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Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 155831

February 18, 2008

MA. LOURDES T. DOMINGO, petitioner,


vs.
ROGELIO I. RAYALA, respondent.
x-------------------------x
G.R. No. 155840

February 18, 2008

ROGELIO I. RAYALA, petitioner,


vs.
OFFICE OF THE PRESIDENT; RONALDO V. ZAMORA, in his capacity as Executive
Secretary; ROY V. SENERES, in his capacity as Chairman of the National Labor Relations
Commission (in lieu of RAUL T. AQUINO, in his capacity as Acting Chairman of the
National labor Relations Commission); and MA. LOURDES T. DOMINGO, respondents.
x-------------------------x
G.R. No. 158700

February 18, 2008

The REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF THE PRESIDENT;


and ALBERTO G. ROMULO, in his capacity as Executive Secretary, petitioners,
vs.
ROGELIO I. RAYALA, respondent.
DECISION
NACHURA, J.:
Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an
employees spirit and her capacity for advancement. It affects her sense of judgment; it changes
her life.1
Before this Court are three Petitions for Review on Certiorari assailing the October 18, 2002
Resolution of the CAs Former Ninth Division2 in CA-G.R. SP No. 61026. The Resolution modified
the December 14, 2001 Decision3 of the Court of Appeals Eleventh Division, which had affirmed
the Decision of the Office of the President (OP) dismissing from the service then National Labor
Relations Commission (NLRC) Chairman Rogelio I. Rayala (Rayala) for disgraceful and immoral
conduct.
All three petitions stem from the same factual antecedents.

On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then Stenographic Reporter III at
the NLRC, filed a Complaint for sexual harassment against Rayala before Secretary Bienvenido
Laguesma of the Department of Labor and Employment (DOLE).
To support the Complaint, Domingo executed an Affidavit narrating the incidences of sexual
harassment complained of, thus:
xxxx
4. Sa simula ay pabulong na sinasabihan lang ako ni Chairman Rayala ng mga salitang
"Lot, gumaganda ka yata?"
5. Sa ibang mga pagkakataon nilalapitan na ako ni Chairman at hahawakan ang aking
balikat sabay pisil sa mga ito habang ako ay nagta-type at habang nagbibigay siya ng
diktasyon. Sa mga pagkakataong ito, kinakabahan ako. Natatakot na baka mangyari sa
akin ang mga napapabalitang insidente na nangyari na noon tungkol sa mga sekretarya
niyang nagbitiw gawa ng mga mahahalay na panghihipo ni Chairman.
6. Noong ika-10 ng Setyembre, 1998, nang ako ay nasa 8th Floor, may nagsabi sa akin
na kailangan akong bumaba sa 7th Floor kung nasaan ang aming opisina dahil sa may
koreksyon daw na gagawin sa mga papel na tinayp ko. Bumaba naman ako para gawin
ito. Habang ginagawa ko ito, lumabas si Chairman Rayala sa silid ni Mr. Alex Lopez.
Inutusan ako ni Chairman na sumunod sa kaniyang silid. Nang nasa silid na kami, sinabi
niya sa akin:
Chairman: Lot, I like you a lot. Naiiba ka sa lahat.
At pagkatapos ako ay kaniyang inusisa tungkol sa mga personal na bagay sa aking
buhay. Ang ilan dito ay tungkol sa aking mga magulang, kapatid, pag-aaral at kung may
boyfriend na raw ba ako.
Chairman: May boyfriend ka na ba?
Lourdes: Dati nagkaroon po.
Chairman: Nasaan na siya?
Lourdes: Nag-asawa na ho.
Chairman: Bakit hindi kayo nagkatuluyan?
Lourdes: Nainip po.
Chairman: Pagkatapos mo ng kurso mo ay kumuha ka ng Law at ako ang bahala
sa iyo, hanggang ako pa ang Chairman dito.
Pagkatapos ay kumuha siya ng pera sa kaniyang amerikana at inaabot sa akin.
Chairman: Kuhanin mo ito.

Lourdes: Huwag na ho hindi ko kailangan.


Chairman: Hindi sige, kuhanin mo. Ayusin mo ang dapat ayusin.
Tinanggap ko po ang pera ng may pag-aalinlangan. Natatakot at kinakabahan na kapag
hindi ko tinanggap ang pera ay baka siya magagalit kasabay na rito ang pagtapon sa
akin kung saan-saan opisina o kaya ay tanggalin ako sa posisyon.
Chairman: Paglabas mo itago mo ang pera. Ayaw ko ng may makaka-alam nito.
Just the two of us.
Lourdes: Bakit naman, Sir?
Chairman: Basta. Maraming tsismosa diyan sa labas. But I dont give them a
damn. Hindi ako mamatay sa kanila.
Tumayo na ako at lumabas. Pumanhik na ako ng 8th Floor at pumunta ako sa officemate
ko na si Agnes Magdaet. Ikinwento ko ang nangyari sa akin sa opisina ni Chairman.
Habang kinikwento ko ito kay Agnes ay binilang namin ang pera na nagkakahalaga ng
tatlong libong piso (PHP 3,000). Sinabi ni Agnes na isauli ko raw ang pera, pero ang sabi
ko ay natatakot ako baka magalit si Sir. Nagsabi agad kami kay EC Perlita Velasco at
sinalaysay ko ang nangyari. Sinabi niya na isauli ko ang pera at noong araw ding iyon ay
nagpasiya akong isauli na nga ito ngunit hindi ako nagkaroon ng pagkakataon dahil
marami siyang naging bisita. Isinauli ko nga ang pera noong Lunes, Setyembre 14, 1998.
7. Noong huling linggo ng Setyembre, 1998, ay may tinanong din sa akin si Chairman
Rayala na hindi ko masikmura, at sa aking palagay at tahasang pambabastos sa akin.
Chairman: Lot, may ka live-in ka ba?
Lourdes: Sir, wala po.
Chairman: Bakit malaki ang balakang mo?
Lourdes: Kayo, Sir ha! Masama sa amin ang may ka live-in.
Chairman: Bakit, ano ba ang relihiyon ninyo?
Lourdes: Catholic, Sir. Kailangan ikasal muna.
Chairman: Bakit ako, hindi kasal.
Lourdes: Sir, di magpakasal kayo.
Chairman: Huh. Ibahin na nga natin ang usapan.
8. Noong Oktubre 29, 1998, ako ay pumasok sa kwarto ni Chairman Rayala. Ito ay sa
kadahilanang ang fax machine ay nasa loob ng kaniyang kwarto. Ang nag-aasikaso nito,
si Riza Ocampo, ay naka-leave kaya ako ang nag-asikaso nito noong araw na iyon.
Nang mabigyan ko na ng fax tone yung kausap ko, pagharap ko sa kanan ay

nakaharang sa dadaanan ko si Chairman Rayala. Tinitingnan ako sa mata at ang titig


niya ay umuusad mula ulo hanggang dibdib tapos ay ngumiti na may mahalay na
pakahulugan.
9. Noong hapon naman ng pareho pa ring petsa, may nag-aapply na sekretarya sa
opisina, sinabi ko ito kay Chairman Rayala:
Lourdes: Sir, si Pinky po yung applicant, mag-papainterview po yata sa inyo.
Chairman: Sabihin mo magpa-pap smear muna siya
Chairman: O sige, i-refer mo kay Alex. (Alex Lopez, Chief of Staff).
10. Noong Nobyembre 9, 1998, ako ay tinawag ni Chairman Rayala sa kaniyang opisina
upang kuhanin ko ang diktasyon niya para kay ELA Oscar Uy. Hindi pa kami
nakakatapos ng unang talata, may pumasok na bisita si Chairman, si Baby Pangilinan na
sinamahan ni Riza Ocampo. Pinalabas muna ako ni Chairman. Nang maka-alis na si Ms.
Pangilinan, pinapasok na niya ako ulit. Umupo ako. Lumapit sa likuran ko si Chairman,
hinawakan ang kaliwang balikat ko na pinipisil ng kanang kamay niya at sinabi:
Chairman: Saan na ba tayo natapos?
Palakad-lakad siya sa aking likuran habang nag-didikta. Huminto siya pagkatapos, at
nilagay niya ang kanang kamay niya sa aking kanang balikat at pinisil-pisil ito
pagkatapos ay pinagapang niya ito sa kanang bahagi ng aking leeg, at pinagapang
hanggang kanang tenga at saka kiniliti. Dito ko inalis ang kaniyang kamay sa
pamamagitan ng aking kaliwang kamay. At saka ko sinabi:
Lourdes: Sir, yung kamay ninyo alisin niyo!
Natapos ko rin ang liham na pinagagawa niya pero halos hindi ko na maintindihan ang
na-isulat ko dahil sa takot at inis na nararamdaman ko.4
After the last incident narrated, Domingo filed for leave of absence and asked to be immediately
transferred. Thereafter, she filed the Complaint for sexual harassment on the basis of
Administrative Order No. 250, the Rules and Regulations Implementing RA 7877 in the
Department of Labor and Employment.
Upon receipt of the Complaint, the DOLE Secretary referred the Complaint to the OP, Rayala
being a presidential appointee. The OP, through then Executive Secretary Ronaldo Zamora,
ordered Secretary Laguesma to investigate the allegations in the Complaint and create a
committee for such purpose. On December 4, 1998, Secretary Laguesma issued Administrative
Order (AO) No. 280, Series of 1998,5 constituting a Committee on Decorum and Investigation
(Committee) in accordance with Republic Act (RA) 7877, the Anti-Sexual Harassment Act of
1995.6
The Committee heard the parties and received their respective evidence. On March 2, 2000, the
Committee submitted its report and recommendation to Secretary Laguesma. It found Rayala
guilty of the offense charged and recommended the imposition of the minimum penalty provided
under AO 250, which it erroneously stated as suspension for six (6) months.

The following day, Secretary Laguesma submitted a copy of the Committee Report and
Recommendation to the OP, but with the recommendation that the penalty should be suspension
for six (6) months and one (1) day, in accordance with AO 250.
On May 8, 2000, the OP, through Executive Secretary Zamora, issued AO 119, 7 the pertinent
portions of which read:
Upon a careful scrutiny of the evidence on record, I concur with the findings of the
Committee as to the culpability of the respondent [Rayala], the same having been
established by clear and convincing evidence. However, I disagree with the
recommendation that respondent be meted only the penalty of suspension for six (6)
months and one (1) day considering the circumstances of the case.
What aggravates respondents situation is the undeniable circumstance that he took
advantage of his position as the superior of the complainant. Respondent occupies the
highest position in the NLRC, being its Chairman. As head of said office, it was
incumbent upon respondent to set an example to the others as to how they should
conduct themselves in public office, to see to it that his subordinates work efficiently in
accordance with Civil Service Rules and Regulations, and to provide them with healthy
working atmosphere wherein co-workers treat each other with respect, courtesy and
cooperation, so that in the end the public interest will be benefited (City Mayor of
Zamboanga vs. Court of Appeals, 182 SCRA 785 [1990]).
What is more, public service requires the utmost integrity and strictest discipline (Gano
vs. Leonen, 232 SCRA 99 [1994]). Thus, a public servant must exhibit at all times the
highest sense of honesty and integrity, and "utmost devotion and dedication to duty"
(Sec. 4 (g), RA 6713), respect the rights of others and shall refrain from doing acts
contrary to law, and good morals (Sec. 4(c)). No less than the Constitution sanctifies the
principle that a public office is a public trust, and enjoins all public officers and employees
to serve with the highest degree of responsibility, integrity, loyalty and efficiency (Section
1, Article XI, 1987 Constitution).
Given these established standards, I see respondents acts not just [as] a failure to give
due courtesy and respect to his co-employees (subordinates) or to maintain good
conduct and behavior but defiance of the basic norms or virtues which a government
official must at all times uphold, one that is contrary to law and "public sense of morality."
Otherwise stated, respondent to whom stricter standards must apply being the highest
official [of] the NLRC had shown an attitude, a frame of mind, a disgraceful conduct,
which renders him unfit to remain in the service.
WHEREFORE, in view of the foregoing, respondent Rogelio I. Rayala, Chairman,
National Labor Relations Commission, is found guilty of the grave offense of disgraceful
and immoral conduct and is herebyDISMISSED from the service effective upon receipt of
this Order.
SO ORDER[ED].
Rayala filed a Motion for Reconsideration, which the OP denied in a Resolution 8 dated May 24,
2000. He then filed a Petition for Certiorari and Prohibition with Prayer for Temporary Restraining
Order under Rule 65 of the Revised Rules on Civil Procedure before this Court on June 14,

2000.9 However, the same was dismissed in a Resolution dated June 26, 2000 for disregarding
the hierarchy of courts.10 Rayala filed a Motion for
Reconsideration11 on August 15, 2000. In its Resolution12 dated September 4, 2000, the Court
recalled its June 26 Resolution and referred the petition to the Court of Appeals (CA) for
appropriate action.
The CA rendered its Decision13 on December 14, 2001. It held that there was sufficient evidence
on record to create moral certainty that Rayala committed the acts he was charged with. It said:
The complainant narrated her story complete with details. Her straightforward and
uninhibited testimony was not emasculated by the declarations of Commissioner Rayala
or his witnesses. x x x
Moreover, Commissioner Rayala has not proven any vicious motive for Domingo and her
witnesses to invent their stories. It is very unlikely that they would perjure themselves
only to accommodate the alleged conspiracy to oust petitioner from office. Save for his
empty conjectures and speculations, Rayala failed to substantiate his contrived
conspiracy. It is a hornbook doctrine that conspiracy must be proved by positive and
convincing evidence (People v. Noroa, 329 SCRA 502 [2000]). Besides, it is improbable
that the complainant would concoct a story of sexual harassment against the highest
official of the NLRC and thereby expose herself to the possibility of losing her job, or be
the subject of reprisal from her superiors and perhaps public ridicule if she was not telling
the truth.
It also held that Rayalas dismissal was proper. The CA pointed out that Rayala was dismissed
for disgraceful and immoral conduct in violation of RA 6713, the Code of Conduct and Ethical
Standards for Public Officials and Employees. It held that the OP was correct in concluding that
Rayalas acts violated RA 6713:
Indeed, [Rayala] was a public official, holding the Chairmanship of the National Labor
Relations Commission, entrusted with the sacred duty of administering justice.
Occupying as he does such an exalted position, Commissioner Rayala must pay a high
price for the honor bestowed upon him. He must comport himself at all times in such a
manner that the conduct of his everyday life should be beyond reproach and free from
any impropriety. That the acts complained of were committed within the sanctuary of [his]
office compounded the objectionable nature of his wrongdoing. By daring to violate the
complainant within the solitude of his chambers, Commissioner Rayala placed the
integrity of his office in disrepute. His disgraceful and immoral conduct warrants his
removal from office.14
Thus, it dismissed the petition, to wit:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby DISMISSED and
Administrative Order No. 119 as well [as] the Resolution of the Office of the President in
O.P. Case No. 00-E-9118 dated May 24, 2000 are AFFIRMED IN TOTO. No cost.
SO ORDERED.15

Rayala timely filed a Motion for Reconsideration. Justices Vasquez and Tolentino voted to affirm
the December 14 Decision. However, Justice Reyes dissented mainly because AO 250 states
that the penalty imposable is suspension for six (6) months and one (1) day.16 Pursuant to the
internal rules of the CA, a Special Division of Five was constituted.17 In its October 18, 2002
Resolution, the CA modified its earlier Decision:
ACCORDINGLY, the Decision dated December [14], 2001 is MODIFIED to the effect that
the penalty of dismissal is DELETED and instead the penalty of suspension from service
for the maximum period of one (1) year is HEREBY IMPOSED upon the petitioner. The
rest of the challenged decision stands.
SO ORDERED.
Domingo filed a Petition for Review18 before this Court, which we denied in our February 19, 2003
Resolution for having a defective verification. She filed a Motion for Reconsideration, which the
Court granted; hence, the petition was reinstated.
Rayala likewise filed a Petition for Review19 with this Court essentially arguing that he is not guilty
of any act of sexual harassment.
Meanwhile, the Republic filed a Motion for Reconsideration of the CAs October 18, 2002
Resolution. The CA denied the same in its June 3, 2003 Resolution, the dispositive portion of
which reads:
ACCORDINGLY, by a majority vote, public respondents Motion for Reconsideration, (sic)
is DENIED.
SO ORDERED.
The Republic then filed its own Petition for Review.20
On June 28, 2004, the Court directed the consolidation of the three (3) petitions.
G.R. No. 155831
Domingo assails the CAs resolution modifying the penalty imposed by the Office of the
President. She raises this issue:
The Court of Appeals erred in modifying the penalty for the respondent from dismissal to
suspension from service for the maximum period of one year. The President has the
prerogative to determine the proper penalty to be imposed on an erring Presidential
appointee. The President was well within his power when he fittingly used that
prerogative in deciding to dismiss the respondent from the service. 21
She argues that the power to remove Rayala, a presidential appointee, is lodged with the
President who has control of the entire Executive Department, its bureaus and offices. The OPs
decision was arrived at after affording Rayala due process. Hence, his dismissal from the service
is a prerogative that is entirely with the President. 22

As to the applicability of AO No. 250, she argues that the same was not intended to cover cases
against presidential appointees. AO No. 250 refers only to the instances wherein the DOLE
Secretary is the disciplining authority, and thus, the AO does not circumscribe the power of the
President to dismiss an erring presidential appointee.
G.R. No. 155840
In his petition, Rayala raises the following issues:
I. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, THE ACTS OF
HEREIN PETITIONER DO NOT CONSTITUTE SEXUAL HARASSMENT AS LAID
DOWN BY THE En Banc RULING IN THE CASE OF AQUINO vs. ACOSTA, ibid., AS
WELL AS IN THE APPLICATION OF EXISTING LAWS.
II. CONTRARY TO THE FINDINGS OF THE HONORABLE COURT OF APPEALS,
INTENT IS AN INDISPENSABLE ELEMENT IN A CASE FOR SEXUAL HARASSMENT.
THE HONORABLE COURT ERRED IN ITS FINDING THAT IT IS AN OFFENSE THAT
IS MALUM PROHIBITUM.
III. THE INVESTIGATION COMMITTEE, THE OFFICE OF THE PRESIDENT, AND
NOW, THE HONORABLE COURT OF APPEALS, HAS MISAPPLIED AND EXPANDED
THE DEFINITION OF SEXUAL HARASSMENT IN THE WORKPLACE UNDER R.A.
No. 7877, BY APPLYING DOLE A.O. 250, WHICH RUNS COUNTER TO THE RECENT
PRONOUNCEMENTS OF THIS HONORABLE SUPREME COURT.23
Invoking Aquino v. Acosta,24 Rayala argues that the case is the definitive ruling on what
constitutes sexual harassment. Thus, he posits that for sexual harassment to exist under RA
7877, there must be: (a) demand, request, or requirement of a sexual favor; (b) the same is
made a pre-condition to hiring, re-employment, or continued employment; or (c) the denial
thereof results in discrimination against the employee.
Rayala asserts that Domingo has failed to allege and establish any sexual favor, demand, or
request from petitioner in exchange for her continued employment or for her promotion.
According to Rayala, the acts imputed to him are without malice or ulterior motive. It was merely
Domingos perception of malice in his alleged acts a "product of her own imagination" 25 that
led her to file the sexual harassment complaint.
Likewise, Rayala assails the OPs interpretation, as upheld by the CA, that RA 7877 is malum
prohibitum such that the defense of absence of malice is unavailing. He argues that sexual
harassment is considered an offense against a particular person, not against society as a whole.
Thus, he claims that intent is an essential element of the offense because the law requires as
a conditio sine qua non that a sexual favor be first sought by the offender in order to achieve
certain specific results. Sexual harassment is committed with the perpetrators deliberate intent
to commit the offense.26
Rayala next argues that AO 250 expands the acts proscribed in RA 7877. In particular, he assails
the definition of the forms of sexual harassment:
Rule IV

FORMS OF SEXUAL HARASSMENT


Section 1. Forms of Sexual Harassment. Sexual harassment may be committed in
any of the following forms:
a) Overt sexual advances;
b) Unwelcome or improper gestures of affection;
c) Request or demand for sexual favors including but not limited to going out on dates,
outings or the like for the same purpose;
d) Any other act or conduct of a sexual nature or for purposes of sexual gratification
which is generally annoying, disgusting or offensive to the victim.27
He posits that these acts alone without corresponding demand, request, or requirement do not
constitute sexual harassment as contemplated by the law.28 He alleges that the rule-making
power granted to the employer in Section 4(a) of RA 7877 is limited only to procedural matters.
The law did not delegate to the employer the power to promulgate rules which would provide
other or additional forms of sexual harassment, or to come up with its own definition of sexual
harassment.29
G.R. No. 158700
The Republic raises this issue:
Whether or not the President of the Philippines may validly dismiss respondent
Rayala as Chairman of the NLRC for committing acts of sexual harassment.30
The Republic argues that Rayalas acts constitute sexual harassment under AO 250. His acts
constitute unwelcome or improper gestures of affection and are acts or conduct of a sexual
nature, which are generally annoying or offensive to the victim. 31
It also contends that there is no legal basis for the CAs reduction of the penalty imposed by the
OP. Rayalas dismissal is valid and warranted under the circumstances. The power to remove the
NLRC Chairman solely rests upon the President, limited only by the requirements under the law
and the due process clause.
The Republic further claims that, although AO 250 provides only a one (1) year suspension, it will
not prevent the OP from validly imposing the penalty of dismissal on Rayala. It argues that even
though Rayala is a presidential appointee, he is still subject to the Civil Service Law. Under the
Civil Service Law, disgraceful and immoral conduct, the acts imputed to Rayala, constitute grave
misconduct punishable by dismissal from the service. 32 The Republic adds that Rayalas position
is invested with public trust and his acts violated that trust; thus, he should be dismissed from the
service.
This argument, according to the Republic, is also supported by Article 215 of the Labor Code,
which states that the Chairman of the NLRC holds office until he reaches the age of 65 only
during good behavior.33 Since Rayalas security of tenure is conditioned upon his good behavior,
he may be removed from office if it is proven that he has failed to live up to this standard.

All the issues raised in these three cases can be summed up in two ultimate questions, namely:
(1) Did Rayala commit sexual harassment?
(2) If he did, what is the applicable penalty?
Initially, however, we must resolve a procedural issue raised by Rayala. He accuses the Office of
the Solicitor General (OSG), as counsel for the Republic, of forum shopping because it filed a
motion for reconsideration of the decision in CA-G.R. SP No. 61026 and then filed a comment in
G.R. No. 155840 before this Court.
We do not agree.
Forum shopping is an act of a party, against whom an adverse judgment or order has been
rendered in one forum, of seeking and possibly securing a favorable opinion in another forum,
other than by appeal or special civil action for certiorari.34 It consists of filing multiple suits
involving the same parties for the same cause of action, either simultaneously or successively,
for the purpose of obtaining a favorable judgment.35
There is forum shopping when the following elements concur: (1) identity of the parties or, at
least, of the parties who represent the same interest in both actions; (2) identity of the rights
asserted and relief prayed for, as the latter is founded on the same set of facts; and (3) identity of
the two preceding particulars such that any judgment rendered in the other action will amount
to res judicata in the action under consideration or will constitute litis pendentia.36
Reviewing the antecedents of these consolidated cases, we note that the CA rendered the
assailed Resolution on October 18, 2002. The Republic filed its Motion for Reconsideration on
November 22, 2002. On the other hand, Rayala filed his petition before this Court on November
21, 2002. While the Republics Motion for Reconsideration was pending resolution before the CA,
on December 2, 2002, it was directed by this Court to file its Comment on Rayalas petition,
which it submitted on June 16, 2003.
When the CA denied the Motion for Reconsideration, the Republic filed its own Petition for
Review with this Court on July 3, 2003. It cited in its "Certification and Verification of a NonForum Shopping" (sic), that there was a case involving the same facts pending before this Court
denominated as G.R. No. 155840. With respect to Domingos petition, the same had already
been dismissed on February 19, 2003. Domingos petition was reinstated on June 16, 2003 but
the resolution was received by the OSG only on July 25, 2003, or after it had filed its own
petition.37
Based on the foregoing, it cannot be said that the OSG is guilty of forum shopping. We must
point out that it was Rayala who filed the petition in the CA, with the Republic as the adverse
party. Rayala himself filed a motion for reconsideration of the CAs December 21, 2001 Decision,
which led to a more favorable ruling, i.e., the lowering of the penalty from dismissal to one-year
suspension. The parties adversely affected by this ruling (Domingo and the Republic) had the
right to question the same on motion for reconsideration. But Domingo directly filed a Petition for
Review with this Court, as did Rayala. When the Republic opted to file a motion for
reconsideration, it was merely exercising a right. That Rayala and Domingo had by then already
filed cases before the SC did not take away this right. Thus, when this Court directed the

Republic to file its Comment on Rayalas petition, it had to comply, even if it had an unresolved
motion for reconsideration with the CA, lest it be cited for contempt.
Accordingly, it cannot be said that the OSG "file[d] multiple suits involving the same parties for
the same cause of action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment."
We now proceed to discuss the substantive issues.
It is noteworthy that the five CA Justices who deliberated on the case were unanimous in
upholding the findings of the Committee and the OP. They found the assessment made by the
Committee and the OP to be a "meticulous and dispassionate analysis of the testimonies of the
complainant (Domingo), the respondent (Rayala), and their respective witnesses." 38 They
differed only on the appropriate imposable penalty.
That Rayala committed the acts complained of and was guilty of sexual harassment is,
therefore, the common factual finding of not just one, but three independent bodies: the
Committee, the OP and the CA. It should be remembered that when supported by substantial
evidence, factual findings made by quasi-judicial and administrative bodies are accorded great
respect and even finality by the courts.39 The principle, therefore, dictates that such findings
should bind us.40
Indeed, we find no reason to deviate from this rule. There appears no valid ground for this Court
to review the factual findings of the CA, the OP, and the Investigating Committee. These findings
are now conclusive on the Court. And quite significantly, Rayala himself admits to having
committed some of the acts imputed to him.
He insists, however, that these acts do not constitute sexual harassment, because Domingo did
not allege in her complaint that there was a demand, request, or requirement of a sexual favor as
a condition for her continued employment or for her promotion to a higher position. 41 Rayala
urges us to apply to his case our ruling in Aquino v. Acosta.42
We find respondents insistence unconvincing.
Basic in the law of public officers is the three-fold liability rule, which states that the wrongful acts
or omissions of a public officer may give rise to civil, criminal and administrative liability. An action
for each can proceed independently of the others. 43 This rule applies with full force to sexual
harassment.
The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof defines
work-related sexual harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual Harassment Defined. Work,
education or training-related sexual harassment is committed by an employer, manager,
supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any
other person who, having authority, influence or moral ascendancy over another in a
work or training or education environment, demands, requests or otherwise requires any
sexual favor from the other, regardless of whether the demand, request or requirement
for submission is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual harassment is committed when:


(1) The sexual favor is made as a condition in the hiring or in the employment, reemployment or continued employment of said individual, or in granting said individual
favorable compensation, terms, conditions, promotions, or privileges; or the refusal to
grant the sexual favor results in limiting, segregating or classifying the employee which in
a way would discriminate, deprive or diminish employment opportunities or otherwise
adversely affect said employee;
(2) The above acts would impair the employees rights or privileges under existing labor
laws; or
(3) The above acts would result in an intimidating, hostile, or offensive environment for
the employee.
This section, in relation to Section 7 on penalties, defines the criminal aspect of the unlawful act
of sexual harassment. The same section, in relation to Section 6, authorizes the institution of an
independent civil action for damages and other affirmative relief.
Section 4, also in relation to Section 3, governs the procedure for administrative cases, viz.:
Sec. 4. Duty of the Employer or Head of Office in a Work-related, Education or Training
Environment. It shall be the duty of the employer or the head of the work-related,
educational or training environment or institution, to prevent or deter the commission of
acts of sexual harassment and to provide the procedures for the resolution, settlement or
prosecution of acts of sexual harassment. Towards this end, the employer or head of
office shall:
(a) Promulgate appropriate rules and regulations in consultation with and jointly
approved by the employees or students or trainees, through their duly designated
representatives, prescribing the procedure for the investigation or sexual
harassment cases and the administrative sanctions therefor.
Administrative sanctions shall not be a bar to prosecution in the proper courts for
unlawful acts of sexual harassment.
The said rules and regulations issued pursuant to this section (a) shall include,
among others, guidelines on proper decorum in the workplace and educational or
training institutions.
(b) Create a committee on decorum and investigation of cases on sexual
harassment. The committee shall conduct meetings, as the case may be, with
other officers and employees, teachers, instructors, professors, coaches, trainors
and students or trainees to increase understanding and prevent incidents of
sexual harassment. It shall also conduct the investigation of the alleged cases
constituting sexual harassment.
In the case of a work-related environment, the committee shall be composed of at least
one (1) representative each from the management, the union, if any, the employees from
the supervisory rank, and from the rank and file employees.

In the case of the educational or training institution, the committee shall be composed of
at least one (1) representative from the administration, the trainors, teachers, instructors,
professors or coaches and students or trainees, as the case maybe.
The employer or head of office, educational or training institution shall disseminate or
post a copy of this Act for the information of all concerned.
The CA, thus, correctly ruled that Rayalas culpability is not to be determined solely on the basis
of Section 3, RA 7877, because he is charged with the administrative offense, not the criminal
infraction, of sexual harassment.44It should be enough that the CA, along with the Investigating
Committee and the Office of the President, found substantial evidence to support the
administrative charge.
Yet, even if we were to test Rayalas acts strictly by the standards set in Section 3, RA 7877, he
would still be administratively liable. It is true that this provision calls for a "demand, request or
requirement of a sexual favor." But it is not necessary that the demand, request or requirement of
a sexual favor be articulated in a categorical oral or written statement. It may be discerned, with
equal certitude, from the acts of the offender. Holding and squeezing Domingos shoulders,
running his fingers across her neck and tickling her ear, having inappropriate conversations with
her, giving her money allegedly for school expenses with a promise of future privileges, and
making statements with unmistakable sexual overtones all these acts of Rayala resound with
deafening clarity the unspoken request for a sexual favor.
Likewise, contrary to Rayalas claim, it is not essential that the demand, request or requirement
be made as a condition for continued employment or for promotion to a higher position. It is
enough that the respondents acts result in creating an intimidating, hostile or offensive
environment for the employee.45 That the acts of Rayala generated an intimidating and hostile
environment for Domingo is clearly shown by the common factual finding of the Investigating
Committee, the OP and the CA that Domingo reported the matter to an officemate and, after the
last incident, filed for a leave of absence and requested transfer to another unit.
Rayalas invocation of Aquino v. Acosta46 is misplaced, because the factual setting in that case is
different from that in the case at bench. In Aquino, Atty. Susan Aquino, Chief of the Legal and
Technical Staff of the Court of Tax Appeals (CTA), charged then CTA Presiding Judge (now
Presiding Justice) Ernesto Acosta of sexual harassment. She complained of several incidents
when Judge Acosta allegedly kissed her, embraced her, and put his arm around her shoulder.
The case was referred to CA Justice Josefina G. Salonga for investigation. In her report, Justice
Salonga found that "the complainant failed to show by convincing evidence that the acts of Judge
Acosta in greeting her with a kiss on the cheek, in a `beso-beso fashion, were carried out with
lustful and lascivious desires or were motivated by malice or ill motive. It is clear from the
circumstances that most of the kissing incidents were done on festive and special occasions,"
and they "took place in the presence of other people and the same was by reason of the
exaltation or happiness of the moment." Thus, Justice Salonga concluded:
In all the incidents complained of, the respondent's pecks on the cheeks of the
complainant should be understood in the context of having been done on the occasion of
some festivities, and not the assertion of the latter that she was singled out by Judge
Acosta in his kissing escapades. The busses on her cheeks were simply friendly and
innocent, bereft of malice and lewd design. The fact that respondent judge kisses other
people on the cheeks in the 'beso-beso' fashion, without malice, was corroborated by

Atty. Florecita P. Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili, who stated that
they usually practice 'beso-beso' or kissing on the cheeks, as a form of greeting on
occasions when they meet each other, like birthdays, Christmas, New Year's Day and
even Valentine's Day, and it does not matter whether it is Judge Acosta's birthday or their
birthdays. Theresa Cinco Bactat, a lawyer who belongs to complainant's department,
further attested that on occasions like birthdays, respondent judge would likewise greet
her with a peck on the cheek in a 'beso-beso' manner. Interestingly, in one of several
festive occasions, female employees of the CTA pecked respondent judge on the cheek
where Atty. Aquino was one of Judge Acosta's well wishers.
In sum, no sexual harassment had indeed transpired on those six occasions. Judge
Acosta's acts of bussing Atty. Aquino on her cheek were merely forms of greetings,
casual and customary in nature. No evidence of intent to sexually harass complainant
was apparent, only that the innocent acts of 'beso-beso' were given malicious
connotations by the complainant. In fact, she did not even relate to anyone what
happened to her. Undeniably, there is no manifest sexual undertone in all those
incidents.47
This Court agreed with Justice Salonga, and Judge Acosta was exonerated.
To repeat, this factual milieu in Aquino does not obtain in the case at bench. While in Aquino, the
Court interpreted the acts (of Judge Acosta) as casual gestures of friendship and camaraderie,
done during festive or special occasions and with other people present, in the instant case,
Rayalas acts of holding and squeezing Domingos shoulders, running his fingers across her
neck and tickling her ear, and the inappropriate comments, were all made in the confines of
Rayalas office when no other members of his staff were around. More importantly, and a
circumstance absent in Aquino, Rayalas acts, as already adverted to above, produced a hostile
work environment for Domingo, as shown by her having reported the matter to an officemate
and, after the last incident, filing for a leave of absence and requesting transfer to another unit.
Rayala also argues that AO 250 does not apply to him. First, he argues that AO 250 does not
cover the NLRC, which, at the time of the incident, was under the DOLE only for purposes of
program and policy coordination. Second, he posits that even assuming AO 250 is applicable to
the NLRC, he is not within its coverage because he is a presidential appointee.
We find, however, that the question of whether or not AO 250 covers Rayala is of no real
consequence. The events of this case unmistakably show that the administrative charges against
Rayala were for violation of RA 7877; that the OP properly assumed jurisdiction over the
administrative case; that the participation of the DOLE, through the Committee created by the
Secretary, was limited to initiating the investigation process, reception of evidence of the parties,
preparation of the investigation report, and recommending the appropriate action to be taken by
the OP. AO 250 had never really been applied to Rayala. If it was used at all, it was to serve
merely as an auxiliary procedural guide to aid the Committee in the orderly conduct of the
investigation.
Next, Rayala alleges that the CA erred in holding that sexual harassment is an offense malum
prohibitum. He argues that intent is an essential element in sexual harassment, and since the
acts imputed to him were done allegedly without malice, he should be absolved of the charges
against him.

We reiterate that what is before us is an administrative case for sexual harassment. Thus,
whether the crime ofsexual harassment is malum in se or malum prohibitum is immaterial.
We also reject Rayalas allegations that the charges were filed because of a conspiracy to get
him out of office and thus constitute merely political harassment. A conspiracy must be proved by
clear and convincing evidence. His bare assertions cannot stand against the evidence presented
by Domingo. As we have already ruled, the acts imputed to Rayala have been proven as fact.
Moreover, he has not proven any ill motive on the part of Domingo and her witnesses which
would be ample reason for her to conjure stories about him. On the contrary, ill motive is belied
by the fact that Domingo and her witnesses all employees of the NLRC at that time stood to
lose their jobs or suffer unpleasant consequences for coming forward and charging their boss
with sexual harassment.
Furthermore, Rayala decries the alleged violation of his right to due process. He accuses the
Committee on Decorum of railroading his trial for violation of RA 7877. He also scored the OPs
decision finding him guilty of "disgraceful and immoral conduct" under the Revised Administrative
Code and not for violation of RA 7877. Considering that he was not tried for "disgraceful and
immoral conduct," he argues that the verdict is a "sham and total nullity."
We hold that Rayala was properly accorded due process. In previous cases, this Court held that:
[i]n administrative proceedings, due process has been recognized to include the
following: (1) the right to actual or constructive notice of the institution of proceedings
which may affect a respondents legal rights; (2) a real opportunity to be heard personally
or with the assistance of counsel, to present witnesses and evidence in ones favor, and
to defend ones rights; (3) a tribunal vested with competent jurisdiction and so constituted
as to afford a person charged administratively a reasonable guarantee of honesty as well
as impartiality; and (4) a finding by said tribunal which is supported by substantial
evidence submitted for consideration during the hearing or contained in the records or
made known to the parties affected.48
The records of the case indicate that Rayala was afforded all these procedural due process
safeguards. Although in the beginning he questioned the authority of the Committee to try
him,49 he appeared, personally and with counsel, and participated in the proceedings.
On the other point raised, this Court has held that, even in criminal cases, the designation of the
offense is not controlling, thus:
What is controlling is not the title of the complaint, nor the designation of the offense
charged or the particular law or part thereof allegedly violated, these being mere
conclusions of law made by the prosecutor, but the description of the crime charged and
the particular facts therein recited. The acts or omissions complained of must be alleged
in such form as is sufficient to enable a person of common understanding to know what
offense is intended to be charged, and enable the court to pronounce proper judgment.
No information for a crime will be sufficient if it does not accurately and clearly allege the
elements of the crime charged. Every element of the offense must be stated in the
information. What facts and circumstances are necessary to be included therein must be
determined by reference to the definitions and essentials of the specified crimes. The
requirement of alleging the elements of a crime in the information is to inform the

accused of the nature of the accusation against him so as to enable him to suitably
prepare his defense.50
It is noteworthy that under AO 250, sexual harassment amounts to disgraceful and immoral
conduct.51 Thus, any finding of liability for sexual harassment may also be the basis of culpability
for disgraceful and immoral conduct.
With the foregoing disquisitions affirming the finding that Rayala committed sexual harassment,
we now determine the proper penalty to be imposed.
Rayala attacks the penalty imposed by the OP. He alleges that under the pertinent Civil Service
Rules, disgraceful and immoral conduct is punishable by suspension for a period of six (6)
months and one (1) day to one (1) year. He also argues that since he is charged administratively,
aggravating or mitigating circumstances cannot be appreciated for purposes of imposing the
penalty.
Under AO 250, the penalty for the first offense is suspension for six (6) months and one (1) day
to one (1) year, while the penalty for the second offense is dismissal.52 On the other hand,
Section 22(o), Rule XVI of the Omnibus Rules Implementing Book V of the Administrative Code
of 198753 and Section 52 A(15) of the Revised Uniform Rules on Administrative Cases in the Civil
Service54 both provide that the first offense of disgraceful and immoral conduct is punishable by
suspension of six (6) months and one (1) day to one (1) year. A second offense is punishable by
dismissal.
Under the Labor Code, the Chairman of the NLRC shall hold office during good behavior until
he or she reaches the age of sixty-five, unless sooner removed for cause as provided by
law or becomes incapacitated to discharge the duties of the office. 55
In this case, it is the President of the Philippines, as the proper disciplining authority, who would
determine whether there is a valid cause for the removal of Rayala as NLRC Chairman. This
power, however, is qualified by the phrase "for cause as provided by law." Thus, when the
President found that Rayala was indeed guilty of disgraceful and immoral conduct, the Chief
Executive did not have unfettered discretion to impose a penalty other than the penalty provided
by law for such offense. As cited above, the imposable penalty for the first offense of either the
administrative offense of sexual harassment or for disgraceful and immoral conduct is
suspension of six (6) months and one (1) day to one (1) year. Accordingly, it was error for the
Office of the President to impose upon Rayala the penalty of dismissal from the service, a
penalty which can only be imposed upon commission of a second offense.
Even if the OP properly considered the fact that Rayala took advantage of his high government
position, it still could not validly dismiss him from the service. Under the Revised Uniform Rules
on Administrative Cases in the Civil Service,56 taking undue advantage of a subordinate may be
considered as an aggravating circumstance57and where only aggravating and no mitigating
circumstances are present, the maximum penalty shall be imposed.58 Hence, the maximum
penalty that can be imposed on Rayala is suspension for one (1) year.
Rayala holds the exalted position of NLRC Chairman, with the rank equivalent to a CA Justice.
Thus, it is not unavailing that rigid standards of conduct may be demanded of him. In TalensDabon v. Judge Arceo,59 this Court, in upholding the liability of therein respondent Judge, said:

The actuations of respondent are aggravated by the fact that complainant is one of his
subordinates over whom he exercises control and supervision, he being the executive
judge. He took advantage of his position and power in order to carry out his lustful and
lascivious desires. Instead of he being in loco parentis over his subordinate employees,
respondent was the one who preyed on them, taking advantage of his superior position.
In yet another case, this Court declared:
As a managerial employee, petitioner is bound by more exacting work ethics. He failed to
live up to his higher standard of responsibility when he succumbed to his moral
perversity. And when such moral perversity is perpetrated against his subordinate, he
provides a justifiable ground for his dismissal for lack of trust and confidence. It is the
right, nay, the duty of every employer to protect its employees from oversexed
superiors.60
It is incumbent upon the head of office to set an example on how his employees should conduct
themselves in public office, so that they may work efficiently in a healthy working atmosphere.
Courtesy demands that he should set a good example. 61
Rayala has thrown every argument in the book in a vain effort to effect his exoneration. He even
puts Domingos character in question and casts doubt on the morality of the former President
who ordered, albeit erroneously, his dismissal from the service. Unfortunately for him, these are
not significant factors in the disposition of the case. It is his character that is in question here and
sadly, the inquiry showed that he has been found wanting.
WHEREFORE, the foregoing premises considered, the October 18, 2002 Resolution of the Court
of Appeals in CA-G.R. SP No. 61026 is AFFIRMED. Consequently, the petitions in G.R. Nos.
155831, 155840, and 158700 areDENIED. No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
A.M. No. CTA-01-1

April 2, 2002

ATTY. SUSAN M. AQUINO, complainant,


vs.
HON. ERNESTO D. ACOSTA, Presiding Judge, Court of Tax Appeals, respondent.
SANDOVAL-GUTIERREZ, J.:
The present administrative case filed with this Court originated from a sworn affidavitcomplaint1 of Atty. Susan M. Aquino, Chief of the Legal and Technical Staff of the Court of Tax
Appeals (CTA), charging Judge Ernesto Acosta, Presiding Judge of the same court, with sexual
harassment under R.A. 7877 and violation of the Canons of Judicial Ethics and Code of
Professional Responsibility.
In her affidavit-complaint, complainant alleged several instances when respondent judge sexually
harassed her.
On November 21, 2000, she reported for work after her vacation in the United States, bringing
gifts for the three judges of the CTA, including respondent. In the afternoon of the same day, he
entered her room and greeted her by shaking her hand. Suddenly, he pulled her towards him and
kissed her on her cheek.
On December 28, 2000, while respondent was on official leave, he called complainant by phone,
saying he will get something in her office. Shortly thereafter, he entered her room, shook her
hand and greeted her, "Merry Christmas." Thereupon, he embraced her and kissed her. She was
able to free herself by slightly pushing him away. Complainant submitted the Joint Affidavit 2 of
Ma. Imelda C. Samonte and Anne Benita M. Santos, CTA Tax Specialists, to prove that
respondent went to her office that day.
On the first working day in January, 2001, respondent phoned complainant, asking if she could
see him in his chambers in order to discuss some matters. When complainant arrived there,
respondent tried to kiss her but she was able to evade his sexual attempt. She then resolved not
to enter his chambers alone.
Weeks later, after the Senate approved the proposed bill expanding the jurisdiction of the CTA,
while complainant and her companions were congratulating and kissing each other, respondent
suddenly placed his arms around her shoulders and kissed her.
In the morning of February 14, 2001, respondent called complainant, requesting her to go to his
office. She then asked Ruby Lanuza, a clerk in the Records Section, to accompany her.
Fortunately, when they reached his chambers, respondent had left.
The last incident happened the next day. At around 8:30 a.m., respondent called complainant
and asked her to see him in his office to discuss the Senate bill on the CTA. She again requested

Ruby to accompany her. The latter agreed but suggested that they should act as if they met by
accident in respondent's office. Ruby then approached the secretary's table which was separated
from respondent's office by a transparent glass. For her part, complainant sat in front of
respondent's table and asked him what he wanted to know about the Senate bill. Respondent
seemed to be at a loss for words and kept glancing at Ruby who was searching for something at
the secretary's desk. Forthwith, respondent approached Ruby, asked her what she was looking
for and stepped out of the office. When he returned, Ruby said she found what she was looking
for and left. Respondent then approached complainant saying, "me gusto akong gawin sa iyo
kahapon pa." Thereupon, he tried to "grab" her. Complainant instinctively raised her hands to
protect herself but respondent held her arms tightly, pulled her towards him and kissed her. She
pushed him away, then slumped on a chair trembling. Meantime, respondent sat on his chair and
covered his face with his hands. Thereafter, complainant left crying and locked herself inside a
comfort room. After that incident, respondent went to her office and tossed a note 3 stating, "sorry,
it won't happen again."
In his comment, respondent judge denied complainant's allegation that he sexually harassed her
six times. He claimed that he has always treated her with respect, being the head of the CTA
Legal Staff. In fact, there is no strain in their professional relationship.
On the first incident, he explained that it was quite unlikely that complainant would ask him to go
to her office on such date in order to give him a "pasalubong."
With respect to the second incident on December 28, he claimed it could not have happened as
he was then on official leave.
Anent the third incident, respondent explained that he went to the various offices of the CTA to
extend New Year's greetings to the personnel. He also greeted complainant with a casual buss
on her cheek and gave her a calendar. In turn, she also greeted him.
As to the fourth episode, he averred that he and complainant had been attending the
deliberations of the Bicameral Conference Committee at the Senate on the bill expanding the
jurisdiction of the CTA. Hence, when the bill was finally approved that particular day, respondent,
in jubilation and in the presence of other people, gave complainant a spontaneous peck on her
cheek. He could not recall any resentment on her part when he kissed her. She even
congratulated him in return, saying "Justice ka na Judge." Then he treated her to a lunch to
celebrate the event. Respondent recounted several times when they would return to the CTA in
the evening after attending the committee hearings in Congress to retrieve complainant's
personal belongings from her office. Surely, if he had malice in his mind, those instances would
have been the perfect opportunities for him to sexually harass her.
As to the fifth incident, respondent alleged that he did not call complainant to harass her, but to
discuss with her and Elizabeth Lozano, HRMO III, and Elsie T. Forteza, Administrative Officer,
the health plan for the CTA officers and employees. The fact that such meeting took place was
confirmed by a Certification issued by Lozano.4
Regarding the sixth incident, respondent narrated his version as follows: Complainant arrived in
his office past 9 a.m. that day, followed by another court employee, Ruby Lanuza. He proceeded
to discuss the CTA Expansion Bill with complainant. Then he went for a while to the rest room.
When he returned, Ruby had already left but complainant was still there. Forthwith, he remarked
that he forgot to greet her on Valentine's Day, the day before. He approached complainant to give

her a casual buss on the cheek. But she suddenly stood and raised her arms to cover her face,
causing her to lose her balance. So he held her arms to prevent her from falling. Her rejection
came as a surprise to him and made him feel quite embarrassed. Shortly, complainant excused
herself and left the room. Stunned at the thought that she might misinterpret his gesture, he sent
her a short note of apology. Respondent further explained that the structure of his office, being
seen through a transparent glass divider, makes it impossible for anyone to commit any improper
conduct inside.
In a Resolution dated August 21, 2001, this Court referred the instant case to Justice Josefina G.
Salonga of the Court of Appeals for investigation, report and recommendation.
Justice Salonga set the hearing of the case on November 6, 2001. However, the parties, through
counsel, manifested that "they will not be adducing any further evidence." On November 7, 2001,
Justice Salonga issued an Order directing them to submit their memoranda simultaneously, after
which, the case shall be considered submitted for resolution.
On January 9, 2002, Justice Salonga forwarded to this Court her Report on Investigation and
Recommendation, thus:
"We find for the respondent.
"The complainant failed to show by convincing evidence that the acts of Judge Acosta in
greeting her with a kiss on the cheek, in a 'beso-beso' fashion, were carried out with
lustful and lascivious desires or were motivated by malice or ill-motive. It is clear under
the circumstances that most of the kissing incidents were done on festive and special
occasions. In fact, complainant's testimony that she was sexually harassed on November
21, 2000, is hardly believable. Notably, complainant declared in her affidavit-complaint
that she brought some 'pasalubongs' for the respondent judge from her trip abroad.
Therefore, Atty. Aquino could not have been 'taken aback' by the respondent's act of
greeting her in a friendly manner and thanking her by way of a kiss on the cheek.
Moreover, it was established that Judge Acosta was on official leave of absence from
December 26-29, 2000. This was corroborated by Ricardo Hebia, the driver of
respondent judge, in his Panunumpa (Affidavit) dated March 26, 2001, where he stated
among others, to wit:
x xx
"Corollarily, the joint affidavit of Ms. Santos and Ms. Samonte attesting to the fact that
respondent dropped by at the third floor of the CTA and greeted them Happy New Year,
even if it true, can not be given any evidentiary weight. Clearly, they did not make any
categorical statement that they had witnessed or seen Judge Acosta making sexual
advances on the complainant. Nor did they even attribute any malicious acts on
respondent constituting sexual harassment.
"In addition, the respondent admitted that when he handed a calendar and greeted
complainant with a buss, complainant reciprocated by greeting him a Happy New Year.
The allegation of Atty. Aquino that the respondent merely used the calendars as 'props' to
kiss her on the cheek and that she was singled out by respondent is not supported by
any convincing evidence. The affidavit of Ms. Aurora U. Aso and Renelyn L. Larga that
Ms. Carmen Acosta gave them calendars for the office of Attys. Margarette Guzman and

Felizardo O. Consing, is immaterial and irrelevant, as Judge Acosta had stated that he
handed to complainant Aquino, a 2001 calendar in the course of greeting her with a buss
on the cheek. Said affidavit could not account for the calendars distributed to the other
offices in the CTA, more specifically, the Legal and Technical Staff headed by Atty.
Aquino.
"Moreover, the claim of the complainant that she was sexually harassed immediately
after the final reading of the bill anent the expansion of the CTA at the Senate, can not be
accorded great evidentiary value. The alleged kissing incident took place in the presence
of other people and the same was by reason of the exaltation or happiness of the
moment, due to the approval of the subject bill. Quite interesting to note, is that Atty.
Aquino reciprocated by congratulating respondent and remarking "justice ka na judge"
after the latter had bussed her on the cheek. Complainant even failed to dispute the fact
that after the kissing incident, she joined Judge Acosta and his driver for lunch at a
seafood restaurant in Luneta. There was even a time that she allowed the respondent
judge to accompany her to the office alone and at nighttime at that, to retrieve her car
keys and bag when they returned to the CTA after the hearing at the Senate on the CTA
expansion bill. These acts are not at square with the behavior of one who has been
sexually harassed, for the normal reaction of a victim of sexual harassment would be to
avoid the harasser or decline his invitations after being offended. In fact, this occasion
could have provided the respondent judge with the right opportunity to commit malicious
acts or to sexually harass complainant, but then Judge Acosta never even attempted to
do so. Undoubtedly, it could be said that no strained relations existed between Atty.
Aquino and Judge Acosta at that moment.
"Neither can the alleged continuous call of Judge Acosta on complainant in the morning
of February 14, 2001 to see him in his office, be considered as acts constituting sexual
harassment. Atty. Aquino failed to state categorically in her affidavit-complaint that
respondent demanded sexual advances or favors from her, or that the former had
committed physical conduct of sexual nature against her. The telephone calls were
attributed malicious implications by the complainant. To all intents and purposes, the
allegation was merely a product of her imagination, hence, the same deserves no weight
in law. Indeed, Atty. Aquino's own version, indicates that she well knew that the purpose
of the respondent in calling her in the morning of February 14, 2001 was to discuss the
CTA Health Plan which was disapproved by the Supreme Court and not for the
respondent to demand sexual favors from her. This was corroborated by Atty. Margarette
Guzman in her affidavit dated February 28, 2001, attached to the complainant's affidavit,
where she stated:
x xx
"Finally, while Judge Acosta admitted having pecked Atty. Aquino on her cheek, which
was avoided by the latter, the same was not meant to sexually harass her. Judge
Acosta's act of extending his post Valentine greeting to complainant was done in good
faith and sans any malice. This is so because immediately after the complainant had
displayed annoyance to the kissing episode, Judge Acosta immediately extended an
apology by way of a handwritten note saying that the incident won't happen again.
"Parenthetically, the undersigned is convinced that Ms. Lanuza's affidavit that she
supposedly accompanied complainant to respondent's office as she allegedly had a

previous 'bad experience' with the latter when he was still an Associate Judge, was
merely concocted to add flavor to the baseless imputations hurled against Judge Acosta.
The accusation is implausible as Ms. Lanuza did not seem to complain about the alleged
bad experience she had with Judge Acosta or relate it to anyone until ten (10) years later.
It must be stressed that Ms. Lanuza is a biased-witness who harbored ill feelings against
the respondent, as she was reprimanded by Judge Acosta for habitual absenteeism and
tardiness in 1996. More importantly, Ms. Lanuza did not even attest that she was a
witness to the alleged sexual advances of Judge Acosta.
"In all the incidents complained of, the respondent's pecks on the cheeks of the
complainant should be understood in the context of having been done on the occasion of
some festivities, and not the assertion of the latter hat she was singled out by Judge
Acosta in his kissing escapades. The busses on her cheeks were simply friendly and
innocent, bereft of malice and lewd design. The fact that respondent judge kisses other
people on the cheeks in the 'beso-beso' fashion, without malice, was corroborated by
Atty. Florecita P. Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili, who stated that
they usually practice 'beso-beso' or kissing on the cheeks, as a form of greeting on
occasions when they meet each other, like birthdays, Christmas, New Year's Day and
even Valentine's Day, and it does not matter whether it is Judge Acosta's birthday or their
birthdays. Theresa Cinco Bactat, a lawyer who belongs to complainant's department,
further attested that on occasions like birthdays, respondent judge would likewise greet
her with a peck on the cheek in a 'beso-beso' manner. Interestingly, in one of several
festive occasions, female employees of the CTA pecked respondent judge on the cheek
where Atty. Aquino was one of Judge Acosta's well wishers. (Annex "8" to Comment, p.
65, Rollo)
"In sum, no sexual harassment had indeed transpired on those six occasions. Judge
Acosta's acts of bussing Atty. Aquino on her cheek were merely forms of greetings,
casual and customary in nature. No evidence of intent to sexually harass complainant
was apparent, only that the innocent acts of 'beso-beso'were given malicious
connotations by the complainant. In fact, she did not even relate to anyone what
happened to her. Undeniably, there is no manifest sexual undertone in all those
incidents."5
Justice Salonga then made the following recommendation:
"Considering the above, the undersigned respectfully recommends that the
administrative complaint for sexual harassment and violations of the Canons of Judicial
Ethics and the Code of Professional Responsibility be DISMISSED and accordingly,
respondent Presiding Judge Ernesto D. Acosta be exonerated therefrom; that in view of
these charges which might have tainted the image of the Court, though unsubstantiated
they may be, Judge Acosta is WARNED to refrain from doing similar acts, or any act for
that matter on the complainant and other female employees of the Court of Tax Appeals,
which in any manner may be interpreted as lustful advances." 6
We agree with the findings of Justice Salonga.
Administrative complaints against members of the judiciary are viewed by this Court with utmost
care, for proceedings of this nature affect not only the reputation of the respondents concerned,
but the integrity of the entire judiciary as well.

We have reviewed carefully the records of this case and found no convincing evidence to sustain
complainant's charges. What we perceive to have been committed by respondent judge are
casual gestures of friendship and camaraderie, nothing more, nothing less. In kissing
complainant, we find no indication that respondent was motivated by malice or lewd design.
Evidently, she misunderstood his actuations and construed them as work-related sexual
harassment under R.A. 7877.
As aptly stated by the Investigating Justice:
"A mere casual buss on the cheek is not a sexual conduct or favor and does not fall
within the purview of sexual harassment under R.A. No. 7877. Section 3 (a) thereof
provides, to wit:
'Sec. 3. Work, Education or Training - related Sexual Harassment Defined. Work, education or training-related sexual harassment is committed by an
employer, employee, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person who, having authority,
influence or moral ascendancy over another in a work or training or education
environment, demands, requests or otherwise requires any sexual favor from the
other, regardless of whether the demand, request or requirement for submission
is accepted by the object of said Act.
a) In a work-related or employment environment, sexual harassment is
committed when:
1) The sexual favor is made as a condition in the hiring or in the
employment, re-employment or continued employment of said individual,
or in granting said individual favorable compensation, terms, conditions,
promotions or privileges; or the refusal to grant sexual favor results in
limiting, segregating or classifying the employee which in anyway would
discriminate, deprive or diminish employment opportunities or otherwise
adversely affect said employees;
2) The above acts would impair the employee's right or privileges under
existing labor laws; or
3) The above acts would result in an intimidating, hostile, or offensive
environment for the employee.'
"Clearly, under the foregoing provisions, the elements of sexual harassment are as
follows:
1) The employer, employee, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person has authority, influence
or moral ascendancy over another;
2) The authority, influence or moral ascendancy exists in a working environment;

3) The employer, employee, manager, supervisor, agent of the employer, teacher,


instructor, professor, coach, or any other person having authority, influence or
moral ascendancy makes a demand, request or requirement of a sexual favor.
"In her Complaint-affidavit, Reply and Sur-rejoinder, complainant did not even allege that
Judge Acosta demanded, requested or required her to give him a buss on the cheek
which, she resented. Neither did Atty. Aquino establish by convincing evidence that the
busses on her cheek, which she considers as sexual favors, discriminated against her
continued employment, or resulted in an intimidating, hostile or offensive environment. In
fact, complainant continued to perform her work in the office with the usual normalcy.
Obviously, the alleged sexual favor, if there ever was, did not interfere with her working
condition (Annexes "9" - "9-FFF"). Moreover, Atty. Aquino also continued to avail of
benefits and leaves appurtenant to her office and was able to maintain a consistent
outstanding performance. On top of this, her working area which, is at the third floor of
the CTA, is far removed from the office of Judge Acosta located at the fourth floor of the
same building. Resultantly, no hostile or intimidating working environment is apparent.
"Based on the foregoing findings, there is no sufficient evidence to create a moral
certainty that Judge Acosta committed the acts complained of; that Atty. Aquino's
determination to seek justice for herself was not substantiated by convincing evidence;
that the testimony of respondent judge and his witnesses are credible and therefore,
should be given weight and probative value; that the respondent's acts undoubtedly do
not bear the marks of misconduct, impropriety or immorality, either under R.A. No. 7877
or the Canons of Judicial Ethics and the Code of Professional Responsibility." 7
Indeed, from the records on hand, there is no showing that respondent judge demanded,
requested or required any sexual favor from complainant in exchange for "favorable
compensation, terms, conditions, promotion or privileges" specified under Section 3 of R.A.
7877. Nor did he, by his actuations, violate the Canons of Judicial Ethics or the Code of
Professional Responsibility.
While we exonerate respondent from the charges herein, however, he is admonished not to
commit similar acts against complainant or other female employees of the Court of Tax Appeals,
otherwise, his conduct may be construed as tainted with impropriety.
We laud complainant's effort to seek redress for what she honestly believed to be an affront to
her honor. Surely, it was difficult and agonizing on her part to come out in the open and accuse
her superior of sexual harassment. However, her assessment of the incidents is misplaced for
the reasons mentioned above.
WHEREFORE, respondent Judge Ernesto D. Acosta is hereby EXONERATED of the charges
against him. However, he is ADVISED to be more circumspect in his deportment.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
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 coemployees or employees of competing drug companies. If management perceives a conflict of
interest or a potential conflict between such relationship and the employees employment with the
company, the management and the employee will explore the possibility of a "transfer to another
department in a non-counterchecking position" or preparation for employment outside the
company after six months.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte
sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals3(Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay.
She supervised the district managers and medical representatives of her company and prepared
marketing strategies for Astra in that area.

Even before they got married, Tecson received several reminders from his District Manager
regarding the conflict of interest which his relationship with Bettsy might engender. Still, love
prevailed, and Tecson married Bettsy in September 1998.
In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a
conflict of interest. Tecsons superiors reminded him that he and Bettsy should decide which one
of them would resign from their jobs, although they told him that they wanted to retain him as
much as possible because he was performing his job well.
Tecson requested for time to comply with the company policy against entering into a relationship
with an employee of a competitor company. He explained that Astra, Bettsys employer, was
planning to merge with Zeneca, another drug company; and Bettsy was planning to avail of the
redundancy package to be offered by Astra. With Bettsys separation from her company, the
potential conflict of interest would be eliminated. At the same time, they would be able to avail of
the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the problem. In September 1999,
Tecson applied for a transfer in Glaxos milk division, thinking that since Astra did not have a milk
division, the potential conflict of interest would be eliminated. His application was denied in view
of Glaxos "least-movement-possible" policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur
sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied.
Tecson sought Glaxos reconsideration regarding his transfer and brought the matter to Glaxos
Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon until
February 7, 2000 to comply with the transfer order. Tecson defied the transfer order and
continued acting as medical representative in the Camarines 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 () month
pay for every year of service, or a total of P50,000.00 but he declined the offer. On November 15,
2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as
valid Glaxos policy on relationships between its employees and persons employed with
competitor companies, and affirming Glaxos right to transfer Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the
NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for
Review on the ground that the NCMB did not err in rendering its Decision. The appellate court
held that Glaxos policy prohibiting its employees from having personal relationships with
employees of competitor companies is a valid exercise of its management prerogatives. 4
Tecson filed a Motion for Reconsideration of the appellate courts Decision, but the motion was
denied by the appellate court in its Resolution dated March 26, 2004.5

Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in affirming
the NCMBs finding that the Glaxos policy prohibiting its employees from marrying an employee
of a competitor company is valid; and (ii) the Court of Appeals also erred in not finding that
Tecson was constructively dismissed when he was transferred to a new sales territory, and
deprived of the opportunity to attend products seminars and training sessions. 6
Petitioners contend that Glaxos policy against employees marrying employees of competitor
companies violates the equal protection clause of the Constitution because it creates invalid
distinctions among employees on account only of marriage. They claim that the policy restricts
the employees right to marry.7
They also argue that Tecson was constructively dismissed as shown by the following
circumstances: (1) he was transferred from the Camarines Sur-Camarines Norte sales area to
the Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) he was excluded
from attending seminars and training sessions for medical representatives, and (4) he was
prohibited from promoting respondents products which were competing with Astras products. 8
In its Comment on the petition, Glaxo argues that the company policy prohibiting its employees
from having a relationship with and/or marrying an employee of a competitor company is a valid
exercise of its management prerogatives and does not violate the equal protection clause; and
that Tecsons reassignment from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City and Agusan del Sur sales area does not amount to constructive dismissal. 9
Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products,
it has a genuine interest in ensuring that its employees avoid any activity, relationship or interest
that may conflict with their responsibilities to the company. Thus, it expects its employees to
avoid having personal or family interests in any competitor company which may influence their
actions and decisions and consequently deprive Glaxo of legitimate profits. The policy is also
aimed at preventing a competitor company from gaining access to its secrets, procedures and
policies.10
It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing or
future relationships with employees of competitor companies, and is therefore not violative of the
equal protection clause. It maintains that considering the nature of its business, the prohibition is
based on valid grounds.11
According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra, posed a real and
potential conflict of interest. Astras products were in direct competition with 67% of the products
sold by Glaxo. Hence, Glaxos enforcement of the foregoing policy in Tecsons case was a valid
exercise of its management prerogatives.12 In any case, Tecson was given several months to
remedy the situation, and was even encouraged not to resign but to ask his wife to resign 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 Tecsons reassignment to another sales area and his exclusion from
seminars regarding respondents new products did not amount to constructive dismissal.
It claims that in view of Tecsons refusal to resign, he was relocated from the Camarines SurCamarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur sales area.
Glaxo asserts that in effecting the reassignment, it also considered the welfare of Tecsons family.
Since Tecsons hometown was in Agusan del Sur and his wife traces her roots to Butuan City,
Glaxo assumed that his transfer from the Bicol region to the Butuan City sales area would be
favorable to him and his family as he would be relocating to a familiar territory and minimizing his
travel expenses.15
In addition, Glaxo avers that Tecsons exclusion from the seminar concerning the new antiasthma drug was due to the fact that said product was in direct competition with a drug which
was soon to be sold by Astra, and hence, would pose a potential conflict of interest for him.
Lastly, the delay in Tecsons receipt of his sales paraphernalia was due to the mix-up created by
his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new
sales area instead of Naga City because the supplier thought he already transferred to Butuan). 16
The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in
ruling that Glaxos policy against its employees marrying employees from competitor companies
is valid, and in not holding that said policy violates the equal protection clause of the Constitution;
(2) Whether Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecsons contract of employment with Glaxo being questioned by petitioners
provides:

10. You agree to disclose to management any existing or future relationship you may
have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management discretion,
you agree to resign voluntarily from the Company as a matter of Company policy.
17
The same contract also stipulates that 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 coemployees of competing drug companies are expected to disclose such relationship to
the Management. If management perceives a conflict or potential conflict of interest,
every effort shall be made, together by management and the employee, to arrive at a
solution within six (6) months, either by transfer to another department in a non-counter
checking position, or by career preparation toward outside employment after Glaxo
Wellcome. Employees must be prepared for possible resignation within six (6) months, if
no other solution is feasible.19
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy
prohibiting an employee from having a relationship with an employee of a competitor company is
a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors, especially so that it and Astra are
rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies
upon Glaxos employees is reasonable under the circumstances because relationships of that
nature might compromise the interests of the company. In laying down the assailed company
policy, Glaxo only aims to protect its interests against the possibility that a competitor company
will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than
the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect
its right to reasonable returns on investments and to expansion and growth. 20 Indeed, while our
laws endeavor to give life to the constitutional policy on social justice and the protection of labor,
it does not mean that every labor dispute will be decided in favor of the workers. The law also
recognizes that management has rights which are also entitled to respect and enforcement in the
interest of fair play.21
As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business
confidentiality and protect a competitive position by even-handedly disqualifying from jobs male
and female applicants or employees who are married to a competitor. Consequently, the court
ruled than an employer that discharged an employee who was married to an employee of an

active competitor did not violate Title VII of the Civil Rights Act of 1964. 23The Court pointed out
that the policy was applied to men and women equally, and noted that the employers business
was highly competitive and that gaining inside information would constitute a competitive
advantage.
The challenged company policy does not violate the equal protection clause of the Constitution
as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its
authority.24 Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the
equal protection clause erects no shield against merely private conduct, however, discriminatory
or wrongful.25 The only exception occurs when the 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
employees personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . . 28
The Court of Appeals also correctly noted that the assailed company policy which forms part of
respondents Employee Code of Conduct and of its contracts with its employees, such as that
signed by 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 CitySurigao City-Agusan del Sur sales area, and when he was excluded from attending the
companys seminar on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation
resorted to when continued employment becomes impossible, unreasonable, or unlikely; when
there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee. 30 None of these conditions are
present in the instant case. The record does not show that 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, petitioners transfer to another place of assignment was merely in


keeping with the policy of the company in avoidance of conflict of interest, and thus
validNote that [Tecsons] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close coordination
with District Managers and Medical Representatives. Her duties include monitoring sales
of Astra products, conducting sales drives, establishing and furthering relationship with
customers, collection, monitoring and managing Astras inventoryshe therefore takes
an active participation in the market war characterized as it is by stiff competition among
pharmaceutical companies. Moreover, and this is significant, petitioners sales territory
covers Camarines Sur and Camarines Norte while his wife is supervising a branch of her
employer in Albay. The proximity of their areas of responsibility, all in the same Bicol
Region, renders the conflict of interest not only possible, but actual, as learning by one
spouse of the others market strategies in the region would be inevitable. [Managements]
appreciation of a conflict of interest is therefore not merely illusory and wanting in factual
basis31
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved a
complaint filed by a medical representative against his employer drug company for illegal
dismissal for allegedly terminating his employment when he refused to accept his reassignment
to a new area, the Court upheld the right of the drug company to transfer or reassign its
employee in accordance with its operational demands and requirements. The ruling of the Court
therein, quoted hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman or medical representative is
expected to travel. He should anticipate reassignment according to the demands of their
business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or to areas
where the need for pushing its products is great. More so if such reassignments are part
of the employment contract.33
As noted earlier, the challenged policy has been implemented by Glaxo impartially and
disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave
Tecson several chances to eliminate the conflict of interest brought about by his relationship with
Bettsy. When their relationship was still in its initial stage, Tecsons supervisors at Glaxo
constantly reminded him about its effects on his employment with the company and on the
companys interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by
either resigning from the company or asking his wife to resign from Astra. Glaxo even expressed
its desire to retain Tecson in its employ because of his satisfactory performance and suggested
that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his repeated
requests for more time to resolve the conflict of interest. When the problem could not be resolved
after several years of waiting, Glaxo was constrained to reassign Tecson to a sales area different
from that handled by his wife for Astra. Notably, the Court did not terminate Tecson from
employment but only reassigned him to another area where his home province, Agusan del Sur,
was included. In effecting Tecsons transfer, Glaxo even considered the welfare of Tecsons
family. Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the part of
Glaxo.34
WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-44169 December 3, 1985
ROSARIO A. GAA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, and
CESAR R. ROXAS, Deputy Sheriff of Manila, respondents.
Federico C. Alikpala and Federico Y. Alikpala, Jr. for petitioner.
Borbe and Palma for private respondent.

PATAJO, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals promulgated on
March 30, 1976, affirming the decision of the Court of First Instance of Manila.
It appears that respondent Europhil Industries Corporation was formerly one of the tenants in
Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the
building administrator. On December 12, 1973, Europhil Industries commenced an action (Civil
Case No. 92744) in the Court of First Instance of Manila for damages against petitioner "for
having perpetrated certain acts that Europhil Industries considered a trespass upon its rights,
namely, cutting of its electricity, and removing its name from the building directory and gate
passes of its officials and employees" (p. 87 Rollo). On June 28, 1974, said court rendered
judgment in favor of respondent Europhil Industries, ordering petitioner to pay the former the sum
of P10,000.00 as actual damages, P5,000.00 as moral damages, P5,000.00 as exemplary
damages and to pay the costs.
The said decision having become final and executory, a writ of garnishment was issued pursuant
to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon
El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or
remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said
garnishment on the ground that her "salaries, commission and, or remuneration are exempted
from execution under Article 1708 of the New Civil Code. Said motion was denied by the lower
Court in an order dated November 7, 1975. A motion for reconsideration of said order was
likewise denied, and on January 26, 1976 petitioner filed with the Court of Appeals a petition for
certiorari against filed with the Court of Appeals a petition for certiorari against said order of
November 7, 1975.
On March 30, 1976, the Court of Appeals dismissed the petition for certiorari. In dismissing the
petition, the Court of Appeals held that petitioner is not a mere laborer as contemplated under
Article 1708 as the term laborer does not apply to one who holds a managerial or supervisory
position like that of petitioner, but only to those "laborers occupying the lower strata." It also held

that the term "wages" means the pay given" as hire or reward to artisans, mechanics, domestics
or menial servants, and laborers employed in manufactories, agriculture, mines, and other
manual occupation and usually employed to distinguish the sums paid to persons hired to
perform manual labor, skilled or unskilled, paid at stated times, and measured by the day, week,
month, or season," citing 67 C.J. 285, which is the ordinary acceptation of the said term, and that
"wages" in Spanish is "jornal" and one who receives a wage is a "jornalero."
In the present petition for review on certiorari of the aforesaid decision of the Court of Appeals,
petitioner questions the correctness of the interpretation of the then Court of Appeals of Article
1708 of the New Civil Code which reads as follows:
ART. 1708. The laborer's wage shall not be subject to execution or attachment,
except for debts incurred for food, shelter, clothing and medical attendance.
It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a responsibly
place employee," of El Grande Hotel, "responsible for planning, directing, controlling, and
coordinating the activities of all housekeeping personnel" (p. 95, Rollo) so as to ensure the
cleanliness, maintenance and orderliness of all guest rooms, function rooms, public areas, and
the surroundings of the hotel. Considering the importance of petitioner's function in El Grande
Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a managerial or
supervisory position.
In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or
physical labor, but as commonly and customarily used and understood, it only applies to one
engaged in some form of manual or physical labor. That is the sense in which the courts
generally apply the term as applied in exemption acts, since persons of that class usually look to
the reward of a day's labor for immediate or present support and so are more in need of the
exemption than are other. (22 Am. Jur. 22 citing Briscoe vs. Montgomery, 93 Ga 602, 20 SE
40;Miller vs. Dugas, 77 Ga 4 Am St Rep 192; State ex rel I.X.L. Grocery vs. Land, 108 La 512, 32
So 433; Wildner vs. Ferguson, 42 Minn 112, 43 NW 793; 6 LRA 338; Anno 102 Am St Rep. 84.
In Oliver vs. Macon Hardware Co., 98 Ga 249 SE 403, it was held that in determining whether a
particular laborer or employee is really a "laborer," the character of the word he does must be
taken into consideration. He must be classified not according to the arbitrary designation given to
his calling, but with reference to the character of the service required of him by his employer.
In Wildner vs. Ferguson, 42 Minn 112, 43 NW 793, the Court also held that all men who earn
compensation by labor or work of any kind, whether of the head or hands, including judges,
laywers, bankers, merchants, officers of corporations, and the like, are in some sense "laboring
men." But they are not "laboring men" in the popular sense of the term, when used to refer to a
must presume, the legislature used the term. The Court further held in said case:
There are many cases holding that contractors, consulting or assistant engineers,
agents, superintendents, secretaries of corporations and livery stable keepers, do
not come within the meaning of the term. (Powell v. Eldred, 39 Mich, 554, Atkin v.
Wasson, 25 N.Y. 482; Short v. Medberry, 29 Hun. 39; Dean v. De Wolf, 16 Hun.
186; Krausen v. Buckel, 17 Hun. 463; Ericson v. Brown, 39 Barb. 390; Coffin v.
Reynolds, 37 N.Y. 640; Brusie v. Griffith, 34 Cal. 306; Dave v. Nunan,62 Cal.
400).

Thus, in Jones vs. Avery, 50 Mich, 326, 15 N.W. Rep. 494, it was held that a traveling salesman,
selling by sample, did not come within the meaning of a constitutional provision making
stockholders of a corporation liable for "labor debts" of the corporation.
In Kline vs. Russell 113 Ga. 1085, 39 SE 477, citing Oliver vs. Macon Hardware Co., supra, it
was held that a laborer, within the statute exempting from garnishment the wages of a "laborer,"
is one whose work depends on mere physical power to perform ordinary manual labor, and not
one engaged in services consisting mainly of work requiring mental skill or business capacity,
and involving the exercise of intellectual faculties.
So, also in Wakefield vs. Fargo, 90 N.Y. 213, the Court, in construing an act making stockholders
in a corporation liable for debts due "laborers, servants and apprentices" for services performed
for the corporation, held that a "laborer" is one who performs menial or manual services and
usually looks to the reward of a day's labor or services for immediate or present support. And
in Weymouth vs. Sanborn, 43 N.H. 173, 80 Am. Dec. 144, it was held that "laborer" is a term
ordinarily employed to denote one who subsists by physical toil in contradistinction to those who
subsists by professional skill. And in Consolidated Tank Line Co. vs. Hunt, 83 Iowa, 6, 32 Am. St.
Rep. 285, 43 N.W. 1057, 12 L.R.A. 476, it was stated that "laborers" are those persons who earn
a livelihood by their own manual labor.
Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what
are to be exempted from attachment and execution. The term "wages" as distinguished from
"salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season, while "salary" denotes a higher degree of
employment, or a superior grade of services, and implies a position of office: by contrast, the
term wages " indicates considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important service (35 Am. Jur.
496).
The distinction between wages and salary was adverted to in Bell vs. Indian Livestock Co. (Tex.
Sup.), 11 S.W. 344, wherein it was said: "'Wages' are the compensation given to a hired person
for service, and the same is true of 'salary'. The words seem to be synonymous, convertible
terms, though we believe that use and general acceptation have given to the word 'salary' a
significance somewhat different from the word 'wages' in this: that the former is understood to
relate to position of office, to be the compensation given for official or other service, as
distinguished from 'wages', the compensation for labor." Annotation 102 Am. St. Rep. 81, 95.
We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code
to operate in favor of any but those who are laboring men or women in the sense that their work
is manual. Persons belonging to this class usually look to the reward of a day's labor for
immediate or present support, and such persons are more in need of the exemption than any
others. Petitioner Rosario A. Gaa is definitely not within that class.
We find, therefore, and so hold that the Trial Court did not err in denying in its order of November
7, 1975 the motion of petitioner to lift the notice of garnishment against her salaries, commission
and other remuneration from El Grande Hotel since said salaries, Commission and other
remuneration due her from the El Grande Hotel do not constitute wages due a laborer which,
under Article 1708 of the Civil Code, are not subject to execution or attachment.

IN VIEW OF THE FOREGOING, We find the present petition to be without merit and hereby
AFFIRM the decision of the Court of Appeals, with costs against petitioner.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 118978 May 23, 1997


PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN, respondents.

REGALADO, J.:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and
Telephone Company (hereafter, PT & T) invokes the alleged concealment of civil status and
defalcation of company funds as grounds to terminate the services of an employee. That
employee, herein private respondent Grace de Guzman, contrarily argues that what really
motivated PT & T to terminate her services was her having contracted marriage during her
employment, which is prohibited by petitioner in its company policies. She thus claims that she
was discriminated against in gross violation of law, such a proscription by an employer being
outlawed by Article 136 of the Labor Code.
Grace de Guzman was initially hired by petitioner as a reliever, specifically as a "Supernumerary
Project Worker," for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F.
Tenorio who went on maternity leave.1 Under the Reliever Agreement which she signed with
petitioner company, her employment was to be immediately terminated upon expiration of the agreed
period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991,
private respondent's services as reliever were again engaged by petitioner, this time in replacement of
one Erlinda F. Dizon who went on leave during both periods. 2 After August 8, 1991, and pursuant to
their Reliever Agreement, her services were terminated.
On September 2, 1991, private respondent was once more asked to join petitioner company as a
probationary employee, the probationary period to cover 150 days. In the job application form
that was furnished her to be filled up for the purpose, she indicated in the portion for civil status
therein that she was single although she had contracted marriage a few months earlier, that is,
on May 26, 1991. 3
It now appears that private respondent had made the same representation in the two successive
reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner
supposedly learned about the same later, its branch supervisor in Baguio City, Delia M. Oficial,
sent to private respondent a memorandum dated January 15, 1992 requiring her to explain the
discrepancy. In that memorandum, she was reminded about the company's policy of not
accepting married women for employment. 4

In her reply letter dated January 17, 1992, private respondent stated that she was not aware of
PT&T's policy regarding married women at the time, and that all along she had not deliberately
hidden her true civil status. 5Petitioner nonetheless remained unconvinced by her explanations.
Private respondent was dismissed from the company effective January 29, 1992, 6 which she readily
contested by initiating a complaint for illegal dismissal, coupled with a claim for non-payment of cost of
living allowances (COLA), before the Regional Arbitration Branch of the National Labor Relations
Commission in Baguio City.
At the preliminary conference conducted in connection therewith, private respondent volunteered
the information, and this was incorporated in the stipulation of facts between the parties, that she
had failed to remit the amount of P2,380.75 of her collections. She then executed a promissory
note for that amount in favor of petitioner 7. All of these took place in a formal proceeding and with
the agreement of the parties and/or their counsel.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision declaring
that private respondent, who had already gained the status of a regular employee, was illegally
dismissed by petitioner. Her reinstatement, plus payment of the corresponding back wages and
COLA, was correspondingly ordered, the labor arbiter being of the firmly expressed view that the
ground relied upon by petitioner in dismissing private respondent was clearly insufficient, and
that it was apparent that she had been discriminated against on account of her having contracted
marriage in violation of company rules.
On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld
the labor arbiter and, in its decision dated April 29, 1994, it ruled that private respondent had
indeed been the subject of an unjust and unlawful discrimination by her employer, PT & T.
However, the decision of the labor arbiter was modified with the qualification that Grace de
Guzman deserved to be suspended for three months in view of the dishonest nature of her acts
which should not be condoned. In all other respects, the NLRC affirmed the decision of the labor
arbiter, including the order for the reinstatement of private respondent in her employment with PT
& T.
The subsequent motion for reconsideration filed by petitioner was rebuffed by respondent NLRC
in its resolution of November 9, 1994, hence this special civil action assailing the aforestated
decisions of the labor arbiter and respondent NLRC, as well as the denial resolution of the latter.
1. Decreed in the Bible itself is the universal norm that women should be regarded with love and
respect but, through the ages, men have responded to that injunction with indifference, on the
hubristic conceit that women constitute the inferior sex. Nowhere has that prejudice against
womankind been so pervasive as in the field of labor, especially on the matter of equal
employment opportunities and standards. In the Philippine setting, women have traditionally
been considered as falling within the vulnerable groups or types of workers who must be
safeguarded with preventive and remedial social legislation against discriminatory and
exploitative practices in hiring, training, benefits, promotion and retention.
The Constitution, cognizant of the disparity in rights between men and women in almost all
phases of social and political life, provides a gamut of protective provisions. To cite a few of the
primordial ones, Section 14, Article II 8on the Declaration of Principles and State Policies, expressly
recognizes the role of women in nation-building and commands the State to ensure, at all times, the
fundamental equality before the law of women and men. Corollary thereto, Section 3 of Article
XIII 9 (the progenitor whereof dates back to both the 1935 and 1973 Constitution) pointedly requires

the State to afford full protection to labor and to promote full employment and equality of employment
opportunities for all, including an assurance of entitlement to tenurial security of all workers. Similarly,
Section 14 of Article XIII 10 mandates that the State shall protect working women through provisions
for opportunities that would enable them to reach their full potential.

2. Corrective labor and social laws on gender inequality have emerged with more frequency in
the years since the Labor Code was enacted on May 1, 1974 as Presidential Decree No. 442,
largely due to our country's commitment as a signatory to the United Nations Convention on the
Elimination of All Forms of Discrimination Against Women (CEDAW). 11
Principal among these laws are Republic Act No. 6727 12 which explicitly prohibits discrimination
against women with respect to terms and conditions of employment, promotion, and training
opportunities; Republic Act No. 6955 13 which bans the "mail-order-bride" practice for a fee and the
export of female labor to countries that cannot guarantee protection to the rights of women workers;
Republic Act No. 7192 14 also known as the "Women in Development and Nation Building Act," which
affords women equal opportunities with men to act and to enter into contracts, and for appointment,
admission, training, graduation, and commissioning in all military or similar schools of the Armed
Forces of the Philippines and the Philippine National Police; Republic Act No. 7322 15 increasing the
maternity benefits granted to women in the private sector; Republic Act No. 7877 16 which outlaws and
punishes sexual harassment in the workplace and in the education and training environment; and
Republic Act No. 8042, 17 or the "Migrant Workers and Overseas Filipinos Act of 1995," which
prescribes as a matter of policy, inter alia, the deployment of migrant workers, with emphasis on
women, only in countries where their rights are secure. Likewise, it would not be amiss to point out
that in the Family Code, 18 women's rights in the field of civil law have been greatly enhanced and
expanded.
In the Labor Code, provisions governing the rights of women workers are found in Articles 130 to
138 thereof. Article 130 involves the right against particular kinds of night work while Article 132
ensures the right of women to be provided with facilities and standards which the Secretary of
Labor may establish to ensure their health and safety. For purposes of labor and social
legislation, a woman working in a nightclub, cocktail lounge, massage clinic, bar or other similar
establishments shall be considered as an employee under Article 138. Article 135, on the other
hand, recognizes a woman's right against discrimination with respect to terms and conditions of
employment on account simply of sex. Finally, and this brings us to the issue at hand, Article 136
explicitly prohibits discrimination merely by reason of the marriage of a female employee.
3. Acknowledged as paramount in the due process scheme is the constitutional guarantee of
protection to labor and security of tenure. Thus, an employer is required, as a condition sine qua
non prior to severance of the employment ties of an individual under his employ, to convincingly
establish, through substantial evidence, the existence of a valid and just cause in dispensing with
the services of such employee, one's labor being regarded as constitutionally protected property.
On the other hand, it is recognized that regulation of manpower by the company falls within the
so-called management prerogatives, which prescriptions encompass the matter of hiring,
supervision of workers, work assignments, working methods and assignments, as well as
regulations on the transfer of employees, lay-off of workers, and the discipline, dismissal, and
recall of employees. 19 As put in a case, an employer is free to regulate, according to his discretion
and best business judgment, all aspects of employment, "from hiring to firing," except in cases of
unlawful discrimination or those which may be provided by law. 20

In the case at bar, petitioner's policy of not accepting or considering as disqualified from work any
woman worker who contracts marriage runs afoul of the test of, and the right against,
discrimination, afforded all women workers by our labor laws and by no less than the
Constitution. Contrary to petitioner's assertion that it dismissed private respondent from
employment on account of her dishonesty, the record discloses clearly that her ties with the
company were dissolved principally because of the company's policy that married women are not
qualified for employment in PT & T, and not merely because of her supposed acts of dishonesty.
That it was so can easily be seen from the memorandum sent to private respondent by Delia M.
Oficial, the branch supervisor of the company, with the reminder, in the words of the latter, that
"you're fully aware that the company is not accepting married women employee (sic), as it was
verbally instructed to you." 21 Again, in the termination notice sent to her by the same branch
supervisor, private respondent was made to understand that her severance from the service was not
only by reason of her concealment of her married status but, over and on top of that, was her violation
of the company's policy against marriage ("and even told you that married women employees are not
applicable [sic] or accepted in our company.") 22 Parenthetically, this seems to be the curious reason
why it was made to appear in the initiatory pleadings that petitioner was represented in this case only
by its said supervisor and not by its highest ranking officers who would otherwise be solidarily liable
with the corporation. 23
Verily, private respondent's act of concealing the true nature of her status from PT & T could not
be properly characterized as willful or in bad faith as she was moved to act the way she did
mainly because she wanted to retain a permanent job in a stable company. In other words, she
was practically forced by that very same illegal company policy into misrepresenting her civil
status for fear of being disqualified from work. While loss of confidence is a just cause for
termination of employment, it should not be simulated. 24 It must rest on an actual breach of duty
committed by the employee and not on the employer's caprices. 25 Furthermore, it should never be
used as a subterfuge for causes which are improper, illegal, or unjustified. 26
In the present controversy, petitioner's expostulations that it dismissed private respondent, not
because the latter got married but because she concealed that fact, does have a hollow ring. Her
concealment, so it is claimed, bespeaks dishonesty hence the consequent loss of confidence in
her which justified her dismissal.
Petitioner would asseverate, therefore, that while it has nothing against marriage, it nonetheless
takes umbrage over the concealment of that fact. This improbable reasoning, with interstitial
distinctions, perturbs the Court since private respondent may well be minded to claim that the
imputation of dishonesty should be the other way around.
Petitioner would have the Court believe that although private respondent defied its policy against
its female employees contracting marriage, what could be an act of insubordination was
inconsequential. What it submits as unforgivable is her concealment of that marriage yet, at the
same time, declaring that marriage as a trivial matter to which it supposedly has no objection. In
other words, PT & T says it gives its blessings to its female employees contracting marriage,
despite the maternity leaves and other benefits it would consequently respond for and which
obviously it would have wanted to avoid. If that employee confesses such fact of marriage, there
will be no sanction; but if such employee conceals the same instead of proceeding to the
confessional, she will be dismissed. This line of reasoning does not impress us as reflecting its
true management policy or that we are being regaled with responsible advocacy.

This Court should be spared the ennui of strained reasoning and the tedium of propositions
which confuse through less than candid arguments. Indeed, petitioner glosses over the fact that it
was its unlawful policy against married women, both on the aspects of qualification and retention,
which compelled private respondent to conceal her supervenient marriage. It was, however, that
very policy alone which was the cause of private respondent's secretive conduct now complained
of. It is then apropos to recall the familiar saying that he who is the cause of the cause is the
cause of the evil caused.
Finally, petitioner's collateral insistence on the admission of private respondent that she
supposedly misappropriated company funds, as an additional ground to dismiss her from
employment, is somewhat insincere and self-serving. Concededly, private respondent admitted in
the course of the proceedings that she failed to remit some of her collections, but that is an
altogether different story. The fact is that she was dismissed solely because of her concealment
of her marital status, and not on the basis of that supposed defalcation of company funds. That
the labor arbiter would thus consider petitioner's submissions on this supposed dishonesty as a
mere afterthought, just to bolster its case for dismissal, is a perceptive conclusion born of
experience in labor cases. For, there was no showing that private respondent deliberately
misappropriated the amount or whether her failure to remit the same was through negligence
and, if so, whether the negligence was in nature simple or grave. In fact, it was merely agreed
that private respondent execute a promissory note to refund the same, which she did, and the
matter was deemed settled as a peripheral issue in the labor case.
Private respondent, it must be observed, had gained regular status at the time of her dismissal.
When she was served her walking papers on January 29, 1992, she was about to complete the
probationary period of 150 days as she was contracted as a probationary employee on
September 2, 1991. That her dismissal would be effected just when her probationary period was
winding down clearly raises the plausible conclusion that it was done in order to prevent her from
earning security of tenure. 27 On the other hand, her earlier stints with the company as reliever were
undoubtedly those of a regular employee, even if the same were for fixed periods, as she performed
activities which were essential or necessary in the usual trade and business of PT & T. 28 The primary
standard of determining regular employment is the reasonable connection between the activity
performed by the employee in relation to the business or trade of the employer. 29
As an employee who had therefore gained regular status, and as she had been dismissed
without just cause, she is entitled to reinstatement without loss of seniority rights and other
privileges and to full back wages, inclusive of allowances and other benefits or their monetary
equivalent. 30 However, as she had undeniably committed an act of dishonesty in concealing her
status, albeit under the compulsion of an unlawful imposition of petitioner, the three-month suspension
imposed by respondent NLRC must be upheld to obviate the impression or inference that such act
should be condoned. It would be unfair to the employer if she were to return to its fold without any
sanction whatsoever for her act which was not totally justified. Thus, her entitlement to back wages,
which shall be computed from the time her compensation was withheld up to the time of her actual
reinstatement, shall be reduced by deducting therefrom the amount corresponding to her three
months suspension.
4. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by
petitioner PT & T. The Labor Code state, in no uncertain terms, as follows:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to
require as a condition of employment or continuation of employment that a

woman shall not get married, or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of marriage.
This provision had a studied history for its origin can be traced to Section 8 of Presidential
Decree No. 148, 31better known as the "Women and
Child Labor Law," which amended paragraph (c), Section 12 of Republic Act No. 679, 32 entitled "An
Act to Regulate the Employment of Women and Children, to Provide Penalties for Violations Thereof,
and for Other Purposes." The forerunner to Republic Act No. 679, on the other hand, was Act No.
3071 which became law on March 16, 1923 and which regulated the employment of women and
children in shops, factories, industrial, agricultural, and mercantile establishments and other places of
labor in the then Philippine Islands.
It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et
al. vs. Philippine Air Lines,33 a decision that emanated from the Office of the President. There, a
policy of Philippine Air Lines requiring that prospective flight attendants must be single and that they
will be automatically separated from the service once they marry was declared void, it being violative
of the clear mandate in Article 136 of the Labor Code with regard to discrimination against married
women. Thus:
Of first impression is the incompatibility of the respondent's policy or regulation
with the codal provision of law. Respondent is resolute in its contention that
Article 136 of the Labor Code applies only to women employed in ordinary
occupations and that the prohibition against marriage of women engaged in
extraordinary occupations, like flight attendants, is fair and reasonable,
considering the pecularities of their chosen profession.
We cannot subscribe to the line of reasoning pursued by respondent. All along, it
knew that the controverted policy has already met its doom as early as March 13,
1973 when Presidential Decree No. 148, otherwise known as the Women and
Child Labor Law, was promulgated. But for the timidity of those affected or their
labor unions in challenging the validity of the policy, the same was able to obtain
a momentary reprieve. A close look at Section 8 of said decree, which amended
paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is exactly the
same provision reproduced verbatim in Article 136 of the Labor Code, which was
promulgated on May 1, 1974 to take effect six (6) months later, or on November
1, 1974.
It cannot be gainsaid that, with the reiteration of the same provision in the new
Labor Code, all policies and acts against it are deemed illegal and therefore
abrogated. True, Article 132 enjoins the Secretary of Labor to establish standards
that will ensure the safety and health of women employees and in appropriate
cases shall by regulation require employers to determine appropriate minimum
standards for termination in special occupations, such as those of flight
attendants, but that is precisely the factor that militates against the policy of
respondent. The standards have not yet been established as set forth in the first
paragraph, nor has the Secretary of Labor issued any regulation affecting flight
attendants.

It is logical to presume that, in the absence of said standards or regulations which


are as yet to be established, the policy of respondent against marriage is patently
illegal. This finds support in Section 9 of the New Constitution, which provides:
Sec. 9. The State shall afford protection to labor, promote full employment and
equality in employment, ensure equal work opportunities regardless of sex, race,
or creed, and regulate the relations between workers and employees. The State
shall assure the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work . . . .
Moreover, we cannot agree to the respondent's proposition that termination from
employment of flight attendants on account of marriage is a fair and reasonable
standard designed for their own health, safety, protection and welfare, as no
basis has been laid therefor. Actually, respondent claims that its concern is not so
much against the continued employment of the flight attendant merely by reason
of marriage as observed by the Secretary of Labor, but rather on the
consequence of marriage-pregnancy. Respondent discussed at length in the
instant appeal the supposed ill effects of pregnancy on flight attendants in the
course of their employment. We feel that this needs no further discussion as it
had been adequately explained by the Secretary of Labor in his decision of May
2, 1976.
In a vain attempt to give meaning to its position, respondent went as far as
invoking the provisions of Articles 52 and 216 of the New Civil Code on the
preservation of marriage as an inviolable social institution and the family as a
basic social institution, respectively, as bases for its policy of non-marriage. In
both instances, respondent predicates absence of a flight attendant from her
home for long periods of time as contributory to an unhappy married life. This is
pure conjecture not based on actual conditions, considering that, in this modern
world, sophisticated technology has narrowed the distance from one place to
another. Moreover, respondent overlooked the fact that married flight attendants
can program their lives to adapt to prevailing circumstances and events.
Article 136 is not intended to apply only to women employed in ordinary
occupations, or it should have categorically expressed so. The sweeping
intendment of the law, be it on special or ordinary occupations, is reflected in the
whole text and supported by Article 135 that speaks of non-discrimination on the
employment of women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial
Corporation 34considered as void a policy of the same nature. In said case, respondent, in dismissing
from the service the complainant, invoked a policy of the firm to consider female employees in the
project it was undertaking as separated the moment they get married due to lack of facilities for
married women. Respondent further claimed that complainant was employed in the project with an
oral understanding that her services would be terminated when she gets married. Branding the policy
of the employer as an example of "discriminatory chauvinism" tantamount to denying equal
employment opportunities to women simply on account of their sex, the appellate court struck down
said employer policy as unlawful in view of its repugnance to the Civil Code, Presidential Decree No.
148 and the Constitution.

Under American jurisprudence, job requirements which establish employer preference or


conditions relating to the marital status of an employee are categorized as a "sex-plus"
discrimination where it is imposed on one sex and not on the other. Further, the same should be
evenly applied and must not inflict adverse effects on a racial or sexual group which is protected
by federal job discrimination laws. Employment rules that forbid or restrict the employment of
married women, but do not apply to married men, have been held to violate Title VII of the United
States Civil Rights Act of 1964, the main federal statute prohibiting job discrimination against
employees and applicants on the basis of, among other things, sex. 35
Further, it is not relevant that the rule is not directed against all women but just against married
women. And, where the employer discriminates against married women, but not against married
men, the variable is sex and the discrimination is unlawful. 36 Upon the other hand, a requirement
that a woman employee must remain unmarried could be justified as a "bona fide occupational
qualification," or BFOQ, where the particular requirements of the job would justify the same, but not
on the ground of a general principle, such as the desirability of spreading work in the workplace. A
requirement of that nature would be valid provided it reflects an inherent quality reasonably necessary
for satisfactory job performance. Thus, in one case, a no-marriage rule applicable to both male and
female flight attendants, was regarded as unlawful since the restriction was not related to the job
performance of the flight attendants. 37
5. Petitioner's policy is not only in derogation of the provisions of Article 136 of the Labor Code
on the right of a woman to be free from any kind of stipulation against marriage in connection
with her employment, but it likewise assaults good morals and public policy, tending as it does to
deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in
the individual as an intangible and inalienable right. 38 Hence, while it is true that the parties to a
contract may establish any agreements, terms, and conditions that they may deem convenient, the
same should not be contrary to law, morals, good customs, public order, or public policy. 39 Carried to
its logical consequences, it may even be said that petitioner's policy against legitimate marital bonds
would encourage illicit or common-law relations and subvert the sacrament of marriage.
Parenthetically, the Civil Code provisions on the contract of labor state that the relations between
the parties, that is, of capital and labor, are not merely contractual, impressed as they are with so
much public interest that the same should yield to the common good. 40 It goes on to intone that
neither capital nor labor should visit acts of oppression against the other, nor impair the interest or
convenience of the public. 41 In the final reckoning, the danger of just such a policy against marriage
followed by petitioner PT & T is that it strikes at the very essence, ideals and purpose of marriage as
an inviolable social institution and, ultimately, of the family as the foundation of the nation. 42 That it
must be effectively interdicted here in all its indirect, disguised or dissembled forms as discriminatory
conduct derogatory of the laws of the land is not only in order but imperatively required.
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone Company
is hereby DISMISSED for lack of merit, with double costs against petitioner.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 202961

February 4, 2015

EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, BONIFACIO


MATUNDAN, NORA MENDOZA, et al., Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, SOLID MILLS, INC., and/or PHILIP
ANG, Respondents.
DECISION
LEONEN, J.:
An employer is allowed to withhold terminal pay and benefits pending the employee's return of its
properties.
Petitioners are respondent Solid Mills, Inc.' s (Solid Mills) employees. They are represented by
the National Federation of Labor Unions (NAFLU), their collective bargaining agent.
1

As Solid Mills employees, petitionersand their families were allowed to occupy SMI Village, a
property owned by Solid Mills. According to Solid Mills, this was "[o]ut of liberality and for the
convenience of its employees . . . [and] on the condition that the employees . . . would vacate the
premises anytime the Company deems fit."
3

In September 2003, petitioners were informed that effective October 10, 2003, Solid Mills would
cease its operations due to serious business losses. NAFLU recognized Solid Mills closure due
to serious business losses in the memorandum of agreement dated September 1, 2003. The
memorandum of agreement provided for Solid Mills grant of separation pay less accountabilities,
accrued sick leave benefits, vacation leave benefits, and 13th month pay to the
employees. Pertinent portions of the agreement provide:
5

WHEREAS, the COMPANYhas incurred substantial financial losses and is currently experiencing
further severe financial losses;
WHEREAS, in view of such irreversible financial losses, the COMPANY will cease its operations
on October 10, 2003;
WHEREAS, all employees of the COMPANY on account of irreversible financial losses, will
bedismissed from employment effective October 10, 2003;
In view thereof, the parties agree as follows:
1. That UNION acknowledges that the COMPANY is experiencing severe financial losses
and as a consequence of which, management is constrained to cease the companys
operations.

2. The UNION acknowledges that under Article 283 of the Labor Code, separation pay is
granted to employees who are dismissed due to closures or cessation of operations NOT
DUE to serious business losses.
3. The UNION acknowledges that in view of the serious business losses the Company
has been experiencing as seen in their audited financial statements, employees ARE
NOT granted separation benefits under the law.
4. The COMPANY, by way of goodwill and in the spirit of generosity agrees to grant
financial assistance less accountabilities to members of the Union based on length of
service to be computed as follows: (Italics in this paragraph supplied)
Number of days - 12.625 for every year of service
5. In view of the above, the members of the UNION will receive such financial assistance
on an equal monthly installments basis based on the following schedule:
First Check due on January 5, 2004 and every 5th of the month thereafter until
December 5, 2004.
6. The COMPANY commits to pay any accrued benefits the Union members are entitled
to, specifically those arising from sick and vacation leave benefits and 13th month pay,
less accountabilities based on the following schedule:
One Time Cash Payment to bedistributed anywhere from. . . .
....
8. The foregoing agreement is entered into with full knowledge by the parties of their
rights under the law and they hereby bind themselves not to conduct any concerted
action of whatsoever kind, otherwise the grant of financial assistance as discussed above
will be withheld. (Emphasis in the original)
8

Solid Mills filed its Department of Labor and Employment termination report on September 2,
2003.
9

Later, Solid Mills, through Alfredo Jingco, sent to petitioners individual notices to vacate SMI
Village.
10

Petitioners were no longer allowed to report for work by October 10, 2003. They were required
to sign a memorandum of agreement with release and quitclaim before their vacation and sick
leave benefits, 13th month pay, and separation pay would be released. Employees who signed
the memorandum of agreement were considered to have agreed to vacate SMI Village, and to
the demolition of the constructed houses inside as condition for the release of their termination
benefits and separation pay. Petitioners refused to sign the documents and demanded to be
paid their benefits and separation pay.
11

12

13

14

Hence, petitioners filed complaintsbefore the Labor Arbiter for alleged non-payment of separation
pay, accrued sick and vacation leaves, and 13th month pay. They argued that their accrued
benefits and separation pay should not be withheld becausetheir payment is based on company
15

policy and practice. Moreover, the 13th month pay is based on law, specifically, Presidential
Decree No. 851. Their possession of Solid Mills property is not an accountability that is subject
to clearance procedures. They had already turned over to SolidMills their uniforms and
equipment when Solid Mills ceased operations.
16

17

18

19

On the other hand, Solid Mills argued that petitioners complaint was premature because they
had not vacated its property.
20

The Labor Arbiter ruled in favor of petitioners. According to the Labor Arbiter, Solid Mills
illegallywithheld petitioners benefits and separation pay. Petitioners right to the payment of their
benefits and separation pay was vestedby law and contract. The memorandum of agreement
dated September 1, 2003 stated no condition to the effect that petitioners must vacate SolidMills
property before their benefits could be given to them. Petitioners possession should not be
construed as petitioners "accountabilities" that must be cleared first before the release of
benefits. Their possession "is not by virtue of any employer-employee relationship." It is a civil
issue, which isoutside the jurisdiction of the Labor Arbiter.
21

22

23

24

25

26

27

The dispositive portion of the Labor Arbiters decision reads:


WHEREFORE, premises considered, judgment is entered ORDERING respondents SOLID
MILLS, INC. and/or PHILIP ANG (President), in solido to pay the remaining 21 complainants:
1) 19 of which, namely EMER MILAN, RAMON MASANGKAY, ALFREDO JAVIER,
RONALDO DAVID, BONIFACIO MATUNDAN, NORA MENDOZA, MYRNA IGCAS, RAUL
DE LAS ALAS, RENATO ESTOLANO, REX S. DIMAFELIX, MAURA MILAN, JESSICA
BAYBAYON, ALFREDO MENDOZA, ROBERTO IGCAS, ISMAEL MATA, CARLITO
DAMIAN, TEODORA MAHILOM, MARILOU LINGA, RENATO LINGA their separation
pay of 12.625 days pay per year of service, pro-rated 13th month pay for 2003 and
accrued vacation and sick leaves, plus 12% interest p.a. from date of filing of the
leadcase/judicial demand on 12/08/03 until actual payment and/or finality;
2) the remaining 2 of which, complainants CLEOPATRA ZACARIAS, as she already
received on 12/19/03 her accrued 13th month pay for 2003, accrued VL/SL total amount
of P15,435.16, likewise, complainant Jerry L. Sesma as he already received his accrued
13th month pay for 2003, SL/VL in the total amount ofP10,974.97, shall be paid only their
separation pay of 12.625 days pay per year of service but also with 12% interest p.a.
from date of filing of the lead case/judicial demand on 12/08/03 until actual payment
and/or finality, which computation as of date, amount to as shown in the attached
computation sheet.
3) Nine (9) individual complaintsviz., of Maria Agojo, Joey Suarez, Ronaldo Vergara,
Ronnie Vergara, Antonio R. Dulo, Sr., Bryan D. Durano, Silverio P. Durano, Sr., Elizabeth
Duarte and Purificacion Malabanan are DISMISSED WITH PREJUDICE due to amicable
settlement, whereas, that of [RONIE ARANAS], [EMILITO NAVARRO], [NONILON
PASCO], [GENOVEVA PASCO], [OLIMPIO A. PASCO] are DISMISSED WITHOUT
PREJUDICE, for lack of interest and/or failure to prosecute.
The Computation and Examination unit is directed to cause the computation of the award in
Pars. 2 and 3 above. (Emphasis in the original)
28

Solid Mills appealed to the National Labor Relations Commission. It prayed for, among others,
the dismissal of the complaints against it and the reversal of the Labor Arbiters decision.
29

30

The National Labor Relations Commission affirmed paragraph 3 of the Labor Arbiters dispositive
portion, but reversed paragraphs 1 and 2. Thus:
WHEREFORE, the Decision of Labor Arbiter Renaldo O. Hernandez dated 10/17/05 is
AFFIRMED in so far as par. 3 thereof is concerned but modified in that paragraphs 1 and 2
thereof are REVERSED and SET ASIDE. Accordingly, the following complainants, namely: Emir
Milan, Ramon Masangkay, Alfredo Javier, Ronaldo David, Bonifacio Matundan, Nora Mendoza,
Myrna Igcas, Raul De Las Alas, Renato Estolano, Rex S. Dimaf[e]lix, Maura Milan, Jessica
Baybayon, Alfredo Mendoza, Roberto Igcas, Cleopatra Zacarias and Jerry L. Sesmas monetary
claims in the form of separation pay, accrued 13th month pay for 2003, accrued vacation and
sick leave pays are held in abeyance pending compliance of their accountabilities to respondent
company by turning over the subject lots they respectively occupy at SMI Village Sucat
Muntinlupa City, Metro Manila to herein respondent company.

31

The National Labor Relations Commission noted that complainants Marilou Linga, Renato Linga,
IsmaelMata, and Carlito Damian were already paid their respective separation pays and
benefits. Meanwhile, Teodora Mahilom already retired longbefore Solid Mills closure. She was
already given her retirement benefits.
32

33

34

The National Labor Relations Commission ruled that because of petitioners failure to vacate
Solid Mills property, Solid Mills was justified in withholding their benefits and separation
pay. Solid Mills granted the petitioners the privilege to occupy its property on accountof
petitioners employment. It had the prerogative toterminate such privilege. The termination of
Solid Mills and petitioners employer-employee relationship made it incumbent upon petitioners to
turn over the property to Solid Mills.
35

36

37

38

Petitioners filed a motion for partial reconsideration on October 18, 2010, but this was denied in
the November 30, 2010 resolution.
39

40

Petitioners, thus, filed a petition for certiorari before the Court of Appeals to assail the National
LaborRelations Commission decision of August 31, 2010 and resolution of November 30, 2010.
41

42

On January 31, 2012, the Court of Appeals issued a decision dismissing petitioners
petition, thus:
43

WHEREFORE, the petition is hereby ordered DISMISSED.

44

The Court of Appeals ruled thatSolid Mills act of allowing its employees to make temporary
dwellingsin its property was a liberality on its part. It may be revoked any time at its
discretion. As a consequence of Solid Mills closure and the resulting termination of petitioners,
the employer-employee relationship between them ceased to exist. There was no more reason
for them to stay in Solid Mills property. Moreover, the memorandum of agreement between
Solid Mills and the union representing petitioners provided that Solid Mills payment of
employees benefits should be "less accountabilities."
45

46

47

On petitioners claim that there was no evidence that Teodora Mahilom already received her
retirement pay, the Court of Appeals ruled that her complaint filed before the Labor Arbiter did not
include a claim for retirement pay. The issue was also raised for the first time on appeal, which is
not allowed. In any case, she already retired before Solid Mills ceased its operations.
48

49

The Court of Appeals agreed with the National Labor Relations Commissions deletion of interest
since it found that Solid Mills act of withholding payment of benefits and separation pay was
proper. Petitioners terminal benefits and pay were withheld because of petitioners failure to
vacate Solid Mills property.
50

Finally, the Court of Appeals noted that Carlito Damian already received his separation pay and
benefits. Hence, he should no longer be awarded these claims.
51

52

In the resolution promulgated on July 16, 2012, the Court of Appeals denied petitioners motion
for reconsideration.
53

Petitioners raise in this petition the following errors:


I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT RULED THAT PAYMENT OF THE MONETARY
CLAIMS OF PETITIONERS SHOULD BE HELD IN ABEYANCE PENDING
COMPLIANCE OF THEIR ACCOUNTABILITIES TO RESPONDENT SOLID MILLS BY
TURNING OVER THE SUBJECT LOTS THEY RESPECTIVELY OCCUPY AT SMI
VILLAGE, SUCAT, MUNTINLUPA CITY.
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT UPHELD THE RULING OF THE NLRC DELETING
THE INTEREST OF 12% PER ANNUM IMPOSED BY THE HONORABLE LABOR
ARBITER HERNANDEZ ON THE AMOUNTDUE FROM THE DATE OF FILING OF THE
LEAD CASE/JUDICIAL DEMAND ON DECEMBER 8, 2003 UNTIL ACTUAL PAYMENT
AND/OR FINALITY.
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT UPHELD THE RULING OF THE NLRC DENYING THE
CLAIM OF TEODORA MAHILOM FOR PAYMENT OF RETIREMENT BENEFITS
DESPITE LACK OF ANY EVIDENCE THAT SHE RECEIVED THE SAME.
IV
WHETHER OR NOT PETITIONER CARLITO DAMIAN IS ENTITLED TO HIS
MONETARY BENEFITS FROM RESPONDENT SOLID MILLS.
54

Petitioners argue that respondent Solid Mills and NAFLUs memorandum of agreement has no
provision stating that benefits shall be paid only upon return of the possession of respondent

Solid Mills property. It only provides that the benefits shall be "less accountabilities," which
should not be interpreted to include such possession. The fact that majority of NAFLUs
members were not occupants of respondent Solid Mills property is evidence that possession of
the property was not contemplated in the agreement. "Accountabilities" should be interpreted to
refer only to accountabilities that wereincurred by petitioners while they were performing their
duties asemployees at the worksite. Moreover, applicable laws, company practice, or policies do
not provide that 13th month pay, and sick and vacation leave pay benefits, may be withheld
pending satisfaction of liabilities by the employee.
55

56

57

58

59

Petitioners also point out thatthe National Labor Relations Commission and the Court of Appeals
have no jurisdiction to declare that petitioners act of withholding possession of respondent Solid
Mills property is illegal. The regular courts have jurisdiction over this issue. It is independent
from the issue of payment of petitioners monetary benefits.
60

61

62

For these reasons, and because, according to petitioners, the amount of monetary award is no
longer in question, petitioners are entitled to 12% interest per annum.
63

Petitioners also argue that Teodora Mahilom and Carlito Damian are entitled to their claims. They
insistthat Teodora Mahilom did not receive her retirement benefits and that Carlito Damian did
not receive his separation benefits.
64

Respondents Solid Mills and Philip Ang,in their joint comment, argue that petitioners failure to
turn over respondentSolid Mills property "constituted an unsatisfied accountability" for which
reason "petitioners benefits could rightfully be withheld." The term "accountability" should be
given its natural and ordinary meaning. Thus, it should be interpreted as "a state of being liable
or responsible," or "obligation." Petitioners differentiation between accountabilities incurred
while performing jobs at the worksite and accountabilities incurred outside the worksite is
baseless because the agreement with NAFLUmerely stated "accountabilities," without
qualification.
65

66

67

68

On the removal of the award of 12% interest per annum, respondents argue that such removal
was proper since respondent Solid Mills was justified in withholding the monetary
claims. Respondents argue that Teodora Mahilom had no more cause of action for retirement
benefits claim. She had already retired more than a decade before Solid Mills closure. She also
already received her retirement benefits in 1991. Teodora Mahiloms claim was also not
included in the complaint filed before the Labor Arbiter.It was improper to raise this claim for the
first time on appeal. In any case, Teodora Mahiloms claim was asserted long after the three-year
prescriptive period provided in Article 291 of the Labor Code.
69

70

71

72

Lastly, according to respondents, it would be unjust if Carlito Damian would be allowed to receive
monetary benefits again, which he, admittedly, already received from Solid Mills.
73

I
The National Labor Relations Commission may preliminarily determine issues related to rights
arising from an employer-employee relationship
The National Labor Relations Commission has jurisdiction to determine, preliminarily, the
partiesrights over a property, when it is necessary to determine an issue related to rights or
claims arising from an employer-employee relationship.

Article 217 provides that the Labor Arbiter, in his or her original jurisdiction, and the National
Labor Relations Commission, in its appellate jurisdiction, may determine issues involving claims
arising from employeremployee relations. Thus:
ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. (1) Except as
otherwise provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of stenographic notes, the
following cases involving workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00), regardless of whether accompanied with a claim for reinstatement.
(2) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters. (Emphasis supplied)
Petitioners claim that they have the right to the immediate release of their benefits as employees
separated from respondent Solid Mills is a question arising from the employer-employee
relationship between the parties.
Claims arising from an employer-employee relationship are not limited to claims by an employee.
Employers may also have claims against the employee, which arise from the same relationship.
In Baez v. Valdevilla, this court ruled that Article 217 of the Labor Code also applies to
employers claim for damages, which arises from or is connected with the labor issue. Thus:
Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article
217 to claims for damages filed by employees, we hold that by the designating clause "arising
from the employer-employee relations" Article 217 should apply with equal force to the claim of
an employer for actual damages against its dismissed employee, where the basis for the claim
arises from or is necessarily connected with the factof termination, and should be entered as a
counterclaim in the illegal dismissal case.
74

75

Baez was cited in Domondon v. National Labor Relations Commission. One of the issues in
Domondonis whether the Labor Arbiter has jurisdiction to decide an issue on the transfer of
76

ownership of a vehicle assigned to the employee. It was argued that only regular courts have
jurisdiction to decide the issue.
77

This court ruled that since the transfer of ownership of the vehicle to the employee was
connected to his separation from the employer and arose from the employer-employee
relationship of the parties, the employers claim fell within the LaborArbiters jurisdiction.

78

As a general rule, therefore, a claim only needs to be sufficiently connected to the labor issue
raisedand must arise from an employeremployee relationship for the labortribunals to have
jurisdiction.
In this case, respondent Solid Mills claims that its properties are in petitioners possession by
virtue of their status as its employees. Respondent Solid Mills allowed petitioners to use its
property as an act of liberality. Put in other words, it would not have allowed petitioners to use its
property had they not been its employees. The return of its properties in petitioners possession
by virtue of their status as employees is an issue that must be resolved to determine whether
benefits can be released immediately. The issue raised by the employer is, therefore, connected
to petitioners claim for benefits and is sufficiently intertwined with the parties employeremployee
relationship. Thus, it is properly within the labor tribunals jurisdiction.
II
Institution of clearance procedures has legal bases
Requiring clearance before the release of last payments to the employee is a standard
procedure among employers, whether public or private. Clearance procedures are instituted to
ensure that the properties, real or personal, belonging to the employer but are in the possession
of the separated employee, are returned tothe employer before the employees departure.
As a general rule, employers are prohibited from withholding wages from employees. The Labor
Code provides:
Art. 116. Withholding of wages and kickbacks prohibited.It shall be unlawful for any person,
directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up
any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever
without the workers consent.
The Labor Code also prohibits the elimination or diminution of benefits. Thus:
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.
However, our law supports the employers institution of clearance procedures before the release
of wages. As an exception to the general rule that wages may not be withheld and benefits may
not be diminished, the Labor Code provides:
Art. 113. Wage deduction.No employer, in his own behalf or in behalf of any person, shall make
any deduction from the wages of his employees, except:

1. In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium on the
insurance;
2. For union dues, in cases where the right of the worker or his union to check-off has
been recognized by the employer or authorized in writing by the individual worker
concerned; and
3. In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor and Employment. (Emphasis supplied)
The Civil Code provides that the employer is authorized to withhold wages for debts due:
Article 1706. Withholding of the wages, except for a debt due, shall not be made by the
employer.
"Debt" in this case refers to any obligation due from the employee to the employer. It includes
any accountability that the employee may have to the employer. There is no reason to limit its
scope to uniforms and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed
that the release of petitioners benefits shall be "less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the
term "accountability" does not limit the definition of accountability to those incurred in the
worksite. As long as the debt or obligation was incurred by virtue of the employer-employee
relationship, generally, it shall be included in the employees accountabilities that are subject to
clearance procedures.
It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills
property. However, this alone does not imply that this privilege when enjoyed was not a result of
the employer-employee relationship. Those who did avail of the privilege were employees of
respondent Solid Mills. Petitioners possession should, therefore, be included in the term
"accountability."
Accountabilities of employees are personal. They need not be uniform among all employees in
order to be included in accountabilities incurred by virtue of an employer-employee relationship.
Petitioners do not categorically deny respondent Solid Mills ownership of the property, and they
do not claim superior right to it. What can be gathered from the findings ofthe Labor Arbiter,
National Labor Relations Commission, and the Court ofAppeals is that respondent Solid Mills
allowed the use of its property for the benefit of petitioners as its employees. Petitioners were
merely allowed to possess and use it out of respondent Solid Mills liberality. The employer may,
therefore, demand the property at will.
79

The return of the propertys possession became an obligation or liability on the part of the
employees when the employer-employee relationship ceased. Thus, respondent Solid Mills has
the right to withhold petitioners wages and benefitsbecause of this existing debt or liability. In
Solas v. Power and Telephone Supply Phils., Inc., et al., this court recognized this right of the
employer when it ruled that the employee in that case was not constructively dismissed. Thus:
80

There was valid reason for respondents withholding of petitioners salary for the month of
February 2000. Petitioner does not deny that he is indebted to his employer in the amount of
around 95,000.00. Respondents explained that petitioners salary for the period of February 115, 2000 was applied as partial payment for his debt and for withholding taxes on his income;
while for the period of February 15-28, 2000, petitioner was already on absence without leave,
hence, was not entitled to any pay.
81

The law does not sanction a situation where employees who do not even assert any claim over
the employers property are allowed to take all the benefits out of their employment while they
simultaneously withhold possession of their employers property for no rightful reason.
Withholding of payment by the employer does not mean that the employer may renege on its
obligation to pay employees their wages, termination payments, and due benefits. The
employees benefits are also not being reduced. It is only subjectedto the condition that the
employees return properties properly belonging to the employer. This is only consistent with the
equitable principle that "no one shall be unjustly enriched or benefited at the expense of
another."
82

For these reasons, we cannot hold that petitioners are entitled to interest of their
withheldseparation benefits. These benefits were properly withheld by respondent Solid Mills
because of their refusal to return its property.
III
Mahilom and Damian are not entitled to the benefits claimed
Teodora Mahilom is not entitled to separation benefits.
Both the National Labor Relations Commission and the Court of Appeals found that Teodora
Mahilom already retired long before respondent Solid Mills closure. They found that she already
received her retirement benefits. We have no reason to disturb this finding. This court is not a
trier of facts. Findings of the National Labor Relations Commission, especially when affirmed by
the Court of Appeals, are binding upon this court.
83

Moreover, Teodora Mahiloms claim for retirement benefits was not included in her complaint filed
before the Labor Arbiter. Hence, it may not be raised in the appeal.
Similarly, the National Labor Relations Commission and the Court of Appeals found that Carlito
Damian already received his terminal benefits. Hence, he may no longer claim terminal benefits.
The fact that respondent Solid Mills has not yet demolished Carlito Damians house in SMI
Village is not evidence that he did not receive his benefits. Both the National Labor Relations
Commission and the Court of Appeals found that he executed an affidavit stating that he already
received the benefits.
A bsent any showing that the National Labor Relations Commission and the Court of Appeals
misconstrued these facts, we will not reverse these findings.
Our laws provide for a clear preference for labor. This is in recognition of the asymmetrical power
of those with capital when they are left to negotiate with their workers without the standards and
protection of law. In cases such as these, the collective bargaining unit of workers are able to get
more benefits and in exchange, the owners are able to continue with the program of cutting their

losses or wind down their operations due to serious business losses. The company in this case
did all that was required by law.
The preferential treatment given by our law to labor, however, is not a license for abuse. It is not
a signal to commit acts of unfairness that will unreasonably infringe on the property rights of the
company. Both labor and employer have social utility, and the law is not so biased that it does not
find a middle ground to give each their due.
84

Clearly, in this case, it is for the workers to return their housing in exchange for the release of
their benefits. This is what they agreed upon. It is what is fair in the premises.
1wphi1

WHEREFORE, the petition is DENIED. The Court of Appeals' decision is AFFIRMED.