Week 1 and 2

ART II

SECTION 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of
the nation and free the people from poverty through policies that provide adequate social services, promote full
employment, a rising standard of living, and an improved quality of life for all.

SECTION 11. The State values the dignity of every human person and guarantees full respect for human rights

SECTION 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their
physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs.

SECTION 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality
before the law of women and men.

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

SECTION 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and
provides incentives to needed investments.

ART III

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.

SECTION 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the
people peaceably to assemble and petition the government for redress of grievances.

SECTION 7. The right of the people to information on matters of public concern shall be recognized. Access to official
records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be
provided by law.

SECTION 8. The right of the people, including those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall not be abridged.

SECTION 10. No law impairing the obligation of contracts shall be passed.

SECTION 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or
administrative bodies.

SECTION 18. (1) No person shall be detained solely by reason of his political beliefs and aspirations.

(2) No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been
duly convicted.

ARTICLE XIII

SECTION 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of
all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by
equitably diffusing wealth and political power for the common good.

To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.
SECTION 2. The promotion of social justice shall include the commitment to create economic opportunities based on
freedom of initiative and self-reliance.

SECTION 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential use
of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in
the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.

SECTION 13. The State shall establish a special agency for disabled persons for rehabilitation, self-development and self-
reliance, and their integration into the mainstream of society.

SECTION 14. The State shall protect working women by providing safe and healthful working conditions, taking into
account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them
to realize their full potential in the service of the nation.

PRESIDENTIAL DECREE NO. 442

Art. 1. Name of Decree. This Decree shall be known as the “Labor Code of the Philippines”.

Art. 2. Date of effectivity. This Code shall take effect six (6) months after its promulgation.

Art. 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall
assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane
conditions of work.

Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in favor of labor.

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

Art. 6. Applicability. All rights and benefits granted to workers under this Code shall, except as may otherwise be
provided herein, apply alike to all workers, whether agricultural or non-agricultural. (As amended by Presidential Decree
No. 570-A, November 1, 1974)

Art. 7. Statement of objectives. Inasmuch as the old concept of land ownership by a few has spawned valid and
legitimate grievances that gave rise to violent conflict and social tension and the redress of such legitimate grievances
being one of the fundamental objectives of the New Society, it has become imperative to start reformation with the
emancipation of the tiller of the soil from his bondage.
 On Art. 13 Sec. 3

G.R. No. 127598 February 22, 2000

MANILA ELECTRIC COMPANY, petitioner,

vs.
Hon. SECRETARY OF LABOR LEONARDO QUISUMBING and MERALCO EMPLOYEES and WORKERS
ASSOCIATION (MEWA), respondent.

RESOLUTION

YNARES-SANTIAGO, J.:

In the Decision promulgated on January 27, 1999, the Court disposed of the case as follows:

WHEREFORE, the petition is granted and the orders of public respondent Secretary of Labor dated August
19, 1996 and December 28, 1996 are set aside to the extent set forth above. The parties are directed to
execute a Collective Bargaining Agreement incorporating the terms and conditions contained in the
unaffected portions of the Secretary of Labor's orders of August 19, 1996 and December 28, 1996, and the
modifications set forth above. The retirement fund issue is remanded to the Secretary of Labor for reception
of evidence and determination of the legal personality of the MERALCO retirement fund.1

The modifications of the public respondent's resolutions include the following:

January 27, 1999 decision Secretary's resolution

Wages - P1,900.00 for 1995-96 P2,200.00
X'mas bonus - modified to one month 2 months

Retirees - remanded to the Secretary granted

Loan to coops - denied granted

GHSIP, HMP and

Housing loans - granted up to P60,000.00 granted

Signing bonus - denied granted

Union leave - 40 days (typo error) 30 days
High voltage/pole - not apply to those who are members of a team
not exposed to the risk
Collectors - no need for cash bond, no
need to reduce quota and MAPL

CBU - exclude confidential employees include

Union security - maintenance of membership closed shop

Contracting out - no need to consult union consult first

All benefits - existing terms and conditions all terms

Retroactivity - Dec. 28, 1996-Dec. 27, 199(9) from Dec. 1, 1995

Dissatisfied with the Decision, some alleged members of private respondent union (Union for brevity) filed a motion
for intervention and a motion for reconsideration of the said Decision. A separate intervention was likewise made by
the supervisor's union (FLAMES2) of petitioner corporation alleging that it has bona fide legal interest in the outcome
of the case.3 The Court required the "proper parties" to file a comment to the three motions for reconsideration but
the Solicitor-General asked that he be excused from filing the comment because the "petition filed in the instant
case was granted" by the Court.4 Consequently, petitioner filed its own consolidated comment. An "Appeal Seeking
Immediate Reconsideration" was also filed by the alleged newly elected president of the Union.5 Other subsequent
pleadings were filed by the parties and intervenors.

The issues raised in the motions for reconsideration had already been passed upon by the Court in the January 27,
1999 decision. No new arguments were presented for consideration of the Court. Nonetheless, certain matters will
be considered herein, particularly those involving the amount of wages and the retroactivity of the Collective
Bargaining Agreement (CBA) arbitral awards.

Petitioner warns that if the wage increase of P2,200.00 per month as ordered by the Secretary is allowed, it would
simply pass the cost covering such increase to the consumers through an increase in the rate of electricity. This is
a non sequitur. The Court cannot be threatened with such a misleading argument. An increase in the prices of
electric current needs the approval of the appropriate regulatory government agency and does not automatically
result from a mere increase in the wages of petitioner's employees. Besides, this argument presupposes that
petitioner is capable of meeting a wage increase. The All Asia Capital report upon which the Union relies to support
its position regarding the wage issue cannot be an accurate basis and conclusive determinant of the rate of wage
increase. Section 45 of Rule 130 Rules of Evidence provides:

Commercial lists and the like. — Evidence of statements of matters of interest to persons engaged in an
occupation contained in a list, register, periodical, or other published compilation is admissible as tending to
prove the truth of any relevant matter so stated if that compilation is published for use by persons engaged
in that occupation and is generally used and relied upon by them therein.

Under the afore-quoted rule, statement of matters contained in a periodical, may be admitted only "if that
compilation is published for use by persons engaged in that occupation and is generally used and relied upon by
them therein." As correctly held in our Decision dated January 27, 1999, the cited report is a mere newspaper
account and not even a commercial list. At most, it is but an analysis or opinion which carries no persuasive weight
for purposes of this case as no sufficient figures to support it were presented. Neither did anybody testify to its
accuracy. It cannot be said that businessmen generally rely on news items such as this in their occupation. Besides,
no evidence was presented that the publication was regularly prepared by a person in touch with the market and
that it is generally regarded as trustworthy and reliable. Absent extrinsic proof of their accuracy, these reports are
not admissible.6 In the same manner, newspapers containing stock quotations are not admissible in evidence when
the source of the reports is available.7 With more reason, mere analyses or projections of such reports cannot be
admitted. In particular, the source of the report in this case can be easily made available considering that the same
is necessary for compliance with certain governmental requirements.

Nonetheless, by petitioner's own allegations, its actual total net income for 1996 was P5.1 billion.8 An estimate by
the All Asia financial analyst stated that petitioner's net operating income for the same year was about P5.7 billion, a
figure which the Union relies on to support its claim. Assuming without admitting the truth thereof, the figure is higher
than the P4.171 billion allegedly suggested by petitioner as its projected net operating income. The P5.7 billion
which was the Secretary's basis for granting the P2,200.00 is higher than the actual net income of P5.1 billion
admitted by petitioner. It would be proper then to increase this Court's award of P1,900.00 to P2,000.00 for the two
years of the CBA award. For 1992, the agreed CBA wage increase for rank-and-file was P1,400.00 and was
reduced to P1,350.00; for 1993; further reduced to P1,150.00 for 1994. For supervisory employees, the agreed
wage increase for the years 1992-1994 are P1,742.50, P1,682.50 and P1,442.50, respectively. Based on the
foregoing figures, the P2,000.00 increase for the two-year period awarded to the rank-and-file is much higher than
the highest increase granted to supervisory employees.9 As mentioned in the January 27, 1999 Decision, the Court
does "not seek to enumerate in this decision the factors that should affect wage determination" because collective
bargaining disputes particularly those affecting the national interest and public service "requires due consideration
and proper balancing of the interests of the parties to the dispute and of those who might be affected by the
dispute."10 The Court takes judicial notice that the new amounts granted herein are significantly higher than the
weighted average salary currently enjoyed by other rank-and-file employees within the community. It should be
noted that the relations between labor and capital is impressed with public interest which must yield to the common
good.11 Neither party should act oppressively against the other or impair the interest or convenience of the
public.12 Besides, matters of salary increases are part of management prerogative.13
On the retroactivity of the CBA arbitral award, it is well to recall that this petition had its origin in the renegotiation of
the parties' 1992-1997 CBA insofar as the last two-year period thereof is concerned. When the Secretary of Labor
assumed jurisdiction and granted the arbitral awards, there was no question that these arbitral awards were to be
given retroactive effect. However, the parties dispute the reckoning period when retroaction shall commence.
Petitioner claims that the award should retroact only from such time that the Secretary of Labor rendered the award,
invoking the 1995 decision in Pier 8 case14 where the Court, citing Union of Filipino Employees v. NLRC,15 said:

The assailed resolution which incorporated the CBA to be signed by the parties was promulgated on June 5,
1989, the expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be
agreed upon by the parties. But since no agreement to that effect was made, public respondent did not
abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is within
the ambit of its authority vested by existing law.

On the other hand, the Union argues that the award should retroact to such time granted by the Secretary, citing the
1993 decision of St. Luke's.16

Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the
previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A
cannot be properly applied to herein case. As correctly stated by public respondent in his assailed Order of
April 12, 1991 dismissing petitioner's Motion for Reconsideration —

Anent the alleged lack of basis for the retroactivity provisions awarded; we would stress that the
provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by
and between the parties, and not arbitral awards . . .

Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral
awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein
involved, public respondent is deemed vested with plenary and discretionary powers to determine the
effectivity thereof.

In the 1997 case of Mindanao Terminal,17 the Court applied the St. Luke's doctrine and ruled that:

In St. Luke's Medical Center v. Torres, a deadlock also developed during the CBA negotiations between
management and the union. The Secretary of Labor assumed jurisdiction and ordered the retroaction of the
CBA to the date of expiration of the previous CBA. As in this case, it was alleged that the Secretary of Labor
gravely abused its discretion in making his award retroactive. In dismissing this contention this Court held:

Therefore, in the absence of a specific provision of law prohibiting retroactive of the effectivity of
arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such
as herein involved, public respondent is deemed vested with plenary and discretionary powers to
determine the effectivity thereof.

The Court in the January 27, 1999 Decision, stated that the CBA shall be "effective for a period of 2 years counted
from December 28, 1996 up to December 27, 1999." Parenthetically, this actually covers a three-year period. Labor
laws are silent as to when an arbitral award in a labor dispute where the Secretary had assumed jurisdiction by
virtue of Article 263 (g) of the Labor Code shall retroact. In general, a CBA negotiated within six months after the
expiration of the existing CBA retroacts to the day immediately following such date and if agreed thereafter, the
effectivity depends on the agreement of the parties.18 On the other hand, the law is silent as to the retroactivity of a
CBA arbitral award or that granted not by virtue of the mutual agreement of the parties but by intervention of the
government. Despite the silence of the law, the Court rules herein that CBA arbitral awards granted after six months
from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or
their union. Absent such an agreement as to retroactivity, the award shall retroact to the first day after the six-month
period following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the
Secretary's determination of the date of retroactivity as part of his discretionary powers over arbitral awards shall
control.

It is true that an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties
because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes
jurisdiction. However, the arbitral award can be considered as an approximation of a collective bargaining
agreement which would otherwise have been entered into by the parties.19 The terms or periods set forth in Article
253-A pertains explicitly to a CBA. But there is nothing that would prevent its application by analogy to an arbitral
award by the Secretary considering the absence of an applicable law. Under Article 253-A: "(I)f any such agreement
is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof." In other words, the
law contemplates retroactivity whether the agreement be entered into before or after the said six-month period. The
agreement of the parties need not be categorically stated for their acts may be considered in determining the
duration of retroactivity. In this connection, the Court considers the letter of petitioner's Chairman of the Board and
its President addressed to their stockholders, which states that the CBA "for the rank-and-file employees covering
the period December 1, 1995 to November 30, 1997 is still with the Supreme Court,"20 as indicative of petitioner's
recognition that the CBA award covers the said period. Earlier, petitioner's negotiating panel transmitted to the
Union a copy of its proposed CBA covering the same period inclusive.21 In addition, petitioner does not dispute the
allegation that in the past CBA arbitral awards, the Secretary granted retroactivity commencing from the period
immediately following the last day of the expired CBA. Thus, by petitioner's own actions, the Court sees no reason
to retroact the subject CBA awards to a different date. The period is herein set at two (2) years from December 1,
1995 to November 30, 1997.

On the allegation concerning the grant of loan to a cooperative, there is no merit in the union's claim that it is no
different from housing loans granted by the employer. The award of loans for housing is justified because it pertains
to a basic necessity of life. It is part of a privilege recognized by the employer and allowed by law. In contrast,
providing seed money for the establishment of the employee's cooperative is a matter in which the employer has no
business interest or legal obligation. Courts should not be utilized as a tool to compel any person to grant loans to
another nor to force parties to undertake an obligation without justification. On the contrary, it is the government that
has the obligation to render financial assistance to cooperatives and the Cooperative Code does not make it an
obligation of the employer or any private individual.22

Anent the 40-day union leave, the Court finds that the same is a typographical error. In order to avoid any confusion,
it is herein declared that the union leave is only thirty (30) days as granted by the Secretary of Labor and affirmed in
the Decision of this Court.

The added requirement of consultation imposed by the Secretary in cases of contracting out for six (6) months or
more has been rejected by the Court. Suffice it to say that the employer is allowed to contract out services for six
months or more. However, a line must be drawn between management prerogatives regarding business
operations per se and those which affect the rights of employees, and in treating the latter, the employer should see
to it that its employees are at least properly informed of its decision or modes of action in order to attain a
harmonious labor-management relationship and enlighten the workers concerning their rights.23 Hiring of workers is
within the employer's inherent freedom to regulate and is a valid exercise of its management prerogative subject
only to special laws and agreements on the matter and the fair standards of justice.24 The management cannot be
denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its
operation. It has the ultimate determination of whether services should be performed by its personnel or contracted
to outside agencies. While there should be mutual consultation, eventually deference is to be paid to what
management decides.25 Contracting out of services is an exercise of business judgment or management
prerogative.26 Absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere
with the exercise of judgment by an employer.27 As mentioned in the January 27, 1999 Decision, the law already
sufficiently regulates this matter.28 Jurisprudence also provides adequate limitations, such that the employer must be
motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been
the result of malicious or arbitrary actions.29 These are matters that may be categorically determined only when an
actual suit on the matter arises.

WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed Decision is MODIFIED as
follows: (1) the arbitral award shall retroact from December 1, 1995 to November 30, 1997; and (2) the award of
wage is increased from the original amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand
Pesos (P2,000.00) for the years 1995 and 1996. This Resolution is subject to the monetary advances granted by
petitioner to its rank-and-file employees during the pendency of this case assuming such advances had actually
been distributed to them. The assailed Decision is AFFIRMED in all other respects. 1âwphi 1.nêt

SO ORDERED.Davide, Jr., C.J., Melo, Kapunan and Pardo, JJ., concur.

Due Process in Labor cases

G.R. No. 158693 November 17, 2004

JENNY M. AGABON and VIRGILIO C. AGABON, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and VICENTE
ANGELES, respondents.

DECISION

YNARES-SANTIAGO, J.:

This petition for review seeks to reverse the decision1 of the Court of Appeals dated January 23, 2003, in CA-G.R.
SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No.
023442-00.

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental
and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 19922 until February 23, 1999 when they were dismissed for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on December 28, 1999, the
Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the
monetary claims. The dispositive portion of the decision states:

WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly,
respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93

2. Virgilio C. Agabon - 56, 231.93

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

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

SO ORDERED.4

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

Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned
their employment but ordered the payment of money claims. The dispositive portion of the decision reads:

WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it
dismissed petitioner's money claims. Private respondents are ordered to pay petitioners holiday pay for four
(4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and
to pay the balance of petitioner Virgilio Agabon's 13th month pay for 1998 in the amount of P2,150.00.

SO ORDERED.6

Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.7

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

Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their
work.9 In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to
report for work. Private 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

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; and

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

In case of termination, the foregoing notices shall be served on the 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 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.

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 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.

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.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-
Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ., concur.
G.R. No. 192571 July 23, 2013

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T.

YABUTMISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated December 10,2009 and Resolution3 dated
June 9, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 101045 which pronounced that the National Labor
Relations Commission (NLRC) did not gravely abuse its discretion when it ruled that respondent Pearlie Ann F.
Alcaraz (Alcaraz) was illegally dismissed from her employment.

The Facts

On June 27, 2004, petitioner Abbott Laboratories, Philippines (Abbott) caused the publication in a major broadsheet
newspaper of its need for a Medical and Regulatory Affairs Manager (Regulatory Affairs Manager) who would: (a)
be responsible for drug safety surveillance operations, staffing, and budget; (b) lead the development and
implementation of standard operating procedures/policies for drug safety surveillance and vigilance; and (c) act as
the primary interface with internal and external customers regarding safety operations and queries.4 Alcaraz - who
was then a Regulatory Affairs and Information Manager at Aventis Pasteur Philippines, Incorporated (another
pharmaceutical company like Abbott) – showed interest and submitted her application on October 4, 2004.5

On December 7, 2004, Abbott formally offered Alcaraz the abovementioned position which was an item under the
company’s Hospira Affiliate Local Surveillance Unit (ALSU) department.6 In Abbott’s offer sheet.7 it was stated that
Alcaraz was to be employed on a probationary basis.8 Later that day, she accepted the said offer and received an
electronic mail (e-mail) from Abbott’s Recruitment Officer, petitioner Teresita C. Bernardo (Bernardo), confirming the
same. Attached to Bernardo’s e-mail were Abbott’s organizational chart and a job description of Alcaraz’s work.9

On February 12, 2005, Alcaraz signed an employment contract which stated, inter alia, that she was to be placed on
probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005. The said contract was also
signed by Abbott’s General Manager, petitioner Edwin Feist (Feist):10

PROBATIONARY EMPLOYMENT

Dear Pearl,

After having successfully passed the pre-employment requirements, you are hereby appointed as follows:

Position Title : Regulatory Affairs Manager

Department : Hospira

The terms of your employment are:

Nature of Employment : Probationary

Effectivity : February 15, 2005 to August 14, 2005

Basic Salary : ₱110,000.00/ month

It is understood that you agree to abide by all existing policies, rules and regulations of the company, as well as
those, which may be hereinafter promulgated.
Unless renewed, probationary appointment expires on the date indicated subject to earlier termination by the
Company for any justifiable reason.

If you agree to the terms and conditions of your employment, please signify your conformity below and return a copy
to HRD.

Welcome to Abbott!

Very truly yours,

Sgd.
EDWIN D. FEIST
General Manager

CONFORME:

Sgd.
PEARLIE ANN FERRER-ALCARAZ

During Alcaraz’s pre-employment orientation, petitioner Allan G. Almazar (Almazar), Hospira’s Country Transition
Manager, briefed her on her duties and responsibilities as Regulatory Affairs Manager, stating that: (a) she will
handle the staff of Hospira ALSU and will directly report to Almazar on matters regarding Hopira’s local operations,
operational budget, and performance evaluation of the Hospira ALSU Staff who are on probationary status; (b) she
must implement Abbott’s Code of Good Corporate Conduct (Code of Conduct), office policies on human resources
and finance, and ensure that Abbott will hire people who are fit in the organizational discipline; (c) petitioner Kelly
Walsh (Walsh), Manager of the Literature Drug Surveillance Drug Safety of Hospira, will be her immediate
supervisor; (d) she should always coordinate with Abbott’s human resource officers in the management and
discipline of the staff; (e) Hospira ALSU will spin off from Abbott in early 2006 and will be officially incorporated and
known as Hospira, Philippines. In the interim, Hospira ALSU operations will still be under Abbott’s management,
excluding the technical aspects of the operations which is under the control and supervision of Walsh; and (f) the
processing of information and/or raw material data subject of Hospira ALSU operations will be strictly confined and
controlled under the computer system and network being maintained and operated from the United States. For this
purpose, all those involved in Hospira ALSU are required to use two identification cards: one, to identify them as
Abbott’s employees and another, to identify them as Hospira employees.11

On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa), Abbott’s Human Resources (HR) Director, sent
Alcaraz an e-mail which contained an explanation of the procedure for evaluating the performance of probationary
employees and further indicated that Abbott had only one evaluation system for all of its employees. Alcaraz was
also given copies of Abbott’s Code of Conduct and Probationary Performance Standards and Evaluation (PPSE)
and Performance Excellence Orientation Modules (Performance Modules) which she had to apply in line with her
task of evaluating the Hospira ALSU staff.12

Abbott’s PPSE procedure mandates that the job performance of a probationary employee should be formally
reviewed and discussed with the employee at least twice: first on the third month and second on the fifth month from
the date of employment. The necessary Performance Improvement Plan should also be made during the third-
month review in case of a gap between the employee’s performance and the standards set. These performance
standards should be discussed in detail with the employee within the first two (2) weeks on the job. It was equally
required that a signed copy of the PPSE form must be submitted to Abbott’s Human Resources Department (HRD)
and shall serve as documentation of the employee’s performance during his/her probationary period. This shall form
the basis for recommending the confirmation or termination of the probationary employment.13

During the course of her employment, Alcaraz noticed that some of the staff had disciplinary problems. Thus, she
would reprimand them for their unprofessional behavior such as non-observance of the dress code, moonlighting,
and disrespect of Abbott officers. However, Alcaraz’s method of management was considered by Walsh to be "too
strict."14 Alcaraz approached Misa to discuss these concerns and was told to "lie low" and let Walsh handle the
matter. Misa even assured her that Abbott’s HRD would support her in all her management decisions.15
On April 12, 2005, Alcaraz received an e-mail from Misa requesting immediate action on the staff’s performance
evaluation as their probationary periods were about to end. This Alcaraz eventually submitted.16

On April 20, 2005, Alcaraz had a meeting with petitioner Cecille Terrible (Terrible), Abbott’s former HR Director, to
discuss certain issues regarding staff performance standards. In the course thereof, Alcaraz accidentally saw a
printed copy of an e-mail sent by Walsh to some staff members which essentially contained queries regarding the
former’s job performance. Alcaraz asked if Walsh’s action was the normal process of evaluation. Terrible said that it
was not.17

On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible where she was informed that she failed
to meet the regularization standards for the position of Regulatory Affairs Manager.18 Thereafter, Walsh and Terrible
requested Alcaraz to tender her resignation, else they be forced to terminate her services. She was also told that,
regardless of her choice, she should no longer report for work and was asked to surrender her office identification
cards. She requested to be given one week to decide on the same, but to no avail.19

On May 17, 2005, Alcaraz told her administrative assistant, Claude Gonzales (Gonzales), that she would be on
leave for that day. However, Gonzales told her that Walsh and Terrible already announced to the whole Hospira
ALSU staff that Alcaraz already resigned due to health reasons.20

On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating that her services had
been terminated effective May 19, 2005.21 The letter detailed the reasons for Alcaraz’s termination – particularly,
that Alcaraz: (a) did not manage her time effectively; (b) failed to gain the trust of her staff and to build an effective
rapport with them; (c) failed to train her staff effectively; and (d) was not able to obtain the knowledge and ability to
make sound judgments on case processing and article review which were necessary for the proper performance of
her duties.22 On May 27, 2005, Alcaraz received another copy of the said termination letter via registered mail.23

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal dismissal
and damages against Abbott and its officers, namely, Misa, Bernardo, Almazar, Walsh, Terrible, and Feist.24 She
claimed that she should have already been considered as a regular and not a probationary employee given Abbott’s
failure to inform her of the reasonable standards for her regularization upon her engagement as required under
Article 29525 of the Labor Code. In this relation, she contended that while her employment contract stated that she
was to be engaged on a probationary status, the same did not indicate the standards on which her regularization
would be based.26 She further averred that the individual petitioners maliciously connived to illegally dismiss her
when: (a) they threatened her with termination; (b) she was ordered not to enter company premises even if she was
still an employee thereof; and (c) they publicly announced that she already resigned in order to humiliate her.27

On the contrary, petitioners maintained that Alcaraz was validly terminated from her probationary employment given
her failure to satisfy the prescribed standards for her regularization which were made known to her at the time of her
engagement.28

The LA Ruling

In a Decision dated March 30, 2006,29 the LA dismissed Alcaraz’s complaint for lack of merit.

The LA rejected Alcaraz’s argument that she was not informed of the reasonable standards to qualify as a regular
employee considering her admissions that she was briefed by Almazar on her work during her pre-employment
orientation meeting30 and that she received copies of Abbott’s Code of Conduct and Performance Modules which
were used for evaluating all types of Abbott employees.31 As Alcaraz was unable to meet the standards set by
Abbott as per her performance evaluation, the LA ruled that the termination of her probationary employment was
justified.32 Lastly, the LA found that there was no evidence to conclude that Abbott’s officers and employees acted in
bad faith in terminating Alcaraz’s employment.33

Displeased with the LA’s ruling, Alcaraz filed an appeal with the National Labor Relations Commission (NLRC).

The NLRC Ruling

On September 15, 2006, the NLRC rendered a Decision,34 annulling and setting aside the LA’s ruling, the dispositive
portion of which reads:

WHEREFORE, the Decision of the Labor Arbiter dated 31 March 2006 [sic] is hereby reversed, annulled and set
aside and judgment is hereby rendered:

1. Finding respondents Abbot [sic] and individual respondents to have committed illegal dismissal;

2. Respondents are ordered to immediately reinstate complainant to her former position without loss of
seniority rights immediately upon receipt hereof;

3. To jointly and severally pay complainant backwages computed from 16 May 2005 until finality of this
decision. As of the date hereof the backwages is computed at

a. Backwages for 15 months - PhP 1,650,000.00

b. 13th month pay - 110,000.00

TOTAL PhP 1,760,000.00

4. Respondents are ordered to pay complainant moral damages of ₱50,000.00 and exemplary damages of
₱50,000.00.

5. Respondents are also ordered to pay attorney’s fees of 10% of the total award.

6. All other claims are dismissed for lack of merit.

SO ORDERED.35

The NLRC reversed the findings of the LA and ruled that there was no evidence showing that Alcaraz had been
apprised of her probationary status and the requirements which she should have complied with in order to be a
regular employee.36 It held that Alcaraz’s receipt of her job description and Abbott’s Code of Conduct and
Performance Modules was not equivalent to her being actually informed of the performance standards upon which
she should have been evaluated on.37 It further observed that Abbott did not comply with its own standard operating
procedure in evaluating probationary employees.38 The NLRC was also not convinced that Alcaraz was terminated
for a valid cause given that petitioners’ allegation of Alcaraz’s "poor performance" remained unsubstantiated.39

Petitioners filed a motion for reconsideration which was denied by the NLRC in a Resolution dated July 31, 2007.40

Aggrieved, petitioners filed with the CA a Petition for Certiorari with Prayer for Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction, docketed as CA G.R. SP No. 101045 (First CA Petition), alleging grave
abuse of discretion on the part of NLRC when it ruled that Alcaraz was illegally dismissed.41

Pending resolution of the First CA Petition, Alcaraz moved for the execution of the NLRC’s Decision before the LA,
which petitioners strongly opposed. The LA denied the said motion in an Order dated July 8, 2008 which was,
however, eventually reversed on appeal by the NLRC.42 Due to the foregoing, petitioners filed another Petition for
Certiorari with the CA, docketed as CA G.R. SP No. 111318 (Second CA Petition), assailing the propriety of the
execution of the NLRC decision.43

The CA Ruling

With regard to the First CA Petition, the CA, in a Decision44 dated December 10, 2009, affirmed the ruling of the
NLRC and held that the latter did not commit any grave abuse of discretion in finding that Alcaraz was illegally
dismissed.
It observed that Alcaraz was not apprised at the start of her employment of the reasonable standards under which
she could qualify as a regular employee.45 This was based on its examination of the employment contract which
showed that the same did not contain any standard of performance or any stipulation that Alcaraz shall undergo a
performance evaluation before she could qualify as a regular employee.46 It also found that Abbott was unable to
prove that there was any reasonable ground to terminate Alcaraz’s employment.47 Abbott moved for the
reconsideration of the aforementioned ruling which was, however, denied by the CA in a Resolution48 dated June 9,
2010.

The CA likewise denied the Second CA Petition in a Resolution dated May 18, 2010 (May 18, 2010 Resolution) and
ruled that the NLRC was correct in upholding the execution of the NLRC Decision.49 Thus, petitioners filed a motion
for reconsideration.

While the petitioners’ motion for reconsideration of the CA’s May 18, 2010 Resolution was pending, Alcaraz again
moved for the issuance of a writ of execution before the LA. On June 7, 2010, petitioners received the LA’s order
granting Alcaraz’s motion for execution which they in turn appealed to the NLRC – through a Memorandum of
Appeal dated June 16, 2010 (June 16, 2010 Memorandum of Appeal ) – on the ground that the implementation of
the LA’s order would render its motion for reconsideration moot and academic.50

Meanwhile, petitioners’ motion for reconsideration of the CA’s May 18, 2010 Resolution in the Second CA Petition
was denied via a Resolution dated October 4, 2010.51 This attained finality on January 10, 2011 for petitioners’
failure to timely appeal the same.52 Hence, as it stands, only the issues in the First CA petition are left to be
resolved.

Incidentally, in her Comment dated November 15, 2010, Alcaraz also alleges that petitioners were guilty of forum
shopping when they filed the Second CA Petition pending the resolution of their motion for reconsideration of the
CA’s December 10, 2009 Decision i.e., the decision in the First CA Petition.53 She also contends that petitioners
have not complied with the certification requirement under Section 5, Rule 7 of the Rules of Court when they failed
to disclose in the instant petition the filing of the June 16, 2010 Memorandum of Appeal filed before the NLRC.54

The Issues Before the Court

The following issues have been raised for the Court’s resolution: (a) whether or not petitioners are guilty of forum
shopping and have violated the certification requirement under Section 5, Rule 7 of the Rules of Court; (b) whether
or not Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular employee; (c)
whether or not Alcaraz was validly terminated from her employment; and (d) whether or not the individual petitioners
herein are liable.

The Court’s Ruling

A. Forum Shopping and

Violation of Section 5, Rule 7
of the Rules of Court.

At the outset, it is noteworthy to mention that the prohibition against forum shopping is different from a violation of
the certification requirement under Section 5, Rule 7 of the Rules of Court. In Sps. Ong v. CA,55 the Court explained
that:

x x x The distinction between the prohibition against forum shopping and the certification requirement should by now
be too elementary to be misunderstood. To reiterate, compliance with the certification against forum shopping is
separate from and independent of the avoidance of the act of forum shopping itself. There is a difference in the
treatment between failure to comply with the certification requirement and violation of the prohibition against forum
shopping not only in terms of imposable sanctions but also in the manner of enforcing them. The former constitutes
sufficient cause for the dismissal without prejudice to the filing of the complaint or initiatory pleading upon motion
and after hearing, while the latter is a ground for summary dismissal thereof and for direct contempt. x x x. 56

As to the first, forum shopping takes place when a litigant files multiple suits involving the same parties, either
simultaneously or successively, to secure a favorable judgment. It exists where the elements of litis pendentia are
present, namely: (a) identity of parties, or at least such parties who represent the same interests in both actions; (b)
identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with
respect to the two preceding particulars in the two (2) cases is such that any judgment that may be rendered in the
pending case, regardless of which party is successful, would amount to res judicata in the other case.57

In this case, records show that, except for the element of identity of parties, the elements of forum shopping do not
exist. Evidently, the First CA Petition was instituted to question the ruling of the NLRC that Alcaraz was illegally
dismissed. On the other hand, the Second CA Petition pertains to the propriety of the enforcement of the judgment
award pending the resolution of the First CA Petition and the finality of the decision in the labor dispute between
Alcaraz and the petitioners. Based on the foregoing, a judgment in the Second CA Petition will not constitute res
judicata insofar as the First CA Petition is concerned. Thus, considering that the two petitions clearly cover different
subject matters and causes of action, there exists no forum shopping.

As to the second, Alcaraz further imputes that the petitioners violated the certification requirement under Section 5,
Rule 7 of the Rules of Court58 by not disclosing the fact that it filed the June 16, 2010 Memorandum of Appeal before
the NLRC in the instant petition.

In this regard, Section 5(b), Rule 7 of the Rules of Court requires that a plaintiff who files a case should provide a
complete statement of the present status of any pending case if the latter involves the same issues as the one that
was filed. If there is no such similar pending case, Section 5(a) of the same rule provides that the plaintiff is obliged
to declare under oath that to the best of his knowledge, no such other action or claim is pending.

Records show that the issues raised in the instant petition and those in the June 16, 2010 Memorandum of Appeal
filed with the NLRC likewise cover different subject matters and causes of action. In this case, the validity of
Alcaraz’s dismissal is at issue whereas in the said Memorandum of Appeal, the propriety of the issuance of a writ of
execution was in question.

Thus, given the dissimilar issues, petitioners did not have to disclose in the present petition the filing of their June
16, 2010 Memorandum of Appeal with the NLRC. In any event, considering that the issue on the propriety of the
issuance of a writ of execution had been resolved in the Second CA Petition – which in fact had already attained
finality – the matter of disclosing the June 16, 2010 Memorandum of Appeal is now moot and academic.

Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.

B. Probationary employment;
grounds for termination.

A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary
employment, aside from just or authorized causes of termination, an additional ground is provided under Article 295
of the Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular
employee in accordance with the reasonable standards made known by the employer to the employee at the time of
the engagement.59 Thus, the services of an employee who has been engaged on probationary basis may be
terminated for any of the following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular
employee in accordance with reasonable standards prescribed by the employer.60

Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that if the
employer fails to inform the probationary employee of the reasonable standards upon which the regularization would
be based on at the time of the engagement, then the said employee shall be deemed a regular employee, viz.:

(d) In all cases of probationary employment, the employer shall make known to the employee the standards under
which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to
the employee at that time, he shall be deemed a regular employee.

In other words, the employer is made to comply with two (2) requirements when dealing with a probationary
employee: first, the employer must communicate the regularization standards to the probationary employee; and
second, the employer must make such communication at the time of the probationary employee’s engagement. If
the employer fails to comply with either, the employee is deemed as a regular and not a probationary employee.
Keeping with these rules, an employer is deemed to have made known the standards that would qualify a
probationary employee to be a regular employee when it has exerted reasonable efforts to apprise the employee of
what he is expected to do or accomplish during the trial period of probation. This goes without saying that the
employee is sufficiently made aware of his probationary status as well as the length of time of the probation.

The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of maids, cooks,
drivers, or messengers.61 Also, in Aberdeen Court, Inc. v. Agustin,62 it has been held that the rule on notifying a
probationary employee of the standards of regularization should not be used to exculpate an employee who acts in
a manner contrary to basic knowledge and common sense in regard to which there is no need to spell out a policy
or standard to be met. In the same light, an employee’s failure to perform the duties and responsibilities which have
been clearly made known to him constitutes a justifiable basis for a probationary employee’s non-regularization.

In this case, petitioners contend that Alcaraz was terminated because she failed to qualify as a regular employee
according to Abbott’s standards which were made known to her at the time of her engagement. Contrarily, Alcaraz
claims that Abbott never apprised her of these standards and thus, maintains that she is a regular and not a mere
probationary employee.

The Court finds petitioners’ assertions to be well-taken.

A punctilious examination of the records reveals that Abbott had indeed complied with the above-stated
requirements. This conclusion is largely impelled by the fact that Abbott clearly conveyed to Alcaraz her duties and
responsibilities as Regulatory Affairs Manager prior to, during the time of her engagement, and the incipient stages
of her employment. On this score, the Court finds it apt to detail not only the incidents which point out to the efforts
made by Abbott but also those circumstances which would show that Alcaraz was well-apprised of her employer’s
expectations that would, in turn, determine her regularization:

(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of its need for a
Regulatory Affairs Manager, indicating therein the job description for as well as the duties and
responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit her application to Abbott
on October 4, 2004;

(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a
probationary status;

(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia, that
she was to be placed on probation for a period of six (6) months beginning February 15, 2005 to August 14,
2005;

(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s
organizational structure and her job description through e-mail;

(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed her that she had to
implement Abbott’s Code of Conduct and office policies on human resources and finance and that she
would be reporting directly to Walsh;

(f) Alcaraz was also required to undergo a training program as part of her orientation;

(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from Misa who
explained to her the procedure for evaluating the performance of probationary employees; she was further
notified that Abbott had only one evaluation system for all of its employees; and

(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to have
an "extensive training and background" to acquire the necessary skills for her job.63

Considering the totality of the above-stated circumstances, it cannot, therefore, be doubted that Alcaraz was well-
aware that her regularization would depend on her ability and capacity to fulfill the requirements of her position as
Regulatory Affairs Manager and that her failure to perform such would give Abbott a valid cause to terminate her
probationary employment.

Verily, basic knowledge and common sense dictate that the adequate performance of one’s duties is, by and of
itself, an inherent and implied standard for a probationary employee to be regularized; such is a regularization
standard which need not be literally spelled out or mapped into technical indicators in every case. In this regard, it
must be observed that the assessment of adequate duty performance is in the nature of a management prerogative
which when reasonably exercised – as Abbott did in this case – should be respected. This is especially true of a
managerial employee like Alcaraz who was tasked with the vital responsibility of handling the personnel and
important matters of her department.

In fine, the Court rules that Alcaraz’s status as a probationary employee and her consequent dismissal must stand.
Consequently, in holding that Alcaraz was illegally dismissed due to her status as a regular and not a probationary
employee, the Court finds that the NLRC committed a grave abuse of discretion.

To elucidate, records show that the NLRC based its decision on the premise that Alcaraz’s receipt of her job
description and Abbott’s Code of Conduct and Performance Modules was not equivalent to being actually informed
of the performance standards upon which she should have been evaluated on.64 It, however, overlooked the legal
implication of the other attendant circumstances as detailed herein which should have warranted a contrary finding
that Alcaraz was indeed a probationary and not a regular employee – more particularly the fact that she was well-
aware of her duties and responsibilities and that her failure to adequately perform the same would lead to her non-
regularization and eventually, her termination.

Accordingly, by affirming the NLRC’s pronouncement which is tainted with grave abuse of discretion, the CA
committed a reversible error which, perforce, necessitates the reversal of its decision.

C. Probationary employment;
termination procedure.

A different procedure is applied when terminating a probationary employee; the usual two-notice rule does not
govern.65 Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code states that "if the termination is
brought about by the x x x failure of an employee to meet the standards of the employer in case of probationary
employment, it shall be sufficient that a written notice is served the employee, within a reasonable time from the
effective date of termination."

As the records show, Alcaraz's dismissal was effected through a letter dated May 19, 2005 which she received on
May 23, 2005 and again on May 27, 2005. Stated therein were the reasons for her termination, i.e., that after proper
evaluation, Abbott determined that she failed to meet the reasonable standards for her regularization considering
her lack of time and people management and decision-making skills, which are necessary in the performance of her
functions as Regulatory Affairs Manager.66 Undeniably, this written notice sufficiently meets the criteria set forth
above, thereby legitimizing the cause and manner of Alcaraz’s dismissal as a probationary employee under the
parameters set by the Labor Code.67

D. Employer’s violation of
company policy and
procedure.

Nonetheless, despite the existence of a sufficient ground to terminate Alcaraz’s employment and Abbott’s
compliance with the Labor Code termination procedure, it is readily apparent that Abbott breached its contractual
obligation to Alcaraz when it failed to abide by its own procedure in evaluating the performance of a probationary
employee.

Veritably, a company policy partakes of the nature of an implied contract between the employer and employee. In
Parts Depot, Inc. v. Beiswenger,68 it has been held that:

Employer statements of policy . . . can give rise to contractual rights in employees without evidence that the parties
mutually agreed that the policy statements would create contractual rights in the employee, and, hence, although
the statement of policy is signed by neither party, can be unilaterally amended by the employer without notice to the
employee, and contains no reference to a specific employee, his job description or compensation, and although no
reference was made to the policy statement in pre-employment interviews and the employee does not learn of its
existence until after his hiring. Toussaint, 292 N.W .2d at 892. The principle is akin to estoppel. Once an employer
establishes an express personnel policy and the employee continues to work while the policy remains in effect, the
policy is deemed an implied contract for so long as it remains in effect. If the employer unilaterally changes the
policy, the terms of the implied contract are also thereby changed. (Emphasis and underscoring supplied.)
1âw phi 1

Hence, given such nature, company personnel policies create an obligation on the part of both the employee and
the employer to abide by the same.

Records show that Abbott’s PPSE procedure mandates, inter alia, that the job performance of a probationary
employee should be formally reviewed and discussed with the employee at least twice: first on the third month and
second on the fifth month from the date of employment. Abbott is also required to come up with a Performance
Improvement Plan during the third month review to bridge the gap between the employee’s performance and the
standards set, if any.69 In addition, a signed copy of the PPSE form should be submitted to Abbott’s HRD as the
same would serve as basis for recommending the confirmation or termination of the probationary employment.70

In this case, it is apparent that Abbott failed to follow the above-stated procedure in evaluating Alcaraz. For one,
there lies a hiatus of evidence that a signed copy of Alcaraz’s PPSE form was submitted to the HRD. It was not
even shown that a PPSE form was completed to formally assess her performance. Neither was the performance
evaluation discussed with her during the third and fifth months of her employment. Nor did Abbott come up with the
necessary Performance Improvement Plan to properly gauge Alcaraz’s performance with the set company
standards.

While it is Abbott’s management prerogative to promulgate its own company rules and even subsequently amend
them, this right equally demands that when it does create its own policies and thereafter notify its employee of the
same, it accords upon itself the obligation to faithfully implement them. Indeed, a contrary interpretation would entail
a disharmonious relationship in the work place for the laborer should never be mired by the uncertainty of flimsy
rules in which the latter’s labor rights and duties would, to some extent, depend.

In this light, while there lies due cause to terminate Alcaraz’s probationary employment for her failure to meet the
standards required for her regularization, and while it must be further pointed out that Abbott had satisfied its
statutory duty to serve a written notice of termination, the fact that it violated its own company procedure renders the
termination of Alcaraz’s employment procedurally infirm, warranting the payment of nominal damages. A further
exposition is apropos.

Case law has settled that an employer who terminates an employee for a valid cause but does so through invalid
procedure is liable to pay the latter nominal damages.

In Agabon v. NLRC (Agabon),71 the Court pronounced that where the dismissal is for a just cause, 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.72 Thus, in Agabon, the employer was ordered
to pay the employee nominal damages in the amount of ₱30,000.00.73

Proceeding from the same ratio, the Court modified Agabon in the case of Jaka Food Processing Corporation v.
Pacot (Jaka)74 where it created a distinction between procedurally defective dismissals due to a just cause, on one
hand, and those due to an authorized cause, on the other.

It was explained that if the dismissal is based on a just cause under Article 282 of the Labor Code (now Article 296)
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; if the
dismissal is based on an authorized cause under Article 283 (now Article 297) 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.75 Hence, in Jaka, where the employee was dismissed for an authorized
cause of retrenchment76 – as contradistinguished from the employee in Agabon who was dismissed for a just cause
of neglect of duty77 – the Court ordered the employer to pay the employee nominal damages at the higher amount of
₱50,000.00.
Evidently, the sanctions imposed in both Agabon and Jaka proceed from the necessity to deter employers from
future violations of the statutory due process rights of employees.78 In similar regard, the Court deems it proper to
apply the same principle to the case at bar for the reason that an employer’s contractual breach of its own company
procedure – albeit not statutory in source – has the parallel effect of violating the laborer’s rights. Suffice it to state,
the contract is the law between the parties and thus, breaches of the same impel recompense to vindicate a right
that has been violated. Consequently, while the Court is wont to uphold the dismissal of Alcaraz because a valid
cause exists, the payment of nominal damages on account of Abbott’s contractual breach is warranted in
accordance with Article 2221 of the Civil Code.79

Anent the proper amount of damages to be awarded, the Court observes that Alcaraz’s dismissal proceeded from
her failure to comply with the standards required for her regularization. As such, it is undeniable that the dismissal
process was, in effect, initiated by an act imputable to the employee, akin to dismissals due to just causes under
Article 296 of the Labor Code. Therefore, the Court deems it appropriate to fix the amount of nominal damages at
the amount of ₱30,000.00, consistent with its rulings in both Agabon and Jaka.

E. Liability of individual
petitioners as corporate
officers.

It is hornbook principle that personal liability of corporate directors, trustees or officers attaches only when: (a) they
assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence in
directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders or
other persons; (b) they consent to the issuance of watered down stocks or when, having knowledge of such
issuance, do not forthwith file with the corporate secretary their written objection; (c) they agree to hold themselves
personally and solidarily liable with the corporation; or (d) they are made by specific provision of law personally
answerable for their corporate action.80

In this case, Alcaraz alleges that the individual petitioners acted in bad faith with regard to the supposed crude
manner by which her probationary employment was terminated and thus, should be held liable together with Abbott.
In the same vein, she further attributes the loss of some of her remaining belongings to them.81

Alcaraz’s contention fails to persuade.

A judicious perusal of the records show that other than her unfounded assertions on the matter, there is no evidence
to support the fact that the individual petitioners herein, in their capacity as Abbott’s officers and employees, acted in
bad faith or were motivated by ill will in terminating

Alcaraz’s services. The fact that Alcaraz was made to resign and not allowed to enter the workplace does not
necessarily indicate bad faith on Abbott’s part since a sufficient ground existed for the latter to actually proceed with
her termination. On the alleged loss of her personal belongings, records are bereft of any showing that the same
could be attributed to Abbott or any of its officers. It is a well-settled rule that bad faith cannot be presumed and he
who alleges bad faith has the onus of proving it. All told, since Alcaraz failed to prove any malicious act on the part
of Abbott or any of its officers, the Court finds the award of moral or exemplary damages unwarranted.

WHEREFORE, the petition is GRANTED. The Decision dated December 10, 2009 and Resolution dated June 9,
2010 of the Court of Appeals in CA-G.R. SP No. 101045 are hereby REVERSED and SET ASIDE. Accordingly, the
Decision dated March 30, 2006 of the Labor Arbiter is REINSTATED with the MODIFICATION that petitioner Abbott
Laboratories, Philippines be ORDERED to pay respondent Pearlie Ann F. Alcaraz nominal damages in the amount
of ₱30,000.00 on account of its breach of its own company procedure.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice
 Equal Protection

G.R. No. 168081 October 17, 2008

ARMANDO G. YRASUEGUI, petitioners,

vs.
PHILIPPINE AIRLINES, INC., respondents.

DECISION

REYES, R.T., J.:

THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to
adhere to the weight standards of the airline company.

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

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

The Facts

Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL). He
stands five feet and eight inches (5’8") with a large body frame. The proper weight for a man of his height and body
structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual1 of PAL.

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

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

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company policy, he
was removed from flight duty effective May 6, 1989 to July 3, 1989. He was formally requested to trim down to his
ideal weight and report for weight checks on several dates. He was also told that he may avail of the services of the
company physician should he wish to do so. He was advised that his case will be evaluated on July 3, 1989.2

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

On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on
the progress of his effort to lose weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous weight.
After the visit, petitioner made a commitment3 to reduce weight in a letter addressed to Cabin Crew Group Manager
Augusto Barrios. The letter, in full, reads:

Dear Sir:

I would like to guaranty my commitment towards a weight loss from 217 pounds to 200 pounds from today until 31
Dec. 1989.
From thereon, I promise to continue reducing at a reasonable percentage until such time that my ideal weight is
achieved.

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

Respectfully Yours,

F/S Armando Yrasuegui4

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

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

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

On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check would be dealt
with accordingly. He was given another set of weight check dates.6 Again, petitioner ignored the directive and did
not report for weight checks. On June 26, 1990, petitioner was required to explain his refusal to undergo weight
checks.7

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

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

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

On December 7, 1992, petitioner submitted his Answer.9 Notably, he did not deny being overweight. What he
claimed, instead, is that his violation, if any, had already been condoned by PAL since "no action has been taken by
the company" regarding his case "since 1988." He also claimed that PAL discriminated against him because "the
company has not been fair in treating the cabin crew members who are similarly situated."

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

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

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

Labor Arbiter, NLRC and CA Dispositions

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled13 that petitioner was illegally dismissed. The
dispositive part of the Arbiter ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the complainant’s dismissal illegal,
and ordering the respondent to reinstate him to his former position or substantially equivalent one, and to pay him:

a. Backwages of Php10,500.00 per month from his dismissal on June 15, 1993 until reinstated, which for purposes
of appeal is hereby set from June 15, 1993 up to August 15, 1998 at ₱651,000.00;

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

SO ORDERED.14

The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of
petitioner.15 However, the weight standards need not be complied with under pain of dismissal since his weight did
not hamper the performance of his duties.16 Assuming that it did, petitioner could be transferred to other positions
where his weight would not be a negative factor.17 Notably, other overweight employees, i.e., Mr. Palacios, Mr. Cui,
and Mr. Barrios, were promoted instead of being disciplined.18

Both parties appealed to the National Labor Relations Commission (NLRC).19

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

On February 1, 2000, the Labor Arbiter denied21 the Motion to Quash Writ of Execution22 of PAL.

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

On June 23, 2000, the NLRC rendered judgment24 in the following tenor:

WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November 1998 as modified by our
findings herein, is hereby AFFIRMED and that part of the dispositive portion of said decision concerning
complainant’s entitlement to backwages shall be deemed to refer to complainant’s entitlement to his full
backwages, inclusive of allowances and to his other benefits or their monetary equivalent instead of simply
backwages, from date of dismissal until his actual reinstatement or finality hereof. Respondent is enjoined to
manifests (sic) its choice of the form of the reinstatement of complainant, whether physical or through payroll within
ten (10) days from notice failing which, the same shall be deemed as complainant’s reinstatement through payroll
and execution in case of non-payment shall accordingly be issued by the Arbiter. Both appeals of respondent thus,
are DISMISSED for utter lack of merit.25

According to the NLRC, "obesity, or the tendency to gain weight uncontrollably regardless of the amount of food
intake, is a disease in itself."26 As a consequence, there can be no intentional defiance or serious misconduct by
petitioner to the lawful order of PAL for him to lose weight.27

Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable. However, it found as
unnecessary the Labor Arbiter holding that petitioner was not remiss in the performance of his duties as flight
steward despite being overweight. According to the NLRC, the Labor Arbiter should have limited himself to the issue
of whether the failure of petitioner to attain his ideal weight constituted willful defiance of the weight standards of
PAL.28

PAL moved for reconsideration to no avail.29 Thus, PAL elevated the matter to the Court of Appeals (CA) via a
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.30

By Decision dated August 31, 2004, the CA reversed31 the NLRC:

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

SO ORDERED.32
The CA opined that there was grave abuse of discretion on the part of the NLRC because it "looked at wrong and
irrelevant considerations"33 in evaluating the evidence of the parties. Contrary to the NLRC ruling, the weight
standards of PAL are meant to be a continuing qualification for an employee’s position.34 The failure to adhere to the
weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in
relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest.35 Said the CA, "the element
of willfulness that the NLRC decision cites is an irrelevant consideration in arriving at a conclusion on whether the
dismissal is legally proper."36 In other words, "the relevant question to ask is not one of willfulness but one of
reasonableness of the standard and whether or not the employee qualifies or continues to qualify under this
standard."37

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

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

Issues

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

I.

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

II.

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

III.

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

IV.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED ASIDE PETITIONER’S
CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT AND
ACADEMIC.43 (Underscoring supplied)

Our Ruling

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

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

By its nature, these "qualifying standards" are norms that apply prior to and after an employee is hired. They
apply prior to employment because these are the standards a job applicant must initially meet in order to be hired.
They apply after hiring because an employee must continue to meet these standards while on the job in order to
keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed
pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed simply because he no longer "qualifies" for
his job irrespective of whether or not the failure to qualify was willful or intentional. x x x45

Petitioner, though, advances a very interesting argument. He claims that obesity is a "physical abnormality and/or
illness."46 Relying on Nadura v. Benguet Consolidated, Inc.,47 he says his dismissal is illegal:

Conscious of the fact that Nadura’s case cannot be made to fall squarely within the specific causes enumerated in
subparagraphs 1(a) to (e), Benguet invokes the provisions of subparagraph 1(f) and says that Nadura’s illness –
occasional attacks of asthma – is a cause analogous to them.

Even a cursory reading of the legal provision under consideration is sufficient to convince anyone that, as the trial
court said, "illness cannot be included as an analogous cause by any stretch of imagination."

It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others expressly enumerated in the
law are due to the voluntary and/or willful act of the employee. How Nadura’s illness could be considered as
"analogous" to any of them is beyond our understanding, there being no claim or pretense that the same was
contracted through his own voluntary act.48

The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from the case at
bar. First, Nadura was not decided under the Labor Code. The law applied in that case was Republic Act (RA) No.
1787. Second, the issue of flight safety is absent in Nadura, thus, the rationale there cannot apply here. Third,
in Nadura, the employee who was a miner, was laid off from work because of illness, i.e., asthma. Here, petitioner
was dismissed for his failure to meet the weight standards of PAL. He was not dismissed due to illness. Fourth, the
issue in Nadura is whether or not the dismissed employee is entitled to separation pay and damages. Here, the
issue centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of PAL. Fifth,
in Nadura, the employee was not accorded due process. Here, petitioner was accorded utmost leniency. He was
given more than four (4) years to comply with the weight standards of PAL.

In the case at bar, the evidence on record militates against petitioner’s claims that obesity is a disease. That he was
able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to lose weight given the proper
attitude, determination, and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner
himself claimed that "[t]he issue is could I bring my weight down to ideal weight which is 172, then the answer is
yes. I can do it now."49

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

Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and
Hospitals,52 decided by the United States Court of Appeals (First Circuit). In that case, Cook worked from 1978 to
1980 and from 1981 to 1986 as an institutional attendant for the mentally retarded at the Ladd Center that was being
operated by respondent. She twice resigned voluntarily with an unblemished record. Even respondent admitted that
her performance met the Center’s legitimate expectations. In 1988, Cook re-applied for a similar position. At that
time, "she stood 5’2" tall and weighed over 320 pounds." Respondent claimed that the morbid obesity of plaintiff
compromised her ability to evacuate patients in case of emergency and it also put her at greater risk of serious
diseases.

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

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

Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court for the District of Rhode
Island, Cook was sometime before 1978 "at least one hundred pounds more than what is considered appropriate of
her height." According to the Circuit Judge, Cook weighed "over 320 pounds" in 1988. Clearly, that is not the case
here. At his heaviest, petitioner was only less than 50 pounds over his ideal weight.

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

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

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

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

Both arguments must fail.

First, the Constitution,59 the Labor Code,60 and RA No. 727761 or the Magna Carta for Disabled Persons62 contain
provisions similar to BFOQ.

Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British Columbia
Government and Service Employee’s Union (BCGSEU),63 the Supreme Court of Canada adopted the so-called
"Meiorin Test" in determining whether an employment policy is justified. Under this test, (1) the employer must show
that it adopted the standard for a purpose rationally connected to the performance of the job;64 (2) the employer
must establish that the standard is reasonably necessary65 to the accomplishment of that work-related purpose; and
(3) the employer must establish that the standard is reasonably necessary in order to accomplish the legitimate
work-related purpose. Similarly, in Star Paper Corporation v. Simbol,66 this Court held that in order to justify a
BFOQ, the employer must prove that (1) the employment qualification is reasonably related to the essential
operation of the job involved; and (2) that there is factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of the job.67
In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ.68 BFOQ is valid
"provided it reflects an inherent quality reasonably necessary for satisfactory job performance."69

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

Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor
Arbiter,71 NLRC,72 and CA73 are one in holding that the weight standards of PAL are reasonable. A common carrier,
from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the
safety of the passengers it transports.74 It is bound to carry its passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.75

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

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

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

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

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

The rationale in Western Air Lines v. Criswell76 relied upon by petitioner cannot apply to his case. What was involved
there were two (2) airline pilots who were denied reassignment as flight engineers upon reaching the age of 60, and
a flight engineer who was forced to retire at age 60. They sued the airline company, alleging that the age-60
retirement for flight engineers violated the Age Discrimination in Employment Act of 1967. Age-based BFOQ and
being overweight are not the same. The case of overweight cabin attendants is another matter. Given the cramped
cabin space and narrow aisles and emergency exit doors of the airplane, any overweight cabin attendant would
certainly have difficulty navigating the cramped cabin area.

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

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

Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him prior to
his employment. He is presumed to know the weight limit that he must maintain at all times.78 In fact, never did he
question the authority of PAL when he was repeatedly asked to trim down his weight. Bona fides exigit ut quod
convenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat kanyang
tutuparin ang napagkasunduan.

Too, the weight standards of PAL provide for separate weight limitations based on height and body frame for both
male and female cabin attendants. A progressive discipline is imposed to allow non-compliant cabin attendants
sufficient opportunity to meet the weight standards. Thus, the clear-cut rules obviate any possibility for the
commission of abuse or arbitrary action on the part of PAL.

III. Petitioner failed to substantiate his claim that he was discriminated against by PAL.

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

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

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

We are not unmindful that findings of facts of administrative agencies, like the Labor Arbiter and the NLRC, are
accorded respect, even finality.83 The reason is simple: administrative agencies are experts in matters within their
specific and specialized jurisdiction.84 But the principle is not a hard and fast rule. It only applies if the findings of
facts are duly supported by substantial evidence. If it can be shown that administrative bodies grossly
misappreciated evidence of such nature so as to compel a conclusion to the contrary, their findings of facts must
necessarily be reversed. Factual findings of administrative agencies do not have infallibility and must be set aside
when they fail the test of arbitrariness.85

Here, the Labor Arbiter and the NLRC inexplicably misappreciated evidence. We thus annul their findings.

To make his claim more believable, petitioner invokes the equal protection clause guaranty86 of the Constitution.
However, in the absence of governmental interference, the liberties guaranteed by the Constitution cannot be
invoked.87 Put differently, the Bill of Rights is not meant to be invoked against acts of private individuals.88 Indeed,
the United States Supreme Court, in interpreting the Fourteenth Amendment,89 which is the source of our equal
protection guarantee, is consistent in saying that the equal protection erects no shield against private conduct,
however discriminatory or wrongful.90 Private actions, no matter how egregious, cannot violate the equal protection
guarantee.91

IV. The claims of petitioner for reinstatement and wages are moot.
As his last contention, petitioner avers that his claims for reinstatement and wages have not been mooted. He is
entitled to reinstatement and his full backwages, "from the time he was illegally dismissed" up to the time that the
NLRC was reversed by the CA.92

At this point, Article 223 of the Labor Code finds relevance:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.

The law is very clear. Although an award or order of reinstatement is self-executory and does not require a writ of
execution,93 the option to exercise actual reinstatement or payroll reinstatement belongs to the employer. It does not
belong to the employee, to the labor tribunals, or even to the courts.

Contrary to the allegation of petitioner that PAL "did everything under the sun" to frustrate his "immediate return to
his previous position,"94 there is evidence that PAL opted to physically reinstate him to a substantially equivalent
position in accordance with the order of the Labor Arbiter.95 In fact, petitioner duly received the return to work notice
on February 23, 2001, as shown by his signature.96

Petitioner cannot take refuge in the pronouncements of the Court in a case97 that "[t]he unjustified refusal of the
employer to reinstate the dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution"98 and ""even if the order of reinstatement
of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages
of the employee during the period of appeal until reversal by the higher court."99 He failed to prove that he complied
with the return to work order of PAL. Neither does it appear on record that he actually rendered services for PAL
from the moment he was dismissed, in order to insist on the payment of his full backwages.

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

V. Petitioner is entitled to separation pay.

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

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

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

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

WHEREFORE, the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in that petitioner
Armando G. Yrasuegui is entitled to separation pay in an amount equivalent to one-half (1/2) month’s pay for every
year of service, which should include his regular allowances.

SO ORDERED
G.R. No. 162994 September 17, 2004

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners,

vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.

RESOLUTION

TINGA, J.:

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

This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003 and the Resolution dated
March 26, 2004 of the Court of Appeals in CA-G.R. SP No. 62434.2

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

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

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

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

Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals3 (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay. She supervised
the district managers and medical representatives of her company and prepared marketing strategies for Astra in
that area.

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

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

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

In August 1999, Tecson again requested for more time resolve the problem. In September 1999, Tecson applied for
a transfer in Glaxo’s milk division, thinking that since Astra did not have a milk division, the potential conflict of
interest would be eliminated. His application was denied in view of Glaxo’s "least-movement-possible" policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson
asked Glaxo to reconsider its decision, but his request was denied.

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

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

Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for
voluntary arbitration. Glaxo offered Tecson a separation pay of one-half (½) month pay for every year of service, or
a total of ₱50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation and Mediation
Board (NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships between its employees and
persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales
territory.

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

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

Tecson filed a Motion for Reconsideration of the appellate court’s Decision, but the motion was denied by the
appellate court in its Resolution dated March 26, 2004.5

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

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

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

In its Comment on the petition, Glaxo argues that the company policy prohibiting its employees from having a
relationship with and/or marrying an employee of a competitor company is a valid exercise of its management
prerogatives and does not violate the equal protection clause; and that Tecson’s reassignment from the Camarines
Norte-Camarines Sur sales area to the Butuan City-Surigao City and Agusan del Sur sales area does not amount to
constructive dismissal.9

Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it has a genuine
interest in ensuring that its employees avoid any activity, relationship or interest that may conflict with their
responsibilities to the company. Thus, it expects its employees to avoid having personal or family interests in any
competitor company which may influence their actions and decisions and consequently deprive Glaxo of legitimate
profits. The policy is also aimed at preventing a competitor company from gaining access to its secrets, procedures
and policies.10
It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing or future
relationships with employees of competitor companies, and is therefore not violative of the equal protection clause.
It maintains that considering the nature of its business, the prohibition is based on valid grounds.11

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

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

Glaxo likewise insists that Tecson’s reassignment to another sales area and his exclusion from seminars regarding
respondent’s new products did not amount to constructive dismissal.

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

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

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

The Court finds no merit in the petition.

The stipulation in Tecson’s contract of employment with Glaxo being questioned by petitioners provides:

10. You agree to disclose to management any existing or future relationship you may have, either by
consanguinity or affinity with co-employees or employees of competing drug companies. Should it pose a
possible conflict of interest in management discretion, you agree to resign voluntarily from the Company as
a matter of Company policy.

…17

The same contract also stipulates that Tescon agrees to abide by the existing company rules of Glaxo, and to study
and become acquainted with such policies.18 In this regard, the Employee Handbook of Glaxo expressly informs its
employees of its rules regarding conflict of interest:

1. Conflict of Interest

Employees should avoid any activity, investment relationship, or interest that may run counter to the
responsibilities which they owe Glaxo Wellcome.
 Specifically, this means that employees are expected:

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

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

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

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

1.1. Employee Relationships

Employees with existing or future relationships either by consanguinity or affinity with co-employees of
competing drug companies are expected to disclose such relationship to the Management. If management
perceives a conflict or potential conflict of interest, every effort shall be made, together by management and
the employee, to arrive at a solution within six (6) months, either by transfer to another department in a non-
counter checking position, or by career preparation toward outside employment after Glaxo Wellcome.
Employees must be prepared for possible resignation within six (6) months, if no other solution is feasible.19

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

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

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

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

As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business confidentiality and protect a
competitive position by even-handedly disqualifying from jobs male and female applicants or employees who are
married to a competitor. Consequently, the court ruled than an employer that discharged an employee who was
married to an employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964.23 The Court
pointed out that the policy was applied to men and women equally, and noted that the employer’s business was
highly competitive and that gaining inside information would constitute a competitive advantage.

The challenged company policy does not violate the equal protection clause of the Constitution as petitioners
erroneously suggest. It is a settled principle that the commands of the equal protection clause are addressed only to
the state or those acting under color of its authority.24 Corollarily, it has been held in a long array of U.S. Supreme
Court decisions that the equal protection clause erects no shield against merely private conduct, however,
discriminatory or wrongful.25 The only exception occurs when the state29 in any of its manifestations or actions has
been found to have become entwined or involved in the wrongful private conduct.27 Obviously, however, the
exception is not present in this case. Significantly, the company actually enforced the policy after repeated requests
to the employee to comply with the policy. Indeed, the application of the policy was made in an impartial and even-
handed manner, with due regard for the lot of the employee.

In any event, from the wordings of the contractual provision and the policy in its employee handbook, it is clear that
Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor
companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the
company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out
of such relationships. As succinctly explained by the appellate court, thus:

The policy being questioned is not a policy against marriage. An employee of the company remains free to
marry anyone of his or her choosing. The policy is not aimed at restricting a personal prerogative that
belongs only to the individual. However, an employee’s personal decision does not detract the employer
from exercising management prerogatives to ensure maximum profit and business success. . .28

The Court of Appeals also correctly noted that the assailed company policy which forms part of respondent’s
Employee Code of Conduct and of its contracts with its employees, such as that signed by Tescon, was made
known to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his
employment contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily
entered into a contract of employment with Glaxo, the stipulations therein have the force of law between them and,
thus, should be complied with in good faith."29 He is therefore estopped from questioning said policy.

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

. . . In this case, petitioner’s transfer to another place of assignment was merely in keeping with the policy of
the company in avoidance of conflict of interest, and thus valid…Note that [Tecson’s] wife holds a sensitive
supervisory position as Branch Coordinator in her employer-company which requires her to work in close
coordination with District Managers and Medical Representatives. Her duties include monitoring sales of
Astra products, conducting sales drives, establishing and furthering relationship with customers, collection,
monitoring and managing Astra’s inventory…she therefore takes an active participation in the market war
characterized as it is by stiff competition among pharmaceutical companies. Moreover, and this is
significant, petitioner’s sales territory covers Camarines Sur and Camarines Norte while his wife is
supervising a branch of her employer in Albay. The proximity of their areas of responsibility, all in the same
Bicol Region, renders the conflict of interest not only possible, but actual, as learning by one spouse of the
other’s market strategies in the region would be inevitable. [Management’s] appreciation of a conflict of
interest is therefore not merely illusory and wanting in factual basis…31

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved a complaint filed by a
medical representative against his employer drug company for illegal dismissal for allegedly terminating his
employment when he refused to accept his reassignment to a new area, the Court upheld the right of the drug
company to transfer or reassign its employee in accordance with its operational demands and requirements. The
ruling of the Court therein, quoted hereunder, also finds application in the instant case:

By the very nature of his employment, a drug salesman or medical representative is expected to travel. He
should anticipate reassignment according to the demands of their business. It would be a poor drug
corporation which cannot even assign its representatives or detail men to new markets calling for opening or
expansion or to areas where the need for pushing its products is great. More so if such reassignments are
part of the employment contract.33
As noted earlier, the challenged policy has been implemented by Glaxo impartially and disinterestedly for a long
period of time. In the case at bar, the record shows that Glaxo gave Tecson several chances to eliminate the conflict
of interest brought about by his relationship with Bettsy. When their relationship was still in its initial stage, Tecson’s
supervisors at Glaxo constantly reminded him about its effects on his employment with the company and on the
company’s interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by either resigning
from the company or asking his wife to resign from Astra. Glaxo even expressed its desire to retain Tecson in its
employ because of his satisfactory performance and suggested that he ask Bettsy to resign from her company
instead. Glaxo likewise acceded to his repeated requests for more time to resolve the conflict of interest. When the
problem could not be resolved after several years of waiting, Glaxo was constrained to reassign Tecson to a sales
area different from that handled by his wife for Astra. Notably, the Court did not terminate Tecson from employment
but only reassigned him to another area where his home province, Agusan del Sur, was included. In effecting
Tecson’s transfer, Glaxo even considered the welfare of Tecson’s family. Clearly, the foregoing dispels any
suspicion of unfairness and bad faith on the part of Glaxo.34

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

SO ORDERED.

Puno, Austria-Martinez, Callejo, Sr., and Chico-Nazario*, JJ., concur.