Labor Law 1

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Republic of the Philippines On May 23, 1986, ten (10) employees of the petitioner employed in different
SUPREME COURT capacities/positions filed a complaint with the Office of the Regional Director of
Manila Labor and Employment, Region X, for underpayment of their salaries and ECOLAS,
which was docketed as ROX Case No. CW-71-86.
EN BANC
On June 16, 1986, the Regional Director directed two of his Labor Standard and
G.R. No. 78909 June 30, 1989 Welfare Officers to inspect the records of the petitioner to ascertain the truth of the
allegations in the complaints (p. 98, Rollo). Payrolls covering the periods of May,
1974, January, 1985, November, 1985 and May, 1986, were duly submitted for
MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO,
inspection.
President, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR On July 17, 1986, the Labor Standard and Welfare Officers submitted their report
OF LABOR, REGION X, respondents. confirming that there was underpayment of wages and ECOLAs of all the
employees by the petitioner, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING, deficiency on wage and ecola

as verified and confirmed per review of the respondent payrolls
MEDIALDEA, J.:
and interviews with the complainant workers and all other
information gathered by the team, it is respectfully
This is a petition for certiorari seeking the annulment of the Decision of the recommended to the Honorable Regional Director, this office,
respondent Secretary of Labor dated September 24, 1986, affirming with that Antera Dorado, President be ORDERED to pay the amount
modification the Order of respondent Regional Director of Labor, Region X, dated of SIX HUNDRED FIFTY FOUR THOUSAND SEVEN
August 4, 1986, awarding salary differentials and emergency cost of living HUNDRED FIFTY SIX & 01/100 (P654,756.01), representing
allowances (ECOLAS) to employees of petitioner, and the Order denying petitioner's underpayment of wages and ecola to the THIRTY SIX (36)
motion for reconsideration dated May 13, 1987, on the ground of grave abuse of employees of the said hospital as appearing in the attached
discretion. Annex "F" worksheets and/or whatever action equitable under
the premises. (p. 99, Rollo)
Petitioner is a semi-government hospital, managed by the Board of Directors of the
Cagayan de Oro Women's Club and Puericulture Center, headed by Mrs. Antera Based on this inspection report and recommendation, the Regional Director issued
Dorado, as holdover President. The hospital derives its finances from the club itself an Order dated August 4, 1986, directing the payment of P723,888.58, representing
as well as from paying patients, averaging 130 per month. It is also partly subsidized underpayment of wages and ECOLAs to all the petitioner's employees, the
by the Philippine Charity Sweepstakes Office and the Cagayan De Oro City dispositive portion of which reads:
government.
WHEREFORE, premises considered, respondent Maternity and
Petitioner has forty-one (41) employees. Aside from salary and living allowances, Children Hospital is hereby ordered to pay the above-listed
the employees are given food, but the amount spent therefor is deducted from their complainants the total amount indicated opposite each name,
respective salaries (pp. 77-78, Rollo). thru this Office within ten (10) days from receipt thereof.
Thenceforth, the respondent hospital is also ordered to pay its

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employees/workers the prevailing statutory minimum wage and The primary issue here is whether or not the Regional Director had jurisdiction over
allowance. 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
SO ORDERED. (p. 34, Rollo) Code. The matter of whether or not the decision states clearly and distinctly
statement of facts as well as the law upon which it is based, becomes relevant after
the issue on jurisdiction has been resolved.
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 This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as
May 23, 1983 to May 23, 1986, the dispositive portion of which reads: amended by E.O. No. 111. Labor standards refer to the minimum requirements
prescribed by existing laws, rules, and regulations relating to wages, hours of work,
cost of living allowance and other monetary and welfare benefits, including
WHEREFORE, the August 29, 1986 order is hereby MODIFIED
occupational, safety, and health standards (Section 7, Rule I, Rules on the
in that the deficiency wages and ECOLAs should only be
Disposition of Labor Standards Cases in the Regional Office, dated September 16,
computed from May 23, 1983 to May 23, 1986. The case is
1987). 1 Under the present rules, a Regional Director exercises both visitorial and
remanded to the Regional Director, Region X, for recomputation
enforcement power over labor standards cases, and is therefore empowered to
specifying the amounts due each the complainants under each
adjudicate money claims, provided there still exists an employer-employee
of the applicable Presidential Decrees. (p. 40, Rollo)
relationship, and the findings of the regional office is not contested by the employer
concerned.
On October 24, 1986, the petitioner filed a motion for reconsideration which was
denied by the Secretary of Labor in his Order dated May 13, 1987, for lack of merit
Prior to the promulgation of E.O. No. 111 on December 24, 1986, the Regional
(p. 43 Rollo).
Director's authority over money claims was unclear. The complaint in the present
case was filed on May 23, 1986 when E.O. No. 111 was not yet in effect, and the
The instant petition questions the all-embracing applicability of the award involving prevailing view was that stated in the case of Antonio Ong, Sr. vs. Henry M. Parel,
salary differentials and ECOLAS, in that it covers not only the hospital employees et al., G.R. No. 76710, dated December 21, 1987, thus:
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
. . . the Regional Director, in the exercise of his visitorial and
time the complaints were filed.
enforcement powers under Article 128 of the Labor Code, has
no authority to award money claims, properly falling within the
Petitioner likewise maintains that the Order of the respondent Regional Director of jurisdiction of the labor arbiter. . . .
Labor, as affirmed with modifications by respondent Secretary of Labor, does not
clearly and distinctly state the facts and the law on which the award was based. In
. . . If the inspection results in a finding that the employer has
its "Rejoinder to Comment", petitioner further questions the authority of the Regional
violated certain labor standard laws, then the regional director
Director to award salary differentials and ECOLAs to private respondents, (relying
must order the necessary rectifications. However, this does not
on the case of Encarnacion vs. Baltazar, G.R. No. L-16883, March 27, 1961, 1
include adjudication of money claims, clearly within the ambit of
SCRA 860, as authority for raising the additional issue of lack of jurisdiction at any
the labor arbiter's authority under Article 217 of the Code.
stage of the proceedings, p. 52, Rollo), alleging that the original and exclusive
jurisdiction over money claims is properly lodged in the Labor Arbiter, based on
Article 217, paragraph 3 of the Labor Code. The Ong case relied on the ruling laid down in Zambales Base Metals Inc. vs. The
Minister of Labor, et al., (G.R. Nos. 73184-88, November 26, 1986, 146 SCRA 50)

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that the "Regional Director was not empowered to share in the original and The Regional Director exercised visitorial rights only under then Article 127 of the
exclusive jurisdiction conferred on Labor Arbiters by Article 217." Code as follows:

We believe, however, that even in the absence of E. O. No. 111, Regional Directors ART. 127. Visitorial Powers. — The Secretary of Labor or his
already had enforcement powers over money claims, effective under P.D. No. 850, duly authorized representatives, including, but not restricted, to
issued on December 16, 1975, which transferred labor standards cases from the the labor inspectorate, shall have access to employers' records
arbitration system to the enforcement system. and premises at any time of the day or night whenever work is
being undertaken therein, and the right to copy therefrom, to
To clarify matters, it is necessary to enumerate a series of rules and provisions of question any employee and investigate any fact, condition or
law on the disposition of labor standards cases. matter which may be necessary to determine violations or in aid
in the enforcement of this Title and of any Wage Order or
regulation issued pursuant to this Code.
Prior to the promulgation of PD 850, labor standards cases were an exclusive
function of labor arbiters, under Article 216 of the then Labor Code (PD No. 442, as
amended by PD 570-a), which read in part: With the promulgation of PD 850, Regional Directors were given enforcement
powers, in addition to visitorial powers. Article 127, as amended, provided in part:
Art. 216. Jurisdiction of the Commission. — The Commission
shall have exclusive appellate jurisdiction over all cases decided SEC. 10. Article 127 of the Code is hereby amended to read as
by the Labor Arbiters and compulsory arbitrators. follows:

The Labor Arbiters shall have exclusive jurisdiction to hear and Art. 127. Visitorial and enforcement powers.
decide the following cases involving all workers whether —
agricultural or non-agricultural.
xxx xxx xxx
xxx xxx xxx
(b) The Secretary of
(c) All money claims of workers, involving Labor or his duly
non-payment or underpayment of wages, authorized
overtime compensation, separation pay, representatives shall
maternity leave and other money claims have the power to order
arising from employee-employer relations, and administer, after
except claims for workmen's compensation, due notice and
social security and medicare benefits; hearing, compliance with
the labor standards
provisions of this Code
(d) Violations of labor standard laws;
based on the findings of
labor regulation officers
xxx xxx xxx or industrial safety
engineers made in the
(Emphasis supplied) course of inspection,

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and to issue writs of otherwise provided in

execution to the Article 127 of this Code.
appropriate authority for
the enforcement of their xxx xxx xxx
order.
(Emphasis supplied)
xxx xxx xxx
Under the then Labor Code therefore (PD 442 as amended by PD 570-a, as further
Labor Arbiters, on the other hand, lost jurisdiction over labor standards cases. amended by PD 850), there were three adjudicatory units: The Regional Director,
Article 216, as then amended by PD 850, provided in part: the Bureau of Labor Relations and the Labor Arbiter. It became necessary to clarify
and consolidate all governing provisions on jurisdiction into one document. 2 On
SEC. 22. Article 216 of the Code is hereby amended to read as April 23, 1976, MOLE Policy Instructions No. 6 was issued, and provides in part (on
follows: labor standards cases) as follows:

Art. 216. Jurisdiction of Labor Arbiters and POLICY INSTRUCTIONS NO. 6

the Commission. — (a) The Labor Arbiters
shall have exclusive jurisdiction to hear and TO: All Concerned
decide the following cases involving all
workers, whether agricultural or non-
SUBJECT: DISTRIBUTION OF JURISDICTION OVER LABOR
agricultural:
CASES

xxx xxx xxx

xxx xxx xxx

(3) All money claims of

1. The following cases are under
workers involving non-
the exclusive original jurisdiction of the
payment or
Regional Director.
underpayment of wages,
overtime or premium
compensation, maternity a) Labor standards
or service incentive cases arising from
leave, separation pay violations of labor
and other money claims standard
arising from employer- laws discovered in the
employee relations, course of inspection or
except claims for complaints where
employee's employer-employee
compensation, social relations still exist;
security and medicare
benefits and as xxx xxx xxx

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2. The following cases are under Under PD 850, labor standards cases have been taken from the
the exclusive original jurisdiction of arbitration system and placed under the enforcement system,
the Conciliation Section of the Regional except where a) questions of law are involved as determined by
Office: the Regional Director, b) the amount involved exceeds
P100,000.00 or over 40% of the equity of the employer,
a) Labor standards whichever is lower, c) the case requires evidentiary matters not
cases where employer- disclosed or verified in the normal course of inspection, or
employee d) there is no more employer-employee relationship.
relations no longer exist;
The purpose is clear: to assure the worker the rights and
xxx xxx xxx benefits due to him under labor standards laws without having to
go through arbitration. The worker need not litigate to get what
legally belongs to him. The whole enforcement machinery of the
6. The following cases are certifiable to the
Department of Labor exists to insure its expeditious delivery to
Labor Arbiters:
him free of charge. (Emphasis supplied)
a) Cases not settled by
Under the foregoing, a complaining employee who was denied his rights and
the Conciliation Section
benefits due him under labor standards law need not litigate. The Regional Director,
of the Regional Office,
by virtue of his enforcement power, assured "expeditious delivery to him of his rights
namely:
and benefits free of charge", provided of course, he was still in the employ of the
firm.
1) labor standard cases
where employer-
After PD 850, Article 216 underwent a series of amendments (aside from being re-
employee relations no
numbered as Article 217) and with it a corresponding change in the jurisdiction of,
longer exist;
and supervision over, the Labor Arbiters:
xxx xxx xxx
1. PD 1367 (5-1-78) — gave Labor Arbiters
exclusive jurisdiction over unresolved issues
(Emphasis supplied) in collective bargaining, etc., and those
cases arising from employer-employee
MOLE Policy Instructions No. 7 (undated) was likewise subsequently issued, relations duly indorsed by the Regional
enunciating the rationale for, and the scope of, the enforcement power of the Directors. (It also removed his jurisdiction
Regional Director, the first and second paragraphs of which provide as follows: over moral or other damages) In other
words, the Labor Arbiter entertained
POLICY INSTRUCTIONS NO. 7 cases certified to him. (Article 228, 1978
Labor Code.)
TO: All Regional Directors
2. PD 1391 (5-29-78) — all regional units of
SUBJECT: LABOR STANDARDS CASES the National Labor Relations Commission

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(NLRC) were integrated into the Regional SUBJECT: ASSIGNMENT OF CASES TO LABOR ARBITERS
Offices Proper of the Ministry of Labor;
effectively transferring direct administrative Pursuant to the provisions of Presidential
control and supervision over the Arbitration Decree No. 1391 and to insure speedy
Branch to the Director of the Regional Office disposition of labor cases, the following
of the Ministry of Labor. "Conciliable cases" guidelines are hereby established for the
which were thus previously under the information and guidance of all concerned.
jurisdiction of the defunct Conciliation
Section of the Regional Office for purposes
1. Conciliable Cases.
of conciliation or amicable settlement,
became immediately assignable to the
Arbitration Branch for joint conciliation and Cases which are conciliable per se i.e., (a)
compulsory arbitration. In addition, the Labor labor standards cases where employer-
Arbiter had jurisdiction even over termination employee relationship no longer exists; (b)
and labor-standards cases that may be cases involving deadlock in collective
assigned to them for compulsory arbitration bargaining, except those falling under P.D.
by the Director of the Regional Office. PD 823, as amended; (c) unfair labor practice
1391 merged conciliation and compulsory cases; and (d) overseas employment cases,
arbitration functions in the person of the except those involving overseas seamen,
Labor Arbiter. The procedure governing the shall be assigned by the Regional Director
disposition of cases at the Arbitration Branch to the Labor Arbiter for conciliation and
paralleled those in the Special Task Force arbitration without coursing them through the
and Field Services Division, with one major conciliation section of the Regional Office.
exception: the Labor Arbiter exercised full
and untrammelled authority in the 2. Labor Standards
disposition of the case, particularly in the Cases.
substantive aspect, his decisions and orders
subject to review only on appeal to the Cases involving violation of labor standards
NLRC. 3 laws where employer- employee
relationship still exists shall be assigned to
3. MOLE Policy Instructions No. 37 — the Labor Arbiters where:
Because of the seemingly overlapping
functions as a result of PD 1391, MOLE a) intricate questions of
Policy Instructions No. 37 was issued on law are involved; or
October 7, 1978, and provided in part:
b) evidentiary matters
POLICY INSTRUCTIONS NO. 37 not disclosed or verified
in the normal course of
TO: All Concerned inspection by labor

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regulations officers are The present petition questions the authority of the Regional Director to issue the
required for their proper Order, dated August 4, 1986, on the basis of his visitorial and enforcement powers
disposition. under Article 128 (formerly Article 127) of the present Labor Code. It is contended
that based on the rulings in the Ong vs. Parel (supra) and the Zambales Base
3. Disposition of Cases. Metals, Inc. vs. The Minister of Labor (supra) cases, a Regional Director is
precluded from adjudicating money claims on the ground that this is an exclusive
function of the Labor Arbiter under Article 217 of the present Code.
When a case is assigned to a Labor Arbiter,
all issues raised therein shall be resolved by
him including those which are originally On August 4, 1986, when the order was issued, Article 128(b) 4 read as follows:
cognizable by the Regional Director to avoid
multiplicity of proceedings. In other words, (b) The Minister of Labor or his duly
the whole case, and not merely issues authorized representatives shall have the
involved therein, shall be assigned to and power to order and administer, after due
resolved by him. notice and hearing, compliance with the
labor standards provisions of this Code
xxx xxx xxx based on the findings of labor regulation
officers or industrial safety engineers made
in the course of inspection, and to issue
(Emphasis supplied)
writs of execution to the appropriate
authority for the enforcement of their order,
4. PD 1691(5-1-80) — original and exclusive except in cases where the employer
jurisdiction over unresolved issues in contests the findings of the labor regulations
collective bargaining and money claims, officer and raises issues which cannot be
which includes moral or other damages. resolved without considering evidentiary
matters that are not verifiable in the normal
Despite the original and exclusive jurisdiction of labor arbiters course of inspection. (Emphasis supplied)
over money claims, however, the Regional Director
nonetheless retained his enforcement power, and remained On the other hand, Article 217 of the Labor Code as amended by P.D. 1691,
empowered to adjudicate uncontested money claims. effective May 1, 1980; Batas Pambansa Blg. 130, effective August 21, 1981; and
Batas Pambansa Blg. 227, effective June 1, 1982, inter alia, provides:
5. BP 130 (8-21-8l) — strengthened
voluntary arbitration. The decree also ART. 217. Jurisdiction of Labor Arbiters and the Commission. —
returned the Labor Arbiters as part of the (a) The Labor Arbiters shall have the original and
NLRC, operating as Arbitration Branch exclusive jurisdiction to hear and decide within thirty (30)
thereof. working days after submission of the case by the parties for
decision, the following cases involving all workers, whether
6. BP 227(6-1- 82) — original and exclusive agricultural or non-agricultural:
jurisdiction over questions involving legality
of strikes and lock-outs. 1. Unfair labor practice cases;

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2. Those that workers may file involving (b) THE PROVISIONS OF ARTICLE 217 OF
wages, hours of work and other terms and THIS CODE TO THE CONTRARY
conditions of employment; NOTWITHSTANDING AND IN CASES
WHERE THE RELATIONSHIP OF
3. All money claims of workers, including EMPLOYER-EMPLOYEE STILL EXISTS,
those based on non-payment or the Minister of Labor and Employment or his
underpayment of wages, overtime duly authorized representatives shall have
compensation, separation pay and other the power to order and administer, after due
benefits provided by law or appropriate notice and hearing, compliance with the
agreement, except claims for employees' labor standards provisions of this Code AND
compensation, social security, medicare and OTHER LABOR LEGISLATION based on
maternity benefits; the findings of labor regulation officers or
industrial safety engineers made in the
course of inspection, and to issue writs of
4. Cases involving household services; and
execution to the appropriate authority for the
enforcement of their orders, except in cases
5. Cases arising from any violation of Article where the employer contests the findings of
265 of this Code, including questions the labor regulation officer and raises issues
involving the legality of strikes and lock-outs. which cannot be resolved without
(Emphasis supplied) considering evidentiary matters that are not
verifiable in the normal course of inspection.
The Ong and Zambales cases involved workers who were still connected with the (Emphasis supplied)
company. However, in the Ong case, the employer disputed the adequacy of the
evidentiary foundation (employees' affidavits) of the findings of the labor standards As seen from the foregoing, EO 111 authorizes a Regional Director to order
inspectors while in the Zambales case, the money claims which arose from alleged compliance by an employer with labor standards provisions of the Labor Code and
violations of labor standards provisions were not discovered in the course of normal other legislation. It is Our considered opinion however, that the inclusion of the
inspection. Thus, the provisions of MOLE Policy Instructions Nos. 6, (Distribution of phrase, " The provisions of Article 217 of this Code to the contrary notwithstanding
Jurisdiction Over Labor Cases) and 37 (Assignment of Cases to Labor Arbiters) and in cases where the relationship of employer-employee still exists" ... in Article
giving Regional Directors adjudicatory powers over uncontested money claims 128(b), as amended, above-cited, merely confirms/reiterates the enforcement
discovered in the course of normal inspection, provided an employer-employee adjudication authority of the Regional Director over uncontested money claims in
relationship still exists, are inapplicable. cases where an employer-employee relationship still exists. 6

In the present case, petitioner admitted the charge of underpayment of wages to Viewed in the light of PD 850 and read in coordination with MOLE Policy
workers still in its employ; in fact, it pleaded for time to raise funds to satisfy its Instructions Nos. 6, 7 and 37, it is clear that it has always been the intention of our
obligation. There was thus no contest against the findings of the labor inspectors. labor authorities to provide our workers immediate access (when still feasible, as
where an employer-employee relationship still exists) to their rights and benefits,
Barely less than a month after the promulgation on November 26, 1986 of the without being inconvenienced by arbitration/litigation processes that prove to be not
Zambales Base Metals case, Executive Order No. 111 was issued on December 24, only nerve-wracking, but financially burdensome in the long run.
1986,5 amending Article 128(b) of the Labor Code, to read as follows:

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Note further the second paragraph of Policy Instructions No. 7 indicating that the exclusive and original jurisdiction of the labor arbiters. . . .
transfer of labor standards cases from the arbitration system to the enforcement (Emphasis supplied)
system is
Likewise, it is also clear that the limitation embodied in MOLE Policy Instructions No.
. . to assure the workers the rights and benefits due to him 7 to amounts not exceeding P100,000.00 has been dispensed with, in view of the
under labor standard laws, without having to go through following provisions of pars. (b) and (c), Section 7 on "Restitution", the same Rules,
arbitration. . . thus:

so that xxx xxx xxx

. . the workers would not litigate to get what legally belongs to (b) Plant-level restitutions may be effected
him. .. ensuring delivery . . free of charge. for money claims not exceeding Fifty
Thousand (P50,000.00). . . .
Social justice legislation, to be truly meaningful and rewarding to our workers, must
not be hampered in its application by long-winded arbitration and litigation. Rights (c) Restitutions in excess of the
must be asserted and benefits received with the least inconvenience. Labor laws aforementioned amount shall be effected at
are meant to promote, not defeat, social justice. the Regional Office or at the worksite
subject to the prior approval of the Regional
This view is in consonance with the present "Rules on the Disposition of Labor Director.
Standard Cases in the Regional Offices " 7 issued by the Secretary of Labor,
Franklin M. Drilon on September 16, 1987. which indicate the intention to empower the Regional Director to award money
claims in excess of P100,000.00; provided of course the employer does not contest
Thus, Sections 2 and 3 of Rule II on "Money Claims Arising from Complaint Routine the findings made, based on the provisions of Section 8 thereof:
Inspection", provide as follows:
Section 8. Compromise agreement. — Should the parties arrive
Section 2. Complaint inspection. — All such complaints shall at an agreement as to the whole or part of the dispute, said
immediately be forwarded to the Regional Director who shall agreement shall be reduced in writing and signed by the parties
refer the case to the appropriate unit in the Regional Office for in the presence of the Regional Director or his duly authorized
assignment to a Labor Standards and Welfare Officer (LSWO) representative.
for field inspection. When the field inspection does not produce
the desired results, the Regional Director shall summon the E.O. No. 111 was issued on December 24, 1986 or three (3) months after the
parties for summary investigation to expedite the disposition of promulgation of the Secretary of Labor's decision upholding private respondents'
the case. . . . salary differentials and ECOLAs on September 24, 1986. The amendment of the
visitorial and enforcement powers of the Regional Director (Article 128-b) by said
Section 3. Complaints where no employer-employee relationship E.O. 111 reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to
actually exists. — Where employer-employee relationship no empower the Regional Directors to resolve uncontested money claims in cases
longer exists by reason of the fact that it has already been where an employer-employee relationship still exists. This intention must be given
severed, claims for payment of monetary benefits fall within the

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weight and entitled to great respect. As held in Progressive Workers' Union, et. al. of Labor and Employment nugatory, but would be the pinnacle
vs. F.P. Aguas, et. al. G.R. No. 59711-12, May 29, 1985, 150 SCRA 429: of injustice considering that it would not only discriminate but
also deprive them of legislated benefits.
. . The interpretation by officers of laws which are entrusted to
their administration is entitled to great respect. We see no . . . (pp. 38-39, Rollo).
reason to detract from this rudimentary rule in administrative
law, particularly when later events have proved said This view is further bolstered by the provisions of Sec. 6, Rule II of the "Rules on the
interpretation to be in accord with the legislative intent. .. Disposition of Labor Standards cases in the Regional Offices" (supra) presently
enforced, viz:
The proceedings before the Regional Director must, perforce, be upheld on the
basis of Article 128(b) as amended by E.O. No. 111, dated December 24, 1986, this SECTION 6. Coverage of complaint inspection. — A complaint
executive order "to be considered in the nature of a curative statute with inspection shall not be limited to the specific allegations or
retrospective application." (Progressive Workers' Union, et al. vs. Hon. F.P. Aguas, violations raised by the complainants/workers but shall be a
et al. (Supra); M. Garcia vs. Judge A. Martinez, et al., G.R. No. L- 47629, May 28, thorough inquiry into and verification of the compliance by
1979, 90 SCRA 331). employer with existing labor standards and shall cover all
workers similarly situated. (Emphasis supplied)
We now come to the question of whether or not the Regional Director erred in
extending the award to all hospital employees. We answer in the affirmative. However, there is no legal justification for the award in favor of those employees
who were no longer connected with the hospital at the time the complaint was filed,
The Regional Director correctly applied the award with respect to those employees having resigned therefrom in 1984, viz:
who signed the complaint, as well as those who did not sign the complaint, but were
still connected with the hospital at the time the complaint was filed (See Order, p. 33 1. Jean (Joan) Venzon (See Order, p. 33, Rollo)
dated August 4, 1986 of the Regional Director, Pedrito de Susi, p. 33, Rollo). 2. Rosario Paclijan
3. Adela Peralta
The justification for the award to this group of employees who were not signatories 4. Mauricio Nagales
to the complaint is that the visitorial and enforcement powers given to the Secretary 5. Consesa Bautista
of Labor is relevant to, and exercisable over establishments, not over the individual 6. Teresita Agcopra
members/employees, because what is sought to be achieved by its exercise is the 7. Felix Monleon
observance of, and/or compliance by, such firm/establishment with the labor 8. Teresita Salvador
standards regulations. Necessarily, in case of an award resulting from a violation of 9. Edgar Cataluna; and
labor legislation by such establishment, the entire members/employees should
benefit therefrom. As aptly stated by then Minister of Labor Augusto S. Sanchez: 10. Raymond Manija ( p.7, Rollo)

. . It would be highly derogatory to the rights of the workers, if The enforcement power of the Regional Director cannot legally be upheld in cases
after categorically finding the respondent hospital guilty of of separated employees. Article 129 of the Labor Code, cited by petitioner (p.
underpayment of wages and ECOLAs, we limit the award to 54, Rollo) is not applicable as said article is in aid of the enforcement power of the
only those who signed the complaint to the exclusion of the Regional Director; hence, not applicable where the employee seeking to be paid
majority of the workers who are similarly situated. Indeed, this underpayment of wages is already separated from the service. His claim is purely a
would be not only render the enforcement power of the Minister

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money claim that has to be the subject of arbitration proceedings and therefore I concur, with the observation that even as reconciled, it would seem inevitable to
within the original and exclusive jurisdiction of the Labor Arbiter. state that the conclusion in the Zambales and Ong cases that, prior to Executive
Order No. 111, Regional Directors were not empowered to share the original and
Petitioner has likewise questioned the order dated August 4, 1986 of the Regional exclusive jurisdiction conferred on Labor Arbiters over money claims, is now
Director in that it does not clearly and distinctly state the facts and the law on which deemed modified, if not superseded.
the award is based.
It may not be amiss to state either that under Section 2, Republic Act No. 6715,
We invite attention to the Minister of Labor's ruling thereon, as follows: which amends further the Labor Code of the Philippines (PD No. 442), Regional
Directors have also been granted adjudicative powers, albeit limited, over monetary
claims and benefits of workers, thereby settling any ambiguity on the matter. Thus:
Finally, the respondent hospital assails the order under appeal
as null and void because it does not clearly and distinctly state
the facts and the law on which the awards were based. Contrary SEC. 2. Article 129 of the Labor Code of the Philippines, as
to the pretensions of the respondent hospital, we have carefully amended, is hereby further amended to read as follows:
reviewed the order on appeal and we found that the same
contains a brief statement of the (a) facts of the case; (b) issues Art. 129. Recovery of wages, simple money
involved; (c) applicable laws; (d) conclusions and the reasons claims and other benefits. — Upon
therefor; (e) specific remedy granted (amount awarded). (p. complaint of any interested party, the
40, Rollo) Regional Director of the Department of
Labor and Employment or any of the duly
ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as authorized hearing officers of the
regards all persons still employed in the Hospital at the time of the filing of the Department is empowered, through
complaint, but GRANTED as regards those employees no longer employed at that summary proceeding and after due notice,
time. to hear and decide any matter involving the
recovery of wages and other monetary
claims and benefits, including legal interest,
SO ORDERED.
owing to an employee or person employed
in domestic or household service or
Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, househelper under this Code, arising from
Bidin, Cortes, Griño-Aquino and Regalado, JJ., concur. employer-employee relations: Provided,
That such complaint does not include a
claim for reinstatement: Provided, further,
That the aggregate money claims of each
Separate Opinions employee or househelper do not exceed five
thousand pesos (P5,000.00). The Regional
SARMIENTO, J., concurring: Director or hearing officer shall decide or
resolve the complaint within thirty (30)
calendar days from the date of the filing of
Subject to my opinion in G.R. Nos. 82805 and 83205.
the same. ...

MELENCIO-HERRERA, J., concurring:

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Labor Law 1
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Separate Opinions claim for reinstatement: Provided, further,

That the aggregate money claims of each
SARMIENTO, J., concurring: employee or househelper do not exceed five
thousand pesos (P5,000.00). The Regional
Director or hearing officer shall decide or
Subject to my opinion in G.R. Nos. 82805 and 83205.
resolve the complaint within thirty (30)
calendar days from the date of the filing of
MELENCIO-HERRERA, J., concurring: the same. ...

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

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

SEC. 2. Article 129 of the Labor Code of the Philippines, as

amended, is hereby further amended to read as follows:

Art. 129. Recovery of wages, simple money

claims and other benefits. — Upon
complaint of any interested party, the
Regional Director of the Department of
Labor and Employment or any of the duly
authorized hearing officers of the
Department is empowered, through
summary proceeding and after due notice,
to hear and decide any matter involving the
recovery of wages and other monetary
claims and benefits, including legal interest,
owing to an employee or person employed
in domestic or household service or
househelper under this Code, arising from
employer-employee relations: Provided,
That such complaint does not include a

12
Labor Law 1
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Republic of the Philippines clause, in addition to the "great and irreparable injury" that PASEI members face
SUPREME COURT should the Order be further enforced.
Manila
On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of
EN BANC Labor and Administrator of the Philippine Overseas Employment Administration,
filed a Comment informing the Court that on March 8, 1988, the respondent Labor
G.R. No. 81958 June 30, 1988 Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada,
Hongkong, United States, Italy, Norway, Austria, and Switzerland. * In submitting
the validity of the challenged "guidelines," the Solicitor General invokes the police
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., petitioner,
power of the Philippine State.
vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and
TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas It is admitted that Department Order No. 1 is in the nature of a police power
Employment Administration, respondents. measure. The only question is whether or not it is valid under the Constitution.

Gutierrez & Alo Law Offices for petitioner. The concept of police power is well-established in this jurisdiction. It has been
defined as the "state authority to enact legislation that may interfere with personal
liberty or property in order to promote the general welfare." 5 As defined, it consists
of (1) an imposition of restraint upon liberty or property, (2) in order to foster the
common good. It is not capable of an exact definition but has been, purposely,
SARMIENTO, J.: veiled in general terms to underscore its all-comprehensive embrace.

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a "Its scope, ever-expanding to meet the exigencies of the times, even to anticipate
firm "engaged principally in the recruitment of Filipino workers, male and female, for the future where it could be done, provides enough room for an efficient and flexible
overseas placement," 1 challenges the Constitutional validity of Department Order response to conditions and circumstances thus assuring the greatest benefits." 6
No. 1, Series of 1988, of the Department of Labor and Employment, in the character
of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF
It finds no specific Constitutional grant for the plain reason that it does not owe its
DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in this
origin to the Charter. Along with the taxing power and eminent domain, it is inborn in
petition for certiorari and prohibition. Specifically, the measure is assailed for
the very fact of statehood and sovereignty. It is a fundamental attribute of
"discrimination against males or females;" 2 that it "does not apply to all Filipino
government that has enabled it to perform the most vital functions of governance.
workers but only to domestic helpers and females with similar skills;" 3 and that it is
Marshall, to whom the expression has been credited, 7 refers to it succinctly as the
violative of the right to travel. It is held likewise to be an invalid exercise of the
plenary power of the State "to govern its citizens." 8
lawmaking power, police power being legislative, and not executive, in character.

"The police power of the State ... is a power coextensive with self- protection, and it
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the
is not inaptly termed the "law of overwhelming necessity." It may be said to be that
Constitution, providing for worker participation "in policy and decision-making
inherent and plenary power in the State which enables it to prohibit all things hurtful
processes affecting their rights and benefits as may be provided by
to the comfort, safety, and welfare of society." 9
law." 4 Department Order No. 1, it is contended, was passed in the absence of prior
consultations. It is claimed, finally, to be in violation of the Charter's non-impairment

13
Labor Law 1
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It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is rape and various forms of torture, confirmed by testimonies of returning workers, are
"rooted in the conception that men in organizing the state and imposing upon its compelling motives for urgent Government action. As precisely the caretaker of
government limitations to safeguard constitutional rights did not intend thereby to Constitutional rights, the Court is called upon to protect victims of exploitation. In
enable an individual citizen or a group of citizens to obstruct unreasonably the fulfilling that duty, the Court sustains the Government's efforts.
enactment of such salutary measures calculated to ensure communal peace, safety,
good order, and welfare." 10 Significantly, the Bill of Rights itself does not purport to The same, however, cannot be said of our male workers. In the first place, there is
be an absolute guaranty of individual rights and liberties "Even liberty itself, the no evidence that, except perhaps for isolated instances, our men abroad have been
greatest of all rights, is not unrestricted license to act according to one's will." 11 It is afflicted with an Identical predicament. The petitioner has proffered no argument
subject to the far more overriding demands and requirements of the greater number. that the Government should act similarly with respect to male workers. The Court, of
course, is not impressing some male chauvinistic notion that men are superior to
Notwithstanding its extensive sweep, police power is not without its own limitations. women. What the Court is saying is that it was largely a matter of evidence (that
For all its awesome consequences, it may not be exercised arbitrarily or women domestic workers are being ill-treated abroad in massive instances) and not
unreasonably. Otherwise, and in that event, it defeats the purpose for which it is upon some fanciful or arbitrary yardstick that the Government acted in this case. It is
exercised, that is, to advance the public good. Thus, when the power is used to evidence capable indeed of unquestionable demonstration and evidence this Court
further private interests at the expense of the citizenry, there is a clear misuse of the accepts. The Court cannot, however, say the same thing as far as men are
power. 12 concerned. There is simply no evidence to justify such an inference. Suffice it to
state, then, that insofar as classifications are concerned, this Court is content that
In the light of the foregoing, the petition must be dismissed. distinctions are borne by the evidence. Discrimination in this case is justified.

As a general rule, official acts enjoy a presumed vahdity. 13 In the absence of clear As we have furthermore indicated, executive determinations are generally final on
and convincing evidence to the contrary, the presumption logically stands. the Court. Under a republican regime, it is the executive branch that enforces policy.
For their part, the courts decide, in the proper cases, whether that policy, or the
manner by which it is implemented, agrees with the Constitution or the laws, but it is
The petitioner has shown no satisfactory reason why the contested measure should
not for them to question its wisdom. As a co-equal body, the judiciary has great
be nullified. There is no question that Department Order No. 1 applies only to
respect for determinations of the Chief Executive or his subalterns, especially when
"female contract workers," 14 but it does not thereby make an undue discrimination
the legislature itself has specifically given them enough room on how the law should
between the sexes. It is well-settled that "equality before the law" under the
be effectively enforced. In the case at bar, there is no gainsaying the fact, and the
Constitution 15 does not import a perfect Identity of rights among all men and
Court will deal with this at greater length shortly, that Department Order No. 1
women. It admits of classifications, provided that (1) such classifications rest on
implements the rule-making powers granted by the Labor Code. But what should be
substantial distinctions; (2) they are germane to the purposes of the law; (3) they are
noted is the fact that in spite of such a fiction of finality, the Court is on its own
not confined to existing conditions; and (4) they apply equally to all members of the
persuaded that prevailing conditions indeed call for a deployment ban.
same class. 16

There is likewise no doubt that such a classification is germane to the purpose

The Court is satisfied that the classification made-the preference for female workers
behind the measure. Unquestionably, it is the avowed objective of Department
— rests on substantial distinctions.
Order No. 1 to "enhance the protection for Filipino female overseas workers" 17 this
Court has no quarrel that in the midst of the terrible mistreatment Filipina workers
As a matter of judicial notice, the Court is well aware of the unhappy plight that has have suffered abroad, a ban on deployment will be for their own good and welfare.
befallen our female labor force abroad, especially domestic servants, amid
exploitative working conditions marked by, in not a few cases, physical and personal
abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even

14
Labor Law 1
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The Order does not narrowly apply to existing conditions. Rather, it is intended to equal protection." 23 In the case at bar, the assailed Order clearly accords protection
apply indefinitely so long as those conditions exist. This is clear from the Order itself to certain women workers, and not the contrary.)
("Pending review of the administrative and legal measures, in the Philippines and in
the host countries . . ."18), meaning to say that should the authorities arrive at a It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas
means impressed with a greater degree of permanency, the ban shall be lifted. As a deployment. From scattered provisions of the Order, it is evident that such a total
stop-gap measure, it is possessed of a necessary malleability, depending on the ban has hot been contemplated. We quote:
circumstances of each case. Accordingly, it provides:
5. AUTHORIZED DEPLOYMENT-The deployment of domestic
9. LIFTING OF SUSPENSION. — The Secretary of Labor and helpers and workers of similar skills defined herein to the
Employment (DOLE) may, upon recommendation of the following [sic] are authorized under these guidelines and are
Philippine Overseas Employment Administration (POEA), lift the exempted from the suspension.
suspension in countries where there are:
5.1 Hirings by immediate members of the
1. Bilateral agreements or understanding with the Philippines, family of Heads of State and Government;
and/or,
5.2 Hirings by Minister, Deputy Minister and
2. Existing mechanisms providing for sufficient safeguards to the other senior government officials; and
ensure the welfare and protection of Filipino workers. 19
5.3 Hirings by senior officials of the
The Court finds, finally, the impugned guidelines to be applicable to all female diplomatic corps and duly accredited
domestic overseas workers. That it does not apply to "all Filipina workers" 20 is not international organizations.
an argument for unconstitutionality. Had the ban been given universal applicability,
then it would have been unreasonable and arbitrary. For obvious reasons, not all of
5.4 Hirings by employers in countries with
them are similarly circumstanced. What the Constitution prohibits is the singling out
whom the Philippines have [sic] bilateral
of a select person or group of persons within an existing class, to the prejudice of
labor agreements or understanding.
such a person or group or resulting in an unfair advantage to another person or
group of persons. To apply the ban, say exclusively to workers deployed by A, but
not to those recruited by B, would obviously clash with the equal protection clause of xxx xxx xxx
the Charter. It would be a classic case of what Chase refers to as a law that "takes
property from A and gives it to B." 21 It would be an unlawful invasion of property 7. VACATIONING DOMESTIC HELPERS AND WORKERS OF
rights and freedom of contract and needless to state, an invalid act. 22 (Fernando SIMILAR SKILLS--Vacationing domestic helpers and/or workers
says: "Where the classification is based on such distinctions that make a real of similar skills shall be allowed to process with the POEA and
difference as infancy, sex, and stage of civilization of minority groups, the better leave for worksite only if they are returning to the same
rule, it would seem, is to recognize its validity only if the young, the women, and the employer to finish an existing or partially served employment
cultural minorities are singled out for favorable treatment. There would be an contract. Those workers returning to worksite to serve a new
element of unreasonableness if on the contrary their status that calls for the law employer shall be covered by the suspension and the provision
ministering to their needs is made the basis of discriminatory legislation against of these guidelines.
them. If such be the case, it would be difficult to refute the assertion of denial of
xxx xxx xxx

15
Labor Law 1
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9. LIFTING OF SUSPENSION-The Secretary of Labor and Sec. 3. The State shall afford full protection to labor, local and
Employment (DOLE) may, upon recommendation of the overseas, organized and unorganized, and promote full
Philippine Overseas Employment Administration (POEA), lift the employment and equality of employment opportunities for all. 30
suspension in countries where there are:
"Protection to labor" does not signify the promotion of employment alone. What
1. Bilateral agreements or understanding concerns the Constitution more paramountly is that such an employment be above
with the Philippines, and/or, all, decent, just, and humane. It is bad enough that the country has to send its sons
and daughters to strange lands because it cannot satisfy their employment needs at
2. Existing mechanisms providing for home. Under these circumstances, the Government is duty-bound to insure that our
sufficient safeguards to ensure the welfare toiling expatriates have adequate protection, personally and economically, while
and protection of Filipino workers. 24 away from home. In this case, the Government has evidence, an evidence the
petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and
as part of its duty, it has precisely ordered an indefinite ban on deployment.
xxx xxx xxx

The Court finds furthermore that the Government has not indiscriminately made use
The consequence the deployment ban has on the right to travel does not impair the
of its authority. It is not contested that it has in fact removed the prohibition with
right. The right to travel is subject, among other things, to the requirements of
respect to certain countries as manifested by the Solicitor General.
"public safety," "as may be provided by law." 25 Department Order No. 1 is a valid
implementation of the Labor Code, in particular, its basic policy to "afford protection
to labor," 26 pursuant to the respondent Department of Labor's rule-making authority The non-impairment clause of the Constitution, invoked by the petitioner, must yield
vested in it by the Labor Code. 27 The petitioner assumes that it is unreasonable to the loftier purposes targetted by the Government. 31 Freedom of contract and
simply because of its impact on the right to travel, but as we have stated, the right enterprise, like all other freedoms, is not free from restrictions, more so in this
itself is not absolute. The disputed Order is a valid qualification thereto. jurisdiction, where laissez faire has never been fully accepted as a controlling
economic way of life.
Neither is there merit in the contention that Department Order No. 1 constitutes an
invalid exercise of legislative power. It is true that police power is the domain of the This Court understands the grave implications the questioned Order has on the
legislature, but it does not mean that such an authority may not be lawfully business of recruitment. The concern of the Government, however, is not
delegated. As we have mentioned, the Labor Code itself vests the Department of necessarily to maintain profits of business firms. In the ordinary sequence of events,
Labor and Employment with rulemaking powers in the enforcement whereof. 28 it is profits that suffer as a result of Government regulation. The interest of the State
is to provide a decent living to its citizens. The Government has convinced the Court
in this case that this is its intent. We do not find the impugned Order to be tainted
The petitioners's reliance on the Constitutional guaranty of worker participation "in
with a grave abuse of discretion to warrant the extraordinary relief prayed for.
policy and decision-making processes affecting their rights and benefits" 29 is not
well-taken. The right granted by this provision, again, must submit to the demands
and necessities of the State's power of regulation. WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED.

The Constitution declares that: Yap, C.J., Fernan, Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco,
Padilla, Bidin, Cortes and Griño-Aquino, JJ., concur. Gutierrez, Jr. and Medialdea,
JJ., are on leave.

16
Labor Law 1
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FIRST DIVISION
2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL
[G.R. No. 47800. December 2, 1940.] AUTHORITY. — Commonwealth Act No. 548 was passed by the National Assembly
in the exercise of the paramount police power of the state. Said Act, by virtue of
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents. which the rules and regulations complained of were promulgated, aims to promote
safe transit upon and avoid obstructions on national roads, in the interest and
Maximo Calalang in his own behalf. convenience of the public. In enacting said law, therefore, the National Assembly
was prompted by considerations of public convenience and welfare. It was inspired
Solicitor General Ozaeta and Assistant Solicitor General Amparo for by a desire to relieve congestion of traffic, which is, to say the least, a menace to
respondents Williams, Fragante and Bayan public safety. Public welfare, then, lies at the bottom of the enactment of said law,
and the state in order to promote the general welfare may interfere with personal
City Fiscal Mabanag for the other respondents. liberty, with property, and with business and occupations. Persons and property may
be subjected to all kinds of restraints and burdens, in order to secure the general
SYLLABUS comfort, health, and prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To
this fundamental aim of our Government the rights of the individual are
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT subordinated. Liberty is a blessing without which life is a misery, but liberty should
No. 648; DELEGATION OF LEGISLATIVE POWER; AUTHORITY OF DIRECTOR not be made to prevail over authority because then society will fall into anarchy.
OF PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS AND Neither should authority be made to prevail over liberty because then the individual
COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. — The will fall into slavery. The citizen should achieve the required balance of liberty and
provisions of section 1 of Commonwealth Act No. 648 do not confer legislative authority in his mind through education and, personal discipline, so that there may
power upon the Director of Public Works and the Secretary of Public Works and be established the resultant equilibrium, which means peace and order and
Communications. The authority therein conferred upon them and under which they happiness for all. The moment greater authority is conferred upon the government,
promulgated the rules and regulations now complained of is not to determine what logically so much is withdrawn from the residuum of liberty which resides in the
public policy demands but merely to carry out the legislative policy laid down by the people. The paradox lies in the fact that the apparent curtailment of liberty is
National Assembly in said Act, to wit, "to promote safe transit upon, and avoid precisely the very means of insuring its preservation.
obstructions on, roads and streets designated as national roads by acts of the
National Assembly or by executive orders of the President of the Philippines" and to 3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor
close them temporarily to any or all classes of traffic "whenever the condition of the despotism, nor atomism, nor anarchy," but the humanization of laws and the
road or the traffic thereon makes such action necessary or advisable in the public equalization of social and economic forces by the State so that justice in its rational
convenience and interest." The delegated power, if at all, therefore, is not the and objectively secular conception may at least be approximated. Social justice
determination of what the law shall be, but merely the ascertainment of the facts and means the promotion of the welfare of all the people, the adoption by the
circumstances upon which the application of said law is to be predicated. To Government of measures calculated to insure economic stability of all the
promulgate rules and regulations on the use of national roads and to determine competent elements of society, through the maintenance of a proper economic and
when and how long a national road should be closed to traffic, in view of the social equilibrium in the interrelations of the members of the community,
condition of the road or the traffic thereon and the requirements of public constitutionally, through the adoption of measures legally justifiable, or extra-
convenience and interest, is an administrative function which cannot be directly constitutionally, through the exercise of powers underlying the existence of all
discharged by the National Assembly. It must depend on the discretion of some governments on the time-honored principle of salus populi est suprema lex. Social
other government official to whom is confided the duty of determining whether the justice, therefore, must be founded on the recognition of the necessity of
proper occasion exists for executing the law. But it cannot be said that the exercise interdependence among divers and diverse units of a society and of the protection
of such discretion is the making of the law. that should be equally and evenly extended to all groups as a combined force in our

17
Labor Law 1
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social and economic life, consistent with the fundamental and paramount objective Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the
of the state of promoting the health, comfort, and quiet of all persons, and of points and during the hours as above indicated, for a period of one year from the
bringing about "the greatest good to the greatest number." date of the opening of the Colgante Bridge to traffic; that the Mayor of Manila and
the Acting Chief of Police of Manila have enforced and caused to be enforced the
rules and regulations thus adopted; that as a consequence of such enforcement, all
DECISION 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.
LAUREL, J.:
It is contended by the petitioner that Commonwealth Act No. 548 by which the
Director of Public Works, with the approval of the Secretary of Public Works and
Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, Communications, is authorized to promulgate rules and regulations for the
brought before this court this petition for a writ of prohibition against the regulation and control of the use of and traffic on national roads and streets is
respondents, A. D. Williams, as Chairman of the National Traffic Commission; unconstitutional because it constitutes an undue delegation of legislative power.
Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of This contention is untenable. As was observed by this court in Rubi v. Provincial
Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been better stated than
Manila; and Juan Dominguez, as Acting Chief of Police of Manila. in the early Ohio case decided by Judge Ranney, and since followed in a multitude
of cases, namely: ’The true distinction therefore is between the delegation of power
It is alleged in the petition that the National Traffic Commission, in its resolution of to make the law, which necessarily involves a discretion as to what it shall be, and
July 17, 1940, resolved to recommend to the Director of Public Works and to the conferring an authority or discretion as to its execution, to be exercised under and in
Secretary of Public Works and Communications that animal-drawn vehicles be pursuance of the law. The first cannot be done; to the latter no valid objection can
prohibited from passing along Rosario Street extending from Plaza Calderon de la be made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St., 88.)
Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1)
5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo may be committed by the Legislature to an executive department or official. The
Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the Legislature may make decisions of executive departments or subordinate officials
date of the opening of the Colgante Bridge to traffic; that the Chairman of the thereof, to whom it has committed the execution of certain acts, final on questions of
National Traffic Commission, on July 18, 1940 recommended to the Director of fact. (U.S. v. Kinkead, 248 Fed., 141.) The growing tendency in the decisions is to
Public Works the adoption of the measure proposed in the resolution give prominence to the ’necessity’ of the case."cralaw virtua1aw library
aforementioned, in pursuance of the provisions of Commonwealth Act No. 548
which authorizes said Director of Public Works, with the approval of the Secretary of Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph
Public Works and Communications, to promulgate rules and regulations to regulate
and control the use of and traffic on national roads; that on August 2, 1940, the "SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and
Director of Public Works, in his first indorsement to the Secretary of Public Works streets designated as national roads by acts of the National Assembly or by
and Communications, recommended to the latter the approval of the executive orders of the President of the Philippines, the Director of Public Works,
recommendation made by the Chairman of the National Traffic Commission as with the approval of the Secretary of Public Works and Communications, shall
aforesaid, with the modification that the closing of Rizal Avenue to traffic to animal- promulgate the necessary rules and regulations to regulate and control the use of
drawn vehicles be limited to the portion thereof extending from the railroad crossing and traffic on such roads and streets. Such rules and regulations, with the approval
at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of of the President, may contain provisions controlling or regulating the construction of
Public Works and Communications, in his second indorsement addressed to the buildings or other structures within a reasonable distance from along the national
Director of Public Works, approved the recommendation of the latter that Rosario roads. Such roads may be temporarily closed to any or all classes of traffic by the

18
Labor Law 1
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Director of Public Works and his duly authorized representatives whenever the promulgated June 12, 1939, and in Pangasinan Transportation v. The Public
condition of the road or the traffic thereon makes such action necessary or Service Commission, G.R. No. 47065, promulgated June 26, 1940, this Court had
advisable in the public convenience and interest, or for a specified period, with the occasion to observe that the principle of separation of powers has been made to
approval of the Secretary of Public Works and Communications."cralaw virtua1aw adapt itself to the complexities of modern governments, giving rise to the adoption,
library within certain limits, of the principle of "subordinate legislation," not only in the
United States and England but in practically all modern governments. Accordingly,
The above provisions of law do not confer legislative power upon the Director of with the growing complexity of modern life, the multiplication of the subjects of
Public Works and the Secretary of Public Works and Communications. The authority governmental regulations, and the increased difficulty of administering the laws, the
therein conferred upon them and under which they promulgated the rules and rigidity of the theory of separation of governmental powers has, to a large extent,
regulations now complained of is not to determine what public policy demands but been relaxed by permitting the delegation of greater powers by the legislative and
merely to carry out the legislative policy laid down by the National Assembly in said vesting a larger amount of discretion in administrative and executive officials, not
Act, to wit, "to promote safe transit upon and avoid obstructions on, roads and only in the execution of the laws, but also in the promulgation of certain rules and
streets designated as national roads by acts of the National Assembly or by regulations calculated to promote public interest.
executive orders of the President of the Philippines" and to close them temporarily
to any or all classes of traffic "whenever the condition of the road or the traffic The petitioner further contends that the rules and regulations promulgated by the
makes such action necessary or advisable in the public convenience and interest." respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an
The delegated power, if at all, therefore, is not the determination of what the law unlawful interference with legitimate business or trade and abridge the right to
shall be, but merely the ascertainment of the facts and circumstances upon which personal liberty and freedom of locomotion. Commonwealth Act No. 548 was
the application of said law is to be predicated. To promulgate rules and regulations passed by the National Assembly in the exercise of the paramount police power of
on the use of national roads and to determine when and how long a national road the state.
should be closed to traffic, in view of the condition of the road or the traffic thereon
and the requirements of public convenience and interest, is an administrative Said Act, by virtue of which the rules and regulations complained of were
function which cannot be directly discharged by the National Assembly. It must promulgated, aims to promote safe transit upon and avoid obstructions on national
depend on the discretion of some other government official to whom is confided the roads, in the interest and convenience of the public. In enacting said law, therefore,
duty of determining whether the proper occasion exists for executing the law. But it the National Assembly was prompted by considerations of public convenience and
cannot be said that the exercise of such discretion is the making of the law. As was welfare. It was inspired by a desire to relieve congestion of traffic. which is, to say
said in Locke’s Appeal (72 Pa. 491): "To assert that a law is less than a law, the least, a menace to public safety. Public welfare, then, lies at the bottom of the
because it is made to depend on a future event or act, is to rob the Legislature of enactment of said law, and the state in order to promote the general welfare may
the power to act wisely for the public welfare whenever a law is passed relating to a interfere with personal liberty, with property, and with business and occupations.
state of affairs not yet developed, or to things future and impossible to fully know." Persons and property may be subjected to all kinds of restraints and burdens, in
The proper distinction the court said was this: "The Legislature cannot delegate its order to secure the general comfort, health, and prosperity of the state (U.S. v.
power to make the law; but it can make a law to delegate a power to determine Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights
some fact or state of things upon which the law makes, or intends to make, its own of the individual are subordinated. Liberty is a blessing without which life is a misery,
action depend. To deny this would be to stop the wheels of government. There are but liberty should not be made to prevail over authority because then society will fall
many things upon which wise and useful legislation must depend which cannot be into anarchy. Neither should authority be made to prevail over liberty because then
known to the law-making power, and, must, therefore, be a subject of inquiry and the individual will fall into slavery. The citizen should achieve the required balance of
determination outside of the halls of legislation." (Field v. Clark, 143 U. S. 649, 694; liberty and authority in his mind through education and personal discipline, so that
36 L. Ed. 294.) there may be established the resultant equilibrium, which means peace and order
and happiness for all. The moment greater authority is conferred upon the
In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, government, logically so much is withdrawn from the residuum of liberty which

19
Labor Law 1
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resides in the people. The paradox lies in the fact that the apparent curtailment of In view of the foregoing, the writ of prohibition prayed for is hereby denied, with
liberty is precisely the very means of insuring its preservation. costs against the petitioner. So ordered.

The scope of police power keeps expanding as civilization advances. As was said in Avanceña, C.J., Imperial, Diaz. and Horrilleno. JJ. concur.
the case of Dobbins v. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), "the right to
exercise the police power is a continuing one, and a business lawful today may in
the future, because of the changed situation, the growth of population or other
causes, become a menace to the public health and welfare, and be required to yield
to the public good." And in People v. Pomar (46 Phil., 440), it was observed that
"advancing civilization is bringing within the police power of the state today things
which were not thought of as being within such power yesterday. The development
of civilization, the rapidly increasing population, the growth of public opinion, with an
increasing desire on the part of the masses and of the government to look after and
care for the interests of the individuals of the state, have brought within the police
power many questions for regulation which formerly were not so considered."cralaw
virtua1aw library

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

Social justice, therefore, must be founded on the recognition of the necessity of

interdependence among divers and diverse units of a society and of the protection
that should be equally and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and paramount objective
of the state of promoting the health, comfort, and quiet of all persons, and of
bringing about "the greatest good to the greatest number."cralaw virtua1aw library

20
Labor Law 1
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Republic of the Philippines These material facts recited in the basic petition are virtually undisputed and we
SUPREME COURT reproduce the same hereunder:
Manila
1. Individual respondents are all Port Stewards of Catering Sub-
SECOND DIVISION Department, Passenger Services Department of petitioner. Their
duties and responsibilities, among others, are:

Prepares meal orders and checklists, setting

G.R. No. 77875 February 4, 1993 up standard equipment in accordance with
the requirements of the type of service for
each flight; skiing, binning, and inventorying
PHILIPPINE AIRLINES, INC., petitioner,
of Commissary supplies and equipment.
vs.
ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO
DURAN, PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION, and THE 2. On various occasions, several deductions were made from
NATIONAL LABOR RELATIONS COMMISSION, respondents. their salary. The deductions represented losses of inventoried
items charged to them for mishandling of company properties . .
. which respondents resented. Such that on August 21, 1984,
Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T. Jamoralin, jr.
individual respondents, represented by the union, made a formal
and Paulino D. Ungos, Jr. for petitioner.
notice regarding the deductions to petitioner thru Mr. Reynaldo
Abad, Manager for Catering. . . .
Adolpho M. Guerzon for private respondents.
3. As there was no action taken on said representation, private
respondents filed a formal grievance on November 4, 1984
pursuant to the grievance machinery Step 1 of the Collective
REGALADO, J.: Bargaining Agreement between petitioner and the union. . . .
The topics which the union wanted to be discussed in the said
The instant petition for certiorari seeks to set aside the decision of The National grievance were the illegal/questionable salary deductions and
Labor Relations Commission (NLRC) in NLRC Case No. 4-1206-85, promulgated on inventory of bonded goods and merchandise being done by
December 11, 1986,1 containing the following disposition: catering service personnel which they believed should not be
their duty.
WHEREFORE, in view of the foregoing consideration, the
Decision appealed from is set aside and another one entered, 4. The said grievance was submitted on November 21, 1984 to
declaring the suspension of complainants to be illegal and the office of Mr. Reynaldo Abad, Manager for Catering, who at
consequently, respondent PAL is directed to pay complainants the time was on vacation leave. . . .
their salaries corresponding to the respective period(s) of their
suspension, and to delete the disciplinary action from 5. Subsequently, the grievants (individual respondents) thru the
complainants' service records.2 shop steward wrote a letter on December 5, 1984 addressed to
the office of Mr. Abad, who was still on leave at the time, that
inasmuch as no reply was made to their grievance which "was

21
Labor Law 1
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duly received by your secretary" and considering that petitioner 4. Since the grievance step 1 was not
had only five days to resolve the grievance as provided for in the decided and no action was done by your
CBA, said grievance as believed by them (private respondents) office within 5 days from November 21,
was deemed resolved in their favor. . . . 1984, per provision of the PAL-PALEA CBA,
Art. IV, Sec. 2, the grievance is deemed
6. Upon Mr. Abad's return on December 7, 1984, he resolved in PALEA's favor.
immediately informed the grievants and scheduled a meeting on
December 12, 1984. . . . 11. Going over the explanation, Mr. Abad found the same
unsatisfactory. Thus, a penalty of suspension ranging from 7
7. Thereafter, the individual respondents refused to conduct days to 30 days were (sic) imposed depending on the number of
inventory works. Alberto Santos, Jr. did not conduct ramp infractions committed. *
inventory on December 7, 10 and 12. Gilbert Antonio did not
conduct ramp inventory on December 10. In like manner, 12. After the penalty of suspension was meted down, PALEA
Regino Duran and Houdiel Magadia did not conduct the same filed another grievance asking for lifting of, or at least, holding in
on December 10 and 12. abeyance the execution of said penalty. The said grievance was
forthwith denied but the penalty of suspension with respect to
8. At the grievance meeting which was attended by some union respondent Ramos was modified, such that his suspension
representatives, Mr. Abad resolved the grievance by denying which was originally from January 15, 1985 to April 5, 1985 was
the petition of individual respondents and adopted the position shortened by one month and was lifted on March 5, 1985. The
that inventory of bonded goods is part of their duty as catering union, however, made a demand for the reimbursement of the
service personnel, and as for the salary deductions for losses, salaries of individual respondents during the period of their
he rationalized: suspension.

1. It was only proper that employees are 13. Petitioner stood pat (o)n the validity of the suspensions.
charged for the amount due to mishandling Hence, a complaint for illegal suspension was filed before the
of company property which resulted to Arbitration Branch of the Commission, . . . Labor Arbiter
losses. However, loss may be cost price Ceferina J. Diosana, on March 17, 1986, ruled in favor of
1/10 selling price. petitioner by dismissing the complaint. . . .3

9. As there was no ramp inventory conducted on the mentioned Private respondents appealed the decision of the labor arbiter to respondent
dates, Mr. Abad, on January 3, 1985 wrote by an inter-office commission which rendered the aforequoted decision setting aside the labor
memorandum addressed to the grievants, individual arbiter's order of dismissal. Petitioner's motion for reconsideration having been
respondents herein, for them to explain on (sic) why no denied, it interposed the present petition.
disciplinary action should be taken against them for not
conducting ramp inventory. . . . The Court is accordingly called upon to resolve the issue of whether or not public
respondent NLRC acted with grave abuse of discretion amounting to lack of
10. The directive was complied with . . . . The reason for not jurisdiction in rendering the aforementioned decision.
conducting ramp inventory was put forth as:

22
Labor Law 1
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Evidently basic and firmly settled is the rule that judicial review by this Court in labor not preempt the resolution of his grievance; rather, he has the duty to observe
cases does not go so far as to evaluate the sufficiency of the evidence upon which the status quo.6
the labor officer or office based his or its determination, but is limited to issues of
jurisdiction and grave abuse of discretion.4 It has not been shown that respondent Citing Section 1, Article IV of the CBA, petitioner further argues that respondent
NLRC has unlawfully neglected the performance of an act which the law specifically employees have the obligation, just as management has, to settle all labor disputes
enjoins it to perform as a duty or has otherwise unlawfully excluded petitioner from through friendly negotiations. Thus, Section 2 of the CBA should not be narrowly
the exercise of a right to which it is entitled. interpreted. 7 Before the prescriptive period of five days begins to run, two
concurrent requirements must be met, i.e., presentment of the grievance and
The instant case hinges on the interpretation of Section 2, Article IV of the PAL- its discussion between the shop steward and the division head who in this case is
PALEA Collective Bargaining Agreement, (hereinafter, CBA), to wit: Mr. Abad. Section 2 is not self-executing; the mere filing of the grievance does not
trigger the tolling of the prescriptive period.8
Sec. 2 — Processing of Grievances
Petitioner has sorely missed the point.
xxx xxx xxx
It is a fact that the sympathy of the Court is on the side of the laboring classes, not
STEP 1 — Any employee who believes that he has a justifiable only because the Constitution imposes such sympathy, but because of the one-
grievance shall take the matter up with his shop steward. If the sided relation between labor and capital.9 The constitutional mandate for the
shop steward feels there is justification for taking the matter up promotion of labor is as explicit as it is demanding. The purpose is to place the
with the Company, he shall record the grievance on the workingman on an equal plane with management — with all its power and influence
grievance form heretofore agreed upon by the parties. Two (2) — in negotiating for the advancement of his interests and the defense of his
copies of the grievance form properly filled, accepted, and rights.10 Under the policy of social justice, the law bends over backward to
signed shall then be presented to and discussed by the shop accommodate the interests of the working class on the humane justification that
steward with the division head. The division head shall answer those with less privileges in life should have more privileges in law. 11
the grievance within five (5) days from the date of presentation
by inserting his decision on the grievance form, signing and It is clear that the grievance was filed with Mr. Abad's secretary during his
dating same, and returning one copy to the shop steward. If the absence.12 Under Section 2 of the CBA aforequoted, the division head shall act on
division head fails to act within the five (5)-day regl(e)mentary the grievance within five (5) days from the date of presentation thereof, otherwise
period, the grievance must be resolved in favor of the aggrieved "the grievance must be resolved in favor of the aggrieved party." It is not disputed
party. If the division head's decision is not appealed to Step II, that the grievants knew that division head Reynaldo Abad was then "on leave" when
the grievance shall be considered settled on the basis of the they filed their grievance which was received by Abad's secretary.13 This knowledge,
decision made, and shall not be eligible for further however, should not prevent the application of the CBA.
appeal.5 (Emphasis ours.)
On this score, respondent NLRC aptly ruled:
Petitioner submits that since the grievance machinery was established for both labor
and management as a vehicle to thresh out whatever problems may arise in the . . . Based on the facts heretofore narrated, division head
course of their relationship, every employee is duty bound to present the matter Reynaldo Abad had to act on the grievance of complainants
before management and give the latter an opportunity to impose whatever within five days from 21 November 1984. Therefore, when
corrective measure is possible. Under normal circumstances, an employee should Reynaldo Abad, failed to act within the reglementary period,
complainants, believing in good faith that the effect of the CBA

23
Labor Law 1
Part 1

had already set in, cannot be blamed if they did not conduct ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED
ramp inventory for the days thereafter. In this regard, and the assailed decision of respondent National Labor Relations Commission is
respondent PAL argued that Reynaldo Abad was on leave at the AFFIRMED. This judgment is immediately executory.
time the grievance was presented. This, however, is of no
moment, for it is hard to believe that everything under Abad's SO ORDERED.
authority would have to stand still during his absence from
office. To be sure, it is to be expected that someone has to be
Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.
left to attend to Abad's duties. Of course, this may be a product
of inadvertence on the part of PAL management, but certainly,
complainants should not be made to suffer the consequences. 14

Contrary to petitioner's submission,15 the grievance of employees is not a matter

which requires the personal act of Mr. Abad and thus could not be delegated.
Petitioner could at least have assigned an officer-in-charge to look into the
grievance and possibly make his recommendation to Mr. Abad. It is of no moment
that Mr. Abad immediately looked into the grievance upon returning to work, for it
must be remembered that the grievants are workingmen who suffered salary
deductions and who rely so much on their meager income for their daily subsistence
and survival. Besides, it is noteworthy that when these employees first presented
their complaint on August 21, 1984, petitioner failed to act on it. It was only after a
formal grievance was filed and after Mr. Abad returned to work on December 7,
1984 that petitioner decided to turn an ear to their plaints.

As respondent NLRC has pointed out, Abad's failure to act on the matter may have
been due to petitioner's inadvertence,16 but it is clearly too much of an injustice if the
employees be made to bear the dire effects thereof. Much as the latter were willing
to discuss their grievance with their employer, the latter closed the door to this
possibility by not assigning someone else to look into the matter during Abad's
absence. Thus, private respondents should not be faulted for believing that the
effects of the CBA in their favor had already stepped into the controversy.

If the Court were to follow petitioner's line of reasoning, it would be easy for
management to delay the resolution of labor problems, the complaints of the
workers in particular, and hide under the cloak of its officers being "on leave" to
avoid being caught by the 5-day deadline under the CBA. If this should be allowed,
the workingmen will suffer great injustice for they will necessarily be at the mercy of
their employer. That could not have been the intendment of the pertinent provision
of the CBA, much less the benevolent policy underlying our labor laws.

24
Labor Law 1
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Republic of the Philippines In its answer, petitioner claimed that it erroneously included items subject of the
SUPREME COURT complaint in the computation of the thirteenth month pay for the years prior to 1982,
Manila upon a doubtful and difficult question of law. According to petitioner, this mistake
was discovered only in 1981 after the promulgation of the Supreme Court decision
FIRST DIVISION in the case of San Miguel Corporation v. Inciong (103 SCRA 139).

A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos, in

favor of respondent ALU. The dispositive portion of the decision reads as follows:
G.R. No. 85073 August 24, 1993
WHEREFORE, in view of all the foregoing considerations,
judgment is hereby rendered ordering respondent to pay the
DAVAO FRUITS CORPORATION, petitioner,
1982 — 13th month pay differential to all its rank-and-file
vs.
workers/employees herein represented by complainant Union
ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rank-and-file
(Rollo, p. 32).
workers/employees of DAVAO FRUITS CORPORATION and NATIONAL
LABOR RELATIONS COMMISSION, respondents.
Petitioner appealed the decision of the Labor Arbiter to the NLRC, which affirmed
the said decision accordingly dismissed the appeal for lack of merit.
Dominguez & Paderna Law Offices for petitioners.

Petitioner elevated the matter to this Court in a petition for review under Rule 45 of
The Solicitor General for public respondents.
the Revised Rules of Court. This error notwithstanding and in the interest of justice,
this Court resolved to treat the instant petition as a special civil action
for certiorari under Rule 65 of the Revised Rules of Court (P.D. No. 1391, Sec. 5;
Rules Implementing P.D. No. 1391, Rule II, Sec. 7; Cando v. National Labor
QUIASON, J.: Relations Commission, 189 SCRA 666 [1990]: Pearl S. Buck Foundation, Inc. v.
National Labor Relations Commission, 182 SCRA 446 [1990]).
This is a petition for certiorari to set aside the resolution of the National Labor
Relations Commission (NLRC), dismissing for lack of merit petitioner's appeal from The crux of the present controversy is whether in the computation of the thirteenth
the decision of the Labor Arbiter in NLRC Case No. 1791-MC-X1-82. month pay given by employers to their employees under P.D.
No. 851, payments for sick, vacation and maternity leaves, premiums for work done
On December 28, 1982 respondent Associated Labor Unions (ALU), for and in on rest days and special holidays, and pay for regular holidays may be excluded in
behalf of all the rank-and-file workers and employees of petitioner, filed a complaint the computation and payment thereof, regardless of long-standing company
(NLRC Case No. 1791-MC-XI-82) before the Ministry of Labor and Employment, practice.
Regional Arbitration Branch XI, Davao City, against petitioner, for "Payment of the
Thirteenth-Month Pay Differentials." Respondent ALU sought to recover from Presidential Decree No. 851, promulgated on December 16, 1975, mandates all
petitioner the thirteenth month pay differential for 1982 of its rank-and-file employers to pay their employees a thirteenth month pay. How this pay shall be
employees, equivalent to their sick, vacation and maternity leaves, premium for computed is set forth in Section 2 of the "Rules and Regulations Implementing
work done on rest days and special holidays, and pay for regular holidays which Presidential Decree No. 851," thus:
petitioner, allegedly in disregard of company practice since 1975, excluded from the
computation of the thirteenth month pay for 1982.

25
Labor Law 1
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SECTION 2. . . . remuneration other than the daily wage rate is excluded. It follows therefore, that
payments for sick, vacation and maternity leaves, premium for work done on rest
(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the days special holidays, as well as pay for regular holidays, are likewise excluded in
basic salary of an employee within a calendar year. computing the basic salary for the purpose of determining the thirteen month pay.

(b) "Basic Salary" shall include all renumerations or earnings Petitioner claims that the mistake in the interpretation of "basic salary" was caused
paid by an employer to an employee for services rendered but by the opinions, orders and rulings rendered by then Acting Labor Secretary Amado
may not include cost of living allowances granted pursuant to C. Inciong, expressly including the subject items in computing the thirteenth month
Presidential Decree No. 525 or Letter of Instructions No. 174, pay. The inclusion of these items is clearly not sanctioned under P.D. No. 851, the
profit-sharing payments, and all allowances and monetary governing law and its implementing rules, which speak only of "basis salary" as the
benefits which are not considered or integrated as part of the basis for determining the thirteenth month pay.
regular or basic salary of the employee at the time of the
promulgation of the Decree on December 16, 1975. Moreover, whatever doubt arose in the interpretation of P.D. No. 851 was erased by
the Supplementary Rules and Regulations which clarified the definition of "basic
The Department of Labor and Employment issued on January 16, 1976 the salary."
"Supplementary Rules and Regulations Implementing P.D. No. 851" which in
paragraph 4 thereof further defines the term "basic salary," thus: As pointed out in San Miguel Corporation v. Inciong, (supra):

4. Overtime pay, earnings and other renumerations which are While doubt may have been created by the prior Rules and
not part of the basic salary shall not be included in the Regulations and Implementing Presidential Decree 851 which
computation of the 13th month pay. defines basic salary to include all remunerations or
earnings paid by an employer to an employee, this cloud is
Clearly, the term "basic salary" includes renumerations or earnings paid by the dissipated in the later and more controlling Supplementary
employer to employee, but excludes cost-of-living allowances, profit-sharing Rules and Regulations which categorically, exclude from the
payments, and all allowances and monetary benefits which have not been definition of basic salary earnings and other remunerations paid
considered as part of the basic salary of the employee as of December 16, 1975. by employer to an employee. A cursory perusal of the two sets
The exclusion of cost-of-living allowances and profit sharing payments shows the of Rules indicates that what has hitherto been the subject of
intention to strip "basic salary" of payments which are otherwise considered as broad inclusion is now a subject of broad exclusion. The
"fringe" benefits. This intention is emphasized in the catch all phrase "all allowances Supplementary Rules and Regulations cure the seeming
and monetary benefits which are not considered or integrated as part of the basic tendency of the former rules to include all remunerations and
salary." Basic salary, therefore does not merely exclude the benefits expressly earnings within the definition of basic salary.
mentioned but all payments which may be in the form of "fringe" benefits or
allowances (San Miguel Corporation v. Inciong, supra, at 143-144). In fact, the The all-embracing phrase "earnings and other remunerations
Supplementary Rules and Regulations Implementing P.D. No. 851 are very which are deemed not part of the basic salary includes within its
emphatic in declaring that overtime pay, earnings and other renumerations shall be meaning payments for sick, vacation, or maternity leaves,
excluded in computing the thirteenth month pay. premium for work performed on rest days and special holidays,
pay for regular holidays and night differentials. As such they are
In other words, whatever compensation an employee receives for an eight-hour deemed not part of the basic salary and shall not be considered
work daily or the daily wage rate in the basic salary. Any compensation or in the computation of the 13th-month pay. If they were not so

26
Labor Law 1
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excluded, it is hard to find any "earnings and other WHEREFORE, finding no grave abuse of discretion on the part of the NLRC, the
remunerations" expressly excluded in computation of the 13th petition is hereby DISMISSED, and the questioned decision of respondent NLRC is
month-pay. Then the exclusionary provision would prove to be AFFIRMED accordingly.
idle and with purpose.
Cruz, Griño-Aquino, Davide, Jr. and Bellosillo, JJ., concur.
The "Supplementary Rules and Regulations Implementing P.D. No. 851," which put
to rest all doubts in the computation of the thirteenth month pay, was issued by the
Secretary of Labor as early as January 16, 1976, barely one month after the
effectivity of P.D. No. 851 and its Implementing Rules. And yet, petitioner computed
and paid the thirteenth month pay, without excluding the subject items therein until
1981. Petitioner continued its practice in December 1981, after promulgation of the
afore-quoted San Miguel decision on February 24, 1981, when petitioner
purportedly "discovered" its mistake.

From 1975 to 1981, petitioner had freely, voluntarily and continuously included in
the computation of its employees' thirteenth month pay, the payments for sick,
vacation and maternity leaves, premiums for work done on rest days and special
holidays, and pay for regular holidays. The considerable length of time the
questioned items had been included by petitioner indicates a unilateral and
voluntary act on its part, sufficient in itself to negate any claim of mistake.

A company practice favorable to the employees had indeed been established and
the payments made pursuant thereto, ripened into benefits enjoyed by them. And
any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer, by virtue of Section 10 of
the Rules and Regulations Implementing P.D. No. 851, and Article 100 of the labor
of the Philippines, which prohibit the diminution or elimination by the employer of the
employees' existing benefits (Tiangco v. Leogardo, Jr., 122 SCRA 267, [1983]).

Petitioner cannot invoke the principle of solutio indebiti which as a civil law concept
that is not applicable in Labor Law. Besides, in solutio indebiti, the obligee is
required to return to the obligor whatever he received from the latter (Civil Code of
the Philippines, Arts. 2154 and 2155). Petitioner in the instant case, does not
demand the return of what it paid respondent ALU from 1975 until 1981; it merely
wants to "rectify" the error it made over these years by excluding unilaterally from
the thirteenth month pay in 1982 the items subject of litigation. Solutio indebiti,
therefore, is not applicable to the instant case.

27
Labor Law 1
Part 1

Republic of the Philippines employment contract or for three (3) months for every year of the unexpired
SUPREME COURT term, whichever is less.
Manila
x x x x (Emphasis and underscoring supplied)
EN BANC
does not magnify the contributions of overseas Filipino workers (OFWs) to national
G.R. No. 167614 March 24, 2009 development, but exacerbates the hardships borne by them by unduly limiting their
entitlement in case of illegal dismissal to their lump-sum salary either for the
ANTONIO M. SERRANO, Petitioner, unexpired portion of their employment contract "or for three months for every year of
vs. the unexpired term, whichever is less" (subject clause). Petitioner claims that the
Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., last clause violates the OFWs' constitutional rights in that it impairs the terms of their
INC., Respondents. contract, deprives them of equal protection and denies them due process.

DECISION By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails
the December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of
Appeals (CA), which applied the subject clause, entreating this Court to declare the
AUSTRIA-MARTINEZ, J.:
subject clause unconstitutional.
For decades, the toil of solitary migrants has helped lift entire families and
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co.,
communities out of poverty. Their earnings have built houses, provided health care,
Ltd. (respondents) under a Philippine Overseas Employment Administration
equipped schools and planted the seeds of businesses. They have woven together
(POEA)-approved Contract of Employment with the following terms and conditions:
the world by transmitting ideas and knowledge from country to country. They have
provided the dynamic human link between cultures, societies and economies. Yet,
only recently have we begun to understand not only how much international Duration of contract 12 months
migration impacts development, but how smart public policies can magnify this
effect. Position Chief Officer
Basic monthly salary US$1,400.00
United Nations Secretary-General Ban Ki-Moon
Global Forum on Migration and Development Hours of work 48.0 hours per week
Brussels, July 10, 20071 Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month5
For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th
paragraph of Section 10, Republic Act (R.A.) No. 8042,2 to wit:
On March 19, 1998, the date of his departure, petitioner was constrained to accept a
Sec. 10. Money Claims. - x x x In case of termination of overseas employment downgraded employment contract for the position of Second Officer with a monthly
without just, valid or authorized cause as defined by law or contract, the workers salary of US$1,000.00, upon the assurance and representation of respondents that
shall be entitled to the full reimbursement of his placement fee with interest of twelve he would be made Chief Officer by the end of April 1998.6
percent (12%) per annum, plus his salaries for the unexpired portion of his

28
Labor Law 1
Part 1

Respondents did not deliver on their promise to make petitioner Chief 01/30,
Officer.7 Hence, petitioner refused to stay on as Second Officer and was repatriated 1998
to the Philippines on May 26, 1998.8
Dec. 2,590.00
01/31,
Petitioner's employment contract was for a period of 12 months or from March 19,
1998
1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he
had served only two (2) months and seven (7) days of his contract, leaving an Jan. 2,590.00
unexpired portion of nine (9) months and twenty-three (23) days. 01/31,
1999
Petitioner filed with the Labor Arbiter (LA) a Complaint9 against respondents for Feb. 2,590.00
constructive dismissal and for payment of his money claims in the total amount of 01/28,
US$26,442.73, broken down as follows: 1999
Mar. 1,640.00
May US$ 413.90 1/19,
27/31, 1999
1998 (5 (19
days) days)
incl. incl.
Leave leave
pay pay
June 2,590.00 --------------------------------------------------------------------------------
01/30,
25,382.23
1998
Amount
July 2,590.00
adjuste
01/31,
d to
1998
chief
August 2,590.00 mate's
01/31, salary
1998
(March 1,060.5010
Sept. 2,590.00 19/31,
01/30, 1998 to
1998 April
Oct. 2,590.00 1/30,
01/31, 1998) +
1998 --------------------------------------------------------------------------------------
Nov. 2,590.00 --------

29
Labor Law 1
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TOTAL US$ 26,442.7311 employment contract - applying the subject clause. However, the LA
CLAIM applied the salary rate of US$2,590.00, consisting of petitioner's "[b]asic
salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, +
US$490.00/month, vacation leave pay = US$2,590.00/compensation per
as well as moral and exemplary damages and attorney's fees. month."14

The LA rendered a Decision dated July 15, 1999, declaring the dismissal Respondents appealed15 to the National Labor Relations Commission
of petitioner illegal and awarding him monetary benefits, to wit: (NLRC) to question the finding of the LA that petitioner was illegally
dismissed.
WHEREFORE, premises considered, judgment is hereby rendered
declaring that the dismissal of the complainant (petitioner) by the Petitioner also appealed16 to the NLRC on the sole issue that the LA erred
respondents in the above-entitled case was illegal and the respondents in not applying the ruling of the Court in Triple Integrated Services, Inc. v.
are hereby ordered to pay the complainant [petitioner], jointly and National Labor Relations Commission17 that in case of illegal dismissal,
severally, in Philippine Currency, based on the rate of exchange prevailing OFWs are entitled to their salaries for the unexpired portion of their
at the time of payment, the amount of EIGHT THOUSAND SEVEN contracts.18
HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the
complainant’s salary for three (3) months of the unexpired portion of
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to
the aforesaid contract of employment.1avvphi1
wit:
The respondents are likewise ordered to pay the complainant [petitioner],
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED.
jointly and severally, in Philippine Currency, based on the rate of
Respondents are hereby ordered to pay complainant, jointly and severally,
exchange prevailing at the time of payment, the amount of FORTY FIVE
in Philippine currency, at the prevailing rate of exchange at the time of
U.S. DOLLARS (US$ 45.00),12 representing the complainant’s claim for a
salary differential. In addition, the respondents are hereby ordered to pay payment the following:
the complainant, jointly and severally, in Philippine Currency, at the
exchange rate prevailing at the time of payment, the complainant’s 1. Three (3) months salary
(petitioner's) claim for attorney’s fees equivalent to ten percent (10%) of
the total amount awarded to the aforesaid employee under this Decision. $1,400 x 3 US$4,200.00
2. Salary differential 45.00
The claims of the complainant for moral and exemplary damages are
hereby DISMISSED for lack of merit. US$4,245.00
3. 10% Attorney’s fees 424.50
All other claims are hereby DISMISSED.
TOTAL US$4,669.50
SO ORDERED.13 (Emphasis supplied)
The other findings are affirmed.
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based
his computation on the salary period of three months only -- rather than SO ORDERED.19
the entire unexpired portion of nine months and 23 days of petitioner's

30
Labor Law 1
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The NLRC corrected the LA's computation of the lump-sum salary awarded to III
petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00
because R.A. No. 8042 "does not provide for the award of overtime pay, which Even without considering the constitutional limitations [of] Sec. 10 of Republic Act
should be proven to have been actually performed, and for vacation leave pay."20 No. 8042, the Court of Appeals gravely erred in law in excluding from petitioner’s
award the overtime pay and vacation pay provided in his contract since under the
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the contract they form part of his salary.28
constitutionality of the subject clause.21 The NLRC denied the motion.22
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional already old and sickly, and he intends to make use of the monetary award for his
challenge against the subject clause.24 After initially dismissing the petition on a medical treatment and medication.29 Required to comment, counsel for petitioner
technicality, the CA eventually gave due course to it, as directed by this Court in its filed a motion, urging the court to allow partial execution of the undisputed monetary
Resolution dated August 7, 2003 which granted the petition for certiorari, docketed award and, at the same time, praying that the constitutional question be resolved. 30
as G.R. No. 151833, filed by petitioner.
Considering that the parties have filed their respective memoranda, the Court now
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the takes up the full merit of the petition mindful of the extreme importance of the
reduction of the applicable salary rate; however, the CA skirted the constitutional constitutional question raised therein.
issue raised by petitioner.25
On the first and second issues
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings
his cause to this Court on the following grounds: The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was
illegal is not disputed. Likewise not disputed is the salary differential of US$45.00
I awarded to petitioner in all three fora. What remains disputed is only the
computation of the lump-sum salary to be awarded to petitioner by reason of his
The Court of Appeals and the labor tribunals have decided the case in a way not in illegal dismissal.
accord with applicable decision of the Supreme Court involving similar issue of
granting unto the migrant worker back wages equal to the unexpired portion of his Applying the subject clause, the NLRC and the CA computed the lump-sum salary
contract of employment instead of limiting it to three (3) months of petitioner at the monthly rate of US$1,400.00 covering the period of three months
out of the unexpired portion of nine months and 23 days of his employment contract
II or a total of US$4,200.00.

In the alternative that the Court of Appeals and the Labor Tribunals were merely Impugning the constitutionality of the subject clause, petitioner contends that, in
applying their interpretation of Section 10 of Republic Act No. 8042, it is submitted addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to
that the Court of Appeals gravely erred in law when it failed to discharge its judicial US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the
duty to decide questions of substance not theretofore determined by the Honorable entire nine months and 23 days left of his employment contract, computed at the
Supreme Court, particularly, the constitutional issues raised by the petitioner on the monthly rate of US$2,590.00.31
constitutionality of said law, which unreasonably, unfairly and arbitrarily limits
payment of the award for back wages of overseas workers to three (3) months.

31
Labor Law 1
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The Arguments of Petitioner In terms of practical application, the local employers are not limited to the amount of
backwages they have to give their employees they have illegally dismissed,
Petitioner contends that the subject clause is unconstitutional because it unduly following well-entrenched and unequivocal jurisprudence on the matter. On the
impairs the freedom of OFWs to negotiate for and stipulate in their overseas other hand, foreign employers will only be limited to giving the illegally dismissed
employment contracts a determinate employment period and a fixed salary migrant workers the maximum of three (3) months unpaid salaries notwithstanding
package.32 It also impinges on the equal protection clause, for it treats OFWs the unexpired term of the contract that can be more than three (3) months.38
differently from local Filipino workers (local workers) by putting a cap on the amount
of lump-sum salary to which OFWs are entitled in case of illegal dismissal, while Lastly, petitioner claims that the subject clause violates the due process clause, for
setting no limit to the same monetary award for local workers when their dismissal is it deprives him of the salaries and other emoluments he is entitled to under his fixed-
declared illegal; that the disparate treatment is not reasonable as there is no period employment contract.39
substantial distinction between the two groups;33 and that it defeats Section
18,34 Article II of the Constitution which guarantees the protection of the rights and The Arguments of Respondents
welfare of all Filipino workers, whether deployed locally or overseas.35
In their Comment and Memorandum, respondents contend that the constitutional
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are issue should not be entertained, for this was belatedly interposed by petitioner in his
not in line with existing jurisprudence on the issue of money claims of illegally appeal before the CA, and not at the earliest opportunity, which was when he filed
dismissed OFWs. Though there are conflicting rulings on this, petitioner urges the an appeal before the NLRC.40
Court to sort them out for the guidance of affected OFWs.36
The Arguments of the Solicitor General
Petitioner further underscores that the insertion of the subject clause into R.A. No.
8042 serves no other purpose but to benefit local placement agencies. He marks
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July
the statement made by the Solicitor General in his Memorandum, viz.:
15, 1995, its provisions could not have impaired petitioner's 1998 employment
contract. Rather, R.A. No. 8042 having preceded petitioner's contract, the provisions
Often, placement agencies, their liability being solidary, shoulder the payment of thereof are deemed part of the minimum terms of petitioner's employment,
money claims in the event that jurisdiction over the foreign employer is not acquired especially on the matter of money claims, as this was not stipulated upon by the
by the court or if the foreign employer reneges on its obligation. Hence, placement parties.42
agencies that are in good faith and which fulfill their obligations are unnecessarily
penalized for the acts of the foreign employer. To protect them and to promote their
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the
continued helpful contribution in deploying Filipino migrant workers, liability for
nature of their employment, such that their rights to monetary benefits must
money claims was reduced under Section 10 of R.A. No. 8042. 37 (Emphasis
necessarily be treated differently. The OSG enumerates the essential elements that
supplied)
distinguish OFWs from local workers: first, while local workers perform their jobs
within Philippine territory, OFWs perform their jobs for foreign employers, over
Petitioner argues that in mitigating the solidary liability of placement agencies, the whom it is difficult for our courts to acquire jurisdiction, or against whom it is almost
subject clause sacrifices the well-being of OFWs. Not only that, the provision makes impossible to enforce judgment; and second, as held in Coyoca v. National Labor
foreign employers better off than local employers because in cases involving the Relations Commission43 and Millares v. National Labor Relations
illegal dismissal of employees, foreign employers are liable for salaries covering a Commission,44 OFWs are contractual employees who can never acquire regular
maximum of only three months of the unexpired employment contract while local employment status, unlike local workers who are or can become regular employees.
employers are liable for the full lump-sum salaries of their employees. As petitioner Hence, the OSG posits that there are rights and privileges exclusive to local
puts it: workers, but not available to OFWs; that these peculiarities make for a reasonable

32
Labor Law 1
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and valid basis for the differentiated treatment under the subject clause of the judicial function – its function in the present case is limited to determining questions
money claims of OFWs who are illegally dismissed. Thus, the provision does not of fact to which the legislative policy of R.A. No. 8042 is to be applied and to
violate the equal protection clause nor Section 18, Article II of the Constitution.45 resolving such questions in accordance with the standards laid down by the law
itself;55 thus, its foremost function is to administer and enforce R.A. No. 8042, and
Lastly, the OSG defends the rationale behind the subject clause as a police power not to inquire into the validity of its provisions. The CA, on the other hand, is vested
measure adopted to mitigate the solidary liability of placement agencies for this with the power of judicial review or the power to declare unconstitutional a law or a
"redounds to the benefit of the migrant workers whose welfare the government provision thereof, such as the subject clause.56 Petitioner's interposition of the
seeks to promote. The survival of legitimate placement agencies helps [assure] the constitutional issue before the CA was undoubtedly seasonable. The CA was
government that migrant workers are properly deployed and are employed under therefore remiss in failing to take up the issue in its decision.
decent and humane conditions."46
The third condition that the constitutional issue be critical to the resolution of the
The Court's Ruling case likewise obtains because the monetary claim of petitioner to his lump-sum
salary for the entire unexpired portion of his 12-month employment contract, and not
just for a period of three months, strikes at the very core of the subject clause.
The Court sustains petitioner on the first and second issues.

Thus, the stage is all set for the determination of the constitutionality of the subject
When the Court is called upon to exercise its power of judicial review of the acts of
clause.
its co-equals, such as the Congress, it does so only when these conditions obtain:
(1) that there is an actual case or controversy involving a conflict of rights
susceptible of judicial determination;47 (2) that the constitutional question is raised Does the subject clause violate Section 10,
by a proper party48 and at the earliest opportunity;49 and (3) that the constitutional Article III of the Constitution on non-impairment
question is the very lis mota of the case,50 otherwise the Court will dismiss the case of contracts?
or decide the same on some other ground.51
The answer is in the negative.
Without a doubt, there exists in this case an actual controversy directly involving
petitioner who is personally aggrieved that the labor tribunals and the CA computed Petitioner's claim that the subject clause unduly interferes with the stipulations in his
his monetary award based on the salary period of three months only as provided contract on the term of his employment and the fixed salary package he will
under the subject clause. receive57 is not tenable.

The constitutional challenge is also timely. It should be borne in mind that the Section 10, Article III of the Constitution provides:
requirement that a constitutional issue be raised at the earliest opportunity entails
the interposition of the issue in the pleadings before a competent court, such that, No law impairing the obligation of contracts shall be passed.
if the issue is not raised in the pleadings before that competent court, it cannot be
considered at the trial and, if not considered in the trial, it cannot be considered on
The prohibition is aligned with the general principle that laws newly enacted have
appeal.52 Records disclose that the issue on the constitutionality of the subject
only a prospective operation,58 and cannot affect acts or contracts already
clause was first raised, not in petitioner's appeal with the NLRC, but in his Motion for
perfected;59 however, as to laws already in existence, their provisions are read into
Partial Reconsideration with said labor tribunal,53 and reiterated in his Petition
contracts and deemed a part thereof.60 Thus, the non-impairment clause under
for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably raised
Section 10, Article II is limited in application to laws about to be enacted that would
because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-

33
Labor Law 1
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in any way derogate from existing acts or contracts by enlarging, abridging or in any To Filipino workers, the rights guaranteed under the foregoing constitutional
manner changing the intention of the parties thereto. provisions translate to economic security and parity: all monetary benefits should be
equally enjoyed by workers of similar category, while all monetary obligations should
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded be borne by them in equal degree; none should be denied the protection of the laws
the execution of the employment contract between petitioner and respondents in which is enjoyed by, or spared the burden imposed on, others in like
1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, circumstances.65
impaired the employment contract of the parties. Rather, when the parties executed
their 1998 employment contract, they were deemed to have incorporated into it all Such rights are not absolute but subject to the inherent power of Congress to
the provisions of R.A. No. 8042. incorporate, when it sees fit, a system of classification into its legislation; however,
to be valid, the classification must comply with these requirements: 1) it is based on
But even if the Court were to disregard the timeline, the subject clause may not be substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited
declared unconstitutional on the ground that it impinges on the impairment clause, to existing conditions only; and 4) it applies equally to all members of the class.66
for the law was enacted in the exercise of the police power of the State to regulate a
business, profession or calling, particularly the recruitment and deployment of There are three levels of scrutiny at which the Court reviews the constitutionality of a
OFWs, with the noble end in view of ensuring respect for the dignity and well-being classification embodied in a law: a) the deferential or rational basis scrutiny in which
of OFWs wherever they may be employed.61 Police power legislations adopted by the challenged classification needs only be shown to be rationally related to serving
the State to promote the health, morals, peace, education, good order, safety, and a legitimate state interest;67 b) the middle-tier or intermediate scrutiny in which the
general welfare of the people are generally applicable not only to future contracts government must show that the challenged classification serves an important state
but even to those already in existence, for all private contracts must yield to the interest and that the classification is at least substantially related to serving that
superior and legitimate measures taken by the State to promote public welfare.62 interest;68 and c) strict judicial scrutiny69 in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right70 or operates to the
Does the subject clause violate Section 1, peculiar disadvantage of a suspect class71 is presumed unconstitutional, and the
Article III of the Constitution, and Section 18, burden is upon the government to prove that the classification is necessary to
Article II and Section 3, Article XIII on labor achieve a compelling state interest and that it is the least restrictive means to
as a protected sector? protect such interest.72

The answer is in the affirmative. Under American jurisprudence, strict judicial scrutiny is triggered by suspect
classifications73 based on race74 or gender75 but not when the classification is drawn
along income categories.76
Section 1, Article III of the Constitution guarantees:

It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng

No person shall be deprived of life, liberty, or property without due process of law
Pilipinas) Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the
nor shall any person be denied the equal protection of the law.
constitutionality of a provision in the charter of the Bangko Sentral ng
Pilipinas (BSP), a government financial institution (GFI), was challenged for
Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor maintaining its rank-and-file employees under the Salary Standardization Law
sector, without distinction as to place of deployment, full protection of their rights (SSL), even when the rank-and-file employees of other GFIs had been exempted
and welfare. from the SSL by their respective charters. Finding that the disputed provision
contained a suspect classification based on salary grade, the Court deliberately
employed the standard of strict judicial scrutiny in its review of the constitutionality of

34
Labor Law 1
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said provision. More significantly, it was in this case that the Court revealed the support for a more vigorous state effort towards achieving a reasonable measure of
broad outlines of its judicial philosophy, to wit: equality.

Congress retains its wide discretion in providing for a valid classification, and its Our present Constitution has gone further in guaranteeing vital social and economic
policies should be accorded recognition and respect by the courts of justice except rights to marginalized groups of society, including labor. Under the policy of social
when they run afoul of the Constitution. The deference stops where the justice, the law bends over backward to accommodate the interests of the working
classification violates a fundamental right, or prejudices persons accorded class on the humane justification that those with less privilege in life should have
special protection by the Constitution. When these violations arise, this Court more in law. And the obligation to afford protection to labor is incumbent not only on
must discharge its primary role as the vanguard of constitutional guaranties, and the legislative and executive branches but also on the judiciary to translate this
require a stricter and more exacting adherence to constitutional limitations. Rational pledge into a living reality. Social justice calls for the humanization of laws and the
basis should not suffice. equalization of social and economic forces by the State so that justice in its rational
and objectively secular conception may at least be approximated.
Admittedly, the view that prejudice to persons accorded special protection by the
Constitution requires a stricter judicial scrutiny finds no support in American or xxxx
English jurisprudence. Nevertheless, these foreign decisions and authorities are not
per se controlling in this jurisdiction. At best, they are persuasive and have been Under most circumstances, the Court will exercise judicial restraint in deciding
used to support many of our decisions. We should not place undue and fawning questions of constitutionality, recognizing the broad discretion given to Congress in
reliance upon them and regard them as indispensable mental crutches without exercising its legislative power. Judicial scrutiny would be based on the "rational
which we cannot come to our own decisions through the employment of our own basis" test, and the legislative discretion would be given deferential treatment.
endowments. We live in a different ambience and must decide our own problems in
the light of our own interests and needs, and of our qualities and even
But if the challenge to the statute is premised on the denial of a fundamental right,
idiosyncrasies as a people, and always with our own concept of law and justice. Our
or the perpetuation of prejudice against persons favored by the Constitution
laws must be construed in accordance with the intention of our own lawmakers and
with special protection, judicial scrutiny ought to be more strict. A weak and
such intent may be deduced from the language of each law and the context of other
watered down view would call for the abdication of this Court’s solemn duty to strike
local legislation related thereto. More importantly, they must be construed to serve
down any law repugnant to the Constitution and the rights it enshrines. This is true
our own public interest which is the be-all and the end-all of all our laws. And it need
whether the actor committing the unconstitutional act is a private person or the
not be stressed that our public interest is distinct and different from others.
government itself or one of its instrumentalities. Oppressive acts will be struck down
regardless of the character or nature of the actor.
xxxx
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal
protection as a tool of effective judicial intervention.
In the case at bar, the challenged proviso operates on the basis of the salary grade
or officer-employee status. It is akin to a distinction based on economic class and
Equality is one ideal which cries out for bold attention and action in the Constitution. status, with the higher grades as recipients of a benefit specifically withheld from the
The Preamble proclaims "equality" as an ideal precisely in protest against crushing lower grades. Officers of the BSP now receive higher compensation packages that
inequities in Philippine society. The command to promote social justice in Article II, are competitive with the industry, while the poorer, low-salaried employees are
Section 10, in "all phases of national development," further explicitated in Article XIII, limited to the rates prescribed by the SSL. The implications are quite disturbing:
are clear commands to the State to take affirmative action in the direction of greater BSP rank-and-file employees are paid the strictly regimented rates of the SSL while
equality. x x x [T]here is thus in the Philippine Constitution no lack of doctrinal employees higher in rank - possessing higher and better education and

35
Labor Law 1
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opportunities for career advancement - are given higher compensation packages to into play only when the employment contract concerned has a term of at least
entice them to stay. Considering that majority, if not all, the rank-and-file employees one (1) year or more. This is evident from the words "for every year of the
consist of people whose status and rank in life are less and limited, especially in unexpired term" which follows the words "salaries x x x for three months." To
terms of job marketability, it is they - and not the officers - who have the real follow petitioners’ thinking that private respondent is entitled to three (3) months
economic and financial need for the adjustment . This is in accord with the policy of salary only simply because it is the lesser amount is to completely disregard and
the Constitution "to free the people from poverty, provide adequate social services, overlook some words used in the statute while giving effect to some. This is contrary
extend to them a decent standard of living, and improve the quality of life for all." to the well-established rule in legal hermeneutics that in interpreting a statute, care
Any act of Congress that runs counter to this constitutional desideratum deserves should be taken that every part or word thereof be given effect since the law-making
strict scrutiny by this Court before it can pass muster. (Emphasis supplied) body is presumed to know the meaning of the words employed in the statue and to
have used them advisedly. Ut res magis valeat quam pereat.80 (Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in
the present case also employs the standard of strict judicial scrutiny, for it perceives In Marsaman, the OFW involved was illegally dismissed two months into his 10-
in the subject clause a suspect classification prejudicial to OFWs. month contract, but was awarded his salaries for the remaining 8 months and 6
days of his contract.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all
OFWs. However, a closer examination reveals that the subject clause has a Prior to Marsaman, however, there were two cases in which the Court made
discriminatory intent against, and an invidious impact on, OFWs at two levels: conflicting rulings on Section 10(5). One was Asian Center for Career and
Employment System and Services v. National Labor Relations Commission (Second
First, OFWs with employment contracts of less than one year vis-à-vis Division, October 1998),81 which involved an OFW who was awarded a two-year
OFWs with employment contracts of one year or more; employment contract, but was dismissed after working for one year and two months.
The LA declared his dismissal illegal and awarded him SR13,600.00 as lump-sum
salary covering eight months, the unexpired portion of his contract. On appeal, the
Second, among OFWs with employment contracts of more than one year;
Court reduced the award to SR3,600.00 equivalent to his three months’ salary, this
and
being the lesser value, to wit:
Third, OFWs vis-à-vis local workers with fixed-period employment;
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment
without just, valid or authorized cause is entitled to his salary for the unexpired
OFWs with employment contracts of less than one year vis-à-vis OFWs with portion of his employment contract or for three (3) months for every year of the
employment contracts of one year or more unexpired term, whichever is less.

As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National In the case at bar, the unexpired portion of private respondent’s employment
Labor Relations Commission79 (Second Division, 1999) that the Court laid down the contract is eight (8) months. Private respondent should therefore be paid his basic
following rules on the application of the periods prescribed under Section 10(5) of salary corresponding to three (3) months or a total of SR3,600.82
R.A. No. 804, to wit:
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
A plain reading of Sec. 10 clearly reveals that the choice of which amount to Commission (Third Division, December 1998),83 which involved an OFW (therein
award an illegally dismissed overseas contract worker, i.e., whether his respondent Erlinda Osdana) who was originally granted a 12-month contract, which
salaries for the unexpired portion of his employment contract or three (3) was deemed renewed for another 12 months. After serving for one year and seven-
months’ salary for every year of the unexpired term, whichever is less, comes and-a-half months, respondent Osdana was illegally dismissed, and the Court

36
Labor Law 1
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awarded her salaries for the entire unexpired portion of four and one-half months of Pentagon v. 12 9 months 2 months and 2 months and
her contract. Adelantar93 months and 7 days 23 days 23 days

The Marsaman interpretation of Section 10(5) has since been adopted in the Phil. Employ 12 10 months 2 months Unexpired
following cases: v. Paramio, months portion
et al.94

Case Title Contract Period of Unexpired Period Applied Flourish 2 years 26 days 23 months 6 months or 3
Period Service Period in the Maritime v. and 4 days months for each
Computation Almanzor 95 year of contract
of the Athenna 1 year, 10 1 month 1 year, 9 6 months or 3
Monetary Manpower v. months months and months for each
Award Villanos 96 and 28 28 days year of contract
Skippers v. 6 months 2 months 4 months 4 months days
Maguad84
Bahia 9 months 8 months 4 months 4 months As the foregoing matrix readily shows, the subject clause classifies OFWs into two
Shipping v. categories. The first category includes OFWs with fixed-period employment
Reynaldo contracts of less than one year; in case of illegal dismissal, they are entitled to their
Chua 85 salaries for the entire unexpired portion of their contract. The second category
consists of OFWs with fixed-period employment contracts of one year or more; in
Centennial 9 months 4 months 5 months 5 months case of illegal dismissal, they are entitled to monetary award equivalent to only 3
Transmarine months of the unexpired portion of their contracts.
v. dela Cruz
l86 The disparity in the treatment of these two groups cannot be discounted.
Talidano v. 12 3 months 9 months 3 months In Skippers, the respondent OFW worked for only 2 months out of his 6-month
Falcon87 months contract, but was awarded his salaries for the remaining 4 months. In contrast, the
respondent OFWs in Oriental and PCL who had also worked for about 2 months out
Univan v. 12 3 months 9 months 3 months of their 12-month contracts were awarded their salaries for only 3 months of the
CA 88 months unexpired portion of their contracts. Even the OFWs involved
Oriental v. 12 more than 10 months 3 months in Talidano and Univan who had worked for a longer period of 3 months out of their
CA 89 months 2 months 12-month contracts before being illegally dismissed were awarded their salaries for
only 3 months.
PCL v. 12 more than more or less 9 3 months
NLRC90 months 2 months months To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-
Olarte v. 12 21 days 11 months 3 months A with an employment contract of 10 months at a monthly salary rate of
Nayona91 months and 9 days US$1,000.00 and a hypothetical OFW-B with an employment contract of 15 months
with the same monthly salary rate of US$1,000.00. Both commenced work on the
JSS 12 16 days 11 months 3 months same day and under the same employer, and were illegally dismissed after one
v.Ferrer92 months and 24 days month of work. Under the subject clause, OFW-A will be entitled to US$9,000.00,

37
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equivalent to his salaries for the remaining 9 months of his contract, whereas OFW- It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
B will be entitled to only US$3,000.00, equivalent to his salaries for 3 months of the unexpired portions thereof, were treated alike in terms of the computation of their
unexpired portion of his contract, instead of US$14,000.00 for the unexpired portion monetary benefits in case of illegal dismissal. Their claims were subjected to a
of 14 months of his contract, as the US$3,000.00 is the lesser amount. uniform rule of computation: their basic salaries multiplied by the entire unexpired
portion of their employment contracts.
The disparity becomes more aggravating when the Court takes into account
jurisprudence that, prior to the effectivity of R.A. No. 8042 on July 14, The enactment of the subject clause in R.A. No. 8042 introduced a differentiated
1995,97 illegally dismissed OFWs, no matter how long the period of their rule of computation of the money claims of illegally dismissed OFWs based on their
employment contracts, were entitled to their salaries for the entire unexpired employment periods, in the process singling out one category whose contracts
portions of their contracts. The matrix below speaks for itself: have an unexpired portion of one year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their salaries for 3 months
or for the unexpired portion thereof, whichever is less, but all the while sparing the
Case Title Contract Period of Unexpired Period Applied in other category from such prejudice, simply because the latter's unexpired contracts
Period Service Period the Computation fall short of one year.
of the Monetary
Award
Among OFWs With Employment Contracts of More Than One Year
ATCI v. CA, 2 years 2 months 22 months 22 months
et al.98 Upon closer examination of the terminology employed in the subject clause, the
Phil. 2 years 7 days 23 months 23 months and 23 Court now has misgivings on the accuracy of the Marsaman interpretation.
Integrated v. and 23 days
NLRC99 days The Court notes that the subject clause "or for three (3) months for every year of the
unexpired term, whichever is less" contains the qualifying phrases "every year" and
JGB v. 2 years 9 months 15 months 15 months "unexpired term." By its ordinary meaning, the word "term" means a limited or
NLC100 definite extent of time.105 Corollarily, that "every year" is but part of an "unexpired
Agoy v. 2 years 2 months 22 months 22 months term" is significant in many ways: first, the unexpired term must be at least one
NLRC101 year, for if it were any shorter, there would be no occasion for such unexpired term
to be measured by every year; and second, the original term must be more than one
EDI v. 2 years 5 months 19 months 19 months year, for otherwise, whatever would be the unexpired term thereof will not reach
NLRC, et even a year. Consequently, the more decisive factor in the determination of when
al.102 the subject clause "for three (3) months for every year of the unexpired
Barros v. 12 months 4 months 8 months 8 months term, whichever is less" shall apply is not the length of the original contract period as
NLRC, et held in Marsaman,106 but the length of the unexpired portion of the contract period --
al.103 the subject clause applies in cases when the unexpired portion of the contract
period is at least one year, which arithmetically requires that the original contract
Philippine 12 months 6 months 5 months 5 months and 18 period be more than one year.
Transmarine and 22 and 18 days
v. Carilla104 days days Viewed in that light, the subject clause creates a sub-layer of discrimination among
OFWs whose contract periods are for more than one year: those who are illegally
dismissed with less than one year left in their contracts shall be entitled to their

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salaries for the entire unexpired portion thereof, while those who are illegally In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to
dismissed with one year or more remaining in their contracts shall be covered by the determine the liability of a shipping company for the illegal discharge of its
subject clause, and their monetary benefits limited to their salaries for three months managers prior to the expiration of their fixed-term employment. The Court therein
only. held the shipping company liable for the salaries of its managers for
the remainder of their fixed-term employment.
To concretely illustrate the application of the foregoing interpretation of the subject
clause, the Court assumes hypothetical OFW-C and OFW-D, who each have a 24- There is a more specific rule as far as seafarers are concerned: Article 605 of the
month contract at a salary rate of US$1,000.00 per month. OFW-C is illegally Code of Commerce which provides:
dismissed on the 12th month, and OFW-D, on the 13th month. Considering that
there is at least 12 months remaining in the contract period of OFW-C, the subject Article 605. If the contracts of the captain and members of the crew with the agent
clause applies to the computation of the latter's monetary benefits. Thus, OFW-C should be for a definite period or voyage, they cannot be discharged until the
will be entitled, not to US$12,000,00 or the latter's total salaries for the 12 months fulfillment of their contracts, except for reasons of insubordination in serious matters,
unexpired portion of the contract, but to the lesser amount of US$3,000.00 or the robbery, theft, habitual drunkenness, and damage caused to the vessel or to its
latter's salaries for 3 months out of the 12-month unexpired term of the contract. On cargo by malice or manifest or proven negligence.
the other hand, OFW-D is spared from the effects of the subject clause, for there are
only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in
US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month
unexpired portion.
which the Court held the shipping company liable for the salaries and subsistence
allowance of its illegally dismissed employees for the entire unexpired portion of
OFWs vis-à-vis Local Workers
their employment contracts.
With Fixed-Period Employment
While Article 605 has remained good law up to the present,111 Article 299 of the
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the
Code of Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
monetary awards of illegally dismissed OFWs was in place. This uniform system
was applicable even to local workers with fixed-term employment.107
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain
time and for a certain work cannot leave or be dismissed without sufficient cause,
The earliest rule prescribing a uniform system of computation was actually Article
before the fulfillment of the contract. (Emphasis supplied.)
299 of the Code of Commerce (1888),108 to wit:
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article
Article 299. If the contracts between the merchants and their shop clerks and
1586 as a conjunctive "and" so as to apply the provision to local workers who are
employees should have been made of a fixed period, none of the contracting
employed for a time certain although for no particular skill. This interpretation of
parties, without the consent of the other, may withdraw from the fulfillment of said
Article 1586 was reiterated in Garcia Palomar v. Hotel de France Company.113 And
contract until the termination of the period agreed upon.
in both Lemoine and Palomar, the Court adopted the general principle that in
actions for wrongful discharge founded on Article 1586, local workers are entitled to
Persons violating this clause shall be subject to indemnify the loss and damage recover damages to the extent of the amount stipulated to be paid to them by the
suffered, with the exception of the provisions contained in the following articles. terms of their contract. On the computation of the amount of such damages, the
Court in Aldaz v. Gay114 held:

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The doctrine is well-established in American jurisprudence, and nothing has been OFW whose 12-month contract was illegally cut short in the second month was
brought to our attention to the contrary under Spanish jurisprudence, that when an declared entitled to his salaries for the remaining 10 months of his contract.
employee is wrongfully discharged it is his duty to seek other employment of the
same kind in the same community, for the purpose of reducing the damages In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment
resulting from such wrongful discharge. However, while this is the general rule, the who were illegally discharged were treated alike in terms of the computation of their
burden of showing that he failed to make an effort to secure other employment of a money claims: they were uniformly entitled to their salaries for the entire unexpired
like nature, and that other employment of a like nature was obtainable, is upon the portions of their contracts. But with the enactment of R.A. No. 8042, specifically the
defendant. When an employee is wrongfully discharged under a contract of adoption of the subject clause, illegally dismissed OFWs with an unexpired portion
employment his prima facie damage is the amount which he would be entitled to of one year or more in their employment contract have since been differently treated
had he continued in such employment until the termination of the period. (Howard in that their money claims are subject to a 3-month cap, whereas no such limitation
vs. Daly, 61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District is imposed on local workers with fixed-term employment.
No. 2, 98 Mich., 43.)115 (Emphasis supplied)
The Court concludes that the subject clause contains a suspect classification
On August 30, 1950, the New Civil Code took effect with new provisions on fixed- in that, in the computation of the monetary benefits of fixed-term employees
term employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and who are illegally discharged, it imposes a 3-month cap on the claim of OFWs
Sections 2 (Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title with an unexpired portion of one year or more in their contracts, but none on
VIII, Book IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions the claims of other OFWs or local workers with fixed-term employment. The
of the Civil Code do not expressly provide for the remedies available to a fixed-term subject clause singles out one classification of OFWs and burdens it with a
worker who is illegally discharged. However, it is noted that in Mackay Radio & peculiar disadvantage.
Telegraph Co., Inc. v. Rich,117 the Court carried over the principles on the payment
of damages underlying Article 1586 of the Civil Code of 1889 and applied the same
There being a suspect classification involving a vulnerable sector protected by the
to a case involving the illegal discharge of a local worker whose fixed-period
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
employment contract was entered into in 1952, when the new Civil Code was
determines whether it serves a compelling state interest through the least restrictive
already in effect.118
means.

More significantly, the same principles were applied to cases involving overseas
What constitutes compelling state interest is measured by the scale of rights and
Filipino workers whose fixed-term employment contracts were illegally terminated,
powers arrayed in the Constitution and calibrated by history.124 It is akin to the
such as in First Asian Trans & Shipping Agency, Inc. v. Ople,119 involving seafarers
paramount interest of the state125 for which some individual liberties must give way,
who were illegally discharged. In Teknika Skills and Trade Services, Inc. v. National
such as the public interest in safeguarding health or maintaining medical
Labor Relations Commission,120 an OFW who was illegally dismissed prior to the
standards,126 or in maintaining access to information on matters of public concern.127
expiration of her fixed-period employment contract as a baby sitter, was awarded
salaries corresponding to the unexpired portion of her contract. The Court arrived at
the same ruling in Anderson v. National Labor Relations Commission,121 which In the present case, the Court dug deep into the records but found no compelling
involved a foreman hired in 1988 in Saudi Arabia for a fixed term of two years, but state interest that the subject clause may possibly serve.
who was illegally dismissed after only nine months on the job -- the Court awarded
him salaries corresponding to 15 months, the unexpired portion of his contract. In The OSG defends the subject clause as a police power measure "designed to
Asia World Recruitment, Inc. v. National Labor Relations Commission,122 a Filipino protect the employment of Filipino seafarers overseas x x x. By limiting the liability to
working as a security officer in 1989 in Angola was awarded his salaries for the three months [sic], Filipino seafarers have better chance of getting hired by foreign
remaining period of his 12-month contract after he was wrongfully discharged. employers." The limitation also protects the interest of local placement agencies,
Finally, in Vinta Maritime Co., Inc. v. National Labor Relations Commission,123 an which otherwise may be made to shoulder millions of pesos in "termination pay."128

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The OSG explained further: Any compromise/amicable settlement or voluntary agreement on any money claims
exclusive of damages under this Section shall not be less than fifty percent (50%) of
Often, placement agencies, their liability being solidary, shoulder the payment of such money claims: Provided, That any installment payments, if applicable, to
money claims in the event that jurisdiction over the foreign employer is not acquired satisfy any such compromise or voluntary settlement shall not be more than two (2)
by the court or if the foreign employer reneges on its obligation. Hence, placement months. Any compromise/voluntary agreement in violation of this paragraph shall be
agencies that are in good faith and which fulfill their obligations are unnecessarily null and void.
penalized for the acts of the foreign employer. To protect them and to promote their
continued helpful contribution in deploying Filipino migrant workers, liability for Non-compliance with the mandatory period for resolutions of cases provided under
money are reduced under Section 10 of RA 8042. this Section shall subject the responsible officials to any or all of the following
penalties:
This measure redounds to the benefit of the migrant workers whose welfare the
government seeks to promote. The survival of legitimate placement agencies helps (1) The salary of any such official who fails to render his decision or
[assure] the government that migrant workers are properly deployed and are resolution within the prescribed period shall be, or caused to be, withheld
employed under decent and humane conditions.129 (Emphasis supplied) until the said official complies therewith;

However, nowhere in the Comment or Memorandum does the OSG cite the source (2) Suspension for not more than ninety (90) days; or
of its perception of the state interest sought to be served by the subject clause.
(3) Dismissal from the service with disqualification to hold any appointive
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio public office for five (5) years.
Gallego in sponsorship of House Bill No. 14314 (HB 14314), from which the law
originated;130 but the speech makes no reference to the underlying reason for the Provided, however, That the penalties herein provided shall be without prejudice to
adoption of the subject clause. That is only natural for none of the 29 provisions in any liability which any such official may have incurred under other existing laws or
HB 14314 resembles the subject clause. rules and regulations as a consequence of violating the provisions of this paragraph.

On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money But significantly, Section 10 of SB 2077 does not provide for any rule on the
claims, to wit: computation of money claims.

Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the A rule on the computation of money claims containing the subject clause was
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the inserted and eventually adopted as the 5th paragraph of Section 10 of R.A. No.
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar 8042. The Court examined the rationale of the subject clause in the transcripts of
days after the filing of the complaint, the claims arising out of an employer-employee the "Bicameral Conference Committee (Conference Committee) Meetings on the
relationship or by virtue of the complaint, the claim arising out of an employer- Magna Carta on OCWs (Disagreeing Provisions of Senate Bill No. 2077 and House
employee relationship or by virtue of any law or contract involving Filipino workers Bill No. 14314)." However, the Court finds no discernible state interest, let alone a
for overseas employment including claims for actual, moral, exemplary and other compelling one, that is sought to be protected or advanced by the adoption of the
forms of damages. subject clause.

The liability of the principal and the recruitment/placement agency or any and all
claims under this Section shall be joint and several.

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In fine, the Government has failed to discharge its burden of proving the existence While all the provisions of the 1987 Constitution are presumed self-
of a compelling state interest that would justify the perpetuation of the discrimination executing,132 there are some which this Court has declared not judicially
against OFWs under the subject clause. enforceable, Article XIII being one,133 particularly Section 3 thereof, the nature of
which, this Court, in Agabon v. National Labor Relations Commission,134 has
Assuming that, as advanced by the OSG, the purpose of the subject clause is to described to be not self-actuating:
protect the employment of OFWs by mitigating the solidary liability of placement
agencies, such callous and cavalier rationale will have to be rejected. There can Thus, the constitutional mandates of protection to labor and security of tenure may
never be a justification for any form of government action that alleviates the burden be deemed as self-executing in the sense that these are automatically
of one sector, but imposes the same burden on another sector, especially when the acknowledged and observed without need for any enabling legislation. However, to
favored sector is composed of private businesses such as placement agencies, declare that the constitutional provisions are enough to guarantee the full exercise
while the disadvantaged sector is composed of OFWs whose protection no less of the rights embodied therein, and the realization of ideals therein expressed,
than the Constitution commands. The idea that private business interest can be would be impractical, if not unrealistic. The espousal of such view presents the
elevated to the level of a compelling state interest is odious. dangerous tendency of being overbroad and exaggerated. The guarantees of "full
protection to labor" and "security of tenure", when examined in isolation, are facially
Moreover, even if the purpose of the subject clause is to lessen the solidary liability unqualified, and the broadest interpretation possible suggests a blanket shield in
of placement agencies vis-a-vis their foreign principals, there are mechanisms favor of labor against any form of removal regardless of circumstance. This
already in place that can be employed to achieve that purpose without infringing on interpretation implies an unimpeachable right to continued employment-a utopian
the constitutional rights of OFWs. notion, doubtless-but still hardly within the contemplation of the framers.
Subsequent legislation is still needed to define the parameters of these guaranteed
rights to ensure the protection and promotion, not only the rights of the labor sector,
The POEA Rules and Regulations Governing the Recruitment and Employment of
but of the employers' as well. Without specific and pertinent legislation, judicial
Land-Based Overseas Workers, dated February 4, 2002, imposes administrative
bodies will be at a loss, formulating their own conclusion to approximate at least the
disciplinary measures on erring foreign employers who default on their contractual
aims of the Constitution.
obligations to migrant workers and/or their Philippine agents. These disciplinary
measures range from temporary disqualification to preventive suspension. The
POEA Rules and Regulations Governing the Recruitment and Employment of Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source
Seafarers, dated May 23, 2003, contains similar administrative disciplinary of a positive enforceable right to stave off the dismissal of an employee for just
measures against erring foreign employers. cause owing to the failure to serve proper notice or hearing. As manifested by
several framers of the 1987 Constitution, the provisions on social justice require
Resort to these administrative measures is undoubtedly the less restrictive means of legislative enactments for their enforceability.135 (Emphasis added)
aiding local placement agencies in enforcing the solidary liability of their foreign
principals. Thus, Section 3, Article XIII cannot be treated as a principal source of direct
enforceable rights, for the violation of which the questioned clause may be declared
unconstitutional. It may unwittingly risk opening the floodgates of litigation to every
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is
violative of the right of petitioner and other OFWs to equal protection.1avvphi1 worker or union over every conceivable violation of so broad a concept as social
justice for labor.
Further, there would be certain misgivings if one is to approach the declaration of
the unconstitutionality of the subject clause from the lone perspective that the clause It must be stressed that Section 3, Article XIII does not directly bestow on the
working class any actual enforceable right, but merely clothes it with the status of a
directly violates state policy on labor under Section 3,131 Article XIII of the
sector for whom the Constitution urges protection through executive or legislative
Constitution.

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action and judicial recognition. Its utility is best limited to being an impetus not just On the Third Issue
for the executive and legislative departments, but for the judiciary as well, to protect
the welfare of the working class. And it was in fact consistent with that constitutional Petitioner contends that his overtime and leave pay should form part of the salary
agenda that the Court in Central Bank (now Bangko Sentral ng Pilipinas) Employee basis in the computation of his monetary award, because these are fixed benefits
Association, Inc. v. Bangko Sentral ng Pilipinas, penned by then Associate Justice that have been stipulated into his contract.
now Chief Justice Reynato S. Puno, formulated the judicial precept that when the
challenge to a statute is premised on the perpetuation of prejudice against persons
Petitioner is mistaken.
favored by the Constitution with special protection -- such as the working class or a
section thereof -- the Court may recognize the existence of a suspect classification
and subject the same to strict judicial scrutiny. The word salaries in Section 10(5) does not include overtime and leave pay. For
seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a
Standard Employment Contract of Seafarers, in which salary is understood as the
The view that the concepts of suspect classification and strict judicial scrutiny
basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime
formulated in Central Bank Employee Association exaggerate the significance of
pay is compensation for all work "performed" in excess of the regular eight hours,
Section 3, Article XIII is a groundless apprehension. Central Bank applied Article XIII
and holiday pay is compensation for any work "performed" on designated rest days
in conjunction with the equal protection clause. Article XIII, by itself, without the
and holidays.
application of the equal protection clause, has no life or force of its own as
elucidated in Agabon.
By the foregoing definition alone, there is no basis for the automatic inclusion of
overtime and holiday pay in the computation of petitioner's monetary award, unless
Along the same line of reasoning, the Court further holds that the subject clause
there is evidence that he performed work during those periods. As the Court held
violates petitioner's right to substantive due process, for it deprives him of property,
in Centennial Transmarine, Inc. v. Dela Cruz,138
consisting of monetary benefits, without any existing valid governmental purpose.136
However, the payment of overtime pay and leave pay should be disallowed in light
The argument of the Solicitor General, that the actual purpose of the subject clause
of our ruling in Cagampan v. National Labor Relations Commission, to wit:
of limiting the entitlement of OFWs to their three-month salary in case of illegal
dismissal, is to give them a better chance of getting hired by foreign employers. This
is plain speculation. As earlier discussed, there is nothing in the text of the law or The rendition of overtime work and the submission of sufficient proof that said was
the records of the deliberations leading to its enactment or the pleadings of actually performed are conditions to be satisfied before a seaman could be entitled
respondent that would indicate that there is an existing governmental purpose for to overtime pay which should be computed on the basis of 30% of the basic monthly
the subject clause, or even just a pretext of one. salary. In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established.
The subject clause does not state or imply any definitive governmental purpose; and
it is for that precise reason that the clause violates not just petitioner's right to equal In the same vein, the claim for the day's leave pay for the unexpired portion of the
protection, but also her right to substantive due process under Section 1,137 Article contract is unwarranted since the same is given during the actual service of the
III of the Constitution. seamen.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three
entire unexpired period of nine months and 23 days of his employment contract, months for every year of the unexpired term, whichever is less" in the 5th paragraph
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042. of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and
the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of

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Appeals are MODIFIED to the effect that petitioner is AWARDED his salaries for the
entire unexpired portion of his employment contract consisting of nine months and
23 days computed at the rate of US$1,400.00 per month. CERTIFICATION

No costs. Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Decision were reached in consultation before the case was
SO ORDERED. assigned to the writer of the opinion of the Court.

MA. ALICIA AUSTRIA-MARTINEZ REYNATO S. PUNO

Associate Justice Chief Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice

ANTONIO T. CARPIO RENATO C. CORONA

Associate Justice Associate Justice

CONCHITA CARPIO MORALES DANTE O. TINGA

Associate Justice Associate Justice

(On leave)
PRESBITERO J. VELASCO, JR.
MINITA V. CHICO-NAZARIO
Associate Justice
Associate Justice

ANTONIO EDUARDO B. TERESITA J. LEONARDO-DE

NACHURA CASTRO
Associate Justice Associate Justice

(see concurring opinion)

DIOSDADO M. PERALTA
ARTURO D. BRION
Associate Justice
Associate Justice

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Republic of the Philippines On 11 November 2000, petitioner filed a complaint against de Leon for allegedly
SUPREME COURT abusing his authority as site administrator by using the private respondent’s vehicles
Manila and other facilities for personal ends. In the same complaint, petitioner also accused
de Leon of immoral conduct allegedly carried out within the private respondent’s
THIRD DIVISION premises. A copy of the complaint was duly received by private respondent’s Chief
Accountant, Nita Azarcon (Azarcon).5
G.R. No. 174585 October 19, 2007
On 27 November 2000, de Leon filed a written report against the petitioner
addressed to private respondent’s Vice-President for Administration, Ricky Ty (Ty),
FEDERICO M. LEDESMA, JR., Petitioner,
citing his suspected drug use.
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC-SECOND DIVISION)
HONS. RAUL T. AQUINO, VICTORIANO R. CALAYCAY and ANGELITA A. In view of de Leon’s report, private respondent’s Human Resource Manager, Trina
GACUTAN ARE THE COMMISSIONERS, PHILIPPINE NAUTICAL TRAINING Cueva (HR Manager Cueva), on 29 November 2000, served a copy of a Notice to
INC., ATTY. HERNANI FABIA, RICKY TY, PABLO MANOLO, C. DE LEON and petitioner requiring him to explain within 24 hours why no disciplinary action should
TREENA CUEVA, Respondents. be imposed on him for allegedly violating Section 14, Article IV of the private
respondent’s Code of Conduct.6
DECISION
On 3 December 2000, petitioner filed a complaint for illegal dismissal against private
respondent before the Labor Arbiter.
CHICO-NAZARIO, J.:

In his Position Paper,7 petitioner averred that in view of the complaint he filed
This a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
against de Leon for his abusive conduct as site administrator, the latter retaliated by
Court, filed by petitioner Federico Ledesma, Jr., seeking to reverse and set aside
falsely accusing petitioner as a drug user. VP for Administration Ty, however,
the Decision,1 dated 28 May 2005, and the Resolution,2 dated 7 September 2006, of
instead of verifying the veracity of de Leon’s report, readily believed his allegations
the Court of Appeals in CA-G.R. SP No. 79724. The appellate court, in its assailed
and together with HR Manager Cueva, verbally dismissed petitioner from service on
Decision and Resolution, affirmed the Decision dated 15 April 2003, and Resolution
29 November 2000.
dated 9 June 2003, of the National Labor Relations Commission (NLRC), dismissing
petitioner’s complaint for illegal dismissal and ordering the private respondent
Philippine National Training Institute (PNTI) to reinstate petitioner to his former Petitioner alleged that he was asked to report at private respondent’s main office in
position without loss of seniority rights. España, Manila, on 29 November 2000. There, petitioner was served by HR
Manager Cueva a copy of the Notice to Explain together with the copy of de Leon’s
report citing his suspected drug use. After he was made to receive the copies of the
The factual and procedural antecedents of the instant petition are as follows:
said notice and report, HR Manager Cueva went inside the office of VP for
Administration Ty. After a while, HR Manager Cueva came out of the office with VP
On 4 December 1998, petitioner was employed as a bus/service driver by the for Administration Ty. To petitioner’s surprise, HR Manager Cueva took back the
private respondent on probationary basis, as evidenced by his appointment.3 As earlier Notice to Explain given to him and flatly declared that there was no more
such, he was required to report at private respondent’s training site in Dasmariñas, need for the petitioner to explain since his drug test result revealed that he was
Cavite, under the direct supervision of its site administrator, Pablo Manolo de Leon positive for drugs. When petitioner, however, asked for a copy of the said drug test
(de Leon).4 result, HR Manager Cueva told him that it was with the company’s president, but

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she would also later claim that the drug test result was already with the proper to enter the training site was further belied by the fact that he was able to claim his
authorities at Camp Crame.8 13th month pay thereat on 9 December 2000, supported by a copy of the pay
voucher signed by petitioner.12
Petitioner was then asked by HR Manager Cueva to sign a resignation letter and
also remarked that whether or not petitioner would resign willingly, he was no longer On 26 July 2002, the Labor Arbiter rendered a Decision,13 in favor of the petitioner
considered an employee of private respondent. All these events transpired in the declaring illegal his separation from employment. The Labor Arbiter, however, did
presence of VP for Administration Ty, who even convinced petitioner to just not order petitioner’s reinstatement for the same was no longer practical, and only
voluntarily resign with the assurance that he would still be given separation pay. directed private respondent to pay petitioner backwages. The dispositive portion of
Petitioner did not yet sign the resignation letter replying that he needed time to think the Labor Arbiter’s Decision reads:
over the offers. When petitioner went back to private respondent’s training site in
Dasmariñas, Cavite, to get his bicycle, he was no longer allowed by the guard to WHEREFORE, premises considered, the dismissal of the [petitioner] is herein
enter the premises.9 declared to be illegal. [Private respondent] is directed to pay the complainant
backwages and separation pay in the total amount of One Hundred Eighty Four
On the following day, petitioner immediately went to St. Dominic Medical Center for Thousand Eight Hundred Sixty One Pesos and Fifty Three Centavos (₱184,
a drug test and he was found negative for any drug substance. With his drug result 861.53).14
on hand, petitioner went back to private respondent’s main office in Manila to talk to
VP for Administration Ty and HR Manager Cueva and to show to them his drug test Both parties questioned the Labor Arbiter’s Decision before the NLRC. Petitioner
result. Petitioner then told VP for Administration Ty and HR Manager Cueva that assailed the portion of the Labor Arbiter’s Decision denying his prayer for
since his drug test proved that he was not guilty of the drug use charge against him, reinstatement, and arguing that the doctrine of strained relations is applied only to
he decided to continue to work for the private respondent.10 confidential employees and his position as a driver was not covered by such
prohibition.15 On the other hand, private respondent controverted the Labor Arbiter’s
On 2 December 2000, petitioner reported for work but he was no longer allowed to finding that petitioner was illegally dismissed from employment, and insisted that
enter the training site for he was allegedly banned therefrom according to the guard petitioner was never dismissed from his job but failed to report to work after he was
on duty. This incident prompted the petitioner to file the complaint for illegal asked to explain regarding his suspected drug use.161âwphi1
dismissal against the private respondent before the Labor Arbiter.
On 15 April 2003, the NLRC granted the appeal raised by both parties and reversed
For its part, private respondent countered that petitioner was never dismissed from the Labor Arbiter’s Decision.17 The NLRC declared that petitioner failed to establish
employment but merely served a Notice to Explain why no disciplinary action should the fact of dismissal for his claim that he was banned from entering the training site
be filed against him in view of his superior’s report that he was suspected of using was rendered impossible by the fact that he was able to subsequently claim his
illegal drugs. Instead of filing an answer to the said notice, however, petitioner salary and 13th month pay. Petitioner’s claim for reinstatement was, however,
prematurely lodged a complaint for illegal dismissal against private respondent granted by the NLRC. The decretal part of the NLRC Decision reads:
before the Labor Arbiter.11
WHEREFORE, premises considered, the decision under review is, hereby
Private respondent likewise denied petitioner’s allegations that it banned the latter REVERSED and SET ASIDE, and another entered, DISMISSING the complaint for
from entering private respondent’s premises. Rather, it was petitioner who failed or lack of merit.
refused to report to work after he was made to explain his alleged drug use. Indeed,
on 3 December 2000, petitioner was able to claim at the training site his salary for [Petitioner] is however, ordered REINSTATED to his former position without loss of
the period of 16-30 November 2000, as evidenced by a copy of the pay voucher seniority rights, but WITHOUT BACKWAGES.18
bearing petitioner’s signature. Petitioner’s accusation that he was no longer allowed

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The Motion for Reconsideration filed by petitioner was likewise denied by the NLRC RESPONDENTS SUBVERTED PETITIONER’S RIGHT TO DUE
in its Resolution dated 29 August 2003.19 PROCESS OF THE LAW.23

The Court of Appeals dismissed petitioner’s Petition for Certiorari under Rule 65 of Before we delve into the merits of this case, it is best to stress that the issues raised
the Revised Rules of Court, and affirmed the NLRC Decision giving more credence by petitioner in this instant petition are factual in nature which is not within the office
to private respondent’s stance that petitioner was not dismissed from employment, of a Petition for Review.24 The raison d’etre for this rule is that, this Court is not a
as it is more in accord with the evidence on record and the attendant circumstances trier of facts and does not routinely undertake the re-examination of the evidence
of the instant case.20 Similarly ill-fated was petitioner’s Motion for Reconsideration, presented by the contending parties for the factual findings of the labor officials who
which was denied by the Court of Appeals in its Resolution issued on 7 September have acquired expertise in their own fields are accorded not only respect but even
2006. 21 finality, and are binding upon this Court.25

Hence, this instant Petition for Review on Certiorari22 under Rule 45 of the Revised However, when the findings of the Labor Arbiter contradict those of the NLRC,
Rules of Court, filed by petitioner assailing the foregoing Court of Appeals Decision departure from the general rule is warranted, and this Court must of necessity make
and Resolution on the following grounds: an infinitesimal scrunity and examine the records all over again including the
evidence presented by the opposing parties to determine which findings should be
I. preferred as more conformable with evidentiary facts.26

WHETHER, THE HON. COURT OF APPEALS COMMITTED A The primordial issue in the petition at bar is whether the petitioner was illegally
MISAPPREHENSION OF FACTS, AND THE ASSAILED DECISION IS dismissed from employment.
NOT SUPPORTED BY THE EVIDENCE ON RECORD. PETITIONER’S
DISMISSAL WAS ESTABLISHED BY THE UNCONTRADICTED The Labor Arbiter found that the petitioner was illegally dismissed from employment
EVIDENCES ON RECORD, WHICH WERE MISAPPRECIATED BY warranting the payment of his backwages. The NLRC and the Court of Appeals
PUBLIC RESPONDENT NLRC, AND HAD THESE BEEN CONSIDERED found otherwise.
THE INEVITABLE CONCLUSION WOULD BE THE AFFIRMATION OF
THE LABOR ARBITER’S DECISION FINDING ILLEGAL DISMISSAL In reversing the Labor Arbiter’s Decision, the NLRC underscored the settled
evidentiary rule that before the burden of proof shifts to the employer to prove the
II. validity of the employee’s dismissal, the employee must first sufficiently establish
that he was indeed dismissed from employment. The petitioner, in the present case,
WHETHER, THE HON. COURT OF APPEALS SUBVERTED DUE failed to establish the fact of his dismissal. The NLRC did not give credence to
PROCESS OF LAW WHEN IT DID NOT CONSIDER THE EVIDENCE ON petitioner’s allegation that he was banned by the private respondent from entering
RECORD SHOWING THAT THERE WAS NO JUST CAUSE FOR the workplace, opining that had it been true that petitioner was no longer allowed to
DISMISSAL AS PETITIONER IS NOT A DRUG USER AND THERE IS enter the training site when he reported for work thereat on 2 December 2000, it is
NO EVIDENCE TO SUPPORT THIS GROUND FOR DISMISSAL. quite a wonder he was able to do so the very next day, on 3 December 2000, to
claim his salary.27
III.
The Court of Appeals validated the above conclusion reached by the NLRC and
further rationated that petitioner’s positive allegations that he was dismissed from
WHETHER, THE HON. COURT OF APPEALS COMMITTED
service was negated by substantial evidence to the contrary. Petitioner’s averments
REVERSIBLE ERROR OF LAW IN NOT FINDING THAT
of what transpired inside private respondent’s main office on 29 November 2000,

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when he was allegedly already dismissed from service, and his claim that he was Moreover, the petitioner alleged that he was not allowed to enter the training site by
effectively banned from private respondent’s premises are belied by the fact that he the guard on duty who told him that he was already banned from the premises.
was able to claim his salary for the period of 16-30 November 2000 at private Subsequently, however, petitioner admitted in his Supplemental Affidavit that he
respondent’s training site. was able to return to the said site on 3 December 2000, to claim his 16-30
November 2000 salary, and again on 9 December 2000, to receive his 13th month
Petitioner, therefore, is now before this Court assailing the Decisions handed down pay. The fact alone that he was able to return to the training site to claim his salary
by the NLRC and the Court of Appeals, and insisting that he was illegally dismissed and benefits raises doubt as to his purported ban from the premises.
from his employment. Petitioner argues that his receipt of his earned salary for the
period of 16-30 November 2000, and his 13th month pay, is neither inconsistent with Finally, petitioner’s stance that he was dismissed by private respondent was further
nor a negation of his allegation of illegal dismissal. Petitioner maintains that he weakened with the presentation of private respondent’s payroll bearing petitioner’s
received his salary and benefit only from the guardhouse, for he was already name proving that petitioner remained as private respondent’s employee up to
banned from the work premises. December 2000. Again, petitioner’s assertion that the payroll was merely fabricated
for the purpose of supporting private respondent’s case before the NLRC cannot be
We are not persuaded. given credence. Entries in the payroll, being entries in the course of business, enjoy
the presumption of regularity under Rule 130, Section 43 of the Rules of Court. It is
therefore incumbent upon the petitioner to adduce clear and convincing evidence in
Well-entrenched is the principle that in order to establish a case before judicial and
support of his claim of fabrication and to overcome such presumption of
quasi-administrative bodies, it is necessary that allegations must be supported by
regularity.30 Unfortunately, petitioner again failed in such endeavor.
substantial evidence.28 Substantial evidence is more than a mere scintilla. It means
such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion.29 On these scores, there is a dearth of evidence to establish the fact of petitioner’s
dismissal. We have scrupulously examined the records and we found no evidence
presented by petitioner, other than his own contentions that he was indeed
In the present case, there is hardly any evidence on record so as to meet the
dismissed by private respondent.
quantum of evidence required, i.e., substantial evidence. Petitioner’s claim of illegal
dismissal is supported by no other than his own bare, uncorroborated and, thus,
self-serving allegations, which are also incoherent, inconsistent and contradictory. While this Court is not unmindful of the rule that in cases of illegal dismissal, the
employer bears the burden of proof to prove that the termination was for a valid or
authorized cause in the case at bar, however, the facts and the evidence did not
Petitioner himself narrated that when his presence was requested on 29 November
establish a prima facie case that the petitioner was dismissed from
2000 at the private respondent’s main office where he was served with the Notice to
employment.31 Before the private respondent must bear the burden of proving that
Explain his superior’s report on his suspected drug use, VP for Administration Ty
the dismissal was legal, petitioner must first establish by substantial evidence the
offered him separation pay if he will just voluntarily resign from employment. While
fact of his dismissal from service. Logically, if there is no dismissal, then there can
we do not condone such an offer, neither can we construe that petitioner was
be no question as to the legality or illegality thereof.
dismissed at that instance. Petitioner was only being given the option to either
resign and receive his separation pay or not to resign but face the possible
disciplinary charges against him. The final decision, therefore, whether to voluntarily In Machica v. Roosevelt Services Center, Inc.,32 we had underscored that the
resign or to continue working still, ultimately rests with the petitioner. In fact, by burden of proving the allegations rest upon the party alleging, to wit:
petitoner’s own admission, he requested from VP for Administration Ty more time to
think over the offer. The rule is that one who alleges a fact has the burden of proving it; thus,
petitioners were burdened to prove their allegation that respondents dismissed them
from their employment. It must be stressed that the evidence to prove this fact

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must be clear, positive and convincing. The rule that the employer bears the CONSUELO YNARES-SANTIAGO
burden of proof in illegal dismissal cases finds no application here because the Associate Justice
respondents deny having dismissed the petitioners.33 Chairperson

In Rufina Patis Factory v. Alusitain,34 this Court took the occasion to emphasize: MA. ALICIA AUSTRIA-MARTINEZ RENATO C. CORONA
Associate Justice Associate Justice
It is a basic rule in evidence, however, that the burden of proof is on the part of the
party who makes the allegations – ei incumbit probatio, qui dicit, non qui negat. If he ANTONIO EDUARDO B. NACHURA
claims a right granted by law, he must prove his claim by competent evidence, Associate Justice
relying on the strength of his own evidence and not upon the weakness of that
of his opponent.35
ATTESTATION
It is true that the Constitution affords full protection to labor, and that in light of this
Constitutional mandate, we must be vigilant in striking down any attempt of the I attest that the conclusions in the above Decision were reached in consultation
management to exploit or oppress the working class. However, it does not mean before the case was assigned to the writer of the opinion of the Court’s Division.
that we are bound to uphold the working class in every labor dispute brought before
this Court for our resolution. CONSUELO YNARES-SANTIAGO
Associate Justice
The law in protecting the rights of the employees, authorizes neither oppression nor Chairperson, Third Division
self-destruction of the employer. It should be made clear that when the law tilts the
scales of justice in favor of labor, it is in recognition of the inherent economic CERTIFICATION
inequality between labor and management. The intent is to balance the scales of
justice; to put the two parties on relatively equal positions. There may be cases Pursuant to Section 13, Article VIII of the Constitution, and the Division
where the circumstances warrant favoring labor over the interests of management Chairperson’s Attestation, it is hereby certified that the conclusions in the above
but never should the scale be so tilted if the result is an injustice to the Decision were reached in consultation before the case was assigned to the writer of
employer. Justitia nemini neganda est -- justice is to be denied to none.36 the opinion of the Court’s Division.

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of REYNATO S. PUNO
Appeals Decision dated 28 May 2005 and its Resolution dated 7 September 2006 in Chief Justice
CA-G.R. SP No. 79724 are hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

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