CMS ESTATE, INC.

V SOCIAL SECURITY SYSTEM

CUEVAS; September 28, 1984

NATURE
Appeal by the CMS Estate, Inc.

FACTS
- Petitioner is a domestic corporation organized primarily for the purpose of engaging in real estate
business. On December 1, 1952, it started doing business with only six (6) employees.
- January 28, 1957: petitioner entered into a contract of management with one Eufracio D. Rojas for the
operation and exploitation of the forest concession. The logging operation actually started on April 1, 1957
with four monthly-salaried employees. As of September 1, 1957, petitioner had 89 employees and
laborers in the logging operation.
- December 26, 1957: petitioner revoked its contract of management with Mr. Rojas.
- August 1, 1958: petitioner became a member of the Social Security System with respect to its
real estate business. On September 6, 1958, petitioner remitted to the System the sum of P203.13
representing the initial premium on the monthly salaries of the employees in its logging business.
- October 9, 1958: petitioner demanded the refund of the said amount.
- On November 10, 1958, petitioner filed a petition with the Social Security Commission praying for the
determination of the effectivity date of the compulsory coverage of petitioner's logging business.
- January 14, 1960: the instant petition was denied and petitioner was adjudged to be subject to
compulsory coverage as Sept. 1, 1957 and the Social Security System was directed to effect such coverage
of petitioner's employees in its logging and real estate business conformably to the provisions of Rep. Act
No. 1161, as amended.
- Petitioner’s Claim
CMS Estate, Inc. is not yet subject to compulsory coverage with respect to its logging business because it
does not have the minimum required number of employees (per company).
- Respondent’s Comments
The logging business was a mere expansion of petitioner's activities and for purposes of the Social
Security Act, petitioner should be considered a member of the System since December 1, 1952 when it
commenced its real estate business.

ISSUES
1. WON the contributions required of employers and employees under our Social Security Act of 1954 are
obligatory because the said Act was allegedly enacted by Congress in the exercise of the police power of
the State, not of its taxing power
2. WON a contractee-independent contractor relationship existed between petitioner and Eufracio Rojas.
during the time that he was operating its forest concession at Baganga, Davao
3. WON Section 9 of the Social Security Act on the question of compulsory membership and employers
should be given a liberal interpretation

HELD
1. Ratio The said enactment implements the general welfare mandate of the Constitution and
constitutes a legitimate exercise of the police power of the State.
Reasoning
- The Social Security Law was enacted pursuant to the policy of the government "to develop, establish
gradually and perfect a social security system which shall be suitable to the needs of the people
throughout the Philippines, and shall provide protection against the hazards of disability,
sickness, old age and death" (Sec. 2, RA 1161, as amended).
- Membership in the SSS is not a result of bilateral, concensual agreement where the rights and
obligations of the parties are defined by and subject to their will, RA 1161 requires compulsory
coverage of employees and employers under the System. It is actually a legal imposition on said employers
and employees, designed to provide social security to the workingmen. The principle of non-impairment of
the obligation of contract as provided in the Bill of Rights is not a proper defense, the enactment being a
lawful exercise of the police power of the State.
- The taxing power of the State is exercised for the purpose of raising revenues. However, under our Social
Security Law, the emphasis is more on the promotion of the general welfare. The Act is not part of out
Internal Revenue Code nor are the contributions and premiums therein dealt with and provided for,
collectible by the Bureau of Internal Revenue. The funds contributed to the System belong to the
members who will receive benefits, as a matter of right, whenever the hazards provided by the law occur.
- Together with the contributions imposed upon employees and the Government, they are intended for the
protection of said employees against the hazards of disability, sickness, old age and death in line with the
constitutional mandate to promote social justice to insure the well-being and economic security of all the
people.
- It is the intention of the law to cover as many persons as possible so as to promote the constitutional
objective of social justice. It is clear that a later law prevails over a prior statute and moreover the
legislative intent must be given effect.
2. Ratio Rojas was not an independent contractor but merely an employee of the petitioner.
Reasoning
- Rojas was appointed as operations manager of the logging concession; he has no power to appoint or
hire employees; as the term implies, he only manages the employees and it is petitioner who furnishes
him the necessary equipment for use in the logging business; and he is not free from the control and
direction of his employer in matter connected with the performance of his work. Rojas should be entitled
to the compulsory coverage of the Act.
3. Ratio Because of the broad social purpose of the Social Security Act, all doubts in construing the Act
should favor coverage rather than exemption.
Reasoning
- Prior to its amendment, Sec. 9 of the Act provides that before an employer could be compelled to become
a member of the System, he must have been in operation for at least two years and has at the time of
admission at least six employees. It should be pointed out that it is the employer, either natural, or
judicial person, who is subject to compulsory coverage and not the business.
- It is the intention of the law to cover as many persons as possible so as to promote the constitutional
objective of social justice. It is axiomatic that a later law prevails over a prior statute and moreover the
legislative in tent must be given effect
Disposition The records show that petitioner started its real estate business on December 1, 1952
while its logging operation was actually commenced on April 1, 1957. Applying the provision of Sec. 10
(previously Sec. 9) of the Act, petitioner is subject to compulsory coverage as of December 1, 1952 with
respect to the real estate business and as of April 1, 1957 with respect to its logging operation. The
appeal is dismissed, with costs against the petitioner.
Maternity Children’s Hospital vs. Secretary of Labor
G.R. No. 78909 June 30, 1989

EN BANC: MEDIALDEA, J.:

Facts:

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 Dorado, as holdover President. The
hospital derives its finances from the club itself as well as from paying patients, averaging 130 per month.
It is also partly subsidized by the Philippine Charity Sweepstakes Office and the Cagayan De Oro City
government.

Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are given
food, but the amount spent therefor is deducted from their respective salaries

On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a
complaint with the Office of the Regional Director of Labor and Employment, Region X, for underpayment
of their salaries and ECOLAS, which was docketed as ROX Case No. CW-71-86.

On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to
inspect the records of the petitioner to ascertain the truth of the allegations in the complaints. Based on
their inspection report and recommendation, the Regional Director issued an Order dated August 4,
1986, directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all the
petitioner's employees.

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

Issue:

Whether or not the Regional Director had jurisdiction over the case and if so, the extent of coverage of any
award that should be forthcoming, arising from his visitorial and enforcement powers under Article 128 of
the Labor Code.

Held:

This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by E.O. No.
111. Under the present rules, a Regional Director exercises both visitorial and enforcement power over
labor standards cases, and is therefore empowered to adjudicate money claims, provided there still exists
an employer-employee relationship, and the findings of the regional office is not contested by the
employer concerned.

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 occupational, safety, and health standards (Section 7, Rule I, Rules on the Disposition of Labor
Standards Cases in the Regional Office, dated September 16, 1987).

Decision:

ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all persons still
employed in the Hospital at the time of the filing of the complaint, but GRANTED as regards those
employees no longer employed at that time. SO ORDERED.

Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes, Griño-Aquino
and Regalado, JJ., concur

SAMEER OVERSEAS PLACEMENT AGENCY, INC. vs NLRC

JULY 11, 2015 KNOWYERLAW

G.R. No. 132564 October 20, 1999
FACTS:Private respondent Endozo was employed as domestic helper in Taiwan. The employment contract
was for adefinite period of one (1) year, with six (6) months probationary period. She stayed in Taiwan
only for eleven (11)days as her employer terminated her services, and sent her home for alleged
incompetence. Hence, privaterespondent filed with the Philippine Overseas Employment Administration a
complaint against petitioner for illegaldismissal. Consequently, respondent’s claim was transferred to the
National Labor Relations Commission,Arbitration Branch, in San Pablo City.ISSUE:Whether the employer
in Taiwan could lawfully terminate private respondent’s employment as domestic helperfor incompetence
during the probationary period of her employment.HELD:It is an elementary rule in the law on labor
relations that even a probationary employee is entitled to security of tenure. A probationary employee can
not be terminated, except for cause.In this case, the employment contract was for a definite period of one
(1) year, with six (6) months probationaryperiod. After only eleven days of work, the employer dismissed
private respondent without just cause.A probationary employee may be terminated on two grounds: (a) for
just cause or (b) when he fails to qualify as aregular employee in accordance with reasonable standards
made known by the employer to the employee at thetime of his engagement.Under the contract of
employment, the employer may terminate the services of private respondent during theprobationary
period for “being found losing ability to work.” However, “the power of the employer to terminate
aprobationary employment contract is subject to limitations.
First
, it must be exercised in accordance with thespecific requirements of the contract.
Secondly
, the dissatisfaction of the employer must be real and in good faith,not feigned so as to circumvent the
contract or the law; and
thirdly
, there must be no unlawful discrimination inthe dismissal.” In termination cases, the burden of proving
just or valid cause for dismissing an employee rests onthe employer. In this case, petitioner was not able
to present convincing proof establishing respondent Endozo’salleged incompetence.

CALALANG V WILLIAMS
LAUREL; December 2, 1940

FACTS
- The Secretary of Public Works and Communications (PWC) approved with modification the
recommendation that originated from the National Traffic Commission (NTC), which was favorably
indorsed by the Director of Public Works (PW), that Rosario Street and Rizal Avenue be closed to traffic of
animal-drawn vehicles, between the points and during the hours from 7 a.m. to 11 p.m., for a period of
one year from the 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 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.
- Commonwealth Act No. 548 gives the Director of Public Works, with the approval of the Secretary of the
Public Works and Communications the authority to promulgate rules and regulations to regulate and
control the use of and traffic on national roads.
- Maximo Calang, in his capacity as private citizen and as a taxpayer of Manila, filed a petition for a writ
of prohibition against the Chairman of NTC, Director of PW, Acting Secretary of PWC, Mayor of Manila
and Acting Chielf of Police of Manila.

ISSUES
1. WON Commonwealth Act No. 548 is unconstitutional because it constitutes an undue delegation of
legislative power
2. WON the rules and regulations promulgated constitute an unlawful interference with legitimate
business or trade and abridge the right to personal liberty and freedom of locomotion
3. WON the rules and regulations complained of infringe the upon the constitutional precept regarding
the promotion of social justice to insure the well-being of all the people

HELD
1. NO
- The Legislature cannot delegate power to make law; but it can make a law to delegate a power to
determine some fact or state of things upon which the law makes, or intends to make, its own action
depend.
Reasoning
- adherence to precedent
Rubi vs. Provincial Board of Mindoro, Wayman vs. Southard – it was held here that discretion may be
delegated to executive departments or subordinate officials the execution of certain acts, final on
questions of fact.
- textual interpretation of Commonwealth Act No. 548
The provision that “….the Director of Public Works, with the approval of the Secretary of the Public
Works and Communications, shall promulgate rules and regulations to regulate and control the use of
and traffic on national roads…”, is an administrative function which cannot be directly discharged by
the National Assembly.
- practicality
The complexities of modern governments, the multiplication of the subjects of govt’l regulations, and the
increased difficulty in administering the law give rise to the adoption, within certain limits, the
delegation of greater powers by the legislative and vesting a larger amount of discretion in
administrative and executive officials, not only in the execution of the laws, but also in the
promulgation of certain rules and regulations.
2. NO
- The state may enact laws that may interfere with personal liberty, with property, and with business and
occupation if the said laws are intended to promote the welfare of the public. (police power of the State)
Reasoning
- precedents (US vs. Gomez, Dobbins vs. Los Angeles & People vs. Pomar)
- Paradox - The apparent curtailment of liberty is precisely the very means of insuring its preservation
- No. Social justice is promoted if the greatest good is brought about to the greatest number.

Philippine Association of Service Expporters, Inc. vs. Drilon

G.R. No. 81958 June 30, 1988

EN BANC, SARMIENTO, J:

Facts:

The petitioner, Philippine Association of Service Exporters, Inc. (PASEI), a firm "engaged
principally in the recruitment of Filipino workers for overseas placement," challenges the Constitutional
validity of Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the
character of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO
DOMESTIC AND HOUSEHOLD WORKERS," and specifically assailed for "discrimination against males or
females;" 2 that it "does not apply to all Filipino workers but only to domestic helpers and females with
similar skills;" 3 and that it is violative of the right to travel. It is held likewise to be an invalid exercise of
the lawmaking power, police power being legislative, and not executive, in character.

On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and
Administrator of the Philippine Overseas Employment Administration, filed a Comment informing the
Court that on March 8, 1988, the respondent Labor 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 power of the
Philippine State.

Issue:

Whether the challenged Department Order is a valid regulation in the nature of a police power measure
under the Constitution.

Held:

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, veiled in
general terms to underscore its all-comprehensive embrace.

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could
be done, provides enough room for an efficient and flexible response to conditions and circumstances
thus assuring the greatest benefits.

It finds no specific Constitutional grant for the plain reason that it does not owe its origin to the Charter.
Along with the taxing power and eminent domain, it is inborn in the very fact of statehood and
sovereignty. It is a fundamental attribute of government that has enabled it to perform the most vital
functions of governance. The police power of the State ... is a power coextensive with self- protection. It
may be said to be that inherent and plenary power in the State which enables it to prohibit all things
hurtful to the comfort, safety, and welfare of society.

As a general rule, official acts enjoy a presumed validity. 13 In the absence of clear and convincing
evidence to the contrary, the presumption logically stands.

The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is
no question that Department Order No. 1 applies only to "female contract workers," 14 but it does not
thereby make an undue discrimination between the sexes. It is well-settled that "equality before the law"
under the Constitution 15 does not import a perfect Identity of rights among all men and women.

"Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution
more paramountly is that such an employment be above all, decent, just, and humane. Under these
circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate
protection, personally and economically, while 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.

This Court understands the grave implications the questioned Order has on the business of recruitment.
The concern of the Government, however, is not necessarily to maintain profits of business firms. In the
ordinary sequence of events, 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.

Decision:

The Government has convinced the Court in this case that this is its intent. We do not find the impugned
Order to be tainted with a grave abuse of discretion to warrant the extraordinary relief prayed for.

WHEREFORE, the petition is DISMISSED. No costs. SO ORDERED

ANG TIBAY, AND NATIONAL WORKERS BROTHERHOOD V CIR, AND NATIONAL LABOR UNION, INC.
LAUREL; February 27, 1940

NATURE
The respondent National Labor Union, Inc., prays for the vacation of the judgment rendered by the
majority of this Court and the remanding of the case to the Court of the Industrial Relations for a new
trial.
The petitioner, Ang Tibay, has filed an opposition to the motion for reconsideration of the respondent
National Labor Union, Inc.

FACTS
- CIR created by Commonwealth Act No. 103. Its functions are specifically stated therein
- Nature of the CIR:
> more administrative than part of judicial system
> not a mere receptive organ of Govt, not passive
> active: not just judicial/quasi-judicial in disputes, but also has jurisdiction over the entire
Philippines to consider, investigate, decide, settle any question, matter, controversy or dispute arising
between, and/or affecting employers and employees or laborers, and regulate the relations between
them.
> mingling of executive and judicial functions (a departure from the rigid doctrine of the separation of
governmental powers)
> not narrowly constrained by technical rules of procedure: it’s required to act according to justice
and equity and substantial merits of the case, without regard to technicalities or legal forms…”
(Section 20, Commonwealth Act No. 103)
> The fact that the CIR may be said to be free from certain procedural requirements doe not mean
that it can entirely ignore or disregard the fundamental requirements of due process in trials.
- Primary rights which must be respected even in proceedings of this character:
(1) the right to a hearing, which includes the right of the party interested or affected to present his own
case and submit evidence in support thereof. Morgan v. U.S "the liberty and property of the citizen shall
be protected by the rudimentary requirements of fair play.
(2) Not only must the party be given an opportunity to present his case and to adduce evidence tending to
establish the rights which he asserts but the tribunal must consider the evidence presented. Edwards vs.
McCoy, "the right to adduce evidence, without the corresponding duty on the part of the board to consider
it, is vain. Such right is conspicuously futile if the person or persons to whom the evidence is presented
can thrust it aside without notice or consideration."
(3) "While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity
which cannot be disregarded, namely, that of having something to support it is a nullity, a place when
directly attached." (Edwards vs. McCoy, supra.) Law is both a grant and a limitation upon power.
(4) Not only must there be some evidence to support a finding but the evidence must be "substantial." -
such relevant evidence as a reasonable mind accept as adequate to support a conclusion." The statute
provides that "the rules of evidence prevailing in courts of law and equity shall not be controlling.' The
obvious purpose of this and similar provisions is to free administrative boards from the compulsion of
technical rules so that the mere admission of matter which would be deemed incompetent inn judicial
proceedings would not invalidate the administrative order. But this assurance of a desirable flexibility in
administrative procedure does not go far as to justify orders without a basis in evidence having rational
probative force.
(5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the
record and disclosed to the parties affected. -Protect parties in their right to know and meet the case
against them. It should not, however, detract from their duty actively to see that the law is enforced, and
for that purpose, to use the authorized legal methods of securing evidence and informing itself of facts
material and relevant to the controversy. Boards of inquiry may be appointed for the purpose of
investigating and determining the facts in any given case, but their report and decision are only advisory.
(Section 9, Commonwealth Act No. 103.) The Court of Industrial Relations may refer any industrial or
agricultural dispute or any matter under its consideration or advisement to a local board of inquiry, a
provincial fiscal. a justice of the peace or any public official in any part of the Philippines for investigation,
report and recommendation, and may delegate to such board or public official such powers and functions
as the said Court of Industrial Relations may deem necessary, but such delegation shall not affect the
exercise of the Court itself of any of its powers.
(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the views of a
subordinate in arriving at a decision. It may be that the volume of work is such that it is literally
Relations personally to decide all controversies coming before them. In the United States the difficulty is
solved with the enactment of statutory authority authorizing examiners or other subordinates to render
final decision, with the right to appeal to board or commission, but in our case there is no such statutory
authority.
(7) The Court of Industrial Relations should, in all controversial questions, render its decision in such a
manner that the parties to the proceeding can know the various issues involved, and the reasons for the
decision rendered. The performance of this duty is inseparable from the authority conferred upon it.
- The record of the proceedings had before the CIR in this particular case had no substantial evidence that
the exclusion of the 89 laborers was due to their union affiliation.
- The whole transcript of the hearing is just a record of contradictory statements of opposing counsel,
with sporadic conclusion drawn to suit their own views
- these statements have no evidentiary value
0 utf8
Respondents' Comments
1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of leather soles in ANG
TIBAY making it necessary for him to temporarily lay off the members of the National Labor Union Inc., is
entirely false and unsupported by the records of the Bureau of Customs and the Books of Accounts of
native dealers in leather.
2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a scheme to
systematically prevent the forfeiture of this bond despite the breach of his CONTRACT with the Philippine
Army.
3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re supposed delay of
leather soles from the States) was but a scheme to systematically prevent the forfeiture of this bond
despite the breach of his CONTRACT with the Philippine Army.
4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer union dominated by
Toribio Teodoro, the existence and functions of which are illegal. (281 U.S., 548, petitioner's printed
memorandum, p. 25.)
5. That in the exercise by the laborers of their rights to collective bargaining, majority rule and elective
representation are highly essential and indispensable. (Sections 2 and 5, Commonwealth Act No. 213.)
6. That the century provisions of the Civil Code which had been (the) principal source of dissensions and
continuous civil war in Spain cannot and should not be made applicable in interpreting and applying the
salutary provisions of a modern labor legislation of American origin where the industrial peace has always
been the rule.
7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating against the
National Labor Union, Inc., and unjustly favoring the National Workers' Brotherhood.
8. That the exhibits hereto attached are so inaccessible to the respondents that even with the exercise of
due diligence they could not be expected to have obtained them and offered as evidence in the Court of
Industrial Relations.
9. That the attached documents and exhibits are of such far-reaching importance and effect that their
admission would necessarily mean the modification and reversal of the judgment rendered herein.

ISSUE
WON a new trial in the CIR should be granted

HELD
YES
Ratio When a hearing before the CIR is conducted and a ruling is arrived at without any substantial
evidence, and there may be more evidence to be heard, a new trial shall be granted.
Reasoning
- The SC found no substantial evidence that the exclusion of the 89 laborers here was due to their union
affiliation or activity. Although the CIR is a court with special nature- in that it may be said to be free
from technical rules of procedure- it must still respect certain primary rights, one of which is that its
decision must be based on substantial evidence.
The interest of justice would be better served if the movant is given opportunity to present at the hearing
the documents referred to in his motion and such other evidence as may be relevant to the main issue
involved. The legislation which created the Court of Industrial Relations and under which it acts is new.
The failure to grasp the fundamental issue involved is not entirely attributable to the parties adversely
affected by the result.
Disposition The motion for a new trial should be and the same is hereby granted, and the entire record
of this case shall be remanded to the Court of Industrial Relations, with instruction that it reopen the
case, receive all such evidence as may be relevant and otherwise proceed in accordance with the
requirements set forth hereinabove. So ordered

ERRANO V. GALLANT MARITIME DIGEST

DECEMBER 20, 2016 ~ VBDIAZ

SERRANO V. GALLANT MARITIME SERVICES,INC.

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the Decision and

Resolution of the Court of Appeals (CA).

FACTS:

Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents)

under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment

with the following terms and conditions:

Duration of contract 12 months

Position Chief Officer

Basic monthly salary US$1,400.00

Hours of work 48.0 hours per week

Overtime US$700.00 per month

Vacation leave with pay 7.00 days per month

On March 19, 1998, the date of his departure, petitioner was constrained to accept

a downgraded employment contract for the position of Second Officer with a monthly salary of

US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer

by the end of April 1998.

Respondents did not deliver on their promise to make petitioner Chief Officer. Hence, petitioner

refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.

Petitioner’s employment contract was for a period of 12 months or from March 19, 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 unexpired portion of nine (9) months and twenty-three

(23) days.

Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents for constructive

dismissal and for payment of his money claims in the total amount of US$26,442.73.

The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and

awarding him monetary benefits, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the

complainant (petitioner) by the respondents in the above-entitled case was illegal and the respondents

are hereby ordered to pay the complainant [petitioner], jointly and severally, in Philippine

Currency, based on the rate of exchange prevailing at the time of payment, the amount of EIGHT

THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the

complainant’s salary for three (3) months of the unexpired portion of the aforesaid contract of

employment.

The claims of the complainant for moral and exemplary damages are hereby DISMISSED for lack of merit.

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 the entire unexpired portion of nine months and

23 days of petitioner’s employment contract – applying the subject clause. However, the LA

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 month.”

Respondents appealed to the National Labor Relations Commission (NLRC) to question the finding of the

LA that petitioner was illegally dismissed.

The NLRC modified the LA Decision and corrected the LA’s computation of the lump-sum salary awarded

to 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 should be proven to have been

actually performed, and for vacation leave pay.

Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the

constitutionality of the subject clause. The NLRC denied the motion.

Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge against the

subject clause. After initially dismissing the petition on a technicality, the CA eventually gave due course

to it, as directed by this Court in its Resolution which granted the petition for certiorari,filed by

petitioner.

The CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA

skirted the constitutional issue raised by petitioner.

His Motion for Reconsideration having been denied by the CA, petitioner brings his cause to this Court on

the following grounds:

The Court of Appeals and the labor tribunals have decided the case in a way not in 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 contract of employment instead of limiting it to three (3)

months.

Even without considering the constitutional limitations [of] Sec. 10 of Republic Act 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 contract they form part of his salary.

The Court now takes up the full merit of the petition mindful of the extreme importance of the

constitutional question raised therein.

ISSUES:

 Whether Section 10 (par 5) of RA 8042 is unconstitutional

 Proper computation of the Lump-sum salary to be awarded to petitioner by reason of his illegal

dismissal

 Whether the overtime and leave pay should form part of the salary basis in the computation of

his monetary award

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 awarded to petitioner in all three

fora.

Applying the subject clause, the NLRC and the CA computed the lump-sum salary 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 or a total of US$4,200.00.

Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the

US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of

US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his

employment contract, computed at the monthly rate of US$2,590.00.31

Arguments of the Petitioner

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10,

Republic Act (R.A.) No. 8042, violates the OFWs’ constitutional rights in that it impairs the terms of their

contract, deprives them of equal protection and denies them due process.

The Arguments of Respondents

Respondents contend that the constitutional issue should not be entertained, for this was belatedly

interposed by petitioner in his appeal before the CA, and not at the earliest opportunity, which was when

he filed an appeal before the NLRC.40

The Arguments of the Solicitor General

The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 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 thereof are deemed part of the minimum terms of petitioner’s

employment, especially on the matter of money claims, as this was not stipulated upon by the parties.

The Court’s Ruling:

First Issue

Does the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II

and Section 3, Article XIII on Labor as protected sector?

The answer is in the affirmative.

Section 1, Article III of the Constitution guarantees:

No person shall be deprived of life, liberty, or property without due process of law nor shall any person be

denied the equal protection of the law.

Section 18, Article II and Section 3, Article XIII accord all members of the labor sector, without distinction

as to place of deployment, full protection of their rights and welfare.

To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to

economic security and parity: all monetary benefits should be equally enjoyed by workers of similar

category, while all monetary obligations should be borne by them in equal degree; none should be denied

the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like

circumstances.

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 the subject clause a

suspect classification prejudicial to OFWs.

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 discriminatory intent against, and an invidious

impact on OFWs
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 protection, but also her right to

substantive due process under Section 1, Article III of the Constitution.

Second Issue

It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired

portions thereof, were treated alike in terms of the computation of their monetary benefits in case of

illegal dismissal. Their claims were subjected to a uniform rule of computation: their basic salaries

multiplied by the entire unexpired portion of their employment contracts.

The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of

computation of the money claims of illegally dismissed OFWs based on their employment periods,

in the process singling out one category whose contracts 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

other category from such prejudice, simply because the latter’s unexpired contracts fall short of one year.

Prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed

OFWs was in place. This uniform system was applicable even to local workers with fixed-term

employment.

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 protection, but also her right to

substantive due process under Section 1, Article III of the Constitution.

The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire

unexpired period of nine months and 23 days of his employment contract, pursuant to law and

jurisprudence prior to the enactment of R.A. No. 8042.

Third Issue

Petitioner contends that his overtime and leave pay should form part of the salary basis in the

computation of his monetary award, because these are fixed benefits that have been stipulated into his

contract.

Petitioner is mistaken.
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 basic wage, exclusive of overtime, leave pay and other bonuses;

whereas overtime pay is compensation for all work “performed” in excess of the regular eight

hours, and holiday pay is compensation for any work “performed” on designated rest days and

holidays.

In the same vein, the claim for the day’s leave pay for the unexpired portion of the contract is

unwarranted since the same is given during the actual service of the seamen.

WHEREFORE, the Court GRANTS the Petition. The subject clause “or for three months for every

year of the unexpired term, whichever is less” in the 5th paragraph 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 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.

People vs. Pomar

G.R. No. L-22008 November 3, 1924

EN BANC, JOHNSON, J.:

Facts:

On the 26th day of October, 1923, the prosecuting attorney of the City of Manila presented a complaint in
the Court of First Instance, accusing the defendant of a violation of section 13 in connection with section
15 of Act No. 3071 of the Philippine Legislature. The complaint alleged that the defendant being the
manager and person in charge of La Flor de la Isabela (a tobacco factory) failed and refused to pay
Macaria Fajardo (employed as cigar maker) the sum of P80 to which she was entitled as her regular wages
on time of delivery and confinement by reason of pregnancy depite and over the demands to do so.

To said complaint, the defendant demurred, alleging that the facts therein contained did not constitute an
offense. The demurrer was overruled, whereupon the defendant answered and admitted at the trial all of
the allegations contained in the complaint, and contended that the provisions of said Act No. 3071, upon
which the complaint was based were illegal, unconstitutional and void.

Upon a consideration of the facts charged in the complaint and admitted by the defendant, the Honorable
C. A. Imperial, judge, found the defendant guilty of the alleged offense described in the complaint, and
sentenced him to pay a fine of P50, in accordance with the provisions of section 15 of said Act, to suffer
subsidiary imprisonment in case of insolvency, and to pay the costs. From that sentence the defendant
appealed.

Issue:
Whether or not the provisions of sections 13 and 15 of Act No. 3071 are a reasonable and lawful exercise
of the police power of the state.

Held:

The provisions of section 13, of Act No. 3071 of the Philippine Legislature, are unconstitutional and void,
in that they violate and are contrary to the provisions of the first paragraph of section 3 of the Act of
Congress of the United States of August 29, 1916.

Said section 13 was enacted by the Legislature of the Philippine Islands in the exercise of its supposed
police power, with the praiseworthy purpose of safeguarding the health of pregnant women laborers in
"factory, shop or place of labor of any description," and of insuring to them, to a certain extent,
reasonable support for one month before and one month after their delivery. It has been said that the
particular statute before us is required in the interest of social justice for whose end freedom of contract
may lawfully be subjected to restraint.

The right to liberty includes the right to enter into contracts and to terminate contracts. One citizen
cannot be compelled to give employment to another citizen, nor can anyone be compelled to be employed
against his will. The Act of 1893, now under consideration, deprives the employer of the right to terminate
his contract with his employee. Clearly, therefore, the law has deprived, every person, firm, or corporation
owning or managing a factory, shop or place of labor of any description within the Philippine Islands, of
his right to enter into contracts of employment upon such terms as he and the employee may agree upon.
The law creates a term in every such contract, without the consent of the parties. Such persons are,
therefore, deprived of their liberty to contract. The constitution of the Philippine Islands guarantees to
every citizen his liberty and one of his liberties is the liberty to contract.

Every law for the restraint and punishment of crimes, for the preservation of the public peace, health, and
morals, must come within this category. But the state, when providing by legislation for the protection of
the public health, the public morals, or the public safety, is subject to and is controlled by the paramount
authority of the constitution of the state, and will not be permitted to violate rights secured or guaranteed
by that instrument or interfere with the execution of the powers and rights guaranteed to the people
under their law — the constitution.

The police power of the state is a growing and expanding power. But that power cannot grow faster than
the fundamental law of the state, nor transcend or violate the express inhibition of the people's law — the
constitution. If the people desire to have the police power extended and applied to conditions and things
prohibited by the organic law, they must first amend that law.

It will also be noted from an examination of said section 13, that it takes no account of contracts for the
employment of women by the day nor by the piece. The law is equally applicable to each case. It will
hardly be contended that the person, firm or corporation owning or managing a factory, shop or place of
labor, who employs women by the day or by the piece, could be compelled under the law to pay for sixty
days during which no services were rendered.

Decision:

The rule in this jurisdiction is, that the contracting parties may establish any agreements, terms, and
conditions they may deem advisable, provided they are not contrary to law, morals or public policy. (Art.
1255, Civil Code.)

Therefore, the sentence of the lower court is hereby revoked, the complaint is hereby dismissed, and the
defendant is hereby discharged from the custody of the law, with costs de oficio. So ordered.

Street, Malcolm, Avanceña, Villamor, Ostrand and Romualdez, JJ., concur

Agabon vs NLRC

FACTS
Virgilio and Jenny Agabon worked for respondent Riviera Home Improvements, Inc. as gypsum and
cornice installers from January 1992 until Feb 1999. Their employment was terminated when they were
dismissed for allegedly abandoning their work. Petitioners Agabon then filed a case of illegal dismissal.
/// The LA ruled in favor of the spouses and ordered Riviera to pay them their money claims. The NLRC
reversed the LA, finding that the Agabons were indeed guilty of abandonment. The CA modified the LA by
ruling that there was abandonment but ordering Riviera to pay the Agabons’ money claims.///

The arguments of both parties are as follows:

The Agabons claim, among others that Riviera violated the requirements of notice and hearing when the
latter did not send written letters of termination to their addresses.
Riviera admitted to not sending the Agabons letters of termination to their last known addresses because
the same would be futile, as the Agabons do not reside there anymore. However, it also claims that the
Agabons abandoned their work. More than once, they subcontracted installation works for other
companies. They already were warned of termination if the same act was repeated, still, they disregarded
the warning.

ISSUES
1. Whether the Agabons were illegally dismissed
2. Whether Riviera violated the requirements of notice and hearing
3. Is the violation of the procedural requirements of notice and hearing for termination of employees a
violation of the Constitutional due process?
4. What are the consequences of violating the procedural requirements of termination?

RULING: Valid dismissal but violation of statutory due process = payment of nominal damages
(P30,000) & balance of 13th month pay, etc.
1. No. There was just cause for their dismissal, i.e., abandonment. Art. 282 specifies the grounds for just
dismissal, to wit:
a. Serious misconduct or willful disobedience of the lawful orders of the employer or his duly
authorized representative in connection with the employee’s work
b. Gross and habitual neglect of the by the employee of his duties (includes abandonment)
c. Fraud or willful breach of the trust reposed by the employer or his duly authorized representative
to the employee
d. Commission of a crime or offense by the employee against the person of the employer or any
member of his immediate family or his duly authorized representative
e. Any other causes analogous to the foregoing.

To establish abandonment, two elements must be present:

a. The unjustified failure of the employee to report for work
b. A clear intention to sever e-e relationship, manifested by overt acts

Here, the Agabons were frequently absent from work for having performed installation work for
another company, despite prior warning given by Riviera. This clearly establishes an intention to sever
the e-e relationship between them, and which constitutes abandonment.

2. Yes. While the employer has the right to expect good performance, diligence, good conduct and loyalty
from its employees, it also has the duty to provide just compensation to his employees and to observe
the procedural requirements of notice and hearing in the termination of his employees.
Procedure of termination (Omnibus Rules Implementing the Labor Code):
a. A written notice to the employee specifying the grounds for termination and giving the employee
reasonable opportunity to be heard
b. A hearing where the employee is given the opportunity to respond to the charges against him and
present evidence or rebut the evidence presented against him (if he so requests)
c. A written notice of termination indicating that grounds have been established to justify his
termination upon due consideration of all circumstances

In this case, Riviera failed to notify the Agabons of their termination to their last known addresses.
Hence, they violated the procedural requirement laid down by the law in the termination of
employees.
3. No. Constitutional due process is that provided under the Constitution, which involves the
protection of the individual against governmental oppression and the assurance of his rights In civil,
criminal and administrative proceedings; statutory due process is that found in the Labor Code and
its Implementing Rules and protects the individual from being unjustly terminated without just or
authorized cause after notice and hearing.

The two are similar in that they both have two aspects: substantive due process and procedural due
process. However, they differ in that under the Labor Code, the first one refers to the valid and
authorized causes of employment termination, while the second one refers to the manner of dismissal.
A denial of statutory due process is not the same as a denial of Constitutional due process for reasons
enunciated in Serrano v. NLRC.

4. The dismissal is valid, but Riviera should pay nominal damages to the Agabons in vindication of the
latter for violating their right to notice and hearing. The penalty is in the nature of a penalty or
indemnification, the amount dependent on the facts of each case, including the nature of gravity of
offense of the employer.

In this case, the Serrano doctrine was re-examined.

First, in the Serrano case, the dismissal was upheld, but it was held to be ineffectual (without legal
effect). Hence, Serrano was still entitled to the payment of his backwages from the time of dismissal
until the promulgation of the court of the existence of an authorized cause. Further, he was entitled to
his separation pay as mandated under Art. 283. The ruling is unfair to employers and has the danger
of the following consequences:
a. The encouragement of filing frivolous suits even by notorious employees who were justly dismissed
but were deprived of statutory due process; they are rewarded by invoking due process
b. It would create absurd situations where there is just or authorized cause but a procedural
infirmity invalidates the termination, ie an employee who became a criminal and threatened his
co-workers’ lives, who fled and could not be faound
c. It could discourage investments that would generate employment in the economy
Second, the payment of backwages is unjustified as only illegal termination gives the employee the
right to be paid full backwages. When the dismissal is valid or upheld, the employee has no right to
backwages.

ADDITIONAL NOTES:
1. Dismissals based on just causes: acts or omissions attributable to the employee; no right to
claim backwages or to pay separation pay (separation pay is subject to exception, ie if termination
is not based on serious misconduct or a conduct reflecting the moral depravity of a person,
separation pay may be granted by reason of social justice)
Dismissals based on authorized causes: involve grounds provided under the Labor Code;
employee (and DOLE) is entitled the payment of separation pay (redundancy and installation of
labor-saving devices: 1 month pay or 1 month/yr of service, whichever is higher; retrenchment
and closure or cessation of business: 1 month pay or ½ month per year of service, whichever is
higher)
Illegal termination: employee is entitled to the payment of full backwages as well as
reinstatement without loss of seniority rights and other privileges, inclusive of allowances and
other monetary claims from the time compensation was withheld until reinstatement; if
reinstatement is not possible, separation pay shall be given.

UNION OF FILIPRO EMPLOYEES vs. BENIGNO VIVAR, JR.

G.R. No. 79255 January 20, 1992

Facts: On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National
Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and
obligations respecting claims of its monthly paid employees for holiday pay in the light of the Court's
decision in Chartered Bank Employees Association v. Ople.

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2, 1980,
Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid employees holiday pay
pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82
and such other legal restrictions as are provided for in the Code.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the
exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical representatives
from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for
overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor. Petitioner UFE
answered that the award should be made effective from the date of effectivity of the Labor Code, that their
sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251
as divisor is an established employee benefit which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of
the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He
adjudged, however, that the company's sales personnel are field personnel and, as such, are not entitled
to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should be
changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night differential,
vacation and sick leave pay due to the use of 251 days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent
Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued a
resolution remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to
review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code. However, in a
letter the respondent arbitrator refused to take cognizance of the case reasoning that he had no more
jurisdiction to continue as arbitrator because he had resigned from service.

Issue: Whether or not Nestle's sales personnel are entitled to holiday pay.

Held: Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel
as "non-agritultural employees who regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty."

The Court finds that the clause "whose time and performance is unsupervised by the employer"
did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field
cannot be determined with reasonable certainty." The former clause is still within the scope and purview
of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual
working hours in the field can be determined with reasonable certainty, query must be made as to
whether or not such employee's time and performance is constantly supervised by the employer.

The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a
lower daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of
the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend,
which represents the employee's annual salary, should correspondingly be increased to incorporate the
holiday pay. There is thus no merit in respondent Nestle's claim of overpayment of overtime and night
differential pay and sick and vacation leave benefits, the computation of which are all based on the daily
rate, since the daily rate is still the same before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251
days as divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor." (Article 4). Nevertheless, in order to fully settle the issues, the Court resolved to take up the
matter of effectivity of the holiday pay award raised by Nestle.

Applying the “operative fact”aforementioned doctrine to the case at bar, it is not far-fetched that
Nestle, relying on the implicit validity of the implementing rule and policy instruction before this Court
nullified them, and thinking that it was not obliged to give holiday pay benefits to its monthly paid
employees, may have been moved to grant other concessions to its employees, especially in the collective
bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's employees are
among the highest paid in the industry. With this consideration, it would be unfair to impose additional
burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not in any way
attributed to Nestle's fault.

The Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but from the
date of promulgation of the IBAA case.

Colgate Palmolive Philippines, Inc., vs. Ople

G.R. No. 73681 June 30, 1988

SECOND DIVISION: PARAS, J.:

Facts:

On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of Labor Relations (BLR)
on ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of union
officers/members; and coercing employees to retract their membership with the union and restraining
non-union members from joining the union.

After efforts at amicable settlement proved unavailing, the Office of the MOLE, upon petition of petitioner
assumed jurisdiction over the dispute pursuant to Article 264 (g) of the Labor Code.

In its position paper, the petitioner pointed out that the infractions committed by the three salesmen fully
convinced the company, after investigation of the existence of just cause for their dismissal, that their
dismissal was carried out pursuant to the inherent right and prerogative of management to disciplne
erring employees. Moreover, the petitioner refuted the union’s charge that the membership in union and
refusal to retract precipitated their dismissal was totally false and amounted to malicious imputation of
union busting. Thre respondent union on hte other hand assailed its answers to the petitioner’s position
paper.

On August 9,1985, respondent Minister rendered a decision whichfound no merit in the Union's
Complaint for unfair labor practice allegedly committed by petitioner and that the the three salesmen,
Peregrino Sayson, Salvador Reynante & Cornelio Mejia, "not without fault" hence "the company has
grounds to dismiss above named salesmen".

At the same time respondent Minister directly certified the respondent Union as the collective bargaining
agent for the sales force in petitioner company and ordered the reinstatement of the three salesmen to the
company on the ground that the employees were first offenders.

Petitioner filed a Motion for Reconsideration which was denied by respondent Minister in his assailed
Order, dated December 27, 1985. Hence, this petition.

Issue:

Whether the respondent Minister committed a grave abuse of discretion when, notwithstanding his very
own finding that there was just cause for the dismissal of the three (3) salesmen, he nevertheless ordered
their reinstatement.

Held:
The respondent Minister has the power to decide a labor dispute in a case assumed by him under Art.
264 (g) of the Labor Code.

The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on their
part is not in conformity with law. Reinstatement is simply incompatible with a finding of guilt. Where the
totality of the evidence was sufficient to warrant the dismissal of the employees the law warrants their
dismissal without making any distinction between a first offender and a habitual delinquent. Under the
law, respondent Minister is duly mandated to equally protect and respect not only the labor or workers'
side but also the management and/or employers' side. The law, in protecting the rights of the laborer,
authorizes neither oppression nor self-destruction of the employer. To order the reinstatement of the
erring employees would in effect encourage unequal protection of the laws as a managerial employee of
petitioner company involved in the same incident was already dismissed and was not ordered to be
reinstated. As stated by Us in the case of San Miguel Brewery vs. National Labor Union, "an employer
cannot legally be compelled to continue with the employment of a person who admittedly was guilty of
misfeasance or malfeasance towards his employer, and whose continuance in the service of the latter is
patently inimical to his interest."

Decision:

WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the Order of the
respondent Minister, dated December 27, 1985 for grave abuse of discretion. However, in view of the fact
that the dismissed employees are first offenders, petitioner is hereby ordered to give them separation pay.
The temporary restraining order is hereby made permanent.

SO ORDERED.

Yap, C.J., Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

INSULAR BANK OF ASIA and AMERICAN EMPLOYEES UNION v. Hon. AMADO INCIONG

G.R. No. L- 52415 October 23, 1984

Ponente: MAKASIAR, J!1

FACTS: On June 20, 1975, the Union filed a complaint against the bank for the payment of holiday pay
before the then Department of Labor, NLRC, Regional Office IV in Manila. Conciliation having failed, and
upon the request of both parties, the case was certified for arbitration on July 7, 1975. On August 25,
1975, Labor Arbiter Ricarte T. Soriano rendered a decision granting petitioner’s complaint for payment of
holiday pay. Respondent bank did not appeal from the said decision. Instead, it complied with the order
of the Labor Arbiter by paying their holiday pay up to and including January 1976.

P.D. 850 was promulgated amending the provisions of the Labor Code on the right to holiday pay.
Accordingly by authority of Article 5 of the Labor Code, the Department of Labor (now Ministry of Labor)
promulgated the rules and regulations for the implementation of holidays with pay.

The section reads: “Status of employees paid by the month. — Employees who are uniformly paid by the
month, irrespective of the number of working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in the month whether worked or
not.” Policy Instruction 9 was issued by the then Secretary of Labor on April 23,1976, interpreting the
said rule. The bank, by reason of the ruling laid down by the rule implementing Article 94 of the Labor
Code and by Policy Instruction 9, stopped the payment of holiday pay to an its employees.

On August 30,1976, the Union filed a motion for a writ of execution to enforce the arbiter’s decision
dated August 1975, which the bank opposed. On October 18,1976, the Labor Arbiter, instead of issuing a
writ of execution, issued an order enjoining the bank to continue paying its employees their regular
holiday pay. On November 17, 1976, the bank appealed from the order of the Labor Arbiter to the NLRC.
On 20 June 1978, the NLRC promulgated its resolution dismissing the bank’s appeal, and ordering the
issuance of the proper writ of execution. On February 21,1979, the bank filed with the Office of the
Minister of Labor a motion for reconsideration/appeal with urgent prayer to stay execution. On August
13,1979 the NLRC issued an order directing the Chief of Research and Information of the Commission to
compute the holiday pay of the IBAA employees from April 1976 to the present in accordance with the
Labor Arbiter dated August 25,1975.

On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado Inciong,
issued an order setting aside the resolution of the NLRC dated June 20, 1978, and dismissing the case for
lack of merit.

Issue: Whether or not the Ministry of Labor is correct in determining that monthly paid employees are
excluded from the benefits of holiday pay?

Held: From Article 92 of the Labor Code, as amended by Presidential Decree 850, and Article 82 of the
same Code, it is clear that monthly paid employees are not excluded from the benefits of holiday pay.
However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes
monthly paid employees from the said benefits by inserting, under Rule IV, Book Ill of the implementing
rules, Section 2, which provides that: “employees who are uniformly paid by the month, irrespective of the
number of working days therein, with a salary of not less than the statutory or established minimum
wage shall be presumed to be paid for all days in the month whether worked or not.” Even if
contemporaneous construction placed upon a statute by executive officers whose duty is to enforce it is
given great weight by the courts, still if such construction is so erroneous, the same must be declared as
null and void. So long, as the regulations relate solely to carrying into effect the provisions of the law,
they are valid. Where an administrative order betrays inconsistency or repugnancy to the provisions of the
Act, the mandate of the Act must prevail and must be followed. A rule is binding on the Courts so long as
the procedure fixed for its promulgation is followed and its scope is within the statutory authority granted
by the legislature, even if the courts are not in agreement with the policy stated therein or its innate
wisdom. Further, administrative interpretation of the law is at best merely advisory, for it is the courts
that finally determine what the law means.

The Supreme Court granted the petition, set aside the order of the Deputy Minister of Labor, and
reinstated the decision of the Labor Arbiter Ricarte T. Soriano.