESPITE THE LAW AND EVIDENCE TO THE
CONTRARY.
II.
THE COURT OF APPEALS ERRED IN AW ARD ING BACK WAGES AND
SEPARATION PAY TO RESPONDENT AYAPANA DESPITE LACK OF
LEGAL BASIS.
Simply put, this Court is tasked to consider whether the CA correctly
held that respondent's dismissal was invalid and that he is entitled to
full back wages and separation pay.
DISCUSSION
Incipiently, this Court addresses respondent's contention that
petitioner can no longer raise the issue on the validity of his dismissal
since it has failed to file a motion for reconsideration from the NLRC's
decision, thus, it is bound by the NLRC's finding on this issue.
Respondent errs. It is settled that the entire case becomes open to
review, and the Court can review matters not specifically raised or
assigned as error by the parties, if their consideration is necessary in
arriving at a just resolution of the case.13
The issue of whether respondent was validly dismissed, though ruled
upon by the NLRC without an appeal from petitioner, is pivotal in
determining respondent's entitlement to back wages and separation
pay, which was raised by respondent in his appeal to the CA. It is
clearly necessary to arriving at a just disposition of the controversy.
Thus, it was proper for the CA to pass upon said issue, and for
petitioner to interpose an appeal therefrom.
113
Now to the primary issue at bar: was respondent validly dismissed?
The Court rules in the affirmative.
Respondent held a position of trust and confidence and committed an
act that justified petitioner's loss of trust and confidence.
A perusal of the notice of dismissal issued by petitioner to respondent
shows that the ground relied upon by the former was the latter's
breach of the trust and confidence reposed in him by the company,
contrary to the ruling of the CA, which based its decision on gross and
habitual neglect, a separate ground under Article 29?14 of the Labor
Code.
The willful breach by the employee of the trust reposed in him by his
employer or the latter's duly authorized representative is a just cause
for dismissal.1âwphi1 However, the validity of a dismissal based on
this ground is premised upon the concurrence of these conditions: (1)
the employee concerned must be holding a position of trust and
confidence; and (2) there must be a willful act that would justify the
loss of trust and confidence.15
The first requisite is certainly present. In a number of cases, this
Court has held that rank-and-file employees who are routinely
charged with the care and custody of the employer's money or
property are classified as occupying positions of trust and
confidence.16 In Philippine Plaza Holdings, Inc. v. Episcope, 17 the
Court held that a service attendant tasked to attend to dining guests,
handle their bills, and receive their payments for transmittal to the
cashier is an employee occupying a position of trust and confidence
and is thus expected to act with utmost honesty and fidelity.18
It is not disputed that respondent was tasked to solicit subscribers for
petitioner's FEX line and, in the course thereof, collect money for
subscriptions and issue official receipts therefor, as was the case in
the transaction subject of this controversy. Being involved in the
handling of the company's funds, respondent undeniably occupies a
position of trust and confidence.
The records likewise reveal that the second requisite is present. It
must be emphasized that a finding that an employer's trust and
confidence has been breached by the employee must be supported by
substantial evidence,19or such amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. It
must not be based on the employer's whims or caprices or suspicions;

otherwise, the employee would eternally remain at the mercy of the
employer.20
The totality of the circumstances in the case at bar supports a
conclusion that respondent's dismissal was based on substantial
evidence that he had willfully breached the trust reposed upon him by
petitioner, and that petitioner was not actuated by mere whim or
capriciousness.
It is uncontroverted that respondent took part in a series of
irregularities relative to his transaction with Lim, to wit:
First, he offered an inexistent FEX line to Lim, for which he received a
subscription payment of ₱7,000.00. Even granting he did not know
that the Atimonan line was unavailable at the time he offered the
same to Lim, he was remiss in not ascertaining its availability before
he concluded his transaction with Lim and received from her the
subscription payment. As an employee admittedly tasked with
soliciting subscribers for the Company's FEX line, it was an integral
part of his functions to ensure that the lines he offered to potential
subscribers were valid and subsisting.
Second, it is not disputed that respondent was required and expected
to immediately remit the proceeds acquired in the course of his sales
transactions; which he failed to do in Lim's case, without sufficient
explanation for such lapse.
Third, respondent readily admits that when he came to know of the
Atimonan line's unavailability, he did not immediately effect a refund
nor inform management of his decision to retain the money
supposedly pending Lim's decision to acquire another line. Instead, he
retrieved the official receipts from Lim and issued an acknowledgment
receipt.
Respondent contends that he could not be imputed with any reckless,
willful, or deliberate act of breaching petitioner's trust and confidence
because he was of the honest belief that the Atimonan line was
existent when he offered it to Lim; that he retained the money
pursuant to an oral agreement between him and Lim, wherein he gave
her time to contemplate the option of obtaining a refund or availing of
another FEX line pending the availability of the Atimonan line; and
that he issued the acknowledgment receipt as evidence that the sum
collected was in his possession.
114
Respondent's arguments are misplaced. Even if this Court were to
concede that he was merely negligent in offering an FEX line whose
existence he did not ascertain first, his acts subsequent to being
aware of the Atimonan line's unavailability indubitably manifests
willfulness and deliberateness. In his response to petitioner's notice to
explain, respondent admitted he came to know of the Atimonan line's
unavailability during their team's 7 September 2006 meeting when he
was informed by his superior, Rene Rico (Rico). When respondent
inquired from Rico if it was possible that the Atimonan line would be
available in the near future, the latter answered in the negative.21 It
therefore reeked of underhandedness that petitioner still gave Lim the
option to avail of a different FEX line until such time that the Atimonan
line would become available, when he already knew at the time that
the Company was not even contemplating such service. There is also
no showing that he disclosed the full extent of Rico's response to Lim.
Respondent's act of retrieving and cancelling the official receipts
without petitioner's knowledge or conformity was also highly irregular
and prejudicial to the company, as its cancellation has tax and
reportorial implications that may result in liability.
Moreover, respondent admitted that the reason he cancelled the
official receipts was to conceal from the treasury department the fact
of late remittance.22 Notably, petitioner also failed to explain why he
did not at least inform management about his oral agreement with
Lim, considering that the company could incur liability arising from his
continued retention of the subscription money. Lim's consent to such
retention is immaterial, because the duty to remit the proceeds or at
least disclose any action relative to funds acquired for the availment
of the company's services was mandatory to the company.
Third, respondent retained the subject amount from 6 September
2006 to 28 November 2006, offering no sufficient explanation for this
prolonged period of retention, other than to insist that he was allowed
to do so by Lim. However, as discussed earlier, this does not explain
why respondent would withhold from the company information
regarding company funds or a potentially contentious transaction, if
he had truly acted in good faith. As borne by the records, it was only
on 23 November 2006 that the petitioner, through its customer
representative Santiago, became aware of such retention. Moreover,
while respondent claims that he issued an acknowledgment receipt as
proof that he possessed the money and would return it as soon as Lim
signified her desire for a refund, it is curious that he was only able to
return the subject amount on 28 November 2006, or five (5) days
after being told by Santiago to refund it on 23 November 2006.
 115

All the above circumstances militated against respondent's claim of
good faith and clearly established an act that justified the Company's
loss of trust and confidence in him. In Bristol Myers Squibb (Phils.),
Inc. v. Baban, 23 the Court held that "as a general rule, employers are
allowed a wider latitude of discretion in terminating the services of
employees who perform functions by which their nature require the
employer's full trust and confidence. Mere existence of basis for
believing that the employee has breached the trust and confidence of
the employer is sufficient and does not require proof beyond
reasonable doubt."24
Furthermore, no bad faith or ill will could be imputed to the company
in dismissing respondent because the latter was apprised of the
charges against him and was given an opportunity to submit a written
explanation, which he complied with. A hearing was also conducted.
It must be remembered that the discipline, dismissal, and recall of
employees are management prerogatives, limited only by those
imposed by labor laws and dictated by the principles of equity and
social justice.25 This Court finds that petitioner exercised its
management prerogatives consistent with these principles.
Even with a finding that respondent was validly dismissed, separation
pay may be granted as a measure of social justice.
as he admitted in his response to the notice to explain that offering an
alternative FEX line to Lim was part of his strategy to ensure her
subscription.
The lack of moral depravity on respondent's part is also shown by the
following circumstances: (1) he was the recipient of certificates of
commendation30 from petitioner in the years 2001 and 2002, for being
an outstanding account manager, as well as of a service award in
2006 for continuous service to the company; (2) he was granted
promotional increases31 in 2002, 2004, and 2005, as well as a merit
increase32 in 2003; (3) he has served the company from 16 February
2001 to 19 January 2007 with only one other known infraction
embodied in a notice of final warning that petitioner failed to expound
on; and (4) based on Cielo's Salaysay,33 Lim did allow respondent to
retain the subject amount for a time, even though, as discussed
earlier, this is immaterial to determining whether his act justified his
dismissal, since he had an independent duty to disclose material
agreements or transactions to petitioner.
To be sure, his zealousness was manifested through acts that showed
an inordinate lapse of judgment warranting his dismissal in
accordance with management prerogative, but this Court considers in
his favor the above circumstances in granting him separation pay in
the amount of one (1) month pay for every year of service.34

WHEREFORE, premises considered, the petition is GRANTED. The

Generally, an employee dismissed for any of the just causes under
assailed 7 October 2010 Decision and 4 February 2011 Resolution of
Article 297 is not entitled to separation pay. By way of exception, the
the Court of Appeals in CA-G.R. SP No. 112160,
Court has allowed the grant of separation pay based on equity and as
are REVERSED and SET ASIDE.The Decision of the Labor Arbiter
a measure of social justice, as long as the dismissal was for causes
dismissing respondent Neilson M. Ayapana's complaint for illegal
other than serious conduct or those manifesting moral depravity.26
dismissal and other monetary claims
is REINSTATED with MODIFICATION that respondent should be
This Court is mindful of the new rule it established in Toyota v. paid separation pay equivalent to one month of his latest salary for
NLRC,27 where the Court held that "in addition to serious misconduct, every year of service.
in dismissals based on other grounds under Art. 28228 like willful
disobedience, gross and habitual neglect of duty, fraud or willful
SO ORDERED.
breach of trust, and commission of a crime against the employer or
his family, separation pay should not be conceded to the dismissed
employee."29 However, the Court also recognizes that some cases
merit a relaxation of this rule, taking into consideration their peculiar
circumstances.

Here, while it is clear that respondent's act constitutes a willful breach

of trust and confidence that justified his dismissal, it also appears that
he was primarily actuated by zealousness in acquiring and retaining
subscribers rather than any intent to misappropriate company funds;