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[1989V518] MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO, President,


petitioner, vs. THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DIRECTOR OF LABOR, REGION
X, respondents.1989 June 30En BancG.R. No. 78909D E C I S I O N

MEDIALDEA, J.:

This is a petition for certiorari seeking the annulment of the Decision of the respondent Secretary of Labor dated
September 24, 1986, affirming with modification the Order of respondent Regional Director of Labor, Region X, dated
August 4, 1986, awarding salary differentials and emergency cost of living allowances (ECOLAs) to employees of
petitioner, and the Order denying petitioner's motion for reconsideration dated May 13, 1987, on the ground of grave
abuse of discretion.

Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro Women's Club
and Puericulture Center, headed by Mrs. Antera Dorado, as hold-over President. The hospital derives its finances from
the club itself as well as from paying patients, averaging 130 per month. It is also partly subsidized by the Philippine
Charity Sweepstakes Office and the Cagayan De Oro City government.

Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are given food, but
the amount spent therefor is deducted from their respective salaries (pp. 77-78, Rollo).

On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a complaint
with the Office of the Regional Director of Labor and Employment, Region X, for underpayment of their salaries and
ECOLAs, which was docketed as ROX Case No. CW-71-86.

On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to inspect the records
of the petitioner to ascertain the truth of the allegations in the complaints (p. 98, Rollo). Payrolls covering the periods
of May, 1974, January, 1985, November, 1985 and May, 1986, were duly submitted for inspection.

On July 17, 1986, the Labor Standard and Welfare Officers submitted their report confirming that there was
underpayment of wages and ECOLAs of all the employees by the petitioner, the dispositive portion of which reads:

"IN VIEW OF THE FOREGOING, deficiency on wage and ecola as verified and confirmed per review of the respondent
payrolls and interviews with the complainant workers and all other information gathered by the team, it is respectfully
recommended to the Honorable Regional Director, this office, that Antera Dorado, President be ORDERED to pay the
amount of SIX HUNDRED FIFTY FOUR THOUSAND SEVEN HUNDRED FIFTY SIX & 01/100 (P654,756.01), representing
underpayment of wages and ecola to the THIRTY SIX (36) employees of the said hospital as appearing in the attached
Annex "F" worksheets and/or whatever action equitable under the premises." (p. 99, Rollo)

Based on this inspection report and recommendation, the Regional Director issued an Order dated August 4, 1986,
directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all the petitioner's
employees, the dispositive portion of which reads:

"WHEREFORE, premises considered, respondent Maternity and Children Hospital is hereby ordered to pay the above-
listed complainants the total amount indicated opposite each name, thru this Office within ten (10) days from receipt
thereof. Thenceforth, the respondent hospital is also ordered to pay its employees/workers the prevailing statutory
minimum wage and allowance.

SO ORDERED." (p. 34, Rollo)

Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez, who rendered
a Decision on September 24, 1986, modifying the said Order in that deficiency wages and ECOLAs should be
computed only from May 23, 1983 to May 23, 1986, the dispositive portion of which reads:

"WHEREFORE, the August 29, 1986 order is hereby MODIFIED in that the deficiency wages and ECOLAs should only
be computed from May 23, 1983 to May 23, 1986. The case is remanded to the Regional Director, Region X, for
recomputation specifying the amounts due each the complainants under each of the applicable Presidential Decrees."
(p. 40, Rollo)

On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the Secretary of Labor in
his Order dated May 13, 1987, for lack of merit (p. 43 Rollo).

The instant petition questions the all-embracing applicability of the award involving salary differentials and ECOLAs, in
that it covers not only the hospital employees who signed the complaints, but also those (a) who are not signatories
to the complaint, and (b) those who were no longer in the service of the hospital at the time the complaints were
filed.

Petitioner likewise maintains that the Order of the respondent Regional Director of Labor, as affirmed with
modifications by respondent Secretary of Labor, does not clearly and distinctly state the facts and the law on which
the award was based. In its "Rejoinder to Comment", petitioner further questions the authority of the Regional
Director to award salary differentials and ECOLAs to private respondents, (relying on the case of Encarnacion vs.
Baltazar, G.R. No. L-16883, March 27, 1961, 1 SCRA 860, as authority for raising the additional issue of lack of
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jurisdiction at any stage of the proceedings, p. 52, Rollo), alleging that the original and exclusive jurisdiction over
money claims is properly lodged in the Labor Arbiter, based on Article 217, paragraph 3 of the Labor Code.

The primary issue here is whether or not the Regional Director had jurisdiction over the case and if so, the extent of
coverage of any award that should be forthcoming, arising from his visitorial and enforcement powers under Article
128 of the Labor Code. The matter of whether or not the decision states clearly and distinctly statement of facts as
well as the law upon which it is based, becomes relevant after the issue on jurisdiction has been resolved.

This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by E.O. No. 111. Labor
standards refer to the minimum requirements prescribed by existing laws, rules, and regulations relating to wages,
hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety, and
health standards (Section 7, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated
September 16, 1987). 1 Under the present rules, a Regional Director exercises both visitorial and enforcement power
over labor standards cases, and is therefore empowered to adjudicate money claims, provided there still exists an
employer-employee relationship, and the findings of the regional office is not contested by the employer concerned.

Prior to the promulgation of E.O. No. 111 on December 24, 1986, the Regional Director's authority over money claims
was unclear. The complaint in the present case was filed on May 23, 1986 when E.O. No. 111 was not yet in effect,
and the prevailing view was that stated in the case of Antonio Ong, Sr. vs. Henry M. Parel, et al., G.R. No. 76710,
dated December 21, 1987, thus:

". . . the Regional Director, in the exercise of his visitorial and enforcement powers under Article 128 of the Labor
Code, has no authority to award money claims, properly falling within the jurisdiction of the labor arbiter . . .

". . . If the inspection results in a finding that the employer has violated certain labor standard laws, then the regional
director must order the necessary rectifications. However, this does not include adjudication of money claims, clearly
within the ambit of the labor arbiter's authority under Article 217 of the Code."

The Ong case relied on the ruling laid down in Zambales Base Metals Inc. vs. The Minister of Labor, et al., (G.R. Nos.
73184-88, November 26, 1986, 146 SCRA 50) that the "Regional Director was not empowered to share in the original
and exclusive jurisdiction conferred on Labor Arbiters by Article 217."

We believe, however, that even in the absence of E.O. No. 111, Regional Directors already had enforcement powers
over money claims, effective under P.D. No. 850, issued on December 16, 1975, which transferred labor standards
cases from the arbitration system to the enforcement system.

To clarify matters, it is necessary to enumerate a series of rules and provisions of law on the disposition of labor
standards cases.

Prior to the promulgation of PD 850, labor standards cases were an exclusive function of labor arbiters, under Article
216 of the then Labor Code (PD No. 442, as amended by PD 570-a), which read in part:

"Art 216. Jurisdiction of the Commission. The Commission shall have exclusive appellate jurisdiction over all cases
decided by the Labor Arbiters and compulsory arbitrators.

"The Labor Arbiters shall have exclusive jurisdiction to hear and decide the following cases involving all workers
whether agricultural or non-agricultural.

xxx xxx xxx

"(c ) All money claims of workers, involving non-payment or underpayment of wages, overtime compensation,
separation pay, maternity leave and other money claims arising from employee-employer relations, except claims for
workmen's compensation, social security and medicare benefits;

"(d) Violations of labor standard laws;

"xxx xxx xxx"

The Regional Director exercised visitorial rights only under then Article 127 of the Code as follows:

"ART. 127. Visitorial Powers. The Secretary of Labor or his duly authorized representatives, including, but not
restricted, to the labor inspectorate, shall have access to employers' records and premises at any time of the day or
night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and
investigate any fact, condition or matter which may be necessary to determine violations or in aid in the enforcement
of this Title and of any Wage Order or regulation issued pursuant to this Code."

With the promulgation of PD 850, Regional Directors were given enforcement powers, in addition to visitorial powers.
Article 127, as amended, provided in part:

"SEC. 10. Article 127 of the Code is hereby amended to read as follows:

'Art. 127. Visitorial and enforcement powers.

'xxx xxx xxx;


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'(b) The Secretary of Labor or his duly authorized representatives shall have the power to order and administer, after
due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor
regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to
the appropriate authority for the enforcement of their order.'

"xxx xxx xxx"

Labor Arbiters, on the other hand, lost jurisdiction over labor standards cases. Article 216, as then amended by PD
850, provided in part:

"SEC. 22. Article 216 of the Code is hereby amended to read as follows:

'Art. 216. Jurisdiction of Labor Arbiters and the Commission. ---- (a) The Labor Arbiters shall have exclusive
jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural:

'xxx xxx xxx;

'(3) All money claims of workers involving non-payment or underpayment of wages, overtime or premium
compensation, maternity or service incentive leave, separation pay and other money claims arising from employer-
employee relations, except claims for employee's compensation, social security and medicare benefits and as
otherwise provided in Article 127 of this Code.'

"xxx xxx xxx"

Under the then Labor Code therefore (PD 442 as amended by PD 570-a, as further amended by PD 850), there were
three adjudicatory units: The Regional Director, the Bureau of Labor Relations and the Labor Arbiter. It became
necessary to clarify and consolidate all governing provisions on jurisdiction into one document. 2 On April 23, 1976,
MOLE Policy Instructions No. 6 was issued, and provides in part (on labor standards cases) as follows:

"POLICY INSTRUCTIONS NO. 6

TO: All Concerned

SUBJECT: DISTRIBUTION OF JURISDICTION OVER


LABOR CASES.

"xxx xxx xxx

"1. The following cases are under the exclusive original jurisdiction of the Regional Director.

a) Labor standards cases arising from violations of labor standard laws discovered in the course of inspection or
complaints where employer-employee relations still exist;

xxx xxx xxx

"2. The following cases are under the exclusive original jurisdiction of the Conciliation Section of the Regional Office:

a) Labor standards cases where employer-employee relations no longer exist;

xxx xxx xxx

"6. The following cases are certifiable to the Labor Arbiters:

a) Cases not settled by the Conciliation Section of the Regional Office, namely:

1) labor standard cases where employer-employee relations no longer exist;

xxx xxx xxx"

MOLE Policy Instructions No. 7 (undated) was likewise subsequently issued, enunciating the rationale for, and the
scope of, the enforcement power of the Regional Director, the first and second paragraphs of which provide as
follows:

"POLICY INSTRUCTIONS NO. 7

TO: All Regional Directors

SUBJECT: LABOR STANDARDS CASES

Under PD 850, labor standards cases have been taken from the arbitration system and placed under the enforcement
system, except where a) questions of law are involved as determined by the Regional Director, b) the amount
involved exceeds P100,000.00 or over 40% of the equity of the employer, whichever is lower, c) the case requires
evidentiary matters not disclosed or verified in the normal course of inspection, or d) there is no more employer-
employee relationship.
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The purpose is clear: to assure the worker the rights and benefits due to him under labor standards laws without
having to go through arbitration. The worker need not litigate to get what legally belongs to him. The whole
enforcement machinery of the Department of Labor exists to insure its expeditious delivery to him free of charge."

Under the foregoing, a complaining employee who was denied his rights and benefits due him under labor standards
law need not litigate. The Regional Director, by virtue of his enforcement power, assured "expeditious delivery to him
of his rights and benefits free of charge", provided of course, he was still in the employ of the firm.

After PD 850, Article 216 underwent a series of amendments (aside from being re-numbered as Article 217) and with
it a corresponding change in the jurisdiction of, and supervision over, the Labor Arbiters:

1. PD 1367 (5-1-78) ---- gave Labor Arbiters exclusive jurisdiction over unresolved issues in collective bargaining,
etc., and those cases arising from employer-employee relations duly indorsed by the Regional Directors. (It also
removed his jurisdiction over moral or other damages) In other words, the Labor Arbiter entertained cases certified to
him. (Article 228, 1978 Labor Code.)

2. PD 1391 (5-29-78) ---- all regional units of the National Labor Relations Commission (NLRC) were integrated into
the Regional Offices Proper of the Ministry of Labor; effectively transferring direct administrative control and
supervision over the Arbitration Branch to the Director of the Regional Office of the Ministry of Labor. "Conciliable
cases" which were thus previously under the jurisdiction of the defunct Conciliation Section of the Regional Office for
purposes of conciliation or amicable settlement, became immediately assignable to the Arbitration Branch for joint
conciliation and compulsory arbitration. In addition, the Labor Arbiter had jurisdiction even over termination and
labor-standards cases that may be assigned to them for compulsory arbitration by the Director of the Regional Office.
PD 1391 merged conciliation and compulsory arbitration functions in the person of the Labor Arbiter. The procedure
governing the disposition of cases at the Arbitration Branch paralleled those in the Special Task Force and Field
Services Division, with one major exception: the Labor Arbiter exercised full and untrammelled authority in the
disposition of the case, particularly in the substantive aspect, his decisions and orders subject to review only on
appeal to the NLRC. 3

3. MOLE Policy Instructions No. 37 ---- Because of the seemingly overlapping functions as a result of PD 1391, MOLE
Policy Instructions No. 37 was issued on October 7, 1978, and provided in part:

"POLICY INSTRUCTIONS NO. 37

TO: All Concerned

SUBJECT: ASSIGNMENT OF CASES TO LABOR ARBITERS

Pursuant to the provisions of Presidential Decree No. 1391 and to insure speedy disposition of labor cases, the
following guidelines are hereby established for the information and guidance of all concerned.

1. Conciliable Cases.

Cases which are conciliable per se i.e., (a) labor standards cases where employer-employee relationship no longer
exists; (b) cases involving deadlock in collective bargaining, except those falling under P.D. 823, as amended; (c)
unfair labor practice cases; and (d) overseas employment cases, except those involving overseas seamen, shall be
assigned by the Regional Director to the Labor Arbiter for conciliation and arbitration without coursing them through
the conciliation section of the Regional Office.

2. Labor Standards Cases.

Cases involving violation of labor standards laws where employer-employee relationship still exists shall be assigned
to the Labor Arbiters where:

a) intricate questions of law are involved; or

b) evidentiary matters not disclosed or verified in the normal course of inspection by labor regulations officers are
required for their proper disposition.

3. Disposition of Cases.

When a case is assigned to a Labor Arbiter, all issues raised therein shall be resolved by him including those which are
originally cognizable by the Regional Director to avoid multiplicity of proceedings. In other words, the whole case, and
not merely issues involved therein, shall be assigned to and resolved by him.

xxx xxx xxx"

4. PD 1691 (5-1-80) ---- original and exclusive jurisdiction over unresolved issues in collective bargaining and money
claims, which includes moral or other damages.

Despite the original and exclusive jurisdiction of labor arbiters over money claims, however, the Regional Director
nonetheless retained his enforcement power, and remained empowered to adjudicate uncontested money claims.

5. BP 130 (8-21-81) ---- strengthened voluntary arbitration. The decree also returned the Labor Arbiters as part of
the NLRC, operating as Arbitration Branch thereof.
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6. BP 227 (6-1-82) ---- original and exclusive jurisdiction over questions involving legality of strikes and lock-outs.

The present petition questions the authority of the Regional Director to issue the Order, dated August 4, 1986, on the
basis of his visitorial and enforcement powers under Article 128 (formerly Article 127) of the present Labor Code. It is
contended that based on the rulings in the Ong vs. Parel (supra) and the Zambales Base Metals, Inc. vs. The Minister
of Labor (supra) cases, a Regional Director is precluded from adjudicating money claims on the ground that this is an
exclusive function of the Labor Arbiter under Article 217 of the present Code.

On August 4, 1986, when the order was issued, Article 128(b) 4 read as follows:

"(b) The Minister of Labor or his duly authorized representatives shall have the power to order and administer, after
due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor
regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to
the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings
of the labor regulations officer and raises issues which cannot be resolved without considering evidentiary matters
that are not verifiable in the normal course of inspection."

On the other hand, Article 217 of the Labor Code as amended by P.D. 1691, effective May 1,1980; Batas Pambansa
Blg. 130, effective August 21, 1981; and Batas Pambansa Blg. 227, effective June 1, 1982, inter alia, provides:

"ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and
exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for
decision, the following cases involving all workers, whether agricultural or non-agricultural:

"1. Unfair labor practice cases;

"2. Those that workers may file involving wages, hours of work and other terms and conditions of employment;

"3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime
compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for
employees' compensation, social security, medicare and maternity benefits;

"4. Cases involving household services; and

"5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes
and lockouts."

The Ong and Zambales cases involved workers who were still connected with the company. However, in the Ong case,
the employer disputed the adequacy of the evidentiary foundation (employees' affidavits) of the findings of the labor
standards inspectors while in the Zambales case, the money claims which arose from alleged violations of labor
standards provisions were not discovered in the course of normal inspection. Thus, the provisions of MOLE Policy
Instructions Nos. 6, (Distribution of Jurisdiction Over Labor Cases) and 37 (Assignment of Cases to Labor Arbiters)
giving Regional Directors adjudicatory powers over uncontested money claims discovered in the course of normal
inspection, provided an employer-employee relationship still exists, are inapplicable.

In the present case, petitioner admitted the charge of underpayment of wages to workers still in its employ; in fact, it
pleaded for time to raise funds to satisfy its obligation. There was thus no contest against the findings of the labor
inspectors.

Barely less than a month after the promulgation on November 26, 1986 of the Zambales Base Metals case, Executive
Order No. 111 was issued on December 24, 1986, 5 amending Article 128(b) of the Labor Code, to read as follows:

"(b) THE PROVISIONS OF ARTICLE 217 OF THIS CODE TO THE CONTRARY NOTWITHSTANDING AND IN CASES
WHERE THE RELATIONSHIP OF EMPLOYER-EMPLOYEE STILL EXISTS, the Minister of Labor and Employment or his
duly authorized representatives shall have the power to order and administer, after due notice and hearing,
compliance with the labor standards provisions of this Code AND OTHER LABOR LEGISLATION based on the findings of
labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution
to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the
findings of the labor regulation officer and raises issues which cannot be resolved without considering evidentiary
matters that are not verifiable in the normal course of inspection."

As seen from the foregoing, EO 111 authorizes a Regional Director to order compliance by an employer with labor
standards provisions of the Labor Code and other legislation. It is Our considered opinion however, that the inclusion
of the phrase, "The provisions of Article 217 of this Code to the contrary notwithstanding and in cases where the
relationship of employer-employee still exists" . . . in Article 128(b), as amended, above-cited, merely
confirms/reiterates the enforcement adjudication authority of the Regional Director over uncontested money claims in
cases where an employer-employee relationship still exists. 6

Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos. 6, 7 and 37, it is clear that it
has always been the intention of our labor authorities to provide our workers immediate access (when still feasible, as
where an employer-employee relationship still exists) to their rights and benefits, without being inconvenienced by
arbitration/litigation processes that prove to be not only nerve-wracking, but financially burdensome in the long run.
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Note further the second paragraph of Policy Instructions No. 7 indicating that the transfer of labor standards cases
from the arbitration system to the enforcement system is.

". . . to assure the workers the rights and benefits due to him under labor standard laws, without having to go through
arbitration . . ."

so that

". . . the workers would not litigate to get what legally belongs to him . . . ensuring delivery . . . free of charge."

Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application
by long-winded arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience.
Labor laws are meant to promote, not defeat, social justice.

This view is in consonance with the present "Rules on the Disposition of Labor Standard Cases in the Regional Offices"
7 issued by the Secretary of Labor, Franklin M. Drilon on September 16, 1987.

Thus, Sections 2 and 3 of Rule II on "Money Claims Arising from Complaint Routine Inspection", provide as follows:

"Section 2. Complaint inspection. All such complaints shall immediately be forwarded to the Regional Director who
shall refer the case to the appropriate unit in the Regional Office for assignment to a Labor Standards and Welfare
Officer (LSWO) for field inspection. When the field inspection does not produce the desired results, the Regional
Director shall summon the parties for summary investigation to expedite the disposition of the case . . .

"Section 3. Complaints where no employer-employee relationship actually exists. ---- Where employer-employee
relationship no longer exists by reason of the fact that it has already been severed, claims for payment of monetary
benefits fall within the exclusive and original jurisdiction of the labor arbiters . . ."

Likewise, it is also clear that the limitation embodied in MOLE Policy Instructions No. 7 to amounts not exceeding
P100,000.00 has been dispensed with, in view of the following provisions of pars. (b) and (c), Section 7 on
"Restitution", the same Rules, thus:

"xxx xxx xxx

"(b) Plant-level restitutions may be effected for money claims not exceeding Fifty Thousand (P50,000.00) . . .

"(c ) Restitutions in excess of the aforementioned amount shall be effected at the Regional Office or at the worksite
subject to the prior approval of the Regional Director."

which indicate the intention to empower the Regional Director to award money claims in excess of P100,000.00;
provided of course the employer does not contest the findings made, based on the provisions of Section 8 thereof:

"Section 8. Compromise agreement. Should the parties arrive at an agreement as to the whole or part of the
dispute, said agreement shall be reduced in writing and signed by the parties in the presence of the Regional Director
or his duly authorized representative."

E.O. No. 111 was issued on December 24, 1986 or three (3) months after the promulgation of the Secretary of
Labor's decision upholding private respondents' salary differentials and ECOLAs on September 24, 1986. The
amendment of the visitorial and enforcement powers of the Regional Director (Article 128-b) by said E.O. 111 reflects
the intention enunciated in Policy Instructions Nos. 6 and 37 to empower the Regional Directors to resolve
uncontested money claims in cases where an employer-employee relationship still exists. This intention must be given
weight and entitled to great respect. As held in Progressive Workers' Union, et. al. vs. F.P. Aguas, et. al. G.R. No.
59711-12, May 29, 1985, 150 SCRA 429:

". . . The interpretation by officers of laws which are entrusted to their administration is entitled to great respect. We
see no reason to detract from this rudimentary rule in administrative law, particularly when later events have proved
said interpretation to be in accord with the legislative intent . . ."

The proceedings before the Regional Director must, perforce, be upheld on the basis of Article 128(b) as amended by
E.O. No. 111, dated December 24, 1986, this executive order "to be considered in the nature of a curative statute
with retrospective application." (Progressive Workers' Union, et al. vs. Hon. F.P. Aguas, et al. (Supra); M. Garcia vs.
Judge A. Martinez, et al., G.R. No. L-47629, May 28, 1979, 90 SCRA 331).

We now come to the question of whether or not the Regional Director erred in extending the award to all hospital
employees. We answer in the affirmative.

The Regional Director correctly applied the award with respect to those employees who signed the complaint, as well
as those who did not sign the complaint, but were still connected with the hospital at the time the complaint was filed.
(See Order, p. 33 dated August 4, 1986 of the Regional Director, Pedrito de Susi, p. 33, Rollo).

The justification for the award to this group of employees who were not signatories to the complaint is that the
visitorial and enforcement powers given to the Secretary of Labor is relevant to, and exercisable over establishments,
not over the individual members/employees, because what is sought to be achieved by its exercise is the observance
of, and/or compliance by, such firm/establishment with the labor standards regulations. Necessarily, in case of an
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award resulting from a violation of labor legislation by such establishment, the entire members/employees should
benefit therefrom. As aptly stated by then Minister of Labor Augusto S. Sanchez:

". . . It would be highly derogatory to the rights of the workers, if after categorically finding the respondent hospital
guilty of underpayment of wages and ECOLAs, we limit the award to only those who signed the complaint to the
exclusion of the majority of the workers who are similarly situated. Indeed, this would be not only render the
enforcement power of the Minister of Labor and Employment nugatory, but would be the pinnacle of injustice
considering that it would not only discriminate but also deprive them of legislated benefits.

"xxx xxx xxx" (pp. 38-39, Rollo)

This view is further bolstered by the provisions of Sec. 6, Rule II of the "Rules on the Disposition of Labor Standards
cases in the Regional Offices" (supra) presently enforced, viz:

"SECTION 6. Coverage of complaint inspection. A complaint inspection shall not be limited to the specific
allegations or violations raised by the complainants/workers but shall be a thorough inquiry into and verification of the
compliance by employer with existing labor standards and shall cover all workers similarly situated."

However, there is no legal justification for the award in favor of those employees who were no longer connected with
the hospital at the time the complaint was filed, having resigned therefrom in 1984, viz:

1. Jean (Joan) Venzon (See Order, p. 33, Rollo)


2. Rosario Paclijan
3. Adela Peralta
4. Mauricio Nagales
5. Consega Bautista
6. Teresita Agcopra
7. Felix Monleon
8. Teresita Salvador
9. Edgar Cataluna; and
10. Raymond Manija (p. 7, Rollo).

The enforcement power of the Regional Director cannot legally be upheld in cases of separated employees. Article 129
of the Labor Code, cited by petitioner (p. 54, Rollo) is not applicable as said article is in aid of the enforcement power
of the Regional Director; hence, not applicable where the employee seeking to be paid underpayment of wages is
already separated from the service. His claim is purely a money claim that has to be the subject of arbitration
proceedings and therefore within the original and exclusive jurisdiction of the Labor Arbiter.

Petitioner has likewise questioned the order dated August 4, 1986 of the Regional Director in that it does not clearly
and distinctly state the facts and the law on which the award is based.

We invite attention to the Minister of Labor's ruling thereon, as follows:

"Finally, the respondent hospital assails the order under appeal as null and void because it does not clearly and
distinctly state the facts and the law on which the awards were based. Contrary to the pretensions of the respondent
hospital, we have carefully reviewed the order on appeal and we found that the same contains a brief statement of the
(a) facts of the case; (b) issues involved; (c) applicable laws; (d) conclusions and the reasons therefor; (e) specific
remedy granted (amount awarded)." (p. 40, Rollo)

ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all persons still employed in
the Hospital at the time of the filing of the complaint, but GRANTED as regards those employees no longer employed
at that time.

SO ORDERED.

Fernan (C.J.), Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes, Griño-Aquino and
Regalado, JJ., concur.
Sarmiento, J., Subject to my opinion in G.R. Nos. 82805 and 83205.

<b>Separate Opinions</b>

<b>MELENCIO-HERRERA, J., concurring:</b>

I concur, with the observation that even as reconciled, it would seem inevitable to state that the conclusion in the
Zambales and Ong cases that, prior to Executive Order No. 111, Regional Directors were not empowered to share the
original and exclusive jurisdiction conferred on Labor Arbiters over money claims, is now deemed modified, if not
superseded.

It may not be amiss to state either that under Section 2, Republic Act No. 6715, which amends further the Labor Code
of the Philippines (PD No. 442), Regional Directors have also been granted adjudicative powers, albeit limited, over
monetary claims and benefits of workers, thereby settling any ambiguity on the matter. Thus:

"SEC. 2. Article 129 of the Labor Code of the Philippines, as amended, is hereby further amended to read as follows:
8

Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any interested party, the
Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the
Department is empowered, through summary proceeding and after due notice, to hear and decide any matter
involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an
employee or person employed in domestic or household service or househelper under this Code, arising from
employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided,
further, That the aggregate money claims of each employee or househelper do not exceed five thousand pesos
(P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar
days from the date of the filing of the same . . ."

----------------
Footnotes

1. Cited in J. Nolledo, Labor Code of the Philippines, Ann., 1988 Rev. Ed. p. 217.
2. (See Critical Areas in the Administration of Labor Justice) (Proceedings of the 16th Annual Institute on Labor
Relations Law ---- 1979, U.P. Law Center, p. 5).
3. Ibid.
4. as amended by Section 2, PD 1691.
5. EO 111 expressly declared that its provisions would become effective fifteen (15) days after publication in the
Official Gazette. The executive order was published on February 16, 1987 (83 O.G. No. 7, p. 5770) and therefore
became effective on March 3, 1987.
6. A present exception may be found in Section 2 of RA 6715, effective March 20, 1989 which gives Regional
Director, "through summary proceeding, to hear and decide any matter involving the recovery of wages and other
monetary claims and benefits, . . . to an employee or person employed in domestic or household service or
househelper . . . arising from employee-employer relations. Provided, That such complaint does not include a claim for
reinstatement: Provided, further, That the aggregate money claims of each employee or househelper do not exceed
five thousand pesos (P5,000.00) . . .
7. Cited in J. Nolledo, Labor Code of the Philippines, Ann., 1988 Rev. Ed., p. 216.

\---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---/

([1989V518] MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO, President,


petitioner, vs. THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DIRECTOR OF LABOR, REGION
X, respondents., G.R. No. 78909, 1989 June 30, En Banc)

/---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---\

[1999R603] BATONG BUHAY GOLD MINES, INC., petitioner, vs. HONORABLE DIONISIO DELA SERNA IN HIS
CAPACITY AS THE UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, ELSIE ROSALINDA TY,
ANTONIO MENDELEBAR, MA. CONCEPCION Q. REYES, AND THE OTHER COMPLAINANTS* IN CASE NO. NCR-LSED-CI-
2047-87; MFT CORPORATION AND SALTER HOLDINGS PTY. LTD., respondents.1999 Aug 63rd DivisionG.R. No.
86963R E S O L U T I O N

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court with a Prayer for Preliminary Injunction
and or Restraining Order brought by Batong Buhay Gold Mines, Inc. (BBGMI for brevity) to annul three orders issued
by respondent Undersecretary Dionisio dela Serna of the Department of Labor and Employment, dated September
16, 1988, December 14, 1988 and February 13, 1989, respectively.

The Order of September 16, 1988 stated the facts as follows:

"xxx on 5 February 1987, Elsie Rosalinda B. Ty, Antonia L. Mendelebar, Ma. Concepcion O. Reyes and 1,247 others
filed a complaint against Batong Buhay Gold Mines, Inc. for: (1) Non-payment of their basic pay and allowances for
the period of 6 July 1983 to 5 July 1984, inclusive, under Wage Order No. 2; (2) Non-payment of their basic pay and
allowances for the period 16 June 1984 to 5 October 1986, inclusive under Wage Order No. 5; (3) Non-payment of
their salaries for the period 16 March 1986 to the present; (4) Non-payment of their 13th month pay for 1985, 1986
and 1987; (5) Non-payment of their vacation and sick leave, and the compensatory leaves of mine site employees;
and (6) Non-payment of the salaries of employees who were placed on forced leaves since November, 1985 to the
present, if this is not feasible, the affected employees be awarded corresponding separation pay.

On 9 February 1987, the Regional Director set the case for hearing on 17 February 1987.

On 17 February 1987, the respondent moved for the resetting of the case to 2 March 1987.

On 27 February 1987, the complainants filed a Motion for the issuance of an inspection authority.

xxx

On 13 July 1987, the Labor Standards and Welfare Officers submitted their report with the following
recommendations:
9

‘WHEREFORE, premises considered, this case is hereby submitted with the recommendation that an Order of
Compliance be issued directing respondent Batong Buhay Gold Mines Inc. to pay complainants’ Elsie Rosalina Ty, et al.
FOUR MILLION EIGHT HUNDRED EIGHTEEN THOUSAND SEVEN HUNDRED FORTY-SIX PESOS AND FORTY CENTAVOS
(P4,818,746.40) by way of unpaid salaries of workers from March 16, 1987 to present, unpaid and ECOLA
differentials under Wage Order Nos. 2 and 5 unpaid 13th months pay for 1985 and 1986, and upaid (sic)
vacation/sick/compensatory leave benefits.’

On 31 July 1987, the Regional Director[1] adopted the recommendation of the LSWOs and issued an order directing
the respondent to pay the complainants the sum of P4,818,746.40 representing their unpaid 13th month pay for 1985
and 1986, wage and ECOLA differentials under wage order Nos. 2 and 5, unpaid salaries from 16 March 1986 to
present and vacation/sick leave benefits for 1984, 1985 and 1986.

On 19 August 1987, the complainants filed an ex-parte motion for the issuance of a writ of execution and appointment
of special sheriff.

xxx

On 21 August 1987, the Regional Director issued an Order directing the respondent to put up a cash or surety bond
otherwise a writ of execution will be issued.

xxx

When the respondent failed to post a cash/surety bond, and upon motion for the issuance of a writ of execution by the
complainants, the Regional Director, on 14 September 1987 issued a writ of execution appointing Mr. John Espiridion
C. Ramos as Special Sheriff and directing him to do the following:

‘You are to collect the above-stated amount from the respondent and deposit the same with Cashier of this Office for
appropriate disposition to herein complainants under the supervision of the office of the Director. Otherwise, you are
to execute this writ by attaching the goods and chattels of the respondent not exempt from execution or in case of
insufficiency thereof against the real or immovable property of the respondent.’

The Special Sheriff proceeded to execute the appealed Order on 17 September 1987 and seized three (3) units of
Peterbuilt trucks and then sold the same by public auction. Various materials and motor vehicles were also seized on
different dates and sold at public auction by said sheriff.

xxx xxx xxx

On 11 December 1987, the respondent finally posted a supersedeas bond which prompted this Office to issue an
Order dated 26 January 1988, restraining the complainants and sheriff Ramos from enforcing the writ of execution.
xxx“[2]

BBGMI appealed the Order dated July 31, 1987 of Regional Director Luna C. Piezas to respondent Undersecretary
Dionisio de la Serna, contending that the Regional Director had no jurisdiction over the case.

On September 16, 1988, the public respondent issued the first challenged Order upholding the jurisdiction of the
Regional Director and annulling all the auction sales conducted by Special Sheriff John Ramos. The decretal portion of
the said Order ruled:

“WHEREFORE, the Order dated 31 July 1987 of the Regional Director, National Capital Region, is hereby AFFIRMED.
Accordingly, the writ of execution dated 14 September 1987 issued in connection thereto is hereby declared VALID.

However, the public auction sales conducted by special sheriff John Ramos pursuant to the writ of execution dated 14
September 1987 on 24 September 2, 20, 23, and 29 October 1987 are all hereby declared NULL AND VOID.
Furthermore, the personal properties sold and the proceeds thereof which have been turned over to the complainants
thru their legal counsel are hereby ordered returned to the custody of the respondent and the buyers respectively.

SO ORDERED.”[3]

On October 13, 1988, a Motion for Reconsideration of the aforesaid order was presented by the complainants in Case
No. NCR-LSED-CI-2047-87 but the same was denied.

On November 7, 1988, a Motion for Intervention was filed by MFT Corporation, inviting attention to a Deed of Sale
executed in its favor by Fidel Bermudez, the highest bidder in the auction sale conducted on October 29, 1987.

On December 2, 1988, another Motion for Intervention was filed, this time by Salter Holdings Pty., Ltd., claiming that
MFT Corporation assigned its rights over the subject properties in favor of movant as evidenced by a Sales Agreement
between MFT Corp. and Salter Holdings Pty., Ltd.

The two Motions for Intervention were granted in the second questioned order dated December 14, 1988, directing
the exclusion from annulment of the properties sold at the October 29, 1987 auction sale and claimed by the
intervenors, including one cluster of junk mining machineries, equipment and supplies, and disposing thus:

“WHEREFORE, in view of the foregoing, the motions for reconsideration filed by intervenors MFT and Salter are hereby
granted. Correspondingly, this Office’s Order dated 16 September 1988 is hereby modified to exclude from
10

annulment “the one lot of junk mining machineries, equipment and supplies as-is-where-is” sold by Sheriff John C.
Ramos in the auction sale of 29 October 1987.

xxx xxx xxx”

Motions for Reconsideration were interposed by Batong Buhay Gold Mining, Inc. and the respondent employees but to
no avail. The same were likewise denied in the third assailed Order dated February 13, 1989.

Hence, the petition under scrutiny, ascribing grave abuse of discretion amounting to lack or excess of jurisdiction to
the public respondent in issuing the three Orders under attack.

The questioned Orders aforementioned have given rise to the issues: (1) whether the Regional Director has
jurisdiction over the complaint filed by the employees of BBGMI; and (2) whether or not the auction sales conducted
by the said Special Sheriff are valid.

Anent the first issue, an affirmative ruling is indicated. The Regional Director has jurisdiction over the BBGMI
employees who are the complainants in Case Number NCR-LSED-CI-2047-87.

The subject labor standards case of the petition arose from the visitorial and enforcement powers by the Regional
Director of Department of Labor and Employment (DOLE). Labor standards refers to the minimum requirements
prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance and other
monetary and welfare benefits, including occupational, safety and health standards.[4] Labor standards cases are
governed by Article 128(b) of the Labor Code.

The pivot of inquiry here is whether the Regional Director has jurisdiction over subject labor standards case.

As can be gleaned from the records on hand, subject labor standards case was filed on February 5, 1987 at which
time Article 128 (b) read as follows[5]:

Art. 128 ( b) Visitorial and enforcement powers -

“(b) The Minister of Labor or his duly authorized representative shall have the power to order and administer, after
due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor
regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to
the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings
of the labor regulations officers and raises issues which cannot be resolved without considering evidentiary matters
that are not verifiable in the ordinary course of inspection.”

Petitioner theorizes that the Regional Director is without jurisdiction over subject case, placing reliance on the ruling in
Zambales Base Inc. vs. Minister of Labor[6]and Oreshoot Mining Company vs. Arellano.[7]

Respondent Undersecretary Dionision C. Dela Serna, on the other hand, upheld the jurisdiction of Regional Director
Luna C. Piezas by relying on E.O. 111, to quote:

“Considering therefore that there still exists an employer-employee relationship between the parties; that the case
involves violations of the labor standard provisions of the labor code; that the issues therein could be resolved without
considering evidentiary matters that are not verifiable in the normal course of inspection; and, if only to give meaning
and not render nugatory and meaningless the visitorial and enforcement powers of the Secretary of Labor and
Employment as provided by Article 128(b) of the Labor Code, as amended by Section 2 of Executive Order No. 111
which states:

‘The provisions of article 217 of this code to the contrary notwithstanding and in cases where the relationship of
employer-employee still exists, the Minister of Labor and Employment or his duly authorized representative shall have
the power to order and administer, after due notice and hearing, compliance with the labor standards provision of this
Code based on the findings of the findings of labor regulation officers or industrial safety engineers made in the course
of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in
cases where the employer contests the findings of the labor regulations officers and raises issues which cannot be
resolved without considering evidentiary matters that are not verifiable in the ordinary course of inspection.’

We agree with the complainants that the regional office a quo has jurisdiction to hear and decide the instant labor
standard case.

xxx xxx xxx”[8]

The Court agrees with the public respondent. In the case of Maternity Children’s Hospital vs Secretary of Labor (174
SCRA 632), the Court in upholding the jurisdiction of the Regional Director over the complaint on underpayment of
wages and ECOLAs filed on May 23, 1986, by the employees of Maternity Children’s Hospital, held:

“This is a labor standards case and is governed by Art. 128(b) of the Labor Code, as amended by E.O. 111.

xxx xxx xxx

Prior to the promulgation of E.O. 111 on December 24, 1986, the Regional Director’s authority over money claims was
unclear. The complaint in the present case was filed on May 23, 1986 when E.O. 111 was not yet in effect. xxx
xxx
11

We believe, however , that even in the absence of E.O. 111 , Regional Directors already had enforcement powers over
money claims, effective under P.D. 850, issued on December 16, 1975, which transferred labor standards cases from
the arbitration system to the enforcement system.“

In the aforecited case, the Court in reinforcing its conclusion that Regional Director has jurisdiction over labor
standards cases, treated E.O. 111 as a curative statute, ruling as follows:

“E.O. No. 111 was issued on December 24, 1986 or three(3) months after the promulgation of the Secretary of
Labor’s decision upholding private respondents’ salary differentials and ECOLAs on September 24, 1986. The
amendment of the visitorial and enforcement powers of the Regional Director (Article 128(b)) by said E.O. 111 reflects
the intention enunciated in Policy Instructions Nos. 6 and 37 to empower the Regional Directors to resolve
uncontested money claims in cases where an employer-employee relationship still exists. This intention must be
given weight and entitled to great respect. As held in Progressive Worker’s Union, et al. vs. F.P. Aguas, et al. G.R. No.
59711-12, May 29, 1985, 150 SCRA 429:

.’xx The interpretation by officers of laws which are entrusted to their administration is entitled to great respect. We
see no reason to detract from this rudimentary rule in administrative law, particularly when later events have proved
said interpretation to be in accord with the legislative intent. xx’

The proceedings before the Regional Director must, perforce be upheld on the basis of Article 128(b) as amended by
E.O. No. 111, dated December 24, 1986, this executive order ‘to be considered in the nature of a curative statute with
retrospective application.’ (Progressive Workers’ Union, et al. vs. Hon. Aguas, et al. (Supra); M. Garcia vs. Judge A.
Martinez, et al. G.R.No. l-47629, may 28,1979, 90 SCRA 331).

With regard to the petitioner’s reliance on the cases of Zambales Base, Inc. vs. Minister of Labor (supra) and Oreshoot
Mining Company vs. Arellano, (supra), this is misplaced. In the case of Zambales Base, Inc., the court has already
ruled that:

“xxx, in view of the promulgation of Executive Order No. 111, Zambales Base Metals vs. Minister of Labor is no longer
good law. mphasis supplied) Executive Order No. 111 is in the character of a curative law, that is to say, it was
intended to remedy a defect that, in the opinion of the Legislature (the incumbent Chief Executive in this case, in the
exercise of her lawmaking powers under the Freedom Constitution) had attached to the provision under the
amendment.

xxx xxx xxx”[9]

The case of Oreshoot Mining Corporation, on the other hand, involved money claims of illegally dismissed employees.
As the employer-employee relationship has already ceased and reinstatement is sought, jurisdiction necessarily falls
under the Labor Arbiter. Petitioner should not have used this to support its theory as this petition involves labor
standards cases and not monetary claims of illegally dismissed employees.

The Court would have ruled differently had the petitioner shown that subject labor standards case is within the
purview of the exception clause in Article 128 (b) of the Labor Code. Said provision requires the concurrence of the
following elements in order to divest the Regional Director or his representatives of jurisdiction, to wit: (a) that the
petitioner (employer) contests the findings of the labor regulations officer and raises issues thereon; (b) that in order
to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in
the normal course of inspection.[10]

Nowhere in the records does it appear that the petitioner alleged any of the aforestated grounds. In fact, in its Motion
for Reconsideration of the Order of the Regional Director dated August 20, 1987, the grounds which petitioner raised
were the following:

“1. This Honorable Office has no jurisdiction to hear this case and its Order of 31 October 1987 is therefore null and
void;

2. Batong Buhay Gold Mines, Inc. is erroneously impleaded as the sole party respondent, the complaint should have
been directed also against the Asset Privatization Trust.

In the other pleadings filed by petitioner in NCR-LSED-C1-2047-87, such as the Urgent Omnibus Motion to declare
void the Writ of Execution for lack of jurisdiction and the Oppositions it filed on the Motions for Intervention
questioning the legal personality of the intervenors, questions as to the amounts complained of by the employees or
absence of violation of labor standards laws were never raised. Raising lack of jurisdiction in a Motion to Dismiss is
not the contest contemplated by the exception clause under Article 128(b) of the Labor Code which would take the
case out of the jurisdiction of the Regional Director and bring it before the Labor Arbiter.

The only instance when there was a semblance of raising the aforestated grounds, was when they filed an Appeal
Memorandum dated January 14, 1988, before the respondent undersecretary. In the said Appeal Memorandum,
petitioner comes up with the defense that the Regional Director was without jurisdiction, as employer-employee
relationship was absent, since petitioner had ceased doing business since 1985.

Records indicate that the Labor Standards and Welfare Officers, pursuant to Complaint Inspection Authority No. CI-2-
047-87, were not allowed to look into records, vouchers and other related documents. The officers of the petitioner
alleged that the company is presently under receivership of the Development Bank of the Philippines.[11] In lieu of
this, the Regional Director had ordered that a summary investigation be conducted.[12] Despite proper notices, the
12

petitioner refused to appear before the Regional Director. To give it another chance, an order to file its position paper
was issued to substantiate its defenses. Notwithstanding all these opportunities to be heard, petitioner chose not to
avail of such.

As held in the case of M. Ramirez Industries vs. Sec. of Labor and Employment, (266 SCRA 111):

“xxx Under Art. 128(a) of the Labor Code, the Secretary of Labor or his duly authorized representatives, such as the
Regional Directors, has visitorial powers which authorize him to inspect the records nd premises of an employer at any
time of the day or night whenever work is being undertaken therein, to question any employee and investigate any
fact, condition or matter, and to determine violations of labor laws, wage orders or rules and regulations. If the
employer refuses to attend the inspection or conference or to submit any record, such as payrolls and daily time
records, he will be deemed to have waived his right to present evidence.” mphasis supplied)

Petitioner’s refusal to allow the Labor Standards and Welfare Officers to conduct inspection in the premises of their
head office in Makati and the failure to file their position paper is equivalent to a waiver of its right to contest the
claims of the employees. This Court had occasion to hold there is no violation of due process where the Regional
Director merely required the submission of position papers and resolved the case summarily thereafter.[13]
Furthermore, the issuance of the compliance order was well within the jurisdiction of the Regional Director, as Section
14 of the Rules on the Disposition of Labor Standards Cases provides:

Section 14. Failure to Appear - Where the employer or the complainant fails or refuses to appear during the
investigation, despite proper notice, for two (2) consecutive hearings without justifiable reasons, the hearing officer
may recommend to the Regional Director the issuance of a compliance order based on the evidence at hand or an
order of dismissal of the complaint as the case may be. mphasis supplied)

It bears stressing that this petition involves a labor standards case and it is in keeping with the law that “the worker
need not litigate to get what legally belongs to him, for the whole enforcement machinery of the Department of Labor
exists to insure its expeditious delivery to him free of charge.“[14]

Thus, their claim of closure for business, among other things, are factual issues which cannot be brought here for the
first time. As petitioner refused to participate in the proceedings below where it could have ventilated the appropriate
defenses, to do so in this petition is unavailing. The reason for this is that factual issues are not proper subjects of a
special civil action for certiorari to the Supreme Court.[15]

It is therefore abundantly clear that at the time of the filing of the claims of petitioner’s employees, the Regional
Director was already exercising visitorial and enforcement powers.

Regional Director’s visitorial and enforcement powers under Art. 128 (b) has undergone series of amendments which
the Court feels to be worth mentioning.

Confusion was engendered by the promulgation of the decision in the case of Servando’s Inc. vs. Secretary of Labor
and Employment and the Regional Director, Region VI, Department of Labor and Employment.[16] In the said case,
the Regional Director took cognizance of the labor standards cases of the employees of Servando’s Inc., but this Court
held that:

“In the case of Briad Agro Development Corporation vs. Dela Cerna and Camus Engineering Corp. vs. Sec. Of labor
applying E.O. 111 the Court recognized the concurrent jurisdiction of the Secretary of labor (or Regional Directors)
and the labor Arbiters to pass on employees money claims, including those cases which the labor Arbiters had
previously exercised jurisdiction. However, in a subsequent modificatory resolution in the Briad Agro Case, dated 9
November 1989, the Court modified its original decision in view of the enactment of RA 6715, and upheld the power of
the Regional Directors to adjudicate money claims subject to the conditions set forth in Section 2 of said law (RA
6715).

The power then of the Regional Director (under the present state of law) to adjudicate employees money claims is
subject to the concurrence of all the requisites provided under Sec. 2 of RA 6715, to wit:

(a) the claim is represented by an employer or person employed in domestic or household service, or househelper;

(b) the claim arises from employer-employee relationship;

(c) the claimant does not seek reinstatement; and

(d) the aggregate money claim of each employee or househelper does not exceed P5,000.

xxx xxx xxx”[17]

The Servando ruling, in effect, expanded the jurisdictional limitation provided for by RA 6715 as to include labor
standards cases under Article 128 (b) and no longer limited to ordinary monetary claims under Article 129.

In fact, in the Motion for Reconsideration[18] presented by the private respondents in the Servando case, the court
applied more squarely the P5,000 limit to the visitorial and enforcement power of the Regional Director, to wit:

“To construe the visitorial power of the Secretary of Labor to order and enforce compliance with labor laws as
including the power to hear and decide cases involving employee’s claims for wages, arising from employer-employee
relations, even if the amount of said claims exceed P5,000 for each employee, would, in our considered opinion,
13

emasculate and render meaningless, if not useless, the provisions of Art. 217 (a) and (6) and Article 129 of the Labor
Code which, as above-pointed out, confer exclusive jurisdiction on the Labor Arbiter to hear and decide such
employees’ claims, regardless of amount, can be heard and determined by the Secretary of Labor under his visitorial
power. This does not, however, appear to be the legislative intent.”

But prevailing law and jurisprudence rendered the Servando ruling inapplicable. In the recent case of Francisco Guico,
Jr. versus The Honorable Secretary of Labor & Employment Leonardo A. Quisumbing, GR # 131750, promulgated on
November 16, 1998, this Court upheld the jurisdiction of the Regional Director notwithstanding the fact that the
amounts awarded exceeded P5,000.

Republic Act 7730, the law governing the visitorial and enforcement powers of the Labor Secretary and his
representatives reads:

“Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers
or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representative
shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where
the employer contests the findings of the labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection.

xxx xxx xxx” mphasis supplied)

The present law, RA 7730, can be considered a curative statute to reinforce the conclusion that the Regional Director
has jurisdiction over the present labor standards case.

Well-settled is the rule that jurisdiction over the subject matter is determined by the law in force when the action was
commenced, unless a subsequent statute provides for its retroactive application, as when it is a curative legislation.
[19]

Curative statutes are intended to supply defects, abridge superfluities in existing laws and curb certain evils. They are
intended to enable persons to carry into effect that which they have designed and intended, but has failed of expected
legal consequence by reason of some statutory disability or irregularity in their own action. They make valid that
which, before the enactment of the statute, was invalid.[20]

In arriving at this conclusion, the case of Briad Agro Development vs. De la Cerna[21] comes to the fore. In the said
case, RA 6715 was held to be a curative statute. There, the Court ruled that RA 6715 is deemed a curative statute
and should be applied to pending cases. The rationale of the ruling of the Court was that prior to RA 6715, Article 217
as amended by E.O. 111, created a scenario where the Labor Arbiter and the Regional Director of DOLE had
overlapping jurisdiction over money claims. Such a situation was viewed as a defect in the law so that when RA 6715
was passed, it was treated or interpreted by the Court as a rectification of the infirmity of the law, and therefore
curative in nature, with retroactive application.

Parenthetically, the same rationale applies in treating RA 7730 as a curative statute. Explicit in its title[22] is the
legislative intent to rectify the error brought about by this Court’s ruling that RA 6715 covers even labor standards
cases where the amounts to be awarded by the Regional Director exceed P5,000 as provided for under RA 6715.
Congressional records relative to Republic Act 7730 reveal that, “this bill seeks to do away with the jurisdictional
limitations imposed thru said ruling (referring to Servando) and to finally settle any lingering doubts on the visitorial
and enforcement powers of the Secretary of Labor and Employment.”[23]

All the foregoing studiedly considered, the ineluctable conclusion is that the application of RA 7730 to the case under
consideration is proper.

Thus, it is decisively clear that the public respondent did not act with grave abuse of discretion in issuing the Order
dated September 16, 1988.

The second issue for resolution is the validity of the auction sales conducted by Special Sheriff Ramos. It bears
stressing that the writ of execution issued by the Regional Director led to the several auction sales conducted on
September 24, 1987, October 2, 1987, October 23, 1987, October 29, 1987 and October 30, 1987.

In the first Order of public respondent, the five (5) auction sales were declared null and void. As the public
respondent put it, “the scandalously low price for which the personal properties of the respondent were sold leads us
to no other recourse but to invalidate the auction sales conducted by the special sheriff.”[24]

In the September 16, 1988 Order[25] of public respondent, the personal properties and corresponding prices for
which they were sold were as follows:

“Personal properties sold on September 24, 1987:

1. One (1) unit peterbuilt truck Model 1978 with Engine No. 6A4102-65, Chassis No. 139155-P not running condition.

2. One (1) unit 1978 Model peterbuilt truck with Engine No. 6467-8040, Chassis No. 6A410235, truck with Engine No.
(Truck 4) not running condition.
14

3. One (1) unit 1978 Model peterbuilt truck with Engine No. 6A410319, Chassis No. 139163-P Truck No. 4 not
running condition.

Proceeds of Sale ............P178,000.00

Personal Properties Sold on October 2, 1987:

1. One (1) unit peterbuilt truck model 1978, with Engine No. 6A410347, Chassis No. 1391539-P.

2. One (1) unit peterbuilt truck Model 1978 with Engine No. 6A410325, Chassis No. 139149.

3. One (1) unit payloader (caterpillar with Engine No. (not visible) 966.

4. One (1) unit Forklift; one (1) unit crowler crane, Engine No. (not visible); and one (1) Lot of scrap irons
impounded inside the Batong Buhay Compound, Calanan, Kalinga Apayao.

5. One (1) unit panel Isuzu with Engine No. 821 POF200207, Plate No. PBV 386.

Proceeds of Sale....P228,750.00

Personal Properties Sold on October 23, 1987:

1. One (1) Unit Toyota Land Cruiser, with Engine No. BO4466340, Chassis No. 81400500227, Plate No. BAT 353,
burned, damage not running condition, type of body jeep motor not visible.

2. Two (2) units peterbuilts, damaged, burned motor Nos. (not visible) and Chassis Nos. not visible.

3. One (1) Unit Layland, burned, damaged and Motor No. not visible.

4. Two (units) air compressor, burned, damaged and one (1) generator.

5. One (1) Unit Loader Michigan 50, damaged and burned, and

6. One (1) rock crasher, damaged, burned, scrap iron junk.

Proceeds of Sale...........P98,000.00

Properties sold on October 29, 1987:

1. One (1) lot of scrap construction materials

2. One (1) lot of scrap mining machineries equipments and supplies.

3. One (1) lot of junk machineries, equipments and supplies.

Proceeds of Sale............P1,699,999.99

Personal Properties Sold on October 20, 1987*

1. One (1) lot of scrap construction materials

2. One (1) lot of scrap mining machineries, equipments and supplies

Proceeds of Sale...........P2,185,000.00

Total Proceeds Sale.... P4,389,749.99

to satisfy the judgment award in the amount of P4,818,746.00.”

As a general rule, findings of fact and conclusion of law arrived at by quasi-judicial agencies are not to be disturbed
absent any showing of grave abuse of discretion tainting the same. But in the case under scrutiny, there was grave
abuse of discretion when the public respondent, without any evidentiary support, adjudged such prices as
“scandalously low”. He merely relied on the self-serving assertion by the petitioner that the value of the auctioned
properties was more than the price bid. Obviously, this ratiocination did not suffice to set aside the auction sales.

The presumption of regularity in the performance of official function is applicable here. Conformably, any party
alleging irregularity vitiating auction sales must come forward with clear and convincing proof.

Furthermore, it is a well-settled principle that:

“Mere inadequacy of price is not, of itself sufficient ground to set aside an execution sale where the sale is regular,
proper and legal in other respects, the parties stand on an equal footing, there are no confidential relation between
them, there is no element of fraud, unfairness, or oppression, and there is no misconduct, accident, mistake or
surprise connected with, and tending to cause, the inadequacy.”[26]
15

Consequently, in declaring the nullity of the subject auction sales on the ground of inadequacy of price, the public
respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

But, this is not to declare the questioned auction sales as valid. The same are null and void since on the properties of
petitioner involved was constituted a mortgage between petitioner and the Development Bank of the Philippines, as
shown by the:

(a) Deed of Mortgage dated December 28,1973;

(b) Joint Mortgage (Amending Deed of Mortgage) dated August 25, 1975;

(c) Amendment to Joint Mortgage dated October 18, 1976.

(d) Confirmation of Mortgage dated March 27,1979; and

(e) Additional Joint First Mortgage dated March 31, 1981.[27]

The aforementioned documents were executed between the petitioner and Development Bank of the Philippines (DBP)
even prior to the filing of the complaint of petitioner’s employees. The properties having been mortgaged to DBP, the
applicable law is Section 14 of Executive Order No. 81, dated 3 December 1986, otherwise known as the “The 1986
Revised Charter of the Development Bank of the Philippines,” which exempts the properties of petitioner mortgaged to
DBP from attachment or execution sales. Section 14 of E.O. 81, reads:

“Sec. 14. Exemption from Attachment. The provisions of any law to the contrary notwithstanding, securities on loans
and/or other accommodations granted by the Bank or its predecessor-in-interest shall not be subject to attachment,
execution or any other court process, nor shall they be included in the property of insolvent persons or institutions,
unless all debts and obligations of the Bank or its predecessor-in-interest, penalties, collection of expenses, and other
charges, subject to the provisions of paragraph (e) of Sec. 9 of this Charter.”

In fact, a letter dated January 31, 1990 of Jose C. Sison, Associate Executive Trustee of the Asset Privatization Trust,
to the Office of the Clerk of Court of the Supreme Court, certified that the petitioner is covered by Proclamation No.
50 issued on December 8, 1986 by President Corazon C. Aquino.

Quoted hereunder are the pertinent portions of the said letter:[28]

RE: BBGMI vs. Hon. dela Serna, GR No. 86963

Supreme Court Certiorari

SIR:

xxx xxx xxx

xxx all the assets (real and personal/chattel) of Batong Buhay Gold Mines, Inc. (BBGMI) have been transferred and
entrusted to the Asset Privatization Trust (APT) by virtue of Proclamation No. 50 dated December 8, 1986 of her
Excellency, President Corazon C. Aquino. All the said assets of BBGMI are covered by real and chattel mortgages
executed in favor of the Philippine National Bank (‘PNB’), the Development Bank of the Philippines (‘DBP’) and the
National Investment and Development Corporation (‘NIDC’).

xxx xxx xxx

Section 14, Executive Order No. 81:

xxx xxx xxx

Pursuant to the above-quoted provision of law, you are hereby warned that all the assets (real and personal /chattel)
of BBGMI are exempted from writs of execution, attachment, or any other lien or court processes. The Government,
through APT, shall initiate any administrative measures and remedies against you for any violation of the vested rights
of PNB, DBP and APT.

xxx xxx xxx

(sgd)

JOSE C. SISON

The exemption referred to in the aforecited letter is one of the circumstances contemplated by Rule 39 of the Revised
Rules of Court, to wit:

“Sec. 13. Property exempt from execution. - Except as otherwise expressly provided by law, the following properties,
and no other, shall be exempt from execution:

xxx xxx xxx

(m) Properties specially exempted by law.


16

xxx xxx xxx”

Private respondents contend that even if subject properties were mortgaged to DBP (now under Asset Privatization
Trust), Article 110[29] of the Labor Code, as amended by RA 6715, applies just the same. According to them, the
said provision of law grants preference to money claims of workers over and above all credits of the petitioner. This
contention is untenable. In the case of DBP vs. NLRC,[30] the Supreme Court held that the workers preference
regarding wages and other monetary claims under Article 110 of the Labor Code, as amended, contemplates
bankruptcy or liquidation proceedings of the employer’s business. What is more, it does not disregard the preferential
lien of mortgagees considered as preferred credits under the provisions of the New Civil Code on the classification,
concurrence and preference of credits.

We now come to the issue with respect to the second Order, dated December 14, 1988, which declared as valid the
auction sale conducted on October 29, 1987 by Special Sheriff John Ramos. Public respondent had no authority to
validate the said auction sale on the ground that the intervenors, MFT Corporation and Salter Holdings Pty., Ltd., as
purchasers for value, acquired legal title over subject properties.

It is well to remember that the said properties were transferred to the intervenors, when Fidel Bermudez, the highest
bidder at the auction sale, sold the properties to MFT Corporation which, in turn, sold the same properties to Salter
Holdings Pty., Ltd. Public respondent opined that the contract of sale between the intervenors and the highest bidder
should be respected as these sales took place during the interregnum after the auction sale was conducted on October
29, 1987 and before the issuance of the first disputed Order declaring all the auction sales null and void.

On this issue, the Court rules otherwise.

As regards personal properties, the general rule is that title, like a stream, cannot rise higher than its source.[31]
Consequently, a seller without title cannot transfer a title better than what he holds. MFT Corporation and Salter
Holdings Pty., Ltd. trace their title from Fidel Bermudez, who was the highest bidder of a void auction sale over
properties exempt from execution. Such being the case, the subsequent sale made by him (Fidel Bermudez) is
incapable of vesting title or ownership in the vendee.

The Order dated December 14, 1988, declaring the October 29, 1987 auction sale as valid, was issued with grave
abuse of discretion amounting to lack or excess of jurisdiction.

WHEREFORE, the petition is hereby GRANTED, insofar as the Order dated December 14, 1988 of Undersecretary
Dionisio dela Serna is concerned, which Order is SET ASIDE. The Order of September 16, 1988, upholding the
jurisdiction of the Regional Director, is AFFIRMED. No pronouncement as to costs.

SO ORDERED.

Melo, (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

--------------------------------------------------------------------------------

* Attachment "Q", Rollo, pp. 175-191.

* This was typographical error as admitted by the public respondent and should have read Oct. 30, 1987. As can be
seen from the records, there was no auction sale conducted by the Special Sheriff dated Oct. 20, 1987.

--------------------------------------------------------------------------------

[1] Rollo, p. 67, penned by Regional Director Luna C. Piezas.

[2] Rollo, pp. 192-198. Attachment “R”. Order of Usec Dionisio dela Serna dated September 16, 1988.

[3] Rollo, p. 203.

[4] Section 7, Rule 1, Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September 16,
1987.

[5] PD 850 as amended by PD 1691, latter became effective May 1, 1980.

[6] 146 SCRA 51.

[7] 156 SCRA 498.

[8] Rollo, pp. 199-200.

[9] Briad Agro Development Corporation vs. Dionisio dela Serna, 174 SCRA 524.
17

[10] SSK Parts Corporation vs. Camas, 181 SCRA 675.

[11] Rollo, page 65.

[12] Section 11. Hearing. Where no proof of compliance is submitted by the employer after seven (7) calendar days
from receipt of the inspection results, the Regional Director shall summon the employer and the complainants to a
summary investigation. In regular routine inspection cases however, such investigation shall be conducted where no
complete field investigation can be made for reasons attributable to the fault of the employer or his representatives,
such as those but not limited to instances when the field inspectors are denied access to the premises, employment
records, or workers of the employer. (Rules on the Disposition of Labor Standards Cases)

[13] Villadolid vs. Inciong, 121 SCRA 205.

[14] MOLE Policy Instructions No. 7.

[15] Philippine Long Distance Company vs. NLRC, 190 SCRA 717.

[16] 184 SCRA 664

[17] 184 SCRA 664; 198 SCRA 156.

[18] 198 SCRA 156.

[19] Atlas Fertilizer Corporation vs. Navarro, April 30, 1987.

[20] Agpalo, Ruben. Statutory Construction. Citing the cases of Del Castillo vs. SEC, 96 Phil 119; Santos vs. Duata,
14 SCRA 1041; DBP vs. CA, 96 SCRA 342.

[21] 179 SCRA 270.

[22] Entitled “AN ACT FURTHER STRENGTHENING THE VISITORIAL AND ENFORCEMENT POWERS OF THE SECRETARY
OF LABOR AND EMPLOYMENT, AMENDING FOR THE PURPOSE ARTICLE 128OF PD 442, AS AMENDED, OTHERWISE
KNOWN AS THE LABOR CODE OF THE PHILIPPINES”, approved by the President on June 2, 1994.

[23] The records of the House of Representatives showed that Congressman Alberto S. Veloso and Eriberto V. Loreto
sponsored RA 7730.

[24] Rollo, p. 203.

[25] Rollo, pp. 200-202.

[26] Francisco, The Revised Rules of Court in the Philippines, supra, page 755.

[27] Rollo, pp. 478-508.

[28] Rollo, pp. 451-452.

[29] Art. 110. Worker preference in case of bankruptcy. - In the event of bankruptcy or liquidation of an employer’s
business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of
law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of
government and other creditors may be paid.

[30] 183 SCRA 328.

[31] Tolentino, Arturo M. CIVIL CODE OF THE PHILIPPINES, Vol. V, page 65, citing National Bank vs. Wisconsin, C.R.
Co., 44 Minn, 224, 46 N.W. 342, 9 L. R. A., 20 Am. St. Rep 566.

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([1999R603] BATONG BUHAY GOLD MINES, INC., petitioner, vs. HONORABLE DIONISIO DELA SERNA IN HIS
CAPACITY AS THE UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, ELSIE ROSALINDA TY,
ANTONIO MENDELEBAR, MA. CONCEPCION Q. REYES, AND THE OTHER COMPLAINANTS* IN CASE NO. NCR-LSED-CI-
2047-87; MFT CORPORATION AND SALTER HOLDINGS PTY. LTD., respondents., G.R. No. 86963, 1999 Aug 6, 3rd
Division)

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[2006V480] CHARLITO PEÑARANDA, Petitioner, versus BAGANGA PLYWOOD CORPORATION and HUDSON
CHUA, Respondents.2006 May 31st DivisionG.R. No. 159577D E C I S I O N

PANGANIBAN, CJ:
18

Managerial employees and members of the managerial staff are exempted from the provisions of the Labor Code on
labor standards. Since petitioner belongs to this class of employees, he is not entitled to overtime pay and premium
pay for working on rest days.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, assailing the January 27, 2003[2] and July
4, 2003[3] Resolutions of the Court of Appeals (CA) in CA-GR SP No. 74358. The earlier Resolution disposed as
follows:

“WHEREFORE, premises considered, the instant petition is hereby DISMISSED.”[4]

The latter Resolution denied reconsideration.

On the other hand, the Decision of the National Labor Relations Commission (NLRC) challenged in the CA disposed as
follows:

“WHEREFORE, premises considered, the decision of the Labor Arbiter below awarding overtime pay and premium pay
for rest day to complainant is hereby REVERSED and SET ASIDE, and the complaint in the above-entitled case
dismissed for lack of merit.[5]

The Facts

Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood Corporation
(BPC) to take charge of the operations and maintenance of its steam plant boiler.[6] In May 2001, Peñaranda filed a
Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the
NLRC.[7]

After the parties failed to settle amicably, the labor arbiter[8] directed the parties to file their position papers and
submit supporting documents.[9] Their respective allegations are summarized by the labor arbiter as follows:

“[Peñaranda] through counsel in his position paper alleges that he was employed by respondent [Baganga] on March
15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated
on December 19, 2000. Further, [he] alleges that his services [were] terminated without the benefit of due process
and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working
during holidays/rest days, night shift differentials and finally claims for payment of damages and attorney’s fees
having been forced to litigate the present complaint.

“Upon the other hand, respondent [BPC] is a domestic corporation duly organized and existing under Philippine laws
and is represented herein by its General Manager HUDSON CHUA, [the] individual respondent. Respondents thru
counsel allege that complainant’s separation from service was done pursuant to Art. 283 of the Labor Code. The
respondent [BPC] was on temporary closure due to repair and general maintenance and it applied for clearance with
the Department of Labor and Employment, Regional Office No. XI to shut down and to dismiss employees (par. 2
position paper). And due to the insistence of herein complainant he was paid his separation benefits (Annexes C and
D, ibid). Consequently, when respondent [BPC] partially reopened in January 2001, [Peñaranda] failed to reapply.
Hence, he was not terminated from employment much less illegally. He opted to severe employment when he
insisted payment of his separation benefits. Furthermore, being a managerial employee he is not entitled to overtime
pay and if ever he rendered services beyond the normal hours of work, [there] was no office order/or authorization for
him to do so. Finally, respondents allege that the claim for damages has no legal and factual basis and that the
instant complaint must necessarily fail for lack of merit.”[10]

The labor arbiter ruled that there was no illegal dismissal and that petitioner’s Complaint was premature because he
was still employed by BPC.[11] The temporary closure of BPC’s plant did not terminate his employment, hence, he
need not reapply when the plant reopened.

According to the labor arbiter, petitioner’s money claims for illegal dismissal was also weakened by his quitclaim and
admission
during the clarificatory conference that he accepted separation benefits, sick and vacation leave conversions and
thirteenth month pay.[12]

Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for working on rest days, and
attorney’s fees in the total amount of P21,257.98.[13]

Ruling of the NLRC

Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and premium pay for
working on rest days. According to the Commission, petitioner was not entitled to these awards because he was a
managerial employee.[14]

Ruling of the Court of Appeals

In its Resolution dated January 27, 2003, the CA dismissed Peñaranda’s Petition for Certiorari. The appellate
court held that he failed to: 1) attach copies of the pleadings submitted before the labor arbiter and NLRC; and 2)
explain why the filing and service of the Petition was not done by personal service.[15]
19

In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground that petitioner still
failed to submit the pleadings filed before the NLRC.[16]

Hence this Petition.[17]

The Issues

Petitioner states the issues in this wise:

“The [NLRC] committed grave abuse of discretion amounting to excess or lack of jurisdiction when it entertained the
APPEAL of the respondent[s] despite the lapse of the mandatory period of TEN DAYS.

“The [NLRC] committed grave abuse of discretion amounting to an excess or lack of jurisdiction when it rendered the
assailed RESOLUTIONS dated May 8, 2002 and AUGUST 16, 2002 REVERSING AND SETTING ASIDE the FACTUAL AND
LEGAL FINDINGS of the [labor arbiter] with respect to the following:

“I. The finding of the [labor arbiter] that [Peñaranda] is a regular, common employee entitled to monetary
benefits under Art. 82 [of the Labor Code].

“II. The finding that [Peñaranda] is entitled to the payment of OVERTIME PAY and OTHER MONETARY
BENEFITS.”[18]

The Court’s Ruling

The Petition is not meritorious.

Preliminary Issue:

Resolution on the Merits

The CA dismissed Peñaranda’s Petition on purely technical grounds, particularly with regard to the failure to
submit supporting documents.

In Atillo v. Bombay,[19] the Court held that the crucial issue is whether the documents accompanying the petition
before the CA sufficiently supported the allegations therein. Citing this case, Piglas-Kamao v. NLRC[20] stayed the
dismissal of an appeal in the exercise of its equity jurisdiction to order the adjudication on the merits.

The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence to challenge the finding that
he was a managerial employee.[21] In his Motion for Reconsideration, petitioner also submitted the pleadings before
the labor arbiter in an attempt to comply with the CA rules.[22] Evidently, the CA could have ruled on the Petition on
the basis of these attachments. Petitioner should be deemed in substantial compliance with the procedural
requirements.

Under these extenuating circumstances, the Court does not hesitate to grant liberality in favor of petitioner and to
tackle his substantive arguments in the present case. Rules of procedure must be adopted to help promote, not
frustrate, substantial justice.[23] The Court frowns upon the practice of dismissing cases purely on
procedural grounds.[24] Considering that there was substantial compliance,[25] a liberal interpretation of procedural
rules in this labor case is more in keeping with the constitutional mandate to secure social justice.[26]

First Issue:

Timeliness of Appeal

Under the Rules of Procedure of the NLRC, an appeal from the decision of the labor arbiter should be filed within 10
days from receipt thereof.[27]

Petitioner’s claim that respondents filed their appeal beyond the required period is not substantiated. In the pleadings
before us, petitioner fails to indicate when respondents received the Decision of the labor arbiter. Neither did the
petitioner attach a copy of the challenged appeal. Thus, this Court has no means to determine from the records when
the 10-day period commenced and terminated. Since petitioner utterly failed to support his claim that respondents’
appeal was filed out of time, we need not belabor that point. The parties alleging have the burden of substantiating
their allegations.[28]

Second Issue:

Nature of Employment

Petitioner claims that he was not a managerial employee, and therefore, entitled to the award granted by the
labor arbiter.

Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor
standards provide the working conditions of employees, including entitlement to overtime pay and premium pay for
working on rest days.[29] Under this provision, managerial employees are “those whose primary duty consists of the
management of the establishment in which they are employed or of a department or subdivision.”[30]
20

The Implementing Rules of the Labor Code state that managerial employees are those who meet the following
conditions:

“(1) Their primary duty consists of the management of the establishment in which they are employed or of a
department or subdivision thereof;

“(2) They customarily and regularly direct the work of two or more employees therein;

“(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees
are given particular weight.”[31]

The Court disagrees with the NLRC’s finding that petitioner was a managerial employee. However, petitioner
was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial
employees, officers and members of the managerial staff are not entitled to the provisions of law on labor standards.
[32] The Implementing Rules of the Labor Code define members of a managerial staff as those with the following
duties and responsibilities:

“(1) The primary duty consists of the performance of work directly related to management policies of the employer;

“(2) Customarily and regularly exercise discretion and independent judgment;

“(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the
management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general
supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii)
execute under general supervision special assignments and tasks; and

“(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly
and closely related to the performance of the work described in paragraphs (1), (2), and (3) above.”[33]

As shift engineer, petitioner’s duties and responsibilities were as follows:

“1. To supply the required and continuous steam to all consuming units at minimum cost.

“2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories.

“3. To evaluate performance of machinery and manpower.

“4. To follow-up supply of waste and other materials for fuel.

“5. To train new employees for effective and safety while working.

“6. Recommend parts and supplies purchases.

“7. To recommend personnel actions such as: promotion, or disciplinary action.

“8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit.

“9. Implement Chemical Dosing.

“10. Perform other task as required by the superior from time to time.”[34]

The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the
managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the
Implementing Rules.

Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of
the machines and the performance of the workers in the engineering section. This work necessarily required the use
of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor,
petitioner is deemed a member of the managerial staff.[35]

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the
foreman responsible for the operation of the boiler.[36] The term foreman implies that he was the representative of
management over the workers and the operation of the department.[37] Petitioner’s evidence also showed that he
was the supervisor of the steam plant.[38] His classification as supervisor is further evident from the manner his
salary was paid. He belonged to the 10% of respondent’s 354 employees who were paid on a monthly basis; the
others were paid only on a daily basis.[39]

On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for rest days to
petitioner.

WHEREFORE, the Petition is DENIED. Costs against petitioner.

SO ORDERED.
21

ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division

WE C O N C U R:

CONSUELO YNARES-SANTIAGO
Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ


Associate Justice

ROMEO J. CALLEJO, SR.


Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1] Rollo, pp. 4-11.

[2] Id. at 64-65 & 298-299. Former Sixteenth Division. Penned by Justice Rodrigo V. Cosico (Division
chairperson), with the concurrence of Justices Rebecca de Guia-Salvador and Regalado E. Maambong (members).

[3] Id. at 51-52.

[4] Id. at 65 & 299.

[5] Id. at 34.

[6] Petitioner’s Memorandum, p. 3; rollo, p. 266.

[7] Id. at 2; id. at 265.

[8] The labor arbiter assigned to the case was Arturo L. Gamolo.

[9] Decision of the Labor Arbiter, p. 1; rollo, p. 21.

[10] Id. at 2; id. at 22.

[11] Id. at 3; id. at 23.

[12] Id. at 4; id. at 24.

[13] Id. at 5; id. at 25.

[14] NLRC Resolution dated May 8, 2002, p. 2; rollo, p. 33.

[15] Assailed CA Resolution dated January 27, 2003, pp. 1-2; rollo, pp. 298-299.

[16] Assailed CA Resolution dated July 4, 2003, p. 1; id. at 51.

[17] This Petition was deemed submitted for decision on June 29, 2005 upon this Court’s receipt of petitioner’s
Memorandum, which he signed with the assistance of Atty. Angela A. Librado. Respondents’ Memorandum, signed by
Atty. Leo N. Caubang, was received by this Court on May 26, 2005.

[18] Petitioner’s Memorandum, pp. 5-6; rollo, pp. 268-269.

[19] 351 SCRA 361, February 7, 2001.

[20] 357 SCRA 640, May 9, 2001.


22

[21] Petitioner attached his pay slips and job designation, and the company’s manpower schedule as Annexes
“C,” “D,” and “E” (CA rollo, pp. 20-31).

[22] Petitioner submitted the parties’ position papers before the labor arbiter and their respective supporting
documents (CA rollo, pp. 43-64).

[23] Chua v. Absolute Management Corporation, 412 SCRA 547, October 16, 2003; Pacific Life Assurance
Corporation v. Sison, 359 Phil. 332, November 20, 1998; Gregorio v. Court of Appeals, 72 SCRA 120, July 28, 1976.

[24] Pacific Life Assurance Corporation v. Sison, id.; Empire Insurance Company v. National Labor Relations
Commission, 355 Phil. 694, August 14, 1998; People Security Inc. v. National Labor Relations Commission, 226 SCRA
146, September 8, 1993; Tamargo v. Court of Appeals, 209 SCRA 518, June 3, 1992.

[25] Chua v. Absolute Management Corporation, supra note 23; Cusi-Hernandez v. Diaz, 336 SCRA 113, July
18, 2000.

[26] Constitution Art. II, Sec. 18 and Art. XIII, Sec. 3. See Ablaza v. Court of Industrial Relations, 126 SCRA
247, December 21, 1983.

[27] New Rules of Procedure of the National Labor Relations Commission, Rule VI, Sec. 1.

[28] Rules of Court, Rule 131, Sec. 1.

[29] Labor standards is found in Book 3 of the Labor Code, entitled “Conditions of Employment.” Arts. 87 and
93 provide:

“Arts. 87. Overtime work. – Work may be performed beyond eight (8) hours a day provided that the
employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least
twenty-five (25%) per cent thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an
additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty
percent thereof.”

“Art. 93. Compensation for rest day, Sunday or holiday work. – (a) Where an employee is made or permitted
to work on his scheduled rest day, he shall be paid an additional compensation of at least thirty percent (30%) of his
regular wage. An employee shall be entitled to such additional compensation for work performed on Sunday only
when it is his established rest day.

(b) When the nature of the work of the employee is such that he has no regular workdays and no regular rest
days can be scheduled, he shall be paid an additional compensation of at least thirty percent (30%) of his regular
wage for work performed on Sundays and holidays.

(c) Work performed on any special holiday shall be paid an additional compensation of at least thirty percent
(30%) of the regular wage of the employee. Where such holiday work falls on the employees scheduled rest day, he
shall be entitled to an additional compensation of at least fifty percent (50%) of his regular wage.

(d) Where the collective bargaining agreement or other applicable employment contract stipulates the
payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate.”

[30] The other definition of a managerial employee found in the Labor Code Art. 212(m) is in connection with
labor relations or the right to engage in unionization. Under this provision, a managerial employee is one “vested with
powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay off, recall,
discharge, assign or discipline employees.” C. Azucena, Everyone’s Labor Code, 58 (2001 ed.).

[31] Implementing Rules of the Labor Code, Book III, Rule I, Sec. 2(b).

[32] Labor Code, Art. 82.

[33] Implementing Rules of the Labor Code, Book III, Rule I, Sec. 2(c).

[34] Job Description, submitted as petitioner’s Annex to his Memorandum; rollo, p. 312.

[35] See Quebec v. National Labor Relations Commission, 361 Phil. 555, January 22, 1999; Salazar v. National
Labor Relations Commission, 326 Phil. 288, April 17, 1996; National Sugar Refineries Corporation v. National Labor
Relations Commission, 220 SCRA 452, March 24, 1993.

[36] Petitioner’s Position Paper, p. 1; rollo, p. 14.

[37] Webster’s Third New International Dictionary, 889 (1976).

[38] Servicing Schedule, submitted as petitioner’s Annex to his Memorandum; rollo p. 315.

[39] Respondent’s Termination Report submitted to the Department of Labor and Employment; rollo, pp. 49-61.

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23

([2006V480] CHARLITO PEÑARANDA, Petitioner, versus BAGANGA PLYWOOD CORPORATION and HUDSON CHUA,
Respondents., G.R. No. 159577, 2006 May 3, 1st Division)

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[2004V1038] SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, Petitioners, versus COURT
OF APPEALS and JOSE RAGO, Respondents.2004 Sept 271st DivisionG.R. No. 152058DECISION

DAVIDE, JR., C.J.:

This is a petition for the review of the decision[1] of 18 October 2001 and the resolution of 30 January 2002 of the
Court of Appeals in CA-G.R. SP No. 63389 entitled Jose Rago vs. Social Security Commission and Social Security
System. The decision reversed the 20 December 2000 Resolution of the Social Security Commission (SSC) in SSC
Case No. 4-15009-2000 denying respondent Jose Rago’s request to convert his monthly pension from permanent
partial disability to permanent total disability. The resolution denied the motion to reconsider the decision.

Private respondent Jose Rago (hereafter Rago) worked as an electrician for Legend Engineering in Basak, Pardo, Cebu
City. On 1 December 1993, at about 6:15 p.m., while working on the ceiling of a building, he stepped on a weak
ceiling joist. The structure gave way and he crashed into the corridor twelve feet below. The x-rays taken that day
revealed that he had a (1) marked compression fracture of L1 vertebra without signs of dislocation and bone
destruction; and (2) slight kyphosis at the level of L1 vertebrae, with the alignment of the spine still normal.[2] He
was confined at the Perpetual Succour Hospital in Cebu City for twenty-four (24) days from 1 December 1993 to 24
December 1993,[3] and, thereafter, he was confined in his home from 25 December 1993 to 25 August 1994.[4]

On 20 May 1994, Rago filed a claim for permanent partial disability with the Cebu City office of the Social Security
System (SSS). Since he had only 35 monthly contributions, he was granted only a lump sum benefit.[5] He made
additional premium contributions on 6 November 1995, and sought the adjustment of his approved partial disability
benefits from lump sum to monthly payments. The adjustment was resolved in his favor on 18 October 1995.[6]

On 9 November 1995, Rago filed a claim for Employee’s Compensation (EC) sickness benefit, which was supported by
an x-ray report dated 1 December 1993. This was approved for a maximum of 120 days to cover the period of illness
from 1 December 1993 to 30 March 1994.

On 7 June 1996, Rago filed another claim to convert his SSS disability to EC disability. Again, it was resolved in his
favor on 14 June 1996.[7]

Two years later, on 16 June 1998, Rago claimed for the extension of his EC partial disability. A rating of 50% OB (of
the body) was granted corresponding to the maximum benefit allowed under the Manual on Ratings of Physical
Impairment.[8]

Thereafter, Rago filed several requests for the adjustment of his partial disability to total disability. This time, his
requests were denied by the Cebu City office of the SSS in its letters of 11 April 1999, 10 September 1999, 28
September 1999, 4 April 2000, and 17 April 2000. The denial was based on the medical findings of the Cebu City
office that he was not totally prevented from engaging in any gainful occupation.[9]

Undaunted, on 3 April 2000, Rago filed with the petitioner Social Security Commission (SSC) a petition for total
permanent disability benefits based on the following grounds:

1. his convalescence period from the time of his hospital confinement to home confinement totaled 268 days and
under SSS guidelines, if the injury persisted for more than 240 days, the injury would be considered as a permanent
total disability;

2. his x-ray results showed a deterioration of his condition without any visible improvement on the disabilities
resulting from the accident; and

3. he had lost his original capacity to work as an electrician and has been unemployed since the accident.

The petition was docketed as SSC Case No. 4-15009-2000.[10]

In its position paper dated 24 August 2000, the SSS argued that Rago had already been granted the maximum partial
disability benefits. The physical examination conducted by the Cebu City office of the SSS showed that he was more
than capable of physically engaging in any gainful occupation and that there was no manifestation of progression of
illness. Thus, the SSS recommended the denial of Rago’s petition.[11]

In a resolution dated 20 December 2000, the SSC denied Rago’s petition for lack of merit. The SSC ruled that he was
not entitled to permanent partial disability more than what was already granted, more so to permanent total disability
benefits since he was already granted the maximum allowable benefit for his injury.[12]

Without filing a motion for reconsideration, Rago appealed to the Court of Appeals by filing a petition for review and
reiterating his claim for permanent disability benefits under Section 13-A (g) of R.A. No. 1161, as amended by R.A.
No. 8282.[13] The petition was docketed as CA-G.R. SP No. 63389.
24

In its decision of 18 October 2001, the Court of Appeals reversed the SSC’s resolution, and decreed as follows:

WHEREFORE, the assailed decision of the Social Security Commission is hereby reversed and set aside. Petitioner’s
plea for conversion of his disability status from permanent partial to permanent total is granted. The SSS is hereby
directed to pay him the necessary compensation benefits in accordance with the proper computation.

The SSS seasonably filed a motion for reconsideration on the ground that the Court of Appeals should have considered
an order issued by the SSC dated 11 July 2001 which affirmed, but clarified, its 20 December 2000 Resolution under
appeal. The SSS then referred to the findings and conclusions of the SSC in said 11 July 2001 order, which
emphasized that: (1) Rago failed to file a motion for reconsideration with the SSC, which is mandatory, before filing a
petition for review with the Court of Appeals; (2) the manual verification of the monthly contributions of Rago
revealed that he had only 35 contributions and not 59; and (3) thus, whether or not the sickness or disability of Rago
had showed signs of progression, a conversion of the same from permanent partial disability to permanent total
disability could not be granted. This is because Rago lacked the required number of contributions mentioned in
Section 13-A (a) of R.A. 1161, as amended, which reads:

SEC. 13-A. Permanent disability benefits. – (a) Upon the permanent total disability of a member who has paid at
least thirty-six (36) monthly contributions prior to the semester of disability, he shall be entitled to the monthly
pension: Provided, That if he has not paid the required thirty-six (36) monthly contributions, he shall be entitled to a
lump sum benefit equivalent to the monthly pension times the number of monthly contributions paid to the SSS or
twelve (12) times the monthly pension, whichever is higher. A member who (1) has received a lump sum benefit and
(2) is re-employed or has resumed self-employment or has resumed self-employment not earlier than one (1) year
from the date of his disability shall again be subject to compulsory coverage and shall be considered a new member.

With that, the SSC ordered the SSS to re-compute the lump sum benefit due Rago and his EC benefit on the basis of
the actual monthly contributions remitted in his behalf and to collect all excess payments made to him.[14]

In its resolution of 30 January 2002, the Court of Appeals denied the motion for reconsideration. It explained the
denial in this wise:

At the outset, the Court strikes down the Commission’s July 11, 2001 clarificatory order as an exercise of grave abuse
of authority amounting to lack and/or excess of jurisdiction. The said Order was issued at a time when the
Commission itself was knowledgeable of the petition for review pending before this Court. …It must be pointed out
that when petitioner timely filed his petition for review, [the] appeal from the Commission’s resolution had thus
become perfected, and it is this Court which therefore had jurisdiction over the matter, and sole authority to make
any affirmation or modification of the assailed resolution. Once appeal is perfected, the lower tribunal loses its
jurisdiction over the case, in favor of the appellate tribunal. The Court deems it the height of injustice for the
Commission to add to and bolster its final ruling with additional observations and justifications, not otherwise
embodied in the original ruling, after the losing claimant had already perfected and was actively pursuing his appeal.
It behooves upon the Commission, therefore, to refrain from making any substantial addition, or modification of its
assailed ruling, such authority in law, now having been transferred to this Court. What prompted the Social Security
Commission to issue its clarificatory order is not made clear in its motion for reconsideration, nor in the clarificatory
order itself. In any case, any modification of the tenor and justification of the assailed resolution of the Commission by
the same body effectively altered the tenor of the earlier ruling, amounting to a violation of the petitioner’s right to
due process and fair play, and, therefore, null and void.

Moreover, the specific arguments raised by the Commission are not convincing to encourage a reversal of our earlier
decision.

To be sure, the alleged failure to file a motion for reconsideration of the Commission’s December 20, 2000 resolution
is not a fatal mistake, it appearing that the same was in clear violation of the petitioner’s rights and claims, as a
member of the Social Security System. It is the established rule that the filing of a motion for reconsideration may be
dispensed with when the assailed ruling is a patent nullity. Furthermore, the fact that the petitioner as credited by
SSS monthly contributions short to entitle him to be qualified for permanent total disability benefits appear to be
largely due to the SSS’ and its branches’ failure to accurately account the petitioner’s total payments, and not on the
petitioner’s or his employers’ failure to do so. The same July 11, 2001 Order shows that the SSS Cotabato City Branch
and the SSS Davao Hub Branch Office were unable to account for the complete contributions of the petitioner while he
was employed by the San Miguel Corporation.[15]

Thus, in their petition in the case at bar, the SSS and the SSC pray to set aside the Court of Appeals’ decision of 18
October 2001 and resolution of 30 January 2002 and to remand the case to the SSC for further proceedings.[16]

In support of their prayer, the petitioners assert that the Court of Appeals erred in disregarding the established
jurisprudence that the filing of a motion for reconsideration is a prerequisite to the filing of a petition for review to
enable the tribunal, board or office concerned to pass upon and correct its mistakes without the intervention of the
higher court. Failure to do so is a fatal procedural defect.[17]

The petitioners likewise argue that they had not violated Rago’s rights; hence, his case does not fall within the
purview of Arroyo v. House of Representatives Electoral Tribunal[18] where we held that a prior motion for
reconsideration could be dispensed with if fundamental rights to due process were violated.

Additionally, the petitioners contend that the SSC’s 11 July 2001 clarificatory order was issued to rectify its perceived
error in the 20 January 2000 resolution relative to the number of Rago’s contributions which directly affected the
computation of his disability benefits. Petitioners further maintain that the Court of Appeals relied heavily on the x-
ray reports which contained no statement that Rago could no longer work. However, a certain Alvin C. Cabreros
25

attested in an affidavit that Rago went out “disco[e]ing” after the accident, for which reason, Rago is not totally
helpless as he portrayed himself to be.

On 20 March 2003, we received a handwritten letter from Rago informing us that his lawyer had withdrawn from the
case and of his difficulty in securing a new counsel. After naming Attys. Pedro Rosito, Arturo Fernan or Fritz
Quiñanola of the IBP Cebu City at Capitol Compound as his “informal lawyers,” he asked us to consider, in lieu of his
Comment, an attached copy of the opposition to the motion for reconsideration he filed with the Court of Appeals. In
said pleading, Rago argued that the word “may” as used in the provision concerning the filing of a motion for
reconsideration in the SSC’s 1997 Revised Rules of Procedure is not mandatory but merely permissive. He also
agreed with the conclusion of the Court of Appeals that a very strict interpretation of procedural rules would defeat
the constitutional mandate on social justice.

We gave due course to the petition and required the parties to submit their Memoranda, which they did.

We shall first dispose of the procedural issue of prematurity raised by petitioners which is Rago’s failure to file a
motion for reconsideration. Section 5, Rule VI of the SSC’s 1997 Revised Rules of Procedure provides:

The party aggrieved by the order, resolution, award or decision of the Commission may file a motion for
reconsideration thereof within fifteen (15) days from receipt of the same. Only one motion for reconsideration shall
be allowed any party.

The filing of the motion for reconsideration shall interrupt the running of the period to appeal, unless said motion is
pro forma.

The ordinary acceptations of the terms “may” and “shall” may be resorted to as guides in ascertaining the mandatory
or directory character of statutory provisions. As regards adjective rules in general, the term “may” is construed as
permissive and operating to confer discretion, while the word “shall” is imperative and operating to impose a duty
which may be enforced.[19] However, these are not absolute and inflexible criteria in the vast areas of law and
equity. Depending upon a consideration of the entire provision, its nature, its object and the consequences that
would follow from construing it one way or the other, the convertibility of said terms either as mandatory or
permissive is a standard recourse in statutory construction.[20]

Conformably therewith, we have consistently held that the term “may” is indicative of a mere possibility, an
opportunity or an option. The grantee of that opportunity is vested with a right or faculty which he has the option to
exercise.[21] If he chooses to exercise the right, he must comply with the conditions attached thereto.[22]

Applying these guidelines, we can construe Section 5, Rule VI as granting Rago, or any member of the System
aggrieved by the SSC’s resolution, the option of filing a motion for reconsideration which he may or may not exercise.
Should he choose to do so, he is allowed to file only one motion for reconsideration within fifteen days from the
promulgation of the questioned resolution.

This is as far as we go in construing the provision in isolation because a second procedural rule now comes into play:
the requirements for appeals filed against the rulings of quasi-judicial agencies in the exercise of its quasi-judicial
functions.

Section 1 of Rule VII of the SSC rules provides:

[A]ny order, resolution, award or decision of the Commission, in the absence of an appeal therefrom as herein
provides, shall become final and executory fifteen (15) days after the date of notification to the parties, and judicial
review thereof shall be permitted only after any party claiming to be aggrieved thereby has exhausted his remedies
before the Commission….

It now becomes apparent that the permissive nature of a motion for reconsideration with the SSC must be read in
conjunction with the requirements for judicial review, or the conditions sine qua non before a party can institute
certain civil actions. A combined reading of Section 5 of Rule VI, quoted earlier, and Section 1 of Rule VII of the SSC’s
1997 Revised Rules of Procedure reveals that the petitioners are correct in asserting that a motion for reconsideration
is mandatory in the sense that it is a precondition to the institution of an appeal or a petition for review before the
Court of Appeals. Stated differently, while Rago certainly had the option to file a motion for reconsideration before
the SSC, it was nevertheless mandatory that he do so if he wanted to subsequently avail of judicial remedies.

This rule is explicit in Rule 43 of the Rules of Court, which states:

Sec. 1. Scope – This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from
awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its
quasi-judicial functions. Among these agencies are the…Social Security Commission….

Sec. 4. Period of appeal. – The appeal shall be taken within fifteen (15) days from notice of the award, judgment,
final order or resolution, or from the date of its last publication, if publication is required by law for its effectivity, or of
the denial of petitioner’s motion for new trial or reconsideration duly filed in accordance with the governing law of the
court or agency a quo. Only one (1) motion for reconsideration shall be allowed.

The policy of judicial bodies to give quasi-judicial agencies, such as the SSC, an opportunity to correct its mistakes by
way of motions for reconsideration or other statutory remedies before accepting appeals therefrom finds extensive
doctrinal support in the well-entrenched principle of exhaustion of administrative remedies.
26

The reason for the principle rests upon the presumption that the administrative body, if given the chance to correct its
mistake or error, may amend its decision on a given matter and decide it properly.[23] The principle insures orderly
procedure and withholds judicial interference until the administrative process would have been allowed to duly run its
course. This is but practical since availing of administrative remedies entails lesser expenses and provides for a
speedier disposition of controversies.[24] Even comity dictates that unless the available administrative remedies have
been resorted to and appropriate authorities given an opportunity to act and correct the errors committed in the
administrative forum, judicial recourse must be held to be inappropriate, impermissible,[25] premature, and even
unnecessary.[26]

However, we are not unmindful of the doctrine that the principle of exhaustion of administrative remedies is not an
ironclad rule. It may be disregarded (1) when there is a violation of due process, (2) when the issue involved is
purely a legal question, (3) when the administrative action is patently illegal amounting to lack or excess of
jurisdiction, (4) when there is estoppel on the part of the administrative agency concerned, (5) when there is
irreparable injury, (6) when the respondent is a department secretary whose acts as an alter ego of the President
bears the implied and assumed approval of the latter, (7) when to require exhaustion of administrative remedies
would be unreasonable, (8) when it would amount to a nullification of a claim, (9) when the subject matter is a
private land in land case proceedings, (10) when the rule does not provide a plain, speedy and adequate remedy, (11)
when there are circumstances indicating the urgency of judicial intervention,[27] (12) when no administrative review
is provided by law, (13) where the rule of qualified political agency applies, and (14) when the issue of non-
exhaustion of administrative remedies has been rendered moot.[28]

Fortunately for Rago, his case falls within some of these exceptions as discussed below.

Petitioners’ attempts to distinguish Arroyo v. House of Representatives Electoral Tribunal[29] from this case is
misplaced. The ground relied upon by the Court of Appeals for exempting this case from exhaustion of administrative
remedies was not the denial of due process but of the patent nullity of the SSC decision in question.

It is true that Rago disregarded procedural and curative rules in taking immediate recourse to the appellate court.
The Court of Appeals similarly erred in taking cognizance of Rago’s appeal. We likewise do not subscribe to issuing
rulings or decisions that do not acknowledge or give reason for the disregard of the procedural defect of the petition,
especially when it was specifically raised as an issue in respondent’s answer.[30]

Nevertheless, to require Rago to comply with the principle of exhaustion of administrative remedies at this stage of
the proceedings would be unreasonable, unjust and inequitable. It would prolong needlessly and uselessly the
resolution of his claim.

Petitioners SSS and SSC have consistently shown their obstinacy in their stand to deny Rago’s request to convert his
permanent partial disability to permanent total disability. The SSC’s reliance on the SSS recommendations, which did
not consider other evidence of the illness’ progression and its disregard of long-standing jurisprudence, made for the
patent nullity of the SSC decision. The error was made more blatant when, in the SSC’s clarificatory order, it
classified the disability based on the amount of contributions Rago had paid.[31]

To give the SSC another chance to rectify its error in accordance with the principle of exhaustion of administrative
remedies would inevitably result in the same inflexible stance in defense of its error. We say another chance because
we can consider the SSC’s clarificatory order as in the nature of a judgment on Rago’s motion for reconsideration as if
he had filed one. Otherwise, to admit the misnamed order which was issued when the SSC no longer had jurisdiction
over the case, and which modified and altered the contents and tenor of its original resolution, would have amounted
to a violation of Rago’s right to due process. To this extent we give imprimatur to the assailed decision and resolution
of the Court of Appeals, and uphold its factual determination that Rago is entitled to the conversion of his permanent
partial disability to permanent total disability. Thus:

There is merit in the petition. Evidently clear from the recitals of the assailed decision some indicia of petitioner’s state
of permanent total disability. To emphasize, he was granted sickness benefit for a maximum period of 120 days from
December 1, 1993 to March 30, 1994. Then he was awarded lump sum permanent partial disability benefits paid on
June 15, 1994, which was then adjusted on October 18, 1995 to monthly pension benefit covering the period of 30
months from May 20, 1994 to October 1996. More, the permanent partial disability benefit was extended for another
eight (8) months from July 3, 1998 to February 1999, all in all covering a period of 38 months. If temporary total
disability lasting continuously for more than 120 days is deemed total and permanent, it is not therefore amiss to
consider the payment of permanent partial disability benefits for 38 months as recognition of permanent total
disability. Award of permanent partial disability benefits for 19 months was considered by the Supreme Court as an
acknowledgment that the awardee was suffering from permanent total disability. (Diopenes vs. GSIS (205 SCRA
331[1992]).

xxx

The test of whether or not an employee suffers from permanent total disability is a showing of the capacity of the
employee to continue performing his work notwithstanding the disability he incurred. (IJARES v. Court of Appeals, 313
SCRA 141 [1999]). The cited radiologic report under date of February 26, 1999 is demonstrative of the fact that
petitioner is still in a state which at the time of the taking deters him from performing his job or any such related
function. It is evident that the pain caused to petitioner by his injuries still persists even after more than 5 years when
the accident occurred on December 1, 1993. The disability caused thereby which had earlier been diagnosed as
permanent partial had possibly became permanent total. (GSIS vs. CA 260 SCRA 133, [1996]). Also in the case of
27

Tria vs. ECC, (supra) – a disability is total and permanent if as a result of the injury, the employee is not able to
perform any gainful occupation for a period exceeding 120 days.

Moreover, prior payment of compensation benefits for permanent partial disability may not foreclose his right to
compensation benefits for permanent total disability. Otherwise, the social justice policy underlying the enactment of
labor laws would lose its meaning.

Caution should be taken against a too strict interpretation of the rules lest the constitutional mandate of social justice
policy calls for a liberal and sympathetic approval of the pleas of disabled employees like herein petitioner.
Compassion for him is not a dole out. It is a right. (GSIS vs. Court of Appeals, 285 SCRA 430 [1998]).[32]

The Court of Appeals correctly observed that Rago’s injury made him unable to perform any gainful occupation for a
continuous period exceeding 120 days. The SSS had granted Rago sickness benefit for 120 days and, thereafter,
permanent partial disability for 38 months. Such grant is an apparent recognition by the SSS that his injury is
permanent and total as we have pronounced in several cases.[33] This is in conformity with Section 2 (b), Rule VII of
the Amended Rules on Employees Compensation which defines a disability to be total and permanent if, as a result of
the injury or sickness, the employee is unable to perform any gainful occupation for a continuous period exceeding
120 days, and Section 1, b (1) of Rule XI of the same Amended Rules which provides that a temporary total disability
lasting continuously for more than 120 days, shall be considered permanent.

In Vicente vs. Employees Compensation Commission,[34] we laid down the litmus test and distinction between
Permanent Total Disability and Permanent Partial Disability, to wit:

[W]hile ‘permanent total disability’ invariably results in an employee’s loss of work or inability to perform his usual
work, ‘permanent partial disability,’ on the other hand, occurs when an employee loses the use of any particular
anatomical part of his body which disables him to continue with his former work. Stated otherwise, the test of
whether or not an employee suffers from ‘permanent total disability’ is a showing of the capacity of the employee to
continue performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury or sickness
he sustained, the employee is unable to perform his customary job for more than 120 days and he does not come
within the coverage of Rule X of the Amended Rules on Employees Compensability (which, in a more detailed manner,
describes what constitutes temporary total disability), then the said employee undoubtedly suffers from ‘permanent
total disability’ regardless of whether or not he loses the use of any part of his body.

We further reiterate that disability should be understood less on its medical significance than on the loss of earning
capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work, or
work of similar nature that he was trained for or accustomed to perform, or any kind of work which a person of his
mentality and attainment could do. It does not mean absolute helplessness.[35] Moreover, a person’s disability may
not manifest fully at one precise moment in time but rather over a period of time. It is possible that an injury which at
first was considered to be temporary may later on become permanent or one who suffers a partial disability becomes
totally and permanently disabled from the same cause.[36]

With this, petitioners’ additional arguments that the x-ray reports lacked a physician’s finding that Rago could no
longer work and that Mr. Cabrero’s affidavit attested to the contrary lose persuasive worth. X-ray reports and its
confirmation by a physician are simply appraised for their evidentiary value and are not considered as indispensable
prerequisites to compensation.[37] Even then, the three x-ray reports submitted by Rago clearly show the
degenerative condition of his injury, viz.

(a) Radiology report stated 1 December 1993 revealed “Mark compression fracture o L1 vertebra without signs of
dislocation and bone destruction and slight kyphosis at the level of L1 vertebra but the alignment of the spine is
normal”;

(b) Radiology report dated 4 may 1994 showed that “consistent with compression fracture with mild posterior
dislocation of the L1”; and

(c) Radiology report dated 26 February 1999 showed anterior wedging or compression fracture of L1 with gibbus
deformity and thoraco-lumber junction and suggested lumbo-sacral AP for further study. [ mphasis supplied]

Clearly, Rago is entitled to permanent total disability benefits.

One final note. Although the SSS and the SSC should be commended for their vigilance against unjustified claims that
will deplete the funds intended to be disbursed for the benefit only of deserving disabled employees, they should be
cautioned against a very strict interpretation of the rules lest it results in the withholding of full assistance from those
whose capabilities have been diminished, if not completely impaired, as a consequence of their dedicated service. A
humanitarian impulse, dictated by no less than the Constitution under its social justice policy, calls for a liberal and
sympathetic approach to the legitimate appeals of disabled workers like Rago. Compassion for them is not a dole out
but a right.[38]

WHEREFORE, the decision of the Court of Appeals dated 18 October 2001 and its resolution of 30 January 2002 in CA-
G.R. SP No. 63389 reversing the Social Security Commission’s Resolution of 20 December 2000 in SSC Case No. 4-
15009-2000 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.
28

HILARIO G. DAVIDE, JR.


Chief Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice

CONSUELO YNARES-SANTIAGO
Associate Justice

ANTONIO T. CARPIO
Associate Justice

ADOLFO S. AZCUNA
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision
were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

HILARIO G. DAVIDE, JR.


Chief Justice

Item No. ____


Agenda for 22 September 2004

FIRST DIVISION

FOR CONCURRENCE

G.R. No. 152058

SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, Petitioners, versus COURT OF APPEALS and JOSE
RAGO, Respondents.

X- - - - - - - - - - - - - - - - - - - - - - - - -X

COUNSEL FOR THE PETITIONERS:

ATTY. AMADO D. VALDEZ


ATTY. JESUS F.D. CLARIZA
ATTY. MARIANO C. ALOJADO
OFFICE OF THE GOVERNMENT CORPORATE COUNSEL
3rd Floor, MWSS Bldg., Katipunan Avenue
Balara, Quezon City

COUNSEL FOR THE PRIVATE RESPONDENT:

MERCADO LIM AND ASSOCIATES LAW OFFICES


Unit B, 1544 San Marcelino Street
Ermita, Manila
29

X- - - - - - - - - - - - - - - - - - - - - - - - -X

Court of Appeals - Decision of 18 October 2001 and the


Sixth Division Resolution of 30 January 2002:
Per Cosico, R. J., with the concurrence of
Barcelona, R. and Santos, A., JJ,

X- - - - - - - - - - - - - - - - - - - - - - - - -X

(Please return to the Office of Chief Justice HILARIO G. DAVIDE, JR.)

-----------------------------

[1] Per Cosico, R. J., with the concurrence of Barcelona, R. and Santos, A., JJ, Rollo, 120-126.

[2] Rollo, 44.

[3] Id., 39

[4] Id.

[5] Id., 56.

[6] Id., 57.

[7] Rollo, 57.

[8] Id.

[9] Id.

[10] Rollo, 31-35.

[11] Id., 62-64.

[12] Id., 312-320.

[13] Otherwise known as the Social Security Law of 1997. Section 13-A (g) provides the percentage degree
of disability, which is equivalent to the ratio` that the designated number of months of compensability bears to
seventy-five (75), rounded to the next higher integer, shall not be additive for distinct, separate and unrelated
permanent partial disabilities, but shall be additive for deteriorating and related permanent partial disabilities, to a
maximum of one hundred percent (100%), in which case the employee shall be deemed as permanently totally
disabled.

[14] Rollo, 110-119.

[15] Rollo, 136-137.

[16] Rollo, 330-336.

[17] PNCC v. NLRC, G.R. No. 112629, 7 July 1995, 245 SCRA 668.

[18] G.R. No. 118597, 14 July 1995, 246 SCRA 384.

[19] Manufacturers Hanover Trust Co. & Chemical Bank v. Guerrero, G.R. No. 136804, 19 February 2003; Tan
v. Securities and Exchange Commission, G.R. No. 95696, 3 March 1992, 206 SCRA 740, citing Shauf v. Court of
Appeals, G.R. No. G.R. No. 90314, 27 November 1990, 191 SCRA 713; Bersabal v. Judge Salvador G.R. No. L-35910,
21 July 1978, 84 SCRA 176.

[20] De Mesa, et al. v. Mencias, 124 Phil 1187 (1966). See also Federation of Free Workers and Allied Sugar
Centrals Employees and Workers Union – FFW v. Inciong, No. L-48848, 11 May 1998, 161 SCRA 295, citing In Re
Guarina, 24 Phil 37 (1913) and San Carlos Milling Co. v. Commissioner of Internal Revenue, G.R. No. 103379, 23
November 1993, 228 SCRA 135.

[21] In Shauf v. Court of Appeals, G.R. No. 90314, 27 November 1990, 191 SCRA 713, "may" was used in a
U.S. federal statute (about equal opportunity for civilian employment in U.S. military installations) to give an
aggrieved party a number of remedies which are not exclusive. In People v. Court of Appeals, 312 Phil 739 (1995),
“may” as used in section 7 of Rule 112 presented an "opportunity," a "possibility" or an option of filing a motion for
30

preliminary investigation and in Section 1 of Rule 45, as an opportunity or option to file a petition for review. In
Legaspi v. Estrella, G.R. No. 90205, 24 August 1990 (Cited in the SCRA as Supangan, Jr. v. Santos, a consolidation of
cases), 189 SCRA 56 (1990) we interpreted "may" as used in Section 146 of Batas Pambansa Blg. 337 or the old Local
Government Code as- being indicative of a "possibility" or an "opportunity," to avoid defeating the purpose of the law
to immediately include sectoral representatives in the legislative councils of local government units.

[22] Id., People v. Court of Appeals, 312 Phil 739 (1995).

[23] Lopez v. City of Manila, 363 Phil 68 (1999).

[24] See Carale v. Abarintos, G.R. No. 120704, 3 March 1997, 269 SCRA 132; Paat v. Court of Appeals, 334
Phil 146 (1997); see also Union Bank of the Philippines v. Court of Appeals, G.R. No. 131729, 19 May 1998 citing
University of the Philippines v. Catungal, Jr., 338 Phil 728 (1997); Associated Communications and Wireless Services,
Ltd. v. Dumlao, et al., G.R. No. 136762, 21 November 2002.

[25] Garcia v. Court of Appeals, 411 Phil 25 (2001).

[26] Lopez v. City of Manila, supra note 23; Ambil v. COMELEC, G.R. No. 143398, 25 October 2000, 344
SCRA 358.

[27] Paat v. Court of Appeals, 334 Phil 146 (1997); Roxas & Co. Inc. v. Court of Appeals, 378 Phil 727
(1999).

[28] Province of Zamboanga del Norte v. Court of Appeals, G.R. No. 109853, 11 October 2000.

[29] G.R. No. 118597, 14 July 1995, 246 SCRA 384.

[30] See generally Yao v. Court of Appeals, G.R. No. 132428, 24 October 2000, 344 SCRA 202.

[31] This tenuous basis was again put to question when it was later brought to our attention that the manual
verification of Mr. Rago’s contributions revealed that he had 57 total contributions and not 35. It was claimed that the
additional 29 contributions were not made available to the SSC at the time of the promulgation of the clarificatory
judgment.

[32] Rollo, 124-126.

[33] In Abaya, Jr. v. ECC, G.R. No. 64255, 16 August 1989, 176 SCRA 507, partial permanent benefits was
granted for more than 150 days. In Aguja v. GSIS, G.R. No. 84846, 5 August 1991, 200 SCRA 187, permanent
partial disability benefits was granted for 25 months. In Aquino v. ECC, G.R. No. 89558, 22 August 1991, 201 SCRA
84, permanent partial disability was granted for 19 months. The Court held that such grants indicated a recognition
on the part of the System of the members’ permanent total disability. In Diopenes v. GSIS G.R. No. 96844, 23
January 1992, 205 SCRA 331, temporary total disability benefits was granted for 240 days and permanent partial
disability for 19 months.

[34] G.R. No. 85024, 23 January 1991, 193 SCRA 190; see also Ijares v. Court of Appeals, G.R. No. 105854,
26 August 1999, 313 SCRA 141.

[35] Marcelino v. Seven-Up Bottling Co., 150-C Phil 133 (1972); Landicho v. WCC, G.R. No. L-45996, 26
March 1979, 89 SCRA 147; Legaspi v. Province of Negros Oriental, G.R. No. L-43066, 29 December 1978, 87 SCRA
418; GSIS v. Court of Appeals, 363 Phil 1999.

[36] GSIS v. Court of Appeals, G.R. No. 117572, 29 January 1998, 285 SCRA 430 citing GSIS v. Court of
Appeals, G.R. No. 116015, 31 July 1996, 260 SCRA 133.

[37] Balanga v. Workmen’s Compensation Commission, No. L-43339, 22 June 1978, 83 SCRA 721; Romero v.
WCC, G.R. No. L-42617, 30 June 1997, 77 SCRA 482; and Ybañez v. WCC, G.R. No. L-44123, 30 June 1997, 77 SCRA
501.

[38] See GSIS v. Court of Appeals, G.R. No. 117572, 29 January 1998, 285 SCRA 430.

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([2004V1038] SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM, Petitioners, versus COURT OF
APPEALS and JOSE RAGO, Respondents., G.R. No. 152058, 2004 Sept 27, 1st Division)

/---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---\

[1996V485] JMM PROMOTION AND MANAGEMENT, INC., and KARY INTERNATIONAL, INC., petitioner,
vs.
HON. COURT OF APPEALS, HON. MA. NIEVES CONFESSOR, then Secretary of the Department of Labor and
Employment, HON. JOSE BRILLANTES, in his capacity as acting Secretary of the Department of Labor and
Employment and HON. FELICISIMO JOSON, in his capacity as Administrator of the Philippine Overseas
Employment Administration, respondents.1996 Aug 51st DivisionG.R. No. 120095KAPUNAN, J.:
31

The limits of government regulation under the State's police power are once again at the vortex of the instant
controversy. Assailed is the government's power to control deployment of female entertainers to Japan by requiring
an Artist Record Book (ARB) as a precondition to the processing by the POEA of any contract for overseas
employment. By contending that the right to overseas employment is a property right within the meaning of the
Constitution, petitioners vigorously aver that deprivation thereof allegedly through the onerous requirement of an ARB
violates the due process clause and constitutes an invalid exercise of the police power.

The factual antecedents are undisputed.

Following the much-publicized death of Maricris Sioson in 1991, former President Corazon C. Aquino ordered a total
ban against the deployment of performing artists to Japan and other foreign destinations. The ban was, however,
rescinded after leaders of the overseas employment industry promised to extend full support for a program aimed at
removing kinks in the system of deployment. In its place, the government, through the Secretary of Labor and
Employment, subsequently issued Department Order No. 28, creating the Entertainment Industry Advisory Council
(EIAC), which was tasked with issuing guidelines on the training, testing certification and deployment of performing
artists abroad.

Pursuant to the EIAC's recommendations, 1 the Secretary of Labor, on January 6, 1994, issued Department Order No.
3 establishing various procedures and requirements for screening performing artists under a new system of training,
testing, certification and deployment of the former. Performing artists successfully hurdling the test, training and
certification requirement were to be issued an Artist's Record Book (ARB), a necessary prerequisite to processing of
any contract of employment by the POEA. Upon request of the industry, implementation of the process, originally
scheduled for April 1, 1994, was moved to October 1, 1994.

Thereafter, the Department of Labor, following the EIAC's recommendation, issued a series of orders fine-tuning and
implementing the new system. Prominent among these orders were the following issuances:

1. Department Order No. 3-A, providing for additional guidelines on the training, testing, certification and
deployment of performing artists.

2. Department Order No. 3-B, pertaining to the Artist Record Book (ARB) requirement, which could be processed
only after the artist could show proof of academic and skills training and has passed the required tests.

3. Department Order No. 3-E, providing the minimum salary a performing artist ought to received (not less than
US$600.00 for those bound for Japan) and the authorized deductions therefrom.

4. Department Order No. 3-F, providing for the guidelines on the issuance and use of the ARB by returning
performing artists who, unlike new artists, shall only undergo a Special Orientation Program (shorter than the basic
program) although they must pass the academic test.

In Civil Case No. 95-72750, the Federation of Entertainment Talent Managers of the Philippines (FETMOP), on January
27, 1995 filed a class suit assailing these department orders, principally contending that said orders 1) violated the
constitutional right to travel; 2) abridged existing contracts for employment; and 3) deprived individual artists of their
licenses without due process of law. FETMOP, likewise, averred that the issuance of the Artist Record Book (ARB) was
discriminatory and illegal and "in gross violation of the constitutional right... to life liberty and property." Said
Federation consequently prayed for the issuance of a writ of preliminary injunction against the aforestated orders.

On February 2, 1992, JMM Promotion and Management, Inc. Kary International, Inc., herein petitioners, filed a Motion
for Intervention in said civil case, which was granted by the trial court in an Order dated 15 February, 1995.

However, on February 21, 1995, the trial court issued an Order denying petitioners' prayed for a writ of preliminary
injunction and dismissed the complaint.

On appeal from the trial court's Order, respondent court, in CA G.R. SP No. 36713 dismissed the same. Tracing the
circumstances which led to the issuance of the ARB requirement and the assailed Department Order, respondent court
concluded that the issuance constituted a valid exercise by the state of the police power.

We agree.

The latin maxim salus populi est surprema lex embodies the character of the entire spectrum of public laws aimed at
promoting the general welfare of the people under the State's police power. As an inherent attribute of sovereignty
which virtually "extends to all public needs," 2 this "least limitable" 3 of governmental powers grants a wide panoply
of instruments through which the state, as parens patriae gives effect to a host of its regulatory powers.

Describing the nature and scope of the police power, Justice Malcolm, in the early case of Rubi v. Provincial Board of
Mindoro 4 wrote:

"The police power of the State," one court has said... is a power coextensive with self-protection, and is not inaptly
termed "the law of overruling necessity." It may be said to be that inherent and plenary power in the state which
enables it to prohibit all things hurtful to the comfort, safety and welfare of society." Carried onward by the current of
legislature, the judiciary rarely attempts to dam the onrushing power of legislative discretion, provided the purposes
of the law do not go beyond the great principles that mean security for the public welfare or do not arbitrarily interfere
with the right of the individual. 5
32

Thus, police power concerns government enactments which precisely interfere with personal liberty or property in
order to promote the general welfare or the common good. As the assailed Department Order enjoys a presumed
validity, it follows that the burden rests upon petitioners to demonstrate that the said order, particularly, its ARB
requirement, does not enhance the public welfare or was exercised arbitrarily or unreasonably.

A thorough review of the facts and circumstances leading to the issuance of the assailed orders compels us to rule
that the Artist Record Book requirement and the questioned Department Order related to its issuance were issued by
the Secretary of Labor pursuant to a valid exercise of the police power.

In 1984, the Philippines emerged as the largest labor sending country in Asia dwarfing the labor export of countries
with mammoth populations such as India and China. According to the National Statistics Office, this diaspora was
augmented annually by over 450,000 documented and clandestine or illegal (undocumented) workers who left the
country for various destinations abroad, lured by higher salaries, better work opportunities and sometimes better
living conditions.

Of the hundreds of thousands of workers who left the country for greener pastures in the last few years, women
composed slightly close to half of those deployed, constituting 47% between 1987-1991, exceeding this proportion
(58%) by the end of 1991, 6 the year former President Aquino instituted the ban on deployment of performing artists
to Japan and other countries as a result of the gruesome death of Filipino entertainer Maricris Sioson.

It was during the same period that this Court took judicial notice not only of the trend, but also of the fact that most
of our women, a large number employed as domestic helpers and entertainers, worked under exploitative conditions
"marked by physical and personal abuse." 7 Even then, we noted that "[t]he sordid tales of maltreatment suffered by
migrant Filipina workers, even rape and various forms of torture, confirmed by testimonies of returning workers"
compelled "urgent government action." 8

Pursuant to the alarming number of reports that a significant number of Filipina performing artists ended up as
prostitutes abroad (many of whom were beaten, drugged and forced into prostitution), and following the deaths of
number of these women, the government began instituting measures aimed at deploying only those individuals who
met set standards which would qualify them as legitimate performing artists. In spite of these measures, however, a
number of our countrymen have nonetheless fallen victim to unscrupulous recruiters, ending up as virtual slaves
controlled by foreign crime syndicates and forced into jobs other than those indicated in their employment contracts.
Worse, some of our women have been forced into prostitution.

Thus, after a number of inadequate and failed accreditation schemes, the Secretary of Labor issued on August 16,
1993, D.O. No. 28, establishing the Entertainment Industry Advisory Council (EIAC), the policy advisory body of DOLE
on entertainment industry matters. 9 Acting on the recommendations of the said body, the Secretary of Labor, on
January 6, 1994, issued the assailed orders. These orders embodied EIAC's Resolution No. 1, which called for
guidelines on screening, testing and accrediting performing overseas Filipino artists. Significantly, as the respondent
court noted, petitioners were duly represented in the EIAC, 10 which gave the recommendations on which the ARB
and other requirements were based.

Clearly, the welfare of Filipino performing artists, particularly the women was paramount in the issuance of
Department Order No. 3. Short of a total and absolute ban against the deployment of performing artists to "high risk"
destinations, a measure which would only drive recruitment further underground, the new scheme at the very least
rationalizes the method of screening performing artists by requiring reasonable educational and artistic skills from
them and limits deployment to only those individuals adequately prepared for the unpredictable demands of
employment as artists abroad. It cannot be gainsaid that this scheme at least lessens the room for exploitation by
unscrupulous individuals and agencies.

Moreover, here or abroad, selection of performing artists is usually accomplished by auditions, where those deemed
unfit are usually weeded out through a process which is inherently subjective and vulnerable to bias and differences in
taste. The ARB requirement goes one step further, however, attempting to minimize the subjectivity of the process by
defining the minimum skills required from entertainers and performing artists. As the Solicitor General observed, this
should be easily met by experienced artists possessing merely basic skills. The test are aimed at segregating real
artists or performers from those passing themselves off as such, eager to accept any available job and therefore
exposing themselves to possible exploitation.

As to the other provisions of Department Order No. 3 questioned by petitioners, we see nothing wrong with the
requirements for document and booking confirmation (D.O. 3-C), a minimum salary scale (D.O. 3-E), or the
requirement for registration of returning performers. The requirement for a venue certificate or other documents
evidencing the place and nature or work allows the government closer monitoring of foreign employers and helps keep
our entertainers away from prostitution fronts and other worksites associated with unsavory, immoral, illegal or
exploitative practices. Parenthetically, none of these issuances appear to us, by any stretch of the imagination, even
remotely unreasonable or arbitrary. They address a felt need of according greater protection for an oft-exploited
segment of our OCW's. They respond to the industry's demand for clearer and more practicable rules and guidelines.
Many of these provisions were fleshed out following recommendations by, and after consultations with, the affected
sectors and non-government organizations. On the whole, they are aimed at enhancing the safety and security of
entertainers and artists bound for Japan and other destinations, without stifling the industry's concerns for expansion
and growth.

In any event, apart from the State's police power, the Constitution itself mandates government to extend the fullest
protection to our overseas workers. The basic constitutional statement on labor, embodied in Section 18 of Article II of
the Constitution provides:
33

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

More emphatically, the social justice provisions on labor of the 1987 Constitution in its first paragraph states:

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.

Obviously, protection to labor does not indicate promotion of employment alone. Under the welfare and social justice
provisions of the Constitution, the promotion of full employment, while desirable, cannot take a backseat to the
government's constitutional duty to provide mechanisms for the protection of our workforce, local or overseas. As this
Court explained in Philippine Association of Service Exporters (PASEI) v. Drilon, 11 in reference to the recurring
problems faced by our overseas workers:

What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and
humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot
satisfy their employment needs at home. Under these circumstances, the Government is duty-adequate protection,
personally and economically, while away from home.

We now go to petitioners' assertion that the police power cannot, nevertheless, abridge the right of our performing
workers to return to work abroad after having earlier qualified under the old process, because, having previously been
accredited, their accreditation became a "property right," protected by the due process clause. We find this contention
untenable.

A profession, trade of calling is a property right within the meaning of our constitutional guarantees. One cannot be
deprived of the right to work and right to make a living because these rights are property rights, the arbitrary and
unwarranted deprivation of which normally constitutes an actionable wrong. 12

Nevertheless, no right is absolute, and the proper regulation of a profession, calling, business or trade has always
been upheld as a legitimate subject of a valid exercise of the police power by the state particularly when their conduct
affects either the execution of legitimate governmental functions, the preservation of the State, the public health and
welfare and public morals.

According to the maxim, sic utere tuo ut alienum non laedas, it must of course be within the legitimate range of
legislative action to define the mode and manner in which every one may so use of his own property so as not to pose
injury to himself or others. 13

In any case, where the liberty curtailed affects at most the rights of property, the permissible scope of regulatory
measures is certainly muchwider. 14 To pretend that licensing or accreditation requirements violates the due process
clause is to ignore the settled practice, under the mantle of the police power, of regulating entry to the practice of
various trades or professions. Professionals leaving for abroad are required to pass rigid written and practical exams
before they are deemed fit to practice their trade. Seamen are required to take tests determining their seamanship.
Locally, the Professional Regulation Commission has began to require previously licensed doctors and other
professionals to furnish documentary proof that they has either re-trained or had undertaken continuing education
courses as a requirement for renewal of their licenses. It is not claimed that these requirements pose an unwarranted
deprivation of a property right under the due process clause. So long as professionals and other workers meet
reasonable regulatory standards no such deprivation exists.

Finally, it is a futile gesture on the part of petitioners to invoke the non-impairment clause of the Constitution to
support their argument that the government cannot enact the assailed regulatory measures because they abridge the
freedom to contract. In Philippine Association of Service Exporters, Inc. vs. Drilon, we held that "[t]he non-impairment
clause of the Constitution... must yield to the loftier purposes targeted by the government." 15 Equally important, into
every contract is read provisions of existing law, and always, a reservation of the police power for so long as the
agreement deals with a subject impressed with the public welfare.

A last point. Petitioners suggest that the singling out of entertainers and performing artists under the assailed
department orders constitutes class legislation which violates the equal protection clause of the Constitution. We do
not agree.

The equal protection clause is directed principally against undue favor and individual or class privilege. It is not
intended to prohibit legislation which is limited to the object to which it is directed or by the territory in which it is to
operate. It does not require absolute equality, but merely that all persons be treated alike under like conditions both
as to privileges conferred and liabilities imposed. 16 We have held, time and again, that the equal protection clause of
the Constitution does not forbid classification for so long as such classification is based on real and substantial
differences having a reasonable relation to the subject of the particular legislation. 17 If classification is germane to
the purpose of the law, concerns all members of the class, and applies equally to present and future conditions, the
classification does not violate the equal protection guarantee.

In the case at bar, the challenged Department Order clearly applies to all performing artists and entertainers destined
for jobs abroad. These orders, we stressed hereinfore, further the Constitutional mandate requiring government to
protect our workforce, particularly those who may be prone to abuse and exploitation as they are beyond the physical
reach of government regulatory agencies. The tragic incidents must somehow stop, but short of absolutely curtailing
the right of these performers and entertainers to work abroad, the assailed measures enable our government to
assume a measure of control.
34

WHEREFORE, finding no reversible error in the decision sought to be reviewed, petition is hereby DENIED.

SO ORDERED.

Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.

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([1996V485] JMM PROMOTION AND MANAGEMENT, INC., and KARY INTERNATIONAL, INC., petitioner,
vs.
HON. COURT OF APPEALS, HON. MA. NIEVES CONFESSOR, then Secretary of the Department of Labor and
Employment, HON. JOSE BRILLANTES, in his capacity as acting Secretary of the Department of Labor and
Employment and HON. FELICISIMO JOSON, in his capacity as Administrator of the Philippine Overseas Employment
Administration, respondents., G.R. No. 120095, 1996 Aug 5, 1st Division)
35

/---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---\

[2000V71] NUEVA ECIJA I ELECTRIC COOPERATIVE, INC., (NEECO I) EMPLOYEES ASSOCIATION,


PRESIDENT RODOLFO JIMENEZ, and members, REYNALDO FAJARDO, ERNESTO MARIN, EVER GUEVARRA,
PETRONILO BAGUISA, VICTORINO CARILLO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
NUEVA ECIJA I ELECTRIC COOPERATIVE, INC., (NEECO I) and PATRICIO DELA PEÑA, respondents2000
Jan 242nd DivisionG.R. No. 116066D E C I S I O N

QUISUMBING, J.:

Petitioners assail the decision1 [Rollo, pp. 67-76.] of the National Labor Relations Commission in NLRC RAB-III-03-
2673-92, which modified the ruling of the Labor Arbiter, by deleting the award of moral and exemplary damages, as
well as attorneys’ fees and costs of litigation.

The facts, as found a quo, are as follows:

Petitioners Reynaldo Fajardo, Ernesto Marin, Ever Guevarra, Petronilo Baguisa, Victorino Carillo, and Erdie Javate were
permanent employees of respondent Nueva Ecija I Electric Cooperative (NEECO I). They were members of petitioner
NEECO I Employees Association, a labor organization established for the mutual aid and protection of its members.
Petitioner Rodolfo Jimenez was the president of the association.

Respondent NEECO I is an electric cooperative under the general supervision and control of the National Electrification
Administration (NEA). The management of NEECO I is vested on the Board of Directors. Respondent Patricio dela Peña
was NEECO’s general manager on detail from NEA.

On February 7, 1987, the Board of Directors adopted Policy No. 3-33, which set the guidelines for NEECO I’s
retirement benefits. On October 28, 1987, all regular employees were ordered by NEECO I to accomplish Form 87,
which were applications for either retirement, resignation, or separation from service.

On October 5, 1991 and February 28, 1992, the applications of Petronilo Baguisa and Ever Guevarra, respectively,
were approved. They were paid the appropriate separation pay.

These successive events, followed by the promotion of certain union officers to supervisory rank, caused apprehension
in the labor association. They were considered as harassment threatening the union members, and circumventing the
employees’ security of tenure. On February 29, 1992, to strengthen and neutralize management’s arbitrary moves,
the union held a "snap election" of officers.2 [Records, p. 29.] Reynaldo Fajardo was elected Treasurer, while Evaristo
Guevarra, Victorino Carillo and Ernesto Marin were elected Public Relations Officers for Jaen, Gapan A and Gapan B,
respectively.

On March 3, 1992, petitioner labor association passed a resolution withdrawing the applications for retirement of all its
members, thus:

"Upon popular request of all members and officers of the association their manifestation of willingness to retire on
optional basis is hereby WITHDRAWN by the ASSOCIATION for and in behalf of all its members, EXCEPT those who
are willing to avail their retirement benefits with all their hearts and mind. To avoid what had happened to EVARISTO
GUEVARRA. The union officers and its members, claimed their right to be protected under the security of tenure
clause under the Labor Code of the Philippines. No employee shall be retired without his/her consent or approval of
the union.

On motion and duly seconded. Approved unanimously. Let copies of the resolution be furnished NEECO I PS/AGM
Patricio S. dela Peña, for his information and appropriate action."3 [Id. at 79.]

On March 4, March 17, and April 7, 1992, petitioners Ernesto Marin, Reynaldo Fajardo and Victorino Carillo were
compulsorily retired by management. They received their separation pay under protest on March 16, March 18, and
April 15, 1992, respectively.

On August 21, 1991, Erdie Javate was terminated from employment allegedly due to misappropriation of funds and
dishonesty. He was not paid separation or retirement benefits.

On March 29, 1992, petitioners and Erdie Javate instituted a complaint for illegal dismissal and damages with the
NLRC Regional Arbitration Branch in San Fernando. They alleged they were purposely singled out for retirement from
a listing of employees who were made to submit retirement forms, even if they were not on top of the list because
they were union officers, past officers or active members of the association. Further, petitioners claimed that their
acceptance of the money offered by NEECO I did not constitute estoppel nor waiver, since their acceptances were with
vehement objections and without prejudice to all their rights resulting from an illegal dismissal.

Additionally, Javate averred he was framed up and dismissed without due process.

On December 21, 1992, the labor arbiter decided the case as follows:

"WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered, as follows:

1. Declaring respondents NEECO I and PS/AGM Engr. Patricio dela Peña guilty of illegal dismissal and unfair labor
practice act, as charged;
36

2. Ordering respondents to reinstate individual complainants Reynaldo Fajardo, Ernesto Marin, Ever Guevarra,
Petronilo Baguisa, Victorino Carillo, and Erdie Javate of their former positions under the same terms and conditions of
work obtaining at the time of dismissal, without loss of seniority rights and other privileges, either physically or in the
payroll, at the option of the respondents, with payment of full backwages, including all benefits and privileges that
they should have received if they were not illegally dismissed, computed as follows:

1. Reynaldo Fajardo-

a.) Backwages as of Dec. 31, 1992 P 36,306.55

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 41,056.55

2. Ernesto Marin -

a.) Backwages as of Dec. 31, 1992 P 37,783.60

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 42,533.60

3. Ever Guevarra -

a.) Backwages as of Dec. 31, 1992 P 37,783.60

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 42,533.60

4. Petronilo Baguisa -

a.) Backwages as of Dec. 31, 1992 P 56,675.40

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 61,425.40

5. Victorino Carillo -

a.) Backwages as of Dec. 31, 1992 P 32,162.78

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00


37

Total P 36, 912.78

6. Erdie Javate -

a.) Backwages as of Dec. 31, 1992 P 15,680.00

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1999 2,000.00

Total P 20,430.00

GRAND TOTAL P244,891.93

3. Ordering respondents to pay complainants moral damages in the amount of P30,000.00 each or in the total amount
of P180,000.00 and exemplary damages in the amount of P120,000.00;

4. Ordering respondents to pay complainants their attorney’s fees equivalent to ten (10%) percent of their monetary
claims in the sum of P54,489.20;

5. Ordering respondents to pay complainants their cost of litigation in the amount of P30,000.00

SO ORDERED."4 [Rollo, pp. 62-64.]

Thereafter, herein private respondents elevated the case to respondent NLRC. They filed their appeal on December
28, 1992, and posted a surety bond on January 5, 1993, in the amount of two hundred forty-four thousand, eight
hundred ninety one pesos and ninety three centavos (P244,891.93). But herein petitioners filed an omnibus motion to
dismiss on the ground of late appeal, claiming that insufficient bond was filed by NEECO I only on January 5, 1993.
The bond excluded the award of moral and exemplary damages, attorneys’ fees and costs of litigation.

Respondent NLRC denied the motion and instead gave due course to the appeal. On July 16, 1993, the NLRC modified
the decision, as follows:

"WHEREFORE, premises considered, the appealed Decision is modified by deleting the awards of moral and exemplary
damages, attorney’s fees and cost of litigation. The amounts of retirement benefits received by the individual
complainants are to be applied to the backwages that may be due to the herein complainants. All other dispositions
stand.

SO ORDERED."5 [Id. at 75.]

Meanwhile, on March 16, 1993, petitioners were reinstated by NEECO I pending appeal.

On April 22, 1993, Erdie Javate withdrew his complaint and opted to receive his retirement benefits amounting to
forty-two thousand, one hundred fourteen pesos and nine centavos (P42,114.09).

Herein petitioners filed a motion for reconsideration, which the NLRC denied on August 31, 1993. Likewise, herein
private respondents filed a motion for reconsideration but the same was also denied on September 28, 1993.

Petitioners are now before us, via this special civil action under Rule 65 of the Revised Rules of Court, raising three
issues:

"I. WHETHER OR NOT THE APPEAL TAKEN BY THE RESPONDENT NEECO I FROM THE DECISION OF NLRC-RAB-III
DOLE TO NLRC THIRD DIVISION, MANILA, WAS NOT PERFECTED WITHIN THE TEN (10) CALENDAR DAYS
REGLEMENTARY PERIOD; HENCE THE APPEAL SHOULD NOT BE GIVEN DUE COURSE;

II. WHETHER OR NOT PUBLIC RESPONDENT NLRC ACTED WITHOUT OR IN EXCESS OF JURISDICTION WHEN IT
RESOLVED TO DELETE EN TOTO MORAL DAMAGES, EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COSTS OF
LITIGATION. FACTUAL BASIS OF WHICH WERE ASCERTAINED BY THE HONORABLE LABOR ARBITER BELOW;

III. WHETHER OR NOT THE ORDER TO APPLY AND DEDUCT RECEIVABLE BACKWAGES FROM RECEIVED BENEFITS
MAY BE REASONABLE BUT UNREALISTIC AND ARBITRARY."

Petitioners contend that although respondent NEECO I filed its appeal on December 28, 1992, such appeal was not
completed for failure to file the necessary supersedeas bond, during the period prescribed by law, or until January 4,
1993. Hence, no appeal was perfected.

Indisputable is the legal doctrine that the appeal of a decision involving a monetary award in labor cases may be
perfected "only upon the posting of a cash or surety bond."6 [Rosewood Processing, Inc. vs. NLRC, 290 SCRA 408,
420 (1998); Unicane Workers Union-CLUP vs. NLRC, 261 SCRA 573, 583 (1996); Banawa vs. NLRC, 251 SCRA 515,
521 (1995); Garais vs. NLRC, 256 SCRA 560, 566 (1996).]
38

The Labor Code, as amended by Republic Act No. 6715, clearly provides:

"Art. 223. Appeal - Decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. . .

xxx

In case of a judgment involving a monetary award,

an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the
judgment appealed from.

xxx

Also, the perfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional,
and noncompliance with such legal requirement is fatal and effectively renders the judgment final and executory.7
[Rosewood Processing, Inc. vs. NLRC, 290 SCRA 408, 420 (1998); Philippine Airlines, Inc. vs. NLRC, 263 SCRA 638,
658 (1996); Garcia vs. NLRC, 264 SCRA 261, 268 (1996); Cabalan Pastulan Negrito Labor Association vs. NLRC, 241
SCRA 643, 656 (1995).]

However, in a number of cases,8 [Firestone Tire and Rubber Co. vs. Lariosa, 148 SCRA 187, 190-191 (1987); Insular
Life Assurance Co. vs. NLRC, 156 SCRA 740, 746 (1987) and the resolution therein of July 26, 1988; Ruga vs. NLRC,
181 SCRA 266, 272 (1990); Benguet Electric Coop. vs. NLRC, 209 SCRA 55, 61 (1992); Blancaflor vs. NLRC, 218
SCRA 366, 370-371 (1993); Olacao vs. NLRC, 177 SCRA 38, 49 (1989); Pacific Asia Overseas Shipping Corp. vs.
NLRC, 161 SCRA 122, 130 (1988); City Fair Corp. vs. NLRC, 243 SCRA 572, 576 (1995).] this Court relaxed the rule
to resolve controversies on the merits,9 [Cabalan Pastulan Negrito Labor Association vs. NLRC, supra; Oriental
Mindoro Electric Cooperative Inc. vs. NLRC, 246 SCRA 794 (1995)] specifically, when there are special meritorious
circumstances and issues.10 [Philippine Airlines, Inc. vs. NLRC, 263 SCRA 638, 659 (1996)] We relaxed the
requirement of posting a supersedeas bond for the perfection of an appeal, when there was substantial compliance
with the rule, so that on balance, we made technical considerations to give way to equity and justice.11 [Quiambao
vs. NLRC, 254 SCRA 211, 216 (1996).]

In the case before us, the decision of the labor arbiter was issued on December 21, 1992. Private respondents filed
their appeal on December 28, 1992, barely seven days from receipt thereof. The bonding company issued the bond
dated January 4, 1993, the last day for filing an appeal. However, it was forwarded to respondent NLRC only on the
following day, January 5, 1993. Considering these circumstances and the holiday season, we find it equitable to ease
the rules and consider that there was substantial compliance with the requirements of the law.

As to the amount of bond, we note that there had been changes in the Rules promulgated by the NLRC. Previously the
computation of the cash or surety bond to be posted by an employer who wishes to appeal contained in the original
rules was "exclusive of moral and exemplary damages and attorney’s fees."12 [Pursuant to Article 218 of the Labor
Code (Power of the Commission), the NLRC adopted and promulgated its New Rules of Procedure on August 31, 1990.
The Rules were published in the Manila Bulletin and the Philippine Daily Inquirer on September 24, 1990 and became
effective fifteen (15) days thereafter. Section 6, Rule VI of the said Rules reads:

Section 6. Bond. -- In case the decision of a Labor Arbiter involves a monetary award, an appeal by the employer shall
be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited
by the Commission or the Supreme Court in an amount equivalent to the monetary award.

The Commission, may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond.
However, an appeal is deemed perfected upon posting of the bond equivalent to the monetary award exclusive of
moral and exemplary damages as well as attorney’s fees. (Cosico, Jr. vs. NLRC, 272 SCRA 583, 589-590 [1997]).

Nothing herein however, shall be construed as extending the period of appeal. talics supplied)] It was later deleted
sometime in 1991 and 1992, then restored on November 20, 1993.13 [Cosico, Jr. vs. NLRC, supra. at 591.]

It may be noted that while respondent NLRC in its Resolution No. 11-01-91 dated November 7, 1991 deleted the
phrase "exclusive of moral and exemplary damages as well as attorney’s fees" in the determination of the amount of
the bond, it provided a safeguard against the imposition of excessive bonds providing "(T)he Commission may, in
meritorious cases and upon Motion of the Appellant, reduce the amount of the bond."14 [Ibid.]

In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583, we ruled:

"In the case at bar, the backwages and thirteenth month pay awarded to petitioner amounted only to P270,000.00,
but the moral and exemplary damages, plus 10% attorney’s fees, totalled P2,497,000.00. In other words, the moral
and exemplary damages and attorney’s fees are almost ten (10) times greater than the basic monetary judgment.
Private respondents posted a supersedeas bond of P270,000.00, obviously, on the honest belief that the amount was
sufficient. At the very least, therefore, there was substantial compliance with the requirement of appeal bond. For to
rule otherwise would negate the interest of justice and deviate from the mandate of the Labor Code that the rules of
procedure should be liberally construed, . . .

xxx
39

Since private respondents filed a bond which they honestly believed sufficient for purposes of their appeal, respondent
NLRC should have called their attention that the bond was inadequate, which it did not."15 [Id. at 592-593.]

The unreasonable and excessive amount of bond would be oppressive and unjust and would have the effect of
depriving a party of his right to appeal. Besides, private respondents stress that the petitioners were paid their
retirement benefits16 [Total retirement benefits given by NEECO I amounts to P332,079.50. The breakdown is as
follows: Rey Fajardo-P64,185.00 (Records, p. 88); Ernesto Marin - P 77,592.46 (Records, p. 90); Ever Guevarra -
P103,736.90 (Records, p. 152); Victorino Carillo - P11,277.04 (Records, p. 112); Petronilo Baguisa - P75,288.10
(Records, Vol.2, p. 51).] and that the cooperative has sufficient assets from which the other claims for damages and
attorney’s fees may be obtained.

We come next to the issue of the propriety of the award of moral and exemplary damages.

To warrant an award of moral damages, it must be shown that the dismissal of the employee was attended to by bad
faith, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy.17 [Quijano vs. Mercury Drug Corporation, 292 SCRA 109, 120-121 (1998); citing; Belaunzaran vs. NLRC, 265
SCRA 800, 809 (1996); Garcia vs. NLRC, 234 SCRA 632, 638 (1994); Lopez vs. Javier, 252 SCRA 68, 79 (1996).] The
Labor Arbiter ruled that there was unfair labor practice:

"As a backdrop, complainants alleged, and this is supported by documentary evidence, that on 7 February 1987, the
then NEECO I Board of Directors adopted their own Policy No. 3-33 under Resolution No. 47, series of 1987 requiring
all employees to avail of the retirement benefits. All regular employees, including the complainants were ordered to
file their application for retirement/resignation and/or separation from the service under NEECO I Form 87. All NEECO
I employees have no choice but to manifest their willingness to retire.

However, the complainants pointed out that the approval of the employees’ application for retirement was not done in
succession according to the list, but according to the choice of the respondents, and for which, complainants were
singled out from the list because they were union officers, past officers and active members of the complainant
Association."18 [Rollo, p. 55.]

xxx

"Clearly, therefore, complainants have established the fact that they were illegally dismissed by the respondents and
their illegal dismissal was even tainted with unfair labor practice act. ..."19 [Id. at 60.]

Unfair labor practices violate the constitutional rights of workers and employees to self-organization, are inimical to
the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal
with each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations.20 [The Labor Code of the Philippines, Book V, Title VI,
Chapter I, Article 247.] As the conscience of the government, it is the Court’s sworn duty to ensure that none trifles
with labor rights.21 [CLLC E.G. Gochangco Workers Union vs. NLRC, 161 SCRA 655, 671 (1988).]

For this reason, we find it proper in this case to impose moral and exemplary damages on private respondent.
However, the damages awarded by the labor arbiter, to our mind, are excessive. In determining the amount of
damages recoverable, the business, social and financial position of the offended parties and the business and financial
position of the offender are taken into account.22 [Lopez vs. Pan American World Airways, 16 SCRA 431, 444 (1966).]
It is our view that herein private respondents had not fully acted in good faith. However, we are cognizant that a
cooperative promotes the welfare of its own members. The economic benefits filter to the cooperative members.
Either equally or proportionally, they are distributed among members in correlation with the resources of the
association utilized. Cooperatives help promote economic democracy and support community development. Under
these circumstances, we deem it proper to reduce moral damages to only P10,000.00 payable by private respondent
NEECO I to each individual petitioner. We also deem it sufficient for private respondent NEECO I to pay each individual
petitioner P5,000.00 to answer for exemplary damages, based on the provisions of Articles 2229 and 2232 of the Civil
Code.23 [Article 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory damages.

Article 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner.]

Having been illegally dismissed, individual petitioners are entitled to reinstatement from the time they were illegally
dismissed, until they were reinstated on March 16, 1993. For that period they are likewise entitled to backwages
minus the amount petitioners were forced to receive as "retirement" pay.24 [San Miguel vs. NLRC, 293 SCRA 13, 19
(1998).] It must be noted that the backwages computed by the labor arbiter covered only until December 22, 1992
but did not include backwages from January 1, 1993 to March 15, 1993,25 [Rollo, p. 38. Petitioners’ assertion in their
petition, which private respondents failed to controvert.] which should now be computed and included for payment. In
the event that the amount of "retirement" pay received by an individual petitioner exceeds the amount of his
backwages, then the excess should be deemed as advances of salary which should be refundable until fully repaid by
him.

WHEREFORE, the petition is PARTIALLY GRANTED. The assailed decision of the NLRC is AFFIRMED with
MODIFICATION. Private respondent Nueva Ecija 1 Electric Cooperative is hereby ORDERED through its executive
officers:

1. to pay individual petitioners their full backwages from the time they were illegally dismissed until the date of their
reinstatement on March 13, 1992, minus the amount they received as "retirement" pay. In the event that the
40

computed backwages of a concerned petitioner is less than the amount of so-called "retirement" pay already received,
the difference should be treated as advances refundable from his salary until fully repaid;

2. to pay moral and exemplary damages in the amount of ten thousand (P10,000.00) pesos and five thousand
(P5,000.00) pesos, respectively, to each of the petitioners who were illegally terminated and/or compulsorily retired;

3. to pay ten (10%) of the total amount due to petitioners as attorney’s fees; and

4. to pay the cost of suits.

Respondent NLRC is ORDERED to RECOMPUTE the total monetary benefits awarded and due to the employees
concerned in accordance with the decision and to submit its compliance thereon within thirty (30) days from notice of
this decision, with copies furnished to the parties.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

\---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---/

([2000V71] NUEVA ECIJA I ELECTRIC COOPERATIVE, INC., (NEECO I) EMPLOYEES ASSOCIATION, PRESIDENT
RODOLFO JIMENEZ, and members, REYNALDO FAJARDO, ERNESTO MARIN, EVER GUEVARRA, PETRONILO BAGUISA,
VICTORINO CARILLO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, NUEVA ECIJA I ELECTRIC
COOPERATIVE, INC., (NEECO I) and PATRICIO DELA PEÑA, respondents, G.R. No. 116066, 2000 Jan 24, 2nd Division)

/---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---\

[1999V465] SEMIRARA COAL CORPORATION, petitioner, vs. HON. SECRETARY OF LABOR, SEMIRARA COAL
CORPORATION SUPERVISORY UNION (SECCSUN) and SEMIRARA COAL CORPORATION UNION OF NON-
MANAGERIAL EMPLOYEES (SCCUNME), respondents.1999 Jun 293rd DivisionG.R. No. 95405D E C I S I O N

PURISIMA, J.:

Before the Court is a Petition for Certiorari with prayer for the issuance of a Temporary Restraining Order and/or
Preliminary Injunction, seeking to annul the Decision1 [Dated July 30, 1990; Rollo, pp. 36-45.] and affirmatory
Orders2 [Dated August 21, 1990; Rollo, pp. 50-53.] of the Secretary of Labor which set aside the Order3 [Dated April
18, 1990; Rollo, pp. 20-25.] of the Med-Arbiter dated April 18, 1990.

The petitioner, Semirara Coal Corporation, prays for the reinstatement of the Order of the Med-Arbiter which excluded
the members of Semirara Coal Corporation Supervisory Union (SECCSUN) allegedly performing a managerial function,
from participating in the certification election among the petitioner’s supervisory employees.

On February 13, 1989, the Court issued a Temporary Restraining Order,4 [Rollo, p. 97.] enjoining the respondents
from proceeding with the pre-election conference and/or certification election scheduled for February 15, 1991.

The antecedent facts that matter are as follows:

On January 13, 1989, respondent Semirara Corporation Union of Non-Managerial Employees (SCCUNME) filed a
petition for certification election among the non-managerial (supervisors and Junior staff) employees of the bargaining
unit consisting, more or less, of one hundred forty (140) employees.

On March 21, 1989, Republic Act 6715, amending the Labor Code, took effect. Among others, it amended Article 212
(m) and Article 245 of the Labor Code by creating a new group of employees the supervisory employees separate and
distinct from the managerial employees.

Meanwhile, the petition for certification election was granted. Accordingly, on May 29, 1989 the Med-Arbiter issued an
Order directing the conduct of a certification election among the non-managerial (supervisors and junior staff)
employees of the petitioner with the following choices:

1. Semirara Coal Corporation Union of Non-Managerial Employees (SCCUNME);

2. No Union.5 [Decision; Rollo, p. 37.]

On June 23, 1989, petitioner appealed from the aforesaid Order on the sole ground that the "Honorable Med-Arbiter
erred in considering the petitioner union as vested with legal personality to seek certification election as the exclusive
bargaining agent of the corporations supervisory employees."6 [Rollo, p. 37.]

In his Resolution of August 3, 1989, the Secretary of Labor dismissed the appeal of petitioner and directed the
immediate conduct of a certification election. Petitioner’s motion for reconsideration of the said resolution was denied.
41

On December 6, 1989, respondent Semirara Coal Corporation of Supervisory Union (SECCSUN), which was granted a
certificate of registration on September 11, 1989, filed an Ex-Parte motion for intervention in the certification election
sought by respondent SCCUNME.7 [Rollo, p. 38.]

During the hearing of the petition for certification election on January 4, 1990, the private respondents, SCCNME,
SECCSUN, and the petitioner voluntarily agreed to hold a consent election.8 [Ibid.]

However, on or about February 2, 1990, petitioner, instead of submitting the required list of eligible voters pursuant
to a prior undertaking, sent a telegram to Med-Arbiter Claudio Sigaya, Jr., informing the latter that petitioner could
not submit a list of non-managerial supervisors since all the supervisors are performing managerial functions. The
pertinent portion of said telegram stated:

"Further to our communication earlier made to your Office to the effect that we can not submit a list of non
managerial supervisors because all of our supervisors are performing managerial function based on following definition
of R.A. 6715 x x x"9 [Rollo, p. 181.]

On February 5, 1990, private respondent SCCUNME filed a Manifestation and Motion withdrawing its consent to the
intervention of private respondent SECCSUN.

On the same date, petitioner instead of submitting the list of eligible voters requested by the Med-arbiter, filed a
Manifestation and Motion alleging that its supervisors are not eligible to participate in the certification election because
they are managerial employees within the contemplation of Section 4 (o) of the Rules and Regulation Implementing
Republic Act No. 6715. In so claiming, petitioner presented a copy of a company memorandum10 [Rollo, pp. 32-33.]
dated August 29, 1988, allegedly vesting in the supervisory employees of petitioner the power to discipline the
subordinates. To support its portion on the matter, the petitioner likewise submitted samples of the standard form of
the company disciplinary memorandum.

In its Order, dated April 18, 1990, Med-Arbiter Claudio M. Sigaya Jr. declared that the so-called supervisory
employees of Semirara Coal Corporation are managerial employees and are therefore deemed ineligible to participate
in a certification election.11 [Rollo, p. 25.]

On appeal12 [Rollo, pp. 162-166.] by private respondent SECCSUN on May 18, 1990, the said Order was set aside by
the Honorable Secretary of Labor, and declared the so-called supervisory employees as truly supervisory employees.
He further ordered the inclusion of SECCSUN as one of the choices in the certification election, ruling thus:

"WHEREFORE, premises considered, the appeal of intervenor-appellant Semirara Coal Corporation Supervisory Union
(SECCSUN) is hereby granted, and the Order dated 18 April 1990 is hereby set aside. In lieu thereof, a new Order is
entered declaring the so-called supervisory employees of the respondent Semirara Coal Corporation as truly
supervisory employees pursuant to the mandate of paragraph (m), Article 212, of the Labor Code, as amended by
Republic Act No. 6715.

A certification election is hereby directed to be conducted within the context of our previous Resolution dated 3 August
1989 and 30 October 1989, with the inclusion of herein intervenor-appellant Semirara Coal Corporation Supervisory
Union (SECCSUN) as one of the choices.

Let, therefore, the entire records of this case be remanded to the Regional Office of origin for the immediate conduct
of the certification election aforestated subject to the usual pre-election conference.

SO ORDERED."13 [Rollo, pp. 44-45.]

A motion for reconsideration of the aforesaid ruling was denied by the Secretary of Labor, on August 21, 1990.14
[Rollo, pp. 47-48.]

On August 30, 1990, petitioner issued a memorandum, entitled "Policy Empowering All the Junior Staffs/Supervisors
In The Company To Discipline The Erring Employees Under Them."15 [Rollo, pp. 159-161.]

On September 4, 1990, petitioner filed its Manifestation and Motion for the reversal of the Secretary’s Decision of July
30, 1990, as well as the affirmatory Order dated August 21, 1990. Petitioner manifested that "[R]ecently, on 30
August 1990, the Company issued a Memorandum captioned ‘Policy Empowering All the Supervisors in the company
to Discipline the Erring Employees Directly Under Them,’ which unequivocally vested upon the supervisors the power
to discipline employees. It has already taken effect."16 [Rollo, pp. 185.]

On September 19, 1990, the Honorable Secretary of Labor denied17 [Rollo, pp. 50-53.] for lack of merit the
aforementioned Manifestation and Motion of petitioner.

With the denial of its Manifestation and Motion, petitioner found its way to this court via the present petition.

The petition is not impressed with merit.

The law in point is Article 212 (m) of the Labor Code, which reads:

"Managerial employee is one who is vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are
those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such
42

authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank and file employees for purposes of this Book."

Are the supervisory employees of petitioner truly supervisory employees? The Med-Arbiter and the Secretary of Labor
in delving into this pivot of inquiry relied upon the: 1) April 10, 1984 Memorandum entitled "Guidelines on Disciplinary
Actions;"18 [Rollo, pp. 26-31.] 2) August 29, 1988 Memorandum entitled "Processing of Disciplinary Action Cases;"19
[Rollo, pp. 32-33.] and 3) Standard Forms of the Company Disciplinary Memoranda.20 [Sample at Rollo, p. 34.]

Pertinent portion of the Memorandum, entitled "Guidelines on Disciplinary Actions," dated April 10, 1984, addressed to
all department heads/supervisory reads:

"A. PHILOSOPHY

xxx

3. The company shall take prompt and consistent disciplinary action on its erring employees. All offenses as a general
rule, shall be investigated within 24 hours and shall be acted upon within three (3) working days.

4. While reporting person/s/immediate supervisor/s is/are responsible for reporting violations of the company rules
and regulations, conducing preliminary investigation thereof, and making the appropriate recommendations in
accordance with company rules and regulations, nevertheless all disciplinary actions should be reviewed and
concurred by Personnel Manager who reserves the right and responsibility to conduct further investigation on
violations committed as well as determine and administer the appropriate disciplinary action against erring employees,
upon concurrence and approval of the Resident Manager.

xxx

C. PROCEDURES

xxx

4. Recommendation

Here the immediate supervisor, after studying the facts of the case and the surrounding circumstances recommends
appropriate action based on company rules and regulations/policy/SOP.

5. Concurrences

All disciplinary actions must be concurred by the following officers in this order: Department Manager, Personnel
Manager, Division Manager.

6. Approval

The disciplinary action as concurred goes for approval of the Resident Manager."

From the foregoing, it can be gleaned unerringly that the disciplinary actions of the immediate superiors are truly
supervisory, the same being recommendatory in nature. Note that their findings and decisions are subject to the
approval of the Personnel Manager and Resident Manager. Obviously, then, they fall into the category of supervisory
employees within the contemplation of Article 212 (m) of the Labor Code, as amended by Republic Act. No. 6715.

Pertinent portion of the Company Memorandum of August 29, 1988, entitled "Processing of Disciplinary Action Cases,"
addressed to all Department Heads, states:

"POLICY:
To practice due process of law in enforcing company discipline.

PROCEDURES:

1. Right after an employee allegedly committed an offense, the immediate superior shall inform the erring employee
in writing of the charges against him using the REQUEST FOR EXPLANATION form. This is to be accomplished in four
copies. xxx

At the same time, the immediate superior fills up the COMPANY RULE DEVIATION report form. This is to be
accomplished in three copies. xxx

Should the employee who is charged of the offense refuse to acknowledge the REQUEST FOR EXPLANATION form, the
immediate superior shall call the attention of a steward to acknowledge receipt of the form in behalf of the employee.

2. The employee charged has three days from receipt of the REQUEST FOR EXPLANATION form to submit his written
explanation to the immediate superior. If no reply is given within the three-day limit, it is construed that the employee
has waived the due process requirement and is admitting his guilt.

3. In case the employee charged of the offense submits a written explanation, the immediate superior together with
the HRD representatives shall conduct an investigation. During the investigation the employee charged may challenge
43

the statement of any witness to rebut any evidence presented against him. The proceedings of the investigation must
be recorded.

4. If it is indeed proven that the employee is guilty of the offense, the appropriate penalty will be given based on the
existing table of penalties for offenses. The immediate superior will fill up the CORRECTIVE MEMO form in four copies.
xxx In case of suspensions Accounting Department will be duly advised and suspension dates reflected in the
employee’s time-sheet, time-card or location sheet.

5. As much as possible, the immediate superior shall discuss with the employee the decision made regarding the
offense.

HRD will be conducting a briefing with individual departnmemt heads to ensure proper implementation of these
procedures. xxx"

Petitioner has theorized that the abovecited August 29, 1988 memorandum supersedes the April 10, 1984
memorandum which expressly indicated the supervisory nature of the immediate supervisors’ job. That the 1988
memorandum vested in the supervisory employees the power to discipline their subordinates is the bone of its
contention. It is averred that by virtue of the August 29, 1988 memorandum, the immediate supervisors became
managerial employees, and therefore, not entitled to participate in the certification election.

We are not persuaded by petitioner’s stance. A conscientious scrutiny of the August 29, 1988 memorandum reveals
that nothing therein alters the nature of the duty of the members of SECCSUN from supervisory to managerial. The
duty to conduct a preliminary investigation with the HRD representatives, in the memorandum in question, is a mere
reiteration of the same duty stated in paragraph four (4) of the April 10, 1984 company memorandum of petitioner.

As to who ultimately determines the guilt of the erring employee, the 1988 memorandum is silent. Paragraph four (4)
thereof merely states that: "If it is indeed proven that the employee is guilty of the offense, the appropriate penalty
will be given based on the existing table of penalties for offenses. The immediate superior will fill up the corrective
memo in four copies." There is thus no sufficient basis for a conclusion that the memorandum of 1988 divested the
Personnel Manager and the Resident Manager of their power to review the results of the preliminary investigation
conducted by the immediate superiors. To conclude other wise would be to bargain away the mandate of the
Constitution, to wit:

"Sec. 8. The right of the people, including those employed in the public and private sectors, to form unions x x x for
purposes not contrary to law shall not be abridged."21 [Sec. 8, Art. III, 1987 Constitution.]

"Sec. 3. The state shall afford full protection to labor x x x

It shall guarantee the rights of workers to self-organization, collective bargaining, and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law. x x x"22 [Sec. 3, Art. XIII, 1987
Constitution.]

The claim of petitioner that the Memorandum of 1988 lodged on the supervisors the ultimate prerogative to determine
the guilt of the erring employee and to impose the penalty on him without an express grant of such power in the same
memorandum relied upon by the petitioner, creates a doubt as to the true status of the employees in the case. This
doubt militates against petitioner’s stand. Time honored is the rule that in interpreting the Constitution and labor laws
or rules and regulations implementing the constitutional mandate, the Court has always adopted the liberal approach
which favors the exercise of labor rights.23 [Adamson vs. CIR, 127 SCRA 268, p. 272.]

In the case at bar, the members of SECCSUN should be declared as they are so referred supervisory employees. This
finding accords with the intention of the lawmakers in enacting Republic Act 6715 to revive the existence of the
nomenclature of employees referred to as "supervisory employees" and their corresponding right to unionize among
themselves. Article 245 of the Labor Code, as amended by Republic Act 6715, states:

"Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees.
Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not
be eligible for membership in labor organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own."

It is indeed decisively clear that the existence of supervisory employees and their corresponding right to organize
under the Industrial Peace Act as been revived under the amendment so introduced by Republic Act 6715.24
[Pagkakaisa na mga Manggagawa sa Triumph International vs. Pura Ferrer Calleja, January 17, 1990, 181 SCRA 119.]

This noble objective of the lawmakers should not be defeated. To declare the members of SECCSUN as managerial
employees amidst the doubtful ratiocination by petitioner would be to deprive them of their constitutional right to self-
organization.

To substantiate petitioner’s submission that the August 29, 1988 memorandum (which allegedly vested in the
supervisory employees the power to discipline their subordinates) has actually been implemented by the petitioner,
copies of the standard form of the company disciplinary memoranda were presented. A sample25 [Rollo, p. 34.] of
said memoranda showing the disciplinary sanction imposed by E. A. Lapinig in his capacity as "immediate supervisor"
has been attached to the petition. Pertinent portion thereof, reads:

"In view of the above and in accordance with rules, we shall impose on you the following penalty:
44

[x] REPRIMAND for committing the stated infraction.

[ ] SUSPENSION for ______ days without pay commencing on _________________ to _______________________

[ ] _____________________________

Please be informed that this is your _________ offense. Repetition of the same will subject you to a graver penalty if
not dismissal."

E. A. LAPINIG
Immediate Supervisor

The aforequoted memorandum fails to convince the court that the power to discipline erring employees is vested in
their immediate supervisor. True it is, the immediate supervisor’s signature appears on the said memorandum. But
other than this, it cannot further be inferred therefrom that it is the immediate supervisor’s sole power to decide the
fate of erring employees and to impose on them the prescribed penalty. That the immediate supervisors’ disciplinary
action is not subject to review by the Personnel Manager and the Resident Manager is not provided by the aforestated
disciplinary memorandum.

As regards the July 30, 1990 memorandum, entitled "Policy Empowering All The Junior Staff/Supervisors In The
Company To Discipline The Erring Employees Under Them," the court agrees with the following observation of the
Solicitor General, to wit:

"It will be noted that if indeed it were true, as claimed by petitioner, that is memorandum of 10 April 1984 had
already been repealed by that of 29 August 1988, why should there be a need for its (memorandum of 10 April 1984)
express repeal by another memorandum (of 30 August 1990)?

Moreover, even the title/subject of the latest memorandum ("Policy Empowering All The Junior Staff/Supervisors In
The Company To Discipline The Erring Employees Under Them") indicates petitioner’s tacit admission of the fact that
prior to 30 August 1990 memorandum and therefore even at the time of the questioned decision of the Secretary of
Labor on 30 July 1990 the company supervisors were not vested with the power to discipline"26 [Rollo, pp. 202-203.]

WHEREFORE, the petition is hereby DISMISSED for lack of merit; the Temporary Restraining Order of February 13,
1989 LIFTED and the July 30, 1990 Decision of the Honorable Secretary of Labor and affirmatory Orders, dated
August 21, 1990 and September 19, 1990, respectively, AFFIRMED in toto. No pronouncement as to costs.

SO ORDERED.

Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.


Romero (Chairman), J., abroad on official business.

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([1999V465] SEMIRARA COAL CORPORATION, petitioner, vs. HON. SECRETARY OF LABOR, SEMIRARA COAL
CORPORATION SUPERVISORY UNION (SECCSUN) and SEMIRARA COAL CORPORATION UNION OF NON-MANAGERIAL
EMPLOYEES (SCCUNME), respondents., G.R. No. 95405, 1999 Jun 29, 3rd Division)

/---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---\

BENJAMIN VICTORIANO, plaintiff-appellee, vs. ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE
FACTORY, INC., defendants, ELIZALDE ROPE WORKERS' UNION, defendant-appellant.1974 September
12En BancG.R. No. L-25246PART I/4

DECISION

ZALDIVAR, J:

Appeal to this Court on purely questions of law from the decision of the Court of First Instance of Manila in its Civil
Case No. 58894.

The undisputed facts that spawned the instant case follow:

Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the "Iglesia ni
Cristo", had been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as Company) since 1958. As
such employee, he was a member of the Elizalde Rope Workers' Union (hereinafter referred to as Union) which had
with the Company a collective bargaining agreement containing a closed shop provision which reads as follows:
45

"Membership in the Union shall he required as a condition of employment for all permanent employees workers
covered by this Agreement."

The collective bargaining agreement expired on March 3, 1964 but was renewed the following day, March 4, 1964.

Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No. 3350, the
employer was not precluded "from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative of the employees." On June 18,
1961, however, Republic Act No. 3350 was enacted, introducing an amendment to paragraph (4) subsection (a) of
section 4 of Republic Act No. 875, as follows: . . . "but such agreement shall not cover members of any religious sects
which prohibit affiliation of their members in any such labor organization".

Being a member of a religious sect that prohibits the affiliation of its members with any labor organization, Appellee
presented his resignation to appellant Union in 1962, and when no action was taken thereon, he reiterated his
resignation on September 3, 1974.
Thereupon, the Union wrote a formal letter to the Company asking the latter to separate Appellee from the service in
view of the fact that he was resigning from the Union as a member. The management of the Company in turn notified
Appellee and his counsel that unless the Appellee could achieve a satisfactory arrangement with the Union, the
Company would be constrained to dismiss him from the service. This prompted Appellee to file an action for
injunction, docketed as Civil Case No. 58894 in the Court of First Instance of Manila to enjoin the Company and the
Union from dismissing Appellee. 1 In its answer, the Union invoked the "union security clause" of the collective
bargaining agreement; assailed the constitutionality of Republic Act No. 3350; and contended that the Court had no
jurisdiction over the case, pursuant to Republic Act No. 875, Sections 24 and 9 (d) and (e). 2 Upon the facts agreed
upon by the parties during the pre-trial conference, the Court a quo rendered its decision on August 26, 1965, the
dispositive portion of which reads:

"IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant Elizalde Rope Factory, Inc. from
dismissing the plaintiff from his present employment and sentencing the defendant Elizalde Rope Workers' Union to
pay the plaintiff P500 for attorney's fees and the costs of this action." 3

From this decision, the Union appealed directly to this Court on purely questions of law, assigning the following errors:

"I. That the lower court erred when it did not rule that Republic Act No. 3350 is unconstitutional.

"II. That the lower court erred when it sentenced appellant herein to pay plaintiff the sum of P500 as attorney's fees
and the cost thereof."

In support of the alleged unconstitutionality of Republic Act No. 3350, the Union contented, firstly, that the Act
infringes on the fundamental right to form lawful associations; that "the very phraseology of said Republic Act 3350,
that membership in a labor organization is banned to all those belonging to such religious sect prohibiting affiliation
with any labor organization" 4 , "prohibits all the members of a given religious sect from joining any labor union if
such sect prohibits affiliations of their members thereto" 5 ; and, consequently, deprives said members of their
constitutional right to form or join lawful associations or organizations guaranteed by the Bill of Rights, and thus
becomes obnoxious to Article III, Section 1 (6) of the 1935 Constitution. 6

Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for impairing the obligation of contracts
in that, while the Union is obliged to comply with its collective bargaining agreement containing a "closed shop
provision," the Act relieves the employer from its reciprocal obligation of cooperating in the maintenance of union
membership as a condition of employment; and that said Act, furthermore, impairs the Union's rights as it deprives
the union of dues from members who, under the Act, are relieved from the obligation to continue as such members.
7

Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors those religious sects which ban their
members from joining labor unions, in violation of Article III, Section 1 (7) of the 1935 Constitution; and while said
Act unduly protects certain religious sects, it leaves no rights or protection to labor organizations. 8

Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional provision that "no religious test shall
be required for the exercise of a civil right," in that the laborer's exercise of his civil right to join associations for
purposes not contrary to law has to be determined under the Act by his affiliation with a religious sect; that
conversely, if a worker has to sever his religious connection with a sect that prohibits membership in a labor
organization in order to be able to join a labor organization, said Act would violate religious freedom. 9

Fifthly, the Union contended that Republic Act No. 3350, violates the "equal protection of laws" clause of the
Constitution, it being a discriminatory legislation, inasmuch as by exempting from the operation of closed shop
agreement the members of the "Iglesia ni Cristo", it has granted said members undue advantages over their fellow
workers, for while the Act exempts them from union obligation and liability, it nevertheless entitles them at the same
time to the enjoyment of all concessions, benefits and other emoluments that the union might secure from the
employer. 10

Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional provision regarding the promotion
of social justice. 11

Appellant Union, furthermore, asserted that a "closed shop provision" in a collective bargaining agreement cannot be
considered violative of religious freedom, as to call for the amendment introduced by Republic Act No. 3350; 12 and
that unless Republic Act No. 3350 is declared unconstitutional, trade unionism in this country would be wiped out as
46

employers would prefer to hire or employ members of the Iglesia ni Cristo in order to do away with labor
organizations. 13

Appellee, assailing appellant's arguments, contended that Republic Act No. 3350 does not violate the right to form
lawful associations, for the right to join associations includes the right not to join or to resign from a labor
organization, if one's conscience does not allow his membership therein, and the Act has given substance to such right
by prohibiting the compulsion of workers to join labor organizations; 14 that said Act does not impair the obligation
of contracts for said law formed part of, and was incorporated into, the terms of the closed shop agreement; 15 that
the Act does not violate the establishment of religion clause or separation of Church and State, for Congress, in
enacting said law, merely accommodated the religious needs of those workers whose religion prohibits its members
from joining labor unions, and balanced the collective rights of organized labor with the constitutional right of an
individual to freely exercise his chosen religion; that the constitutional right to the free exercise of one's religion has
primacy and preference over union security measures which are merely contractual 16 ; that said Act does not
violate the constitutional provision of equal protection, for the classification of workers under the Act depending on
their religious tenets is based on substantial distinction, is germane to the purpose of the law, and applies to all the
members of a given class; 17 that said Act, finally, does not violate the social justice policy of the Constitution, for
said Act was enacted precisely to equalize employment opportunities for all citizens in the midst of the diversities of
their religious beliefs. 18

I. Before We proceed to the discussion of the first assigned error, it is necessary to premise that there are some
thoroughly established principles which must be followed in all cases where questions of constitutionality as obtains in
the instant case are involved. All presumptions are indulged in favor of constitutionality; one who attacks a statute,
alleging unconstitutionality must prove its invalidity beyond a reasonable doubt; that a law may work hardship does
not render it unconstitutional; that if any reasonable basis may be conceived which supports the statute, it will be
upheld, and the challenger must negate all possible bases; that the courts are not concerned with the wisdom, justice,
policy, or expediency of a statute; and that a liberal interpretation of the constitution in favor of the constitutionality
of legislation should be adopted. 19

1. Appellant Union's contention that Republic Act No. 3350 prohibits and bans the members of such religious sects
that forbid affiliation of their members with labor unions from joining labor unions appears nowhere in the wording of
Republic Act No. 3350; neither can the same be deduced by necessary implication therefrom. It is not surprising,
therefore, that appellant, having thus misread the Act, committed the error of contending that said Act is obnoxious to
the constitutional provision on freedom of association.

Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1 (6) of Article III of the
Constitution of 1935, as well as Section 7 of Article n of the Constitution of 1973, provide that the right to form
associations or societies for purposes not contrary to law shall not be abridged. Section 3 of Republic Act No. 875
provides that employees shall have the right to self-organization and to form, join or assist labor organizations of their
own choosing for the purpose of collective bargaining and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection. What the Constitution and the Industrial Peace Act recognize
and guarantee is the "right" to form or join associations. Notwithstanding the different theories propounded by the
different schools of jurisprudence regarding the nature and contents of a "right", it can be safely said that whatever
theory one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i e., the
absence of legal restraint, whereby an employee may act for himself without being prevented by law; and second,
power, whereby an employee may, as he pleases, join or refrain from joining an association. It is, therefore, the
employee who should decide for himself whether he should join or not an association; and should he choose to join,
he himself makes up his mind as to which association he would join; and even after he has joined, he still retains the
liberty and the power to leave and cancel his membership with said organization at any time. 20 It is clear,
therefore, that the right to join a union includes the right to abstain from joining any union. 21 Inasmuch as what
both the Constitution and the Industrial Peace Act have recognized, and guaranteed to the employee, is the "right" to
join associations of his choice, it would be absurd to say that the law also imposes, in the same breath, upon the
employee the duty to join associations. The law does not enjoin an employee to sign up with any association.

The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however,
limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a
labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only
members of the collective bargaining union, and the employees must continue to be members of the union for the
duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its
amendment by Republic Act No. 3350, provides that although it would be an unfair labor practice for an employer "to
discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or
discourage membership in any labor organization" the employer is, however, not precluded "from making an
agreement with a labor organization to require as a condition of employment membership therein, if such labor
organization is the representative of the employees". By virtue, therefore, of a closed shop agreement, before the
enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes to be employed or to
keep his employment, he must become a member of the collective bargaining union. Hence, the right of said
employee not to join the labor union is curtailed and withdrawn.

To that all embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an exception, when
it added to Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but such agreement shall not cover
members of any religious sects which prohibit affiliation of their members in any such labor organization". Republic
Act No. 3350 merely excludes ipso jure from the application and coverage of the closed shop agreement the
employees belonging to any religious sects which prohibit affiliation of their members with any labor organization.
What the exception provides, therefore, is that members of said religious sects cannot be compelled or coerced to join
labor unions even when said unions have closed shop agreements with the employers; that in spite of any closed shop
agreement, members of said religious sects cannot be refused employment or dismissed from their jobs on the sole
47

ground that they are not members of the collective bargaining union. It is clear, therefore, that the assailed Act, far
from infringing the constitutional provision on freedom of association, upholds and reinforces it. It does not prohibit
the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and
the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of
said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious
faith, they refuse to sign up, they can do so; the law does not coerce them to join; neither does the law prohibit them
from joining; and neither may the employer or labor union compel them to join. Republic Act No. 3350, therefore,
does not violate the constitutional provision on freedom of association.

2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its contract,
specifically, the "union security clause" embodied in its Collective Bargaining Agreement with the Company, by virtue
of which "membership in the union was required as a condition for employment for all permanent employees
workers". This agreement was already in existence at the time Republic Act No. 3350 was enacted of June 18, 1961,
and it cannot, therefore, be deemed to have been incorporated into the agreement. But by reason of this amendment,
Appellee, as well as others similarly situated, could no longer be dismissed from his job even if he should cease to be
a member, or disaffiliate from the Union, and the Company could continue employing him notwithstanding his
disaffiliation from the Union. The Act, therefore, introduced a change into the express terms of the union security
clause; the Company was partly absolved by law from the contractual obligation it had with the Union of employing
only Union members in permanent positions. It cannot be denied, therefore, that there was indeed an impairment of
said union security clause.

According to Black, any statute which introduces a change into the express terms of the contract, or its legal
construction, or its validity, or its discharge, or the remedy for its enforcement, impairs the contract. The extent of the
change is not material. It is not a question of degree or manner or cause, but of encroaching in any respect on its
obligation or dispensing with any part of its force. There is an impairment of the contract if either party is absolved by
law from its performance. 22 Impairment has also been predicated on laws which, without destroying contracts,
derogate from substantial contractual rights. 23

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and
unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the details. The
prohibition is not to be read with literal exactness like a mathematical formula, for it prohibits unreasonable
impairment only. 24 In spite of the constitutional prohibition, the State continues to possess authority to safeguard
the vital interests of its people. Legislation appropriate to safeguarding said interests may modify or abrogate
contracts already in effect. 25 For not only are existing laws read into contracts in order to fix the obligations as
between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a
postulate of the legal order. All contracts made with reference to any matter that is subject to regulation under the
police power must be understood as made in reference to the possible exercise of that power. 26 Otherwise,
important and valuable reforms may be precluded by the simple device of entering into contracts for the purpose of
doing that which otherwise may be prohibited. The policy of protecting contracts against impairment presupposes the
maintenance of a government by virtue of which contractual relations are worthwhile a government which retains
adequate authority to secure the peace and good order of society. The contract clause of the Constitution must,
therefore, be not only in harmony with, but also in subordination to, in appropriate instances, the reserved power of
the state to safeguard the vital interests of the people. It follows that not all legislations, which have the effect of
impairing a contract, are obnoxious to the constitutional prohibition as to impairment, and a statute passed in the
legitimate exercise of police power, although it incidentally destroys existing contract rights, must be upheld by the
courts. This has special application to contracts regulating relations between capital and labor which are not merely
contractual, and said labor contracts, for being impressed with public interest, must yield to the common good. 27

In several occasions this Court declared that the prohibition against impairing the obligations of contracts has no
application to statutes relating to public subjects within the domain of the general legislative powers of the state
involving public welfare. 28 Thus, this Court also held that the Blue Sunday Law was not an infringement of the
obligation of a contract that required the employer to furnish work on Sundays to his employees, the law having been
enacted to secure the well-being and happiness of the laboring class, and being, furthermore, a legitimate exercise of
the police power. 29
In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging yardstick,
applicable at all times and under all circumstances, by which the validity of each statute may be measured or
determined, has been fashioned, but every case must be determined upon its own circumstances. Legislation
impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general good of the
people, and when the means adopted to secure that end are reasonable. Both the end sought and the means adopted
must be legitimate, i.e., within the scope of the reserved power of the state construed in harmony with the
constitutional limitation of that power. 30

What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure freedom of
belief and religion, and to promote the general welfare by preventing discrimination against those members of
religious sects which prohibit their members from joining labor unions, confirming thereby their natural, statutory and
constitutional right to work, the fruits of which work are usually the only means whereby they can maintain their own
life and the life of their dependents. It cannot be gainsaid that said purpose is legitimate.

The questioned Act also provides protection to members of said religious sects against two aggregates of group
strength from which the individual needs protection. The individual employee, at various times in his working life, is
confronted by two aggregates of power collective labor, directed by a union, and collective capital, directed by
management. The union, an institution developed to organize labor into a collective force and thus protect the
individual employee from the power of collective capital, is, paradoxically, both the champion of employee rights, and
a new source of their frustration. Moreover, when the Union interacts with management, it produces yet a third
aggregate of group strength from which the individual also needs protection the collective bargaining relationship. 31
48

The aforementioned purpose of the amendatory law is clearly seen in the Explanatory Note to House Bill No. 5859,
which later became Republic Act No. 3350, as follows:
"It would be unthinkable indeed to refuse employing a person who, on account of his religious beliefs and convictions,
cannot accept membership in a labor organization although he possesses all the qualifications for the job. This is
tantamount to punishing such person for believing in a doctrine he has a right under the law to believe in. The law
would not allow discrimination to flourish to the detriment of those whose religion discards membership in any labor
organization, Likewise, the law would not commend the deprivation of their right to work and pursue a modest means
of livelihood, without in any manner violating their religious faith and/or belief." 32

It cannot be denied, furthermore, that the means adopted by the Act to achieve that purpose exempting the
members of said religious sects from coverage of union security agreements is reasonable.

It may not be amiss to point out here that the free exercise of religious profession or belief is superior to contract
rights. In case of conflict, the latter must, therefore, yield to the former. The Supreme Court of the United States has
also declared on several occasions that the rights in the First Amendment, which include freedom of religion, enjoy a
preferred position in the constitutional system. 33 Religious freedom, although not unlimited, is a fundamental
personal right and liberty, 34 and has a preferred position in the hierarchy of values. Contractual rights, therefore,
must yield to freedom of religion. It is only where unavoidably necessary to prevent an immediate and grave danger
to the security and welfare of the community that infringement of religious freedom may be justified, and only to the
smallest extent necessary to avoid the danger.

3. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union averred that
said Act discriminates in favor of members of said religious sects in violation of Section 1(7) of Article III of the 1935
Constitution, and which is now Section 8 of Article 8 of the 1973 Constitution, which provides:

"No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free
exercise and enjoyment of religious profession and worship, without. discrimination and preference, shall forever be
allowed. No religious test shall be required for the exercise of civil or political rights."

The constitutional provision not only prohibits legislation for the support of any religious tenets or the modes of
worship of any sect, thus forestalling compulsion by law of the acceptance of any creed or the practice of any form of
worship, 35 but also assures the free exercise of one's chosen form of religion within limits of utmost amplitude. It
has been said that the religion clauses of the Constitution are all designed to protect the broadest possible liberty of
conscience, to allow each man to believe as his conscience directs, to profess his beliefs, and to live as he believes he
ought to live, consistent with the liberty of others and with the common good. 36 Any legislation whose effect or
purpose is to impede the observance of one or all religions, or to discriminate invidiously between the religions, is
invalid, even though the burden may be characterized as being only indirect. 37 But if the stage regulates conduct
by enacting, within its power, a general law which has for its purpose and effect to advance the state's secular goals,
the statute is valid despite its indirect burden on religious observance, unless the state can accomplish its purpose
without imposing such burden. 38

In Aglipay v. Ruiz 39 , this Court had occasion to state that the government should not be precluded from pursuing
valid objectives secular ID character even if the incidental result would be favorable to a religion or sect. It has
likewise been held that the statute, in order to withstand the strictures of constitutional prohibition, must have a
secular legislative purpose and a primary effect that neither advances nor inhibits religion. 40 Assessed by these
criteria, Republic Act No. 3350 cannot be said to violate the constitutional inhibition of the "no-establishment" (of
religion) clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual or religious or holy and eternal.
It was intended to serve the secular purpose of advancing the constitutional right to the free exercise of religion, by
averting that certain persons be refused work, or be dismissed from work, or be dispossessed of their right to work
and of being impeded to pursue a modest means of livelihood, by reason of union security agreements. To help its
citizens to find gainful employment whereby they can make a living to support themselves and their families is a valid
objective of the state. In fact, the state is enjoined, in the 1935 Constitution, to afford protection to labor, and
regulate the relations between labor and capital and industry. 41 More so now in the 1973 Constitution where it is
mandated that "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 relation between workers and
employers." 42
The primary effects of the exemption from closed shop agreements in favor of members of religious sects that prohibit
their members from affiliating with a labor organization, is the protection of said employees against the aggregate
force of the collective bargaining agreement, and relieving certain citizens of a burden on their religious beliefs; and
by eliminating to a certain extent economic insecurity due to unemployment, which is a serious menace to the health,
morals, and welfare of the people of the State, the Act also promotes the well-being of society. It is our view that the
exemption from the effects of closed shop agreement does not directly advance, or diminish, the interests of any
particular religion. Although the exemption may benefit those who are members of religious sects that prohibit their
members from joining labor unions, the benefit upon the religious sects is merely incidental and indirect. The
"establishment clause" (of religion) does not ban regulation on conduct whose reason or effect merely happens to
coincide or harmonize with the tenets of some or all religions. 43 The free exercise clause of the Constitution has
been interpreted to require that religious exercise be preferentially aided. 44

We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit of the constitutional
provision. It acted merely to relieve the exercise of religion, by certain persons, of a burden that is imposed by union
security agreements. It was Congress itself that imposed that burden when it enacted the Industrial Peace Act
(Republic Act 875), and, certainly, Congress, if it so deems advisable, could take away the same burden. It is certain
that not every conscience can be accommodated by all the laws of the land; but when general laws conflict with
49

scrupples of conscience, exemptions ought to be granted unless some "compelling state interest" intervenes. 45 In
the instant case, We see no such compelling state interest to withhold exemption.

Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it leaves no right to,
and is silent as to the protection of, labor organizations. The purpose of Republic Act No. 3350 was not to grant rights
to labor unions. The rights of labor unions are amply provided for in Republic Act No. 875 and the new Labor Code. As
to the lamented silence of the Act regarding the rights and protection of labor unions, suffice it to say, first, that the
validity of a statute is determined by its provisions, not by its silence 46 ; and, second, the fact that the law may
work hardship does not render it unconstitutional. 47

It would not be amiss to state, regarding this matter, that to compel persons to join and remain members of a union
to keep their jobs in violation of their religious scrupples, would hurt, rather than help, labor unions. Congress has
seen it fit to exempt religious objectors lest their resistance spread to other workers, for religious objections have
contagious potentialities more than political and philosophic objections.
Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori to a labor union -
assuming that such unity and loyalty can be attained through coercion is not a goal that is constitutionally obtainable
at the expense of religious liberty. 48 A desirable end cannot be promoted by prohibited means.

4. Appellants' fourth contention, that Republic Act No. 3350 violates the constitutional prohibition against requiring a
religious test for the exercise of a civil right or a political right, is not well taken. The Act does not require as a
qualification, or condition, for joining any lawful association membership in any particular religion or in any religious
sect; neither does the Act require affiliation with a religious sect that prohibits Its members from joining a labor union
as a condition or qualification for withdrawing from a labor union. Joining or withdrawing from a labor union requires a
positive act. Republic Act No. 3350 only exempts members with such religious affiliation from the coverage of closed
shop agreements. So, under this Act, a religious objector is not required to do a positive act to exercise the right to
join or to resign from the union. He is exempted ipso jure without need of any positive act on his part. A conscientious
religious objector need not perform a positive act or exercise the right of resigning from the labor union he is
exempted from the coverage of any closed shop agreement that a labor union may have entered into. How then can
there be a religious test required for the exercise of a right when no right need be exercised?

We have said that it was within the police power of the State to enact Republic Act No. 3350, and that its purpose was
legal and in consonance with the Constitution. It is never an illegal evasion of a constitutional provision or prohibition
to accomplish a desired result, which is lawful in itself, by discovering or following a legal way to do it. 49

5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation, inasmuch as it grants
to the members of certain religious sects undue advantages over other workers, thus violating Section 1 of Article III
of the 1935 Constitution which forbids the denial to any person of the equal protection of the laws. 50

The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all
citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against
inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes
does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which
are different in fact be treated in law as though they were the same. The equal protection clause does not forbid
discrimination as to things that are different. 51 It does not prohibit legislation which is limited either in the object to
which it is directed or by the territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other
departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one
another in certain particulars. A law is not invalid because of simple inequality. 52 The very idea of classification is
that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter
of constitutionality. 53 All that is required of a valid classification is that it be reasonable, which means that the
classification should be based on substantial distinctions which make for real differences; that it must be germane to
the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each
member of the class. 54 This Court has held that the standard is satisfied if the classification or distinction is based
on a reasonable foundation or rational basis and is not palpably arbitrary. 55

In the exercise of its power to make classifications for the purpose of enacting laws over matters within its
jurisdiction, the state is recognized as enjoying a wide range of discretion. 56 It is not necessary that the
classification be based on scientific or marked differences of things or in their relation. 57 Neither is it necessary that
the classification be made with mathematical nicety. 58 Hence legislative classification may in many cases properly
rest on narrow distinctions, 59 for the equal protection guaranty does not preclude the legislature from recognizing
degrees of evil or harm, and legislation is addressed to evils as they may appear.

We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act classifies employees and
workers, as to the effect and coverage of union shop security agreements, into those who by reason of their religious
beliefs and convictions cannot sign up with a labor union, and those whose religion does not prohibit membership in
labor unions. The classification rests on real or substantial, not merely imaginary or whimsical, distinctions. There is
such real distinction in the beliefs, feelings and sentiments of employees. Employees do not believe in the same
religious faith and different religions differ in their dogmas and cannons. Religious beliefs, manifestations and
practices, though they are found in all places, and in all times, take so many varied forms as to be almost beyond
imagination. There are many views that comprise the broad spectrum of religious beliefs among the people. There are
diverse manners in which beliefs, equally paramount in the lives of their possessors, may be articulated. Today the
country is far more heterogenous in religion than before, differences in religion do exist, and these differences are
important and should not be ignored.
50

Even from the psychological point of view, the classification is based on real and important differences. Religious
beliefs are not mere beliefs, mere ideas existing only in the mind, for they carry with them practical consequences and
are the motives of certain rules of human conduct and the justification of certain acts. 60 Religious sentiment makes
a man view things and events in their relation to his God. It gives to human life its distinctive-character, its tone, its
happiness, or unhappiness, its enjoyment or irksomeness. Usually, a strong and passionate desire is involved in a
religious belief. To certain persons, no single factor of their experience is more important to them than their religion,
or their not having any religion. Because of differences in religious belief and sentiments, a very poor person may
consider himself better than the rich, and the man who even lacks the necessities of life may be more cheerful than
the one who has all possible luxuries. Due to their religious beliefs people, like the martyrs, became resigned to the
inevitable and accepted cheerfully even the most painful and excruciating pains. Because of differences in religious
beliefs, the world has witnessed turmoil, civil strife, persecution, hatred, bloodshed and war, generated to a large
extent by members of sects who were intolerant of other religious beliefs. The classification, introduced by Republic
Act No. 3350, therefore, rests on substantial distinctions.

The classification introduced by said Act is also germane to its purpose. The purpose of the law is precisely to avoid
those who cannot, because of their religious belief, join labor unions, from being deprived of their right to work and
from being dismissed from their work because of union shop security agreements.

Republic Act No. 3350, furthermore, is not limited in its application to conditions existing at the time of its enactment.
The law does not provide that it is to be effective for a certain period of time only. It is intended to apply for all times
as long as the conditions to which the law is applicable exist. As long as there are closed shop agreements between an
employer and a labor union, and there are employees who are prohibited by their religion from affiliating with labor
unions, their exemption from the coverage of said agreements continues.

Finally, the Act applies equally to all members of said religious sects; this is evident from its provision.

The fact that the law grants a privilege to members of said religious sects cannot by itself render the Act
unconstitutional, for as We have adverted to, the Act only restores to them their freedom of association which closed
shop agreements have taken away, and puts them in the same plane as the other workers who are not prohibited by
their religion from joining labor unions. The circumstance, that the other employees, because they are differently
situated, are not granted the same privilege, does not render the law unconstitutional, for every classification allowed
by the Constitution by its nature involves inequality.

The mere fact that the legislative classification may result in actual inequality is not violative of the right to equal
protection, for every classification of persons or things for regulation by law produces inequality in some degree, but
the law is not thereby rendered invalid. A classification otherwise reasonable does not offend the constitution simply
because in practice it results in some inequality. 61 Anent this matter, it has been said that whenever it is apparent
from the scope of the law that its object is for the benefit of the public and the means by which the benefit is to be
obtained are of public character, the law will be upheld even though incidental advantage may occur to individuals
beyond those enjoyed by the general public. 62

6. Appellant's further contention that Republic Act No. 3350 violates the constitutional provision on social justice is
also baseless. Social justice is intended to promote the welfare of all the people. 63 Republic Act No. 3350 promotes
that welfare insofar as it looks after the welfare of those who, because of their religious belief, cannot join labor
unions; the Act prevents their being deprived of work and of the means of livelihood. In determining whether any
particular measure is for public advantage, it is not necessary that the entire state be directly benefited it is sufficient
that a portion of the state be benefited thereby.

Social justice also means the adoption by the Government of measures calculated to insure economic stability of all
component elements of society, through the maintenance of a proper economic and social equilibrium in the inter-
relations of the members of the community. 64 Republic Act No. 3350 insures economic stability to the members of
a religious sect, like the Iglesia ni Cristo, who are also component elements of society, for it insures security in their
employment, notwithstanding their failure to join a labor union having a closed shop agreement with the employer.
The Act also advances the proper economic and social equilibrium between labor unions and employees who cannot
join labor unions, for it exempts the latter from the compelling necessity of joining labor unions that have closed shop
agreements, and equalizes, in so far as opportunity to work is concerned, those whose religion prohibits membership
in labor unions with those whose religion does not prohibit said membership. Social justice does not imply social
equality, because social inequality will always exist as long as social relations depend on personal or subjective
proclivities. Social justice does not require legal equality because legal equality, being a relative term, is necessarily
premised on differentiations based on personal or natural conditions. 65 Social justice guarantees equality of
opportunity 66 , and this is precisely what Republic Act No. 3350 proposes to accomplish it gives laborers,
irrespective of their religious scrupples, equal opportunity for work.

7. As its last ground, appellant contends that the amendment introduced by Republic Act No. 3350 is not called for -
in other words, the Act is not proper, necessary or desirable. Anent this matter, it has been held that a statute which
is not necessary is not, for that reason, unconstitutional; that in determining the constitutional validity of legislation,
the courts are unconcerned with issues as to the necessity for the enactment of the legislation in question. 67 Courts
do inquire into the wisdom of laws. 68
Moreover, legislatures, being chosen by the people, are presumed to understand and correctly appreciate the needs of
the people, and it may change the laws accordingly. 69 The fear is entertained by appellant that unless the Act is
declared unconstitutional, employers will prefer employing members of religious sects that prohibit their members
from joining labor unions, and thus be a fatal blow to unionism. We do not agree. The threat to unionism will depend
on the number of employees who are members of the religious sects that control the demands of the labor market.
But there is really no occasion now to go further and anticipate problems We cannot judge with the material now
51

before Us. At any rate, the validity of a statute is to be determined from its general purpose and its efficacy to
accomplish the end desired, not from its effects on a particular case. 70 The essential basis for the exercise of
power, and not a mere incidental result arising from its exertion, is the criterion by which the validity of a statute is to
be measured. 71

II. We now pass on the second assignment of error, in support of which the Union argued that the decision of the
trial court ordering the Union to pay P500 for attorney's fees directly contravenes Section 24 of Republic Act No. 875,
for the instant action involves an industrial dispute wherein the Union was a party, and said Union merely acted in the
exercise of its rights under the union shop provision of its existing collective bargaining contract with the Company;
that said order also contravenes Article 2208 of the Civil Code; that, furthermore, Appellee was never actually
dismissed by the defendant Company and did not therefore suffer any damage at all. 72

In refuting appellant Union's arguments, Appellee claimed that in the instant case there was really no industrial
dispute involved in the attempt to compel Appellee to maintain its membership in the union under pain of dismissal,
and that the Union, by its act, inflicted intentional harm on Appellee; that since Appellee was compelled to institute an
action to protect his right to work, appellant could legally be ordered to pay attorney's fees under Articles 1704 and
2208 of the Civil Code. 73

The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by appellant provides that:

"No suit, action or other proceedings shall he maintainable in any court against a labor organization or any officer or
member thereof for any act done by or on behalf of such organization in furtherance of an industrial dispute to which
it is a party, on the ground only that such act induces some other person to break a contract of employment or that it
is in restraint of trade or interferes with the trade, business or employment of some other person or with the right of
some other person to dispose of his capital or labor."

That there was a labor dispute in the instant case cannot be 'disputed for appellant sought the discharge of
respondent by virtue of the closed shop agreement and under Section 2 (j) of Republic Act No. 875 a question
involving tenure of employment is included in the term "labor dispute". 74 The discharge or the act of seeking it is
the labor dispute itself. It being the labor dispute itself, that very same act of the Union in asking the employer to
dismiss Appellee cannot be "an act done . . . in furtherance of an industrial dispute". The mere fact that appellant is a
labor union does not necessarily mean that all its acts are in furtherance of an industrial dispute. 75 Appellant Union,
therefore, cannot invoke in its favor Section 24 of Republic Act No. 875. This case is not intertwined with any unfair
labor practice case existing at the time when Appellee filed his complaint before the lower court.

Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its shield. The article provides that
attorney's fees and expenses of litigation may be awarded "when the defendant's act or omission has compelled the
plaintiff . . . to incur expenses to protect his interest"; and "in any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be recovered". In the instant case, it cannot be
gainsaid that appellant Union's act in demanding Appellee's dismissal caused Appellee to incur expenses to prevent his
being dismissed from his job. Costs according to Section 1, Rule 142, of the Rules of Court, shall be allowed as a
matter of course to the prevailing party.

WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26, 1965, of the Court of First Instance
of Manila, in its Civil Case No. 58894, appealed from is affirmed, with costs against appellant Union.

It is so ordered.
Makalintal, C.J., Castro, Teehankee, Barredo, Makasiar, Antonio, Esguerra, Muñoz Palma and Aquino, JJ., concur.
Fernandez, J., did not take part because he was co-author, when he was a Senator, of Rep. Act No. 3350.

/---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---\

BENJAMIN VICTORIANO, plaintiff-appellee, vs. ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY,
INC., defendants, ELIZALDE ROPE WORKERS' UNION, defendant-appellant.1974 September 12En BancG.R. No. L-
25246PART II/4

Separate Opinions

FERNANDO, J., concurring:

The decision arrived at unanimously by this Court that Republic Act No. 3350 is free from the constitutional infirmities
imputed to it was demonstrated in a manner well-nigh conclusive in the learned, scholarly, and comprehensive
opinion so typical of the efforts of the ponente, Justice Zaldivar. Like the rest of my brethren, I concur fully.
Considering moreover, the detailed attention paid to each and every objection raised as to its validity and the clarity
and persuasiveness with which it was shown to be devoid of support in authoritative doctrines, it would appear that
the last word has been written on this particular subject. Nonetheless, I deem it proper to submit this brief expression
of my views on the transcendent character of religious freedom 1 and its primacy even as against the claims of
protection to labor, 2 also one of the fundamental principles of the Constitution.

1. Religious freedom is identified with the liberty every individual possesses to worship or not a Supreme Being, and
if a devotee of any sect, to act in accordance with its creed. Thus is constitutionally safeguarded, according to Justice
Laurel, that "profession of faith to an active power that binds and elevates man to his Creator . . ." 3 The choice of
what a man wishes to believe in is his and his alone. That is a domain left untouched, where intrusion is not allowed, a
citadel to which the law is denied entry, whatever be his thoughts or hopes. In that sphere, what he wills reigns
supreme. The doctrine to which he pays fealty may for some be unsupported by evidence, devoid of rational
52

foundation. No matter. There is no requirement as to its conformity to what has found acceptance. It suffices that for
him such a concept holds undisputed sway. That is a recognition of man's freedom. That for him is one of the ways of
self-realization. It would be to disregard the dignity that attaches to every human being to deprive him of such an
attribute. The "fixed star on our constitutional constellation," to borrow the felicitous phrase of Justice Jackson, is that
no official, not excluding the highest, has it in his power to prescribe what shall be orthodox in matters of conscience
or to mundane affairs, for that matter.
Gerona v. Secretary of Education 4 speaks similarly. In the language of its ponente, Justice Montemayor: "The realm
of belief and creed is infinite and limitless bounded only by one's imagination and thought. So is the freedom of belief,
including religious belief, limitless and without bounds. One may believe in most anything, however strange, bizarre
and unreasonable the same may appear to others, even heretical when weighed in the scales of orthodoxy or doctrinal
standards." 5 There was this qualification though: "But between the freedom of belief and the exercise of said belief,
there is quite a stretch of road to travel. If the exercise of said religious belief clashes with the established institutions
of society and with the law, then the former must yield and give way to the latter. The Government steps in and
either restrains said exercise or even prosecutes the one exercising it." 6 It was on that basis that the daily
compulsory flag ceremony in accordance with a statute 7 was found free from the constitutional objection on the part
of a religious sect, the Jehovah's Witnesses, whose members alleged that their participation would be offensive to
their religious beliefs. In a case not dissimilar, West Virginia State Board of Education v. Barnette, 8 the American
Supreme Court reached a contrary conclusion. Justice Jackson's eloquent opinion is, for this writer, highly persuasive.
Thus: "The case is made difficult not because the principles of its decision are obscure but because the flag involved is
our own. Nevertheless, we apply the limitations of the Constitution with no fear that freedom to be intellectually and
spiritually diverse or even contrary will disintegrate the social organization. To believe that patriotism will not flourish
if patriotic ceremonies are voluntary and spontaneous instead of a compulsory routine is to make an unflattering
estimate of the appeal of our institutions to free minds. We can have intellectual individualism and the rich cultural
diversities that we owe to exceptional minds only at the price of occasional eccentricity and abnormal attitudes. When
they are so harmless to others or to the State as those we deal with here, the price is not too great. But freedom to
differ is not limited to things that do not matter much. That would be a mere shadow of freedom. The test of its
substance is the right to differ as to things that touch the heart of the existing order." 9

There is moreover this ringing affirmation by Chief Justice Hughes of the primacy of religious freedom in the forum of
conscience even as against the command of the State itself: "Much has been said of the paramount duty to the state,
a duty to be recognized, it is urged, even though it conflicts with convictions of duty to God. Undoubtedly that duty to
the state exists within the domain of power, for government may enforce obedience to laws regardless of scruples.
When one's belief collides with the power of the state, the latter is supreme within its sphere and submission or
punishment follows. But, in the forum of conscience, duty to a moral power higher than the state has always been
maintained. The reservation of that supreme obligation, as a matter of principle, would unquestionably be made by
many of our conscientious and law-abiding citizens. The essence of religion is belief in a relation to God involving
duties superior to those arising from any human relation." 10 The American Chief Justice spoke in dissent, it is true,
but with him in agreement were three of the foremost jurists who ever sat in that Tribunal, Justices Holmes, Brandeis,
and Stone.

2. As I view Justice Zaldivar's opinion in that light, my concurrence, as set forth earlier, is wholehearted and entire.
With such a cardinal postulate as the basis of our polity, it has a message that cannot be misread. Thus is intoned
with a reverberating clang, to paraphrase Cardozo, a fundamental principle that drowns all weaker sounds. The
labored effort to cast doubt on the validity of the statutory provision in question is far from persuasive. It is attended
by futility. It is not for this Court, as I conceive of the judicial function, to restrict the scope of a preferred freedom.

3. There is, however, the question of whether such an exception possesses an implication that lessens the
effectiveness of state efforts to protect labor, likewise, as noted, constitutionally ordained. Such a view, on the
surface, may not be lacking in plausibility, but upon closer analysis, it cannot stand scrutiny. Thought must be given
to the freedom of association, likewise an aspect of intellectual liberty. For the late Professor Howe, a constitutionalist
and in his lifetime the biographer of the great Holmes, it even partakes of the political theory of pluralistic
sovereignty. So great is the respect for the autonomy accorded voluntary societies. 11 Such a right implies at the
very least that one can determine for himself whether or not he should join or refrain from joining a labor
organization, an institutional device for promoting the welfare of the working man. A closed shop, on the other hand,
is inherently coercive. That is why, as is unmistakably reflected in our decisions, the latest of which is Guijarno v.
Court of Industrial Relations, 12 it is far from being a favorite of the law. For a statutory provision then to further
curtail its operation, is precisely to follow the dictates of sound public policy.

The exhaustive and well-researched opinion of Justice Zaldivar thus is in the mainstream of constitutional tradition.
That, for me, is the channel to follow.

Footnotes

1.Record on Appeal, pages 2-7.


2.Record on Appeal, pages 14-17.
3.Record on Appeal, pages 27-35.
4.Quoted from Brief for Appellant, page 3.
5.Quoted from Brief for Appellant, page 2.
6.Brief for Appellant, pages 2-3.
7.Brief for Appellant, pages 3-5.
8.Brief for Appellant, pages 5-6.
9.Brief for Appellant, page 6.
10.Brief for Appellant, pages 7-8.
11.Brief for Appellant, pages 8-9.
53

12.Appellant cites in support thereof Otten v. Baltimore & Or., et al., 205 F 2d 58, and Wieks v. Southern Pacific Co.,
D.C. Cal., 121 F. Supp. 454; Jenson v. Union Pacific R. Co., et al., 121 F. Supp. 454.
13.Brief for Appellant, pages 9-11.
14.Brief for Plaintiff-Appellee, pages 6-8.
15.Brief for Plaintiff-Appellee, pages 8-11.
16.Brief for Plaintiff-Appellee, pages 11-28.
17.Brief for Plaintiff-Appellee, pages 28-32.
18.Brief for Plaintiff-Appellee, pages 32-36.
19.Danner v. Hass, 194 N.W. 2d 534, 539; Spurbeek v. Statton, 106 N.W. 2d, 660, 63.
20.Pagkakaisa Samahang Manggagawa ng San Miguel Brewery vs. Enriquez, et al., 108 Phil., 1010, 1019.
21.Abo, et al. vs. PHILAME (KG) Employees Union, et al., L-19912, January 30, 1965, 13 SCRA 120, 123, quoting
Rothenberg, Labor Relations.
22.Black's Constitutional Law, 2nd ed., page 607.
23.Home Building & Loan Association vs. Blaisdell, 290 U.S. 398, 78 L Ed 413, 425.
24.Re People (Title & Mort. Guar. Co.) 264 N.Y. 69, 190 N.E., 153, 96 ALR 297, 304.
25.Stephenson v. Binford, 287 U.S. 251, 176, 77 L. ed. 288, 301, 53 S. Ct. 181, 87 A.L.R. 721.
26.16 Am. Jur. 2d, pages 584-585.
27.Art. 1700, Civil Code of the Philippines.
28.Ilusorio, et al. vs. Court of Agrarian Relations, et al., L-20344, May 16, 1966, 17 SCRA 25, 29; Ongsiako v.
Gamboa, et al., 86 Phil., 50, 54-55.
29.Asia Bed Factory vs. National Bed and Kapok Industries Workers' Union, 100 Phil., 837, 840.
30.Re People (Title & Mort. Guar. Co.), 264 N.Y. 69, 190 N.E. 153, 96 ALR 297, 304.
31."Individual Rights in Industrial Self-Government - A 'State Action' Analysis", Northwestern University Law Review,
Vol. 63, No. 1, March-April, 1968, page 4.
32.Congressional Record of the House, Vol. IV, Part II, April 11 to May 18, 1961, pages 3300-3301.
33.Jones vs. Opelika, 316 U.S. 584, 86 L. ed. 1691, 62 S. Ct. 117; Follet vs. McCormick, 321 U.S. 158, 88 L. ed. 938,
64 S. Ct. 717.
34.Schneider v. Irgington, 308 U.S. 147, 161, 84 L. ed. 155, 164, 60 S. Ct. 146.
35.U.S. v. Ballard, 322 U.S. 78, 88 L. ed. 1148, 1153.
36.William A. Carroll, "The Constitution, the Supreme Court, and Religion", The American Political Science Review,
LXI: 657-674, page 663, Sept., 1967.
37.Sherbert v. Verner, 374 U.S. 398, 10 L.ed. 2d 965, 83 S. Ct. 1970.
38.Braunfeld v. Brown, 366 US 599, 6 L ed. 2d. 563, 81 S. Ct. 1144; McGowan v. Maryland, 366 U.S. 420, 444-5 and
449.
39.64 Phil. 201, 209-210.
40.Board of Education v. Allen, 392 US 236, 20 L. ed. 2d, 1060, 88 S. Ct. 1923.
41.Art. XIV, Section 6, 1935 Constitution of the Philippines.
42.Article II, Section 9, 1973 Constitution.
43.McGowan v. Maryland, 366 U.S. 420, 422, 6 L. ed. 2d 393, 408, 81 S. Ct. 1101.
44.Alan Schwartz, "No Imposition of Religion: The Establishment Clause Value", Yale Law Journal, 1968 Vol. 77, page
692.
45.Sherbert v. Verner, 374 U.S. 398, 10 L. ed. 2d 965, 970, 83 S. Ct. 1790.
46.People ex rel. Ryan v. Sempek, 147 N.E. 2d 295, 298.
47.Diamond Auto Sales Inc. v. Erbe, 105 N.W. 2d 650, 652; Spurbeck v. Statton, 106 N.W. 2d 660, 663; Danner v.
Hass, 134 N.W. 2d 534, 539.
48.Cf. Meyer v. Nebraska, 262 U.S. 390, 67 L. ed. 1042, 1046.
49.Book v. State Office Bldg. Commission, 149 N.E. 2d 273, 278.
50.Now Section 1, Article IV, 1973 Constitution.
51.16 Am Jur. 2d, page 850.
52.International Harvester Co. v. Missouri, 234 U.S. 199, 58 L. ed. 1276, 1282.
53.Atchison, T.S.F.R. Co. v. Missouri, 234 U.S. 199, 58 L. ed. 1276, 282.
54.People v. Vera, 65 Phil. 56, 126.
55.People v. Carlos, 78 Phil. 535, 542, citing 16 C.J.S. 997.
56.16 Am. Jur. 2d, page 862.
57.Continental Baking Co. v. Woodring, 286 U.S. 352, 76 L. ed. 1155, 1182.
58.Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 81 L. ed. 1193, 1200.
59.German Alliance Ins. Co. v. Lewis, 233 U.S. 389, 58 L. ed., 1011, 1024.
60.Charles Dubray, Introductory Philosophy, 1923, page 132.
61.Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 81 L. ed. 1193, 1200.
62.State v. Stinson Canning Co., 211 A. 2d 553, 555.
63.Calalang v. Williams, 70 Phil. 726, 734.
64.Ibid.
65.Speech delivered by Jose P. Laurel before the Constitutional Convention on November 19, 1934, In Malcolm and
Laurel, Philippine Constitutional Law, page 534.
66.Guido v. Rural Progress Administration, 84 Phil. 847, 852.
67.16 Am Jur. 2d. page 378.
68.Province of Pangasinan v. Hon. Secretary of Public Works, et al., L-27861, October 31, 1969, 30 SCRA 134.
69.Arizona Copper Co. v. Hammer, 250 U.S. 400, 63 L. ed. 1058, 1066.
70.Sanitation Dist. v. Campbell, 249 SW 2d 767, 770; City of Rochester v. Gutberlett, 211 NW 309, 105 NE 548, 550.
71.Hammond Packing Co. v. Arkansas, 212 U.S. 322, 53 L. ed. 530, 545.
72.Brief for Appellant, pages 12-14.
73.Brief for Plaintiff-Appellee, pages 48-49.
74.Seno v. Mendoza, L-20565, Nov. 29, 1967, 21 SCRA 1124, 1129.
75.Abo v. PHILAME (kg) Employees and Workers Union, L-19912, January 30, 1965, 13 SCRA 120, 124.
FERNANDO, J., concurring:
54

1.Article IV, Section 8 of the Constitution provides: "No law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof. The free exercise and enjoyment of religious profession and worship, without
discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or
political rights." There is thus a reiteration of such freedom as found in Article III, Section 1, par. 7 of the 1935
Constitution.
2.Article II, Section 9 of the Constitution provides: "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 employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work. The State may
provide for compulsory arbitration." The above is an expanded version of what is found in Article XIV, Section 6 of the
1935 Constitution.
3.Aglipay v. Ruiz, 64 Phil. 201, 206 (1937).
4.106 Phil. 2 (1959).
5.Ibid, 9-10.
6.Ibid, 10.
7.Republic Act No. 1265 (1955).
8.319 US 624 (1943). Minersville School District v. Gobitis, 310 US 586 (1940) was thus overruled.
9.Ibid, 641-642.
10.United States v. MacIntosh, 283 US 605, 633-634 (1931).
11.Cf. Howe, Political Theory and the Nature of Liberty, 67 Harvard Law Review, 91, 94 (1953). He was reflecting on
the radiations to which Kedroff v. St. Nicholas Cathedral, 344 US 94 (1952) and Barrows v. Jackson, 346 US 249
(1953) might give rise to.
12.L-28791, August 27, 1973, 52 SCRA 307. Cf. Confederated Sons of Labor v. Anakan Lumber Co., 107 Phil. 915
(1960); Freeman Shirt Manufacturing Co., Inc. v. Court of Industrial Relations, L-16561, Jan. 28, 1961, 1 SCRA 353;
Findlay Millar Timber Co. v. Phil. Land-Air-Sea Labor Union, L-18217, Sept. 29, 1962, 6 SCRA 227; Kapisanan Ng Mga
Manggagawa Ng Alak v. Hamilton Distillery Company, L-18112, Oct. 30, 1962, 6 SCRA 367; United States Lines Co. v.
Associated Watchmen & Security Union, L-15508, June 29, 1963, 8 SCRA 326; National Brewery & Allied Industries
Labor Union of the Phil. v. San Miguel Brewery, Inc., L-18170, Aug. 31, 1963, 8 SCRA 805; Phil. Steam Navigation Co.
v. Phil. Marine Officers Guild, L-20667, Oct. 29, 1965, 15 SCRA 174; Rizal Labor Union v. Rizal Cement Co., Inc., L-
19779, July 30, 1966, 17 SCRA 857.

\---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---/

(BENJAMIN VICTORIANO, plaintiff-appellee, vs. ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY,
INC., defendants, ELIZALDE ROPE WORKERS' UNION, defendant-appellant., G.R. No. L-25246, 1974 September 12,
En Banc)

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. Nos. L-7771-73 May 31, 1955

PHILIPPINE MOVIE PICTURES WORKERS' ASSOCIATION, petitioner,


vs.
PREMIERE PRODUCTIONS, INC., respondent.

Cid Villaluz and Associates for petitioner.


Ross, Selph, Carrascoso and Janda for respondent.

MONTEMAYOR, J.:

With the view taken by the Court of these cases, there is no need of making a long and elaborate statement of the
facts involved. The petitioner in each of these cases, Philippine Movie Pictures Workers' Association later referred to as
the Association, is a labor organization whose members were employees and laborers of the respondent Premiere
Productions, Inc., referred to later as the Company, a corporation engaged in the production of movie pictures. On
October 2, 1951, respondent company filed a petition with the Court of Industrial Relations (CIR) for permission to
lay-off its personnel working in three of its departments, numbering about 44 on the ground that it was losing in the
operation of its business. Judge Arsenio C. Roldan, presiding judge of the CIR after an ocular inspection of the
company's premises, and after conferring with the personnel he found therein, granted the petition and the personnel
were laid off.

After shutting the studios, the company filed another petition with the CIR for permission or authority to lease its
equipments, studios, and other facilities to Eddie Infante, Braulio Calma and others. The association objected to the
proposed lease on the ground that it was an attempt by the company to make use of its properties through other
persons which would mean disturbance of the status quo while the dispute between the association and the company
was pending. Then the company filed a motion to withdraw its petition saying that it was convinced that the lease of
its properties was a mere exercise of its proprietary rights, and that court permission was unnecessary. The motion
was granted. Thereafter, on February 7, 1952, the company transferred some of its equipment to Polo, Bulacan to be
leased and used as in fact they were used by one Artemio Marquez in the filming of the picture "Bakas Ng Kahapon".
For this action of the company the association on February 9, 1952, filed an urgent petition with the CIR, incidental
55

case No. 98 V-8, for contempt and for injunction on the ground that the company had no right to remove its
equipment from its studios to be leased to Marquez without court authority. Thereafter, the company again leased its
equipment and facilities to one Efren Reyes for the filming of the picture "Larawan Ng Buhay". The association again
filed another urgent petition, incidental case No. 598 V-10, for contempt and injunction. Again, on March 5, 1952, the
company leased its other sound equipment to one Manuel Vistan for the filming of the picture "Troubador" and to
Artemio Marquez in filming the picture "Boys Town". The association again filed another petition, incidental case No.
598 V-11, for contempt and injunction.

After the company had answered the three petitions for contempt and injunction, by agreement of the parties, these
three incidental cases were heard jointly. During the hearing held before Presiding Judge Roldan and in the presence
of one Martin Dolorico, a Commissioner of the CIR, the parties entered into a stipulation of facts and stated therein
their respective contention, after which, both parties submitted the cases for decision without further evidence. This
was on October 7, 1952. However, no decision was immediately rendered because both parties asked for time to
enable them to bargain collectively, the negotiations commencing in January, 1953 and lasting until July of the same
year. In the meantime, on April 18, 1953, the association filed a "Supplemental petition to annul lease contracts and
for contempt of court and for injunction", and on June 14, 1953, the association filed a "Motion for production of
document" under section 1, Rule 21, of the Rules of Court, alleging that the movie company had in the meantime
entered into other contracts of lease, and asking that Dr. Ciriaco Santiago, president of the movie company or his
representative produce before the court the contracts referred to for purposes of inspection, copying or photographing
thereof, and to set for hearing the urgent petitions of February 9, 1952 and April 18, 1953 regarding the simulated
leases.

Thereafter, Commissioner Martin Dolorico filed his report, which report was approved and completely adopted by
Judge Roldan in his decision rendered on July 29, 1953, wherein he found that the leases of the equipment, studios
and other properties of the movie company to third parties were not simulated but genuine, and that they were valid;
that it was entirely proper for the movie company to lease its equipment which was lying idle because of the shutting
down of its studios so as to make money and perhaps enable it to rehabilitate itself financially and to re-employ the
same personnel who had been laid off, that the association should not object to these leases because it was the
understanding at the time that they were laid off that in case it was later decided by the court that they had been
improperly made to stop working, they would not only be reinstated but they would also be given backpay for the
entire period of the lay-off. As to the supplemental petition to annul he lease contracts and for contempt of court and
for injunction filed on April 18, 1953 and the motion filed on June 14th, Judge Roldan held that they would be heard
separately from the incidental cases, for purposes of expediency. The decision ended by denying the three petitions
for injunction and for contempt of court.

Upon motion for reconsideration by the association and over the opposition of the company, the CIR in banc by
resolution dated November 13, 1953, reconsidered the decision aforementioned and set it aside, as premature, saying
that before rendering a final decision, the court should have awaited further presentation of evidence on the
supplemental petition of April 18, 1953, "so that all ingredients for the proper disposal of the case would have been
complete." The resolution was penned by Judge Jose Bautista and concurred in by Judges Castillo and Yanson. Judge
Roldan wrote a dissenting opinion concurred in by Judge Juan E. Lanting.

The association has now filed these petitions for review by certiorari, not only of the decision of Judge Roldan but also
of the resolution of the majority of the CIR, to set the same aside, and for the rendition of another decision holding
the leases entered into by the movie company to be illegal and that the company and its officers and agents be held
to have committed contempt of court in entering into those leases without authority of the CIR.

The majority of the Tribunal believe that it is unnecessary to go into the merits of the present cases, because the
resolution of the majority of the CIR setting aside the decision of Judge Roldan, left the cases without any decision to
appeal from, and that said resolution is in the nature of a mere interlocutory order, which is not subject to appeal.

In view of the foregoing, these petitions for certiorari are hereby denied, and the cases are ordered remanded to the
CIR for further proceedings. No costs.

Pablo, Acting C.J., Bengzon, Bautista Angelo, Labrador, Concepcion, and Reyes, J.B.L., JJ., concur.

Separate Opinions

REYES, A., J., concurring:

For a technical reason the majority want these cases remanded to the Court of Industrial Relations "for further
proceeding." To satisfy a rule of procedure I will not object. However, I think the remand should be, not for "further
proceedings", but for the specific purpose of having the Court of Industrial Relations, sitting in banc and without
further proceeding for the taking of evidence, render a decision to take the place of the one it has set aside, and that
court should be so advised. There is need for this caution, because it appears from the resolution appeared from that
the court in banc set aside the decision of the trial judge for the reason that it was premature, believing "that the trial
court should have waited further presentation of evidence in the aforesaid union's supplemental petition, so that all
ingredients for the proper disposal of the case would have been complete." The court in banc thus ruled that further
evidence should be taken pursuant to the union's supplemental petition. It should be noted, however, that the union
seems to have already waived presentation of further evidence since it has petitioned this Court for an order directing
the lower court to decide these cases, thus implying that the cases were being submitted on the evidence already
taken. In the circumstances, a decision is now in order without further proceedings.
56

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[1940V235] MAXIMO CALALANG, petitioner, vs. A. D. WILLIAMS, ET AL., respondents.1940 Dec 21st
DivisionG.R. No. 47800D E C I S I O N

LAUREL, J:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court this
petition for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the National Traffic
Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and
Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of
Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940, resolved to
recommend to the Director of Public Works and to the Secretary of Public Works and Communications that animal-
drawn vehicles be prohibited from passing along Rosario Street extending from Plaza Calderon de la Barca to
Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue
extending from the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of
one year from the date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic
Commission, on July 18, 1940 recommended to the Director of Public Works the adoption of the measure proposed in
the resolution aforementioned, in pursuance of the provisions of Commonwealth Act No. 548 which authorizes said
Director of Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate rules
and regulations to regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director
of Public Works, in his first indorsement to the Secretary of Public Works and Communications, recommended to the
latter the approval of the recommendation made by the Chairman of the National Traffic Commission as aforesaid,
with the modification that the closing of Rizal Avenue to traffic to animal-drawn vehicles be limited to the portion
thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the
Secretary of Public Works and Communications, in his second indorsement addressed to the Director of Public Works,
approved the recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn
vehicles, between the points and during the hours as above indicated, for a period of one year from the date of the
opening of the Colgante Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have
enforced and caused to be enforced the rules and regulations thus adopted; that as a consequence of such
enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places above-mentioned
to the detriment not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works, with the
approval of the Secretary of Public Works and Communications, is authorized to promulgate rules and regulations for
the regulation and control of the use of and traffic on national roads and streets is unconstitutional because it
constitutes an undue delegation of legislative power. This contention is untenable. As was observed by this court in
Rubi vs. Provincial Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been better stated than in the early
Ohio case decided by Judge Ranney, and since followed in a multitude of cases, namely: 'The true distinction therefore
is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and
conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first
cannot be done; to the latter no valid objection can be made.' (Cincinnati, W. & Z. R. Co. vs. Comm'rs. Clinton
County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman vs. Southard (10 Wheat., 1) may be
committed by the Legislature to an executive department or official. The Legislature may make decisions of executive
departments or subordinate officials thereof, to whom it has committed the execution of certain acts, final on
questions of fact. (U.S. vs. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to give prominence to
the 'necessity' of the case."

Section 1 of Commonwealth Act No. 548 reads as follows:

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national
roads by acts of the National Assembly or by executive orders of the President of the Philippines, the Director of Public
Works, with the approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules
and regulations to regulate and control the use of and traffic on such roads and streets. Such rules and regulations,
with the approval of the President, may contain provisions controlling or regulating the construction of buildings or
other structures within a reasonable distance from along the national roads. Such roads may be temporarily closed to
any or all classes of traffic by the Director of Public Works and his duly authorized representatives whenever the
condition of the road or the traffic thereon makes such action necessary or advisable in the public convenience and
interest, or for a specified period, with the approval of the Secretary of Public Works and Communications."

The above provisions of law do not confer legislative power upon the Director of Public Works and the Secretary of
Public Works and Communications. The authority therein conferred upon them and under which they promulgated the
rules and regulations now complained of is not to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon and avoid
obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive
orders of the President of the Philippines" and to close them temporarily to any or all classes of traffic "whenever the
condition of the road or the traffic makes such action necessary or advisable in the public convenience and interest."
The delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the application of said law is to be predicated. To
promulgate rules and regulations on the use of national roads and to determine when and how long a national road
should be closed to traffic, in view of the condition of the road or the traffic thereon and the requirements of public
57

convenience and interest, is an administrative function which cannot be directly discharged by the National Assembly.
It must depend on the discretion of some other government official to whom is confided the duty of determining
whether the proper occasion exists for executing the law. But it cannot be said that the exercise of such discretion is
the making of the law. As was said in Locke's Appeal (72 Pa. 491): "To assert that a law is less than a law, because it
is made to depend on a future event or act, is to rob the Legislature of the power to act wisely for the public welfare
whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully
know." The proper distinction the court said was this: "The Legislature cannot delegate its power to make the law; but
it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends
to make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon
which wise and useful legislation must depend which cannot be known to the law-making power, and, must, therefore,
be a subject of inquiry and determination outside of the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; 36 L.
Ed. 294.)

In the case of People vs. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated June 12, 1939, and in
Pangasinan Transportation vs. The Public Service Commission, G.R. No. 47065, promulgated June 26, 1940, this
Court had occasion to observe that the principle of separation of powers has been made to adapt itself to the
complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of "subordinate
legislation," not only in the United States and England but in practically all modern governments. Accordingly, with the
growing complexity of modern life, the multiplication of the subjects of governmental regulations, and the increased
difficulty of administering the laws, the rigidity of the theory of separation of governmental powers has, to a large
extent, been relaxed by permitting the delegation of greater powers by the legislative and vesting a larger amount of
discretion in administrative and executive officials, not only in the execution of the laws, but also in the promulgation
of certain rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to the
provisions of Commonwealth Act No. 548 constitute an unlawful interference with legitimate business or trade and
abridge the right to personal liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the
National Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit
upon and avoid obstructions on national roads, in the interest and convenience of the public. In enacting said law,
therefore, the National Assembly was prompted by considerations of public convenience and welfare. It was inspired
by a desire to relieve congestion of traffic. which is, to say the least, a menace to public safety. Public welfare, then,
lies at the bottom of the enactment of said law, and the state in order to promote the general welfare may interfere
with personal liberty, with property, and with business and occupations. Persons and property may be subjected to all
kinds of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state (U.S. vs.
Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated.
Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over authority because
then society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual
will fall into slavery. The citizen should achieve the required balance of liberty and authority in his mind through
education and personal discipline, so that there may be established the resultant equilibrium, which means peace and
order and happiness for all. The moment greater authority is conferred upon the government, logically so much is
withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins vs. Los
Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a continuing one, and a
business lawful today may in the future, because of the changed situation, the growth of population or other causes,
become a menace to the public health and welfare, and be required to yield to the public good." And in People vs.
Pomar (46 Phil., 440), it was observed that "advancing civilization is bringing within the police power of the state
today things which were not thought of as being within such power yesterday. The development of civilization, the
rapidly increasing population, the growth of public opinion, with an increasing desire on the part of the masses and of
the government to look after and care for the interests of the individuals of the state, have brought within the police
power many questions for regulation which formerly were not so considered."

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional precept
regarding the promotion of social justice to insure the well-being and economic security of all the people. The
promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given group.
Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and
the equalization of social and economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the
adoption by the Government of measures calculated to insure economic stability of all the competent elements of
society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of
the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of all governments on the time-honored principle of salus
populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and
diverse units of a society and of the protection that should be equally and evenly extended to all groups as a
combined force in our social and economic life, consistent with the fundamental and paramount objective of the state
of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest
number."

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the petitioner. So
ordered.
58

Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ.. concur.

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([1940V235] MAXIMO CALALANG, petitioner, vs. A. D. WILLIAMS, ET AL., respondents., G.R. No. 47800, 1940 Dec 2,
1st Division)

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[1993V97] PHILIPPINE AIRLINES, INC., petitioner, vs. ALBERTO SANTOS, JR., HOUDIEL MAGADIA,
GILBERT ANTONIO, REGINO DURAN, PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION, and THE
NATIONAL LABOR RELATIONS COMMISSION, respondents.1993 Feb 42nd DivisionG.R. No. 77875D E C I S
ION

REGALADO, J p:

The instant petition for certiorari seeks to set aside the decision of the National Labor Relations Commission (NLRC) in
NLRC Case No. 4-1206-85, promulgated on December 11, 1986, 1 containing the following disposition:

"WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set aside and another one
entered, declaring the suspension of complainants to be illegal and consequently, respondent PAL is directed to pay
complainants their salaries corresponding to the respective period(s) of their suspension, and to delete the disciplinary
action from complainants' service records." 2

These material facts recited in the basic petition are virtually undisputed and we reproduce the same hereunder:

"1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger Services Department of
petitioner. Their duties and responsibilities, among others, are:

'Prepares meal orders and checklists, setting up standard equipment in accordance with the requirements of the type
of service for each flight; skiing, binning and inventorying of Commissary supplies and equipment.'

"2. On various occasions, several deductions were made from their salary. The deductions represented losses of
inventoried items charged to them for mishandling of company properties . . . which respondents resented. Such that
on August 21, 1984, individual respondents, represented by the union, made a formal notice regarding the deductions
to petitioner thru Mr. Reynaldo Abad, Manager for Catering. . . .

"3. As there was no action taken on said representation, private respondents filed a formal grievance on November 4,
1984 pursuant to the grievance machinery Step 1 of the Collective Bargaining Agreement between petitioner and the
union. . . . The topics which the union wanted to be discussed in the said grievance were the illegal/questionable
salary deductions and inventory of bonded goods and merchandise being done by catering service personnel which
they believed should not be their duty.

"4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo Abad, Manager for
Catering, who at the time was on vacation leave. . . .

"5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a letter on December 5, 1984
addressed to the office of Mr. Abad, who was still on leave at the time, that inasmuch as no reply was made to their
grievance which `was duly received by your secretary' and considering that petitioner had only five days to resolve
the grievance as provided for in the CBA, said grievance as believed by them (private respondents) was deemed
resolved in their favor. . . .

"6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the grievants and scheduled a meeting on
December 12, 1984. . . .

"7. Thereafter, the individual respondents refused to conduct inventory works. Alberto Santos, Jr. did not conduct
ramp inventory on December 7, 10 and 12. Gilbert Antonio did not conduct ramp inventory on December 10. In like
manner, Regino Duran and Houdiel Magadia did not conduct the same on December 10 and 12.

"8. At the grievance meeting which was attended by some union representatives, Mr. Abad resolved the grievance by
denying the petition of individual respondents and adopted the position that inventory of bonded goods is part of their
duty as catering service personnel, and as for the salary deductions for losses, he rationalized:

'1. It was only proper that employees are charged for the amount due to mishandling of company property which
resulted to losses. However, loss may be cost price 1/10 selling price.'

"9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on January 3, 1985 wrote by an
inter-office memorandum addressed to the grievants, individual respondents herein, for them to explain on (sic) why
no disciplinary action should be taken against them for not conducting ramp inventory. . . .

"10. The directive was complied with . . . . The reason for not conducting ramp inventory was put forth as:
59

'4) Since the grievance step 1 was not decided and no action was done by your office within 5 days from November
21, 1984, per provision of the PAL-PALEA CBA, Art. IV, Sec. 2, the grievance is deemed resolved in PALEA's favor.'

"11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty of suspension ranging from
7 days to 30 days were (sic) imposed depending on the number of infractions committed. **

"12. After the penalty of suspension was meted down, PALEA filed another grievance asking for lifting of, or at least,
holding in abeyance the execution of said penalty. The said grievance was forthwith denied but the penalty of
suspension with respect to respondent Santos was modified, such that his suspension which was originally from
January 15, 1985 to 5 April 5, 1985 was shortened by one month and was lifted on March 5, 1985. The union,
however, made a demand for the reimbursement of the salaries of individual respondents during the period of their
suspension.

"13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal suspensions. Hence, a
complaint for illegal suspension was filed before the Arbitration Branch of the Commission. . . . Labor Arbiter Ceferina
J. Diosana, on March 17, 1986, ruled in favor of petitioner by dismissing the complaint. . . . 3

Private respondents appealed the decision of the labor arbiter to respondent commission which rendered the
aforequoted decision setting aside the labor arbiter's order of dismissal. Petitioner's motion for reconsideration having
been denied, it interposed the present petition.

The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC acted with grave
abuse of discretion amounting to lack of jurisdiction in rendering the aforementioned decision.

Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not go so far as to
evaluate the sufficiency of the evidence upon which the labor officer or office based his or its determination, but are
limited to issues of jurisdiction and grave abuse of discretion. 4 It has not been shown that respondent NLRC has
unlawfully neglected the performance of an act which the law specifically enjoins it to perform as a duty or has
otherwise unlawfully excluded petitioner from the exercise of a right to which it is entitled.

The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective Bargaining
Agreement (hereinafter, CBA), to wit:

"Section 2 - Processing of Grievances.

xxx xxx xxx

STEP 1 - Any employee who believes that he has a justifiable grievance shall take the matter up with his shop
steward. If the shop steward feels there is justification for taking the matter up with the Company, he shall record the
grievance on the grievance form heretofore agree upon by the parties. Two (2) copies of the grievance form properly
filled, accepted, and signed shall then be presented to and discussed by the shop steward with the division head. The
division head shall answer the grievance within five (5) days from the date of presentation by inserting his decision on
the grievance form, signing an dating same, and returning one copy to the shop steward. If the division head fails to
act within the five (5)-day regl(e)mentary period, the grievance must be resolved in favor of the aggrieved party. If
the division head's decision is not appealed to Step II, the grievance shall be considered settled on the basis of the
decision made, and shall not be eligible for further appeal." 5 (Emphasis ours.)

Petitioner submits that since the grievance machinery was established for both labor and management as a vehicle to
thresh out whatever problems may arise in the course of their relationship, every employee is duty bound to present
the matter before management and give the latter an opportunity to impose whatever corrective measure is possible.
Under normal circumstances, an employee should not preempt the resolution of his grievance; rather, he has the duty
to observe the status quo. 6

Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the obligation, just
as management has, to settle all labor disputes through friendly negotiations. Thus, Section 2 of the CBA should not
be narrowly interpreted. 7 Before the prescriptive period of five days begins to run, two concurrent requirements must
be met, i.e., presentment of the grievance and its discussion between the shop steward and the division head who in
this case is Mr. Abad. Section 2 is not self-executing; the mere filing of the grievance does not trigger the tolling of
the prescriptive period. 8

Petitioner has sorely missed the point.

It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the Constitution
imposes such sympathy, but because of the one-sided relation between labor and capital. 9 The constitutional
mandate for the protection of labor is as explicit as it is demanding. The purpose is to place the workingman on an
equal plane with management - with all its power and influence - in negotiating for the advancement of his interests
and the defense of his rights. 10 Under the policy of social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those with less privileges in life should have more
privileges in law. 11

It is clear that the grievance was filed with Mr. Abad's secretary during his absence. 12 Under Section 2 of the CBA
aforequoted, the division head shall act on the grievance within five (5) days from the date of presentation thereof,
otherwise "the grievance must be resolved in favor of the aggrieved party." It is not disputed that the grievants knew
that division head Reynaldo Abad was then "on leave" when they filed their grievance which was received by Abad's
secretary. 13 This knowledge, however, should not prevent the application of the CBA.
60

On this score, respondent NLRC aptly ruled:

". . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the grievance of complainants
within five days from 21 November 1984. Therefore, when Reynaldo Abad failed to act within the reglementary
period, complainants, believing in good faith that the effect of the CBA had already set in, cannot be blamed if they
did not conduct ramp inventory for the days thereafter. In this regard, respondent PAL argued that Reynaldo Abad
was on leave at the time the grievance was presented. This, however, is of no moment, for it is hard to believe that
everything under Abad's authority would have to stand still during his absence from office. To be sure, it is to be
expected that someone has to be left to attend to Abad's duties. Of course, this may be a product of inadvertence on
the part of PAL management, but certainly, complainants should not be made to suffer the consequences." 14

Contrary to petitioner's submission, 15 the grievance of employees is not a matter which requires the personal act of
Mr. Abad and thus could not be delegated. Petitioner could at least have assigned an officer-in-charge to look into the
grievance and possibly make his recommendation to Mr. Abad. It is of no moment that Mr. Abad immediately looked
into the grievance upon returning to work, for it must be remembered that the grievants are workingmen who
suffered salary deductions and who rely so much on their meager income for their daily subsistence and survival.
Besides, it is noteworthy that when these employees first presented their complaint on August 21, 1984, petitioner
failed to act on it. It was only after a formal grievance was filed and after Mr. Abad returned to work on December 7,
1984 that petitioner decided to turn an ear to their plaints.

As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to petitioner's
inadvertence, 16 but it is clearly too much of an injustice if the employees be made to bear the dire effects thereof.
Much as the latter were willing to discuss their grievance with their employer, the latter closed the door to this
possibility by not assigning someone else to look into the matter during Abad's absence. Thus, private respondents
should not be faulted for believing that the effects of the CBA in their favor had already stepped into the controversy.

If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay the resolution of
labor problems, the complaints of the workers in particular, and hide under the cloak of its officers being "on leave" to
avoid being caught by the 5-day deadline under the CBA. If this should be allowed, the workingmen will suffer great
injustice for they will necessarily be at the mercy of their employer. That could not have been the intendment of the
pertinent provision of the CBA, much less the benevolent policy underlying our labor laws.

ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed decision of
respondent National Labor Relations Commission is AFFIRMED. This judgment is immediately executory.

SO ORDERED.

Narvasa, (C.J., Chairman), Feliciano, Nocon and Campos, Jr., JJ., concur.

Footnotes

1. Per Presiding Commissioner Edna Bonto-Perez and Commissioners Daniel M. Lucas, Jr. and Mirasol V. Corleto.

2. Original Record, 119.

** Private respondents were meted the penalty of suspension without pay as follows: Alberto Santos, Jr., from
January 15 to April 5, 1985 (Exh. H, Original Record, 45); Regino Duran, from January 15 to February 4, 1985 (Exh.
I, ibid., 46); Gilbert Antonio, from January 15 to 21, 1985 (Exh. J, ibid., 47); and Houdiel Magadia, from January 15
to February 4, 1985 (Exh. K, ibid., 48).

3. Petition, 2-5; Rollo, 3-6.

4. Pan Pacific Industrial Sales., Inc. vs. NLRC, et al., 194 SCRA 633 (1991).

5. Exhibit S; Original Record, 57.

6. Petition, 8; Rollo, 9.

7. Ibid., 8-9; Rollo, 9-10.

8. Ibid., 9, Rollo, 10.

9. Reliance Surety and Insurance Co., Inc. vs. NLRC, et al., 193 SCRA 365 (1991).

10. Dagupan Bus Company, Inc. vs. NLRC, et al., 191 SCRA 328 (1990).

11. Ditan vs. POEA, et al., 191 SCRA 823 (1990).

12. Exhibit E; Original Record, 42.

13. Original Record, 105.

14. Ibid., 118-119.


61

15. Petition, 9-10; Rollo, 10-11.

16. Original Record, 119.

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([1993V97] PHILIPPINE AIRLINES, INC., petitioner, vs. ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT
ANTONIO, REGINO DURAN, PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION, and THE NATIONAL LABOR RELATIONS
COMMISSION, respondents., G.R. No. 77875, 1993 Feb 4, 2nd Division)

/---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---\

[1988V594] PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner, vs. HON. FRANKLIN M.
DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as Administrator of the
Philippine Overseas Employment Administration, respondents.1988 June 30En BancG.R. No. L-81958D E C
ISION

SARMIENTO, J.:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in the
recruitment of Filipino workers, male and female, for overseas placement," 1 challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of
"GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. Specifically, the measure is assailed for
"discrimination against males or females;" 2 that it "does not apply to all Filipino workers but only to domestic helpers
and females with similar skills;" 3 and that it is violative of the right to travel. It is held likewise to be an invalid
exercise of the lawmaking power, police power being legislative, and not executive, in character.

In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing for worker
participation "in policy and decision-making processes affecting their rights and benefits as may be provided by law."
4 Department Order No. 1, it is contended, was passed in the absence of prior consultations. It is claimed, finally, to
be in violation of the Charter's non-impairment clause, in addition to the "great and irreparable injury" that PASEI
members face should the Order be further enforced.

On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and Administrator of the
Philippine Overseas Employment Administration, filed a Comment informing the Court that on March 8, 1988, the
respondent Labor Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United
States, Italy, Norway, Austria, and Switzerland. ** In submitting the validity of the challenged "guidelines," the
Solicitor General invokes the police power of the Philippine State.

It is admitted that Department Order No. 1 is in the nature of a police power measure. The only question is whether
or not it is valid under the Constitution.

The concept of police power is well-established in this jurisdiction. It has been defined as the "state authority to enact
legislation that may interfere with personal liberty or property in order to promote the general welfare." 5 As defined,
it consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not
capable of an exact definition but has been, purposely, veiled in general terms to underscore its all-comprehensive
embrace.

"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done,
provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the
greatest benefits." 6

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the Charter. Along with
the taxing power and eminent domain, it is inborn in the very fact of statehood and sovereignty. It is a fundamental
attribute of government that has enabled it to perform the most vital functions of governance. Marshall, to whom the
expression has been credited, 7 refers to it succinctly as the plenary power of the State "to govern its citizens." 8

"The police power of the State . . . is a power coextensive with self-protection, and it is not inaptly termed the 'law of
overwhelming necessity.' It may be said to be that inherent and plenary power in the State which enables it to
prohibit all things hurtful to the comfort, safety, and welfare of society." 9

It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the conception that
men in organizing the state and imposing upon its government limitations to safeguard constitutional rights did not
intend thereby to enable an individual citizen or a group of citizens to obstruct unreasonably the enactment of such
salutary measures calculated to ensure communal peace, safety, good order, and welfare." 10 Significantly, the Bill of
Rights itself does not purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the
greatest of all rights, is not unrestricted license to act according to one's will." 11 It is subject to the far more
overriding demands and requirements of the greater number.
62

Notwithstanding its extensive sweep, police power is not without its own limitations. For all its awesome
consequences, it may not be exercised arbitrarily or unreasonably. Otherwise, and in that event, it defeats the
purpose for which it is exercised, that is, to advance the public good. Thus, when the power is used to further private
interests at the expense of the citizenry, there is a clear misuse of the power. 12

In the light of the foregoing, the petition must be dismissed.

As a general rule, official acts enjoy a presumed validity. 13 In the absence of clear and convincing evidence to the
contrary, the presumption logically stands.

The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no question
that Department Order No. 1 applies only to "female contract workers," 14 but it does not thereby make an undue
discrimination between the sexes. It is well-settled that "equality before the law" under the Constitution 15 does not
import a perfect identity of rights among all men and women. It admits of classifications, provided that (1) such
classifications rest on substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not
confined to existing conditions; and (4) they apply equally to all members of the same class. 16

The Court is satisfied that the classification made ---- the preference for female workers ---- rests on substantial
distinctions.

As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force
abroad, especially domestic servants, amid exploitative working conditions marked by, in not a few cases, physical
and personal abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various
forms of torture, confirmed by testimonies of returning workers, are compelling motives for urgent Government
action. As precisely the caretaker of Constitutional rights, the Court is called upon to protect victims of exploitation. In
fulfilling that duty, the Court sustains the Government's efforts.

The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps
for isolated instances, our men abroad have been afflicted with an identical predicament. The petitioner has proffered
no argument that the Government should act similarly with respect to male workers. The Court, of course, is not
impressing some male chauvinistic notion that men are superior to women. What the Court is saying is that it was
largely a matter of evidence (that women domestic workers are being ill-treated abroad in massive instances) and not
upon some fanciful or arbitrary yardstick that the Government acted in this case. It is evidence capable indeed of
unquestionable demonstration and evidence this Court accepts. The Court cannot, however, say the same thing as far
as men are concerned. There is simply no evidence to justify such an inference. Suffice it to state, then, that insofar
as classifications are concerned, this Court is content that distinctions are borne by the evidence. Discrimination in
this case is justified.

As we have furthermore indicated, executive determinations are generally final on the Court. Under a republican
regime, it is the executive branch that enforces policy. For their part, the courts decide, in the proper cases, whether
that policy, or the manner by which it is implemented, agrees with the Constitution or the laws, but it is not for them
to question its wisdom. As a co-equal body, the judiciary has great respect for determinations of the Chief Executive
or his subalterns, especially when the legislature itself has specifically given them enough room on how the law should
be effectively enforced. In the case at bar, there is no gainsaying the fact, and the Court will deal with this at greater
length shortly, that Department Order No. 1 implements the rule-making powers granted by the Labor Code. But what
should be noted is the fact that in spite of such a fiction of finality, the Court is on its own persuaded that prevailing
conditions indeed call for a deployment ban.

There is likewise no doubt that such a classification is germane to the purpose behind the measure. Unquestionably, it
is the avowed objective of Department Order No. 1 to "enhance the protection for Filipino female overseas workers."
17 This Court has no quarrel that in the midst of the terrible mistreatment Filipina workers have suffered abroad, a
ban on deployment will be for their own good and welfare.

The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so long as those
conditions exist. This is clear from the Order itself ("Pending review of the administrative and legal measures, in the
Philippines and in the host countries . . ." 18), meaning to say that should the authorities arrive at a means impressed
with a greater degree of permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary
malleability, depending on the circumstances of each case. Accordingly, it provides:

9. LIFTING OF SUSPENSION. The Secretary of Labor and Employment (DOLE) may, upon recommendation of the
Philippine Overseas Employment Administration (POEA), lift the suspension in countries where there are:

1. Bilateral agreements or understanding with the Philippines, and/or,

2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers.
19

The Court finds, finally, the impugned guidelines to be applicable to all female domestic overseas workers. That it
does not apply to "all Filipina workers" 20 is not an argument for unconstitutionality. Had the ban been given universal
applicability, then it would have been unreasonable and arbitrary. For obvious reasons, not all of them are similarly
circumstanced. What the Constitution prohibits is the singling out of a select person or group of persons within an
existing class, to the prejudice of such a person or group or resulting in an unfair advantage to another person or
group of persons. To apply the ban, say exclusively to workers deployed by A, but not to those recruited by B, would
obviously clash with the equal protection clause of the Charter. It would be a classic case of what Chase refers to as a
law that "takes property from A and gives it to B." 21 It would be an unlawful invasion of property rights and freedom
63

of contract and needless to state, an invalid act. 22 (Fernando says: "Where the classification is based on such
distinctions that make a real difference as infancy, sex, and stage of civilization of minority groups, the better rule, it
would seem, is to recognize its validity only if the young, the women, and the cultural minorities are singled out for
favorable treatment. There would be an element of unreasonableness if on the contrary their status that calls for the
law ministering to their needs is made the basis of discriminatory legislation against them. If such be the case, it
would be difficult to refute the assertion of denial of equal protection." 23 In the case at bar, the assailed Order clearly
accords protection to certain women workers, and not the contrary.)

It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From scattered
provisions of the Order, it is evident that such a total ban has not been contemplated. We quote:

5. AUTHORIZED DEPLOYMENT ---- The deployment of domestic helpers and workers of similar skills defined herein to
the following [sic] are authorized under these guidelines and are exempted from the suspension.

5.1 Hirings by immediate members of the family of Heads of State and Government;

5.2 Hirings by Minister, Deputy Minister and the other senior government officials; and

5.3 Hirings by senior officials of the diplomatic corps and duly accredited international organizations.

5.4 Hirings by employers in countries with whom the Philippines have [sic] bilateral labor agreements or
understanding.

xxx xxx xxx

7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS ---- Vacationing domestic helpers and/or
workers of similar skills shall be allowed to process with the POEA and leave for worksite only if they are returning to
the same employer to finish an existing or partially served employment contract. Those workers returning to worksite
to serve a new employer shall be covered by the suspension and the provision of these guidelines.

xxx xxx xxx

9. LIFTING OF SUSPENSION ---- The Secretary of Labor and Employment (DOLE) may, upon recommendation of the
Philippine Overseas Employment Administration (POEA), lift the suspension in countries where there are:

1. Bilateral agreements or understanding with the Philippines, and/or,

2. Existing mechanisms providing for sufficient safeguards to ensure the welfare and protection of Filipino workers.
24

xxx xxx xxx

The consequence the deployment ban has on the right to travel does not impair the right. The right to travel is
subject, among other things, to the requirements of "public safety," "as may be provided by law." 25 Department
Order No. 1 is a valid implementation of the Labor Code, in particular, its basic policy to "afford protection to labor,"
26 pursuant to the respondent Department of Labor's rule-making authority vested in it by the Labor Code. 27 The
petitioner assumes that it is unreasonable simply because of its impact on the right to travel, but as we have stated,
the right itself is not absolute. The disputed Order is a valid qualification thereto.

Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative
power. It is true that police power is the domain of the legislature, but it does not mean that such an authority may
not be lawfully delegated. As we have mentioned, the Labor Code itself vests the Department of Labor and
Employment with rule-making powers in the enforcement whereof. 28

The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and decision-making
processes affecting their rights and benefits." 29 is not well-taken. The right granted by this provision, again, must
submit to the demands and necessities of the State's power of regulation.

The Constitution declares that:

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. 30

"Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more
paramountly is that such an employment be above all, decent, just, and humane. It is bad enough that the country
has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under
these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection,
personally and economically, while away from home. In this case, the Government has evidence, an evidence the
petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has
precisely ordered an indefinite ban on deployment.

The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not
contested that it has in fact removed the prohibition with respect to certain countries as manifested by the Solicitor
General.
64

The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targetted
by the Government. 31 Freedom of contract and enterprise, like all other freedoms, is not free from restrictions, more
so in this jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life.

This Court understands the grave implications the questioned Order has on the business of recruitment. The concern
of the Government, however, is not necessarily to maintain profits of business firms. In the ordinary sequence of
events, it is profits that suffer as a result of Government regulation. The interest of the State is to provide a decent
living to its citizens. The Government has convinced the Court in this case that this is its intent. We do not find the
impugned Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief prayed for.

WHEREFORE, the petition is DISMISSED. No costs.

SO ORDERED.

Yap (C.J.), Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes and Griño-
Aquino, JJ., concur.
Gutierrez, Jr. and Medialdea, JJ., on leave.

--------------
Footnotes

1. Rollo, 3.
2. Id., 12.
3. Id., 13.
4. CONST., Art XIII, Sec. 3.
** Per reports, on June 14, 1988, the Government is said to have lifted the ban on five more countries: New
Zealand, Australia, Sweden, Spain, and West Germany. ("Maid export ban lifted in 5 states," The Manila Chronicle,
June 14, 1988, p. 17, col. 2.).

5. Edu v. Ericta, No. L-32096, October 24, 1970, 35 SCRA 481, 487.
6. Supra, 488.
7. TRIBE, AMERICAN CONSTITUTIONAL LAW, 323 (1978).
8. Id.
9. Rubi v. Provincial Board of Mindoro, 39 Phil. 660, 708 (1919).
10. Edu v. Ericta, supra.
11. Rubi v. Provincial Board of Mindoro, supra, 704.
12. It is generally presumed, notwithstanding the plenary character of the lawmaking power, that the legislature
must act for public purposes. In Pascual v. Secretary of Public Works [110 Phil. 331 (1960)], the Court nullified an act
of Congress appropriating funds for a private purpose. The prohibition was not embodied in the Constitution then in
force, however, it was presumed that Congress could not do it.
13. Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila, No. L-24693, July 31, 1967,
20 SCRA 849.
14. Dept. Order No. 1 (DOLE), February 10, 1988.
15. CONST., supra, Art. III, Sec. 1.
16. People v. Cayat, 68 Phil. 12 (1939).
17. Dept. Order No. 1, supra.
18. Supra.
19. Supra.
20. Rollo, id., 13.
21. See TRIBE, id., citing Calder v. Bull, 3 U.S. 386 (1798).
22. Id.
23. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 549-550 (1977).
24. Dept. Order No. 1, supra.
25. CONST., supra, Art. III, Sec. 6.
26. Pres. Decree No. 442, Art. 3.
27. Supra, Art. 5.
28. Supra.
29. CONST., supra, Art. XIII, Sec. 3.
30. Supra.
31. Heirs of Juancho Ardona v. Reyes, Nos. L-60549, 60553-60555, October 26, 1983, 125 SCRA 220.

\---!e-library! 6.0 Philippines Copyright © 2000 by Sony Valdez---/

([1988V594] PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner, vs. HON. FRANKLIN M. DRILON as
Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas
Employment Administration, respondents., G.R. No. L-81958, 1988 June 30, En Banc)
65