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[ G.R. No.

177114, April 13, 2010 ]


MANOLO A. PEAFLOR, PETITIONER, VS. OUTDOOR CLOTHING MANUFACTURING
CORPORATION, NATHANIEL T. SYFU, PRESIDENT, MEDYLENE M. DEMOGENA,
FINANCE MANAGER, AND PAUL LEE, CHAIRMAN, RESPONDENTS.
RESOLUTION
BRION, J.:
In our Decision of January 21, 2010, we granted petitioner Manolo Peaflor's (Peaflor) petition for review
oncertiorari and reversed the Court of Appeals (CA) decision of December 29, 2006 and resolution of March 14,
2007. We found that Peaflor had been constructively dismissed from his employment with respondent Outdoor
Clothing Manufacturing Corporation (Outdoor Clothing). Outdoor Clothing now seeks a reconsideration of this ruling.
FACTUAL BACKGROUND

Peaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2, 1999. On March 13, 2000,
more than six months from the time he was hired, Peaflor learned that Outdoor Clothing's President, Nathaniel Syfu
(Syfu), appointed Edwin Buenaobra (Buenaobra) as the concurrent HRD and Accounting Manager. After enduring
what he claimed as discriminatory treatment at work, Peaflor considered the appointment of Buenaobra to his
position as the last straw, and thus filed his irrevocable resignation from Outdoor Clothing effective at the close of
office hours on March 15, 2000. He thereafter filed an illegal dismissal complaint with the labor arbiter claiming that he
had been constructively dismissed. The labor arbiter agreed with Peaflor and issued a decision in his favor on
August 15, 2001.

On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's ruling in its September 24,
2002 decision. When Peaflor questioned the NLRC's decision before the CA, the appellate court affirmed the
NLRC's decision. Hence, Peaflor filed a petition for review on certiorari with the Court.

The Court's January 21, 2010 Decision

Our January 21, 2010 decision focused on resolving the issue of whether Peaflor's resignation from Outdoor
Clothing was voluntary or a forced one , the latter making it a constructive dismissal equivalent to an illegal
dismissal. We found it crucial to determine whether Peaflor filed his resignation letter before or after the
appointment of Buenaobra as concurrent HRD and Accounting Manager . If the resignation was
submittedbefore Syfu's appointment of Buenaobra, little support would exist for Peaflor's allegation of constructive
dismissal, as the appointment would merely be intended to cover the vacancy created by Peaflor's resignation. If
however the resignation was made after the appointment of Buenaobra, then factual basis exists to consider Peaflor
as constructively dismissed by Outdoor Clothing, as the resignation would be a response to the unacceptable
appointment of another person to a position he still occupied.

Peaflor claimed that he filed his undated resignation letter on the very same date he made his resignation effective March 15, 2000. On the other hand, Outdoor Clothing contended that the letter was submitted on March 1, 2000. In
support of this allegation, Outdoor Clothing presented three memoranda:
a.

the March 1, 2000 memorandum from Syfu to Buenaobra appointing the latter as the concurrent HRD and
Accounting Manager;

b.

the March 3, 2000 memorandum from Buenaobra to Syfu accepting the appointment; and

c.

the March 10, 2000 office memorandum from Syfu informing all concerned of Buenaobra's new appointment.

Our analysis of the records led us to conclude that Peaflor submitted his resignation on March 15, 2000 as a
response to the appointment of Buenaobra to his post.

We considered suspicious Outdoor Clothing's above memoranda because these were only presented to the
NLRC on appeal, but not before the labor arbiter. They were not even mentioned in Outdoor Clothing's position
paper filed with the labor arbiter. The failure to present them and to justify this failure are significant considering that
these are clinching pieces of evidence that allowed the NLRC to justify the reversal of the labor arbiter's decision.

The surrounding circumstances of the issuance of these memoranda also cast doubts on their
authenticity.Although the memoranda directly concerned Peaflor, he was never informed of their contents nor given
copies. While the March 10, 2000 memorandum bore signatures of its recipients, there were no marks on the March 1
and 3, 2000 memoranda indicating that their intended recipients actually received them on the date they were issued.
It was likewise strange that Peaflor's resignation and Buenaobra's appointment would be kept under wraps from the
supposed filing of Peaflor's resignation letter on March 1, 2000 up to Syfu's issuance of the March 10, 2000 office
memorandum, since the turnover of responsibilities and work load alone to a successor in a small company such as
Outdoor Clothing would have prevented the resignation from being kept a secret.

We also considered the timeliness of Peaflor's resignation. It was highly unlikely for Peaflor to resign on March
1, 2000, as claimed by Outdoor Corporation, considering that he would have become a regular employee by
that time. It did not appear logical that an employee would tender his resignation on the very same day he was
entitled by law to be considered a regular employee, especially when downsizing was taking place and he could have
availed of its benefits if separated from the services as a regular employee.

Considering the above circumstances, and applying basic labor law principles, the Court ruled that Peaflor
was constructively dismissed from his employment with Outdoor Clothing. We thus reversed the CA's decision
and resolution and reinstated the decision of the labor arbiter which found the respondents (Outdoor Clothing and its
corporate officers) jointly and severally liable to pay Peaflor backwages, illegally deducted salaries, proportionate
13th month pay, attorney's fees, moral and exemplary damages.
THE MOTION FOR RECONSIDERATION

Outdoor Clothing now moves for the reconsideration of the Court's January 21, 2010 Decision. It alleges that the
Court erred in declaring that Peaflor was constructively dismissed from his employment despite his submission of an
"irrevocable resignation" letter. It also claims that the Court erred in holding all the respondents jointly and severally
liable to pay Peaflor the salaries and damages awarded in his favor.

Outdoor Clothing maintains that Peaflor's resignation was voluntary; Peaflor resigned because he wanted to
disassociate himself from a company that was experiencing severe financial difficulty and to focus on his teaching job.
Indeed, Peaflor's own letter stating his decision to irrevocably resign from his employment with Outdoor Clothing
was a clear indication that he was not forced to leave the company.

Outdoor Clothing also relies heavily on the three memoranda it presented before the NLRC to support its claim of
Peaflor's voluntary resignation. Although belatedly filed, Outdoor Clothing claims there is nothing in the rules which
disallows the filing of new documents before the NLRC. "Submission of additional documents, albeit belatedly done,
should always be looked upon with liberality especially when the same was important for any factual determination of
the case." [1]

Since it was Peaflor who filed the resignation letter, Outdoor Clothing posits that the burden of proving that the
resignation was involuntary rests on Peaflor. The evidence presented by Peaflor simply failed to overcome this
burden and thus, his resignation should be deemed voluntary and should absolve Outdoor Clothing of any liability for
illegal dismissal.

Additionally, Outdoor Clothing asserts that the Court erred in reinstating the labor arbiter's decision which ordered all
the respondents jointly and severally liable for the sums due to Peaflor. There was nothing in the decision of the
Court or even those of the CA and the administrative bodies finding Outdoor Clothing's corporate officers Syfu,
Medylene Demogena (Demogena), and Paul Lee (Lee) to have personally acted in bad faith or with malice with
respect to Peaflor's resignation. Assuming Outdoor Clothing is indeed liable to Peaflor for illegal dismissal, it would
be legally out of line to consider its corporate officers solidarily liable with the company without a finding of bad faith or
malice on their part.
THE COURT'S RULING

Other than the issue of solidary liability of the respondents in the present case, Outdoor Clothing raises no new matter
that would merit a reconsideration of the Court's January 21, 2010 Decision.

Peaflor's resignation letter read:


Mr. Nathaniel Y. Syfu
Chief Corporate Officer
Outdoor Clothing Manufacturing Corporation

Sir:
Please accept my irrevocable resignation effective at the close of office on March 15, 2000.

Thank you.

Very truly yours,

Manolo A. Peaflor[2]

While the letter states that Peaflor's resignation was irrevocable, it does not necessarily signify that it was
also voluntarily executed. Precisely because of the attendant hostile and discriminatory working environment,
Peaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely within the concept of
constructive dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile,
and unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility, or disdain by an
employer exists and has become unbearable to the employee.[3] The gauge for constructive dismissal is whether a
reasonable person in the employee's position would feel compelled to give up his employment under the prevailing
circumstances.[4] With the appointment of Buenaobra to the position he then still occupied, Peaflor felt that he was
being eased out and this perception made him decide to leave the company.

The fact of filing a resignation letter alone does not shift the burden of proving that the employee's dismissal was for a
just and valid cause from the employer to the employee. In Mora v. Avesco,[5] we ruled that should the employer
interpose the defense of resignation, it is still incumbent upon the employer to prove that the employee voluntarily
resigned. To our mind, Outdoor Clothing did not discharge this burden by belatedly presenting the three memoranda it
relied on. If these memoranda were authentic, they would have shown that Peaflor's resignation preceded the

appointment of Buenaobra. Thus, they would be evidence supporting the claim of voluntariness of Peaflor's
resignation and should have been presented early on in the case - any lawyer or layman by simple logic can be
expected to know this. Outdoor Clothing however raised them only before the NLRC when they had lost the case
before the labor arbiter and now conveniently attributes the failure to do so to its former counsel. Outddor Clothing's
belated explanation as expressed in its motion for reconsideration, to our mind, is a submission we cannot accept for
serious consideration. We find it significant that Peaflor attacked the belated presentation of these memoranda in his
Answer to Outdoor Clothing's Memoranda of Appeal with the NLRC, but records do not show that Outdoor Clothing
ever satisfactorily countered Peaflor's arguments. It was not until we pointed out Outdoor Clothing's failure to explain
its belated presentation of the memoranda in our January 21, 2010 decision that Outdoor Clothing offered a
justification.

Whatever doubts that remain in our minds on the credibility of the parties' evidence should, by the law's dictate, be
settled in favor of the working man. Our ruling that Peaflor was constructively dismissed from his employment with
Outdoor Clothing therefore stands.

We modify, however, our ruling on the extent of liability of Outdoor Clothing and its co-respondents. A corporation, as
a juridical entity, may act only through its directors, officers and employees. Obligations incurred as a result of the
directors' and officers' acts as corporate agents, are not their personal liability but the direct responsibility of the
corporation they represent. As a rule, they are only solidarily liable with the corporation for the illegal termination of
services of employees if they acted with malice or bad faith. In the present case, malice or bad faith on the part of the
Syfu, Demogena, and Lee, as corporate officers of Outdoor Clothing, was not sufficiently proven to justify a ruling
holding them solidarily liable with Outdoor Clothing.[6]

WHEREFORE, we PARTIALLY GRANT respondents' motion for reconsideration and MODIFY our Decision dated
January 21, 2010. Respondent Outdoor Clothing is hereby ordered to pay petitioner the following:
a.

backwages computed from the time of constructive dismissal up to the time of the finality of the Court's
Resolution;

b.

separation pay, due to the strained relations between the parties, equivalent to the petitioner's one month's
salary;

c.

illegally deducted salary for six days, as computed by the labor arbiter;

d.

proportionate 13th month pay;

e.

attorney's fees, moral and exemplary damages in the amount of P100,000.00; and

f.

costs against the respondent corporation.

SO ORDERED.

[ G.R. No. 126703, December 29, 1998 ]


GANDARA MILL SUPPLY AND MILAGROS SY, PETITIONERS, VS. THE NATIONAL LABOR
RELATIONS COMMISSION AND SILVESTRE GERMANO, RESPONDENTS.
DECISION
PURISIMA, J.:
At bar is a special civil action for Certiorari under Rule 65 of the Revised Rules of Court, assailing the Resolution[1]of
the National Labor Relations Commission[2] (NLRC) promulgated on May 22, 1996, and NLRC Resolution[3]dated July
23, 1996, denying petitioners motion for reconsideration in NLRC NCR 00-02-1653-94.

From the records on hand, it appears that:

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

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

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

On February 27, 1995, a case of illegal dismissal was commenced by the private respondent with the Department of
Labor and Employment.

To buy peace, petitioner offered P5,000.00 but to no avail. The offer was flatly rejected by private respondent. When
conciliation efforts proved futile, the Labor Arbiter directed the parties to submit their position papers on or before April
28, 1995, which deadline was extended to May 5, 1995. In his Order of May 9, 1995, Labor Arbiter Facundo L. Leda
gave petitioner a "last opportunity to file/submit their (sic) Position Paper within seven (7) days from receipt hereof
otherwise their (sic) right to be heard are (sic) deemed waived and this case will be decided on the basis of the
documents on file." [4]

Despite receipt of the aforesaid Order, however, petitioner still failed to comply therewith, prompting the Labor Arbiter
to hand down a decision on January 29, 1996, disposing, thus:
"WHEREFORE, decision is hereby rendered ordering respondent/s Gandara Mill Supply and/or Milagros Sy to pay
complainant Silvestre Germano the sum of SIXTY FIVE THOUSAND SIX HUNDRED EIGHTY FIVE PESOS AND
90/100 (P65,685.90) representing separation pay, backwages, SLIP and attorneys fee as iscussed and computed
above."
On March 4, 1996, petitioner appealed said decision to the NLRC. To the appeal, an Opposition was interposed on
March 15, 1996.

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

The appeal was predicated on the submission that petitioners business is small, on which invoked ground petitioner
sought exemption from posting a bond. Should its prayer for exemption of a bond be denied, petitioner asked for at
least twenty (20) days to put up such bond.

The petition attacks the July 23, 1996 Resolution of public respondent, affirming the decision of the Labor Arbiter
dated January 29, 1996. On August 14, 1996, a Motion for Execution was presented by private respondent. NLRC
entered its judgment on August 26, 1996.

On September 6, 1996, private respondent sent in an Ex-parte Motion for Execution, which was granted. The
corresponding Writ of Execution issued on September 13, 1996.

The issues posited for resolution :

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

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

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

In a long line of cases, the Court has consistently ruled that, findings of fact by quasi-judicial agencies like the NLRC
are conclusive upon the court in the absence of proof of grave error in the appreciation of facts. Petitioners bare
allegation that it was denied the right to be heard is negated by the Labor Arbiters extension of much leniency to
petitioner by allowing the latter to submit a position paper on April 28, 1995, then on May 5, 1995, and finally, seven
(7) days from receipt of the Order dated May 9, 1995. Generally, reglementary periods are strictly observed to the end
that orderly administration of justice be safeguarded. In the case under consideration, the public respondent had been
quite liberal in observing and enforcing the rules. Consequently, petitioners protestation of denial of opportunity to be
heard is barren of any factual basis. The principle of laches finds a wide room for application here. Laches, in a
general sense, is failure or neglect for an unreasonable length of time to do that which by exercising due diligence
could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time
warranting a presumption that the party entitled to assert it has either abandoned or declined to raise it. The doctrine
of laches or "stale demands" is based upon grounds of public policy which require for the peace of society,
discouragement of stale claims. And unlike the statute of limitations, it is not a mere question of time but is principally
a question of inequity or unfairness or permitting a right or claim to be enforced or asserted. (Tijam v. Sibonghanoy,
23 SCRA 29). So also, in the Order, dated May 9, 1995, respondent Commission declared in clear and unequivocal
terms that "failure to file a position paper is deemed a waiver of the right to be heard and that decisions will be based
on the position paper submitted." Evidently, for making good his said Order, the Labor Arbiter cannot be faulted for
acting arbitrarily .

Neither can grave error be ascribed to respondent NLRC for handing down its decision without petitioners Position
Paper. By its inaction, petitioner was properly considered to have waived or forfeited the right to refute private
respondents stance. Indeed, petitioner cannot now be permitted to belatedly complain of a denial of due process.

That petitioner was not represented by a lawyer in all the aforesaid proceedings was solely attributable to its own
negligence or inattention to the case. While the court has held that representation by a lawyer is a fundamental right
of litigants, petitioner has nobody to blame but itself for its failure to secure the services of counsel resulting to the
dismissal of its case. In the case under scrutiny, petitioner was represented by a non-lawyer, Ramon Flores, who was
present from the beginning of the case but failed to efficiently follow-up the case until the promulgation of judgment.
While the right to due process is available to all the parties, it does not countenance self-serving excuses devised to
undermine orderly administration of justice.

After a careful study, and a thorough examination of the pleadings and supporting documents, it appears decisively
clear that private respondent Silvestre Germano was illegally dismissed. While a prolonged absence without leave
may constitute as a just cause of dismissal, its illegality stems from the non-observance of due process. Applying the
WenPhil Doctrine by analogy, where dismissal was not preceded by the twin requirement of notice and hearing, the
legality of the dismissal in question, is under heavy clouds and therefore illegal. While it cannot be deduced unerringly
from the records on hand that private respondent was really dismissed, there is no clear indication that the latter was
to be reinstated. In fact, since the inception of the case, what petitioner merely endeavored was to compromise for a
measly sum of P5,000.00, and no mention of taking respondent back to his job was ever offered as part of the deal to
end the controversy. What can be surmised from petitionerss offer to re-admit the private respondent, was nothing but
a polite gesture couched in words intended to make the impact of his so-called suspension less severe. Invoking the
plight of a working man, where "no work, no pay" is the rule of thumb, the court cannot sanction an over extended
suspension. The Labor Code explicitly provides, that :
"No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker to
his former or substantially equivalent position or the employer may extend the period of suspension provided that
during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall
not be bound to reimburse the amount paid to him during the extension if the employer decides after completion of the
hearing to dismiss the worker."[5]
In this case, the supposed suspension was expected to last for more than the period allowed by law, thus making the
suspension constitutive of an illegal dismissal. Therefore, the Labor Arbiters contention is upheld by the Court.

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

The timeliness of petitioners appeal is an issue which this court endeavors to pass upon. While the rule governing the
instant Petition does not fix a period within which to file an appeal, "the yardstick to measure the seasonableness of a
Petition for Certiorari is the reasonableness of the duration of time that expired from the commission of the act
complained of, to the institution of the proceedings to annul the same."[7] The court had the occasion to hold that
where no law can be applied, resort to the fundamental law can be had. The Constitution provides that :
"All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial and
administrative bodies."[8]

Taking into account the interval of time that elapsed from the receipt of the assailed Resolution by petitioner, to the
time the court received the present petition, an interregnum of almost three (3) months, the irresistible conclusion is
that the Petition was not filed on time.

All things studiedly considered, we are of the view that public respondent NLRC did not act with grave abuse of
discretion in awarding to private respondent the amount of P65,685.90 which is not at all excessive under the facts
and circumstances of the case. Time and again, the court held that factual findings by the Labor Arbiter are to treated
as final absent any showing that he erred in his evaluation. The familiarity with the parties, circumstances and
opportunity to observe their demeanor is something the court did not have the privilege to witness.

Untenable is petitioners contention that the said amount awarded, representing backwages, separation pay and
attorneys fee is excessive and tantamount to a deprivation of petitioners property without due process of law. Once a
finding of illegal dismissal is established, an award of separation pay and backwages is in order and binding upon the
court, unless the contrary is proved. The court shares the Labor Arbiters observation and ratiocination that the
amount of the questioned award is not excessive in light of prevailing economic conditions.

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

Accordingly, the NLRC Resolution of July 23, 1996 is AFFIRMED in toto; the writ of execution issued on September
13, 1996 upheld; and petitioners prayer for a restraining order DENIED.

No pronouncement as to costs.

SO ORDERED.

[ G.R. No. 163419, February 13, 2008 ]


TSPIC CORPORATION, Petitioner, vs. TSPIC EMPLOYEES UNION (FFW), representing
MARIA FE FLORES, FE CAPISTRANO, AMY DURIAS,[1] CLAIRE EVELYN VELEZ,
JANICE OLAGUIR, JERICO ALIPIT, GLEN BATULA, SER JOHN HERNANDEZ,
RACHEL NOVILLAS, NIMFA ANILAO, ROSE SUBARDIAGA, VALERIE CARBON,
OLIVIA EDROSO, MARICRIS DONAIRE, ANALYN AZARCON, ROSALIE RAMIREZ,
JULIETA ROSETE, JANICE NEBRE, NIA ANDRADE, CATHERINE YABA,
DIOMEDISA ERNI,[2] MARIO SALMORIN, LOIDA COMULLO,[3] MARIE ANN DELOS
SANTOS,[4] JUANITA YANA, and SUZETTE DULAY, Respondents.
DECISION
VELASCO JR., J.:
The path towards industrial peace is a two-way street. Fundamental fairness and protection to labor should always
govern dealings between labor and management. Seemingly conflicting provisions should be harmonized to arrive at
an interpretation that is within the parameters of the law, compassionate to labor, yet, fair to management.

In this Petition for Review on Certiorari under Rule 45, petitioner TSPIC Corporation (TSPIC) seeks to annul and set
aside the October 22, 2003 Decision[5] and April 23, 2004 Resolution[6] of the Court of Appeals (CA) in CA-G.R. SP
No. 68616, which affirmed the September 13, 2001 Decision[7] of Accredited Voluntary Arbitrator Josephus B.
Jimenez in National Conciliation and Mediation Board Case No. JBJ-AVA-2001-07-57.

TSPIC is engaged in the business of designing, manufacturing, and marketing integrated circuits to serve the
communication, automotive, data processing, and aerospace industries. Respondent TSPIC Employees Union (FFW)
(Union), on the other hand, is the registered bargaining agent of the rank-and-file employees of TSPIC. The
respondents, Maria Fe Flores, Fe Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir, Jerico Alipit, Glen
Batula, Ser John Hernandez, Rachel Novillas, Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso,
Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba,
Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, are all
members of the Union.

In 1999, TSPIC and the Union entered into a Collective Bargaining Agreement (CBA)[8] for the years 2000 to 2004.
The CBA included a provision on yearly salary increases starting January 2000 until January 2002. Section 1, Article
X of the CBA provides, as follows:
Section 1. Salary/ Wage Increases.Employees covered by this Agreement shall be granted salary/wage increases
as follows:

a) Effective January 1, 2000, all employees on regular status and within the
bargaining unit on or before said date shall be granted a salary increase
equivalent to ten percent (10%) of their basic monthly salary as of December 31,
1999.
b) Effective January 1, 2001, all employees on regular status and within the
bargaining unit on or before said date shall be granted a salary increase
equivalent to twelve (12%) of their basic monthly salary as of December 31,
2000.
c) Effective January 1, 2002, all employees on regular status and within the
bargaining unit on or before said date shall be granted a salary increase
equivalent to eleven percent (11%) of their basic monthly salary as of December
31, 2001.

The wage salary increase of the first year of this Agreement shall be over and above the wage/salary increase,
including the wage distortion adjustment, granted by the COMPANY on November 1, 1999 as per Wage Order No.

NCR-07.

The wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated minimum wage
increases under future Wage Orders, that may be issued after Wage Order No. NCR-07, and shall be considered as
correction of any wage distortion that may have been brought about by the said future Wage Orders. Thus the
wage/salary increases in 2001 and 2002 shall be deemed as compliance to future wage orders after Wage Order No.
NCR-07.
Consequently, on January 1, 2000, all the regular rank-and-file employees of TSPIC received a 10% increase in their
salary. Accordingly, the following nine (9) respondents (first group) who were already regular employees received the
said increase in their salary: Maria Fe Flores, Fe Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir, Jerico
Alipit, Glen Batula, Ser John Hernandez, and Rachel Novillas.[9]

The CBA also provided that employees who acquire regular employment status within the year but after the effectivity
of a particular salary increase shall receive a proportionate part of the increase upon attainment of their regular
status. Sec. 2 of the CBA provides:
SECTION 2. Regularization Increase.A covered daily paid employee who acquires regular status within the year
subsequent to the effectivity of a particular salary/wage increase mentioned in Section 1 above shall be granted a
salary/wage increase in proportionate basis as follows:

Regularization Period

Equivalent Increase

- 1st Quarter

100%

- 2nd Quarter

75%

- 3rd Quarter

50%

- 4th Quarter

25%

Thus, a daily paid employee who becomes a regular employee covered by this Agreement only on May 1, 2000, i.e.,
during the second quarter and subsequent to the January 1, 2000 wage increase under this Agreement, will be
entitled to a wage increase equivalent to seventy-five percent (75%) of ten percent (10%) of his basic pay. In the
same manner, an employee who acquires regular status on December 1, 2000 will be entitled to a salary increase
equivalent to twenty-five percent (25%) of ten percent (10%) of his last basic pay.

On the other hand, any monthly-paid employee who acquires regular status within the term of the Agreement shall be
granted regularization increase equivalent to 10% of his regular basic salary.
Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National Capital Region, issued Wage
Order No. NCR-08[10] (WO No. 8) which raised the daily minimum wage from PhP 223.50 to PhP 250 effective
November 1, 2000. Conformably, the wages of 17 probationary employees, namely: Nimfa Anilao, Rose Subardiaga,
Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia
Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana,
and Suzette Dulay (second group), were increased to PhP 250.00 effective November 1, 2000.

On various dates during the last quarter of 2000, the above named 17 employees attained regular employment[11]and
received 25% of 10% of their salaries as granted under the provision on regularization increase under Article X, Sec.
2 of the CBA.

In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine employees
(first group), who were senior to the above-listed recently regularized employees, received less wages.

On January 19, 2001, a few weeks after the salary increase for the year 2001 became effective, TSPICs Human
Resources Department notified 24 employees,[12] namely: Maria Fe Flores, Janice Olaguir, Rachel Novillas, Fe
Capistrano, Jerico Alipit, Amy Durias, Glen Batula, Claire Evelyn Velez, Ser John Hernandez, Nimfa Anilao, Rose
Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete,
Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, and Marie Ann Delos
Santos, that due to an error in the automated payroll system, they were overpaid and the overpayment would be
deducted from their salaries in a staggered basis, starting February 2001. TSPIC explained that the correction of the
erroneous computation was based on the crediting provision of Sec. 1, Art. X of the CBA.

The Union, on the other hand, asserted that there was no error and the deduction of the alleged overpayment from
employees constituted diminution of pay. The issue was brought to the grievance machinery, but TSPIC and the
Union failed to reach an agreement.

Consequently, TSPIC and the Union agreed to undergo voluntary arbitration on the solitary issue of whether or not
the acts of the management in making deductions from the salaries of the affected employees constituted diminution
of pay.

On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding that the unilateral deduction made by
TSPIC violated Art. 100[13] of the Labor Code. The fallo reads:
WHEREFORE, in the light of the law on the matter and on the facts adduced in evidence, judgment is hereby
rendered in favor of the Union and the named individual employees and against the company, thereby ordering the
[TSPIC] to pay as follows:

1) to the sixteen (16) newly regularized employees named above, the amount of
P12,642.24 a month or a total of P113,780.16 for nine (9) months or P7,111.26
for each of them as well as an additional P12,642.24 (for all), or P790.14 (for
each), for every month after 30 September 2001, until full payment, with legal
interests for every month of delay;

2) to the nine (9) who were hired earlier than the sixteen (16); also named above,
their respective amount of entitlements, according to the Unions correct
computation, ranging from P110.22 per month (or P991.98 for nine months) to
P450.58 a month (or P4,055.22 for nine months), as well as corresponding
monthly entitlements after 30 September 2001, plus legal interests until full
payment,

3) to Suzette Dulay, the amount of P608.14 a month (or P5,473.26), as well as


corresponding monthly entitlements after 30 September 2001, plus legal interest
until full payment,

4) Attorneys fees equal to 10% of all the above monetary awards.

The claim for exemplary damages is denied for want of factual basis.

The parties are hereby directed to comply with their joint voluntary commitment to abide by this Award and thus,
submit to this Office jointly, a written proof of voluntary compliance with this DECISION within ten (10) days after the

finality hereof.

SO ORDERED.[14]
TSPIC filed a Motion for Reconsideration which was denied in a Resolution dated November 21, 2001.

Aggrieved, TSPIC filed before the CA a petition for review under Rule 43 docketed as CA-G.R. SP No. 68616. The
appellate court, through its October 22, 2003 Decision, dismissed the petition and affirmed in toto the decision of the
voluntary arbitrator. The CA declared TSPICs computation allowing PhP 287 as daily wages to the newly regularized
employees to be correct, noting that the computation conformed to WO No. 8 and the provisions of the CBA.
According to the CA, TSPIC failed to convince the appellate court that the deduction was a result of a system error in
the automated payroll system. The CA explained that when WO No. 8 took effect on November 1, 2000, the
concerned employees were still probationary employees who were receiving the minimum wage of PhP 223.50. The
CA said that effective November 1, 2000, said employees should have received the minimum wage of PhP 250. The
CA held that when respondents became regular employees on November 29, 2000, they should be allowed the salary
increase granted them under the CBA at the rate of 25% of 10% of their basic salary for the year 2000; thereafter, the
12% increase for the year 2001 and the 10% increase for the year 2002 should also be made applicable to them.[15]

TSPIC filed a Motion for Reconsideration which was denied by the CA in its April 23, 2004 Resolution.

TSPIC filed the instant petition which raises this sole issue for our resolution: Does the TSPICs decision to deduct the
alleged overpayment from the salaries of the affected members of the Union constitute diminution of benefits in
violation of the Labor Code?

TSPIC maintains that the formula proposed by the Union, adopted by the arbitrator and affirmed by the CA, was
flawed, inasmuch as it completely disregarded the crediting provision contained in the last paragraph of Sec. 1, Art.
X of the CBA.

We find TSPICs contention meritorious.


A Collective Bargaining Agreement is the law between the parties

It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to
comply with its provisions.[16] We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:
A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization
and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining
unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they
may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy.
Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is
mandated by the express policy of the law. [17]
Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of their stipulations shall control.[18] However, sometimes, as in this case, though the
provisions of the CBA seem clear and unambiguous, the parties sometimes arrive at conflicting interpretations. Here,
TSPIC wants to credit the increase granted by WO No. 8 to the increase granted under the CBA. According to TSPIC,
it is specifically provided in the CBA that the salary/wage increase for the year 2001 shall be deemed inclusive of the
mandated minimum wage increases under future wage orders that may be issued after Wage Order No. 7. The
Union, on the other hand, insists that the crediting provision of the CBA finds no application in the present case,

since at the time WO No. 8 was issued, the probationary employees (second group) were not yet covered by the CBA,
particularly by its crediting provision.

As a general rule, in the interpretation of a contract, the intention of the parties is to be pursued.[19] Littera necat
spiritus vivificat. An instrument must be interpreted according to the intention of the parties. It is the duty of the courts
to place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated
and the purpose which it is intended to serve.[20] Absurd and illogical interpretations should also be avoided.
Considering that the parties have unequivocally agreed to substitute the benefits granted under the CBA with those
granted under wage orders, the agreement must prevail and be given full effect.

Paragraph (b) of Sec. 1 of Art. X of the CBA provides for the general agreement that, effective January 1, 2001, all
employees on regular status and within the bargaining unit on or before said date shall be granted a salary increase
equivalent to twelve (12%) of their basic monthly salary as of December 31, 2000. The 12% salary increase is
granted to all employees who (1) are regular employees and (2) are within the bargaining unit.

Second paragraph of (c) provides that the salary increase for the year 2000 shall not include the increase in salary
granted under WO No. 7 and the correction of the wage distortion for November 1999.

The last paragraph, on the other hand, states the specific condition that the wage/salary increases for the years 2001
and 2002 shall be deemed inclusive of the mandated minimum wage increases under future wage orders, that may
be issued after WO No. 7, and shall be considered as correction of the wage distortions that may be brought about by
the said future wage orders. Thus, the wage/salary increases in 2001 and 2002 shall be deemed as compliance to
future wage orders after WO No. 7.

Paragraph (b) is a general provision which allows a salary increase to all those who are qualified. It, however, clashes
with the last paragraph which specifically states that the salary increases for the years 2001 and 2002 shall be
deemed inclusive of wage increases subsequent to those granted under WO No. 7. It is a familiar rule in interpretation
of contracts that conflicting provisions should be harmonized to give effect to all.[21] Likewise, when general and
specific provisions are inconsistent, the specific provision shall be paramount to and govern the general provision.
[22]

Thus, it may be reasonably concluded that TSPIC granted the salary increases under the condition that any wage

order that may be subsequently issued shall be credited against the previously granted increase. The intention of the
parties is clear: As long as an employee is qualified to receive the 12% increase in salary, the employee shall be
granted the increase; and as long as an employee is granted the 12% increase, the amount shall be credited against
any wage order issued after WO No. 7.

Respondents should not be allowed to receive benefits from the CBA while avoiding the counterpart crediting
provision. They have received their regularization increases under Art. X, Sec. 2 of the CBA and the yearly increase
for the year 2001. They should not then be allowed to avoid the crediting provision which is an accompanying
condition.

Respondents attained regular employment status before January 1, 2001. WO No. 8, increasing the minimum wage,
was issued after WO No. 7. Thus, respondents rightfully received the 12% salary increase for the year 2001 granted
in the CBA; and consequently, TSPIC rightfully credited that 12% increase against the increase granted by WO No. 8.

Proper formula for computing the salaries for the year 2001

Thus, the proper computation of the salaries of individual respondents is as follows:

(1) With regard to the first group of respondents who attained regular employment status before the effectivity of WO
No. 8, the computation is as follows:

For respondents Jerico Alipit and Glen Batula:[23]

Wage rate before WO No.


8 ..............................

PhP 234.67

Increase due to WO No. 8


setting the minimum wage at PhP
250 ..................
Total Salary upon effectivity of WO No.
8 ...........

15.33
PhP 250.00

Increase for 2001 (12% of 2000


salary) ..............

PhP 30.00

Less the wage increase under WO No.


8 ............

____15.33

Total difference between the wage


increase
for 2001 and the increase granted under
WO No. 8 .............

Wage rate by December


2000 ............................

PhP 14.67

PhP 250.00

Plus total difference between the wage


increase for 2001
and the increase granted under WO No.
8 ...........

14.67

Total (Wage rate range beginning January PhP 264.67


1, 2001)

For respondents Ser John Hernandez and Rachel Novillas:[24]

Wage rate range before WO No.


8 .....................

PhP 234.68

Increase due to WO No. 8


setting the minimum wage at PhP
250 ..................
Total Salary upon effectivity of WO No.
8 ...........

Increase for 2001 (12% of 2000


salary) ..............

15.32
PhP 250.00

PhP 30.00

Less the wage increase under WO No.


8 ............

15.32

Total difference between the wage increase


for 2001 and the increase granted under WO
No. 8 ........................

Wage rate by December


2000 ............................

PhP 14.68

PhP 250.00

Plus total difference between the wage


increase for 2001
and the increase granted under WO No.
8 ...........

_____14.68

Total (Wage rate range beginning January 1,


2001) ......................

PhP 264.68

For respondents Amy Durias, Claire Evelyn Velez, and Janice Olaguir:[25]

Wage rate range before WO No.


8 ....................................

PhP 240.26

Increase due to WO No. 8


setting the minimum wage at PhP
250 ...................
Total Salary upon effectivity of WO No.
8 ......................

Increase for 2001 (12% of 2000


salary) .............................
Less the wage increase under WO No.
8 ...................

9.74
PhP 250.00

PhP 30.00
_____9.74

Total difference between the wage


increase for 2001
and the increase granted under WO No.
8 .........................

Wage rate by December


2000 ...........................................

PhP 20.26

PhP 250.00

Plus total difference between the wage


increase for 2001
and the increase granted under WO No.
8 ...............
Total (Wage rate range beginning January
1, 2001) .......

_____20.26
PhP 270.26

For respondents Ma. Fe Flores and Fe Capistrano:[26]

Wage rate range before WO No.


8 ..............................

PhP 245.85

Increase due to WO No. 8


setting the minimum wage at PhP
250 ...............................
Total Salary upon effectivity of WO No.
8 .........................

Increase for 2001 (12% of 2000


salary) ................................

4.15
PhP 250.00

PhP 30.00

Less the wage increase under WO No.


8 ............

4.15

Total difference between the wage


increase for 2001
and the increase granted under WO No.
8 ................................

Wage rate by December


2000 .......................................

PhP 25.85

PhP 250.00

Plus total difference between the wage


increase for 2001
and the increase granted under WO No.
8 ...........

Total (Wage rate range beginning January


1, 2001) ...................

_____25.85

PhP 275.85

(2) With regard to the second group of employees, who attained regular employment status after the implementation
of WO No. 8, namely: Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn
Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario
Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, the proper computation of the
salaries for the year 2001, in accordance with the CBA, is as follows:

Compute the increase in salary after the implementation of WO No. 8 by subtracting the minimum wage before WO
No. 8 from the minimum wage per the wage order to arrive at the wage increase, thus:

Minimum Wage per Wage


Order ..................................
Wage rate before Wage
Order ......................................

PhP 250.00
223.50

Wage Increase ......................................

PhP 26.50

Upon attainment of regular employment status, the employees salaries were increased by 25% of 10% of their basic
salaries, as provided for in Sec. 2, Art. X of the CBA, thus resulting in a further increase of PhP 6.25, for a total of PhP
256.25, computed as follows:

Wage rate after WO No.


8 ..................................................
Regularization increase (25 % of 10% of basic
salary) ..........
Total (Salary for the end of year
2000) ................................

PhP 250.00
6.25
PhP 256.25

To compute for the increase in wage rates for the year 2001, get the increase of 12% of the employees salaries as of
December 31, 2000; then subtract from that amount, the amount increased in salaries as granted under WO No. 8 in
accordance with the crediting provision of the CBA, to arrive at the increase in salaries for the year 2001 of the
recently regularized employees. Add the result to their salaries as of December 31, 2000 to get the proper salary
beginning January 1, 2001, thus:

Increase for 2001 (12% of 2000


salary) .......................................
Less the wage increase under WO No.
8 .....................................

PhP 30.75
26.50

Difference between the wage increase


for 2001 and the increase granted under WO
No. 8 .....................

Wage rate after regularization


increase ..........................................

PhP 4.25

PhP 256.25

Plus total difference between the wage


increase and
the increase granted under WO No.
8 ..........................................
Total (Wage rate beginning January 1,
2001) ...............................

4.25
PhP 260.50

With these computations, the crediting provision of the CBA is put in effect, and the wage distortion between the first
and second group of employees is cured. The first group of employees who attained regular employment status
before the implementation of WO No. 8 is entitled to receive, starting January 1, 2001, a daily wage rate within the
range of PhP 264.67 to PhP 275.85, depending on their wage rate before the implementation of WO No. 8. The
second group that attained regular employment status after the implementation of WO No. 8 is entitled to receive a
daily wage rate of PhP 260.50 starting January 1, 2001.
Diminution of benefits

TSPIC also maintains that charging the overpayments made to the 16 respondents through staggered deductions
from their salaries does not constitute diminution of benefits.

We agree with TSPIC.

Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees.
There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a policy or has ripened into
a practice over a long period; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the
construction or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done
unilaterally by the employer.[27]

As correctly pointed out by TSPIC, the overpayment of its employees was a result of an error. This error was
immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously granted benefit may be
withdrawn without violating the prohibition against non-diminution of benefits. We ruled in Globe-Mackay Cable and
Radio Corp. v. NLRC:
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law.
Payment may be said to have been made by reason of a mistake in the construction or application of a doubtful or
difficult question of law. (Article 2155, in relation to Article 2154 of the Civil Code). Since it is a past error that is being
corrected, no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor
Code may be said to have resulted by virtue of the correction.[28]
Here, no vested right accrued to individual respondents when TSPIC corrected its error by crediting the salary
increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the CBA.

Hence, any amount given to the employees in excess of what they were entitled to, as computed above, may be
legally deducted by TSPIC from the employees salaries. It was also compassionate and fair that TSPIC deducted the
overpayment in installments over a period of 12 months starting from the date of the initial deduction to lessen the
burden on the overpaid employees. TSPIC, in turn, must refund to individual respondents any amount deducted from
their salaries which was in excess of what TSPIC is legally allowed to deduct from the salaries based on the
computations discussed in this Decision.

As a last word, it should be reiterated that though it is the states responsibility to afford protection to labor, this policy
should not be used as an instrument to oppress management and capital.[29] In resolving disputes between labor and
capital, fairness and justice should always prevail. We ruled in Norkis Union v. Norkis Trading that in the resolution of
labor cases, we have always been guided by the State policy enshrined in the Constitution: social justice and
protection of the working class. Social justice does not, however, mandate that every dispute should be automatically
decided in favor of labor. In any case, justice is to be granted to the deserving and dispensed in the light of the
established facts and the applicable law and doctrine.[30]

WHEREFORE, premises considered, the September 13, 2001 Decision of the Labor Arbitrator in National
Conciliation and Mediation Board Case No. JBJ-AVA-2001-07-57 and the October 22, 2003 CA Decision in CA-G.R.
SP No. 68616 are hereby AFFIRMED with MODIFICATION. TSPIC is hereby ORDERED to pay respondents their
salary increases in accordance with this Decision, as follows:

Name of
Employee

No. of
No. of
Total
Daily Wage Working Months
Salary
Rate
Days in a
in a
for 2001
Month
Year

Nimfa Anilao

260.5

26

12

81,276.00

Rose Subardiaga

260.5

26

12

81,276.00

Valerie Carbon

260.5

26

12

81,276.00

Olivia Edroso

260.5

26

12

81,276.00

Maricris Donaire

260.5

26

12

81,276.00

Analyn Azarcon

260.5

26

12

81,276.00

Rosalie Ramirez

260.5

26

12

81,276.00

Julieta Rosete

260.5

26

12

81,276.00

Janice Nebre

260.5

26

12

81,276.00

Nia Andrade

260.5

26

12

81,276.00

Catherine Yaba

260.5

26

12

81,276.00

Diomedisa Erni

260.5

26

12

81,276.00

Mario Salmorin

260.5

26

12

81,276.00

Loida Camullo

260.5

26

12

81,276.00

Marie Ann Delos


Santos

260.5

26

12

81,276.00

Juanita Yana

260.5

26

12

81,276.00

Suzette Dulay

260.5

26

12

81,276.00

Jerico Alipit

264.67

26

12

82,577.04

Glen Batula

264.67

26

12

82,577.04

Ser John
Hernandez

264.68

26

12

82,580.16

Rachel Novillas

264.68

26

12

82,580.16

Amy Durias

270.26

26

12

84,321.12

Claire Evelyn Velez

270.26

26

12

84,321.12

Janice Olaguir

270.26

26

12

84,321.12

Maria Fe Flores

275.85

26

12

86,065.20

Fe Capistrano

275.85

26

12

86,065.20

The award for attorneys fees of ten percent (10%) of the total award is MAINTAINED.

SO ORDERED.

[ G.R. No. 117040, January 27, 2000 ]

RUBEN SERRANO, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND


ISETANN DEPARTMENT STORE, RESPONDENTS.
DECISION
MENDOZA, J.:
This is a petition seeking review of the resolutions, dated March 30, 1994 and August 26, 1994, of the National Labor
Relations Commission (NLRC) which reversed the decision of the Labor Arbiter and dismissed petitioner Ruben
Serranos complaint for illegal dismissal and denied his motion for reconsideration. The facts are as follows:

Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend shoplifters
and prevent pilferage of merchandise.[1] Initially hired on October 4, 1984 on contractual basis, petitioner eventually
became a regular employee on April 4, 1985. In 1988, he became head of the Security Checkers Section of private
respondent.[2]

Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security section and
engage the services of an independent security agency. For this reason, it wrote petitioner the following
memorandum:[3]
October 11, 1991

MR. RUBEN SERRANO


PRESENT

Dear Mr. Serrano,

In view of the retrenchment program of the company, we hereby reiterate our verbal notice to you of your termination
as Security Section Head effective October 11, 1991.

Please secure your clearance from this office.


Very truly yours,

[Sgd.] TERESITA A. VILLANUEVA


Human Resources Division Manager
The loss of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal dismissal, illegal
layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and overtime pay.[4]

The parties were required to submit their position papers, on the basis of which the Labor Arbiter defined the issues
as follows:[5]
Whether or not there is a valid ground for the dismissal of the complainant.

Whether or not complainant is entitled to his monetary claims for underpayment of wages, nonpayment of salaries,
13th month pay for 1991 and overtime pay.

Whether or not Respondent is guilty of unfair labor practice.


Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision finding petitioner to have
been illegally dismissed. He ruled that private respondent failed to establish that it had retrenched its security section
to prevent or minimize losses to its business; that private respondent failed to accord due process to petitioner; that

private respondent failed to use reasonable standards in selecting employees whose employment would be
terminated; that private respondent had not shown that petitioner and other employees in the security section were so
inefficient so as to justify their replacement by a security agency, or that "cost-saving devices [such as] secret video
cameras (to monitor and prevent shoplifting) and secret code tags on the merchandise" could not have been
employed; instead, the day after petitioners dismissal, private respondent employed a safety and security supervisor
with duties and functions similar to those of petitioner.

Accordingly, the Labor Arbiter ordered:[6]


WHEREFORE, above premises considered, judgment is hereby decreed:

(a) Finding the dismissal of the complainant to be illegal and concomitantly,


Respondent is ordered to pay complainant full backwages without qualification
or deduction in the amount of P74,740.00 from the time of his dismissal until
reinstatement (computed till promulgation only) based on his monthly salary of
P4,040.00/month at the time of his termination but limited to (3) three years;
(b) Ordering the Respondent to immediately reinstate the complainant to his
former position as security section head or to a reasonably equivalent
supervisorial position in charges of security without loss of seniority rights,
privileges and benefits. This order is immediately executory even pending
appeal;
(c) Ordering the Respondent to pay complainant unpaid wages in the amount
of P2,020.73 and proportionate 13th month pay in the amount of P3,198.30;
(d) Ordering the Respondent to pay complainant the amount of P7,995.91,
representing 10% attorneys fees based on the total judgment award
of P79,959.12.
All other claims of the complainant whether monetary or otherwise is hereby dismissed for lack of merit.

SO ORDERED.
Private respondent appealed to the NLRC which, in its resolution of March 30, 1994, reversed the decision of the
Labor Arbiter and ordered petitioner to be given separation pay equivalent to one month pay for every year of service,
unpaid salary, and proportionate 13th month pay. Petitioner filed a motion for reconsideration, but his motion was
denied.

The NLRC held that the phase-out of private respondents security section and the hiring of an independent security
agency constituted an exercise by private respondent of "[a] legitimate business decision whose wisdom we do not
intend to inquire into and for which we cannot substitute our judgment"; that the distinction made by the Labor Arbiter
between "retrenchment" and the employment of "cost-saving devices" under Art. 283 of the Labor Code was
insignificant because the company official who wrote the dismissal letter apparently used the term "retrenchment" in
its "plain and ordinary sense: to layoff or remove from ones job, regardless of the reason therefor"; that the rule of
"reasonable criteria" in the selection of the employees to be retrenched did not apply because all positions in the
security section had been abolished; and that the appointment of a safety and security supervisor referred to by
petitioner to prove bad faith on private respondents part was of no moment because the position had long been in
existence and was separate from petitioners position as head of the Security Checkers Section.

Hence this petition. Petitioner raises the following issue:

IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT TO REPLACE ITS
CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF THE EMPLOYEES CLASSED
UNDER THE LATTER?[7]
Petitioner contends that abolition of private respondents Security Checkers Section and the employment of an
independent security agency do not fall under any of the authorized causes for dismissal under Art. 283 of the Labor
Code.
Petitioner Laid Off for Cause

Petitioners contention has no merit. Art. 283 provides:


Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at
least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1)
month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered as one (1) whole year.
In De Ocampo v. National Labor Relations Commission,[8] this Court upheld the termination of employment of three
mechanics in a transportation company and their replacement by a company rendering maintenance and repair
services. It held:
In contracting the services of Gemac Machineries, as part of the companys cost-saving program, the services
rendered by the mechanics became redundant and superfluous, and therefore properly terminable. The company
merely exercised its business judgment or management prerogative. And in the absence of any proof that the
management abused its discretion or acted in a malicious or arbitrary manner, the court will not interfere with the
exercise of such prerogative.[9]
In Asian Alcohol Corporation v. National Labor Relations Commission,[10] the Court likewise upheld the termination of
employment of water pump tenders and their replacement by independent contractors. It ruled that an employers
good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the services of
an independent contractor to replace the services of the terminated employees to promote economy and efficiency.

Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the faculty of
promoting efficiency and attaining economy by a study of what units are essential for its operation. To it belongs the
ultimate determination of whether services should be performed by its personnel or contracted to outside
agencies . . . [While there] should be mutual consultation, eventually deference is to be paid to what management
decides."[11] Consequently, absent proof that management acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer.[12]

In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private
respondents real purpose was to avoid payment to the security checkers of the wage increases provided in the
collective bargaining agreement approved in 1990.[13] Such an assertion is not a sufficient basis for concluding that the
termination of petitioners employment was not a bona fide decision of management to obtain reasonable return from

its investment, which is a right guaranteed to employers under the Constitution.[14] Indeed, that the phase-out of the
security section constituted a "legitimate business decision" is a factual finding of an administrative agency which
must be accorded respect and even finality by this Court since nothing can be found in the record which fairly detracts
from such finding.[15]

Accordingly, we hold that the termination of petitioners services was for an authorized cause, i.e., redundancy.
Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation pay at the rate of one month pay
for every year of service.
Sanctions for Violations of the
Notice Requirement

Art. 283 also provides that to terminate the employment of an employee for any of the authorized causes the
employer must serve "a written notice on the workers and the Department of Labor and Employment at least one (1)
month before the intended date thereof." In the case at bar, petitioner was given a notice of termination on October
11, 1991. On the same day, his services were terminated. He was thus denied his right to be given written notice
before the termination of his employment, and the question is the appropriate sanction for the violation of petitioners
right.

To be sure, this is not the first time this question has arisen. In Sebuguero v. NLRC,[16] workers in a garment factory
were temporarily laid off due to the cancellation of orders and a garment embargo. The Labor Arbiter found that the
workers had been illegally dismissed and ordered the company to pay separation pay and backwages. The NLRC, on
the other hand, found that this was a case of retrenchment due to business losses and ordered the payment of
separation pay without backwages. This Court sustained the NLRCs finding. However, as the company did not
comply with the 30-day written notice in Art. 283 of the Labor Code, the Court ordered the employer to pay the
workers P2,000.00 each as indemnity.

The decision followed the ruling in several cases involving dismissals which, although based on any of the just causes
under Art. 282,[17] were effected without notice and hearing to the employee as required by the implementing rules.
[18]

As this Court said: "It is now settled that where the dismissal of one employee is in fact for a just and valid cause

and is so proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin requirements
of notice and opportunity to be heard, the dismissal shall be upheld but the employer must be sanctioned for noncompliance with the requirements of, or for failure to observe, due process."[19]

The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a just cause
or the termination of employment is for an authorized cause, the dismissal or termination is illegal if effected without
notice to the employee. The shift in doctrine took place in 1989 in Wenphil Corp. v. NLRC.[20] In announcing the
change, this Court said:[21]
The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority
and the payment of his wages during the period of his separation until his actual reinstatement but not exceeding
three (3) years without qualification or deduction, when it appears he was not afforded due process, although his
dismissal was found to be for just and authorized cause in an appropriate proceeding in the Ministry of Labor and
Employment, should be re-examined. It will be highly prejudicial to the interests of the employer to impose on him the
services of an employee who has been shown to be guilty of the charges that warranted his dismissal from
employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable, remains in the service.

....

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an
investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must
be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement.
Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by
law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must
indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer.
The fines imposed for violations of the notice requirement have varied
from P1,000.00[22] to P2,000.00[23] toP5,000.00[24] to P10,000.00.[25]
Need for Reexamining the Wenphil Doctrine

Today, we once again consider the question of appropriate sanctions for violations of the notice requirement in light of
our experience during the last decade or so with the Wenphil doctrine. The number of cases involving dismissals
without the requisite notice to the employee, although effected for just or authorized causes, suggests that the
imposition of fine for violation of the notice requirement has not been effective in deterring violations of the notice
requirement. Justice Panganiban finds the monetary sanctions "too insignificant, too niggardly, and sometimes even
too late." On the other hand, Justice Puno says there has in effect been fostered a policy of "dismiss now, pay later"
which moneyed employers find more convenient to comply with than the requirement to serve a 30-day written notice
(in the case of termination of employment for an authorized cause under Arts. 283-284) or to give notice and hearing
(in the case of dismissals for just causes under Art. 282).

For this reason, they regard any dismissal or layoff without the requisite notice to be null and void even though there
are just or authorized causes for such dismissal or layoff. Consequently, in their view, the employee concerned should
be reinstated and paid backwages.
Validity of Petitioners Layoff Not
Affected by Lack of Notice

We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the sanction of fine
for an employers disregard of the notice requirement. We do not agree, however, that disregard of this requirement by
an employer renders the dismissal or termination of employment null and void. Such a stance is actually a reversion
to the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid backwages when it is shown
that he has not been given notice and hearing although his dismissal or layoff is later found to be for a just or
authorized cause. Such rule was abandoned in Wenphil because it is really unjust to require an employer to keep in
his service one who is guilty, for example, of an attempt on the life of the employer or the latters family, or when the
employer is precisely retrenching in order to prevent losses.

The need is for a rule which, while recognizing the employees right to notice before he is dismissed or laid off, at the
same time acknowledges the right of the employer to dismiss for any of the just causes enumerated in Art. 282 or to
terminate employment for any of the authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a
fine on an employer who is found to have dismissed an employee for cause without prior notice is deemed ineffective
in deterring employer violations of the notice requirement, the remedy is not to declare the dismissal void if there are
just or valid grounds for such dismissal or if the termination is for an authorized cause. That would be to uphold the
right of the employee but deny the right of the employer to dismiss for cause. Rather, the remedy is to order the
payment to the employee of full backwages from the time of his dismissal until the court finds that the dismissal was
for a just cause. But, otherwise, his dismissal must be upheld and he should not be reinstated. This is because his

dismissal is ineffectual.

For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a laborsaving device, but the employer did not give him and the DOLE a 30-day written notice of termination in advance,
then the termination of his employment should be considered ineffectual and he should be paid backwages. However,
the termination of his employment should not be considered void but he should simply be paid separation pay as
provided in Art. 283 in addition to backwages.

Justice Puno argues that an employers failure to comply with the notice requirement constitutes a denial of the
employees right to due process. Prescinding from this premise, he quotes the statement of Chief Justice Concepcion
in Vda. de Cuaycong v. Vda. de Sengbengco[26] that "acts of Congress, as well as of the Executive, can deny due
process only under the pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same
sanction, any statutory provision to the contrary notwithstanding." Justice Puno concludes that the dismissal of an
employee without notice and hearing, even if for a just cause, as provided in Art. 282, or for an authorized cause, as
provided in Arts. 283-284, is a nullity. Hence, even if just or authorized causes exist, the employee should be
reinstated with full back pay. On the other hand, Justice Panganiban quotes from the statement in People v.
Bocar[27] that "[w]here the denial of the fundamental right of due process is apparent, a decision rendered in disregard
of that right is void for lack of jurisdiction."

Violation of Notice Requirement


Not a Denial of Due Process

The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process by the State,
which is not the case here. There are three reasons why, on the other hand, violation by the employer of the notice
requirement cannot be considered a denial of due process resulting in the nullity of the employees dismissal or layoff.

The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does not apply
to the exercise of private power, such as the termination of employment under the Labor Code. This is plain from the
text of Art. III, 1 of the Constitution, viz.: "No person shall be deprived of life, liberty, or property without due process
of law. . . ." The reason is simple: Only the State has authority to take the life, liberty, or property of the individual. The
purpose of the Due Process Clause is to ensure that the exercise of this power is consistent with what are considered
civilized methods.

The second reason is that notice and hearing are required under the Due Process Clause before the power of
organized society are brought to bear upon the individual. This is obviously not the case of termination of employment
under Art. 283. Here the employee is not faced with an aspect of the adversary system. The purpose for requiring a
30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge
against him, for there is none. The purpose rather is to give him time to prepare for the eventual loss of his job and
the DOLE an opportunity to determine whether economic causes do exist justifying the termination of his
employment.

Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not to comply with
Due Process Clause of the Constitution. The time for notice and hearing is at the trial stage. Then that is the time we
speak of notice and hearing as the essence of procedural due process. Thus, compliance by the employer with the
notice requirement before he dismisses an employee does not foreclose the right of the latter to question the legality
of his dismissal. As Art. 277(b) provides, "Any decision taken by the employer shall be without prejudice to the right of
the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission."

Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook the fact
that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882 which gave either party to the
employer-employee relationship the right to terminate their relationship by giving notice to the other one month in
advance. In lieu of notice, an employee could be laid off by paying him a mesada equivalent to his salary for one
month.[28] This provision was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on
June 12, 1954, R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the mesada. On
June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of advance notice or the payment of
compensation at the rate of one-half month for every year of service.[29]

The Termination Pay Law was held not to be a substantive law but a regulatory measure, the purpose of which was to
give the employer the opportunity to find a replacement or substitute, and the employee the equal opportunity to look
for another job or source of employment. Where the termination of employment was for a just cause, no notice was
required to be given to the employee.[30] It was only on September 4, 1981 that notice was required to be given even
where the dismissal or termination of an employee was for cause. This was made in the rules issued by the then
Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor Code. And it was still much
later when the notice requirement was embodied in the law with the amendment of Art. 277(b) by R.A. No. 6715 on
March 2, 1989. It cannot be that the former regime denied due process to the employee. Otherwise, there should now
likewise be a rule that, in case an employee leaves his job without cause and without prior notice to his employer, his
act should be void instead of simply making him liable for damages.

The third reason why the notice requirement under Art. 283 can not be considered a requirement of the Due Process
Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause. This is also
the case in termination of employment for a just cause under Art. 282 (i.e., serious misconduct or willful disobedience
by the employee of the lawful orders of the employer, gross and habitual neglect of duties, fraud or willful breach of
trust of the employer, commission of crime against the employer or the latters immediate family or duly authorized
representatives, or other analogous cases).

Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won by
employees before the grievance committees manned by impartial judges of the company." The grievance machinery
is, however, different because it is established by agreement of the employer and the employees and composed of
representatives from both sides. That is why, in Batangas Laguna Tayabas Bus Co. v. Court of Appeals,[31] which
Justice Puno cites, it was held that "Since the right of [an employee] to his labor is in itself a property and that the
labor agreement between him and [his employer] is the law between the parties, his summary and arbitrary dismissal
amounted to deprivation of his property without due process of law." But here we are dealing with dismissals and
layoffs by employers alone, without the intervention of any grievance machinery. Accordingly in Montemayor v.
Araneta University Foundation,[32] although a professor was dismissed without a hearing by his university, his
dismissal for having made homosexual advances on a student was sustained, it appearing that in the NLRC, the
employee was fully heard in his defense.

Lack of Notice Only Makes


Termination Ineffectual

Not all notice requirements are requirements of due process. Some are simply part of a procedure to be followed
before a right granted to a party can be exercised. Others are simply an application of the Justinian precept,
embodied in the Civil Code,[33] to act with justice, give everyone his due, and observe honesty and good faith toward
ones fellowmen. Such is the notice requirement in Arts. 282-283. The consequence of the failure either of the
employer or the employee to live up to this precept is to make him liable in damages, not to render his act (dismissal

or resignation, as the case may be) void. The measure of damages is the amount of wages the employee should have
received were it not for the termination of his employment without prior notice. If warranted, nominal and moral
damages may also be awarded.

We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employers failure to comply with the notice
requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination
of employment which makes the termination of employment merely ineffectual. It is similar to the failure to observe the
provisions of Art. 1592, in relation to Art. 1191, of the Civil Code[34] in rescinding a contract for the sale of immovable
property. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal obligations,
nonetheless, in cases involving the sale of immovable property, the vendor cannot exercise this power even though
the vendee defaults in the payment of the price, except by bringing an action in court or giving notice of rescission by
means of a notarial demand.[35] Consequently, a notice of rescission given in the letter of an attorney has no legal
effect, and the vendee can make payment even after the due date since no valid notice of rescission has been given.
[36]

Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can make the
dismissal of an employee illegal. This is clear from Art. 279 which provides:
Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.[37]
Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and, therefore, the
employee should be reinstated and paid backwages. To contend, as Justices Puno and Panganiban do, that even if
the termination is for a just or authorized cause the employee concerned should be reinstated and paid backwages
would be to amend Art. 279 by adding another ground for considering a dismissal illegal. What is more, it would
ignore the fact that under Art. 285, if it is the employee who fails to give a written notice to the employer that he is
leaving the service of the latter, at least one month in advance, his failure to comply with the legal requirement does
not result in making his resignation void but only in making him liable for damages.[38] This disparity in legal treatment,
which would result from the adoption of the theory of the minority cannot simply be explained by invoking President
Ramon Magsaysays motto that "he who has less in life should have more in law." That would be a misapplication of
this noble phrase originally from Professor Thomas Reed Powell of the Harvard Law School.

Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,[39] in support of his view that an illegal dismissal results not
only from want of legal cause but also from the failure to observe "due process." The Pepsi-Cola case actually
involved a dismissal for an alleged loss of trust and confidence which, as found by the Court, was not proven. The
dismissal was, therefore, illegal, not because there was a denial of due process, but because the dismissal was
without cause. The statement that the failure of management to comply with the notice requirement "taints the
dismissal with illegality" was merely a dictum thrown in as additional grounds for holding the dismissal to be illegal.

Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the payment of
backwages for the period when the employee is considered not to have been effectively dismissed or his employment
terminated. The sanction is not the payment alone of nominal damages as Justice Vitug contends.

Unjust Results of Considering Dismissals/


Layoffs Without Prior Notice As Illegal

The refusal to look beyond the validity of the initial action taken by the employer to terminate employment either for an
authorized or just cause can result in an injustice to the employer. For not giving notice and hearing before dismissing
an employee, who is otherwise guilty of, say, theft, or even of an attempt against the life of the employer, an employer
will be forced to keep in his employ such guilty employee. This is unjust.

It is true the Constitution regards labor as "a primary social economic force."[40] But so does it declare that it
"recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to
needed investment."[41] The Constitution bids the State to "afford full protection to labor."[42] But it is equally true that
"the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the
employer."[43] And it is oppression to compel the employer to continue in employment one who is guilty or to force the
employer to remain in operation when it is not economically in his interest to do so.

In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of employment
was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is
failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay in accordance with
Art. 283, to wit:
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one month for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever
is higher. A fraction of at least six months shall be considered one (1) whole year.
If the employees separation is without cause, instead of being given separation pay, he should be reinstated. In either
case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has been laid off
without written notice at least 30 days in advance.

On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed
for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not be
reinstated. However, he must be paid backwages from the time his employment was terminated until it is determined
that the termination of employment is for a just cause because the failure to hear him before he is dismissed renders
the termination of his employment without legal effect.

WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is
MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation pay equivalent
to one (1) month pay for every year of service, his unpaid salary, and his proportionate 13th month pay and, in
addition, full backwages from the time his employment was terminated on October 11, 1991 up to the time the
decision herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for computation of the
separation pay, backwages, and other monetary awards to petitioner.

SO ORDERED.

[ G.R. No. 158693, November 17, 2004 ]


JENNY M. AGABON AND VIRGILIO C. AGABON, PETITIONERS, VS. NATIONAL LABOR
RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. AND
VICENTE ANGELES, RESPONDENTS.
DECISION
YNARES-SATIAGO, J.:
This petition for review seeks to reverse the decision[1] of the Court of Appeals dated January 23, 2003, in CA-G.R.
SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No.
023442-00.

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental
and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 1992[2] until February 23, 1999 when they were dismissed for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claims[3] and on December 28, 1999, the
Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary
claims. The dispositive portion of the decision states:
WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly, respondent is
hereby ordered to pay them their backwages up to November 29, 1999 in the sum of:

1. Jenny M.
Agabon

P56, 231.93

2. Virgilio C.
Agabon

56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of
hiring up to November 29, 1999.

Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years
1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabons 13thmonth pay
differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of
ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for
Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100
(P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and
Computation Unit, NCR.

SO ORDERED.[4]
On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and
were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also
denied for lack of evidence.[5]

Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned
their employment but ordered the payment of money claims. The dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed
petitioners money claims. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays

in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and to pay the balance of
petitioner Virgilio Agabons 13th month pay for 1998 in the amount of P2,150.00.

SO ORDERED.[6]
Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.[7]

Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless
they agreed to work on a pakyaw basis when they reported for duty on February 23, 1999. They did not agree on
this arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also
claim that private respondent did not comply with the twin requirements of notice and hearing.[8]

Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work.
[9]

In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for

work. Private respondents manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to
tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation
work. However, petitioners did not report for work because they had subcontracted to perform installation work for
another company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not
granted, petitioners stopped reporting for work and filed the illegal dismissal case.[10]

It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even
finality if the findings are supported by substantial evidence. This is especially so when such findings were affirmed
by the Court of Appeals.[11] However, if the factual findings of the NLRC and the Labor Arbiter are conflicting, as in
this case, the reviewing court may delve into the records and examine for itself the questioned findings.[12]

Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners dismissal was for a just
cause. They had abandoned their employment and were already working for another employer.

To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the
employer to give the employee the opportunity to be heard and to defend himself.[13] Article 282 of the Labor Code
enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or the latters representative in connection with the employees work; (b)
gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust
reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the
employee against the person of his employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.[14] It is a form of
neglect of duty, hence, a just cause for termination of employment by the employer.[15] For a valid finding of
abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more
intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and
unjustified.[16]

In February 1999, petitioners were frequently absent having subcontracted for an installation work for another
company. Subcontracting for another company clearly showed the intention to sever the employer-employee
relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for

work because they were working for another company. Private respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to
sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the
penalty that should be meted out to him.[17]

In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work without leave or
permission from his employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his
job. We should apply that rule with more reason here where petitioners were absent because they were already
working in another company.

The law imposes many obligations on the employer such as providing just compensation to workers, observance of
the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also
recognizes the right of the employer to expect from its workers not only good performance, adequate work and
diligence, but also good conduct[19] and loyalty. The employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be inimical to his interests.[20]

After establishing that the terminations were for a just and valid cause, we now determine if the procedures for
dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules
Implementing the Labor Code:
Standards of due process: requirements of notice. In all cases of termination of employment, the following
standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against
him; and

(c) A written notice of termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the employees last known address.
Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based
on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A
termination for an authorized cause requires payment of separation pay. When the termination of employment is
declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer
possible where the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two
written notices and a hearing or opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard

and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article
282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due
process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.

In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled
to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and
other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of
actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not
invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural
requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established
that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow
the notice requirements and instead argued that sending notices to the last known addresses would have been
useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid
excuse because the law mandates the twin notice requirements to the employees last known address.[21] Thus, it
should be held liable for non-compliance with the procedural requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on
employment termination in the light of Serrano v. National Labor Relations Commission.[22]

Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In the
1989 case of Wenphil Corp. v. National Labor Relations Commission,[23] we reversed this long-standing rule and held
that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and
backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under
Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried
to pacify him. We concluded that reinstating the employee and awarding backwages may encourage him to do even
worse and will render a mockery of the rules of discipline that employees are required to observe.[24] We further held
that:
Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right
to return to his former employment.

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an
investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must
be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement.
Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by
law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must

indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer.[25]
The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due
process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the
employee. This became known as the Wenphil or Belated Due Process Rule.

On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by
the employer of the notice requirement in termination for just or authorized causes was not a denial of due process
that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages from
the time of termination until it is judicially declared that the dismissal was for a just or authorized cause.

The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving
dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of
the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the
time of dismissal until the time the Court finds the dismissal was for a just or authorized cause.

Serrano was confronting the practice of employers to dismiss now and pay later by imposing full backwages.

We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code
which states:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.
This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law.
Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly
dismissed.

The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to
revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on
moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a
civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of
what is fair and right and just.[26] It is a constitutional restraint on the legislative as well as on the executive and judicial
powers of the government provided by the Bill of Rights.

Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and
authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal.
Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order
Nos. 9 and 10.[27] Breaches of these due process requirements violate the Labor Code. Therefore statutory due
process should be differentiated from failure to comply with constitutional due process.

Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil

or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects
employees from being unjustly terminated without just cause after notice and hearing.

In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and valid cause but the
employee was not accorded due process. The dismissal was upheld by the Court but the employer was sanctioned.
The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the
gravity of the omission committed by the employer.

In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee was not given due process,
the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just cause,albeit without
due process, did not entitle the employee to reinstatement, backwages, damages and attorneys fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations
Commission,[30] which opinion he reiterated in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would
not be right to order either the reinstatement of the dismissed employee or the payment of backwages to him. In
failing, however, to comply with the procedure prescribed by law in terminating the services of the employee, the
employer must be deemed to have opted or, in any case, should be made liable, for the payment of separation pay. It
might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due
process requirement of law to be accorded to the employee by the employer. Nevertheless, peculiar circumstances
might obtain in certain situations where to undertake the above steps would be no more than a useless formality and
where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay,
nominal damages to the employee. x x x.[31]
After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we
believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and
hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for
just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed
in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees,
but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with
statutory due process may have far-reaching consequences.

This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by
invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but
a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught
stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or
where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal
would not serve public interest. It could also discourage investments that can generate employment in the local
economy.

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The
commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the
right, as in this case.[32] Certainly, an employer should not be compelled to pay employees for work not actually
performed and in fact abandoned.

The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or
malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of
the laborer authorizes neither oppression nor self-destruction of the employer.[33]

It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if
the requirements of due process were complied with, would undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice
Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the
eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about the
greatest good to the greatest number.[34]

This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related
cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and
circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations and
dispense justice with an even hand in every case:
We have repeatedly stressed that social justice or any justice for that matter is for the deserving, whether he be a
millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the
balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it
justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich,
for justice must always be served for the poor and the rich alike, according to the mandate of the law.[35]
Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal
dismissal would automatically be decided in favor of labor, as management has rights that should be fully respected
and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and management
need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and
welfare of both the employee and employer.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the
dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of
his statutory rights, as ruled in Reta v. National Labor Relations Commission.[36] The indemnity to be imposed should
be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in
the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts
of each case, taking into special consideration the gravity of the due process violation of the employer.

Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered by him.[37]

As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an employer is liable to pay
indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the
employer fails to comply with the requirements of due process. The Court, after considering the circumstances

therein, fixed the indemnity at P2,590.50, which was equivalent to the employees one month salary. This indemnity is
intended not to penalize the employer but to vindicate or recognize the employees right to statutory due process
which was violated by the employer.[39]

The violation of the petitioners right to statutory due process by the private respondent warrants the payment of
indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the
court, taking into account the relevant circumstances.[40] Considering the prevailing circumstances in the case at
bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers
from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or
recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules.

Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners holiday pay,
service incentive leave pay and 13th month pay.

We are not persuaded.

We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for petitioners
holiday pay, service incentive leave pay and 13th month pay without deductions.

As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege nonpayment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to
prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and
other similar documents which will show that overtime, differentials, service incentive leave and other claims of
workers have been paid are not in the possession of the worker but in the custody and absolute control of the
employer.[41]

In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave pay, it could
have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it
did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the
benefit in the years disputed.[42] Allegations by private respondent that it does not operate during holidays and that it
allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment.
Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners.

Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13th month pay, we find
the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in
the form of the 13th month pay to employees not already receiving the same[43] so as to further protect the level of real
wages from the ravages of world-wide inflation.[44] Clearly, as additional income, the 13th month pay is included in the
definition of wage under Article 97(f) of the Labor Code, to wit:
(f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being
expressed in terms of money whether fixed or ascertained on a time, task, piece , or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished
by the employer to the employee
from which an employer is prohibited under Article 113[45] of the same Code from making any deductions without the
employees knowledge and consent. In the instant case, private respondent failed to show that the deduction of the

SSS loan and the value of the shoes from petitioner Virgilio Agabons 13th month pay was authorized by the latter.
The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one
of his money claims against private respondent.

The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private
respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of
P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio
Agabons thirteenth month pay for 1998 in the amount of P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January
23, 2003, in CA-G.R. SP No. 63017, finding that petitioners Jenny and Virgilio Agabon abandoned their work, and
ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in
the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance
of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00 isAFFIRMED with
the MODIFICATION that private respondent Riviera Home Improvements, Inc. is furtherORDERED to pay each of the
petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process.

No costs.

SO ORDERED.

[ G.R. No. 168081, October 17, 2008 ]

ARMANDO G. YRASUEGUI, PETITIONER, VS. PHILIPPINE AIRLINES, INC., RESPONDENT.


DECISION
REYES, R.T., J.:
THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to
adhere to the weight standards of the airline company.

He is now before this Court via a petition for review on certiorari claiming that he was illegally dismissed. To buttress
his stance, he argues that (1) his dismissal does not fall under 282(e) of the Labor Code; (2) continuing adherence to
the weight standards of the company is not a bona fide occupational qualification; and (3) he was discriminated
against
because other overweight employees were promoted instead of being disciplined.

After a meticulous consideration of all arguments pro and con, We uphold the legality of dismissal. Separation pay,
however, should be awarded in favor of the employee as an act of social justice or based on equity. This is so
because his dismissal is not for serious misconduct. Neither is it reflective of his moral character.
The Facts

Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL). He stands
five feet and eight inches (5'8") with a large body frame. The proper weight for a man of his height and body structure
is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration
Manual[1] of PAL.

The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an extended vacation
leave from December 29, 1984 to March 4, 1985 to address his weight concerns. Apparently, petitioner failed to meet
the company's weight standards, prompting another leave without pay from March 5, 1985 to November 1985.

After meeting the required weight, petitioner was allowed to return to work. But petitioner's weight problem recurred.
He again went on leave without pay from October 17, 1988 to February 1989.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company policy, he
was removed from flight duty effective May 6, 1989 to July 3, 1989. He was formally requested to trim down to his
ideal weight and report for 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 was advised that his case will be evaluated on July 3, 1989.[2]

On February 25, 1989, petitioner underwent weight check. It was discovered that he gained, instead of losing, weight.
He was overweight at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-duty status was
retained.

On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on
the progress of his effort to lose weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous weight.
After the visit, petitioner made a commitment[3] to reduce weight in a letter addressed to Cabin Crew Group Manager
Augusto Barrios. The letter, in full, reads:
Dear Sir:

I would like to guaranty my commitment towards a weight loss from 217 pounds to 200 pounds from today until 31
Dec. 1989.

From thereon, I promise to continue reducing at a reasonable percentage until such time that my ideal weight is
achieved.

Likewise, I promise to personally report to your office at the designated time schedule you will set for my weight
check.
Respectfully Yours,

F/S Armando Yrasuegui[4]


Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained overweight. On
January 3, 1990, he was informed of the PAL decision for him to remain grounded until such time that he satisfactorily
complies with the weight standards. Again, he was directed to report every two weeks for weight checks.

Petitioner failed to report for weight checks. Despite that, he was given one more month to comply with the weight
requirement. As usual, he was asked to report for weight check on different dates. He was reminded that his
grounding would continue pending satisfactory compliance with the weight standards.[5]

Again, petitioner failed to report for weight checks, although he was seen submitting his passport for processing at the
PAL Staff Service Division.

On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check would be dealt
with accordingly. He was given another set of weight check dates.[6] Again, 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]

When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he was still way over his ideal
weight of 166 pounds.

From then on, nothing was heard from petitioner until he followed up his case requesting for leniency on the latter part
of 1992. He weighed at 219 pounds on August 20, 1992 and 205 pounds on November 5, 1992.

On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company
standards on weight requirements. He was given ten (10) days from receipt of the charge within which to file his
answer and submit controverting evidence.[8]

On December 7, 1992, petitioner submitted his Answer.[9] Notably, he did not deny being overweight. What he
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 cabin crew members who are similarly situated."

On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he was undergoing a weight
reduction program to lose at least two (2) pounds per week so as to attain his ideal weight.[10]

On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, "and
considering the utmost leniency" extended to him "which spanned a period covering a total of almost five (5) years,"
his services were considered terminated "effective immediately."[11]

His motion for reconsideration having been denied,[12] petitioner filed a complaint for illegal dismissal against PAL.

Labor Arbiter, NLRC and CA Dispositions

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled[13] that petitioner was illegally dismissed. The
dispositive part of the Arbiter ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the complainant's dismissal illegal,
and ordering the respondent to reinstate him to his former position or substantially equivalent one, and to pay him:
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 15, 1993 up to August 15, 1998 at P651,000.00;

b.

Attorney's fees of five percent (5%) of the total award.

SO ORDERED.[14]
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]

On October 8, 1999, the Labor Arbiter issued a writ of execution directing the reinstatement of petitioner without loss
of seniority rights and other benefits.[20]

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

On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC.[23]

On June 23, 2000, the NLRC rendered judgment[24] in the following tenor:
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
complainant's entitlement to backwages shall be deemed to refer to complainant's 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 complainant's 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]
According to the NLRC, "obesity, or the tendency to gain weight uncontrollably regardless of the amount of food
intake, is a disease in itself."[26] As a consequence, there can be no intentional defiance or serious misconduct by
petitioner to the lawful order of PAL for him to lose weight.[27]

Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable. However, it found as
unnecessary the Labor 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 limited himself to the issue of
whether the failure of petitioner to attain his ideal weight constituted willful defiance of the weight standards of PAL.[28]

PAL moved for reconsideration to no 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]

By Decision dated August 31, 2004, the CA reversed[31] the NLRC:


WHEREFORE, premises considered, we hereby GRANT the petition. The assailed NLRC decision is declared NULL
and VOID and is hereby SET ASIDE. The private respondent's complaint is hereby DISMISSED. No costs.

SO ORDERED.[32]
The CA opined that there was grave abuse of discretion on the part of the NLRC because it "looked at wrong and
irrelevant considerations"[33] in evaluating the evidence of the parties. Contrary to the NLRC ruling, the weight
standards of PAL are meant to be a continuing qualification for an employee's position.[34] The failure to adhere to the
weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in
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 qualifies or continues to qualify under this
standard."[37]

Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL are reasonable.[38] Thus,
petitioner was legally dismissed because he repeatedly failed to meet the prescribed weight standards.[39] It is obvious
that the issue of discrimination was only invoked by petitioner for purposes of escaping the result of his dismissal for
being overweight.[40]

On May 10, 2005, the CA denied petitioner's motion for reconsideration.[41] Elaborating on its earlier ruling, the CA
held that the weight standards of PAL are a bona fide occupational qualification which, in case of violation, "justifies
an employee's separation from the service."[42]
Issues

In this Rule 45 petition for review, the following issues are posed for resolution:
I.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER'S OBESITY
CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR CODE OF THE
PHILIPPINES;
II.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER'S DISMISSAL
FOR OBESITY CAN BE PREDICATED ON THE "BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ)
DEFENSE";
III.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER WAS NOT
UNDULY DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE OTHER OVERWEIGHT CABIN
ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR PROMOTED;
IV.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED ASIDE PETITIONER'S

CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT AND ACADEMIC.[43](Underscoring
supplied)
Our Ruling

I. The obesity of petitioner is a ground for dismissal under Article 282(e) [44] of the Labor Code.

A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing
qualification of an 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 prescribed by the weight standards. The dismissal of the employee would
thus fall under Article 282(e) of the Labor Code. As explained by the CA:
x x x [T]he standards violated in this case were not mere "orders" of the employer; they were the "prescribed weights"
that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other
words, they were standards that establish continuing qualifications for an employee's position. In this sense, the
failure to maintain these standards does not fall under Article 282(a) whose express terms require the element of
willfulness in order to be a ground for dismissal. The failure to meet the employer's qualifying standards is in fact a
ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) - the
"other causes analogous to the foregoing."

By its nature, these "qualifying standards" are norms that apply prior to and after an employee is hired. They
applyprior to employment because these are the standards a job applicant must initially 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 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 longer "qualifies" for
his job irrespective of whether or not the failure to qualify was willful or intentional. x x x[45]
Petitioner, though, advances a very interesting argument. He claims that obesity is a "physical abnormality and/or
illness."[46] Relying on Nadura v. Benguet Consolidated, Inc.,[47] he says his dismissal is illegal:
Conscious of the fact that Nadura's case cannot be made to fall squarely within the specific causes enumerated in
subparagraphs 1(a) to (e), Benguet invokes the provisions of subparagraph 1(f) and says that Nadura's 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, as the trial
court said, "illness cannot be included as an analogous cause by any stretch of imagination."

It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others expressly enumerated in the law
are due to the voluntary and/or willful act of the employee. How Nadura's illness could be considered as "analogous"
to any of them is beyond our understanding, there being no claim or pretense that the same was contracted through
his own voluntary act.[48]
The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from the case at
bar.First, Nadura was not decided under the Labor Code. The law applied in that case was Republic Act (RA) No.
1787. Second, the issue of flight safety is absent in Nadura, thus, the rationale there cannot apply here. Third,
inNadura, the employee who was a miner, was laid off from work because of illness, i.e., asthma. Here, petitioner was
dismissed for his failure to meet the weight standards of PAL. He was not dismissed due to illness. Fourth, the issue
in Nadura is whether or not the dismissed employee is entitled to separation pay and damages. Here, the issue
centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of PAL. Fifth,
in Nadura, the employee was not accorded due process. Here, petitioner was accorded utmost leniency. He was
given more than four (4) years to comply with the weight standards of PAL.

In the case at bar, the evidence on record militates against petitioner's claims that obesity is a disease. That he was

able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to lose weight given the proper
attitude, determination, and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner
himself claimed that "[t]he issue is could I bring my weight down to ideal weight which is 172, then the answer is yes. I
can do it now."[49]

True, petitioner claims that reducing weight is costing him "a lot of expenses."[50] However, petitioner has only himself
to blame. He could have easily availed the assistance of the company physician, per the advice of PAL.[51]He chose to
ignore the suggestion. In fact, he repeatedly failed to report when required to undergo weight checks, without offering
a valid explanation. Thus, his fluctuating weight indicates absence of willpower rather than an illness.

Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and Hospitals,
[52]

decided by the United States Court of Appeals (First Circuit). In that case, Cook worked from 1978 to 1980 and

from 1981 to 1986 as an institutional attendant for the mentally retarded at the Ladd Center that was being operated
by respondent. She twice resigned voluntarily with an unblemished record. Even respondent admitted that her
performance met the Center's legitimate expectations. In 1988, Cook re-applied for a similar position. At that time,
"she stood 5'2" tall and weighed over 320 pounds." Respondent claimed that the morbid obesity of plaintiff
compromised her ability to evacuate patients in case of emergency and it also put her at greater risk of serious
diseases.

Cook contended that the action of respondent amounted to discrimination on the basis of a handicap. This was in
direct violation of Section 504(a) of the Rehabilitation Act of 1973,[53] which incorporates the remedies contained in
Title VI of the Civil Rights Act of 1964. Respondent claimed, however, that morbid obesity could never constitute a
handicap within the purview of the Rehabilitation Act. Among others, obesity is a mutable condition, thus plaintiff
could simply lose weight and rid herself of concomitant disability.

The appellate Court disagreed and held that morbid obesity is a disability under the Rehabilitation Act and that
respondent discriminated against Cook based on "perceived" disability. The evidence included expert testimony that
morbid obesity is a physiological disorder. It involves a dysfunction of both the metabolic system and the neurological
appetite - suppressing signal system, which is capable of causing adverse effects within the musculoskeletal,
respiratory, and cardiovascular systems. Notably, the Court stated that "mutability is relevant only in determining the
substantiality of the limitation flowing from a given impairment," thus "mutability only precludes those conditions that
an individual can easily and quickly reverse by behavioral alteration."

Unlike Cook, however, petitioner is not morbidly obese. In 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 Judge, Cook weighed "over 320 pounds" in 1988. Clearly, that is not the case
here. At his heaviest, petitioner was only less than 50 pounds over his ideal weight.

In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an
analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may
not be unintended, but is nonetheless voluntary. As the CA correctly puts it, "[v]oluntariness basically means that the
just cause is solely attributable to the employee without any external force influencing or controlling his actions. This
element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or omission.
Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent
found in Article 282(a), (c), and (d)."[54]

II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense.

Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless the
employer can show that sex, religion, or national origin is an actual qualification for performing the job. The
qualification is called a bona fide occupational qualification (BFOQ).[55] In the United States, there are a few federal
and many state job discrimination laws that contain an exception allowing an employer to engage in an otherwise
unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a
business or enterprise.[56]

Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute providing for it.[57]Further,
there is no existing BFOQ statute that could justify his dismissal.[58]

Both arguments must fail.

First, the Constitution,[59] the Labor Code,[60] and RA No. 7277[61] or the Magna Carta for Disabled Persons[62]contain
provisions similar to BFOQ.

Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British Columbia Government
and Service Employee's Union (BCGSEU),[63] the Supreme Court of Canada adopted the so-called "Meiorin Test" in
determining whether an employment policy is justified. Under this test, (1) the employer must show that it adopted the
standard for a purpose rationally connected to the performance of the job;[64] (2) the employer must establish that the
standard is reasonably necessary[65] to the accomplishment of that work-related purpose; and (3) the employer must
establish that the standard is reasonably necessary in order to accomplish the legitimate work-related purpose.
Similarly, in Star Paper Corporation v. Simbol,[66] this Court held that in order to justify a BFOQ, the employer must
prove that (1) the employment qualification is reasonably related to the essential operation of the job involved; and (2)
that there is factual basis for believing that all or substantially all persons meeting the qualification would be unable to
properly perform the duties of the job.[67]

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]

In Duncan Association of Detailman-PTGWTO v. Glaxo Wellcome Philippines, Inc.,[70] the Court did not hesitate to
pass upon the validity of a company policy which prohibits its employees from marrying employees of a rival
company. It was held that the company policy is reasonable considering that its purpose is the protection of the
interests of the company against possible competitor infiltration on its trade secrets and procedures.

Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor
Arbiter,[71] NLRC,[72] and CA[73] are one in holding that the weight standards of PAL are reasonable. A common carrier,
from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the
safety of the passengers it transports.[74] It is bound to carry its passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.[75]

The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to hold that
the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of
being a common carrier.

The business of PAL is air transportation. As such, it has committed itself to safely transport its passengers. In order
to achieve this, it must necessarily rely on its employees, most particularly the cabin flight deck crew who are on
board the aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its
employees.

In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. It
cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger confidence on
their ability to care for the passengers when something goes wrong. It is not farfetched to say that airline companies,
just like all common carriers, thrive due to public confidence on their safety records. People, especially the riding
public, expect no less than that airline companies transport their passengers to their respective destinations safely
and soundly. A lesser performance is unacceptable.

The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims and caprices of
the passengers. The most important activity of the cabin crew is to care for the safety of passengers and the
evacuation of the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin
attendant. Truly, airlines need cabin attendants who have the necessary strength to open emergency doors, the agility
to attend to passengers in cramped working conditions, and the stamina to withstand grueling flight schedules.

On board an aircraft, the body weight and size of a cabin attendant are important factors to consider in case of
emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Thus, the arguments of
respondent that "[w]hether the airline's flight attendants are overweight or not has no direct relation to its mission of
transporting passengers to their destination"; and that the weight standards "has nothing to do with airworthiness of
respondent's airlines," must fail.

The rationale in Western Air Lines v. Criswell[76] relied upon by petitioner cannot apply to his case. What was involved
there were two (2) airline pilots who were denied reassignment as flight engineers upon reaching the age of 60, and a
flight engineer who was forced to retire at age 60. They sued the airline company, alleging 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 narrow aisles and emergency exit doors of the airplane, any overweight cabin attendant would certainly
have difficulty navigating the cramped cabin area.

In short, there is no need to individually evaluate their ability to perform their task. That an obese cabin attendant
occupies more space than a slim one is an unquestionable fact which courts can judicially recognize without
introduction of evidence.[77] It would also be absurd to require airline companies to reconfigure the aircraft in order to
widen the aisles and exit doors just to accommodate overweight cabin attendants like petitioner.

The biggest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating the
aircraft, should the occasion call for it. The job of a cabin attendant during emergencies is to speedily get the
passengers out of the aircraft safely. Being overweight necessarily impedes mobility. Indeed, in an emergency
situation, seconds are what cabin attendants are dealing with, not minutes. Three lost seconds can translate into
three lost lives. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow aisles.
These possibilities are not remote.

Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him prior to
his employment. He is presumed to know the weight limit that he must 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 fides exigit ut quod
convenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat kanyang
tutuparin ang napagkasunduan.

Too, the weight standards of PAL provide for separate weight limitations based on height and body frame for both
male and female cabin attendants. A progressive discipline is imposed to allow non-compliant cabin attendants

sufficient opportunity to meet the weight standards. Thus, the clear-cut rules obviate any possibility for the
commission of abuse or arbitrary action on the part of PAL.
III. Petitioner failed to substantiate his claim that he was discriminated against by PAL.

Petitioner next claims that PAL is using passenger safety as a convenient excuse to discriminate against him.[79]We
are constrained, however, to hold otherwise. We agree with the CA that "[t]he element of discrimination came into play
in this case as a secondary position for the private respondent in order to escape the consequence of dismissal that
being overweight entailed. It is a confession-and-avoidance position that impliedly admitted the cause of dismissal,
including the reasonableness of the applicable standard and the private respondent's failure to comply."[80] It is a basic
rule in evidence that each party must prove his affirmative allegation.[81]

Since the burden of evidence lies with the party who asserts an affirmative allegation, petitioner has to prove his
allegation with particularity. There is nothing on the records which could support the finding of discriminatory
treatment. Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who are
allegedly similarly situated with him. Substantial proof must be shown as to how and why they are similarly situated
and the differential treatment petitioner got from PAL despite the similarity of his situation with other employees.

Indeed, except for pointing out the names of the supposed overweight cabin attendants, petitioner miserably failed to
indicate their respective ideal weights; weights over their ideal weights; the periods they were allowed to fly despite
their being overweight; the particular flights assigned to them; the discriminating treatment they got from PAL; and
other relevant data that could have adequately established a case of discriminatory treatment by PAL. In the words of
the CA, "PAL really had no substantial case of discrimination to meet."[82]

We are not unmindful that findings of facts of administrative agencies, like the Labor Arbiter and the NLRC, are
accorded respect, even finality.[83] The reason is simple: administrative agencies are experts in matters within their
specific and specialized jurisdiction.[84] But the principle is not a hard and fast rule. It only applies if the findings of
facts are duly supported by substantial evidence. If it can be shown that administrative bodies grossly misappreciated
evidence of such nature so as to compel a conclusion to the contrary, their findings of facts must necessarily be
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 and wages are moot.

As his last contention, petitioner avers that his claims for reinstatement and wages have not been mooted. He is
entitled to 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 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]

Petitioner cannot take refuge in the pronouncements of the Court in a case[97] that "[t]he unjustified refusal of the
employer to reinstate the dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution"[98] and ""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 employee during the period of appeal until reversal by the higher court."[99] He failed to prove that he complied
with the return to work order of PAL. Neither does it appear on record that he actually rendered services for PAL from
the moment he was dismissed, in order to insist on the payment of his full backwages.

In insisting that he be reinstated to his actual position despite being overweight, petitioner in effect wants to render the
issues in the present case moot. He asks PAL to comply with the impossible. Time and again, the Court ruled that the
law does not exact compliance with the impossible.[100]

V. Petitioner is entitled to separation pay.

Be that as it may, all is not lost for petitioner.

Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the language of
Article 279 of the Labor Code that "[a]n employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement." Luckily for petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed employee as an act "social justice,"[101] or based on
"equity."[102] In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not
reflect on the moral character of the employee.[103]

Here, We grant petitioner separation pay equivalent to one-half (1/2) month's pay for every year of service.[104] It
should include regular allowances which he might have been receiving.[105] We are not blind to the fact that he was not
dismissed for any serious misconduct or to any act which would reflect on his moral character. We also recognize that
his employment with PAL lasted for more or less a decade.

WHEREFORE, the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in that petitioner

Armando G. Yrasuegui is entitled to separation pay in an amount equivalent to one-half (1/2) month's pay for every
year of service, which should include his regular allowances.

SO ORDERED.

[ G.R. No. 85985, August 13, 1993 ]


PHILIPPINE AIRLINES, INC. (PAL), PETITIONER, VS. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA, AND PHILIPPINE
AIRLINES EMPLOYEES ASSOCIATION (PALEA), RESPONDENTS.

DECISION
MELO, J.:
In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation of a Code of
Discipline among employees is a shared responsibility of the employer and the employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of Discipline. The Code was
circulated among the employees and was immediately implemented, and some employees were forthwith subjected
to the disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint before the
National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-7-2051-85) with the following
remarks: "ULP with arbitrary implementation of PAL's Code of Discipline without notice and prior discussion with
Union by Management" (Rollo, p. 41). In its position paper, PALEA contended that PAL, by its unilateral
implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article 249 and
Article 253 of the Labor Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that
being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code was
arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation of the Code be held
in abeyance; that PAL should discuss the substance of the Code with PALEA; that employees dismissed under the
Code be reinstated and their cases subjected to further hearing; and that PAL be declared guilty of unfair labor
practice and be ordered to pay damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescribe rules and
regulations regarding employees' conduct in carrying out their duties and functions, and alleging that by implementing
the Code, it had not violated the collective bargaining agreement (CBA) or any provision of the Labor Code. Assailing
the complaint as unsupported by evidence, PAL maintained that Article 253 of the Labor Code cited by PALEA
referred to the requirements for negotiating a CBA which was inapplicable as indeed the current CBA had been
negotiated.
In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was violated when PAL
unilaterally implemented the Code, and cited provisions of Articles IV and I of Chapter II of the Code as defective for,
respectively, running counter to the construction of penal laws and making punishable any offense within PAL's
contemplation. These provisions are the following:
Section 2. Non-exclusivity. - This Code does not contain the entirety of the rules and regulations of the company.
Every employee is bound to comply with all applicable rules, regulations, policies, procedures and standards,
including standards of quality, productivity, and behaviour, as issued and promulgated by the company through its
duly authorized officials. Any violations thereof shall be punishable with a penalty to be determined by the gravity
and/or frequency of the offense.
Section 7. Cumulative Record. - An employee's record of offenses shall be cumulative. The penalty for an offense
shall be determined on the basis of his past record of offenses of any nature or the absence thereof. The more
habitual an offender has been, the greater shall be the penalty for the latest offense. Thus, an employee may be
dismissed if the number of his past offenses warrants such penalty in the judgment of management even if each
offense considered separately may not warrant dismissal. Habitual offenders or recidivists have no place in PAL. On
the other hand, due regard shall be given to the length of time between commission of individual offenses to
determine whether the employee's conduct may indicate occasional lapses (which may nevertheless require sterner
disciplinary action) or a pattern of incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed to appear at the
scheduled date. Interpreting such failure as a waiver of the parties' right to present evidence, the labor arbiter
considered the case submitted for decision. On November 7, 1986, a decision was rendered finding no bad faith on

the part of PAL in adopting the Code and ruling that no unfair labor practice had been committed. However, the arbiter
held that PAL was "not totally fault free" considering that while the issuance of rules and regulations governing the
conduct of employees is a "legitimate management prerogative" such rules and regulations must meet the test of
"reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all embracing and all
encompassing provision that makes punishable any offense one can think of in the company"; while Section 7,
likewise quoted above, is "objectionable for it violates the rule against double jeopardy thereby ushering in two or
more punishment for the same misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated." Noting that PAL's
assertion that it had furnished all its employees copies of the Code is unsupported by documentary evidence, she
stated that such "failure" on the part of PAL resulted in the imposition of penalties on employees who thought all the
while that the 1966 Code was still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance of the law
excuses no one from compliance ... finds application only after it has been conclusively shown that the law was
circulated to all the parties concerned and efforts to disseminate information regarding the new law have been
exerted." (p. 39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and remand the same
for further hearing; and
3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision.
All other claims of the complainant union (is) [are] hereby dismissed for lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with Presiding
Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no evidence of unfair labor practice
committed by PAL and affirmed the dismissal of PALEA's charge. Nonetheless, the NLRC made the following
observations:
Indeed, failure of management to discuss the provisions of a contemplated code of discipline which shall govern the
conduct of its employees would result in the erosion and deterioration of an otherwise harmonious and smooth
relationship between them as did happen in the instant case. There is no dispute that adoption of rules of conduct or
discipline is a prerogative of management and is imperative and essential if an industry has to survive in a competitive
world. But labor climate has progressed, too. In the Philippine scene, at no time in our contemporary history is the
need for a cooperative, supportive and smooth relationship between labor and management more keenly felt if we are
to survive economically. Management can no longer exclude labor in the deliberation and adoption of rules and
regulations that will affect them.
The complainant union in this case has the right to feel isolated in the adoption of the New Code of Discipline. The
Code of Discipline involves security of tenure and loss of employment - a property right! It is time that management
realizes that to attain effectiveness in its conduct rules, there should be candidness and openness by Management
and participation by the union, representing its members. In fact, our Constitution has recognized the principle of
"shared responsibility" between employers and workers and has likewise recognized the right of workers to participate
in policy and decision-making process affecting their rights The latter provision was interpreted by the
Constitutional Commissioners to mean participation in "management" (Record of the Constitutional Commission, Vol.
II).

In a sense, participation by the union in the adoption of the code of conduct could have accelerated and enhanced
their feelings of belonging and would have resulted in cooperation rather than resistance to the Code. In fact, labormanagement cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed decision in the sense that the New Code of Discipline
should be reviewed and discussed with complainant union, particularly the disputed provisions [.] [T]hereafter,
respondent is directed to furnish each employee with a copy of the appealed Code of Discipline. The pending cases
adverted to in the appealed decision if still in the arbitral level, should be reconsidered by the respondent Philippine
Air Lines. Other dispositions of the Labor Arbiter are sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents with grave abuse of discretion in: (a)
directing PAL "to share its management prerogative of formulating a Code of Discipline"; (b) engaging in quasi-judicial
legislation in ordering PAL to share said prerogative with the union; (c) deciding beyond the issue of unfair labor
practice, and (d) requiring PAL to reconsider pending cases still in the arbitral level (p. 7, Petition; p. 8, Rollo.)
As stated above, the principal issue submitted for resolution in the instant petition is whether management may be
compelled to share with the union or its employees its prerogative of formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the sharing of
responsibility therefor between employer and employee.
Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211 of the Labor
Code, that the law explicitly considered it a State policy "(t)o ensure the participation of workers in decision and
policy-making processes affecting their rights, duties and welfare." However, even in the absence of said clear
provision of law, the exercise of management prerogatives was never considered boundless. Thus,
in Cruz vs.Medina (177 SCRA 565 [1989]), it was held that management's prerogatives must be without abuse of
discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the company's right
to implement a new system of distributing its products, but gave the following caveat:
So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under
valid agreements, this Court will uphold them. (at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by
limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice
(University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated
in Abbott Laboratories(Phil.), Inc. vs. NLRC (154 SCRA 713 [1987]), it must be duly established that the prerogative
being invoked is clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they are not purely business-oriented nor do
they concern the management aspect of the business of the company as in the San Miguel case. The provisions of
the Code clearly have repercusions on the employees' right to security of tenure. The implementation of the
provisions may result in the deprivation of an employee's means of livelihood which, as correctly pointed out by the
NLRC, is a property right (Callanta vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of
the case which border on infringement of constitutional rights, we must uphold the constitutional requirements for the
protection of labor and the promotion of social justice, for these factors, according to Justice Isagani Cruz, tilt "the
scales of justice when there is doubt, in favor of
the worker" (Employees Association of thePhilippine American Life Insurance Company vs. NLRC, 199 SCRA 628
[1991] 635).

Verily, a line must be drawn between management prerogatives regarding business operations per se and those
which affect the rights of the employees. In treating the latter, management should see to it that its employees are at
least properly informed of its decisions or modes of action. PAL asserts that all its employees have been furnished
copies of the Code. Public respondents found to the contrary, which finding, to say the least is entitled to great
respect.
PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27, 1990, PALEA in
effect recognized PAL's "exclusive right to make and enforce company rules and regulations to carry out the functions
of management without having to discuss the same with PALEA and much less, obtain the latter'sconformity thereto"
(pp. 11-12, Petitioner's Memorandum; pp. 180-181, Rollo.) Petitioner's view is based on the following provision of the
agreement:
The Association recognizes the right of the Company to determine matters of management policy and Company
operations and to direct its manpower. Management of the Company includes the right to organize, plan, direct and
control operations, to hire, assign employees to work, transfer employees from one department to another, to
promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal
causes, to introduce new or improved methods or facilities or to change existing methods or facilities and the right to
make and enforce Company rules and regulations to carry out the functions of management.
The exercise by management of its prerogative shall be done in a just, reasonable, humane and/or lawful manner.
Such provision in the collective bargaining agreement may not be interpreted as cession of employees' rights to
participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto.
And one such matter is the formulation of a code of discipline.
Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion of
matters affecting their rights. Thus, even before Article 211 of the Labor Code (P.D. 442) was amended by Republic
Act No. 6715, it was already declared a policy of the State: "(d) To promote the enlightenment of workers concerning
their rights and obligations ... as employees." This was, of course, amplified by Republic Act No. 6715 when it
decreed the "participation of workers in decision and policy making processes affecting their rights, duties and
welfare." PAL's position that it cannot be saddled with the "obligation" of sharing management prerogatives as during
the formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo,
p. 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code was formulated,
the attainment of a harmonious labor-management relationship and the then already existing state policy of
enlightening workers concerning their rights as employees demand no less than the observance of transparency in
managerial moves affecting employees' rights.
Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the nature of its
business cannot be overemphasized. In fact, its being a local monopoly in the business demands the most stringent
of measures to attain safe travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot be
properly implemented in the absence of full cooperation of the employees. Such cooperation cannot be attained if the
employees are restive on account of their being left out in the determination of cardinal and fundamental matters
affecting their employment.
WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special pronouncement is
made as to costs.
SO ORDERED.

[ G.R. No. 162994, September 17, 2004 ]


DUNCAN ASSOCIATION OF DETAILMAN-PTGWO AND PEDRO A. TECSON, PETITIONERS,
VS. GLAXO WELLCOME PHILIPPINES, INC. RESPONDENT.
RESOLUTION

TINGA, J.:
Confronting the Court in this petition is a novel question, with constitutional overtones, involving the validity of the
policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company.

This is a Petition for Review on Certiorari assailing the Decision[1] dated May 19, 2003 and the Resolution dated
March 26, 2004 of the Court of Appeals in CA-G.R. SP No. 62434.[2]

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

Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and
abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or
affinity with co-employees or employees of competing drug companies and should management find that such
relationship poses a possible conflict of interest, to resign from the company.

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

Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte sales area.

Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals[3]
(Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay. She supervised the district managers
and medical representatives of her company and prepared marketing strategies for Astra in that area.

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

In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a conflict of interest.
Tecsons superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs,
although they told him that they wanted to retain him as much as possible because he was performing his job well.

Tecson requested for time to comply with the company policy against entering into a relationship with an employee of
a competitor company. He explained that Astra, Bettsys employer, was planning to merge with Zeneca, another drug
company; and Bettsy was planning to avail of the redundancy package to be offered by Astra. With Bettsys
separation from her company, the potential conflict of interest would be eliminated. At the same time, they would be
able to avail of the attractive redundancy package from Astra.

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

In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson
asked Glaxo to reconsider its decision, but his request was denied.

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

During the pendency of the grievance proceedings, Tecson was paid his salary, but was not issued samples of
products which were competing with similar products manufactured by Astra. He was also not included in product
conferences regarding such products.

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

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

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

Tecson filed a Motion for Reconsideration of the appellate courts Decision, but the motion was denied by the
appellate court in its Resolution dated March 26, 2004.[5]

Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in affirming the NCMBs finding
that the Glaxos policy prohibiting its employees from marrying an employee of a competitor company is valid; and (ii)
the Court of Appeals also erred in not finding that Tecson was constructively dismissed when he was transferred to a
new sales territory, and deprived of the opportunity to attend products seminars and training sessions.[6]

Petitioners contend that Glaxos policy against employees marrying employees of competitor companies violates the
equal protection clause of the Constitution because it creates invalid distinctions among employees on account only
of marriage. They claim that the policy restricts the employees right to marry.[7]

They also argue that Tecson was constructively dismissed as shown by the following circumstances: (1) he was
transferred from the Camarines Sur-Camarines Norte sales area to the Butuan-Surigao-Agusan sales area, (2) he
suffered a diminution in pay, (3) he was excluded from attending seminars and training sessions for medical
representatives, and (4) he was prohibited from promoting respondents products which were competing with Astras
products.[8]

In its Comment on the petition, Glaxo argues that the

company policy prohibiting its employees from having a

relationship with and/or marrying an employee of a competitor company is a valid exercise of its management
prerogatives and does not violate the equal protection clause; and that Tecsons reassignment from the Camarines
Norte-Camarines Sur sales area to the Butuan City-Surigao City and Agusan del Sur sales area does not amount to
constructive dismissal.[9]

Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it has a genuine

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

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

According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra, posed a real and potential conflict of interest.
Astras products were in direct competition with 67% of the products sold by Glaxo. Hence, Glaxos enforcement of
the foregoing policy in Tecsons case was a valid exercise of its management prerogatives.[12] In any case, Tecson was
given several months to remedy the situation, and was even encouraged not to resign but to ask his wife to resign
from Astra instead.[13]

Glaxo also points out that Tecson can no longer question the assailed company policy because when he signed his
contract of employment, he was aware that such policy was stipulated therein. In said contract, he also agreed to
resign from respondent if the management finds that his relationship with an employee of a competitor company
would be detrimental to the interests of Glaxo.[14]

Glaxo likewise insists that Tecsons reassignment to another sales area and his exclusion from seminars regarding
respondents new products did not amount to constructive dismissal.

It claims that in view of Tecsons refusal to resign, he was relocated from the Camarines Sur-Camarines Norte sales
area to the Butuan City-Surigao City and Agusan del Sur sales area. Glaxo asserts that in effecting the
reassignment, it also considered the welfare of Tecsons family. Since Tecsons hometown was in Agusan del Sur and
his wife traces her roots to Butuan City, Glaxo assumed that his transfer from the Bicol region to the Butuan City sales
area would be favorable to him and his family as he would be relocating to a familiar territory and minimizing his travel
expenses.[15]

In addition, Glaxo avers that Tecsons exclusion from the seminar concerning the new anti-asthma drug was due to
the fact that said product was in direct competition with a drug which was soon to be sold by Astra, and hence, would
pose a potential conflict of interest for him. Lastly, the delay in Tecsons receipt of his sales paraphernalia was due to
the mix-up created by his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new
sales area instead of Naga City because the supplier thought he already transferred to Butuan).[16]

The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in ruling that Glaxos
policy against its employees marrying employees from competitor companies is valid, and in not holding that said
policy violates the equal protection clause of the Constitution; (2) Whether Tecson was constructively dismissed.

The Court finds no merit in the petition.

The stipulation in Tecsons contract of employment with Glaxo being questioned by petitioners provides:

10. You agree to disclose to management any existing or future relationship you may have, either by consanguinity or

affinity with co-employees or employees of competing drug companies. Should it pose a possible conflict of interest
in management discretion, you agree to resign voluntarily from the Company as a matter of Company policy.
[17]
The same contract also stipulates that Tecson agrees to abide by the existing company rules of Glaxo, and to study
and become acquainted with such policies.[18] In this regard, the Employee Handbook of Glaxo expressly informs its
employees of its rules regarding conflict of interest:
1. Conflict of Interest

Employees should avoid any activity, investment relationship, or interest that may run counter to the responsibilities
which they owe Glaxo Wellcome.

Specifically, this means that employees are expected:


a.

To avoid having personal or family interest, financial or otherwise, in any competitor supplier or other
businesses which may consciously or unconsciously influence their actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.

b.

To refrain from using their position in Glaxo Wellcome or knowledge of Company plans to advance their
outside personal interests, that of their relatives, friends and other businesses.

c.

To avoid outside employment or other interests for income which would impair their effective job
performance.

d.

To consult with Management on such activities or relationships that may lead to conflict of interest.

1.1. Employee Relationships

Employees with existing or future relationships either by consanguinity or affinity with co-employees of competing
drug companies are expected to disclose such relationship to the Management. If management perceives a conflict
or potential conflict of interest, every effort shall be made, together by management and the employee, to arrive at a
solution within six (6) months, either by transfer to another department in a non-counter checking position, or by
career preparation toward outside employment after Glaxo Wellcome. Employees must be prepared for possible
resignation within six (6) months, if no other solution is feasible.[19]
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy prohibiting an employee
from having a relationship with an employee of a competitor company is a valid exercise of management prerogative.

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

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

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

also recognizes that management has rights which are also entitled to respect and enforcement

in the interest of fair play.[21]

As held in a Georgia, U.S.A case,[22] it is a legitimate business practice to guard business confidentiality and protect a
competitive position by even-handedly disqualifying from jobs male and female applicants or employees who are
married to a competitor. Consequently, the court ruled than an employer that discharged an employee who was
married to an employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964.[23]The Court
pointed out that the policy was applied to men and women equally, and noted that the employers business was highly
competitive and that gaining inside information would constitute a competitive advantage.

The challenged company policy does not violate the equal protection clause of the Constitution as petitioners
erroneously suggest. It is a settled principle that the commands of the equal protection clause are addressed only to
the state or those acting under color of its authority.[24] Corollarily, it has been held in a long array of U.S. Supreme
Court decisions that the equal protection clause erects no shield against merely private conduct, however,
discriminatory or wrongful.[25] The only exception occurs when the state[26] in any of its manifestations or actions has
been found to have become entwined or involved in the wrongful private conduct.[27] Obviously, however, the exception
is not present in this case. Significantly, the company actually enforced the policy after repeated requests to the
employee to comply with the policy. Indeed, the application of the policy was made in an impartial and even-handed
manner, with due regard for the lot of the employee.

In any event, from the wordings of the contractual provision and

the policy in its employee handbook, it is clear that

Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor
companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the
company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of
such relationships. As succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the company remains free to marry
anyone of his or her choosing. The policy is not aimed at restricting a personal prerogative that belongs only to the
individual. However, an employees personal decision does not detract the employer from exercising management
prerogatives to ensure maximum profit and business success. . . [28]
The Court of Appeals also correctly noted that the assailed company policy which forms part of respondents
Employee Code of Conduct and of its contracts with its employees, such as that signed by Tecson, was made known
to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his employment
contract

and when he entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a

contract of employment with Glaxo, the stipulations therein have the force of law between them and, thus, should be
complied with in good faith.[29] He is therefore estopped from questioning said policy.

The Court finds no merit in petitioners contention that Tecson was constructively dismissed when he was transferred
from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur sales area, and
when he was excluded from attending the companys seminar on new products which were directly competing with
similar products manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation
resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in
rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable
to the employee.[30] None of these conditions are present in the instant case. The record does not show that Tecson
was demoted or unduly discriminated upon by reason of such transfer. As found by the appellate court, Glaxo
properly exercised its management prerogative in reassigning Tecson to the Butuan City sales area:
. . . In this case, petitioners transfer to another place of assignment was merely in keeping with the policy of the
company in avoidance of conflict of interest, and thus validNote that [Tecsons] wife holds a sensitive supervisory
position as Branch Coordinator in her employer-company which requires her to work in close coordination with District
Managers and Medical Representatives. Her duties include monitoring sales of Astra products, conducting sales

drives, establishing and furthering relationship with customers, collection, monitoring and managing Astras
inventoryshe therefore takes an active participation in the market war characterized as it is by stiff competition
among pharmaceutical companies. Moreover, and this is significant, petitioners sales territory covers Camarines Sur
and Camarines Norte while his wife is supervising a branch of her employer in Albay. The proximity of their areas of
responsibility, all in the same Bicol Region, renders the conflict of interest not only possible, but actual, as learning by
one spouse of the others market strategies in the region would be inevitable. [Managements] appreciation of a
conflict of interest is therefore not merely illusory and wanting in factual basis[31]
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,[32] which involved a complaint filed by a
medical representative against his employer drug company for illegal dismissal for allegedly terminating his
employment when he refused to accept his reassignment to a new area, the Court upheld the right of the drug
company to transfer or reassign its employee in accordance with its operational demands and requirements. The
ruling of the Court therein, quoted hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman or medical representative is expected to travel. He should
anticipate reassignment according to the demands of their business. It would be a poor drug corporation which
cannot even assign its representatives or detail men to new markets calling for opening or expansion or to areas
where the need for pushing its products is great. More so if such reassignments are part of the employment contract.
[33]

As noted earlier, the challenged policy has been implemented by Glaxo impartially and disinterestedly for a long
period of time. In the case at bar, the record shows that Glaxo gave Tecson several chances to eliminate the conflict
of interest brought about by his relationship with Bettsy. When their relationship was still in its initial stage, Tecsons
supervisors at Glaxo constantly reminded him about its effects on his employment with the company and on the
companys interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by either resigning from
the company or asking his wife to resign from Astra. Glaxo even expressed its desire to retain Tecson in its employ
because of his satisfactory performance and suggested that he ask Bettsy to resign from her company instead.
Glaxo likewise acceded to his repeated requests for more time to resolve the conflict of interest. When the problem
could not be resolved after several years of waiting, Glaxo was constrained to reassign Tecson to a sales area
different from that handled by his wife for Astra. Notably, the Court did not terminate Tecson from employment but
only reassigned him to another area where his home province, Agusan del Sur, was included. In effecting Tecsons
transfer, Glaxo even considered the welfare of Tecsons family. Clearly, the foregoing dispels any suspicion of
unfairness and bad faith on the part of Glaxo.[34]

WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.

[ G.R. No. 119243, April 17, 1997 ]


BREW MASTER INTERNATIONAL INC., PETITIONER, VS. NATIONAL FEDERATION OF
LABOR UNIONS (NAFLU), ANTONIO D. ESTRADA AND HONORABLE NATIONAL
LABOR RELATIONS COMMISSION (THIRD DIVISION), RESPONDENTS.

DECISION
DAVIDE, JR., J.:
This is a special civil action for certiorari seeking the reversal of the 7 October 1994 decision[1] of the National Labor
Relations Commission (NLRC) in NLRC Case No. 00-06-04136-93 (CA No. L-007370-94), which modified the 11 July
1994 decision[2] of the Labor Arbiter by directing the reinstatement of private respondent Antonio D. Estrada, the
complainant, without loss of seniority rights and benefits.

Private respondent National Federation of Labor Unions (NAFLU), a co-complainant in the labor case, is a labor union
of which complainant is a member.

The factual and procedural antecedents are summarized in the decision of the Labor Arbiter which we quote verbatim:
Complainant was first employed by respondent on 16 September 1991 as route helper with the latest daily wage of
P119.00. From 19 April 1993 up to 19 May 1993, for a period of one (1) month, complainant went on absent without
permission (AWOP). On 20 May 1993, respondent thru Mr. Rodolfo Valentin, sent a Memo to complainant, to wit:
Please explain in writing within 24 hours of your receipt of this memo why no disciplinary action should be taken
against you for the following offense:

You were absent since April 19, 1993 up to May 19, 1993.

For your strict compliance.

In answer to the aforesaid memo, complainant explained:

Sa dahilan po na ako ay hindi nakapagpaalam sainyo [sic] dahil inuwi ko ang mga anak ko sa Samar dahil ang
asawa ko ay lumayas at walang mag-aalaga sa mga anak ko. Kaya naman hindi ako naka long distance or telegrama
dahil wala akong pera at ibinili ko ng gamot ay puro utang pa.
Finding said explanation unsatisfactory, on 16 June 1993, respondent thru its Sales Manager, Mr. Henry A. Chongco
issued a Notice of Termination which reads:
We received your letter of explanation dated May 21, 1993 but we regret to inform you that we do not consider it
valid. You are aware of the company Rules and Regulations that absence without permission for six (6) consecutive
working days is considered abandonment of work.

In view of the foregoing, the company has decided to terminate your employment effective June 17, 1993 for
abandonment of work.
Hence, this complaint.

Complainants contend that individual complainants dismissal was done without just cause; that it was not sufficiently
established that individual complainants absence from April 19, 1993 to June 16, 1993 are unjustified; that the
penalty of dismissal for such violation is too severe; that in imposing such penalty, respondent should have taken into
consideration complainants length of service and as a first offender, a penalty less punitive will suffice such as
suspension for a definite period, (Position Paper, complainants).

Upon the other hand, respondent contends that individual complainant was dismissed for cause allowed by the
company Rules and Regulations and the Labor Code; that the act of complainant in absenting from work for one (1)

month without official leave is deleterious to the business of respondent; that it will result to stoppage of production
which will not only destructive to respondents interests but also to the interest of its employees in general; that the
dismissal of complainant from the service is legal, (Position Paper, respondent).[3]
The Labor Arbiter dismissed the complaint for lack of merit, citing the principle of managerial control, which
recognizes the employers prerogative to prescribe reasonable rules and regulations to govern the conduct of his
employees. The principle allows the imposition of disciplinary measures which are necessary for the efficiency of both
the employer and the employees. In complainant's case, he persisted in not reporting for work until 16 June 1993
notwithstanding his receipt of the memorandum requiring him to explain his absence without approval. The Labor
Arbiter, relying on Shoemart, Inc. vs. NLRC,[4] thus concluded:
Verily, it is crystal clear that individual complainant has indeed abandoned his work. The filing of the complaint on 25
June 1993 or almost two (2) months from the date complainant failed to report for work affirms the findings of this
Office and therefore, under the law and jurisprudence which upholds the right of an employer to discharge an
employee who incurs frequent, prolonged and unexplained absences as being grossly remiss in his duties to the
employer and is therefore, dismissed for cause, (Shoemart, Inc. vs. NLRC, 176 SCRA 385). An employee is deemed
to have abandoned his position or to have resigned from the same, whenever he has been absent therefrom without
previous permission of the employer for three consecutive days or more. This justification is the obvious harm to
employers interest, resulting from [sic] the non-availability of the workers services, (Supra). (underscoring supplied)[5]
and ruled that complainants termination from his employment was legal, the same with just or authorized cause and
due process.[6]

Complainant appealed to the NLRC, alleging that the immediate filing of a complaint for illegal dismissal verily
indicated that he never intended to abandon his work, then cited Policarpio v. Vicente Dy Sun, Jr.,[7] where the NLRC
ruled that prolonged absence does not, by itself, necessarily mean abandonment. Accordingly, there must be a
concurrence of intention and overt acts from which it can be inferred that the employee is no longer interested in
working. Complainant likewise invoked compassion in the application of sanctions, as dismissal from employment
brings untold hardship and sorrows on the dependents of the wage earners. In his case, a penalty less punitive than
dismissal could have sufficed.

In the assailed decision[8] of 7 October 1994, the NLRC modified the Labor Arbiter's decision and held that
complainants dismissal was invalid for the following reasons:
Complainant-appellants prolonged absences, although unauthorized, may not amount to gross neglect or
abandonment of work to warrant outright termination of employment. Dismissal is too severe a penalty. For one, the
mere fact that complainant-appellant is a first offender must be considered in his favor. Besides, it is generally
impossible for an employee to anticipate when he would be ill or compelled to attend to some family problems or
emergency like in the case at bar.

Reliance on the ruling enunciated in the cited case of Shoemart Inc. vs. National Labor Relations, 176 SCRA 385, is
quite misplaced because of the obvious dissimilarities of the attendant circumstances in the said case vis-a-vis those
obtaining in the case at bar. Unlike in the aforecited Shoemart Case, herein complainant-appellant was not dismissed
for unauthorized absences and eventually reinstated anterior to his second dismissal for the same offense nor was he
given a second chance which he could have ignored.

Otherwise stated, the difference between the two cases greatly lies [in] the fact that complainant in the Shoemart
Case in the language of the Supreme Court was an inveterate absentee who does not deserve reinstatement
compared to herein complainant-appellant who is a first offender[9]

The NLRC then decreed as follows:


PREMISES CONSIDERED, and [sic] the Decision of the Labor Arbiter, dated 11 July 1994 is hereby MODIFIED, by
directing the reinstatement of complainant-appellant to his former position without loss of seniority rights and other
benefits, but without backwages. The other findings in the appealed decision stand AFFIRMED.[10]
Petitioners motion for the reconsideration[11] was denied by the NLRC in its 7 December 1994 resolution.[12]Petitioner
thus filed this special civil action contending that the NLRC committed grave abuse of discretion in ordering
complainant's reinstatement, which in effect countenances the reinstatement of an employee who is found guilty of
excessive absences without prior approval. It further argued that the NLRC failed to consider the rationale behind
petitioners Rules and Regulations; that it was deprived of its prerogative to enforce them; and that complainant's
reinstatement would adversely affect its business and send the wrong signals to its employees.

In its comment[13] for public respondent NLRC, the Office of the Solicitor General maintained that dismissal from
employment was too severe a penalty for a first time offender like complainant. Although he violated petitioners rules
and regulations, his absences were justified: he had to bring his children to Samar, his home province, as his wife
deserted him. While that by itself might not excuse the failure to seek permission, the Office of the Solicitor General
submitted, however, that it would be at [sic] the height of callousness if one, considering his plight under the
circumstance[s], would not give due consideration to [complainants] explanation. There has to be an exception.[14]

Applying Itogon-Suyoc Mines, Inc. v. NLRC,[15] the Office of the Solicitor General recommended complainants
reinstatement, which would be more harmonious to the dictates of social justice and equity. It further emphasized that
the reinstatement should not be considered a condonation of complainants irresponsible behavior, rather, it must be
viewed as a mitigation of the severity of the penalty of dismissal. Accordingly, it prays that this petition be dismissed.

In its reply,[16] petitioner disputed the application of Itogon-Suyoc because: (1) the employee involved therein had been
in the service for twenty-three years while complainant herein had served petitioner for only two years; and (2) the
offense in Itogon-Suyoc was limited to a single act of high grading while complainant herein committed a series of
unexcused absences.

We gave due course to the petition and dispensed with complainants comment.

The sole issue to be resolved is whether the NLRC committed grave abuse of discretion in modifying the decision of
the Labor Arbiter.

The answer must be in the negative.

A scrutiny of the facts discloses that complainants absence was precipitated by a grave family problem as his wife
unexpectedly deserted him and abandoned the family. Considering that he had a full-time job, there was no one to
whom he could entrust the children and he was thus compelled to bring them to the province. It would have been
extremely difficult for him to have been husband and wife/father and mother at the same time to the children in the
metropolis. He was then under emotional, psychological, spiritual and physical stress and strain. The reason for his
absence is, under these circumstances, justified. While his failure to inform and seek petitioner's approval was an
omission which must be corrected and chastised, he did not merit the severest penalty of dismissal from the service.

Petitioners finding that complainant was guilty of abandonment is misplaced. Abandonment as a just and valid
ground for dismissal requires the deliberate, unjustified refusal of the employee to resume his employment. Two
elements must then be satisfied: (1) the failure to report for work or absence without valid or justifiable reason; and (2)

a clear intention to sever the employer-employee relationship. The second element is the more determinative factor
and must be evinced by overt acts.[17] Likewise, the burden of proof is on the employer to show the employees clear
and deliberate intent to discontinue his employment without any intention of returning,[18] mere absence is not
sufficient.[19] These elements are not present here. First, as held above, complainant's absence was justified under the
circumstances. As to the second requisite, we are not convinced that complainant ever intended to sever the
employer-employee relationship. Complainant immediately complied with the memo requiring him to explain his
absence, and upon knowledge of his termination, immediately sued for illegal dismissal. These plainly refuted any
claim that he was no longer interested in returning to work.[20] Without doubt, the intention is lacking.

Moreover, petitioner failed to discharge the burden of proof that complainant was guilty of abandonment. No evidence
other than complainants letter explaining his absence was presented. Needless to state, the letter did not indicate, in
the least, that complainant was no longer interested in returning to work. On the contrary, complainant sought
petitioners understanding. In declaring him guilty of abandonment, petitioner merely relied on its Rules and
Regulations which limited its application to a six-day continuous absence, contrary to the purpose of the law. While
the employer is not precluded from prescribing rules and regulations to govern the conduct of his employees, these
rules and their implementation must be fair, just and reasonable. It must be underscored that no less than our
Constitution looks with compassion on the workingman and protects his rights not only under a general statement of a
state policy,[21] but under the Article on Social Justice and Human Rights,[22] thus placing labor contracts on a higher
plane and with greater safeguards. Verily, relations between capital and labor are not merely contractual. They are
impressed with public interest and labor contracts must, perforce, yield to the common good.[23]

We then conclude that complainants "prolonged" absence without approval does not fall within the definition of
abandonment and that his dismissal was unjustified. While we do not decide here the validity of petitioner's Rules and
Regulations on continuous, unauthorized absences, what is plain is that it was wielded with undue haste resulting in a
deprivation of due process, thus not allowing for a determination of just cause or abandonment. In this light,
petitioner's dismissal was illegal. This is not to say that his absence should go unpunished, as impliedly noted by the
NLRC in declining to award back wages. In the absence of the appropriate offense which defines complainants
infraction in the companys Rules and Regulations, equity dictates that a penalty commensurate to the infraction be
imposed.

WHEREFORE, the petition is hereby DISMISSED and the decision of the National Labor Relations Commission in
NLRC Case No. 06-04136-93 is hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.

[ G.R. No. 128845, June 01, 2000 ]


INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), PETITIONER, VS. HON.
LEONARDO A. QUISUMBING IN HIS CAPACITY AS THE SECRETARY OF LABOR
AND EMPLOYMENT; HON. CRESENCIANO B. TRAJANO IN HIS CAPACITY AS THE
ACTING SECRETARY OF LABOR AND EMPLOYMENT; DR. BRIAN MACCAULEY IN
HIS CAPACITY AS THE SUPERINTENDENT OF INTERNATIONAL SCHOOL-

MANILA; AND INTERNATIONAL SCHOOL, INC., RESPONDENTS.


DECISION
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent School, mostly
Filipinos, cry discrimination. We agree. That the local-hires are paid more than their colleagues in other schools is, of
course, beside the point. The point is that employees should be given equal pay for work of equal value. That is a
principle long honored in this jurisdiction. That is a principle that rests on fundamental notions of justice. That is the
principle we uphold today.

Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a
domestic educational institution established primarily for dependents of foreign diplomatic personnel and other
temporary residents.[1] To enable the School to continue carrying out its educational program and improve its standard
of instruction, Section 2(c) of the same decree authorizes the School to
employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other
nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their
employment, except laws that have been or will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two:
(1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be
classified as a foreign-hire or a local hire:

a.

What is one's domicile?

b.

Where is one's home economy?

c.

To which country does one owe economic allegiance?

d.

Was the individual hired abroad specifically to work in the School and was
the School responsible for bringing that individual to the Philippines? [2]

Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire;
otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local-hires. These include housing, transportation,
shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent
(25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages" foreignhires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from his home country, leave his family and friends, and take
the risk of deviating from a promising career path-all for the purpose of pursuing his profession as an educator, but
this time in a foreign land. The new foreign hire is faced with economic realities: decent abode for oneself and/or for
one's family, effective means of transportation, allowance for the education of one's children, adequate insurance
against illness and death, and of course the primary benefit of a basic salary/retirement compensation.

Because of a limited tenure, the foreign hire is confronted again with the same economic reality after his term: that he
will eventually and inevitably return to his home country where he will have to confront the uncertainty of obtaining
suitable employment after a long period in a foreign land.

The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in
terms of attracting competent professionals in the field of international education.[3]

When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International School
Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty
members"[4] of the School, contested the difference in salary rates between foreign and local-hires. This issue, as well
as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a
deadlock between the parties.

On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and Mediation Board
to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume
jurisdiction over the dispute. On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an
Order resolving the parity and representation issues in favor of the School. Then DOLE Secretary Leonardo A.
Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997. Petitioner
now seeks relief in this Court.

Petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the
grant of higher salaries to foreign-hires constitutes racial discrimination.

The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all, with
nationalities other than Filipino, who have been hired locally and classified as local hires.[5]The Acting Secretary of
Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires:
The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there
are foreigners who have been hired locally and who are paid equally as Filipino local hires.[6]
The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates:
The principle "equal pay for equal work" does not find application in the present case. The international character of
the School requires the hiring of foreign personnel to deal with different nationalities and different cultures, among the
student population.

We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel
which system is universally recognized. We agree that certain amenities have to be provided to these people in order
to entice them to render their services in the Philippines and in the process remain competitive in the international
market.

Furthermore, we took note of the fact that foreign hires have limited contract of employment unlike the local hires who
enjoy security of tenure. To apply parity therefore, in wages and other benefits would also require parity in other terms
and conditions of employment which include the employment contract.

A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and professional
compensation wherein the parties agree as follows:
All members of the bargaining unit shall be compensated only in accordance with Appendix C hereof provided that
the Superintendent of the School has the discretion to recruit and hire expatriate teachers from abroad, under terms
and conditions that are consistent with accepted international practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. The 25%
differential is reflective of the agreed value of system displacement and contracted status of the OSRS as
differentiated from the tenured status of Locally Recruited Staff (LRS).

To our mind, these provisions demonstrate the parties' recognition of the difference in the status of two types of
employees, hence, the difference in their salaries.

The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an established principle of
constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants
based on reasonable classification. A classification is reasonable if it is based on substantial distinctions and apply to
all members of the same class. Verily, there is a substantial distinction between foreign hires and local hires, the
former enjoying only a limited tenure, having no amenities of their own in the Philippines and have to be given a good
compensation package in order to attract them to join the teaching faculty of the School.[7]

We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the
policy against these evils. The Constitution[8] in the Article on Social Justice and Human Rights exhorts Congress to
"give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity,
reduce social, economic, and political inequalities." The very broad Article 19 of the Civil Code requires every person,
"in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and
observe honesty and good faith."

International law, which springs from general principles of law,[9] likewise proscribes discrimination. General principles
of law include principles of equity,[10] i.e., the general principles of fairness and justice, based on the test of what is
reasonable.[11] The Universal Declaration of Human Rights,[12] the International Covenant on Economic, Social, and
Cultural Rights,[13] the International Convention on the Elimination of All Forms of Racial Discrimination,[14] the
Convention against Discrimination in Education,[15] the Convention (No. 111) Concerning Discrimination in Respect of
Employment and Occupation[16] - all embody the general principle against discrimination, the very antithesis of
fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part of its national
laws.

In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and
discrimination by the employer are all the more reprehensible.

The Constitution[17] specifically provides that labor is entitled to "humane conditions of work." These conditions are not
restricted to the physical workplace - the factory, the office or the field - but include as well the manner by which
employers treat their employees.

The Constitution[18] also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor
Code[19] provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be
an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and
ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of
employment.[20]

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example, prohibits
and penalizes[21] the payment of lesser compensation to a female employee as against a male employee for work of
equal value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order
to encourage or discourage membership in any labor organization.

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides:

The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable
conditions of work, which ensure, in particular:

a.

Remuneration which provides all workers, as a minimum, with:


i.

Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed
conditions of work not inferior to those enjoyed by men, with equal
pay for equal work;

x x x.
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for
equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar
conditions, should be paid similar salaries.[22] This rule applies to the School, its "international character"
notwithstanding.

The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreignhires.[23] The Court finds this argument a little cavalier. If an employer accords employees the same position and rank,
the presumption is that these employees perform equal work. This presumption is borne by logic and human
experience. If the employer pays one employee less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. That would be adding insult to injury. The employer has discriminated
against that employee; it is for the employer to explain why the employee is treated unfairly.

The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform
25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which
they perform under similar working conditions.

The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary
rates without violating the principle of equal work for equal pay.

"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services performed."
Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for the
rendering of services." In Songco v. National Labor Relations Commission,[24] we said that:

"salary" means a recompense or consideration made to a person for his pains or industry in another man's business.
Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered. (Emphasis supplied.)

While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to
the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the
same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also
cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires,
such as housing, transportation, shipping costs, taxes and home leave travel allowances.

The Constitution enjoins the State to "protect the rights of workers and promote their welfare,"[25] "to afford labor full
protection."[26] The State, therefore, has the right and duty to regulate the relations between labor and capital.[27]These
relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining

agreements included, must yield to the common good.[28] Should such contracts contain stipulations that are contrary
to public policy, courts will not hesitate to strike down these stipulations.

In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the
salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between
the services rendered by foreign-hires and local-hires. The practice of the School of according higher salaries to
foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court.

We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires.

A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the entire body of
employees, consistent with equity to the employer indicate to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law."[29] The factors in determining the
appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the
employees' interest, such as substantial similarity of work and duties, or similarity of compensation and working
conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment
status.[30] The basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their collective bargaining rights.[31]

It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes
of collective bargaining. The collective bargaining history in the School also shows that these groups were always
treated separately. Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreign-hires
perform similar functions under the same working conditions as the local-hires, foreign-hires are accorded certain
benefits not granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and home
leave travel allowance, are reasonably related to their status as foreign-hires, and justify the exclusion of the former
from the latter. To include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise
of their respective collective bargaining rights.

WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART. The Orders of the
Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997, are hereby REVERSED and SET
ASIDE insofar as they uphold the practice of respondent School of according foreign-hires higher salaries than localhires.

SO ORDERED.

[ G.R. No. 178505, September 30, 2008 ]


CHERRY J. PRICE, STEPHANIE G. DOMINGO AND LOLITA ARBILERA, PETITIONERS, VS.
INNODATA PHILS. INC.,/ INNODATA CORPORATION, LEO RABANG AND JANE
NAVARETTE, RESPONDENTS.
DECISION
CHICO-NAZARIO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision[1] dated 25 September
2006 and Resolution[2] dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795, which affirmed the
Decision dated 14 December 2001 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 3003-01274-2000 finding that petitioners were not illegally dismissed by respondents.

The factual antecedents of the case are as follows:

Respondent Innodata Philippines, Inc./Innodata Corporation (INNODATA) was a domestic corporation engaged in the
data encoding and data conversion business. It employed encoders, indexers, formatters, programmers,
quality/quantity staff, and others, to maintain its business and accomplish the job orders of its clients. Respondent
Leo Rabang was its Human Resources and Development (HRAD) Manager, while respondent Jane Navarette was its
Project Manager. INNODATA had since ceased operations due to business losses in June 2002.

Petitioners Cherry J. Price, Stephanie G. Domingo, and Lolita Arbilera were employed as formatters by INNODATA.
The parties executed an employment contract denominated as a "Contract of Employment for a Fixed Period,"
stipulating that the contract shall be for a period of one year,[3] to wit:
CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD
xxxx

WITNESSETH: That

WHEREAS, the EMPLOYEE has applied for the position of FORMATTER and in the course thereof and represented
himself/herself to be fully qualified and skilled for the said position;

WHEREAS, the EMPLOYER, by reason of the aforesaid representations, is desirous of engaging that the (sic)
services of the EMPLOYEE for a fixed period;

NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have mutually agreed as follows:

TERM/DURATION

The EMPLOYER hereby employs, engages and hires the EMPLOYEE and the EMPLOYEE hereby accepts such
appointment as FORMATTER effective FEB. 16, 1999 to FEB. 16, 2000 a period of ONE YEAR.
xxxx

TERMINATION

6.1 In the event that EMPLOYER shall discontinue operating its business, this CONTRACT shall also ipso facto
terminate on the last day of the month on which the EMPLOYER ceases operations with the same force and effect as
is such last day of the month were originally set as the termination date of this Contract. Further should the Company
have no more need for the EMPLOYEE's services on account of completion of the project, lack of work (sic) business
losses, introduction of new production processes and techniques, which will negate the need for personnel, and/or
overstaffing, this contract maybe pre-terminated by the EMPLOYER upon giving of three (3) days notice to the
employee.

6.2 In the event period stipulated in item 1.2 occurs first vis--vis the completion of the project, this contract shall

automatically terminate.

6.3 COMPANY's Policy on monthly productivity shall also apply to the EMPLOYEE.

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at least
Fifteen - (15) notice to that effect. Provided, that such pre-termination shall be effective only upon issuance of the
appropriate clearance in favor of the said EMPLOYEE.

6.5 Either of the parties may terminate this Contract by reason of the breach or violation of the terms and conditions
hereof by giving at least Fifteen (15) days written notice. Termination with cause under this paragraph shall be
effective without need of judicial action or approval.[4]
During their employment as formatters, petitioners were assigned to handle jobs for various clients of INNODATA,
among which were CAS, Retro, Meridian, Adobe, Netlib, PSM, and Earthweb. Once they finished the job for one
client, they were immediately assigned to do a new job for another client.

On 16 February 2000, the HRAD Manager of INNODATA wrote petitioners informing them of their last day of work.
The letter reads:
RE: End of Contract
Date: February 16, 2000

Please be informed that your employment ceases effective at the end of the close of business hours on February 16,
2000.[5]
According to INNODATA, petitioners' employment already ceased due to the end of their contract.

On 22 May 2000, petitioners filed a Complaint[6] for illegal dismissal and damages against respondents. Petitioners
claimed that they should be considered regular employees since their positions as formatters were necessary and
desirable to the usual business of INNODATA as an encoding, conversion and data processing company. Petitioners
also averred that the decisions in Villanueva v. National Labor Relations Commission[7] andServidad v. National Labor
Relations Commission,[8] in which the Court already purportedly ruled "that the nature of employment at Innodata
Phils., Inc. is regular,"[9] constituted stare decisis to the present case. Petitioners finally argued that they could not be
considered project employees considering that their employment was not coterminous with any project or
undertaking, the termination of which was predetermined.

On the other hand, respondents explained that INNODATA was engaged in the business of data processing,
typesetting, indexing, and abstracting for its foreign clients. The bulk of the work was data processing, which involved
data encoding. Data encoding, or the typing of data into the computer, included pre-encoding, encoding 1 and 2,
editing, proofreading, and scanning. Almost half of the employees of INNODATA did data encoding work, while the
other half monitored quality control. Due to the wide range of services rendered to its clients, INNODATA was
constrained to hire new employees for a fixed period of not more than one year. Respondents asserted that
petitioners were not illegally dismissed, for their employment was terminated due to the expiration of their terms of
employment. Petitioners' contracts of employment with INNODATA were for a limited period only, commencing on 6
September 1999 and ending on 16 February 2000.[10] Respondents further argued that petitioners were estopped
from asserting a position contrary to the contracts which they had knowingly, voluntarily, and willfully agreed to or
entered into. There being no illegal dismissal, respondents likewise maintained that petitioners were not entitled to
reinstatement and backwages.

On 17 October 2000, the Labor Arbiter[11] issued its Decision[12] finding petitioners' complaint for illegal dismissal and
damages meritorious. The Labor Arbiter held that as formatters, petitioners occupied jobs that were necessary,
desirable, and indispensable to the data processing and encoding business of INNODATA. By the very nature of their
work as formatters, petitioners should be considered regular employees of INNODATA, who were entitled to security
of tenure. Thus, their termination for no just or authorized cause was illegal. In the end, the Labor Arbiter decreed:
FOREGOING PREMISES CONSIDERED, judgment is hereby rendered declaring complainants' dismissal illegal and
ordering respondent INNODATA PHILS. INC./INNODATA CORPORATION to reinstate them to their former or
equivalent position without loss of seniority rights and benefits. Respondent company is further ordered to pay
complainants their full backwages plus ten percent (10%) of the totality thereof as attorney's fees. The monetary
awards due the complainants as of the date of this decision are as follows:

A. Backwages
1. Cherry J. Price
2/17/2000 - 10/17/2000 at
223.50/day
P5,811.00/mo/ x 8 mos.
2. Stephanie Domingo

P46,488.00
46,488.00

(same computation)
3. Lolita Arbilera

46,488.00

(same computation)
Total Backwages
B. Attorney's fees (10% of total
award)
Total Award

P139,464.00
13,946.40
P153,410.40

Respondent INNODATA appealed the Labor Arbiter's Decision to the NLRC. The NLRC, in its Decision dated 14
December 2001, reversed the Labor Arbiter's Decision dated 17 October 2000, and absolved INNODATA of the
charge of illegal dismissal.

The NLRC found that petitioners were not regular employees, but were fixed-term employees as stipulated in their
respective contracts of employment. The NLRC applied Brent School, Inc. v. Zamora[13] and St. Theresa's School of
Novaliches Foundation v. National Labor Relations Commission,[14] in which this Court upheld the validity of fixed-term
contracts. The determining factor of such contracts is not the duty of the employee but the day certain agreed upon by
the parties for the commencement and termination of the employment relationship. The NLRC observed that the
petitioners freely and voluntarily entered into the fixed-term employment contracts with INNODATA. Hence,
INNODATA was not guilty of illegal dismissal when it terminated petitioners' employment upon the expiration of their
contracts on 16 February 2000.

The dispositive portion of the NLRC Decision thus reads:


WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET ASIDE and a new
one entered DISMISSING the instant complaint for lack of merit.[15]
The NLRC denied petitioners' Motion for Reconsideration in a Resolution dated 28 June 2002.[16]

In a Petition for Certiorari under Rule 65 of the Rules of Court filed before the Court of Appeals, petitioners prayed for
the annulment, reversal, modification, or setting aside of the Decision dated 14 December 2001 and Resolution dated

28 June 2002 of the NLRC.

On 25 September 2006, the Court of Appeals promulgated its Decision sustaining the ruling of the NLRC that
petitioners were not illegally dismissed.

The Court of Appeals ratiocinated that although this Court declared in Villanueva and Servidad that the employees of
INNODATA working as data encoders and abstractors were regular, and not contractual, petitioners admitted entering
into contracts of employment with INNODATA for a term of only one year and for a project called Earthweb. According
to the Court of Appeals, there was no showing that petitioners entered into the fixed-term contracts unknowingly and
involuntarily, or because INNODATA applied force, duress or improper pressure on them. The appellate court also
observed that INNODATA and petitioners dealt with each other on more or less equal terms, with no moral dominance
exercised by the former on latter. Petitioners were therefore bound by the stipulations in their contracts terminating
their employment after the lapse of the fixed term.

The Court of Appeals further expounded that in fixed-term contracts, the stipulated period of employment is governing
and not the nature thereof. Consequently, even though petitioners were performing functions that are necessary or
desirable in the usual business or trade of the employer, petitioners did not become regular employees because their
employment was for a fixed term, which began on 16 February 1999 and was predetermined to end on 16 February
2000.

The appellate court concluded that the periods in petitioners' contracts of employment were not imposed to preclude
petitioners from acquiring security of tenure; and, applying the ruling of this Court in Brent, declared that petitioners'
fixed-term employment contracts were valid. INNODATA did not commit illegal dismissal for terminating petitioners'
employment upon the expiration of their contracts.

The Court of Appeals adjudged:


WHEREFORE, the instant petition is hereby DENIED and the Resolution dated December 14, 2001 of the National
Labor Relations Commission declaring petitioners were not illegally dismissed is AFFIRMED.[17]
The petitioners filed a Motion for Reconsideration of the afore-mentioned Decision of the Court of Appeals, which was
denied by the same court in a Resolution dated 15 June 2007.

Petitioners are now before this Court via the present Petition for Review on Certiorari, based on the following
assignment of errors:
I.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW AND GRAVE ABUSE OF
DISCRETION WHEN IT DID NOT APPLY THE SUPREME COURT RULING IN THE CASE OF NATIVIDAD &
QUEJADA THAT THE NATURE OF EMPLOYMENT OF RESPONDENTS IS REGULAR NOT FIXED, AND AS SO
RULED IN AT LEAST TWO OTHER CASES AGAINST INNODATA PHILS. INC.
II.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN RULING THAT THE
STIPULATION OF CONTRACT IS GOVERNING AND NOT THE NATURE OF EMPLOYMENT AS DEFINED BY
LAW.

III.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION WHEN IT DID NOT CONSIDER THE EVIDENCE ON RECORD SHOWING THAT THERE IS
CLEAR CIRCUMVENTION OF THE LAW ON SECURITY OF TENURE THROUGH CONTRACT MANIPULATION.[18]
The issue of whether petitioners were illegally dismissed by respondents is ultimately dependent on the question of
whether petitioners were hired by INNODATA under valid fixed-term employment contracts.

After a painstaking review of the arguments and evidences of the parties, the Court finds merit in the present Petition.
There were no valid fixed-term contracts and petitioners were regular employees of the INNODATA who could not be
dismissed except for just or authorized cause.

The employment status of a person is defined and prescribed by law and not by what the parties say it should be.
[19]

Equally important to consider is that a contract of employment is impressed with public interest such that labor

contracts must yield to the common good.[20] Thus, provisions of applicable statutes are deemed written into the
contract, and the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other.[21]

Regular employment has been defined by Article 280 of the Labor Code, as amended, which reads:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of engagement of the employee or where the work or services
to be performed is seasonal in nature and employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall continue
while such activity exists. (Underscoring ours).
Based on the afore-quoted provision, the following employees are accorded regular status: (1) those who are
engaged to perform activities which are necessary or desirable in the usual business or trade of the employer,
regardless of the length of their employment; and (2) those who were initially hired as casual employees, but have
rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are
employed.

Undoubtedly, petitioners belong to the first type of regular employees.

Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered
regular or non-regular is the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer.[22]

In the case at bar, petitioners were employed by INNODATA on 17 February 1999 as formatters. The primary
business of INNODATA is data encoding, and the formatting of the data entered into the computers is an essential
part of the process of data encoding. Formatting organizes the data encoded, making it easier to understand for the
clients and/or the intended end users thereof. Undeniably, the work performed by petitioners was necessary or

desirable in the business or trade of INNODATA.

However, it is also true that while certain forms of employment require the performance of usual or desirable functions
and exceed one year, these do not necessarily result in regular employment under Article 280 of the Labor Code.
[23]

Under the Civil Code, fixed-term employment contracts are not limited, as they are under the present Labor Code,

to those by nature seasonal or for specific projects with predetermined dates of completion; they also include those to
which the parties by free choice have assigned a specific date of termination.[24]

The decisive determinant in term employment is the day certain agreed upon by the parties for the commencement
and termination of their employment relationship, a day certain being understood to be that which must necessarily
come, although it may not be known when. Seasonal employment and employment for a particular project are
instances of employment in which a period, where not expressly set down, is necessarily implied.[25]

Respondents maintain that the contracts of employment entered into by petitioners with INNDOATA were valid fixedterm employment contracts which were automatically terminated at the expiry of the period stipulated therein,i.e., 16
February 2000.

The Court disagrees.

While this Court has recognized the validity of fixed-term employment contracts, it has consistently held that this is the
exception rather than the general rule. More importantly, a fixed-term employment is valid only under certain
circumstances. In Brent, the very same case invoked by respondents, the Court identified several circumstances
wherein a fixed-term is an essential and natural appurtenance, to wit:
Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for
specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts,
for one, to which, whatever the nature of the engagement, the concept of regular employment with all that it implies
does not appear ever to have been applied, Article 280 of the Labor Code notwithstanding; also appointments to the
positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational
institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a
necessity without which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280,
Policy Instructions No. 8 of the Minister of Labor implicitly recognize that certain company officials may be elected for
what would amount to fixed periods, at the expiration of which they would have to stand down, in providing that these
officials, "x x may lose their jobs as president, executive vice-president or vice president, etc. because the
stockholders or the board of directors for one reason or another did not reelect them."[26]
As a matter of fact, the Court, in its oft-quoted decision in Brent, also issued a stern admonition that where, from the
circumstances, it is apparent that the period was imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals, good customs, public order and public
policy.[27]

After considering petitioners' contracts in their entirety, as well as the circumstances surrounding petitioners'
employment at INNODATA, the Court is convinced that the terms fixed therein were meant only to circumvent
petitioners' right to security of tenure and are, therefore, invalid.

The contracts of employment submitted by respondents are highly suspect for not only being ambiguous, but also for
appearing to be tampered with.

Petitioners alleged that their employment contracts with INNODATA became effective 16 February 1999, and the first
day they reported for work was on 17 February 1999. The Certificate of Employment issued by the HRAD Manager of
INNODATA also indicated that petitioners Price and Domingo were employed by INNODATA on 17 February 1999.

However, respondents asserted before the Labor Arbiter that petitioners' employment contracts were effective only on
6 September 1999. They later on admitted in their Memorandum filed with this Court that petitioners were originally
hired on 16 February 1999 but the project for which they were employed was completed before the expiration of one
year. Petitioners were merely rehired on 6 September 1999 for a new project. While respondents submitted
employment contracts with 6 September 1999 as beginning date of effectivity, it is obvious that in one of them, the
original beginning date of effectivity, 16 February 1999, was merely crossed out and replaced with 6 September 1999.
The copies of the employment contracts submitted by petitioners bore similar alterations.

The Court notes that the attempt to change the beginning date of effectivity of petitioners' contracts was very crudely
done. The alterations are very obvious, and they have not been initialed by the petitioners to indicate their assent to
the same. If the contracts were truly fixed-term contracts, then a change in the term or period agreed upon is material
and would already constitute a novation of the original contract.

Such modification and denial by respondents as to the real beginning date of petitioners' employment contracts
render the said contracts ambiguous. The contracts themselves state that they would be effective until 16 February
2000 for a period of one year. If the contracts took effect only on 6 September 1999, then its period of effectivity would
obviously be less than one year, or for a period of only about five months.

Obviously, respondents wanted to make it appear that petitioners worked for INNODATA for a period of less than one
year. The only reason the Court can discern from such a move on respondents' part is so that they can preclude
petitioners from acquiring regular status based on their employment for one year. Nonetheless, the Court emphasizes
that it has already found that petitioners should be considered regular employees of INNODATA by the nature of the
work they performed as formatters, which was necessary in the business or trade of INNODATA. Hence, the total
period of their employment becomes irrelevant.

Even assuming that petitioners' length of employment is material, given respondents' muddled assertions, this Court
adheres to its pronouncement in Villanueva v. National Labor Relations Commission,[28] to the effect that where a
contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed
strictly against the party who prepared it. The Court is, thus, compelled to conclude that petitioners' contracts of
employment became effective on 16 February 1999, and that they were already working continuously for INNODATA
for a year.

Further attempting to exonerate itself from any liability for illegal dismissal, INNODATA contends that petitioners were
project employees whose employment ceased at the end of a specific project or undertaking. This contention is
specious and devoid of merit.

In Philex Mining Corp. v. National Labor Relations Commission,[29] the Court defined "project employees" as those
workers hired (1) for a specific project or undertaking, and wherein (2) the completion or termination of such project
has been determined at the time of the engagement of the employee.

Scrutinizing petitioners' employment contracts with INNODATA, however, failed to reveal any mention therein of what
specific project or undertaking petitioners were hired for. Although the contracts made general references to a
"project," such project was neither named nor described at all therein. The conclusion by the Court of Appeals that
petitioners were hired for the Earthweb project is not supported by any evidence on record. The one-year period for

which petitioners were hired was simply fixed in the employment contracts without reference or connection to the
period required for the completion of a project. More importantly, there is also a dearth of evidence that such project
or undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact, petitioners
alleged - and respondents failed to dispute that petitioners did not work on just one project, but continuously worked
for a series of projects for various clients of INNODATA.

In Magcalas v. National Labor Relations Commission,[30] the Court struck down a similar claim by the employer therein
that the dismissed employees were fixed-term and project employees. The Court here reiterates the rule that all
doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor of labor. It is a well-entrenched
doctrine that in illegal dismissal cases, the employer has the burden of proof. This burden was not discharged in the
present case.

As a final observation, the Court also takes note of several other provisions in petitioners' employment contracts that
display utter disregard for their security of tenure. Despite fixing a period or term of employment, i.e., one year,
INNODATA reserved the right to pre-terminate petitioners' employment under the following circumstances:
6.1 x x x Further should the Company have no more need for the EMPLOYEE's services on account of completion
of the project, lack of work (sic) business losses, introduction of new production processes and techniques, which
will negate the need for personnel, and/or overstaffing, this contract maybe pre-terminated by the EMPLOYER upon
giving of three (3) days notice to the employee.
xxxx

6.4 The EMPLOYEE or the EMPLOYER may pre-terminate this CONTRACT, with or without cause, by giving at
least Fifteen - (15) [day] notice to that effect. Provided, that such pre-termination shall be effective only upon issuance
of the appropriate clearance in favor of the said EMPLOYEE. (Emphasis ours.)
Pursuant to the afore-quoted provisions, petitioners have no right at all to expect security of tenure, even for the
supposedly one-year period of employment provided in their contracts, because they can still be pre-terminated (1)
upon the completion of an unspecified project; or (2) with or without cause, for as long as they are given a three-day
notice. Such contract provisions are repugnant to the basic tenet in labor law that no employee may be terminated
except for just or authorized cause.

Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the workers of security of tenure
and free them from the bondage of uncertainty of tenure woven by some employers into their contracts of
employment. This was exactly the purpose of the legislators in drafting Article 280 of the Labor Code - to prevent the
circumvention by unscrupulous employers of the employee's right to be secure in his tenure by indiscriminately and
completely ruling out all written and oral agreements inconsistent with the concept of regular employment.

In all, respondents' insistence that it can legally dismiss petitioners on the ground that their term of employment has
expired is untenable. To reiterate, petitioners, being regular employees of INNODATA, are entitled to security of
tenure. In the words of Article 279 of the Labor Code:
ART. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.

By virtue of the foregoing, an illegally dismissed employee is entitled to reinstatement without loss of seniority rights
and other privileges, with full back wages computed from the time of dismissal up to the time of actual reinstatement.

Considering that reinstatement is no longer possible on the ground that INNODATA had ceased its operations in June
2002 due to business losses, the proper award is separation pay equivalent to one month pay[31] for every year of
service, to be computed from the commencement of their employment up to the closure of INNODATA.

The amount of back wages awarded to petitioners must be computed from the time petitioners were illegally
dismissed until the time INNODATA ceased its operations in June 2002.[32]

Petitioners are further entitled to attorney's fees equivalent to 10% of the total monetary award herein, for having been
forced to litigate and incur expenses to protect their rights and interests herein.

Finally, unless they have exceeded their authority, corporate officers are, as a general rule, not personally liable for
their official acts, because a corporation, by legal fiction, has a personality separate and distinct from its officers,
stockholders and members. Although as an exception, corporate directors and officers are solidarily held liable with
the corporation, where terminations of employment are done with malice or in bad faith,[33] in the absence of evidence
that they acted with malice or bad faith herein, the Court exempts the individual respondents, Leo Rabang and Jane
Navarette, from any personal liability for the illegal dismissal of petitioners.

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Decision dated 25 September 2006 and
Resolution dated 15 June 2007 of the Court of Appeals in CA-G.R. SP No. 72795 are hereby REVERSED and SET
ASIDE. Respondent Innodata Philippines, Inc./Innodata Corporation is ORDERED to pay petitioners Cherry J. Price,
Stephanie G. Domingo, and Lolita Arbilera: (a) separation pay, in lieu of reinstatement, equivalent to one month pay
for every year of service, to be computed from the commencement of their employment up to the date respondent
Innodata Philippines, Inc./Innodata Corporation ceased operations; (b) full backwages, computed from the time
petitioners' compensation was withheld from them up to the time respondent Innodata Philippines, Inc./Innodata
Corporation ceased operations; and (3) 10% of the total monetary award as attorney's fees. Costs against respondent
Innodata Philippines, Inc./Innodata Corporation.

SO ORDERED.

[ G.R. No. 169712, January 20, 2009 ]


MA. WENELITA S. TIRAZONA, PETITIONER, VS. PHILIPPINE EDS TECHNO- SERVICE
INC. (PET INC.) AND/OR KEN KUBOTA, MAMORU ONO AND JUNICHI HIROSE,
RESPONDENTS.
RESOLUTION
CHICO-NAZARIO, J.:
Before Us is a Motion for Leave to File [a] Second Motion for Reconsideration,[1] with the Second Motion for
Reconsideration incorporated therein, where petitioner Ma. Wenelita Tirazona (Tirazona) seeks the reconsideration of

the Resolution[2] of this Court dated 23 June 2008. Said Resolution denied for lack of merit petitioner's previous
Motion for Reconsideration,[3] which sought the reversal of our Decision[4] dated 14 March 2008 or, in the alternative,
modification thereof by awarding her separation pay and retirement benefits under existing laws.

In our 14 March 2008 Decision, we subscribed to the factual findings of the National Labor Relations Commission
(NLRC) and the Court of Appeals that Tirazona, being the Administrative Manager of Philippine EDS Techno-Service,
Inc. (PET), was a managerial employee who held a position of trust and confidence; that after PET officers/directors
called her attention to her improper handling of a situation involving a rank-and-file employee, she claimed that she
was denied due process for which she demanded P2,000,000.00 indemnity from PET and its officers/directors; that
she admitted to reading a confidential letter addressed to PET officers/directors containing the legal opinion of the
counsel of PET regarding her case; and that she was validly terminated from her employment on the ground that she
willfully breached the trust and confidence reposed in her by her employer. In the end, we concluded that:
Tirazona, in this case, has given PET more than enough reasons to distrust her. The arrogance and hostility she has
shown towards the company and her stubborn, uncompromising stance in almost all instances justify the company's
termination of her employment. Moreover, Tirazona's reading of what was supposed to be a confidential letter
between the counsel and directors of the PET, even if it concerns her, only further supports her employer's view that
she cannot be trusted. In fine, the Court cannot fault the actions of PET in dismissing petitioner.[5]
Hence, the fallo of our 14 March 2008 Decision reads:
WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit and the Decision of the
Court of Appeals dated 24 May 2005 is hereby AFFIRMED. Costs against the petitioner.[6]
On 29 April 2008, Tirazona moved for reconsideration[7] of our afore-mentioned Decision. She argued therein that the
Court failed to consider the length of her service to PET in affirming her termination from employment. She prayed
that her dismissal be declared illegal. Alternatively, should the Court uphold the legality of her dismissal, Tirazona
pleaded that she be awarded separation pay and retirement benefits, out of humanitarian considerations.

In our Resolution[8] dated 23 June 2008, we denied Tirazona's Motion for Reconsideration, as the same did not
present any substantial arguments that would warrant a modification of our previous ruling. We thus decreed:
ACCORDINGLY, the Court resolves to DENY the motion for reconsideration with FINALITY for lack of merit.
On 21 August 2008, Tirazona filed the instant Motion for Leave to File [a] Second Motion for Reconsideration, with the
Second Motion for Reconsideration incorporated therein, raising essentially the same arguments and prayers
contained in her first Motion for Reconsideration.

The Court thereafter required PET to comment on the above motion. On 19 November 2008, PET filed its
Comment/Opposition,[9] to which Tirazona filed her Reply[10] on 8 December 2008.

After thoroughly scrutinizing the averments of the present Motion, the Court unhesitatingly declares the same to be
completely unmeritorious.

Section 2, Rule 52 of the Rules of Court explicitly decrees that no second motion for reconsideration of a judgment or
final resolution by the same party shall be entertained. Accordingly, a second motion for reconsideration is a
prohibited pleading, which shall not be allowed, except for extraordinarily persuasive reasons and only after an
express leave shall have first been obtained.[11] In this case, we fail to find any such extraordinarily persuasive reason
to allow Tirazona's Second Motion for Reconsideration.

As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282[12] of
the Labor Code is not entitled to separation pay.[13] In Sy v. Metropolitan Bank & Trust Company,[14] we declared that
only unjustly dismissed employees are entitled to retirement benefits and other privileges including reinstatement
and backwages.

Although by way of exception, the grant of separation pay or some other financial assistance may be allowed to an
employee dismissed for just causes on the basis of equity,[15] in Philippine Long Distance Telephone Company v.
National Labor Relations Commission,[16] we set the limits for such a grant and gave the following ratio for the same:
[S]eparation 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. x x
x.

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 [a] refuge of scoundrels any more than can equity be an
impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean
and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is
not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the
cause of labor with the blemishes of their own character. (Emphasis ours.)
In accordance with the above pronouncements, Tirazona is not entitled to the award of separation pay.

Contrary to her exaggerated claims, Tirazona was not just "gracelessly expelled" or "simply terminated" from the
company on 22 April 2002. She was found to have violated the trust and confidence reposed in her by her employer
when she arrogantly and unreasonably demanded from PET and its officers/directors the exorbitant amount of
P2,000,000.00 in damages, coupled with a threat of a lawsuit if the same was not promptly paid within five days. This
unwarranted imposition on PET and its officers/directors was made after the company sent Tirazona a letter, finding
her handling of the situation involving a rank-and-file employee to be less than ideal, and merely reminding her to be
more circumspect when dealing with the more delicate concerns of their employees. To aggravate the situation,
Tirazona adamantly and continually refused to cooperate with PET's investigation of her case and to provide an
adequate explanation for her actions.

Verily, the actions of Tirazona reflected an obdurate character that is arrogant, uncompromising, and hostile. By
immediately and unreasonably adopting an adverse stance against PET, she sought to impose her will on the
company and placed her own interests above those of her employer. Her motive for her actions was rendered even
more questionable by her exorbitant and arbitrary demand for P2,000,000.00 payable within five days from demand.
Her attitude towards her employer was clearly inconsistent with her position of trust and confidence. Her poor
character became even more evident when she read what was supposed to be a confidential letter of the legal

counsel of PET to PET officers/directors expressing his legal opinion on Tirazona's administrative case. PET was,
therefore, fully justified in terminating Tirazona's employment for loss of trust and confidence.

Tirazona also failed to persuade us to consider in her favor her length of service to PET.

In the Motion for Reconsideration filed on 29 April 2008 and in the instant motion, Tirazona prays for this Court to
grant her separation and other retirement benefits, should we uphold the legality of her dismissal. She anchors her
claim on the fact that she had allegedly been in the employ of PET for twenty-six (26) years and that the Court must
give due consideration to the length of her service to the company.[17] However, in her Reply to the
Comment/Opposition to the instant motion filed by PET, Tirazona retracted the above allegation and stated that the
claim of twenty-six (26) years of employment with PET was an error committed through inadvertence. She then
averred that the length of her employment with PET should indeed be counted from July 1999, which up to the
present time will result in a period of eight (8) years, more or less.

We find that the above statement is still inaccurate. As this Court ruled in our Decision dated 14 March 2008, Tirazona
was validly terminated from her employment on 22 April 2002. Therefore, counting from the time when Tirazona was
employed by PET on 19 July 1999 up to the time when she was dismissed, she had only rendered a little more
than two (2) years and nine (9) months of service to PET.

Finally, the cases cited by Tirazona hardly support her cause.

In Soco v. Mercantile Corporation of Davao[18] and Firestone Tire and Rubber Company of the Philippines v. Lariosa,
[19]

separation pay was granted to the dismissed employees, as they were mere rank-and-file employees who did not

have any previous derogatory record with their companies and in equitable regard for their long years of service
spanning more than ten (10) years.

In Farrol v. Court of Appeals,[20] separation pay was awarded because the penalty of dismissal was held to be harsh
and disproportionate to the offense committed and the dismissed employee had been at the service of the company
for twenty four (24) years.

In Negros Navigation Co. Inc. v. National Labor Relations Commission,[21] separation pay was awarded to the
employee dismissed, as it was the employer itself that prayed for the award of the same, in lieu of the employee's
reinstatement.

Lastly, in Philippine Commercial International Bank v. Abad,[22] separation pay was ordered granted to a dismissed
managerial employee because there was an express finding that the violation of the bank policies was not perpetrated
for the employee's self-interest, nor did the employee exhibit any lack of moral depravity. The employee had also been
in the service of the company for twenty-five (25) years.

Obviously, Tirazona's reliance upon the above-cited cases is misleading, as the circumstances therein are markedly
different from those in the case at bar.

In sum, we hold that the award of separation pay or any other kind of financial assistance to Tirazona, under the guise
of compassionate justice, is not warranted in this case. To hold otherwise would only cause a disturbance of the
sound jurisprudence on the matter and a perversion of the noble dictates of social justice.

While the Court commiserates with the plight of Tirazona, who has recently manifested[23] that she has since been
suffering from her poor health condition, the Court cannot grant her plea for the award of financial benefits based

solely on this unfortunate circumstance. For all its conceded merit, equity is available only in the absence of law and
not as its replacement. Equity as an exceptional extenuating circumstance does not favor, nor may it be used to
reward, the indolent[24] or the wrongdoer, for that matter. This Court will not allow a party, in the guise of equity, to
benefit from its own fault.[25]

WHEREFORE, the Motion for Leave to File [a] Second Motion for Reconsideration is hereby DENIED for lack of merit
and the Second Motion for Reconsideration incorporated therein is NOTED WITHOUT ACTION in view of the denial
of the former.

SO ORDERED.