Page 1 of 26 Article II, Constitution (Labor Law) | amgisidro
and Development Authority), GOV.
G.R. No. 143855 September
21, 2010
REPRESENTATIVES GERARDO S.
ESPINA, ORLANDO FUA, JR.,
PROSPERO AMATONG, ROBERT
ACE S. BARBERS, RAUL M.
GONZALES, PROSPERO PICHAY,
JUAN MIGUEL ZUBIRI and
FRANKLIN BAUTISTA,Petitioners,
vs.
HON. RONALDO ZAMORA, JR.
(Executive Secretary), HON. MAR
ROXAS (Secretary of Trade and
Industry), HON. FELIPE MEDALLA
(Secretary of National Economic
Category A Less
US$2,500,000.00
Category B US$2,500,000.00 up but less than For the first two years of R.A. 8762s effectivity, foreign
US$7,500,000.00
Category C US$7,500,000.00 or more
Category D US$250,000.00 per store of foreign May be wholly owned by foreigners.
enterprises specializing in high-end
or luxury products
R.A. 8762 also allows natural-born
Filipino citizens, who had lost their
citizenship and now reside in the
Philippines, to engage in the retail trade
business with the same rights as
Filipino citizens.
On October 11, 2000
petitioners ***Magtanggol T. Gunigundo
I, Michael T. Defensor, Gerardo S.
Espina, Benjamin S. Lim, Orlando Fua,
Jr., Prospero Amatong, Sergio Apostol,
Robert Ace S. Barbers, Enrique Garcia,
Jr., Raul M. Gonzales, Jaime Jacob,
Apolinario Lozada, Jr., Leonardo
Montemayor, Ma. Elena Palma-Gil,
Prospero Pichay, Juan Miguel Zubiri
and Franklin Bautista, all members of
the House of Representatives, filed the
present petition, assailing the
constitutionality of R.A. 8762 on the
following grounds:
First, the law runs afoul of Sections 9,
19, and 20 of Article II of the
Constitution which enjoins the State to
place the national economy under the
control of Filipinos to achieve equal
distribution of opportunities, promote
industrialization and full employment,
and protect Filipino enterprise against
unfair competition and trade policies.
Second, the implementation of R.A.
8762 would lead to alien control of the
development of a self-reliant and
RAFAEL BUENAVENTURA (Bangko
Sentral ng Pilipinas) and HON. LILIA
BAUTISTA (Chairman, Securities
and Exchange
Commission), Respondents.
DECISION
ABAD, J.:
This case calls upon the Court to
exercise its power of judicial review and
determine the constitutionality of the
Retail Trade Liberalization Act of 2000,
which has been assailed as in breach of
the constitutional mandate for the
than Exclusively for Filipino citizens and corporations wholly
owned by Filipino citizens.
ownership is allowed up to 60%. After the two-year
period, 100% foreign equity shall be allowed.
May be wholly owned by foreigners. Foreign
investments for establishing a store in Categories B and
C shall not be less than the equivalent in Philippine
Pesos of US$830,000.00.
retail trade, which taken together with
alien dominance of other areas of
business, would result in the loss of
effective Filipino control of the
economy.
Third, foreign retailers like Walmart and
K-Mart would crush Filipino retailers
and sari-sari store vendors, destroy
self-employment, and bring about more
unemployment.
Fourth, the World Bank-International
Monetary Fund had improperly
imposed the passage of R.A. 8762 on
the government as a condition for the
release of certain loans.
Fifth, there is a clear and present
danger that the law would promote
monopolies or combinations in restraint
of trade.
Respondents Executive Secretary
Ronaldo Zamora, Jr., Trade and
Industry Secretary Mar Roxas, National
Economic and Development Authority
(NEDA) Secretary Felipe Medalla,
Bangko Sentral ng Pilipinas Gov.
Rafael Buenaventura, and Securities
and Exchange Commission Chairman
Lilia Bautista countered that:
First, petitioners have no legal standing
to file the petition. They cannot invoke
the fact that they are taxpayers since
R.A. 8762 does not involve the
independent national economy
effectively controlled by Filipinos.
The Facts and the Case
On March 7, 2000 President Joseph E.
Estrada signed into law Republic Act
(R.A.) 8762, also known as the Retail
Trade Liberalization Act of 2000. It
expressly repealed R.A. 1180, which
absolutely prohibited foreign nationals
from engaging in the retail trade
business. R.A. 8762 now allows them to
do so under four categories:
disbursement of public funds. Nor can
they invoke the fact that they are
members of Congress since they made
no claim that the law infringes on their
right as legislators.
Second, the petition does not involve
any justiciable controversy. Petitioners
of course claim that, as members of
Congress, they represent the small
retail vendors in their respective
districts but the petition does not allege
that the subject law violates the rights of
those vendors.
Third, petitioners have failed to
overcome the presumption of
constitutionality of R.A. 8762. Indeed,
they could not specify how the new law
violates the constitutional provisions
they cite. Sections 9, 19, and 20 of
Article II of the Constitution are not self-
executing provisions that are judicially
demandable.
Fourth, the Constitution mandates the
regulation but not the prohibition of
foreign investments. It directs Congress
to reserve to Filipino citizens certain
areas of investments upon the
recommendation of the NEDA and
when the national interest so dictates.
But the Constitution leaves to the
discretion of the Congress whether or
not to make such reservation. It does
not prohibit Congress from enacting
 Page 2 of 26 Article II, Constitution (Labor Law) | amgisidro
laws allowing the entry of foreigners
into certain industries not reserved by
the Constitution to Filipino citizens.
The Issues Presented
Simplified, the case presents two
issues:
1. Whether or not petitioner lawmakers
have the legal standing to challenge the
constitutionality of R.A. 8762; and
2. Whether or not R.A. 8762 is
unconstitutional.
The Courts Ruling
One. The long settled rule is that he
who challenges the validity of a law
must have a standing to do so.1 Legal
standing or locus standi refers to the
right of a party to come to a court of
justice and make such a challenge.
More particularly, standing refers to his
personal and substantial interest in that
he has suffered or will suffer direct
injury as a result of the passage of that
law.2 To put it another way, he must
show that he has been or is about to be
denied some right or privilege to which
he is lawfully entitled or that he is about
to be subjected to some burdens or
penalties by reason of the law he
complains of.3
Here, there is no clear showing that the
implementation of the Retail Trade
Liberalization Act prejudices petitioners
or inflicts damages on them, either as
taxpayers4 or as legislators.5 Still the
Court will resolve the question they
raise since the rule on standing can be
relaxed for nontraditional plaintiffs like
ordinary citizens, taxpayers, and
legislators when as in this case the
public interest so requires or the matter
is of transcendental importance, of
overarching significance to society, or
of paramount public interest.6
Two. Petitioners mainly argue that R.A.
8762 violates the mandate of the 1987
Constitution for the State to develop a
self-reliant and independent national
economy effectively controlled by
Filipinos. They invoke the provisions of
the Declaration of Principles and State
Policies under Article II of the 1987
Constitution, which read as follows:
Section 9. The State shall promote a
just and dynamic social order that will
ensure the prosperity and
independence of the nation and free the
people from poverty through policies
that provide adequate social services,
promote full employment, a rising
standard of living, and an improved
quality of life for all.
xxxx
Section 19. The State shall develop a
self-reliant and independent national
economy effectively controlled by
Filipinos.
Section 20. The State recognizes the
indispensable role of the private sector,
encourages private enterprise, and
provides incentives to needed
investments.
Petitioners also invoke the provisions of
the National Economy and Patrimony
under Article XII of the 1987
Constitution, which reads:
Section 10. The Congress shall, upon
recommendation of the economic and
planning agency, when the national
interest dictates, reserve to citizens of
the Philippines or to corporations or
associations at least sixty per centum of
whose capital is owned by such
citizens, or such higher percentage as
Congress may prescribe, certain areas
of investments. The Congress shall
enact measures that will encourage the
formation and operation of enterprises
whose capital is wholly owned by
Filipinos.
In the grant of rights, privileges, and
concessions covering the national
economy and patrimony, the State shall
give preference to qualified Filipinos.
The State shall regulate and exercise
authority over foreign investments
within its national jurisdiction and in
accordance with its national goals and
priorities.
xxxx
Section 12. The State shall promote the
preferential use of Filipino labor,
domestic materials and locally
produced goods, and adopt measures
that help make them competitive.
Section 13. The State shall pursue a
trade policy that serves the general
welfare and utilizes all forms and
arrangements of exchange on the basis
of equality and reciprocity.
But, as the Court explained in Taada
v. Angara,7 the provisions of Article II of
the 1987 Constitution, the declarations
of principles and state policies, are not
self-executing. Legislative failure to
pursue such policies cannot give rise to
a cause of action in the courts.
The Court further explained in Taada
that Article XII of the 1987 Constitution
lays down the ideals of economic
nationalism: (1) by expressing
preference in favor of qualified Filipinos
in the grant of rights, privileges and
concessions covering the national
economy and patrimony and in the use
of Filipino labor, domestic materials and
locally-produced goods; (2) by
mandating the State to adopt measures
that help make them competitive; and
(3) by requiring the State to develop a
self-reliant and independent national
economy effectively controlled by
Filipinos.8ten.lihpwal
In other words, while Section 19, Article
II of the 1987 Constitution requires the
development of a self-reliant and
independent national economy
effectively controlled by Filipino
entrepreneurs, it does not impose a
policy of Filipino monopoly of the
economic environment. The objective is
simply to prohibit foreign powers or
interests from maneuvering our
economic policies and ensure that
Filipinos are given preference in all
areas of development.
Indeed, the 1987 Constitution takes into
account the realities of the outside
world as it requires the pursuit of a trade
policy that serves the general welfare
and utilizes all forms and arrangements
of exchange on the basis of equality
and reciprocity; and speaks of
industries which are competitive in both
domestic and foreign markets as well
as of the protection of Filipino
enterprises against unfair foreign
competition and trade practices. Thus,
while the Constitution mandates a bias
in favor of Filipino goods, services,
labor and enterprises, it also recognizes
the need for business exchange with
the rest of the world on the bases of
equality and reciprocity and limits
protection of Filipino enterprises only
against foreign competition and trade
practices that are unfair.9
In other words, the 1987 Constitution
does not rule out the entry of foreign
investments, goods, and services.
While it does not encourage their
unlimited entry into the country, it does
not prohibit them either. In fact, it allows
an exchange on the basis of equality
and reciprocity, frowning only on foreign
competition that is unfair.10 The key, as
in all economies in the world, is to strike
a balance between protecting local
businesses and allowing the entry of
foreign investments and
services.1avvphi1
More importantly, Section 10, Article XII
of the 1987 Constitution gives
Congress the discretion to reserve to
Filipinos certain areas of investments
upon the recommendation of the NEDA
and when the national interest requires.
Thus, Congress can determine what
policy to pass and when to pass it
depending on the economic exigencies.
It can enact laws allowing the entry of
foreigners into certain industries not
reserved by the Constitution to Filipino
citizens. In this case, Congress has
decided to open certain areas of the
retail trade business to foreign
investments instead of reserving them
 Page 3 of 26 Article II, Constitution (Labor Law) | amgisidro
exclusively to Filipino citizens. The
NEDA has not opposed such policy.
The control and regulation of trade in
the interest of the public welfare is of
course an exercise of the police power
of the State. A persons right to
property, whether he is a Filipino citizen
or foreign national, cannot be taken
from him without due process of law. In
1954, Congress enacted the Retail
Trade Nationalization Act or R.A. 1180
that restricts the retail business to
Filipino citizens. In denying the petition
assailing the validity of such Act for
violation of the foreigners right to
substantive due process of law, the
Supreme Court held that the law
constituted a valid exercise of police
power.11 The State had an interest in
preventing alien control of the retail
trade and R.A. 1180 was reasonably
related to that purpose. That law is not
arbitrary.
Here, to the extent that R.A. 8762, the
Retail Trade Liberalization Act, lessens
the restraint on the foreigners right to
property or to engage in an ordinarily
lawful business, it cannot be said that
the law amounts to a denial of the
Filipinos right to property and to due
process of law. Filipinos continue to
have the right to engage in the kinds of
retail business to which the law in
question has permitted the entry of
foreign investors.
Certainly, it is not within the province of
the Court to inquire into the wisdom of
R.A. 8762 save when it blatantly
violates the Constitution. But as the
Court has said, there is no showing that
the law has contravened any
constitutional mandate. The Court is not
convinced that the implementation of
R.A. 8762 would eventually lead to
alien control of the retail trade business.
Petitioners have not mustered any
concrete and strong argument to
support its thesis. The law itself has
provided strict safeguards on foreign
participation in that business. Thus
First, aliens can only engage in retail
trade business subject to the categories
above-enumerated; Second, only
nationals from, or juridical entities
formed or incorporated in countries
which allow the entry of Filipino retailers
shall be allowed to engage in retail
trade business; and Third, qualified
foreign retailers shall not be allowed to
engage in certain retailing activities
outside their accredited stores through
the use of mobile or rolling stores or
carts, the use of sales representatives,
door-to-door selling, restaurants and
sari-sari stores and such other similar
retailing activities.
In sum, petitioners have not shown how
the retail trade liberalization has
prejudiced and can prejudice the local
small and medium enterprises since its
implementation about a decade ago.
WHEREFORE, the
Court DISMISSES the petition for lack
of merit. No costs.
SO ORDERED.
G.R. No. 188747 January 29,
2014
MANILA WATER
COMPANY, Petitioner,
vs.
CARLITO DEL
ROSARIO, Respondent.
DECISION
PEREZ, J.:
This is a Petition for Review on
Certiorari1 filed pursuant to Rule 45 of
the Revised Rules of Court, assailing
the 31 March 2009 Decision2 rendered
by the Fifth Division of the Court of
Appeals in CA-G.R. SP No. 925 83. In
its assailed decision, the appellate
court: ( 1) reversed as grave abuse of
discretion the Resolution of the National
Labor Relations Commission (NLRC)
which dismissed the petition of Manila
Water Company (Manila Water) on
technical grounds; and (2) proceeded to
affirm with modification the ruling of the
Labor Arbiter. Manila Water was
ordered to pay respondent Carlito Del
Rosario (Del Rosario) separation pay to
be computed from 1 August 1997 up to
June 2000.
In a Resolution3 dated 7 July 2009, the
appellate court refused to reconsider its
earlier decision.
The Facts
On 22 October 1979, Del Rosario was
employed as Instrument Technician by
Metropolitan Waterworks and
Sewerage System (MWSS). Sometime
in 1996, MWSS was reorganized
pursuant to Republic Act No. 8041 or
the National Water Crisis Act of 1995,
and its implementing guidelines
Executive Order No. 286. Because of
the reorganization, Manila Water
absorbed some employees of MWSS
including Del Rosario. On 1 August
1997, Del Rosario officially became an
employee of Manila Water.
Sometime in May 2000, Manila Water
discovered that 24 water meters were
missing in its stockroom. Upon initial
investigation, it appeared that Del
Rosario and his co-employee, a certain
Danilo Manguera, were involved in the
pilferage and the sale of water meters
to the companys contractor.
Consequently, Manila Water issued a
Memorandum dated 23 June 2000,
directing Del Rosario to explain in
writing within 72 hours why he should
not be dealt with administratively for the
loss of the said water meters.4 In his
letter-explanation,5 Del Rosario
confessed his involvement in the act
charged and pleaded for forgiveness,
promising not to commit similar acts in
the future.
On 29 June 2000, Manila Water
conducted a hearing to afford Del
Rosario the opportunity to personally
defend himself and to explain and
clarify his defenses to the charge
against him. During the formal
investigation Del Rosario was found
responsible for the loss of the water
meters and therefore liable for violating
Section 11.1 of the Companys Code of
Conduct.6 Manila Water proceeded to
dismiss Del Rosario from employment
on 3 July 2000.7
This prompted Del Rosario to file an
action for illegal dismissal claiming that
his severance from employment is
without just cause. In his Position Paper
submitted before the labor officer, Del
Rosario averred that his admission to
the misconduct charged was not
voluntary but was coerced by the
company. Such admission therefore,
made without the assistance of a
counsel, could not be made basis in
terminating his employment.
Refuting the allegations of Del Rosario,
Manila Water pointed out that he was
indeed involved in the taking of the
water meters from the companys stock
room and of selling these to a private
contractor for personal gain. Invoking
Section 11.1 of the Companys Code of
Conduct, Manila Water averred that
such act of stealing the companys
property is punishable by dismissal.
The company invited the attention of
this Court to the fact that Del Rosario
himself confessed his involvement to
the loss of the water meters not only in
his letter-explanation, but also during
the formal investigation, and in both
instances, pleaded for his employers
forgiveness.8
After weighing the positions taken by
the opposing parties, including the
evidence adduced in support of their
respective cases, the Labor Arbiter
issued a Decision9 dated 30 May 2002
dismissing for lack of merit the
complaint filed by Del Rosario who was,
however, awarded separation pay.
According to the Labor Arbiter, Del
Rosarios length of service for 21 years,
without previous derogatory record,
warrants the award of separation pay.
The decretal portion of the decision
reads:
 Page 4 of 26 Article II, Constitution (Labor Law) | amgisidro
WHEREFORE, viewed from the
foregoing, judgment is hereby rendered
DISMISSING the complaint for illegal
dismissal for lack of merit.
[Manila Water] is hereby ordered to pay
complainant separation pay equivalent
to one-half (1/2) months salary for
every year of service based on his basic
salary (Php 11,244.00) at the time of his
dismissal. This shall be computed from
[1 August 1997] up to June 2000, the
total amount of which is ONE
HUNDRED EIGHTEEN THOUSAND
SIXTY-TWO (Php 118,062.00)
PESOS.10
In a Resolution11 dated 30 September
2003, the NLRC dismissed the appeal
interposed by Manila Water for its
failure to append a certification against
forum shopping in its Memorandum of
Appeal.
Similarly ill-fated was Manila Waters
Motion for Reconsideration which was
denied by the NLRC in a
Resolution12dated 28 April 2005.
On Certiorari, the Court of Appeals in its
Decision dated 31 March 2009,
reversed the NLRC Resolution and held
that it committed a grave abuse of
discretion when it dismissed Manila
Waters appeal on mere technicality.
The appellate court, however,
proceeded to affirm the decision of the
Labor Arbiter awarding separation pay
to Del Rosario. Considering that Del
Rosario rendered 21 years of service to
the company without previous
derogatory record, the appellate court
considered the granting of separation
pay by the labor officer justified. The
fallo of the assailed Court of Appeals
Decision reads:
WHEREFORE, the petition is partly
granted. The assailed Resolutions
dated September 30, 2003 and [April
28, 2005] of public respondent NLRC
are set aside. The Decision dated May
30, 2002 of the [L]abor [A]rbiter is
reinstated, subject to the modification
that the computation of the award of
separation pay [to] private respondent
shall be counted from August 1, 1997 x
x x up to June 2000.13
In a Resolution14 dated 7 July 2009, the
Court of Appeals refused to reconsider
its earlier decision.
Unrelenting, Manila Water filed the
instant Petition for Review on Certiorari
assailing the foregoing Court of
Appeals Decision and Resolution on
the sole ground that:
THE [COURT OF APPEALS]
SERIOUSLY ERRED IN ISSUING THE
QUESTIONED DECISION AND
RESOLUTION WHICH DIRECTLY
CONTRAVENE BOOK VI, RULE 1,
AND SECTION 7 OF THE OMNIBUS
RULES IMPLEMENTING THE LABOR
CODE AND PREVAILING
JURISPRUDENCE WHICH
CATEGORICALLY PROVIDE THAT
AN EMPLOYEE SEPARATED FROM
SERIOUS MISCONDUCT IS NOT
ENTITLED TO TERMINATION
(SEPARATION) PAY.15
The Courts Ruling
In the instant petition, Manila Water
essentially questions the award of
separation pay to respondent who was
dismissed for stealing the companys
property which amounted to gross
misconduct. It argues that separation
pay or financial assistance is not
awarded to employees guilty of gross
misconduct or for cause reflecting on
his moral character.16
Del Rosario for his part maintains that
there is no legal ground to justify his
termination from employment. He
insists that his admission pertaining to
his involvement in the loss of the water
meters was merely coerced by the
company. Since his dismissal was
without valid or just cause, Del Rosario
avers that Manila Water is guilty of
illegal dismissal rendering it liable for
the payment of backwages and
separation pay.17
It must be stressed at the outset that the
correctness of the Labor Arbiters
pronouncement on the legality of Del
Rosarios dismissal is no longer an
issue and is beyond modification. While
Manila Water timely appealed the ruling
of the Labor Arbiter awarding
separation pay to Del Rosario, the latter
did not question the dismissal of his
illegal termination case.18 It is settled in
our jurisprudence that a party who has
not appealed cannot obtain from the
appellate court any affirmative relief
other than the ones granted in the
appealed decision.19 Due process
prevents the grant of additional awards
to parties who did not appeal.20 Having
said that, this Court will no longer dwell
on the issue of whether or not Del
Rosario was illegally dismissed from
employment. Included in the closed
aspect of the case is respondents
argument that the absence of his
counsel when he admitted the charge
against him diminished the evidentiary
value of such admission. Nonetheless,
it may be mentioned that the
constitutional right to counsel is
available only during custodial
investigation. If the investigation is
merely administrative conducted by the
employer and not a criminal
investigation, the admission made
during such investigation may be used
as evidence to justify dismissal.21
Our focus will be on the propriety of the
award for separation pay.
As a general rule, an employee who
has been dismissed for any of the just
causes enumerated under Article
28222 of the Labor Code is not entitled
to a separation pay.23 Section 7, Rule I,
Book VI of the Omnibus Rules
implementing the Labor Code provides:
Sec. 7. Termination of employment by
employer. The just causes for
terminating the services of an employee
shall be those provided in Article 282 of
the Code. The separation from work of
an employee for a just cause does not
entitle him to the termination pay
provided in the Code, without prejudice,
however, to whatever rights, benefits
and privileges he may have under the
applicable individual or collective
agreement with the employer or
voluntary employer policy or practice.
In exceptional cases, however, the
Court has granted separation pay to a
legally dismissed employee as an act of
"social justice" or on "equitable
grounds."24 In both instances, it is
required that the dismissal (1) was not
for serious misconduct; and (2) did not
reflect on the moral character of the
employee.25
In the leading case of Philippine Long
Distance Telephone Company v.
NLRC,26 we laid down the rule that
separation pay shall be allowed as a
measure of social justice only in the
instances where the employee is validly
dismissed for causes other than serious
misconduct reflecting his moral
character. We clarified that:
We hold that henceforth separation pay
shall be allowed as a measure of social
justice only in those instances where
the employee is validly dismissed for
causes other than serious misconduct
or those reflecting on his moral
character. Where the reason for the
valid dismissal is, for example, habitual
intoxication or an offense involving
moral turpitude, like theft or illicit sexual
relations with a fellow worker, the
employer may not be required to give
the dismissed employee separation
pay, or financial assistance, or
whatever other name it is called, on the
ground of social justice.
A contrary rule would, as the petitioner
correctly argues, have the effect, of
rewarding rather than punishing the
erring employee for his offense. And we
do not agree that the punishment is his
dismissal only and that the separation
pay has nothing to do with the wrong he
has committed. Of course it has.
Indeed, if the employee who steals from
the company is granted separation pay
even as he is validly dismissed, it is not
 Page 5 of 26 Article II, Constitution (Labor Law) | amgisidro
unlikely that he will commit a similar
offense in his next employment
because he thinks he can expect a like
leniency if he is again found out. This
kind of misplaced compassion is not
going to do labor in general any good
as it will encourage the infiltration of its
ranks by those who do not deserve the
protection and concern of the
Constitution.
The policy of social justice is not
intended to countenance wrongdoing
simply because it is committed by the
underprivileged. At best[,] it may
mitigate the penalty but it certainly will
not condone the offense. Compassion
for the poor is an imperative of every
humane society but only when the
recipient is not a rascal claiming an
undeserved privilege. Social justice
cannot be permitted to be refuge of
scoundrels any more than can equity be
an impediment to the punishment of the
guilty. Those who invoke social justice
may do so only if their hands are clean
and their motives blameless and not
simply because they happen to be poor.
This great policy of our Constitution is
not meant for the protection of those
who have proved they are not worthy of
it, like the workers who have tainted the
cause of labor with the blemishes of
their own character.27
In the subsequent case of Toyota Motor
Phils. Corp. Workers Association
(TMPCWA) v. National Labor Relations
Commission,28 we expanded the
exclusions and elucidated that
separation pay shall be allowed as a
measure of social justice only in
instances where the employee is validly
dismissed for causes other than serious
misconduct, willful disobedience, gross
and habitual neglect of duty, fraud or
willful breach of trust, commission of a
crime against the employer or his
family, or those reflecting on his moral
character. In the same case, we
instructed the labor officials that they
must be most judicious and
circumspect in awarding separation pay
or financial assistance as the
constitutional policy to provide full
protection to labor is not meant to be an
instrument to oppress the
employers.29 The commitment of the
court to the cause of the labor should
not embarrass us from sustaining the
employers when they are right, as here.
In fine, we should be more cautious in
awarding financial assistance to the
undeserving and those who are
unworthy of liberality of the law.30
Guided by the foregoing rules, we have
carefully treaded the path of
compassionate justice in the
subsequent cases so as not to slip and
favor labor at the expense of award of benefits, since his violation
management. reflects a regrettable lack of loyalty and
worse, betrayal of the company. If an
In Tirazona v. Phillippine EDS Techno-
employee's length of service is to be
Service, Inc. (PET, Inc.),31 we denied
regarded as a justification for
the award of separation pay to an
moderating the penalty of dismissal,
employee who was dismissed from
such gesture will actually become a
employment due to loss of trust and
prize for disloyalty, distorting the
confidence.
meaning of social justice and
While [this] Court commiserates with undermining the efforts of labor to
the plight of Tirazona, who has recently cleanse its ranks of undesirables.34
manifested that she has since been (Emphasis supplied).
suffering from her poor health condition,
Indubitably, the appellate court erred in
the Court cannot grant her plea for the
awarding separation pay to Del Rosario
award of financial benefits based solely
without taking into consideration that
on this unfortunate circumstance. For
the transgression he committed
all its conceded merit, equity is
constitutes a serious offense. The grant
available only in the absence of law and
of separation pay to a dismissed
not as its replacement. Equity as an
employee is determined by the cause of
exceptional extenuating circumstance
the dismissal. The years of service may
does not favor, nor may it be used to
determine how much separation pay
reward, the indolent or the wrongdoer
may be awarded. It is, however, not the
for that matter. This Court will not allow
reason why such pay should be granted
a party, in guise of equity, to benefit
at all.
from its own fault.32 (Emphasis
supplied). In sum, we hold that the award of
separation pay or any other kind of
The attendant circumstances in the
financial assistance to Del Rosario,
present case considered, we are
under the nomenclature of
constrained to deny Del Rosario
compassionate justice, is not warranted
separation pay since the admitted
in the instant case. A contrary rule
cause of his dismissal amounts to
would have the effect of rewarding
serious misconduct. He is not only
rather than punishing an erring
responsible for the loss of the water
employee, disturbing the noble concept
meters in flagrant violation of the
of social justice.
companys policy but his act is in utter
disregard of his partnership with his WHEREFORE, premises considered,
employer in the pursuit of mutual the petition is GRANTED. The assailed
benefits. Decision and Resolution of the Court of
Appeals are hereby REVERSED and
In the recent case of Daabay v. Coca-
SET ASIDE.
Cola Bottlers,33 this Court reiterated our
ruling in Toyota and disallowed the SO ORDERED.
payment of separation pay to an
No costs.
employee who was found guilty of
stealing the companys property. We SO ORDERED.
repeated that an award of separation
pay in such an instance is misplaced G.R. No. 118978 May 23, 1997
compassion for the undeserving who PHILIPPINE TELEGRAPH AND
may find their way back and weaken the TELEPHONE COMPANY, *
fiber of labor. petitioner,
vs.
That Del Rosario rendered 21 years of
NATIONAL LABOR RELATIONS
service to the company will not save the
COMMISSION and GRACE DE
day for him.1wphi1 To this case,
GUZMAN, respondents.
Central Pangasinan Electric
Cooperative, Inc. v. National Labor
Relations Commission is on all fours,
REGALADO, J.:
thus:
Although long years of service might Seeking relief through the extraordinary
generally be considered for the award writ of certiorari, petitioner Philippine
of separation benefits or some form of Telegraph and Telephone Company
financial assistance to mitigate the (hereafter, PT & T) invokes the alleged
effects of termination, this case is not concealment of civil status and
the appropriate instance for generosity defalcation of company funds as
under the Labor Code nor under our grounds to terminate the services of an
employee. That employee, herein
prior decisions. The fact that private
private respondent Grace de Guzman,
respondent served petitioner for more
contrarily argues that what really
than twenty years with no negative
motivated PT & T to terminate her
record prior to his dismissal, in our view
of this case, does not call for such services was her having contracted
 Page 6 of 26 Article II, Constitution (Labor Law) | amgisidro
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
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
for
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
 Page 7 of 26 Article II, Constitution (Labor Law) | amgisidro
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 was made to appear in the initiatory
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 should not be simulated. 24 It must rest
case, an employer is free to regulate, on an actual breach of duty committed
according to his discretion and best by the employee and not on the
business judgment, all aspects of employer's caprices. 25 Furthermore, it
employment, "from hiring to firing," should never be used as a subterfuge
except in cases of unlawful for causes which are improper, illegal,
discrimination or those which may be or unjustified. 26
provided by law. 20
In the present controversy, petitioner's
In the case at bar, petitioner's policy of expostulations that it dismissed private
not accepting or considering as respondent, not because the latter got
disqualified from work any woman married but because she concealed
worker who contracts marriage runs that fact, does have a hollow ring. Her
afoul of the test of, and the right against, concealment, so it is claimed, bespeaks
discrimination, afforded all women dishonesty hence the consequent loss
workers by our labor laws and by no of confidence in her which justified her
less than the Constitution. Contrary to dismissal.
petitioner's assertion that it dismissed
Petitioner would asseverate, therefore,
private respondent from employment
that while it has nothing against
on account of her dishonesty, the
marriage, it nonetheless takes umbrage
record discloses clearly that her ties
over the concealment of that fact. This
with the company were dissolved
improbable reasoning, with interstitial
principally because of the company's
distinctions, perturbs the Court since
policy that married women are not
private respondent may well be minded
qualified for employment in PT & T, and
to claim that the imputation of
not merely because of her supposed
dishonesty should be the other way
acts of dishonesty.
around.
That it was so can easily be seen from
Petitioner would have the Court believe
the memorandum sent to private
that although private respondent defied
respondent by Delia M. Oficial, the
its policy against its female employees
branch supervisor of the company, with
contracting marriage, what could be an
the reminder, in the words of the latter,
act of insubordination was
that "you're fully aware that the
inconsequential. What it submits as
company is not accepting married
unforgivable is her concealment of that
women employee (sic), as it was
marriage yet, at the same time,
verbally instructed to you." 21 Again, in
declaring that marriage as a trivial
the termination notice sent to her by the
matter to which it supposedly has no
same branch supervisor, private
objection. In other words, PT & T says
respondent was made to understand
it gives its blessings to its female
that her severance from the service was
employees contracting marriage,
not only by reason of her concealment
despite the maternity leaves and other
of her married status but, over and on
benefits it would consequently respond
top of that, was her violation of the
for and which obviously it would have
company's policy against marriage
wanted to avoid. If that employee
("and even told you that married women
confesses such fact of marriage, there
employees are not applicable [sic] or
will be no sanction; but if such
accepted in our
employee conceals the same instead of
company.") 22 Parenthetically, this
proceeding to the confessional, she will
seems to be the curious reason why it
be dismissed. This line of reasoning
does not impress us as reflecting its
pleadings that petitioner was
true management policy or that we are
represented in this case only by its said
being regaled with responsible
supervisor and not by its highest
advocacy.
ranking officers who would otherwise
be solidarily liable with the This Court should be spared the ennui
corporation. 23 of strained reasoning and the tedium of
propositions which confuse through
Verily, private respondent's act of
less than candid arguments. Indeed,
concealing the true nature of her status
petitioner glosses over the fact that it
from PT & T could not be properly
was its unlawful policy against married
characterized as willful or in bad faith as
women, both on the aspects of
she was moved to act the way she did
qualification and retention, which
mainly because she wanted to retain a
compelled private respondent to
permanent job in a stable company. In
conceal her supervenient marriage. It
other words, she was practically forced
was, however, that very policy alone
by that very same illegal company
which was the cause of private
policy into misrepresenting her civil
respondent's secretive conduct now
status for fear of being disqualified from
complained of. It is then apropos to
work. While loss of confidence is a just
recall the familiar saying that he who is
cause for termination of employment, it
 Page 8 of 26 Article II, Constitution (Labor Law) | amgisidro
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
 Page 9 of 26 Article II, Constitution (Labor Law) | amgisidro
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.
G.R. No. 181806 March 12,
2014
WESLEYAN UNIVERSITY-
PHILIPPINES, Petitioner,
vs.
WESLEYAN UNIVERSITY-
PHILIPPINES FACULTY and STAFF
ASSOCIATION, Respondent.
DECISION
DEL CASTILLO, J.:
A Collective Bargaining Agreement
(CBA) is a contract entered into by an
employer and a legitimate labor
organization concerning the terms and
conditions of employment.1 Like any
other contract, it has the force of law
 Page 10 of 26 Article II, Constitution (Labor Law) | amgisidro
between the parties and, thus, should
be complied with in good
faith.2 Unilateral changes or
suspensions in the implementation of
the provisions of the CBA, therefore,
cannot be allowed without the consent
of both parties.
This Petition for Review on
Certiorari3 under Rule 45 of the Rules
of Court assails the September 25,
2007 Decision4 and the February 5,
2008 Resolution5 of the Court of
Appeals (CA) in CA-G.R. SP No.
97053.
Factual Antecedents
Petitioner Wesleyan University-
Philippines is a non-stock, non-profit
educational institution duly organized
and existing under the laws of the
Philippines.6 Respondent Wesleyan
University-Philippines Faculty and Staff
Association, on the other hand, is a duly
registered labor organization7 acting as
the sole and exclusive bargaining agent
of all rank-and-file faculty and staff
employees of petitioner.8
In December 2003, the parties signed a
5-year CBA9 effective June 1, 2003
until May 31, 2008.10
On August 16, 2005, petitioner, through
its President, Atty. Guillermo T.
Maglaya (Atty. Maglaya), issued a
Memorandum11 providing guidelines on
the implementation of vacation and sick
leave credits as well as vacation leave
commutation. The pertinent portions of
the Memorandum read:
1. VACATION AND SICK LEAVE
CREDITS
Vacation and sick leave credits are not
automatic. They have to be earned.
Monthly, a qualified employee earns an
equivalent of 1.25 days credit each for
VL and SL. Vacation Leave and Sick
Leave credits of 15 days become
complete at the cut off date of May 31
of each year. (Example, only a total of 5
days credit will be given to an employee
for each of sick leave [or] vacation
leave, as of month end September, that
is, 4 months from June to September
multiplied by 1.25 days). An employee,
therefore, who takes VL or SL beyond
his leave credits as of date will have to
file leave without pay for leaves beyond
his credit.
2. VACATION LEAVE
COMMUTATION
Only vacation leave is commuted or
monetized to cash. Vacation leave
commutation is effected after the
second year of continuous service of an
employee. Hence, an employee who
started working June 1, 2005 will get his
commutation on May 31, 2007 or
thereabout.12
On August 25, 2005, respondents
President, Cynthia L. De Lara (De Lara)
wrote a letter13 to Atty. Maglaya
informing him that respondent is not
amenable to the unilateral changes
made by petitioner.14 De Lara
questioned the guidelines for being
violative of existing practices and the
CBA,15 specifically Sections 1 and 2,
Article XII of the CBA, to wit:
ARTICLE XII
VACATION LEAVE AND SICK LEAVE
SECTION 1. VACATION LEAVE - All
regular and non-tenured rank-and-file
faculty and staff who are entitled to
receive shall enjoy fifteen (15) days
vacation leave with pay annually.
1.1 All unused vacation leave after the
second year of service shall be
converted into cash and be paid to the
entitled employee at the end of each
school year to be given not later than
August 30 of each year.
SECTION 2. SICK LEAVE - All regular
and non-tenured rank-and-file faculty
and staff shall enjoy fifteen (15) days
sick leave with pay annually.16
On February 8, 2006, a Labor
Management Committee (LMC)
Meeting was held during which
petitioner advised respondent to file a
grievance complaint on the
implementation of the vacation and sick
leave policy.17 In the same meeting,
petitioner announced its plan of
implementing a one-retirement
policy,18 which was unacceptable to
respondent.
Ruling of the Voluntary Arbitrator
Unable to settle their differences at the
grievance level, the parties referred the
matter to a Voluntary Arbitrator. During
the hearing, respondent submitted
affidavits to prove that there is an
established practice of giving two
retirement benefits, one from the
Private Education Retirement Annuity
Association (PERAA) Plan and another
from the CBA Retirement Plan.
Sections 1, 2, 3 and 4 of Article XVI of
the CBA provide:
ARTICLE XVI
SEPARATION, DISABILITY AND
RETIREMENT PAY
SECTION 1. ELIGIBILITY FOR
MEMBERSHIP - Membership in the
Plan shall be automatic for all full-time,
regular staff and tenured faculty of the
University, except the University
President. Membership in the Plan shall
commence on the first day of the month
coincident with or next following his
statement of Regular/Tenured
Employment Status.
SECTION 2. COMPULSORY
RETIREMENT DATE - The compulsory
retirement date of each Member shall
be as follows:
a. Faculty The last day of the School
Year, coincident with his attainment of
age sixty (60) with at least five (years)
of unbroken, credited service.
b. Staff Upon reaching the age of sixty
(60) with at least five (5) years of
unbroken, credited service.
SECTION 3. OPTIONAL
RETIREMENT DATE - A Member may
opt for an optional retirement prior to his
compulsory retirement. His number of
years of service in the University shall
be the basis of computing x x x his
retirement benefits regardless of his
chronological age.
SECTION 4. RETIREMENT BENEFIT -
The retirement benefit shall be a sum
equivalent to 100% of the members
final monthly salary for compulsory
retirement.
For optional retirement, the vesting
schedule shall be:
x x x x19
On November 2, 2006, the Voluntary
Arbitrator rendered a
Decision20 declaring the one-retirement
policy and the Memorandum dated
August 16, 2005 contrary to law. The
dispositive portion of the Decision
reads:
WHEREFORE, the following award is
hereby made:
1. The assailed University guidelines on
the availment of vacation and sick leave
credits and vacation leave commutation
are contrary to law. The University is
consequently ordered to reinstate the
earlier scheme, practice or policy in
effect before the issuance of the said
guidelines on August 16, 2005;
2. The "one retirement" policy is
contrary to law and is hereby revoked
and rescinded. The University is
ordered x x x to resume and proceed
with the established practice of
extending to qualified employees
retirement benefits under both the CBA
and the PERAA Plan.
3. The other money claims are
denied.21
Ruling of the Court of Appeals
Aggrieved, petitioner appealed the
case to the CA via a Petition for Review
under Rule 43 of the Rules of Court.
On September 25, 2007, the CA
rendered a Decision22 finding the
rulings of the Voluntary Arbitrator
 Page 11 of 26 Article II, Constitution (Labor Law) | amgisidro
supported by substantial evidence. It
also affirmed the nullification of the one-
retirement policy and the Memorandum
dated August 16, 2005 on the ground
that these unilaterally amended the
CBA without the consent of
respondent.23Thus:
WHEREFORE, the instant appeal is
DISMISSED for lack of merit.
SO ORDERED.24
Petitioner moved for reconsideration
but the same was denied by the CA in
its February 5, 2008 Resolution.25
Issues
Hence, this recourse by petitioner
raising the following issues:
a.
Whether x x x the [CA] committed grave
and palpable error in sustaining the
Voluntary Arbitrators ruling that the
Affidavits submitted by Respondent
WU-PFSA are substantial evidence as
defined by the rules and jurisprudence
that would substantiate that Petitioner
WU-P has long been in the practice of
granting its employees two (2) sets of
Retirement Benefits.
b.
Whether x x x the [CA] committed grave
and palpable error in sustaining the
Voluntary Arbitrators ruling that a
university practice of granting its
employees two (2) sets of Retirement
Benefits had already been established
as defined by the law and jurisprudence
especially in light of the illegality and
lack of authority of such alleged grant.
c.
Whether x x x the [CA] committed grave
and palpable error in sustaining the
Voluntary Arbitrators ruling that it is
incumbent upon Petitioner WU-P to
show proof that no Board Resolution
was issued granting two (2) sets of
Retirement Benefits.
d.
Whether x x x the [CA] committed grave
and palpable error in revoking the 16
August 2005 Memorandum of
Petitioner WU-P for being contrary to
extant policy.26
Petitioners Arguments
Petitioner argues that there is only one
retirement plan as the CBA Retirement
Plan and the PERAA Plan are one and
the same.27 It maintains that there is no
established company practice or policy
of giving two retirement benefits to its
employees.28 Assuming, without
admitting, that two retirement benefits
were released,29 petitioner insists that
these were done by mere oversight or
mistake as there is no Board Resolution
authorizing their release.30 And since
these benefits are unauthorized and
irregular, these cannot ripen into a
company practice or policy.31 As to the
affidavits submitted by respondent,
petitioner claims that these are self-
serving declarations,32and thus, should
not be given weight and credence.33
In addition, petitioner claims that the
Memorandum dated August 16, 2005,
which provides for the guidelines on the
implementation of vacation and sick
leave credits as well as vacation leave
commutation, is valid because it is in full
accord with existing policy.34
Respondents Arguments
Respondent belies the claims of
petitioner and asserts that there are two
retirement plans as the PERAA
Retirement Plan, which has been
implemented for more than 30 years, is
different from the CBA Retirement
Plan.35 Respondent further avers that it
has always been a practice of petitioner
to give two retirement benefits36and
that this practice was established by
substantial evidence as found by both
the Voluntary Arbitrator and the CA.37
As to the Memorandum dated August
16, 2005, respondent asserts that it is
arbitrary and contrary to the CBA and
existing practices as it added
qualifications or limitations which were
not agreed upon by the parties.38
Our Ruling
The Petition is bereft of merit.
The Non-Diminution Rule found in
Article 10039 of the Labor Code
explicitly prohibits employers from
eliminating or reducing the benefits
received by their employees. This rule,
however, applies only if the benefit is
based on an express policy, a written
contract, or has ripened into a
practice.40 To be considered a practice,
it must be consistently and deliberately
made by the employer over a long
period of time.41
An exception to the rule is when "the
practice is due to error in the
construction or application of a doubtful
or difficult question of law."42 The error,
however, must be corrected
immediately after its
discovery;43 otherwise, the rule on Non-
Diminution of Benefits would still apply.
The practice of giving two retirement
benefits to petitioners employees is
supported by substantial evidence.
In this case, respondent was able to
present substantial evidence in the form
of affidavits to support its claim that
there are two retirement plans. Based
on the affidavits, petitioner has been
giving two retirement benefits as early
as 1997.44 Petitioner, on the other
hand, failed to present any evidence to
refute the veracity of these affidavits.
Petitioners contention that these
affidavits are self-serving holds no
water. The retired employees of
petitioner have nothing to lose or gain
in this case as they have already
received their retirement benefits.
Thus, they have no reason to perjure
themselves. Obviously, the only reason
they executed those affidavits is to
bring out the truth. As we see it then,
their affidavits, corroborated by the
affidavits of incumbent employees, are
more than sufficient to show that the
granting of two retirement benefits to
retiring employees had already ripened
into a consistent and deliberate
practice.
Moreover, petitioners assertion that
there is only one retirement plan as the
CBA Retirement Plan and the PERAA
Plan are one and the same is not
supported by any evidence. There is
nothing in Article XVI of the CBA to
indicate or even suggest that the "Plan"
referred to in the CBA is the PERAA
Plan. Besides, any doubt in the
interpretation of the provisions of the
CBA should be resolved in favor of
respondent. In fact, petitioners
assertion is negated by the
announcement it made during the LMC
Meeting on February 8, 2006 regarding
its plan of implementing a "one-
retirement plan." For if it were true that
petitioner was already implementing a
one-retirement policy, there would have
been no need for such announcement.
Equally damaging is the letter-
memorandum45 dated May 11, 2006,
entitled "Suggestions on the defenses
we can introduce to justify the abolition
of double retirement policy," prepared
by the petitioners legal counsel.
These circumstances, taken together,
bolster the finding that the two-
retirement policy is a
practice.1wphi1 Thus, petitioner
cannot, without the consent of
respondent, eliminate the two-
retirement policy and implement a one-
retirement policy as this would violate
the rule on non-diminution of benefits.
As a last ditch effort to abolish the two-
retirement policy, petitioner contends
that such practice is illegal or
unauthorized and that the benefits were
erroneously given by the previous
administration. No evidence, however,
was presented by petitioner to
substantiate its allegations.
Considering the foregoing disquisition,
we agree with the findings of the
Voluntary Arbitrator, as affirmed by the
CA, that there is substantial evidence to
prove that there is an existing practice
 Page 12 of 26 Article II, Constitution (Labor Law) | amgisidro
of giving two retirement benefits, one
under the PERAA Plan and another
under the CBA Retirement Plan.
The Memorandum dated August 16,
2005 is contrary to the existing CBA.
Neither do we find any reason to disturb
the findings of the CA that the
Memorandum dated August 16, 2005 is
contrary to the existing CBA.
Sections 1 and 2 of Article XII of the
CBA provide that all covered
employees are entitled to 15 days sick
leave and 15 days vacation leave with
pay every year and that after the
second year of service, all unused
vacation leave shall be converted to
cash and paid to the employee at the
end of each school year, not later than
August 30 of each year.
The Memorandum dated August 16,
2005, however, states that vacation and
sick leave credits are not automatic as
leave credits would be earned on a
month-to-month basis. This, in effect,
limits the available leave credits of an
employee at the start of the school year.
For example, for the first four months of
the school year or from June to
September, an employee is only
entitled to five days vacation leave and
five days sick leave.46 Considering that
the Memorandum dated August 16,
2005 imposes a limitation not agreed
upon by the parties nor stated in the
CBA, we agree with the CA that it must
be struck down.
In closing, it may not be amiss to
mention that when the provision of the
CBA is clear, leaving no doubt on the
intention of the parties, the literal
meaning of the stipulation shall
govem.47
However, if there is doubt in its
interpretation, it should be resolved in
Duration of contract 12 months
Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month5
On March 19, 1998, the date of his
departure, petitioner was constrained to
accept a downgraded employment
contract for the position of Second
Officer with a monthly salary of
US$1,000.00, upon the assurance and
favor of labor,48 as this is mandated by
no less than the Constitution.49
WHEREFORE, the Petition is hereby
DENIED. The assailed September 25,
2007 Decision and the February 5,
2008 Resolution of the Court of Appeals
in CA-G.R. SP No. 97053 are hereby
AFFIRMED.
SO ORDERED.
G.R. No. 167614 March 24,
2009
ANTONIO M. SERRANO, Petitioner,
vs.
Gallant MARITIME SERVICES, INC.
and MARLOW NAVIGATION CO.,
INC., Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
For decades, the toil of solitary migrants
has helped lift entire families and
communities out of poverty. Their
earnings have built houses, provided
health care, equipped schools and
planted the seeds of businesses. They
have woven together the world by
transmitting ideas and knowledge from
country to country. They have provided
the dynamic human link between
cultures, societies and economies. Yet,
only recently have we begun to
understand not only how much
international migration impacts
development, but how smart public
policies can magnify this effect.
United Nations Secretary-General Ban
Ki-Moon
Global Forum on Migration and
Development
Brussels, July 10, 20071
For Antonio Serrano (petitioner), a
Filipino seafarer, the last clause in the
5th paragraph of Section 10, Republic
Act (R.A.) No. 8042,2 to wit:
representation of respondents that he
would be made Chief Officer by the end
of April 1998.6
Respondents did not deliver on their
promise to make petitioner Chief
Officer.7 Hence, petitioner refused to
Sec. 10. Money Claims. - x x x In case
of termination of overseas employment
without just, valid or authorized cause
as defined by law or contract, the
workers shall be entitled to the full
reimbursement of his placement fee
with interest of twelve percent (12%)
per annum, plus his salaries for the
unexpired portion of his employment
contract or for three (3) months for
every year of the unexpired term,
whichever is less.
x x x x (Emphasis and underscoring
supplied)
does not magnify the contributions of
overseas Filipino workers (OFWs) to
national development, but exacerbates
the hardships borne by them by unduly
limiting their entitlement in case of
illegal dismissal to their lump-sum
salary either for the unexpired portion of
their employment contract "or for three
months for every year of the unexpired
term, whichever is less" (subject
clause). Petitioner claims that the last
clause violates the OFWs'
constitutional rights in that it impairs the
terms of their contract, deprives them of
equal protection and denies them due
process.
By way of Petition for Review under
Rule 45 of the Rules of Court, petitioner
assails the December 8, 2004
Decision3 and April 1, 2005
Resolution4 of the Court of Appeals
(CA), which applied the subject clause,
entreating this Court to declare the
subject clause unconstitutional.
Petitioner was hired by Gallant Maritime
Services, Inc. and Marlow Navigation
Co., Ltd. (respondents) under a
Philippine Overseas Employment
Administration (POEA)-approved
Contract of Employment with the
following terms and conditions:
stay on as Second Officer and was
repatriated to the Philippines on May
26, 1998.8
Petitioner's employment contract was
for a period of 12 months or from March
19, 1998 up to March 19, 1999, but at
 Page 13 of 26 Article II, Constitution (Labor Law) | amgisidro
the time of his repatriation on May 26,
1998, he had served only two (2)
months and seven (7) days of his
contract, leaving an unexpired portion
May 27/31, 1998 (5 days) incl. Leave pay
June 01/30, 1998
July 01/31, 1998
August 01/31, 1998
Sept. 01/30, 1998
Oct. 01/31, 1998
Nov. 01/30, 1998
Dec. 01/31, 1998
Jan. 01/31, 1999
Feb. 01/28, 1999
Mar. 1/19, 1999 (19 days) incl. leave pay
Amount adjusted to chief mate's salary
(March 19/31, 1998 to April 1/30, 1998) +
TOTAL CLAIM
as well as moral and exemplary
damages and attorney's fees.
The LA rendered a Decision dated July
15, 1999, declaring the dismissal of
petitioner illegal and awarding him
monetary benefits, to wit:
WHEREFORE, premises considered,
judgment is hereby rendered declaring
that the dismissal of the complainant
(petitioner) by the respondents in the
above-entitled case was illegal and the
respondents are hereby ordered to pay
the complainant [petitioner], jointly and
severally, in Philippine Currency, based
on the rate of exchange prevailing at
the time of payment, the amount
of EIGHT THOUSAND SEVEN
HUNDRED SEVENTY U.S. DOLLARS
(US $8,770.00), representing the
of nine (9) months and twenty-three for constructive dismissal and for
(23) days. payment of his money claims in the total
amount of US$26,442.73, broken down
Petitioner filed with the Labor Arbiter
as follows:
(LA) a Complaint9 against respondents
US$ 413.90
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
2,590.00
1,640.00
-------------------------------
-------------------------------
------------------
25,382.23
1,060.5010
-------------------------------
-------------------------------
-------------------------------
-
US$ 26,442.7311
complainants salary for three (3) attorneys fees equivalent to ten
months of the unexpired portion of percent (10%) of the total amount
the aforesaid contract of awarded to the aforesaid employee
employment.1avvphi1 under this Decision.
The respondents are likewise ordered The claims of the complainant for moral
to pay the complainant [petitioner], and exemplary damages are hereby
jointly and severally, in Philippine DISMISSED for lack of merit.
Currency, based on the rate of
All other claims are hereby
exchange prevailing at the time of
DISMISSED.
payment, the amount of FORTY FIVE
U.S. DOLLARS (US$ SO ORDERED.13 (Emphasis supplied)
45.00),12 representing the
In awarding petitioner a lump-sum
complainants claim for a salary
salary of US$8,770.00, the LA based
differential. In addition, the respondents
his computation on the salary period of
are hereby ordered to pay the
three months only -- rather than the
complainant, jointly and severally, in
entire unexpired portion of nine months
Philippine Currency, at the exchange
and 23 days of petitioner's employment
rate prevailing at the time of payment,
contract - applying the subject clause.
the complainants (petitioner's) claim for
However, the LA applied the salary rate
 Page 14 of 26 Article II, Constitution (Labor Law) | amgisidro

of US$2,590.00, consisting of Petitioner also appealed16 to the NLRC WHEREFORE, the Decision dated 15
petitioner's "[b]asic salary, on the sole issue that the LA erred in July 1999 is MODIFIED. Respondents
US$1,400.00/month + not applying the ruling of the Court are hereby ordered to pay complainant,
US$700.00/month, fixed overtime pay, in Triple Integrated Services, Inc. v. jointly and severally, in Philippine
+ US$490.00/month, vacation leave National Labor Relations currency, at the prevailing rate of
pay = US$2,590.00/compensation per Commission17 that in case of illegal exchange at the time of payment the
month."14 dismissal, OFWs are entitled to their following:
salaries for the unexpired portion of
Respondents appealed15 to the
their contracts.18
National Labor Relations Commission
(NLRC) to question the finding of the LA In a Decision dated June 15, 2000, the
that petitioner was illegally dismissed. NLRC modified the LA Decision, to wit:

1. Three (3) months salary

$1,400 x 3 US$4,200.00

2. Salary differential 45.00

US$4,245.00

3. 10% Attorneys fees 424.50

TOTAL US$4,669.50

is already old and sickly, and he intends

The other findings are affirmed. I
to make use of the monetary award for
SO ORDERED.19 The Court of Appeals and the labor his medical treatment and
tribunals have decided the case in a medication.29 Required to comment,
The NLRC corrected the LA's
way not in accord with applicable counsel for petitioner filed a motion,
computation of the lump-sum salary
decision of the Supreme Court involving urging the court to allow partial
awarded to petitioner by reducing the
similar issue of granting unto the execution of the undisputed monetary
applicable salary rate from
migrant worker back wages equal to the award and, at the same time, praying
US$2,590.00 to US$1,400.00 because
unexpired portion of his contract of that the constitutional question be
R.A. No. 8042 "does not provide for the
employment instead of limiting it to resolved.30
award of overtime pay, which should be
three (3) months
proven to have been actually Considering that the parties have filed
performed, and for vacation leave II their respective memoranda, the Court
pay."20 now takes up the full merit of the
In the alternative that the Court of
petition mindful of the extreme
Petitioner filed a Motion for Partial Appeals and the Labor Tribunals were
importance of the constitutional
Reconsideration, but this time he merely applying their interpretation of
question raised therein.
questioned the constitutionality of the Section 10 of Republic Act No. 8042, it
subject clause.21 The NLRC denied the is submitted that the Court of Appeals On the first and second issues
motion.22 gravely erred in law when it failed to
The unanimous finding of the LA, NLRC
discharge its judicial duty to decide
Petitioner filed a Petition and CA that the dismissal of petitioner
questions of substance not theretofore
for Certiorari23 with the CA, reiterating was illegal is not disputed. Likewise not
determined by the Honorable Supreme
the constitutional challenge against the disputed is the salary differential of
Court, particularly, the constitutional
subject clause.24 After initially US$45.00 awarded to petitioner in all
issues raised by the petitioner on the
dismissing the petition on a technicality, three fora. What remains disputed is
constitutionality of said law, which
the CA eventually gave due course to it, only the computation of the lump-sum
unreasonably, unfairly and arbitrarily
as directed by this Court in its salary to be awarded to petitioner by
limits payment of the award for back
Resolution dated August 7, 2003 which reason of his illegal dismissal.
wages of overseas workers to three (3)
granted the petition for certiorari,
months. Applying the subject clause, the NLRC
docketed as G.R. No. 151833, filed by
and the CA computed the lump-sum
petitioner. III
salary of petitioner at the monthly rate
In a Decision dated December 8, 2004, Even without considering the of US$1,400.00 covering the period of
the CA affirmed the NLRC ruling on the constitutional limitations [of] Sec. 10 of three months out of the unexpired
reduction of the applicable salary rate; Republic Act No. 8042, the Court of portion of nine months and 23 days of
however, the CA skirted the Appeals gravely erred in law in his employment contract or a total of
constitutional issue raised by excluding from petitioners award the US$4,200.00.
petitioner.25 overtime pay and vacation pay provided
Impugning the constitutionality of the
in his contract since under the contract
His Motion for subject clause, petitioner contends that,
they form part of his salary.28
Reconsideration26 having been denied in addition to the US$4,200.00 awarded
by the CA,27 petitioner brings his cause On February 26, 2008, petitioner wrote by the NLRC and the CA, he is entitled
to this Court on the following grounds: the Court to withdraw his petition as he to US$21,182.23 more or a total of
 Page 15 of 26 Article II, Constitution (Labor Law) | amgisidro
US$25,382.23, equivalent to his
salaries for the entire nine months and
23 days left of his employment contract,
computed at the monthly rate of
US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject
clause is unconstitutional because it
unduly impairs the freedom of OFWs to
negotiate for and stipulate in their
overseas employment contracts a
determinate employment period and a
fixed salary package.32 It also impinges
on the equal protection clause, for it
treats OFWs differently from local
Filipino workers (local workers) by
putting a cap on the amount of lump-
sum salary to which OFWs are entitled
in case of illegal dismissal, while setting
no limit to the same monetary award for
local workers when their dismissal is
declared illegal; that the disparate
treatment is not reasonable as there is
no substantial distinction between the
two groups;33 and that it defeats
Section 18,34 Article II of the
Constitution which guarantees the
protection of the rights and welfare of all
Filipino workers, whether deployed
locally or overseas.35
Moreover, petitioner argues that the
decisions of the CA and the labor
tribunals are not in line with existing
jurisprudence on the issue of money
claims of illegally dismissed OFWs.
Though there are conflicting rulings on
this, petitioner urges the Court to sort
them out for the guidance of affected
OFWs.36
Petitioner further underscores that the
insertion of the subject clause into R.A.
No. 8042 serves no other purpose but
to benefit local placement agencies. He
marks the statement made by the
Solicitor General in his
Memorandum, viz.:
Often, placement agencies, their
liability being solidary, shoulder the
payment of money claims in the event
that jurisdiction over the foreign
employer is not acquired by the court or
if the foreign employer reneges on its
obligation. Hence, placement agencies
that are in good faith and which fulfill
their obligations are unnecessarily
penalized for the acts of the foreign
employer. To protect them and to
promote their continued helpful
contribution in deploying Filipino
migrant workers, liability for money
claims was reduced under Section 10 of
R.A. No. 8042.37 (Emphasis supplied)
Petitioner argues that in mitigating the
solidary liability of placement agencies,
the subject clause sacrifices the well-
being of OFWs. Not only that, the
provision makes foreign employers
better off than local employers because
in cases involving the illegal dismissal
of employees, foreign employers are
liable for salaries covering a maximum
of only three months of the unexpired
employment contract while local
employers are liable for the full lump-
sum salaries of their employees. As
petitioner puts it:
In terms of practical application, the
local employers are not limited to the
amount of backwages they have to give
their employees they have illegally
dismissed, following well-entrenched
and unequivocal jurisprudence on the
matter. On the other hand, foreign
employers will only be limited to giving
the illegally dismissed migrant workers
the maximum of three (3) months
unpaid salaries notwithstanding the
unexpired term of the contract that can
be more than three (3) months.38
Lastly, petitioner claims that the subject
clause violates the due process clause,
for it deprives him of the salaries and
other emoluments he is entitled to
under his fixed-period employment
contract.39
The Arguments of Respondents
In their Comment and Memorandum,
respondents contend that the
constitutional issue should not be
entertained, for this was belatedly
interposed by petitioner in his appeal
before the CA, and not at the earliest
opportunity, which was when he filed an
appeal before the NLRC.40
The Arguments of the Solicitor
General
The Solicitor General (OSG)41 points
out that as R.A. No. 8042 took effect on
July 15, 1995, its provisions could not
have impaired petitioner's 1998
employment contract. Rather, R.A. No.
8042 having preceded petitioner's
contract, the provisions thereof are
deemed part of the minimum terms of
petitioner's employment, especially on
the matter of money claims, as this was
not stipulated upon by the parties.42
Moreover, the OSG emphasizes that
OFWs and local workers differ in terms
of the nature of their employment, such
that their rights to monetary benefits
must necessarily be treated differently.
The OSG enumerates the essential
elements that distinguish OFWs from
local workers: first, while local workers
perform their jobs within Philippine
territory, OFWs perform their jobs for
foreign employers, over whom it is
difficult for our courts to acquire
jurisdiction, or against whom it is almost
impossible to enforce judgment; and
second, as held in Coyoca v. National
Labor Relations Commission43 and
Millares v. National Labor Relations
Commission,44 OFWs are contractual
employees who can never acquire
regular employment status, unlike local
workers who are or can become regular
employees. Hence, the OSG posits that
there are rights and privileges exclusive
to local workers, but not available to
OFWs; that these peculiarities make for
a reasonable and valid basis for the
differentiated treatment under the
subject clause of the money claims of
OFWs who are illegally dismissed.
Thus, the provision does not violate the
equal protection clause nor Section 18,
Article II of the Constitution.45
Lastly, the OSG defends the rationale
behind the subject clause as a police
power measure adopted to mitigate the
solidary liability of placement agencies
for this "redounds to the benefit of the
migrant workers whose welfare the
government seeks to promote. The
survival of legitimate placement
agencies helps [assure] the
government that migrant workers are
properly deployed and are employed
under decent and humane
conditions."46
The Court's Ruling
The Court sustains petitioner on the first
and second issues.
When the Court is called upon to
exercise its power of judicial review of
the acts of its co-equals, such as the
Congress, it does so only when these
conditions obtain: (1) that there is an
actual case or controversy involving a
conflict of rights susceptible of judicial
determination;47 (2) that the
constitutional question is raised by a
proper party48 and at the earliest
opportunity;49 and (3) that the
constitutional question is the very lis
mota of the case,50otherwise the Court
will dismiss the case or decide the
same on some other ground.51
Without a doubt, there exists in this
case an actual controversy directly
involving petitioner who is personally
aggrieved that the labor tribunals and
the CA computed his monetary award
based on the salary period of three
months only as provided under the
subject clause.
The constitutional challenge is also
timely. It should be borne in mind that
the requirement that a constitutional
issue be raised at the earliest
opportunity entails the interposition of
the issue in the pleadings before
a competent court, such that, if the
issue is not raised in the pleadings
before that competent court, it cannot
 Page 16 of 26 Article II, Constitution (Labor Law) | amgisidro
be considered at the trial and, if not
considered in the trial, it cannot be
considered on appeal.52 Records
disclose that the issue on the
constitutionality of the subject clause
was first raised, not in petitioner's
appeal with the NLRC, but in his Motion
for Partial Reconsideration with said
labor tribunal,53 and reiterated in his
Petition for Certiorari before the
CA.54 Nonetheless, the issue is
deemed seasonably raised because it
is not the NLRC but the CA which has
the competence to resolve the
constitutional issue. The NLRC is a
labor tribunal that merely performs a
quasi-judicial function its function in
the present case is limited to
determining questions of fact to which
the legislative policy of R.A. No. 8042 is
to be applied and to resolving such
questions in accordance with the
standards laid down by the law
itself;55 thus, its foremost function is to
administer and enforce R.A. No. 8042,
and not to inquire into the validity of its
provisions. The CA, on the other hand,
is vested with the power of judicial
review or the power to declare
unconstitutional a law or a provision
thereof, such as the subject
clause.56Petitioner's interposition of the
constitutional issue before the CA was
undoubtedly seasonable. The CA was
therefore remiss in failing to take up the
issue in its decision.
The third condition that the
constitutional issue be critical to the
resolution of the case likewise obtains
because the monetary claim of
petitioner to his lump-sum salary for the
entire unexpired portion of his 12-month
employment contract, and not just for a
period of three months, strikes at the
very core of the subject clause.
Thus, the stage is all set for the
determination of the constitutionality of
the subject clause.
Does the subject clause violate Section
10,
Article III of the Constitution on non-
impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject
clause unduly interferes with the
stipulations in his contract on the term
of his employment and the fixed salary
package he will receive57 is not tenable.
Section 10, Article III of the Constitution
provides:
No law impairing the obligation of
contracts shall be passed.
The prohibition is aligned with the
general principle that laws newly
enacted have only a prospective the labor sector, without distinction as
operation,58and cannot affect acts or to place of deployment, full protection of
contracts already perfected;59 however, their rights and welfare.
as to laws already in existence, their
To Filipino workers, the rights
provisions are read into contracts and
guaranteed under the foregoing
deemed a part thereof.60 Thus, the non-
constitutional provisions translate to
impairment clause under Section 10,
economic security and parity: all
Article II is limited in application to laws
monetary benefits should be equally
about to be enacted that would in any
enjoyed by workers of similar category,
way derogate from existing acts or
while all monetary obligations should be
contracts by enlarging, abridging or in
borne by them in equal degree; none
any manner changing the intention of
should be denied the protection of the
the parties thereto.
laws which is enjoyed by, or spared the
As aptly observed by the OSG, the burden imposed on, others in like
enactment of R.A. No. 8042 in 1995 circumstances.65
preceded the execution of the
Such rights are not absolute but subject
employment contract between
to the inherent power of Congress to
petitioner and respondents in 1998.
incorporate, when it sees fit, a system
Hence, it cannot be argued that R.A.
of classification into its legislation;
No. 8042, particularly the subject
however, to be valid, the classification
clause, impaired the employment
must comply with these requirements:
contract of the parties. Rather, when
1) it is based on substantial distinctions;
the parties executed their 1998
2) it is germane to the purposes of the
employment contract, they were
law; 3) it is not limited to existing
deemed to have incorporated into it all
conditions only; and 4) it applies equally
the provisions of R.A. No. 8042.
to all members of the class.66
But even if the Court were to disregard
There are three levels of scrutiny at
the timeline, the subject clause may not
which the Court reviews the
be declared unconstitutional on the
constitutionality of a classification
ground that it impinges on the
embodied in a law: a) the deferential or
impairment clause, for the law was
rational basis scrutiny in which the
enacted in the exercise of the police
challenged classification needs only be
power of the State to regulate a
shown to be rationally related to serving
business, profession or calling,
a legitimate state interest;67 b) the
particularly the recruitment and
middle-tier or intermediate scrutiny in
deployment of OFWs, with the noble
which the government must show that
end in view of ensuring respect for the
the challenged classification serves an
dignity and well-being of OFWs
important state interest and that the
wherever they may be
classification is at least substantially
employed.61 Police power legislations
related to serving that interest;68 and c)
adopted by the State to promote the
strict judicial scrutiny69 in which a
health, morals, peace, education, good
legislative classification which
order, safety, and general welfare of the
impermissibly interferes with the
people are generally applicable not only
exercise of a fundamental right70 or
to future contracts but even to those
operates to the peculiar disadvantage
already in existence, for all private
of a suspect class71 is presumed
contracts must yield to the superior and
unconstitutional, and the burden is
legitimate measures taken by the State
upon the government to prove that the
to promote public welfare.62
classification is necessary to achieve
Does the subject clause violate Section a compelling state interest and that it
1, is the least restrictive means to
Article III of the Constitution, and protect such interest.72
Section 18,
Under American jurisprudence, strict
Article II and Section 3, Article XIII on
judicial scrutiny is triggered by suspect
labor
classifications73 based on race74 or
as a protected sector?
gender75 but not when the classification
The answer is in the affirmative. is drawn along income categories.76
Section 1, Article III of the Constitution It is different in the Philippine setting. In
guarantees: Central Bank (now Bangko Sentral ng
Pilipinas) Employee Association, Inc. v.
No person shall be deprived of life,
Bangko Sentral ng Pilipinas,77 the
liberty, or property without due process
constitutionality of a provision in the
of law nor shall any person be denied
charter of the Bangko Sentral ng
the equal protection of the law.
Pilipinas (BSP), a government financial
Section 18,63 Article II and Section institution (GFI), was challenged for
3,64 Article XIII accord all members of maintaining its rank-and-file employees
 Page 17 of 26 Article II, Constitution (Labor Law) | amgisidro
under the Salary Standardization Law
(SSL), even when the rank-and-file
employees of other GFIs had been
exempted from the SSL by their
respective charters. Finding that the
disputed provision contained a suspect
classification based on salary grade,
the Court deliberately employed the
standard of strict judicial scrutiny in its
review of the constitutionality of said
provision. More significantly, it was in
this case that the Court revealed the
broad outlines of its judicial philosophy,
to wit:
Congress retains its wide discretion in
providing for a valid classification, and
its policies should be accorded
recognition and respect by the courts of
justice except when they run afoul of
the Constitution. The deference stops
where the classification violates a
fundamental right, or prejudices
persons accorded special protection
by the Constitution. When these
violations arise, this Court must
discharge its primary role as the
vanguard of constitutional guaranties,
and require a stricter and more exacting
adherence to constitutional limitations.
Rational basis should not suffice.
Admittedly, the view that prejudice to
persons accorded special protection by
the Constitution requires a stricter
judicial scrutiny finds no support in
American or English jurisprudence.
Nevertheless, these foreign decisions
and authorities are not per se
controlling in this jurisdiction. At best,
they are persuasive and have been
used to support many of our decisions.
We should not place undue and
fawning reliance upon them and regard
them as indispensable mental crutches
without which we cannot come to our
own decisions through the employment
of our own endowments. We live in a
different ambience and must decide our
own problems in the light of our own
interests and needs, and of our qualities
and even idiosyncrasies as a people,
and always with our own concept of law
and justice. Our laws must be
construed in accordance with the
intention of our own lawmakers and
such intent may be deduced from the
language of each law and the context of
other local legislation related thereto.
More importantly, they must be
construed to serve our own public
interest which is the be-all and the end-
all of all our laws. And it need not be
stressed that our public interest is
distinct and different from others.
xxxx
Further, the quest for a better and more
"equal" world calls for the use of equal
protection as a tool of effective judicial
intervention.
Equality is one ideal which cries out for
bold attention and action in the
Constitution. The Preamble proclaims
"equality" as an ideal precisely in
protest against crushing inequities in
Philippine society. The command to
promote social justice in Article II,
Section 10, in "all phases of national
development," further explicitated in
Article XIII, are clear commands to the
State to take affirmative action in the
direction of greater equality. x x x
[T]here is thus in the Philippine
Constitution no lack of doctrinal support
for a more vigorous state effort towards
achieving a reasonable measure of
equality.
Our present Constitution has gone
further in guaranteeing vital social and
economic rights to marginalized groups
of society, including labor. Under the
policy of social justice, the law bends
over backward to accommodate the
interests of the working class on the
humane justification that those with less
privilege in life should have more in law.
And the obligation to afford protection to
labor is incumbent not only on the
legislative and executive branches but
also on the judiciary to translate this
pledge into a living reality. Social justice
calls for the humanization of laws and
the equalization of social and economic
forces by the State so that justice in its
rational and objectively secular
conception may at least be
approximated.
xxxx
Under most circumstances, the Court
will exercise judicial restraint in deciding
questions of constitutionality,
recognizing the broad discretion given
to Congress in exercising its legislative
power. Judicial scrutiny would be based
on the "rational basis" test, and the
legislative discretion would be given
deferential treatment.
But if the challenge to the statute is
premised on the denial of a
fundamental right, or the perpetuation
of prejudice against persons favored
by the Constitution with special
protection, judicial scrutiny ought to
be more strict. A weak and watered
down view would call for the abdication
of this Courts solemn duty to strike
down any law repugnant to the
Constitution and the rights it enshrines.
This is true whether the actor
committing the unconstitutional act is a
private person or the government itself
or one of its instrumentalities.
Oppressive acts will be struck down
regardless of the character or nature of
the actor.
xxxx
In the case at bar, the challenged
proviso operates on the basis of the
salary grade or officer-employee status.
It is akin to a distinction based on
economic class and status, with the
higher grades as recipients of a benefit
specifically withheld from the lower
grades. Officers of the BSP now receive
higher compensation packages that are
competitive with the industry, while the
poorer, low-salaried employees are
limited to the rates prescribed by the
SSL. The implications are quite
disturbing: BSP rank-and-file
employees are paid the strictly
regimented rates of the SSL while
employees higher in rank - possessing
higher and better education and
opportunities for career advancement -
are given higher compensation
packages to entice them to stay.
Considering that majority, if not all, the
rank-and-file employees consist of
people whose status and rank in life are
less and limited, especially in terms of
job marketability, it is they - and not the
officers - who have the real economic
and financial need for the adjustment .
This is in accord with the policy of the
Constitution "to free the people from
poverty, provide adequate social
services, extend to them a decent
standard of living, and improve the
quality of life for all." Any act of
Congress that runs counter to this
constitutional desideratum deserves
strict scrutiny by this Court before it can
pass muster. (Emphasis supplied)
Imbued with the same sense of
"obligation to afford protection to labor,"
the Court in the present case also
employs the standard of strict judicial
scrutiny, for it perceives in the subject
clause a suspect classification
prejudicial to OFWs.
Upon cursory reading, the subject
clause appears facially neutral, for it
applies to all OFWs. However, a closer
examination reveals that the subject
clause has a discriminatory intent
against, and an invidious impact on,
OFWs at two levels:
First, OFWs with employment contracts
of less than one year vis--vis OFWs
with employment contracts of one year
or more;
Second, among OFWs with
employment contracts of more than one
year; and
Third, OFWs vis--vis local
workers with fixed-period employment;
 Page 18 of 26 Article II, Constitution (Labor Law) | amgisidro
OFWs with employment contracts of
less than one year vis--vis OFWs
with employment contracts of one
year or more
As pointed out by petitioner,78 it was
in Marsaman Manning Agency, Inc. v.
National Labor Relations
Commission79 (Second Division, 1999)
that the Court laid down the following
rules on the application of the periods
prescribed under Section 10(5) of R.A.
No. 804, to wit:
A plain reading of Sec. 10 clearly
reveals that the choice of which
amount to award an illegally
dismissed overseas contract
worker, i.e., whether his salaries for
the unexpired portion of his
employment contract or three (3)
months salary for every year of the
unexpired term, whichever is less,
comes into play only when the
employment contract concerned has
a term of at least one (1) year or
more. This is evident from the words
"for every year of the unexpired
term" which follows the words
"salaries x x x for three months." To
follow petitioners thinking that private
respondent is entitled to three (3)
months salary only simply because it is
the lesser amount is to completely
disregard and overlook some words
used in the statute while giving effect to
Case Title Contract
Period
Skippers v. 6 months
Maguad84
Bahia Shipping v. 9 months
Reynaldo Chua 85
Centennial 9 months
Transmarine v.
dela Cruz l86
Talidano v. 12 months
Falcon87
Univan v. CA 88 12 months
Oriental v. CA 89 12 months
PCL v. NLRC90 12 months
Olarte v. Nayona91 12 months
some. This is contrary to the well-
established rule in legal hermeneutics
that in interpreting a statute, care
should be taken that every part or word
thereof be given effect since the law-
making body is presumed to know the
meaning of the words employed in the
statue and to have used them
advisedly. Ut res magis valeat quam
pereat.80 (Emphasis supplied)
In Marsaman, the OFW involved was
illegally dismissed two months into his
10-month contract, but was awarded
his salaries for the remaining 8 months
and 6 days of his contract.
Prior to Marsaman, however, there
were two cases in which the Court
made conflicting rulings on Section
10(5). One was Asian Center for Career
and Employment System and Services
v. National Labor Relations
Commission (Second Division, October
1998),81 which involved an OFW who
was awarded a two-year employment
contract, but was dismissed after
working for one year and two months.
The LA declared his dismissal illegal
and awarded him SR13,600.00 as
lump-sum salary covering eight
months, the unexpired portion of his
contract. On appeal, the Court reduced
the award to SR3,600.00 equivalent to
his three months salary, this being the
lesser value, to wit:
Period of Unexpired Period
Service
2 months 4 months
8 months 4 months
4 months 5 months
3 months 9 months
3 months 9 months
more than 2 10 months
months
more than 2 more or less 9 3 months
months months
21 days 11 months and 9
days
Under Section 10 of R.A. No. 8042, a
worker dismissed from overseas
employment without just, valid or
authorized cause is entitled to his salary
for the unexpired portion of his
employment contract or for three (3)
months for every year of the unexpired
term, whichever is less.
In the case at bar, the unexpired portion
of private respondents employment
contract is eight (8) months. Private
respondent should therefore be paid his
basic salary corresponding to three (3)
months or a total of SR3,600.82
Another was Triple-Eight Integrated
Services, Inc. v. National Labor
Relations Commission (Third Division,
December 1998),83 which involved an
OFW (therein respondent Erlinda
Osdana) who was originally granted a
12-month contract, which was
deemed renewed for another 12
months. After serving for one year and
seven-and-a-half months, respondent
Osdana was illegally dismissed, and
the Court awarded her salaries for the
entire unexpired portion of four and
one-half months of her contract.
The Marsaman interpretation of
Section 10(5) has since been adopted
in the following cases:
Period Applied in the
Computation of the
Monetary Award
4 months
4 months
5 months
3 months
3 months
3 months
3 months
 Page 19 of 26 Article II, Constitution (Labor Law) | amgisidro

JSS v.Ferrer92 12 months 16 days 11 months and 24 3 months

days

Pentagon v. 12 months 9 months and 7 2 months and 23 2 months and 23 days

Adelantar93 days days

Phil. Employ v. 12 months 10 months 2 months Unexpired portion

Paramio, et al.94

Flourish Maritime 2 years 26 days 23 months and 4 6 months or 3 months

v. Almanzor 95 days for each year of
contract

Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3 months

Manpower v. months and and 28 days for each year of
Villanos 96 28 days contract

worked for about 2 months out of their subject clause, OFW-A will be entitled
As the foregoing matrix readily shows,
12-month contracts were awarded their to US$9,000.00, equivalent to his
the subject clause classifies OFWs into
salaries for only 3 months of the salaries for the remaining 9 months of
two categories. The first category
unexpired portion of their contracts. his contract, whereas OFW-B will be
includes OFWs with fixed-period
Even the OFWs involved entitled to only US$3,000.00,
employment contracts of less than one
in Talidano and Univan who equivalent to his salaries for 3 months
year; in case of illegal dismissal, they
had worked for a longer period of 3 of the unexpired portion of his contract,
are entitled to their salaries for the
months out of their 12-month contracts instead of US$14,000.00 for the
entire unexpired portion of their
before being illegally dismissed were unexpired portion of 14 months of his
contract. The second category consists
awarded their salaries for only 3 contract, as the US$3,000.00 is the
of OFWs with fixed-period employment
months. lesser amount.
contracts of one year or more; in case
of illegal dismissal, they are entitled to To illustrate the disparity even more The disparity becomes more
monetary award equivalent to only 3 vividly, the Court assumes a aggravating when the Court takes into
months of the unexpired portion of their hypothetical OFW-A with an account jurisprudence that, prior to the
contracts. employment contract of 10 months at a effectivity of R.A. No. 8042 on July
monthly salary rate of US$1,000.00 and 14, 1995,97 illegally dismissed OFWs,
The disparity in the treatment of these
a hypothetical OFW-B with an no matter how long the period of their
two groups cannot be discounted.
employment contract of 15 months with employment contracts, were entitled to
In Skippers, the respondent OFW
the same monthly salary rate of their salaries for the entire unexpired
worked for only 2 months out of his 6-
US$1,000.00. Both commenced work portions of their contracts. The matrix
month contract, but was awarded his
on the same day and under the same below speaks for itself:
salaries for the remaining 4 months. In
employer, and were illegally dismissed
contrast, the respondent OFWs
after one month of work. Under the
in Oriental and PCL who had also

Case Title Contract Period of Unexpired Period Applied in the

Period Service Period Computation of the
Monetary Award

ATCI v. CA, et 2 years 2 months 22 months 22 months

al.98

Phil. Integrated v. 2 years 7 days 23 months and 23 months and 23 days

NLRC99 23 days

JGB v. NLC100 2 years 9 months 15 months 15 months

Agoy v. NLRC101 2 years 2 months 22 months 22 months

EDI v. NLRC, et 2 years 5 months 19 months 19 months

al.102

Barros v. NLRC, 12 months 4 months 8 months 8 months

et al.103
 Page 20 of 26 Article II, Constitution (Labor Law) | amgisidro
Philippine 12 months
Transmarine v.
Carilla104
It is plain that prior to R.A. No. 8042, all
OFWs, regardless of contract periods
or the unexpired portions thereof, were
treated alike in terms of the
computation of their monetary benefits
in case of illegal dismissal. Their claims
were subjected to a uniform rule of
computation: their basic salaries
multiplied by the entire unexpired
portion of their employment contracts.
The enactment of the subject clause in
R.A. No. 8042 introduced a the provisions contained in the following
differentiated rule of computation of the
money claims of illegally dismissed
OFWs based on their employment
periods, in the process singling
out one category whose contracts have
an unexpired portion of one year or
more and subjecting them to the
peculiar disadvantage of having their
monetary awards limited to their
salaries for 3 months or for the
unexpired portion thereof, whichever is
less, but all the while sparing the other
category from such prejudice, simply
because the latter's unexpired
contracts fall short of one year.
Among OFWs With Employment
Contracts of More Than One Year
Upon closer examination of the
terminology employed in the subject
clause, the Court now has misgivings
on the accuracy of
the Marsaman interpretation.
The Court notes that the subject clause
"or for three (3) months for every year
of the unexpired term, whichever is
less" contains the qualifying phrases
"every year" and "unexpired term." By
its ordinary meaning, the word "term"
means a limited or definite extent of
time.105 Corollarily, that "every year" is
but part of an "unexpired term" is
significant in many ways: first, the
unexpired term must be at least one
year, for if it were any shorter, there
would be no occasion for such
unexpired term to be measured by
every year; and second, the original
term must be more than one year, for
otherwise, whatever would be the
unexpired term thereof will not reach
even a year. Consequently, the more
decisive factor in the determination of
when the subject clause "for three (3)
months for every year of the unexpired
term, whichever is less" shall apply is
not the length of the original contract
period as held in Marsaman,106 but the
length of the unexpired portion of the
6 months and 5 months and 18 5 months and 18 days
22 days days
contract period -- the subject clause
applies in cases when the unexpired
portion of the contract period is at least
one year, which arithmetically requires
that the original contract period be more
than one year.
Viewed in that light, the subject clause
creates a sub-layer of discrimination
among OFWs whose contract periods
are for more than one year: those who
are illegally dismissed with less than
one year left in their contracts shall be
entitled to their salaries for the entire
unexpired portion thereof, while those
who are illegally dismissed with one
year or more remaining in their
contracts shall be covered by the
subject clause, and their monetary
benefits limited to their salaries for three
months only.
To concretely illustrate the application
of the foregoing interpretation of the
subject clause, the Court assumes
hypothetical OFW-C and OFW-D, who
each have a 24-month contract at a
salary rate of US$1,000.00 per month.
OFW-C is illegally dismissed on the
12th month, and OFW-D, on the 13th
month. Considering that there is at least
12 months remaining in the contract
period of OFW-C, the subject clause
applies to the computation of the latter's
monetary benefits. Thus, OFW-C will
be entitled, not to US$12,000,00 or the
latter's total salaries for the 12 months
unexpired portion of the contract, but to
the lesser amount of US$3,000.00 or
the latter's salaries for 3 months out of
the 12-month unexpired term of the
contract. On the other hand, OFW-D is
spared from the effects of the subject
clause, for there are only 11 months left
in the latter's contract period. Thus,
OFW-D will be entitled to
US$11,000.00, which is equivalent to
his/her total salaries for the entire 11-
month unexpired portion.
OFWs vis--vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No.
8042, a uniform system of computation
of the monetary awards of illegally
dismissed OFWs was in place. This
uniform system was applicable even to
local workers with fixed-term
employment.107
The earliest rule prescribing a uniform
system of computation was actually
Article 299 of the Code of Commerce
(1888),108 to wit:
Article 299. If the contracts between the
merchants and their shop clerks and
employees should have been made of
a fixed period, none of the contracting
parties, without the consent of the
other, may withdraw from the fulfillment
of said contract until the termination of
the period agreed upon.
Persons violating this clause shall be
subject to indemnify the loss and
damage suffered, with the exception of
articles.
In Reyes v. The Compaia
Maritima,109 the Court applied the
foregoing provision to determine the
liability of a shipping company for the
illegal discharge of its managers prior to
the expiration of their fixed-term
employment. The Court therein held the
shipping company liable for the salaries
of its managers for the remainder of
their fixed-term employment.
There is a more specific rule as far as
seafarers are concerned: Article 605 of
the Code of Commerce which provides:
Article 605. If the contracts of the
captain and members of the crew with
the agent should be for a definite period
or voyage, they cannot be discharged
until the fulfillment of their contracts,
except for reasons of insubordination in
serious matters, robbery, theft, habitual
drunkenness, and damage caused to
the vessel or to its cargo by malice or
manifest or proven negligence.
Article 605 was applied to Madrigal
Shipping Company, Inc. v. Ogilvie,110 in
which the Court held the shipping
company liable for the salaries and
subsistence allowance of its illegally
dismissed employees for
the entire unexpired portion of their
employment contracts.
While Article 605 has remained good
law up to the present,111 Article 299 of
the Code of Commerce was replaced
by Art. 1586 of the Civil Code of 1889,
to wit:
Article 1586. Field hands, mechanics,
artisans, and other laborers hired for a
certain time and for a certain work
cannot leave or be dismissed without
sufficient cause, before the fulfillment of
the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v.
Alkan112 read the disjunctive "or" in
Article 1586 as a conjunctive "and" so
 Page 21 of 26 Article II, Constitution (Labor Law) | amgisidro
as to apply the provision to local
workers who are employed for a time
certain although for no particular skill.
This interpretation of Article 1586 was
reiterated in Garcia Palomar v. Hotel de
France Company.113 And in both
Lemoine and Palomar, the Court
adopted the general principle that in
actions for wrongful discharge founded
on Article 1586, local workers are
entitled to recover damages to the
extent of the amount stipulated to be
paid to them by the terms of their
contract. On the computation of the
amount of such damages, the Court in
Aldaz v. Gay114 held:
The doctrine is well-established in
American jurisprudence, and nothing
has been brought to our attention to the
contrary under Spanish jurisprudence,
that when an employee is wrongfully
discharged it is his duty to seek other
employment of the same kind in the
same community, for the purpose of
reducing the damages resulting from
such wrongful discharge. However,
while this is the general rule, the burden
of showing that he failed to make an
effort to secure other employment of a
like nature, and that other employment
of a like nature was obtainable, is upon
the defendant. When an employee is
wrongfully discharged under a contract
of employment his prima facie damage
is the amount which he would be
entitled to had he continued in such
employment until the termination of the
period. (Howard vs. Daly, 61 N. Y., 362;
Allen vs. Whitlark, 99 Mich., 492; Farrell
vs. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)
On August 30, 1950, the New Civil
Code took effect with new provisions on
fixed-term employment: Section 2
(Obligations with a Period), Chapter 3,
Title I, and Sections 2 (Contract of
Labor) and 3 (Contract for a Piece of
Work), Chapter 3, Title VIII, Book
IV.116 Much like Article 1586 of the Civil
Code of 1889, the new provisions of the
Civil Code do not expressly provide for
the remedies available to a fixed-term
worker who is illegally discharged.
However, it is noted that in Mackay
Radio & Telegraph Co., Inc. v.
Rich,117 the Court carried over the
principles on the payment of damages
underlying Article 1586 of the Civil
Code of 1889 and applied the same to
a case involving the illegal discharge of
a local worker whose fixed-period
employment contract was entered into
in 1952, when the new Civil Code was
already in effect.118
More significantly, the same principles
were applied to cases involving
overseas Filipino workers whose fixed-
term employment contracts were
illegally terminated, such as in First
Asian Trans & Shipping Agency, Inc. v.
Ople,119involving seafarers who were
illegally discharged. In Teknika Skills
and Trade Services, Inc. v. National
Labor Relations Commission,120 an
OFW who was illegally dismissed prior
to the expiration of her fixed-period
employment contract as a baby sitter,
was awarded salaries corresponding to
the unexpired portion of her contract.
The Court arrived at the same ruling in
Anderson v. National Labor Relations
Commission,121 which involved a Constitution
foreman hired in 1988 in Saudi Arabia
for a fixed term of two years, but who
was illegally dismissed after only nine
months on the job -- the Court awarded
him salaries corresponding to 15
months, the unexpired portion of his
contract. In Asia World Recruitment,
Inc. v. National Labor Relations
Commission,122 a Filipino working as a
security officer in 1989 in Angola was
awarded his salaries for the remaining
period of his 12-month contract after he
was wrongfully discharged. Finally,
in Vinta Maritime Co., Inc. v. National
Labor Relations Commission,123 an
OFW whose 12-month contract was
illegally cut short in the second month
was declared entitled to his salaries for
the remaining 10 months of his
contract.
In sum, prior to R.A. No. 8042, OFWs
and local workers with fixed-term
employment who were illegally
discharged were treated alike in terms
of the computation of their money
claims: they were uniformly entitled to
their salaries for the entire unexpired
portions of their contracts. But with the
enactment of R.A. No. 8042,
specifically the adoption of the subject
clause, illegally dismissed OFWs with
an unexpired portion of one year or
more in their employment contract have
since been differently treated in that
their money claims are subject to a 3-
month cap, whereas no such limitation
is imposed on local workers with fixed-
term employment.
The Court concludes that the subject
clause contains a suspect
classification in that, in the
computation of the monetary
benefits of fixed-term employees
who are illegally discharged, it
imposes a 3-month cap on the claim
of OFWs with an unexpired portion
of one year or more in their
contracts, but none on the claims of
other OFWs or local workers with
fixed-term employment. The subject
clause singles out one classification
of OFWs and burdens it with a
peculiar disadvantage.
There being a suspect classification
involving a vulnerable sector protected
by the Constitution, the Court now
subjects the classification to a strict
judicial scrutiny, and determines
whether it serves a compelling state
interest through the least restrictive
means.
What constitutes compelling state
interest is measured by the scale of
rights and powers arrayed in the
and calibrated by
history.124 It is akin to the paramount
interest of the state125 for which some
individual liberties must give way, such
as the public interest in safeguarding
health or maintaining medical
standards,126 or in maintaining access
to information on matters of public
concern.127
In the present case, the Court dug deep
into the records but found no
compelling state interest that the
subject clause may possibly serve.
The OSG defends the subject clause as
a police power measure "designed to
protect the employment of Filipino
seafarers overseas x x x. By limiting the
liability to three months [sic], Filipino
seafarers have better chance of getting
hired by foreign employers." The
limitation also protects the interest of
local placement agencies, which
otherwise may be made to shoulder
millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their
liability being solidary, shoulder the
payment of money claims in the event
that jurisdiction over the foreign
employer is not acquired by the court or
if the foreign employer reneges on its
obligation. Hence, placement agencies
that are in good faith and which fulfill
their obligations are unnecessarily
penalized for the acts of the foreign
employer. To protect them and to
promote their continued helpful
contribution in deploying Filipino
migrant workers, liability for money
are reduced under Section 10 of RA
8042.
This measure redounds to the benefit of
the migrant workers whose welfare the
government seeks to promote. The
survival of legitimate placement
agencies helps [assure] the
government that migrant workers are
properly deployed and are employed
under decent and humane
conditions.129 (Emphasis supplied)
However, nowhere in the Comment or
Memorandum does the OSG cite the
 Page 22 of 26 Article II, Constitution (Labor Law) | amgisidro
source of its perception of the state
interest sought to be served by the
subject clause.
The OSG locates the purpose of R.A.
No. 8042 in the speech of Rep.
Bonifacio Gallego in sponsorship of
House Bill No. 14314 (HB 14314), from
which the law originated;130 but the
speech makes no reference to the
underlying reason for the adoption of
the subject clause. That is only natural
for none of the 29 provisions in HB
14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077
(SB 2077) contains a provision on
money claims, to wit:
Sec. 10. Money Claims. -
Notwithstanding any provision of law to
the contrary, the Labor Arbiters of the
National Labor Relations Commission
(NLRC) shall have the original and
exclusive jurisdiction to hear and
decide, within ninety (90) calendar days
after the filing of the complaint, the
claims arising out of an employer-
employee relationship or by virtue of the
complaint, the claim arising out of an
employer-employee relationship or by
virtue of any law or contract involving
Filipino workers for overseas
employment including claims for actual,
moral, exemplary and other forms of
damages.
The liability of the principal and the
recruitment/placement agency or any
and all claims under this Section shall
be joint and several.
Any compromise/amicable settlement
or voluntary agreement on any money
claims exclusive of damages under this
Section shall not be less than fifty
percent (50%) of such money
claims: Provided, That any installment
payments, if applicable, to satisfy any
such compromise or voluntary
settlement shall not be more than two
(2) months. Any compromise/voluntary
agreement in violation of this paragraph
shall be null and void.
Non-compliance with the mandatory
period for resolutions of cases provided
under this Section shall subject the
responsible officials to any or all of the
following penalties:
(1) The salary of any such official who
fails to render his decision or resolution
within the prescribed period shall be, or
caused to be, withheld until the said
official complies therewith;
(2) Suspension for not more than ninety
(90) days; or
(3) Dismissal from the service with
disqualification to hold any appointive
public office for five (5) years.
Provided, however, That the penalties
herein provided shall be without
prejudice to any liability which any such
official may have incurred under other
existing laws or rules and regulations as
a consequence of violating the
provisions of this paragraph.
But significantly, Section 10 of SB 2077
does not provide for any rule on the
computation of money claims.
A rule on the computation of money
claims containing the subject clause
was inserted and eventually adopted as
the 5th paragraph of Section 10 of R.A.
No. 8042. The Court examined the
rationale of the subject clause in the
transcripts of the "Bicameral
Conference Committee (Conference
Committee) Meetings on the Magna
Carta on OCWs (Disagreeing
Provisions of Senate Bill No. 2077 and
House Bill No. 14314)." However, the
Court finds no discernible state interest,
let alone a compelling one, that is
sought to be protected or advanced by
the adoption of the subject clause.
In fine, the Government has failed to
discharge its burden of proving the
existence of a compelling state interest
that would justify the perpetuation of the
discrimination against OFWs under the
subject clause.
Assuming that, as advanced by the
OSG, the purpose of the subject clause
is to protect the employment of OFWs
by mitigating the solidary liability of
placement agencies, such callous and
cavalier rationale will have to be
rejected. There can never be a
justification for any form of government
action that alleviates the burden of one
sector, but imposes the same burden
on another sector, especially when the
favored sector is composed of private
businesses such as placement
agencies, while the disadvantaged
sector is composed of OFWs whose
protection no less than the Constitution
commands. The idea that private
business interest can be elevated to the
level of a compelling state interest is
odious.
Moreover, even if the purpose of the
subject clause is to lessen the solidary
liability of placement agencies vis-a-
vis their foreign principals, there are
mechanisms already in place that can
be employed to achieve that purpose
without infringing on the constitutional
rights of OFWs.
The POEA Rules and Regulations
Governing the Recruitment and
Employment of Land-Based Overseas
Workers, dated February 4, 2002,
imposes administrative disciplinary
measures on erring foreign employers
who default on their contractual
obligations to migrant workers and/or
their Philippine agents. These
disciplinary measures range from
temporary disqualification to preventive
suspension. The POEA Rules and
Regulations Governing the Recruitment
and Employment of Seafarers, dated
May 23, 2003, contains similar
administrative disciplinary measures
against erring foreign employers.
Resort to these administrative
measures is undoubtedly the less
restrictive means of aiding local
placement agencies in enforcing the
solidary liability of their foreign
principals.
Thus, the subject clause in the 5th
paragraph of Section 10 of R.A. No.
8042 is violative of the right of petitioner
and other OFWs to equal
protection.1avvphi1
Further, there would be certain
misgivings if one is to approach the
declaration of the unconstitutionality of
the subject clause from the lone
perspective that the clause directly
violates state policy on labor under
Section 3,131Article XIII of the
Constitution.
While all the provisions of the 1987
Constitution are presumed self-
executing,132 there are some which this
Court has declared not judicially
enforceable, Article XIII being
one,133 particularly Section 3 thereof,
the nature of which, this Court,
in Agabon v. National Labor Relations
Commission,134 has described to be not
self-actuating:
Thus, the constitutional mandates of
protection to labor and security of
tenure may be deemed as self-
executing in the sense that these are
automatically acknowledged and
observed without need for any enabling
legislation. However, to declare that the
constitutional provisions are enough to
guarantee the full exercise of the rights
embodied therein, and the realization of
ideals therein expressed, would be
impractical, if not unrealistic. The
espousal of such view presents the
dangerous tendency of being
overbroad and exaggerated. The
guarantees of "full protection to labor"
and "security of tenure", when
examined in isolation, are facially
unqualified, and the broadest
interpretation possible suggests a
blanket shield in favor of labor against
any form of removal regardless of
circumstance. This interpretation
implies an unimpeachable right to
continued employment-a utopian
notion, doubtless-but still hardly within
 Page 23 of 26 Article II, Constitution (Labor Law) | amgisidro
the contemplation of the framers.
Subsequent legislation is still needed to
define the parameters of these
guaranteed rights to ensure the
protection and promotion, not only the
rights of the labor sector, but of the
employers' as well. Without specific and
pertinent legislation, judicial bodies will
be at a loss, formulating their own
conclusion to approximate at least the
aims of the Constitution.
Ultimately, therefore, Section 3 of
Article XIII cannot, on its own, be a
source of a positive enforceable
right to stave off the dismissal of an
employee for just cause owing to the
failure to serve proper notice or hearing.
As manifested by several framers of the
1987 Constitution, the provisions on
social justice require legislative
enactments for their
enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be
treated as a principal source of direct
enforceable rights, for the violation of
which the questioned clause may be
declared unconstitutional. It may
unwittingly risk opening the floodgates
of litigation to every worker or union
over every conceivable violation of so
broad a concept as social justice for
labor.
It must be stressed that Section 3,
Article XIII does not directly bestow on
the working class any actual
enforceable right, but merely clothes it
with the status of a sector for whom the
Constitution urges protection through
executive or legislative action
and judicial recognition. Its utility is
best limited to being an impetus not just
for the executive and legislative
departments, but for the judiciary as
well, to protect the welfare of the
working class. And it was in fact
consistent with that constitutional
agenda that the Court in Central Bank
(now Bangko Sentral ng Pilipinas)
Employee Association, Inc. v. Bangko
Sentral ng Pilipinas, penned by then
Associate Justice now Chief Justice
Reynato S. Puno, formulated the
judicial precept that when the challenge
to a statute is premised on the
perpetuation of prejudice against
persons favored by the Constitution
with special protection -- such as the
working class or a section thereof -- the
Court may recognize the existence of a
suspect classification and subject the
same to strict judicial scrutiny.
The view that the concepts of suspect
classification and strict judicial scrutiny
formulated in Central Bank Employee
Association exaggerate the
significance of Section 3, Article XIII is
a groundless apprehension. Central
Bank applied Article XIII in conjunction
with the equal protection clause. Article
XIII, by itself, without the application of
the equal protection clause, has no life
or force of its own as elucidated
in Agabon.
Along the same line of reasoning, the
Court further holds that the subject
clause violates petitioner's right to
substantive due process, for it deprives
him of property, consisting of monetary
benefits, without any existing valid
governmental purpose.136
The argument of the Solicitor General,
that the actual purpose of the subject
clause of limiting the entitlement of
OFWs to their three-month salary in
case of illegal dismissal, is to give them
a better chance of getting hired by
foreign employers. This is plain
speculation. As earlier discussed, there
is nothing in the text of the law or the
records of the deliberations leading to
its enactment or the pleadings of
respondent that would indicate that
there is an existing governmental
purpose for the subject clause, or even
just a pretext of one.
The subject clause does not state or
imply any definitive governmental
purpose; and it is for that precise
reason that the clause violates not just
petitioner's right to equal protection, but
also her right to substantive due
process under Section 1,137 Article III of
the Constitution.
The subject clause being
unconstitutional, petitioner is entitled to
his salaries for the entire unexpired
period of nine months and 23 days of
his employment contract, pursuant to
law and jurisprudence prior to the
enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime
and leave pay should form part of the
salary basis in the computation of his
monetary award, because these are
fixed benefits that have been stipulated
into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does
not include overtime and leave pay. For
seafarers like petitioner, DOLE
Department Order No. 33, series 1996,
provides a Standard Employment
Contract of Seafarers, in which salary is
understood as the basic wage,
exclusive of overtime, leave pay and
other bonuses; whereas overtime pay is
compensation for all work "performed"
in excess of the regular eight hours, and
holiday pay is compensation for any
work "performed" on designated rest
days and holidays.
By the foregoing definition alone, there
is no basis for the automatic inclusion of
overtime and holiday pay in the
computation of petitioner's monetary
award, unless there is evidence that he
performed work during those periods.
As the Court held in Centennial
Transmarine, Inc. v. Dela Cruz,138
However, the payment of overtime pay
and leave pay should be disallowed in
light of our ruling in Cagampan v.
National Labor Relations Commission,
to wit:
The rendition of overtime work and the
submission of sufficient proof that said
was actually performed are conditions
to be satisfied before a seaman could
be entitled to overtime pay which
should be computed on the basis of
30% of the basic monthly salary. In
short, the contract provision guarantees
the right to overtime pay but the
entitlement to such benefit must first be
established.
In the same vein, the claim for the day's
leave pay for the unexpired portion of
the contract is unwarranted since the
same is given during the actual service
of the seamen.
WHEREFORE, the Court GRANTS the
Petition. The subject clause "or for
three months for every year of the
unexpired term, whichever is less" in
the 5th paragraph of Section 10 of
Republic Act No. 8042
is DECLAREDUNCONSTITUTIONAL;
and the December 8, 2004 Decision
and April 1, 2005 Resolution of the
Court of Appeals are MODIFIED to the
effect that petitioner is AWARDED his
salaries for the entire unexpired portion
of his employment contract consisting
of nine months and 23 days computed
at the rate of US$1,400.00 per month.
No costs.
SO ORDERED.
G.R. No. 147572 February 19,
2003
TEODORICO ROSARIO, petitioner,
vs.
VICTORY RICEMILL, respondent.
DECISION
CALLEJO, J.:
Petitioner Teodorico Rosario filed the
instant petition for review
on certiorari seeking to reverse and set
aside the Decision1 dated September
22, 2000 and Resolution2 dated March
16, 2001 of the Court of Appeals in CA-
G.R. SP No. 52487. In the assailed
decision, the appellate court affirmed
the decision of the National Labor
Relations Commission (NLRC)
 Page 24 of 26 Article II, Constitution (Labor Law) | amgisidro
declaring petitioners dismissal from
employment valid. The assailed
resolution denied petitioners motion for
reconsideration.
The case stemmed from a complaint for
illegal dismissal with money claims
(separation pay, overtime pay, 13th
month pay and incentive pay) filed by
petitioner against respondent Victory
Ricemill, a single proprietorship owned
by Emilio Uy. The antecedent facts, as
culled from the records of the case are,
as follows:
Emilio Uy was engaged in the business
of milling palay under the business
name Victory Ricemill. He employed
petitioner as truck driver from January
11, 1982 up to his dismissal on June 22,
1993. Petitioner was paid the wage rate
of P110.00 per day. As truck driver,
petitioner was tasked to, among others,
haul palay from various points in
Isabela and Cagayan and bring them to
respondents ricemill in Cabatuan,
Isabela. In addition, petitioner acted as
personal driver to the family of Mr. Uy
during their trips to Manila.
On June 22, 1993, respondent
terminated petitioners employment for
his notorious acts of insubordination
and that he attempted to kill a fellow
employee. According to respondent,
petitioner was guilty of insubordination
when he refused to serve as driver of
Mr. Uys son when the latter needed a
driver. Further, on one occasion,
petitioner was instructed to deliver 600
bags of cement to the Felix Hardware in
Tuguegarao. Instead of bringing the
merchandise to the said store,
petitioner delivered the same to one
Eduardo Interior, who had not since
then paid for it to the damage of
respondent in the total sum
of P60,000.00. Because of petitioners
tendency to disobey the orders to him,
respondent was constrained to engage
the services of another driver in the
person of Michael Ng. Petitioner
resented the new driver and became
uncooperative, disrespectful and
quarrelsome. On June 21, 1993,
petitioner, armed with a dagger, fought
with Michael Ng and inflicted an injury
on the latter. Petitioner likewise inflicted
injuries on the head of Rody Senias, a
co-employee, when he intervened in
the fight and tried to pacify petitioner.
After the proceedings, the regional
labor arbiter rendered his
decision3 dismissing for lack of merit
the complaint for illegal dismissal. The
regional labor arbiter found that there
were valid causes, i.e., willful
disobedience to the lawful orders of the
employer and commission of a crime or
offense against the employers duly
authorized representative, for the records that petitioner was given ample
termination of petitioners employment. opportunity to explain his side.
Moreover, even granting that
On appeal, the NLRC ordered the
respondent fell short of the two-notice
remand of the case to the regional labor
requirement, such irregularity,
arbiter for further proceedings.4 The
according to the CA, does not militate
NLRC found that petitioner was denied
against the legality of the dismissal.7
due process during the proceedings
with the regional labor arbiter as he The dispositive portion of the assailed
(petitioner) was not given the CA decision reads:
opportunity to present his additional
WHEREFORE, premises considered,
rebuttal evidence. On the other hand,
the decision, dated August 24, 1998, of
respondent was allowed to submit in
the National Labor Relations
evidence various exhibits to discredit
Commission in NLRC NCR CA
the rebuttal testimony of petitioner.
0008213-95 (NLRC RAB-II-CN-07-
During the subsequent proceedings 00262-93) is hereby AFFIRMED. Costs
before the regional labor arbiter, against the petitioner.8
petitioner submitted the affidavit of
Petitioner filed a motion for
Mario Roque. Roque averred that
reconsideration of the aforesaid
contrary to respondents claim, the 600
decision but the CA denied the same in
bags of cement delivered to Eduardo
the assailed resolution. Aggrieved,
Interior had been paid as evidenced by
petitioner filed with this Court the instant
DBP Check No. B-065462, dated May
petition on the ground that:
22, 1993, in the sum of P58,950.00
payable to respondent. THE HONORABLE COURT OF
APPEALS, WITH ALL DUE RESPECT,
Thereafter, the regional labor arbiter
COMMITTED A REVERSIBLE ERROR
promulgated his decision5 stating that
WHEN IT AFFIRMED THE
he found no reason to deviate from his
QUESTIONED DECISION OF THE
previous decision. Roques testimony
PUBLIC RESPONDENT NATIONAL
was not given any probative value as
LABOR RELATIONS COMMISSION
the same was found to be hearsay. The
NOTWITHSTANDING THE FACT
regional labor arbiter concluded that
THAT PETITIONER WAS ILLEGALLY
respondent was justified in terminating
DISMISSED. THE HONORABLE
the employment of petitioner on ground
COURT OF APPEALS LIKEWISE
of loss of confidence. Accordingly, the
ERRED IN NOT SUSTAINING
regional labor arbiter again dismissed,
PETITIONERS STANCE THAT HIS
for lack of merit, petitioners complaint
DISMISSAL FROM HIS
for illegal dismissal.
EMPLOYMENT WAS NOT IN
On appeal, the NLRC affirmed the ACCORDANCE WITH THE DUE
ruling of the regional labor arbiter and PROCESS REQUIREMENT OF THE
declared that petitioners dismissal was LAW. AND AS A CONSEQUENCE OF
valid. PETITIONERS ILLEGAL DISMISSAL,
HE IS ENTITLED TO SEPARATION
Petitioner then elevated the case to the
PAY, OVERTIME PAY, INCENTIVE
CA which rendered the assailed
LEAVE PAY, HOLIDAY PAY AND
decision.6 The appellate court
OTHER BENEFITS GRANTED BY
accorded respect to the findings of the
LAW. IN SO DOING, THE
NLRC. It declared that petitioners act of
HONORABLE COURT OF APPEALS
delivering the merchandise to Edgardo
RENDERED A DECISION WHICH IS
Interior, instead of Felix Hardware,
CONTRARY TO THE FACTS OF THE
without being authorized to do so by
CASE, THE EVIDENCE, LAW AND
respondent was not only inimical to the
ESTABLISHED JURISPRUDENCE.
latters business interests, but
THESE MANIFEST AND GLARING
constitutive of insubordination or willful
ERRORS, IF NOT CORRECTED,
disobedience as well. The CA likewise
WOULD INEVITABLY WORK
held that petitioners act of fomenting a
INJUSTICE TO HEREIN PETITIONER
fight with a co-worker constituted
AND MAKE HIM SUFFER
serious misconduct. It further noted that
IRREPARABLE DAMAGE.9
petitioners contumacious refusal to
obey the reasonable orders of Petitioner presented the following
respondent was not sufficiently issues for the Courts resolution:
explained. The CA thus found that
I
respondent had justifiable cause to
dismiss petitioner. WHETHER OR NOT PETITIONERS
TERMINATION WAS FOR A JUST
Anent the procedural aspect, the CA
AND LAWFUL CAUSE.
observed that although there was no
strict compliance with the two-notice II
rule, it could be gleaned from the
 Page 25 of 26 Article II, Constitution (Labor Law) | amgisidro
WHETHER OR NOT PETITIONERS
DISMISSAL FROM HIS
EMPLOYMENT WAS IN
ACCORDANCE WITH THE DUE
PROCESS REQUIREMENT OF THE
LAW.
III
WHETHER OR NOT PETITIONER IS
ENTITLED TO SEPARATION PAY,
OVERTIME PAY, INCENTIVE LEAVE
PAY, HOLIDAY PAY AND OTHER
BENEFITS GRANTED BY LAW.10
It is the contention of petitioner that his
act of delivering the 600 bags of cement
to Edgardo Interior, instead of the Felix
Hardware to which they were intended,
does not constitute willful disobedience
nor serious misconduct so as to justify
his dismissal. He was allegedly
constrained to look for another buyer for
the merchandise because the
proprietor of Felix Hardware rejected
the aforesaid materials. It has been
allegedly company practice for
respondent to allow the delivery of
materials to other business
establishments when these are
rejected by the intended customers.
Contrary to respondents claim, Mr.
Interior allegedly paid for the bags of
cement as testified to by Roque.
Petitioner maintains that his refusal to
serve as driver to Mr. Uys son does not
constitute willful disobedience to the
employers lawful order because it was
not work-related. Further, he could not
allegedly be dismissed for committing
an offense against his co-worker,
Michael Ng, because he was neither
the employer, nor a member of his
family nor his duly authorized
representative.
Petitioner likewise claims that he was
not afforded due process of law
because prior to the termination letter,
he was not furnished a written notice
detailing the particular acts and/or
omissions which he allegedly
committed to warrant his dismissal.
Petitioner thus prays that respondent
be directed to reinstate him and pay his
money claims.
The regional labor arbiter, the NLRC
and the CA are unanimous in finding
that there was justifiable cause for the
dismissal of petitioner. They are one in
holding that petitioner committed willful
disobedience when he delivered the
600 bags of cement to Mr. Interior,
instead of the Felix Hardware, without
respondents knowledge nor
permission.
The validity of petitioners dismissal is a
factual question. It is not for the
reviewing court to weigh the conflicting
evidence, determine the credibility of
witnesses, or otherwise substitute its
own judgment for that of the
administrative agency. Well-settled is
the rule that findings of fact of quasi-
judicial agencies, like the NLRC, are
accorded not only respect but at times
even finality if such findings are
supported by substantial
evidence.11 This is especially so in this
case, in which the findings of the NLRC
were affirmed by the Court of Appeals.
The findings of facts made therein can
only be set aside upon showing of
grave abuse of discretion, fraud or error
of law.12None has been shown in this
case.
The unanimous finding of the regional
labor arbiter, the NLRC and the CA that
petitioner is guilty of willful
disobedience is based on substantial
evidence on record. Petitioners cause
is not helped by the fact that he
committed a crime against his co-
worker. His actuations clearly
constituted willful disobedience and
serious misconduct justifying his
dismissal under Article 282(a) of the
Labor Code which provides:
Art. 282. Termination by employer. An
employer may terminate an
employment for any of the following
causes:
(a) Serious misconduct or willful
disobedience by the employee of the
lawful orders of his employer or
representative in connection with his
work;
xxx
Willful disobedience of the employers
lawful orders, as a just cause for the
dismissal of an employee, envisages
the concurrence of at least two
requisites: (1) the employees assailed
conduct must have been willful or
intentional, the willfulness being
characterized by a "wrongful and
perverse attitude;" and (2) the order
violated must have been reasonable,
lawful, made known to the employee
and must pertain to the duties which he
had been engaged to discharge.13
In this case, the order to petitioner was
simple, i.e., to deliver the merchandise
to the Felix Hardware. It was clearly
reasonable, lawful, made known to
petitioner and pertained to his duty as
driver of respondent. Petitioner did not
even proffer a justifiable explanation for
his disobedience thereto. Every
employee is charged with the implicit
duty of caring for the employers
property.14 Petitioners conduct showed
that he could not even be trusted with
this task. Further, his hostile attitude
towards his co-workers which
eventually led him to inflict physical
injuries on one of them cannot be
countenanced. As correctly put by the
NLRC, petitioners "continuance in the
service of respondent company is partly
inimical not only to its interests but also
to the interest of its other employees."15
To effect the dismissal of an employee,
however, the law requires not only that
there be just and valid cause as
provided under Article 282 of the Labor
Code. It likewise enjoins the employer
to afford the employee the opportunity
to be heard and to defend himself. On
the latter aspect, the employer is
mandated to furnish the employee with
two (2) written notices: (a) a written
notice containing a statement of the
cause for the termination to afford the
employee ample opportunity to be
heard and defend himself with the
assistance of his representative, if he
so desires; (b) if the employer decides
to terminate the services of the
employee, the employer must notify him
in writing of the decision to dismiss him,
stating clearly the reason therefor.16
While there was unanimity among the
regional labor arbiter, the NLRC and the
CA on the existence of a valid and
lawful cause for petitioners dismissal,
the same could not be said on their
respective findings on whether or not
respondent complied with the
procedural requirements in effecting
petitioners dismissal, i.e., affording him
the opportunity to be heard. The
regional labor arbiter and the NLRC did
not make any finding on whether
respondent afforded petitioner the
opportunity to be heard and to defend
himself. On the other hand, as
mentioned earlier, the CA found that
petitioner was given ample opportunity
to explain his side. Even granting that
there was no strict compliance with the
two-notice requirement, such
irregularity, according to the CA, does
not militate against the legality of the
dismissal citing Serrano vs. NLRC.17
A careful review of the records revealed
that, indeed, respondents manner of
dismissing petitioner fell short of the
two-notice requirement. While it
furnished petitioner the written notice
informing him of his
dismissal,18respondent failed to furnish
petitioner the written notice apprising
him of the charge or charges against
him. Consequently, petitioner was
deprived of the opportunity to respond
thereto.
However, as correctly opined by the
CA, respondents omission does not
render petitioners dismissal invalid but
merely ineffectual. The prevailing rule is
that when the dismissal is effected for a
 Page 26 of 26 Article II, Constitution (Labor Law) | amgisidro
just and valid cause, as in this case, the
failure to observe procedural
requirements does not invalidate nor
nullify the dismissal of an employee.
The Court had the occasion to expound
this rule in the case of Serrano19 in this
wise:
Not all notice requirements are
requirements of due process. Some are
simply part of a procedure to be
followed before a right granted to a
party can be exercised. Others are
simply an application of the Justinian
precept, embodied in the Civil Code, to
act with justice, give everyone his due,
and observe honesty and good faith
toward ones fellowmen. Such is the
notice requirement in Arts. 282-283.
The consequence of the failure either of
the employer or the employee to live up
to this precept is to make him liable in
damages, not to render his act
(dismissal or resignation, as the case
may be) void. The measure of damages
is the amount of wages the employee
should have received were it not for the
termination of his employment without
prior notice. If warranted, nominal and
moral damages may also be awarded.
We hold, therefore, that, with respect to
Art. 283 of the Labor Code, the
employers failure to comply with the
notice requirement does not constitute
a denial of due process but a mere
failure to observe a procedure for the
termination of employment which
makes the termination of employment
merely ineffectual. It is similar to the
failure to observe the provisions of Art.
1592, in relation to Art. 1191, of the Civil
Code in rescinding a contract for the
sale of immovable property. Under
these provisions, while the power of a
party to rescind a contract is implied in
reciprocal obligations, nonetheless, in
cases involving the sale of immovable
property, the vendor cannot exercise
this power even though the vendee
defaults in the payment of the price,
except by bringing an action in court or
giving notice of rescission by means of
a notarial demand. Consequently, a
notice of rescission given in the letter of
an attorney has no legal effect, and the
vendee can make payment even after
the due date since no valid notice of
rescission has been given.
Indeed, under the Labor Code, only the
absence of a just cause for the
termination of employment can make
the dismissal of an employee illegal.
This is clear from Art. 279 which
provides:
Security of Tenure. In cases of regular
employment, the employer shall not
terminate the services of an employee
except for a just cause or when
authorized by this Title. An employee In fine, the lack of notice and hearing is
who is unjustly dismissed from work considered as being a mere failure to
shall be entitled to reinstatement observe a procedure for the termination
without loss of seniority rights and other of employment which makes the
privileges and to his full backwages, dismissal ineffectual but not necessarily
inclusive of allowances, and to his other illegal. The procedural infirmity is then
benefits or their monetary equivalent remedied by ordering the payment to
computed from the time his the employee his full backwages from
compensation was withheld from him the time of his dismissal until the court
up to the time of his actual finally rules that the dismissal has been
reinstatement. for a valid cause.22
Thus, only if the termination of Having established that respondent
employment is not for any of the causes had just and valid cause to terminate
provided by law is it illegal and, petitioners employment but failed to
therefore, the employee should be hear him prior to his dismissal,
reinstated and paid backwages. x x respondent is obliged to pay petitioner
x.20 (Citations omitted) his backwages computed from the time
of his dismissal up to the time the
In so ruling, the Court recognized that
decision in this case becomes final.
"the law, in protecting the rights of labor,
authorized neither the oppression nor WHEREFORE, the Decision dated
self-destruction of the employer," thus: September 22, 2000 and Resolution
dated March 16, 2001 of the Court of
The refusal to look beyond the validity
Appeals in CA-G.R. SP No. 52487, are
of the initial action taken by the
hereby AFFIRMED with
employer to terminate employment
MODIFICATION. Emilio Uy, doing
either for an authorized or just cause
business under the business name
can result in an injustice to the
Victory Ricemill, is ordered to pay
employer. For not giving notice and
petitioner full backwages from the time
hearing before dismissing an
his employment was terminated on
employee, who is otherwise guilty of,
June 22, 1993 up to the time the herein
say, theft, or even of an attempt against
decision becomes final. For this
the life of the employer, an employer
purpose, this case is REMANDED to
will be forced to keep in his employ
the regional labor arbiter for the
such guilty employee. This is unjust.
computation of the backwages due
It is true the Constitution regards labor petitioner.
as "a primary social economic force."
SO ORDERED.
But so does it declare that it "recognizes
the indispensable role of the private
sector, encourages private enterprise,
and provides incentives to needed
investment. The Constitution bids the
State to "afford full protection to labor."
But it is equally true that "the law, in
protecting the rights of the laborer,
authorizes neither oppression nor self-
destruction of the employer. And it is
oppression to compel the employer to
continue in employment one who is
guilty or to force the employer to remain
in operation when it is not economically
in his interest to do so.
xxx
On the other hand, with respect to
dismissals for cause under Art. 282, if it
is shown that the employee was
dismissed for any of the just causes
mentioned in said Art. 282, then, in
accordance with that article, he should
not be reinstated. However, he must be
paid backwages from the time his
employment was terminated until it is
determined that the termination of
employment is for a just cause because
the failure to hear him before he is
dismissed renders the termination of his
employment without legal
effect.21 (Citations omitted)