[G.R. No.
 127598. January 27, 1999.] 1. LABOR AND SOCIAL LEGISLATION; CONDITIONS OF
MANILA ELECTRIC COMPANY, petitioner,vs.THE
HONORABLE SECRETARY OF LABOR LEONARDO
QUISUMBING AND MERALCO EMPLOYEES AND
WORKERS ASSOCIATION (MEWA), respondents.
Siguion Reyna Montecillo & Ongsiako for petitioner.
Rolando R. Arbues, Atilano S. Guevarra, Jr. and Marianito D.
Miranda for petitioner.
Perfecto V. Fernandez, Jose P. Fernandez and Cristobal
Fernandez  for private respondent.
SYNOPSIS
This is petition for certiorari filed by petitioner Manila Electric Company
(MERALCO) seeking to annul the orders of the Secretary of Labor dated
August 19, 1996 and December 28, 1996 wherein the Secretary, after
assuming jurisdiction, required MERALCO and its rank and file union — the
Meralco Workers Association (MEWA) to execute a collective bargaining
agreement (CBA) for the remainder of the parties, 1992-1997 CBA cycle, and
to incorporate in this new CBA the Secretary's dispositions in the disputed
economic and non-economic issues.
The Court ruled that, after considering the parties' position and the
evidence on record, the Secretary of Labor disregarded and misappreciated
evidence, particularly with respect to the wage award. The Secretary of Labor
apparently also acted arbitrarily and even whimsically in ordering the inclusion
of benefits, terms and conditions that the law and the parties did not intended
to be reflected in their CBA; even the Solicitor General himself considered that
the Secretary gravely abused his discretion on at least three major points: (a)
on the signing bonus; (b) on the inclusion of confidential employees in the rank
and file bargaining unit; and (c) in mandating a union security "closed shop"
regime in the bargaining agreement. The petition is granted and the orders of
the public respondent Secretary of Labor dated August 19 1996 and
December 28, 1996 were set aside. The parties were directed to execute a
Collective Bargaining Agreement incorporating the terms and conditions
contained in the unaffected portions of the Secretary of Labor's orders and the
modifications set forth in the instant case. The retirement issue is remanded to
the Secretary of Labor for reception of evidence and determination of the legal
personality of the MERALCO retirement fund. AaIDCS
SYLLABUS
EMPLOYMENT; BONUS; NOT A DEMANDABLE AND ENFORCEABLE
OBLIGATION. — As a rule, a bonus is not a demandable and enforceable
obligation; it may nevertheless be granted on equitable considerations as
when the giving of such bonus has been the company's long and regular
practice. To be considered a "regular practice," the giving of the bonus should
have been done over a long period of time, and must be shown to have been
consistent and deliberate. Thus we have ruled in National Sugar Refineries
Corporation vs. NLRC: "The test or rationale of this rule on long practice
requires an indubitable showing that the employer agreed to continue giving
the benefits knowing fully well that said employees are not covered by the law
requiring payment thereof." In the case at bar, the record shows that
MERALCO, aside from complying with the regular 13th month bonus, has
P. further been giving its employees an additional Christmas bonus at the tail-end
of the year since 1988. While the special bonuses differed in amount and bore
different titles, it can not be denied that these were given voluntarily and
continuously on or about Christmas time. The considerable length of time
MERALCO has been giving the special grants to its employees indicates a
unilateral and voluntary act on its part, to continue giving said benefits knowing
that such act was not required by law. Indeed, a company practice favorable to
the employees has been established and the payments made by MERALCO
pursuant thereto ripened into benefits enjoyed by the employees.
Consequently, the giving of the special bonus can no longer be withdrawn by
the company as this would amount to a diminution of the employee's existing
benefits.
2. ID.; ID.; THE COOPERATIVE LAW DOES NOT REQUIRE THE
EMPLOYERS TO FUNDS THAT EMPLOYEES CAN USE TO FORM
COOPERATIVE. — The Secretary's disputed ruling requires MERALCO to
provide the employees covered by the bargaining unit with a loan of 1.5 Million
as seed money for the employees formation of a cooperative under the
Cooperative Law, R.A. 6938. We see nothing in this law — whether expressed
or implied — that requires employers to provide funds, by loan or otherwise,
that employees can use to form a cooperative. The formation of a cooperative
is a purely voluntary act under this law, and no party in any context or
relationship is required by law to set up a cooperative or to provide the funds
therefor. In the absence of such legal requirement, the Secretary has no basis
to order the grant of a 1.5 million loan to MERALCO employees for the
formation of a cooperative. Furthermore, we do not see the formation of an
employees cooperative, in the absence of an agreement by the collective
bargaining parties that this is a bargainable term or condition of employment,
to be a term or condition of employment that can be imposed on the parties on
compulsory arbitration.
3. ID.;ID.;SIGNING BONUS; DEFINED; WITHOUT THE GOODWILL,
THE SIGNING BONUS CANNOT BE JUSTIFIED. — On the signing bonus
issue, we agree with the positions commonly taken by MERALCO and by the
Office of the Solicitor General that the signing bonus is a grant motivated by
the goodwill generated when a CBA is successfully negotiated and signed
between the employer and the union. In the present case, this goodwill does
not exist. In the words of the Solicitor General: "When negotiations for the last
two years of the 1992-1997 CBA broke down and the parties sought the
assistance of the NCMB, but which failed to reconcile their differences, and
when petitioner MERALCO bluntly invoked the jurisdiction of the Secretary of
Labor in the resolution of the labor dispute, whatever goodwill existed between
petitioner MERALCO and respondent union disappeared. ...." In contractual
terms, a signing bonus is justified by and is the consideration paid for the
goodwill that existed in the negotiations that culminated in the signing of a
CBA. Without the goodwill, the payment of a signing bonus cannot be justified
and any order for such payment, to our mind, constitutes grave abuse of
discretion. This is more so where the signing bonus is in the not insignificant
total amount of P16 million.
4. ID.;LABOR RELATIONS; CONFIDENTIAL EMPLOYEES;
EXCLUDED FROM RANK AND FILE BARGAINING UNIT. — We have
established on the exclusion of confidential employees from the rank and file
bargaining unit. In Pier 8 Arrastre vs. Confesor and General Maritime and
Stevedore Union,we ruled that: "Put another way, the confidential employee
does not share in the same "community of interests" that might otherwise
make him eligible to join his rank and file co-workers, precisely because of a
conflict in those interest." Thus, in Metrolab Industries vs. Roldan-Confesor,We
ruled: "...that the Secretary's order should exclude the confidential employees
from the regular rank and file employees qualified to become members of the
MEWA bargaining unit." From the foregoing disquisition, it is clear that
employees holding a confidential position are prohibited from joining the union
of the rank and file employees.
5. ID.;ID.;CONTRACTING OUT OF WORK IS A PROPRIETARY
RIGHT OF THE EMPLOYER IN THE EXERCISE OF AN INHERENT
MANAGEMENT PREROGATIVE. — This issue is limited to the validity of the
requirement that the union be consulted before the implementation of any
contracting out that would last for 6 months or more. Proceeding from our
ruling in  San Miguel Employees Union-PTGWO vs. Bersamira,(where we
recognized that contracting out of work is a propriety right of the employer in
the exercise of an inherent management prerogative) the issue we see is
whether the Secretary's consultation requirement is reasonable or unduly
restrictive of the company's management prerogative. We note that the
Secretary himself has considered that management should not be hampered
in the operations of its business when he said that: 'We feel that the limitations
imposed by the union advocates are too specific and may not be applicable to
the situations that the company and the union may face in the future. To our
mind, the greater risk with this type of limitation is that it will tend to curtail
rather than allow the business growth that the company and the union must
aspire for. Hence, we are for the general limitations we have stated above
because they will allow a calibrated response to specific future situations the
company and the union may face."
6. ID.;ID.;THE SECRETARY OF LABOR ACTED IN EXCESS OF ITS
JURISDICTION WHEN HE ORDERED THE INCLUSION OF BENEFITS,
TERMS AND CONDITIONS THAT THE LAW AND THE PARTIES DID NOT
INTEND TO BE REFLECTED IN THE CBA. — The Secretary acted in excess
of the discretion allowed him by law when he ordered the inclusion of benefits,
terms and conditions that the law and the parties did not intend to be reflected
in their CBA. To avoid the possible problems that the disputed orders may
bring, we are constrained to rule that only the terms and conditions already
existing in the current CBA and was granted by the Secretary (subject to the
modifications decreed in this decision) should be incorporated in the CBA, and
that the Secretary's disputed orders should accordingly be modified. AIECSD
DECISION
MARTINEZ, J  p:
In this petition for certiorari,the Manila Electric Company (MERALCO)
seeks to annul the orders of the Secretary of Labor dated August 19, 1996 and
December 28, 1996, wherein the Secretary required MERALCO and its rank
and file union — the Meralco Workers Association (MEWA) — to execute a
collective bargaining agreement (CBA) for the remainder of the parties' 1992-
1997 CBA cycle, and to incorporate in this new CBA the Secretary's
dispositions on the disputed economic and non-economic issues.
MEWA is the duly recognized labor organization of the rank-and-file
employees of MERALCO. LLphil
On September 7, 1995, MEWA informed MERALCO of its intention to
re-negotiate the terms and conditions of their existing 1992-1997 Collective
Bargaining Agreement (CBA) covering the remaining period of two years
starting from December 1, 1995 to November 30, 1997. 1 MERALCO signified
its willingness to re-negotiate through its letter dated October 17, 1995 2 and
formed a CBA negotiating panel for the purpose. On November 10, 1995,
MEWA submitted its proposal 3 to MERALCO, which, in turn, presented a
counter-proposal. Thereafter, collective bargaining negotiations proceeded.
However, despite the series of meetings between the negotiating panels of
MERALCO and MEWA, the parties failed to arrive at "terms and conditions
acceptable to both of them."
On April 23, 1996, MEWA filed a Notice of Strike with the National
Capital Region Branch of the National Conciliation and Mediation Board
(NCMB) of the Department of Labor and Employment (DOLE) which was
docketed as NCMB-NCR-NS-04-152-96, on the grounds of bargaining
deadlock and unfair labor practices. The NCMB then conducted a series of
conciliation meetings but the parties failed to reach an amicable settlement.
Faced with the imminence of a strike, MERALCO on May 2, 1996, filed an
Urgent Petition 4 with the Department of Labor and Employment which was
docketed as OS-AJ No. 0503[1]96 praying that the Secretary assume
jurisdiction over the labor dispute and to enjoin the striking employees to go
back to work.
 The Labor Secretary granted the petition through its Order 5 of May 8,
1996, the dispositive portion of which reads:
"WHEREFORE, premises considered, this Office
now assumes jurisdiction over the labor dispute obtaining
between the parties pursuant to Article 263(g) of the Labor
Code. Accordingly, the parties are here enjoined from
committing any act that may exacerbate the situation. To
speed up the resolution of the dispute, the parties are also
directed to submit their respective Position Papers within ten
(10) days from receipt.
'Undersecretary Jose M. Espanol, Jr. is deputized to
conduct conciliation conferences between the parties to
bridge their differences and eventually hammer out a
solution that is mutually acceptable. He shall be assisted by
the Legal Service.
SO ORDERED."
Thereafter, the parties submitted their respective memoranda and on
August 19, 1996, the Secretary resolved the labor dispute through an
Order, 6 containing the following awards:
"ECONOMIC DEMANDS
Wage increaseP2,300.00 for the first year covering the
period from December 1, 1995 to
November 30, 1996
P2,200.00 for the second year covering the period
December 1, 1996 to November 30,
1997.
Red Circle Rate (RCR) Allowance — all RCR
allowances (promotional increases that go beyond the
maximum range of a job classification salary) shall be
integrated into the basic salary of employees effective
December 1, 1995.
Longevity Allowance — the integration of the
longevity allowance into the basic wage is denied; the
present policy is maintained.
Longevity Increase — the present longevity bonus is
maintained but the bonus shall be incorporated into the new
CBA.
Sick Leave — MEWA's demand for upgrading is
denied; the company's present policy is maintained.
However, those who have not used the sick leave benefit
during a particular year shall be entitled to a one-day sick
leave incentive.
Sick leave reserve — the present reserve of 25
days shall be reduced to 15 days; the employee has the
option either to convert the excess of 10 days to cash or let
it remain as long as he wants. In case he opts to let it
remain, he may later on convert it into cash at his retirement
or separation.
Vacation Leave — MEWA's demand for upgrading
denied & the company's present policy is maintained which
must be incorporated into the new CBA but scheduled
vacation leave may be rounded off to one full day at a time
in case of a benefit involving a fraction of a day.
Union Leave — of MEWA's officers,
directors or stewards assigned to perform union
duties or legitimate union activity is increased from
30 to 40 Mondays per month.
Maternity, Paternity and Funeral leaves — the
existing policy is to be maintained and must be incorporated
in the new CBA unless a new law granting paternity leave
benefit is enacted which is superior to what the company
has already granted.
Birthday Leave — union's demand is granted. If
birthday falls on the employee's rest day or on a non-
working holiday, the worker shall be entitled to go on leave
with pay on the next working day.
Group Hospitalization & Surgical Insurance Plan
(GHSIP) and Health Maintenance Plan (HMP) — present
policy is maintained insofar as the cost sharing is concerned
— 70% for the Company and 30% for MEWA.
Health Maintenance Plan (HMP) for dependents —
subsidized dependents increased from three to five
dependents.
Longevity Bonus — is increased from P140.00 to
P200.00 for every year of service to be received by the
employee after serving the Company for 5 years.
Christmas Bonus and Special Christmas Grant —
MEWA's demand of one month salary as Christmas Bonus
and two month's salary as Special Christmas Grant is
granted and to be incorporated in the new CBA.
 Midyear Bonus — one month's pay to be included in
the CBA.
Anniversary Bonus — union's demand is denied.
Christmas Gift Certificate — company has the
discretion as to whether it will give it to its employees.
Retirement Benefits:
a. Full retirement-present policy is maintained;
b. one cavan of rice per month is granted to retirees;
c. special retirement leave and allowance-present
policy is maintained;
d. HMP coverage for retirees — HMP coverage is
granted to retirees who have not reached
the age of 70, with MERALCO subsidizing
100% of the monthly premium; those over
70 are entitled to not more than 30 days of
hospitalization at the J.F. Cotton Hospital
with the company shouldering the entire
cost.
e. HMP coverage for retiree's dependents is denied
f. Monthly pension of P3,000.00 for each retiree is
denied.
g. Death benefit for retiree's beneficiaries is denied.
Optional retirement — union's demand is
denied; present policy is maintained; employee is
eligible for optional retirement if he has rendered at
least 18 years of service.
Dental, Medical and Hospitalization Benefits —
grant of all the allowable medical, surgical, dental and
annual physical examination benefits, including free
medicine whenever the same is not available at the JFCH.
Resignation benefits — union's demand is denied.
Night work — union demand is denied but present
policy must be incorporated in CBA.
Shortswing — work in another shift within the same
day shall be considered as the employee's work for the
following day and the employee shall be given additional
four (4) hours straight time and the applicable excess time
premium if he works beyond 8 hours in the other shift.
High Voltage allowance — is increased from P45.00
to P55.00 to be given to any employee authorized by the
Safety Division to perform work on or near energized bare
lines & bus including stockman drivers & crane operators
and other crew members on ground.
High Pole Allowance — is increased from P30.00 to
P40.00 to be given to those authorized to climb poles up to
at least 60 ft. from the ground. Members of the team
including stockman drivers, crane operators and other crew
members on the ground, are entitled to this benefit.
Towing Allowance — where stockmen drive tow
trailers with long poles and equipment on board, they shall
be entitled to a towing allowance of P20.00 whether they
perform the job on regular shift or on overtime.
Employee's Cooperative — a loan of P3 M seed
money is granted to the proposed establishment of a
cooperative, payable in twenty (20) years starting one year
from the start of operations.
Holdup Allowance — the union demand is denied;
the present policy shall be maintained.
Meal and Lodging Allowance — shall be increased
effective December 1, 1995 as follows:
Breakfast from P25.00 to P35.00
Lunch from P35.00 to P45.00
Dinner from P35.00 to P45.00
Lodging from P135.00 to
  P180.00 a night in all
  MERALCO franchise areas
Payroll Treatment for Accident while on Duty — an
employee shall be paid his salary and allowance if any is
due plus average excess time for the past 12 months from
the time of the accident up to the time of full recovery and
placing of the employee back to normal duty or an
allowance of P2,000.00, whichever is higher.
Housing and Equity Assistance Loan — is increased
to P60,000.00; those who have already availed of the
privilege shall be allowed to get the difference.
Benefits for Collectors:
a. Company shall reduce proportionately the quota
and monthly average product level (MAPL)
 in terms of equivalent bill assignment when
an employee is on sick leave and paid
vacation leave.
b. When required to work on Saturdays, Sundays
and holidays, an employee shall receive
P60.00 lunch allowance and applicable
transportation allowance as determined by
the Company and shall also receive an
additional compensation to one day fixed
portion in addition to lunch and
transportation allowance.
c. The collector shall be entitled to an incentive pay
of P25.00 for every delinquent account
disconnected.
d. When a collector voluntarily performs other work
on regular shift or overtime, he shall be
entitled to remuneration based on his
computed hourly compensation and the
reimbursement of actually incurred
transportation expenses.
e. Collectors shall be provided with bobcat belt bags
every year.
f. Collector's cash bond shall be deposited under his
capital contribution to MESALA.
g. Collectors quota and MAPL shall be
proportionately reduced during typhoons,
floods, earthquakes and other similar  force
majeure events when it is impossible for a
collector to perform collection work.
Political Demands:
a. Scope of the collective bargaining unit — the
collective bargaining unit shall be composed
of all regular rank-and-file employees hired
by the company in all its offices and
operative centers throughout its franchise
area and those it may employ by reason of
expansion, reorganization or as a result of
operational exigencies.
b. Union recognition and security —
i. The union shall be recognized by the
Company as sole and exclusive
bargaining representative of the
rank-and-file employees included in
the bargaining unit. The Company
shall agree to meet only with Union
officers and its authorized
representatives on all matters
involving the Union and all issues
arising from the implementation and
interpretation of the new CBA.
ii. The union shall meet with the newly
regularized employees for a period
not to exceed four (4) hours, on
company time, to acquaint the new
regular employees of the rights,
duties and benefits of Union
membership.
iii. The right of all rank-and-file employees to
join the union shall be recognized in
accordance with the maintenance of
membership principle as a form of
union security.
c. Transfer of assignment and job security —
i. No transfer of an employee from one
position to another shall be made if
motivated by considerations of sex,
race, creed, political and religious
belief, seniority or union activity.
ii. If the transfer is due to the reorganization
or decentralization, the distance
from the employee's residence shall
be considered unless the transfer is
accepted by the employee. If the
transfer is extremely necessary, the
transfer shall be made within the
offices in the same district.
iii. Personnel hired through agencies or
contractors to perform the work
done by covered employees shall
not exceed one month. If extension
is necessary, the union shall be
informed. But the Company shall
not permanently contract out
regular or permanent positions that
 are necessary in the normal
operation of the Company.
d. Check off Union Dues — where the union
increases its dues as approved by the
Board of Directors, the Company shall
check off such increase from the salaries of
union members after the union submits
check off authorizations signed by majority
of the members. The Company shall honor
only those individual authorizations signed
by the majority of the union members and
collectively submitted by the union to the
Company's Salary Administration.
e. Payroll Reinstatement — shall be in accordance
with Article 223, p. 3 of the Labor Code.
f. Union Representation in Committees — the union
is allowed to participate in policy formulation
and in the decision-making process on
matters affecting their rights and welfare,
particularly in the Uniform Committee, the
Safety Committee and other committees
that may be formed in the future.
Signing Bonus — P4,000.00 per member of the
bargaining unit for the conclusion of the CBA.
Existing benefits already granted by the Company
but which are not expressly or impliedly repealed in the new
agreement shall remain subsisting and shall be included in
the new agreement to be signed by the parties effective
December 1, 1995.
On August 30, 1996, MERALCO filed a motion for
reconsideration 7 alleging that the Secretary of Labor committed grave abuse
of discretion amounting to lack or excess of jurisdiction:
1. in awarding to MEWA a package that would cost at
least P1.142 billion, a package that is grossly excessive and
exorbitant, would not be affordable to MERALCO and would imperil
its viability as a public utility affected with national interest.
2. in ordering the grant of a P4,500 00 wage increase, as
well as a new and improved fringe benefits, under the remaining
two (2) years of the CBA for the rank-and-file employees.
3. in ordering the 'incorporation into the CBA of all existing
employee benefits, on the one hand, and those that MERALCO
has unilaterally granted to its employees by virtue of voluntary
company policy or practice, on the other hand.'
4. in granting certain 'political demands' presented by the
union.
5. in ordering the CBA to be 'effective December 1995'
instead of August 19, 1996 when he resolved the dispute.
MERALCO filed a supplement to the motion for reconsideration on
September 18, 1995, alleging that the Secretary of Labor did not properly
appreciate the effect of the awarded wages and benefits on MERALCO's
financial viability. llcd
MEWA likewise filed a motion asking the Secretary of Labor to
reconsider its Order on the wage increase, leaves, decentralized filing of
paternity and maternity leaves, bonuses, retirement benefits, optional
retirement, medical, dental and hospitalization benefits, short swing and payroll
treatment. On its political demands, MEWA asked the Secretary to rule on its
proposal to institute a Code of Discipline for its members and the union's
representation in the administration of the Pension Fund.
On December 28, 1996, the Secretary issued an Order 8 resolving the
parties' separate motions, the modifications of the August 19, 1996 Order
being highlighted hereunder:
1)  Effectivity of Agreement — December 1, 1995 to
November 30, 1997.
Economic Demands
2)  Wage Increase:
First year — P2,200.00 per month;
Second year —  P2,200.00 per month.
3) Integration of Red Circle Rate (RCR) and
Longevity Allowance into Basic Salary — the RCR
allowance shall be integrated into the basic salary of
employees as of August 19, 1996 (the date of the disputed
Order).
4)  Longevity Bonus — P170 per year of service
starting from 10 years of continuous service.
5) Vacation Leave — The status quo shall be
maintained as to the number of vacation leave
but employees' scheduled vacation may be taken one day
at a time in the manner that this has been provided in the
supervisory CBA.
6)  Sick Leave Reserve — is reduced to 15 days,
with any excess payable at the end of the year. The
employee has the option to avail of this cash conversion or
to accumulate his sick leave credits up to 25 days for
conversion to cash at retirement or separation from the
service.
7)  Birthday Leave — the grant of a day off when an
employee's birthday falls on a non-working day is deleted.
8)  Retirement Benefits for Retirees — The benefits
granted shall be effective on August 19, 1996, the date of
the disputed order up to November 30, 1997, which is the
date the CBA expires and shall apply to those who are
members of the bargaining unit at the time the award is
made.
One sack of rice per quarter of the year shall be
given to those retiring between August 19, 1996 and
November 30, 1997.
On HMP Coverage for Retirees — The parties
'maintain the status quo,that is, with the Company
complying with the present arrangement and the
obligations to retirees as is.'
9)  Medical, Dental and Hospitalization Benefits —
The cost of medicine unavailable at the J.F. Cotton Hospital
shall be in accordance with MERALCO's Memorandum
dated September 14, 1976.
10) GHSIP and HMP for Dependents — The
number of dependents to be subsidized shall be reduced
from 5 to 4 provided that their premiums are proportionately
increased.
11) Employees' Cooperative — The original award
of P3 million pesos as seed money for the proposed
Cooperative is reduced to P1.5 million pesos.
12) Shortswing — the original award is deleted.
13) Payroll Treatment for Accident on Duty —
Company ordered to continue its present practice on payroll
treatment for accident on duty without need to pay the
excess time the Union demanded.
Political Demands:
14) Scope of the collective bargaining unit — The
bargaining unit shall be composed of all rank and file
employees hired by the Company in accordance with the
original Order.
15) Union recognition and security — The
incorporation of a closed shop form of union security in the
CBA;the Company is prohibited from entertaining individuals
or groups of individuals only on matters that are exclusively
within the domain of the union; the Company shall furnish
the Union with a complete list of newly regularized
employees within a week from regularization so that the
Union can meet these employees on the Union's and the
employee's own time.
16) Transfer of assignment and job security — Transfer is a
prerogative of the Company but the transfer must be for a
valid business reason, made in good faith and must be
reasonably exercised. The CBA shall provide that 'No
transfer of an employee from one position to another,
without the employee's written consent, shall be made if
motivated by considerations of sex, race, creed, political and
religious belief, age or union activity.
17) Contracting Out — The Company has the prerogative to
contract out services provided that this move is based on
valid business reasons in accordance with law, is made in
good faith, is reasonably exercised and, provided further
that if the contracting out involves more than six months, the
Union must be consulted before its implementation.
18) Check off of union dues
In any increase of union dues or contributions for
mandatory activities, the union must submit to the
Company a copy of its board resolution increasing the
union dues or authorizing such contributions;
If a board resolution is submitted, the Company
shall deduct union dues from all union members after a
majority of the union members have submitted their
individual written authorizations. Only those check-off
authorizations submitted by the union shall be honored by
the Company.
With respect to special assessments, attorney's
fees, negotiation fees or any other extraordinary fees,
individual authorizations shall be necessary before the
company may so deduct the same.
19) Union Representation in Committees — The
union is granted representation in the Safety Committee, the
Uniform Committee and other committees of a similar nature
and purpose involving personnel welfare, rights and benefits
as well as duties.
Dissatisfied, petitioner filed this petition contending that the Secretary
of Labor gravely abused his discretion:
 1) ...in awarding wage increases of P2,200.00 for 1996
and P2,200 for 1997;
2)  ...in awarding the following economic benefits:
a. Two months Christmas bonus;
b. Rice Subsidy and retirement benefits for retirees;
c. Loan for the employees' cooperative;
d. Social benefits such as GHSIP and HMP for
dependents, employees' cooperative and
housing equity assistance loan;
e. Signing bonus;
f. Integration of the Red Circle Rate Allowance
g. Sick leave reserve of 15 days
h. The 40-day union leave;
i. High pole/high voltage and towing allowance; and
j. Benefits for collectors
3) ...in expanding the scope of the bargaining unit to all
regular rank and file employees hired by the company in all its
offices and operating centers and those it may employ by reason of
expansion, reorganization or as a result of operational exigencies;
4) ...in ordering for a closed shop when his original order
for a maintenance of membership arrangement was not questioned
by the parties;
5) ...in ordering that Meralco should consult the union
before any contracting out for more than six months;
6) ...in decreeing that the union be allowed to have
representation in policy and decision making into matters affecting
"personnel welfare, rights and benefits as well as duties;"
7) ...in ruling for the inclusion of all terms and conditions of
employment in the collective bargaining agreement;
8) ...in exercising discretion in determining the retroactivity
of the CBA;
Both MEWA and the Solicitor General, on behalf of the Secretary of
Labor, filed their comments to the petition. While the case was also set for oral
argument on Feb. 10, 1997, this hearing was cancelled due to MERALCO not
having received the comment of the opposing parties. The parties were
instead required to submit written memoranda, which they did. Subsequently,
both petitioner and private respondent MEWA also filed replies to the opposing
parties' Memoranda, all of which We took into account in the resolution of this
case.
The union disputes the allegation of MERALCO that the Secretary
abused his discretion in issuing the assailed orders arguing that he acted
within the scope of the powers granted him by law and by the Constitution. The
union contends that any judicial review is limited to an examination of the
Secretary's decision-making/discretion — exercising process to determine if
this process was attended by some capricious or whimsical act that constitutes
"grave abuse"; in the absence of such abuse, his findings — considering that
he has both jurisdiction and expertise to make them — are valid.
The union's position is anchored on two premises:
First, no reviewable abuse of discretion could have attended the
Secretary's arbitral award because the Secretary complied with constitutional
norms in rendering the disputed award. The union posits that the yardstick for
comparison and for the determination of the validity of the Secretary's actions
should be the specific standards laid down by the Constitution itself. To the
union, these standards include the State policy on the promotion of workers'
welfare, 9 the principle of distributive justice, 10 the right of the State to
regulate the use of property, 11 the obligation of the State to protect workers,
both organized and unorganized, and insure their enjoyment of "humane
conditions of work" and a "living wage," and the right of labor to a just share in
the fruits of production. 12
Second, no reversible abuse of discretion attended the Secretary's
decision because the Secretary took all the relevant evidence into account,
judiciously weighed them, and rendered a decision based on the facts and law.
Also, the arbitral award should not be reversed given the Secretary's expertise
in his field and the general rule that findings of fact based on such expertise is
generally binding on this Court.
To put matters in proper perspective, we go back to basic principles.
The Secretary of Labor's statutory power under Art. 263 (g) of the Labor
Code to assume jurisdiction over a labor dispute in an industry indispensable
to the national interest, and, to render an award on compulsory arbitration,
does not exempt the exercise of this power from the judicial review that Sec. 1,
Art. 8 of the Constitution mandates. This constitutional provision states:
"Judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of
the government."
Under this constitutional mandate, every legal power of the Secretary
of Labor under the Labor Code, or, for that matter, any act of the Executive,
that is attended by grave abuse of discretion is subject to review by this Court
in an appropriate proceeding. To be sure, the existence of an executive power
alone — whether granted by statute or by the Constitution — cannot exempt
the executive action from judicial oversight, interference or reversal when
grave abuse of discretion is, or is alleged to be, present. This is particularly
true when constitutional norms are cited as the applicable yardsticks since this
Court is the final interpreter of the meaning and intent of the Constitution. 13
The extent of judicial review over the Secretary of Labor's arbitral
award is not limited to a determination of grave abuse in the manner of the
secretary's exercise of his statutory powers. This Court is entitled to, and must
— in the exercise of its judicial power — review the substance of the
Secretary's award when grave abuse of discretion is alleged to exist in the
award, i.e.,in the appreciation of and the conclusions the Secretary drew from
the evidence presented.
The natural and ever present limitation on the Secretary's acts is, of
course, the Constitution. And we recognize that indeed the constitutional
provisions the union cited are State policies on labor and social justice that can
serve as standards in assessing the validity of a Secretary of Labor's actions.
However, we note that these provisions do not provide clear, precise and
objective standards of conduct that lend themselves to easy application. We
likewise recognize that the Constitution is not a lopsided document that only
recognizes the interests of the working man; it too protects the interests of the
property owner and employer as well. 14
For these reasons — and more importantly because a ruling on the
breadth and scope of the suggested constitutional yardsticks is not absolutely
necessary in the disposition of this case — we shall not use these yardsticks in
accordance with the time-honored practice of avoiding constitutional
interpretations when a decision can be reached using non-constitutional
standards. We have repeatedly held that one of the essential requisites for a
successful judicial inquiry into constitutional questions is that the resolution of
the constitutional question must be necessary in deciding the case. 15
In this case we believe that the more appropriate and available
standard — and one does not require a constitutional interpretation — is
simply the standard of reasonableness. In layman's terms, reasonableness
implies the absence of arbitrariness; 16 in legal parlance, this translates into
the exercise of proper discretion and to the observance of due process. Thus,
the question we have to answer in deciding this case is whether the
Secretary's actions have been reasonable in light of the parties positions and
the evidence they presented.
MEWA's second premise — i.e.,that the Secretary duly considered the
evidence presented — is the main issue that we shall discuss at length below.
Additionally, MEWA implied that we should take great care before reading an
abuse of discretion on the part of the Secretary because of his expertise on
labor issues and because his findings of fact deserve the highest respect from
this Court.
This Court has recognized the Secretary of Labor's distinct expertise in
the study and settlement of labor disputes falling under his power of
compulsory arbitration. 17 It is also well-settled that factual findings of labor
administrative officials, if supported by substantial evidence, are entitled not
only to great respect but even to finality. 18 We, therefore, have no difficulty in
accepting the union's caveat on how to handle a Secretary of Labor's arbitral
award. cdlex
But at the same time, we also recognize the possibility that abuse of
discretion may attend the exercise of the Secretary's arbitral functions; his
findings in an arbitration case are usually based on position papers and their
supporting documents (as they are in the present case),and not on the
thorough examination of the parties' contending claims that may be present in
a court trial and in the face-to-face adversarial process that better insures the
proper presentation and appreciation of evidence. 19 There may also be grave
abuse of discretion where the board, tribunal or officer exercising judicial
function fails to consider evidence adduced by the parties. 20 Given the
parties' positions on the justiciability of the issues before us, the question we
have to answer is one that goes into the substance of the Secretary's disputed
orders: Did the Secretary properly consider and appreciate the evidence
presented before him?
We find, based on our consideration of the parties' positions and the
evidence on record, that the Secretary of Labor disregarded and
misappreciated evidence, particularly with respect to the wage award. The
Secretary of Labor apparently also acted arbitrarily and even whimsically in
considering a number of legal points; even the Solicitor General himself
considered that the Secretary gravely abused his discretion on at least three
major points: (a) on the signing bonus issue; (b) on the inclusion of confidential
employees in the rank and file bargaining unit, and (c) in mandating a union
security "closed-shop" regime in the bargaining unit.
We begin with a discussion on the wages issue. The focal point in the
consideration of the wage award is the projected net income for 1996 which
became the basis for the 1996 wage award, which in turn — by extrapolation
— became the basis for the (2nd Year) 1997 award. MERALCO projected that
the net operating income for 1996 was 14.7% above the 1999 level or a total
net operating income of 4.171 Billion, while the union placed the 1996 net
operating income at 5.795 Billion.
MERALCO based its projection on the increase of the income for the
first 6 months of 1996 over the same period in 1995. The union, on the other
hand, projected that the 1996 income would increase by 29% to 35% because
the "consumption of electric power is at its highest during the last two quarters
with the advent of the Yuletide season." The union likewise relied heavily on a
newspaper report citing an estimate by an all Asia capital financial analyst that
the net operating income would amount to 5.795 Billion. 21
Based essentially on these considerations, the Secretary made the
following computations and ordered his disputed wage award:
Projected net operating  
 income for 1996 5,795,000,000
Principals and interests 1,426,571,703
Dividends at 1995 rate 1,636,949,000
Net Amount left with the Company 2,729,479,297
Add: Tax credit equivalent to  
35% of labor cost 231,804,940
Company's net operating income 2,961,284,237
"For 1997, the projected income is P7,613,612
which can easily absorb the incremental increase of P2,200
per month or a total of P4,500 during the last year of the
CBA period.
xxx xxx xxx
"An overriding aim is to estimate the amount that is
left with the Company after the awarded wages and benefits
and the company's customary obligations are paid. This
amount can be the source of an item not found in the above
computations but which the Company must provide for, that
is — the amount the company can use for expansion.
"Considering the expansion plans stated in the
Company's Supplement that calls for capital expenditures of
6 billion, 6.263 billion and 5.802 billion for 1996, 1997 and
1998 respectively, We conclude that our original award of
P2,300 per month for the first year and P2,200 for the
second year will still leave much by way of retained income
that can be used for expansion." 22 (Underscoring ours.)
We find after considering the records that the Secretary gravely
abused his discretion in making this wage award because he disregarded
evidence on record. Where he considered MERALCO's evidence at all, he
apparently misappreciated this evidence in favor of claims that do not have
evidentiary support. To our mind, the MERALCO projection had every reason
to be reliable because it was based on actual and undisputed figures for the
first six months of 1996. 23 On the other hand, the union projection was based
on a speculation of Yuletide consumption that the union failed to substantiate.
In fact, as against the union's unsubstantiated Yuletide consumption claim,
MERALCO adduced evidence in the form of historical consumption data
showing that a lengthy consumption does not tend to rise during the Christmas
period. 24 Additionally, the All-Asia Capital Report was nothing more than a
newspaper report that did not show any specific breakdown or computations.
While the union claimed that its cited figure is based on MERALCO's 10-year
income stream, 25 no data or computation of this 10-year stream appear in the
record.
While the Secretary is not expected to accept the company-offered
figures wholesale in determining a wage award, we find it a grave abuse of
discretion to completely disregard data that is based on actual and undisputed
record of financial performance in favor of the third-hand and unfounded
claims the Secretary eventually relied upon. At the very least, the Secretary
should have properly justified his disregard of the company figures. The
Secretary should have also reasonably insured that the figure that served as
the starting point for his computation had some substantial basis.
Both parties extensely discussed the factors that the decision maker
should consider in making a wage award. While We do not seek to enumerate
in this decision the factors that should affect wage determination, we must
emphasize that a collective bargaining dispute such as this one requires due
consideration and proper balancing of the interests of the parties to the
dispute and of those who might be affected by the dispute.To our mind, the
best way in approaching this task holistically is to consider the available
objective facts, including, where applicable, factors such as the bargaining
history of the company, the trends and amounts of arbitrated and agreed wage
awards and the company's previous CBAs, and industry trends in general. As
a rule, affordability or capacity to pay should be taken into account but cannot
be the sole yardstick in determining the wage award, especially in a public
utility like MERALCO. In considering a public utility, the decision maker must
always take into account the "public interest" aspects of the case; MERALCO's
income and the amount of money available for operating expenses —
including labor costs — are subject to State regulation. We must also keep in
mind that high operating costs will certainly and eventually be passed on to the
consuming public as MERALCO has bluntly warned in its pleadings.
We take note of the "middle ground" approach employed by the
Secretary in this case which we do not necessarily find to be the best method
of resolving a wage dispute. Merely finding the midway point between the
demands of the company and the union, and "splitting the difference" is a
simplistic solution that fails to recognize that the parties may already be at the
limits of the wage levels they can afford. It may lead to the danger too that
neither of the parties will engage in principled bargaining; the company may
keep its position artificially low while the union presents an artificially high
position, on the fear that a "Solomonic" solution cannot be avoided. Thus,
rather than encourage agreement, a "middle ground approach" instead
promotes a "play safe" attitude that leads to more deadlocks than to
successfully negotiated CBAs.
After considering the various factors the parties cited, we believe that
the interests of both labor and management are best served by a wage
increase of P1,900.00 per month for the first year and another P1,900.00 per
month for the second year of the two-year CBA term. Our reason for this is that
these increases sufficiently protects the interest of the worker as they are
roughly 15% of the monthly average salary of P11,600.00. 26 They likewise
sufficiently consider the employer's costs and its overall wage structure, while
at the same time, being within the range that will not disrupt the wage trends in of P2,200.00 monthly wage increase in the assailed order is unreasonably high
Philippine industries. LLphil a burden for MERALCO to shoulder.
The record shows that MERALCO, throughout its long years of We now go to the economic issues.
existence, was never remiss in its obligation towards its employees. In fact, as
a manifestation of its strong commitment to the promotion of the welfare and 1. CHRISTMAS BONUS
well-being of its employees, it has consistently improved their compensation MERALCO questions the Secretary's award of "Christmas bonuses"
package. For instance, MERALCO has granted salary increases 27 through on the ground that what it had given its employees were special bonuses to
the collective bargaining agreement the amount of which since 1980 for both mark or celebrate "special occasions," such as when the Asia Money
rank-and-file and supervisory employees were as follows: Magazine recognized MERALCO as the "best managed company in Asia."
    AMOUNT OF CBA DIFFERENCE These grants were given on or about Christmas time, and the timing of the
INCREASES  grant apparently led the Secretary to the conclusion that what were given were
  CBA         Christmas bonuses given by way of a "company practice" on top of the legally
required 13th month pay.
  COVERAGE RANK- SUPERVISORY AMOUNT PERCENT 
AND- The Secretary in granting the two-month bonus, considered the
FILE following factual finding, to wit:
  1980 230.00 342.50 112.50 48.91%
"We note that each of the grant mentioned in the
  1981 210.00 322.50 112.50 53.57 commonly adopted table of grants has a special description.
  1982 200.00 312.50 112.50 56.25 Christmas bonuses were given in 1988 and 1989. However,
TOTAL 640.00 977.50 337.50 52.73   the amounts of bonuses given differed. In 1988, it was
P1,500. In 1989, it was 1/2 month salary. The use of
  1983 320.00 432.50 112.50 35.16 "Christmas bonus" title stopped after 1989. In 1990, what
  1984 350.00 462.50 112.50 32.14 was given was a "cash gift" of 1/2 month's salary. The
  1985 370.00 482.50 112.50 30.41 grants thereafter bore different titles and were for varying
amounts. Significantly, the Company explained the reason
TOTAL 1,040.00 1,377.50 337.50 32.45  
for the 1995 bonuses and this explanation was not
  1986 860.00 972.50 112.50 13.08 substantially contradicted by the Union.
  1987 640.00 752.50 112.50 17.58
"What comes out from all these is that while the
  1988 600.00 712.50 112.50 18.75 Company has consistently given some amount by way of
TOTAL 2,100.00 2,437.50 337.50 16.07   bonuses since 1988, these awards were not given uniformly
  1989 1,100.00 1,212.50 112.50 10.23 as Christmas bonuses or special Christmas grants although
they may have been given at or about Christmas time.
  1990 1,200.00 1,312.50 112.50 9.38
  1991 1,300.00 1,412.50 112.50 8.65 "xxx xxx xxx
TOTAL 3,600.00 3,937.50 337.50 9.38   "The Company is not therefore correct in its position
  1992 1,400.00 1,742.50 342.50 24.46 that there is no established practice of giving Christmas
bonuses that has ripened to the status of being a term and
  1993 1,350.00 1,682.50 332.50 24.63 condition of employment. Regardless of its nomenclature
  1994 1,150.00 1,442.50 292.50 25.43 and purpose, the act of giving this bonus in the spirit of
TOTAL 3,900.00 4,867.50 967.50 24.81   Christmas has ripened into a Company practice." 28
Based on the above-quoted table, specifically under the column It is MERALCO's position that the Secretary erred when he recognized
"RANK-AND FILE," it is easily discernible that the total wage increase of that there was an "established practice" of giving a two-month Christmas
P3,800.00 for 1996 to 1997 which we are granting in the instant case is bonus based on the fact that bonuses were given on or about Christmas time.
significantly higher than the total increases given in 1992 to 1994, or a span of It points out that the "established practice" attributed to MERALCO was neither
three (3) years, which is only P3,900.00 a month. Thus, the Secretary's grant for a considerable period of time nor identical in either amount or purpose. The
purpose and title of the grants were never the same except for the Christmas
bonuses of 1988 and 1989, and were not in the same amounts.
We do not agree.
As a rule, a bonus is not a demandable and enforceable
obligation; 29 it may nevertheless be granted on equitable
considerations 30 as when the giving of such bonus has been the company's
long and regular practice. 31 To be considered a "regular practice," the giving
of the bonus should have been done over a long period of time, and must be
shown to have been consistent and deliberate. 32 Thus we have ruled
in National Sugar Refineries Corporation vs.  NLRC: 33
"The test or rationale of this rule on long practice
requires an indubitable showing that the employer agreed to
continue giving the benefits knowing fully well that said
employees are not covered by the law requiring payment
thereof."
In the case at bar, the record shows that MERALCO, aside from
complying with the regular 13th month bonus, has further been giving its
employees an additional Christmas bonus at the tail-end of the year since
1988. While the special bonuses differed in amount and bore different titles, it
can not be denied that these were given voluntarily and continuously on or
about Christmas time. The considerable length of time MERALCO has been
giving the special grants to its employees indicates a unilateral and voluntary
act on its part, to continue giving said benefits knowing that such act was not
required by law. cdphil
Indeed, a company practice favorable to the employees has been
established and the payments made by MERALCO pursuant thereto ripened
into benefits enjoyed by the employees. Consequently, the giving of the
special bonus can no longer be withdrawn by the company as this would
amount to a diminution of the employee's existing benefits. 34
We can not, however, affirm the Secretary's award of a two-month
special Christmas bonus to the employees since there was no recognized
company practice of giving a two-month special grant. The two-month special
bonus was given only in 1995 in recognition of the employees' prompt and
efficient response during the calamities. Instead, a one-month special bonus,
We believe, is sufficient, this being merely a generous act on the part of
MERALCO.
2. RICE SUBSIDY and RETIREMENT BENEFITS for RETIREES
It appears that the Secretary of Labor originally ordered the increase
of the retirement pay, rice subsidy and medical benefits of MERALCO retirees.
This ruling was reconsidered based on the position that retirees are no longer
employees of the company and therefore are no longer bargaining members
who can benefit from a compulsory arbitration award. The Secretary, however,
ruled that all members of the bargaining unit who retire between August 19,
1996 and November 30, 1997 (i.e.,the term of the disputed CBA under the
Secretary's disputed orders) are entitled to receive an additional rice subsidy.
The question squarely brought in this petition is whether the Secretary
can issue an order that binds the retirement fund. The company alleges that a
separate and independent trust fund is the source of retirement benefits for
MERALCO retirees, while the union maintains that MERALCO controls these
funds and may therefore be compelled to improve this benefit in an arbitral
award.
The issue requires a finding of fact on the legal personality of the
retirement fund. In the absence of any evidence on record indicating the nature
of the retirement fund's legal personality, we rule that the issue should be
remanded to the Secretary for reception of evidence as whether or not the
MERALCO retirement fund is a separate and independent trust fund. The
existence of a separate and independent juridical entity which controls an
irrevocable retirement trust fund means that these retirement funds are beyond
the scope of collective bargaining: they are administered by an entity not a
party to the collective bargaining and the funds may not be touched without the
trustee's conformity.
On the other hand, MERALCO control over these funds means that
MERALCO may be compelled in the compulsory arbitration of a CBA deadlock
where it is the employer, to improve retirement benefits since retirement is a
term or condition of employment that is a mandatory subject of bargaining.
3. EMPLOYEES' COOPERATIVE
The Secretary's disputed ruling requires MERALCO to provide the
employees covered by the bargaining unit with a loan of 1.5 Million as seed
money for the employees formation of a cooperative under the Cooperative
Law, R.A. 6938. We see nothing in this law — whether expressed or implied —
that requires employers to provide funds, by loan or otherwise, that employees
can use to form a cooperative. The formation of a cooperative is a purely
voluntary act under this law, and no party in any context or relationship is
required by law to set up a cooperative or to provide the funds therefor. In the
absence of such legal requirement, the Secretary has no basis to order the
grant of a 1.5 million loan to MERALCO employees for the formation of a
cooperative. Furthermore, we do not see the formation of an employees
cooperative, in the absence of an agreement by the collective bargaining
parties that this is a bargainable term or condition of employment, to be a term
or condition of employment that can be imposed on the parties on compulsory
arbitration.
4. GHSIP, HMP BENEFITS FOR DEPENDENTS and HOUSING
EQUITY LOAN
MERALCO contends that it is not bound to bargain on these benefits
because these do not relate to "wages, hours of work and other terms and
conditions of employment" hence, the denial of these demands cannot result in
a bargaining impasse.
The GHSIP, HMP benefits for dependents and the housing equity loan
have been the subject of bargaining and arbitral awards in the past. We do not
see any reason why MERALCO should not now bargain on these benefits.
Thus, we agree with the Secretary's ruling:
"...Additionally and more importantly, GHSIP and
HMP, aside from being contributory plans, have been the
subject of previous rulings from this Office as bargainable
matters. At this point, we cannot do any less and must
recognize that GHSIP and HMP are matters where the
union can demand and negotiate for improvements within
the framework of the collective bargaining system." 35
Moreover, MERALCO have long been extending these benefits to the
employees and their dependents that they now become part of the terms and
conditions of employment. In fact, MERALCO even pledged to continue giving
these benefits. Hence, these benefits should be incorporated in the new CBA.
With regard to the increase of the housing equity grant, we find
P60,000.00 reasonable considering the prevailing economic crisis.
5. SIGNING BONUS
On the signing bonus issue, we agree with the positions commonly
taken by MERALCO and by the Office of the Solicitor General that the signing
bonus is a grant motivated by the goodwill generated when a CBA is
successfully negotiated and signed between the employer and the union. In
the present case, this goodwill does not exist. In the words of the Solicitor
General:
"When negotiations for the last two years of the
1992-1997 CBA broke down and the parties sought the
assistance of the NCMB, but which failed to reconcile their
differences, and when petitioner MERALCO bluntly invoked
the jurisdiction of the Secretary of Labor in the resolution of
the labor dispute, whatever goodwill existed between
petitioner MERALCO and respondent union
disappeared. ..." 36
In contractual terms, a signing bonus is justified by and is the
consideration paid for the goodwill that existed in the negotiations that
culminated in the signing of a CBA. Without the goodwill, the payment of a
signing bonus cannot be justified and any order for such payment, to our mind,
constitutes grave abuse of discretion. This is more so where the signing bonus
is in the not insignificant total amount of P16 Million.
6. RED-CIRCLE-RATE ALLOWANCE
An RCR allowance is an amount, not included in the basic salary, that
is granted by the company to an employee who is promoted to a higher
position grade but whose actual basic salary at the time of the promotion
already exceeds the maximum salary for the position to which he or she is
promoted. As an allowance, it applies only to specific individuals whose salary
levels are unique with respect to their new and higher positions. It is for these
reasons that MERALCO prays that it be allowed to maintain the RCR
allowance as a separate benefit and not be integrated in the basic salary.
The integration of the RCR allowance in the basic salary of the
employees had consistently been raised in the past CBAs (1989 and 1992)
and in those cases, the Secretary decreed the integration of the RCR
allowance in the basic salary. We do not see any reason why it should not be
included in the present CBA. In fact, in the 1995 CBA between MERALCO and
the supervisory union (FLAMES),the integration of the RCR allowance was
recognized. Thus, Sec. 4 of the CBA provides:
"All Red-Circle-Rate Allowance as of December 1,
1995 shall be integrated in the basic salary of the covered
employees who as of such date are receiving such
allowance. Thereafter, the company rules on RCR
allowance shall continue to be observed/applied." 37
For purposes of uniformity, we affirm the Secretary's order on the
integration of the RCR allowance in the basic salary of the employees.
7. SICK LEAVE RESERVE OF 15 DAYS
MERALCO assails the Secretary's reduction of the sick leave reserve
benefit from 25 days to 15 days, contending that the sick leave reserve of 15
days has reached the lowest safe level that should be maintained to give
employees sufficient buffer in the event they fall ill.
We find no compelling reason to deviate from the Secretary's ruling
that the sick leave reserve is reduced to 15 days, with any excess convertible
to cash at the end of the year. The employee has the option to avail of this
cash conversion or to accumulate his sick leave credits up to 25 days for
conversion to cash at his retirement or separation from the service. This
arrangement is, in fact, beneficial to MERALCO. The latter admits that "the
diminution of this reserve does not seriously affect MERALCO because
whatever is in reserve are sick leave credits that are payable to the employee
upon separation from service. In fact, it may be to MERALCO's financial
interest to pay these leave credits now under present salary levels than pay
them at future higher salary levels." 38
8. 40-DAY UNION LEAVE
MERALCO objects to the demanded increase in union leave because
the union leave granted to the union is already substantial. It argues that the
union has not demonstrated any real need for additional union leave.
 The thirty (30) days union leave granted by the Secretary, to our mind,
constitute sufficient time within which the union can carry out its union activities
such as but not limited to the election of union officers, selection or election of
appropriate bargaining agents, conduct referendum on union matters and
other union-related matters in furtherance of union objectives. Furthermore,
the union already enjoys a special union leave with pay for union authorized
representatives to attend work education seminars, meetings, conventions and
conferences where union representation is required or necessary, and Paid-
Time-off for union officers, stewards and representatives for purpose of
handling or processing grievances.
9. HIGH VOLTAGE/HIGH POLE/TOWING ALLOWANCE
MERALCO argues that there is no justification for the increase of
these allowances. The personnel concerned will not receive any additional risk
during the life of the current CBA that would justify the increase demanded by
the union. In the absence of such risk, then these personnel deserve only the
same salary increase that all other members of the bargaining unit will get as a
result of the disputed CBA. MERALCO likewise assails the grant of the high
voltage/high pole allowance to members of the team who are not exposed to
the high voltage/high pole risks. The risks that justify the higher salary and the
added allowance are personal to those who are exposed to those risks. They
are not granted to a team because some members of the team are not
exposed to the given risks.
The increase in the high-voltage allowance (from P45.00 to P55.00),
high-pole allowance (from P30.00 to P40.00), and towing allowance is justified
considering the heavy risk the employees concerned are exposed to. The
high-voltage allowance is granted to an employee who is authorized by the
company to actually perform work on or near energized bare lines and bus,
while the high-pole allowance is given to those authorized to climb poles on a
height of at least 60 feet from the ground to work thereat. The towing
allowance, on the other hand, is granted to the stockman drivers who tow
trailers with long poles and equipment on board. Based on the nature of the
job of these concerned employees, it is imperative to give them these
additional allowances for taking additional risks. These increases are not even
commensurate to the danger the employees concerned are subjected to.
Besides, no increase has been given by the company since 1992. 39
We do not, however, subscribe to the Secretary's order granting these
allowances to the members of the team who are not exposed to the given
risks. The reason is obvious — no risk, no pay. To award them the said
allowances would be manifestly unfair for the company and even to those who
are exposed to the risks, as well as to the other members of the bargaining
unit who do not receive the said allowances.
10.  BENEFITS FOR COLLECTORS
MERALCO opposes the Secretary's grant of benefits for collectors on
the ground that this is grossly unreasonable both in scope and on the premise
it is founded.
We have considered the arguments of the opposing parties regarding
these benefits and find the Secretary's ruling on the (a) lunch allowance; (b)
disconnection fee for delinquent accounts; (c) voluntary performance of other
work at the instance of the Company; (d) bobcat belt bags; and (e) reduction of
quota and MAPL during typhoons and other force majeure events, reasonable
considering the risks taken by the company personnel involved, the nature of
the employees' functions and responsibilities and the prevailing standard of
living. We do not however subscribe to the Secretary's award on the following:
(a) Reduction of quota and MAPL when the collector is on
sick leave because the previous CBA has already
provided for a reduction of this demand. There is no
need to further reduce this.
(b) Deposit of cash bond at MESALA because this is no
longer necessary in view of the fact that collectors
are no longer required to post a bond.
We shall now resolve the non-economic issues.
1. SCOPE OF THE BARGAINING UNIT
The Secretary's ruling on this issue states that:
"a. Scope of the collective bargaining unit. The
union is demanding that the collective bargaining unit shall
be composed of all regular rank and file employees hired by
the company in all its offices and operating centers through
its franchise and those it may employ by reason of
expansion, reorganization or as a result of operational
exigencies. The law is that only managerial employees are
excluded from any collective bargaining unit and supervisors
are now allowed to form their own union (Art. 254 of
the Labor Code as amended by R.A. 6715). We grant the
union demand."
Both MERALCO and the Office of the Solicitor General dispute this
ruling because it disregards the rule We have established on the exclusion of
confidential employees from the rank and file bargaining unit. dctai
In Pier 8 Arrastre vs.  Confesor and General Maritime and Stevedores
Union, 40 we ruled that:
"Put another way, the confidential employee does
not share in the same "community of interests" that might
otherwise make him eligible to join his rank and file co-
workers, precisely because of a conflict in those interests."
 Thus, in Metrolab Industries vs. Roldan-Confesor, 41 We ruled:
"...that the Secretary's order should exclude the
confidential employees from the regular rank and file
employees qualified to become members of the MEWA
bargaining unit."
From the foregoing disquisition, it is clear that employees holding a
confidential position are prohibited from joining the union of the rank and file
employees.
2. ISSUE OF UNION SECURITY
The Secretary in his Order of August 19, 1996, 42 ruled that:
"b.  Union recognition and security.— The Union is
proposing that it be recognized by the Company as sole and
exclusive bargaining representative of the rank and file
employees included in the bargaining unit for the purpose of
collective bargaining regarding rates of pay, wages, hours of
work and other terms and conditions of employment. For
this reason, the Company shall agree to meet only with the
Union officers and its authorized representatives on all
matters involving the Union as an organization and all
issues arising from the implementation and interpretation of
the new CBA. Towards this end, the Company shall not
entertain any individual or group of individuals on matters
within the exclusive domain of the Union.
Additionally, the Union is demanding that the right of
all rank and file employees to join the Union shall be
recognized by the Company. Accordingly, all rank and file
employees shall join the Union.
xxx xxx xxx
These demands are fairly reasonable. We grant the
same in accordance with the maintenance of membership
principle as a form of union security."
The Secretary reconsidered this portion of his original order when he
said in his December 28, 1996 order that:
"....When we decreed that all rank and file
employees shall join the Union, we were actually decreeing
the incorporation of a closed shop form of union security in
the CBA between the parties. In Ferrer v.  NLRC, 224 SCRA
410, the Supreme Court ruled that a CBA provision for a
closed shop is a valid form of union security and is not a
restriction on the right or freedom of association guaranteed
by the Constitution, citing Lirag v. Blanco,109 SCRA 87."
MERALCO objected to this ruling on the grounds that: (a) it was never
questioned by the parties; (b) there is no evidence presented that would justify
the restriction on employee's union membership; and (c) the Secretary cannot
rule on the union security demand because this is not a mandatory subject for
collective bargaining agreement.
We agree with MERALCO's contention.
An examination of the records of the case shows that the union did not
ask for a closed shop security regime; the Secretary in the first instance
expressly stated that a maintenance of membership clause should govern;
neither MERALCO nor MEWA raised the issue of union security in their
respective motions for reconsideration of the Secretary's first disputed order;
and that despite the parties clear acceptance of the Secretary's first ruling, the
Secretary motu proprio reconsidered his maintenance of membership ruling in
favor of the more stringent union shop regime.
Under these circumstances, it is indubitably clear that the Secretary
gravely abused his discretion when he ordered a union shop in his order of
December 28, 1996. The distinctions between a maintenance of membership
regime from a closed shop and their consequences in the relationship between
the union and the company are well established and need no further
elaboration.
Consequently, We rule that the maintenance of membership regime
should govern at MERALCO in accordance with the Secretary's order of
August 19, 1996 which neither party disputed.
3. THE CONTRACTING OUT ISSUE
This issue is limited to the validity of the requirement that the union be
consulted before the implementation of any contracting out that would last for 6
months or more. Proceeding from our ruling in San Miguel Employees Union-
PTGWO vs. Bersamira, 43 (where we recognized that contracting out of work
is a proprietary right of the employer in the exercise of an inherent
management prerogative) the issue we see is whether the Secretary's
consultation requirement is reasonable or unduly restrictive of the company's
management prerogative. We note that the Secretary himself has considered
that management should not be hampered in the operations of its business
when he said that:
"We feel that the limitations imposed by the union
advocates are too specific and may not be applicable to the
situations that the company and the union may face in the
future. To our mind, the greater risk with this type of
limitation is that it will tend to curtail rather than allow the
business growth that the company and the union must
aspire for. Hence, we are for the general limitations we have
stated above because they will allow a calibrated response
 to specific future situations the company and the union may
face." 44
Additionally, We recognize that contracting out is not unlimited; rather,
it is a prerogative that management enjoys subject to well-defined legal
limitations. As we have previously held, the company can determine in its best
business judgment whether it should contract out the performance of some of
its work for as long as the employer is motivated by good faith, and the
contracting out must not have been resorted to circumvent the law or must not
have been the result of malicious or arbitrary action. 45 The Labor Code and
its implementing rules also contain specific rules governing contracting out
(Department of Labor Order No. 10, May 30, 1997, Sections 1-25).
Given these realities, we recognize that a balance already exists in the
parties' relationship with respect to contracting out; MERALCO has its legally
defined and protected management prerogatives while workers are
guaranteed their own protection through specific labor provisions and the
recognition of limits to the exercise of management prerogatives. From these
premises, we can only conclude that the Secretary's added requirement only
introduces an imbalance in the parties' collective bargaining relationship on a
matter that the law already sufficiently regulates. Hence, we rule that the
Secretary's added requirement, being unreasonable, restrictive and potentially
disruptive should be struck down.
4. UNION REPRESENTATION IN COMMITTEES
As regards this issue, We quote with approval the holding of the
Secretary in his Order of December 28, 1996, to wit:
"We see no convincing reason to modify our original
Order on union representation in committees. It reiterates
what the Article 211 (A)(g) of the Labor Code provides: "To
ensure the participation of workers in decision and policy-
making processes affecting their rights, duties and welfare.
'Denying this opportunity to the Union is to lay the claim that
only management has the monopoly of ideas that may
improve management strategies in enhancing the
Company's growth. What every company should remember
is that there might be one among the Union members who
may offer productive and viable ideas on expanding the
Company's business horizons. The Union's participation in
such committees might just be the opportune time for
dormant ideas to come forward. So, the Company must
welcome this development (see also PAL v. NLRC, et
al.,G.R. 85985, August 13, 1995).It must be understood,
however, that the committees referred to here are the Safety
Committee, the Uniform Committee and other committees of
a similar nature and purpose involving personnel welfare,
rights and benefits as well as duties."
We do not find merit in MERALCO's contention that the above-quoted
ruling of the Secretary is an intrusion into the management prerogatives of
MERALCO. It is worthwhile to note that all the Union demands and what the
Secretary's order granted is that the Union be allowed to participate in policy
formulation and decision-making process on matters affecting the Union
members' rights, duties and welfare as required in Article 211 (A) (g) of
the  Labor Code.And this can only be done when the Union is allowed to have
representatives in the Safety Committee, Uniform Committee and other
committees of a similar nature. Certainly, such participation by the Union in the
said committees is not in the nature of a co-management control of the
business of MERALCO. What is granted by the Secretary
is participation and representation.Thus, there is no impairment of
management prerogatives.
5. INCLUSION OF ALL TERMS AND CONDITIONS IN THE CBA
MERALCO also decries the Secretary's ruling in both the assailed
Orders that —
"All other benefits being enjoyed by the Company's employees but
which are not expressly or impliedly repealed in this new agreement shall
remain subsisting and shall likewise be included in the new collective
bargaining agreement to be signed by the parties effective December 1,
1995." 46
claiming that the above-quoted ruling intruded into the employer's freedom
to contract by ordering the inclusion in the new CBA all other benefits
presently enjoyed by the employees even if they are not incorporated in
the new CBA. This matter of inclusion, MERALCO argues, was never
discussed and agreed upon in the negotiations; nor presented as issues
before the Secretary; nor were part of the previous CBA's between the
parties.
We agree with MERALCO.
The Secretary acted in excess of the discretion allowed him by law
when he ordered the inclusion of benefits, terms and conditions that the law
and the parties did not intend to be reflected in their CBA.
To avoid the possible problems that the disputed orders may bring, we
are constrained to rule that only the terms and conditions already existing in
the current CBA and was granted by the Secretary (subject to the
modifications decreed in this decision) should be incorporated in the CBA, and
that the Secretary's dispute orders should accordingly be modified.
6. RETROACTIVITY OF THE CBA
Finally, MERALCO also assails the Secretary's order that the
effectivity of the new CBA shall retroact to December 1, 1995, the date of the
commencement of the last two years of the effectivity of the existing CBA. This
retroactive date, MERALCO argues, is contrary to the ruling of this Court
in Pier 8 Arrastre and Stevedoring Services, Inc. vs.  Roldan- One such provision is the principle of hold over, i.e.,that in the
Confessor 47 which mandates that the effective date of the new CBA should absence of a new CBA, the parties must maintain the status quo and must
be the date the Secretary of Labor has resolved the labor dispute. continue in full force and effect the terms and conditions of the existing
agreement until a new agreement is reached. 51 In this manner, the law
On the other hand, MEWA supports the ruling of the Secretary on the prevents the existence of a gap in the relationship between the collective
theory that he has plenary power and discretion to fix the date of effectivity of bargaining parties. Another legal principle that should apply is that in the
his arbitral award citing our ruling in St.  Lukes Medical Center, absence of an agreement between the parties, then, an arbitrated CBA takes
Inc. vs.  Torres. 48 MEWA also contends that if the arbitral award takes effect on the nature of any judicial or quasi-judicial award; it operates and may be
on the date of the Secretary Labor's ruling on the parties' motion for executed only respectively unless there are legal justifications for its
reconsideration (i.e., on December 28, 1996), an anomaly situation will result retroactive application.
when CBA would be more than the 5-year term mandated by Article 253-A of
the Labor Code. Consequently, we find no sufficient legal ground on the other
justification for the retroactive application of the disputed CBA, and therefore
However, neither party took into account the factors necessary for a hold that the CBA should be effective for a term of 2 years counted from
proper resolution of this aspect. Pier 8,for instance, does not involve a mid- December 28, 1996 (the date of the Secretary of Labor's disputed order on the
term negotiation similar to this case, while St.  Lukes does not take the "hold parties' motion for reconsideration) up to December 27, 1999.
over" principle into account, i.e., the rule that although a CBA has expired, it
continues to have legal effects as between the parties until a new CBA has WHEREFORE, the petition is granted and the orders of public
been entered into. 49 respondent Secretary of Labor dated August 19, 1996 and December 28, 1996
are set aside to the extent set forth above. The parties are directed to execute
Article 253-A serves as the guide in determining when the effectivity of a Collective Bargaining Agreement incorporating the terms and conditions
the CBA at bar is to take effect. It provides that the representation aspect of contained in the unaffected portions of the Secretary of Labor's orders of
the CBA is to be for a term of 5 years, while August 19, 1996 and December 28, 1996, and the modifications set forth
"...[A]ll other provisions of the Collective Bargaining above. The retirement fund issue is remanded to the Secretary of Labor for
Agreement shall be re-negotiated not later than 3 years after reception of evidence and determination of the legal personality of the
its execution. Any agreement on such other provision of the MERALCO retirement fund. cdtai
Collective Bargaining Agreement entered into within 6 SO ORDERED.
months from the date of expiry of the term of such other
provisions as fixed in such Collective Bargaining Agreement
shall retroact to the day immediately following such date. If
such agreement is entered into beyond 6 months, the
parties shall agree on the duration of the effectivity
thereof. ..."
Under these terms, it is clear that the 5-year term requirement is
specific to the representation aspect. What the law additionally requires is that
a CBA must be re-negotiated within 3 years "after its execution." It is in this re-
negotiation that gives rise to the present CBA deadlock.
If no agreement is reached within 6 months from the expiry date of the
3 years that follow the CBA execution, the law expressly gives the parties —
not anybody else — the discretion to fix the effectivity of the agreement.
Significantly, the law does not specifically cover the situation where 6
months have elapsed but no agreement has been reached with respect to
effectivity. In this eventuality, we hold that any provision of law should then
apply for the law abhors a vacuum. 50
 employee of the lawful orders of his employer or the latter’s representative in
connection with the employee’s work; (b) gross and habitual neglect by the employee
of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by
his employer or his duly authorized representative; (d) commission of a crime or
offense by the employee against the person of his employer or any immediate member
of his family or his duly authorized representative; and (e) other causes analogous to
the foregoing.
3. Labor Law;  Dismissal of Employees;  Abandonment;  Words and
Phrases; Abandonment is the deliberate and unjustified refusal of an employee to
resume his employment—it is a form of neglect of duty, hence, a just cause for
termination of employment by the employer.-
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer. For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employer-employee relationship,
with the second as the more determinative factor which is manifested by overt acts
from which it may be deduced that the employees has no more intention to work. The
intent to discontinue the employment must be shown by clear proof that it was
deliberate and unjustified.
4. Labor Law;  Dismissal of
Employees;  Abandonment;  Moonlighting; Subcontracting for another company
clearly shows the intention to sever the employer-employee relationship; The record of
an employee is a relevant consideration in determining the penalty that should be
meted out to him.-
In February 1999, petitioners were frequently absent having subcontracted for an
[G.R. No. 158693. November 17, 2004.] installation work for another company. Subcontracting for another company clearly
showed the intention to sever the employer-employee relationship with private
respondent. This was not the first time they did this. In January 1996, they did not
JENNY M. AGABON and VIRGILIO C. report for work because they were working for another company. Private respondent at
AGABON, petitioners, vs. NATIONAL LABOR that time warned petitioners that they would be dismissed if this happened again.
RELATIONS COMMISSION (NLRC), RIVIERA HOME Petitioners disregarded the warning and exhibited a clear intention to sever their
IMPROVEMENTS, INC. and VICENTE employer-employee relationship. The record of an employee is a relevant consideration
ANGELES, respondents. in determining the penalty that should be meted out to him.
yllabi: 5. Labor Law;  Dismissal of Employees;  The employer may not be compelled to
1. Labor Law;  Administrative Law;  If the factual findings of the NLRC and the Labor continue to employ such persons whose continuance in the service will patently be
Arbiter are conflicting, the reviewing court may delve into the records and examine for inimical to his interests.-
itself the questioned findings.- The law imposes many obligations on the employer such as providing just
It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are compensation to workers, observance of the procedural requirements of notice and
accorded not only respect but even finality if the findings are supported by substantial hearing in the termination of employment. On the other hand, the law also recognizes
evidence. This is especially so when such findings were affirmed by the Court of the right of the employer to expect from its workers not only good performance,
Appeals. However, if the factual findings of the NLRC and the Labor Arbiter are con- adequate work and diligence, but also good conduct and loyalty. The employer may not
flicting, as in this case, the reviewing court may delve into the records and examine for be compelled to continue to employ such persons whose continuance in the service will
itself the questioned findings. Accordingly, the Court of Appeals, after a careful review patently be inimical to his interests.
of the facts, ruled that petitioners’ dismissal was for a just cause. They had abandoned 6. Labor Law;  Dismissal of Employees;  Dismissals based on just causes
their employment and were already working for another employer. contemplate acts or omissions attributable to the employee while dismissals based on
2. Labor Law;  Dismissal of Employees;  To dismiss an employee, the law requires authorized causes involve grounds under the Labor Code which allow the employer to
not only the existence of a just and valid cause but also enjoins the employer to give terminate employees.-
the employee the opportunity to be heard and to defend himself.- Dismissals based on just causes contemplate acts or omissions attributable to the
To dismiss an employee, the law requires not only the existence of a just and valid employee while dismissals based on authorized causes involve grounds under the
cause but also enjoins the employer to give the employee the opportunity to be heard Labor Code which allow the employer to terminate employees. A termination for an
and to defend himself. Article 282 of the Labor Code enumerates the just causes for authorized cause requires payment of separation pay. When the termination of
termination by the employer: (a) serious misconduct or willful disobedience by the employment is declared illegal, reinstatement and full backwages are mandated under
Article 279. If reinstatement is no longer possible where the dismissal was unjust,
separation pay may be granted.
7. Labor Law;  Dismissal of Employees;  Due Process;  Notice
Requirement; Procedurally, (1) if the dismissal is based on a just cause under Article
282 of the Labor Code, the employer must give the employee two written notices and a
hearing or opportunity to be heard if requested by the employee before terminating the
employment, and (2) if the dismissal is based on authorized causes under Articles 283
and 284, the employer must give the employee and the Department of Labor and
Employment written notices 30 days prior to the effectivity of his separation; Failure to
observe due process in a dismissal for just or authorized cause does not invalidate the
dismissal but makes the employer liable for non-compliance with the procedural
requirements of due process.-
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the
employer must give the employee two written notices and a hearing or opportunity to
be heard if requested by the employee before terminating the employment: a notice
specifying the grounds for which dismissal is sought a hearing or an opportunity to be
heard and after hearing or opportunity to be heard, a notice of the decision to dismiss;
and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the
employer must give the employee and the Department of Labor and Employment
written notices 30 days prior to the effectivity of his separation. From the foregoing
rules four possible situations may be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause under Article 283, or for health
reasons under Article 284, and due process was observed; (2) the dismissal is without
just or authorized cause but due process was observed; (3) the dismissal is without just
or authorized cause and there was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed. In the first situation, the dismissal
is undoubtedly valid and the employer will not suffer any liability. In the second and
third situations where the dismissals are illegal, Article 279 mandates that the
employee is entitled to reinstatement without loss of seniority rights and other privileges
and full backwages, inclusive of allowances, and other benefits or their monetary
equivalent computed from the time the compensation was not paid up to the time of
actual reinstatement. In the fourth situation, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not invalidate the dismissal. However,
the employer should be held liable for non-compliance with the procedural
requirements of due process.
8. Labor Law;  Dismissal of Employees;  Due Process;  Notice Requirement;  The
fact that the employee may not be residing in the address indicated in the employer’s
records does not excuse the employer from sending the notices to the employee’s last
known address.-
The present case squarely falls under the fourth situation. The dismissal should be
upheld because it was established that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not follow the notice requirements
and instead argued that sending notices to the last known addresses would have been
useless because they did not reside there anymore. Unfortunately for the private
respondent, this is not a valid excuse because the law mandates the twin notice
requirements to the employee’s last known address. Thus, it should be held liable for
non-compliance with the procedural requirements of due process.
9. Labor Law;  Dismissal of Employees;  Due Process;  Notice Requirement;  The
Court believes that the ruling in Serrano v. National Labor Relations Commission, 323
SCRA 445 (2000), did not consider the full meaning of Article 279 of the Labor Code
which provision means that the termination is illegal only if it is not for any of the
justified or authorized causes provided by law and that payment of backwages and
other benefits, including reinstatement, is justified only if the employee was unjustly
dismissed; The fact that the Serrano ruling can cause unfairness and injustice which
elicited strong dissent has prompted the Court to revisit the doctrine.+
10. Labor Law;  Dismissal of Employees;  Due Process;  Constitutional Law;  The
Due Process Clause in Article III, Section 1 of the Constitution embodies a system of
rights based on moral principles so deeply imbedded in the traditions and feelings of
our people as to be deemed fundamental to a civilized society as conceived by our
entire history.-
To be sure, the Due Process Clause in Article III, Section 1 of the Constitution
embodies a system of rights based on moral principles so deeply imbedded in the
traditions and feelings of our people as to be deemed fundamental to a civilized society
as conceived by our entire history. Due process is that which comports with the
deepest notions of what is fair and right and just. It is a constitutional restraint on the
legislative as well as on the executive and judicial powers of the government provided
by the Bill of Rights.
11. Labor Law;  Dismissal of Employees;  Due Process;  Constitutional
Law;  Statutory due process should be differentiated from failure to comply with
constitutional due process—constitutional due process protects the individual from the
government and assures him of his rights in criminal, civil or administrative proceedings
while statutory due process found in the Labor Code and Implementing Rules protects
employees from being unjustly terminated without just cause after notice and hearing.-
Due process under the Labor Code, like Constitutional due process, has two aspects:
substantive, i.e., the valid and authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process
requirements for dismissal are found in the Implementing Rules of P.D. 442, as
amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I,
Sec. 2, as amended by Department Order Nos. 9 and 10. Breaches of these due
process requirements violate the Labor Code. Therefore statutory due process should
be differentiated from failure to comply with constitutional due process. Constitutional
due process protects the individual from the government and assures him of his rights
in criminal, civil or administrative proceedings; while statutory due process found in the
Labor Code and Implementing Rules protects employees from being unjustly
terminated without just cause after notice and hearing.
12. Labor Law;  Dismissal of Employees;  Due Process;  The better rule is to
abandon the Serrano doctrine and to follow Wenphil v. National Labor Relations
Commission, 170 SCRA 69 (1989), by holding that the dismissal was for just cause but
imposing sanctions on the employer, which sanctions, however, must be stiffer than
that imposed in Wenphil.-
After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissals for cause but
without observance of the twin requirements of notice and hearing, the better rule is to
abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was
for just cause but imposing sanctions on the employer. Such sanctions, however, must
be stiffer than that imposed in Wenphil. By doing so, this Court would be able to
achieve a fair result by dispensing justice not just to employees, but to employers as
well.
13. Labor Law;  Dismissal of Employees;  Due Process;  The constitutional policy to
provide full protection to labor is not meant to be a sword to oppress employers—the
commitment of this Court to the cause of labor does not prevent it from sustaining the
employer when it is in the right.-
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized
causes but not complying with statutory due process may have far-reaching
consequences. This would encourage frivolous suits, where even the most notorious
violators of company policy are rewarded by invoking due process. This also creates
absurd situations where there is a just or authorized cause for dismissal but a
procedural infirmity invalidates the termination. Let us take for example a case where
the employee is caught stealing or threatens the lives of his co-employees or has
become a criminal, who has fled and cannot be found, or where serious business
losses demand that operations be ceased in less than a month. Invalidating the
dismissal would not serve public interest. It could also discourage investments that can
generate employment in the local economy. The constitutional policy to provide full
protection to labor is not meant to be a sword to oppress employers. The commitment
of this Court to the cause of labor does not prevent us from sustaining the employer
when it is in the right, as in this case. Certainly, an employer should not be compelled
to pay employees for work not actually performed and in fact abandoned. The employer
should not be compelled to continue employing a person who is admittedly guilty of
misfeasance or malfeasance and whose continued employment is patently inimical to
the employer. The law protecting the rights of the laborer authorizes neither oppression
nor self-destruction of the employer.
14. Labor Law;  Dismissal of Employees;  Social Justice;  An employee who is
clearly guilty of conduct violative of Article 282 should not be protected by the Social
Justice Clause of the Constitution—social justice must be founded on the recognition of
the necessity of interdependence among 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; Social justice is not based on rigid formulas set in stone—it
has to allow for changing times and circumstances.-
An employee who is clearly guilty of conduct violative of Article 282 should not be
protected by the Social Justice Clause of the Constitution. Social justice, as the term
suggests, should be used only to correct an injustice. As the eminent Justice Jose P.
Laurel observed, social justice must be founded on the recognition of the necessity of
interdependence among 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.” This is not to say that the Court was wrong
when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not
based on rigid formulas set in stone. It has to allow for changing times and
circumstances.
15. Labor Law;  Dismissal of Employees;  Due Process;  The violation of an
employee’s right to statutory due process by the employer warrants the payment of
indemnity in the form of nominal damages, the amount of which is addressed to the
sound discretion of the court, taking into account the relevant circumstances.-
The violation of the petitioners’ right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of
such damages is addressed to the sound discretion of the court, taking into account the
relevant circumstances. Considering the prevailing circumstances in the case at bar,
we deem it proper to fix it at P30,000.00. We believe this form of damages would serve
to deter employers from future violations of the statutory due process rights of
employees. At the very least, it provides a vindication or recognition of this fundamental
right granted to the latter under the Labor Code and its Implementing Rules.
16. Labor Law;  Evidence;  Payment;  Burden of Proof; As a general rule, one who
pleads payment has the burden of proving it—even where the employee must allege
non-payment, the general rule is that the burden rests on the employer to prove
payment, rather than on the employee to prove non-payment.-
We affirm the ruling of the appellate court on petitioners’ money claims. Private
respondent is liable for petitioners’ holiday pay, service incentive leave pay and 13th
month pay without deductions. As a general rule, one who pleads payment has the
burden of proving it. Even where the employee must allege non-payment, the general
rule is that the burden rests on the employer to prove payment, rather than on the
employee to prove non-payment. The reason for the rule is that the pertinent personnel
files, payrolls, records, remittances and other similar documents—which will show that
overtime, differentials, service incentive leave and other claims of workers have been
paid—are not in the possession of the worker but in the custody and absolute control of
the employer.
17. Labor Law;  Wages;  Thirteenth Month Pay; The 13th month pay is included in
the definition of wage under Article 97(f) of the Labor Code from which the employer is
prohibited under Article 113 from making any deductions without the employee’s
knowledge and consent.-
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio
Agabon’s 13th month pay, we find the same to be unauthorized. The evident intention
of Presidential Decree No. 851 is to grant an additional income in the form of the 13th
month pay to employees not already receiving the same so as “to further protect the
level of real wages from the ravages of world-wide inflation.” Clearly, as additional
income, the 13th month pay is included in the definition of wage under Article 97(f) of
the Labor Code, to wit: (f) “Wage” paid to any employee shall mean the remuneration
or earnings, however designated, capable of being expressed in terms of money
whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee . . .” from which an employer is prohibited
under Article 113 of the same Code from making any deductions without the em-
ployee’s knowledge and consent. In the instant case, private respondent failed to show
that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio
Agabon’s 13th month pay was authorized by the latter. The lack of authority to deduct
is further bolstered by the fact that petitioner Virgilio Agabon included the same as one
of his money claims against private respondent.
DECISION
YNARES-SANTIAGO,  J p:
This petition for review seeks to reverse the decision 1 of the Court of
Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the
decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case
No. 023442-00.
Private respondent Riviera Home Improvements, Inc. is engaged in
the business of selling and installing ornamental and construction materials. It
employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and
cornice installers on January 2, 1992 2 until February 23, 1999 when they
were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of
money claims 3 and on December 28, 1999, the Labor Arbiter rendered a
decision declaring the dismissals illegal and ordered private respondent to pay
the monetary claims. The dispositive portion of the decision states:
WHEREFORE, premises considered, We find the
termination of the complainants illegal. Accordingly, respondent is
 hereby ordered to pay them their backwages up to November 29,
1999 in the sum of:
1. Jenny M. Agabon — P56,231.93
2. Virgilio C. Agabon — 56,231.93
and, in lieu of reinstatement to pay them their separation
pay of one (1) month for every year of service from date of hiring
up to November 29, 1999.
Respondent is further ordered to pay the complainants
their holiday pay and service incentive leave pay for the years
1996, 1997 and 1998 as well as their premium pay for holidays and
rest days and Virgilio Agabon's 13th month pay differential
amounting to TWO THOUSAND ONE HUNDRED FIFTY
(P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED
TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT &
93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE
HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED
TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio
Agabon, as per attached computation of Julieta C. Nicolas, OIC,
Research and Computation Unit, NCR.
SO ORDERED. 4
On appeal, the NLRC reversed the Labor Arbiter because it found that
the petitioners had abandoned their work, and were not entitled to backwages
and separation pay. The other money claims awarded by the Labor Arbiter
were also denied for lack of evidence. 5
Upon denial of their motion for reconsideration, petitioners filed a
petition for certiorari with the Court of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners
was not illegal because they had abandoned their employment but ordered the
payment of money claims. The dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor
Relations Commission is REVERSED only insofar as it dismissed
petitioner's money claims. Private respondents are ordered to pay
petitioners holiday pay for four (4) regular holidays in 1996, 1997,
and 1998, as well as their service incentive leave pay for said
years, and to pay the balance of petitioner Virgilio Agabon's 13th
month pay for 1998 in the amount of P2,150.00. aIcCTA
SO ORDERED. 6
Hence, this petition for review on the sole issue of whether petitioners
were illegally dismissed. 7
Petitioners assert that they were dismissed because the private
respondent refused to give them assignments unless they agreed to work on a
"pakyaw" basis when they reported for duty on February 23, 1999. They did
not agree on this arrangement because it would mean losing benefits as Social
Security System (SSS) members. Petitioners also claim that private
respondent did not comply with the twin requirements of notice and hearing. 8
Private respondent, on the other hand, maintained that petitioners
were not dismissed but had abandoned their work. 9 In fact, private
respondent sent two letters to the last known addresses of the petitioners
advising them to report for work. Private respondent's manager even talked to
petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him
about the new assignment at Pacific Plaza Towers involving 40,000 square
meters of cornice installation work. However, petitioners did not report for work
because they had subcontracted to perform installation work for another
company. Petitioners also demanded for an increase in their wage to P280.00
per day. When this was not granted, petitioners stopped reporting for work and
filed the illegal dismissal case. 10
It is well-settled that findings of fact of quasi-judicial agencies like the
NLRC are accorded not only respect but even finality if the findings are
supported by substantial evidence. This is especially so when such findings
were affirmed by the Court of Appeals. 11 However, if the factual findings of
the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing
court may delve into the records and examine for itself the questioned
findings. 12
Accordingly, the Court of Appeals, after a careful review of the facts,
ruled that petitioners' dismissal was for a just cause. They had abandoned
their employment and were already working for another employer.
To dismiss an employee, the law requires not only the existence of a
just and valid cause but also enjoins the employer to give the employee the
opportunity to be heard and to defend himself. 13 Article 282 of the Labor
Code enumerates the just causes for termination by the employer: (a) serious
misconduct or willful disobedience by the employee of the lawful orders of his
employer or the latter's representative in connection with the employee's work;
(b) gross and habitual neglect by the employee of his duties; (c) fraud or willful
breach by the employee of the trust reposed in him by his employer or his duly
authorized representative; (d) commission of a crime or offense by the
employee against the person of his employer or any immediate member of his
family or his duly authorized representative; and (e) other causes analogous to
the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee
to resume his employment. 14 It is a form of neglect of duty, hence, a just
cause for termination of employment by the employer. 15 For a valid finding of
abandonment, these two factors should be present: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to
sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was
deliberate and unjustified. 16
In February 1999, petitioners were frequently absent having
subcontracted for an installation work for another company. Subcontracting for
another company clearly showed the intention to sever the employer-employee
relationship with private respondent. This was not the first time they did this. In
January 1996, they did not report for work because they were working for
another company. Private respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners disregarded the
warning and exhibited a clear intention to sever their employer-employee
relationship. The record of an employee is a relevant consideration in
determining the penalty that should be meted out to him. 17
In Sandoval Shipyard v. Clave, 18 we held that an employee who
deliberately absented from work without leave or permission from his
employer, for the purpose of looking for a job elsewhere, is considered to have
abandoned his job. We should apply that rule with more reason here where
petitioners were absent because they were already working in another
company.
The law imposes many obligations on the employer such as providing
just compensation to workers, observance of the procedural requirements of
notice and hearing in the termination of employment. On the other hand, the
law also recognizes the right of the employer to expect from its workers not
only good performance, adequate work and diligence, but also good
conduct 19 and loyalty. The employer may not be compelled to continue to
employ such persons whose continuance in the service will patently be inimical
to his interests. 20
After establishing that the terminations were for a just and valid cause,
we now determine if the procedures for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I,
Section 2(d) of the Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. — In
all cases of termination of employment, the following standards of
due process shall be substantially observed:
I. For termination of employment based on just causes as
defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee
reasonable opportunity within which to explain his side; CaEATI
(b) A hearing or conference during which the employee
concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be
served on the employee's last known address.
Dismissals based on just causes contemplate acts or omissions
attributable to the employee while dismissals based on authorized causes
involve grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal,
reinstatement and full backwages are mandated under Article 279. If
reinstatement is no longer possible where the dismissal was unjust, separation
pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article
282, the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30
days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1)
the dismissal is for a just cause under Article 282 of the Labor Code, for an
authorized cause under Article 283, or for health reasons under Article 284,
and due process was observed; (2) the dismissal is without just or authorized
cause but due process was observed; (3) the dismissal is without just or
authorized cause and there was no due process; and (4) the dismissal is for
just or authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the
employer will not suffer any liability.
In the second and third situations where the dismissals are illegal,
Article 279 mandates that the employee is entitled to reinstatement without
loss of seniority rights and other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the
time the compensation was not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not invalidate the dismissal.
However, the employer should be held liable for non-compliance with the
procedural requirements of due process.
The present case squarely falls under the fourth situation. The
dismissal should be upheld because it was established that the petitioners
abandoned their jobs to work for another company. Private respondent,
however, did not follow the notice requirements and instead argued that
sending notices to the last known addresses would have been useless
because they did not reside there anymore. Unfortunately for the private
respondent, this is not a valid excuse because the law mandates the twin
notice requirements to the employee's last known address. 21 Thus, it should
be held liable for non-compliance with the procedural requirements of due
process.
A review and re-examination of the relevant legal principles is
appropriate and timely to clarify the various rulings on employment termination
in the light of Serrano v. National Labor Relations Commission. 22
Prior to 1989, the rule was that a dismissal or termination is illegal if
the employee was not given any notice. In the 1989 case of Wenphil Corp. v.
National Labor Relations Commission, 23 we reversed this long-standing rule
and held that the dismissed employee, although not given any notice and
hearing, was not entitled to reinstatement and backwages because the
dismissal was for grave misconduct and insubordination, a just ground for
termination under Article 282. The employee had a violent temper and caused
trouble during office hours, defying superiors who tried to pacify him. We
concluded that reinstating the employee and awarding backwages "may
encourage him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe." 24 We further held that:
Under the circumstances, the dismissal of the private
respondent for just cause should be maintained. He has no right to
return to his former employment.
However, the petitioner must nevertheless be held to
account for failure to extend to private respondent his right to an
investigation before causing his dismissal. The rule is explicit as
above discussed. The dismissal of an employee must be  for just or
authorized cause and after due process. Petitioner committed an
infraction of the second requirement. Thus, it must be imposed a
sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing petitioner from
employment. Considering the circumstances of this case petitioner
must indemnify the private respondent the amount of P1,000.00.
The measure of this award depends on the facts of each case and
the gravity of the omission committed by the employer. 25
The rule thus evolved: where the employer had a valid reason to
dismiss an employee but did not follow the due process requirement, the
dismissal may be upheld but the employer will be penalized to pay an
indemnity to the employee. This became known as the Wenphil or Belated
Due Process Rule. AcIaST
On January 27, 2000, in Serrano, the rule on the extent of the sanction
was changed. We held that the violation by the employer of the notice
requirement in termination for just or authorized causes was not a denial of
due process that will nullify the termination. However, the dismissal is
ineffectual and the employer must pay full backwages from the time of
termination until it is judicially declared that the dismissal was for a just or
authorized cause.
The rationale for the re-examination of the Wenphil doctrine
in Serrano was the significant number of cases involving dismissals without
requisite notices. We concluded that the imposition of penalty by way of
damages for violation of the notice requirement was not serving as a deterrent.
Hence, we now required payment of full backwages from the time of dismissal
until the time the Court finds the dismissal was for a just or authorized cause.
Serrano was confronting the practice of employers to "dismiss now
and pay later" by imposing full backwages.
We believe, however, that the ruling in Serrano did not consider the
full meaning of Article 279 of the Labor Code which states:
ART. 279. Security of Tenure. — In cases of regular
employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time
of his actual reinstatement.
This means that the termination is illegal only if it is not for any of the
justified or authorized causes provided by law. Payment of backwages and
other benefits, including reinstatement, is justified only if the employee was
unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice
which elicited strong dissent has prompted us to revisit the doctrine.
To be sure, the Due Process Clause in Article III, Section 1 of
the Constitution embodies a system of rights based on moral principles so
deeply imbedded in the traditions and feelings of our people as to be deemed
fundamental to a civilized society as conceived by our entire history. Due
process is that which comports with the deepest notions of what is fair and
right and just. 26 It is a constitutional restraint on the legislative as well as on
the executive and judicial powers of the government provided by the Bill of
Rights.
Due process under the Labor Code, like Constitutional due process,
has two aspects: substantive, i.e., the valid and authorized causes of
employment termination under the Labor Code; and procedural, i.e., the
manner of dismissal. Procedural due process requirements for dismissal are
found in the Implementing Rules of P.D. 442, as amended, otherwise known
as the Labor Code of the Philippines  in Book VI, Rule I, Sec. 2, as amended
by Department Order Nos. 9 and 10. 27 Breaches of these due
process requirements violate the Labor Code. Therefore statutory due
process should be differentiated from failure to comply with constitutional due
process.
Constitutional due process protects the individual from the government
and assures him of his rights in criminal, civil or administrative proceedings;
while statutory due process found in the Labor Code and Implementing
Rules protects employees from being unjustly terminated without just cause
after notice and hearing.
In Sebuguero v. National Labor Relations Commission, 28 the
dismissal was for a just and valid cause but the employee was not accorded
due process. The dismissal was upheld by the Court but the employer was
sanctioned. The sanction should be in the nature of indemnification or penalty,
and depends on the facts of each case and the gravity of the omission
committed by the employer.
In Nath v. National Labor Relations Commission, 29 it was ruled that
even if the employee was not given due process, the failure did not operate to
eradicate the just causes for dismissal. The dismissal being for just
cause, albeit without due process, did not entitle the employee to
reinstatement, backwages, damages and attorney's fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine
Services, Inc. v. National Labor Relations Commission, 30 which opinion he
reiterated in Serrano, stated:
C. Where there is just cause for dismissal but due process
has not been properly observed by an employer, it would not be
right to order either the reinstatement of the dismissed employee or
the payment of backwages to him. In failing, however, to comply
with the procedure prescribed by law in terminating the services of
the employee, the employer must be deemed to have opted or, in
any case, should be made liable, for the payment of separation
pay. It might be pointed out that the notice to be given and the
hearing to be conducted generally constitute the two-part due
process requirement of law to be accorded to the employee by the
employer. Nevertheless, peculiar circumstances might obtain in
certain situations where to undertake the above steps would be no
more than a useless formality and where, accordingly, it would not
be imprudent to apply the res ipsa loquitur rule and award, in lieu
of separation pay, nominal damages to the employee. . . . 31
After carefully analyzing the consequences of the divergent doctrines
in the law on employment termination, we believe that in cases involving
dismissals for cause but without observance of the twin requirements of notice
and hearing, the better rule is to abandon the Serrano doctrine and to
follow Wenphil by holding that the dismissal was for just cause but imposing
sanctions on the employer. Such sanctions, however, must be stiffer than that
imposed in Wenphil. By doing so, this Court would be able to achieve a fair
result by dispensing justice not just to employees, but to employers as
well. DTAHEC
The unfairness of declaring illegal or ineffectual dismissals for valid or
authorized causes but not complying with statutory due process may have far-
reaching consequences.
This would encourage frivolous suits, where even the most notorious
violators of company policy are rewarded by invoking due process. This also
creates absurd situations where there is a just or authorized cause for
dismissal but a procedural infirmity invalidates the termination. Let us take for
example a case where the employee is caught stealing or threatens the lives
of his co-employees or has become a criminal, who has fled and cannot be
found, or where serious business losses demand that operations be ceased in
less than a month. Invalidating the dismissal would not serve public interest. It
could also discourage investments that can generate employment in the local
economy.
The constitutional policy to provide full protection to labor is not meant
to be a sword to oppress employers. The commitment of this Court to the
cause of labor does not prevent us from sustaining the employer when it is in
the right, as in this case. 32 Certainly, an employer should not be compelled to
pay employees for work not actually performed and in fact abandoned.
The employer should not be compelled to continue employing a
person who is admittedly guilty of misfeasance or malfeasance and whose
continued employment is patently inimical to the employer. The law protecting
the rights of the laborer authorizes neither oppression nor self-destruction of
the employer. 33
It must be stressed that in the present case, the petitioners committed
a grave offense, i.e., abandonment, which, if the requirements of due process
were complied with, would undoubtedly result in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282
should not be protected by the Social Justice Clause of the Constitution. Social
justice, as the term suggests, should be used only to correct an injustice. As
the eminent Justice Jose P. Laurel observed, social justice must be founded
on the recognition of the necessity of interdependence among 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." 34
This is not to say that the Court was wrong when it ruled the way it did
in  Wenphil,  Serrano  and related cases. Social justice is not based on rigid
formulas set in stone. It has to allow for changing times and circumstances.
 Justice Isagani Cruz strongly asserts the need to apply a balanced
approach to labor-management relations and dispense justice with an even
hand in every case:
We have repeatedly stressed that social justice — or any
justice for that matter — is for the deserving, whether he be a
millionaire in his mansion or a pauper in his hovel. It is true that, in
case of reasonable doubt, we are to tilt the balance in favor of the
poor to whom the Constitution fittingly extends its sympathy and
compassion. But never is it justified to give preference to the poor
simply because they are poor, or reject the rich simply because
they are rich, for justice must always be served for the poor and
the rich alike, according to the mandate of the law. 35
Justice in every case should only be for the deserving party. It should
not be presumed that every case of illegal dismissal would automatically be
decided in favor of labor, as management has rights that should be fully
respected and enforced by this Court. As interdependent and indispensable
partners in nation-building, labor and management need each other to foster
productivity and economic growth; hence, the need to weigh and balance the
rights and welfare of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack
of statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the
violation of his statutory rights, as ruled in Reta v. National Labor Relations
Commission. 36 The indemnity to be imposed should be stiffer to discourage
the abhorrent practice of "dismiss now, pay later," which we sought to deter in
the Serrano ruling. The sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer.
Under the Civil Code, nominal damages is adjudicated in order that a
right of the plaintiff, which has been violated or invaded by the defendant, may
be vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him. 37
As enunciated by this Court in Viernes v. National Labor Relations
Commissions, 38 an employer is liable to pay indemnity in the form of nominal
damages to an employee who has been dismissed if, in effecting such
dismissal, the employer fails to comply with the requirements of due process.
The Court, after considering the circumstances therein, fixed the indemnity at
P2,590.50, which was equivalent to the employee's one month salary. This
indemnity is intended not to penalize the employer but to vindicate or
recognize the employee's right to statutory due process which was violated by
the employer. 39
The violation of the petitioners' right to statutory due process by the
private respondent warrants the payment of indemnity in the form of nominal
damages. The amount of such damages is addressed to the sound discretion
of the court, taking into account the relevant circumstances. 40 Considering
the prevailing circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. We believe this form of damages would serve to deter employers
from future violations of the statutory due process rights of employees. At the
very least, it provides a vindication or recognition of this fundamental right
granted to the latter under the Labor Code and its Implementing Rules.
Private respondent claims that the Court of Appeals erred in holding
that it failed to pay petitioners' holiday pay, service incentive leave pay and
13th month pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners' money
claims. Private respondent is liable for petitioners' holiday pay, service
incentive leave pay and 13th month pay without deductions.
As a general rule, one who pleads payment has the burden of proving
it. Even where the employee must allege non-payment, the general rule is that
the burden rests on the employer to prove payment, rather than on the
employee to prove non-payment. The reason for the rule is that the pertinent
personnel files, payrolls, records, remittances and other similar documents —
which will show that overtime, differentials, service incentive leave and other
claims of workers have been paid — are not in the possession of the worker
but in the custody and absolute control of the employer. 41
In the case at bar, if private respondent indeed paid petitioners' holiday
pay and service incentive leave pay, it could have easily presented
documentary proofs of such monetary benefits to disprove the claims of the
petitioners. But it did not, except with respect to the 13th month pay wherein it
presented cash vouchers showing payments of the benefit in the years
disputed. 42 Allegations by private respondent that it does not operate during
holidays and that it allows its employees 10 days leave with pay, other than
being self-serving, do not constitute proof of payment. Consequently, it failed
to discharge the onus probandi thereby making it liable for such claims to the
petitioners.
Anent the deduction of SSS loan and the value of the shoes from
petitioner Virgilio Agabon's 13th month pay, we find the same to be
unauthorized. The evident intention of Presidential Decree No. 851 is to grant
an additional income in the form of the 13th month pay to employees not
already receiving the same 43 so as "to further protect the level of real wages
from the ravages of world-wide inflation." 44 Clearly, as additional income, the
13th month pay is included in the definition of wage under Article 97(f) of
the Labor Code,to wit:
(f) "Wage" paid to any employee shall mean the
remuneration or earnings, however designated, capable of being
expressed in terms of money whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for
 work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the
employee. . . ."
from which an employer is prohibited under Article 113 45 of the
same Code from making any deductions without the employee's
knowledge and consent. In the instant case, private respondent failed to
show that the deduction of the SSS loan and the value of the shoes from
petitioner Virgilio Agabon's 13th month pay was authorized by the latter.
The lack of authority to deduct is further bolstered by the fact that
petitioner Virgilio Agabon included the same as one of his money claims
against private respondent. STCDaI
 
The Court of Appeals properly reinstated the monetary claims
awarded by the Labor Arbiter ordering the private respondent to pay each of
the petitioners holiday pay for four regular holidays from 1996 to 1998, in the
amount of P6,520.00, service incentive leave pay for the same period in the
amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay
for 1998 in the amount of P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The
decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No.
63017, finding that petitioners' Jenny and Virgilio Agabon abandoned their
work, and ordering private respondent to pay each of the petitioners holiday
pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00,
service incentive leave pay for the same period in the amount of P3,255.00
and the balance of Virgilio Agabon's thirteenth month pay for 1998 in the
amount of P2,150.00 is AFFIRMED with the MODIFICATION that private
respondent Riviera Home Improvements, Inc. is further ORDERED to pay
each of the petitioners the amount of P30,000.00 as nominal damages for non-
compliance with statutory due process.
No costs. SO ORDERED.
[G.R. No. 151378. March 28, 2005.]
JAKA FOOD PROCESSING
CORPORATION,  petitioner, vs. DARWIN PACOT,
ROBERT PAROHINOG, DAVID BISNAR, MARLON
DOMINGO, RHOEL LESCANO and JONATHAN
CAGABCAB, respondents.
1. Labor Law;  Dismissals;  Distinction between a dismissal for just cause under
Article 282 and a dismissal for authorized cause under Article 283.-
A dismissal for just cause under Article 282 implies that the employee concerned has
committed, or is guilty of, some violation against the employer, i.e. the employee has
committed some serious misconduct, is guilty of some fraud against the employer, or,
as in Agabon, he has neglected his duties. Thus, it can be said that the employee
himself initiated the dismissal process. On another breath, a dismissal for an authorized
cause under Article 283 does not necessarily imply delinquency or culpability on the
part of the employee. Instead, the dismissal process is initiated by the employer’s
exercise of his management prerogative, i.e. when the employer opts to install labor
saving devices, when he decides to cease business operations or when, as in this
case, he undertakes to implement a retrenchment program. The clear-cut distinction
between a dismissal for just cause under Article 282 and a dismissal for authorized
cause under Article 283 is further reinforced by the fact that in the first, payment of
separation pay, as a rule, is not required, while in the second, the law requires payment
of separa tion pay.
DECISION
GARCIA, J  p:
Assailed and sought to be set aside in this appeal by way of a petition
for review on certiorari under Rule 45 of the Rules of Court are the following
issuances of the Court of Appeals in CA-G.R. SP No. 59847, to wit:
1. Decision dated 16 November 2001, 1 reversing and
setting aside an earlier decision of the National
Labor Relations Commission (NLRC); and
2. Resolution dated 8 January 2002, 2 denying petitioner's
motion for reconsideration.
The material facts may be briefly stated, as follows:
Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon
Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by
petitioner JAKA Foods Processing Corporation (JAKA, for short) until the latter
terminated their employment on August 29, 1997 because the corporation was
"in dire financial straits". It is not disputed, however, that the termination was
effected without JAKA complying with the requirement under Article 283 of
the Labor Code regarding the service of a written notice upon the employees
and the Department of Labor and Employment at least one (1) month before
the intended date of termination.
In time, respondents separately filed with the Regional Arbitration
Branch of the National Labor Relations Commission (NLRC) complaints for
illegal dismissal, underpayment of wages and nonpayment of service incentive
leave and 13th month pay against JAKA and its HRD Manager, Rosana
Castelo.
After due proceedings, the Labor Arbiter rendered a
decision 3 declaring the termination illegal and ordering JAKA and its HRD
Manager to reinstate respondents with full backwages, and separation pay if
reinstatement is not possible. More specifically the decision dispositively
reads:
WHEREFORE, judgment is hereby rendered
declaring as illegal the termination of complainants and
 ordering respondents to reinstate them to their positions with
full backwages which as of July 30, 1998 have already
amounted to P339,768.00. Respondents are also ordered to
pay complainants the amount of P2,775.00 representing the
unpaid service incentive leave pay of Parohinog, Lescano
and Cagabcab and the amount of P19,239.96 as payment
for 1997 13th month pay as alluded in the above
computation.
If complainants could not be reinstated, respondents
are ordered to pay them separation pay equivalent to one
month salary for very (sic) year of service.
SO ORDERED.
Therefrom, JAKA went on appeal to the NLRC, which, in a decision
dated August 30, 1999, 4 affirmed in toto that of the Labor Arbiter. aDSHIC
JAKA filed a motion for reconsideration. Acting thereon, the NLRC
came out with another decision dated January 28, 2000, 5 this time modifying
its earlier decision, thus:
WHEREFORE, premises considered, the instant
motion for reconsideration is hereby GRANTED and the
challenged decision of this Commission [dated] 30 August
1999 and the decision of the Labor Arbiter . . . are hereby
modified by reversing and setting aside the awards of
backwages, service incentive leave pay. Each of the
complainants-appellees shall be entitled to a separation pay
equivalent to one month. In addition, respondents-appellants
is (sic) ordered to pay each of the complainants-appellees
the sum of P2,000.00 as indemnification for its failure to
observe due process in effecting the retrenchment.
SO ORDERED.
Their motion for reconsideration having been denied by the NLRC in
its resolution of April 28, 2000, 6 respondents went to the Court of
Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No.
59847.
As stated at the outset hereof, the Court of Appeals, in a decision
dated November 16, 2000, applying the doctrine laid down by this Court
in Serrano vs. NLRC, 7 reversed and set aside the NLRC's decision of
January 28, 2000, thus:
WHEREFORE, the decision dated January 28, 2000
of the National Labor Relations Commission is REVERSED
and SET ASIDE and another one entered ordering
respondent JAKA Foods Processing Corporation to pay
petitioners separation pay equivalent to one (1) month
salary, the proportionate 13th month pay and, in addition,
full backwages from the time their employment was
terminated on August 29, 1997 up to the time the Decision
herein becomes final.
SO ORDERED.
This time, JAKA moved for a reconsideration but its motion was
denied by the appellate court in its resolution of January 8, 2002.
Hence, JAKA's present recourse, submitting, for our consideration, the
following issues:
"I. WHETHER OR NOT THE COURT OF APPEALS
CORRECTLY AWARDED 'FULL BACKWAGES' TO
RESPONDENTS.
II. WHETHER OR NOT THE ASSAILED DECISION
CORRECTLY AWARDED SEPARATION PAY TO
RESPONDENTS".
As we see it, there is only one question that requires
resolution, i.e. what are the legal implications of a situation where an employee
is dismissed for cause but such dismissal was effected without the employer's
compliance with the notice requirement under the Labor Code.
This, certainly, is not a case of first impression. In the very recent case
of Agabon vs. NLRC, 8 we had the opportunity to resolve a similar question.
Therein, we found that the employees committed a grave offense, i.e.,
abandonment, which is a form of a neglect of duty which, in turn, is one of the
just causes enumerated under Article 282 of the Labor Code. In said case, we
upheld the validity of the dismissal despite non-compliance with the notice
requirement of the Labor Code. However, we required the employer to pay the
dismissed employees the amount of P30,000.00, representing nominal
damages for non-compliance with statutory due process, thus:
"Where the dismissal is for a just cause, as in the
instant case, the lack of statutory due process should not
nullify the dismissal, or render it illegal, or ineffectual.
However, the employer should indemnify the employee for
the violation of his statutory rights, as ruled in Reta vs.
National Labor Relations Commission. The indemnity to be
imposed should be stiffer to discourage the abhorrent
practice of 'dismiss now, pay later,' which we sought to deter
in the Serrano ruling. The sanction should be in the nature
of indemnification or penalty and should depend on the facts
of each case, taking into special consideration the gravity of
the due process violation of the employer.
xxx xxx xxx
 The violation of petitioners' right to statutory due
process by the private respondent warrants the payment of
indemnity in the form of nominal damages. The amount of
such damages is addressed to the sound discretion of the
court, taking into account the relevant
circumstances. Considering the prevailing
circumstances in the case at bar, we deem it proper to
fix it at P30,000.00. We believe this form of damages would
serve to deter employers from future violations of the
statutory due process rights of employees. At the very least,
it provides a vindication or recognition of this fundamental
right granted to the latter tinder the Labor Code and its
Implementing Rules," (Emphasis supplied).
The difference between Agabon and the instant case is that in the
former, the dismissal was based on a just cause under Article 282 of the Labor
Code while in the present case, respondents were dismissed due to
retrenchment, which is one of the authorized causes under Article 283 of the
same Code. ESTCHa
At this point, we note that there are divergent implications of a
dismissal for just cause under Article 282, on one hand, and a dismissal for
authorized cause under Article 283, on the other.
A dismissal for  just cause under Article 282 implies that the employee
concerned has committed, or is guilty of, some violation against the
employer, i.e. the employee has committed some serious misconduct, is guilty
of some fraud against the employer, or, as in Agabon, he has neglected his
duties. Thus, it can be said that the employee himself initiated the dismissal
process.
On another breath, a dismissal for an authorized cause under Article
283 does not necessarily imply delinquency or culpability on the part of the
employee. Instead, the dismissal process is initiated by the employer's
exercise of his management prerogative, i.e. when the employer opts to install
labor saving devices, when he decides to cease business operations or when,
as in this case, he undertakes to implement a retrenchment program.
The clear-cut distinction between a dismissal for just cause under
Article 282 and a dismissal for authorized cause under Article 283 is further
reinforced by the fact that in the first, payment of separation pay, as a rule, is
not required, while in the second, the law requires payment of separation pay.
9 corporation, it necessarily necessarily (sic) follows that the
For these reasons, there ought to be a difference in treatment when
the ground for dismissal is one of the just causes under Article 282, and when
based on one of the authorized causes under Article 283.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a
just cause under Article 282 but the employer failed to comply with the notice
requirement, the sanction to be imposed upon him should
be tempered because the dismissal process was, in effect, initiated by an act
imputable to the employee; and (2) if the dismissal is based on an authorized
cause under Article 283 but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal, process was
initiated by the employer's exercise of his management prerogative.
The records before us reveal that, indeed, JAKA was suffering from
serious business losses at the time it terminated respondents' employment. As
aptly found by the NLRC:
"A careful study of the evidence presented by the
respondent-appellant corporation shows that the audited
Financial Statement of the corporation for the periods 1996,
1997 and 1998 were submitted by the respondent-appellant
corporation. The Statement of Income and Deficit found in
the Audited Financial Statement of the respondent-appellant
corporation clearly shows the following in 1996, the deficit of
the respondent-appellant corporation was P188,218,419.00
or 94.11% of the stockholder's [sic] equity which amounts to
P200,000,000.00. In 1997 when the retrenchment program
of respondent-appellant corporation was undertaken, the
deficit ballooned to P247,222,569.00 or 123.61% of the
stockholders' equity, thus a capital deficiency or, impairment
of equity ensued. In 1998, the deficit grew to
P355,794,897.00 or 177% of the stockholders' equity. From
1996 to 1997, the deficit grew by more that (sic) 31% while
in 1998 the deficit grew by more than 47%.
 
The Statement of Income and Deficit of the
respondent-appellant corporation to prove its alleged losses
was prepared by an independent auditor, SGV & Co. It
convincingly showed that the respondent-appellant
corporation was in dire financial straits, which the
complainants-appellees failed to dispute. The losses
incurred by the respondent-appellant corporation are clearly
substantial and sufficiently proven with clear and satisfactory
evidence. Losses incurred were adequately shown with
respondent-appellant's audited financial statement. Having
established the loss incurred by the respondent-appellant
ground in support of retrenchment existed at the time the
complainants-appellees were terminated. We cannot
therefore sustain the findings of the Labor Arbiter that the
alleged losses of the respondent-appellant was [sic] not well
substantiated by substantial proofs. It is therefore logical for
 the corporation to implement a retrenchment program to
prevent further losses." 10
Noteworthy it is, moreover, to state that herein respondents did not
assail the foregoing finding of the NLRC which, incidentally, was also affirmed
by the Court of Appeals. HEaCcD
It is, therefore, established that there was ground for respondents'
dismissal, i.e., retrenchment, which is one of the authorized causes
enumerated under Article 283 of the Labor Code. Likewise, it is established
that JAKA failed to comply with the notice requirement under the same Article.
Considering the factual circumstances in the instant case and the above
ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00.
We likewise find the Court of Appeals to have been in error when it
ordered JAKA to pay respondents separation pay equivalent to one (1) month
salary for every year of service. This is because in Reahs Corporation vs.
NLRC, 11 we made the following declaration:
"The rule, therefore, is that in all cases of business
closure or cessation of operation or undertaking of the
employer, the affected employee is entitled to separation
pay. This is consistent with the state policy of treating labor
as a primary social economic force, affording full protection
to its rights as well as its welfare. The exception is when
the closure of business or cessation of operations is
due to serious business losses or financial reverses;
duly proved, in which case, the right of affected
employees to separation pay is lost for obvious
reasons. . . ". (Emphasis supplied)
WHEREFORE, the instant petition is GRANTED. Accordingly, the
assailed decision and resolution of the Court of Appeals respectively dated
November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a new
one entered upholding the legality of the dismissal but ordering petitioner to
pay each of the respondents the amount of P50,000.00, representing nominal
damages for non-compliance with statutory due process.
SO ORDERED.
[G.R. No. 192571. July 23, 2013.]
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE,
EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C.
BERNARDO, AND ALLAN G. ALMAZAR, petitioners, vs. PEARLIE ANN
F. ALCARAZ, respondent.
Syllabi:
1. Remedial Law;  Civil Procedure;  Forum Shopping;  Certification Against Forum
Shopping;  The prohibition against forum shopping is different from a violation of the
certification requirement under Section 5, Rule 7 of the Rules of Court.-
—At the outset, it is noteworthy to mention that the prohibition against forum shopping
is different from a violation of the certification requirement under Section 5, Rule 7 of
the Rules of Court. In Sps. Ong v. CA, 384 SCRA 139 (2002), the Court explained that:
x x x The distinction between the prohibition against forum shopping and the
certification requirement should by now be too elementary to be misunderstood. To
reiterate, compliance with the certification against forum shopping is separate from and
independent of the avoidance of the act of forum shopping itself. There is a difference
in the treatment between failure to comply with the certification requirement and
violation of the prohibition against forum shopping not only in terms of imposable
sanctions but also in the manner of enforcing them. The former constitutes sufficient
cause for the dismissal without prejudice [to the filing] of the complaint or initiatory
pleading upon motion and after hearing, while the latter is a ground for summary
dismissal thereof and for direct contempt.
2. Same;  Same;  Same;  Forum shopping takes place when a litigant files multiple suits
involving the same parties, either simultaneously or successively, to secure a favorable
judgment.-
—Forum shopping takes place when a litigant files multiple suits involving the same
parties, either simultaneously or successively, to secure a favorable judgment. It exists
where the elements of litis pendentia are present, namely: (a) identity of parties, or at
least such parties who represent the same interests in both actions; (b) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (c) the
identity with respect to the two preceding particulars in the two (2) cases is such that
any judgment that may be rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case.
3. Same;  Same;  Same;  Section 5(b), Rule 7 of the Rules of Court requires that a
plaintiff who files a case should provide a complete statement of the present status of
any pending case if the latter involves the same issues as the one that was filed.-
—Section 5(b), Rule 7 of the Rules of Court requires that a plaintiff who files a case
should provide a complete statement of the present status of any pending case if the
latter involves the same issues as the one that was filed. If there is no such similar
pending case, Section 5(a) of the same rule provides that the plaintiff is obliged to
declare under oath that to the best of his knowledge, no such other action or claim is
pending.
4. Labor Law;  Probationary Employees;  A probationary employee, like a regular
employee, enjoys security of tenure. However, in cases of probationary employment,
aside from just or authorized causes of termination, an additional ground is provided
under Article 295 of the Labor Code, i.e., the probationary employee may also be
terminated for failure to qualify as a regular employee in accordance with the
reasonable standards made known by the employer to the employee at the time of the
engagement.-
—A probationary employee, like a regular employee, enjoys security of tenure.
However, in cases of probationary employment, aside from just or authorized causes of
termination, an additional ground is provided under Article 295 of the Labor Code, i.e.,
the probationary employee may also be terminated for failure to qualify as a regular
employee in accordance with the reasonable standards made known by the employer
to the employee at the time of the engagement. Thus, the services of an employee who
has been engaged on probationary basis may be terminated for any of the following:
(a) a just or (b) an authorized cause; and (c) when he fails to qualify as a regular
employee in accordance with reasonable standards prescribed by the employer.
5. Same;  Same; If the employer fails to inform the probationary employee of the
reasonable standards upon which the regularization would be based on at the time of
the engagement, then the said employee shall be deemed a regular employee.-
—Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides
that if the employer fails to inform the probationary employee of the reasonable
standards upon which the regularization would be based on at the time of the
engagement, then the said employee shall be deemed a regular employee, viz.: (d) In
all cases of probationary employment, the employer shall make known to the employee
the standards under which he will qualify as a regular employee at the time of his
engagement. Where no standards are made known to the employee at that time, he
shall be deemed a regular employee. In other words, the employer is made to comply
with two (2) requirements when dealing with a probationary employee: first, the
employer must communicate the regularization standards to the probationary
employee; and second, the employer must make such communication at the time of the
probationary employee’s engagement. If the employer fails to comply with either, the
employee is deemed as a regular and not a probationary employee.
6. Same;  Same; An employer is deemed to have made known the standards that
would qualify a probationary employee to be a regular employee when it has exerted
reasonable efforts to apprise the employee of what he is expected to do or accomplish
during the trial period of probation.-
—An employer is deemed to have made known the standards that would qualify a
probationary employee to be a regular employee when it has exerted reasonable
efforts to apprise the employee of what he is expected to do or accomplish during the
trial period of probation. This goes without saying that the employee is sufficiently made
aware of his probationary status as well as the length of time of the probation. The
exception to the foregoing is when the job is self-descriptive in nature, for instance, in
the case of maids, cooks, drivers, or messengers. Also, in Aberdeen Court, Inc. v.
Agustin, 456 SCRA 32 (2005), it has been held that the rule on notifying a probationary
employee of the standards of regularization should not be used to exculpate an
employee who acts in a manner contrary to basic knowledge and common sense in
regard to which there is no need to spell out a policy or standard to be met. In the same
light, an employee’s failure to perform the duties and responsibilities which have been
clearly made known to him constitutes a justifiable basis for a probationary employee’s
nonregularization.
7. Same;  Same;  Basic knowledge and common sense dictate that the adequate
performance of one’s duties is, by and of itself, an inherent and implied standard
for a probationary employee to be regularized;  such is a regularization standard
which need not be literally spelled out or mapped into technical indicators in every
case.-
—Verily, basic knowledge and common sense dictate that the adequate performance
of one’s duties is, by and of itself, an inherent and implied standard for a probationary
employee to be regularized; such is a regularization standard which need not be
literally spelled out or mapped into technical indicators in every case. In this regard, it
must be observed that the assessment of adequate duty performance is in the nature
of a management prerogative which when reasonably exercised — as Abbott did in this
case — should be respected. This is especially true of a managerial employee like
Alcaraz who was tasked with the vital responsibility of handling the personnel and
important matters of her department.
8. Same;  Same; If the termination is brought about by the failure of an employee to
meet the standards of the employer in case of probationary employment, it shall be
sufficient that a written notice is served the employee, within a reasonable time from
the effective date of termination.-
—A different procedure is applied when terminating a probationary employee; the usual
two-notice rule does not govern. Section 2, Rule I, Book VI of the Implementing Rules
of the Labor Code states that “[i]f the termination is brought about by the x x x failure of
an employee to meet the standards of the employer in case of probationary
employment, it shall be sufficient that a written notice is served the employee, within a
reasonable time from the effective date of termination.”
9. Same;  Company Policy;  A company policy partakes of the nature of an implied
contract between the employer and employee.-
— A company policy partakes of the nature of an implied contract between the
employer and employee. In Parts Depot, Inc. v. Beiswenger, 170 S.W.3d 354 (Ky.
2005), it has been held that: [E]mployer statements of policy . . . can give rise to
contractual rights in employees without evidence that the parties mutually agreed that
the policy statements would create contractual rights in the employee, and, hence,
although the statement of policy is signed by neither party, can be unilaterally amended
by the employer without notice to the employee, and contains no reference to a specific
employee, his job description or compensation, and although no reference was made
to the policy statement in pre-employment interviews and the employee does not learn
of its existence until after his hiring. Toussaint, 292 N.W.2d at 892. The principle is akin
to estoppel. Once an employer establishes an express personnel policy and the
employee continues to work while the policy remains in effect, the policy is deemed an
implied contract for so long as it remains in effect. If the employer unilaterally changes
the policy, the terms of the implied contract are also thereby changed.
10. Same;  Termination of Employment;  Nominal Damages;  Case law has settled
that an employer who terminates an employee for a valid cause but does so through
invalid procedure is liable to pay the latter nominal damages.-
—Case law has settled that an employer who terminates an employee for a valid cause
but does so through invalid procedure is liable to pay the latter nominal damages. In
Agabon v. NLRC (Agabon), 442 SCRA 573 (2004), the Court pronounced that where
the dismissal is for a just cause, the lack of statutory due process should not nullify the
dismissal, or render it illegal, or ineffectual. However, the employer should indemnify
the employee for the violation of his statutory rights. Thus, in Agabon, the employer
was ordered to pay the employee nominal damages in the amount of P30,000.00.
11. Same;  Same;  If the dismissal is based on a just cause under Article 282 of
the Labor Code (now Article 296) but the employer failed to comply with the
notice requirement, the sanction to be imposed upon him should be tempered
because the dismissal process was, in effect, initiated by an act imputable to the
employee; if the dismissal is based on an authorized cause under Article 283 (now
Article 297) but the employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal process was initiated by the employer’s
exercise of his management prerogative.-
—It was explained that if the dismissal is based on a just cause under Article 282 of the
Labor Code (now Article 296) but the employer failed to comply with the notice
requirement, the sanction to be imposed upon him should be tempered because the
dismissal process was, in effect, initiated by an act imputable to the employee; if the
dismissal is based on an authorized cause under Article 283 (now Article 297) but the
employer failed to comply with the notice requirement, the sanction should be stiffer
because the dismissal process was initiated by the employer’s exercise of his
management prerogative. Hence, in Jaka, where the employee was dismissed for an
authorized cause of retrenchment — as contradistinguished from the employee in
Agabon who was dismissed for a just cause of neglect of duty — the Court ordered the
employer to pay the employee nominal damages at the higher amount of P50,000.00.
12. Corporation Law;  Liability of Corporate Directors;  Requisites to Hold Corporate
Directors, Trustees or Officers Personally Liable for Corporate Acts.-
—It is hornbook principle that personal liability of corporate directors, trustees or Abbott's Recruitment Officer, petitioner Teresita C. Bernardo (Bernardo),
officers attaches only when: (a) they assent to a patently unlawful act of the confirming the same. Attached to Bernardo's e-mail were Abbott's
corporation, or when they are guilty of bad faith or gross negligence in directing its organizational chart and a job description of Alcaraz's work. 9 IDSaEA
affairs, or when there is a conflict of interest resulting in damages to the corporation, its
stockholders or other persons; (b) they consent to the issuance of watered down stocks On February 12, 2005, Alcaraz signed an employment contract which
or when, having knowledge of such issuance, do not forthwith file with the corporate stated, inter alia, that she was to be placed on probation for a period of six (6)
secretary their written objection; (c) they agree to hold themselves personally and months beginning February 15, 2005 to August 14, 2005. The said contract
solidarily liable with the corporation; or (d) they are made by specific provision of law
was also signed by Abbott's General Manager, petitioner Edwin Feist
personally answerable for their corporate action.
13. Civil Law;  Bad Faith; It is a well-settled rule that bad faith cannot be presumed (Feist): 10
and he who alleges bad faith has the onus of proving it.- PROBATIONARY EMPLOYMENT
—A judicious perusal of the records show that other than her unfounded assertions on
the matter, there is no evidence to support the fact that the individual petitioners herein, Dear Pearl,
in their capacity as Abbott’s officers and employees, acted in bad faith or were
motivated by ill will in terminating Alcaraz’s services. The fact that Alcaraz was made to After having successfully passed the pre-employment
resign and not allowed to enter the workplace does not necessarily indicate bad faith requirements, you are hereby appointed as follows:
on Abbott’s part since a sufficient ground existed for the latter to actually proceed with
her termination. On the alleged loss of her personal belongings, records are bereft of Position Title : Regulatory Affairs Manager
any showing that the same could be attributed to Abbott or any of its officers. It is a      
well-settled rule that bad faith cannot be presumed and he who alleges bad faith has
the onus of proving it. All told, since Alcaraz failed to prove any malicious act on the Department : Hospira
part of Abbott or any of its officers, the Court finds the award of moral or exemplary The terms of your employment are:
damages unwarranted.
DECISION Nature of Employment : Probationary
PERLAS-BERNABE, J  p:      
Assailed in this petition for review on certiorari  1 are the Effectivity : February 15, 2005 to August 14, 2005
Decision 2 dated December 10, 2009 and Resolution 3 dated June 9, 2010 of
the Court of Appeals (CA) in CA-G.R. SP No. 101045 which pronounced that      
the National Labor Relations Commission (NLRC) did not gravely abuse its Basic Salary : P110,000.00/month
discretion when it ruled that respondent Pearlie Ann F. Alcaraz (Alcaraz) was It is understood that you agree to abide by all existing policies,
illegally dismissed from her employment. rules and regulations of the company, as well as those, which
may be hereinafter promulgated. TaCSAD
The Facts
Unless renewed, probationary appointment expires on the date
On June 27, 2004, petitioner Abbott Laboratories, Philippines (Abbott) indicated subject to earlier termination by the Company for any
caused the publication in a major broadsheet newspaper of its need for a justifiable reason.
Medical and Regulatory Affairs Manager (Regulatory Affairs Manager) who
would: (a) be responsible for drug safety surveillance operations, staffing, and If you agree to the terms and conditions of your employment,
please signify your conformity below and return a copy to HRD.
budget; (b) lead the development and implementation of standard operating
procedures/policies for drug safety surveillance and vigilance; and (c) act as Welcome to Abbott!
the primary interface with internal and external customers regarding safety
operations and queries. 4 Alcaraz — who was then a Regulatory Affairs and Very truly yours,
Information Manager at Aventis Pasteur Philippines, Incorporated (another Sgd. EDWIN D. FEIST
pharmaceutical company like Abbott) — showed interest and submitted her General Manager
application on October 4, 2004. 5
CONFORME:
On December 7, 2004, Abbott formally offered Alcaraz the above-
Sgd. PEARLIE ANN
mentioned position which was an item under the company's Hospira Affiliate
FERRER-ALCARAZ
Local Surveillance Unit (ALSU) department. 6 In Abbott's offer sheet, 7 it was
stated that Alcaraz was to be employed on a probationary basis. 8 Later that During Alcaraz's pre-employment orientation, petitioner Allan G.
day, she accepted the said offer and received an electronic mail (e-mail) from Almazar (Almazar), Hospira's Country Transition Manager, briefed her on her
duties and responsibilities as Regulatory Affairs Manager, stating that: (a) she
will handle the staff of Hospira ALSU and will directly report to Almazar on
matters regarding Hopira's local operations, operational budget, and
performance evaluation of the Hospira ALSU Staff who are on probationary
status; (b) she must implement Abbott's Code of Good Corporate Conduct
(Code of Conduct), office policies on human resources and finance, and
ensure that Abbott will hire people who are fit in the organizational
discipline; (c) petitioner Kelly Walsh (Walsh), Manager of the Literature Drug
Surveillance Drug Safety of Hospira, will be her immediate supervisor; (d) she
should always coordinate with Abbott's human resource officers in the
management and discipline of the staff; (e) Hospira ALSU will spin off from
Abbott in early 2006 and will be officially incorporated and known as Hospira,
Philippines. In the interim, Hospira ALSU operations will still be under Abbott's
management, excluding the technical aspects of the operations which is under
the control and supervision of Walsh; and (f) the processing of information
and/or raw material data subject of Hospira ALSU operations will be strictly
confined and controlled under the computer system and network being
maintained and operated from the United States. For this purpose, all those
involved in Hospira ALSU are required to use two identification cards: one, to
identify them as Abbott's employees and another, to identify them as Hospira
employees. 11 IcESaA
On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa),
Abbott's Human Resources (HR) Director, sent Alcaraz an e-mail which
contained an explanation of the procedure for evaluating the performance of
probationary employees and further indicated that Abbott had only one
evaluation system for all of its employees. Alcaraz was also given copies of
Abbott's Code of Conduct and Probationary Performance Standards and
Evaluation (PPSE) and Performance Excellence Orientation Modules
(Performance Modules) which she had to apply in line with her task of
evaluating the Hospira ALSU staff. 12
Abbott's PPSE procedure mandates that the job performance of a
probationary employee should be formally reviewed and discussed with the
employee at least twice: first on the third month and second on the fifth month
from the date of employment. The necessary Performance Improvement Plan
should also be made during the third-month review in case of a gap between
the employee's performance and the standards set. These performance
standards should be discussed in detail with the employee within the first two
(2) weeks on the job. It was equally required that a signed copy of the PPSE
form must be submitted to Abbott's Human Resources Department (HRD) and
shall serve as documentation of the employee's performance during his/her
probationary period. This shall form the basis for recommending the
confirmation or termination of the probationary employment. 13
During the course of her employment, Alcaraz noticed that some of the
staff had disciplinary problems. Thus, she would reprimand them for their
unprofessional behavior such as non-observance of the dress code,
moonlighting, and disrespect of Abbott officers. However, Alcaraz's method of
management was considered by Walsh to be "too strict." 14 Alcaraz
approached Misa to discuss these concerns and was told to "lie low" and let
Walsh handle the matter. Misa even assured her that Abbott's HRD would
support her in all her management decisions. 15
On April 12, 2005, Alcaraz received an e-mail from Misa requesting
immediate action on the staff's performance evaluation as their probationary
periods were about to end. This Alcaraz eventually submitted. 16
On April 20, 2005, Alcaraz had a meeting with petitioner Cecille
Terrible (Terrible), Abbott's former HR Director, to discuss certain issues
regarding staff performance standards. In the course thereof, Alcaraz
accidentally saw a printed copy of an e-mail sent by Walsh to some staff
members which essentially contained queries regarding the former's job
performance. Alcaraz asked if Walsh's action was the normal process of
evaluation. Terrible said that it was not. 17 aHECST
On May 16, 2005, Alcaraz was called to a meeting with Walsh and
Terrible where she was informed that she failed to meet the regularization
standards for the position of Regulatory Affairs Manager. 18 Thereafter, Walsh
and Terrible requested Alcaraz to tender her resignation, else they be forced to
terminate her services. She was also told that, regardless of her choice, she
should no longer report for work and was asked to surrender her office
identification cards. She requested to be given one week to decide on the
same, but to no avail. 19
On May 17, 2005, Alcaraz told her administrative assistant, Claude
Gonzales (Gonzales), that she would be on leave for that day. However,
Gonzales told her that Walsh and Terrible already announced to the whole
Hospira ALSU staff that Alcaraz already resigned due to health reasons. 20
On May 23, 2005, Walsh, Almazar, and Bernardo personally handed
to Alcaraz a letter stating that her services had been terminated effective May
19, 2005. 21 The letter detailed the reasons for Alcaraz's termination —
particularly, that Alcaraz: (a) did not manage her time effectively; (b) failed to
gain the trust of her staff and to build an effective rapport with them; (c) failed
to train her staff effectively; and (d) was not able to obtain the knowledge and
ability to make sound judgments on case processing and article review which
were necessary for the proper performance of her duties. 22 On May 27, 2005,
Alcaraz received another copy of the said termination letter via registered
mail. 23 ECTSDa
Alcaraz felt that she was unjustly terminated from her employment and
thus, filed a complaint for illegal dismissal and damages against Abbott and its
officers, namely, Misa, Bernardo, Almazar, Walsh, Terrible, and Feist. 24 She
claimed that she should have already been considered as a regular and not a
probationary employee given Abbott's failure to inform her of the reasonable
standards for her regularization upon her engagement as required under
Article 295 25 of the Labor Code. In this relation, she contended that while her
employment contract stated that she was to be engaged on a probationary
status, the same did not indicate the standards on which her regularization
would be based. 26 She further averred that the individual petitioners
maliciously connived to illegally dismiss her when: (a) they threatened her with
termination; (b) she was ordered not to enter company premises even if she
was still an employee thereof; and (c) they publicly announced that she
already resigned in order to humiliate her. 27
On the contrary, petitioners maintained that Alcaraz was validly
terminated from her probationary employment given her failure to satisfy the
prescribed standards for her regularization which were made known to her at
the time of her engagement. 28
The LA Ruling
In a Decision dated March 30, 2006, 29 the LA dismissed Alcaraz's complaint
for lack of merit.
The LA rejected Alcaraz's argument that she was not informed of the
reasonable standards to qualify as a regular employee considering her admissions that
she was briefed by Almazar on her work during her pre-employment orientation
meeting 30 and that she received copies of Abbott's Code of Conduct and Performance
Modules which were used for evaluating all types of Abbott employees. 31 As Alcaraz
was unable to meet the standards set by Abbott as per her performance evaluation, the
LA ruled that the termination of her probationary employment was justified. 32 Lastly,
the LA found that there was no evidence to conclude that Abbott's officers and
employees acted in bad faith in terminating Alcaraz's employment. 33
Displeased with the LA's ruling, Alcaraz filed an appeal with the National Labor
Relations Commission (NLRC). DTcACa
The NLRC Ruling
On September 15, 2006, the NLRC rendered a Decision, 34 annulling and
setting aside the LA's ruling, the dispositive portion of which reads:
WHEREFORE, the Decision of the Labor Arbiter dated 31
March 2006 [sic] is hereby reversed, annulled and set aside and
judgment is hereby rendered:
1. Finding respondents Abbot [sic] and individual
respondents to have committed illegal dismissal;
2. Respondents are ordered to immediately reinstate
complainant to her former position without loss of seniority rights
immediately upon receipt hereof;
3. To jointly and severally pay complainant backwages
computed from 16 May 2005 until finality of this decision. As of the
date hereof the backwages is computed at
a. Backwages for 15 months - PhP1,650,000.00
       
b. 13th month pay - 110,000.00
      ————————
  TOTAL   PhP1,760,000.00
      ==========
4. Respondents are ordered to pay complainant moral
damages of P50,000.00 and exemplary damages of P50,000.00.
5. Respondents are also ordered to pay attorney's fees of
10% of the total award. cDCSTA
6. All other claims are dismissed for lack of merit.
SO ORDERED. 35
The NLRC reversed the findings of the LA and ruled that there was no
evidence showing that Alcaraz had been apprised of her probationary status and the
requirements which she should have complied with in order to be a regular
employee. 36 It held that Alcaraz's receipt of her job description and Abbott's Code of
Conduct and Performance Modules was not equivalent to her being actually informed
of the performance standards upon which she should have been evaluated on. 37 It
further observed that Abbott did not comply with its own standard operating procedure
in evaluating probationary employees. 38 The NLRC was also not convinced that
Alcaraz was terminated for a valid cause given that petitioners' allegation of Alcaraz's
"poor performance" remained unsubstantiated. 39
Petitioners filed a motion for reconsideration which was denied by the NLRC in
a Resolution dated July 31, 2007. 40 CHEIcS
Aggrieved, petitioners filed with the CA a Petition for Certiorari  with Prayer for
Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction,
docketed as CA G.R. SP No. 101045 (First CA Petition), alleging grave abuse of
discretion on the part of NLRC when it ruled that Alcaraz was illegally dismissed. 41
Pending resolution of the First CA Petition, Alcaraz moved for the execution of
the NLRC's Decision before the LA, which petitioners strongly opposed. The LA denied
the said motion in an Order dated July 8, 2008 which was, however, eventually
reversed on appeal by the NLRC. 42 Due to the foregoing, petitioners filed another
Petition for Certiorari  with the CA, docketed as CA G.R. SP No. 111318 (Second CA
Petition), assailing the propriety of the execution of the NLRC decision. 43
The CA Ruling
With regard to the First CA Petition, the CA, in a Decision 44 dated December
10, 2009, affirmed the ruling of the NLRC and held that the latter did not commit any
grave abuse of discretion in finding that Alcaraz was illegally dismissed.
It observed that Alcaraz was not apprised at the start of her employment of the
reasonable standards under which she could qualify as a regular employee. 45 This
was based on its examination of the employment contract which showed that the same
did not contain any standard of performance or any stipulation that Alcaraz shall
undergo a performance evaluation before she could qualify as a regular employee. 46 It
also found that Abbott was unable to prove that there was any reasonable ground to
terminate Alcaraz's employment. 47 Abbott moved for the reconsideration of the
aforementioned ruling which was, however, denied by the CA in a Resolution 48 dated
June 9, 2010.
 The CA likewise denied the Second CA Petition in a Resolution dated May 18,
2010 (May 18, 2010 Resolution) and ruled that the NLRC was correct in upholding the
execution of the NLRC Decision. 49 Thus, petitioners filed a motion for
reconsideration. SHADEC
While the petitioners' motion for reconsideration of the CA's May 18, 2010
Resolution was pending, Alcaraz again moved for the issuance of a writ of execution
before the LA. On June 7, 2010, petitioners received the LA's order granting Alcaraz's
motion for execution which they in turn appealed to the NLRC — through a
Memorandum of Appeal dated June 16, 2010 (June 16, 2010 Memorandum of Appeal)
— on the ground that the implementation of the LA's order would render its motion for
reconsideration moot and academic. 50
Meanwhile, petitioners' motion for reconsideration of the CA's May 18, 2010
Resolution in the Second CA Petition was denied via a Resolution dated October 4,
2010. 51 This attained finality on January 10, 2011 for petitioners' failure to timely
appeal the same. 52 Hence, as it stands, only the issues in the First CA petition are left
to be resolved.
Incidentally, in her Comment dated November 15, 2010, Alcaraz also alleges
that petitioners were guilty of forum shopping when they filed the Second CA Petition
pending the resolution of their motion for reconsideration of the CA's December 10,
2009 Decision i.e., the decision in the First CA Petition. 53 She also contends that
petitioners have not complied with the certification requirement under Section 5, Rule 7
of the Rules of Court when they failed to disclose in the instant petition the filing of the
June 16, 2010 Memorandum of Appeal filed before the NLRC. 54
The Issues Before the Court
The following issues have been raised for the Court's resolution: (a) whether
or not petitioners are guilty of forum shopping and have violated the certification
requirement under Section 5, Rule 7 of the Rules of Court; (b) whether or not Alcaraz
was sufficiently informed of the reasonable standards to qualify her as a regular
employee; (c) whether or not Alcaraz was validly terminated from her employment;
and (d) whether or not the individual petitioners herein are liable. CTcSAE
The Court's Ruling
A.  Forum Shopping and
Violation of Section 5, Rule 7
of the Rules of Court.
At the outset, it is noteworthy to mention that the prohibition against
forum shopping is different from a violation of the certification requirement
under Section 5, Rule 7 of the Rules of Court. In Sps. Ong v. CA, 55 the Court
explained that:
. . . The distinction between the prohibition against forum
shopping and the certification requirement should by now be too
elementary to be misunderstood. To reiterate, compliance with the
certification against forum shopping is separate from and
independent of the avoidance of the act of forum shopping itself.
There is a difference in the treatment between failure to comply
with the certification requirement and violation of the prohibition
against forum shopping not only in terms of imposable sanctions
but also in the manner of enforcing them. The former constitutes
sufficient cause for the dismissal without prejudice [to the filing] of
the complaint or initiatory pleading upon motion and after hearing,
while the latter is a ground for summary dismissal thereof and for
direct contempt. . . . . 56
As to the first, forum shopping takes place when a litigant files multiple
suits involving the same parties, either simultaneously or successively, to
secure a favorable judgment. It exists where the elements of litis pendentia  are
present, namely: (a) identity of parties, or at least such parties who represent
the same interests in both actions; (b) identity of rights asserted and relief
prayed for, the relief being founded on the same facts; and (c) the identity with
respect to the two preceding particulars in the two (2) cases is such that any
judgment that may be rendered in the pending case, regardless of which party
is successful, would amount to res judicata in the other case. 57 HSATIC
In this case, records show that, except for the element of identity of
parties, the elements of forum shopping do not exist. Evidently, the First CA
Petition was instituted to question the ruling of the NLRC that Alcaraz was
illegally dismissed. On the other hand, the Second CA Petition pertains to the
propriety of the enforcement of the judgment award pending the resolution of
the First CA Petition and the finality of the decision in the labor dispute
between Alcaraz and the petitioners. Based on the foregoing, a judgment in
the Second CA Petition will not constitute res judicata insofar as the First CA
Petition is concerned. Thus, considering that the two petitions clearly cover
different subject matters and causes of action, there exists no forum shopping.
As to the second, Alcaraz further imputes that the petitioners violated
the certification requirement under Section 5, Rule 7 of the Rules of
Court 58 by not disclosing the fact that it filed the June 16, 2010 Memorandum
of Appeal before the NLRC in the instant petition.
In this regard, Section 5 (b), Rule 7 of the Rules of Court requires that
a plaintiff who files a case should provide a complete statement of the present
status of any pending case if the latter involves the same issues as the one
that was filed. If there is no such similar pending case, Section 5 (a) of the
same rule provides that the plaintiff is obliged to declare under oath that to the
best of his knowledge, no such other action or claim is pending.
Records show that the issues raised in the instant petition and those in
the June 16, 2010 Memorandum of Appeal filed with the NLRC likewise cover
different subject matters and causes of action. In this case, the validity of
Alcaraz's dismissal is at issue whereas in the said Memorandum of Appeal, the
propriety of the issuance of a writ of execution was in question. Thus, given the
dissimilar issues, petitioners did not have to disclose in the present petition the
filing of their June 16, 2010 Memorandum of Appeal with the NLRC. In any
event, considering that the issue on the propriety of the issuance of a writ of
execution had been resolved in the Second CA Petition — which in fact had
already attained finality — the matter of disclosing the June 16, 2010
Memorandum of Appeal is now moot and academic. HCacDE
 Having settled the foregoing procedural matter, the Court now
proceeds to resolve the substantive issues.
B.  Probationary employment;
grounds for termination.
A probationary employee, like a regular employee, enjoys security of
tenure. However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under
Article 295 of the Labor Code, i.e., the probationary employee may also be
terminated for failure to qualify as a regular employee in accordance with the
reasonable standards made known by the employer to the employee at the
time of the engagement. 59 Thus, the services of an employee who has been
engaged on probationary basis may be terminated for any of the
following: (a) a just or (b) an authorized cause; and (c) when he fails to qualify
as a regular employee in accordance with reasonable standards prescribed by
the employer. 60
Corollary thereto, Section 6 (d), Rule I, Book VI of the Implementing
Rules of the Labor Code provides that if the employer fails to inform the
probationary employee of the reasonable standards upon which the
regularization would be based on at the time of the engagement, then the said
employee shall be deemed a regular employee, viz.:
(d)In all cases of probationary employment, the employer shall
make known to the employee the standards under which he will
qualify as a regular employee at the time of his engagement.
Where no standards are made known to the employee at that
time, he shall be deemed a regular employee. caEIDA
In other words, the employer is made to comply with two (2)
requirements when dealing with a probationary employee: first, the employer
must communicate the regularization standards to the probationary employee;
and second, the employer must make such communication at the time of the
probationary employee's engagement. If the employer fails to comply with
either, the employee is deemed as a regular and not a probationary employee.
Keeping with these rules, an employer is deemed to have made
known the standards that would qualify a probationary employee to be a
regular employee when it has exerted reasonable efforts to apprise the
employee of what he is expected to do or accomplish during the trial period of
probation. This goes without saying that the employee is sufficiently made
aware of his probationary status as well as the length of time of the probation.
The exception to the foregoing is when the job is self-descriptive in
nature, for instance, in the case of maids, cooks, drivers, or
messengers. 61 Also, in Aberdeen Court, Inc. v. Agustin, 62 it has been held
that the rule on notifying a probationary employee of the standards of
regularization should not be used to exculpate an employee who acts in a
manner contrary to basic knowledge and common sense in regard to which
there is no need to spell out a policy or standard to be met. In the same light,
an employee's failure to perform the duties and responsibilities which have
been clearly made known to him constitutes a justifiable basis for a
probationary employee's non-regularization.
In this case, petitioners contend that Alcaraz was terminated because
she failed to qualify as a regular employee according to Abbott's standards
which were made known to her at the time of her engagement. Contrarily,
Alcaraz claims that Abbott never apprised her of these standards and thus,
maintains that she is a regular and not a mere probationary employee.
The Court finds petitioners' assertions to be well-taken.
A punctilious examination of the records reveals that Abbott had
indeed complied with the above-stated requirements. This conclusion is largely
impelled by the fact that Abbott clearly conveyed to Alcaraz her duties and
responsibilities as Regulatory Affairs Manager prior to, during the time of her
engagement, and the incipient stages of her employment. On this score, the
Court finds it apt to detail not only the incidents which point out to the efforts
made by Abbott but also those circumstances which would show that Alcaraz
was well-apprised of her employer's expectations that would, in turn, determine
her regularization: DTCSHA
(a)  On June 27, 2004, Abbott caused the publication in a major
broadsheet newspaper of its need for a Regulatory Affairs Manager, indicating
therein the job description for as well as the duties and responsibilities
attendant to the aforesaid position; this prompted Alcaraz to submit her
application to Abbott on October 4, 2004;
(b)  In Abbott's December 7, 2004 offer sheet, it was stated that
Alcaraz was to be employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract
which specifically stated, inter alia, that she was to be placed on probation for
a period of six (6) months beginning February 15, 2005 to August 14, 2005;
(d)  On the day Alcaraz accepted Abbott's employment offer, Bernardo
sent her copies of Abbott's organizational structure and her job description
through e-mail;
(e)  Alcaraz was made to undergo a pre-employment orientation
where Almazar informed her that she had to implement Abbott's Code of
Conduct and office policies on human resources and finance and that she
would be reporting directly to Walsh;
(f)  Alcaraz was also required to undergo a training program as part of
her orientation;
(g)  Alcaraz received copies of Abbott's Code of Conduct and
Performance Modules from Misa who explained to her the procedure for
evaluating the performance of probationary employees; she was further
notified that Abbott had only one evaluation system for all of its employees;
and
(h)  Moreover, Alcaraz had previously worked for another
pharmaceutical company and had admitted to have an "extensive training and
background" to acquire the necessary skills for her job. 63 DIcSHE
Considering the totality of the above-stated circumstances, it cannot,
therefore, be doubted that Alcaraz was well-aware that her regularization
would depend on her ability and capacity to fulfill the requirements of her
position as Regulatory Affairs Manager and that her failure to perform such
would give Abbott a valid cause to terminate her probationary employment.
Verily, basic knowledge and common sense dictate that the adequate
performance of one's duties is, by and of itself, an inherent and implied
standard for a probationary employee to be regularized; such is a
regularization standard which need not be literally spelled out or mapped into
technical indicators in every case. In this regard, it must be observed that the
assessment of adequate duty performance is in the nature of a management
prerogative which when reasonably exercised — as Abbott did in this case —
should be respected. This is especially true of a managerial employee like
Alcaraz who was tasked with the vital responsibility of handling the personnel
and important matters of her department.
In fine, the Court rules that Alcaraz's status as a probationary
employee and her consequent dismissal must stand. Consequently, in holding
that Alcaraz was illegally dismissed due to her status as a regular and not a
probationary employee, the Court finds that the NLRC committed a grave
abuse of discretion.
To elucidate, records show that the NLRC based its decision on the
premise that Alcaraz's receipt of her job description and Abbott's Code of
Conduct and Performance Modules was not equivalent to being actually
informed of the performance standards upon which she should have been
evaluated on. 64 It, however, overlooked the legal implication of the other
attendant circumstances as detailed herein which should have warranted a
contrary finding that Alcaraz was indeed a probationary and not a regular
employee — more particularly the fact that she was well-aware of her duties
and responsibilities and that her failure to adequately perform the same would
lead to her non-regularization and eventually, her termination.
Accordingly, by affirming the NLRC's pronouncement which is tainted
with grave abuse of discretion, the CA committed a reversible error which,
perforce, necessitates the reversal of its decision.
C.  Probationary employment;
termination procedure.
A different procedure is applied when terminating a probationary
employee; the usual two-notice rule does not govern. 65 Section 2, Rule I,
Book VI of the Implementing Rules of the Labor Code states that "[i]f the
termination is brought about by the . . . failure of an employee to meet the
standards of the employer in case of probationary employment, it shall be
sufficient that a written notice is served the employee, within a reasonable time
from the effective date of termination." TIaCHA
As the records show, Alcaraz's dismissal was effected through a letter
dated May 19, 2005 which she received on May 23, 2005 and again on May
27, 2005. Stated therein were the reasons for her termination, i.e., that after
proper evaluation, Abbott determined that she failed to meet the reasonable
standards for her regularization considering her lack of time and people
management and decision-making skills, which are necessary in the
performance of her functions as Regulatory Affairs Manager. 66 Undeniably,
this written notice sufficiently meets the criteria set forth above, thereby
legitimizing the cause and manner of Alcaraz's dismissal as a probationary
employee under the parameters set by the Labor Code. 67
D.  Employer's violation of
company policy and
procedure.
Nonetheless, despite the existence of a sufficient ground to terminate
Alcaraz's employment and Abbott's compliance with the Labor
Code termination procedure, it is readily apparent that Abbott breached its
contractual obligation to Alcaraz when it failed to abide by its own procedure in
evaluating the performance of a probationary employee.
Veritably, a company policy partakes of the nature of an implied
contract between the employer and employee. In Parts Depot, Inc. v.
Beiswenger, 68 it has been held that: EHaCTA
[E]mployer statements of policy . . . can give rise to contractual
rights in employees without evidence that the parties mutually
agreed that the policy statements would create contractual rights
in the employee, and, hence, although the statement of policy is
signed by neither party, can be unilaterally amended by the
employer without notice to the employee, and contains no
reference to a specific employee, his job description or
compensation, and although no reference was made to the
policy statement in pre-employment interviews and the employee
does not learn of its existence until after his hiring. Toussaint,
292 N.W .2d at 892. The principle is akin to estoppel. Once an
employer establishes an express personnel policy and the
employee continues to work while the policy remains in
effect, the policy is deemed an implied contract for so long
as it remains in effect. If the employer unilaterally changes
the policy, the terms of the implied contract are also thereby
changed. (Emphasis and underscoring supplied.)
Hence, given such nature, company personnel policies create an
obligation on the part of both the employee and the employer to abide by the
same.
 Records show that Abbott's PPSE procedure mandates, inter alia, that
the job performance of a probationary employee should be formally reviewed
and discussed with the employee at least twice: first on the third month and
second on the fifth month from the date of employment. Abbott is also required
to come up with a Performance Improvement Plan during the third month
review to bridge the gap between the employee's performance and the
standards set, if any. 69 In addition, a signed copy of the PPSE form should be
submitted to Abbott's HRD as the same would serve as basis for
recommending the confirmation or termination of the probationary
employment. 70
In this case, it is apparent that Abbott failed to follow the above-stated
procedure in evaluating Alcaraz. For one, there lies a hiatus of evidence that a
signed copy of Alcaraz's PPSE form was submitted to the HRD. It was not
even shown that a PPSE form was completed to formally assess her
performance. Neither was the performance evaluation discussed with her
during the third and fifth months of her employment. Nor did Abbott come up
with the necessary Performance Improvement Plan to properly gauge
Alcaraz's performance with the set company standards. cHATSI
While it is Abbott's management prerogative to promulgate its own
company rules and even subsequently amend them, this right equally
demands that when it does create its own policies and thereafter notify its
employee of the same, it accords upon itself the obligation to faithfully
implement them. Indeed, a contrary interpretation would entail a
disharmonious relationship in the work place for the laborer should never be
mired by the uncertainty of flimsy rules in which the latter's labor rights and
duties would, to some extent, depend.
In this light, while there lies due cause to terminate Alcaraz's
probationary employment for her failure to meet the standards required for her
regularization, and while it must be further pointed out that Abbott had satisfied
its statutory duty to serve a written notice of termination, the fact that it violated
its own company procedure renders the termination of Alcaraz's employment
procedurally infirm, warranting the payment of nominal damages. A further
exposition is apropos.
Case law has settled that an employer who terminates an employee
for a valid cause but does so through invalid procedure is liable to pay the
latter nominal damages.
In Agabon v. NLRC  (Agabon), 71 the Court pronounced that where
the dismissal is for a just cause, the lack of statutory due process should not
nullify the dismissal, or render it illegal, or ineffectual. However, the employer
should indemnify the employee for the violation of his statutory rights. 72 Thus,
in  Agabon, the employer was ordered to pay the employee nominal damages
in the amount of P30,000.00. 73
Proceeding from the same ratio, the Court modified Agabon in the
case of Jaka Food Processing Corporation v. Pacot (Jaka) 74 where it created
a distinction between procedurally defective dismissals due to a just cause, on
one hand, and those due to an authorized cause, on the other. ACcHIa
It was explained that if the dismissal is based on a just cause under
Article 282 of the Labor Code (now Article 296) but the employer failed to
comply with the notice requirement, the sanction to be imposed upon him
should be tempered  because the dismissal process was, in effect, initiated by
an act imputable to the employee; if the dismissal is based on an authorized
cause under Article 283 (now Article 297) but the employer failed to comply
with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer's exercise of his management
prerogative. 75 Hence, in Jaka, where the employee was dismissed for an
authorized cause of retrenchment 76 — as contradistinguished from the
employee in  Agabon who was dismissed for a just cause of neglect of
duty 77 — the Court ordered the employer to pay the employee nominal
damages at the higher amount of P50,000.00.
Evidently, the sanctions imposed in both Agabon and Jaka proceed
from the necessity to deter employers from future violations of the statutory
due process rights of employees. 78 In similar regard, the Court deems it
proper to apply the same principle to the case at bar for the reason that an
employer's contractual breach of its own company procedure — albeit not
statutory in source — has the parallel effect of violating the laborer's rights.
Suffice it to state, the contract is the law between the parties and thus,
breaches of the same impel recompense to vindicate a right that has been
violated. Consequently, while the Court is wont to uphold the dismissal of
Alcaraz because a valid cause exists, the payment of nominal damages on
account of Abbott's contractual breach is warranted in accordance with Article
2221 of the Civil Code.79
Anent the proper amount of damages to be awarded, the Court
observes that Alcaraz's dismissal proceeded from her failure to comply with
the standards required for her regularization. As such, it is undeniable that the
dismissal process was, in effect, initiated by an act imputable to the employee,
akin to dismissals due to just causes under Article 296 of the Labor Code.
Therefore, the Court deems it appropriate to fix the amount of nominal
damages at the amount of P30,000.00, consistent with its rulings in
both Agabon and  Jaka. cDHCAE
E. Liability of individual
petitioners as corporate
officers.
It is hornbook principle that personal liability of corporate directors,
trustees or officers attaches only when: (a) they assent to a patently unlawful
act of the corporation, or when they are guilty of bad faith or gross negligence
in directing its affairs, or when there is a conflict of interest resulting in
damages to the corporation, its stockholders or other persons; (b) they consent
to the issuance of watered down stocks or when, having knowledge of such
issuance, do not forthwith file with the corporate secretary their written
objection; (c) they agree to hold themselves personally and solidarily liable
with the corporation; or (d) they are made by specific provision of law
personally answerable for their corporate action. 80
In this case, Alcaraz alleges that the individual petitioners acted in bad
faith with regard to the supposed crude manner by which her probationary
employment was terminated and thus, should be held liable together with
Abbott. In the same vein, she further attributes the loss of some of her
remaining belongings to them. 81
Alcaraz's contention fails to persuade.
A judicious perusal of the records show that other than her unfounded
assertions on the matter, there is no evidence to support the fact that the
individual petitioners herein, in their capacity as Abbott's officers and
employees, acted in bad faith or were motivated by ill will in terminating
Alcaraz's services. The fact that Alcaraz was made to resign and not allowed
to enter the workplace does not necessarily indicate bad faith on Abbott's part
since a sufficient ground existed for the latter to actually proceed with her
termination. On the alleged loss of her personal belongings, records are bereft
of any showing that the same could be attributed to Abbott or any of its
officers. It is a well-settled rule that bad faith cannot be presumed and he who
alleges bad faith has the onus of proving it. All told, since Alcaraz failed to
prove any malicious act on the part of Abbott or any of its officers, the Court
finds the award of moral or exemplary damages unwarranted. CHDaAE
WHEREFORE, the petition is GRANTED. The Decision dated
December 10, 2009 and Resolution dated June 9, 2010 of the Court of
Appeals in CA-G.R. SP No. 101045 are hereby REVERSED and SET ASIDE.
Accordingly, the Decision dated March 30, 2006 of the Labor Arbiter
is REINSTATED with the MODIFICATION that petitioner Abbott Laboratories,
Philippines be ORDERED to pay respondent Pearlie Ann F. Alcaraz nominal
damages in the amount of P30,000.00 on account of its breach of its own
company procedure.
SO ORDERED.
[G.R. No. 162994. September 17, 2004.]
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO
A. TECSON,  petitioners, vs. GLAXO WELLCOME PHILIPPINES,
INC.,  respondent.
Syllabi:
1. Labor Law;  Dismissals; Glaxo’s policy prohibiting an employee from
having a relationship with an employee of a competitior company is a valid
exercise of management prerogative.-
No reversible error can be ascribed to the Court of Appeals when it ruled that
Glaxo’s policy prohibiting an employee from having a relationship with an
employee of a competitor company is a valid exercise of management
prerogative. Glaxo has a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other confidential programs and
information from competitors, especially so that it and Astra are rival
companies in the highly competitive pharmaceutical industry.
2. Labor Law;  Dismissals; While our laws endeavor to give life to the
constitutional policy on social justice and the protection of labor, it does not
mean that every labor dispute will be decided in favor of the workers; The law
also recognizes that management has rights which are also entitled to respect
and enforcement in the interest of fair play.-
That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to
adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth. Indeed, while our laws endeavor to
give life to the constitutional policy on social justice and the protection of labor,
it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also
entitled to respect and enforcement in the interest of fair play.
3. Labor Law;  Dismissals; The challenged company policy does not violate
the equal protection clause of the Constitution.-
The challenged company policy does not violate the equal protection clause of
the Constitution as petitioners erroneously suggest. It is a settled principle that
the commands of the equal protection clause are addressed only to the state
or those acting under color of its authority. Corolla- rily, it has been held in a
long array of U.S. Supreme Court decisions that the equal protection clause
erects no shield against merely private conduct, however, discriminatory or
wrongful. The only exception occurs when the state in any of its manifestations
or actions has been found to have become entwined or involved in the
wrongful private conduct. Obviously, however, the exception is not present in
this case.
4. Labor Law;  Dismissals; Glaxo does not impose an absolute prohibition
against relationships between its employees and those of competitor
companies; What the company merely seeks to avoid is a conflict of interest
between the employee and the company that may arise out of such
relationships.-
From the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition
against relationships between its employees and those of competitor
companies. Its employees are free to cultivate relationships with and marry
persons of their own choosing. What the company merely seeks to avoid is a
conflict of interest between the employee and the company that may arise out
of such relationships.
5. Labor Law;  Dismissals;  Constructive Dismissal;  Definition of
Constructive Dismissal.-
The Court finds no merit in petitioners’ contention that Tecson was
constructively dismissed when he was transferred from the Camarines Norte-
Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur
sales area, and when he was excluded from attending the company’s seminar
on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an
involuntary resignation resorted to when continued employment becomes
impossible, unreasonable, or unlikely; when there is a demotion in rank or
diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee. None of these conditions are
present in the instant case. The record does not show that Tecson was
demoted or unduly discriminated upon by reason of such transfer.
RESOLUTION
TINGA,  J p:
Confronting the Court in this petition is a novel question, with
constitutional overtones, involving the validity of the policy of a pharmaceutical
company prohibiting its employees from marrying employees of any competitor
company.
This is a Petition for Review on Certiorari assailing
the Decision 1 dated May 19, 2003 and the Resolution dated March 26, 2004
of the Court of Appeals in CA-G.R. SP No. 62434. 2
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo
Wellcome Philippines, Inc. (Glaxo) as medical representative on October 24,
1995, after Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates,
among others, that he agrees to study and abide by existing company rules; to
disclose to management any existing or future relationship by consanguinity or
affinity with co-employees or employees of competing drug companies and
should management find that such relationship poses a possible conflict of
interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an
employee is expected to inform management of any existing or future
relationship by consanguinity or affinity with co-employees or employees of
competing drug companies. If management perceives a conflict of interest or a
potential conflict between such relationship and the employee’s employment
with the company, the management and the employee will explore the
possibility of a “transfer to another department in a non-counterchecking
position” or preparation for employment outside the company after six months.
Tecson was initially assigned to market Glaxo’s products in the
Camarines Sur-Camarines Norte sales area. SHADcT
Subsequently, Tecson entered into a romantic relationship with Bettsy,
an employee of Astra Pharmaceuticals 3 (Astra), a competitor of Glaxo. Bettsy
was Astra’s Branch Coordinator in Albay. She supervised the district managers
and medical representatives of her company and prepared marketing
strategies for Astra in that area.
Even before they got married, Tecson received several reminders from
his District Manager regarding the conflict of interest which his relationship with
Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in
September 1998.
In January 1999, Tecson’s superiors informed him that his marriage to
Bettsy gave rise to a conflict of interest. Tecson’s superiors reminded him that
he and Bettsy should decide which one of them would resign from their jobs,
although they told him that they wanted to retain him as much as possible
because he was performing his job well.
Tecson requested for time to comply with the company policy against
entering into a relationship with an employee of a competitor company. He
explained that Astra, Bettsy’s employer, was planning to merge with Zeneca,
another drug company; and Bettsy was planning to avail of the redundancy
package to be offered by Astra. With Bettsy’s separation from her company,
the potential conflict of interest would be eliminated. At the same time, they
would be able to avail of the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the
problem. In September 1999, Tecson applied for a transfer in Glaxo’s milk
division, thinking that since Astra did not have a milk division, the potential
conflict of interest would be eliminated. His application was denied in view of
Glaxo’s “least-movement-possible” policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-
Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its
decision, but his request was denied.
Tecson sought Glaxo’s reconsideration regarding his transfer and
brought the matter to Glaxo’s Grievance Committee. Glaxo, however,
remained firm in its decision and gave Tecson until February 7, 2000 to comply
with the transfer order. Tecson defied the transfer order and continued acting
as medical representative in the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid
his salary, but was not issued samples of products which were competing with
similar products manufactured by Astra. He was also not included in product
conferences regarding such products.
Because the parties failed to resolve the issue at the grievance
machinery level, they submitted the matter for voluntary arbitration. Glaxo
offered Tecson a separation pay of one-half (½) month pay for every year of
service, or a total of P50,000.00 but he declined the offer. On November 15,
2000, the National Conciliation and Mediation Board (NCMB) rendered
its Decision declaring as valid Glaxo’s policy on relationships between its
employees and persons employed with competitor companies, and affirming
Glaxo’s right to transfer Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of
Appeals assailing the NCMB Decision. EHSTcC
On May 19, 2003, the Court of Appeals promulgated
its Decision denying the Petition for Review on the ground that the NCMB did
not err in rendering its Decision. The appellate court held that Glaxo’s policy
prohibiting its employees from having personal relationships with employees of
competitor companies is a valid exercise of its management prerogatives. 4
Tecson filed a Motion for Reconsideration of the appellate court’s
Decision, but the motion was denied by the appellate court in
its Resolution dated March 26, 2004. 5
Petitioners filed the instant petition, arguing therein that (i) the Court of
Appeals erred in affirming the NCMB’s finding that the Glaxo’s policy
prohibiting its employees from marrying an employee of a competitor company
is valid; and (ii) the Court of Appeals also erred in not finding that Tecson was
constructively dismissed when he was transferred to a new sales territory, and
deprived of the opportunity to attend products seminars and training
sessions. 6
Petitioners contend that Glaxo’s policy against employees marrying
employees of competitor companies violates the equal protection clause of
the Constitution because it creates invalid distinctions among employees on
account only of marriage. They claim that the policy restricts the employees’
right to marry. 7
They also argue that Tecson was constructively dismissed as shown
by the following circumstances: (1) he was transferred from the Camarines
Sur-Camarines Norte sales area to the Butuan-Surigao-Agusan sales area, (2)
he suffered a diminution in pay, (3) he was excluded from attending seminars
and training sessions for medical representatives, and (4) he was prohibited
from promoting respondent’s products which were competing with Astra’s
products. 8
In its Comment on the petition, Glaxo argues that the company policy
prohibiting its employees from having a relationship with and/or marrying an
employee of a competitor company is a valid exercise of its management
prerogatives and does not violate the equal protection clause; and that
Tecson’s reassignment from the Camarines Norte-Camarines Sur sales area
to the Butuan City-Surigao City and Agusan del Sur sales area does not
amount to constructive dismissal. 9
Glaxo insists that as a company engaged in the promotion and sale of
pharmaceutical products, it has a genuine interest in ensuring that its
employees avoid any activity, relationship or interest that may conflict with their
responsibilities to the company. Thus, it expects its employees to avoid having
personal or family interests in any competitor company which may influence
their actions and decisions and consequently deprive Glaxo of legitimate
profits. The policy is also aimed at preventing a competitor company from
gaining access to its secrets, procedures and policies. 10
It likewise asserts that the policy does not prohibit marriage per se but
only proscribes existing or future relationships with employees of competitor
companies, and is therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the prohibition is based
on valid grounds. 11
According to Glaxo, Tecson’s marriage to Bettsy, an employee of
Astra, posed a real and potential conflict of interest. Astra’s products were in
direct competition with 67% of the products sold by Glaxo. Hence, Glaxo’s
enforcement of the foregoing policy in Tecson’s case was a valid exercise of
its management prerogatives. 12 In any case, Tecson was given several
months to remedy the situation, and was even encouraged not to resign but to
ask his wife to resign from Astra instead. 13
Glaxo also points out that Tecson can no longer question the assailed
company policy because when he signed his contract of employment, he was
aware that such policy was stipulated therein. In said contract, he also agreed
to resign from respondent if the management finds that his relationship with an
employee of a competitor company would be detrimental to the interests of
Glaxo. 14
Glaxo likewise insists that Tecson’s reassignment to another sales
area and his exclusion from seminars regarding respondent’s new products did
not amount to constructive dismissal.
It claims that in view of Tecson’s refusal to resign, he was relocated
from the Camarines Sur-Camarines Norte sales area to the Butuan City-
Surigao City and Agusan del Sur sales area. Glaxo asserts that in effecting the
reassignment, it also considered the welfare of Tecson’s family. Since
Tecson’s hometown was in Agusan del Sur and his wife traces her roots to
Butuan City, Glaxo assumed that his transfer from the Bicol region to the
Butuan City sales area would be favorable to him and his family as he would
be relocating to a familiar territory and minimizing his travel expenses. 15
 
In addition, Glaxo avers that Tecson’s exclusion from the seminar
concerning the new anti-asthma drug was due to the fact that said product was
in direct competition with a drug which was soon to be sold by Astra, and
hence, would pose a potential conflict of interest for him. Lastly, the delay in
Tecson’s receipt of his sales paraphernalia was due to the mix-up created by
his refusal to transfer to the Butuan City sales area (his paraphernalia was
delivered to his new sales area instead of Naga City because the supplier
thought he already transferred to Butuan). 16
The Court is tasked to resolve the following issues: (1) Whether the
Court of Appeals erred in ruling that Glaxo’s policy against its employees
marrying employees from competitor companies is valid, and in not holding
that said policy violates the equal protection clause of the Constitution; (2)
Whether Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecson’s contract of employment with Glaxo being
questioned by petitioners provides: ScaEIT
xxx xxx xxx
10. You agree to disclose to management any
existing or future relationship you may have, either by
consanguinity or affinity with co-employees or employees of
competing drug companies. Should it pose a possible
conflict of interest in management discretion, you agree to
resign voluntarily from the Company as a matter of
Company policy.
xxx xxx xxx 17
The same contract also stipulates that Tecson agrees to abide by the
existing company rules of Glaxo, and to study and become acquainted with
such policies. 18 In this regard, the Employee Handbook of Glaxo expressly
informs its employees of its rules regarding conflict of interest:
1. Conflict of Interest
Employees should avoid any activity, investment
relationship, or interest that may run counter to the
responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are
expected:
a. To avoid having personal or family interest,
financial or otherwise, in any competitor
supplier or other businesses which may
consciously or unconsciously influence their
actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.
b. To refrain from using their position in Glaxo
Wellcome or knowledge of Company plans
to advance their outside personal interests,
that of their relatives, friends and other
businesses.
c. To avoid outside employment or other interests
for income which would impair their effective
job performance.
d. To consult with Management on such activities or
relationships that may lead to conflict of
interest.
1.1. Employee Relationships
Employees with existing or future relationships
either by consanguinity or affinity with co-employees of
competing drug companies are expected to disclose such
relationship to the Management. If management perceives a
conflict or potential conflict of interest, every effort shall be
made, together by management and the employee, to arrive
at a solution within six (6) months, either by transfer to
another department in a non-counter checking position, or
by career preparation toward outside employment after
Glaxo Wellcome. Employees must be prepared for possible
resignation within six (6) months, if no other solution is
feasible. 19
No reversible error can be ascribed to the Court of Appeals when it
ruled that Glaxo’s policy prohibiting an employee from having a relationship
with an employee of a competitor company is a valid exercise of management
prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information from
competitors, especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.
The prohibition against personal or marital relationships with
employees of competitor companies upon Glaxo’s employees is reasonable
under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed
company policy, Glaxo only aims to protect its interests against the possibility
that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests
cannot be denied. No less than the Constitution recognizes the right of
enterprises to adopt and enforce such a policy to protect its right to reasonable
returns on investments and to expansion and growth. 20 Indeed, while our
laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in
favor of the workers. The law also recognizes that management has rights
which are also entitled to respect and enforcement in the interest of fair
play. 21
As held in a Georgia, U.S.A case, 22 it is a legitimate business
practice to guard business confidentiality and protect a competitive position by
even-handedly disqualifying from jobs male and female applicants or
employees who are married to a competitor. Consequently, the court ruled
than an employer that discharged an employee who was married to an
employee of an active competitor did not violate Title VII of the Civil Rights Act
of 1964. 23 The Court pointed out that the policy was applied to men and
women equally, and noted that the employer’s business was highly competitive
and that gaining inside information would constitute a competitive advantage.
The challenged company policy does not violate the equal protection
clause of the Constitution as petitioners erroneously suggest. It is a settled
principle that the commands of the equal protection clause are addressed only
to the state or those acting under color of its authority. 24 Corollarily, it has
been held in a long array of U.S. Supreme Court decisions that the equal
protection clause erects no shield against merely private conduct, however,
discriminatory or wrongful. 25 The only exception occurs when the state 26 in
any of its manifestations or actions has been found to have become entwined
or involved in the wrongful private conduct. 27 Obviously, however, the
exception is not present in this case. Significantly, the company actually
enforced the policy after repeated requests to the employee to comply with the
policy. Indeed, the application of the policy was made in an impartial and even-
handed manner, with due regard for the lot of the employee. ITDHSE
In any event, from the wordings of the contractual provision and the
policy in its employee handbook, it is clear that Glaxo does not impose an
absolute prohibition against relationships between its employees and those of
competitor companies. Its employees are free to cultivate relationships with
and marry persons of their own choosing. What the company merely seeks to
avoid is a conflict of interest between the employee and the company that may
arise out of such relationships. As succinctly explained by the appellate court,
thus:
The policy being questioned is not a policy against
marriage. An employee of the company remains free to
marry anyone of his or her choosing. The policy is not aimed
at restricting a personal prerogative that belongs only to the
individual. However, an employee’s personal decision does
not detract the employer from exercising management
prerogatives to ensure maximum profit and business
success . . . 28
The Court of Appeals also correctly noted that the assailed company
policy which forms part of respondent’s Employee Code of Conduct and of its
contracts with its employees, such as that signed by Tecson, was made known
to him prior to his employment. Tecson, therefore, was aware of that restriction
when he signed his employment contract and when he entered into a
relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a
contract of employment with Glaxo, the stipulations therein have the force of
law between them and, thus, should be complied with in good faith.” 29 He is
therefore estopped from questioning said policy.
The Court finds no merit in petitioners’ contention that Tecson was
constructively dismissed when he was transferred from the Camarines Norte-
Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur
sales area, and when he was excluded from attending the company’s seminar
on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an
involuntary resignation resorted to when continued employment becomes
impossible, unreasonable, or unlikely; when there is a demotion in rank or
diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee. 30 None of these conditions
are present in the instant case. The record does not show that Tecson was
demoted or unduly discriminated upon by reason of such transfer. As found by
the appellate court, Glaxo properly exercised its management prerogative in
reassigning Tecson to the Butuan City sales area:
. . . In this case, petitioner’s transfer to another
place of assignment was merely in keeping with the policy of
the company in avoidance of conflict of interest, and thus
valid . . . Note that [Tecson’s] wife holds a sensitive
supervisory position as Branch Coordinator in her employer-
company which requires her to work in close coordination
with District Managers and Medical Representatives. Her
duties include monitoring sales of Astra products,
conducting sales drives, establishing and furthering
relationship with customers, collection, monitoring and
managing Astra’s inventory . . . she therefore takes an
active participation in the market war characterized as it is
by stiff competition among pharmaceutical companies.
Moreover, and this is significant, petitioner’s sales territory
covers Camarines Sur and Camarines Norte while his wife
is supervising a branch of her employer in Albay. The
proximity of their areas of responsibility, all in the same Bicol
Region, renders the conflict of interest not only possible, but
 actual, as learning by one spouse of the other’s market
strategies in the region would be inevitable. [Management’s]
appreciation of a conflict of interest is therefore not merely
illusory and wanting in factual basis . . . 31
 
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations
Commission, 32 which involved a complaint filed by a medical representative
against his employer drug company for illegal dismissal for allegedly
terminating his employment when he refused to accept his reassignment to a
new area, the Court upheld the right of the drug company to transfer or
reassign its employee in accordance with its operational demands and
requirements. The ruling of the Court therein, quoted hereunder, also finds [G.R. No. 168081. October 17, 2008.]
application in the instant case: STaCcA
By the very nature of his employment, a drug ARMANDO G. YRASUEGUI, petitioner, vs. PHILIPPINE
salesman or medical representative is expected to travel. He AIRLINES, INC.,  respondent.
should anticipate reassignment according to the demands of
their business. It would be a poor drug corporation which
cannot even assign its representatives or detail men to new Transportation; Weight Standards; Obesity; An employee may be dismissed the
markets calling for opening or expansion or to areas where moment he is unable to comply with his ideal weight as prescribed by the weight
the need for pushing its products is great. More so if such standards—the dismissal would fall under Article 282(e) of the Labor Code.—A
reassignments are part of the employment contract. 33
reading of the weight standards of PAL would lead to no other conclusion than that
As noted earlier, the challenged policy has been implemented by they constitute a continuing qualification of an employee in order to keep the job.
Glaxo impartially and disinterestedly for a long period of time. In the case at Tersely put, an employee may be dismissed the moment he is unable to comply with
bar, the record shows that Glaxo gave Tecson several chances to eliminate his ideal weight as prescribed by the weight standards. The dismissal of the employee
the conflict of interest brought about by his relationship with Bettsy. When their would thus fall under Article 282(e) of the Labor Code. As explained by the CA: x x x
relationship was still in its initial stage, Tecson’s supervisors at Glaxo
constantly reminded him about its effects on his employment with the company [T]he standards violated in this case were not mere “orders” of the employer; they
and on the company’s interests. After Tecson married Bettsy, Glaxo gave him were the “prescribed weights” that a cabin crew must maintain in order to qualify for
time to resolve the conflict by either resigning from the company or asking his
and keep his or her position in the company. In other words, they were standards
wife to resign from Astra. Glaxo even expressed its desire to retain Tecson in
its employ because of his satisfactory performance and suggested that he ask that establish continuing qualifications for an employee’s position. In this sense, the
Bettsy to resign from her company instead. Glaxo likewise acceded to his failure to maintain these standards does not fall under Article 282(a) whose express
repeated requests for more time to resolve the conflict of interest. When the terms require the element of willfulness in order to be a ground for dismissal. The
problem could not be resolved after several years of waiting, Glaxo was failure to meet the employer’s qualifying standards is in fact a ground that does not
constrained to reassign Tecson to a sales area different from that handled by squarely fall under grounds (a) to (d) and is therefore one that falls under Article
his wife for Astra. Notably, the Court did not terminate Tecson from 282(e)—the “other causes analogous to the foregoing.” By its nature, these
employment but only reassigned him to another area where his home
“qualifying standards” are norms that apply prior to and after an employee is hired.
province, Agusan del Sur, was included. In effecting Tecson’s transfer, Glaxo
even considered the welfare of Tecson’s family. Clearly, the foregoing dispels They apply prior to employment because these are the standards a job applicant
any suspicion of unfairness and bad faith on the part of Glaxo. 34 must initially meet in order to be hired. They apply after hiring because an employee
must continue to meet these standards while on the job in order to keep his job.
WHEREFORE, the Petition is DENIED for lack of merit. Costs against
Under this perspective, a violation is not one of the faults for which an employee can
petitioners.
be dismissed pursuant to pars. (a) to (d) of Article 282; the employee can be
SO ORDERED. dismissed simply because he no longer “qualifies” for his job irrespective of whether
or not the failure to qualify was willful or intentional. x x x
Same; Same; Same; Same; Same; Same; The obesity of a cabin crew, when placed in
the context of his work as flight attendant, becomes an analogous cause under Article
282(e) of the Labor Code that justifies his dismissal from the service—his obesity may
not be unintended, but is nonetheless voluntary.—In fine, We hold that the obesity of
petitioner, when placed in the context of his work as flight attendant, becomes an
analogous cause under Article 282(e) of the Labor Code that justifies his dismissal
from the service. His obesity may not be unintended, but is nonetheless voluntary. As
the CA correctly puts it, “[v]oluntariness basically means that the just cause is solely
attributable to the employee without any external force influencing or controlling his
actions. This element runs through all just causes under Article 282, whether they be
in the nature of a wrongful action or omission. Gross and habitual neglect, a
recognized just cause, is considered voluntary although it lacks the element of intent
found in Article 282(a), (c), and (d).”
Same; Same; Same; Same; Same; Same; Bona Fide Occupational Qualification (BFOQ)
Defense; Words and Phrases; Employment in particular jobs may not be limited to
persons of a particular sex, religion, or national origin unless the employer can show
that sex, religion, or national origin is an actual qualification for performing the job—
qualification referred to as bona fide occupational qualification (BFOQ).—
Employment in particular jobs may not be limited to persons of a particular sex,
religion, or national origin unless the employer can show that sex, religion, or national
origin is an actual qualification for performing the job. The qualification is called a
bona fide occupational qualification (BFOQ). In the United States, there are a few
federal and many state job discrimination laws that contain an exception allowing an
employer to engage in an otherwise unlawful form of prohibited discrimination when
the action is based on a BFOQ necessary to the normal operation of a business or
enterprise.
Same; Same; Same; Same; Same; Same; Same; Same; “Meiorin Test”; The
Constitution, the Labor Code, and RA No. 7277 or the Magna Carta for Disabled
Persons contain provisions similar to Bona Fide Occupational Qualification (BFOQ);
The test of reasonableness of the company policy is used because it is parallel to
Bona Fide Occupational Qualification (BFOQ)—Bona Fide Occupational Qualification
(BFOQ) is valid “provided it reflects an inherent quality reasonably necessary for
satisfactory job performance; Under the “Meiorin Test,” (1) the employer must show
that it adopted the standard for a purpose rationally connected to the performance
of the job, (2) the employer must establish that the standard is reasonably necessary
to the accomplishment of that work-related purpose, and, (3) the employer must
establish that the standard is reasonably necessary in order to accomplish the
legitimate work-related purpose.—Petitioner contends that BFOQ is a statutory
defense. It does not exist if there is no statute providing for it. Further, there is no
existing BFOQ statute that could justify his dismissal. Both arguments must fail. First,
the Constitution, the Labor Code, and RA No. 7277 or the Magna Carta for Disabled
Persons contain provisions similar to BFOQ. Second, in British Columbia Public Service
Employee Commission (BSPSERC) v. The British Columbia Government and Service
Employee’s Union (BCGSEU), 3 SCRA 3 (1999), the Supreme Court of Canada adopted
the so-called “Meiorin Test” in determining whether an employment policy is
justified. Under this test, (1) the employer must show that it adopted the standard for
a purpose rationally connected to the performance of the job; (2) the employer must
establish that the standard is reasonably necessary to the accomplishment of that
work-related purpose; and (3) the employer must establish that the standard is
reasonably necessary in order to accomplish the legitimate work-related purpose.
Similarly, in Star Paper Corporation v. Simbol, 487 SCRA 228 (2006), this Court held
that in order to justify a BFOQ, the employer must prove that (1) the employment
qualification is reasonably related to the essential operation of the job involved; and
(2) that there is factual basis for believing that all or substantially all persons meeting
the qualification would be unable to properly perform the duties of the job. In short,
the test of reasonableness of the company policy is used because it is parallel to
BFOQ. BFOQ is valid “provided it reflects an inherent quality reasonably necessary for
satisfactory job performance.”
Same; Same; Same; Civil Law; A common carrier, from the nature of its business and
for reasons of public policy, is bound to observe extraordinary diligence for the safety
of the passengers it transports.—There is no merit to the argument that BFOQ cannot
be applied if it has no supporting statute. Too, the Labor Arbiter, NLRC, and CA are
one in holding that the weight standards of PAL are reasonable. A common carrier,
from the nature of its business and for reasons of public policy, is bound to observe
extraordinary diligence for the safety of the passengers it transports. It is bound to
carry its passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for all the circumstances.
The law leaves no room for mistake or oversight on the part of a common carrier.
Thus, it is only logical to hold that the weight standards of PAL show its effort to
comply with the exacting obligations imposed upon it by law by virtue of being a
common carrier.
Same; Same; Same; Same; The weight standards of an airline should be viewed as
imposing strict norms of discipline upon its employees—the primary objective of said
airline in the imposition of the weight standards for cabin crew is flight safety, for it
cannot be gainsaid that cabin attendants must maintain agility at all times in order to
inspire passenger confidence on their ability to care for the passengers when
something goes wrong.—The business of PAL is air transportation. As such, it has
committed itself to safely transport its passengers. In order to achieve this, it must
necessarily rely on its employees, most particularly the cabin flight deck crew who are
on board the aircraft. The weight standards of PAL should be viewed as imposing
strict norms of discipline upon its employees. In other words, the primary objective of speedily get the passengers out of the aircraft safely. Being overweight necessarily
PAL in the imposition of the weight standards for cabin crew is flight safety. It cannot impedes mobility. Indeed, in an emergency situation, seconds are what cabin
be gainsaid that cabin attendants must maintain agility at all times in order to inspire attendants are dealing with, not minutes. Three lost seconds can translate into three
passenger confidence on their ability to care for the passengers when something goes lost lives. Evacuation might slow down just because a wide-bodied cabin attendant is
wrong. It is not farfetched to say that airline companies, just like all common carriers, blocking the narrow aisles. These possibilities are not remote.
thrive due to public confidence on their safety records. People, especially the riding
Estoppel; Good faith demands that what is agreed upon shall be done.—Petitioner is
public, expect no less than that airline companies transport their passengers to their
also in estoppel. He does not dispute that the weight standards of PAL were made
respective destinations safely and soundly. A lesser performance is unacceptable.
known to him prior to his employment. He is presumed to know the weight limit that
Same; Same; Same; Same; The task of a cabin crew or flight attendant is not limited he must maintain at all times. In fact, never did he question the authority of PAL
to serving meals or attending to the whims and caprices of the passengers— when he was repeatedly asked to trim down his weight. Bona fides exigit ut quod
passenger safety goes to the core of the job of a cabin attendant; On board an convenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang
aircraft, the body weight and size of a cabin attendant are important factors to tao ay tapat kanyang tutuparin ang napagkasunduan.
consider in case of emergency—aircrafts have constricted cabin space, and narrow
Administrative Law; Appeals; Factual findings of administrative agencies do not have
aisles and exit doors.—The task of a cabin crew or flight attendant is not limited to
infallibility and must be set aside when they fail the test of arbitrariness.—We are not
serving meals or attending to the whims and caprices of the passengers. The most
unmindful that findings of facts of administrative agencies, like the Labor Arbiter and
important activity of the cabin crew is to care for the safety of passengers and the
the NLRC, are accorded respect, even finality. The reason is simple: administrative
evacuation of the aircraft when an emergency occurs. Passenger safety goes to the
agencies are experts in matters within their specific and specialized jurisdiction. But
core of the job of a cabin attendant. Truly, airlines need cabin attendants who have
the principle is not a hard and fast rule. It only applies if the findings of facts are duly
the necessary strength to open emergency doors, the agility to attend to passengers
supported by substantial evidence. If it can be shown that administrative bodies
in cramped working conditions, and the stamina to withstand grueling flight
grossly misappreciated evidence of such nature so as to compel a conclusion to the
schedules. On board an aircraft, the body weight and size of a cabin attendant are
contrary, their findings of facts must necessarily be reversed. Factual findings of
important factors to consider in case of emergency. Aircrafts have constricted cabin
administrative agencies do not have infallibility and must be set aside when they fail
space, and narrow aisles and exit doors. Thus, the arguments of respondent that
the test of arbitrariness.
“[w]hether the airline’s flight attendants are overweight or not has no direct relation
to its mission of transporting passengers to their destination”; and that the weight Bill of Rights; Equal Protection Clause; In the absence of governmental interference,
standards “has nothing to do with airworthiness of respondent’s airlines,” must fail. the liberties guaranteed by the Constitution cannot be invoked—the Bill of Rights is
not meant to be invoked against acts of private individuals.—To make his claim more
Same; Same; Same; Same; Judicial Notice; That an obese cabin attendant occupies
believable, petitioner invokes the equal protection clause guaranty of the
more space than a slim one is an unquestionable fact which courts can judicially
Constitution. However, in the absence of governmental interference, the liberties
recognize without introduction of evidence—it would also be absurd to require airline
guaranteed by the Constitution cannot be invoked. Put differently, the Bill of Rights is
companies to reconfigure the aircraft in order to widen the aisles and exit doors just
not meant to be invoked against acts of private individuals. Indeed, the United States
to accommodate overweight cabin attendants; The biggest problem with an
Supreme Court, in interpreting the Fourteenth Amendment, which is the source of
overweight cabin attendant is the possibility of impeding passengers from evacuating
our equal protection guarantee, is consistent in saying that the equal protection
the aircraft, should the occasion call for it—being overweight necessarily impedes
erects no shield against private conduct, however discriminatory or wrongful. Private
mobility.—There is no need to individually evaluate their ability to perform their task.
actions, no matter how egregious, cannot violate the equal protection guarantee.
That an obese cabin attendant occupies more space than a slim one is an
unquestionable fact which courts can judicially recognize without introduction of Labor Law; Payroll Reinstatement; The option to exercise actual reinstatement or
evidence. It would also be absurd to require airline companies to reconfigure the payroll reinstatement belongs to the employer.—The law is very clear. Although an
aircraft in order to widen the aisles and exit doors just to accommodate overweight award or order of reinstatement is self-executory and does not require a writ of
cabin attendants like petitioner. The biggest problem with an overweight cabin execution, the option to exercise actual reinstatement or payroll reinstatement
attendant is the possibility of impeding passengers from evacuating the aircraft,
should the occasion call for it. The job of a cabin attendant during emergencies is to
belongs to the employer. It does not belong to the employee, to the labor tribunals,
or even to the courts.
Same; Separation Pay; Exceptionally, separation pay is granted to a legally dismissed
employee as an act “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.—A legally dismissed employee is not
entitled to separation pay. This may be deduced from the language of Article 279 of
the Labor Code that “[a]n employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.” Luckily for petitioner, this is not an
ironclad rule. Exceptionally, separation pay is granted to a legally dismissed employee
as an act “social justice,” 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. Here, We grant petitioner separation pay
equivalent to one-half (1/2) month’s pay for every year of service. It should include
regular allowances which he might have been receiving. We are not blind to the fact
that he was not dismissed for any serious misconduct or to any act which would
reflect on his moral character. We also recognize that his employment with PAL
lasted for more or less a decade.
DECISION
REYES, R.T., J  p:
THIS case portrays the peculiar story of an international flight
steward who was dismissed because of his failure to adhere to the weight
standards of the airline company. CacTSI
He is now before this Court via a petition for review
on  certiorari claiming that he was illegally dismissed. To buttress his
stance, he argues that (1) his dismissal does not fall under 282 (e) of the
Labor Code; (2) continuing adherence to the weight standards of the
company is not a bona fide occupational qualification; and (3) he was
discriminated against because other overweight employees were
promoted instead of being disciplined.
After a meticulous consideration of all
arguments pro and  con, We uphold the legality of dismissal. Separation
pay, however, should be awarded in favor of the employee as an act of
social justice or based on equity. This is so because his dismissal is not for
serious misconduct. Neither is it reflective of his moral character.
The Facts
Petitioner Armando G. Yrasuegui was a former international flight
steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight
inches (5'8") with a large body frame. The proper weight for a man of his
height and body structure is from 147 to 166 pounds, the ideal weight
being 166 pounds, as mandated by the Cabin and Crew Administration
Manual 1 of PAL. cIADTC
The weight problem of petitioner dates back to 1984. Back then,
PAL advised him to go on an extended vacation leave from December 29,
1984 to March 4, 1985 to address his weight concerns. Apparently,
petitioner failed to meet the company's weight standards, prompting
another leave without pay from March 5, 1985 to November 1985.
After meeting the required weight, petitioner was allowed to return
to work. But petitioner's weight problem recurred. He again went on leave
without pay from October 17, 1988 to February 1989.
On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over
his ideal weight. In line with company policy, he was removed from flight
duty effective May 6, 1989 to July 3, 1989. He was formally requested to
trim down to his ideal weight and report for weight checks on several
dates. He was also told that he may avail of the services of the company
physician should he wish to do so. He was advised that his case will be
evaluated on July 3, 1989. 2
On February 25, 1989, petitioner underwent weight check. It was
discovered that he gained, instead of losing, weight. He was overweight
at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-
duty status was retained. DcCHTa
On October 17, 1989, PAL Line Administrator Gloria Dizon
personally visited petitioner at his residence to check on the progress of
his effort to lose weight. Petitioner weighed 217 pounds, gaining 2 pounds
from his previous weight. After the visit, petitioner made a commitment 3 to
reduce weight in a letter addressed to Cabin Crew Group Manager
Augusto Barrios. The letter, in full, reads:
Dear Sir:
I would like to guaranty my commitment towards a
weight loss from 217 pounds to 200 pounds from today
until 31 Dec. 1989. AaSHED
From thereon, I promise to continue reducing at a
reasonable percentage until such time that my ideal
weight is achieved.
Likewise, I promise to personally report to your
office at the designated time schedule you will set for my
weight check.
Respectfully Yours,
F/S Armando
Yrasuegui 4
 Despite the lapse of a ninety-day period given him to reach his
ideal weight, petitioner remained overweight. On January 3, 1990, he was
informed of the PAL decision for him to remain grounded until such time
that he satisfactorily complies with the weight standards. Again, he was
directed to report every two weeks for weight checks. SEcAIC
Petitioner failed to report for weight checks. Despite that, he was
given one more month to comply with the weight requirement. As usual, he
was asked to report for weight check on different dates. He was reminded
that his grounding would continue pending satisfactory compliance with the
weight standards. 5
Again, petitioner failed to report for weight checks, although he
was seen submitting his passport for processing at the PAL Staff Service
Division.
On April 17, 1990, petitioner was formally warned that a repeated
refusal to report for weight check would be dealt with accordingly. He was
given another set of weight check dates. 6 Again, petitioner ignored the
directive and did not report for weight checks. On June 26, 1990, petitioner
was required to explain his refusal to undergo weight checks. 7
When petitioner tipped the scale on July 30, 1990, he weighed
at 212 pounds. Clearly, he was still way over his ideal weight of 166
pounds. EaScHT
From then on, nothing was heard from petitioner until he followed
up his case requesting for leniency on the latter part of 1992. He weighed
at 219 pounds on August 20, 1992 and 205 pounds on November 5, 1992.
On November 13, 1992, PAL finally served petitioner a Notice of
Administrative Charge for violation of company standards on weight
requirements. He was given ten (10) days from receipt of the charge within
which to file his answer and submit controverting evidence. 8
On December 7, 1992, petitioner submitted his Answer. 9 Notably,
he did not deny being overweight. What he claimed, instead, is that his
violation, if any, had already been condoned by PAL since "no action has
been taken by the company" regarding his case "since 1988". He also
claimed that PAL discriminated against him because "the company has not
been fair in treating the cabin crew members who are similarly
situated". TcCDIS
On December 8, 1992, a clarificatory hearing was held where
petitioner manifested that he was undergoing a weight reduction program
to lose at least two (2) pounds per week so as to attain his ideal weight. 10
On June 15, 1993, petitioner was formally informed by PAL that
due to his inability to attain his ideal weight, "and considering the utmost
leniency" extended to him "which spanned a period covering a total of
almost five (5) years", his services were considered terminated "effective
immediately". 11
His motion for reconsideration having been denied, 12 petitioner
filed a complaint for illegal dismissal against PAL. HcSCED
Labor Arbiter, NLRC and CA Dispositions
On November 18, 1998, Labor Arbiter Valentin C. Reyes
ruled 13 that petitioner was illegally dismissed. The dispositive part of the
Arbiter ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment
is hereby rendered, declaring the complainant's dismissal
illegal, and ordering the respondent to reinstate him to his
former position or substantially equivalent one, and to pay
him:
a. Backwages of Php10,500.00 per month from
his dismissal on June 15, 1993 until reinstated, which for
purposes of appeal is hereby set from June 15, 1993 up to
August 15, 1998 at P651,000.00; ITDHcA
b. Attorney's fees of five percent (5%) of the total
award.
SO ORDERED. 14
The Labor Arbiter held that the weight standards of PAL are
reasonable in view of the nature of the job of petitioner. 15 However, the
weight standards need not be complied with under pain of dismissal since
his weight did not hamper the performance of his duties. 16 Assuming that
it did, petitioner could be transferred to other positions where his weight
would not be a negative factor. 17 Notably, other overweight
employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were promoted
instead of being disciplined. 18
Both parties appealed to the National Labor Relations Commission
(NLRC). 19
On October 8, 1999, the Labor Arbiter issued a writ of execution
directing the reinstatement of petitioner without loss of seniority rights and
other benefits. 20
On February 1, 2000, the Labor Arbiter denied 21 the Motion to
Quash Writ of Execution 22 of PAL. HCEaDI
On March 6, 2000, PAL appealed the denial of its motion to quash
to the NLRC. 23
On June 23, 2000, the NLRC rendered judgment 24 in the
following tenor:
WHEREFORE, premises considered[,] the
Decision of the Arbiter dated 18 November 1998 as
modified by our findings herein, is hereby AFFIRMED and
that part of the dispositive portion of said decision
 concerning complainant's entitlement to backwages shall
be deemed to refer to complainant's entitlement to his full
backwages, inclusive of allowances and to his other
benefits or their monetary equivalent instead of simply
backwages, from date of dismissal until his actual
reinstatement or finality hereof. Respondent is enjoined to
manifests  (sic) its choice of the form of the reinstatement
of complainant, whether physical or through payroll within
ten (10) days from notice failing which, the same shall be
deemed as complainant's reinstatement through payroll
and execution in case of non-payment shall accordingly
be issued by the Arbiter. Both appeals of respondent thus,
are DISMISSED for utter lack of merit. 25
According to the NLRC, "obesity, or the tendency to gain weight
uncontrollably regardless of the amount of food intake, is a disease in
itself". 26 As a consequence, there can be no intentional defiance or
serious misconduct by petitioner to the lawful order of PAL for him to lose
weight. 27
Like the Labor Arbiter, the NLRC found the weight standards of
PAL to be reasonable. However, it found as unnecessary the Labor Arbiter
holding that petitioner was not remiss in the performance of his duties as
flight steward despite being overweight. According to the NLRC, the Labor
Arbiter should have limited himself to the issue of whether the failure of
petitioner to attain his ideal weight constituted willful defiance of the weight
standards of PAL. 28
PAL moved for reconsideration to no avail. 29 Thus, PAL elevated
the matter to the Court of Appeals (CA) via a petition for certiorari  under
Rule 65 of the 1997 Rules of Civil Procedure. 30
By Decision dated August 31, 2004, the CA reversed 31 the
NLRC:
WHEREFORE, premises considered, we hereby
GRANT the petition. The assailed NLRC decision is
declared NULL and VOID and is hereby SET ASIDE. The
private respondent's complaint is hereby DISMISSED. No
costs. caITAC
SO ORDERED. 32
The CA opined that there was grave abuse of discretion on the
part of the NLRC because it "looked at wrong and irrelevant
considerations" 33 in evaluating the evidence of the parties. Contrary to
the NLRC ruling, the weight standards of PAL are meant to be a continuing
qualification for an employee's position. 34 The failure to adhere to the
weight standards is an analogous cause for the dismissal of an employee
under Article 282 (e) of the Labor Code in relation to Article 282 (a). It is
not willful disobedience as the NLRC seemed to suggest. 35 Said the CA,
"the element of willfulness that the NLRC decision cites is an irrelevant
consideration in arriving at a conclusion on whether the dismissal is legally
proper". 36 In other words, "the relevant question to ask is not one of
willfulness but one of reasonableness of the standard and whether or not
the employee qualifies or continues to qualify under this standard". 37
Just like the Labor Arbiter and the NLRC, the CA held that the
weight standards of PAL are reasonable. 38 Thus, petitioner was legally
dismissed because he repeatedly failed to meet the prescribed weight
standards. 39 It is obvious that the issue of discrimination was only
invoked by petitioner for purposes of escaping the result of his dismissal
for being overweight. 40
On May 10, 2005, the CA denied petitioner's motion for
reconsideration. 41 Elaborating on its earlier ruling, the CA held that the
weight standards of PAL are a bona fide occupational qualification which,
in case of violation, "justifies an employee's separation from the
service". 42
Issues
In this Rule 45 petition for review, the following issues are posed
for resolution:
I.
WHETHER OR NOT THE COURT OF APPEALS
GRAVELY ERRED IN HOLDING THAT PETITIONER'S
OBESITY CAN BE A GROUND FOR DISMISSAL UNDER
PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR
CODE OF THE PHILIPPINES;
II.
WHETHER OR NOT THE COURT OF APPEALS
GRAVELY ERRED IN HOLDING THAT PETITIONER'S
DISMISSAL FOR OBESITY CAN BE PREDICATED ON
THE "BONA FIDE OCCUPATIONAL QUALIFICATION
(BFOQ) DEFENSE";
III.
WHETHER OR NOT THE COURT OF APPEALS
GRAVELY ERRED IN HOLDING THAT PETITIONER
WAS NOT UNDULY DISCRIMINATED AGAINST WHEN
HE WAS DISMISSED WHILE OTHER OVERWEIGHT
CABIN ATTENDANTS WERE EITHER GIVEN FLYING
DUTIES OR PROMOTED;
IV.
WHETHER OR NOT THE COURT OF APPEALS
GRAVELY ERRED WHEN IT BRUSHED ASIDE
 PETITIONER'S CLAIMS FOR REINSTATEMENT [AND] enumerated in subparagraphs 1(a) to (e), Benguet
WAGES ALLEGEDLY FOR BEING MOOT AND invokes the provisions of subparagraph 1(f) and says that
ACADEMIC. 43 (Underscoring supplied) Nadura's illness — occasional attacks of asthma — is a
cause analogous to them. IASCTD
Our Ruling
Even a cursory reading of the legal provision
I. The obesity of petitioner is a ground for dismissal under
under consideration is sufficient to convince anyone that,
Article 282 (e) 44 of the Labor Code.
as the trial court said, "illness cannot be included as an
A reading of the weight standards of PAL would lead to no other analogous cause by any stretch of imagination".
conclusion than that they constitute a continuing qualification of an
It is clear that, except the  just cause mentioned in
employee in order to keep the job. Tersely put, an employee may be
sub-paragraph 1(a), all the others expressly enumerated
dismissed the moment he is unable to comply with his ideal weight as
in the law are due to the voluntary and/or willful act of the
prescribed by the weight standards. The dismissal of the employee would
employee. How Nadura's illness could be considered as
thus fall under Article 282 (e) of the Labor Code. As explained by the CA:
"analogous" to any of them is beyond our understanding,
. . . [T]he standards violated in this case were not there being no claim or pretense that the same was
mere "orders" of the employer; they were the "prescribed contracted through his own voluntary act. 48
weights" that a cabin crew must maintain  in order to
The reliance on Nadura  is off-tangent. The factual milieu
qualify for and keep his or her position in the
in  Nadura is substantially different from the case at bar. First,  Nadura was
company. In other words, they were standards that
not decided under the Labor Code. The law applied in that case was
establish continuing qualifications for an employee's
Republic Act (RA) No. 1787. Second, the issue of flight safety is absent
position. In this sense, the failure to maintain these
in  Nadura, thus, the rationale there cannot apply here. Third,
standards does not fall under Article 282 (a) whose
in  Nadura, the employee who was a miner, was laid off from work because
express terms require the element of willfulness in order to
of illness, i.e., asthma. Here, petitioner was dismissed for his failure to
be a ground for dismissal. The failure to meet the
meet the weight standards of PAL. He was not dismissed due to
employer's qualifying standards  is in fact a ground that
illness. Fourth, the issue in  Nadura is whether or not the dismissed
does not squarely fall under grounds (a) to (d) and is
employee is entitled to separation pay and damages. Here, the issue
therefore one that falls under Article 282(e) — the "other
centers on the propriety of the dismissal of petitioner for his failure to meet
causes analogous to the foregoing". TAIDHa
the weight standards of PAL. Fifth, in  Nadura, the employee was not
By its nature, these "qualifying standards" are accorded due process. Here, petitioner was accorded utmost leniency. He
norms that apply  prior to and after  an employee is hired. was given more than four (4) years to comply with the weight standards of
They apply  prior to employment  because these are the PAL. STcaDI
standards a job applicant must initially meet in order to be
In the case at bar, the evidence on record militates against
hired. They apply  after hiring because an employee must
petitioner's claims that obesity is a disease. That he was able to reduce his
continue to meet these standards while on the job in order
weight from 1984 to 1992 clearly shows that it is possible for him to lose
to keep his job. Under this perspective, a violation is not
weight given the proper attitude, determination, and self-discipline. Indeed,
one of the faults for which an employee can be dismissed
during the clarificatory hearing on December 8, 1992, petitioner himself
pursuant to pars. (a) to (d) of Article 282; the employee
claimed that "[t]he issue is could I bring my weight down to ideal weight
can be dismissed simply because he no longer "qualifies"
which is 172, then the answer is yes. I can do it now". 49
for his job irrespective of whether or not the failure to
qualify was willful or intentional. . . . 45 True, petitioner claims that reducing weight is costing him "a lot of
expenses". 50 However, petitioner has only himself to blame. He could
Petitioner, though, advances a very interesting argument. He
have easily availed the assistance of the company physician, per the
claims that obesity is a "physical abnormality and/or illness". 46 Relying
advice of PAL. 51 He chose to ignore the suggestion. In fact, he
on  Nadura v. Benguet Consolidated, Inc.,  47 he says his dismissal is
repeatedly failed to report when required to undergo weight checks,
illegal:
without offering a valid explanation. Thus, his fluctuating weight indicates
Conscious of the fact that Nadura's case cannot absence of willpower rather than an illness. EScHDA
be made to fall squarely within the specific causes
 Petitioner cites  Bonnie Cook v. State of Rhode Island, Department
of Mental Health, Retardation and Hospitals,  52 decided by the United
States Court of Appeals (First Circuit). In that case, Cook worked from
1978 to 1980 and from 1981 to 1986 as an institutional attendant for the
mentally retarded at the Ladd Center that was being operated by
respondent. She twice resigned voluntarily with an unblemished record.
Even respondent admitted that her performance met the Center's
legitimate expectations. In 1988, Cook re-applied for a similar position. At
that time, "she stood 5'2" tall and weighed over 320 pounds". Respondent
claimed that the morbid obesity of plaintiff compromised her ability to
evacuate patients in case of emergency and it also put her at greater risk
of serious diseases.
Cook contended that the action of respondent amounted to
discrimination on the basis of a handicap. This was in direct violation of
Section 504 (a) of the Rehabilitation Act of 1973, 53 which incorporates
the remedies contained in Title VI of the Civil Rights Act of 1964.
Respondent claimed, however, that morbid obesity could never constitute
a handicap within the purview of the Rehabilitation Act. Among others,
obesity is a mutable condition, thus plaintiff could simply lose weight and
rid herself of concomitant disability. cIHDaE
The appellate Court disagreed and held that morbid obesity is a
disability under the Rehabilitation Act and that respondent discriminated
against Cook based on "perceived" disability. The evidence included
expert testimony that morbid obesity is a physiological disorder. It involves
a dysfunction of both the metabolic system and the neurological appetite
— suppressing signal system, which is capable of causing adverse effects
within the musculoskeletal, respiratory, and cardiovascular systems.
Notably, the Court stated that "mutability is relevant only in determining the
substantiality of the limitation flowing from a given impairment", thus
"mutability only precludes those conditions that an individual can easily
and quickly reverse by behavioral alteration".
Unlike Cook, however, petitioner is not morbidly obese. In the
words of the District Court for the District of Rhode Island, Cook was
sometime before 1978 "at least one hundred pounds more than what is
considered appropriate of her height". According to the Circuit Judge,
Cook weighed "over 320 pounds" in 1988. Clearly, that is not the case
here. At his heaviest, petitioner was only less than 50 pounds over his
ideal weight. CEDScA
In fine, We hold that the obesity of petitioner, when placed in the
context of his work as flight attendant, becomes an analogous cause under
Article 282 (e) of the Labor Code that justifies his dismissal from the
service. His obesity may not be unintended, but is nonetheless voluntary.
As the CA correctly puts it, "[v]oluntariness basically means that the just
cause is solely attributable to the employee without any external force
influencing or controlling his actions. This element runs through all just
causes under Article 282, whether they be in the nature of a wrongful
action or omission. Gross and habitual neglect, a recognized just cause, is
considered voluntary although it lacks the element of intent found in Article
282 (a), (c), and (d)." 54
II. The dismissal of petitioner can be predicated on the bona
fide occupational qualification defense.
Employment in particular jobs may not be limited to persons of a
particular sex, religion, or national origin unless the employer can show
that sex, religion, or national origin is an actual qualification for performing
the job. The qualification is called a bona fide occupational qualification
(BFOQ). 55 In the United States, there are a few federal and many state
job discrimination laws that contain an exception allowing an employer to
engage in an otherwise unlawful form of prohibited discrimination when the
action is based on a BFOQ necessary to the normal operation of a
business or enterprise. 56
Petitioner contends that BFOQ is a statutory defense. It does not
exist if there is no statute providing for it. 57 Further, there is no existing
BFOQ statute that could justify his dismissal. 58
Both arguments must fail.
First, the Constitution, 59 the Labor Code, 60 and RA No.
7277 61 or the Magna Carta for Disabled Persons 62 contain provisions
similar to BFOQ. DcAaSI
Second, in British Columbia Public Service Employee
Commission (BSPSERC) v. The British Columbia Government and
Service Employee's Union (BCGSEU), 63 the Supreme Court of Canada
adopted the so-called "Meiorin Test" in determining whether an
employment policy is justified. Under this test, (1) the employer must show
that it adopted the standard for a purpose rationally connected to the
performance of the job; 64 (2) the employer must establish that the
standard is reasonably necessary 65 to the accomplishment of that work-
related purpose; and (3) the employer must establish that the standard is
reasonably necessary in order to accomplish the legitimate work-related
purpose. Similarly, in Star Paper Corporation v. Simbol, 66 this Court held
that in order to justify a BFOQ, the employer must prove that (1) the
employment qualification is reasonably related to the essential operation of
the job involved; and (2) that there is factual basis for believing that all or
substantially all persons meeting the qualification would be unable to
properly perform the duties of the job. 67
In short, the test of reasonableness of the company policy is used
because it is parallel to BFOQ. 68 BFOQ is valid "provided it reflects an
inherent quality reasonably necessary for satisfactory job performance". 69
In Duncan Association of Detailman-PTGWTO v. Glaxo Wellcome
Philippines, Inc.,  70 the Court did not hesitate to pass upon the validity of
a company policy which prohibits its employees from marrying employees
of a rival company. It was held that the company policy is reasonable
considering that its purpose is the protection of the interests of the
company against possible competitor infiltration on its trade secrets and
procedures. TASCDI
Verily, there is no merit to the argument that BFOQ cannot be
applied if it has no supporting statute. Too, the Labor
Arbiter, 71 NLRC, 72 and CA 73 are one in holding that the weight
standards of PAL are reasonable. A common carrier, from the nature of its
business and for reasons of public policy, is bound to observe
extraordinary diligence for the safety of the passengers it transports. 74 It
is bound to carry its passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances. 75
The law leaves no room for mistake or oversight on the part of a
common carrier. Thus, it is only logical to hold that the weight standards of
PAL show its effort to comply with the exacting obligations imposed upon it
by law by virtue of being a common carrier. cSDHEC
The business of PAL is air transportation. As such, it has
committed itself to safely transport its passengers. In order to achieve this,
it must necessarily rely on its employees, most particularly the cabin flight
deck crew who are on board the aircraft. The weight standards of PAL
should be viewed as imposing strict norms of discipline upon its
employees.
In other words, the primary objective of PAL in the imposition of
the weight standards for cabin crew is flight safety. It cannot be gainsaid
that cabin attendants must maintain agility at all times in order to inspire
passenger confidence on their ability to care for the passengers when
something goes wrong. It is not farfetched to say that airline companies,
just like all common carriers, thrive due to public confidence on their safety
records. People, especially the riding public, expect no less than that
airline companies transport their passengers to their respective
destinations safely and soundly. A lesser performance is
unacceptable. aAEIHC
The task of a cabin crew or flight attendant is not limited to serving
meals or attending to the whims and caprices of the passengers. The most
important activity of the cabin crew is to care for the safety of passengers
and the evacuation of the aircraft when an emergency occurs. Passenger
safety goes to the core of the job of a cabin attendant. Truly, airlines need
cabin attendants who have the necessary strength to open emergency
doors, the agility to attend to passengers in cramped working conditions,
and the stamina to withstand grueling flight schedules.
On board an aircraft, the body weight and size of a cabin attendant
are important factors to consider in case of emergency. Aircrafts have
constricted cabin space, and narrow aisles and exit doors. Thus, the
arguments of respondent that "[w]hether the airline's flight attendants are
overweight or not has no direct relation to its mission of transporting
passengers to their destination"; and that the weight standards "has
nothing to do with airworthiness of respondent's airlines", must
fail. DHaEAS
The rationale in  Western Air Lines v. Criswell 76 relied upon by
petitioner cannot apply to his case. What was involved there were two (2)
airline pilots who were denied reassignment as flight engineers upon
reaching the age of 60, and a flight engineer who was forced to retire at
age 60. They sued the airline company, alleging that the age-60 retirement
for flight engineers violated the Age Discrimination in Employment Act of
1967. Age-based BFOQ and being overweight are not the same. The case
of overweight cabin attendants is another matter. Given the cramped cabin
space and narrow aisles and emergency exit doors of the airplane, any
overweight cabin attendant would certainly have difficulty navigating the
cramped cabin area. ADSTCI
In short, there is no need to individually evaluate their ability to
perform their task. That an obese cabin attendant occupies more space
than a slim one is an unquestionable fact which courts can judicially
recognize without introduction of evidence. 77 It would also be absurd to
require airline companies to reconfigure the aircraft in order to widen the
aisles and exit doors just to accommodate overweight cabin attendants like
petitioner.
The biggest problem with an overweight cabin attendant is the
possibility of impeding passengers from evacuating the aircraft, should the
occasion call for it. The job of a cabin attendant during emergencies is to
speedily get the passengers out of the aircraft safely. Being overweight
necessarily impedes mobility. Indeed, in an emergency situation, seconds
are what cabin attendants are dealing with, not minutes. Three lost
seconds can translate into three lost lives. Evacuation might slow down
just because a wide-bodied cabin attendant is blocking the narrow aisles.
These possibilities are not remote. IcTCHD
Petitioner is also in estoppel. He does not dispute that the weight
standards of PAL were made known to him prior to his employment. He is
presumed to know the weight limit that he must maintain at all times. 78 In
fact, never did he question the authority of PAL when he was repeatedly
asked to trim down his weight. Bona fides exigit ut quod convenit
fiat.  Good faith demands that what is agreed upon shall be done.  Kung
ang tao ay tapat kanyang tutuparin ang napagkasunduan.
Too, the weight standards of PAL provide for separate weight
limitations based on height and body frame for both male and female cabin
attendants. A progressive discipline is imposed to allow non-compliant
cabin attendants sufficient opportunity to meet the weight standards. Thus,
the clear-cut rules obviate any possibility for the commission of abuse or
arbitrary action on the part of PAL. HcSaTI
III. Petitioner failed to substantiate his claim that he was
discriminated against by PAL.
 Petitioner next claims that PAL is using passenger safety as a
convenient excuse to discriminate against him. 79 We are constrained,
however, to hold otherwise. We agree with the CA that "[t]he element of
discrimination came into play in this case as a secondary position for the
private respondent in order to escape the consequence of dismissal that
being overweight entailed. It is a confession-and-avoidance position that
impliedly admitted the cause of dismissal, including the reasonableness of
the applicable standard and the private respondent's failure to
comply". 80 It is a basic rule in evidence that each party must prove his
affirmative allegation. 81
Since the burden of evidence lies with the party who asserts an
affirmative allegation, petitioner has to prove his allegation with
particularity. There is nothing on the records which could support the
finding of discriminatory treatment. Petitioner cannot establish
discrimination by simply naming the supposed cabin attendants who are
allegedly similarly situated with him. Substantial proof must be shown as to
how and why they are similarly situated and the differential treatment
petitioner got from PAL despite the similarity of his situation with other
employees. ICHcaD
Indeed, except for pointing out the names of the supposed
overweight cabin attendants, petitioner miserably failed to indicate their
respective ideal weights; weights over their ideal weights; the periods they
were allowed to fly despite their being overweight; the particular flights
assigned to them; the discriminating treatment they got from PAL; and
other relevant data that could have adequately established a case of
discriminatory treatment by PAL. In the words of the CA, "PAL really had
no substantial case of discrimination to meet". 82
We are not unmindful that findings of facts of administrative
agencies, like the Labor Arbiter and the NLRC, are accorded respect, even
finality. 83 The reason is simple: administrative agencies are experts in
matters within their specific and specialized jurisdiction. 84 But the
principle is not a hard and fast rule. It only applies if the findings of facts
are duly supported by substantial evidence. If it can be shown that
administrative bodies grossly misappreciated evidence of such nature so
as to compel a conclusion to the contrary, their findings of facts must
necessarily be reversed. Factual findings of administrative agencies do not
have infallibility and must be set aside when they fail the test of
arbitrariness. 85
Here, the Labor Arbiter and the NLRC inexplicably misappreciated
evidence. We thus annul their findings. HSIaAT
To make his claim more believable, petitioner invokes the equal
protection clause guaranty 86 of the Constitution. However, in the absence
of governmental interference, the liberties guaranteed by the Constitution
cannot be invoked. 87 Put differently, the Bill of Rights is not meant to be
invoked against acts of private individuals. 88 Indeed, the United States
Supreme Court, in interpreting the Fourteenth Amendment, 89 which is the
source of our equal protection guarantee, is consistent in saying that the
equal protection erects no shield against private conduct, however
discriminatory or wrongful. 90 Private actions, no matter how egregious,
cannot violate the equal protection guarantee. 91
IV. The claims of petitioner for reinstatement and wages are
moot.
As his last contention, petitioner avers that his claims for
reinstatement and wages have not been mooted. He is entitled to
reinstatement and his full backwages, "from the time he was illegally
dismissed" up to the time that the NLRC was reversed by the CA. 92
At this point, Article 223 of the Labor Code finds relevance:
In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee, insofar as
the reinstatement aspect is concerned, shall immediately
be executory, even pending appeal. The employee shall
either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided
herein. ATaDHC
The law is very clear. Although an award or order of reinstatement
is self-executory and does not require a writ of execution, 93 the option to
exercise actual reinstatement or payroll reinstatement belongs to the
employer. It does not belong to the employee, to the labor tribunals, or
even to the courts.
Contrary to the allegation of petitioner that PAL "did everything
under the sun" to frustrate his "immediate return to his previous
position", 94 there is evidence that PAL opted to physically reinstate him to
a substantially equivalent position in accordance with the order of the
Labor Arbiter. 95 In fact, petitioner duly received the return to work notice
on February 23, 2001, as shown by his signature. 96
Petitioner cannot take refuge in the pronouncements of the Court
in a case 97 that "[t]he unjustified refusal of the employer to reinstate the
dismissed employee entitles him to payment of his salaries effective from
the time the employer failed to reinstate him despite the issuance of a writ
of execution" 98 and "even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the employee during the period of appeal
until reversal by the higher court". 99 He failed to prove that he complied
with the return to work order of PAL. Neither does it appear on record that
he actually rendered services for PAL from the moment he was dismissed,
in order to insist on the payment of his full backwages. cTCEIS
 In insisting that he be reinstated to his actual position despite
being overweight, petitioner in effect wants to render the issues in the
present case moot. He asks PAL to comply with the impossible. Time and
again, the Court ruled that the law does not exact compliance with the
impossible. 100
V. Petitioner is entitled to separation pay.
Be that as it may, all is not lost for petitioner.
Normally, a legally dismissed employee is not entitled to
separation pay. This may be deduced from the language of Article 279 of
the Labor Code that "[a]n employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement". Luckily for petitioner, this is not an ironclad rule. caTESD
Exceptionally, separation pay is granted to a legally dismissed
employee as an act "social justice", 101 or based on "equity". 102 In both
instances, it is required that the dismissal (1) was not for serious
misconduct; and (2) does not reflect on the moral character of the
employee. 103
Here, We grant petitioner separation pay equivalent to one-half
(1/2) month's pay for every year of service. 104 It should include regular
allowances which he might have been receiving. 105 We are not blind to
the fact that he was not dismissed for any serious misconduct or to any act
which would reflect on his moral character. We also recognize that his
employment with PAL lasted for more or less a decade. HIaTDS
WHEREFORE, the appealed Decision of the Court of Appeals is
AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui is
entitled to separation pay in an amount equivalent to one-half (1/2)
month's pay for every year of service, which should include his regular
allowances.
SO ORDERED.
|||  (Yrasuegui v. Pilippine Airlines, Inc., G.R. No. 168081, [October 17, 2008],
590 PHIL 490-524)