Title

Servidad vs. National Labor Relations Commission

Case
G.R. No. 128682
Ponente
PURISIMA, J
Decision Date
Mar 18, 1999
A data control clerk fights against his illegal dismissal by his employer, Innodata Philippines,
Inc./Innodata Corporation, as the Supreme Court rules in his favor, declaring the contract of
employment to be a double-bladed scheme that violated his right to security of tenure.

Facts:
 Joaquin T. Servidad, a data control clerk, was dismissed from his job by Innodata
Philippines, Inc./Innodata Corporation.
 The dismissal was based on the alleged termination of his contract of employment.
 Servidad filed an illegal dismissal case before the Labor Arbiter.
 The Labor Arbiter ruled in favor of Servidad and ordered his reinstatement and payment
of backwages.
 On appeal, the National Labor Relations Commission (NLRC) reversed the decision of the
Labor Arbiter, stating that the contract between Servidad and Innodata was for a fixed
term and therefore, the dismissal was valid.
 Dissatisfied with the decision, Servidad filed a special civil action for certiorari before the
Supreme Court.

Issue:
Whether the contract of employment between Servidad and Innodata was a scheme to block
his acquisition of tenurial security and violated his right to security of tenure guaranteed by the
Constitution.
Ruling:
 The Supreme Court ruled in favor of Servidad.
 The Court held that the termination against Servidad was clearly illegal.
 The contract of employment was found to be a double-bladed scheme to block the
acquisition of tenurial security by the employee.
 The contract gave Innodata the option to terminate the employee by reason of
expiration of the contract or to use "failure to meet work standards" as the ground for
dismissal.
 This jeopardized the right of the worker to security of tenure.
 The Court declared the contract to be a complete nullity and reinstated the decision of
the Labor Arbiter, ordering the reinstatement of Servidad and payment of backwages.
Ratio:
 An employer can only terminate the services of an employee for valid and just causes,
which must be shown by clear and convincing evidence.
 If it is apparent that periods have been imposed in a contract to preclude the acquisition
of tenurial security by the employee, those periods should be disregarded for being
contrary to public policy.
 An employee allowed to work beyond the probationary period is deemed a regular
employee.
 Mere allegations of besmirched reputation, embarrassment, and sleepless nights are
insufficient to warrant an award of moral damages.
 The proximate cause of such damages must be the unlawful act or omission of the
employer.

(SUMMARY)

Case Background and Parties Involved

The case involves Joaquin T. Servidad, a data control clerk, who was illegally dismissed by his
employer, Innodata Philippines, Inc./Innodata Corporation.
Servidad filed a case for illegal dismissal before the Labor Arbiter.
The National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter,
stating that the contract between Servidad and Innodata was for a fixed term and therefore,
the dismissal was valid.
Servidad appealed to the Supreme Court, arguing that the NLRC acted with grave abuse of
discretion.
Supreme Court Ruling
The Supreme Court ruled in favor of Servidad, stating that his termination was clearly illegal.
The contract between Servidad and Innodata was deemed to be a double-bladed scheme that
violated his right to security of tenure.
The contract allowed Innodata to terminate Servidad either by reason of expiration of the
contract or by using "failure to meet work standards" as the ground for dismissal, which
jeopardized Servidad's right to security of tenure.
The Court emphasized that if the contract was truly for a fixed term, Innodata should not have
had the discretion to dismiss Servidad for reasons other than just and authorized causes.
The contract's provisions were found to be violative of the employee's right against
unwarranted dismissal.
Interpretation of Obscure Words or Stipulations in the Contract
The Court cited Article 1377 of the Civil Code, which states that the interpretation of obscure
words or stipulations in a contract should not favor the party who caused the obscurity.
In this case, the favorable interpretation should be for Servidad, not Innodata.
Rejection of Innodata's Argument on Probationary Employment
The Court rejected Innodata's argument that the one-year term of employment was
probationary.
Even if the nature of the job required at least one year for the employee to acquire the
necessary training and experience, it could not be considered a valid probationary employment
as it did not meet the requirements of Article 281 of the Labor Code.
Servidad's Employment Status as a Regular Employee
The Court concluded that Servidad was hired as a regular employee and his work as a data
control clerk was necessary and important to Innodata's business.
Therefore, he should be considered a regular employee under Article 280 of the Labor Code.
Similarity to a Previous Case Involving Innodata
The Court noted that the case was similar to a previous case involving Innodata, where the
same standard form of employment contract was found to violate the employee's right to
security of tenure.
Claim for Moral Damages
The Court ruled in favor of Innodata regarding the claim for moral damages.
Mere allegations of besmirched reputation, embarrassment, and sleepless nights were
insufficient to warrant an award for moral damages.
It must be shown that the proximate cause of such damages was the unlawful act or omission
of Innodata.
Remedies and Costs Imposed on Innodata
The Court ordered Innodata to pay Servidad full backwages from the time of his dismissal until
his actual or payroll reinstatement, without any deduction.
The decision of the NLRC was set aside, and the decision of the Labor Arbiter was reinstated
with the modification of the backwages computation.
Costs were also imposed on Innodata.
Title
Calalang vs. Williams
Case
G.R. No. 47800
Ponente
LAUREL, J
Decision Date
Dec 2, 1940
A private citizen challenges the constitutionality of a law restricting the use of animal-drawn
vehicles on certain streets, but the court rules in favor of the government, stating that the law
falls within the government's authority to promote public welfare.
Facts:
 Petition filed by Maximo Calalang, a private citizen and taxpayer of Manila, against
several respondents including A.D. Williams, Chairman of the National Traffic
Commission, Vicente Fragante, Director of Public Works, Sergio Bayan, Acting Secretary
of Public Works and Communications, Eulogio Rodriguez, Mayor of the City of Manila,
and Juan Dominguez, Acting Chief of Police of Manila.
 Petition challenges the constitutionality of Commonwealth Act No. 648, which restricts
the use of animal-drawn vehicles on certain streets in Manila.
 National Traffic Commission recommended the prohibition of animal-drawn vehicles on
specific streets during certain hours to promote safe transit and avoid obstructions.
 Petitioner argues that the law constitutes an undue delegation of legislative power and
infringes upon personal liberty.
Issue:
Whether Commonwealth Act No. 648, which delegates the authority to promulgate rules and
regulations on the use of national roads and the closure of roads to traffic, is constitutional.
Ruling:
 The court ruled in favor of the government and denied the petition for a writ of
prohibition.
 The court held that the provisions of Commonwealth Act No. 648 do not confer
legislative power upon the Director of Public Works and the Secretary of Public Works
and Communications.
 The authority given to them is not to determine public policy but to carry out the
legislative policy laid down by the National Assembly.
 The court emphasized that the delegated power is not the determination of what the
law shall be, but the ascertainment of the facts and circumstances upon which the
application of the law is to be based.
 The court concluded that the promulgation of rules and regulations on the use of
national roads and the closure of roads to traffic is an administrative function that
cannot be directly discharged by the National Assembly.
Ratio:
 The court based its decision on the principle that the legislature cannot delegate its
power to make the law, but it can delegate a power to determine certain facts or
circumstances upon which the law's application depends.
 The court cited previous cases to support this distinction.
 The court emphasized the importance of maintaining a balance between liberty and
authority, stating that the curtailment of liberty is necessary to ensure its preservation
and to promote peace and order in society.
 The court further discussed the concept of social justice, which aims to promote the
welfare of all people and achieve economic stability through the equalization of social
and economic forces.
 The court concluded that the challenged law is within the scope of the government's
authority to promote public welfare and does not violate constitutional principles.

(SUMMARY)

Case Background and Challenge to Constitutionality

 The case of Calalang v. Williams involves a challenge to the constitutionality of
Commonwealth Act No. 648.
 The law restricts the use of animal-drawn vehicles on certain streets.
 The petitioner, Maximo Calalang, argues that the law constitutes an undue delegation of
legislative power and infringes upon personal liberty.
Delegation of Legislative Power
 The court clarifies that Commonwealth Act No. 648 does not confer legislative power
upon the Director of Public Works and the Secretary of Public Works and
Communications.
 Their authority is to carry out the legislative policy laid down by the National Assembly.
 The delegated power is not the determination of what the law shall be, but rather the
ascertainment of the facts and circumstances upon which the application of the law is to
be based.
 The promulgation of rules and regulations on the use of national roads and the decision
to close them to traffic are administrative functions that cannot be directly discharged
by the National Assembly.
Personal Liberty and Authority
 The court addresses the petitioner's argument regarding personal liberty.
 It states that while liberty is a blessing, it should not prevail over authority, as that
would lead to anarchy.
 Likewise, authority should not prevail over liberty, as that would result in slavery.
  The court emphasizes the need for a balance between liberty and authority, achieved
through education and personal discipline, in order to establish peace, order, and
happiness for all.
 The apparent curtailment of liberty is necessary to ensure its preservation.
Social Justice and Economic Stability
 The court explains that social justice is achieved through the humanization of laws and
the equalization of social and economic forces by the state.
 Social justice aims to promote the welfare of all people and maintain economic stability
through a proper economic and social equilibrium.
 It should be founded on the recognition of interdependence among diverse units of
society and the equal protection extended to all groups.
Court's Ruling
 Based on the arguments presented, the court denies the writ of prohibition sought by
the petitioner.
 The court rules that the law in question does not violate constitutional principles.

Title
Philippine Airlines, Inc. vs. National Labor Relations Commission
Case
G.R. No. 85985
Ponente
MELO, J
Decision Date
Aug 13, 1993
The case involves a dispute between Philippine Airlines and its employees' association over the
implementation of a revised Code of Discipline, with the Supreme Court ruling that
management's prerogatives must be exercised in good faith and with employee participation,
emphasizing the importance of protecting labor rights and promoting social justice.
Facts:
 The case involves Philippine Airlines, Inc. (PAL) and the Philippine Airlines Employees
Association (PALEA).
 On March 15, 1985, PAL completely revised its 1966 Code of Discipline and immediately
implemented it.
 Some employees were subjected to disciplinary measures as a result.
 PALEA filed a complaint before the National Labor Relations Commission (NLRC) for
unfair labor practice.
 PALEA alleged that PAL implemented the Code without notice and prior discussion with
the union.
 PAL argued that it had the prerogative as an employer to prescribe rules and regulations
regarding employees' conduct.
 PAL claimed that it had not violated the collective bargaining agreement (CBA) or any
provision of the law.
 Issue:
 Is the formulation of a Code of Discipline a shared responsibility of the employer and the
employees?
Ruling:
 The Supreme Court upheld the decision of the NLRC.
 The Court stated that management's prerogatives must be exercised in good faith and
with employee participation.
 The Court emphasized the importance of protecting labor rights and promoting social
justice.
 The Court held that the exercise of managerial prerogatives is not unlimited and is
circumscribed by limitations found in law, a collective bargaining agreement, or the
general principles of fair play and justice.
 The Court recognized the employees' right to participate in the discussion of matters
affecting their rights, including the formulation of a code of discipline.
 The Court concluded that the employees should be properly informed of management's
decisions or modes of action.
 Industrial peace cannot be achieved if employees are denied their just participation in
matters affecting their rights.
Ratio:
 The Court's decision was based on the principle that management's prerogatives must
be exercised in good faith and with employee participation.
 The Court recognized the employees' right to participate in the formulation of a code of
discipline.
 The Court emphasized the importance of protecting labor rights and promoting social
justice.
 The exercise of managerial prerogatives is not unlimited and is subject to limitations
found in law, collective bargaining agreements, and the general principles of fair play
and justice.
 Employees should be properly informed of management's decisions.
 Industrial peace cannot be achieved if employees are denied their just participation in
matters affecting their rights.

(SUMMARY)

Case Background
 The case involved the revision of the Code of Discipline by Philippine Airlines, Inc. (PAL)
in 1985.
 The revised Code was implemented without prior notice or discussion with the
Philippine Airlines Employees Association (PALEA).
 PALEA filed a complaint for unfair labor practice, arguing that PAL's unilateral
implementation of the Code violated their rights.
Decision of the Labor Arbiter
 The labor arbiter found that PAL had the prerogative to establish rules and regulations.
 However, the Code was objectionable for its broad and encompassing provisions and its
violation of the rule against double jeopardy.
 The arbiter ordered PAL to furnish all employees with the new Code, reconsider the
cases of penalized employees, and discuss the objectionable provisions with PALEA.
Decision of the NLRC
 The NLRC affirmed the dismissal of PALEA's charge but emphasized the need for
cooperation and participation between labor and management.
 The NLRC modified the decision, ordering PAL to review and discuss the disputed
provisions of the Code with PALEA and provide each employee with a copy of the Code.
PAL's Petition for Certiorari
 PAL filed a petition arguing that it should not be compelled to share its management
prerogative of formulating a Code of Discipline.
 PAL claimed that the collective bargaining agreement recognized its exclusive right to
make and enforce company rules without discussion or conformity from PALEA.
Supreme Court's Decision
  The Supreme Court held that the exercise of managerial prerogatives is not unlimited
and must be circumscribed by limitations found in law, collective bargaining
agreements, or principles of fair play and justice.
 The Court emphasized the need for management to properly inform employees of
decisions and actions that may affect their rights.
 The Court rejected PAL's argument that the collective bargaining agreement recognized
its exclusive right, stating that employees have the right to participate in matters
affecting their rights, including the formulation of a code of discipline.
Conclusion
 The Supreme Court affirmed the decision of the NLRC, dismissing PAL's petition.
 The Court upheld the importance of employee participation in the formulation of rules
and regulations that affect their rights.
 The decision emphasized the need for management to exercise prerogatives in good
faith and with employee participation, promoting social justice and protecting labor
rights.

Title
WPP Marketing Communications, Inc. vs. Galera
Case
G.R. No. 169207 & 169239
Ponente
CARPIO, Acting C.J
Decision Date
Mar 25, 2010
An American citizen working as a Managing Director for WPP Marketing Communications, Inc.
in the Philippines is illegally dismissed and fights for employee benefits, backwages, and
damages, but is denied due to her failure to obtain a proper work permit.
Facts:
 Jocelyn M. Galera, an American citizen, was recruited by John Steedman, Chairman-WPP
Worldwide and CEO of Mindshare, Co., to work for WPP Marketing Communications,
Inc. in the Philippines.
 Galera accepted the offer and signed an Employment Contract, which stated her
position as Managing Director and outlined her salary, benefits, and other terms and
conditions of employment.
 Galera started working on September 1, 1999.
 Four months later, WPP filed an application for Galera to receive a working visa,
designating her as Vice President of WPP.
 Galera claimed that she was forced to sign the application in order to remain in the
Philippines and keep her job.
 On December 14, 2000, Galera was verbally notified by Steedman that her services were
terminated, and a termination letter followed the next day.
 Galera filed a complaint for illegal dismissal and other claims against WPP, Steedman,
and other individuals.
 The Labor Arbiter ruled in favor of Galera, finding her dismissal to be illegal and
awarding her backwages, separation pay, unpaid benefits, damages, and attorney's fees.
 The National Labor Relations Commission (NLRC) reversed the decision, stating that
Galera was a corporate officer and the case fell under the jurisdiction of the Regional
Trial Court.
 Galera appealed to the Court of Appeals, which reversed the NLRC's decision and found
that Galera was an employee, not a corporate officer.
 The court also held that the Labor Arbiter and the NLRC had jurisdiction over the case
and awarded Galera various monetary benefits and damages.
 WPP, Steedman, Webster, and Lansang filed a petition for review before the Supreme
Court, arguing that Galera was a corporate officer and not entitled to the monetary
award.
 Galera also filed a petition, seeking full backwages and holding the individual
respondents liable for her dismissal.

Issue:
 Whether Galera was an employee or a corporate officer
  Whether the Labor Arbiter and the NLRC had jurisdiction over the case
 Whether Galera was entitled to monetary benefits and damages
 Ruling:
 Galera was an employee, not a corporate officer.
 The Labor Arbiter and the NLRC had jurisdiction over the case.
 Galera was entitled to monetary benefits and damages.
Ratio:
 The Supreme Court based its ruling on the terms of Galera's employment contract and
the control exercised by WPP over her work.
 The court found that Galera's position as Managing Director and the terms of her
employment contract indicated that she was an employee, not a corporate officer.
 The court also considered the nature of Galera's relationship with WPP, which was
characterized by control and supervision by the company.
 The court held that the Labor Arbiter and the NLRC had jurisdiction over the case
because it involved an illegal dismissal claim and other labor-related issues.
 The court found that Galera's dismissal lacked both substantive and procedural due
process, as she was not given a valid reason for termination and was not afforded an
opportunity to be heard.
 However, the court noted that Galera had worked in the Philippines without a proper
work permit, which posed a problem in seeking relief.
 The court held that Galera could not claim employee benefits under Philippine labor
laws due to her failure to obtain a work permit.
 Therefore, the Supreme Court partially granted the petitions, setting aside the decision
of the Court of Appeals and leaving the parties where they are.
 The court held that Galera could seek relief from other jurisdictions but could not claim
employee benefits in the Philippines without a proper work permit.

(SUMMARY)
Background and Employment Contract
 The case involves Jocelyn M. Galera, an American citizen working as a Managing
Director for WPP Marketing Communications, Inc. in the Philippines.
 Galera was recruited by John Steedman, Chairman-WPP Worldwide and CEO of
Mindshare, Co., and signed an Employment Contract outlining her position, salary,
benefits, and other terms and conditions of employment.
 The contract stated that WPP would provide suitable housing, a company car, medical
and insurance benefits, and other perks.
 Galera would also be entitled to paid holidays and sick leave.
Alleged Illegal Dismissal
 Four months after starting work, WPP filed an application for Galera to receive a
working visa.
 Galera claimed that she was forced to sign the application to remain in the Philippines
and keep her job.
  On December 14, 2000, Galera was verbally notified by Steedman that her services were
terminated, and a termination letter followed the next day.
Labor Arbiter's Decision
 Galera filed a complaint for illegal dismissal and other claims against WPP and its
officers.
 The Labor Arbiter ruled in favor of Galera, stating that she was illegally dismissed and
not given due process.
 The Arbiter ordered WPP to pay Galera backwages, separation pay, unpaid benefits,
damages, and attorney's fees.
NLRC's Reversal and Jurisdiction Issue
 The National Labor Relations Commission (NLRC) reversed the decision of the Labor
Arbiter, stating that Galera was a corporate officer and the case should be under the
jurisdiction of the Regional Trial Court.
 The NLRC argued that Galera's appointment as Vice-President was valid, even though it
exceeded the number of positions allowed in WPP's by-laws.
Court of Appeals' Ruling
 Galera appealed the NLRC's decision to the Court of Appeals, which ruled in her favor.
 The appellate court found that Galera was an employee and not a corporate officer
based on the terms of her employment contract and the control exercised by WPP over
her work.
 The court also held that the NLRC had jurisdiction over the case.
Supreme Court's Decision
 WPP, Steedman, Webster, and Lansang filed a petition for review with the Supreme
Court, arguing that Galera was a corporate officer and not entitled to employee
benefits.
 The Supreme Court agreed with Galera that she was an employee and not a corporate
officer.
 The court found that her appointment as Vice-President was invalid because it exceeded
the number of positions allowed in WPP's by-laws.
 The court also held that the Labor Arbiter and the NLRC had jurisdiction over the case.
Denial of Backwages and Benefits
 However, the court denied Galera's claim for backwages and other benefits due to her
failure to obtain a proper work permit.
 The court stated that granting her claim would sanction the violation of Philippine labor
laws requiring aliens to secure work permits before employment.
 The court suggested that Galera seek relief from other jurisdictions.
Summary of Supreme Court's Ruling
 Galera was ruled to be an employee and not a corporate officer.
 The Labor Arbiter and the NLRC had jurisdiction over the case.
 Galera's claim for backwages and benefits was denied due to her failure to obtain a
work permit.
Title
Asuncion vs. National Labor Relations Commission
Case
G.R. No. 129329
Ponente
KAPUNAN, J
Decision Date
Jul 31, 2001
A case involving the illegal termination of an accountant/bookkeeper due to lack of credible
evidence and unreasonable charges, resulting in the Supreme Court ordering her reinstatement
with backwages.
Facts:
 Ester M. Asuncion was employed as an accountant/bookkeeper by Mabini Medical
Clinic.
 In May 1994, the Department of Labor and Employment conducted an inspection and
found violations of labor standards laws.
 On August 9, 1994, the Medical Director, Dr. Wilfrido Juco, issued a memorandum to
Asuncion charging her with chronic absenteeism, habitual tardiness, loitering, wasting of
company time, getting the salary of an absent employee without acknowledging or
signing for it, disobedience, and insubordination.
 Asuncion was given two days to explain why she should not be terminated.
 She submitted her response three days later, but was still dismissed.
 Asuncion filed a case for illegal termination before the National Labor Relations
Commission (NLRC).
Issue:
 Whether the dismissal of Asuncion was justified based on the charges against her.
 Ruling:
 The Supreme Court reversed the decision of the NLRC and reinstated the decision of the
Labor Arbiter.
 The Court found that the private respondents failed to present credible evidence to
support the charges against Asuncion.
 The handwritten listing and unsigned computer print-outs submitted by the employer
were unauthenticated and unreliable.
 The official record book of Asuncion's alleged absences and tardiness, which was
mentioned in the notice of termination, was not presented as evidence.
 The Court also considered that the two-day period given to Asuncion to explain and
answer the charges was unreasonable, and the charges lacked particularity.
 Therefore, the Court concluded that the dismissal of Asuncion was illegal.
Ratio:
 The employer has the burden of proving that the dismissal was for a just or authorized
cause.
 In this case, the private respondents failed to present credible evidence to support the
charges against Asuncion.
 The handwritten listing and unsigned computer print-outs were unauthenticated and
unreliable.
  The non-presentation of the official record book, which was the best evidence in the
possession of the employer, cast doubts on the factual basis of the charges.
 The two-day period given to Asuncion to explain and answer the charges was deemed
unreasonable.
 In case of doubts, the scales of justice must be tilted in favor of the employee.
 Therefore, the Court concluded that the dismissal was illegal and ordered the
reinstatement of Asuncion with backwages.

(SUMMARY)
Case Background and Charges against Asuncion
 Ester M. Asuncion, an accountant/bookkeeper, was illegally dismissed by Mabini
Medical Clinic and Dr. Wilfrido Juco.
 The Department of Labor and Employment conducted an inspection of the clinic and
found violations of labor standards laws.
 Asuncion was charged with chronic absenteeism, habitual tardiness, loitering, wasting
company time, getting the salary of an absent employee without acknowledging it,
disobedience, and insubordination.
 She was given two days to explain why she should not be terminated, but her response
was not accepted by the employer and she was dismissed.
Asuncion's Case before the NLRC
 Asuncion filed a case for illegal termination before the National Labor Relations
Commission (NLRC).
 The Labor Arbiter ruled in favor of Asuncion, stating that the employer failed to present
credible evidence of her absences and tardiness.
 However, the NLRC reversed the decision, claiming that Asuncion had admitted to the
charges.
 The Supreme Court ultimately reversed the NLRC's decision and reinstated the Labor
Arbiter's ruling.
Lack of Credible Evidence Presented by the Employer
 The Supreme Court found that the employer failed to present any credible evidence to
support the charges against Asuncion.
 The handwritten listing and unsigned computer print-outs submitted by the employer
were deemed unreliable and unauthenticated.
 The employer also failed to present the official record book of Asuncion's alleged
absences and tardiness, which was mentioned in the notice of termination.
 The Court concluded that the employer's failure to present the best evidence available
cast serious doubts on the factual basis of the charges.
Unreasonable Timeframe and Lack of Opportunity for Defense
 The Court noted that the two-day period given to Asuncion to explain and answer the
charges was unreasonable, considering the number of offenses she was charged with
and the lack of particularity in the charges.
  The Court also found that the employer did not provide Asuncion with ample
opportunity to prepare her defense, as they prevented her from submitting her
explanation within the given timeframe.
Ruling and Remedies
 Based on these findings, the Court ruled that the employer failed to prove just cause for
the dismissal of Asuncion and that her termination was illegal.
 As a result, Asuncion was entitled to reinstatement to her former position without loss
of seniority and the payment of backwages.