LABOR LAW 1; WEEK 1 DIGESTS
St. Luke’s Medical Center Employee’s Association-AFW v. NLRC, 517 SCRA 677 (2007);
Philippine Association of Service Exporters, Inc. v. Drilon,* 163 SCRA 386 (1988);
FACTS:
1. PASEI, a firm engaged in the recruitment of OFWs, challenges the constitutionality of Dept.
Order No. 1 (1988) of DOLE or the guidelines on the temporary suspension of deployment
of Filipino domestic and household workers.
2. It claimed that said order discriminates against males and females, does not apply to all
Filipino workers but only to domestic helpers and females with similar skills, and is violative
of the right to travel.
3. It contends that it is an invalid exercise of the lawmaking power, police power being
legislative, and not executive in character.
4. PASEI invoked Sec. 3, Art. 13 of the Constitution providing for worker participation in policy
and decision-making process affecting their rights and benefits and the order was passed
without prior consultations.
5. The SolGen invoked the police power of the State in submitting the validity of the guidelines
and informed the Court that the Labor Secretary already lifted the deployment ban in certain
states.
6. It is admitted that the order is in the nature of a police power measure.
ISSUE: Whether the order is valid under the Constitution. YES.
RATIO:
 Official acts enjoy presumed validity (no clear and convincing evidence was shown to the
contrary).
 Police power: State authotity to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare.
 Police power constitutes an implied limitation on the Bill of Rights.
 Equality before the law admits classifications provided that it rest on substantial distinctions,
germane to the purposes of the law, not confined to existing conditions and apply equally to
all members of the same class.
 The unhappy plight that the female labor force experience abroad compels urgent
Government action.
 The same cannot be said for male workers (save for some isolated cases) so the
classifications are borne by evidence; discrimination is justified.
 DO No. 1 is a valid implementation of the Labor Code to “afford protection to labor.”
 Not an invalid exercise of legislative power because the Labor Code itself vests the DOLE
with rule-making powers.
 “Protection to Labor” does not signify the promotion of employment alone. The Constitution
wants that employment be decent, just, and humane.
 The Government is duty-bound to insure that our toiling expatriates have adequate
protection, personally and economically, while away from home and as part of its duty, it has
ordered an indefinite ban on deployment.
 The petitioner’s reliance on the Constitutional guaranty of worker participation in policy
making processes must submit to the demands and necessities of the State’s power of
regulation.
 The court understands the grave implications of the Order to recruitment businesses but it is
the State’s interest to provide a decent living to its citizens.
FACTS:
1. Santos was hired as x-ray technician of SLMC (1984).
2. 1992: Congress passed RA 7431 known as the Radiologic Technology Act of 1992. This law
required that no person shall practice as an x-ray technologist without having obtained the
proper certificate of registration from the Board of Radiologic Technology.
3. The HR Director of SLMC issued a final notice to all practitioners of Radiologic Technology
to comply with RA 7431, otherwise, the unlicensed employee will be transferred to an area
which does not require a license if a slot is available.
4. Santos received a notice requiring her to take and pass the exam, otherwise, she may be
compelled to retire from employment should there be no other position available.
5. Another memorandum was issued to Santos advising her that only a license can assure her
of her continued employment and that it was her last chance to take and pass the exam.
6. Santos was informed that the management of SLMC has approved her retirement in lieu of
separation pay.
7. The Personnel Manager of SLMC issued a “Notice of Separation from the Company” to
Santos due to her refusal to accept the offer for early retirement. Further, it said that her
qualifications do not fit any of the present vacant positions in the hospital.
8. The President of the Philippine Association of Radiologic Technologists asked SLMC to give
Santos due consideration by giving her an assignment in any department in the hospital
awaiting her chance to pass the Board exam.
9. Another Notice of Separation was issued to Santos after she failed to present her appeal for
rechecking to PRC of the recent board exam which she failed.
10. Santos filed a complaint against SLMC for illegal dismissal and non-payment of salaries and
benefits.
11. The Alliance of Filipino Workers President requested SLMC to accommodate Santos and
assign her to a vacant position. In response, SLMC said that Santos must go through the
usual application procedures.
12. Petitioners: Santos’ failure to comply with the certification requirement did not constitute just
case for termination as it violated her right to security of tenure.
13. Labor Arbiter: Ordered SLMC to pay Santos her separation pay. All other claims were
dismissed.
14. NLRC and CA affirmed.
ISSUES:
1. Whether Santos’ constitutional right of security of tenure was violated. NO.
2. Whether Santos was illegally dismissed on the basis of her inability to secure a
certificate of registration from the Board of Radiologic Technology. NO.
RATIO:
 While the security of tenure is guaranteed by the Constitution, its exercise may be regulated
pursuant to the police power of the State to safeguard health, morals, peace, education,
order, safety, and the general welfare of the people.
 The state is justified in prescribing the specific requirements for x-ray technicians.
 The law is clear that the Certificate of Registration cannot be substituted by any other
requirement to allow a person to practice as a technician.
 Persons who desire to engage in the learned profession may be required to take an exam as
a prerequisite to engage in their careers.
 No malice or ill-will can be imputed upon SLMC because her continued employment without
a certificate exposes the hospital to possible sanctions or license revocation.
 Santos was given enough opportunity to qualify for the position but she still failed to comply.
 Management has rights which are also entitled to respect and enforcement in the interest of
fair play.
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Magana v. Medicard Phil., Inc., 638 SCRA 606 (2010);
FACTS
1. Medicard, a health maintenance organization, hired Magana as company nurse who was
detailed to Medicard’s corporate client (Manila Pavilion).
2. Medicard was summarily replaced with another nurse. Medicard then offered Magana the
position of liaison officer.
3. Magana found the offer unacceptable and with her continued non-assignment, she sued
Medicard and Manila Pavilion in the NLRC for illegal dismissal and payment of benefits and
damages.
4. Labor Arbiter: Medicard was a mere labor contractor for Manila Pavilion which exercised
control and termination powers over Magana. The summary replacement was without cause
and of bad faith. Ordered Manila Pavilion to reinstate Magana and with Medicard, be solidarily
liable for backwages, etc.
5. NLRC: Affirmed, but found Medicard, not Manila Pavilion, as Magana’s employer and held it
liable for constructive illegal dismissal and for the payment of the backwages. Also awarded
reinstatement wages for Medicard’s failure to reinstate her pending appeal as required by
the Labor Code.
6. CA: Found Magana’s dismissal with cause, noting that Medicard’s failure to assign Magana
to a suitable position within six months after her replacement is “analogous to a suspension
of operations of an enterprise” entitling her of separation pay only. Deleted reinstatement
wages.
ISSUE: Whether Magana is entitled to draw wages under an arbiter’s ruling ordering her
reinstatement even though such order is subsequently reversed on appeal.
 HELD: YES. The unusual, mandatory mandatory order by law to execute reinstatement
orders pending appeal, unheard of in ordinary civil proceedings, is a police power measure,
grounded on the theory that the preservation of the lives of the citizens is a basic duty of the
State that is more vital than the preservation of corporate profits.
 The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. This must be done immediately upon the filing of their appeal,
without need of any executory writ.
 Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory
on the part of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court.
JMM Promotion Management, Inc. v. CA, G.R. No. 120095, August 5, 1996;
1. Pres. Cory Aquino ordered a total ban against the deployment of performing artists to Japan
and other foreign destinations after the death of Maricris Sioson.
2. The ban was rescinded after leaders of the overseas employment industry promised to
extend full support for a program aimed at removing kinks in the deployment system.
3. The government issued Dept. Order No. 28 creating Entertainment Industry Advisory Council
(EIAC), tasked to issue guidelines on the training, testing certification and deployment of
artists abroad.
4. Pursuant to EIAC’s recommendations, Labor Sec issued Dept. Order No. 3 establishing
various procedures and requirements for screening artists.
5. Artists successfully hurdling the test, training and certification were to be issued Artists
Record Book (ARB), a necessary prerequisite to processing of any contract of employment
by the POEA.
6. The Dept. of Labor issued a series of orders for fine-tuning and implementing the new system.
7. The Federation of Entertainment Talent Managers of the Philippines (FETMOP) filed a class
suit assailing these Department Orders saying that they violated the constitutional right to
travel, abridged existing contracts for employment, and deprived individual artists of their
licenses without due process of law. Further contended that it violated the right to life, liberty,
and property.
8. JMM Promotion and Kary International (Petitioners) filed a Motion for Intervention.
9. TC: Denied petitioners’ prayer for a writ of preliminary injunction and dismissed the complaint.
10. CA: Dismissed the appeal. The Department orders and issuances constituted a valid exercise
by the State of the police power.
ISSUE: Whether the ARB requirement and Department Order No. 3 were valid exercise of police
power. YES.
RATIO:
 Salus populi est suprema 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.
 It is an inherent attribute of sovereignty which extends to all public needs.
 Police power concerns government enactments which precisely interfere with personal liberty
or property in order to promote the general welfare or the common good.
 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.”
 The government began instituting measures aimed at deploying only those individuals who
met set standards which would qualify them as legitimate performing artists.
 The tests 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.
ON DUE PROCESS and RIGHT TO LABOR AS PROPERTY:
 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.
 So long as professionals and other workers meet reasonable regulatory standards no such
deprivation exists.
Eagle Security Agency, Inc. v. NLRC, G.R. No. 81314, May 18, 1989
FACTS:
1. Petitioners Philippine Tuberculosis Society (PTSI) and Eagle Security Agency entered into a
“Contract for Security Services” wherein Eagle will provide security services in PTSI’s
premises (1979-1985).
2. Private respondents were assigned by Eagle to PTSI as security guards.
3. 1985: A complaint was filed by private respondents against PTSI and Eagle for unpaid wage
and allowance increases.
4. Labor Arbiter: Ordered Eagle and PTSI to pay jointly and severally the wages.
5. PTSI and Eagle appealed. Still ordered to pay.
6. Motion for Reconsideration. Denied by NLRC for lack of merit.
7. PTSI and Eagle filed for separate petitions for certiorari.
8. A TRO was issued enjoining the NLRC from enforcing its decision.
9. PTSI: Payment of the wage shall be borne exclusively by Eagle pursuant to the Contract.
10. Eagle: PTSI should be liable pursuant to Wage Order Nos. 3, 5 and 6 (…increase in the
minimum wage shall be borne by the principal or client of the service contractor…)
11. PTSI: To uphold the ruling of the NLRC would be violative of the Constitutional prohibition
against impairment of the obligation of contracts.
ISSUES:
1. Whether the wage orders would violate the non-impairment clause. NO, they are labor
standard legislations enacted pursuant to the police power of the State.
2. Whether PTSI and Eagle are solidarily liable for the unpaid wages. YES.
RATIO:
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1. They are enacted to alleviate the plight of the workers whose wages barely meet the spiraling
costs of their basic needs. The increase in the minimum wage was ordered precisely to
ensure the workers’ health, efficiency and well-being towards achieving the country’s goal of
ensuring increased productivity and viability of business and industry.
2. Petitioners’ solidary liability finds support in Articles 106, 107 and 109 of Labor Code. It is
mandated to assure compliance of the provisions therein including the statutory minimum
wage. It facilitates payment of the workers’ performance of any work, task, job or project,
giving protection as mandated by the Constitution.
Solidary liability does not preclude the right of reimbursement from the co-debtor
by the one who paid.
Ultimate liability for the payment of the increases rests with the principal.
CONST., Art. II, Secs. 5 & 10; Art. XIII, Secs. 1 & 2
Calalang v. Williams, 70 Phil. 726 (1940); Fr. Joaquin Bernas, The 1987 Philippine
FACTS:
1. Calalang, in his capacity as citizen and taxpayer, filed a petition for a writ of prohibition against
Williams, Chairman of National Traffic Commission, the Director of Public Workes, the Acting
Secretary of Public Works and Communications, Mayor of the City of Manila, and acting Chief
of Police.
2. Calalang: The National Traffic Commission resolved to recommend that animal-drawn
vehicles be prohibited from passing along Rosario Street and Rizal Avenue for a period of
one year from the opening of the Colgante Bridge to traffic.
3. This measure was pursuant to the provisions of CA 548 authorizing the Director of Public
Works to promulgate rules and regulations to regulate and control the use of and traffic on
national roads.
4. Calalang: Rules and regulations infringe upon the constitutional precept regarding the
promotion of social justice to insure the well-being and economic security of all the people.
ISSUE: Whether the rules and regulations infringe upon the constitutional precept regarding the
promotion of social justice. NO.
RATIO:
 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 is bringing about “the greatest good to the greatest number.”
HFS Phil., Inc. v. Pilar, G.R. No. 168716, April 16, 2009;
FACTS:
1. Pilar was engaged by IUM Shipmanagement and its Philippine manning agent, HFS
Philippines, as a crew member (electrician) of the Norwegian vessel.
2. Four months after he boarded, he complained of loss of appetite, nausea, vomiting, and
severe nervousness. His condition did not improve despite being given medical treatment.
3. He was diagnosed with depression and gastric ulcer. The physician declared him unfit for
work and recommended hospitalization and repatriation. He returned to Manila same day.
4. He was met by an HFS representative who brought him to Medical Center where it was
confirmed that he was suffering from major depression.
5. He was placed under continuous medical treatment for several months.
6. He was later on declared fit to work.
7. He sought the opinion of other physicians. One said he was still depressed and the other with
illnesses making him unfit to work.
8. He then filed a complaint for underpayment of disability and medical benefits and for
damages in the NLRC. NLRC referred the case to the National Conciliation and Mediation
Board because he was a registered member of the Seaman’s Union.
9. Pilar: He was hit by an officer on the head. He was traumatized and from there, all he
symptoms started showing. He claimed to be entitled to disability compensation under Art.
12 of the CBA between AMOSUP and the Norwegian Shipowner’s Assoc.
10. Petitioners: In the absence of proof that his depression was caused by an accident, he is not
entitled to disability and medical benefits. Instead, he was only entitled to the 120-day sick
pay as provided in the CBA.
11. NCMB: Pilar’s depression was a compensable sickness since it arose out of his employment.
In view of the principle of social justice, that those who have less in life should have more
in the law, he was awarded disability compensation.
12. CA: He was not entitled to disability compensation granted by the CBA but is entitled to
disability benefits granted by Sec. 32 of the employment contract after proving that his
illnesses impaired him.
ISSUE: Whether Pilar is entitled to disability compensation. YES, under the employment
contract.
RATIO:
 Pilar is clearly entitled to sick pay because he fell ill while on board the vessel as provided by
the CBA.
 However, the CBA does not cover all kinds of illnesses such as those suffered by Pilar.
Neither the NCMB nor the CA found that his illnesses were the result of an accident or a
marine peril.
 A seafarer may be entitled to disability compensation if (1) he is shown to have contracted
an illness or suffered an injury in the course of his employment and (2) such illness or injury
resulted in his total or partial disability.
 The discrepancy between the findings of the company doctor and Pilar’s doctor would make
or break his claim. The Court, thus, adopts the findings favorable to Pilar.
 The law looks tenderly on the laborer. Where the evidence may be reasonably
interpreted in two divergent ways, one prejudicial and the other favorable to him, the
balance must be tilted in his favor consistent with the principle of social justice.
PLDT v. NLRC,* 164 SCRA (1988);
FACTS:
1. Abucay, a traffic operator of PLDT, was accused by two complainants of having demanded
and received P3,800 in consideration of her promise to facilitate the application approval for
telephone installation.
2. She was found guilty and was separated from the service.
3. She went to the Ministry of Labor and Employment claiming she had been illegally removed.
Complaint dismissed but she was awarded one month pay for every year of service as
financial assistance and for reasons of equity and compassion.
4. PLDT and Abucay appealed to the NLR Board. Dismissed.
5. PLDT questions the affirmance of the award as having been made with grave abuse of
discretion. An employee dismissed for cause is entitled to neither reinstatement nor
backwages and is not allowed any relief at all because the dismissal is accordance with law.
6. NLRC: Abucay is sufficiently punished with her dismissal.
7. SolGen: Separation pay allowed on grounds of social and compassionate justice.
ISSUE: Whether Abucay is entitled to the separation pay. NO.
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RATIO:
 General rule: A person dismissed for cause is not entitled to separation pay.
 Exception: Equity. It is grounded on the precepts of conscience and not on any sanction of
positive law.
 The Constitution is replete with positive commands for the promotion of social justice, and
particularly the protection of the rights of the workers.
 Separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character.
 The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an imperative of every humane society but
only when the recipient is not a rascal claiming an undeserved privilege.
 This great policy of our Constitution is not meant for the protection of those who have proved
they are not worthy of it, like the workers who have tainted the cause of labor with the
blemishes of their own character.
 Abucay was dismissed for dishonesty. The fact that she worked with PLDT for more
than a decade should even be taken against her as in reflects a regrettable lack of
loyalty. If regarded as justification for moderating penalty, it will pervert the meaning
of social justice and undermining the efforts of labor to cleanse its ranks of all
undesirables.
Toyota Motor Phil. Corp. Workers Association v. NLRC,* G.R. No. 158786, October 19,
2007;
FACTS:
1. The Union is a legitimate labor organization and is certified as the sole and exclusive
bargaining agent of all Toyota rank and file employees.
2. Toyota is a domestic corporation engaged in the assembly and sale of vehicles and parts.
3. Toyota challenged the said Order via an appeal to the DOLE Secretary.
4. In the meantime, the Union submitted it CBA proposals to Toyota but it refused to negotiate
pending appeal.
5. The Union filed a Notice of strike which was converted by the NCMB to a preventive
mediation case pending the appeal.
6. The Union and Toyota were required to attend a hearing.
7. The Union officers and members failed to render the required overtime work and instead
marched and staged a picket in front of the BLR Office. It also requested that its members
be allowed to be absent to attend the hearing. Toyota denied the request.
8. Despite the denial, more than 200 employees staged mass actions in front of the BLR and
the DOLE Offices to protest.
9. Due to their absence, Toyota experience acute lack of manpower in its manufacturing and
production lines and was unable to meet its goals resulting to losses of P53M.
10. Toyota sent individual letters to 360 employees requiring them to explain within 24 hours why
they should not be dismissed for defiance of company’s order to render overtime work, failure
to report, and participation in the actions.
11. The Union again filed for another notice of strike for union busting amounting to unfair labor
practice. But submitted their explanation.
12. Toyota terminated the employment of 227 employees for participation in concerted actions
in violation of its Code of Conduct and for misconduct under Art. 282 of the Labor Code.
13. The Union went on another strike and barricaded the plants and prevented workers who
reported for work from entering therefrom.
14. Toyota filed a petition for injunction and issuance of a TRO before the NLRC. Approved. It
also filed a petition to declare the strike illegal.
15. The Secretary of Labor ordered all striking workers to return to work and for Toyota to accept
the returning employees, under same terms or put them under payroll reinstatement (which
it chose).
16. Despite orders, several payroll-reinstated members of the Union staged a protest rally and
picketed in the Bicutan and Sta. Rosa plants.
17. NLRC considered the mass action illegal.
18. CA deleted the award of severance compensation to the dismissed Union members
considering the illegal strikes as serious misconduct.
ISSUES:
1. Whether the mass actions committed by the Union on different occasions are illegal strikes.
YES.
2. Whether separation pay should be awarded to the Union members who participated in the
illegal strikes. NO.
RATIO:
 These strikes were illegal because unlawful means were employed. The acts of the Union
officers and members are in palpable violation of Art. 264(e), which proscribes acts of
violence, coercion, or intimidation, or which obstruct the free ingress to and egress from the
company premises. Undeniably, the strikes from March 28 to April 12, 2001 were illegal.
 The Union, by its mass actions, has inflamed an already volatile situation, which was explicitly
proscribed by the DOLE Secretary’s Order.
 One exception where separation pay is given even though an employee is validly dismissed
is when there is justification in applying the principle of social justice.
 There can be no good faith in intentionally incurring absences in a collective fashion from
work just to attend the DOLE hearings.
 The Union’s strategy was plainly to cripple the operations of Toyota.
 The Union officials and members are supposed to know through common sense that huge
losses would befall the company by the abandonment of their regular work.
 They were also fully aware of the company’s prohibition against concerted action inimical to
the interests of the company.
 They violated the order of the DOLE Secretary, exhibiting lack of obeisance to the rule of law.
Yrasuegui v. PAL, G.R. No. 168081, October 17, 2008;
FACTS:
1. Yrasuegui was a former international flight steward of PAL, he was dismissed because of his
failure to adhere to the weight standards of PAL.
2. The ideal weight for his height (5’8”) is 166 lbs. as mandated by the Cabin and Crew
Administration Manual of PAL.
3. PAL advised him to go on an extended vacation leave to address his weight concerns. He
failed to meet the standards prompting another leave without pay.
4. After meeting the required weight, he was allowed to return to work. But his weight problem
recurred. He again went on leave without pay.
5. In line with company policy, he was removed from flight duty and was formally requested to
trim down to his ideal weight.
6. When he went back for a weight check, it was discovered that he gained weight (215 lbs.).
7. Yrasuegui, in a letter, made a commitment addressed to the Cabin Crew Group Manager to
reduce weight.
8. Despite the ninety-day period given him to reach his ideal weight, he remained overweight.
He remained grounded. He was directed to report every two weeks for weight check but he
failed to go.
9. He was still given one more month to comply. He continuously ignored all directives to report
back for weight checks.
10. He requested for leniency but PAL finally served a Notice of Administrative Charge for
violation of company standards on weight requirements. He was given 10 days to file his
answer.
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11. Yrasuegui: His violation, if any, had already been condoned since no action has been taken
by the company regarding the case. And that PAL discriminated against him because the
company has not been fair in treating the cabin crew members who are similarly situated.
12. After a hearing, Yrasuegui was informed that due to his inability to attain his ideal weight, and
considering the utmost leniency given to him, his services were considered terminated
effective immediately.
13. He filed for illegal dismissal against PAL.
14. Labor Arbiter: Illegally dismissed. Weight standards need not be complied with under pain of
dismissal since his weight did not hamper the performance of his duties. Directed
reinstatement.
15. NLRC: Affirmed, entitled to full backwages. Obesity is a disease in itself. There can be no
intentional defiance or serious misconduct to lawful order of PAL.
16. CA: Reversed, NLRC looked at wrong and irrelevant considerations. Weight standards of
PAL are meant to be continuing qualification for an employee’s position. Failure to adhere is
an analogous cause for dismissal.
ISSUES:
1. Whether Yrasuegui’s obesity is a ground for dismissal. YES.
2. Whether he was unduly discriminated against when he was dismissed. NO.
3. Whether he is entitled to reinstatement and backwages. NO, but he is entitled to separation
pay.
RATIO:
 The weight standards were a continuing qualification to keep his job.
 He was able to reduce weight so it clearly shows that it is possible for him to lose weight. He
also repeatedly ignored all requests for weight checks.
 His obesity may not be unintended but it is voluntary.
 PAL has committed itself to safely transport its passengers. In order to achieve this, it must
necessarily rely on its employees, its cabin flight deck crew on board the aircraft.
 The weight standards should be viewed as imposing strict norms of discipline upon its
employees.
 He failed to prove that he complied with the return to work order of PAL.
 No record of him actually rendering services for PAL when he was dismissed, in order to
insist on the payment of his full backwages.
 Separation pay is granted to a legally dismissed employee as an act of “social justice”
or based on “equity.”
 In both instances, it is required that the dismissal (1) was not for serious misconduct
and (2) does not reflect on the moral character of the employee.
Digital Telecommunications Phils., Inc. v. Ayapana, G.R. No. 195614, [January 10, 2018]
DOCTRINE: The willful breach by the employee of the trust reposed in him by his employer or the
latter's duly authorized representative is a just cause for dismissal. Even there is a valid dismissal,
separation pay may be granted as a measure of social justice.
FACTS:
Petitioner hired respondent as Key Accounts Manager for its telecommunication
products and services. Respondent was tasked, among others, to offer and sell DIGITEL's foreign
exchange (FEX) line to prospective customers.
Respondent successfully offered two (2) FEX lines for Atimonan, Quezon, to Estela Lim. He
received from Lim the total amount of ₱7,000.00 for the two lines, for which he issued two (2)
official receipts. Respondent, however, did not remit the subject amount to petitioner on the same
date.
Respondent learned, from his immediate superior, that there was no available FEX line in
Atimonan, Quezon; and that it was not possible to have a FEX line in the area due to technical
constraints. On the same day, respondent retrieved from Lim the two (2) official receipts issued to
the latter and replaced them with an acknowledgment receipt.
The secretary of Lim, went to petitioner's business office to pay bills and to ask for the refund of
the subject amount but there was no existing application for the said service under the name of
Star Lala Group of Companies. The respondent was notified about the request of refund and five
(5) days from said notice, that respondent was able to make the refund.
Petitioner issued a Notice to Explain to respondent, asking him to explain in which the respondent
submitted a written response. On 4 December 2006, petitioner sent a Notice of Offense to
respondent, scheduling his administrative hearing and requesting his presence there. On 19
January 2007, petitioner issued a Notice of Dismissal finding respondent guilty of "breach by the
employee of the trust and confidence reposed in him by management or by a company
representative" under petitioner's disciplinary rules, which merited dismissal for the first offense.
Aggrieved, respondent filed a complaint for illegal dismissal.
ISSUE:
1. Is the respondent guilty of breach of trust and confidence reposed in him by the
petitioner?
2. Is the respondent entitled to separation pay despite there is a valid dismissal?
RULING:
1. Yes. Respondent held a position of trust and confidence and committed an act that
justified petitioner's loss of trust and confidence.
The willful breach by the employee of the trust reposed in him by his employer or the
latter's duly authorized representative is a just cause for dismissal. However, the validity of a
dismissal based on this ground is premised upon the concurrence of these conditions: (1)
the employee concerned must be holding a position of trust and confidence; and (2) there
must be a willful act that would justify the loss of trust and confidence.
The first requisite is certainly present. In a number of cases, this Court has held that rank-
and-file employees who are routinely charged with the care and custody of the employer's
money or property are classified as occupying positions of trust and confidence. It is not
disputed that respondent was tasked to solicit subscribers for petitioner's FEX line and, in the
course thereof, collect money for subscriptions and issue official receipts therefor, as was
the case in the transaction subject of this controversy. Being involved in the handling of the
company's funds, respondent undeniably occupies a position of trust and confidence.
The records likewise reveal that the second requisite is present. It must be emphasized that
a finding that an employer's trust and confidence has been breached by the employee must
be supported by substantial evidence, or such amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. It must not be based on
the employer's whims or caprices or suspicions; otherwise, the employee would eternally
remain at the mercy of the employer.
The totality of the circumstances in the case at bar supports a conclusion that respondent's
dismissal was based on substantial evidence that he had willfully breached the trust reposed
upon him by petitioner, and that petitioner was not actuated by mere whim or capriciousness.
2. YES. Even with a finding that respondent was validly dismissed, separation pay may be
granted as a measure of social justice.
Generally, an employee dismissed for any of the just causes under Article
297 is not entitled to separation pay. By way of exception, the Court has allowed the
grant of separation pay based on equity and as a measure of social justice, as long as
the dismissal was for causes other than serious conduct or those manifesting moral
depravity.
Here, while it is clear that respondent's act constitutes a willful breach of trust
and confidence that justified his dismissal, it also appears that he was primarily actuated
by zealousness in acquiring and retaining subscribers rather than any intent to
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misappropriate company funds; as he admitted in his response to the notice to explain
that offering an alternative FEX line to Lim was part of his strategy to ensure her
subscription.
Respondent’s zealousness was manifested through acts that showed an inordinate
lapse of judgment warranting his dismissal in accordance with management
prerogative, but this Court considers in his favor the above circumstances in granting
him separation pay in the amount of one (1) month pay for every year of service.