SECOND DIVISION

G.R. No. 194884, October 22, 2014

IMASEN PHILIPPINE MANUFACTURING CORPORATION, Petitioner, v. RAMONCHITO T. ALCON AND

JOANN S. PAPA, Respondents.

DECISION

BRION, J.:

We resolve in this petition for review on certiorari1 the challenge to he June 9, 2010 decision2 and the
December 22, 2010 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 110327. This CA decision
nullified the December 24, 2008 decision4 of the National Labor Relations Commission (NLRC) in NLRC CA
No. 043915-05 (NLRC CASE No. RAB IV-12-1661-02-L). The NLRC ruling, in turn, affirmed the December
10, 2004 decision5 of the Labor Arbiter (LA), dismissing the illegal dismissal complaint filed by respondents
Ramonchito T. Alcon and Joann S. Papa (collectively referred to as respondents).

The Factual Antecedents

Petitioner Imasen Philippine Manufacturing Corporation is a domestic corporation engaged in the

manufacture of auto seat-recliners and slide-adjusters. It hired the respondents as manual welders in 2001.

On October 5, 2002, the respondents reported for work on the second shift - from 8:00 pm to 5:00 am of
the following day. At around 12:40 am, Cyrus A. Altiche, Imasen's security guard on duty, went to patrol
and inspect the production plant's premises. When Altiche reached Imasen's Press Area, he heard the sound
of a running industrial fan. Intending to turn the fan off, he followed the sound that led him to the plant's
"Tool and Die" section.

At the "Tool and Die" section, Altiche saw the respondents having sexual intercourse on the floor, using a
piece of carton as mattress. Altiche immediately went back to the guard house and relayed what he saw to
Danilo S. Ogana, another security guard on duty.

On Altiche's request, Ogana made a follow-up inspection. Ogana went to the "Tool and Die" section and saw
several employees, including the respondents, already leaving the area. He noticed, however, that Alcon
picked up the carton that Altiche claimed the respondents used as mattress during their sexual act, and
returned it to the place where the cartons were kept. Altiche then submitted a handwritten report6 of the
incident to Imasen's Finance and Administration Manager.

On October 14, 2002, Imasen issued the respondents separate interoffice memoranda7 informing them of
Altiche's report on the October 5, 2002 incident and directing them to submit their individual explanation.
The respondents complied with the directive; they claimed that they were merely sleeping in the "Tool and
Die" section at the time of the incident. They also claimed that other employees were near the area, making
the commission of the act charged impossible.

On October 22, 2002, Imasen issued the respondents another interoffice memorandum8 directing them to
appear at the formal hearing of the administrative charge against them. The hearing was conducted on
October 30, 2002,9 presided by a mediator and attended by the representatives of Imasen, the respondents,
Altiche and Ogana. Altiche and Ogana reiterated the narrations in Altiche's handwritten report.

On December 4, 2002, Imasen issued the respondents separate interoffice memoranda10 terminating their
services. It found the respondents guilty of the act charged which it considered as "gross misconduct
contrary to the existing policies, rules and regulations of the company."

On December 5, 2002, the respondents filed before the LA the complaint11 for illegal dismissal. The
respondents maintained their version of the incident.

In the December 10, 2004 decision,12 the LA dismissed the respondents' complaint for lack of merit. The LA
found the respondents' dismissal valid, i.e., for the just cause of gross misconduct and with due process.
The LA gave weight to Altiche's account of the incident, which Ogana corroborated, over the respondents'
mere denial of the incident and the unsubstantiated explanation that other employees were present near the
"Tool and Die" section, making the sexual act impossible. The LA additionally pointed out that the
respondents did not show any ill motive or intent on the part; of Altiche and Ogano sufficient to render their
accounts of the incident suspicious.

The NLRC"s ruling

In its December 24, 2008 decision,13 the NLRC dismissed the respondents' appeal14 for lack of merit. In
affirming the LA's ruling, the NLRC declared that Imasen substantially and convincingly proved just cause for
dismissing the respondents and complied with the required due process.

The respondents filed before the CA a petition for certiorari15 after the NLRC denied their motion for
reconsideration16 in its May 29, 2009 resolution.17c ralawred

The CA's ruling

In its June 9, 2010 decision,18 the CA nullified the NLRC's ruling. The CA agreed with the labor tribunals'
findings regarding the infraction charged - engaging in sexual intercourse on October 5, 2002 inside
company premises - and Imasen's observance of due process in dismissing the respondents from
employment.

The CA, however, disagreed with the conclusion that the respondents' sexual intercourse inside company
premises constituted serious misconduct that the Labor Code considers sufficient to justify the penalty of
dismissal. The CA pointed out that the respondents' act, while provoked by "reckless passion in an inviting
environment and time," was not done with wrongful intent or with the grave or aggravated character that
the law requires. To the CA, the penalty of dismissal is not commensurate to the respondents' act,
considering especially that the respondents had not committed any infraction in the past.

Accordingly, the CA reduced the respondents' penalty to a three-month suspension and ordered Imasen to:
(1) reinstate the respondents to their former position without loss of seniority rights and other privileges;
and (2) pay the respondents backwages from December 4, 2002 until actual reinstatement, less the wages
corresponding to the three-month suspension.

Imasen filed the present petition after the CA denied its motion for reconsideration19 in the CA's December
22, 2010 resolution.20c ralawred

The Petition

Imasen argues in this petition that the act of engaging in sexual intercourse inside company premises during
work hours is serious misconduct by whatever standard it is measured. According to Imasen, the
respondents' infraction is an affront to its core values and high ethical work standards, and justifies the
dismissal. When the CA reduced the penalty from dismissal to three-month suspension, Imasen points out
that the CA, in effect, substituted its own judgment with its (Imasen's) own legally protected management
prerogative.

Lastly, Imasen questions the CA's award of backwages in the respondents' favor. Imasen argues that the
respondents would virtually gain from their infraction as they would be paid eight years worth of wages
without having rendered any service; eight (8) years, in fact, far exceeds their actual period of service prior
to their dismissal.

The Case for the Respondents

The respondents argue in their comment21 that the elements of serious misconduct that justifies an
employee's dismissal are absent in this case, adopting thereby the CA's ruling. Hence, to the respondents,
the CA correctly reversed the NLRC's ruling; the CA, in deciding the case, took a wholistic consideration of
all the attendant facts, i.e., the time, the place, the persons involved, and the surrounding circumstances
before, during, and after the sexual intercourse, and not merely the infraction committed.

The Issue

The sole issue for this Court's resolution is whether the respondents' infraction — engaging in sexual
intercourse inside company premises during work hours — amounts to serious misconduct within the terms
of Article 282 (now Article 296) of the Labor Code justifying their dismissal.

The Court's Ruling

We GRANT the petition.

We find that the CA reversibly erred when it nullified the NLRC's decision for grave abuse of discretion the
NLRC's decision.

Preliminary considerations:
tenurial security vis-a-vis
management prerogative

The law and jurisprudence guarantee to every employee security of tenure. This textual and the ensuing
jurisprudential commitment to the cause and welfare of the working class proceed from the social justice
principles of the Constitution that the Court zealously implements out of its concern for those with less in
life. Thus, the Court will not hesitate to strike down as invalid any employer act that attempts to undermine
workers' tenurial security. All these the State undertakes under Article 279 (now Article 293)22 of the Labor
Code which bar an employer from terminating the services of an employee, except for just or authorized
cause and upon observance of due process.

In protecting the rights of the workers, the law, however, does not authorize the oppression or self-
destruction of the employer.23 The constitutional commitment to the policy of social justice cannot be
understood to mean that every labor dispute shall automatically be decided in favor of labor.24 The
constitutional and legal protection equally recognize the employer's right and prerogative to manage its
operation according to reasonable standards and norms of fair play.

Accordingly, except as limited by special law, an employer is free to regulate, according to his own judgment
and discretion, all aspects of employment, including hiring, work assignments, working methods, time, place
and manner of work, tools to be used, processes to be followed, supervision of workers, working
regulations, transfer of employees, worker supervision, layoff of workers and the discipline, dismissal and
recall of workers.25 As a general proposition, an employer has free reign over every aspect of its business,
including the dismissal of his employees as long as the exercise of its management prerogative is done
reasonably, in good faith, and in a manner not otherwise intended to defeat or circumvent the rights of
workers.

In these lights, the Court's task in the present petition is to balance the conflicting rights of the respondents
to security of tenure, on one hand, and of Imasen to dismiss erring employees pursuant to the legitimate
exercise of its management prerogative, on the other.

Management's right to dismiss an

employee; serious misconduct as just
cause for the dismissal

The just causes for dismissing an employee are provided under Article 28226 (now Article 296)27 of the Labor
Code. Under Article 282(a), serious misconduct by the employee justifies the employer in terminating his or
her employment.

Misconduct is defined as an improper or wrong conduct. It is a transgression of some established and

definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment.28 To constitute a valid cause for the dismissal within the text and meaning
of Article 282 of the Labor Code, the employee's misconduct must be serious, i.e., of such grave and
aggravated character and not merely trivial or unimportant.29 cralawred

Additionally, the misconduct must be related to the performance of the employee's duties showing
him to be unfit to continue working for the employer.30 Further, and equally important and required,
the act or conduct must have been performed with wrongful intent.31 cralawred

To summarize, for misconduct or improper behavior to be a just cause for dismissal, the following elements
must concur: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's
duties showing that the employee has become unfit to continue working for the employer;32and (c) it must
have been performed with wrongful intent.

The respondents' infraction amounts to

serious misconduct within the terms of
Article 282 (now Article 296) of the
Labor Code justifying their dismissal

Dismissal situations (on the ground of serious misconduct) involving sexual acts, particularly sexual
intercourse committed by employees inside company premises and during work hours, are not usual
violations33 and are not found in abundance under jurisprudence. Thus, in resolving the present petition, we
are largely guided by the principles we discussed above, as applied to the totality of the circumstances that
surrounded the petitioners' dismissal.

In other words, we view the petitioners' act from the prism of the elements that must concur for an act to
constitute serious misconduct, analyzed and understood within the context of the overall circumstances of
the case. In taking this approach, we are guided, too, by the jurisdictional limitations that a Rule 45 review
of the CA's Rule 65 decision in labor cases imposes on our discretion.34c ralaw red

In addressing the situation that we are faced with in this petition, we determine whether Imasen validly
exercised its prerogative as employer to dismiss the respondents-employees who, within company premises
and during work hours, engaged in sexual intercourse. As framed within our limited Rule 45 jurisdiction, the
question that we ask is: whether the NLRC committed grave abuse of discretion in finding that the
respondents' act amounted to what Article 282 of the Labor Code textually considers as serious misconduct
to warrant their dismissal.

After due consideration, we find the NLRC legally correct and well within its jurisdiction when it affirmed the
validity of the respondents' dismissal on the ground of serious misconduct.

Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to the realm of
purely private relations. Whether aroused by lust or inflamed by sincere affection, sexual acts should be
carried out at such place, time and circumstance that, by the generally accepted norms of conduct, will not
offend public decency nor disturb the generally held or accepted social morals. Under these parameters,
sexual acts between two consenting adults do not have a place in the work environment.

Indisputably, the respondents engaged in sexual intercourse inside company premises and during work
hours. These circumstances, by themselves, are already punishable misconduct. Added to these
considerations, however, is the implication that the respondents did not only disregard company rules but
flaunted their disregard in a manner that could reflect adversely on the status of ethics and morality in the
company.

Additionally, the respondents engaged in sexual intercourse in an area where co-employees or other
company personnel have ready and available access. The respondents likewise committed their act at a time
when the employees were expected to be and had, in fact, been at their respective posts, and when they
themselves were supposed to be, as all other employees had in fact been, working.

Under these factual premises and in the context of legal parameters we discussed, we cannot help but
consider the respondents' misconduct to be of grave and aggravated character so that the company was
justified in imposing the highest penalty available — dismissal. Their infraction transgressed the bounds of
socially and morally accepted human public behavior, and at the same time showed brazen disregard for the
respect that their employer expected of them as employees. By their misconduct, the respondents, in effect,
issued an open invitation for others to commit the same infraction, with like disregard for their employer's
rules, for the respect owed to their employer, and for their co-employees' sensitivities. Taken together,
these considerations reveal a depraved disposition that the Court cannot but consider as a valid cause for
dismissal.

In ruling as we do now, we considered the balancing between the respondents' tenurial rights and the
petitioner's interests - the need to defend their management prerogative and to maintain as well a high
standard of ethics and morality in the workplace. Unfortunately for the respondents, in this balancing under
the circumstances of the case, we have to rule against their tenurial rights in favor of the employer's
management rights.

All told, the respondents' misconduct, under the circumstances of this case, fell within the terms of Article
282 (now Article 296) of the Labor Code. Consequently, we reverse the CA's decision for its failure to
recognize that no grave abuse of discretion attended the NLRC's decision to support the respondents'
dismissal for serious misconduct.

WHEREFORE, in light of these considerations, we hereby GRANT the petition. We REVERSE the decision
dated June 9, 2010 and the resolution dated December 22, 2010 of the Court of Appeals in CA-G.R. SP No.
110327 and REINSTATE the decision dated December 24, 2008 of the National Labor Relations Commission
in NLRC CA No. 043915-05 (NLRC Case No. RAB IV-12-1661-02-L).

SO ORDERED.

Carpio, (Chairperson), Mendoza, Reyes,*and Perlas-Bernabe,** JJ., concur.

SECOND DIVISION

MICHAEL J. LAGROSAS, G.R. No. 168637

Petitioner,

Present:
- versus -
QUISUMBING, J., Chairperson,
CARPIO MORALES,
BRISTOL-MYERS SQUIBB (PHIL.), TINGA,
INC./MEAD JOHNSON PHIL., VELASCO, JR., and
RICHARD SMYTH as General BRION, JJ.
Manager and FERDIE SARFATI, as
Medical Sales Director,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - -x

BRISTOL-MYERS SQUIBB (PHIL.), G.R. No. 170684

INC./MEAD JOHNSON PHIL.,
Petitioner,

- versus -
 COURT OF APPEALS and Promulgated:
MICHAEL J. LAGROSAS,
Respondents. September 12, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
QUISUMBING, J.:

Before this Court are two consolidated petitions. The first petition, docketed
as G.R. No. 168637, filed by Michael J. Lagrosas, assails the
Decision[1] dated January 28, 2005 and the Resolution[2] dated June 23, 2005 of the
Court of Appeals in CA-G.R. SP No. 83885. The second petition, docketed as G.R.
No. 170684, filed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil., assails
the Resolutions[3] dated August 12, 2005 and October 28, 2005 of the Court of
Appeals in CA-G.R. SP No. 83885.

The facts are undisputed.

Michael J. Lagrosas was employed by Bristol-Myers Squibb (Phil.),

Inc./Mead Johnson Phil. from January 6, 1997 until March 23, 2000 as Territory
Manager in its Medical Sales Force Division.[4]

On February 4, 2000, Ma. Dulcinea S. Lim, also a Territory Manager and

Lagrosas former girlfriend, attended a district meeting of territory managers at
McDonalds Alabang Town Center. After the meeting, she dined out with her
friends. She left her car at McDonalds and rode with Cesar R. Menquito, Jr. When
they returned to McDonalds, Lim saw Lagrosas car parked beside her car. Lim told
Menquito not to stop his car but Lagrosas followed them and slammed Menquitos
car thrice. Menquito and Lim alighted from the car. Lagrosas approached them and
hit Menquito with a metal steering wheel lock. When Lim tried to intervene,
Lagrosas accidentally hit her head.

Upon learning of the incident, Bristol-Myers required Lagrosas to explain in

writing why he should not be dismissed for assaulting a co-employee outside of
business hours. While the offense is not covered by the Code of Discipline for
Territory Managers, the Code states that other infractions not provided for herein
shall be penalized in the most appropriate manner at the discretion of
management.[5] In his memo, Lagrosas admitted that he accidentally hit Lim when
she tried to intervene. He explained that he did not intend to hit her as shown by the
fact that he never left the hospital until he was assured that she was all right. [6]

In the disciplinary hearing that followed, it was established that Lagrosas and
Lim had physical confrontations prior to the incident. But Lagrosas denied saying
that he might not be able to control himself and hurt Lim and her boyfriend if he sees
them together.

On March 23, 2000, Bristol-Myers dismissed Lagrosas effective

immediately.[7] Lagrosas then filed a complaint[8] for illegal dismissal, non-payment
of vacation and sick leave benefits, 13th month pay, attorneys fees, damages and fair
market value of his Team Share Stock Option Grant.

On February 28, 2002, Labor Arbiter Renaldo O. Hernandez rendered a

Decision[9] in NLRC NCR Case No. 00-03-02821-99,declaring the dismissal
illegal. He noted that while Lagrosas committed a misconduct, it was not connected
with his work. The incident occurred outside of company premises and office
hours. He also observed that the misconduct was not directed against a co-employee
who just happened to be accidentally hit in the process. Nevertheless, Labor Arbiter
Hernandez imposed a penalty of three months suspension or forfeiture of pay to
remind Lagrosas not to be carried away by the mindless dictates of his passion. Thus,
the Arbiter ruled:
WHEREFORE, premises considered, judgment is hereby [rendered]
finding that respondent company illegally dismissed complainant
thus, ORDERING it:

1) [t]o reinstate him to his former position without loss of seniority rights,
privileges and benefits and to pay him full backwages reckoned from [the] date of
his illegal dismissal on 23 March 2000 including the monetary value of his
vacation/sick leave of 16 days per year reckoned from July 1, 2000 until actually
reinstated, less three (3) months salary as penalty for his infraction;

2) to pay him the monetary equivalent of his accrued and unused combined
sick/vacation leaves as of June 30, 2000 of 16 days x 3 years and 4 months 10 days
x P545.45 = P23,636.16 and the present fair market value of his Team Share stock
option grant for eight hundred (800) BMS common shares of stock listed in the
New York Stock Exchange which vested in complainant as of 01 July 1997,
provisionally computed as 90% (800 shares x US$40.00 per share x P43.20/US$ =
P1,244,160.00).

3) to pay him Attorneys fee of 10% on the entire computable amount.

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

SO ORDERED.[10]

On appeal, the National Labor Relations Commission (NLRC) set aside the
Decision of Labor Arbiter Hernandez in its Decision[11] dated September 24, 2002. It
held that Lagrosas was validly dismissed for serious misconduct in hitting his co-
employee and another person with a metal steering wheel lock. The gravity and
seriousness of his misconduct is clear from the fact that he deliberately waited for
Lim and Menquito to return to McDonalds. The NLRC also ruled that the
misconduct was committed in connection with his duty as Territory Manager since
it occurred immediately after the district meeting of territory managers.

Lagrosas moved for reconsideration. On May 7, 2003, the NLRC issued a

Resolution[12] reversing its earlier ruling. It ratiocinated that the incident was not
work-related since it occurred only after the district meeting of territory managers. It
emphasized that for a serious misconduct to merit dismissal, it must be connected
with the employees work. The dispositive portion of the Resolution states:
WHEREFORE, premises considered, We find this time no reason to alter
the Labor Arbiters Decision of February 28, 2002 and hereby affirm the same in
toto. We vacate our previous Decision of September 24, 2002.

SO ORDERED.[13]

Bristol-Myers filed a motion for reconsideration which the NLRC denied in

an Order dated February 4, 2004 in NLRC NCR Case No. 00-03-02821-99 (NLRC
NCR CA No. 031646-02).[14] Later, Labor Arbiter Hernandez issued a writ of
execution.[15]Notices of garnishment were then served upon the Philippine British
Assurance Co., Inc. for the supersedeas bond posted by Bristol-Myers and the Bank
of the Philippine Islands for the balance of the judgment award.[16]

Bristol-Myers moved to quash the writ of execution contending that it timely

filed a petition for certiorari with the Court of Appeals. The appellate court gave due
course to Bristol-Myers petition and issued a temporary restraining order
(TRO)[17]enjoining the enforcement of the writ of execution and notices of
garnishment. Upon the expiration of the TRO, the appellate court issued a writ of
preliminary injunction dated September 17, 2004.[18]
 Bristol-Myers then moved to discharge and release the TRO cash bond. It
argued that since it has posted an injunction cash bond, the TRO cash bond should
be legally discharged and released.

On January 28, 2005, the appellate court rendered the following Decision:
WHEREFORE, the petition is GRANTED. The Resolution of May 7,
2003 and the Order of February 4, 2004 in NLRC NCR Case No. [00-03-02821-
99] (NLRC NCR CA No. [031646-02]), are REVERSED and SET ASIDE. The
public respondent NLRCs Decision dated September 24, 2002 which reversed the
Labor Arbiters decision and in effect sustained the legality of the private
respondents termination and the dismissal of his claim for the fair market value of
the [Team Share] stock option grant
is REINSTATEDand AFFIRMED, with MODIFICATION that the petitioner
shall pay the private respondent the monetary equivalent of his accrued and unused
combined sick/vacation leave plus ten (10%) percent thereof, as attorneys fees. The
injunction bond and the TRO bond previously posted by the petitioner
are DISCHARGED.

SO ORDERED.[19]

The appellate court considered the misconduct as having been committed in

connection with Lagrosas duty as Territory Manager since it occurred immediately
after the district meeting of territory managers. It also held that the gravity and
seriousness of the misconduct cannot be denied. Lagrosas employed such a degree
of violence that caused damage not only to Menquitos car but also physical injuries
to Lim and Menquito.

Lagrosas filed a motion for reconsideration which the appellate court denied.

In the meantime, Bristol-Myers moved to release the TRO cash bond and
injunction cash bond in view of the Decision dated January 28, 2005. On August 12,
2005, the appellate court denied the motion as premature since the decision is not
yet final and executory due to Lagrosas appeal to this Court.[20]

Bristol-Myers filed a motion for reconsideration. On October 28, 2005, the

appellate court resolved:
WHEREFORE, the petitioners Motion [f]or
Reconsideration dated September 6, 2005 is PARTIALLY GRANTED and the
Resolution of August 12, 2005 is RECONSIDERED and SET ASIDE. The
temporary restraining order cash bond in the amount of SIX HUNDRED
 THOUSAND PESOS (P600,000.00) which was posted by the petitioners on July
19, 2004 is ordered DISCHARGED and RELEASED to the petitioners.

SO ORDERED.[21]

The appellate court held that upon the expiration of the TRO, the cash bond
intended for it also expired. Thus, the discharge and release of the cash bond for the
expired TRO is proper. But the appellate court disallowed the discharge of the
injunction cash bond since the writ of preliminary injunction was
issued pendente lite. Since there is a pending appeal with the Supreme Court, the
Decision dated January 28, 2005 is not yet final and executory.

Hence, the instant petitions.

In G.R. No. 168637, Lagrosas assigns the following errors:

I.
THE HONORABLE COURT OF APPEALS IN DECLARING THAT THE
TERMINATION OF EMPLOYMENT OF THE PETITIONER-APPELLANT
WAS LEGAL HAD DECIDED A QUESTION OF SUBSTANCE IN A WAY
NOT IN ACCORD WITH THE LABOR LAWS AND JURISPRUDENCE AND
DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS, AS TO CALL FOR THE EXERCISE OF THIS HONORABLE
COURTS POWER OF REVIEW AND/OR SUPERVISION.

II.
THE HONORABLE COURT OF APPEALS IN IMPOSING THE PENALTY OF
DISMISSAL, BEING A PENALTY TOO HARSH IN THIS CASE, DECIDED A
QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE
LABOR LAWS AND JURISPRUDENCE AND DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO
CALL FOR THE EXERCISE OF THIS HONORABLE COURTS POWER OF
REVIEW AND/OR SUPERVISION.[22]

In G.R. No. 170684, Bristol-Myers raises the following issue:

[WHETHER OR NOT THE HONORABLE] COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR EXCESS OF JURISDICTION IN DISALLOWING THE RELEASE AND
DISCHARGE OF PETITIONERS INJUNCTION BOND.[23]
 Simply put, the basic issues in the instant petitions are: (1) Did the Court of
Appeals err in finding the dismissal of Lagrosas legal? and (2) Did the Court of
Appeals err in disallowing the discharge and release of the injunction cash bond?

On the first issue, serious misconduct as a valid cause for the dismissal of an
employee is defined simply as improper or wrong conduct. It is a transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error of judgment. To
be serious within the meaning and intendment of the law, the misconduct must be of
such grave and aggravated character and not merely trivial or unimportant. However
serious such misconduct, it must, nevertheless, be in connection with the employees
work to constitute just cause for his separation. The act complained of must be
related to the performance of the employees duties such as would show him to be
unfit to continue working for the employer.[24]

Thus, for misconduct or improper behavior to be a just cause for dismissal, it

(a) must be serious; (b) must relate to the performance of the employees duties; and
(c) must show that the employee has become unfit to continue working for the
employer.[25]

Tested against the foregoing standards, it is clear that Lagrosas was not guilty
of serious misconduct. It may be that the injury sustained by Lim was serious since
it rendered her unconscious and caused her to suffer cerebral contusion that
necessitated hospitalization for several days. But we fail to see how such misconduct
could be characterized as work-related and reflective of Lagrosas unfitness to
continue working for Bristol-Myers.

Although we have recognized that fighting within company premises may

constitute serious misconduct, we have also held that not every fight within company
premises in which an employee is involved would automatically warrant dismissal
from service.[26] More so, in this case where the incident occurred outside of
company premises and office hours and not intentionally directed against a co-
employee, as hereafter explained.

First, the incident occurred outside of company premises and after office
hours since the district meeting of territory managers which Lim attended at
McDonalds had long been finished. McDonalds may be considered an extension of
Bristol-Myers office and any business conducted therein as within office hours, but
the moment the district meeting was concluded, that ceased too. When Lim dined
with her friends, it was no longer part of the district meeting and considered official
time. Thus, when Lagrosas assaulted Lim and Menquito upon their return, it was no
longer within company premises and during office hours. Second, Bristol-Myers
itself admitted that Lagrosas intended to hit Menquito only. In the
Memorandum[27] dated March 23, 2000, it was stated that You got out from your car
holding an umbrella steering wheel lock and proceeded to hit Mr. Menquito. Dulce
tried to intervene, but you accidentally hit her on the head, knocking her
unconscious.[28] Indeed, the misconduct was not directed against a co-employee who
unfortunately got hit in the process. Third, Lagrosas was not performing official
work at the time of the incident.He was not even a participant in the district
meeting. Hence, we fail to see how his action could have reflected his unfitness to
continue working for Bristol-Myers.

In light of Bristol-Myers failure to adduce substantial evidence to prove that

Lagrosas was guilty of serious misconduct, it cannot use this ground to justify his
dismissal. Thus, the dismissal of Lagrosas employment was without factual and legal
basis.

On the second issue, it is settled that the purpose of a preliminary injunction

is to prevent threatened or continuous irremediable injury to some of the parties
before their claims can be thoroughly studied and adjudicated. Its sole aim is to
preserve the status quo until the merits of the case can be heard fully.[29]

A preliminary injunction may be granted only when, among other things, the
applicant, not explicitly exempted, files with the court where the action or
proceeding is pending, a bond executed to the party or person enjoined, in an amount
to be fixed by the court, to the effect that the applicant will pay such party or person
all damages which he may sustain by reason of the injunction or temporary
restraining order if the court should finally decide that the applicant was not entitled
thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall
be issued.[30]

The injunction bond is intended as a security for damages in case it is finally

decided that the injunction ought not to have been granted. Its principal purpose is
to protect the enjoined party against loss or damage by reason of the injunction, and
the bond is usually conditioned accordingly.[31]

In this case, the Court of Appeals issued the writ of preliminary injunction to
enjoin the implementation of the writ of execution and notices of garnishment
pending final resolution of this case or unless the [w]rit is sooner lifted by the
Court.[32]

By its Decision dated January 28, 2005, the appellate court disposed of the
case by granting Bristol-Myers petition and reinstating the Decision
dated September 24, 2002 of the NLRC which dismissed the complaint for
dismissal. It also ordered the discharge of the TRO cash bond and injunction cash
bond. Thus, both conditions of the writ of preliminary injunction were satisfied.

Notably, the appellate court ruled that Lagrosas had no right to the monetary
awards granted by the labor arbiter and the NLRC, and that the implementation of
the writ of execution and notices of garnishment was properly enjoined. This in
effect amounted to a finding that Lagrosas did not sustain any damage by reason of
the injunction. To reiterate, the injunction bond is intended to protect Lagrosas
against loss or damage by reason of the injunction only. Contrary to Lagrosas claim,
it is not a security for the judgment award by the labor arbiter.[33]

Considering the foregoing, we hold that the appellate court erred in

disallowing the discharge and release of the injunction cash bond.

WHEREFORE, the two consolidated petitions are GRANTED. In G.R. No.

168637, filed by Michael J. Lagrosas, the Decision dated January 28, 2005, and the
Resolution dated June 23, 2005 of the Court of Appeals in CA-G.R. SP No. 83885
are REVERSED. The Resolution dated May 7, 2003, and the Order dated February
4, 2004 of the NLRC in NLRC NCR Case No. 00-03-02821-99 (NLRC NCR CA
No. 031646-02) are REINSTATED and hereby AFFIRMED.

In G.R. No. 170684, filed by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson

Phil., the Resolutions dated August 12, 2005and October 28, 2005 of the Court of
Appeals in CA-G.R. SP No. 83885 are REVERSED. The injunction cash bond in
the amount of SIX HUNDRED THOUSAND PESOS (P600,000) which was posted
by Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil. on September 17, 2004 is
hereby ordered DISCHARGED and RELEASED to it.

No pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 49549 August 30, 1990

EVELYN CHUA-QUA, petitioner,

vs.
HON. JACOBO C. CLAVE, in his capacity as Presidential Executive Assistant, and TAY TUNG
HIGH SCHOOL, INC., respondents.

William C. Gunitang and Jaime Opinion for petitioner.

Laogan Law Offices for private respondent.

REGALADO, J.:

This would have been just another illegal dismissal case were it not for the controversial and unique situation that the marriage of herein
petitioner, then a classroom teacher, to her student who was fourteen (14) years her junior, was considered by the school authorities as
sufficient basis for terminating her services.

Private respondent Tay Tung High School, Inc. is an educational institution in Bacolod City.
Petitioner had been employed therein as a teacher since 1963 and, in 1976 when this dispute arose,
was the class adviser in the sixth grade where one Bobby Qua was enrolled. Since it was the policy
of the school to extend remedial instructions to its students, Bobby Qua was imparted such
instructions in school by petitioner. 1 In the course thereof, the couple fell in love and on December
24, 1975, they got married in a civil ceremony solemnized in Iloilo City by Hon. Cornelio G. Lazaro,
City Judge of Iloilo.2 Petitioner was then thirty (30) years of age but Bobby Qua being sixteen (16)
years old, consent and advice to the marriage was given by his mother, Mrs. Concepcion Ong.3 Their
marriage was ratified in accordance with the rites of their religion in a church wedding solemnized by
Fr. Nick Melicor at Bacolod City on January 10, 1976. 4

On February 4, 1976, private respondent filed with the sub-regional office of the Department of
Labor at Bacolod City an application for clearance to terminate the employment of petitioner on the
following ground: "For abusive and unethical conduct unbecoming of a dignified school teacher and
that her continued employment is inimical to the best interest, and would downgrade the high moral
values, of the school." 5

Petitioner was placed under suspension without pay on March 12, 1976. 6 Executive Labor Arbiter
Jose Y. Aguirre, Jr. of the National Labor Relations Commission, Bacolod City, to whom the case
was certified for resolution, required the parties to submit their position papers and supporting
evidence. Affidavits 7 were submitted by private respondent to bolster its contention that petitioner,
"defying all standards of decency, recklessly took advantage of her position as school teacher, lured
a Grade VI boy under her advisory section and 15 years her junior into an amorous relation." 8 More
specifically, private respondent raised issues on the fact that petitioner stayed alone with Bobby Qua
in the classroom after school hours when everybody had gone home, with one door allegedly locked
and the other slightly open.

On September 17, 1976, Executive Labor Arbiter Jose Y. Aguirre, Jr., without conducting any formal
hearing, rendered an "Award" in NLRC Case No. 956 in favor of private respondent granting the
clearance to terminate the employment of petitioner. It was held therein that —

The affidavits . . . although self-serving but were never disputed by the respondent
pointed out that before the marriage of respondent to Bobby Qua, fourteen (14) years
her junior and during her employment with petitioner, an amorous relationship
existed between them. In the absence of evidence to the contrary, the undisputed
written testimonies of several witnesses convincingly picture the circumstances
under which such amorous relationship was manifested within the premises of the
school, inside the classroom, and within the sight of some employees. While no
direct evidences have been introduced to show that immoral acts were committed
during these times, it is however enough for a sane and credible mind to imagine and
conclude what transpired and took place during these times. . . . 9

Petitioner, however, denied having received any copy of the affidavits referred to. 10

On October 7, 1976, petitioner appealed to the National Labor Relations Commission claiming denial
of due process for not having been furnished copies of the aforesaid affidavits relied on by the labor
arbiter. She further contended that there was nothing immoral, nor was it abusive and unethical
conduct unbecoming of a dignified school teacher, for a teacher to enter into lawful wedlock with her
student.11

On December 27, 1976, the National Labor Relations Commission unanimously reversed the Labor
Arbiter's decision and ordered petitioner's reinstatement with backwages, with the following specific
findings:

Affiant Maselliones deposed and said that he saw appellant and Qua sitting on the
student desk inside a classroom after classes. The depositions of affiants Despi and
Chin are of the same tenor. No statements whatever were sworn by them that they
were eyewitnesses to immoral or scandalous acts.

xxx xxx xxx

Even if we have to strain our sense of moral values to accommodate the conclusion
of the Arbiter, we could not deduce anything immoral or scandalous about a girl and
a boy talking inside a room after classes with lights on and with the door open.

xxx xxx xxx

Petitioner-appellee naively insisted that the clearance application was precipitated by

immoral acts which did not lend dignity to the position of appellant. Aside from such
gratuitous assertions of immoral acts or conduct by herein appellant, no evidence to
support such claims was introduced by petitioner-appellee. We reviewed the the
sequence of events from the beginning of the relationship between appellant Evelyn
Chua and Bobby Qua up to the date of the filing of the present application for
clearance in search of evidence that could have proved detrimental to the image and
dignity of the school but none has come to our attention. . . . 12
The case was elevated by private respondent to the Minister of Labor who, on March 30, 1977,
reversed the decision of the National Labor Relations Commission. The petitioner was, however,
awarded six (6) months salary as financial assistance. 13

On May 20, 1977, petitioner appealed the said decision to the Office of the President of the
Philippines. 14 After the corresponding exchanges, on September 1, 1978 said office, through
Presidential Executive Assistant Jacobo C. Clave, rendered its decision reversing the appealed
decision. Private respondent was ordered to reinstate petitioner to her former position without loss of
seniority rights and other privileges and with full back wages from the time she was not allowed to
work until the date of her actual reinstatement. 15

Having run the gamut of three prior adjudications of the case with alternating reversals, one would
think that this decision of public respondent wrote finis to petitioner's calvary. However, in a
resolution dated December 6, 1978, public respondent, acting on a motion for reconsideration 16 of
herein private respondent and despite opposition thereto, 17 reconsidered and modified the aforesaid
decision, this time giving due course to the application of Tay Tung High School, Inc. to terminate
the services of petitioner as classroom teacher but giving her separation pay equivalent to her six (6)
months salary. 18

In thus reconsidering his earlier decision, public respondent reasoned out in his
manifestation/comment filed on August 14, 1979 in this Court in the present case:

That this Office did not limit itself to the legal issues involved in the case, but went
further to view the matter from the standpoint of policy which involves the delicate
task of rearing and educating of children whose interest must be held paramount in
the school community, and on this basis, this Office deemed it wise to uphold the
judgment and action of the school authorities in terminating the services of a teacher
whose actuations and behavior, in the belief of the school authorities, had spawned
ugly rumors that had cast serious doubts on her integrity, a situation which was
considered by them as not healthy for a school campus, believing that a school
teacher should at all times act with utmost circumspection and conduct herself
beyond reproach and above suspicion; 19

In this petition for certiorari, petitioner relies on the following grounds for the reversal of the aforesaid
resolution of public respondent, viz.:

1. The dismissal or termination of petitioner's employment, despite Tay Tung's claim

to the contrary, was actually based on her marriage with her pupil and is, therefore,
illegal.

2. Petitioner's right to due process under the Constitution was violated when the
hearsay affidavits of Laddy Maselliones, Eleuterio Despi, Pina D. Chiu, and Ong Lee
Bing, were admitted and considered in evidence without presenting the affiants as
witnesses and affording the petitioner the right to confront and cross-examine them.

3. No sufficient proofs were adduced to show that petitioner committed serious

misconduct or breached the trust reposed on her by her employer or committed any
of the other grounds enumerated in Article 283 (Now Article 282) of the Labor Code
which will justify the termination of her employment. 20

We first dispose of petitioner's claim that her right to due process was violated. We do not agree.
There is no denial of due process where a party was afforded an opportunity to present his side.
Also, the procedure by which issues are resolved based on position papers, affidavits and other
documentary evidence is recognized as not violative of such right. Moreover, petitioner could have
insisted on a hearing to confront and cross-examine the affiants but she did not do so, obviously
because she was convinced that the case involves a question of law. Besides, said affidavits were
also cited and discussed by her in the proceedings before the Ministry of Labor.

Now, on the merits. Citing its upright intention to preserve the respect of the community toward the
teachers and to strengthen the educational system, private respondent submits that petitioner's
actuations as a teacher constitute serious misconduct, if not an immoral act, a breach of trust and
confidence reposed upon her and, thus, a valid and just ground to terminate her services. It argues
that as a school teacher who exercises substitute parental authority over her pupils inside the school
campus, petitioner had moral ascendancy over Bobby Qua and, therefore, she must not abuse such
authority and respect extended to her. Furthermore, it charged petitioner with having allegedly
violated the Code of Ethics for teachers the pertinent provision of which states that a "school official
or teacher should never take advantage of his/her position to court a pupil or student." 21

On the other hand, petitioner maintains that there was no ground to terminate her services as there
is nothing wrong with a teacher falling in love with her pupil and, subsequently, contracting a lawful
marriage with him. She argued that she was dismissed because of her marriage with Bobby Qua
This contention was sustained in the aforesaid decision of the National Labor Relations Commission
thus:

. . . One thing, however, has not escaped our observation: That the application for
clearance was filed only after more than one month elapsed from the date of
appellant's marriage to Bobby Qua Certainly, such belated application for clearance
weakens instead of strengthening the cause of petitioner-appellee. The alleged
immoral acts transpired before the marriage and if it is these alleged undignified
conduct that triggered the intended separation, then why was the present application
for clearance not filed at that time when the alleged demoralizing effect was still fresh
and abrasive?22

After a painstaking perusal of the records, we are of the considered view that the determination of
the legality of the dismissal hinges on the issue of whether or not there is substantial evidence to
prove that the antecedent facts which culminated in the marriage between petitioner and her student
constitute immorality and/or grave misconduct. To constitute immorality, the circumstances of each
particular case must be holistically considered and evaluated in the light of prevailing norms of
conduct and the applicable law. Contrary to what petitioner had insisted on from the very start, what
is before us is a factual question, the resolution of which is better left to the trier of facts.

Considering that there was no formal hearing conducted, we are constrained to review the factual
conclusions arrived at by public respondent, and to nullify his decision through the extraordinary writ
of certiorari if the same is tainted by absence or excess of jurisdiction or grave abuse of discretion.
The findings of fact must be supported by substantial evidence; otherwise, this Court is not bound
thereby.23

We rule that public respondent acted with grave abuse of discretion. As vividly and forcefully
observed by him in his original decision:

Indeed, the records relied upon by the Acting Secretary of Labor (actually the records
referred to are the affidavits attached as Annexes "A" to "D" of the position paper
dated August 10, 1976 filed by appellee at the arbitration proceedings) in arriving at
his decision are unbelievable and unworthy of credit, leaving many question
 unanswered by a rational mind. For one thing, the affidavits refer to certain times of
the day during off school hours when appellant and her student were found together
in one of the classrooms of the school. But the records of the case present a ready
answer: appellant was giving remedial instruction to her student and the school was
the most convenient place to serve the purpose. What is glaring in the affidavits is
the complete absence of specific immoral acts allegedly committed by appellant and
her student. For another, and very important at that, the alleged acts complained of
invariably happened from September to December, 1975, but the disciplinenary
action imposed by appellee was sought only in February, 1976, and what is more,
the affidavits were executed only in August, 1976 and from all indications, were
prepared by appellee or its counsel. The affidavits heavily relied upon by appellee
are clearly the product of after-thought. . . . The action pursued by appellee in
dismissing appellant over one month after her marriage, allegedly based on immoral
acts committed even much earlier, is open to basis of the action sought seriously
doubted; on the question. The basis of the action sought is seriously doubted; on the
contrary, we are more inclined to believe that appellee had certain selfish, ulterior
and undisclosed motives known only to itself. 24

As earlier stated, from the outset even the labor arbiter conceded that there was no direct evidence
to show that immoral acts were committed. Nonetheless, indulging in a patently unfair conjecture, he
concluded that "it is however enough for a sane and credible mind to imagine and conclude what
transpired during those times." 25 In reversing his decision, the National Labor Relations Commission
observed that the assertions of immoral acts or conducts are gratuitous and that there is no direct
evidence to support such claim, 26 a finding which herein public respondent himself shared.

We are, therefore, at a loss as to how public respondent could adopt the volte-face in the questioned
resolution, which we hereby reject, despite his prior trenchant observations hereinbefore quoted. What is revealing however, is that the
reversal of his original decision is inexplicably based on unsubstantiated surmises and non sequiturs which he incorporated in his assailed
resolution in this wise:

. . . While admittedly, no one directly saw Evelyn Chua and Bobby Qua doing
immoral acts inside the classroom it seems obvious and this Office is convinced that
such a happening indeed transpired within the solitude of the classrom after regular
class hours. The marriage between Evelyn Chua and Bobby Qua is the best proof
which confirms the suspicion that the two indulged in amorous relations in that place
during those times of the day. . . . 27

With the finding that there is no substantial evidence of the imputed immoral acts, it follows that the
alleged violation of the Code of Ethics governing school teachers would have no basis. Private
respondent utterly failed to show that petitioner took advantage of her position to court her student. If
the two eventually fell in love, despite the disparity in their ages and academic levels, this only lends
substance to the truism that the heart has reasons of its own which reason does not know. But,
definitely, yielding to this gentle and universal emotion is not to be so casually equated with
immorality. The deviation of the circumstances of their marriage from the usual societal pattern
cannot be considered as a defiance of contemporary social mores.

It would seem quite obvious that the avowed policy of the school in rearing and educating children is
being unnecessarily bannered to justify the dismissal of petitioner. This policy, however, is not at
odds with and should not be capitalized on to defeat the security of tenure granted by the
Constitution to labor. In termination cases, the burden of proving just and valid cause for dismissing
an employee rests on the employer and his failure to do so would result in a finding that the
dismissal is unjustified.
The charge against petitioner not having been substantiated, we declare her dismissal as
unwarranted and illegal. It being apparent, however, that the relationship between petitioner and
private respondent has been inevitably and severely strained, we believe that it would neither be to
the interest of the parties nor would any prudent purpose be served by ordering her reinstatement.

WHEREFORE, the petition for certiorari is GRANTED and the resolution of public respondent, dated
December 6, 1978 is ANNULLED and SET ASIDE. Private respondent Tay Tung High School, Inc.
is hereby ORDERED to pay petitioner backwages equivalent to three (3) years, without any
deduction or qualification, and separation pay in the amount of one (1) month for every year of
service.

SO ORDERED.

Melencio-Herrera (Chairman), Paras and Padilla, JJ., concur.

Sarmiento, J., is on leave.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 187226 January 28, 2015

CHERYLL SANTOS LEUS, Petitioner,

vs.
ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or SR. EDNA QUIAMBAO,
OSB, Respondents.

DECISION

REYES, J.:

Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove (SSCW), a
Catholic educational institution, as a non-teaching personnel, engaged in pre-marital sexual
relations, got pregnant out of wedlock, married the father of her child, and was dismissed by SSCW,
in that order. The question that has to be resolved is whether the petitioner's conduct constitutes a
ground for her dismissal.

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 dated September 24, 2008 and Resolution2 dated March 2, 2009
issued by the Court of Appeals (CA) in CA-G.R. SP No. 100188, which affirmed the Resolutions
dated February 28, 20073 and May 21, 20074 of the National Labor Relations Commission (NLRC)in
NLRC CA No. 049222-06.

The Facts

SSCW is a catholic and sectarian educational institution in Silang, Cavite. In May 2001, SSCW hired
the petitioner as an Assistant to SSCW’s Director of the Lay Apostolate and Community Outreach
Directorate.
Sometime in 2003, the petitioner and her boyfriend conceived a child out of wedlock. When SSCW
learned of the petitioner’s pregnancy, Sr. Edna Quiambao (Sr. Quiambao), SSCW’s Directress,
advised her to file a resignation letter effective June 1, 2003. In response, the petitioner informed Sr.
Quiambao that she would not resign from her employment just because she got pregnant without the
benefit of marriage.5

On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain in writing why she should
not be dismissed for engaging in pre-marital sexual relations and getting pregnant as a result
thereof, which amounts to serious misconduct and conduct unbecoming of an employee of a
Catholic school.6

In a letter7 dated May 31, 2003, the petitioner explained that her pregnancy out of wedlock does not
amount to serious misconduct or conduct unbecoming of an employee. She averred that she is
unaware of any school policy stating that being pregnant out of wedlock is considered as a serious
misconduct and, thus, a ground for dismissal. Further, the petitioner requested a copy of SSCW’s
policy and guidelines so that she may better respond to the charge against her. On June 2, 2003, Sr.
Quiambao informed the petitioner that, pending the promulgation of a "Support Staff Handbook,"
SSCW follows the 1992 Manual of Regulations for Private Schools (1992 MRPS) on the causes for
termination of employments; that Section 94(e) of the 1992 MRPS cites "disgraceful or immoral
conduct" as a ground for dismissal in addition to the just causes for termination of employment
provided under Article 282 of the Labor Code.8

On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a letter,9 which, in part, reads:

To us, pre-marital sex between two consenting adults without legal impediment to marry each other
who later on married each other does not fall within the contemplation of "disgraceful or immoral
conduct" and "serious misconduct" of the Manual of Regulations for Private Schools and the Labor
Code of the Philippines.

Your argument that what happened to our client would set a bad example to the students and other
employees of your school is speculative and is more imaginary than real. To dismiss her on that sole
ground constitutes grave abuse of management prerogatives.

Considering her untarnished service for two years, dismissing her with her present condition would
also mean depriving her to be more secure in terms of financial capacity to sustain maternal needs.10

In a letter11 dated June 6, 2003, SSCW, through counsel, maintained that pre-marital sexual
relations, evenif between two consenting adults without legal impediment to marry, is considered a
disgraceful and immoral conduct or a serious misconduct, which are grounds for the termination of
employment under the 1992 MRPS and the Labor Code. That SSCW, as a Catholic institution of
learning, has the right to uphold the teaching of the Catholic Church and expect its employees to
abide by the same. They further asserted that the petitioner’s indiscretion is further aggravated by
the fact that she is the Assistant to the Director of the Lay Apostolate and Community Outreach
Directorate, a position of responsibility that the students look up to as rolemodel. The petitioner was
again directed to submit a written explanation on why she should not be dismissed.

On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts her counsel’s letter dated
June 4, 2003 as her written explanation.12

Consequently, in her letter13 dated June 11, 2003, Sr. Quiambao informed the petitioner that her
employment with SSCW is terminated on the ground of serious misconduct. She stressed that pre-
marital sexual relations between two consenting adults with no impediment to marry, even if they
subsequently married, amounts to immoral conduct. She further pointed out that SSCW finds
unacceptable the scandal brought about by the petitioner’s pregnancy out of wedlock as it ran
counter to the moral principles that SSCW stands for and teaches its students.

Thereupon, the petitioner filed a complaint for illegal dismissal with the Regional Arbitration Branch
of the NLRC in Quezon City against SSCW and Sr. Quiambao (respondents). In her position
paper,14 the petitioner claimed that SSCW gravely abused its management prerogative as there was
no just cause for her dismissal. She maintained that her pregnancy out of wedlock cannot be
considered as serious misconduct since the same is a purely private affair and not connected in any
way with her duties as an employee of SSCW. Further, the petitioner averred that she and her
boyfriend eventually got married even prior to her dismissal.

For their part, SSCW claimed that there was just cause to terminate the petitioner’s employment with
SSCW and that the same is a valid exercise of SSCW’s management prerogative. They maintained
that engaging in pre-marital sex, and getting pregnant as a result thereof, amounts to a disgraceful
or immoral conduct, which is a ground for the dismissal of an employee under the 1992 MRPS.

They pointed out that SSCW is a Catholic educational institution, which caters exclusively to young
girls; that SSCW would lose its credibility if it would maintain employees who do not live up to the
values and teachings it inculcates to its students. SSCW further asserted that the petitioner, being
an employee of a Catholic educational institution, should have strived to maintain the honor, dignity
and reputation of SSCW as a Catholic school.15

The Ruling of the Labor Arbiter

On February 28, 2006, the Labor Arbiter (LA) rendered a Decision,16 in NLRC Case No. 6-17657-03-
C which dismissed the complaint filed by the petitioner. The LA found that there was a valid ground
for the petitioner’s dismissal; that her pregnancy out of wedlock is considered as a "disgraceful and
immoral conduct." The LA pointed out that, as an employee of a Catholic educational institution, the
petitioner is expected to live up to the Catholic values taught by SSCW to its students. Likewise, the
LA opined that:

Further, a deep analysis of the facts would lead us to disagree with the complainant that she was
dismissed simply because she violate[d] a Catholic [teaching]. It should not be taken in isolation but
rather it should be analyzed in the lightof the surrounding circumstances as a whole. We must also
take into [consideration] the nature of her work and the nature of her employer-school. For us, it is
not just an ordinary violation. It was committed by the complainant in an environment where her strict
adherence to the same is called for and where the reputation of the school is at stake. x x x.17

The LA further held that teachers and school employees, both in their official and personal conduct,
must display exemplary behavior and act in a manner that is beyond reproach.

The petitioner appealed to the NLRC, insisting that there was no valid ground for the termination of
her employment. She maintained that her pregnancy out of wedlock cannot be considered as
"serious misconduct" under Article 282 of the Labor Code since the same was not of such a grave
and aggravated character. She asserted that SSCW did not present any evidence to establish that
her pregnancy out of wedlock indeed eroded the moral principles that it teaches its students.18

The Ruling of the NLRC

On February 28, 2007, the NLRC issued a Resolution,19 which affirmed the LA Decision dated
February 28, 2006. The NLRC pointed out that the termination of the employment of the personnel
of private schools is governed by the 1992 MRPS; that Section 94(e) thereof cites "disgraceful or
immoral conduct" as a just cause for dismissal, in addition to the grounds for termination of
employment provided for under Article 282 of the Labor Code. The NLRC held that the petitioner’s
pregnancy out of wedlock is a "disgraceful or immoral conduct" within the contemplation of Section
94(e) of the 1992 MRPS and, thus, SSCW had a valid reason to terminate her employment.

The petitioner sought reconsideration20 of the Resolution dated February 28, 2007 but it was denied
by the NLRC in its Resolution21 dated May 21, 2007.

Unperturbed, the petitioner filed a petition22 for certiorari with the CA, alleging that the NLRC gravely
abused its discretion in ruling that there was a valid ground for her dismissal. She maintained that
pregnancy out of wedlock cannot be considered as a disgraceful or immoral conduct; that SSCW
failed to prove that its students were indeed gravely scandalized by her pregnancy out of wedlock.
She likewise asserted that the NLRC erred in applying Section 94(e) of the 1992 MRPS.

The Ruling of the CA

On September 24, 2008, the CA rendered the herein assailed Decision,23 which denied the petition
for certiorari filed by the petitioner. The CA held that it is the provisions of the 1992 MRPS and not
the Labor Code which governs the termination of employment of teaching and non-teaching
personnel of private schools, explaining that:

It is a principle of statutory construction that where there are two statutes that apply to a particular
case, that which was specially intended for the said case must prevail. Petitioner was employed by
respondent private Catholic institution which undeniably follows the precepts or norms of conduct set
forth by the Catholic Church. Accordingly, the Manual of Regulations for Private Schools followed by
it must prevail over the Labor Code, a general statute. The Manual constitutes the private schools’
Implementing Rules and Regulations of Batas Pambansa Blg. 232 or the Education Act of 1982. x x
x.24

The CA further held that the petitioner’s dismissal was a valid exercise of SSCW’s management
prerogative to discipline and impose penalties on erring employees pursuant toits policies, rules and
regulations. The CA upheld the NLRC’s conclusion that the petitioner’s pregnancy out of wedlock is
considered as a "disgraceful and immoral conduct" and, thus, a ground for dismissal under Section
94(e) of the 1992 MRPS. The CA likewise opined that the petitioner’s pregnancy out of wedlock is
scandalous per segiven the work environment and social milieu that she was in, viz:

Under Section 94 (e) of the [MRPS], and even under Article 282 (serious misconduct) of the Labor
Code, "disgraceful and immoral conduct" is a basis for termination of employment.

xxxx

Petitioner contends that her pre-marital sexual relations with her boyfriend and her pregnancy prior
to marriage was not disgraceful or immoral conduct sufficient for her dismissal because she was not
a member of the school’s faculty and there is no evidence that her pregnancy scandalized the school
community.

We are not persuaded. Petitioner’s pregnancy prior to marriage is scandalous in itself given the work
environment and social milieu she was in. Respondent school for young ladies precisely seeks to
prevent its students from situations like this, inculcating in them strict moral values and standards.
Being part of the institution, petitioner’sprivate and public life could not be separated. Her admitted
pre-marital sexual relations was a violation of private respondent’s prescribed standards of conduct
that views pre-marital sex as immoral because sex between a man and a woman must only take
place within the bounds of marriage.

Finally, petitioner’s dismissal is a valid exercise of the employer-school’s management prerogative to

discipline and impose penalties on erring employees pursuant to its policies, rules and regulations. x
x x.25 (Citations omitted)

The petitioner moved for reconsideration26 but it was denied by the CA in its Resolution27 dated March
2, 2009.

Hence, the instant petition.

Issues

Essentially, the issues set forth by the petitioner for this Court’s decision are the following: first,
whether the CA committed reversible error in ruling that it is the 1992 MRPS and not the Labor Code
that governs the termination of employment of teaching and non-teaching personnel of private
schools; and second, whether the petitioner’spregnancy out of wedlock constitutes a valid ground to
terminate her employment.

The Ruling of the Court

The Court grants the petition.

First Issue: Applicability of the 1992 MRPS

The petitioner contends that the CA, in ruling that there was a valid ground to dismiss her, erred in
applying Section 94 of the 1992 MRPS. Essentially, she claims that the 1992 MRPS was issued by
the Secretary of Education as the revised implementing rules and regulations of Batas Pambansa
Bilang 232 (BP 232) or the "Education Act of 1982." That there is no provision in BP 232, which
provides for the grounds for the termination of employment of teaching and non-teaching personnel
of private schools. Thus, Section 94 of the 1992 MRPS, which provides for the causes of terminating
an employment, isinvalid as it "widened the scope and coverage" of BP 232.

The Court does not agree.

The Court notes that the argument against the validity of the 1992 MRPS, specifically Section 94
thereof, is raised by the petitioner for the first time in the instant petition for review. Nowhere in the
proceedings before the LA, the NLRC or the CA did the petitioner assail the validity of the provisions
of the 1992 MRPS.

"It is well established that issues raised for the first time on appeal and not raised in the proceedings
in the lower court are barred by estoppel. Points of law, theories, issues, and arguments not brought
to the attention of the trial court ought not to be considered by a reviewing court, as these cannot be
raised for the first time on appeal. To consider the alleged facts and arguments belatedly raised
would amount to trampling on the basic principles of fair play, justice, and due process."28

In any case, even if the Court were to disregard the petitioner’s belated claim of the invalidity of the
1992 MRPS, the Court still finds the same untenable.
The 1992 MRPS, the regulation in force at the time of the instant controversy, was issued by the
Secretary of Education pursuant to BP 232. Section 7029 of BP 232 vests the Secretary of Education
with the authority to issue rules and regulations to implement the provisions of BP 232.
Concomitantly, Section 5730 specifically empowers the Department of Education to promulgate rules
and regulations necessary for the administration, supervision and regulation of the educational
system in accordance with the declared policy of BP 232.

The qualifications of teaching and non-teaching personnel of private schools, as well as the causes
for the termination of their employment, are an integral aspect of the educational system of private
schools. Indubitably, ensuring that the teaching and non-teaching personnel of private schools are
not only qualified, but competent and efficient as well goes hand in hand with the declared objective
of BP 232 – establishing and maintaining relevant quality education.31 It is thus within the authority of
the Secretary of Education to issue a rule, which provides for the dismissal of teaching and non-
teaching personnel of private schools based on their incompetence, inefficiency, or some other
disqualification.

Moreover, Section 69 of BP 232 specifically authorizes the Secretary of Education to "prescribe and
impose such administrative sanction as he may deem reasonable and appropriate in the
implementing rules and regulations" for the "[g]ross inefficiency of the teaching or non-teaching
personnel" of private schools.32 Accordingly, contrary to the petitioner’s claim, the Court sees no
reason to invalidate the provisions of the 1992 MRPS, specifically Section 94 thereof. Second Issue:
Validity of the Petitioner’s Dismissal

The validity of the petitioner’s dismissal hinges on the determination of whether pregnancy out of
wedlock by an employee of a catholic educational institution is a cause for the termination of her
employment.

In resolving the foregoing question,the Court will assess the matter from a strictly neutral and secular
point of view – the relationship between SSCW as employer and the petitioner as an employee, the
causes provided for by law in the termination of suchrelationship, and the evidence on record. The
ground cited for the petitioner’s dismissal, i.e., pre-marital sexual relations and, consequently,
pregnancy outof wedlock, will be assessed as to whether the same constitutes a valid ground for
dismissal pursuant to Section 94(e) of the 1992 MRPS.

The standard of review in a Rule 45

petition from the CA decision in
labor cases.

In a petition for review under Rule 45 of the Rules of Court, such as the instant petition, where the
CA’s disposition in a labor case is sought to be calibrated, the Court’s review isquite limited. In ruling
for legal correctness, the Court has to view the CA decision in the same context that the petition for
certiorari it ruled upon was presented to it; the Court has to examine the CA decision from the prism
of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC decision on the merits of the case was
correct.33

The phrase "grave abuse of discretion" is well-defined in the Court’s jurisprudence. It exists where
an act of a court or tribunal is performed with a capricious or whimsical exercise ofjudgment
equivalent to lack of jurisdiction.34 The determination of the presence or absence of grave abuse of
discretion does not include an inquiry into the correctness of the evaluation of evidence, which was
the basis of the labor agency in reaching its conclusion.35
Nevertheless, while a certiorari proceeding does not strictly include an inquiry as to the correctness
of the evaluation of evidence (that was the basis of the labor tribunals in determining their
conclusion), the incorrectness of its evidentiary evaluation should not result in negating the
requirement of substantial evidence. Indeed, when there is a showing that the findings or
conclusions, drawn from the same pieces of evidence, were arrived at arbitrarily or in disregard of
the evidence on record, they may be reviewed by the courts. In particular, the CA can grant the
petition for certiorariif it finds that the NLRC, in its assailed decision or resolution, made a factual
finding not supported by substantial evidence. A decision that is not supported by substantial
evidence is definitely a decision tainted with grave abuse of discretion.36

The labor tribunals’ respective

conclusions that the petitioner’s
pregnancy is a "disgraceful or
immoral conduct" were arrived at
arbitrarily.

The CA and the labor tribunals affirmed the validity of the petitioner’s dismissal pursuant to Section
94(e) of the 1992 MRPS, which provides that:

Sec. 94. Causes of Terminating Employment – In addition to the just causes enumerated in the
Labor Code, the employment of school personnel, including faculty, may be terminated for any of the
following causes:

xxxx

e. Disgraceful or immoral conduct;

xxxx

The labor tribunals concluded that the petitioner’s pregnancy out of wedlock, per se, is "disgraceful
and immoral"considering that she is employed in a Catholic educational institution. In arriving at such
conclusion, the labor tribunals merely assessed the fact of the petitioner’s pregnancy vis-à-visthe
totality of the circumstances surrounding the same.

However, the Court finds no substantial evidence to support the aforementioned conclusion arrived
at by the labor tribunals. The fact of the petitioner’s pregnancy out of wedlock, without more, is not
enough to characterize the petitioner’s conduct as disgraceful or immoral. There must be substantial
evidence to establish that pre-marital sexual relations and, consequently, pregnancy outof wedlock,
are indeed considered disgraceful or immoral.

The totality of the circumstances

surrounding the conduct alleged to
be disgraceful or immoral must be
assessed against the prevailing
norms of conduct.

In Chua-Qua v. Clave,37 the Court stressed that to constitute immorality, the circumstances of each
particular case must be holistically considered and evaluated in light of the prevailing norms of
conductand applicable laws.38Otherwise stated, it is not the totality of the circumstances surrounding
the conduct per se that determines whether the same is disgraceful or immoral, but the conduct that
is generally accepted by society as respectable or moral. If the conduct does not conform to what
society generally views as respectable or moral, then the conduct is considered as disgraceful or
immoral. Tersely put, substantial evidence must be presented, which would establish that a
particular conduct, viewed in light of the prevailing norms of conduct, is considered disgraceful or
immoral.

Thus, the determination of whether a conduct is disgraceful or immoral involves a two-step process:
first, a consideration of the totality of the circumstances surrounding the conduct; and second, an
assessment of the said circumstances vis-à-visthe prevailing norms of conduct, i.e., what the society
generally considers moral and respectable.

That the petitioner was employed by a Catholic educational institution per se does not absolutely
determine whether her pregnancy out of wedlock is disgraceful or immoral. There is still a necessity
to determine whether the petitioner’s pregnancy out of wedlock is considered disgraceful or immoral
in accordance with the prevailing norms of conduct.

Public and secular morality should

determine the prevailing norms of
conduct, not religious morality.

However, determining what the prevailing norms of conduct are considered disgraceful or immoral is
not an easy task. An individual’s perception of what is moral or respectable is a confluence of a
myriad of influences, such as religion, family, social status, and a cacophony of others. In this
regard, the Court’s ratiocination in Estrada v. Escritor39 is instructive.

In Estrada, an administrative case against a court interpreter charged with disgraceful and immoral
conduct, the Court stressed that in determining whether a particular conduct can be considered as
disgraceful and immoral, the distinction between public and secular morality on the one hand, and
religious morality, on the other, should be kept in mind.40 That the distinction between public and
secular morality and religious morality is important because the jurisdiction of the Court extends only
to public and secular morality.41 The Court further explained that:

The morality referred to in the law is public and necessarily secular, not religiousx x x. "Religious
teachings as expressed in public debate may influence the civil public order but public moral
disputes may be resolved only on grounds articulable in secular terms." Otherwise, if government
relies upon religious beliefs in formulating public policies and morals, the resulting policies and
morals would require conformity to what some might regard as religious programs or agenda.The
non-believers would therefore be compelled to conform to a standard of conduct buttressed by a
religious belief, i.e., to a "compelled religion," anathema to religious freedom. Likewise, if
government based its actions upon religious beliefs, it would tacitly approve or endorse that belief
and thereby also tacitly disapprove contrary religious or non-religious views that would not support
the policy. As a result, government will not provide full religious freedom for all its citizens, or even
make it appear that those whose beliefs are disapproved are second-class citizens. Expansive
religious freedom therefore requires that government be neutral in matters of religion; governmental
reliance upon religious justification is inconsistent with this policy of neutrality.

In other words, government action, including its proscription of immorality as expressed in criminal
law like concubinage, must have a secular purpose. That is, the government proscribes this conduct
because it is "detrimental (or dangerous) to those conditions upon which depend the existence and
progress of human society" and not because the conduct is proscribed by the beliefs of one religion
or the other. Although admittedly, moral judgments based on religion might have a compelling
influence on those engaged in public deliberations over what actions would be considered a moral
disapprobation punishable by law. After all, they might also be adherents of a religion and thus have
religious opinions and moral codes with a compelling influence on them; the human mind endeavors
to regulate the temporal and spiritual institutions of society in a uniform manner, harmonizing earth
with heaven. Succinctly put, a law could be religious or Kantian or Aquinian or utilitarian in its
deepest roots, but it must have an articulable and discernible secular purpose and justification to
pass scrutiny of the religion clauses.x x x.42(Citations omitted and emphases ours)

Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it pertains to
public and secular morality; it refers to those conducts which are proscribed because they are
detrimental to conditions upon which depend the existence and progress of human society. Thus, in
Anonymous v. Radam,43 an administrative case involving a court utility worker likewise charged with
disgraceful and immoral conduct, applying the doctrines laid down in Estrada, the Court held that:

For a particular conduct to constitute "disgraceful and immoral" behavior under civil service laws, it
must be regulated on account of the concerns of public and secular morality. It cannot be judged
based on personal bias, specifically those colored by particular mores. Nor should it be grounded on
"cultural" values not convincingly demonstrated to have been recognized in the realm of public policy
expressed in the Constitution and the laws. At the same time, the constitutionally guaranteed rights
(such as the right to privacy) should be observed to the extent that they protect behavior that may be
frowned upon by the majority.

Under these tests, two things may be concluded from the fact that an unmarried woman gives birth
out of wedlock:

(1) if the father of the child is himself unmarried, the woman is not ordinarily administratively
liable for disgraceful and immoral conduct.It may be a not-so-ideal situation and may cause
complications for both mother and child but it does not give cause for administrative
sanction. There is no law which penalizes an unmarried mother under those circumstances
by reason of her sexual conduct or proscribes the consensual sexual activity between two
unmarried persons. Neither does the situation contravene any fundamental state policy as
expressed in the Constitution, a document that accommodates various belief systems
irrespective of dogmatic origins.

(2) if the father of the child born out of wedlock is himself married to a woman other thanthe
mother, then there is a cause for administrative sanction against either the father or the
mother. In sucha case, the "disgraceful and immoral conduct" consists of having extramarital
relations with a married person. The sanctity of marriage is constitutionally recognized and
likewise affirmed by our statutes as a special contract of permanent union. Accordingly,
judicial employees have been sanctioned for their dalliances with married persons or for their
own betrayals of the marital vow of fidelity.

In this case, it was not disputed that, like respondent, the father of her child was unmarried.
Therefore, respondent cannot be held liable for disgraceful and immoral conduct simply because she
gave birth to the child Christian Jeon out of wedlock.44 (Citations omitted and emphases ours)

Both Estrada and Radamare administrative cases against employees in the civil service. The Court,
however, sees no reason not to apply the doctrines enunciated in Estrada and Radamin the instant
case. Estrada and Radamalso required the Court to delineate what conducts are considered
disgraceful and/or immoral as would constitute a ground for dismissal. More importantly, as in the
said administrative cases, the instant case involves an employee’s security of tenure; this case
likewise concerns employment, which is not merely a specie of property right, but also the means by
which the employee and those who depend on him live.45
It bears stressing that the right of an employee to security of tenure is protected by the Constitution.
Perfunctorily, a regular employee may not be dismissed unless for cause provided under the Labor
Code and other relevant laws, in this case, the 1992 MRPS. As stated above, when the law refers to
morality, it necessarily pertains to public and secular morality and not religious morality. Thus, the
proscription against "disgraceful or immoral conduct" under Section 94(e) of the 1992 MRPS, which
is made as a cause for dismissal, must necessarily refer to public and secular morality. Accordingly,
in order for a conduct tobe considered as disgraceful or immoral, it must be "‘detrimental (or
dangerous) to those conditions upon which depend the existence and progress of human society’
and not because the conduct is proscribed by the beliefs of one religion or the other."

Thus, in Santos v. NLRC,46 the Court upheld the dismissal of a teacher who had an extra-marital
affair with his co-teacher, who is likewise married, on the ground of disgraceful and immoral conduct
under Section 94(e) of the 1992 MRPS. The Court pointed out that extra-marital affair is considered
as a disgraceful and immoral conduct is an afront to the sanctity of marriage, which is a basic
institution of society, viz:

We cannot overemphasize that having an extra-marital affair is an afront to the sanctity of marriage,
which is a basic institution of society. Even our Family Code provides that husband and wife must
live together, observe mutual love, respect and fidelity. This is rooted in the fact that both our
Constitution and our laws cherish the validity of marriage and unity of the family. Our laws, in
implementing this constitutional edict on marriage and the family underscore their permanence,
inviolability and solidarity.47

The petitioner’s pregnancy out of

wedlock is not a disgraceful or
immoral conduct since she and the
father of her child have no
impediment to marry each other.

In stark contrast to Santos, the Court does not find any circumstance in this case which would lead
the Court to conclude that the petitioner committed a disgraceful or immoral conduct. It bears
stressing that the petitioner and her boyfriend, at the time they conceived a child, had no legal
impediment to marry. Indeed, even prior to her dismissal, the petitioner married her boyfriend, the
father of her child. As the Court held in Radam, there is no law which penalizes an unmarried mother
by reason of her sexual conduct or proscribes the consensual sexual activity between two unmarried
persons; that neither does such situation contravene any fundamental state policy enshrined in the
Constitution.

Admittedly, the petitioner is employed in an educational institution where the teachings and doctrines
of the Catholic Church, including that on pre-marital sexual relations, is strictly upheld and taught to
the students. That her indiscretion, which resulted in her pregnancy out of wedlock, is anathema to
the doctrines of the Catholic Church. However, viewed against the prevailing norms of conduct, the
petitioner’s conduct cannot be considered as disgraceful or immoral; such conduct is not denounced
by public and secular morality. It may be an unusual arrangement, but it certainly is not disgraceful
or immoral within the contemplation of the law.

To stress, pre-marital sexual relations between two consenting adults who have no impediment to
marry each other, and, consequently, conceiving a child out of wedlock, gauged from a purely public
and secular view of morality, does not amount to a disgraceful or immoral conduct under Section
94(e) of the 1992 MRPS.
Accordingly, the labor tribunals erred in upholding the validity of the petitioner’s dismissal. The labor
tribunals arbitrarily relied solely on the circumstances surrounding the petitioner’s pregnancy and its
supposed effect on SSCW and its students without evaluating whether the petitioner’s conduct is
indeed considered disgraceful or immoral in view of the prevailing norms of conduct. In this regard,
the labor tribunals’ respective haphazard evaluation of the evidence amounts to grave abuse of
discretion, which the Court will rectify.

The labor tribunals’ finding that the petitioner’s pregnancy out of wedlock despite the absence of
substantial evidence is not only arbitrary, but a grave abuse of discretion, which should have been
set right by the CA.

There is no substantial evidence to

prove that the petitioner’s pregnancy
out of wedlock caused grave scandal
to SSCW and its students.

SSCW claimed that the petitioner was primarily dismissed because her pregnancy out of wedlock
caused grave scandal to SSCW and its students. That the scandal brought about by the petitioner’s
indiscretion prompted them to dismiss her. The LA upheld the respondents’ claim, stating that:

In this particular case, an "objective" and "rational evaluation" of the facts and circumstances
obtaining in this case would lead us to focus our attention x x x on the impact of the act committed
by the complainant. The act of the complainant x x x eroded the moral principles being taught and
project[ed] by the respondent [C]atholic school to their young lady students.48 (Emphasis in the
original)

On the other hand, the NLRC opined that:

In the instant case, when the complainant-appellant was already conceiving a child even before she
got married, such is considered a shameful and scandalous behavior, inimical to public welfare and
policy. It eroded the moral doctrines which the respondent Catholic school, an exclusive school for
girls, is teaching the young girls. Thus, when the respondent-appellee school terminated
complainant-appellant’s services, it was a valid exercise of its management prerogative. Whether or
not she was a teacher is of no moment. There is no separate set of rules for non-teaching personnel.
Respondents-appellees uphold the teachings of the Catholic Church on pre-marital sex and that the
complainant-appellant as an employee of the school was expected to abide by this basic principle
and to live up with the standards of their purely Catholic values. Her subsequent marriage did not
take away the fact that she had engaged in pre-marital sex which the respondent-appellee school
denounces as the same is opposed to the teachings and doctrines it espouses.49 (Emphasis ours)

Contrary to the labor tribunals’ declarations, the Court finds that SSCW failed to adduce substantial
evidence to prove that the petitioner’s indiscretion indeed caused grave scandal to SSCW and its
students. Other than the SSCW’s bare allegation, the records are bereft of any evidence that would
convincingly prove that the petitioner’s conduct indeed adversely affected SSCW’s integrity in
teaching the moral doctrines, which it stands for. The petitioner is only a non-teaching personnel; her
interaction with SSCW’s students is very limited. Itis thus quite impossible that her pregnancy out of
wedlock caused such a grave scandal, as claimed by SSCW, as to warranther dismissal.

Settled is the rule that in termination cases, the burden of proving that the dismissal of the
employees was for a valid and authorized cause rests on the employer. It is incumbent upon the
employer to show by substantial evidence that the termination of the employment of the employees
was validly made and failure to discharge that duty would mean that the dismissal is not justified and
therefore illegal.50 "Substantial evidence is more than a mere scintilla of evidence. It means such
relevant evidence as a reasonable mind might accept as adequateto support a conclusion, even if
other minds equally reasonable mightconceivably opine otherwise."51

Indubitably, bare allegations do not amount to substantial evidence. Considering that the
respondents failed to adduce substantial evidence to prove their asserted cause for the petitioner’s
dismissal, the labor tribunals should not have upheld their allegations hook, line and sinker. The
labor tribunals’ respective findings, which were arrived at sans any substantial evidence, amounts to
a grave abuse of discretion, which the CA should have rectified. "Security of tenure is a right which
may not be denied on mere speculation of any unclearand nebulous basis."52

The petitioner’s dismissal is not a

valid exercise of SSCW’s
management prerogative.

The CA be labored the management prerogative of SSCW to discipline its employees. The CA
opined that the petitioner’s dismissal is a valid exercise of management prerogative to impose
penalties on erring employees pursuant to its policies, rules and regulations.

The Court does not agree.

The Court has held that "management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods, time,
place and manner of work, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of
workers. The exercise of management prerogative, however, is not absolute as it must beexercised
in good faith and with due regard to the rights of labor." Management cannot exercise its prerogative
in a cruel, repressive, or despotic manner.53

SSCW, as employer, undeniably has the right to discipline its employees and, if need be, dismiss
themif there is a valid cause to do so. However, as already explained, there is no cause to dismiss
the petitioner. Her conduct is not considered by law as disgraceful or immoral. Further, the
respondents themselves have admitted that SSCW, at the time of the controversy, does not have
any policy or rule against an employee who engages in pre-marital sexual relations and conceives a
child as a result thereof. There being no valid basis in law or even in SSCW’s policy and rules,
SSCW’s dismissal of the petitioner is despotic and arbitrary and, thus, not a valid exercise of
management prerogative.

In sum, the Court finds that the petitioner was illegally dismissed as there was no just cause for the
termination of her employment. SSCW failed to adduce substantial evidence to establish that the
petitioner’s conduct, i.e., engaging in pre-marital sexual relations and conceiving a child out of
wedlock, assessed in light of the prevailing norms of conduct, is considered disgraceful or immoral.
The labor tribunals gravely abused their discretion in upholding the validity of the petitioner’s
dismissal as the charge against the petitioner lay not on substantial evidence, but on the bare
allegations of SSCW. In turn, the CA committed reversible error in upholding the validity of the
petitioner’s dismissal, failing torecognize that the labor tribunals gravely abused their discretion in
ruling for the respondents.

The petitioner is entitled to

separation pay, in lieu of actual
reinstatement, full backwages and
attorney’s fees, but not to moral and
exemplary damages.

Having established that the petitioner was illegally dismissed, the Court now determines the reliefs
thatshe is entitled to and their extent. Under the law and prevailing jurisprudence, "an illegally
dismissed employee is entitled to reinstatement as a matter of right."54 Aside from the instances
provided under Articles 28355 and 28456 of the Labor Code, separation pay is, however, granted when
reinstatement is no longer feasible because of strained relations between the employer and the
employee. In cases of illegal dismissal, the accepted doctrine is that separation pay is available in
lieu of reinstatement when the latter recourse is no longer practical or in the best interest of the
parties.57

In Divine Word High School v. NLRC,58 the Court ordered the employer Catholic school to pay the
illegally dismissed high school teacher separation pay in lieu of actual reinstatement since her
continued presence as a teacher in the school "may well bemet with antipathy and antagonism by
some sectors in the school community."59

In view of the particular circumstances of this case, it would be more prudent to direct SSCW to pay
the petitioner separation pay inlieu of actual reinstatement. The continued employment of the
petitioner with SSCW would only serve to intensify the atmosphere of antipathy and antagonism
between the parties. Consequently, the Court awards separation pay to the petitioner equivalent to
one (1) month pay for every year of service, with a fraction of at least six (6) months considered as
one (1) whole year, from the time of her illegal dismissal up to the finality of this judgment, as an
alternative to reinstatement.

Also, "employees who are illegally dismissed are entitled to full backwages, inclusive of allowances
and other benefits or their monetary equivalent, computed from the time their actual compensation
was withheld from them up to the time of their actual reinstatement but if reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal termination up to the finality
of the decision."60 Accordingly, the petitioner is entitled to an award of full backwages from the time
she was illegally dismissed up to the finality of this decision.

Nevertheless, the petitioner is not entitled to moral and exemplary damages. "A dismissed employee
isentitled to moral damages when the dismissal is attended by bad faith or fraud or constitutes an act
oppressive to labor, or is done in a manner contrary to good morals, good customs or public policy.
Exemplary damages may be awarded if the dismissal is effected in a wanton, oppressive or
malevolent manner."61

"Bad faith, under the law, does not simply connote bad judgment or negligence. It imports a
1âw phi1

dishonest purpose or some moral obliquity and conscious doing of a wrong, or a breach of a known
duty through some motive or interest or ill will that partakes of the nature of fraud."62

"It must be noted that the burden of proving bad faith rests on the one alleging it"63 since basic is the
principle that good faith is presumed and he who alleges bad faith has the duty to prove the
same.64 "Allegations of bad faith and fraud must be proved by clear and convincing evidence."65

The records of this case are bereft of any clear and convincing evidence showing that the
respondents acted in bad faith or in a wanton or fraudulent manner in dismissing the petitioner. That
the petitioner was illegally dismissed is insufficient to prove bad faith. A dismissal may be contrary to
law but by itself alone, it does not establish bad faith to entitle the dismissed employee to moral
damages. The award of moral and exemplary damages cannot be justified solely upon the premise
that the employer dismissed his employee without cause.66
However, the petitioner is entitled to attorney’s fees in the amount of 10% of the total monetary
award pursuant to Article 11167 of the Labor Code. "It is settled that where an employee was forced
to litigate and, thus, incur expenses to protect his rights and interest, the award of attorney’s fees is
legally and morally justifiable."68

Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of six
percent (6%) per annumfrom the finality of this judgment until fully paid.69

WHEREFORE, in consideration of the foregoing disquisitions, the petition is GRANTED. The

Decision dated September 24, 2008 and Resolution dated March 2, 2009 of the Court of Appeals in
CA-G.R. SP No. 100188 are hereby REVERSED and SET ASIDE.

The respondent, St. Scholastica’s College Westgrove, is hereby declared guilty of illegal dismissal
and is hereby ORDERED to pay the petitioner, Cheryll Santos Leus, the following: (a) separation
pay in lieu of actual reinstatement equivalent to one (1) month pay for every year of service, with a
fraction of at least six (6) months considered as one (1) whole year from the time of her dismissal up
to the finality of this Decision; (b) full backwages from the time of her illegal dismissal up to the
finality of this Decision; and (c) attorney’s fees equivalent to ten percent (10%) of the total monetary
award. The monetary awards herein granted shall earn legal interest at the rate of six percent (6%)
per annumfrom the date of the finality of this Decision untilfully paid. The case is REMANDED to the
Labor Arbiter for the computation of petitioner’s monetary awards.

SO ORDERED.

THIRD DIVISION

February 24, 2016

G.R. No. 187417

CHRISTINE JOY CAPIN-CADIZ, Petitioner,

vs.
BRENT HOSPITAL AND COLLEGES, INC., Respondent.

DECISION

REYES, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing the
Resolutions dated July 22, 20082 and February 24, 20093 of the Court of Appeals (CA) in CA-GR. SP
No. 02373-MIN, which dismissed the petition filed by petitioner Christine Joy Capin-Cadiz (Cadiz) on
the following grounds: (1) incomplete statement of material dates; (2) failure to attach registry
receipts; and (3) failure to indicate the place of issue of counsel's Professional Tax Receipt (PTR)
and Integrated Bar of the Philippines (IBP) official receipts.

Antecedent Facts
Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent) at
the time of her indefinite suspension from employment in 2006. The cause of suspension was
Cadiz's Unprofessionalism and Unethical Behavior Resulting to Unwed Pregnancy. It appears that
Cadiz became pregnant out of wedlock, and Brent imposed the suspension until such time that she
marries her boyfriend in accordance with law.

Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, Constructive
Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement.4

Ruling of the Labor Tribunals

In its Decision5 dated April 12, 2007, the LA found that Cadiz's indefinite suspension amounted to a
constructive dismissal; nevertheless, the LA ruled that Cadiz was not illegally dismissed as there
was just cause for her dismissal, that is, she engaged in premarital sexual relations with her
boyfriend resulting in a pregnancy out of wedlock. 6 The LA further stated that her "immoral conduct x
x x [was] magnified as serious misconduct not only by her getting pregnant as a result thereof before
and without marriage, but more than that, also by the fact that Brent is an institution of the Episcopal
Church in the Philippines operating both a hospital and college where [Cadiz] was employed."7 The
LA also ruled that she was not entitled to reinstatement "at least until she marries her boyfriend," to
backwages and vacation/sick leave pay. Brent, however, manifested that it was willing to pay her
13th month pay. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered, ordering [Brent] to pay [Cadiz] 13th month pay in the
sum of Seven Thousand Nine Hundred Seventy & 11/100 Pesos (P7,970.11).

All other charges and claims are hereby dismissed for lack of merit.

SO ORDERED.8

Cadiz appealed to the National Labor Relations Commission (NLRC), which affirmed the LA decision
in its Resolution9 dated December 10, 2007. Her motion for reconsideration having been denied by
the NLRC in its Resolution10 dated February 29, 2008, Cadiz elevated her case to the CA on petition
for certiorari under Rule 65.

Ruling of the CA

The CA, however, dismissed her petition outright due to technical defects in the petition: (1)
incomplete statement of material dates; (2) failure to attach registry receipts; and (3) failure to
indicate the place of issue of counsel's PTR and IBP official receipts. 11 Cadiz sought reconsideration
of the assailed CA Resolution dated July 22, 2008 but it was denied in the assailed Resolution dated
February 24, 2009. 12 The CA further ruled that "a perusal of the petition will reveal that public
respondent NLRC committed no grave abuse of discretion amounting to lack or excess of jurisdiction
x x x holding [Cadiz's] dismissal from employment valid." 13

Hence, the present petition.

Cadiz argues that -

I
THE HONORABLE [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT HELD THAT
[CADIZ'S] IMPREGNATION OUTSIDE OF WEDLOCK IS A GROUND FOR THE TERMINATION OF
[CADIZ'S] EMPLOYMENT14

II

THE [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT UPHELD THE DISMISSAL
OF [CADIZ] ON THE GROUND THAT THE INDEFINITE SUSPENSION WAS VALID AND
REQUIRED [CADIZ] TO FIRST ENTER INTO MARRIAGE BEFORE SHE CAN BE ADMITTED
BACK TO HER EMPLOYMENT15

III

RESPONDENT [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED [CADIZ'S]

CLAIM FOR BACKWAGES, ALLOWANCES, SICK LEAVE PAY, MATERNITY PAY AND MORAL
AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES 16

IV

THE [CA] MISPLACED APPLICATION OF THE MATERIAL DATA RULE RESULTING TO GRAVE
ABUSE OF DISCRETION WHEN IT DISMISSED THE APPEAL17

Cadiz contends, among others, that getting pregnant outside of wedlock is not grossly immoral,
especially when both partners do not have any legal impediment to marry. Cadiz surmises that the
reason for her suspension was not because of her relationship with her then boyfriend but because
of the resulting pregnancy. Cadiz also lambasts Brent's condition for her reinstatement - that she
gets married to her boyfriend - saying that this violates the stipulation against marriage under Article
136 of the Labor Code. Finally, Cadiz contends that there was substantial compliance with the rules
of procedure, and the CA should not have dismissed the petition. 18

Brent, meanwhile, adopts and reiterates its position before the LA and the NLRC that Cadiz's
arguments are irrational and out of context. Brent argues, among others, that for Cadiz to limit acts
of immorality only to extra-marital affairs is to "change the norms, beliefs, teachings and practices of
BRENT as a Church institution of the x x x Episcopal Church in the Philippines." 19

Ruling of the Court

Ordinarily, the Court will simply gloss over the arguments raised by Cadiz, given that the main matter
dealt with by the CA were the infirmities found in the petition and which caused the dismissal of her
case before it. In view, however, of the significance of the issues involved in Cadiz's dismissal from
employment, the Court will resolve the petition including the substantial grounds raised herein.

The issue to be resolved is whether the CA committed a reversible error in ruling that: (1) Cadiz's
petition is dismissible on ground of technical deficiencies; and (2) the NLRC did not commit grave
abuse of discretion in upholding her dismissal from employment.

Rules of procedure are mere tools

designed to facilitate the attainment
of justice
In dismissing outright Cadiz's petition, the CA found the following defects: (1) incomplete statement
of material dates; (2) failure to attach registry receipts; and (3) failure to indicate the place of issue of
counsel's PTR and IBP official receipts.

Rule 46, Section 3 of the Rules of Court states the contents of a petition filed with the CA under Rule
65, viz, "the petition shall x x x indicate the material dates showing when notice of the judgment or
final order or resolution subject thereof was received, when a motion for new trial or reconsideration,
if any, was filed and when notice of the denial thereof was received." The rationale for this is to
enable the CA to determine whether the petition was filed within the period fixed in the
rules. 20 Cadiz's failure to state the date of receipt of the copy of the NLRC decision, however, is not
fatal to her case since the more important material date which must be duly alleged in a petition is
the date of receipt of the resolution of denial of the motion for reconsideration,21 which she has duly
complied with. 22

The CA also dismissed the petition for failure to attach the registry receipt in the affidavit of
service.23 Cadiz points out, on the other hand, that the registry receipt number was indicated in the
petition and this constitutes substantial compliance with the requirement. What the rule requires,
however, is that the registry receipt must be appended to the paper being served.24 Clearly, mere
indication of the registry receipt numbers will not suffice. In fact, the absence of the registry receipts
amounts to lack of proof of service.25 Nevertheless, despite this defect, the Court finds that the ends
of substantial justice would be better served by relaxing the application of technical rules of
procedure. 26With regard to counsel's failure to indicate the place where the IBP and PTR receipts
were issued, there was substantial compliance with the requirement since it was indicated in the
verification and certification of non-forum shopping, as correctly argued by Cadiz's lawyer. 27

Time and again, the Court has emphasized that rules of procedure are designed to secure
substantial justice. These are mere tools to expedite the decision or resolution of cases and if their
strict and rigid application would frustrate rather than promote substantial justice, then it must be
avoided.28

Immorality as a just cause for

termination of employment

Both the LA and the NLRC upheld Cadiz's dismissal as one attended with just cause. The LA, while
ruling that Cadiz's indefinite suspension was tantamount to a constructive dismissal, nevertheless
found that there was just cause for her dismissal. According to the LA, "there was just cause
therefor, consisting in her engaging in premarital sexual relations with Carl Cadiz, allegedly her
boyfriend, resulting in her becoming pregnant out of wedlock."29 The LA deemed said act to be
immoral, which was punishable by dismissal under Brent's rules and which likewise constituted
serious misconduct under Article 282(a) of the Labor Code. The LA also opined that since Cadiz was
Brent's Human Resource Officer in charge of implementing its rules against immoral conduct, she
should have been the "epitome of proper conduct."30 The LA ruled:

[Cadiz's] immoral conduct by having premarital sexual relations with her alleged boy friend, a former
Brent worker and her co-employee, is magnified as serious misconduct not only by her getting
pregnant as a result thereof before and without marriage, but more than that, also by the fact that
Brent is an institution of the Episcopal Church in the Philippines x x x committed to "developing
competent and dedicated professionals x x x and in providing excellent medical and other health
services to the community for the Glory of God and Service to Humanity." x x x As if these were not
enough, [Cadiz] was Brent's Human Resource Officer charged with, among others, implementing the
rules of Brent against immoral conduct, including premarital sexual relations, or fornication x x x. She
should have been the epitome of proper conduct, but miserably failed. She herself engaged in
premarital sexual relations, which surely scandalized the Brent community.xx x.31

The NLRC, for its part, sustained the LA's conclusion.

The Court, however, cannot subscribe to the labor tribunals' conclusions.

Admittedly, one of the grounds for disciplinary action under Brent's policies is immorality, which is
punishable by dismissal at first offense.32 Brent's Policy Manual provides:

CATEGORY IV

In accordance with Republic Act No. 1052,33 the following are just cause for terminating an
employment of an employee without a definite period:

xxxx

2. Serious misconduct or willful disobedience by the employee of the orders of his employer or
representative in connection with his work, such as, but not limited to the following:

xxxx

b. Commission of immoral conduct or indecency within the company premises, such as an act of
lasciviousness or any act which is sinful and vulgar in nature.

c. Immora1ity, concubinage, bigamy. 34

Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such as scandalous
behaviour, acts of lasciviousness against any person (patient, visitors, co-workers) within hospital
premises"35 as a ground for discipline and discharge. Brent also relied on Section 94 of the Manual of
Regulations for Private Schools (MRPS), which lists "disgraceful or immoral conduct" as a cause for
terminating employment. 36

Thus, the question that must be resolved is whether Cadiz's premarital relations with her boyfriend
and the resulting pregnancy out of wedlock constitute immorality. To resolve this, the Court makes
reference to the recently promulgated case of Cheryll Santos Leus v. St. Scholastica’s College
Westgrove and/or Sr. Edna Quiambao, OSB.37

Leus involved the same personal circumstances as the case at bench, albeit the employer was a
Catholic and sectarian educational institution and the petitioner, Cheryll Santos Leus (Leus ), worked
as an assistant to the school's Director of the Lay Apostolate and Community Outreach Directorate.
Leus was dismissed from employment by the school for having borne a child out of wedlock. The
Court ruled in Leus that the determination of whether a conduct is disgraceful or immoral involves a
two-step process: first, a consideration of the totality of the circumstances surrounding the conduct;
and second, an assessment of the said circumstances vis-a-vis the prevailing norms of
conduct, i.e., what the society generally considers moral and respectable.

In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she was
employed as a human resources officer in an educational and medical institution of the Episcopal
Church of the Philippines; she and her boyfriend at that time were both single; they engaged in
premarital sexual relations, which resulted into pregnancy. The labor tribunals characterized these
as constituting disgraceful or immoral conduct. They also sweepingly concluded that as Human
Resource Officer, Cadiz should have been the epitome of proper conduct and her indiscretion
"surely scandalized the Brent community."38

The foregoing circumstances, however, do not readily equate to disgraceful and immoral conduct.
Brent's Policy Manual and Employee's Manual of Policies do not define what constitutes immorality;
it simply stated immorality as a ground for disciplinary action. Instead, Brent erroneously relied on
the standard dictionary definition of fornication as a form of illicit relation and proceeded to conclude
that Cadiz's acts fell under such classification, thus constituting immorality. 39

Jurisprudence has already set the standard of morality with which an act should be gauged - it is
public and secular, not religious. 40 Whether a conduct is considered disgraceful or immoral should
be made in accordance with the prevailing norms of conduct, which, as stated in Leus, refer to those
conducts which are proscribed because they are detrimental to conditions upon which depend
the existence and progress of human society. The fact that a particular act does not conform to
the traditional moral views of a certain sectarian institution is not sufficient reason to qualify such act
as immoral unless it, likewise, does not conform to public and secular standards. More importantly,
there must be substantial evidence to establish that premarital sexual relations and pregnancy out
of wedlock is considered disgraceful or immoral.41

The totality of the circumstances of this case does not justify the conclusion that Cadiz committed
acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single and had no legal
impediment to marry at the time she committed the alleged immoral conduct. In fact, they eventually
married on April 15, 2008.42 Aside from these, the labor tribunals' respective conclusion that Cadiz's
"indiscretion" "scandalized the Brent community" is speculative, at most, and there is no proof
adduced by Brent to support such sweeping conclusion. Even Brent admitted that it came to know of
Cadiz's "situation" only when her pregnancy became manifest.43 Brent also conceded that "[a]t the
time [Cadiz] and Carl R. Cadiz were just carrying on their boyfriend-girlfriend relationship, there was
no knowledge or evidence by [Brent] that they were engaged also in premarital sex."44 This only goes
to show that Cadiz did not flaunt her premarital relations with her boyfriend and it was not carried on
under scandalous or disgraceful circumstances. As declared in Leus, "there is no law which
penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual sexual
activity between two unmarried persons; that neither does such situation contravene[s] any
fundamental state policy enshrined in the Constitution. "45 The fact that Brent is a sectarian institution
does not automatically subject Cadiz to its religious standard of morality absent an express
statement in its manual of personnel policy and regulations, prescribing such religious standard as
gauge as these regulations create the obligation on both the employee and the employer to abide by
the same. 46

Brent, likewise, cannot resort to the MRPS because the Court already stressed in Leus that
"premarital sexual relations between two consenting adults who have no impediment to marry each
other, and, consequently, conceiving a child out of wedlock, gauged from a purely public and secular
view of morality, does not amount to a disgraceful or immoral conduct under Section 94(e) of the
1992 MRPS."47

Marriage as a condition for

reinstatement

The doctrine of management prerogative gives an employer the right to "regulate, according to his
own discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, the time, place and manner of work, work supervision, transfer of employees, lay-
off of workers, and discipline, dismissal, and recall of employees."48 In this case, Brent imposed on
Cadiz the condition that she subsequently contract marriage with her then boyfriend for her to be
reinstated. According to Brent, this is "in consonance with the policy against encouraging illicit or
common-law relations that would subvert the sacrament of marriage."49

Statutory law is replete with legislation protecting labor and promoting equal opportunity in
employment. No less than the 1987 Constitution mandates that the "State shall afford full protection
to labor, local and overseas, organized and unorganized, and promote full employment and equality
of employment opportunities for all."50 The Labor Code of the Philippines, meanwhile, provides:

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 employee 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 her marriage.

With particular regard to women, Republic Act No. 9710 or the Magna Carta of Women51 protects
women against discrimination in all matters relating to marriage and family relations, including
the right to choose freely a spouse and to enter into marriage only with their free and full
consent.52

Weighed against these safeguards, it becomes apparent that Brent's condition is coercive,
oppressive and discriminatory. There is no rhyme or reason for it. It forces Cadiz to marry for
1âw phi 1

economic reasons and deprives her of the freedom to choose her status, which is a privilege that
inheres in her as an intangible and inalienable right. 53While a marriage or no-marriage qualification
may be justified as a "bona fide occupational qualification," Brent must prove two factors
necessitating its imposition, viz: (1) that the employment qualification is reasonably related to the
essential operation of the job involved; and (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be unable to properly perform the duties of
the job.54 Brent has not shown the presence of neither of these factors. Perforce, the Court cannot
uphold the validity of said condition.

Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option, separation pay should be
awarded as an alternative and as a form of financial assistance. 55 In the computation of separation
pay, the Court stresses that it should not go beyond the date an employee was deemed to
have been actually separated from employment, or beyond the date when reinstatement was
rendered impossible.56 In this case, the records do not show whether Cadiz already severed her
employment with Brent or whether she is gainfully employed elsewhere; thus, the computation of
separation pay shall be pegged based on the findings that she was employed on August 16, 2002,
on her own admission in her complaint that she was dismissed on November 17, 2006, and that she
was earning a salary of P9,108.70 per month,57 which shall then be computed at a rate of one (1)
month salary for every year of service,58 as follows:

Monthly salary P9,108.70

multiplied by number of years x
in service (Aug 02 to Nov 06) 4

P36,434.80
The Court also finds that Cadiz is only entitled to limited backwages. Generally, the computation of
backwages is reckoned from the date of illegal dismissal until actual reinstatement. 59 In case
separation pay is ordered in lieu of reinstatement or reinstatement is waived by the employee,
backwages is computed from the time of dismissal until the finality of the decision ordering
separation pay. 60 Jurisprudence further clarified that the period for computing the backwages during
the period of appeal should end on the date that a higher court reversed the labor arbitration ruling of
illegal dismissal. 61 If applied in Cadiz's case, then the computation of backwages should be from
November 17, 2006, which was the time of her illegal dismissal, until the date of promulgation of this
decision. Nevertheless, the Court has also recognized that the constitutional policy of providing full
protection to labor is not intended to oppress or destroy management. 62 The Court notes that at the
time of Cadiz's indefinite suspension from employment, Leus was yet to be decided by the Court.
Moreover, Brent was acting in good faith and on its honest belief that Cadiz's pregnancy out of
wedlock constituted immorality. Thus, fairness and equity dictate that the award of backwages shall
only be equivalent to one (1) year or P109,304.40, computed as follows:

Monthly salary P9,108.70

multiplied by one year x
or 12 months 12

P109,304.40

Finally, with regard to Cadiz's prayer for moral and exemplary damages, the Court finds the same
without merit. A finding of illegal dismissal, by itself, does not establish bad faith to entitle an
employee to moral damages. 63 Absent clear and convincing evidence showing that Cadiz's dismissal
from Brent's employ had been carried out in an arbitrary, capricious and malicious manner, moral
and exemplary damages cannot be awarded. The Court nevertheless grants the award of attorney's
fees in the amount of ten percent (10%) of the total monetary award, Cadiz having been forced to
litigate in order to seek redress of her grievances.64

WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and February 24,
2009 of the Court of Appeals in CA-G.R. SP No. 02373-MIN are REVERSED and SET ASIDE, and
a NEW ONE ENTERED finding petitioner Christine Joy Capin-Cadiz to have been dismissed without
just cause.

Respondent Brent Hospital and Colleges, Inc. is hereby ORDERED TO PAY petitioner Christine Joy
Capin-Cadiz:

(1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100 (Pl 09,304.40) as
backwages;

(2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100 (P36,434.80) as
separation pay; and

(3) Attorney's fees equivalent to ten percent (10%) of the total award.

The monetary awards granted shall earn legal interest at the rate of six percent (6%) per
annum from the date of the finality of this Decision until fully paid.

SO ORDERED.
 SECOND DIVISION

G.R. No. 162994 September 17, 2004

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

vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.

RESOLUTION

TINGA, J.:

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

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

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

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

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

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

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

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

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

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

In August 1999, Tecson again requested for more time resolve the problem. In September 1999,
Tecson applied for a transfer in Glaxo’s milk division, thinking that since Astra did not have a milk
division, the potential conflict of interest would be eliminated. His application was denied in view of
Glaxo’s "least-movement-possible" policy.

In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales
area. Tecson asked Glaxo to reconsider its decision, but his request was denied.

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

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

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

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

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

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

Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in affirming the
NCMB’s finding that the Glaxo’s policy prohibiting its employees from marrying an employee of a
competitor company is valid; and (ii) the Court of Appeals also erred in not finding that Tecson was
constructively dismissed when he was transferred to a new sales territory, and deprived of the
opportunity to attend products seminars and training sessions.6
Petitioners contend that Glaxo’s policy against employees marrying employees of competitor
companies violates the equal protection clause of the Constitution because it creates invalid
distinctions among employees on account only of marriage. They claim that the policy restricts the
employees’ right to marry.7

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

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

Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it
has a genuine interest in ensuring that its employees avoid any activity, relationship or interest that
may conflict with their responsibilities to the company. Thus, it expects its employees to avoid having
personal or family interests in any competitor company which may influence their actions and
decisions and consequently deprive Glaxo of legitimate profits. The policy is also aimed at
preventing a competitor company from gaining access to its secrets, procedures and policies.10

It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing or
future relationships with employees of competitor companies, and is therefore not violative of the
equal protection clause. It maintains that considering the nature of its business, the prohibition is
based on valid grounds.11

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

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

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

It claims that in view of Tecson’s refusal to resign, he was relocated from the Camarines Sur-
Camarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur sales area. Glaxo
asserts that in effecting the reassignment, it also considered the welfare of Tecson’s family. Since
Tecson’s hometown was in Agusan del Sur and his wife traces her roots to Butuan City, Glaxo
assumed that his transfer from the Bicol region to the Butuan City sales area would be favorable to
him and his family as he would be relocating to a familiar territory and minimizing his travel
expenses.15
In addition, Glaxo avers that Tecson’s exclusion from the seminar concerning the new anti-asthma
drug was due to the fact that said product was in direct competition with a drug which was soon to
be sold by Astra, and hence, would pose a potential conflict of interest for him. Lastly, the delay in
Tecson’s receipt of his sales paraphernalia was due to the mix-up created by his refusal to transfer
to the Butuan City sales area (his paraphernalia was delivered to his new sales area instead of Naga
City because the supplier thought he already transferred to Butuan).16

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

The Court finds no merit in the petition.

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

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

…17

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

1. Conflict of Interest

Employees should avoid any activity, investment relationship, or interest that may run
counter to the responsibilities which they owe Glaxo Wellcome.

Specifically, this means that employees are expected:

a. To avoid having personal or family interest, financial or otherwise, in any

competitor supplier or other businesses which may consciously or unconsciously
influence their actions or decisions and thus deprive Glaxo Wellcome of legitimate
profit.

b. To refrain from using their position in Glaxo Wellcome or knowledge of Company

plans to advance their outside personal interests, that of their relatives, friends and
other businesses.

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

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

conflict of interest.
 1.1. Employee Relationships

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

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

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

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

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

As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business

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

The challenged company policy does not violate the equal protection clause of the Constitution as
petitioners erroneously suggest. It is a settled principle that the commands of the equal protection
clause are addressed only to the state or those acting under color of its authority.24 Corollarily, it has
been held in a long array of U.S. Supreme Court decisions that the equal protection clause erects no
shield against merely private conduct, however, discriminatory or wrongful.25 The only exception
occurs when the state29 in any of its manifestations or actions has been found to have become
entwined or involved in the wrongful private conduct.27 Obviously, however, the exception is not
present in this case. Significantly, the company actually enforced the policy after repeated requests
to the employee to comply with the policy. Indeed, the application of the policy was made in an
impartial and even-handed manner, with due regard for the lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its employee handbook,
it is clear that Glaxo does not impose an absolute prohibition against relationships between its
employees and those of competitor companies. Its employees are free to cultivate relationships with
and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of
interest between the employee and the company that may arise out of such relationships. As
succinctly explained by the appellate court, thus:

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

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

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

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

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

By the very nature of his employment, a drug salesman or medical representative is

expected to travel. He should anticipate reassignment according to the demands of their
business. It would be a poor drug corporation which cannot even assign its representatives
or detail men to new markets calling for opening or expansion or to areas where the need for
pushing its products is great. More so if such reassignments are part of the employment
contract.33

As noted earlier, the challenged policy has been implemented by Glaxo impartially and
disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave Tecson
several chances to eliminate the conflict of interest brought about by his relationship with Bettsy.
When their relationship was still in its initial stage, Tecson’s supervisors at Glaxo constantly
reminded him about its effects on his employment with the company and on the company’s interests.
After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by either resigning from the
company or asking his wife to resign from Astra. Glaxo even expressed its desire to retain Tecson in
its employ because of his satisfactory performance and suggested that he ask Bettsy to resign from
her company instead. Glaxo likewise acceded to his repeated requests for more time to resolve the
conflict of interest. When the problem could not be resolved after several years of waiting, Glaxo was
constrained to reassign Tecson to a sales area different from that handled by his wife for Astra.
Notably, the Court did not terminate Tecson from employment but only reassigned him to another
area where his home province, Agusan del Sur, was included. In effecting Tecson’s transfer, Glaxo
even considered the welfare of Tecson’s family. Clearly, the foregoing dispels any suspicion of
unfairness and bad faith on the part of Glaxo.34

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

SO ORDERED.

SECOND DIVISION

[G.R. No. 118978. May 23, 1997]

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, petitioner, *

vs. NATIONAL LABOR RELATIONS COMMISSION and GRACE DE

GUZMAN, respondents.

DECISION
REGALADO, J.:

Seeking relief through the extraordinary writ of certiorari, petitioner

Philippine Telegraph and Telephone Company (hereafter, PT&T) invokes the
alleged concealment of civil status and defalcation of company funds as
grounds to terminate the services of an employee. That employee, herein
private respondent Grace de Guzman, contrarily argues that what really
motivated PT&T to terminate her services was her having contracted marriage
during her employment, which is prohibited by petitioner in its company
policies. She thus claims that she was discriminated against in gross violation
of law, such a proscription by an employer being outlawed by Article 136 of the
Labor Code.
Grace de Guzman was initially hired by petitioner as a reliever, specifically
as a Supernumerary Project Worker, for a fixed period from November 21, 1990
until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under[1]

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 respondents services as reliever were again engaged
by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave
during both periods. After August 8, 1991, and pursuant to their Reliever
[2]

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 companys
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&Ts policy regarding married women at the time, and
that all along she had not deliberately hidden her true civil status. Petitioner
[5]

nonetheless remained unconvinced by her explanations. Private respondent

was dismissed from the company effective January 29, 1992, which she readily
[6]

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. All of these took place in a formal proceeding and
[7]

with the agreement of the parties and/or their counsel.

On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a
decision declaring that private respondent, who had already gained the status
of a regular employee, was illegally dismissed by petitioner. Her reinstatement,
plus payment of the corresponding back wages and COLA, was
correspondingly ordered, the labor arbiter being of the firmly expressed view
that the ground relied upon by petitioner in dismissing private respondent was
clearly insufficient, and that it was apparent that she had been discriminated
against on account of her having contracted marriage in violation of company
rules.
On appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiter and, in its decision dated April 29, 1994, it
ruled that private respondent had indeed been the subject of an unjust and
unlawful discrimination by her employer, PT&T. However, the decision of the
labor arbiter was modified with the qualification that Grace de Guzman
deserved to be suspended for three months in view of the dishonest nature of
her acts which should not be condoned. In all other respects, the NLRC affirmed
the decision of the labor arbiter, including the order for the reinstatement of
private respondent in her employment with PT&T.
The subsequent motion for reconsideration filed by petitioner was rebuffed
by respondent NLRC in its resolution of November 9, 1994, hence this special
civil action assailing the aforestated decisions of the labor arbiter and
respondent NLRC, as well as the denial resolution of the latter.
1. Decreed in the Bible itself is the universal norm that women should be
regarded with love and respect but, through the ages, men have responded to
that injunction with indifference, on the hubristic conceit that women constitute
the inferior sex. Nowhere has that prejudice against womankind been so
pervasive as in the field of labor, especially on the matter of equal employment
opportunities and standards. In the Philippine setting, women have traditionally
been considered as falling within the vulnerable groups or types of workers who
must be safeguarded with preventive and remedial social legislation against
discriminatory and exploitative practices in hiring, training, benefits, promotion
and retention.
 The Constitution, cognizant of the disparity in rights between men and
women in almost all phases of social and political life, provides a gamut of
protective provisions. To cite a few of the primordial ones, Section 14, Article
II on the Declaration of Principles and State Policies, expressly recognizes the
[8]

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 (the progenitor whereof dates back to both the
[9]

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 mandates that the State shall
[10]

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 countrys 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 which explicitly
[12]

prohibits discrimination against women with respect to terms and conditions of

employment, promotion, and training opportunities; Republic Act No.
6955 which bans the mail-order-bride practice for a fee and the export of
[13]

female labor to countries that cannot guarantee protection to the rights of

women workers; Republic Act No. 7192, also known as the Women in
[14]

Development and Nation Building Act, which affords women equal opportunities
with men to act and to enter into contracts, and for appointment, admission,
training, graduation, and commissioning in all military or similar schools of the
Armed Forces of the Philippines and the Philippine National Police; Republic
Act No. 7322 increasing the maternity benefits granted to women in the private
[15]

sector; Republic Act No. 7877 which outlaws and punishes sexual harassment
[16]

in the workplace and in the education and training environment; and Republic
Act No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995,
[17]

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, womens rights in the field of civil law have been greatly enhanced and
[18]

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 womans right against
discrimination with respect to terms and conditions of employment on account
simply of sex. Finally, and this brings us to the issue at hand, Article 136
explicitly prohibits discrimination merely by reason of the marriage of a female
employee.
3. Acknowledged as paramount in the due process scheme is the
constitutional guarantee of protection to labor and security of tenure.Thus, an
employer is required, as a condition sine qua non prior to severance of the
employment ties of an individual under his employ, to convincingly establish,
through substantial evidence, the existence of a valid and just cause in
dispensing with the services of such employee, ones 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. As put in a case, an employer is free to regulate,
[19]

according to his discretion and best business judgment, all aspects of

employment, from hiring to firing, except in cases of unlawful discrimination or
those which may be provided by law. [20]

In the case at bar, petitioners policy of not accepting or considering as

disqualified from work any woman worker who contracts marriage runs afoul of
the test of, and the right against, discrimination, afforded all women workers by
our labor laws and by no less than the Constitution. Contrary to petitioners
assertion that it dismissed private respondent from employment on account of
her dishonesty, the record discloses clearly that her ties with the company were
dissolved principally because of the companys policy that married women are
not qualified for employment in PT&T, and not merely because of her supposed
acts of dishonesty.
That it was so can easily be seen from the memorandum sent to private
respondent by Delia M. Oficial, the branch supervisor of the company, with the
reminder, in the words of the latter, that youre fully aware that the company is
not accepting married women employee (sic), as it was verbally instructed to
you. Again, in the termination notice sent to her by the same branch
[21]
supervisor, private respondent was made to understand that her severance
from the service was not only by reason of her concealment of her married
status but, over and on top of that, was her violation of the companys policy
against marriage (and even told you that married women employees are not
applicable [sic] or accepted in our company.) Parenthetically, this seems to be
[22]

the curious reason why it was made to appear in the initiatory pleadings that
petitioner was represented in this case only by its said supervisor and not by its
highest ranking officers who would otherwise be solidarily liable with the
corporation. [23]

Verily, private respondents act of concealing the true nature of her status
from PT&T could not be properly characterized as willful or in bad faith as she
was moved to act the way she did mainly because she wanted to retain a
permanent job in a stable company. In other words, she was practically forced
by that very same illegal company policy into misrepresenting her civil status
for fear of being disqualified from work. While loss of confidence is a just cause
for termination of employment, it should not be simulated. It must rest on an
[24]

actual breach of duty committed by the employee and not on the employers
caprices. Furthermore, it should never be used as a subterfuge for causes
[25]

which are improper, illegal, or unjustified.[26]

In the present controversy, petitioners expostulations that it dismissed

private respondent, not because the latter got married but because she
concealed that fact, does have a hollow ring. Her concealment, so it is claimed,
bespeaks dishonesty hence the consequent loss of confidence in her which
justified her dismissal. Petitioner would asseverate, therefore, that while it has
nothing against marriage, it nonetheless takes umbrage over the concealment
of that fact. This improbable reasoning, with interstitial distinctions, perturbs the
Court since private respondent may well be minded to claim that the imputation
of dishonesty should be the other way around.
Petitioner would have the Court believe that although private respondent
defied its policy against its female employees contracting marriage, what could
be an act of insubordination was inconsequential. What it submits as
unforgivable is her concealment of that marriage yet, at the same time,
declaring that marriage as a trivial matter to which it supposedly has no
objection. In other words, PT&T says it gives its blessings to its female
employees contracting marriage, despite the maternity leaves and other
benefits it would consequently respond for and which obviously it would have
wanted to avoid. If that employee confesses such fact of marriage, there will be
no sanction; but if such employee conceals the same instead of proceeding to
the confessional, she will be dismissed. This line of reasoning does not impress
us as reflecting its true management policy or that we are being regaled with
responsible advocacy.
This Court should be spared the ennui of strained reasoning and
the tedium of propositions which confuse through less than candid
arguments. Indeed, petitioner glosses over the fact that it was its unlawful policy
against married women, both on the aspects of qualification and retention,
which compelled private respondent to conceal her supervenient marriage. It
was, however, that very policy alone which was the cause of private
respondents secretive conduct now complained of. It is then apropos to recall
the familiar saying that he who is the cause of the cause is the cause of the evil
caused.
Finally, petitioners 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
petitioners 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. On the other hand, her earlier stints with
[27]

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. The primary
[28]

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. However, as she
[30]

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 states, 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, better known as the Women and Child Labor
[31]

Law, which amended paragraph (c), Section 12 of Republic Act No.

679, entitled An Act to Regulate the Employment of Women and Children, to
[32]

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, a decision that emanated from the
[33]

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 respondents policy or regulation with
the codal provision of law. Respondent is resolute in its contention that Article 136 of
the Labor Code applies only to women employed in ordinary occupations and that the
prohibition against marriage of women engaged in extraordinary occupations, like
flight attendants, is fair and reasonable, considering the pecularities of their chosen
profession.

We cannot subscribe to the line of reasoning pursued by respondent. All along, it

knew that the controverted policy has already met its doom as early as March 13,
1973 when Presidential Decree No. 148, otherwise known as the Women and Child
Labor Law, was promulgated. But for the timidity of those affected or their labor
unions in challenging the validity of the policy, the same was able to obtain a
momentary reprieve. A close look at Section 8 of said decree, which amended
paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is exactly the
same provision reproduced verbatim in Article 136 of the Labor Code, which was
promulgated on May 1, 1974 to take effect six (6) months later, or on November 1,
1974.

It cannot be gainsaid that, with the reiteration of the same provision in the new Labor
Code, all policies and acts against it are deemed illegal and therefore abrogated. True,
Article 132 enjoins the Secretary of Labor to establish standards that will ensure the
safety and health of women employees and in appropriate cases shall by regulation
require employers to determine appropriate minimum standards for termination in
special occupations, such as those of flight attendants, but that is precisely the factor
that militates against the policy of respondent. The standards have not yet been
established as set forth in the first paragraph, nor has the Secretary of Labor issued
any regulation affecting flight attendants.

It is logical to presume that, in the absence of said standards or regulations which are
as yet to be established, the policy of respondent against marriage is patently
illegal. This finds support in Section 9 of the New Constitution, which provides:

Sec. 9. The State shall afford protection to labor, promote full employment and
equality in employment, ensure equal work opportunities regardless of sex, race, or
creed, and regulate the relations between workers and employees. The State shall
assure the rights of workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work x x x.

Moreover, we cannot agree to the respondents 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 considered as void a policy of the same
[34]

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. Upon the other hand, a requirement that a woman
[36]

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. Petitioners 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. Hence, while it is true that the
[38]

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. Carried to its logical
[39]

consequences, it may even be said that petitioners 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. It goes on to intone that neither capital nor
[40]

labor should visit acts of oppression against the other, nor impair the interest or
convenience of the public. In the final reckoning, the danger of just such a
[41]

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. That it must be
[42]

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.

SECOND DIVISION

G.R. No. 164774 April 12, 2006

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners,

vs.
RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents.

DECISION

PUNO, J.:

We are called to decide an issue of first impression: whether the policy of the employer banning
spouses from working in the same company violates the rights of the employee under the
Constitution and the Labor Code or is a valid exercise of management prerogative.

At bar is a Petition for Review on Certiorari of the Decision of the Court of Appeals dated August 3,
2004 in CA-G.R. SP No. 73477 reversing the decision of the National Labor Relations Commission
(NLRC) which affirmed the ruling of the Labor Arbiter.

Petitioner Star Paper Corporation (the company) is a corporation engaged in trading – principally of
paper products. Josephine Ongsitco is its Manager of the Personnel and Administration Department
while Sebastian Chua is its Managing Director.

The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N.
Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company.1

Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an employee
of the company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco advised the
couple that should they decide to get married, one of them should resign pursuant to a company
policy promulgated in 1995,2 viz.:

1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the]
3rd degree of relationship, already employed by the company.

2. In case of two of our employees (both singles [sic], one male and another female)
developed a friendly relationship during the course of their employment and then decided to
get married, one of them should resign to preserve the policy stated above.3

Simbol resigned on June 20, 1998 pursuant to the company policy.4

Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee,
whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company
policy, one must resign should they decide to get married. Comia resigned on June 30, 2000.5

Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker. Petitioners
stated that Zuñiga, a married man, got Estrella pregnant. The company allegedly could have
terminated her services due to immorality but she opted to resign on December 21, 1999.6

The respondents each signed a Release and Confirmation Agreement. They stated therein that they
have no money and property accountabilities in the company and that they release the latter of any
claim or demand of whatever nature.7

Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not
resign voluntarily; they were compelled to resign in view of an illegal company policy. As to
respondent Estrella, she alleges that she had a relationship with co-worker Zuñiga who
misrepresented himself as a married but separated man. After he got her pregnant, she discovered
that he was not separated. Thus, she severed her relationship with him to avoid dismissal due to the
company policy. On November 30, 1999, she met an accident and was advised by the doctor at the
Orthopedic Hospital to recuperate for twenty-one (21) days. She returned to work on December 21,
1999 but she found out that her name was on-hold at the gate. She was denied entry. She was
directed to proceed to the personnel office where one of the staff handed her a memorandum. The
memorandum stated that she was being dismissed for immoral conduct. She refused to sign the
memorandum because she was on leave for twenty-one (21) days and has not been given a chance
to explain. The management asked her to write an explanation. However, after submission of the
explanation, she was nonetheless dismissed by the company. Due to her urgent need for money,
she later submitted a letter of resignation in exchange for her thirteenth month pay.8

Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay
and attorney’s fees. They averred that the aforementioned company policy is illegal and contravenes
Article 136 of the Labor Code. They also contended that they were dismissed due to their union
membership.

On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of
merit, viz.:

[T]his company policy was decreed pursuant to what the respondent corporation perceived as
management prerogative. This management prerogative is quite broad and encompassing for it
covers hiring, work assignment, working method, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of workers. Except as provided
for or limited by special law, an employer is free to regulate, according to his own discretion and
judgment all the aspects of employment.9 (Citations omitted.)

On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter on January 11,
2002. 10

Respondents filed a Motion for Reconsideration but was denied by the NLRC in a Resolution11 dated
August 8, 2002. They appealed to respondent court via Petition for Certiorari.

In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC
decision, viz.:
WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of the National Labor
Relations Commission is hereby REVERSED and SET ASIDE and a new one is entered as follows:

(1) Declaring illegal, the petitioners’ dismissal from employment and ordering private
respondents to reinstate petitioners to their former positions without loss of seniority rights
with full backwages from the time of their dismissal until actual reinstatement; and

(2) Ordering private respondents to pay petitioners attorney’s fees amounting to 10% of the
award and the cost of this suit.13

On appeal to this Court, petitioners contend that the Court of Appeals erred in holding that:

1. x x x the subject 1995 policy/regulation is violative of the constitutional rights towards

marriage and the family of employees and of Article 136 of the Labor Code; and

2. x x x respondents’ resignations were far from voluntary.14

We affirm.

The 1987 Constitution15 states our policy towards the protection of labor under the following
provisions, viz.:

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

xxx

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

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

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

The Civil Code likewise protects labor with the following provisions:

Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts
are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor and similar subjects.

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of
the safety and decent living for the laborer.
The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar
involves Article 136 of the Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation
of employment that a woman employee 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 her
marriage.

Respondents submit that their dismissal violates the above provision. Petitioners allege that its
policy "may appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if
read together with the first paragraph of the rule. The rule does not require the woman employee to
resign. The employee spouses have the right to choose who between them should resign. Further,
they are free to marry persons other than co-employees. Hence, it is not the marital status of the
employee, per se, that is being discriminated. It is only intended to carry out its no-employment-for-
relatives-within-the-third-degree-policy which is within the ambit of the prerogatives of
management.16

It is true that the policy of petitioners prohibiting close relatives from working in the same company
takes the nature of an anti-nepotism employment policy. Companies adopt these policies to prevent
the hiring of unqualified persons based on their status as a relative, rather than upon their
ability.17 These policies focus upon the potential employment problems arising from the perception of
favoritism exhibited towards relatives.

With more women entering the workforce, employers are also enacting employment policies
specifically prohibiting spouses from working for the same company. We note that two types of
employment policies involve spouses: policies banning only spouses from working in the same
company (no-spouse employment policies), and those banning all immediate family members,
including spouses, from working in the same company (anti-nepotism employment policies).18

Unlike in our jurisdiction where there is no express prohibition on marital discrimination,19 there are
twenty state statutes20 in the United States prohibiting marital discrimination. Some state
courts21 have been confronted with the issue of whether no-spouse policies violate their laws
prohibiting both marital status and sex discrimination.

In challenging the anti-nepotism employment policies in the United States, complainants utilize two
theories of employment discrimination: the disparate treatment and the disparate impact. Under
the disparate treatment analysis, the plaintiff must prove that an employment policy is
discriminatory on its face. No-spouse employment policies requiring an employee of a particular
sex to either quit, transfer, or be fired are facially discriminatory. For example, an employment policy
prohibiting the employer from hiring wives of male employees, but not husbands of female
employees, is discriminatory on its face.22

On the other hand, to establish disparate impact, the complainants must prove that a facially
neutral policy has a disproportionate effect on a particular class. For example, although most
employment policies do not expressly indicate which spouse will be required to transfer or leave the
company, the policy often disproportionately affects one sex.23

The state courts’ rulings on the issue depend on their interpretation of the scope of marital status
discrimination within the meaning of their respective civil rights acts. Though they agree that the term
"marital status" encompasses discrimination based on a person's status as either married, single,
divorced, or widowed, they are divided on whether the term has a broader meaning. Thus, their
decisions vary.24

The courts narrowly25 interpreting marital status to refer only to a person's status as married, single,
divorced, or widowed reason that if the legislature intended a broader definition it would have either
chosen different language or specified its intent. They hold that the relevant inquiry is if one is
married rather than to whom one is married. They construe marital status discrimination to include
only whether a person is single, married, divorced, or widowed and not the "identity, occupation, and
place of employment of one's spouse." These courts have upheld the questioned policies and ruled
that they did not violate the marital status discrimination provision of their respective state statutes.

The courts that have broadly26 construed the term "marital status" rule that it encompassed the
identity, occupation and employment of one's spouse. They strike down the no-spouse employment
policies based on the broad legislative intent of the state statute. They reason that the no-spouse
employment policy violate the marital status provision because it arbitrarily discriminates against all
spouses of present employees without regard to the actual effect on the individual's qualifications or
work performance.27 These courts also find the no-spouse employment policy invalid for failure of the
employer to present any evidence of business necessity other than the general perception that
spouses in the same workplace might adversely affect the business.28 They hold that the absence of
such a bona fide occupational qualification29 invalidates a rule denying employment to one
spouse due to the current employment of the other spouse in the same office.30 Thus, they rule that
unless the employer can prove that the reasonable demands of the business require a distinction
based on marital status and there is no better available or acceptable policy which would better
accomplish the business purpose, an employer may not discriminate against an employee based on
the identity of the employee’s spouse.31 This is known as the bona fide occupational qualification
exception.

We note that since the finding of a bona fide occupational qualification justifies an employer’s no-
spouse rule, the exception is interpreted strictly and narrowly by these state courts. There must be a
compelling business necessity for which no alternative exists other than the discriminatory
practice.32 To justify a bona fide occupational qualification, the employer must prove two factors: (1)
that the employment qualification is reasonably related to the essential operation of the job involved;
and, (2) that there is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.33

The concept of a bona fide occupational qualification is not foreign in our jurisdiction. We employ the
standard of reasonableness of the company policy which is parallel to the bona fide occupational
qualification requirement. In the recent case of Duncan Association of Detailman-PTGWO and
Pedro Tecson v. Glaxo Wellcome Philippines, Inc.,34 we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any competitor company. We
held that Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors. We considered the prohibition against personal or
marital relationships with employees of competitor companies upon Glaxo’s employees reasonable under the
circumstances because relationships of that nature might compromise the interests of Glaxo. In laying down
the assailed company policy, we recognized that Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures.35

The requirement that a company policy must be reasonable under the circumstances to qualify as a
valid exercise of management prerogative was also at issue in the 1997 case of Philippine
Telegraph and Telephone Company v. NLRC.36 In said case, the employee was dismissed in
violation of petitioner’s policy of disqualifying from work any woman worker who contracts marriage.
We held that the company policy violates the right against discrimination afforded all women workers
under Article 136 of the Labor Code, but established a permissible exception, viz.:

[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.37(Emphases supplied.)

The cases of Duncan and PT&T instruct us that the requirement of reasonableness must
be clearly established to uphold the questioned employment policy. The employer has the burden to
prove the existence of a reasonable business necessity. The burden was successfully discharged in
Duncan but not in PT&T.

We do not find a reasonable business necessity in the case at bar.

Petitioners’ sole contention that "the company did not just want to have two (2) or more of its
employees related between the third degree by affinity and/or consanguinity"38 is lame. That the
second paragraph was meant to give teeth to the first paragraph of the questioned rule39 is evidently
not the valid reasonable business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the
job, but were asked to resign when they married a co-employee. Petitioners failed to show how the
marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its business operations. Neither did petitioners explain
how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the
Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy
is premised on the mere fear that employees married to each other will be less efficient. If we uphold
the questioned rule without valid justification, the employer can create policies based on an
unproven presumption of a perceived danger at the expense of an employee’s right to security of
tenure.

Petitioners contend that their policy will apply only when one employee marries a co-employee, but
they are free to marry persons other than co-employees. The questioned policy may not facially
violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate
impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite
the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy cannot prejudice the employee’s right to be free
from arbitrary discrimination based upon stereotypes of married persons working together in one
company.40

Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot
benefit the petitioners. The protection given to labor in our jurisdiction is vast and extensive that we
cannot prudently draw inferences from the legislature’s silence41 that married persons are not
protected under our Constitution and declare valid a policy based on a prejudice or stereotype. Thus,
for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that
the questioned policy is an invalid exercise of management prerogative. Corollarily, the issue as to
whether respondents Simbol and Comia resigned voluntarily has become moot and academic.

As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the singular fact that
her resignation letter was written in her own handwriting. Both ruled that her resignation was
voluntary and thus valid. The respondent court failed to categorically rule whether Estrella voluntarily
resigned but ordered that she be reinstated along with Simbol and Comia.

Estrella claims that she was pressured to submit a resignation letter because she was in dire need of
money. We examined the records of the case and find Estrella’s contention to be more in accord
with the evidence. While findings of fact by administrative tribunals like the NLRC are generally given
not only respect but, at times, finality, this rule admits of exceptions,42 as in the case at bar.

Estrella avers that she went back to work on December 21, 1999 but was dismissed due to her
alleged immoral conduct. At first, she did not want to sign the termination papers but she was forced
to tender her resignation letter in exchange for her thirteenth month pay.

The contention of petitioners that Estrella was pressured to resign because she got impregnated by
a married man and she could not stand being looked upon or talked about as immoral43 is
incredulous. If she really wanted to avoid embarrassment and humiliation, she would not have gone
back to work at all. Nor would she have filed a suit for illegal dismissal and pleaded for
reinstatement. We have held that in voluntary resignation, the employee is compelled by personal
reason(s) to dissociate himself from employment. It is done with the intention of relinquishing an
office, accompanied by the act of abandonment. 44 Thus, it is illogical for Estrella to resign and then
file a complaint for illegal dismissal. Given the lack of sufficient evidence on the part of petitioners
that the resignation was voluntary, Estrella’s dismissal is declared illegal.

IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No. 73477 dated August
3, 2004 is AFFIRMED. 1avvphil.n et

SO ORDERED.

THIRD DIVISION

ARMANDO G. YRASUEGUI, G.R. No. 168081

Petitioner,
Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

Promulgated:
PHILIPPINE AIRLINES, INC.,
Respondent. October 17, 2008
x--------------------------------------------------x

DECISION

REYES, R.T., J.:

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

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

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

The Facts

Petitioner Armando G. Yrasuegui was a former international flight steward of

Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (58) with a large
body frame. The proper weight for a man of his height and body structure is from
147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin
and Crew Administration Manual[1] of PAL.

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

After meeting the required weight, petitioner was allowed to return to

work. But petitioners weight problem recurred. He again went on leave without pay
from October 17, 1988 to February 1989.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal
weight. In line with company policy, he was removed from flight duty effective May
6, 1989 to July 3, 1989. He was formally requested to trim down to his ideal weight
and report for weight checks on several dates. He was also told that he may avail
of the services of the company physician should he wish to do so. He was advised
that his case will be evaluated on July 3, 1989.[2]

On February 25, 1989, petitioner underwent weight check. It was discovered

that he gained, instead of losing, weight. He was overweight at 215 pounds, which
is 49 pounds beyond the limit. Consequently, his off-duty status was retained.

On October 17, 1989, PAL Line Administrator Gloria Dizon personally

visited petitioner at his residence to check on the progress of his effort to lose
weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous
weight. After the visit, petitioner made a commitment[3] to reduce weight in a letter
addressed to Cabin Crew Group Manager Augusto Barrios. The letter, in full, reads:

Dear Sir:

I would like to guaranty my commitment towards a weight loss

from 217 pounds to 200 pounds from today until 31 Dec. 1989.

From thereon, I promise to continue reducing at a reasonable

percentage until such time that my ideal weight is achieved.

Likewise, I promise to personally report to your office at the

designated time schedule you will set for my weight check.

Respectfully Yours,
F/S Armando Yrasuegui[4]
 Despite the lapse of a ninety-day period given him to reach his ideal weight,
petitioner remained overweight. On January 3, 1990, he was informed of
the PAL decision for him to remain grounded until such time that he satisfactorily
complies with the weight standards. Again, he was directed to report every two
weeks for weight checks.

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

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

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

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

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

On November 13, 1992, PAL finally served petitioner a Notice of

Administrative Charge for violation of company standards on weight
requirements. He was given ten (10) days from receipt of the charge within which
to file his answer and submit controverting evidence.[8]
 On December 7, 1992, petitioner submitted his Answer.[9] Notably, he did not
deny being overweight. What he claimed, instead, is that his violation, if any, had
already been condoned by PAL since no action has been taken by the company
regarding his case since 1988. He also claimed that PAL discriminated against him
because the company has not been fair in treating the cabin crew members who are
similarly situated.

On December 8, 1992, a clarificatory hearing was held where petitioner

manifested that he was undergoing a weight reduction program to lose at least two
(2) pounds per week so as to attain his ideal weight.[10]

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

His motion for reconsideration having been denied,[12] petitioner filed a

complaint for illegal dismissal against PAL.

Labor Arbiter, NLRC and CA Dispositions

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled[13] that

petitioner was illegally dismissed. The dispositive part of the Arbiter ruling runs as
follows:

WHEREFORE, in view of the foregoing, judgment is hereby

rendered, declaring the complainants dismissal illegal, and ordering the
respondent to reinstate him to his former position or substantially
equivalent one, and to pay him:

a. Backwages of Php10,500.00 per month from his dismissal

on June 15, 1993 until reinstated, which for purposes of appeal is hereby
set from June 15, 1993 up to August 15, 1998 at P651,000.00;

b. Attorneys fees of five percent (5%) of the total award.

 SO ORDERED.[14]

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

Both parties appealed to the National Labor Relations Commission

(NLRC).[19]

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

On February 1, 2000, the Labor Arbiter denied[21] the Motion to Quash Writ
of Execution[22] of PAL.

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

On June 23, 2000, the NLRC rendered judgment[24] in the following tenor:

WHEREFORE, premises considered[,] the Decision of the

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

According to the NLRC, obesity, or the tendency to gain weight

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

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

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

By Decision dated August 31, 2004, the CA reversed[31] the NLRC:

WHEREFORE, premises considered, we hereby GRANT the

petition. The assailed NLRC decision is declared NULL and VOID and is
hereby SET ASIDE. The private respondents complaint is hereby
DISMISSED. No costs.

SO ORDERED.[32]

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

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

On May 10, 2005, the CA denied petitioners motion for

reconsideration.[41] Elaborating on its earlier ruling, the CA held that the weight
standards of PAL are a bona fide occupational qualification which, in case of
violation, justifies an employees separation from the service.[42]

Issues

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

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

II.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT PETITIONERS DISMISSAL FOR
OBESITY CAN BE PREDICATED ON THE BONA FIDE
OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE;
 III.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
IN HOLDING THAT PETITIONER WAS NOT UNDULY
DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE
OTHER OVERWEIGHT CABIN ATTENDANTS WERE EITHER
GIVEN FLYING DUTIES OR PROMOTED;

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

Our Ruling

I. The obesity of petitioner is a ground for dismissal under Article

282(e) [44] of the Labor Code.

A reading of the weight standards of PAL would lead to no other conclusion than
that they constitute a continuing qualification of an employee in order to keep the
job. Tersely put, an employee may be dismissed the moment he is unable to
comply with his ideal weight as prescribed by the weight standards. The dismissal
of the employee would thus fall under Article 282(e) of the Labor Code. As
explained by the CA:

x x x [T]he standards violated in this case were not mere orders of the employer;
they were the prescribed weights that a cabin crew must maintain in order to
qualify for and keep his or her position in the company. In other words, they
were standards that establish continuing qualifications for an employees
position. In this sense, the failure to maintain these standards does not fall under
Article 282(a) whose express terms require the element of willfulness in order to
be a ground for dismissal. The failure to meet the employers qualifying
standards is in fact a ground that does not squarely fall under grounds (a) to (d)
and is therefore one that falls under Article 282(e) the other causes analogous to
the foregoing.

By its nature, these qualifying standards are norms that apply prior to and
after an employee is hired. They apply prior to employment because these are the
standards a job applicant must initially meet in order to be hired. They apply after
hiring because an employee must continue to meet these standards while on the
job in order to keep his job. Under this perspective, a violation is not one of the
 faults for which an employee can be dismissed pursuant to pars. (a) to (d) of
Article 282; the employee can be dismissed simply because he no longer qualifies
for his job irrespective of whether or not the failure to qualify was willful or
intentional. x x x[45]

Petitioner, though, advances a very interesting argument. He claims that obesity is

a physical abnormality and/or illness.[46]Relying
on Nadura v. Benguet Consolidated, Inc.,[47] he says his dismissal is illegal:

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

Even a cursory reading of the legal provision under consideration is sufficient to

convince anyone that, as the trial court said, illness cannot be included as an
analogous cause by any stretch of imagination.

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

The reliance on Nadura is off-tangent. The factual milieu in Nadura is

substantially different from the case at bar. First, Nadura was not decided under
the Labor Code. The law applied in that case was Republic Act (RA) No.
1787. Second, the issue of flight safety is absent in Nadura, thus, the rationale
there cannot apply here. Third, in Nadura, the employee who was a miner, was laid
off from work because of illness, i.e., asthma. Here, petitioner was dismissed for
his failure to meet the weight standards of PAL. He was not dismissed due to
illness. Fourth, the issue in Nadura is whether or not the dismissed employee is
entitled to separation pay and damages. Here, the issue centers on the propriety of
the dismissal of petitioner for his failure to meet the weight standards
of PAL. Fifth, in Nadura, the employee was not accorded due process. Here,
petitioner was accorded utmost leniency. He was given more than four (4) years to
comply with the weight standards of PAL.
 In the case at bar, the evidence on record militates against petitioners claims
that obesity is a disease. That he was able to reduce his weight from 1984 to 1992
clearly shows that it is possible for him to lose weight given the proper attitude,
determination, and self-discipline. Indeed, during the clarificatory hearing
on December 8, 1992, petitioner himself claimed that [t]he issue is could I bring
my weight down to ideal weight which is 172, then the answer is yes. I can do it
now.[49]

True, petitioner claims that reducing weight is costing him a lot of

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

Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental

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

Cook contended that the action of respondent amounted to discrimination on

the basis of a handicap. This was in direct violation of Section 504(a) of the
Rehabilitation Act of 1973,[53] which incorporates the remedies contained in Title
VI of the Civil Rights Act of 1964. Respondent claimed, however, that morbid
obesity could never constitute a handicap within the purview of the Rehabilitation
Act. Among others, obesity is a mutable condition, thus plaintiff could simply lose
weight and rid herself of concomitant disability.
 The appellate Court disagreed and held that morbid obesity is a disability
under the Rehabilitation Act and that respondent discriminated against Cook based
on perceived disability. The evidence included expert testimony that morbid
obesity is a physiological disorder. It involves a dysfunction of both the metabolic
system and the neurological appetite suppressing signal system, which is capable
of causing adverse effects within the musculoskeletal, respiratory, and
cardiovascular systems. Notably, the Court stated that mutability is relevant only in
determining the substantiality of the limitation flowing from a given impairment,
thus mutability only precludes those conditions that an individual can easily and
quickly reverse by behavioral alteration.

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

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

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

occupational qualification defense.

Employment in particular jobs may not be limited to persons of a particular sex,

religion, or national origin unless the employer can show that sex, religion, or
national origin is an actual qualification for performing the job. The qualification is
called a bona fide occupational qualification (BFOQ).[55] In the United States, there
are a few federal and many state job discrimination laws that contain an exception
allowing an employer to engage in an otherwise unlawful form of prohibited
discrimination when the action is based on a BFOQ necessary to the normal
operation of a business or enterprise.[56]
Petitioner contends that BFOQ is a statutory defense. It does not exist if there
is no statute providing for it.[57] Further, there is no existing BFOQ statute that could
justify his dismissal.[58]

Both arguments must fail.

First, the Constitution,[59] the Labor Code,[60] and RA No. 7277[61] or the
Magna Carta for Disabled Persons[62] containprovisions similar to BFOQ.

Second, in British Columbia Public Service Employee Commission (BSPSERC)

v. The British Columbia Government and Service Employees Union
(BCGSEU),[63] the Supreme Court of Canada adopted the so-called Meiorin Test in
determining whether an employment policy is justified. Under this test, (1) the
employer must show that it adopted the standard for a purpose rationally connected
to the performance of the job;[64] (2) the employer must establish that the standard is
reasonably necessary[65] to the accomplishment of that work-related purpose; and (3)
the employer must establish that the standard is reasonably necessary in order to
accomplish the legitimate work-related purpose. Similarly, in Star Paper
Corporation v. Simbol,[66] this Court held that in order to justify a BFOQ, the
employer must prove that (1) the employment qualification is reasonably related to
the essential operation of the job involved; and (2) that there is factual basis for
believing that all or substantially all persons meeting the qualification would be
unable to properly perform the duties of the job.[67]

In short, the test of reasonableness of the company policy is used because it is

parallel to BFOQ.[68] BFOQ is valid provided it reflects an inherent quality
reasonably necessary for satisfactory job performance.[69]

In Duncan Association of Detailman-PTGWTO

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

Verily, there is no merit to the argument that BFOQ cannot be applied if it has
no supporting statute. Too, the Labor Arbiter,[71] NLRC,[72] and CA[73] are one in
holding that the weight standards of PAL are reasonable. A common carrier, from
the nature of its business and for reasons of public policy, is bound to observe
extraordinary diligence for the safety of the passengers it transports.[74] It is bound
to carry its passengers safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with due regard for all the
circumstances.[75]

The law leaves no room for mistake or oversight on the part of a common
carrier. Thus, it is only logical to hold that the weight standards of PAL show its
effort to comply with the exacting obligations imposed upon it by law by virtue of
being a common carrier.
The business of PAL is air transportation. As such, it has committed itself to
safely transport its passengers. In order to achieve this, it must necessarily rely on
its employees, most particularly the cabin flight deck crew who are on board the
aircraft.The weight standards of PAL should be viewed as imposing strict norms of
discipline upon its employees.

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

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

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

The rationale in Western Air Lines v. Criswell[76] relied upon by petitioner

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

In short, there is no need to individually evaluate their ability to perform

their task. That an obese cabin attendant occupies more space than a slim one is an
unquestionable fact which courts can judicially recognize without introduction of
evidence.[77] It would also be absurd to require airline companies to reconfigure the
aircraft in order to widen the aisles and exit doors just to accommodate overweight
cabin attendants like petitioner.

The biggest problem with an overweight cabin attendant is the possibility of

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

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

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

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

against by PAL.

Petitioner next claims that PAL is using passenger safety as a convenient

excuse to discriminate against him.[79] We are constrained, however, to hold
otherwise. We agree with the CA that [t]he element of
discrimination came into play in this case as a secondary position for the private
respondent in order to escape the consequence of dismissal that being overweight
entailed. It is a confession-and-avoidance position that impliedly admitted the
cause of dismissal, including the reasonableness of the applicable standard and the
private respondents failure to comply.[80] It is a basic rule in evidence that each
party must prove his affirmative allegation.[81]
Since the burden of evidence lies with the party who asserts an affirmative
allegation, petitioner has to prove his allegation with particularity. There is nothing
on the records which could support the finding of discriminatory treatment.
Petitioner cannot establish discrimination by simply naming the supposed cabin
attendants who are allegedly similarly situated with him. Substantial proof must be
shown as to how and why they are similarly situated and the differential treatment
petitioner got from PAL despite the similarity of his situation with other
employees.

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

We are not unmindful that findings of facts of administrative agencies, like

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

Here, the Labor Arbiter and the NLRC

inexplicably misappreciated evidence. We thus annul their findings.

To make his claim more believable, petitioner invokes the equal protection
clause guaranty[86] of the Constitution. However, in the absence of governmental
interference, the liberties guaranteed by the Constitution cannot be invoked.[87] Put
differently, the Bill of Rights is not meant to be invoked against acts of private
individuals.[88] Indeed, the United States Supreme Court, in interpreting the
Fourteenth Amendment,[89] which is the source of our equal protection guarantee,
is consistent in saying that
the equal protection erects no shield against private conduct, however
discriminatory or wrongful.[90] Private actions, no matter how egregious, cannot
violate the equal protection guarantee.[91]
 IV. The claims of petitioner for reinstatement and wages are moot.

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

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

In any event, the decision of the Labor Arbiter reinstating a dismissed or

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

The law is very clear. Although an award or order of reinstatement is self-

executory and does not require a writ of execution,[93] the option to exercise actual
reinstatement or payroll reinstatement belongs to the employer. It does not belong
to the employee, to the labor tribunals, or even to the courts.

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

Petitioner cannot take refuge in the pronouncements of the Court in a

case[97] that [t]he unjustified refusal of the employer to reinstate the dismissed
employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution[98] and
even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the
employee during the period of appeal until reversal by the higher court.[99] He
failed to prove that he complied with the return to work order of PAL. Neither does
it appear on record that he actually rendered services for PAL from the moment he
was dismissed, in order to insist on the payment of his full backwages.

In insisting that he be reinstated to his actual position despite being

overweight, petitioner in effect wants to render the issues in the present case
moot. He asks PAL to comply with the impossible. Time and again, the Court
ruled that the law does not exact compliance with the impossible.[100]

V. Petitioner is entitled to separation pay.

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

Normally, a legally dismissed employee is not entitled to separation

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

Exceptionally, separation pay is granted to a legally dismissed employee as

an act social justice,[101] or based on equity.[102]In both instances, it is required that
the dismissal (1) was not for serious misconduct; and (2) does not reflect on the
moral character of the employee.[103]

Here, We grant petitioner separation pay equivalent to one-half (1/2) months

pay for every year of service.[104] It should include regular allowances which he
might have been receiving.[105] We are not blind to the fact that he was not
dismissed for any serious misconduct or to any act which would reflect on his
moral character. We also recognize that his employment with PALlasted for more
or less a decade.
 WHEREFORE, the appealed Decision of the Court of Appeals
is AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui is entitled
to separation pay in an amount equivalent to one-half (1/2) months pay for every
year of service, which should include his regular allowances.

SO ORDERED.