Balancing The Interests of Labor and Capital An Empirical Analysis of Philippine Supreme Court Labor Cases From 1987 To 2016

Philippine Political Science Journal
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Balancing the interests of labor and capital: an

empirical analysis of Philippine Supreme Court
labor cases from 1987 to 2016
Rogelio Alicor L. Panao & Bea Xandra De Leon
To cite this article: Rogelio Alicor L. Panao & Bea Xandra De Leon (2018) Balancing the interests
of labor and capital: an empirical analysis of Philippine Supreme Court labor cases from 1987 to
2016, Philippine Political Science Journal, 39:1, 24-46, DOI: 10.1080/01154451.2018.1498606
To link to this article: https://doi.org/10.1080/01154451.2018.1498606
Published online: 18 Jul 2018.
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PHILIPPINE POLITICAL SCIENCE JOURNAL
2018, VOL. 39, NO. 1, 24–46
https://doi.org/10.1080/01154451.2018.1498606
ARTICLE
Balancing the interests of labor and capital: an empirical

analysis of Philippine Supreme Court labor cases from 1987
to 2016
Rogelio Alicor L. Panaoa and Bea Xandra De Leonb
a
Department of Political Science, University of the Philippines, Diliman, Philippines; bPower Sector Assets
and Liabilities Management Corporation, Philippines
ABSTRACT ARTICLE HISTORY

Extending the litigation selection hypothesis to labor regulations Received 9 September 2017
in fledgling democracies, we argue that distributive rules, such as Accepted 5 July 2018
social justice policies create a selection process in the litigation KEYWORDS
and resolution of workplace claims. Specifically, rules protective of Employer–employee
labor increase the expectation of litigation success among other- relations; labor cases;
wise resource-constrained parties, narrowing the suits actually litigation; litigation
brought to action to those that are close to the standard of selection; Philippine
labor legislations. The theory implies that workers in labor actions Supreme Court; Priest-Klein
are more likely to win compared to corporations, a premise we test model; resource inequality
using a unique dataset of 3,601 Supreme Court decisions on labor theory
issues from 1987 to 2016. Our findings suggest that individuals
and unions are likely to emerge victorious, whether as petitioners
or respondents, but only when issues involve compensation
related claims, illegal dismissal, or unfair labor practices. We do
not find evidence of similar predilection toward workers when
issues involve the exercise of management prerogatives and dis-
cipline of employees, suggesting prudence by the high court to
balance social justice with rational fairness.
Introduction
In the Philippines, is labor an underdog in workplace suits? In many affluent societies, it
is well known that overburdened institutional facilities and costly legal services create a
system where those who have more fare better in courts. But where the primacy of labor
has been explicitly recognized as state policy, as in the Philippines, are resource
constrained litigants, such as workers still disadvantaged?
The belief that resource-endowed litigants have the edge in tribunals and adjudica-
tory bodies goes beyond conventional notion. Galanter’s (1974) influential essay on the
dynamics of American courts have shown that in the context of information asymmetry,
resources allow institutions and the wealthy to litigate repeatedly and, in the process,
anticipate their opponents’ decisions. The classic essay on how over docketed judicial
facilities and cost-intensive legal processes give a particular advantage to parties who
have more of different types of capital has also solicited a robust amount of empirical
CONTACT Rogelio Alicor L. Panao rogelio_alicor.panao@upd.edu.ph

© 2018 Philippine Political Science Association (PPSA)
PHILIPPINE POLITICAL SCIENCE JOURNAL 25
scholarship. In Western democracies, much work has been done in the field of resources
and how it shapes the outcome of actions brought before courts and administrative
agencies (Barkan 1980; Wheeler et al. 1987; Songer and Sheehan 1992; McGuire 1995;
Albiston 1999; Farole 1999; Grossman, Kritzer, and Macaulay 1999; Songer, Sheehan, and
Haire 1999; Brace and Hall 2001; Hausegger and Haynie 2003; Manning and Randazzo
2009). The widely cited work not only changed legal thinking, it has also become the
object of subsequent theoretical examinations attempting to extend its application.
Indeed, subsequent studies not only went beyond Galanter’s pragmatic conjecture but
examined other factors influencing litigation success, especially in the context of not so
developed, and far from democratic, polities (McGuire 1995; Hausegger and Haynie
2003; Haynie and Sill 2007; Dumas and Haynie 2012). Haynie’s (1994) examination of
the Marcos period Philippine Supreme Court, for instance, found that in non-industria-
lized systems and those under repressive regimes, courts use their policymaking func-
tion to redistribute resources to establish an image of legitimacy.
This theoretical view ascribing a deliberate policymaking posture on courts not only
questions the premise that the judiciary is structurally independent but suggests they
are not impartial to parties that seek recourse before them. Though seemingly against
the convention, the view that litigation outcomes favor the underdog has actually been
echoed in earlier works, such as in studies rationalizing legal standing as a means by
which small groups take advantage of administrative and legal settings (McCubbins and
Schwartz 1984; Banks and Weingast 1992; see also De Figueredo and De Figueredo
2002). That the judicial process can be an alternative policy mechanism for those who
are marginalized or disenfranchised in the electoral process is well understood even in
early political science and legal literature (Cortner 1968; Epstein and Knight 1997; Olson
1990).
This view is, in many respects, problematic. For one, it fails to recognize that by
institutional design, the judiciary is passive. Unlike the two otherbranches in a system of
coordinated government powers, the cases that courts can hear are restricted to only
those brought by parties to a legal dispute. The process through which cases are tried
and decided, therefore, produces a set of legal actions and parties that is far from a
random selection of potential claims and claimants (Priest and Klein 1984; Eisenberg and
Farber 1997). The selection process is initiated, not by courts, but by parties themselves
who decide whether or not to bring an action, and whether or not to seek a review of a
decision (Feller 2014). In United States (US) tort litigation, for instance, the ratio of
verdicts between plaintiff and defendants is found to predict the motivation for trial
better than legal rules or the perceived bias of judges. In criminal cases, on the other
hand, the process by which prosecutors decide which cases to try and which are to plea
bargain impacts considerably on the ratio of conviction and acquittal (Rasmusen,
Raghav, and Ramseyer2009). The cases that actually proceed to trial, in other words,
are those in which the parties’ expectation of the outcome is greater than the total cost
of the trial for both parties (Priest and Klein 1984).
How does this selection process figure in legal systems that have supposedly already
tilted the balance in favor of a particular class of litigants? Haynie’s (1994) treatise about
a Philippine Supreme Court actively engaging in redistributive policymaking may have
been compelling in the light of the country’s experience under a repressive regime. Her
study, of course, is in the context of the martial law period in the Philippines. The 1987
26 R. A. L. PANAO AND B. X. DE LEON
Constitution, however, has not only recognized the primacy of otherwise marginalized
sectors, such as labor but made explicit adherence to social justice as a national policy.
Section 3 Article XIII of the 1987 Constitution states:
The State shall afford full protection to labor, local and overseas, organized and unorga-
nized, 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 employ-
ers 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 to investments, and to expansion and growth.
As explained in Rance v. National Labor Relations Commission (G.R. No. L-68,147, 30 June
1988), these guarantees manifest the framers’ intent to institutionalize social justice.
“When a person has no property, his job may possibly be his only possession or means
of livelihood” (Rance v. NLRC). Courts have generally been consistent in construing the
state’s duty to protect labor and security of tenure. Even labor disputes are taken as
matters that involve “the fundamental survival of the employees and their families, who
depend upon the former for all the basic necessities in life” (Tangga-an v. Philippine
Transmarine Carriers Inc., G.R. No. 1813 March 0636, 2013). These constitutional princi-
ples are echoed as well in other statutes, such as the Labor Code and the Civil Code
which hold the contractual relation between the employer and the employee as one
imbued with public interest and mandates that doubts in the implementation of labor
laws be resolved in favor of workers. Moreover, the Philippines has ratified all the
fundamental Conventions encompassed in the 1998 Declaration on Fundamental
Principles and Rights at Work and is under special obligation to adopt legislation and
practices that promote decent working conditions (De Wet 2008).
Extending the Priest-Klein hypothesis to labor regulations in fledgling democracies, we
argue that distributive rules, such as social justice policies create a selection process in the
litigation and resolution of workplace claims. Specifically, rules protective of labor increase
the expectation of litigation success among otherwise resource-constrained plaintiffs,
narrowing the suits actually brought to action, and consequently decided with finality by
the Supreme Court, to those that are closest to the standard of statutory and constitutional
protection. In other words, resource constraint in the context of protective social legisla-
tion, drives workers to pursue only the cases that have real merit. This makes the filing of an
action worth the cost of trial for the lowly worker. This also makes the individual employee
more likely to win a suit relative to a corporation.
The likelihood of favorable resolution, in our view, does not necessarily mean bias in
favor of workers. Instead, we contend it is an institutional redistributive mechanism that
balances the interest of workers and employers (Gomez, Budd, and Meltz 2004).
Litigation is often likened to an economic war of attrition where those short on cash are
left to bleed dry until they give up (Guerra-Pujol 2015). Corporations, businesses and
associations, the government, and even large unions, are conventionally assumed to
possess greater resources both in terms of money and litigation experience compared to
individuals, and hence more likely to win suits (Haynie 1994). This imbalance is detri-
mental to economic growth because it depresses consumer purchasing power and
prevents investments in human and material capital (Gomez, Budd, and Meltz 2004).
To test the odds of an individual winning an employment suit, we analyzed a unique
dataset of 3,601 Supreme Court decisions on labor cases from 1987 to 2016, categorized by
issue and type of litigants. Our results show that while individual workers in general are
more likely to win their claims against companies, success is also contingent on the nature
of action. Individuals and unions generally typically emerge at the top with respect to cases
involving compensation, illegal dismissal, and unfair labor practices. But we do not find
evidence of the high court reversing prior adverse resolutions, or sustaining it in favor of
individuals, where exercise of managerial prerogative is involved or if an employee is
disciplined or dismissed for just cause. Although the findings are consistent with the idea
of courts as instruments of distributive justice, we do not construe this as implying that the
high court deliberately tilts the balance in favor of the worker beyond the Constitutional
mandate. If any, this suggests that the Supreme Court as final arbiter of legal disputes is
prudent in its pronouncements despite constitutional policy giving primacy to labor, and
generally balances social justice with rational fairness.
This paper proceeds by first reviewing important empirical studies on litigation and
the logic of why parties go to court. We begin with studies anchored on resource
inequality and the economic disparity between litigants as main theoretical explanation
for litigation success. We then expound on resource inequality as the main constraint
and motivation for case selection. We discuss how litigant driven theories are premised
on a strategic desire to minimize trial cost and an expectation of claim or recovery of the
pecuniary and non-pecuniary cost of litigation.
Next we present a theoretical extension of the Priest-Klein model of litigation selection,
which can be applied in the analysis of labor disputes in fledgling democracies that have
adopted protective social policies, such as the Philippines. Distributive legal frameworks,
such as the constitutional protection of the right to labor, we argue, increases the expected
utility of litigation for otherwise resource constrained plaintiffs. This induces workers to press
only for claims they perceive to have high probabilities of success. This in turn increases the
high rate of success for individuals compared to companies in labor actions. We then discuss
the extent and coverage of our data, the conceptualization and operationalization of our
variables, and the methodological approach to test our empirical assumptions. We employ
logistic regressions to estimate the likelihood of success for certain types of litigants and the
nature of the cases they submit to court. This is followed by a discussion of the results and
how they fit with our hypotheses. We conclude by consolidating our theory with our
principal findings and their implications on labor litigation in the Philippines.
Resources and litigation

The inequality of available resources has always been at the heart of many studies
exploring the dynamics of players, not just in the courtroom. As Thye and Kalkhoff
(2014) note, power and resources are closely intertwined because the ability to create
resources or something of value gives its wielder an advantage over or beyond another
entity. Moreover, the power that resources create also produces other social and
psychological phenomena, such as status distinctions, emotional reactions, perceptions,
and perceived legitimacy. Ewick and Silbey’s (1999) study examining the effect of
popular perception of social unevenness and durability of laws demonstrates how
resources create power, and how in turn, it creates legitimacy.
However, it was Galanter (1974) who first brought into spotlight a typology that
highlights the various litigation configurations and dynamics between and among
parties with asymmetric resources. Although Galanter primarily confined his analysis to
US courts, the assumptions may well apply to other jurisdictions. Because courts are
overloaded and legal services are costly, according to Galanter, it is likely that parties
who lack the resources would be unable to secure the implementation of corrective
remedies under the law. Litigants who are endowed enough to engage in repeated
court battles (repeat players), on the other hand, enjoy lower information cost to their
advantage, become more experienced, can strategically anticipate the behavior of
institutional facilities, or restructure transactions to escape the thrust of a rule. Bias or
politics does not even figure in such perspective because the imbalance is largely due to
the architecture of the legal system.
Galanter’s conjecture has inspired many studies testing its assumptions (Songer and
Sheehan 1992; Farole 1999; Songer, Sheehan, and Haire 1999; Brace and Hall 2001), and
applying them to various contexts, such as suits involving employers (Albiston 1999)
whose resources arguably afford them to engage better legal services and the facility to
withstand protracted litigation. Over time, the conception of a well-endowed litigant has
also been expanded beyond corporations to include governments (Wheeler et al. 1987;
Farole 1999; Kritzer 2003; Dumas and Haynie 2012). Subsequent models also looked into
the role of experienced counsels (McGuire 1995; Haynie and Sill 2007), community
composition in a jury trial context (Dumas and Haynie 2012); and panel assignment
(Hausegger and Haynie 2003).
As more empirical evidence surfaced, it also became apparent that the well-endowed
do not necessarily have a monopoly of courtroom victory. Haynie (1994), for instance,
found that in non-industrialized developing economies, such as the Philippines, courts
tend to balance the interest of the underprivileged with the extreme power of the
political elite, in order to ensure the institutional stability essential for development.
Interestingly, Dotan (1999) observed a similar preponderance towards economic redis-
tribution in the decisions of the Israeli High Court of Justice.
Manning and Randazzo (2009), for their part, found the resource inequality thesis to
vary depending on the issue of litigation. Their findings suggest that individuals are
likely to win against local or the US federal government, at least on the issue of health
care policies. Manning and Randazzo believe the court engages in redistributive policy-
making. The less endowed tend to be victorious in healthcare and health-related
disputes because they entail life or death decisions. Federal judges, it seems, are
consciously making an effort to ensure that individuals are not mistreated or denied
benefits arbitrarily or capriciously.
Resources and litigation selection

The unevenness of resources also figures in parties’ access to legal remedies. Although
laws and the legal processes vary depending on states, the logic behind the remedies is
similar. People go to court when they feel they were harmed unlawfully or a legal right
has been violated. While people may resolve their issues among themselves, this is not
always the case. The one who feels injured may have a valid claim or cause of action
against another person or organization and redress may only be satisfied through
courts. To assert the claim, the injured party – usually represented by a lawyer – files
a complaint narrating the facts of the injury or breach, their legal bases, and the
remedies sought.
The whole process of asserting a claim and submitting it for resolution before a court
of law, however, is intricate and entails cost. In the Philippines, for instance, not only
must plaintiffs’ pay the required filing fee they also need to shoulder the cost of
competent legal representation. Even if parties attempt to settle out of court, there is
cost to exchanging information and bargaining. Moreover, there is always risk of courts
making errors in the application of substantive law. The latter imposes a larger cost to
society as it wears out people’s faith on the justice system and its institutions.
Litigation theories grounded on the economic imbalance between parties are attrac-
tive in that they can explain the seeming counterintuitive pattern of underdog trial
success across different institutional arrangements. One major assumption in these
theories is that justices are politically aware and decide by strategically weighing
personal preferences with other political actors (Epstein and Knight 1997).
Unfortunately, it also assumes that cases tried in courts and ultimately decided by the
Supreme Court in review are an unbiased sample of cases and claimants (Feller 2014).
Even if courts engage in rule-making based on individual or collective preferences, they
are first and foremost courts. Before courts can apply the law to the facts of the case,
there must first be disputes submitted to them for resolution. Even in the case of the
Supreme Court, before it can exercise its power of review, there must first be a litigant
dissatisfied with the outcome of a case either in the first or intermediate level.
Strictly speaking, therefore, what the courts hear are cases that have already been
selected or streamlined. Selection occurs at two levels, both made by no less than
litigants themselves. First, parties select which claims to litigate and which to settle by
themselves or through some formal mechanism. If parties choose to settle, the dispute
ends. Second, if a case is actually litigated, and eventually decided by the courts or
adjudicatory bodies, it is still up to the individual to appeal an unfavorable resolution.
Settlement takes place when a party does not appeal an adverse resolution. It simply
means parties accept the utility of the outcome as greater than the anticipated cost of
the appeal.
There are two prominent litigant driven theories and both suggest that parties
minimize their cost and litigate only upon examination of the expected value of the
claim and the pecuniary and non-pecuniary cost of litigation. Under the theory of
divergent expectations, parties are motivated to go to trial despite litigation cost
because of varying expectations about the outcome (Hutchinson 1981; Priest and
Klein 1984; Cooter and Ulen 2003). The plaintiff expects liability and a large judgment,
while the defendant expects complete exoneration or a small judgment. Three things
affect the probability of trial: the degree of uncertainty in estimating the quality of the
suit, the trial cost relative to the settlement cost, and the prospective award upon a
favorable resolution. According to this theory, trial is a filter and the cases that are
actually litigated are those that are close to the decision standard (Priest and Klein 1984;
Eisenberg 1990; Waldfogel 1993; Kessler, Meites, and Miller 1996; Siegelman and
Donohue III 1995).
Under the theory of asymmetric information, on the other hand, the plaintiff is
assumed to be poorly informed about the probability of success at trial, contrary to
the defendant who is aware of the actual likelihood of prevailing (Bebchuck 1984;
Gertner 1993; Hylton 1993). Here, information asymmetry simply means one party to
an economic transaction has more or greater material details than the other (Akerlof
1970; Spence 1973; Rothschild and Stiglitz 1976). Each party bears the cost of litigation.
The plaintiff makes a take it or leave it demand to settle. The defendant, on the other
hand, accepts any settlement below the expected cost of trial to balance the benefit of
higher settlement against trial cost. An important implication is that higher judgment
awarded upon victory and lower litigation cost induces plaintiffs to litigate, increasing
the trial rate and the probability of plaintiff victory at trial.
Both models construe litigated cases as only those selected after taking into account
the underlying population of actions filed based on the application of legal standard, the
degree of asymmetry between information and stakes, and the predictability of trial
outcomes (Waldfogel 1993). However, under the theory of asymmetric information, the
relatively guilty defendants are the ones who take the relatively uninformed plaintiffs’
take-it-or-leave-it offer, leaving trial one sided. Under the theory of divergent expecta-
tions, on the other hand, litigants are both uninformed and there is trial when the
plaintiff is relatively overoptimistic vis-à-vis the defendant (Waldfogel 1998).
The selection process and the logic of why parties are induced to litigate their issues
will form the basis of our theoretical framework which we will discuss in the next
section.
Selection hypothesis applied to labor cases in the philippines

As in Priest and Klein’s (1984) formulation of the selection hypothesis, we construe an
employee’s motivation to file a labor action as contingent on the amount of settlement
an employer is willing to offer that is more economically attractive than the aggrieved
employee’s expected judgment after trial. The employee will choose trial if the expected
utility from the trial is greater than the economic benefit of a settlement.
Assume that an employee’s complaint is randomly drawn from the pool of cases in
the labor arbiter’s docket and its merit corresponds to Yʹ ∈ ℝ. Assume also Y* ∈ ℝ,
which corresponds to the legal standard in the construction of labor legislation. The
labor arbiter need not know the precise value of Yʹ but only how far it is above or below
the legal standard Y*. Parties, on the other hand, are assumed to have an estimate of Yʹ
enough to predict the cost or damage in the event of actual trial. The employee wins if
Yʹ > Y*. The employer, on the other hand, prevails if Yʹ ≤ Y*. As in Lee and Klerman
(2016), we do not assume a particular probability distribution but only that it has a
probability density function g(Yʹ). Meanwhile, the employee’s win rate is 1 – g(Y*). If the
case is tried, the labor arbiter renders judgment if and only if Yʹ > Y*.
Next, assume that Yʹp and Yʹd are respectively the employee and employer’s estimate
of the Yʹ value of the suit. For any given action, parties will have an expectation of
Yʹp = Yʹ + εp; and Yʹd = Yʹ + εd where the mean of εp and εp are zero and standard errors
σp and σp.
The employee may choose to settle at a minimum demand of Pp(J) – Cp + Sp. The
employer, on the other hand, has a maximum offer of Pd(J) + Cd – Sd, where J
corresponds to the expected judgement, Cp and Cd are the litigation cost borne by
the litigants, and Sp and Sd are the settlement costs by each party. Parties will go to trial
if Pp(J) – Cp + Sp > Pd(J) + Cd – Sd. This can be rewritten as (Pp – Pd)J > (Cp + Cd) – (Sp + Sd).
Intuitively, where both employee and employer have the same expectations of how
the trial will turn out, they will opt to settle for an amount close to their mutual
expectation. The settlement amount will be small if the parties both expect the
employee plaintiff to perform poorly, such as when an employee sues a company for
a spurious cause. Where both parties expect a likely victory for the employee plaintiff,
the amount of settlement will be large. Here, the cases litigated are only those where
there is substantial variation in expectation between employees as plaintiffs and
employers as defendants.
Selection hypothesis under socially protective philippine labor laws

We modify the selection hypothesis to introduce a litigation selection model in the
resolution of labor cases under a legal framework that affords protection to certain
groups or types of individuals or where there are distributive social policies.
Courts engage in social policymaking when they resolve disputes because labor
legislations are grounded in fundamental rights and generally receive peremptory or
constitutional recognition in many polities. As Spector (2006) explains, labor laws are not
just distributive legislations that seek to affect the terms of exchange but protective
institutions that seek to guarantee fair and humane treatment in the workplace. Like
social rights, labor rights are rooted in the need to balance society’s power structures
and are based on the idea of everyone’s free and equal participation as a social agent
(Frost 2012). Social justice is explicit in the 1987 Philippine Constitution, as evident in its
mandate for the state to “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 stan-
dard of living, and an improved quality of life for all” (Article II, section 9). The
Constitution also recognizes “labor as a primary social economic force” and decrees
the protection of the rights of workers and the promotion of their welfare (Article II,
section 18). This does not imply, however, a sanctioned bias against capital. In fact, the
protection is based on the “principle of shared responsibility” and a recognition of “the
right of labor to its just share in the fruits of production and the right of enterprises to
reasonable returns to investments, and to expansion and growth (Article XIII, Sec. 3).
We refer to a workplace suit or issue as any controversy affecting the terms and
conditions of employment, as well as any issue on the association or representation for
the purpose of individual or collective bargaining on the terms and conditions of work,
whether or not parties stand in the proximate relation of employer or employee. There is
an employer–employee relation when a person agrees to perform work or services
under certain conditions in return for remuneration. It is essentially contractual in nature

because it creates reciprocal rights and obligations between the employer and the
employee.1
An employer, under Philippine labor laws and jurisprudence, includes any person
acting in the interest of an employer directly or indirectly (such as managerial staff). This
definition does not cover labor organizations or their officers and agents unless they are
acting as employers (e.g. they contracted the services of another). An employee, on the
other hand, refers to any person in the employ of another. This broad definition includes
even those whose work has ceased as a result of, or in connection with, any current
labor dispute or any unfair labor practice, if they have not obtained any substantially
equivalent or regular employment.
We modify the Priest-Klein selection hypothesis to explain decision-making after a
labor case is finally elevated to the Supreme Court. Although in reality procedural rules
can be more complicated, we deliberately simplify the account to emphasize the
dynamics of judicial challenges to the application of distributive rules.
Under Philippine labor laws, the labor arbiter has exclusive and original jurisdiction
over cases involving employer employee relations, not just those involving wages and
compensation, but also those involving unlawful termination and unfair workplace
practices. Assume that the labor arbiter renders a decision D ∈ ℝ about a case. The
value of D can be negative if the decision is unfavorable to pursuing parties. For
parsimony, appeals to the National Labor Relations Commission (NLRC) and the Court
of Appeals are taken as only intermediary and procedural. Hence, rational parties to
adverse decisions are expected to appeal adverse resolutions and to subsequently raise
them ultimately before the Supreme Court in the hopes of reversing the ruling or
modifying it to approximate their preference Dp whose likelihood of success is P. As
court of last resort, the Supreme Court’s affirmation or rejection of the arbiter’s decision
and subsequent pronouncements in appellate bodies is what ultimately matters, not
only to provide legal clarity and consistency but to resolve issues with finality. The
likelihood of an adverse decision is 1 – P, which leaves the party to bear with decision D.
We clarify that what makes an adverse decision is contingent on the satisfaction
derived from the judgment. While studies typically quantify satisfaction by assigning
values based on, say, award of damages or whether or not a petition has been granted,
in reality only parties can determine what for them constitutes victory. Sometimes
victory is in the details of the pronouncement or the modification of the award, not
necessarily on whether or not a relief is granted or a remedy sustained. A party who
loses at the administrative level (arbiter and NLRC) can either accept the decision or
elevate it further. A party whose plea has been granted by the administrative tribunal
but is dissatisfied with the judgement may also raise the objections to the appellate
courts. If a party chooses to pursue the claim all the way to the end, the expected value
of pursuing the case and bringing it up to the Supreme Court must be greater than D,
thus:
PDp + (1 – P)D – C – O > D, where:
C is the cost of litigation borne by parties and O corresponds to the opportunity cost
of pursuing the case. The likelihood of success in cases brought before the high court,
therefore, is:
P > (C + O)/(Dp – D)
Rational plaintiffs would look at how total cost (direct cost plus opportunity cost) of
litigation will improve their position upon a ruling. As in Feller’s (2014) proposition, it is
worthwhile to seek judicial review if and only if the likelihood of a favorable resolution
exceeds the ratio of the total cost (C + O) over the improvement in the appellant’s
position after the final judgment (Dp – D). Otherwise, the appellant has to be content
with D. This can be written as:
P(Dp – D) > (C + O), where:
The value of appealing the high court’s final resolution is contingent on the differ-
ence between a litigant’s perceived decision standard Dp that should govern the case
and the actual decision D at the first level.
For Feller (2014), decisions by administrative tribunals – such as the labor arbiter and
the NLRC in the context of labor litigation in the Philippines – can be construed as a sort
of settlement where a party accepts an offer simply by doing nothing further and
allowing the decision to take into effect. A party, of course, can decline the offer by
appealing the decision all the way to the Supreme Court. As the party seeking the
reversal of a previous decision, an appellant may or may not be the original plaintiff.
Even winning parties may move for the modification or reconsideration of a decision.2
Since Dp connotes a party’s perception of an appropriate decision standard relative to D,
we construe this as largely a function of the nature of employment-related action
appealed before the high court. In this paper, we categorize cases into five main
types: compensation-related, illegal dismissal, employee discipline, unfair labor practices,
and those that involve the exercise of management prerogatives.
The dynamics of case selection, however, is also underscored by the total cost (C + O)
of suing based on an employment contract and the perceived likelihood of success once
the issue is settled ultimately. Cost may vary depending on the type of plaintiffs.
Individual employees, for example, have very limited resources. For many, their labor
might just be the only property at their disposal.
Eisenberg and Farber (1997) believe potential claimants are more likely to file actions
if the cost of litigation is low. In the Philippines, proceedings before the labor arbiter is
considered non-litigious3 and non-lawyers may even appear in any of the proceedings
before the labor arbiter or the NLRC in some instances. Article 222 of the Labor Code of
the Philippines allows non-lawyers to appear before the NLRC or any Labor Arbiter if
they represent themselves or if they represent their organization or members. Indigent
litigants are also exempted from the immediate filing of fees and charges at the NLRC
and just constitute these as lien on the judgment favorable to the indigent litigant.4 As
such, the initial cost of litigation for individual employees appears to be low, which may
entice some to file claims in which they have a lower probability of prevailing.
However, there is more to litigation cost than out of pocket expenses. Faced with a
corporation, for instance, litigation imposes a number of non-monetary tolls against the
employee. It is more likely to be business as usual for corporations even in the thick of a
labor suit as firms are typically represented by paid retainers. For individual employees,
on the other hand, attending a hearing means foregoing a job interview or the
opportunity to earn a livelihood. It also takes away time that could have been spent
seeking reemployment. Implicitly, parties who are at risk of losing a lot in terms of
opportunity, such as individual employees, are unlikely to pursue actions with very small
odds of winning. Employees who sue, therefore, can be assumed to be restricted to
those who believe they have a big chance of winning based on the merit of the case.
Their suits are actions that have already been preselected when they decided to file a
complaint before the arbiter. They brought these as claims because they believe the
merits of the issue are more than worth the opportunity cost. Without making any
assumption about litigants’ information structure, we construe total cost (C + O) as
largely a function of litigant type. Following Haynie (1994), we categorize litigants into
four types: corporations, the government, individuals, and unions.
Given that C + O is a function of litigant type, and Dp – D a function of case type, the
probability of success for petitions before the high court is construed to be determined
by the type of party bringing the case for review and the nature of the case. More
formally,
P = P (litigant, case)
Individuals with very limited resources, as mentioned, can have very high opportunity
cost and hence would bring only actions that are close to or approximate the criteria
protected by labor legislations. Thus, we hypothesize:
H1: The odds of obtaining favorable resolution is higher for individuals than corpora-
tions if the workplace action involves compensation-related claims, illegal dismissal, or
unfair labor practices.
Social justice in the workplace covers both workers and their associations. In fact, in
some cases, workers are represented by their associations. There are also occasions
where individuals sue in behalf of their organizations. Hence, we likewise construe
that:
H2: The odds of obtaining favorable resolution are higher for unions than corporations
if the workplace action involves compensation-related claims, illegal dismissal, or unfair
labor practices.
We note that there is favorable resolution when a petition to review or modify a ruling is
granted, or when a prior resolution is sustained or affirmed in favor of a particular
litigant (i.e. individual, union).
The constitutional guarantee protecting the rights of workers, however, is meant only
to temper the resource imbalance between labor and capital and not to oppress
employers. The high court has consistently held that “capital and management sectors
must also be protected under a regime of justice and the rule of law” (Manaban et al. v.
Sarphil Corporation, G.R. No. 150,915. 11 April 2005). Moreover, even if litigation cost is
more bearable for corporations, opportunity cost can be high for certain types of
actions. For instance, an organization’s credibility is compromised if it cannot terminate
a recalcitrant employee. Corporate culture is undermined if an employer consistently
fails to assert management prerogatives. Hence, we expect:
H3: The odds of individuals obtaining favorable resolution are no different from
corporations if the workplace action involves employee discipline or the exercise of
management prerogatives.
Data and measure

To test our assumptions, we compiled and analyzed a total of 3,601 labor cases decided by
the Supreme Court from 1987 to 2016. Cases from 1987 to 1995 were compiled from the
online collection of Supreme Court decisions at the virtual law library of the Chan Robles
Publishing Company. Cases from 1996 to 2016, on the other hand, were sourced from the
Supreme Court’s official online repository (http://sc.judiciary.gov.ph/jurisprudence/).
We limited our study to cases decided from 1987 to highlight the changes in the new
legal framework under the 1987 Constitution. Looking at how the high court ruled on
economic issues from 1961 to 1986, Haynie (1994) found that the Supreme Court
engaged in active decision making to redistribute resources from the well-endowed
(government and business) to the underprivileged (individuals). Her findings suggest
that courts in non-democratic or non-industrialized polities resort to this behavior to
build a reputation of legitimacy and stability. But this was a Supreme Court operating
under a repressive regime. Under the 1987 Constitution, there is no need for the
judiciary to engage actively in redistributive policymaking through their dockets as it
has already been made state policy to resolve doubts in favor of labor. All that is left to
do is to determine how close the facts are to the legal standard. The 1987 Constitution is
widely regarded as unique in its emphasis on social and economic rights (Chang, Thio,
Tan, and Yeh 2014). It is also considered a trendsetter in Southeast Asian democratic
constitutions for deliberately incorporating elements of social justice and elevating the
protection of labor to new heights.

pðyjWIN ¼ 1Þ B þ B1 LITIGANTTYPE þ B2 CASETYPE
log ¼ 0
1 pðyjWIN ¼ 0Þ þB3 ðLITIGANTTYPExCASETYPE Þ þ B4 CONTROLS
To facilitate empirical analysis, we frame our litigation model as the log odds of
petitioner or respondent success with the following logit parameters:
Here, LITIGANT TYPE is a categorical variable which takes a value of 1 if the party is a
corporation, 2 if a party is a government instrumentality or agency, 3 if a party is an
individual, and 4 if a party is a union. The base category is corporation.
CASE TYPE consists of five categorical variables corresponding to the nature of the
employment suit, specifically, the exercise of management prerogatives, compensation-
related claims, illegal dismissal, employee discipline, and unfair labor practices.
Management prerogatives include the exercise of the right to regulate all aspects of
employment, including hiring, work assignments, working methods, the time, place and
manner of work, work supervision, transfer of employees, lay-off of workers, and dis-
cipline, dismissal, and recall of employees (Peckson v. Robinson’s Supermarket, G.R. No.
193 July 8534, 2013). The dismissal of a managerial employee due to loss of trust and
confidence also falls under management prerogative (Jerusalem v. Keppel Monte Bank,
G.R. No. 1616 April 9564, 2011). As this is a broad category, we create a separate
category for disciplinary actions to cover cases where the employee committed gross
negligence, serious misconduct, and acts of insubordination. Illegal dismissals, on the
other hand, are those effected with neither just nor authorize cause, or where due
process was not observed (Real vs. Sangu Phils., Inc., G. R. No. 1619 January 8757, 2011).
Compensation related claims pertain to the payment of wages and wage-related ben-
efits. Unfair labor practices refer to acts that violate workers right to self-organization
and to the observance of Collective Bargaining Agreements (Galaxie Steel Workers v.

NLRC, G.R. No. 1617 October 5757, 2006). Since unfair labor practices cover both
individual workers and workers’ associations, we use this as base category to highlight
the effects of the other categories on individuals and corporations.
We are particularly interested in the interaction of litigants and the nature of their
employment actions so we include interaction variables (LITIGANT TYPE x CASE TYPE) to
see whether a particular party’s probability of winning is contingent on the issue
involved.
We also control for political variables which are known in the literature to impact
litigation success rates. In the US, for instance, it is well known that well-resourced
repeat players possess litigation advantage in a wide variety of legal fora (Galanter 1974;
Haynie and Sill 2007), presumably due to their capacity to hire seasoned lawyers
(McGuire 1995). This may not necessarily apply in the pursuit of employment claims in
the Philippines, at least in the early stage, considering that litigants may even appear
before the arbiter in person, and are required to first exhaust administrative remedies
before seeking remedies in courts. Nevertheless, we include a categorical variable, which
denotes the number of times a corporation has had prior actions before the Supreme
Court, to serve as our crude proxy for repeat players. We also account for the number of
years a case has lingered before it was finally decided, which is crucial especially for
under-resourced litigants who cannot afford protracted trials.
In the US, some studies find a strong correlation between the ideological values of
justices that comprise the Supreme Court and the votes they cast on economic and
civil liberties issues (Segal et al. 1995). Again, this may not apply squarely to the
Philippines given the country’s weak partisan orientation. Nevertheless, we include a
categorical variable corresponding to the presidential administrations from 1987 to
2016 (Corazon Aquino’s administration as base category) to see the high court’s
inclination per administration, without making any explicit assumption about judicial
activism or ideology.
Table 1 gives a descriptive summary of the parties and the nature of the labor issues
brought for resolution. Since most of our variables are categorical in structure, we
present their frequency distributions and proportions, as is conventional in presenting
data of this type (Hill and Lewicki 2007). For the continuous control variables corre-
sponding to repeat litigants and delay, we give the mean values and standard deviation,
as well as the minimum and maximum values.
Petitions filed cumulatively by corporations (2,019) and individuals (1,188) com-
prise about nine out of 10 labor cases (89 percent), making up a very large chunk of
cases elevated for final resolution to the Supreme Court. There are very few petitions
filed by unions (around just eight percent), of which they win only 35 percent. We
also see that government agencies are rarely driven to seek the high court’s review
of a prior decision (just three percent) but get favorable rulings 42 percent of the
time. Majority of the petitions (56 percent) are filed by employers (corporations).
Nevertheless, frequency of petitions does not seem to translate into courtroom
victories. Table 1 suggests that even though more appeals come from employers,
decisions are modified in their favor only about a third of the time (33 percent). On
the other hand, individual employees who have relatively fewer appeals than
employers win almost half (48 percent) of the total petitions they bring to the
Table 1. Descriptive summary of labor cases decided by the Philippine Supreme Court, 1987–2016.
Decisions favorable to peti- No. of Decisions favorable to No. of
Litigant tioner litigant cases % respondent litigant cases %
Corporation 658 2,019 33 733 1,320 56
Government 51 121 42 53 127 42
Individual 572 1,188 48 1,191 1,764 68
Union 95 273 35 248 390 64
Total 1,376 3,601 38 2,225 3,601 62
Case type Petitions granted No. of % Petitions denied No. of %
cases cases
Management 201 569 35 368 569 65
prerogatives
Employee discipline 346 915 38 569 915 62
Compensation 407 963 42 556 963 58
related
Unfair labor practices 279 781 36 502 781 64
Illegal dismissal 143 373 38 230 373 62
Total 1,376 3,601 38 2,225 3,601 62
Administrations Petitions granted No. of % Petitions denied No. of %
cases cases
Corazon C. Aquino 296 620 48 324 620 52
Fidel V. Ramos 255 664 38 409 664 62
Joseph E. Estrada 147 356 41 209 356 59
Gloria M. Arroyo 52 153 34 101 153 66
(succession)
Gloria M. Arroyo 263 932 28 669 932 72
Benigno Simeon 363 876 41 513 876 59
Aquino
Total 1,376 3,601 38 2,225 3,601 62
Continuous variables Obs Mean Std. Dev. Min Max
Frequency corporation has petitioned in the past 3,601 3.681 8.204 0 67
(repeat litigant)
Number of year from time case first filed until 3,601 8.615 3.880 1 40
Supreme Court decision (delay)
high court. Decisions are also sustained or affirmed in favor of individuals and unions
respectively by about 68 percent and 64 percent of the time. In spite of this,
corporations would litigate repeatedly because they have a bigger stake in precedent
and judicial rules unlike individual litigants who are more likely just interested in the
outcome of a case (Posner 2014; Rubin 1977). Precedents inform companies not just
whether to settle or to proceed with trial, but also the extent of future precautionary
behavior.
Table 2 elaborates on the distribution of parties based on the nature of employment
action. Again, more corporations seek review or modification of decisions than indivi-
duals. Although appeal by workers comprise about a third of the total number of cases,
there is about twice as many petitions by employers as there are petitions by individual
employees. One in four labor cases elevated to the high court are either disciplinary in
Table 2. Case type by litigant type.

Case type Corporations % Government % Individual % Union % Total %
Management prerogative 324 16 13 11 198 17 34 12 569 16
Disciplinary actions 525 26 26 21 339 29 25 9 915 25
Compensation related 516 26 54 45 341 29 52 19 963 27
ULP and collective bargaining 433 21 24 20 170 14 154 56 781 22
Illegal dismissal 221 11 4 3 140 12 8 3 373 10
Total 2,019 100 121 100 1,188 100 273 100 3,601 100
nature or involve awards on compensation related claims. Unfair labor practices, such as
violation of the right to collective bargaining, on the other hand, make up about 22
percent of the total number of petitions brought before the high court. Meanwhile,
petitions questioning the exercise of management prerogatives and the legality of
dismissal, make up 16 percent and 10 percent, respectively.
Results and discussion

Before the high court, what are the odds of obtaining a favorable resolution for the
individual worker over workplace suits?
Table 3 summarizes the estimates of the logistic regression models for labor cases filed
from 1987 to 2016. Model 1 indicates the log odds of particular litigants successfully
Table 3. Summary of logistic regression estimates.

(Model 1) (Model 2)
Odds of a decision overruled in favor of Odds of a decision affirmed in favor of
litigant litigant
Litigant type (Corporation as base)
Government 0.594 (0.419) −0.494 (0.672)
Individual 1.074 (0.190)*** 0.766 (0.190)***
Union 0.345 (0.201) 0.603 (0.184)**
Case type (Unfair labor practices as base)
Management prerogative 0.325 (0.160)* 0.302 (0.183)
Disciplinary actions 0.341 (0.143)* 0.185 (0.161)
Compensation related 0.360 (0.142)* −0.00264 (0.165)
Illegal dismissal −0.335 (0.197) −0.796 (0.210)***
Interactions
Government × management −0.460 (0.739) 1.270 (1.037)
prerogative
Government × disciplinary action 0.0922 (0.585) 0.227 (0.910)
Government × compensation −0.496 (0.514) −0.145 (0.717)
related
Government × illegal dismissal −0.542 (1.256) 2.266 (1.302)
Individual × management −0.886 (0.268)*** −0.640 (0.266)*
prerogative
Individual × disciplinary action −0.837 (0.240)*** −0.561 (0.239)*
Individual × compensation −0.449 (0.238) −0.357 (0.242)
related
Individual × illegal dismissal 0.693 (0.306)* 1.108 (0.307)***
Union × management −1.066 (0.495)* −0.771 (0.481)
prerogative
Union × disciplinary action −0.532 (0.490) −0.812 (0.400)*
Union × compensation related −0.453 (0.361) −0.589 (0.313)
Union × illegal dismissal 2.675 (1.106)* 0.938 (0.724)
Controls
Repeat litigant 0.00449 (0.00451) −0.00421 (0.00452)
Years from filing to final decision −0.0135 (0.00985) 0.0170 (0.00987)
Presidential administrations
(C. Aquino as base)
Fidel V. Ramos −0.359 (0.117)** 0.345 (0.118)**
Joseph E. Estrada −0.220 (0.136) 0.212 (0.138)
Gloria M. Arroyo (succession −0.555 (0.194)** 0.503 (0.193)**
term)
Gloria M. Arroyo −0.811 (0.113)*** 0.775 (0.114)***
Benigno Simeon Aquino −0.249 (0.112)* 0.185 (0.115)
Constant −0.459 (0.150)** −0.272 (0.159)
N 3601 3601
AIC 4634.0 4647.2
BIC 4801.1 4814.3
Standard errors in parentheses.
* p < 0.05, ** p < 0.01, *** p < 0.001.
obtaining favorable rulings on petitions seeking review or modification of a prior judg-

ment. Model 2, on the other hand, summarizes the log odds of a judgment sustained in
favor of particular litigants despite a petition for modification or reconsideration.
Odds ratios can be computed from the estimates and construed to mean the odds of
winning a case given a particular characteristic (e.g. the petition was filed by an
individual), vis-à-vis the odds of succeeding had it been otherwise. For a more tangible
interpretation, however, Long and Freese (2014) recommend computing probabilities or
changes in probabilities at interesting values of the regressors. Table 4 summarizes the
predicted probabilities, also known as predictive margins (Graubard and Korn 1999;
Kohler, Karlson, and Holme 2011), for models 1 and 2. The results suggest that, in
general, the Supreme Court is likely to favor individuals whether as petitioners or
respondents. On average, appeals for a modification or review of a decision filed by
individual workers are 16 percent more likely to be granted than those by corporations.
Similarly, on average, a decision is 12 percent more likely to be sustained or affirmed in
favor of individuals than corporations. We also see that typically, neither government
agencies nor unions are better off than corporations in winning their cases before the
high court. Neither the proxy measure for well-resourced repeat litigants nor case delay
appears to be significant.
As no explicit assumption is made about the policy leaning of courts per presidential
administrations, we construe the probabilities of petitions being granted or denied simply
as tendency by the high court to minimize jurisprudential disagreement and maintain
doctrinal stability. Across all post-EDSA administrations, the high court appears to have
Table 4. Predictive margins for main regressors and controls.

Probability of petition for modification or Probability of decision affirmed
review granted or sustained
(Ave. marginal effects, dy/dx) (Ave. marginal effects, dy/dx)
Litigant type (Corporation as
base)
Government 0.0820 (0.0490) −0.0174 (0.0617)
Individual 0.1556 (0.0179)*** 0.1231 (0.0176)***
Union 0.0418 (0.0367) 0.0491 (0.0364)
Case type
(ULP and collective
bargaining as base)
Management prerogative −0.0183 (0.0270) −0.0075 (0.0285)
Disciplinary actions 0.0011 (0.0245) −0.0349 (0.0257)
Compensation related 0.0333 (0.0239) −0.0533 (0.0248)*
Illegal dismissal 0.0242 (0.0301) −0.0271 (0.0322)
Controls
Repeat litigant 0.0010 (0.0010) −0.0009 (0.0010)
Years from filing to final −0.0030 (0.0022) 0.0038 (0.0022)
decision
Presidential administrations
(C. Aquino as base)
Fidel V. Ramos −0.0842 (0.0273)** 0.0808 (0.0276)**
Joseph E. Estrada −0.0521 (0.0321) 0.0503 (0.0326)
Gloria M. Arroyo −0.1277 (0.0428)** 0.1162 (0.0431)**
(succession term)
Gloria M. Arroyo −0.1807 (0.0250)*** 0.1729 (0.0256)***
Benigno Simeon Aquino −0.0588 (0.0266) 0.0440 (0.0272)
* p < 0.05, ** p < 0.01, *** p < 0.001.
Note: dy/dx for factor levels is the discrete change from the base level.
been generally leaning towards stability in its decision making. We see that the Supreme
Court during President Ramos’ term had been eight percent more likely to sustain a decision
than the Court during Corazon Aquino. However, this tendency appears to have been
stronger when Gloria Macapagal Arroyo succeeded Estrada upon the latter’s resignation
(56 percent), and strongest when she was finally elected to the presidency (81 percent).
Table 4 does not show the marginal effects for the interactions because, as Williams
explains (2012), the value of the interaction term cannot change independently of the
values of the component terms and be estimated as a separate effect. Meaningful
interpretations of interactions in a model must take into account both constitutive
terms and interaction terms (Brambor, Clark, and Golder 2006). We compute marginal
effects for each type of litigant based on the nature of the employment action, which we
summarize in Table 5.
The interaction between litigants and case types, however, gives a more nuanced
dimension to litigation dynamics in the Philippine Supreme Court. The refined estimates
support our hypotheses and indicate that the supposed bias of courts towards labor is
actually limited to certain types of cases. Model 1 of Table 5 shows that petitions to
review or modify judgment in compensation related claims are 15 percent likely to be
granted in favor of individuals than corporations. Meanwhile, it is about 25 percent likely
for a decision to be reconsidered in favor of individual workers than corporations where
unfair labor practices are at issue. Similarly, petitions questioning judgements over
complaints of illegal dismissal are 40 percent likely to be decided in favor of individuals
(40 percent) or unions (62 percent) than corporations. Decisions on cases involving
unfair labor practice are also about 14 percent likely to be sustained in favor of unions
Table 5. Average marginal effects for litigants and case types.

(Model 1) (Model 2)
Probability of petition for modification or review Probability of decision affirmed or sus-
granted tained
(Ave. marginal effects, dy/dx) (Ave. marginal effects, dy/dx)
Government
Management 0.0307 (0.1414) 0.1572 (0.1356)
prerogative
Discipline 0.1641 (0.0997) −0.0642 (0.1496)
Compensation 0.0226 (0.0688) −0.1547 (0.0597)**
Unfair labor practice 0.1316 (0.0988) −0.1203 (0.1615)
Illegal dismissal 0.0090 (0.2076) 0.4022 (0.2008)*
Individual
Management 0.04323 (0.0435) 0.0286 (0.0422)
prerogative
Discipline 0.0549 (0.0339) 0.0475 (0.0336)
Compensation 0.1493 (0.0339)*** 0.0962 (0.0355)***
Unfair labor practice 0.2482 (0.0438)*** 0.1716 (0.0408)***
Illegal dismissal 0.3958 (0.0493)*** 0.4198 (0.0486)***
Union
Management −0.1418 (0.0768) −0.0396 (0.1057)
prerogative
Discipline −0.0411 (0.0952) −0.0501 (0.0861)
Compensation −0.0242 (0.0663) 0.0034 (0.0617)
Unfair labor practice 0.0736 (0.0438) 0.1382 (0.0411)**
Illegal dismissal 0.6251 (0.1402)*** 0.3584 (0.1408)*
* p < 0.05, ** p < 0.01, *** p < 0.001.
Note: dy/dx for factor levels is the discrete change from the base level.
than corporations. Prior rulings on cases where there is illegal dismissal, on the other
hand, are 36 percent likely to be affirmed in favor of unions than corporations.
It is worth mentioning that compensation related claims, the prosecution of unfair
labor practices, and the remedies made available to workers in the event of illegal
dismissal, have long been considered instruments that breathe life into the social
justice provisions of the Constitution and extant labor statutes. In many occasions the
high court has been keen on granting financial assistance to separated employees as
“a measure of social and compassionate justice and as an equitable concession”
(Eastern Shipping Lines v. Antonio, G.R. No. 1713 October 1587, 2009; see also,
Villaruel v. Yeo Han Guan, G.R. No. 169,191). In fact, we see in Model 2 of Table 5
that decisions in compensation related concerns are still about seven percent likely to
be sustained in favor of individuals than corporations. In the same vein, rulings on
cases where there is unfair labor practice are 17 percent likely to be affirmed in favor
of individuals than corporations. Prior pronouncements involving illegal dismissals, on
the other hand, are likely to be sustained still in favor of individual workers by 42
percent.
Be that as it may, we do not find evidence of such predilection where issues involve
the exercise of management prerogative or employee discipline. The non-statistically
significant effects in both Models 1 and 2 of Table 5 indicates that regardless of litigant
type the probability of obtaining favorable resolution is no different statistically from
that of a corporation when the issue involves the exercise of management prerogative
and discipline of employees. This suggests that the high court is generally passive with
respect to management’s natural right to set the course of business and manage
employees. In some instances, corporations appear to have an edge over other types
of litigants. With respect to compensation related claims, for instance, Model 2 of Table 5
shows that it is 15 percent less probable for a prior decision to be sustained in favor of
government instrumentalities than corporations. But then again when a case involves
illegal dismissal, prior decisions are 40 percent likely to be sustained in favor of govern-
ment instrumentalities than corporations.
Conclusion
Labor experts note that in recent years, companies have been losing their cases before
labor tribunals and courts despite their resources and their capacity to retain the
brightest lawyers.5 Our study contributes not only by providing empirical support
qualifying such observation but putting forward a theoretical explanation anchored on
the welfare effects of distributive Constitutional policies. Although our analysis is con-
fined to a narrow set of cases, the systematic treatment is timely in light of recurring
criticism of the 1987 Constitution and current efforts to overhaul it.
Extending the Priest-Klein hypothesis to labor regulations in fledgling democracies,
we contend that distributive legal frameworks, such as social justice legislations create a
selection process in the litigation and resolution of workplace claims. Without attribut-
ing anything sinister to the judicial process, we construe rules protecting labor as raising
the expectation of success by otherwise resource-constrained plaintiffs, such as indivi-
dual employees, and ultimately narrowing the suits actually brought to action to those
that are closest to the standard of decision in the case.
In our analysis of labor cases brought before the Philippine Supreme Court from 1987
to 2016, we find that decisions are generally in favor of individuals, whether as petitioners
or respondents, when the issue involves redress of compensation related claims, illegal
dismissal, or unfair labor practices. We note that in these types of actions, jurisprudence
has been generally consistent with labor legislations balancing the heavier influence of
capital with sympathy and compassion to the underprivileged worker. However, we do
not find evidence of similar predilection to favor individuals in cases involving the exercise
of management prerogatives or employee discipline. This suggests that even in the
presence of socially protective labor policies, courts are circumspect and do not issue
wanton resolutions favorable to workers. Also, the high court is not as inclined to modify
or affirm prior decisions in favor of the individual worker where cases involve the exercise
of employers’ property rights or where employees are disciplined for cause.
There are two important implications. In the Philippines, workers who seek recourse
in the judicial process for work related injury or prejudice are likely to obtain remedy but
not necessarily because courts are biased against corporations. Given that the opportu-
nity cost of litigation is higher for parties with limited resources, employees would more
likely bring to the labor tribunals and courts only the claims that arise from issues which
are closest to the standard of socially protective labor legislation. Protective social
legislations, therefore, are welfare enhancing not only for their redistributive effects
but for inducing precaution to both workers and employers as prospective litigants.
The results also highlight the role of institutions in balancing the interests of competing
economic and social actors. The ASEAN Guidelines on Good Industrial Relations Practices
(ASEAN 2012) notes the importance of sound legal framework that protects the basic right
of employers to manage and develop the business, and of workers to just working
conditions and express their views, as requirement of good industrial relations. From
our analysis, jurisprudential policies on labor issues appear to be driven by the interaction
of actors and their contexts (nature of issue). The findings echo those of Dunlop ([1958]
1993) who first construed an industrial relations system as a rule-guided process generat-
ing other rules governing industrial relations actors at the national, industry and plan level.
Dunlop considers the process as a system because the close interplay of actors, their
environment, and their ideologies, create a real situation of shared responsibility. But
beyond a taxonomy of key elements in an industrial relations system, we digress from
Dunlop by positing a theoretical perspective on the dynamics of litigating employment
suits, using the Philippines as case, based on the premise of optimal litigation selection.
Be that as it may, we acknowledge that in narrowing analysis to aggregate data, we can
only make assumptions and not an in-depth exploration of what motivates parties to file
actions. Estimates, no matter how sophisticated, cannot capture altruism, loyalty, grudge,
or jealousy in individual behavior, nor assure that individuals maximizing their preferences
will also work to maximize social good in the long run. We also acknowledge that in
deciding issues, courts rely more on how parties frame issues than economic principles,
and make judgment based on a particular web of circumstances (Wald 1988).
To enrich the theoretical underpinnings, future research may want to supplement the
empirical findings with in-depth examination of court records and processes, and with
the qualitative narratives of parties, lawyers, and administrative and court personnel.
Since our analysis is specific to labor jurisprudence, the theoretical conjectures may also
be tested against a more expansive set of cases to ascertain consistency and robustness.
Notes
1. Although contractual in nature, labor contracts are impressed with public interest and
parties cannot insulate themselves from the impact of labor laws and administrative
regulations (see Pakistan International Airlines Corporation v. Ople, G.R. No. 628
September 1594, 1990, 190 SCRA 90, 99; Halaguea et al., v. Philippine Airlines Inc., G.R.
No. 172 October 2013, 2009.
2. A very recent but definitely not isolated illustration is Claudia’s Kitchen v. Tanguin (G.R. No.
2228 June 1096, 2017), which is not included in our sample as it was decided only last year.
Here, an employee was being investigated for allegedly forcing coworkers to buy jewelry.
But instead of explaining, she retaliated by filing a complaint for illegal dismissal. The labor
arbiter held she was not illegally dismissed but ordered the payment of back wages. The
decision was affirmed by the NLRC. The employers appealed the decision to the Court of
Appeals, which ruled in their favor this time. According to the appellate court, there was no
illegal dismissal but ordered the payment of separation pay in light of the impossibility of
reinstatement due to strained relationship. The employer, who arguably won the case, still
sought a reconsideration of the decision before the Supreme Court.
3. Sec. 2, Rule V of the 2011 National Labor Relations Commission Rules of Procedure.
4. See, NLRC En Banc Resolution 19–11 series of 2011. Indigent litigants are those whose gross
income and that of the members of their immediate family does not exceed the amount
double of the monthly minimum wage, and do not own real property whose real value
exceeds P300,000.
5. Josephus B. Jimenez, “Why companies lost labor cases in 2012,” The Freeman, 12 January
2013.
Acknowledgments
The authors wish to thank three anonymous reviewers for their helpful insights and comments,
but any error or shortcoming is the authors’ own.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Rogelio Alicor L. Panao, PhD is assistant professor at the Department of Political Science,
University of the Philippines, Diliman. He obtained his PhD in Political Science from
International Christian University, Japan, and is also a member of the Philippine Bar.
Bea Xandra De Leon obtained her BA Political Science degree from the University of the
Philippines, Diliman in 2016. The dataset used in this paper was based on the labor litigation
dataset which she compiled as part of the course requirements in Political Science 199. She is
currently with the Power Sector Assets and Liabilities Management Corporation (PSALM).
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Balancing The Interests of Labor and Capital An Empirical Analysis of Philippine Supreme Court Labor Cases From 1987 To 2016

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Balancing The Interests of Labor and Capital An Empirical Analysis of Philippine Supreme Court Labor Cases From 1987 To 2016

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Philippine Political Science Journal

ISSN: 0115-4451 (Print) 2165-025X (Online) Journal homepage: http://www.tandfonline.com/loi/rpsj20

Balancing the interests of labor and capital: an

Rogelio Alicor L. Panao & Bea Xandra De Leon

To link to this article: https://doi.org/10.1080/01154451.2018.1498606

Published online: 18 Jul 2018.

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Balancing the interests of labor and capital: an empirical

ABSTRACT ARTICLE HISTORY

CONTACT Rogelio Alicor L. Panao rogelio_alicor.panao@upd.edu.ph

Resources and litigation

Resources and litigation selection

Selection hypothesis applied to labor cases in the philippines

Selection hypothesis under socially protective philippine labor laws

under certain conditions in return for remuneration. It is essentially contractual in nature

Data and measure

and to the observance of Collective Bargaining Agreements (Galaxie Steel Workers v.

Table 2. Case type by litigant type.

Results and discussion

Table 3. Summary of logistic regression estimates.

obtaining favorable rulings on petitions seeking review or modiﬁcation of a prior judg-

Table 4. Predictive margins for main regressors and controls.

Table 5. Average marginal eﬀects for litigants and case types.

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