DUE PROCESS Prior to the doctrine laid down in the decision rendered in Wenphil Corp.
NLRC in 1989, the
1.
[G.R. No. 117040. January 27, 2000]
RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ISETANN
DEPARTMENT STORE, respondents.
FACTS
Ruben Serrano was the head of the security checkers section of Isetann Department Store. He
was charged with the task of supervising security checkers in their jobs (apprehending shoplifters
and preventing pilfirege of merchandise). On October 11, 1991, the management sent him a letter
immediately terminating his services as security section head, effective on the same day. The
reason given by the management was “retrenchment”; they had opted to hire an independent
security agency as a cost-cutting measure. Serrano filed a complaint for ID, illegal layoff, ULP,
underpayment of wages and nonpayment of salary and OT pay with the LA.
The LA rendered a decision in favor of Serrano. It stated that Isetann failed to establish that it had
retrenched its security division, that the petitioner was not accorded due process, etc. and even
stated that the day after Serrano’s dismissal, Isetann employed a safety and security supervisor
with similar duties to that of the former.
The NLRC on the other hand reversed the LA but ordered Isetann to pay separation pay
equivalent to one month per year of service, unpaid salary, et al. It held that the phase-out of the
security section was a valid exercise of management prerogative on the part of Isetann, for which
the NLRC cannot substitute its judgment in the absence of bad faith or abuse of discretion on the
part of the latter; and that the security and safety supervisor’s position was long in place prior to
Serrano’s separation from the company, or the phase-out of the Security Section.
ISSUE
Whether the petitioner’s dismissal was illegal.
RULING: Valid, but ineffectual (without legal effect) – payment of backwages, separation pay
and other monetary claims
No. The Court held that the dismissal was due to an authorized cause under Art. 283 of the Labor
Code, i.e. redundancy. However, while an authorized cause exists, Isetann failed to follow the
procedural requirement provided by Art. 283 of LC. For termination due to authorized causes, the
employer must give a written notice of termination to the employee concerned and to the DOLE
at least 30 days prior to its effectivity. This Isetann failed to do.
The question now arises as to whether the failure of Isetann to comply with the procedural
requirements renders the dismissal invalid, or, in the event that it is valid, what the appropriate
sanction or penalty must be meted out.
1
termination of an employee, even for just cause but without following the requisite procedure,
renders such dismissal illegal, and therefore null and void.
In the Wenphil doctrine, this was reversed; the said rule was unjust to employers. Instead, the
dismissal was held to be still valid but the employer was sanctioned by way of the payment of
indemnity (damages) – in that case, P1,000. The amount of indemnity will be depended on the
circumstances of each case, taking into account the gravity of the offense committed by the
employer.
Now, the Court once again examines the Wenphil doctrine. Puno says that the effect of the
Wenphil doctrine was such that there has been a “dismiss now, pay later” policy where the
employers were able to circumvent the procedural requisites of termination, which is more
convenient than the compliance with the 30-day notice. Panganiban said that the monetary
sanctions were too insignificant, niggardly, sometimes even late. Both justices are of the opinion
that the deprivation of due process which must be accorded to the employee renders the
dismissal illegal. Puno quoted that Legislative, Executive and Judicial proceedings that deny due
process do so under the pain of nullity. Panganiban stated that such denial of due process renders
decisions and proceedings void for lack of jurisdiction.
The present ruling of the Court held that the dismissal of the employee is merely ineffectual, not
void. The dismissal was upheld but it is ineffectual. The sanction provided was the payment of
backwages from the time of dismissal up to the decision of the court finding just or authorized
cause. This was thought to balance the interests of both parties, recognizing the employee’s right
to notice and at the same time the right of the employer to dismiss for any of the just and
authorized causes.
The Court also responded to the arguments of Justices Puno and Panganiban by stating that the
violation in the procedural requirement of termination is not a denial of the fundamental right to
due process. This is because of the ff reasons:
1) The due process clause is a limitation on governmental powers, inapplicable to the
exercise of private power, such as in this case. The provision “No person shall be
deprived of life, liberty and property without due process of law” pertains only to the
State, as only it has the authority to do the same.
2) The purpose of the notice and hearing under the Due process clause is to provide an
opportunity for the employee to be heard before the power of the organized society is
brought upon the individual. Under Art. 283, however, the purpose is to give him time to
prepare for the eventual loss of his job and for DOLE to determine whether economic
causes exist to justify termination. It is not to give opportunity to be heard – there is no
charge against the employee under Art. 283
3) The employer cannot be expected to be an impartial judge of his own cause.
4) Not all notice requirements are requisites of due process. Some are simply a part of a
procedure to be followed before a right granted to party can be exercised; others are an
application of the Justinian precept. Such is the case here. The failure of the employer to
 observe a procedure for the termination of employment which makes the termination of 1. Jenny M. Agabon - P56, 231.93
employment merely ineffectual.
5) Art. 279 of the LC provides that only dismissal without just or authorized cause renders 2. Virgilio C. Agabon - 56, 231.93
such dismissal illegal. To consider termination without observing procedural reqt’s as
also ID is to add another ground for ID, thereby amending Art. 279.; Further, there is a
and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of
disparity in legal treatment, as employees who resign without giving due notice are only
service from date of hiring up to November 29, 1999.
liable for damages; it does not make their resignation void.

In this case, the separation pay was a distinct award from the payment of backwages as a Respondent is further ordered to pay the complainants their holiday pay and service incentive
way of penalty. leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days
and Virgilio Agabon's 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED
Petition was denied. 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
DUE PROCESS HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93)
2. Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and
Computation Unit, NCR.
[G.R. NO. 158693 : November 17, 2004]
SO ORDERED.4
JENNY M. AGABON and VIRGILIO C. AGABON, Petitioners, v. NATIONAL LABOR RELATIONS
COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and VICENTE On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had
ANGELES, Respondents. 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
DECISION
Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the
Court of Appeals.
YNARES-SANTIAGO, J.:

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because
This Petition for Review seeks to reverse the decision1 of the Court of Appeals dated January 23,
they had abandoned their employment but ordered the payment of money claims. The dispositive
2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission
portion of the decision reads:
(NLRC) in NLRC-NCR Case No. 023442-00.

WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and
as it dismissed petitioner's money claims. Private respondents are ordered to pay petitioners
installing ornamental and construction materials. It employed petitioners Virgilio Agabon and
holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive
Jenny Agabon as gypsum board and cornice installers on January 2, 19922 until February 23, 1999
leave pay for said years, and to pay the balance of petitioner Virgilio Agabon's 13th month pay for
when they were dismissed for abandonment of work.
1998 in the amount of P2,150.00.

Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on
SO ORDERED.6
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: Hence, this Petition for Review on the sole issue of whether petitioners were illegally dismissed. 7

WHEREFORE, premises considered, We find the termination of the complainants illegal. Petitioners assert that they were dismissed because the private respondent refused to give them
Accordingly, respondent is hereby ordered to pay them their backwages up to November 29, 1999 assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on
in the sum of: February 23, 1999. They did not agree on this arrangement because it would mean losing benefits
2
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 respondent's 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 latter's representative in connection with the employee's 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
3
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
conduct19 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; andcralawlibrary
(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 employee's 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
4
mandates the twin notice requirements to the employee's 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.
5
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 attorney's 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
6
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 employee's one month salary. This indemnity is intended not to penalize the
employer but to vindicate or recognize the employee's 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 non-payment, the general rule is that the burden rests on the employer to
prove payment, rather than on the employee to prove non-payment. The reason for the rule is
that the pertinent personnel files, payrolls, records, remittances and other similar documents -
which will show that overtime, differentials, service incentive leave and other claims of workers
have been paid - are not in the possession of the worker but in the custody and absolute control
of the employer.41
In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive
leave pay, it could have easily presented documentary proofs of such monetary benefits to
disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay
wherein it presented cash vouchers showing payments of the benefit in the years
disputed.42 Allegations by private respondent that it does not operate during holidays and that it
allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof
of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for
such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's 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 same43 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 11345 of the same Code from making any
deductions without the employee's 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 Agabon's 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 Agabon's thirteenth month pay for
1998 in the amount of P2,150.00.
7
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 Agabon's thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with
the MODIFICATION that private respondent Riviera Home Improvements, Inc. is
further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages
for non-compliance with statutory due process.
No costs.
SO ORDERED.
DUE PROCESS
3.
G.R. No. 151378. March 28, 2005
JAKA FOOD PROCESSING CORPORATION, Petitioners,
vs.
DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO
and JONATHAN CAGABCAB, Respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this appeal by way of a petition for review on certiorari
under rule 45 of the Rules of Court are the following issuances of the Court of Appeals in CA-G.R.
SP. No. 59847, to wit:
1. Decision dated 16 November 2001,1 reversing and setting aside an earlier decision of the
National Labor Relations Commission (NLRC); and
2. Resolution dated 8 January 2002,2 denying petitioner’s motion for reconsideration.
The material facts may be briefly stated, as follows:
Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and
Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA,
for short) until the latter terminated their employment on August 29, 1997 because the
corporation was "in dire financial straits". It is not disputed, however, that the termination was
effected without JAKA complying with the requirement under Article 283 of the Labor Code
regarding the service of a written notice upon the employees and the Department of Labor and
Employment at least one (1) month before the intended date of termination.
In time, respondents separately filed with the regional Arbitration Branch of the National Labor
Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and
nonpayment of service incentive leave and 13th month pay against JAKA and its HRD Manager,
Rosana Castelo.
After due proceedings, the Labor Arbiter rendered a decision3 declaring the termination illegal
and ordering JAKA and its HRD Manager to reinstate respondents with full backwages, and
separation pay if reinstatement is not possible. More specifically the decision dispositively reads:
WHEREFORE, judgment is hereby rendered declaring as illegal the termination of complainants
and ordering respondents to reinstate them to their positions with full backwages which as of July
30, 1998 have already amounted to P339,768.00. Respondents are also ordered to pay
complainants the amount of P2,775.00 representing the unpaid service incentive leave pay of
Parohinog, Lescano and Cagabcab an the amount of P19,239.96 as payment for 1997 13th month
pay as alluded in the above computation.
If complainants could not be reinstated, respondents are ordered to pay them separation pay
equivalent to one month salary for very (sic) year of service.
SO ORDERED.
Therefrom, JAKA went on appeal to the NLRC, which, in a decision dated August 30,
1999,4 affirmed in toto that of the Labor Arbiter.
JAKA filed a motion for reconsideration. Acting thereon, the NLRC came out with another decision
dated January 28, 2000,5 this time modifying its earlier decision, thus:
WHEREFORE, premises considered, the instant motion for reconsideration is hereby GRANTED
and the challenged decision of this Commission [dated] 30 August 1999 and the decision of the
Labor Arbiter xxx are hereby modified by reversing an setting aside the awards of backwages,
service incentive leave pay. Each of the complainants-appellees shall be entitled to a separation
pay equivalent to one month. In addition, respondents-appellants is (sic) ordered to pay each of
the complainants-appellees the sum of P2,000.00 as indemnification for its failure to observe due
process in effecting the retrenchment.
SO ORDERED.
8
Their motion for reconsideration having been denied by the NLRC in its resolution of April 28,
2000,6 respondents went to the Court of Appeals via a petition for certiorari, thereat docketed as
CA-G.R. SP No. 59847.
As stated at the outset hereof, the Court of Appeals, in a decision dated November 16, 2000,
applying the doctrine laid down by this Court in Serrano vs. NLRC,7 reversed and set aside the
NLRC’s decision of January 28, 2000, thus:
WHEREFORE, the decision dated January 28, 2000 of the National Labor Relations Commission
is REVERSED and SET ASIDE and another one entered ordering respondent JAKA Foods
Processing Corporation to pay petitioners separation pay equivalent to one (1) month salary, the
proportionate 13th month pay and, in addition, full backwages from the time their employment
was terminated on August 29, 1997 up to the time the Decision herein becomes final.
SO ORDERED.
This time, JAKA moved for a reconsideration but its motion was denied by the appellate court in
its resolution of January 8, 2002.
Hence, JAKA’s present recourse, submitting, for our consideration, the following issues:
"I. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AWARDED ‘FULL BACKWAGES’ TO
RESPONDENTS.
II. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY AWARDED SEPARATION PAY TO
RESPONDENTS".
As we see it, there is only one question that requires resolution, i.e. what are the legal implications
of a situation where an employee is dismissed for cause but such dismissal was effected without
the employer’s compliance with the notice requirement under the Labor Code.
This, certainly, is not a case of first impression. In the very recent case of Agabon vs. NLRC,8 we had
the opportunity to resolve a similar question. Therein, we found that the employees committed a
grave offense, i.e., abandonment, which is a form of a neglect of duty which, in turn, is one of the
just causes enumerated under Article 282 of the Labor Code. In said case, we upheld the validity of
the dismissal despite non-compliance with the notice requirement of the Labor Code. However,
we required the employer to pay the dismissed employees the amount of P30,000.00,
representing nominal damages for non-compliance with statutory due process, thus:
"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 vs. National Labor
Relations Commission. 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.
xxx xxx xxx
The violation of 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. 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," (Emphasis supplied).
The difference between Agabon and the instant case is that in the former, the dismissal was
based on a just cause under Article 282 of the Labor Code while in the present case, respondents
were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of
the same Code.
At this point, we note that there are divergent implications of a dismissal for just cause under
Article 282, on one hand, and a dismissal for authorized cause under Article 283, on the other.
A dismissal for just cause under Article 282 implies that the employee concerned has committed,
or is guilty of, some violation against the employer, i.e. the employee has committed some serious
misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his
duties. Thus, it can be said that the employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283 does not necessarily
imply delinquency or culpability on the part of the employee. Instead, the dismissal process is
initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts
to install labor saving devices, when he decides to cease business operations or when, as in this
case, he undertakes to implement a retrenchment program.
The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for
authorized cause under Article 283 is further reinforced by the fact that in the first, payment of
separation pay, as a rule, is not required, while in the second, the law requires payment of
separation pay.9
For these reasons, there ought to be a difference in treatment when the ground for dismissal is
one of the just causes under Article 282, and when based on one of the authorized causes under
Article 283.
9
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but
the employer failed to comply with the notice requirement, the sanction to be imposed upon him
should be tempered because the dismissal process was, in effect, initiated by an act imputable to
the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the
employer failed to comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer’s exercise of his management prerogative.
The records before us reveal that, indeed, JAKA was suffering from serious business losses at the
time it terminated respondents’ employment. As aptly found by the NLRC:
"A careful study of the evidence presented by the respondent-appellant corporation shows that
the audited Financial Statement of the corporation for the periods 1996, 1997 and 1998 were
submitted by the respondent-appellant corporation, The Statement of Income and Deficit found
in the Audited Financial Statement of the respondent-appellant corporation clearly shows the
following in 1996, the deficit of the respondent-appellant corporation was P188,218,419.00 or
94.11% of the stockholder’s [sic] equity which amounts to P200,000,000.00. In 1997 when the
retrenchment program of respondent-appellant corporation was undertaken, the deficit
ballooned to P247,222,569.00 or 123.61% of the stockholders’ equity, thus a capital deficiency or
impairment of equity ensued. In 1998, the deficit grew to P355,794,897.00 or 177% of the
stockholders’ equity. From 1996 to 1997, the deficit grew by more that (sic) 31% while in 1998 the
deficit grew by more than 47%.
The Statement of Income and Deficit of the respondent-appellant corporation to prove its alleged
losses was prepared by an independent auditor, SGV & Co. It convincingly showed that the
respondent-appellant corporation was in dire financial straits, which the complainants-appellees
failed to dispute. The losses incurred by the respondent-appellant corporation are clearly
substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were
adequately shown with respondent-appellant’s audited financial statement. Having established
the loss incurred by the respondent-appellant corporation, it necessarily necessarily (sic) follows
that the ground in support of retrenchment existed at the time the complainants-appellees were
terminated. We cannot therefore sustain the findings of the Labor Arbiter that the alleged losses
of the respondent-appellant was [sic] not well substantiated by substantial proofs. It is therefore
logical for the corporation to implement a retrenchment program to prevent further losses."10
Noteworthy it is, moreover, to state that herein respondents did not assail the foregoing finding
of the NLRC which, incidentally, was also affirmed by the Court of Appeals.
It is, therefore, established that there was ground for respondents’ dismissal, i.e., retrenchment,
which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise,
it is established that JAKA failed to comply with the notice requirement under the same Article.
Considering the factual circumstances in the instant case and the above ratiocination, we,
therefore, deem it proper to fix the indemnity at P50,000.00.
We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay DECISION
respondents separation pay equivalent to one (1) month salary for every year of service. This is
because in Reahs Corporation vs. NLRC,11 we made the following declaration: CARPIO, J.:

"The rule, therefore, is that in all cases of business closure or cessation of operation or The Case
undertaking of the employer, the affected employee is entitled to separation pay. This is
consistent with the state policy of treating labor as a primary social economic force, affording full
Before this Court is a petition for review on certiorari challenging the 5 June 2013 Decision 1 and 11
protection to its rights as well as its welfare. The exception is when the closure of business or
November 2013 Resolution2 of the Court of Appeals in CA G.R. SP No. 124625. The Court of Appeals
cessation of operations is due to serious business losses or financial reverses; duly proved, in
reversed the decision3 of the National Labor Relations Commission (NLRC) and reinstated the
which case, the right of affected employees to separation pay is lost for obvious reasons. xxx".
decision of the Labor Arbiter finding Emma H. Quiro-quiro's (petitioner) dismissal legal, with the
(Emphasis supplied)
modification that petitioner is awarded nominal damages for Balagtas Credit Cooperative &
Community Development, Inc.'s (respondent) non-compliance with due process requirements.
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and resolution of
the Court of Appeals respectively dated November 16, 2001 and January 8, 2002 are hereby SET
The Facts
ASIDE and a new one entered upholding the legality of the dismissal but ordering petitioner to
pay each of the respondents the amount of P50,000.00, representing nominal damages for non-
compliance with statutory due process. The facts, as summarized by the Court of Appeals, are as follows:

SO ORDERED.
Davide, Jr., C.J., Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez,
Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Chico-Nazario, JJ., concur.
Puno, J., reiterate dissent in Agaban & Serrano.
Petitioner Balagtas Credit Cooperative and Community Development, Inc. ("petitioner"/"BCCCDI")
initially hired respondent Emma H. Quiro-quiro ("respondent/Quiro-quiro) as
accountant/bookkeeper in 1989.
However, sometime in April 2010, BCCCDI terminated the employment of Quiro-quiro, who then
held the concurrent posts of General Manager and Accountant, on the grounds of "gross
negligence/violation of company rules" and "gross dishonesty," committed as follows:

Panganiban, J., reiterate dissent in Agaban v. NLRC, GR 158693, Nov. 17, 2004, and Serrano v.
GROSS NEGLIGENCE/VIOLATION OF COMPANY RULES.
NLRC, 380 Phil. 416, Jan. 27, 2000.

Over withdrawal of Time Deposit (TD) placement of Josie Subido;

Tinga, J., only in the result. See separate opinion.

Loss of borrower’s title for security in the payment of loan obligations of Rolando Roque;

Over computation of interest on TD placements;

DUE PROCESS
4.
Unfair filing of delinquent accounts;
January 13, 2016
JV number duplication;
G.R. No. 209921
Backlog of schedules and recording/postings.
EMMA H. QUIRO-QUIRO, Petitioner,
vs. GROSS DISHONESTY
BALAGTAS CREDIT COOPERATIVE & COMMUNITY DEVELOPMENT, INC., Respondent.
10
Concealment of the irregularity regarding the over withdrawal in the TD placement of MS. JOSIE
SUBIDO that happened way back 18 July 2007. Were it not for the hiring of an OJT who discovered
the said report of MS. DENIZA FUENTES the matter would not have been addressed and resolved
by requiring the party concerned to issue check/s in payment of the same; and,
Non-disclosure of the true financial condition of the cooperative.
These charges are allegedly contained in a Resolution of BCCCDI’s Board of Directors dated April
20, 2010.
Disputing those charges, Quiro-quiro maintained that it was around January 2010 that she was
informed by BCCCDI and its officers of an "overwithdrawal of a certain depositor" that was seen
on the records. According to her, the said overwithdrawal was then "remedied with the full
consent and acquiescence of respondents." The issue was never brought up again, until four
months later, in April 2010, when it was allegedly "resurrected."
Aggrieved, Quiro-quiro filed a complaint for illegal dismissal and damages.
In her position paper before the Labor Arbiter, Quiro-quiro claimed that her termination was not
valid nor justified. She argued that "there was no ground that existed for her dismissal from
employment" and that her dismissal did not satisfy the requirements of due process, as she was
not given "ample opportunity," nor the "natural sequence of notice of charges, hearing and
notice of judgment."
In their position paper, on the other hand, BCCCDI and its officers Fe Adrados ("Adrados") and
Atty. Tagumpay B. Ponce ("Atty. Ponce") averred that the termination of Quiro-quiro’s
employment based on the charges against her were "official acts" of the cooperative BCCCDI, as
contained in the board Resolution of April 20, 2010. Then, Atty. Ponce was designated by the said
board, as BCCCDI’s counsel, to write and send a "Notice to Explain/Show Cause Memo" to Quiro-
quiro to explain her side and show cause why she should not be terminated.
BCCCDI alleged that Quiro-quiro responded with her explanation on April 23,2010. Also, Quiro-
quiro allegedly sent a letter of apology dated April 29, 2010 admitting her "shortcomings and
wrongdoings" but asking for one last chance from the board. On April 30, 2010, the board and
officers convened with Quiro-quiro in attendance. There, she explained her side and answered
questions from the board. Thereafter, the board put the matter to a vote and unanimously
decided to terminate Quiro-quiro’s services. The proceedings were reduced in writing through the
minutes thereof.
Finally, the decision to terminate Quiro-quiro’s employment was communicated to her through a
Notice to Terminate prepared by Atty. Ponce upon the board’s instruction.
11
As for the causes of the dismissal, BCCCDI essentially argued that the following infractions of
Quiro-quiro were grave enough to merit a legal termination, viz: (1) the alleged overwithdrawal of
P250,000.00 which was deliberately omitted from being posted or recorded and followed by a
"series of withdrawals on a monthly basis;" (2) the alleged loss of a (certificate of) title; (3) the
"over-computation of interest on time deposit (TD) placement;" (4) the "unfair filing of
delinquent accounts;" and (5) duplication of journal voucher (JV) numbers, and backlog in the
schedule of postings. BCCCDI rejected her explanation of "ignorance" in failing to post the
withdrawal because "before the TD placement was closed, the same was followed by withdrawals
on a monthly basis." To BCCCDI, such was gross dishonesty and conflict of interest. BCCCDI added
that the over-computation of interest rate and its application to Quiro-quiro’s own account was
also gross dishonesty, conflict of interest and resulted in the loss of trust and confidence by the
employer.
In support of the charges against Quiro-quiro, BCCCDI also attached the affidavits and/or report of
three employees Deniza Fuentes, Rex R. Lim and Susana de la Cruz-Tolentino.
x x x x4
In his 31 January 2011 Decision,5 Labor Arbiter Mariano L. Bactin found that there was substantial
evidence showing that petitioner was lawfully dismissed and respondent observed due process in
terminating her. The dispositive portion of the Labor Arbiter’s decision reads:
WHEREFORE, premises considered, the complaint filed by the complainant, EMMA H. QUIRO-
QUIRO is hereby ordered DISMISSED WITH PREJUDICE for lack of merit.
The claims for damages and attorney’s fees of the complainant are likewise DISMISSED with
prejudice for lack of merit.
SO ORDERED.6
In its 25 November 2011 Decision, the NLRC reversed the decision of the Labor Arbiter, and ruled
as follows:
WHEREFORE, complainant’s appeal is GRANTED and the Decision promulgated on 31 January 2011
is REVERSED and SET ASIDE. Complainant is declared to have been illegally dismissed and
respondent Balagtas Credit Cooperative and Community Development, Inc. is ordered to pay
complainant the following:
(1) backwages computed from her date of dismissal on 1 May 2010 until the finality of
this decision less the amount equivalent to one (1) month salary;
 (2) separation pay in lieu of reinstatement equivalent to one month pay for every year of b) … "render monthly reports to the Board of Directors on the financial condition and
service computed from January 1989 until the finality of this decision. operations of the cooperative....;"

The computation of the monetary award as of the date of this decision is attached as Annex "A" xxx
of this Decision.
d) … "assist the Chair(person) in the preservation of the books of accounts documents,
SO ORDERED.7 vouchers, contracts and record of whatever kind pertaining to the business of the
cooperative which may come to (her) possession."
In its 29 February 2012 Resolution,8 the NLRC denied the motion for reconsideration.
(2) Annexes "B" and "C" of BCCCDI’s Position Paper – which are the Resolution of the Board of
In its 5 June 2013 Decision, the Court of Appeals reversed the decision of the NLRC and reinstated Directors and Notice to Explain/Show Cause Memo, respectively, enumerating the violations
the decision of the Labor Arbiter. committed by Quiro-quiro, which can all be easily cross-referred with her official duties and
responsibilities above. Such violations are:
Petitioner filed a motion for reconsideration, arguing among others that the case had already
been settled by virtue of an offer from respondent to pay the amount awarded by the NLRC. GROSS NEGLIGENCE/VIOLATION OF COMPANY RULES.
Petitioner also maintained that her dismissal was invalid.
Over withdrawal of Time Deposit (TD) placement of Josie Subido;
In its 11 November 2013 Resolution, the Court of Appeals denied the motion for reconsideration.
Loss of borrower’s title for security in the payment of loan obligations of Rolando Roque;
Hence, this petition.
Over computation of interest on TD placements;
The Court of Appeals’ Ruling
Unfair filing of delinquent accounts;
In reversing the NLRC and sustaining the Labor Arbiter, the Court of Appeals found that "there
was more than enough substantial evidence presented" to support a valid dismissal. The Court of JV number duplication;
Appeals gave credence to the following evidence showing petitioner had neglected her duties,
had been dishonest and had breached her employer’s trust: Backlog of schedules and recording/postings.

(1) Annex "A" of BCCCDI’s Position Paper – which is an enumeration from the cooperative’s By- GROSS DISHONESTY
laws of the duties and responsibilities of the General Manager and Accountant, both of which
positions concurrently were being held by Quiro-quiro at the time of termination. Among the
Concealment of the irregularity regarding the over withdrawal in the TD placement of MS. JOSIE
enumerated duties of the general manager was to
SUBIDO that happened way back 18 July 2007. Were it not for the hiring of an OJT who discovered
the said report of MS. DENIZA FUENTES the matter would not have been addressed and resolved
b) …. "maintain (her) records and accounts in such manner that the true and correct condition of by requiring the party concerned to issue check/s in payment of the same; and,
the business of the cooperative may be ascertained therefrom at any time. (She) shall render
annual and periodic statements and reports in the form and in the manner prescribed by the
Non-disclosure of the true financial condition of the cooperative.
Board of Directors, and preserve the books, documents, correspondence and records of whatever
kind pertaining to the business which may come into (her) possession.
(3) Annexes "D" and "E" of BCCCDI’s Position Paper – which are the Explanation Letter and
Apology Letter, respectively, of Quiro-quiro. At first, in the explanation, she denied responsibility
Meanwhile, among the duties of the accountant were to:
for the losses and assigned blame for some of the losses on others; in the apology letter,

a) … "install an adequate and effective accounting system in the cooperative;"

12
however, she admits wrongdoing but asks for another chance. The apology letter is reproduced 5. While I was in the office sometime in November 2009, a student who was on-the-job
hereunder: training (OJT) stumbled on some files and it was discovered that there was an over-
withdrawal in the amount of TWO HUNDRED FIFTY THOUSAND PESOS (P250,000.00)
29 Abril 2010 from the time deposit (TD) placement of MRS. SUBIDO dating back from 18 July 2007
and which EMMA as internal accountant failed to post in the ledger which in the first
place was her duty to perform.
Sa lupong patnugutan
BCCCDI
6. Equally exasperating was the fact that after a year she allowed MRS. SUBIDO to make
subsequent withdrawals which resulted to (sic) the over-withdrawal in the said amount.
Balagtas, Bulacan
Considering that the subsequent withdrawals by MRS. SUBIDO were made on a monthly
Mahal na lupong patnugutan
basis, it baffles the mind to think why the alleged oversight in the posting of the TWO
Purihin ang Panginoon!
HUNDRED FIFTY THOUSAND PESOS (P250,000.00). Her feigned ignorance is highly
suspect.
Ako po ay humihingi ng paumanhin sa lahat ng aking nagawang mali dito sa kooperatiba at hindi
naman po li[n]gid sa inyo ang mga nangyari sa akin.
7. Moreover, although I was around when the discovery was made, I gave her
opportunity to report the matter to our Chairperson and despite several reminders she
Bigyan nyo po ako ng isa pang pagkakataon na mapagpatuloy ko ang aking trabaho sa coop na ito did not budge a bit.
alang-alang sa aking mga maliliit na anak.
8. Forced by her own omission, I reported the matter to MRS. ABRADOS directly who in
Ipinangangako ko po na pagbubutihin ko na ang aking trabaho, magpopocus at dodoblihin ko po turn requested EMMA to require MRS. SUBIDO to replace or return the overwithdrawal
ang aking effort para maisaayos po ang lahat. in the amount of TWO HUNDRED FIFTY THOUSAND PESOS (P250,000.00). Again, she
failed to require MRS. SUBIDO to return the money.
Kung dumating ang pagkakataon na hindi po talaga kayo masiyahan sa trabaho ay ako na po
mismo ang magfifile ng resignation. x x x.

Maraming salamat po sa maraming pang-unawa na ibinigay ninyo sa akin. (6) Annex "J" of BCCCDI’s Position Paper – which is the Affidavit of Rex Revilla Lim, another
employee of BCCCDI, who testified that he delivered an envelope from Quiro-quiro to the
Sumasainyo, Chairman and back to Quiro-quiro. He could not categorically state, however, who might be
responsible for the loss of one of the two titles contained in the said envelope.
(Sgd.)
EMMA H. QUIRO-QUIRO (7) Annex "K" of BCCCDI’s Position Paper – which is a letter from Susana Dela Cruz-Tolentino of
Megasys Computer Center who explained that the confusion in the data of the members in the
(4) Annexes "F" and "G" of BCCCDI’s Position Paper – which are the Minutes of the board’s computer was the result of the use of one "JV number" for different transactions. 9
confrontation with Quiro-quiro and its decision to dismiss her, as well as the Termination Letter of
Atty. Ponce in behalf of BCCCDI. The dispositive portion of the Court of Appeals’ decision reads:

(5) Annex "I" of BCCCDI’s Position Paper – which is the Affidavit of Deniza E. Fuentes, an WHEREFORE, considering the foregoing, the petition is GRANTED. The Decision dated November
employee of BCCCDI, who stated in part, 25, 2011 and Resolution dated February 29, 2012 of the respondent National Labor Relations
Commission in NLRC LAC No. 04-000951-11 (NLRC Case No. RAB-III-05-16217-10), are REVERSED and
xxx SET ASIDE. The Decision of the Labor Arbiter Mariano L. Bactin, promulgated on January 31, 2011,
in NLRC Case No. RAB-III-05-16217-10 is REINSTATED with the MODIFICATION that respondent
Emma Quiro-quiro is AWARDED P30,000.00 in nominal damages.

13
SO ORDERED.10
The Issues
Petitioner raises the following issues: (1) whether respondent’s offer to pay the monetary award
of the NLRC constitutes a compromise agreement putting an end to this controversy; and (2)
whether petitioner’s dismissal was valid and complied with the due process requirements.
The Ruling of the Court
We deny the petition.
Payment of NLRC monetary award does not constitute a compromise agreement.
Petitioner argues that respondent’s offer to pay the total amount of P452,730.34 representing the
monetary award of the NLRC constitutes a compromise agreement that "operates to end
litigation and put the case to rest."11
We disagree. Respondent’s offer to pay the sum of P452,730.34 representing the monetary award
of the NLRC is not in the nature of a compromise agreement, which effectively puts an end to this
controversy. According to respondent, the underlying reason for the offer of payment was
petitioner’s motion for the issuance of the writ of execution, leaving respondent without any
recourse but to pay. In other words, such payment was in compliance with the writ of execution
issued by the NLRC.
Section 14, Rule VII of the NLRC Rules of Procedure provides that "the decisions, resolutions or
orders of the Commission shall become final and executory after ten (10) calendar days from
receipt thereof x x x." Section 1, Rule XI of the same NLRC Rules provides that "a writ of execution
may be issued motu proprio or on motion, upon a decision or order that has become final and
executory." The execution of the final and executory decision or resolution of the NLRC shall
proceed despite the pendency of a petition for certiorari, unless it is restrained by the proper
court.12 Since the Court of Appeals did not issue any temporary restraining order or writ of
injunction against the NLRC decision, such judgment became final and executory after ten
calendar days from its receipt by counsel or party. Consequently, petitioner moved for the
issuance of the writ of execution. As pointed out by respondent, the issuance of the writ of
execution and notice of garnishment forced respondent to pay the monetary award of the NLRC
to avoid its bank account being frozen and to prevent the cessation of its operations.
Clearly, there is no intent on the part of respondent to enter into a compromise agreement to put
an end to this dispute. Otherwise, respondent could have simply filed a motion to withdraw its
petition before the Court of Appeals, specifically manifesting the execution by the parties of a
compromise agreement. On the contrary, respondent pursued its appeal before the Court of
Appeals and vigorously opposed the petition in this Court.
14
Petitioner was validly dismissed.
Petitioner insists that she was illegally dismissed since there is no valid ground to terminate her.
Petitioner further claims that her dismissal failed to satisfy the due process requirements.
We are not convinced. As correctly found by the Court of Appeals, respondent was able to prove
by substantial evidence that petitioner’s dismissal is lawful. Substantial evidence is defined as that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.13
Respondent presented documents and affidavits establishing petitioner’s gross negligence and
her breach of respondent’s trust and confidence in her. Based on the records, it was shown that
petitioner committed the following infractions: (1) the over withdrawal of P250,000 on the time
deposit placement of a member; (2) concealment and non-posting of the over withdrawal; (3) the
series of monthly withdrawals after the P250,000 over withdrawal on the same time deposit
placement; (4) the loss of a certificate of title; (5) the over-computation of interest rate on a time
deposit placement; (6) the "unfair filing of delinquent accounts"; (7) duplication of journal
voucher numbers, and (8) backlog in the schedule of postings.
We agree with the finding of the Court of Appeals that petitioner’s "inability to stop during her
watch an over withdrawal by one member, amounting to P250,000.00,"14 and followed by a series
of monthly withdrawals, "constitutes gross and habitual neglect of duty that is a just cause for her
dismissal."15 The Court of Appeals further found that "her other infractions such as the loss of a
certificate of title, the granting of a high interest to pre-terminated deposits, duplication of JV
numbers, and a backlog in her reportings or postings only add to such major infraction and
establish a pattern of negligence and inability to fulfill her duty."16
Moreover, there is no dispute that petitioner held the sensitive positions of general manager and
accountant, which demand respondent’s utmost trust and confidence. Her responsibilities as
accountant included, among others, the handling and processing of the deposits and withdrawals
of the members of the cooperative; installing an effective accounting system within the
cooperative; and safekeeping of certificates of title. As general manager, petitioner was in charge
of supervising and overseeing the daily operations of the cooperative17 and was tasked to prepare
periodic reports on the financial condition of the cooperative.
In Coca-Cola Export Corporation v. Gacayan,18 involving a Senior Financial Accountant of petitioner
company, the Court upheld the employee’s dismissal for loss of trust and confidence, thus:
In the instant case, respondent Gacayan was the Senior Financial Accountant of petitioner
company. While respondent Gacayan denies that she is handling or has custody of petitioner’s
funds, a re-examination of the records of this case reveals that she indeed handled delicate and
confidential matters in the financial analyses and evaluations of the action plans and strategies of
petitioner company. Respondent Gacayan was also privy to the strategic and operational decision-
making of petitioner company, a sensitive and delicate position requiring the latter’s utmost trust
and confidence. As such, she should be considered as holding a position of responsibility or of
trust and confidence.
Clearly, petitioner’s act of allowing the over withdrawal of P250,000 on the time deposit
placement of a member and her subsequent inaction and non-rectification of such misconduct
breached respondent’s trust and confidence in her, warranting the penalty of dismissal.
In addition, while respondent painstakingly presented evidence to prove the legality of
petitioner’s dismissal, petitioner miserably failed to rebut the charges against her. As found by the
Court of Appeals, petitioner "did not even attach her own evidence [to her pleadings] or at least
refute if not totally contradict the allegations of [respondent]."19 Petitioner merely denied the
allegations against her. In her apology letter, petitioner pleaded for forgiveness and another
chance from respondent, which in effect constituted an admission of her wrongdoings.
While petitioner's dismissal is lawful, we sustain the award of P30,000 nominal damages in favor
of petitioner for respondent's non-observance of the due process requirements in dismissing her.
We agree with the Court of Appeals, which in turn upheld the NLRC, that the 48 hours given to
petitioner to explain her side was insufficient time to "consult the union official or lawyer, gather
data and evidence and decide on [her defenses]."20 Petitioner should have been given at least five
calendar days from receipt of the notice to prepare for her defense. Notwithstanding, the lack of
statutory due process does not nullify the dismissal or render it illegal or ineffectual when the
dismissal was for just cause,21 but it will merit the grant of nominal damages as indemnification.
WHEREFORE, we DENY the petition and AFFIRM the 5 June 2013 Decision and 11November2013
Resolution of the Court of Appeals in CAG.R. SPNo. 124625.
SO ORDERED.
DUE PROCESS
5.
Meco Manning & Crewing Services, Inc. and Capt. Igmedio G. Sorrera
G.R. No. 222939. July 3, 2019
DUE PROCESS
6.
June 06, 2018
G.R. No. 205953
DIONELLA A. GOPIO, doing business under the name and style, JOB ASIA MANAGEMENT
SERVICES, Petitioner
15
vs.
SALVADOR B. BAUTISTA, Respondent
DECISION
JARDELEZA, J.:
This is a petition for review on certiorari1 seeking the reversal of the August 31, 2012 Decision2 of
the Court of Appeals (CA) in CA-G.R. SP No. 116450 which annulled the Decision3 and
Resolution4 issued by the National Labor Relations Commission (NLRC) and reinstated the
Decision5 rendered by the Labor Arbiter, and the February 22, 2013 CA Resolution6 denying
petitioner's motion for reconsideration of the assailed Decision.
On September 26, 2008, respondent Salvador A. Bautista (Bautista) was hired as a Project
Manager for Shorncliffe (PNG) Limited (Shomcliffe) in Papua New Guinea through Job Asia
Management Services (Job Asia), a single proprietorship owned by petitioner Dionella A. Gopio
(Gopio), which is engaged in the business of recruitment, processing, and deployment of land
based manpower for overseas work. Bautista's contract stated that his employment shall be valid
and effective for 31 months with a net monthly
salary of ₱40,000.00. On October 4, 2008, he arrived at his workplace in
Papua New Guinea.7
On July 6, 20091 or just nine months after his deployment in Papua New Guinea, Bautista was
served a notice of termination effective July 10, 2009 on the alleged grounds of unsatisfactory
performance and failure to meet the standards of the company. He was paid his salary for the
period July 1 to 10, 2009, annual leave credits, and one-month pay net of taxes. Thereafter, he was
repatriated on July 11, 2009.8
On July 27, 2009, Bautista lodged a complaint with the arbitration branch of the NLRC against Job
Asia, Gopio, and Shomcliffe for illegal dismissal and monetary claims. He claimed that he was
terminated without just cause since there· had been no job evaluation conducted prior to
Shorncliffe's. decision to dismiss him from employment. As a result, he is entitled to the payment
of his salaries for the unexpired portion of his contract, or for 22 months. He alleged that while his
contract contained an understated monthly income of ₱40,000.00, he was actually being paid the
amount of ₱115,850.00·a month. Other than salaries, Bautista also claimed unrealized
employment benefits, nine days sick leave pay, four weeks recreation leave pay, moral and
exemplary damages, as well as attorney's fees. 9
Job Asia, Gopio, and Shomcliffe, for their part, argued that Bautista's employment was terminated
because he failed to meet Shomcliffe's standards. To buttress their claim, they submitted in
evidence the work performance · evaluation report on Bautista which listed the following
observations:
1. He is not capable of performing the duties of a Project Manager.
2. He was unable to control or direct his workforce, equipment arid materials.
3. He is incompetent in the handling of his daily tasks.
4. [He] failed to provide any monthly reports both verbal and written on the progress of his
projects as a company requirement.
5. He has never submitted any monthly progress claims as a company requirement.
6. He demonstrated that he was technically incompetent and hides himself whe11 there is a
problem.
7. He was not cap8ble of running project site meetings with the management and his staff
8. He is a lazy person, incompetent in his decision making and has poor communication skills.
9. He was w1able to pass his knowledge to young PNG Engineers, in fact they were teaching him
instead. 10
On January 7, 2010, the Labor Arbiter rendered his Decision finding Bautista to have been illegally
dismissed as the dismissal was not proven to be for a just cause and Shomcliffe failed to observe
due process. The Labor Arbiter held that the work performance evaluation allegedly showing
Bautista's inefficiency and shortcomings in the performance of his job was made only on August
22, 2009; or more than one month after Bautista's dismissal. Thus, the findings therein are mere
conclusions of fact, at best self-serving and merits no consideration. 11 Moreover, Shomcliffe failed
to observe due process by not giving Bautista the twin notices required by law. The latter was not
notified of the intention to dismiss him or the acts or omissions complained of. Neither was he
notified of the decision to dismiss him and given an opportunity to answer and rebut the charges
against him in between notices. 12
The Labor Arbiter also rejected the argument that Bautista's employment was terminated on the
basis of Article 4.3 of the employment contract by giving him one-month salary in lieu of one
month's written notice. 13 The said provision states:
4.3 The Employer or Employee may terminate this contract on other grounds. The Employer
should give one month's written notice of his intention to terminate or in lieu thereof pay the
16
Employee a sum equivalent to one month's salary. The Employee may likewise terminate this
Contract by giving three months' notice to the Employer. 14
The Labor Arbiter held that the stipulation providing for payment of one-month salary in lieu of
serving one month's notice of the employer's intention to terminate Bautista's employment is
contrary to our laws which uphold the sanctity of workers' security of tenure. It also considered
the employment contract as a contract of adhesion which cannot militate against the rights of
Bautista. 15 He thus ordered Job Asia, Gopio, and Shomcliffe to jointly and severally pay Bautista
his salaries for the unexpired portion of his contract of employment in the amount of
₱2,548,700.00, 16 moral and exemplary damages in the amount of ₱300,000.00, and attorney's
fees at ₱254,870.00. 17
Undaunted, Job Asia, Gopio, and Shorncliffe filed an appeal with the NLRC. On May 17, 2010, the
NLRC issued its Decision setting aside the Decision of the Labor Arbiter and dismissing the
complaint for illegal dismissal and monetary claims for lack of merit. Nevertheless, it ordered that
Bautista be indemnified nominal damages in the amount of ₱40,000.00. 18
The NLRC held that the parties were bound by the terms and conditions of the employment
contract that bore the stamp of approval of the Philippine Overseas Employment Administration
(POEA). Consequently, it found that Bautista's contract was pre-terminated in accordance with
Article 4.3 thereof. Contrary to the Labor Arbiter's finding, the NLRC upheld the reports of
Shomcliffe's officers pertaining to his unsatisfactory performance and incompetence, and thus
declared Bautista's employment to have been terminated for a just cause. It, however, held that
Bautista was not afforded due process, for which he should be awarded indemnity pegged at the
rate of his basic salary for one month as stated in his employment contract, or ₱40,000.00. The
NLRC found no bad faith or malice on the part of Job Asia, Gopio, or Shomcliffe that would have
been the basis for an award of moral and exemplary damages and attorney's fees. 19
Bautista filed a motion for reconsideration of the NLRC Decision, but it was denied through a
Resolution dated July 30, 2010. Hence, he filed a petition for certiorari with the CA.
On August 31, 2012, the CA rendered its Decision annulling and setting aside the NLRC Decision and
reinstating that of the Labor Arbiter. It held that Article 4.3 of the employment contract violates
the provisions of the Labor Code on security of tenure since it gives the employer the option to do
away with the notice requirement as long as he grants one-month salary to the employee in lieu
thereof. The provision deprives the employee of due process and violates his right to be apprised
of the grounds for his termination without giving him an opportunity to defend himself and refute
the charges against him. Moreover, the term "other grounds" is all-encompassing and makes the
employee susceptible to arbitrary dismissal.20
The CA also held that Job Asia, Gopio, and Shomcliffe failed to substantiate their claim that
Bautista was discharged for just cause. Their claim that the latter was dismissed for performing
below standards was not backed by any proof Further, Bautista was notified of his termination
only four days prior to the intended date of dismissal without evidence of an assessment of his
performance and the results thereof. Neither was he served a notice of any wrongdoing prior to
the service of the notice of his termination. The CA noted that the declarations of Anthony B.
Ponnampalam and Paul Thompson, officers of Shomcliffe, were executed on October 31, 2009 and
October 1, 2009, respectively, or more than two months after the termination of Bautista's
employment on July 10, 2009. Further, the evaluation report made by Robert Aup, another
Shomcliffe official, was made only on August 22, 2009, and hence obviously an afterthought. Thus,
there being no sufficient cause to terminate Bautista' s employment, his dismissal is illegal. The CA
thus upheld the Labor Arbiter's Decision and additionally awarded Bautista full reimbursement of
his placement fee with interest of 12% per annum.21
Thus, this petition where the Court is called upon to ultimately resolve two issues that have been
beleaguering the parties for more than eight years, to wit: whether or .not Bautista was illegally
dismissed from employment, and whether or not he is entitled to his monetary claims.
We uphold with modification the Decision of the CA.
I.
In 1995, Republic Act (R.A.) No. 8042, otherwise known as an "An Act to Institute the Policies of
Overseas Employment and Establish a Higher Standard of Protection and Promotion of the
Welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress, and for Other
Purposes" was passed. More popularly known as the Migrant Workers and Overseas Filipinos Act
of 1995, this law echoes the provision in the 1987 Constitution22 on protection of labor. Thus,
Section 2(b) thereof under "Declaration of Policies," states:
(b) The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all. Towards this end,
the State shall provide adequate and timely social, economic and legal services to Filipino migrant
workers.
Moreover, Section 2(c) thereof provides:
( c) x x x The existence of the overseas employment program rests solely on the assurance that
the dignity and fundamental human rights and freedoms of the Filipino citizens shall not, at any
time, be compromised or violated. xxx
Accordingly, regulatory provisions may be read all throughout R.A. No. 8042 that carry out the
policy of the State to protect and promote the rights of Filipino migrant workers. Employment
agreements are verily more than contractual in nature in the Philippines. The Philippine
Constitution and laws guarantee special protection to workers here and abroad. 23 Thus, even if a
Filipino is employed abroad, he or she is entitled to security of tenure, among
17
other constitutional rights. 24
In termination disputes or illegal dismissal cases, it has been established by Philippine law and
jurisprudence that the employer has the burden of proving that the dismissal is for just and valid
causes; and failure to do so would necessarily mean that the dismissal was not justified and is,
therefore, illegal.25 Taking into account the character of the charges and the penalty meted to an
employee, the employer is bound to adduce clear, accurate, consistent, and convincing evidence
to prove that the dismissal is valid and legal. 26 This is consistent with the principle of security of
tenure as guaranteed by the Constitution and reinforced by Article 292(b)27 of the Labor Code of
the Philippines,28 which provides:
Art. 292. Miscellaneous Provisions - x x x
(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to the
requirement of notice under Article [298] of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in accordance with company rules
and regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer. x x x29
Here, petitioner argues that there was justifiable cause for the termination of Bautista' s
employment since the latter has fallen short of Shomcliffe's employment and work standards. She
cited the report of Shomcliffe's Chief Executive Officer and Project Team Leader, Robert Aup,
which detailed Bautista's shortcomings, as well as the report of Paul Thompson, Supervising
Engineer of the Project to which Bautista was assigned, which mentioned the latter's
incompetence.30 Maintaining that the rights and obligations among the Overseas Filipino Worker
(OFW), the local recruiter or agent) and the foreign employer or principal is governed by the
employment contract which is the law among them, petitioner also claims that Bautista's
employment was validly terminated even without notice as he was given the equivalent of one-
month salary in lieu thereof.31
The Court is not convinced.
As observed by the CA, the evaluation report of Robert Aup was made only on August 22, 2009,
and the declaration of Paul Thompson was executed only on October 1, 2009, which dates are
beyond the date of termination of Bautista's employment on July 10, 2009. The CA correctly
concluded that these were made as an afterthought in order to lend credence to the claim that
the termination of Bautista's employment was for a valid reason.32 In Skippers United Pacific, Inc. v.
Maguad, 33 we held that the Master's Statement Report presented by therein petitioners to
corroborate their claim that the dismissal of therein respondents was for just
cause, i.e., incompetence, was issued 78 days34 after therein respondents were repatriated to
Manila and two months after the latter instituted a complaint for illegal dismissal before the
NLRC. Such report can no longer be a fair and accurate assessment of therein respondents'
competence as the same was presented only after the complaint was filed. Its execution was a
mere afterthought in order to justify the dismissal of therein respondents which had long been
effected before the report was made; hence, such report is a self-serving one. 35
The Court thus .finds that Bautista's incompetence as the alleged just cause for his dismissal was
not proven by substantial evidence.1âwphi1
II.
In addition, Bautista was not accorded due process. Consequently, the Court is not convinced that
he was legally dismissed.
The due process requirement is not a mere formality that may be dispensed with at will. Its
disregard is a matter of serious concern since it constitutes a safeguard of the highest order in
response to man's innate sense of justice. To meet the requirements of due process, the employer
must furnish the worker sought to be dismissed with two written notices before termination of
employment can be legally effected, i.e.: (1) a notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought; and (2) the subsequent notice after due
hearing which informs the employee of the employer's decision to dismiss him. 36
Here, Bautista was dismissed under Article 4.3 of the employment contract which allegedly
permits his employer, Shomcliffe, to terminate the contract on unspecified "other grounds" by
giving one month's written notice of its intention to terminate, or in lieu thereof, to pay the
employee a sum equivalent to one month's salary.
Bautista was notified on July 6, 2009 that his services will be terminated effective on the close of
business hours on July 10, 2009, allegedly because his performance was "unsatisfactory and did
not meet the standards of the Company. "37 He was also paid one-month salary in lieu of one
month's notice of the termination of his employment.38 Surely, this cannot be considered
compliance with the two-notice requirement mandated by the Labor Code in effecting a valid
dismissal. The Labor Code requires both notice and hearing; notice alone will not suffice. The
requirement of notice is intended to inform the employee concerned of the employer's intent to
dismiss him and the reason for the proposed dismissal. On the other hand, the requirement of
hearing affords the employee an opportunity to answer his employer's charges against him and
accordingly defend himself therefrom before dismissal is effected. 39 In this case, Bautista was not
given a chance to defend himself. Five days after the notice was served, he was repatriated.
Clearly, he was denied his right to due process.
18
The CA aptly observed that Article 4.3 deprives the employee of his right to due process of law as
it gives the employer the option to do away with the notice requirement provided that it grants
one-month salary to the employee in lieu thereof. It denies the employee of the right to be
apprised of the grounds for the termination of his employment without giving him an opportunity
to defend himself and refute the charges against him. Moreover, the term "other grounds" is all-
encompassing. It makes the employee susceptible to arbitrary dismissal. The employee may be
terminated not only for just or authorized causes but also for anything under the sun that may suit
his employer. Thus, the employee is left unprotected and at the mercy of his employer, subjected
to the latter's whims.40
We cannot sustain the validity of Article 4.3 of the employment contract as it contravenes the
constitutionally-protected right of every worker to security of tenure;41
Bautista's employment was for a fixed period of 31 months.42 Article 4.3 took back this period
from him by rendering it in effect a facultative one at the option of Shomcliffe, which may shorten
that term at any time and for any cause satisfactory to itself, to a one-month period or even less,
by simply paying Bautista a month's salary. The net effect of Article 4.3 is to render Bautista's
employment basically employment at the pleasure of Shomcliffe. The Court considers that the
provision is intended to prevent any security of tenure from accruing in favor of Bautista even
during the limited period of 31 months.43
To emphasize, overseas workers, regardless of their classification, are entitled to security of
tenure, at least for the period agreed upon in their contracts. This means that they cannot be
dismissed before the end of their contract terms without due process.44 The law recognizes the
right of an employer to dismiss employees in warranted cases, but it frowns upon the arbitrary
and whimsical exercise of that right when employees are not accorded due process. 45 If they
were illegally dismissed, the workers' right to security of tenure is violated.46
The law and jurisprudence guarantee to every employee security of tenure. This textual and the
ensuing jurisprudential commitment to the cause and welfare of the working class proceed from
the social justice principles of the Constitution that the Court zealously implements out of its
concern for those with less in life, Thus, the Court will not hesitate to strike down as invalid any
employer act that attempts to undermine workers' tenurial security. 47
Indeed, while our Civil Code recognizes that parties may stipulate in their contracts such terms
and conditions as they may deem convenient, these terms and conditions must not be contrary to
law, morals, good customs, public order or policy. 48 The employment contract between
Shomcliffe and Bautista is governed by Philippine labor laws. Hence, the stipulations, clauses, and
terms and conditions of the contract must not contravene our labor law provisions.
Time and again, we have held that a contract of employment is imbued with public interest. 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. Also, while a contract is the law
between the parties, the provisions of positive law that regulate such contracts are deemed
included and shall limit and govern the relations between the parties.49
In sum, there being no showing of any clear, valid, and legal cause for the termination of
Bautista's employment and that he was not afforded due process, the law considers the matter a
case of illegal dismissal for which Bautista is entitled to indemnity. We uphold the Labor Arbiter's
award of indemnity equivalent to Bautista's salaries for the unexpired term of his employment
contract, and damages.
III.
Section 10 of R.A. No. 8042 provides that in case of termination of overseas employment without
just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the
full reimbursement of his placement fee with interest of 12% per annum, plus his salaries for the
unexpired portion of his employment contract or for three months for every year of the
unexpired term, whichever is less.
We declared the clause "or for three months for every year of the unexpired term, whichever is
less" unconstitutional in the 2009 case of Serrano v. Gallant ,Maritime Services, Inc., 50 and again in
the 2014 case of Sameer Overseas Placement Agency, Inc. v. Cabiles,51 after the provision found its
way again in R.A. No. 1002252 which took effect in 2010. We held that the clause violated
substantive due process and the equal protection clause of the Constitution in that it generated
classifications among workers that do not rest on any real or substantial distinctions that would
justify different treatments in terms of the computation of money claims resulting from illegal
termination. 53 Thus, we held that the proper indemnity in illegal dismissal cases should be the
amount equivalent to the unexpired term of the employment contract. In this case, it is Bautista's
monthly salary of ₱115,850.0054 multiplied by 22 months, the remaining term of his employment
contract, or a total amount of ₱2,548,700.00.
We also upheld the Labor Arbiter's award of moral and exemplary damages to Bautista on the
ground that his dismissal was without just and authorized cause, in complete disregard of his right
to due process of law, and done in bad faith, in addition to being anti-Filipino and
capricious. 55 Likewise, we find the award of attorney's fees proper. It is settled that when an
action is instituted for the recovery of wages, or when employees are forced to litigate and
consequently incur expenses to protect their rights and interests, the grant of attorney's fees is
legally justifiable. 56
Petitioner's argument that she should not be held jointly and severally liable with Shomcliffe for
the payment of monetary awards to Bautista as she had no control over the manner of
implementation of the employment contract, she had no hand whatsoever in Bautista' s dismissal,
and that her agency was extinguished as soon as the employee was deployed to and have worked
in Shomcliffe's construction project in Papua New Guinea,57 has no merit.
19
In the first place, such joint and solidary liability is required prior to the issuance of a license to
petitioner to operate a recruitment agency.1âwphi1 Thus, Section l(f)(3), Rule II, Part II of the 2002
POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas
Workers provides:
RULE II
ISSUANCE OF LICENSE
Sec. 1. Requirements for Licensing. Every applicant for license to operate a private employment
agency shall submit a written application together with the following requirements:
xxxx
f. A verified undertaking stating that the applicant:
xxxx
3) Shall assume joint and solidary liability with the employer for all claims and liabilities which
may arise in connection with the implementation of the contract, including but not limited to
payment of wages, death and disability compensation and repatriations[.] (Emphasis supplied.)
Furthermore, Section 10 of R.A. No. 8042 provides:
Sec. 10. Money Claims. x x x
The liability of the principal/employer and the recruitment/placement -agency for any and all
claims under this section shall be joint and several. This provision shall be incorporated in the
contract for overseas employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to .the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and damages. (Emphasis supplied.)
Consistent with the law and the POEA Rules, petitioner's joint and several liability is incorporated
in Bautista's employment contract with Shomcliffe, which states:
Article 1: This Employment Contract is executed and entered into by and between:
A. EMPLOYER:
 SHORNCLIFFE (PNG) LIMITED payment of what is due them. The local agency that is held to answer for the overseas worker's
(Name of Establishment) money claims, however, is not left without remedy. The law does not preclude it from going after
xxxx the foreign employer for reimbursement of whatever payment it has made to the employee to
answer for the money claims against the foreign employer.61
Represented in the Philippines:
WHEREFORE, the petition is DENIED. Petitioner is ordered to pay respondent:
JOB ASIA MANAGEMENT SERVICES
By: Mr. JAIME M. ARREO 1. Reimbursement of respondent's placement fee with interest at the rate of 12% per
(Managing Consultant) annum;

and persons authorized by Agent Company who will be jointly and severally responsible 2. Two Million Five Hundred Forty-Eight Thousand Seven Hundred Pesos (₱2,548,
to [sic] compliance herewith: 700.00) representing Bautista's salaries for the unexpired portion of his contract;

and 3. Moral damages in the amount of One Hundred Fifty Thousand Pesos (₱150,000.00);

B. EMPLOYEE: SALVADOR BUSTILLO BAUTISTA58 (Emphasis supplied.) 4. Exemplary damages in the amount of One Hundred Fifty Thousand Pesos
(₱150,000.00); and
xxxx
5. Attorney's fees at the rate of 10% of the monetary award exclusive of damages and
Petitioner thus cannot evade liability by claiming that she did not have any control over the reimbursement of placement fee in the amount of Two Hundred Fifty-Four Thousand
foreign employer and had nothing to do with Bautista's dismissal, because her liability is defined Eight Hundred Seventy Pesos (₱254,870.00).
by law and contract.
All monetary awards and damages (except reimbursement of placement fee) shall earn 6%
We have held that the burden devolves not only upon the foreign-based employer but also on the interest from finality of this judgment until fully paid.
employment or recruitment agency to adduce evidence to convincingly show that the worker's
employment was validly and legally terminated. This is because the latter is not only an agent of SO ORDERED.
the former, but is also solidarily liable with the foreign principal for any claims or liabilities arising
from the dismissal of the worker. 59 DUE PROCESS
7.
R.A. No. 8042 is a police power measure intended to regulate the recruitment and deployment of
OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered by numerous OFWs JULY 17, 2018
seeking to work abroad.60
G.R. No. 202275
In Sameer, we explained that the provision on joint and several liability in R.A. No. 8042 is in line
with the state's policy of affording protection to labor and alleviating workers' plight. It assures
THE PROVINCIAL BUS OPERATORS ASSOCIATION OF THE PHILIPPINES (PBOAP), THE SOUTHERN
overseas workers that their rights will not be frustrated by difficulties in filing money claims
LUZON BUS OPERATORS ASSOCIATION, INC. (SO-LUBOA), THE INTER CITY BUS OPERATORS
against foreign employers. Hence, in the case of overseas employment, either the local agency or
ASSOCIATION (INTERBOA), and THE CITY OF SAN JOSE DEL MONTE BUS OPERATORS
the foreign employer may be sued for all claims arising from the foreign employer's labor law
ASSOCIATION (CSJDMBOA), Petitioners
violations. This way, the overseas workers are assured that someone-at the very least, the foreign
vs.
employer's local agent-may be made to answer for violations that the foreign employer may have
DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) and LAND TRANSPORTATION
committed. By providing that the -liability of the foreign employer may be "enforced to the full
FRANCHISING AND REGULATORY BOARD (LTFRB), Respondents
extent" against the local agent, the overseas worker is assured of immediate and sufficient

20
 DECISION
LEONEN, J.:
Government created policy based on the finding that the boundary payment scheme that has
since determined the take-home pay of bus drivers and conductors has been proven inadequate in
providing our public utility bus drivers and conductors a decent and living wage. It decided that
this was the best approach to ensure that they get the economic and social welfare benefits that
they deserve. This Court will not stand in its way. Policy questions are not what this Court decides.
This resolves an original action for certiorari and prohibition, assailing the constitutionality of the
following:
First, the Department of Labor and Employment (DOLE) Department Order No. 118-12, otherwise
known as the Rules and Regulations Governing the Employment and Working Conditions of
Drivers and Conductors in the Public Utility Bus Transport Industry;
Second, all the implementing guidelines issued pursuant to Department Order No. 118-12, including
the National Wages and Productivity Commission's Guidelines No. 1, series of 2012, otherwise
known as the Operational Guidelines on Department Order No. 118-12; and
Finally, the Land Transportation Franchising and Regulatory Board (LTFRB) Memorandum Circular
No. 2012-001, the subject of which is the Labor Standards Compliance Certificate.
Petitioners Provincial Bus Operators Association of the Philippines, Southern Luzon Bus Operators
Association, Inc., Inter City Bus Operators Association, and City of San Jose Del Monte Bus
Operators Association (collectively, petitioners) argue that Department Order No. 118-12 and
Memorandum Circular No. 2012-001 violate the constitutional rights of public utility bus operators
to due process of law, equal protection of the laws, and non-impairment of obligation of
contracts.
The facts of the case are as follows:
To ensure road safety and address the risk-taking behavior of bus drivers as its declared objective,
the LTFRB issued Memorandum Circular No. 2012-001 1 on January 4, 2012, requiring "all Public
Utility Bus (PUB) operators . . . to secure Labor Standards Compliance Certificates" under pain of
revocation of their existing certificates of public convenience or denial of an application for a new
certificate. Memorandum Circular No. 2012-001 more particularly provides:
MEMORANDUM CIRCULAR
NUMBER 2012-001
21
SUBJECT: LABOR STANDARDS COMPLIANCE CERTIFICATE
This Memorandum Circular covers all Public Utility Bus (PUB) Operators and is being issued to
ensure road safety through linking of labor standards compliance with franchise regulation.
It is based on a DOLE rapid survey of bus drivers/conductors and operators on the working
conditions and compensation schemes in the bus transport sector. The survey results, as validated
in a series of focus group discussions with bus operators, drivers, government regulating agencies
and experts from the academe in the fields of engineering and traffic psychology, indicate that
the risk[-]taking behavior of drivers is associated with the lack of proper training on motor skills,
safety and on traffic rules and regulations; poor health due to long work hours and exposure to
health hazards and; lack of income security under a purely commission-based compensation
scheme. The industry players also cited problems with the enforcement of traffic rules and
regulations as well as the franchising and licensing systems.
To strictly enforce this Memorandum Circular, the Board, thru the [Department of Transportation
and Communication], shall strengthen cooperation and coordination with the Department of
Labor and Employment.
Labor Standards Compliance Certificate
To ensure compliance with the established standards for employment and the Board's policies on
the promotion of road safety, all Public Utility Bus (PUB) operators are required to secure Labor
Standards Compliance Certificates from the Department of Labor and Employment (DOLE).
The Certificate shall indicate compliance by the PUB operators with all relevant legislations on
wages, labor standards, terms and conditions of employment, and such mandatory benefits as
may now or in the future be provided under Philippine Labor Laws; Provided that -
Compensation Scheme
The compensation scheme set or approved by the DOLE shall cover the PUB drivers and
conductors and shall adopt a part-fixed-partperformance[-] based compensation system. The
fixed component shall at no time be lower than the applicable minimum wage in the region. The
performance[-]based component shall be based on the net income of the operator or bus
company and on employee safety records such as that in regard to involvement in road accidents,
commission of traffic violations, and observance of the elementary courtesies of the road.
All PUB drivers and conductors shall be entitled to other mandatory compensation such as but not
limited to overtime, night shift differential, rest day, holiday, birthday, and service incentive leave
pays.
Hours of Work
The number of working hours and rest periods of the drivers and conductors shall be determined
taking into consideration the existing conditions, peculiarities and requirements of the transport
industry.
Benefits
All PUB drivers and conductors shall likewise be entitled to retirement benefits and to all
mandatory social security benefits such as membership in the SSS, Philhealth and Pag-Ibig as
specified by law.
Right to Self Organization
The right of the drivers and conductors to organize themselves to advance their interests and
welfare shall be encouraged. It shall not in any way be abridged or diminished by way of any
agreement or contract entered into in complying with this issuance or in obtaining the Labor
Standards Compliance Certificate.
Nothing herein shall be interpreted to mean as precluding the PUB operators and the drivers or
conductors from entering into collective bargaining agreements granting them more rights,
privileges and benefits.
Company policies and practices, and collective bargaining agreements existing on effectivity of
this issuance which grant more rights, privileges, and benefits to the drivers and conductors than
herein provided shall continue to be in effect and shall not be diminished by virtue hereof or any
subsequent policies or agreements.
The exercise of the right to self-organization shall m no way adversely affect public safety and
convenience.
Effectivity
Failure on the part of the PUB operators to secure and submit to the Board by July 30, 2012 the
required Labor Standards Certificates shall be a ground for the immediate cancellation or
revocation of their franchises/[Certificates of Public Convenience].
No application for new [Certificates of Public Convenience] or renewal of existing [Certificates of
Public Convenience] shall thereafter be granted by the Board without the required Certificates.
22
This Memorandum Circular shall take effect fifteen (15) days following its publication in at least
two (2) newspapers of general circulation. Let three (3) copies hereof be filed with the UP [L]aw
Center pursuant to Presidential Memorandum Circular No. 11, dated 9 October 1992.
SO ORDERED.
Five (5) days later or on January 9, 2012, the DOLE issued Department Order No. 118-12, elaborating
on the part-fixed-part-performance-based compensation system referred to in the L TFRB
Memorandum Circular No. 2012-001.2 Department Order No. 118-12, among others, provides for the
rule for computing the fixed and the performance-based component of a public utility bus driver's
or conductor's wage. Relevant portions of Department Order No. 118-12 provide:
DEPARTMENT ORDER NO.118-12
Series of 2012
RULES AND REGULATIONS GOVERNING THE EMPLOYMENT AND WORKING CONDITIONS OF
DRIVERS AND CONDUCTORS IN THE PUBLIC UTILITY BUS TRANSPORT INDUSTRY
Pursuant to the provision of Article 5 of the Labor Code of the Philippines, as amended, the
following rules and regulations are hereby issued to ensure the protection and welfare of drivers
and conductors employed in the public utility bus transport industry:
....
RULE II
TERMS AND CONDITIONS OF EMPLOYMENT
SECTION 1. Employment Agreement for Drivers and Conductors. -There shall be an agreement in
writing between the public utility bus owner/operator and the public utility bus driver and/or
conductor, which shall include the following terms:
a) Driver['s] or conductor's full name, date of birth or age, address, civil status,
and SSS ID no.;
b) Public Utility Bus owner's/operator's name and address;
c) Place where and date when the employment agreement is entered into;
d) Amount of the driver's or conductor's fixed wage and formula used for
calculating the performance[-]based compensation in accordance with Rule III
(Compensation), as provided hereunder;
 e) Hours of work;
f) Wages and wage-related benefits such as overtime pay, holiday pay,
premium pay, 13th month pay and leaves;
g) Social security and welfare benefits;
h) Separation and retirement benefits; and
i) Other benefits under existing laws.
The public utility bus owner/operator shall provide the public utility bus driver/conductor the
signed and notarized original copy of the agreement.
SECTION 2. Minimum Benefits. - The public utility bus drivers and conductors are entitled to the
following benefits:
a) Wages for all actual work during the normal work hours and days shall not
be lower than the applicable minimum wage rates. Wages shall be paid at least
once every two weeks or twice a month at intervals not exceeding 16 days;
b) Twelve (12) Regular Holidays with pay pursuant to Republic Act 9849 (An Act
Declaring The Tenth Day of Zhul Hijja, The Twelfth Month of The Islamic Calendar,
A National Holiday For The Observance of Eidul Adha, Further Amending For The
Purpose Section 26, Chapter 7, Book I of Executive Order No. 292, Otherwise
Known As The Administrative Code of 1987, As Amended). The driver/conductor
shall be paid holiday pay of 100% of the minimum wage even if he/she does not
report for work, provided he/she is present or is on leave of absence with pay
on the workday immediately preceding the holiday. If the driver/conductor is
required to work on said holiday, he/she shall be paid 200% of the minimum
wage;
c) Rest day of twenty-four (24) consecutive hours for every six (6) consecutive
working days. If the driver/conductor is required to work on a rest day, he/she
shall be paid an additional premium pay of 30% of the basic wage. If the
driver/conductor is required to work on special days under Republic Act No.
9849, he/she shall also be paid an additional premium pay of 30% of the basic
wage. Whenever work is performed on a rest day, which happens to be also a
special day, he/she is entitled to an additional 50% of the basic wage;
23
d) Overtime pay equivalent to at least 25% of the basic wage on ordinary days
and 30% on regular holidays, special days and rest days for work beyond eight
(8) hours per day;
e) Night shift pay of an additional 10% of the basic wage for work between
10:00 pm and 6:00 am of the following day;
f) Paid service incentive leave of five (5) days for every year of service;
g) 13th month pay pursuant to Presidential Decree No. 851, as amended, which
entitles the employee to receive an amount equivalent to 1112 of the total basic
salary earned within the calendar year, not later than 24 December of each
year;
h) Paid maternity leave of sixty (60) days for normal delivery or seventy[-]eight
(78) days for caesarian section delivery, pursuant to Republic Act No. 8282,
otherwise known as the Social Security Act of 1997;
i) Paid paternity leave of seven (7) days, pursuant to Republic Act No. 8187,
otherwise known as the Paternity Leave Act of 1996;
j) Paid parental leave of seven (7) days for solo parents pursuant to Republic
Act No. 8972, otherwise known as the Solo Parents' Welfare Act of 2000;
k) Paid leave of ten (10) days for victims of violence against women and their
children, pursuant to Republic Act No. 9262, otherwise known as the Anti-
Violence Against Women and Their Children Act of 2004;
l) Paid special leave for women who underwent surgery caused by
gynecological disorders, pursuant to Republic Act No. 9710, otherwise known
as the Magna Carta for Women; and
m) Retirement pay upon reaching the age of sixty (60) or more, pursuant to
Republic Act No. 7641.
SECTION 3. Hours of Work and Hours of Rest. - The normal hours of work of a driver and conductor
shall not exceed eight (8) hours a day.
If the driver/conductor is required to work overtime, the maximum hours of work shall not exceed
twelve (12) hours in any 24-hour period, subject to the overriding safety and operational
conditions of the public utility bus.
Drivers and conductors shall be entitled to rest periods of at least one (1) hour, exclusive of meal
breaks, within a 12-hour shift.
SECTION 4. Right to Security of Tenure. - Drivers and conductors shall enjoy security of tenure in
their employment as provided by law. Their employment can only be terminated for just or
authorized causes pursuant to the provisions of the Labor Code, as amended.
....
RULE III
COMPENSATION
SECTION 1. Fixed and Performance[-]Based Compensation Scheme. - Bus owners and/or operators
shall adopt a mutually-agreed upon "part-fixed, part-performance" based compensation scheme
for their bus drivers and conductors.
SECTION 2. Method of Determining Compensation. - Bus owners and/or operators, in consultation
with their drivers and conductors shall determine the following:
[a]) The fixed component shall be based on an amount mutually agreed upon by the
owner/operator and the driver/conductor, which shall in no case be lower than the applicable
minimum wage for work during normal hours/days.
They shall also be entitled to wage[-]related benefits such as overtime pay, premium pay and
holiday pay, among others.
[b]) The performance-based component shall be based on safety performance, business
performance and other related parameters.
SECTION 3. Operational Guidelines. The [National Wages and Productivity Commission] shall
develop operational guidelines to implement the part-fixed, part[-]performance-based
compensation scheme including the formula that should be used by public utility bus companies
within fifteen ( 15) days after publication of th[ese] Rules.
SECTION 4. Submission of Proposed Compensation Scheme.
- All public utility bus owners and/or operators shall submit a proposed compensation scheme,
mutually agreed upon with their drivers/conductors, to the appropriate [Regional Tripartite
Wages and Productivity Board] for information and reference purposes based on Rule III, Section
2 of th[ese] Rules, within sixty (60) days after the effectivity of this Order.
....
24
RULE V
SOCIAL PROTECTION
SECTION 1. Social Welfare Benefits. - Without prejudice to established company policy, collective
bargaining agreement or other applicable employment agreement, all bus drivers and conductors
shall be entitled to coverage for social welfare benefits such as Pagibig Fund (Republic Act No.
7742), PhilHealth (Republic Act No. 7875, as amended by Republic Act No. 9241), Employees'
Compensation Law (Presidential Decree No. 626), Social Security Law (Republic Act No. 1161 as
amended by Republic Act No. 8282) and other applicable laws.
The cost of health services for the illnesses and injuries suffered by the driver and conductor shall
be covered by mandatory social welfare programs under existing laws.
RULE VI
TRAINING AND DEVELOPMENT
SECTION 1. Assessment and Certification. - The [Technical Education and Skills Development
Authority], in coordination with the [Occupational Safety and Health Center], the [Land
Transportation Office], the LTFRB and the [Metropolitan Manila Development Authority] shall
implement an assessment and certification program for professional drivers. The assessment will
focus on knowledge, attitude and skills.
SECTION 2. Driver Proficiency Standards. - The [Technical Education and Skills Development
Authority] shall work closely with LTFRB in the implementation of its Department Order No. 2011-
25 "Inclusion of Driver Proficiency Standard as Additional Requirement in the Exercise of the
Regulatory Powers of L TFRB to Issue Certificates of Public Convenience (CPC)". Applicants for
CPCs shall present sufficient proof and submit a list of its drivers who are duly certified by the
TESDA.
....
RULE VIII
COMPLIANCE AND ENFORCEMENT
....
SECTION 4. Failure to Comply/Restitute. - In case of violations committed by bus owners/operators
and failure to comply or correct such violations, the DOLE shall coordinate with the L TFRB on the
matter of appropriate action, including possible cancellation of franchise after due process.
....
 RULE IX
MISCELLANEOUS PROVISIONS
SECTION 1. Transitory Provisions. - Th[ese] Rules shall initially cover the public utility bus transport
companies exclusively serving or plying Metro Manila routes and shall apply to other public utility
bus companies by July 2012.
In the first six months but not later than one year from the effectivity of th[ese] Rules, the
provisions herein stated shall be liberally construed to enable compliance by the public utility bus
companies.
SECTION 2. Operational Guidelines. Operational guidelines to implement th[ese] Rules shall be
issued by concerned DOLE agencies (i.e., [Bureau of Working Conditions], [Occupational Safety
and Health Center], [National Conciliation and Mediation Board], and [Technical Education and
Skills Development Authority]) within fifteen (15) days after its publication.
SECTION 3. Technical Assistance to Public Utility Bus Transport Companies. - Public utility bus
operators may request for technical assistance from concerned DOLE agencies in the
implementation of th[ese] Rules.
SECTION 4. Non-diminution of Benefits. - Nothing herein shall be construed to authorize
diminution of benefits being enjoyed by the bus drivers and conductors at the time of the
issuance hereof.
SECTION 5. Effect on Existing Company Policy, Contracts or CBAs. - The minimum benefits provided
in th[ese] Rules shall be without prejudice to any company policy, contract, or Collective
Bargaining Agreement (CBA) providing better terms and conditions of employment.
On January 28, 2012, Atty. Emmanuel A. Mahipus, on behalf of the Provincial Bus Operators
Association of the Philippines, Integrated Metro Manila Bus Operators Association, Inter City Bus
Operators Association, the City of San Jose Del Monte Bus Operators Association, and Pro-Bus,
wrote to then Secretary of Labor and Employment Rosalinda Dimapilis-Baldoz, requesting to defer
the implementation of Department Order No. 118-12.3 The request, however, was not acted upon.
Meanwhile, on February 27, 2012 and in compliance with Rule III, Section 3 of Department Order
No. 118-12, the National Wages and Productivity Commission issued NWPC Guidelines No. 1 to
serve as Operational Guidelines on Department Order No. 118-12. NWPC Guidelines No. 1
suggested formulae for computing the fixed-based and the performance-based components of a
bus driver's or conductor's wage. Relevant portions of the NWPC Guidelines, including its Annex
"A" on a sample computation implementing the part-fixed-part-performance-based compensation
scheme, are reproduced below:
25
NWPC GUIDELINES NO.1
(series 2012)
OPERATIONAL GUIDELINES ON DEPARTMENT ORDER NO. 118-12 "RULES AND REGULATIONS
GOVERNING THE EMPLOYMENT AND WORKING CONDITIONS OF DRIVERS AND CONDUCTORS IN
THE PUBLIC UTILITY BUS TRANSPORT INDUSTRY"
Pursuant to Section 3 of Rule III of Department Order No. 118-12 "Rules and Regulations Governing
the Employment and Working Conditions of Drivers and Conductors in the Public Utility Bus
Transport Industry,["] the following operational guidelines on the adoption of a part-fixed, part-
performance[-]based compensation scheme is hereby issued:
RULE I
COVERAGE AND DEFINITION OF TERMS
SECTION 1. Coverage. - Th[ese] Guidelines shall apply to all public utility bus owners and/or
operators employing drivers and conductors. Owners/operators of coaches, school, tourist and
similar buses who are holders of Certificates of Public Convenience (CPC) issued by the Land
Transportation Franchising and Regulatory Board (L TFRB), however, are not covered by the
provisions of th[ese] Guidelines.
....
RULE II
COMPENSATION
SECTION 1. Part-Fixed, Part-Performance[-]Based Compensation Scheme.
a) Bus owners and/or operators shall adopt a mutually-agreed upon "partfixed, pai1-performance"
based compensation scheme for bus drivers and conductors. It shall take into consideration
revenue, ridership, safety, specific conditions of routes and other relevant parameters. (Annex A -
Sample Computation)
SECTION 2. Fixed Wage Component.
a) The fixed wage component shall be an amount mutually agreed upon by the
owner/operator and the driver/conductor and shall be paid in legal tender. It
shall in no case be lower than the applicable minimum wage (basic wage +
COLA) for work performed during normal hours/days. It shall include wage[-
]related benefits such as overtime pay, nightshift differential, service incentive
leave and premium pay among others. The payment of 13th month pay, holiday
and service incentive leave may be integrated into the daily wage of drivers
 and conductors, upon agreement of both owners/operators and drivers and
conductors.
b) The fixed wage may be based on a time unit of work (e.g. hourly, daily or
monthly). It may also be based on a per trip or per kilometer basis where the
drivers/conductors and operators may consider the minimum number of trips
or kilometres/distance travelled within an 8-hour period, as basis for
determining regular/normal workload for an 8-hour period. The fixed wage
may be computed as follows:
Fixed Wage (Time Rate) = (Basic Wage+ Wage-Related Benefits)
OR
Fixed Wage (Trip Basis) = Rate per Trip x No. of Trips per Day
SECTION 3. Performance-Based Wage Component.
a) The performance-based wage component shall be based on business performance, safety
performance and other relevant parameters. Business performance shall consider
revenue/ridership. Safety performance shall consider safety records such as the incidence of road
accident and traffic violation. The performance-based wage may be computed as follows:
Reference Amount of Performance Incentive= (Current Average Daily Earnings - Fixed Wage) x
Y%
Where:
i. Current average daily earnings shall be estimated based on average
daily earnings for 2011 and/or prior years, as may be agreed upon.
ii. Y - range of values (in percent) that correspond to various levels of
safety performance, such that:
• The lower the incidence of traffic violations and road
accidents, the higher will be the value of Y and the
performance incentive
• The higher the incidence of traffic violations and road
accidents, the lower will be the value of Y and the
performance incentive
26
b) Bus operators/owners and drivers/conductors may modify or use other formula for their
compensation scheme provided it is in accordance with the part-fixed[-]part-performance[-]based
compensation scheme as provided herein.
....
SECTION 7. Submission of Proposed Compensation Scheme.- All public utility bus owners and/or
operators shall submit theirproposed compensation scheme, mutually agreed upon with their
drivers/conductors, to the [Regional Tripartite Wage and Productivity Board] having jurisdiction
over the principal place of business of the public utility bus operator, within sixty (60) days after
the effectivity of the Guidelines using the attached Proposed Compensation Form (Annex B). This
form shall be accomplished in duplicate (2) and shall be accompanied by a duly signed
employment agreement between the bus owner/operator and bus driver and between the bus
owner/operator and bus conductor.
Upon submission, the concerned [Regional Tripartite Wage and Productivity Board] shall review
the compensation scheme for conformity with Rule II of the Guidelines. If found not in
conformance with the Guidelines, the [Regional Tripartite Wage and Productivity Board] shall
provide technical assistance to the concerned bus owner/operator to correct the non-
conformance. The [Regional Tripartite Wage and Productivity Board] shall thereafter furnish the
DOLE-[Regional Office] a copy of the compensation scheme and the agreements.
RULE III
MISCELLANEOUS PROVISIONS
....
SECTION 2. Non-diminution of Benefits. - Nothing herein shall be construed to authorize
diminution or reduction of existing wages and benefits being enjoyed by the bus drivers and
conductors.
On July 4, 2012, petitioners filed before this Court a Petition with Urgent Request for Immediate
Issuance of a Temporary Restraining Order and/or a Writ of Preliminary Injunction,4 impleading
the DOLE and the LTFRB as respondents. They pray that this Court enjoin the implementation of
Department Order No. 118-12 and Memorandum Circular No. 2012-001 for being violative of their
right to due process, equal protection, and non-impairment of obligation of contracts.
In its July 11, 2012 Resolution,5 this Court deferred the issuance of a status quo ante order and,
instead, required the DOLE and the L TFRB to comment on the Petition.
On July 13, 2012, petitioners filed the Urgent Manifestation with Motion for Clarification, 6 alleging
that Atty. Ma. Victoria Gleoresty Guerra announced in a press conference that this Court agreed to
issue a status quo ante order in the case. They prayed that this Court clarify whether a status quo
ante order was indeed issued.
In its July 13, 2012 Resolution, 7 this Court noted without action the Urgent Manifestation with
Motion for Clarification.
A Very Urgent Motion for Reconsideration8 of the July 13, 2012 Resolution was filed by petitioners
on which respondents filed a Comment.9
On July 27, 2012, the Metropolitan Manila Development Authority (MMDA) filed a Motion for
Leave to Intervene, 10 alleging "direct and material interest in upholding the constitutionality of
[Department Order No. 118-12 and Memorandum Circular No. 2012-001]." 11 This Court granted the
MMDA's Motion in its August 10, 2012 Resolution. 12
On August 22, 2012, the DOLE and the LTFRB filed their Comment13 via registered mail after which
petitioners filed their Reply. 14 For intervenor MMDA, it filed its Comment-in-Intervention15 on
January 8, 2013.
In its September 3, 2013 Resolution, 16 this Court directed the parties to file their respective
memoranda. In compliance, petitioners filed their Memorandum17 on October 10, 2013, while the
DOLE, the LTFRB, and the MMDA filed a Consolidated Memorandum18 on November 6, 2013.
As earlier stated, petitioners assail the constitutionality of Department Order No. 118-12 and
Memorandum Circular No. 2012-001, arguing that these issuances violate petitioners' rights to non-
impairment of obligation of contracts, due process of law, and equal protection of the laws.
Particularly with respect to Department Order No. 118-12, its provisions on the payment of part-
fixed-part-performance-based wage allegedly impair petitioners' obligations under their existing
collective bargaining agreements where they agreed with their bus drivers and conductors on a
commission or boundary basis. They contend that Memorandum Circular No. 2012-001 further
requires compliance with Department Order No. 118-12 under threat of revocation of their
franchises, which allegedly deprive petitioners of the capital they invested in their businesses in
violation of their right to due process of law.
Petitioners add that the initial implementation of Department Order No. 118-12 within Metro
Manila allegedly creates an arbitrary distinction between bus operators operating in Metro Manila
and those operating outside of Metro Manila, in violation of petitioners' right to equal protection
of the laws.
Respondents counter that petitioners have no legal standing to file the present Petition
considering that Department Order No. 118-12 and Memorandum Circular No. 2012-001 are directed
against bus operators, not against associations of bus operators such as petitioners. They add that
petitioners violated the doctrine of hierarchy courts in directly filing their Petition before this
Court. For these reasons, respondents pray for the dismissal of the Petition.
27
On the constitutional issues raised by petitioners, respondents contend that Department Order
No. 118-12 and Memorandum Circular No. 2012-001 are valid issuances promulgated by the DOLE
and the LTFRB in the exercise of their quasi-legislative powers.
Further, they argue that Department Order No. 118-12 and Memorandum Circular No. 2012-001 do
not violate public utility bus operators' rights to non-impairment of obligation of contracts, due
process of law, and equal protection of the laws for the following reasons:
First, Department Order No. 118-12 and Memorandum Circular No. 2012-001 were issued "[to
promote and protect] the welfare of the public utility bus drivers and conductors"19 and "[to
ensure] road safety"20 by imposing a wage system where public utility bus drivers do not have to
compete with one another and drive recklessly for additional income.21 Department Order No. 118-
12 and Memorandum Circular No. 2012-001 are social legislations and police power measures to
which petitioners' right against impairment of obligation of contracts must yield22;
Second, certificates of public convenience are not property and are always subject to amendment,
alteration, or repeal. Therefore, public utility bus operators cannot argue that they were deprived
of their property without due process of law when the LTFRB required further compliance with
Memorandum Circular No. 2012-001 for bus operators to retain their franchises23; and
Finally, Department Order No. 118-12 does not violate Metro Manila public utility bus operators'
right to equal protection of the laws since it applies to all public utility bus operators in the
country.24
Based on the pleadings, the issues for this Court's resolution are the following:
First, whether or not petitioners Provincial Bus Operators Association of the Philippines, Southern
Luzon Bus Operators Association, Inc., Inter City Bus Operators Association, and City of San Jose
Del Monte Bus Operators Association have legal standing to sue;
Second, whether or not this case falls under any of the exceptions to the doctrine of hierarchy of
courts;
Third, whether or not the DOLE Department Order No. 118-12 and the LTFRB Memorandum
Circular No. 2012-001 deprive public utility bus operators of their right to due process of law;
Fourth, whether or not the DOLE Department Order No. 118-12 and the LTFRB Memorandum
Circular No. 2012-001 impair public utility bus operators' right to non-impairment of obligation of
contracts; and
Finally, whether or not the DOLE Department Order No. 118-12 and the LTFRB Memorandum
Circular No. 2012-001 deny public utility bus operators of their right to equal protection of the
laws.
This Court dismisses the Petition. Petitioners fail to respect the doctrine of hierarchy of courts by
directly invoking this Court's jurisdiction without any special reason. They fail to present an actual
controversy ripe for adjudication and do not even have the requisite standing to file this case.
Even if this Court proceeds on the merits, petitioners fail to show the unconstitutionality of the
DOLE Department Order No. 118-12 and the LTFRB Memorandum Circular No. 2012-001.
I and Osmeña, G. R. Nos. 46076 and 46077, promulgated June 12, 1939.) Accordingly, with the
The Constitution vests in this Court and such lower courts as may be established by law the power
to "declare executive and legislative acts void if violative of the Constitution."25 This Court's power
of judicial review is anchored on Article VIII, Section 1 of the Constitution:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the government.
Our governmental structure rests on the principle of separation of powers. Under our
constitutional order, the legislative branch enacts law, the executive branch implements the law,
and the judiciary construes the law. In reality, however, the powers are not as strictly confined or
delineated to each branch. "[T]he growing complexity of modern life, the multiplication of the
subjects of governmental regulation, and the increased difficulty of administering the
laws"26 require the delegation of powers traditionally belonging to the legislative to
administrative agencies. The legislature may likewise apportion competencies or jurisdictions to
administrative agencies over certain conflicts involving special technical expertise.
Administrative actions reviewable by this Court, therefore, may either be quasi-legislative or quasi-
judicial. As the name implies, quasi-legislative or rule-making power is the power of an
administrative agency to make rules and regulations that have the force and effect of law so long
as they are issued "within the confines of the granting statute."27 The enabling law must be
complete, with sufficient standards to guide the administrative agency in exercising its rule-
making power.28 As an exception to the rule on non-delegation of legislative power,
administrative rules and regulations must be "germane to the objects and purposes of the law,
and be not in contradiction to, but in conformity with, the standards prescribed by
law."29 In Pangasinan Transportation Co., Inc. v. The Public Service Commission, 30 this Court
28
recognized the constitutional permissibility of the grant of quasi-legislative powers to
administrative agencies, thus:
One thing, however, is apparent in the development of the principle of separation of powers and
that is that the maxim of delegatus non potest delegari or delegata potestas non potest
delegari, attributed to Bracton (De Legibus et Consuetedinious Angliae, edited by G .E. Woodbine,
Yale University Press, 1922, vol. 2, p. 167) but which is also recognized in principle in the Roman
Law (D. 17.18.3), has been made to adapt itself to the complexities of modern governments, giving
rise to the adoption, within certain limits, of the principle of "subordinate legislation," not only in
the United States and England but in practically all modem governments. (People vs. Rosenthal
growing complexity of modern life, the multiplication of the subjects of governmental regulation,
and the increased difficulty of administering the laws, there is a constantly growing tendency
toward the delegation of greater powers by the legislature, and toward the approval of the
practice by the courts. (Dillon Catfish Drainage Dist. v. Bank of Dillon, 141 S. E. 274, 275, 143 S. Ct.
178; State v. Knox County, 54 S. W. 2d. 973, 976, 165 Tenn. 319.) In harmony with such growing
tendency, this Court, since the decision in the case of Compañia General de Tabacos de
Filipinas vs. Board of Public Utility Commissioners (34 Phil., 136), relied upon by the petitioner, has,
in instances, extended its seal of approval to the "delegation of greater powers by the
legislature." (Inchausti Steamship Co. vs. Public Utility Commissioner, 44 Phil., 366;
Alegre vs. Collector of Customs, 53 Phil., 394; Cebu Autobus Co. vs. De Jesus, 56 Phil., 446;
People vs. Fernandez & Trinidad, G. R. No. 45655, promulgated June 15, 1938; People vs. Rosenthal
& Osmeña, G. R. Nos. 46076, 46077, promulgated June 12, 1939; and Robb and Hilscher vs. People,
G.R. No. 45866, promulgated June 12, 1939.)31
On the other hand, quasi-judicial or administrative adjudicatory power is "the power to hear and
determine questions of fact to which the legislative policy is to apply and to decide in accordance
with the standards laid down by the law itself in enforcing and administering the same law." 32 The
constitutional permissibility of the grant of quasi-judicial powers to administrative agencies has
been likewise recognized by this Court. In the 1931 case of The Municipal Council of Lemery,
Batangas v. The Provincial Board of Batangas,33 this Court declared that the power of the Municipal
Board of Lemery to approve or disapprove a municipal resolution or ordinance is quasi-judicial in
nature and, consequently, may be the subject of a certiorari proceeding.
Determining whether the act under review is quasi-legislative or quasi-judicial is necessary in
determining when judicial remedies may properly be availed of. Rules issued in the exercise of an
administrative agency's quasi-legislative power may be taken cognizance of by courts on the first
instance as part of their judicial power, thus:
[W]here what is assailed is the validity or constitutionality of a rule or regulation issued by the
administrative agency in the performance of its quasi-legislative function, the regular courts have
jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules
issued by an administrative agency contravenes the law or the constitution is within the
jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review or the
power to declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the regional trial courts. This is within
the scope of judicial power, which includes the authority of the courts to determine in an
appropriate action the validity of the acts of the political departments. Judicial power includes the
duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality
of the Government. 34 (Citations omitted)
However, in cases involving quasi-judicial acts, Congress may require certain quasi-judicial
agencies to first take cognizance of the case before resort to judicial remedies may be allowed.
This is to take advantage of the special technical expertise possessed by administrative
agencies. Pambujan Sur United Mine Workers v. Samar Mining Company, lnc.35 explained the
doctrine of primary administrative jurisdiction, thus:
That the courts cannot or will not determine a controversy involving a question which is within the
jurisdiction of an administrative tribunal prior to the decision of that question by the
administrative tribunal, where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience, and services of the administrative tribunal
to determine technical and intricate matters of fact, and a uniformity of ruling is essential to
comply with the purposes of the regulatory statute administered. 36
Usually contrasted with the doctrine of primary jurisdiction is the doctrine of exhaustion of
administrative remedies. Though both concepts aim to maximize the special technical knowledge
of administrative agencies, the doctrine of primary administrative jurisdiction requires courts to
not resolve or "determine a controversy involving a question which is within the jurisdiction of an
administrative tribunal."37 The issue is jurisdictional and the court, when confronted with a case
under the jurisdiction of an administrative agency, has no option but to dismiss it.38
In contrast, exhaustion of administrative remedies requires parties to exhaust all the remedies in
the administrative machinery before resorting to judicial remedies. The doctrine of exhaustion
presupposes that the court and the administrative agency have concurrent jurisdiction to take
cognizance of a matter. However, in deference to the special and technical expertise of the
administrative agency, courts must yield to the administrative agency by suspending the
proceedings. As such, parties must exhaust all the remedies within the administrative machinery
before resort to courts is allowed.
Discussion of the doctrines of primary jurisdiction and exhaustion of administrative remedies
aside, the present case does not require the application of either doctrine. Department Order No.
118-12 and Memorandum Circular No. 2012-001 were issued in the exercise of the DOLE's39 and the
LTFRB's40 quasi-legislative powers and, as discussed, the doctrines of primary jurisdiction and
exhaustion of administrative remedies may only be invoked in matters involving the exercise of
quasi-judicial power. Specifically, Department Order No. 118-12 enforces the application of labor
standards provisions, i.e., payment of minimum wage and grant of social welfare benefits in the
29
public bus transportation industry. For its part, Memorandum Circular No. 2012-001 was issued by
the LTFRB in the exercise of its power to prescribe the terms and conditions for the issuance of a
certificate of public convenience and its power to promulgate and enforce rules and regulations
on land transportation public utilities.
II
While resort to courts may directly be availed of in questioning the constitutionality of an
administrative rule, parties may not proceed directly before this Court, regardless of its original
jurisdiction over certain matters. This Court's original jurisdiction over petitions for certiorari and
prohibition41 may only be invoked for special reasons under the doctrine of hierarchy of courts.
The doctrine of hierarchy of courts requires that recourse must first be obtained from lower
courts sharing concurrent jurisdiction with a higher court.42 This is to ensure that this Court
remains a court of last resort so as to "satisfactorily perform the functions assigned to it by the
fundamental charter and immemorial tradition."43
The doctrine was first enunciated in People v. Cuaresma44 where a petition for certiorari assailing a
trial court order granting a motion to quash was directly filed before this Court. Noting that there
was no special reason for invoking this Court's original jurisdiction, this Court dismissed the
petition and required the "strict observance" of the policy of hierarchy of courts, thus:
This Court's original jurisdiction to issue writs of certiorari (as well as prohibition, mandamus, quo
warranto, habeas corpus and injunction) is not exclusive. It is shared by this Court with Regional
Trial Courts (formerly Courts of First Instance), which may issue the writ, enforceable in any part
of their respective regions. It is also shared by this Court, and by the Regional Trial Court, with the
Court of Appeals (formerly, Intermediate Appellate Court), although prior to the effectivity
of Batas Pambansa Bilang 129 on August 14, 1981, the latter's competence to issue the
extraordinary writs was restricted to those "in aid of its appellate jurisdiction." This concurrence
of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an
absolute, unrestrained freedom of choice of the court to which application therefor will be
directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of
appeals, and should also serve as a general determinant of the appropriate forum for petitions for
the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court's original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the
petition. This is established policy. It is a policy that is necessary to prevent inordinate demands
upon the Court's time and attention which are better devoted to those matters within its
exclusive jurisdiction, and to prevent further over-crowding of the Court's docket. Indeed, the
removal of the restriction on the jurisdiction of the Court of Appeals in this regard, supra -
resulting from the deletion of the qualifying phrase, "in aid of its appellate jurisdiction" - was
evidently intended precisely to relieve this Court pro tanto of the burden of dealing with
applications for the extraordinary writs which, but for the expansion of the Appellate Court['s]
corresponding jurisdiction, would have had to be filed with it.
The Court feels the need to reaffirm that policy at this time, and to enjoin strict adherence thereto
in the light of what it perceives to be a growing tendency on the part of litigants and lawyers to
have their applications for the so-called extraordinary writs, and sometime even their appeals,
passed upon and adjudicated directly and immediately by the highest tribunal of the land. The
proceeding at bar is a case in point. The application for the writ of certiorari sought against a City
Court was brought directly to this Court although there is discernible special and important reason
for not presenting it to the Regional Trial Court.
The Court therefore closes this decision with the declaration, for the information and guidance of
all concerned, that it will not only continue to enforce the policy, but will require a more strict
observance thereof. 45 (Citations omitted)
More recently, this Court in The Diocese of Bacolod v. Commission on Elections46explained the
purpose of the doctrine: to "ensure that every level of the judiciary performs its designated roles
in an effective and efficient manner."47 This Court said:
Trial courts do not only determine the facts from the evaluation of the evidence presented before
them. They are likewise competent to determine issues of law which may include the validity of an
ordinance, statute, or even an executive issuance in relation to the Constitution. To effectively
perform these functions, they are territorially organized into regions and then into branches. Their
writs generally reach within those territorial boundaries. Necessarily, they mostly perform the all-
important task of inferring the facts from the evidence as these are physically presented before
them. In many instances, the facts occur within their territorial jurisdiction, which properly present
the 'actual case' that makes ripe a determination of the constitutionality of such action. The
consequences, of course, would be national in scope. There are, however, some cases where
resort to courts at their level would not be practical considering their decisions could still be
appealed before the higher courts, such as the Court of Appeals.
The Court of Appeals is primarily designated as an appellate court that reviews the determination
of facts and law made by the trial courts. It is collegiate in nature. This nature ensures more
standpoints in the review of the actions of the trial court. But the Court of Appeals also has
original jurisdiction over most special civil actions. Unlike the trial courts, its writs can have a
nationwide scope. It is competent to determine facts and, ideally, should act on constitutional
issues that may not necessarily be novel unless there are factual questions to determine.
This court, on the other hand, leads the judiciary by breaking new ground or further reiterating - in
the light of new circumstances or in the light of some confusions of bench or bar - existing
precedents. Rather than a court of first instance or as a repetition of the actions of the Court of
Appeals, this court promulgates these doctrinal devices in order that it truly performs that
role.48 (Citation omitted)
30
For this Court to take cognizance of original actions, parties must clearly and specifically allege in
their petitions the special and important reasons for such direct invocation. 49 One such special
reason is that the case requires "the proper legal interpretation of constitutional and statutory
provisions."50 Cases of national interest and of serious implications,51 and those of transcendental
importance52 and of first impression53 have likewise been resolved by this Court on the first
instance.
In exceptional cases, this Court has also overlooked the rule to decide cases that have been
pending for a sufficient period of time. 54 This Court has resolved original actions which could have
been resolved by the lower courts in the interest of speedy justice55 and avoidance of delay. 56
Generally, the rule on hierarchy of courts may be relaxed when "dictated by public welfare and
the advancement of public policy, or demanded by the broader interest of justice, or the orders
complained of were found to be patent nullities, or the appeal was considered as clearly an
inappropriate remedy."57 For all other cases, the parties must have exhausted the remedies
available before the lower courts. A petition filed in violation of the doctrine shall be dismissed. 58
Based on the allegations in the present Petition, this Court finds no special reason for petitioners
to invoke this Court's original jurisdiction.
The alleged "far-reaching consequences"59 and wide "area of coverage"60 of Department Order
No. 118-12 and Memorandum Circular No. 2012-001 are not special reasons. With these
justifications, petitioners could have very well filed their Petition before the Court of Appeals
whose writs, as discussed, are likewise nationwide in scope. The issues raised are not even of first
impression.
Petitioners, therefore, failed to respect the hierarchy of courts.
III
Furthermore, the issues raised in this Petition are not justiciable. The Petition presents no actual
case or controversy.
No less than the Constitution in Article VIII, Section 1 requires an actual controversy for the
exercise of judicial power:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may
be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving
rights which are legally demandable and enforceable, and to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government. (Underscoring supplied)
As a rule, "the constitutionality of a statute will be passed on only if, and to the extent that, it is
directly and necessarily involved in a justiciable controversy and is essential to the protection of
the rights of the parties concemed."61 A controversy is said to be justiciable if: first, there is an
actual case or controversy involving legal rights that are capable of judicial determination; second,
the parties raising the issue must have standing or locus standi to raise the constitutional issue;
third, the constitutionality must be raised at the earliest opportunity; and fourth, resolving the
constitutionality must be essential to the disposition of the case. 62
An actual case or controversy is "one which involves a conflict of legal rights, an assertion of
opposite legal claims susceptible of judicial resolution."63 A case is justiciable if the issues
presented are "definite and concrete, touching on the legal relations of parties having adverse
legal interests."64 The conflict must be ripe for judicial determination, not conjectural or
anticipatory; otherwise, this Court's decision will amount to an advisory opinion concerning
legislative or executive action.65 In the classic words of Angara v. Electoral Commission:66
[T]his power of judicial review is limited to actual cases and controversies to be exercised after full
opportunity of argument by the parties, and limited further to the constitutional question raised
or the very lis mota presented. Any attempt at abstraction could only lead to dialectics and barren
legal questions and to sterile conclusions unrelated to actualities. Narrowed as its function is in
this manner, the judiciary does not pass upon questions of wisdom, justice or expediency of
legislation. More than that, courts accord the presumption of constitutionality to legislative
enactments, not only because the legislature is presumed to abide by the Constitution but also
because the judiciary in the determination of actual cases and controversies must reflect the
wisdom and justice of the people as expressed through their representatives in the executive and
legislative departments of the governments. 67
Even the expanded jurisdiction of this Court under Article VIII, Section 168 does not provide license
to provide advisory opinions. An advisory opinion is one where the factual setting is conjectural or
hypothetical. In such cases, the conflict will not have sufficient concreteness or adversariness so
as to constrain the discretion of this Court. After all, legal arguments from concretely lived facts
are chosen narrowly by the parties. Those who bring theoretical cases will have no such limits.
They can argue up to the level of absurdity. They will bind the future parties who may have more
motives to choose specific legal arguments. In other words, for there to be a real conflict between
the parties, there must exist actual facts from which courts can properly determine whether there
has been a breach of constitutional text.
The absence of actual facts caused the dismissal of the petitions in Southern Hemisphere
Engagement Network, Inc. v. Anti-Terrorism Council. 69 In that case, the petitioners challenged the
constitutionality of Republic Act No. 93 72 or the Human Security Act of 2007 that defines and
punishes the crime of terrorism. They contended that since the enactment of the statute, they
31
had been subjected to "close security surveillance by state security forces" and branded as
"enemies of the State."70
In dismissing the petitions, this Court said that there were no "sufficient facts to enable the Court
to intelligently adjudicate the issues."71 Petitioners' allegations of "sporadic 'surveillance' and ...
being tagged as 'communist fronts'" were not enough to substantiate their claim of grave abuse
of discretion on the part of public respondents. Absent actual facts, this Court said that
the Southern Hemisphere petitions operated in the "realm of the surreal and merely
imagined."72 "Allegations of abuse must be anchored on real events before courts may step in to
settle actual controversies involving rights which are legally demandable and enforceable." 73
The petitioners in Republic of the Philippines v. Herminia Harry Roque, et al. 74 likewise challenged
provisions of the Human Security Act, this time, via a petition for declaratory relief filed before the
Regional Trial Court of Quezon City. During the pendency of the case, this Court decided Southern
Hemisphere, where, as just discussed, the challenge against the constitutionality of the Human
Security Act was dismissed. Thus, the Republic filed a motion to dismiss before the Regional Trial
Court, arguing that the declaratory relief case may no longer proceed.
The Regional Trial Court denied the motion to dismiss on the ground that this Court in Southern
Hemisphere did not pass upon the constitutionality issue. However, this Court, on certiorari, set
aside the Regional Trial Court's order and dismissed the declaratory relief petitions because they
did not properly allege a "state of facts indicating imminent and inevitable litigation." 75 This Court
said:
Pertinently, a justiciable controversy refers to an existing case or controversy that is appropriate
or ripe for judicial determination, not one that is conjectural or merely anticipatory. Corollary
thereto, by "ripening seeds" it is meant, not that sufficient accrued facts may be dispensed with,
but that a dispute may be tried at its inception before it has accumulated the asperity, distemper,
animosity, passion, and violence of a full blown battle that looms ahead. The concept describes a
state of facts indicating imminent and inevitable litigation provided that the issue is not settled and
stabilized by tranquilizing declaration.
A perusal of private respondents' petition for declaratory relief would show that they have failed
to demonstrate how they are left to sustain or are in immediate danger to sustain some direct
injury as a result of the enforcement of the assailed provisions of RA 9372. Not far removed from
the factual milieu in the Southern Hemisphere cases, private respondents only assert general
interests as citizens, and taxpayers and infractions which the government could prospectively
commit if the enforcement of the said law would remain untrammelled. As their petition would
disclose, private respondents' fear of prosecution was solely based on remarks of certain
government officials which were addressed to the general public. They, however, failed to show how
these remarks tended towards any prosecutorial or governmental action geared towards the
implementation of RA 9372 against them. In other words, there was no particular, real or imminent
threat to any of them.76 (Citations omitted, emphasis supplied)
Similar to the petitions in Southern Hemisphere and Roque, the present Petition alleges no actual
facts for this Court to infer the supposed unconstitutionaiity of Department Order No. 118-12 and
Memorandum Circular No. 2012-001.
According to petitioners, implementing Department Order No. 118-12 and Memorandum Circular
No. 2012-001 "may [result] in [the] diminution of the income of ... bus drivers and
conductors."77 The allegation is obviously based on speculation with the use of the word "may."
There was even no showing of how granting bus drivers' and conductors' minimum wage and
social welfare benefits would result in lower income for them.
Petitioners likewise claim that the part-fixed-part-performance-based payment scheme is "unfit to
the nature of operation of public transport system or business." 78 This bare allegation, again, is
not supported by facts from which this Court may conclude that the payment scheme under
Department Order No. 118-12 are unfit to the nature of the businesses of public bus operators. The
"time-immemorial" implementation of the boundary system does not mean that it is the only
payment scheme appropriate for the public transport industry.
There being no actual facts from which this Court could conclude that Department Order No. 118-
12 and Memorandum Circular No. 2012-001 are unconstitutional, this case presents no actual
controversy.
IV
Not only is this Petition not justiciable for failing to present an actual controversy. Petitioners do
not possess the requisite legal standing to file this suit.
Legal standing or locus standi is the "right of appearance in a court of justice on a given
question."79 To possess legal standing, parties must show "a personal and substantial interest in
the case such that [they have] sustained or will sustain direct injury as a result of the
governmental act that is being challenged."80 The requirement of direct injury guarantees that the
party who brings suit has such personal stake in the outcome of the controversy and, in effect,
assures "that concrete adverseness which sharpens the presentation of issues upon which the
court depends for illumination of difficult constitutional questions." 81
The requirements of legal standing and the recently discussed actual case and controversy are
both "built on the principle of separation of powers, sparing as it does unnecessary interference
or invalidation by the judicial branch of the actions rendered by its co-equal branches of
government."82 In addition, economic reasons justify the rule. Thus:
A lesser but not insignificant reason for screening the standing of persons who desire to litigate
constitutional issues is economic in character. Given the sparseness of our resources, the capacity
of courts to render efficient judicial service to our people is severely limited. For courts to
indiscriminately open their doors to all types of suits and suitors is for them to unduly overburden
32
their dockets, and ultimately render themselves ineffective dispensers of justice. To be sure, this is
an evil that clearly confronts our judiciary today. 83
Standing in private suits requires that actions be prosecuted or defended in the name of the real
party-in-interest,84 interest being "material interest or an interest in issue to be affected by the
decree or judgment of the case[,] [not just] mere curiosity about the question
involved."85 Whether a suit is public or private, the parties must have "a present substantial
interest," not a "mere expectancy or a future, contingent, subordinate, or consequential
interest."86 Those who bring the suit must possess their own right to the relief sought.
Like any rule, the rule on legal standing has exceptions. This Court has taken cognizance of
petitions filed by those who have no personal or substantial interest in the challenged
governmental act but whose petitions nevertheless raise "constitutional issue[s] of critical
significance."87 This Court summarized the requirements for granting legal standing to
"nontraditional suitors"88 in Funa v. Villar, 89 thus:
1.) For taxpayers, there must be a claim of illegal disbursement of public funds or that the tax
measure is unconstitutional;
2.) For voters, there must be a showing of obvious interest in the validity of the election law in
question;
3.) For concerned citizens, there must be a showing that the issues raised are of transcendental
importance which must be settled early; and
4.) For legislators, there must be a claim that the official action complained of infringes their
prerogatives as legislators.90 (Emphasis in the original)
Another exception is the concept of third-party standing. Under this concept, actions may be
brought on behalf of third parties provided the following criteria are met: first, "the [party
bringing suit] must have suffered an 'injury-in-fact,' thus giving him or her a 'sufficiently concrete
interest' in the outcome of the issue in dispute"; 91 second, "the party must have a close relation to
the third party"; 92 and third, "there must exist some hindrance to the third party's ability to
protect his or her own interests."93
The concept was first introduced in our jurisdiction in White Light Corp. et al. v. City of
Manila, 94 which involved the City of Manila's Ordinance No. 7774 that prohibited "sh01i-time
admission" in hotels, motels, inns, and other similar establishments located in the City. The
Ordinance defined short-time admission as the "admittance and charging of room rate for less
than twelve (12) hours at any given time or the renting out of rooms more than twice a day or any
other term that may be concocted by owners or managers of [hotels and motels]."95 The declared
purpose of the Ordinance was to protect "the morality of its constituents in general and the youth
in particular."96
Hotel and motel operators White Light Corporation, Titanium Corporation, and Sta. Mesa Tourist
and Development Corporation filed a complaint to prevent the implementation of the Ordinance.
The hotel and motel operators argued, among others, that the Ordinance violated their
clients' rights to privacy,97 freedom of movement,98 and equal protection of the laws.99
Based on third-party standing, this Court allowed the hotel and motel operators to sue on behalf
of their clients. According to this Court, hotel and motel operators have a close relation to their
customers as they "rely on the patronage of their customers for their continued
viability." 100 Preventing customers from availing of short-time rates would clearly injure the
business interests of hotel and motel operators. 101 As for the requirement of hindrance, this Court
said that "the relative silence in constitutional litigation of such special interest groups in our
nation such as the American Civil Liberties Union in the United States may also be construed as a
hindrance for customers to bring suit." 102
Associations were likewise allowed to sue on behalf of their members.
In Pharmaceutical and Health Care Association of the Philippines v. Secretary of Health, 103 the
Pharmaceutical and Health Care Association of the Philippines, "representing its members that are
manufacturers of breastmilk substitutes," 104 filed a petition for certiorari to question the
constitutionality of the rules implementing the Milk Code. The association argued that the
provisions of the implementing rules prejudiced the rights of manufacturers of breastmilk
substitutes to advertise their product.
This Court allowed the Pharmaceutical and Health Care Association of the Philippines to sue on
behalf of its members. "[A]n association," this Court said, "has the legal personality to represent
its members because the results of the case will affect their vital interests." 105 In granting the
Phannaceutical and Health Care Association legal standing, this Court considered the amended
articles of incorporation of the association and found that it was formed "to represent directly or
through approved representatives the pharmaceutical and health care industry before the
Philippine Government and any of its agencies, the medical professions and the general
public." 106 Citing Executive Secretary v. Court of Appeals, 107 this Court declared that "the modem
view is that an association has standing to complain of injuries to its members." 108 This Court
continued:
[This modem] view fuses the legal identity of an association with that of its members. An
association has standing to file suit for its workers despite its lack of direct interest if its members
are affected by the action. An organization has standing to assert the concerns of its constituents.
....
. . . We note that, under its Articles of Incorporation, the respondent was organized . . . to act as
the representative of any individual, company, entity or association on matters related to the
manpower recruitment industry, and to perform other acts and activities necessary to accomplish
33
the purposes embodied therein. The respondent is, thus, the appropriate party to assert the rights
of its members, because it and its members are in every practical sense identical... The respondent
[association] is but the medium through which its individual members seek to make more
effective the expression of their voices and the redress of their grievances. 109
In Holy Spirit Homeowners Association, Inc. v. Defensor, 110 the Holy Spirit Homeowners Association,
Inc. filed a petition for prohibition, praying that this Court enjoin the National Government Center
Administration Committee from enforcing the rules implementing Republic Act No. 9207. The
statute declared the land occupied by the National Government Center in Constitution Hills,
Quezon City distributable to bona fide beneficiaries. The association argued that the implementing
rules went beyond the provisions of Republic Act No. 9207, unduly limiting the area disposable to
the beneficiaries.
The National Government Center Administration Committee questioned the legal standing of the
Holy Spirit Homeowners Association, Inc., contending that the association "is not the duly
recognized people's organization in the [National Government Center]." 111
Rejecting the National Government Center Administration Committee's argument, this Court
declared that the Holy Spirit Homeowners Association, Inc. "ha[ d] the legal standing to institute
the [petition for prohibition] whether or not it is the duly recognized association of homeowners
in the [National Government Center]." 112 This Court noted that the individual members of the
association were residents of the National Government Center. Therefore, "they are covered and
stand to be either benefited or injured by the enforcement of the [implementing rules],
particularly as regards the selection process of beneficiaries and lot allocation to qualified
beneficiaries." 113
In The Executive Secretary v. The Hon. Court of Appeals,114 cited in the earlier
discussed Pharmaceutical and Health Care Association of the Philippines, the Asian Recruitment
Council Philippine Chapter, Inc. filed a petition for declaratory relief for this Court to declare
certain provisions of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of
1995 unconstitutional. The association sued on behalf of its members who were recruitment
agencies.
This Court took cognizance of the associations' petition and said that an association "is but the
medium through which its individual members seek to make more effective the expression of
their voices and the redress of their grievances." 115 It noted that the board resolutions of the
individual members of the Asian Recruitment Council Philippine Chapter, Inc. were attached to the
petition, thus, proving that the individual members authorized the association to sue on their
behalf.
The associations in Pharmaceutical and Health Care Association of the Philippines, Holy Spirit
Homeowners Association, Inc., and The Executive Secretary were allowed to sue on behalf of their
members because they sufficiently established who their members were, that their members
authorized the associations to sue on their behalf, and that the members would be directly injured
by the challenged governmental acts.
The liberality of this Court to grant standing for associations or corporations whose members are
those who suffer direct and substantial injury depends on a few factors.
In all these cases, there must be an actual controversy. Furthermore, there should also be a clear
and convincing demonstration of special reasons why the truly injured parties may not be able to
sue.
Alternatively, there must be a similarly clear and convincing demonstration that the
representation of the association is more efficient for the petitioners to bring. They must further
show that it is more efficient for this Court to hear only one voice from the association. In other
words, the association should show special reasons for bringing the action themselves rather than
as a class suit, 116 allowed when the subject matter of the controversy is one of common or general
interest to many persons. In a class suit, a number of the members of the class are permitted to
sue and to defend for the benefit of all the members so long as they are sufficiently numerous and
representative of the class to which they belong.
In some circumstances similar to those in White Light, the third parties represented by the
petitioner would have special and legitimate reasons why they may not bring the action
themselves. Understandably, the cost to patrons in the White Light case to bring the action
themselves-i.e., the amount they would pay for the lease of the motels-will be too small compared
with the cost of the suit. But viewed in another way, whoever among the patrons files the case
even for its transcendental interest endo.ws benefits on a substantial number of interested
parties without recovering their costs. This is the free rider problem in economics. It is a negative
externality which operates as a disincentive to sue and assert a transcendental right.
In addition to an actual controversy, special reasons to represent, and disincentives for the injured
party to bring the suit themselves, there must be a showing of the transcendent nature of the
right involved.
Only constitutional rights shared by many and requiring a grounded level of urgency can be
transcendent. For instance, in The Association of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform, 117 the association was allowed to file on behalf of its members
considering the importance of the issue involved, i.e., the constitutionality of agrarian reform
measures, specifically, of then newly enacted Comprehensive Agrarian Reform Law.
This Court is not a forum to appeal political and policy choices made by the Executive, Legislative,
and other constitutional agencies and organs. This Court dilutes its role in a democracy if it is
asked to substitute its political wisdom for the wisdom of accountable and representative bodies
where there is no unmistakable democratic deficit. It cannot lose this place in the constitutional
order. Petitioners' invocation of our jurisdiction and the justiciability of their claims must be
34
presented with rigor. Transcendental interest is not a talisman to blur the lines of authority drawn
by our most fundamental law.
As declared at the outset, petitioners in this case do not have standing to bring this suit. As
associations, they failed to establish who their members are and if these members allowed them
to sue on their behalf. While alleging that they are composed of public utility bus operators who
will be directly injured by the implementation of Department Order No. 118- 12 and Memorandum
Circular No. 2012-001, petitioners did not present any proof, such as board resolutions of their
alleged members or their own articles of incorporation authorizing them to act as their members'
representatives in suits involving their members' individual rights.
Some of the petitioners here are not even persons or entitles authorized by law or by the Rules
allowed to file a suit in court. As intervenor MMDA sufficiently demonstrated, petitioners
Provincial Bus Operators Association of the Philippines, Southern Luzon Bus Operators
Association, Inc., and Inter City Bus Operators Association, Inc. had their certificates of
incorporation revoked by the Securities and Exchange Commission for failure to submit the
required general information sheets and financial statements for the years 1996 to 2003. 118 With
their certificates of incorporation revoked, petitioners Provincial Bus Operators Association of the
Philippines, Southern Luzon Bus Operators Association, Inc., and Inter City Bus Operators
Association, Inc. have no corporate existence. 119 They have no capacity to exercise any corporate
power, specifically, the power to sue in their respective corporate names.
Again, the reasons cited-the "far-reaching consequences" and "wide area of coverage and extent
of effect" 120 of Department Order No. 118-12 and Memorandum Circular No. 2012-001-are reasons
not transcendent considering that most administrative issuances of the national government are
of wide coverage. These reasons are not special reasons for this Court to brush aside the
requirement of legal standing.
Thus far, petitioners have not satisfied any of the following requirements for this Court to exercise
its judicial power. They have not sufficiently demonstrated why this Court should exercise its
original jurisdiction. The issues they raised are not justiciable. Finally, as will be shown, they failed
to demonstrate any breach of constitutional text.
V
The protection of private property is the primary function of a constitution. This can be gleaned in
our earliest fundamental law where members of the Malolos Congress declared their purpose in
decreeing the Malolos Constitution: "to secure for [the Filipino people] the blessings of liberty." It
is understood that the rights to enjoy and to dispose of property are among these blessings
considering that several provisions on property are found in the Constitution. Article 32 of the
Malolos Constitution provided that "no Filipino shall establish . . . institutions restrictive of
property rights." Likewise, Article 17 provided that "no one shall be deprived of his property by
expropriation except on grounds of public necessity and benefit."
At present, the due process clause, the equal protection clause, and the takings clause of the
Constitution serve as protections from the government's taking of property. The non-impairment
clause may likewise be invoked if the property taken is in the nature of a contract. In any case, all
these constitutional limits are subject to the fundamental powers of the State, specifically, police
power. As such, the burden of proving that the taking is unlawful rests on the party invoking the
constitutional right.
Unfortunately for petitioners, they miserably failed to prove why Department Order No. 118-12 and
Memorandum Circular No. 2012-001 are unconstitutional.
VI
Article III, Section 1 of the Constitution provides:
ARTICLE III
Bill of Rights
Section 1. No person shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the equal protection of the laws.
The values congealed in the fundamental principle prohibiting the deprivation of life, liberty, and
property "without due process of law" may be those derived within our own cultures even though
the current text is but an incarnation from foreign jurisdictions.
For instance, the phrase "due process of law" does not appear in the Malolos Constitution of
1899. Still, it had similar provisions in Article 32 stating that "no Filipino shall establish ...
institutions restrictive of property rights." Specific to deprivation of property was Article 17, which
stated that "no one shall be deprived of his property by expropriation except on grounds of public
necessity and benefit, previously declared."
Among the "inviolable rules" found in McKinley's Instructions to the Philippine Commission was
"that no person shall be deprived of life, liberty, or property without due process of law." 121
As it is now worded, the due process clause has appeared in the Philippine Bill of 1902, the Jones
Law, the 1935 and 1973 Constitutions and, finally, in the 1987 Constitution.
The right to due process was first conceptualized in England, appearing in an English statute of
1354, 122 with some early scholars claiming that the right to due process is fundamentally
procedural. 123 The statute in which the phrase "due process of law" first appeared was reportedly
enacted to prevent the outlawing of individuals "without their being summoned to answer for the
charges brought against them." 124 The statute, enacted during Edward the Third's reign, thus
provided:
35
That no man of what Estate or Condition that he be, shall be put out of land or Tenement, nor
taken, nor imprisoned, nor disinherited, nor put to death, without being brought in answer by due
process of law. 125
Still, other early scholars asserted that the right to due process originally has a substantive
dimension, requiring that any taking of life, liberty, or property be according to "the law of the
land." 126 This is the view of Sir Edward Coke in interpreting chapter 39 of the Magna Carta on
which the due process clause of the United States Constitution is based. 127 Chapter 39 of the
Magna Carta provides:
No free man shall be taken, imprisoned, disseised, outlawed, banished, or in any way destroyed,
nor will We proceed against or prosecute him, except by lawful judgment of his peers and by the
law of the land.
Currently, this Court reads the due process clause as requiring both procedural and substantive
elements. In the landmark case of Ermita-Malate Hotel and Motel Operators Association, Inc. v. The
Honorable City Mayor of Manila, 128 this Court clarified:
There is no controlling and precise definition of due process. It furnishes though a standard to
which governmental action should conform in order that deprivation of life, liberty or property, in
each appropriate case, be valid. What then is the standard of due process which must exist both
as a procedural and as substantive requisite to free the challenged ordinance, or any government.
action for that matter, from the imputation of legal infirmity; sufficient to spell its doom? It is
responsiveness to the supremacy of reason, obedience to the dictates of justice. Negatively put,
arbitrariness is ruled out and unfairness avoided. To satisfy the due process requirement, official
action, to paraphrase Cardozo, must not outrun the bounds of reasons and result in sheer
oppression. Due process is thus hostile to any official action marred by lack of reasonableness.
Correctly has it been identified as freedom from arbitrariness. It is the embodiment of the
sporting idea of fair play. It exacts fealty "to those strivings for justice" and judges the act of
officialdom of whatever branch "in the light of reason drawn from considerations of fairness that
reflect [democratic] traditions of legal and political thought." It is not a narrow or "technical
conception with fixed content unrelated to time, place and circumstances," decisions based on
such a clause requiring a "close and perceptive inquiry into fundamental principles of our society."
Questions of due process are not to be treated narrowly or pedantically in slavery to form or
phrases. 129 (Citations omitted)
Despite the debate on the historical meaning of "due process of law," compliance with both
procedural and substantive due process is required in this jurisdiction.
The first aspect of due process-procedural due process-"concerns itself with government action
adhering to the established process when it makes an intrusion into the private sphere." 130 It
requires notice and hearing, and, as further clarified in Medenilla v. Civil Service Commission: 131
[I]mplies the right of the person affected thereby to be present before the tribunal which
pronounces judgment upon the question of life, liberty, and property in its most comprehensive
sense; to be heard, by testimony or otherwise, and to have the right of controverting, by proof,
every material fact which bears on the question of the right in the matter involved. 132
It is said that due process means "a law which hears before it condemns."133 The "law" in the due
process clause includes not only statute but also rules issued in the valid exercise of an
administrative agency's quasi-legislative power.
What procedural due process requires depends on the nature of the action. For instance, judicial
proceedings generally require that:
[First,] [t]here must be a court or tribunal clothed with judicial power to hear and determine the
matter before it; [second,] jurisdiction must be lawfully acquired over the person of the defendant
or over the property which is the subject of the proceeding; [third,] the defendant must be given
an opportunity to be heard; and [fourth,] judgment must be rendered upon lawful hearing. 134
For "trials and investigations of an administrative character," 135 Ang Tibay v. Court of Industrial
Relations 136 lay down the seven (7) cardinal primary rights, thus:
(1) The first of these rights is the right to a hearing which includes the right of the party interested
or affected to present his own case and submit evidence in support thereof. In the language of
Chief Justice Hughes, in Morgan v. U.S., . . . , "the liberty and property of the citizen shall be
protected by the rudimentary requirements of fair play."
(2) Not only must the party be given an opportunity to present his case and to adduce evidence
tending to establish the rights which he asserts but the tribunal must consider the evidence
presented. . . . In the language of this court in Edwards vs. McCoy, . . . , "the right to adduce
evidence, without the corresponding duty on the part of the board to consider it, is vain. Such
right is conspicuously futile if the person or persons to whom the evidence is presented can thrust
it aside without notice or consideration."
(3) "While the duty to deliberate does not impose the obligation to decide right, it does imply a
necessity which cannot be disregarded, namely, that of having something to support its decision.
A decision with absolutely nothing to support it is a nullity, a place when directly attached."
(Edwards vs. McCoy, supra.) This principle emanates from the more fundamental principle that
the genius of constitutional government is contrary to the vesting of unlimited power anywhere.
Law is both a grant and a limitation upon power.
(4) Not only must there be some evidence to support a finding or conclusion ... , but the evidence
must be "substantial." ... "Substantial evidence is more than a mere scintilla. It means such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion." . . .
The statute provides that 'the rules of evidence prevailing in courts of law and equity shall not be
36
controlling.' The obvious purpose of this and similar provisions is to free administrative boards
from the compulsion of technical rules so that the mere admission of matter which would be
deemed incompetent in judicial proceedings would not invalidate the administrative order. ... But
this assurance of a desirable flexibility in administrative procedure does not go so far as to justify
orders without a basis in evidence having rational probative force. Mere uncorroborated hearsay
or rumor does not constitute substantial evidence . . . .
(5) The decision must be rendered on the evidence presented at the hearing, or at least contained
in the record and disclosed to the parties affected ... Only by confining the administrative tribunal
to the evidence disclosed to the parties, can the latter be protected in their right to know and
meet the case against them. It should not, however, detract from their duty actively to see that
the law is enforced, and for that purpose, to use the authorized legal methods of securing
evidence and informing itself of facts material and relevant to the controversy . . . .
(6) [The tribunal or officer], therefore, must act on its or his own independent consideration of
the law and facts of the controversy, and not simply accept the views of a subordinate in arriving
at a decision . . . .
(7) [The tribunal or officer] should, in all controversial questions, render its decision in such a
manner that the parties to the proceeding can know the various issues involved, and the reasons
for the decisions rendered. The performance of this duty is inseparable from the authority
conferred upon it. 137 (Underscoring supplied; citations omitted)
However, notice and hearing are not required when an administrative agency exercises its quasi-
legislative power. The reason is that in the exercise of quasi-legislative power, the administrative
agency makes no "determination of past events or facts." 138
The other aspect of due process-substantive due process-requires that laws be grounded on
reason 139 and be free from arbitrariness. The government must have "sufficient justification for
depriving a person of life, liberty, or property." 140 In the words of Justice Felix Frankfurter, due
process is "the embodiment of the sporting idea of fair play." 141
Essentially, substantive due process is satisfied if the deprivation is done in the exercise of the
police power of the State. Called "the most essential, insistent and illimitable" 142 of the powers of
the State, police power is the "authority to enact legislation that may interfere with personal
liberty or property in order to promote the general welfare." 143 In the negative, it is the "inherent
and plenary power in the State which enables it to prohibit all that is hurtful to the comfort,
safety, and welfare of society." 144 "The reservation of essential attributes of sovereign power is ...
read into contracts as a postulate of the legal order." 145
"[P]olice power is lodged primarily in the National Legislature."146 However, it "may delegate this
power to the President and administrative boards as well as the lawmaking bodies of municipal
corporations or local government units." 147 "Once delegated, the agents can exercise only such
legislative powers as are conferred on them by the [National Legislature]." 148
Laws requiring the payment of minimum wage, security of tenure, and traffic safety 149 have been
declared not violative of due process for being valid police power legislations. In these cases, the
test or standard is whether the law is reasonable. The interests of the State to promote the
general welfare, on the one hand, and the right to property, on the other, must be balanced. As
expounded in lchong v. Hernandez:150
The conflict, therefore, between police power and the guarantees of due process and equal
protection of the laws is more apparent than real. Properly related, the power and the guarantees
are supposed to coexist. The balancing is the essence or, shall it be said, the indispensable means
for the attainment of legitimate aspirations of any democratic society. There can be no absolute
power, whoever exercise it, for that would be tyranny. Yet there can neither be absolute liberty,
for that would mean license and anarchy. So the State can deprive persons of life, liberty and
property, provided there is due process of law; and persons may be classified into classes and
groups, provided everyone is given the equal protection of the law. The test or standard, as
always, is reason. The police power legislation must be firmly grounded on public interest and
welfare, and a reasonable relation must exist between purposes and means. And if distinction and
classification ha[ve] been made, there must be a reasonable basis for said distinction. 151
Given the foregoing, this Court finds that Department Order No. 118-12 and Memorandum Circular
No. 2012-001 are not violative of due process, either procedural or substantive.
Department Order No. 118-12 and Memorandum Circular No. 2012- 001 were issued in the exercise
of quasi-legislative powers of the DOLE and the LTFRB, respectively. As such, notice and hearing
are not required for their validity.
In any case, it is undisputed that the DOLE created a Technical Working Group that conducted
several meetings and consultations with interested sectors before promulgating Department
Order No. 118-12. Among those invited were bus drivers, conductors, and operators with whom
officials of the DOLE conducted focused group discussions. 152 The conduct of these discussions
more than complied with the requirements of procedural due process.
Neither are Department Order No. 118-12 and Memorandum Circular No. 2012-001 offensive of
substantive due process.
Department Order No. 118-12 and Memorandum Circular No. 2012- 001 are reasonable and are valid
police power issuances. The pressing need for Department Order No. 118-12 is obvious considering
petitioners' admission that the payment schemes prior to the Order's promulgation consisted of
the "payment by results," the "commission basis," or the boundary system. These payment
schemes do not guarantee the payment of minimum wages to bus drivers and conductors. There
37
is also no mention of payment of social welfare benefits to bus drivers and conductors under
these payment schemes which have allegedly been in effect since "time immemorial."
There can be no meaningful implementation of Department Order No. 118-12 if violating it has no
consequence. As such, the LTFRB was not unreasonable when it required bus operators to comply
with the part-fixed-part- performance-based payment scheme under pain of revocation of their
certificates of public convenience. The L TFRB has required applicants or current holders of
franchises to comply with labor standards as regards their employees, and bus operators must be
reminded that certificates of public convenience are not property. Certificates of public
convenience are franchises always subject to amendment, repeal, or cancellation. Additional
requirements may be added for their issuance, and there can be no violation of due process when
a franchise is cancelled for non-compliance with the new requirement.
An equally important reason for the issuance of Department Order No. 118-12 and Memorandum
Circular No. 2012-001 is to ensure "road safety" by eliminating the "risk-taking behaviors" of bus
drivers and conductors. This Court in Hernandez v. Dolor153 observed that the boundary system
"place[ s] the riding public at the mercy of reckless and irresponsible drivers-reckless because the
measure of their earnings depends largely upon the number of trips they make and, hence, the
speed at which they drive." 154
Behavioral economics explains this phenomenon. The boundary system puts drivers in a "scarcity
mindset" that creates a tunnel vision where bus drivers are nothing but focused on meeting the
boundary required and will do so by any means possible and regardless of risks. 155 They stop for
passengers even outside of the designated bus stops, impeding traffic flow. They compete with
other bus drivers for more income without regard to speed limits and bus lanes. Some drivers
even take in performance-enhancing drugs and, reportedly, even illegal drugs such as shabu, just
to get additional trips. This scarcity mindset is eliminated by providing drivers with a fixed income
plus variable income based on performance. The fixed income equalizes the playing field, so to
speak, so that competition and racing among bus drivers are prevented. The variable pay provided
in Department Order No. 118-12 is based on safety parameters, incentivizing prudent driving.
In sum, Department Order No. 118-12 and Memorandum Circular No. 2012-001 are in the nature of
social legislations to enhance the economic status of bus drivers and conductors, and to promote
the general welfare of the riding public. They are reasonable and are not violative of due process.
VII
Related to due process is the non-impairment clause. The Constitution's Article III, Section 10
provides:
ARTICLE III
Bill of Rights
....
Section 10. No law impairing the obligation of contracts shall be passed.
The non-impairment clause was first incorporated into the United States Constitution after the
American Revolution, an unstable time when worthless money was routinely issued and the
States enacted moratorium laws to extend periods to pay contractual obligations that further
contributed to the lack of confidence to the monetary system during that time. 156 These practices
were prohibited under the clause to limit State interference with free markets and debtor-creditor
relationships. 157
The clause was first adopted in our jurisdiction through the Philippine Bill of 1902 and, similar to
the due process clause, has consistently appeared in subsequent Constitutions.
Since the non-impairment clause was adopted here, this Court has said that its purpose is to
protect purely private agreements from State interference. 158 This is to "encourage trade and
credit by promoting confidence in the stability of contractual relations." 159
There are views, however, that the non-impairment clause is obsolete and redundant because
contracts are considered property, and thus, are protected by the due process clause. On the
other hand, studies show why the non-impairment clause should be maintained. Aside from its
traditional purpose of prohibiting State interference in purely private transactions, the non-
impairment clause serves as a guarantee of the separation of powers between the judicial and
legislative branches of the government. 160 The non-impairment clause serves as a check on the
legislature "to act only through generally applicable laws prescribing rules of conduct that
operate prospectively." 161
This approach, called the institutional regularity approach, was applied in United States v. Diaz
Conde and R. Conde. 162 The accused in the case lent ₱300.00 to two (2) debtors with 5% interest
per month, payable within the first 10 days of each and every month. The Usury Law was
subsequently passed in 1916, outlawing the lending of money with usurious interests.
In 1921, the accused were charged for violating the Usury Law for money lending done in 1915. The
accused were initially convicted but they were subsequently acquitted. This Court held that the
loan contract was valid when it was entered into; thus, to render a previously valid contract illegal
for violating a subsequent law is against the non-impairment clause. This Court explained:
A law imposing a new penalty, or a new liability or disability, or giving a new right of action, must
not be construed as having a retroactive effect. It is an elementary rule of contract that the laws in
force at the time the contract was made must govern its interpretation and application. Laws
must be construed prospectively and not retrospectively. If a contract is legal at its inception, it
cannot be rendered illegal by any subsequent legislation. If that were permitted then the
38
obligations of a contract might be impaired, which is prohibited by the organic law of the
Philippine Islands. 163
It is claimed that the institutional regularity approach "offers the soundest theoretical basis for
reviving the [non-impairment clause] as a meaningful constitutional constraint." 164 It is consistent
with the government's right to regulate itself, but prevents "majoritarian abuse." 165 With the non-
impairment clause, legislature cannot enact "retroactive laws, selective laws, and laws not
supported by a public purpose."166
At any rate, so long as the non-impairment clause appears in the Constitution, it may be invoked
to question the constitutionality of State actions.
There is an impairment when, either by statute or any administrative rule issued in the exercise of
the agency's quasi-legislative power, the terms of the contracts are changed either in the time or
mode of the performance of the obligation. 167 There is likewise impairment when new conditions
are imposed or existing conditions are dispensed with. 168
Not all contracts, however, are protected under the non-impairment clause. Contracts whose
subject matters are so related to the public welfare are subject to the police power of the State
and, therefore, some of its terms may be changed or the whole contract even set aside without
offending the Constitution; 169 otherwise, "important and valuable reforms may be precluded by
the simple device of entering into contracts for the purpose of doing that which otherwise may be
prohibited."170
Likewise, contracts which relate to rights not considered property, such as a franchise or permit,
are also not protected by the non-impairment clause. The reason is that the public right or
franchise is always subject to amendment or repeal by the State,171 the grant being a mere
privilege. In other words, there can be no vested right in the continued grant of a franchise.
Additional conditions for the grant of the franchise may be made and the grantee cannot claim
impairment.
Similar to the right to due process, the right to non-impairment yields to the police power of the
State.
In Anucension v. National Labor Union, 172 Hacienda Luisita and the exclusive bargaining agent of its
agricultural workers, National Labor Union, entered into a collective bargaining agreement. The
agreement had a union security clause that required membership in the union as a condition for
employment. Republic Act No. 3350 was then subsequently enacted in 1961, exempting workers
who were members of religious sects which prohibit affiliation of their members with any labor
organization from the operation of union security clauses.
On the claim that Republic Act No. 3350 violated the obligation of contract, specifically, of the
union security clause found in the collective bargaining agreement, this Court conceded that
"there was indeed an impairment of [the] union security clause." 173 Nevertheless, this Court
noted that the "prohibition to impair the obligation of contracts is not absolute and
unqualified" 174 and that "the policy of protecting contracts against impairment presupposes the
maintenance of a government by virtue of which contractual relations are worthwhile - a
government which retains adequate authority to secure the peace and good order of
society." 175 A statute passed to protect labor is a "legitimate exercise of police power, although it
incidentally destroys existing contract rights." 176 "[C]ontracts regulating relations between capital
and labor ... are not merely contractual, and said labor contracts ... [are] impressed with public
interest, [and] must yield to the common good." 177
This Court found the purpose behind Republic Act No. 3350 legitimate. Republic Act No. 3350
protected labor by "preventing discrimination against those members of religious sects which
prohibit their members from joining labor unions, confirming thereby their natural, statutory and
constitutional right to work, the fruits of which work are usually the only means whereby they can
maintain their own life and the life of their dependents." 178 This Court, therefore, upheld the
constitutionality of Republic Act No. 3350.
Laws regulating public utilities are likewise police power legislations. In Pangasinan Transportation
Co., Inc. v. The Public Service Commission, 179 Pangasinan Transportation Co., Inc. (Pangasinan
Transportation) filed an application with the Public Service Commission to operate 10 additional
buses for transporting passengers in Pangasinan and Tarlac. The Public Service Commission
granted the application on the condition that the authority shall only be for 25 years.
When the Public Service Commission denied Pangasinan Transportation's motion for
reconsideration with respect to the imposition of the 25-year validity period, the bus company
filed a petition for certiorari before this Court. It claimed that it acquired its certificates of public
convenience to operate public utility buses when the Public Service Act did not provide for a
definite period of validity of a certificate of public convenience. Thus, Pangasinan Transportation
claimed that it "must be deemed to have the right [to hold its certificates of public convenience]
in perpetuity." 180
Rejecting Pangasinan Transportation's argument, this Court declared that certificates of public
convenience are granted subject to amendment, alteration, or repeal by Congress. Statutes
enacted for the regulation of public utilities, such as the Public Service Act, are police power
legislations "applicable not only to those public utilities coming into existence after [their]
passage, but likewise to those already established and in operation." 181
Here, petitioners claim that Department Order No. 118-12 and Memorandum Circular No. 2012-001
violate bus operators' right to non-impairment of obligation of contracts because these issuances
force them to abandon their "time-honored"182 employment contracts or arrangements with their
drivers and conductors. Further, these issuances violate the terms of the franchise of bus
operators by imposing additional requirements after the franchise has been validly issued.
39
Petitioners' arguments deserve scant consideration. For one, the relations between capital and
labor are not merely contractual as provided in Article 1700 of the Civil Code. 183 By statutory
declaration, labor contracts are impressed with public interest and, therefore, must yield to the
common good. Labor contracts are subject to special laws on wages, working conditions, hours of
labor, and similar subjects. In other words, labor contracts are subject to the police power of the
State.
As previously discussed on the part on due process, Department Order No. 118-12 was issued to
grant bus drivers and conductors minimum wages and social welfare benefits. Further, petitioners
repeatedly admitted that in paying their bus drivers and conductors, they employ the boundary
system or commission basis, payment schemes which cause drivers to drive recklessly. Not only
does Department Order No. 118-12 aim to uplift the economic status of bus drivers and
conductors; it also promotes road and traffic safety.
Further, certificates of public convenience granted to bus operators are subject to amendment.
When certificates of public convenience were granted in 2012, Memorandum Circular No. 2011-004
on the "Revised Terms and Conditions of [Certificates of Public Convenience] and Providing
Penalties for Violations Thereof' was already in place. This Memorandum Circular, issued before
Memorandum Circular No. 2012-001, already required public utility vehicle operators to comply
with labor and social legislations. Franchise holders cannot object to the reiteration made in
Memorandum Circular No. 2012-001.
All told, there is no violation of the non-impairment clause.
VIII
The equal protection clause was first incorporated in the United States Constitution through the
Fourteenth Amendment, mainly to protect the slaves liberated after the Civil War from racially
discriminatory state laws. 184 This was in 1868. When the Philippines was ceded by Spain to the
United States in 1898, provisions of the United States Constitution were held not to have been
automatically applicable here, except those "parts [falling] within the general principles of
fundamental limitations in favor of personal rights formulated in the Constitution and its
amendments."185 It is said that the equal protection clause, "[b]eing one such limitation in favor of
personal rights enshrined in the Fourteenth Amendment," was deemed extended in this
jurisdiction upon our cession to the United States. 186 The text of the equal protection clause first
appeared in the Philippine Bill of 1902 and has since appeared in our subsequent Constitutions.
"Equal protection of the laws" requires that "all persons ... be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities enforced." 187 "The
purpose of the equal protection clause is to secure every person within a state's jurisdiction
against intentional and arbitrary discrimination, whether occasioned by the express terms of a
statute or by its improper execution through the state's duly constituted authorities." 188
However, the clause does not prevent the legislature from enacting laws making valid
classifications.1âwphi1 Classification is "the grouping of persons or things similar to each other in
certain particulars and different from all others in these same particulars." 189 To be valid, the
classification must be: first, based on "substantial distinctions which make real
differences"; 190 second, it must be "germane to the purposes of the law"; 191 third, it must "not be
limited to existing conditions only"; 192 and fourth, it must apply to each member of the class. 193
In Ichong v. Hernandez, 194 the constitutionality of Republic Act No. 1180 was assailed for alleged
violation of the equal protection clause. The law prohibited aliens from engaging in retail business
in the Philippines. This Court sustained the classification by citizenship created by Republic Act No.
1180. This Court observed how our economy primarily relied on retailers to distribute goods to
consumers; thus, the legislature saw it fit to limit the conduct of retail business to Filipinos to
protect the country's economic freedom. This Court said:
Broadly speaking, the power of the legislature to make distinctions and classifications among
persons is not curtailed or denied by the equal protection of the laws clause. The legislative power
admits of a wide scope of discretion, and a law can be violative of the constitutional limitation
only when the classification is without reasonable basis. In addition to the authorities we have
earlier cited, we can also refer to the case of Lindsley vs. Natural Carbonic Gas Co. (1911), 55 L. ed.,
369, which clearly and succinctly defined the application of equal protection clause to a law
sought to be voided as contrary thereto:
women are more likely than men to be victims of violence; and the widespread gender bias and
prejudice against women" 199 justify the enactment of a law that specifically punishes violence
against women.
In the present case, petitioners' sole claim on their equal protection argument is that the initial
implementation of Department Order No. 118-12 in Metro Manila "is not only discriminatory but is
also prejudicial to petitioners."200 However, petitioners did not even bother explaining how
exactly Department Order No. 118-12 infringed on their right to equal protection.
At any rate, the initial implementation of Department Order No. 118- 12 is not violative of the equal
protection clause.1âwphi1 In Taxicab Operators of Metro Manila, Inc. v. The Board of
Transportation,201 this Court upheld the initial implementation of the phase-out of old taxicab units
in Metro Manila because of the "heavier traffic pressure and more constant use" of the roads. The
difference in the traffic conditions in Metro Manila and in other parts of the country presented a
substantial distinction.
The same substantial distinction can be inferred here. Department Order No. 118-12 has also been
implemented in other parts of the country. Petitioners' weak argument is now not only moot. It
also deserves no merit.
IX

" ... '1. The equal protection clause of the Fourteenth Amendment does not take from the state
In constitutional litigation, this Court presumes that official acts of the other branches of
the power to classify in the adoption of police laws, but admits of the exercise of the wide scope
government are constitutional. This Court proceeds on the theory that "before the act was done
of discretion in that regard, and avoids what is done only when it is without any reasonable basis,
or the law was enacted, earnest studies were made by Congress or the President, or both, to
and therefore is purely arbitrary. 2. A classification having some reasonable basis does not offend
insure that the Constitution would not be breached."202 Absent a clear showing of breach of
against that clause merely because it is not made with mathematical nicety, or because in practice
constitutional text, the validity of the law or action shall be sustained.
it results in some inequality. 3. When the classification in such a law is called in question, if any
state of facts reasonably can be conceived that would sustain it, the existence of that state of
facts at the time the law was enacted must be assumed. 4. One who assails the classification in WHEREFORE, the Petition is DISMISSED.
such a law must carry the burden of showing that it does not rest upon any reasonable basis, but
is essentially arbitrary.'" 195 SO ORDERED.

The petitioners in Basco v. Philippine Amusement and Gaming Corporation 196 claimed that
Presidential Decree No. 1869, the charter of the Philippine Amusement and Gaming Corporation,
was violative of the equal protection guarantee because it only allowed gambling activities
conducted by the Philippine Amusement and Gaming Corporation but outlawed the other forms.
This Court upheld the constitutionality of Presidential Decree No. 1869 mainly because "[t]he
[equal protection] clause does not preclude classification of individuals who may be accorded
different treatment under the law as long as the classification is not unreasonable or arbitrary." 197

In the recent case of Garcia v. Drilon,198 this Court rejected the argument that Republic Act No.
9262 or the Anti-Violence Against Women and Children violated the equal protection guarantee.
According to this Court, the "unequal power relationship between women and men; the fact that
40