FUNDAMENTAL CONCEPTS – CASE DIGEST

1. CAPITOL MEDICAL CENTER VS. MERIS (470 SCRA 125, SEPTEMBER

16, 2005)

CAPITOL MEDICAL CENTER (CMC) v. MERIS,

FACTS: Petitioner closed its industrial service unit due to alleged loss and extinct
demand resulting to the termination of the employment of the respondent. The latter
filed an illegal dismissal case but the same was denied by the labor arbiter, and
subsequently by the NLRC contending that the same is part of the management
prerogative.

ISSUE: Has employer the right to close its business even without basis resulting to the
displacement of the worker?

HELD: No. Employers are also accorded with rights and privileges to assure their self-
determination and independence and reasonable return of capital. This mass of
privileges is called management prerogatives. Although they may be broad and unlimited
in scope, the State has the right to determine whether an employer's privilege is
exercised in a manner that complies with the legal requirements and does not offend the
protected rights of labor.

2. GARCIA v. PAL, GR 164856, Jan. 20, 2009

FACTS: PAL filed an administrative case against Garcia and Dumago after they
were allegedly caught sniffing shabu at the PAL Tool Room. After due notice, they
were dismissed for transgressing the PAL Code of Discipline. The petitioners filed a
complaint for illegal dismissal. The Labor Arbiter decided in favor of petitioners with
an immediate reinstatement. A writ was issued to such effect pending appeal with
the NLRC.

ISSUE: Can the petitioners collect wages on the period of appeal from the Labor
Arbiter’s order up to the final decision of the higher court?

HELD: Yes. The State forcefully and meaningfully underscore labor as a primary
social and economic force. In short, with respect to decisions reinstating employees,
the law itself has determined a sufficiently overwhelming reason for its execution
pending appeal. Therefore, the petitioners can collect wages from the period of the
execution of the decision of the labor arbiter to the time of the final decision of the
higher court.

3. CALALANG v. WILLIAMS, 70 PHIL 726, GR No. 47800, December 2, 1940

FACTS: The National Traffic Commission resolved that animal-drawn vehicles be

prohibited from passing along some major streets such a Rizal Ave. in Manila for a
period of one year from the date of the opening of the Colgante Bridge to traffic. The
Secretary of Public Works approved the resolution on August 10,1940. The Mayor of
Manila and the Acting Chief of Police of Manila have enforced the rules and
regulation. As a consequence, all animal-drawn vehicles are not allowed to pass and
pick up passengers in the places above mentioned to the detriment not only of their
owners but of the riding public as well.

ISSUE: Does the rule infringe upon the constitutional precept regarding the
promotion of social justice? What is Social Justice?
HELD: No. The regulation aims to promote safe transit and avoid obstructions on
national roads in the interest and convenience of the public. Persons and property
may be subject to all kinds of restraints and burdens in order to secure the general
comfort, health, and prosperity of the State. To this fundamental aims of the
government, the rights of the individual are subordinated.
Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but
the humanization of laws and the equalization of social and economic forces by the
State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people,
the adoption by the Government of measures calculated to insure economic stability
of all the competent elements of society, through the maintenance of a proper
economic and social equilibrium in the interrelations of the members of the
community, constitutionally, through the adoption of measures legally justifiable, or
extra-constitutionally, through the exercise of powers underlying the existence of all
governments on the time-honored principles of Salus Populi est Suprema Lex.
(Justice Laurel)

4. BBGM vs Dela Serna, 312 S 22

Facts:

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

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

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

On 27 February 1987, the complainants filed a Motion for the issua... ce of an

inspection authority.

plainants filed a Motion for the issuance of an inspection authority.

On November 7, 1988, a Motion for Intervention was filed by MFT Corporation,

inviting attention to a Deed of Sale executed in its favor by Fidel Bermudez, the
highest bidder in the auction sale conducted on October 29, 1987.

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

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

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

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

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

(1) whether the Regional Director has jurisdiction over the complaint filed by the
employees of BBGMI; and (2) whether or not the auction sales conducted by the
said Special Sheriff are valid.

Ruling:

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

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

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

"WHEREFORE, in view of the foregoing, the motions for reconsideration filed by

intervenors MFT and Salter are hereby granted. Correspondingly, this Office's Order
dated 16 September 1988 is hereby modified to exclude from annulment "the one lot
of junk mining... machineries, equipment and supplies as-is

The Regional Director has jurisdiction over the BBGMI employees who are the
complainants in Case Number NCR-LSED-CI-2047-87.

5. Maternity Children’s Hospital vs SOLE

Facts:

Petitioner is a semi-government hospital... ten (10) employees of the petitioner

employed in different capacities/positions filed a complaint with the Office of the
Regional Director of Labor and Employment, Region X, for underpayment of their
salaries and ECOLAs... the Labor Standard and Welfare Officers submitted their
report confirming that there was underpayment of wages and ECOLAs of all the
employees by the petitioner

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

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

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

Issues:

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

Ruling:

This is a labor standards case, and is governed by Art. 128-b of the Labor Code

Under the present rules, a Regional

Director exercises both visitorial and enforcement power over labor standards cases,
and is therefore empowered to adjudicate money claims, provided there still exists
an employer-employee relationship, and the findings of the regional office is... not
contested by the employer concerned.

In the present case, petitioner admitted the charge of underpayment of wages to

workers still in its employ; in fact, it pleaded for time to raise funds to satisfy its
obligation. There was thus no contest against the findings of the labor inspectors.

Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions
Nos. 6, 7 and 37, it is clear that it has always been the intention of our labor
authorities to provide our workers immediate access (when still feasible, as where an
employer-employee... relationship still exists) to their rights and benefits, without
being inconvenienced by arbitration/litigation processes that prove to be not only
nerve-wracking, but financially burdensome in the long run.

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

ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as

regards all persons still employed in the Hospital at the time of the filing of the
complaint, but GRANTED as regards those employees no longer employed at that...
time.

RATIONALE OF LABOR LAWS – CASE DIGEST

6. BREWMASTER INTERNATIONAL INC. v. NAFLU

FACTS: Private respondent Estrada is a member of the respondent labor union. He

did not report for work for 1 month due to a grave family problem as his wife
deserted him and nobody was there to look after his children. He was required to
explain. Finding his reasons to be unjustified, the petitioner terminated him, since
according to company rules, absence for 6 consecutive days is considered
abandonment of work.

ISSUE: Should a worker be summarily dismissed relying on some company rules?

HELD: No. While the employer is not precluded from prescribing rules and
regulations to govern the conduct of his employees, these rules and their
implementation must be fair, just and reasonable. No less than the Constitution looks
with compassion on the workingman and protects his rights not only under a general
statement of a state policy but under the Article on Social Justice and Human Rights,
thus placing labor contracts on a higher plane and with greater safeguards. Verily,
relations between labor and capital are not merely contractual. They are impressed
with public interest and labor contracts must, perforce, yield to the common good.

7. MABEZA v. NLRC, G.R. No. 118506 April 18, 1997

FACTS: The petitioner and her co-employees were asked by their employer to sign
an instrument attesting to the latter’s compliance with minimum wage and other labor
standard provision, and that they have no complaints against the management. The
petitioner signed the affidavit but refused to go to the City’s Prosecutor’s Office to
confirm the veracity and contents of the affidavit as instructed by management. That
same day she was ordered by the hotel management to turn over the keys to her
living quarters and to remove her belongings in the hotel’s premises. She then filed a
leave of absence which was denied by her employer. She attempted to return to
work but the hotel’s cashier told her that she should not report to work and instead
continue with her unofficial leave of absence. The management defended upon a
ground of loss of confidence.

ISSUE: Was the dismissal of the petitioner valid?

HELD: No. The pivotal question in any case where unfair labor practice on the part
of the employer is alleged is whether or not the employer has exerted pressure, in
the form of restraint, interference or coercion, against his employee’s right to institute
concerted action for better terms and conditions of employment. Without doubt, the
act of compelling employees to sign an instrument indicating that the employer
observed labor standard provisions of the law when he might not have, together with
the act of terminating or coercing those who refuse to cooperate with the employers’
scheme constitutes unfair labor practice.

is a necessary matter in the operations of a small hotel, such as Hotel Supreme.

8. P.I. MANUFACTURING, INCORPORATED, Petitioner, vs. P.I.

MANUFACTURING SUPERVISORS AND FOREMAN ASSOCIATION and
the NATIONAL LABOR UNION, Respondents. G.R. No. 167217,
February 04, 2008

FACTS:

Petitioner P.I. Manufacturing, Incorporated is a domestic corporation engaged in

the manufacture and sale of household appliances. Respondent P.I.
Manufacturing Supervisors and Foremen Association (PIMASUFA) is an
organization of petitioner’s supervisors and foremen, joined in this case by its
federation, the National Labor Union (NLU).

December 10, 1987, R.A. No. 6640 was passed providing an increase in the
statutory minimum wage and salary rates of employees and workers in the
private sector, to which it is increased by P10.00 per day, except non-agricultural
workers and employees outside Metro Manila who shall receive an increase of
P11.00 per day: Provided, That those already receiving above the minimum wage
up to P100.00 shall receive an increase of P10.00 per day. Excepted from the
provisions of this Act are domestic helpers and persons employed in the personal
service of another.

December 18, 1987, petitioner and respondent PIMASUFA entered into a new
CBA (1987 CBA) whereby the supervisors were granted an increase of P625.00
per month and the foremen, P475.00 per month. The increases were made
retroactive to May 12, 1987, or prior to the passage of R.A. No. 6640, and every
year thereafter until July 26, 1989.

January 26, 1989, respondents PIMASUFA and NLU filed a complaint with NLRC
charging petitioner with violation of R.A. No. 6640. Respondents attached to their
complaint a numerical illustration of wage distortion resulting from the
implementation of R.A. No. 6640.

LA favored respondents ordering Petitioner to give members of respondent

PIMASUFA wage increases equivalent to 13.5% of their basic pay they were
receiving prior to December 14, 1987. On appeal by petitioner, the NLRC
affirmed LA’s judgment. Petitioner filed a petition for certiorari with SCourt.
However, SC referred the petition to CA. CA affirmed the Decision of the NLRC
with modification by raising the 13.5% wage increase to 18.5%. M.R. was denied.
Petitioner went to SC but it favored respondents. Hence this MR.

ISSUES:

Whether the implementation of R.A. No. 6640 resulted in a wage distortion

Whether such distortion was cured or remedied by the 1987 CBA.
RULING:
 Yes. R.A. No. 6727, otherwise known as the Wage Rationalization Act,
explicitly defines“wage distortion”as: “a situation where an increase in
prescribed wage rates results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates between and
among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation.”
Otherwise stated, wage distortion means the disappearance or virtual
disappearance of pay differentials between lower and higher positions in an
enterprise because of compliance with a wage order. The increase in the
wage rates by virtue of R.A. No. 6640 resulted in wage distortion or the
elimination of the intentional quantitative differences in the wage rates of the
supervisor employees of petitioner.

II. Yes. Wage distortions were cured or remedied when respondent PIMASUFA
entered into the 1987 CBA with petitioner after the effectivity of R.A. No. 6640.
The 1987 CBA increased the monthly salaries of the supervisors by P625.00 and
the foremen, by P475.00, effective May 12, 1987. These increases re-established
and broadened the gap, not only between the supervisors and the foremen, but
also between them and the rank-and-file employees. Significantly, the 1987 CBA
wage increases almost doubled that of the P10.00 increase under R.A. No. 6640.

The P625.00/month means P24.03 increase per day for the supervisors, while
the P475.00/month means P18.26 increase per day for the foremen. Such
gap as re-established by virtue of the CBA is more than a substantial
compliance with R.A. No. 6640. CA erred in not taking into account the
provisions of the CBA. The provisions of the CBA should be read in harmony
with the wage orders, whose benefits should be given only to those
employees covered thereby.

To require petitioner to pay all the members of respondent PIMASUFA a

wage increase of 18.5%, over and above the negotiated wage increases
provided under the 1987 CBA, is highly unfair and oppressive to the former. It
was not the intention of R.A. No. 6640 to grant an across-the-board increase
in pay to all the employees of petitioner. Only those receiving wages P100.00
and below are entitled to the P10.00 wage increase. The apparent intention of
the law is only to upgrade the salaries or wages of the employees specified
therein. Almost all of the members of respondent PIMASUFA have been
receiving wage rates above P100.00 and, therefore, not entitled to the P10.00
increase. Only 3 of them are receiving wage rates below P100.00, thus,
entitled to such increase.

TO compel employers simply to add on legislative increases in salaries or

allowances without regard to what is already being paid, would be to penalize
employers who grant their workers more than the statutory prescribed
minimum rates of increases. Clearly, this would be counter-productive so far
as securing the interests of labor is concerned.

It must be stressed that a CBA constitutes the law between the parties when
freely and voluntarily entered into. Iit has not been shown that respondent
PIMASUFA was coerced or forced by petitioner to sign the 1987 CBA. All of its
13 officers signed the CBA with the assistance of respondent NLU. They signed it
 fully aware of the passage of R.A. No. 6640. The duty to bargain requires that the
parties deal with each other with open and fair minds. Respondents cannot
invoke the beneficial provisions of the 1987 CBA but disregard the concessions it
voluntary extended to petitioner. The goal of collective bargaining is the making
of agreements that will stabilize business conditions and fix fair standards of
working conditions. Respondents’ posture contravenes this goal.

WHEREFORE, we GRANT petitioner’s MR.

9. TIRAZONA v. PHILIPPINE EDS TECHNO-SERVICE (PET) INC

FACTS: The petitioner, a managerial employee who was holding a position of trust
and confidence, was admonished by the latter of her improper handling of a situation
involving a rank-and-file employee. She admitted having read a supposed
confidential letter for the PET directors containing a legal opinion of the respondent's
counsel regarding the status of her employment. As a consequence, she was
terminated for willful breach of trust reposed upon by her employer. She claimed
having been denied of due process.

ISSUE: Was her dismissal justified?

HELD: Yes. The petitioner has given the respondent more than enough reasons to
distrust her. The arrogance and hostility she has shown towards the company her
stubborn uncompromising stance in almost all instances justify the company's
termination of her employment.

10. Fuentes vs NLRC

FACTS:

Petitioners were regular employees of private respondent Agusan Plantations, Inc.,

which wasengaged in the operation of a palm tree plantation in Trento, Agusan del
Sur, since September1982. Claiming that it was suffering business losses which
resulted in the decision of the headoffice in Singapore to undertake retrenchment
measures, private respondent sent notices oftermination to petitioners and the
Department of Labor and Employment (DOLE).On 31 October1990 petitioners filed
with the DOLE office in Cagayan de Oro City a complaint for illegaldismissal with
prayer for reinstatement, backwages and damages against private
respondentAgusan Plantation, Inc., and/or Chang Chee Kong.

Labor Arbiter rendered a decision on 27 May 1992 in favor of petitioners ordering

privaterespondents to pay the former separation pay equivalent to fifteen (15) days
pay for every year ofservice plus salary differentials and attorney's fees.

On appeal by respondents to the National Labor Relations Commission, the decision

of the LaborArbiter was reversed on 27 November 1992.

ISSUE:

NLRC gravely abused its discretion amounting to lack or excess of jurisdiction in

ruling that petitioners were legally terminated from their employment
RULINGS:

Under Art. 283 therefore retrenchment may be valid only when the following
requisites are met: (a)it is to prevent losses; (b) written notices were served on the
workers and the Department of Laborand Employment (DOLE) at least one (1)
month before the effective date of retrenchment; and, (c)separation pay is paid to the
affected workers.

There is no question that an employer may reduce its work force to prevent losses.
However, theselosses must be serious, actual and real.[3] Otherwise, this ground for
termination of employmentwould be susceptible to abuse by scheming employers
who might be merely feigning losses intheir business ventures in order to ease out
employees.[4]

Indeed, private respondents failed to prove their claim of business losses. What they
submitted tothe Labor Arbiter were mere self
-
serving documents and allegations. Private respondents neveradduced evidence
which would show clearly the extent of losses they suffered as a result of lackof
capital funding, which failure is fatal to their cause.We agree with the conclusion of
the LaborArbiter that the termination of the services of petitioners was illegal as there
was no validretrenchment. Respondent NLRC committed grave abuse of discretion
in reversing the findings ofthe Labor Arbiter and ruling that there was substantial
compliance with the law. This Court firmlyholds that measures should be strictly
implemented to ensure that such constitutional mandate on protection to labor is not
rendered meaningless by an erroneous interpretation of applicable laws.

11. JAMER v. NLRC

FACTS: Petitioners are cashiers of Isetann Department Store who were dismissed
for having accumulated shortages. Petitioners admitted this in their affidavits. The
labor arbiter ruled them having been illegally dismissed. The NLRC reversed the
ruling.

ISSUE: Were the petitioners validly dismissed?

HELD: Yes. The failure of the petitioners to report to the management the
irregularities constitute "fraud or willful breach of the trust reposed in them by their
employer or duly authorized representative"--one of the just causes of valid
termination of employment. The employer cannot be compelled to retain employees
who were guilty of malfeasance as their continued employment will be prejudicial to
the former's best interest. The law, in protecting the rights of the employees,
authorizes neither oppression nor self-destruction of the employer.

12. GANDARA MILL SUPPLY v. NLRC

FACTS: Private respondent Silvestre Germane did not report for work because his
wife delivered their first child. He did not however notify his employer, causing a
disruption in the business of the latter. When the respondent returned to work he
was surprised upon knowing that someone has been hired to take his place.

ISSUE: Was there a case of illegal dismissal?

HELD: Yes. It appeared that the respondent was illegally dismissed. While a
prolonged absence without leave may constitute as a just cause for dismissal, its
illegality stems from the non-observance of due process. Applying the WenPhil
Doctrine by analogy, where dismissal was not preceded by the twin requirement of
notice and hearing, the illegality of the dismissal in question, is under heavy clouds
and therefore illegal.

INDIVIDUAL RIGHTS OF WORKERS – CASE DIGEST

13. PMPWA vs Premier Production 92 P 843

FACTS: Respondent filed 2 petitions with the CIR: 1.) to lay off its 44 employees on
the ground that the company is losing its operations, and 2.) to lease its equipment
to certain individuals. Judge Roldan of the CIR, after ocular inspection, approved the
petitions, thereby leaving the petitioners, if not unemployed, having nothing to do
because of absence of equipment in the studios. Petitioner assailed the ruling of the
judge, and appealed to the CIR en banc.

ISSUE: Should the court grant a petition for mass dismissal without hearing the side
of the employees concerned?

HELD: No. A worker cannot be deprived of his job or his wages without due process
of law. The case was then remanded to CIR for proper hearing.

CALLANTA v. CARNATION PHILS., 145 SCRA 268, G.R. No. 70615 October 28,
1986

FACTS: Upon clearance approved by the MOLE Regional Office, respondent

dismissed the petitioner in June 1979. On July 1982, petitioner filed an illegal
dismissal case with claim for reinstatement with the Labor Arbiter, who granted it. On
appeal, the NLRC reversed the judgment based on the contention that the action by
the petitioner has already prescribed, since Art. 291 & 292 of the Labor Code is
expressed that offenses penalized under the Code and all money claims arising from
employer-employee relationships shall be filed within 3 years from when such cause
of action arises, otherwise it will be barred.

ISSUE: Is ruling of the NLRC correct?

HELD: No. It is a principle well recognized in this jurisdiction, that one's employment,
profession, trade or calling is a property right, and the wrongful interference therewith
is an actionable wrong. The right is considered to be property within the protection of
the Constitutional guarantee of due process of law.

Verily, the dismissal without just cause of an employee from his employment
constitutes a violation of the Labor Code and its implementing rules and regulations.
Such violation, however, does not amount to an "offense" as understood under
Article 291 of the Labor Code. In its broad sense, an offense is an illegal act which
does not amount to a crime as defined in the penal law, but which by statute carries
with it a penalty similar to those imposed by law for the punishment of a crime. The
confusion arises over the use of the term "illegal dismissal" which creates the
impression that termination of an employment without just cause constitutes an
offense. It must be noted, however that unlike in cases of commission of any of the
prohibited activities during strikes or lockouts under Article 265, unfair labor practices
under Article 248, 249 and 250 and illegal recruitment activities under Article 38,
among others, which the Code itself declares to be unlawful, termination of an
employment without just or valid cause is not categorized as an unlawful practice.

SEGISMUNDO VS NLRC

Petitioners Roberto Segismundo and Rogelio Montalvo were regular employees of

private respondent Associated Freight Consolidators, Inc., a corporation engaged in
the air freight forwarding business. It picks up parcels and packages from different
parts of the globe and delivers them "door to door" to their consignees or addressees
in the country. Segismundo was a driver whereas Montalvo was a loader/helper.
They worked as a team, delivering packages to their respective addressees or
consignees.

Sometime in 1988, private respondent began receiving complaints from its

client/consignees regarding missing items in their packages which were delivered by
private respondent's personnel. The number of complaints increased, to the point
that some of private respondent's delivery arrangements were in danger of being
discontinued by disgruntled clients. This prompted private respondent to conduct an
exhaustive investigation to determine whether its delivery personnel were involved in
the pilferages complained of. The investigation yielded the unfortunate result that the
pilferages could only have taken place while the packages were in the custody of
private respondent's delivery personnel.

Based on tabulated records, private respondent discovered that of the 27 complaints

of pilferages lodged during the period from August 1988 to February 1989, 6 of the
complaints involved packages delivered by petitioners' delivery team.

In view of the results of the investigation, private respondent's General Manager

called a meeting on February 17, 1989 of all delivery personnel to discuss the
pilferage incidents. During the meeting, petitioners denied any involvement therein.
They were allowed to inspect the records gathered in the course of the company
investigation. On the same day, petitioners were given notices by management,
placing them under preventive suspension effective February 18, 1989.

On March 15, 1989, private respondent formally terminated petitioners' services

without first conducting a hearing.

Consequently, petitioners filed on May 8, 1989 a complaint for illegal suspension and
dismissal, alleging that their dismissal was not based on a just cause and was
effected in violation of their right to due process.

On December 5, 1990, the Labor Arbiter rendered a decision in favor of petitioners,

ordering their reinstatement with backwages, damages and attorney's fees.

Not satisfied with the decision, private respondent appealed, and on September 30,
1993, the public respondent reversed the decision of the Labor Arbiter, upholding
petitioners' dismissal as valid.

Hence, this petition.

We uphold the finding of the public respondent that petitioners' dismissal was for a
just cause. The public respondent's findings on this score are fully supported by the
results of the investigation conducted by private respondent regarding the pilferages,
and these results were presented before the Labor Arbiter. The conclusion that
petitioners were involved in the pilferages was solidly premised on the tabulated
complaints of consignees, the records of pilfered packages delivered by petitioners'
team and delivery receipts. No evidence was presented to show that private
respondent was motivated by any ill feeling or bad faith in dismissing petitioners. On
the contrary, it could have been more difficult for private respondent to dismiss
petitioners considering that petitioner Segismundo was hired upon the
recommendation of respondent's General Manager himself while petitioner Montalvo
was hired upon the recommendation of a member of private respondent's Board of
Directors. In view of these recommendations, petitioners could not have been
dismissed unless there was sufficient cause therefor. It is thus clear that private
respondent's decision to terminate petitioners' services was prompted by the
necessity to protect its good name and interests.

Private respondent's documentary evidence showing the culpability of petitioners

should prevail over petitioners' uncorroborated explanations and self-serving denials
regarding their involvement in the pilferages. All administrative determinations
require only substantial proof and not clear and convincing evidence (Manalo v.
Roldan-Confesor, 215 SCRA 808). Proof beyond reasonable doubt of the
employee's misconduct is not required, it being sufficient that there is some basis for
the same or that the employer has reasonable ground to believe that the employee is
responsible for the misconduct, and his participation therein renders him unworthy of
the trust and confidence demanded by his position (Riker v. Ople, 155 SCRA 85).
Thus, petitioners cannot assert that the public respondent closed its eyes to their
evidence. The latter's findings are supported by substantial evidence which goes
beyond the minimum evidentiary support required by law.

However, we find that petitioners were dismissed from employment without being
accorded due process. As correctly observed by the Solicitor General, non-
compliance with the twin requirements of notice and hearing is fatal because these
requirements are conditions sine qua non before a dismissal may be validly effected
(Manebo vs. NLRC, G.R. No. 107721, January 10, 1994, citing Tiu v. NLRC, 215
SCRA 540). Neither of these two requirements can be dispensed with without
running afoul with the due process requirement of the Constitution (Century Textile
Mills, Inc. v. NLRC, 161 SCRA 528).

In the instant case, the records show that private respondent failed to give petitioners
the benefit of a hearing. The meeting called by the General Manager on February
17, 1989 does not qualify as the hearing required by law since the same was
apparently for the purpose of merely informing the delivery personnel about the
investigation conducted by the company on the pilferages, and to serve petitioners
and two other employees notices of their preventive suspension. Barely a month
later, petitioners were summarily dismissed.

While it may be true that petitioners were allowed to explain their side during the
February 17, 1989 meeting, the fact remains that no hearing was actually conducted
before petitioners' services were terminated. The opportunity given to petitioners
during the meeting to answer the charges against them and to verify the records of
the pilferage cases is not the kind of "ample opportunity" contemplated by law, which
connotes every kind of assistance that management must accord to the employee to
enable him to prepare adequately for his defense including legal representation
(Abiera v. NLRC, 215 SCRA 476). In the case at bar, both petitioners denied any
involvement in the pilferages at the February 17, 1989 meeting, and these denials
warranted at least a separate hearing to enable petitioners to fully air their side.
Consultations or conferences are not a substitute for the actual observance of notice
and hearing (Pepsi-Cola Bottling Co. v. NLRC, 210 SCRA 277).

Moreover, that petitioners simply "kept silent" from the time they were suspended
until they were formally dismissed is not adequate to constitute a waiver of their
rights. Notice and hearing must be accorded by an employer, even though the
employee does not affirmatively demand it (Century, supra.).

Suffice it to say that in this case, private respondent failed to comply with the
requirement that the decision to dismiss an employee must come only after he is
given a reasonable period from receipt of the first notice within which to answer the
charge, an ample opportunity to be heard and to defend himself with the assistance
of a representative if he so desires. Such non-compliance is fatal and constitutes an
infringement of petitioners' constitutional right to due process. On this score, the
public respondent manifestly erred in holding otherwise.

It appearing that petitioners were dismissed for cause but without the observance of
due process, the ruling in Wenphil Corporation v. NLRC, 170 SCRA 69, as cited by
the Solicitor General in its Comment, squarely applies to the case at bar:

"The Court holds that the policy of ordering the reinstatement to the service of an
employee without loss of seniority and the payment of his wages during the period of
his separation until his actual reinstatement xxx when it appears he was not afforded
due process, although his dismissal was found to be for just and authorized cause in
an appropriate proceeding in the Ministry of Labor and Employment, should be re-
examined. It will be highly prejudicial to the interests of the employer to impose on
him the services of an employee who has been shown to be guilty of the charges
that warranted his dismissal from employment. Indeed, it will demoralize the rank
and file if the undeserving, if not undesirable, remains in the service.

xxx xxx xxx

However, the petitioner (employer) must nevertheless be held to account for failure
to extend to private respondent (employee) 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." (Emphasis supplied)

Accordingly, the assailed decision of the public respondent NLRC dated September
30, 1993 reversing and setting aside the decision of the Labor Arbiter and ordering
the dismissal of petitioners' complaint for illegal dismissal is hereby AFFIRMED
WITH MODIFICATION that private respondent Associated Freight Consolidators,
Inc. is hereby ORDERED to pay each of the petitioners the sum of P1,000.00 as
penalty for failing to conduct a hearing prior to petitioners' dismissal from
employment. This Order is immediately executory.

SO ORDERED.

RETA VS NLRC

This is a petition for certiorari under Rule 65 of the Revised Rules of Court to annul
the Resolution dated March 31, 1993 of the National Labor Relations Commission
(NLRC) in NLRC Case No. 003657-92, which affirmed the decision of the Philippine
Overseas Employment Administration (POEA) dated March 11, 1992, dismissing
petitioner's complaint against private respondents for illegal dismissal.

Petitioner was hired as Second Officer on board the M.V. "Bulk Tupaz" by
respondent Arpaphil Shipping Corp. (ARPAPHIL), the manning agent of respondent
Tarpon Shipping Company. His employment was for a 12-month period effective
December 3, 1990 with a monthly salary of US$825.00 and an overtime pay at the
rate of $2.10 per hour.

On December 11, 1990, while on duty on board the ship, petitioner was caught
watching television at the smoking room instead of being at his post. On December
12, he failed to take proper positions of the vessel, rendering his observations
unreliable. On December 18, he forgot to take sun observation and to keep track of
the vessel's proper position. Thereafter, he made a wrong entry in the logbook. On
December 26, petitioner was required to work overtime, but he refused.

The worst infractions committed by petitioner were: (1) on December 27, when by
reason of his faulty maneuvering, the vessel barely missed colliding with another
vessel; (2) on January 1, 1991, while he was in charge of loading fuel oil into the
holds of the vessel, he left his watch and other duties and went to the dining room;
and (3) on January 8, while the ship was going through strong current, he let loose
the mooring line of the vessel, so that it moved away from the loading berth. The
vessel had to be moored by a tug boat. All the crew, except petitioner, responded to
the call for help in mooring the vessel.

In a span of two months, petitioner committed eight infractions, all of which boil down
to insubordination, incompetence and inefficiency. Due to these infractions, the
master of the vessel discharged petitioner on February 27 while the vessel was
docked at Pireau, Greece.

Consequently, on May 8, petitioner filed a complaint for illegal dismissal with the
POEA. Finding petitioner's dismissal to be justified, the POEA dismissed his petition.
On appeal to the NLRC, the POEA decision was affirmed.

Hence, this petition.

II

The sole issue to be resolved in this case is whether the NLRC committed grave
abuse of discretion in affirming the decision of the POEA, which found petitioner's
dismissal to have been for legal cause.
The petition is devoid of merit.

Contracts are the law between the contracting parties and, as such, they are
expected to abide with good faith in their contractual commitments (Toyota Motor
Philippines Corporation v. Court of Appeals, 216 SCRA 236 [1992]). One of the
stipulations in the employment contract of the petitioner provides that:

"x x x [t]he Master shall have the right to discharge or sign off the seaman xxx.
(a) If the seaman is incompetent x x x; or
(b) If the seaman's conduct shows that his continued presence on board is likely
prejudicial to the safety of the vessel or those on board or to the maintenance of
good order xxx" (Annex "D", p. 8; Comment of the Solicitor General, p. 6).
In the case at bench, petitioner should have seen his dismissal coming, considering
the number and seriousness of the infractions he committed during the two-month
period he was on board the vessel. If petitioner does not consider his infractions as
just causes for his dismissal, then inefficiency, negligence and insubordination
should be removed from the statute books as grounds for dismissal. Both the POEA
and the NLRC found petitioner culpable of the infractions charged against him by
private respondents. We have no grounds to disturb the findings of fact of these two
administrative agencies (Baguio Colleges Foundation v. National Labor Relations
Commission, 222 SCRA 604 [1993]; Five J Taxi v. National Labor Relations
Commission, 212 SCRA 225 [1992]).

However, while his employee had a legal cause to dismiss petitioner, they did not
follow the proper procedure for the dismissal.

Article 277 of the Labor Code of the Philippine as amended by Section 33, R.A. No.
6715 (Herrera-Veloso Law), provides:

xxx xxx xxx

"(b) Subject to the constitutional right of workers to security of tenure and their right
to be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article [283] 285 of this Code, [the
clearance to terminate employment shall no longer be necessary. However,] the
employer shall furnish the worker whose employment is sought to he terminated a
written notice containing a statement of the causes for termination and shall afford
the latter ample opportunity to be heard and to depend himself with the assistance of
his representative if he so desires in accordance with company rules and regulations
promulgated pursuant to guidelines set by the [Ministry] Department of Labor and
Employment. x x x" (Underscoring supplied).
An employee cannot just be separated from his employment without according him
his constitutional right of due process, consisting of the proper notice and hearing.
No notice of any form, apprising of the proffered charges, was served on petitioner,
much less was a hearing conducted wherein he could have defended himself. The
fact that the defense interposed at the hearing would be outlandish or pure
nonsense, is not a ground to cut short the procedure for dismissal. As this Court
ruled in Seahorse Maritime Corporation v. National Labor Relations Commission,
173 SCRA 390 (1989), that before a seaman can be dismissed and discharged from
the vessel, it is required that he be given a written notice regarding the charges
against him and that he be afforded a formal investigation where he could defend
himself personally or through a representative. Fear of any possible trouble that
might be caused by the dismissed employee on board the vessel upon being
informed of his dismissal is not a reason to dispense with the requirement.

As to the consequence of the failure to observe the requirement of due process in

the dismissal of an employee, we ruled in Aurelio v. National Labor Relations
Commission, 221 SCRA 432 (1993):

"In cases where there was a valid ground to dismiss an employee but there wan non-
observance of due process, this Court held that only a sanction must be imposed
upon the employer for failure to give formal notice and to conduct an investigation
required by law before dismissing the employee in consonance with the ruling in
Wenphil v. NLRC, 170 SCRA 69 (1989); Shoemart, Inc. v. NLRC, supra; and in
Pacific Mills, Inc. v. Zenaida Alonzo, 199 SCRA 617 [1991]). xxx In the Pacific Mills,
Inc. and Wenphil cases, this Court merely awarded P1,000.00 as penalty for non?
observance of due process" (Underscoring supplied).
Considering that petitioner was given his walking papers and was forced to leave his
ship in a foreign port, the penalty to be imposed on his employer for the non-
observance of the requirements of due process in dismissing him is higher than that
imposed in the cited cases.

WHEREFORE, the decision of the National Labor Relations Commission is

AFFIRMED with the MODIFICATION that private respondents should pay petitioner
P10,000.00 as penalty for failure to comply with the due process requirement.

SO ORDERED.

SMA VS NLRC

WENPHIL VS NLRC

FACTS:

Private respondent Mallare had an altercation with a co-employee. The following

day, the Operations Manager served them memorandum of suspension and in the
afternoon of that same day, Mallare was dismissed from work. Labor Arbiter
dismissed Mallare’s petition for unfair labor practice for lack of merit. NLRC reversed
the decision and ordered the reinstatement of Mallare with full backwages of one
year without qualification and deduction.

ISSUE:

Whether or not an employee dismissed for just cause but without due process be
reinstated to work.

RULING:

The basic requirement of due proves is that which hears before it condemns,
proceeds upon inquiry and renders judgment only after trial. The dismissal of an
employee must be for a just 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 Mallare from employment. Petitioner must indemnify the dismissed
employee which depends on the facts of each case and the gravity of the omission
committed by the employer.

Where the private respondent appears to be of violent temper, caused trouble during
office hours and even defied his supervisors as they tried to pacify him, he should
not be rewarded with re-employment and backwages. The dismissal of the
respondent should be maintained.

GONZALES VS NLRC

Gonzales vs. National Labor Relations CommissionFacts: Lorlene Gonzales has

been an elementary schoolteacher for private respondent Ateneo de Davao
University since 1974, assigned to teach Grade VI class. In 1991, headmaster
Fr.OscarMillar sent a letter to inform Gonzales of the complaints for alleged use of
corporal punishment on her students. 2years later, Ateneo began to solicit
complainants to lodge written complaints against her. On Mar. 31, 1993, she wrote a
letter to the headmaster demanding that she be formally informed of the complaint
and be duly investigated. On June 9, 1993, she was informed of the composition of
an investigative committee to look into the complaints but petitioner refused to take
part unless the rules of procedure be revised, contending that they were violative oh
her right to due process. She specifically objected to the provision which forbids her
counsel from directly participating in the investigation.

Issue: whether or not procedural due process was accorded to the petitioner in the
investigation prior to her dismissalHeld: Upon being notified of her termination, she
has the right to demand compliance with the basic requirements of due process.
Compliance entails the twin requirements of procedural and substantial due process.
Ample opportunity must be afforded the employee to defend herself either personally
and/or with assistance of a representative; to know the nature of her offense; and, to
cross examine and confront face to face the witnesses against her. Likewise, due
process requires that the decision must be based on established facts and on a
sound legal foundation.It is precisely to demand compliance with these requirements
that petitioner at the very onset of the investigation demanded the revision of the
rules laid down by the Investigative Committee. The adamant refusal of the
Committee to accede to this demand resulted in her failure to confront and cross-
examine her accusers. This is a serious violation of petitioner's statutory and
constitutional right to due process that ultimately vitiated the investigation.The
dismissal of complainant is declared illegal for lack of factual basis.

SERRANO VS NLRC

FACTS:

Serrano was a regular employee of Isetann Department Store as the head of

Security Checker. In 1991, as a cost-cutting measure, Isetann phased out its entire
security section and engaged the services of an independent security agency.
Petitioner filed a complaint for illegal dismissal among others. Labor arbiter ruled in
his favor as Isetann failed to establish that it had retrenched its security section to
prevent or minimize losses to its business; that private respondent failed to accord
due process to petitioner; that private respondent failed to use reasonable standards
in selecting employees whose employment would be terminated. NLRC reversed the
decision and ordered petitioner to be given separation pay.

ISSUE:

Whether or not the hiring of an independent security agency by the private

respondent to replace its current security section a valid ground for the dismissal of
the employees classed under the latter.

RULING:

An employer’s good faith in implementing a redundancy program is not necessarily

put in doubt by the availment of the services of an independent contractor to replace
the services of the terminated employees to promote economy and efficiency.
Absent proof that management acted in a malicious or arbitrary manner, the Court
will not interfere with the exercise of judgment by an employer.

If termination of employment is not for any of the cause provided by law, it is illegal
and the employee should be reinstated and paid backwages. To contend that even if
the termination is for a just cause, the employee concerned should be reinstated and
paid backwages would be to amend Art 279 by adding another ground for
considering dismissal illegal.

If it is shown that the employee was dismissed for any of the causes mentioned in
Art 282, the in accordance with that article, he should not be reinstated but must be
paid backwages from the time his employment was terminated until it is determined
that the termination of employment is for a just cause because the failure to hear him
before he is dismissed renders the termination without legal effect.

VIERNES VS NLRC

FACTS:
Petitioners’ services as meter readers were contracted for hardly a month’s duration,
from October 8 to 31, 1990. The said term notwithstanding, petitioners were allowed
to work until January 2, 1991. On January 3, 1991, they were each served their
identical notices of termination. On the same date, they filed complaints for illegal
dismissal. They contended that they were not apprentices but regular employees
whose services were illegally and unjustly terminated in a manner that was
whimsical and capricious. On the other hand, private respondent BENECO invoked
Article 283 of the Labor Code in defense of the questioned dismissal. The Labor
Arbiter dismissed the complaints for lack of merit. However, it ordered BENECO to
extend to the petitioners the contract of temporary employment that the former had
offered, with the exception of Jaime Viernes. Also, the Labor Arbiter directed
BENECO to pay each the amount equivalent to their monthly salary as indemnity for
its failure to give complainants the 30-day notice mandated under Article 283 of the
Labor Code. Modifying the Arbiter’s decision, the NLRC rendered that the dismissal
was illegal. It ordered petitioners’ reinstatement to their former position as meter
readers or to any equivalent position with payment of backwages limited to one year
deleting the award of indemnity.
ISSUES: Whether or not the petitioners should be reinstated to their former position
as meter readers on probationary status despite the finding that they are regular
employees under Article 280 of the Labor Code?

HELD: YES. Reinstatement means restoration to a state or condition from which

one had been removed or separated. In case of probationary employment, Article
281 of the Labor Code requires the employer to make known to his employee at the
time of the latter’s engagement of the reasonable standards under which they may
qualify as a regular employee. In the case at bar, there is nothing on the letter of
appointment that their employment as meter readers was on probationary basis. It
was not shown that they were informed either, at the time of their appointment, the
reasonable standards under which they could qualify as regular employees. Instead,
they were initially engaged to perform their job for a limited period, their employment
being fixed for a definite period. The principle enunciated in Brent School, Inc. vs.
Zamora applies only to fixed term employments. While it is true that the petitioners
were initially employed on a fixed term basis as their employment contracts were
only for a month, they were allowed to continue working in the same capacity as
meter readers without the benefit of a new contract or without the term of their
employment being fixed a 4

new. After October 31, 1991, the employment of petitioners is no longer on a fixed
term basis. The complexion of the employment relationship is totally changed for the
petitioners have attained the status of regular employees. Under Article 280 of the
Labor Code, there are two instances whereby it is determined that an employee is
regular: (1) the particular activity performed by the employee is necessary or
desirable to the usual trade or business of the employer; or (2) if the employee has
been performing the job for at least one year. The petitioners fall under the first
category. The job of a meter reader is necessary to the business of BENECO since
unless the meter reader records the electric consumption of the subscribing public,
there could not be a valid basis for billing the customers of BENECO. The fact that
the petitioners were allowed to continue working after the expiration of their
employment is evidence of the necessity and desirability of their service to
BENECO’s business. Since petitioners are already regular employees at the time of
their illegal dismissal from employment, they are entitled to be reinstated to their
former position as regular employees, not merely probationary. Moreover, under
Article 279, as amended by R.A. No. 6715, an illegally dismissed employee is
entitled to 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. Therefore, petitioners’ backwages
should not be limited to one year only.

THE AGABON CASE, November 17, 2004

FACTS:

Petitioners were employed by Riviera Home as gypsum board and cornice installers
from January 1992 to February 23, 1999 when they were dismissed for
abandonment of work. Petitioners filed a complaint for illegal dismissal and was
decided in their favor by the Labor Arbiter. Riviera appealed to the NLRC contending
just cause for the dismissal because of petitioner’s abandonment of work. NLRC
ruled there was just cause and petitioners were not entitled to backwages and
separation pay. The CA in turn ruled that the dismissal was not illegal because they
have abandoned their work but ordered the payment of money claims.

ISSUE:

Whether or not petitioners were illegally dismissed.

RULING:

To dismiss an employee, the law required not only the existence of a just and valid
cause but also enjoins the employer to give the employee the right to be heard and
to defend himself. Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. For a valid finding or abandonment, two
factors are considered: failure to report for work without a valid reason; and, 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.

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
Doctrine of the Belated Due process Rule.

Art. 279 means that the termination is illegal if it is not for any of the justifiable or
authorized by law. Where the dismissal is for a just cause, the lack of statutory due
process should not nullify the dismissal but the employer should indemnify the
employee for the violation of his statutory rights. The indemnity should be stiffer to
discourage the abhorrent practice of “dismiss now, pay later” which we sought to
deter in Serrano ruling. The violation of employees’ rights warrants the payment of
nominal damages.

SMC VS ABALLA, January 29, 2005

FACTS:

Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative

(Sunflower) entered into a one-year Contract of Service and such contract is
renewed on a monthly basis until terminated. Pursuant to this, respondent Prospero
Aballa rendered services to SMC. After one year of service, Aballa filed a complaint
before NLRC praying that they be declared as regular employees of SMC. On the
other hand, SMC filed before the DOLE a Notice of Closure due to serious business
losses. Hence, the labor arbiter dismissed the complaint and ruled in favor of SMC.
Aballa then appealed before the NLRC. The NLRC dismissed the appeal finding that
Sunflower is an independent contractor. On appeal, the Court of Appeals reversed
NLRC·s decision on the ground that the agreement between SMC and Sunflower
showed a clear intent to abstain from establishing an employeremployee
relationship.

ISSUE: Whether or not Aballa and other employees of Sunflower are employees of
SMC?
HELD: The test to determine the existence of independent contractorship is whether
one claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control of the
employer, except only as to the results of the work. In legitimate labor contracting,
the law creates an employer-employee relationship for a limited purpose, to ensure
that the employees are paid their wages. The principal employer becomes jointly and
severally liable with the job contractor, only for the payment of the employees wages
whenever the contractor fails to pay the same. Other than that, the principal
employer is not responsible for any claim made by the employees. In labor-only
contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is
considered merely an agent of the principal employer and the latter is responsible to
the employees of the labor-only contractor as if such employees had been directly
employed by the principal employer. The Contract of Services between SMC and
Sunflower shows that the parties clearly disavowed the existence of an employer-
employee relationship between SMC and private respondents. The language of a
contract is not, however, determinative of the parties· relationship; rather it is the
totality of the facts and surrounding circumstances of the case. A party cannot
dictate, by the mere expedient of a unilateral declaration in a contract, the character
of its business, whether as labor-only contractor or job contractor, it being crucial that
its character be measured in terms of and determined by the criteria set by statute.
What appears is that Sunflower does not have substantial capitalization or
investment in the form of tools, equipment, machineries, work premises and other
materials to qualify it as an independent contractor. On the other hand, it is gathered
that the lot, building, machineries and all other working tools utilized by Aballa et al.
in carrying out their tasks were owned and provided by SMC. And from the job
description provided by SMC itself, the work assigned to Aballa et al. was directly
related to the aquaculture operations of SMC. As for janitorial and messengerial
services, that they are considered directly related to the principal business of the
employer has been jurisprudentially recognized. Furthermore, Sunflower did not
carry on an independent business or undertake the performance of its service
contract according to its own manner and method, free from the control and
supervision of its principal, SMC, its apparent role having been merely to recruit
persons to work for SMC. All the foregoing considerations affirm by more than
substantial evidence the existence of an employer- employee relationship between
SMC and Aballa. Since Aballa who were engaged in shrimp processing performed
tasks usually necessary or desirable in the aquaculture business of SMC, they
should be deemed regular employees of the latter and as such are entitled to all the
benefits and rights appurtenant to regular employment. They should thus be
awarded differential pay corresponding to the difference between the wages and
benefits given them and those accorded SMC·s other regular employees.

JAKA FUDS VS NLRC

FACTS: Respondents Pacot et al were earlier hired by petitioner JAKA Foods

Processing Corporation until the latter terminated their employment 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 DOLE at least 1 month before the intended date of termination.

In time, respondents separately filed with the regional Arbitration Branch of the
NLRC complaints for illegal dismissal, underpayment of wages and nonpayment of
SIL and 13th month pay against JAKA and its HRD Manager.

ISSUE: is the dismissal valid, because of non-compliance with the notice

requirement?

HELD: the dismissal is legal, but employer should pay nominal damages for non-
compliance witht the notice requirement

In the case of Agabon vs. NLRC, the court 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 nominal damages for non-compliance with statutory due process.

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.

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.

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.

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 pays, as a rule, is not required, while in the
second, the law requires payment of separation pay.

We find the CA to have been in error when it ordered JAKA to pay respondents
separation pay equivalent to 1 month salary for every year of service. This is
because in Reahs Corporation vs. NLRC, 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.

ITC VS NLRC

Facts:

Petitioner Industrial Timber Corporation (ITC) was leased a plywood plant located at
Butuan City for a period of 5 years by Industrial Plywood Group Corporation (IPGC).
Thereafter, ITC commenced operation of the plywood plant and hired 387 workers.
Sometime after, ITC notified DOLE and its workers of the plant’s shutdown due to
the non-renewal of the anti-pollution permit and the alleged lack of logs for milling
constrained ITC to lay off all its workers until further notice. A final notice of closure
or cessation of business operations followed advising the workers to collect the
benefits due them under the law and CBA. Later, IPGC took over the plywood plant
and was issued a permit to operate coincidentally the same day the ITC ceased
operation of the plant. This prompted respondents to file a complaint for illegal
dismissal and unfair labor practice alleging that the cessation of ITC’s operation was
intended to bust the union and that both corporations are one and the same entity.
LA dismissed the complaint. On appeal, NLRC first ordered the reinstatement of
employees but later on, ruled to dismiss herein respondent’s complaints. CA set
aside the decision.

Issue:

Whether respondents were illegally dismissed due to the closure of ITC’s business.

Ruling: NO.

The right to close the operation of an establishment or undertaking is one of the

authorized causes in terminating employment of workers, the only limitation being
that the closure must not be for the purpose of circumventing the provisions on
termination of employment embodied in the Labor Code. Under Article 283 of the
Labor Code, three requirements are necessary for a valid cessation of business
operations: (a) service of a written notice to the employees and to the DOLE at least
one month before the intended date thereof; (b) the cessation of business must be
bona fide in character; and (c) payment to the employees of termination pay
amounting to one month pay or at least one-half month pay for every year of service,
whichever is higher.
We find that ITC’s closure or cessation of business was done in good faith and for
valid reasons. The records reveal that the decision to permanently close business
operations was arrived at after a suspension of operation for several months
precipitated by lack of raw materials used for milling operations, the expiration of the
anti-pollution permit, and the termination of the lease contract with IPGC over the
plywood plant. Having established that ITC’s closure of the plywood plant was done
in good faith and that it was due to causes beyond its control, the conclusion is
inevitable that said closure is valid.

Although the closure was done in good faith and for valid reasons, we find that ITC
did not comply with the notice requirement. While an employer is under no obligation
to conduct hearings before effecting termination of employment due to authorized
cause, however, the law requires that it must notify the DOLE and its employees at
least one month before the intended date of closure.

In the case at bar, ITC notified its employees and the DOLE of the ‘no plant
operation’ due to lack of raw materials. This was followed by a ‘shut down’ notice
due to the expiration of the anti-pollution permit. However, this shutdown was only
temporary as ITC assured its employees that they could return to work once the
renewal is acted upon by the DENR. Then, ITC sent its employees a final notice of
closure or cessation of business operations to take effect on the same day it was
released. We find that this falls short of the notice requirement for termination of
employment due to authorized cause considering that the DOLE was not furnished
and the notice should have been furnished both the employees and the DOLE at
least one month before the intended date of closure.

Where the dismissal is based on an authorized cause under Article 283 of the Labor
Code but the employer failed to comply with the notice requirement, the sanction
should be stiff as the dismissal process was initiated by the employer’s exercise of
his management prerogative, as opposed to a dismissal based on a just cause under
Article 282 with the same procedural infirmity where the sanction to be imposed
upon the employer should be tempered as the dismissal process was, in effect,
initiated by an act imputable to the employee.

CADALIN VS NLRC

FACTS:

This is a consolidation of 3 cases of SPECIAL CIVIL ACTIONS in the Supreme Court

for Certiorari.

On June 6, 1984, Cadalin, Amul and Evangelista, in their own behalf and on behalf
of 728 other OCWs instituted a class suit by filing an “Amended Complaint” with the
POEA for money claims arising from their recruitment by ASIA INTERNATIONAL
BUILDERS CORPORATION (AIBC) and employment by BROWN & ROOT
INTERNATIONAL, INC (BRI) which is a foreign corporation with headquarters in
Houston, Texas, and is engaged in construction; while AIBC is a domestic
corporation licensed as a service contractor to recruit, mobilize and deploy Filipino
workers for overseas employment on behalf of its foreign principals.

The amended complaint sought the payment of the unexpired portion of the
employment contracts, which was terminated prematurely, and secondarily, the
payment of the interest of the earnings of the Travel and Reserved Fund; interest on
all the unpaid benefits; area wage and salary differential pay; fringe benefits;
reimbursement of SSS and premium not remitted to the SSS; refund of withholding
tax not remitted to the BIR; penalties for committing prohibited practices; as well as
the suspension of the license of AIBC and the accreditation of BRII

On October 2, 1984, the POEA Administrator denied the “Motion to Strike Out of the
Records” filed by AIBC but required the claimants to correct the deficiencies in the
complaint pointed out.

AIB and BRII kept on filing Motion for Extension of Time to file their answer. The
POEA kept on granting such motions.

On November 14, 1984, claimants filed an opposition to the motions for extension of
time and asked that AIBC and BRII declared in default for failure to file their answers.

On December 27, 1984, the POEA Administrator issued an order directing AIBC and
BRII to file their answers within ten days from receipt of the order.

(at madami pang motions ang na-file, new complainants joined the case, ang daming
inavail na remedies ng both parties)
On June 19, 1987, AIBC finally submitted its answer to the complaint. At the same
hearing, the parties were given a period of 15 days from said date within which to
submit their respective position papers. On February 24, 1988, AIBC and BRII
submitted position paper. On October 27, 1988, AIBC and BRII filed a “Consolidated
Reply,” POEA Adminitartor rendered his decision which awarded the amount of
$824, 652.44 in favor of only 324 complainants. Claimants submitted their “Appeal
Memorandum For Partial Appeal” from the decision of the POEA. AIBC also filed its
MR and/or appeal in addition to the “Notice of Appeal” filed earlier.

NLRC promulgated its Resolution, modifying the decision of the POEA. The
resolution removed some of the benefits awarded in favor of the claimants. NLRC
denied all the MRs. Hence, these petitions filed by the claimants and by AlBC and
BRII.

The case rooted from the Labor Law enacted by Bahrain where most of the
complainants were deployed. His Majesty Ise Bin Selman Al Kaifa, Amir of Bahrain,
issued his Amiri Decree No. 23 on June 16, 1176, otherwise known re the Labour
Law for the Private Sector. Some of the provision of Amiri Decree No. 23 that are
relevant to the claims of the complainants-appellants are as follows:

“Art. 79: x x x A worker shall receive payment for each extra hour equivalent to his
wage entitlement increased by a minimum of twenty-rive per centurn thereof for
hours worked during the day; and by a minimum off fifty per centurn thereof for hours
worked during the night which shall be deemed to being from seven o’clock in the
evening until seven o’clock in the morning .”

Art. 80: Friday shall be deemed to be a weekly day of rest on full pay.
If employee worked, 150% of his normal wage shall be paid to him x x x.”

Art. 81; x x x When conditions of work require the worker to work on any official
holiday, he shall be paid an additional sum equivalent to 150% of his normal wage.”
Art. 84: Every worker who has completed one year’s continuous service with his
employer shall be entitled to Laos on full pay for a period of not less than 21 days for
each year increased to a period not less than 28 days after five continuous years of
service.”

A worker shall be entitled to such leave upon a quantum meruit in respect of the
proportion of his service in that year.”

Art. 107: A contract of employment made for a period of indefinite duration may be
terminated by either party thereto after giving the other party prior notice before such
termination, in writing, in respect of monthly paid workers and fifteen days’ notice in
respect of other workers. The party terminating a contract without the required notice
shall pay to the other party compensation equivalent to the amount of wages payable
to the worker for the period of such notice or the unexpired portion thereof.”

Art. Ill: x x x the employer concerned shall pay to such worker, upon termination of
employment, a leaving indemnity for the period of his employment calculated on the
basis of fifteen days’ wages for each year of the first three years of service and of
one month’s wages for each year of service thereafter. Such worker shall be entitled
to payment of leaving indemnity upon a quantum meruit in proportion to the period of
his service completed within a year.”

ISSUE:

1. WON the foreign law should govern or the contract of the parties.(WON the
complainants who have worked in Bahrain are entitled to the above-mentioned
benefits provided by Amiri Decree No. 23 of Bahrain).

2. WON the Bahrain Law should apply in the case. (Assuming it is applicable WON
complainants’ claim for the benefits provided therein have prescribed.)

3. Whether or not the instant cases qualify as; a class suit (siningit ko nalang)
(the rest of the issues in the full text of the case refer to Labor Law)

RULING:

1. NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on Evidence
governing the pleading and proof of a foreign law and admitted in evidence a simple
copy of the Bahrain’s Amiri Decree No. 23 of 1976 (Labour Law for the Private
Sector).

NLRC applied the Amiri Deere, No. 23 of 1976, which provides for greater benefits
than those stipulated in the overseas-employment contracts of the claimants. It was
of the belief that where the laws of the host country are more favorable and
beneficial to the workers, then the laws of the host country shall form part of the
overseas employment contract. It approved the observation of the POEA
Administrator that in labor proceedings, all doubts in the implementation of the
provisions of the Labor Code and its implementing regulations shall be resolved in
favor of labor.

The overseas-employment contracts, which were prepared by AIBC and BRII

themselves, provided that the laws of the host country became applicable to said
contracts if they offer terms and conditions more favorable than those stipulated
therein. However there was a part of the employment contract which provides that
the compensation of the employee may be “adjusted downward so that the total
computation plus the non-waivable benefits shall be equivalent to the compensation”
therein agree,’ another part of the same provision categorically states “that total
remuneration and benefits do not fall below that of the host country regulation and
custom.”

Any ambiguity in the overseas-employment contracts should be interpreted against

AIBC and BRII, the parties that drafted it. Article 1377 of the Civil Code of the
Philippines provides:
‘The interpretation of obscure words or stipulations in a contract shall not favor the
party who caused the obscurity.”

Said rule of interpretation is applicable to contracts of adhesion where there is

already a prepared form containing the stipulations of the employment contract and
the employees merely “take it or leave it.” The presumption is that there was an
imposition by one party against the other and that the employees signed the
contracts out of necessity that reduced their bargaining power.
We read the overseas employment contracts in question as adopting the provisions
of the Amiri Decree No. 23 of 1976 as part and parcel thereof. The parties to a
contract may select the law by which it is to be governed. In such a case, the foreign
law is adopted as a “system” to regulate the relations of the parties, including
questions of their capacity to enter into the contract, the formalities to be observed
by them, matters of performance, and so forth. Instead of adopting the entire mass of
the foreign law, the parties may just agree that specific provisions of a foreign statute
shall be deemed incorporated into their contract “as a set of terms.” By such
reference to the provisions of the foreign law, the contract does not become a foreign
contract to be governed by the foreign law. The said law does not operate as a
statute but as a set of contractual terms deemed written in the contract.

A basic policy of contract is to protect the expectation of the parties. Such party
expectation is protected by giving effect to the parties’ own choice of the applicable
law. The choice of law must, however, bear some relationship the parties or their
transaction. There is no question that the contracts sought to be enforced by
claimants have a direct connection with the Bahrain law because the services were
rendered in that country.

2. NLRC ruled that the prescriptive period for the filing of the claims of the
complainants was 3 years, as provided in Article 291 of the Labor Code of the
Philippines, and not ten years as provided in Article 1144 of the Civil Code of the
Philippines nor one year as provided in the Amiri Decree No. 23 of 1976.

Article 156 of the Amiri Decree No. 23 of 1976 provides:

“A claim arising out of a contract of employment shall not actionable after the lapse
of one year from the date of the expiry of the Contract”.

As a general rule, a foreign procedural law will not be applied in the forum (local
court), Procedural matters, such as service of process, joinder of actions, period and
requisites for appeal, and so forth, are governed by the laws of the forum. This is
true even if the action is based upon a foreign substantive law.

A law on prescription of actions is sui generis in Conflict of Laws in the sense that it
may be viewed either as procedural or substantive, depending on the
characterization given such a law. In Bournias v. Atlantic Maritime Company (220 F.
2d. 152, 2d Cir. [1955]), where the issue was the applicability of the Panama Labor
Code in a case filed in the State of New York for claims arising from said Code, the
claims would have prescribed under the Panamanian Law but not under the Statute
of Limitations of New York. The U.S. Circuit Court of Appeals held that the
Panamanian Law was procedural as it was not “specifically intended to be
substantive,” hence, the prescriptive period provided in the law of the forum should
apply. The Court observed: “. . . we are dealing with a statute of limitations of a
foreign country, and it is not clear on the face of the statute that its purpose was to
limit the enforceability, outside as well as within the foreign country concerned, of the
substantive rights to which the statute pertains. We think that as a yardstick for
determining whether that was the purpose, this test is the most satisfactory one.

The Court further noted: “Applying that test here it appears to us that the libellant is
entitled to succeed, for the respondents have failed to satisfy us that the
Panamanian period of limitation in question was specifically aimed against the
particular rights which the libellant seeks to enforce. The Panama Labor Code is a
statute having broad objectives.” The American court applied the statute of
limitations of New York, instead of the Panamanian law, after finding that there was
no showing that the Panamanian law on prescription was intended to be substantive.
Being considered merely a procedural law even in Panama, it has to give way to the
law of the forum (local Court) on prescription of actions.

However the characterization of a statute into a procedural or substantive law

becomes irrelevant when the country of the forum (local Court) has a “borrowing
statute.” Said statute has the practical effect of treating the foreign statute of
limitation as one of substance. A “borrowing statute” directs the state of the forum
(local Court) to apply the foreign statute of limitations to the pending claims based on
a foreign law. While there are several kinds of “borrowing statutes,” one form
provides that an action barred by the laws of the place where it accrued will not be
enforced in the forum even though the local statute was not run against it.

Section 48 of Code of Civil Procedure is of this kind. It provides: “If by the laws of the
state or country where the cause of action arose, the action is barred, it is also
barred in the Philippine Islands.”

Section 48 has not been repealed or amended by the Civil Code of the Philippines.
In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex
proprio vigore insofar as it ordains the application in this jurisdiction of Section 156 of
the Amiri Decree No. 23 of 1976.

The courts of the forum (local Court) will not enforce any foreign claim obnoxious to
the forum’s public policy. To enforce the one-year prescriptive period of the Amiri
Decree No. 23 of 1976 as regards the claims in question would contravene the
public policy on the protection to labor.

In the Declaration of Principles and State Policies, the 1987 Constitution emphasized
that:“The state shall promote social justice in all phases of national development”
(Sec. 10).
‘The state affirms labor as a primary social economic force. It shall protect the rights
of workers and promote their welfare” (Sec. 18).

In Article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
“Sec. 3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all.”

Thus, the applicable law on prescription is the Philippine law.

The next question is whether the prescriptive period governing the filing of the claims
is 3 years, as provided by the Labor Code or 10 years, as provided by the Civil Code
of the Philippines.

Article 1144 of the Civil Code of the Philippines provides:

“The following actions must be brought within ten years from the time the right of
action accross:

(1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a
judgment”
In this case, the claim for pay differentials is primarily anchored on the written
contracts between the litigants, the ten-year prescriptive period provided by Art.
1144(l) of the New Civil Code should govern.

3. NO. A class suit is proper where the subject matter of the controversy is one of
common or general interest to many and the parties are so numerous that it is
impracticable to bring them all before the court. When all the claims are for benefits
granted under the Bahrain law many of the claimants worked outside Bahrain. Some
of the claimants were deployed in Indonesia under different terms and condition of
employment.

Inasmuch as the First requirement of a class suit is not present (common or general
interest based on the Amiri Decree of the State of Bahrain), it is only logical that only
those who worked in Bahrain shall be entitled to rile their claims in a class suit.

While there are common defendants (AIBC and BRII) and the nature of the claims is
the same (for employee’s benefits), there is no common question of law or fact.
While some claims are based on the Amiri Law of Bahrain, many of the claimants
never worked in that country, but were deployed elsewhere. Thus, each claimant is
interested only in his own demand and not in the claims of the other employees of
defendants. A claimant has no concern in protecting the interests of the other
claimants as shown by the fact, that hundreds of them have abandoned their co-
claimants and have entered into separate compromise settlements of their
respective claims. The claimants who worked in Bahrain can not be allowed to sue in
a class suit in a judicial proceeding.

WHEREFORE, all the three petitioners are DISMISSED.

PEREZ VS PTTC, April 17, 2009

Petitioners Felix B. Perez and Amante G. Doria were employed by respondent

Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and
supervisor, respectively, in PT&T’s Shipping Section, Materials Management Group.
Acting on an alleged unsigned letter regarding anomalous transactions at the
Shipping Section, respondents formed a special audit team to investigate the matter.
It was discovered that the Shipping Section jacked up the value of the freight costs
for goods shipped and that the duplicates of the shipping documents allegedly
showed traces of tampering, alteration and superimposition.

Petitioners were placed on preventive suspension for 30 days for their alleged
involvement in the anomaly. Their suspension was extended for 15 days twice. Then
in a Memorandum, petitioners were dismissed from the service for having falsified
company documents. Petitioners filed a complaint for illegal suspension and illegal
dismissal alleging that they were dismissed on November 8, 1993, the date they
received the above-mentioned memorandum.

LA favored petitioners. NLRC reversed the decision of LA. Petitioners appealed to

CA. CA affirmed the NLRC decision insofar as petitioners’ illegal suspension for 15
days and dismissal for just cause were concerned. However, it found that petitioners
were dismissed without due process. Petitioners now seek a reversal of the CA
decision before the SC. They contend that there was no just cause for their
dismissal, that they were not accorded due process and that they were illegally
suspended for 30 days.

ISSUE:

Whether respondents were dismissed for just cause and with the observance of due
process.

RULING:

Respondents’ evidence is insufficient to clearly and convincingly establish the facts

from which the loss of confidence resulted. Other than their bare allegations and the
fact that such documents came into petitioners’ hands at some point, respondents
should have provided evidence of petitioners’ functions, the extent of their duties, the
procedure in the handling and approval of shipping requests and the fact that no
personnel other than petitioners were involved. The alterations on the shipping
documents could not reasonably be attributed to petitioners because it was never
proven that petitioners alone had control of or access to these documents.
Willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative is a just cause for termination. However, loss of
confidence should not be simulated. It should not be used as a subterfuge for causes
which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily
asserted in the face of overwhelming evidence to the contrary. It must be genuine,
not a mere afterthought to justify an earlier action taken in bad faith.

The burden of proof rests on the employer to establish that the dismissal is for cause
in view of the security of tenure that employees enjoy under the Constitution and the
Labor Code. The employer’s evidence must clearly and convincingly show the facts
on which the loss of confidence in the employee may be fairly made to rest. It must
be adequately proven by substantial evidence. Respondents failed to discharge this
burden.

Respondents’ illegal act of dismissing petitioners was aggravated by their failure to

observe due process. To meet the requirements of due process in the dismissal of
an employee, an employer must furnish the worker with 2 written notices: (1) a
written notice specifying the grounds for termination and giving to said employee a
reasonable opportunity to explain his side and (2) another written notice indicating
that, upon due consideration of all circumstances, grounds have been established to
justify the employer’s decision to dismiss the employee.

Petitioners were neither apprised of the charges against them nor given a chance
to defend themselves. They were simply and arbitrarily separated from work and
served notices of termination in total disregard of their rights to due process and
security of tenure. Respondents failed to comply with the two-notice requirement for
terminating employees.

We note a marked difference in the standards of due process to be followed as

prescribed in the Labor Code and its implementing rules. The Labor Code provides
that an employer must provide the employee ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires.

The omnibus rules implementing the Labor Code, on the other hand, require a
hearing and conference during which the employee concerned is given the
opportunity to respond to the charge, present his evidence or rebut the evidence
presented against him.

In case of conflict, the law prevails over the administrative regulations implementing
it. The authority to promulgate implementing rules proceeds from the law itself. To
be valid, a rule or regulation must conform to and be consistent with the provisions of
the enabling statute. As such, it cannot amend the law either by abridging or
expanding its scope.

Article 277(b) of the Labor Code provides that, in cases of termination for a just
cause, an employee must be given “ample opportunity to be heard and to defend
himself.” Thus, the opportunity to be heard afforded by law to the employee is
qualified by the word “ample” which ordinarily means “considerably more than
adequate or sufficient.” In this regard, the phrase “ample opportunity to be heard”
can be reasonably interpreted as extensive enough to cover actual hearing or
conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI
of the Labor Code is in conformity with Article 277(b).

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor
Code should not be taken to mean that holding an actual hearing or conference is a
condition sine qua non for compliance with the due process requirement in
termination of employment. The test for the fair procedure guaranteed under Article
277(b) cannot be whether there has been a formal pretermination confrontation
between the employer and the employee. The “ample opportunity to be heard”
standard is neither synonymous nor similar to a formal hearing.

The standard for the hearing requirement, ample opportunity, is couched in general
language revealing the legislative intent to give some degree of flexibility or
adaptability to meet the peculiarities of a given situation. To confine it to a single rigid
proceeding such as a formal hearing will defeat its spirit.

Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself
provides that the so-called standards of due process outlined therein shall be
observed “substantially,” not strictly. This is a recognition that while a formal hearing
or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due
process.

A hearing means that a party should be given a chance to adduce his evidence to
support his side of the case and that the evidence should be taken into account in
the adjudication of the controversy. “To be heard” does not mean verbal
argumentation alone inasmuch as one may be heard just as effectively through
written explanations, submissions or pleadings. Therefore, while the phrase “ample
opportunity to be heard” may in fact include an actual hearing, it is not limited to a
formal hearing only. The existence of an actual, formal “trial-type” hearing, although
preferred, is not absolutely necessary to satisfy the employee’s right to be heard.

Due process of law simply means giving opportunity to be heard before judgment is
rendered. In fact, there is no violation of due process even if no hearing was
conducted, where the party was given a chance to explain his side of the
controversy. What is frowned upon is the denial of the opportunity to be heard. Twin
requirements of notice and hearing constitute the essential elements of due process
in the dismissal of employees. It is deemed sufficient for the employer to follow the
natural sequence of notice, hearing and judgment.

In sum, the following are the guiding principles in connection with the hearing
requirement in dismissal cases:

(a) “ample opportunity to be heard” means any meaningful opportunity (verbal or

written) given to the employee to answer the charges against him and submit
evidence in support of his defense, whether in a hearing, conference or some other
fair, just and reasonable way.

(b) a formal hearing or conference becomes mandatory only when requested by the
employee in writing or substantial evidentiary disputes exist or a company rule or
practice requires it, or when similar circumstances justify it.

(c) the “ample opportunity to be heard” standard in the Labor Code prevails over the
“hearing or conference” requirement in the implementing rules and regulations.

On the other hand, an employee may be validly suspended by the employer for just
cause provided by law. Such suspension shall only be for a period of 30 days, after
which the employee shall either be reinstated or paid his wages during the extended
period.

Where the dismissal was without just or authorized cause and there was no due
process, Article 279 of the Labor Code 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 this case, however, reinstatement is no longer possible because of the length of
time that has passed from the date of the incident to final resolution. 14 years have
transpired from the time petitioners were wrongfully dismissed. To order
reinstatement at this juncture will no longer serve any prudent or practical purpose.
So petitioners will just be paid their separation pay.

Petition is hereby GRANTED.

FREEDOM OF EXPRESSION

MORTERA VS CIR

FACTS:

Upon the request of Canlubang Sugar Estate, the NILRC

ordered the laborers to return to their respective work and stop
the picketing, failure to do so, the company is authorized to
employ new laborers to take their place. Hence, a petition was
filed praying for the annulment of the order.

ISSUE: Is the blanket prohibition against picketing in any guise

or form absolute?

HELD: NO.
The prohibition should be understood to cover only illegal
picketing, that is, picketing through the use of illegal means.
Peaceful picketing cannot be prohibited. It is part of the
freedom of speech guaranteed by the Constitution. Therefore, the
order of the Court of Industrial Relations prohibiting picketing
must be understood to refer only to illegal picketing, that is,
picketing through the use of illegal means.

DE LEON VS NLU, 100 P 789

Facts:
The plaintiff Narcisa B. de Leon is the owner of a parcel of land in which stands the
Dalisay Theater at Manila;
Prior to April 14, 1949, the theater was operated jointly by the motion picture firms
known as the plaintiffs LVN Pictures, Inc., Premier Productions and the Sampaguita
Pictures, Inc., as lessees.
De Leon leased the parcel of land to the Filipino Theatrical Enterprises, Inc., who on
that date had become the owners of the building, known as Dalisay Theater; that the
lease contract provided that the lessor of the land, Narcisa B. de Leon would
become the owner of the building, together with all the equipment and accessories,
at the expiration of the lease. During the terms of the lease, the Filipino Theatrical
Enterprises, Inc., operated the theater.
Defendants, except the National Labor Union, Eulogio Lerum and Jose Hernandez,
were all employees of the Filipino Theatrical Enterprises Inc., April 1949 to August
14, 1951, and said employees work at the Dalisay Theater during this period by
reason of such employment.
On July 12, 1951, short before the expiration of the aforesaid lease, Filipino
Theatrical Enterprises, Inc., notified its employees of the termination of their
employment with it.
On August 15, 1951, after the expiration of said lease, the full and complete
possession of the theater building was delivered the turned over to the plaintiff
Narcisa B. de Leon who immediately demolished the building and on the same site
she constructed and finished the new Dalisay Theater Building;
De Leon executed a contract with the theater companies for the operation the new
Dalisay Theater as a joint venture among them, where the latter would exhibit their
picture in said theater;
Plaintiffs opened the new Dalisay Theater and begun exhibiting films with the new
set of personnel, retaining only the services of four old employees.
About thirty persons among whom where the herein defendants, all members of the
National Labor Union, picketed the plaintiffs the said theater from 9:00 a.m. to 2:30
p.m., more or less, by walking to and from on the side walk fronting the lobby of the
theater and displaying placards which for the slogans: "Do not patronize the Dalisay
Theater," "Dalisay Theater is unfair to labor." "Have mercy on the picketeers" "and
sympathize with us," and others
The defendant during the picketing tried to persuade patrons or customers of the
Dalisay Theater to refrain from buying tickets or seeing the show because the cine's
managment is unfair to its employees, and to sympathize with the picketeers.
After the defendants Jose Ramos and Enrique Montoya had left the lobby of the
theater; the iron grill door which separates the theater lobby from the sidewalk was
closed, thereby confining the picketing in the side walk
The picketing was done by defendants so that they might re-employed in the Dalisay
Theater. Due to this, the box-office receipts of said theater for January 10, 1952
amounted only to about P1,250; and that a premiere showing of such a film like"
DIMAS" would ordinarily earned a P2,500 gross receipt for the theater.
In the trial court, the decision was that the defendants’walking slowly and peacefully
back and forth on the public sidewalk in front of the premises of the Dalisay Theater
and displaying placards publicizing the dispute between the theater and the
management did not disturb the public peace at the place. There was no clear and
present danger of destruction to life of property or of other forms of breach of the
peace.
In this case, it is undisputed that after defendants were dismissed or laid off from
their work at the old Dalisay Theater by the Filipino Theatrical Enterprises, Inc., the
showhouse came under a totally different management when it was reopened on
January 10, 1952. There was no existence of a relationship of employees between
plaintiffs and defendants, although defendants purpose in picketing plaintiffs was for
the defendants' reinstatement of their services in the new Dalisay Theater under the
new management.
In the same court, De Leon and other plaintiffs sought to recover damages and an
injunctive relief in the court for the picketing. The defendants filed a cross-claim for
damages estimated at P200 daily which was denied by the plaintiffs in their reply.
After hearing the trial court dismissed the plaintiffs complaint and defendants cross-
claim and dissolved the writ of preliminary injunction issued.
From this judgment the plaintiffs appealed to the Supreme Court for the reason by
the appeal would raised on the questions of law.

Issue: Did the employees picket illegally?

Held: No. Judgment affirmed

Ratio:
Picketing peacefully carried out is not illegal even in the absence of employer-
employee relationship for peaceful picketing is a part of a freedom of speech
guaranteed by the Constitution.

PAFLU VS CLORIBEL
FACTS: Petitioner labor union picketed against Metrobank, which is occupying an
office space in the Wellington building. Wellington complained that the picketers
were annoyingly blocking the common passageway of the building, the only ingress
and egress being used by the occupants of the second to the sixth floors thereof as
well as by their respective employees, clients and customers, so that the picket has
caused a disruption of the business of Wellington as well as the other lessors in the
building.

ISSUE: Does the court have the power to enjoin the picket, despite being peaceful?

HELD: Yes. The courts are vested with the power to limit the exercise of the right of
peaceful picketing to parties involved in the labor dispute, or having a direct interest
to the context of this issue. Wellington is a mere "innocent bystander" who is not
involved in the labor dispute. Thus, they are entitled to seek protection of their rights
from the courts and the courts may, accordingly, legally extend the same.

TUPAS VS COSCOLLUETA, 140 S 302

FACTS:
Petitioner union filed a notice of strike with the Ministry of Labor and Employment
against Super Garments Manufacturing Corporation. It is alleged by the petitioner
union that goods of Super Garments were spirited out of its strike-bound premises
thru Rustan's warehouse. Whereupon, the union picketed not only Super Garments
but also Rustan. As a result Rustan filed a civil case before the respondent judge for
injunction and damages and filed a petition with the National Labor Relations
Commission also to enjoin the union from picketing its premises.

ISSUE:Whether or not picketing is lawful even there is no employer-employee

relationship exist between the parties.

RULING:The Court, while allowing that a peaceful picketing is a phase of the

freedom of expression guaranteed by the Constitution and could not be curtailed
even in the absence of an employer-employee relationship, maintained that this is
not an absolute right. The Court are not without power to localize the sphere of
demonstration, whose interest are foreign to the context of the dispute. This the right
may be recognized at the instance of an “innocent bystander” who is not involved in
the labor dispute if it appears that the result of the picketing is to create an
impression that a labor dispute exist between him and the picketing union.

PENALOSA VS VILLANUEVA, 177 S 778

Facts:

On November 29,1984, in NLRC-NCR Case No. 2517-84 entitled ‘Philippine

Association of Free Labor Unions (PAFLU-RMC Chapter) and its Members v.
Riverside Mills Corporation, et al.”, Labor Arbiter Manuel Caday awarded separation
pay, wage and/or living allowance increases and 13th month pay to the individual
complainants who comprise some of the respondents in this case. Labor Arbiter
likewise awarded separation pay, vacation and sick leave pay and unpaid increases
in the basic wage and allowances to the other private respondents herein in NLRC
Case No. NCR-7- 2577-84 entitled ‘Michael Peñalosa, Jose Garcia and Apolinar
Ray, et al. v. Riverside Mills Corporation, et al., and Samahang Diwang
Manggagawa sa RMC-FFW Chapter, et al. v. Riverside Mills Corporation (RMC).’ On
March 29,1985, after the judgment had become final and executory, Dogelio issued
a writ of execution. The Deputy Sheriff, however, failed to collect the amount so he
levied upon personal and real properties of RMC. On April 25, 1985, a notice of levy
on execution of certain real properties was annotated on the certificate of title filed
with the Register of Deeds of Pasig, Metro Manila, where all the said properties are
situated. Meanwhile in the other development which led to this case, petitioner DBP
obtained a writ of possession on June 7, 1985 from the Regional Trial Court (RTC) of
Pasig of all the properties of RMC after having extra-judicially foreclosed the same at
public auction earlier in 1983. DBP subsequently leased the said properties to Egret
Trading and Manufacturing Corporation, Rosario Textile Mills and General Textile
Mills.

On October 31, 1985, Dogelio issued an order recognizing and declaring the
respondents’ first preference as regards wages and other benefits due them over
and above all earlier encumbrances on the aforesaid properties/assets of said
company, particularly those being asserted by respondent Development Bank of the
Philippines. The petitioner appealed the order of Dogelio to the NLRC. The latter in
turn, set aside the order and remanded the case to public respondent Labor Arbiter
Santos for further proceedings.

Issue: Whether the disputed property did not belong to the judgment debtor could be
validly levied upon by the sheriff for the satisfaction of the judgment?

Held: No, the disputed property did not belong to the judgment debtor, it could not be
validly levied upon by the sheriff for the satisfaction of the judgment therein.
Consequently, the SC rejected the objections raised by herein petitioners to the
jurisdiction of the RTC to issue the questioned writs of preliminary injunction. The
rule is settled that even if a writ of execution is issued by a co-equal court, and we
place the National Labor Relations Commission in the same category for purposes of
this case, respondent judge could validly issue the temporary restraining order and,
later, the writs of preliminary injunction on the basis of DBP’s claim of ownership
over the properties levied upon. Under Sec. 17 of Rule 39 a third person who claims
property levied upon on execution may vindicate such claim by action. Obviously, a
judgment rendered in his favor, declaring him to be the owner of the property, would
not constitute interference with the powers or processes of the court which rendered
the judgment to enforce which the execution was levied. If that be so-and it is so
because the property being that of a stranger is not subject to levy-then an
interlocutory order, such as injunction, upon a claim and prima facie showing of
ownership by the claimant, cannot be considered as such interference either.

KAPISANAN NG MANGGAGAWA SA CAMARA SHOES v. CAMARA SHOES,

111 SCRA 478

FACTS: Petitioner Ramos was suspended for writing the phrase "under protest" in
the company payroll to object to the P1.0 deduction made by the respondent for
allegedly getting P500 worth of lumber in 1964. The deduction started only in 1969,
at the peak of union activities of the petitioner when several complaints of unfair
labor practices were filed by the union against the respondent.

ISSUE: Is the action of the petitioner a lawful exercise of freedom of expression?

HELD: Yes. The freedom of expression is available to individual workers subject to

legal limitation of industrial peace to air valid grievances. It is thus too clear from the
foregoing that petitioner Ramos was justified in airing his grievances against the
unauthorized and illegal deductions made by respondent company. By writing "under
protest" on the company payroll, petitioner Ramos was well within the ambit of his
constitutional freedom of expression as well as the right to petition against what was
obviously a calculated undue harassment amounting to unfair labor practice
perpetuated by respondent employer herein.

FREEDOM OF ASSOCIATION – CASE DIGEST

VICTORIANO VS ERWU, 59 S 54

FACTS:
Victoriano was an employee of the Elizalde Rope Factory, Inc. As such employee,
he was a member of the Elizalde Rope Workers’ Union which had a closed shop
agreement with the Company that membership in the Union shall be required as a
condition of employment for all its permanent employees.

Prior to its amendment, Section 4(a)(4) of Republic Act No. 875 allows the employer
to require as a condition of employment membership in a labor organization, if such
organization is the representative of the employees. However, the provision was
later amended by the enactment of Republic Act No. 3350, which reads: … “but such
agreement shall not cover members of any religious sects which prohibit affiliation of
their members in any such labor organization”.

Being a member of a religious sect that prohibits the affiliation of its members with
any labor organization, Victoriano presented his resignation to the Union. In turn, the
Union asked the Company to dismiss Victoriano from the service in view of the fact
that he was resigning from the Union as a member. This prompted Victoriano to file
an action to enjoin the Company and the Union from dismissing him. The Union
assails the constitutionality of RA No. 3350, contending that it infringes on the
fundamental right to form lawful associations guaranteed by the Bill of Rights.

ISSUE:
Whether or not RA No. 3550 is unconstitutional for infringing on the fundamental
freedom to form associations.

RULING:
No. As ruled by the Supreme Court:

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“RA No. 3350 merely excludes ipso jure from the application and coverage of the
closed shop agreement the employees belonging to any religious sects which
prohibit affiliation of their members with any labor organization. What the exception
provides, therefore, is that members of said religious sects cannot be compelled or
coerced to join labor unions even when said unions have closed shop agreements
with the employers; that in spite of any closed shop agreement, members of said
religious sects cannot be refused employment or dismissed from their jobs on the
sole ground that they are not members of the collective bargaining union. It is clear,
therefore, that the assailed Act, far from infringing the constitutional provision on
freedom of association, upholds and reinforces it. It does not prohibit the members of
said religious sects from affiliating with labor unions. It still leaves to said members
the liberty and the power to affiliate, or not to affiliate, with labor unions. If,
notwithstanding their religious beliefs, the members of said religious sects prefer to
sign up with the labor union, they can do so. If in deference and fealty to their
religious faith, they refuse to sign up, they can do so; the law does not coerce them
to join; neither does the law prohibit them from joining; and neither may the employer
or labor union compel them to join. Republic Act No. 3350, therefore, does not
violate the constitutional provision on freedom of association.

JUAT VS CIR, 15 S 359

FACTS$
Because of the refusal of Juat to join the Union, the executive officer of respondent
company suspendedhim for 15 days. After expiration of suspension the company
sent a letter ordering him to report bac for duty. !n spiteof said letter, Juat did not
report for "or. #he refusal of Juat to become a member of the Busocope $abor
Union as "ell as his refusal to report for "or "hen ordered sho"s lac of respect
to"ard his superior officer. %ith suchattitude, the continuation in the service of the
company of &antos Juat is indeed inimical to the interest of hisemployer.
'onse(uently, he "as dropped from the service of the company.Juat filed complaints
for unfair labor practice and for payment of "ages for overtime "or and "or
on&undays and holidays. )e averred that respondent employer dismissed him from
the service "ithout justifiable causeand that from the time of his dismissal up to the
filing of the complaint he had not found any substantial employmentfor himself.
ISSUE$
!s the dismissal of Juat valid*
RULING$
+es. !t should be declared, therefore, as a settled doctrine, that the closedshop
proviso of a collectivebargaining agreement entered into bet"een an employer and a
duly authori-ed labor union applies, and should beapplied, to old employees or
"orers "ho are nonmembers of any labor union at the time the collective
bargainingagreement "as entered into. !n other "ords, the old employees or "orers
can be obliged by his employer to join thelabor union "hich had entered into a
collective bargaining agreement that provides for a closedshop as a conditionfor
his continuance in his employment, other"ise his refusal to join the contracting labor
union "ould constitute a justifiable basis for his dismissal.

VILLAR VS INCIONG 121 S 444

FACTS:

The petitioners, who are the disaffiliating union members insist that their disaffiliation
from PAFLU and filing a petition for certification election are not acts of disloyalty but
an exercise of their right to self-organization. The contention was that these acts
were done within the 60-day freedom period when questions of representation may
freely be raised.

ISSUE:

Whether or not the disaffiliation from its mother union is justified considering it was
done during the freedom period.

RULING:
No, it must be supported by the majority of the union members. In the first place, had
petitioners merely disaffiliated from the. Amigo Employees Union-PAFLU, there
could be no legal objections thereto for it was their right to do so. But what
petitioners did by the very clear terms of their “Sama-Samang Kapasiyahan” was to
disaffiliate the Amigo Employees Union-PAFLU from PAFLU, an act which they
could not have done with any effective consequence because they constituted the
minority in the Amigo Employees Union-PAFLU.

Extant from the records is the fact that petitioners numbering ten (10), were among
the ninety-six (96) who signed the “Sama-Samang Kapasiyahan” whereas there are
two hundred thirty-four (234) union members in the Amigo Employees Union-PAFLU.
Hence, petitioners constituted a small minority for which reason they could not have
successfully disaffiliated the local union from PAFLU. Since only 96 wanted
disaffiliation, it can be inferred that the majority wanted the union to remain an
affiliate of PAFLU and this is not denied or disputed by petitioners. The action of the
majority must, therefore, prevail over that of the minority members.

SAUYO VS CANIZARES

TDLU VS TANDUAY DISTILLERY

FACTS:
Private respondents were all employees of Tanduay Distillery, Inc., (TDI) and
members of the Tanduay Distillery Labor Union (TDLU), a duly organized and
registered labor organization and the exclusive bargaining agent of the rank and file
employees of the petitioner company.

A Collective Bargaining Agreement (CBA), was executed between TDI and TDLU.
The CBA was duly ratified by a majority of the workers in TDI including herein private
respondents and contained a union security clause which provides that “all workers
who are or may during the effectivity of the CBA, become members of the Union in
accordance with its Constitution and By-Laws shall, as a condition of their continued
employment, maintain membership in good standing in the Union for the duration of
the agreement.”

While the CBA was in effect and within the contract bar period the private
respondents joined another union, the Kaisahan Ng Manggagawang Pilipino
(KAMPIL) and organized its local chapter in TDI. KAMPIL filed a petition for
certification election to determine union representation in TDI, which development
compelled TDI to file a grievance with TDLU.
TDLU created a committee to investigate its erring members in accordance with its
by-laws which are not disputed by the private respondents. Thereafter, TDLU,
through the Investigating Committee and approved by TDLU's Board of Directors,
expelled the private respondents from TDLU for disloyalty to the Union. By letter,
TDLU notified TDI that private respondents had been expelled from TDLU and
demanded that TDI terminate the employment of private, respondents because they
had lost their membership with TDLU.
The private respondents were later on terminated. In their petition, private
respondents contend that their act of organizing a local chapter of KAMPIL and
eventual filing of a petition for certification election was pursuant to their
constitutional right to self-organization.
ISSUES:
a) whether or not TDI was justified in terminating private respondents' employment in
the company on the basis of TDLU's demand for the enforcement of the Union
Security Clause of the CBA between TDI and TDLU; and
b) whether or not TDI is guilty of unfair labor practice in complying with TDLU's
demand for the dismissal of private respondents.

HELD:
The dismissal of an employee pursuant to a demand of the majority union in
accordance with a union security agreement following the loss of seniority rights is
valid and privileged and does not constitute an unfair labor practice.

Article 249 (e) of the Labor Code as amended specifically recognizes the closed
shop arrangement as a form of union security. The closed shop, the union shop, the
maintenance of membership shop, the preferential shop, the maintenance of
treasury shop, and check-off provisions are valid forms of union security and
strength. They do not constitute unfair labor practice nor are they violations of the
freedom of association clause of the Constitution. There is no showing in these
petitions of any arbitrariness or a violation of the safeguards enunciated in the
decisions of this Court interpreting union security arrangements brought to us for
review.

MANILA CORDAGE CO VS CIR, CIR 78

Facts:

Employees of Manila Cordage Company formed the Manila Cordage Workers Union.
Some employees who were members of the Manco Labor Unionresigned from said
nion and !oined the Manila Cordage Workers Union. "t theinstance of the Manco
Labor Union# the Manila Cordage Company dismissedthose who resigned from the
Manco Labor Union. $t is alleged that the MancoLabor Union held meetings wherein
the members were informed that nder thecollecti%e bargaining agreement#
contined membership in the Manco LaborUnion was a condition precedent to
employment in the Manila CordageCompany.$sse: Whether the contention was
correct&'eld: (o. )o constre the stiplations as imposing as a condition to
continedemployment in the Manila Cordage Company the maintenance of
membership inthe Manco Labor Union is to %iolate the natral and constittional
right of thelaborer to organi*e freely. +, Sch interpretation wold be inconsistent
with theconstittional mandate that the State shall afford protection to labor.

NON-IMPAIRMENT CLAUSE – CASE DIGEST

ABE VS FOSTER WHEELER CORPORATION

G.R. Nos. L-14785 and L-14923 November 29, 1960FELI !"E, E# !L.,
plaintiffs-appellees,vs.
F$%#ER &'EELER ($R)$R!#I$N and (!L#E *)'IL.+, IN(.,
defendants-appellants.
F!(#%
: In a complaint filed against Foster Wheeler Corp and Caltex, herein
plaintiffscontends that they were discharged from employment without notice and
demandedrecovery of separation pay and other necessary benefits. It is contended
for thedefendants that since all the contracts entered into with plaintiffs were
executed beforeepublic !ct "#$% became effective, said !ct cannot be given such
effect as to ma&e itapplicable even to contracts already existing upon its approval as
were the contractshere it would become unconstitutional under the rule prohibiting
impairment of contracts.
I%%E
: Is the contention of the defendant meritorious'
'EL
: (). *he freedom of contract under our system of government is not meant to
beabsolute. It is understood to be sub+ect to reasonable legislative regulations
aimed at thepromotion of public, health, moral, safety and welfare. y its very nature,
epublic !ct"#$% is a measure intended to provide protection to the wor&ingmen
and its enactmentis a valid exercise of the police power of the tate

RIGHT AGAINST INVOLUNTARY SERVITUDE

Delos Reyes vs Alojado

FACTS: On or about January 22, 1905, Veronica Alojado received, as a loan, from
Benito de los Reyes that the sum P67 .60, for the purpose of paying a debt she
owed to Olimpia Zaballa. It was agreed between Alojado and Reyes that the debtor
should remain as a servant in the house and in the service of her creditor, without
any renumeration whatever, until she should find someone who would furnish her
with the said sum where with to repeat the loan. After sometime, the debtor left
without paying, so the creditor instituted this action to compel her to pay, and work
as a servant without pay until the debt could finally be paid. The debtor on the other
hand, asked payment for services already rendered.

ISSUE: Whether or not the agreement without pay is valid.

DECISION: The agreement to work without pay is immoral and void since this would
amount to involuntary servitude. The creditor was ordered to pay wages and to
subtract therefrom the amount of the debt.

KAISAHAN VS GOTAMCO SAWMILLS

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RIGHT TO PARTICIPATE IN POLICY/DECISION MAKING

PAL VS NLRC

LABOR CODE PROVISIONS FOR WAGE PROTECTION

NERI VS NLRC, 224 S 717

PHIL. BANK COMM VS NLRC

GUARIN S NLRC

FILSYN VS NLRC

BRO. LABOR UNITY MOVEMENT VS ZAMORA

BROADWAY MOTORS, INC VS NLRC

INDUSTRIAL TIMBER INC VS NLRC

TABAS VS CALIFORNIA MFG. CO

DEFERIA VS NRC

SMC VS NLRC

EAGLE SECURITY AGENCY VS NLRC