LABSTAND Doctrine:

TITLE GR No.
Date: July 12, 1989
Ponente: J. Medialdea
Petitioner Respondent
Nature of the case:
FACTS

ISSUE

HELD/RATIO

WHEREFORE,
Notes

2J 2016-2017 (DELA CRUZ)

FORMAT ^
-------------------------------------------------------------------------------------------------------------------------------------------

LABSTAND Doctrine: Notwithstanding the existence of a valid cause for dismissal, dismissal
should not be imposed if the employee has been employed for a considerable length
Case #1 of time in the service of his employer
TITLE GR No. 78763
Manila Electric vs NLRC Date: July 12, 1989
Ponente: J. Medialdea
Petitioner: Manila Electric Company Respondent: National Labor Relations Commission
Nature of the case: This is a petition for certiorari under Rule 65 of the Rules of Court seeking the
annulment of the resolution of the respondent National Labor Relations Commission, which affirmed the
decision of the Labor Arbiter ordering the reinstatement of private respondent herein, Apolinario Signo, to
his former position without backwages.
FACTS
In 1981, a certain Fernando de Lara filed an application with the petitioner company for electrical
services at his residence at Peafrancia Subdivision, Marcos Highway, Antipolo, Rizal. Private
respondent Signo facilitated the processing of the said application as well as the required
 documentation for said application at the Municipality of Antipolo, Rizal.
In order to expedite the electrical connections at de Lara's residence, certain employees of the
company, including respondent Signo, made it appear in the application that the sari-sari store at
the corner of Marcos Highway, an entrance to the subdivision, is applicant de Lara's establishment,
which, in reality is not owned by the latter.
As a result of this scheme, the electrical connections to de Lara's residence were installed and
made possible. However, due to the fault of the Power Sales Division of petitioner company,
Fernando de Lara was not billed for more than a year. Petitioner company conducted an
investigation of the matter and found respondent Signo responsible for the said irregularities in the
installation. Thus, the services of the latter were terminated on May 18, 1983. This prompted private
respondent to file a complaint for illegal dismissal, unpaid wages and separation pay. The Labor
Arbiter rendered a decision directing the petitioner to reinstate respondent without back wages. Both
parties appealed to the Commission and were dismissed by the Commission for lack of merit and
affirmed the decision of the Labor Arbiter.
ISSUE

Whether or not respondent Signo should be dismissed from petitioner company on grounds of serious
misconduct and loss of trust and confidence.
HELD/RATIO
No. This Court has held time and again, in a number of decisions, that notwithstanding the existence of a
valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be
imposed, as it is too severe a penalty if the latter has been employed for a considerable length of time in
the service of his employer. (Itogon-Suyoc Mines, Inc. v. NLRC, et al., G.R. No. L- 54280, September
30,1982,117 SCRA 523; Meracap v. International Ceramics Manufacturing Co., Inc., et al., G.R. Nos. L-
48235-36, July 30,1979, 92 SCRA 412; Sampang v. Inciong, G.R. No. 50992, June 19,1985,137 SCRA 56;
De Leon v. NLRC, G.R. No. L-52056, October 30,1980, 100 SCRA 691; Philippine Airlines, Inc. v. PALEA,
G.R. No. L-24626, June 28, 1974, 57 SCRA 489). Signo has been an employee of the petitioner since
1963.
Further, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the
workingman's welfare should be the primordial and paramount consideration. This kind of interpretation
gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4
of the New Labor Code which states that "all doubts in the implementation and interpretation of the
provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of
labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140).
ACCORDINGLY, premises considered, the petition is hereby DISMISSED and the assailed decision of the
National Labor Relations Commission dated March 12, 1987 is AFFIRMED. The temporary restraining
order issued on August 3, 1987 is lifted.
Notes

2J 2016-2017 (ABUZO)

LABSTAND DOCTRINE: The law, in protecting the rights of the employees, authorizes neither
oppression nor self-destruction of the employer. Loss of confidence is a valid ground
Case #2 for dismissing an employee and proof beyond reasonable doubt of the employees
misconduct is not required to dismiss him on this charge. It is sufficient if there is
 some basis for such loss of confidence or if the employer has reasonable ground to
believe or to entertain the moral conviction that the employee concerned is
responsible for the misconduct and that the nature of his participation therein
rendered him absolutely unworthy of the trust and confidence demanded by his
position.
TITLE: Jamer vs NLRC GR NO. 112630.
Date: September 5, 1997
Ponente: HERMOSISIMA, JR., J.:
Petitioner: Corazon Jamer Respondent: National Labor Relations Commission (NLRC), Isetann Dept
and Cristina Amortizado Store and/or John Go

Nature of the case: Dismissal Complaint

FACTS
This complaint arose from the dismissal of the complainants Corazon Jamer and Cristina Amortizido both
were cashier of Isetann. They were both dismissed on the alleged ground of dishonesty for incurring a
shortage of P15,353.78. On July 16, 1990, complainants discovered a shortage of P15,353.78. It was
complainant Corazon Jamer who first discovered the shortage. She informed her co-store cashier,
complainant Cristina Amortizado, about the shortage. Cristina Amortizado also reconciled and re-counted
the sale previous to July 16, 1990 and she also confirmed that there was a discrepancy or a shortage of
P15,353.78.. They did not immediately report the shortage to management hoping to find the cause of the
shortage but to no avail they failed to reconcile the same. Hence, they had no other alternative but to report
the same to the management on July 17, 1990.
Complainants were asked to explain and they submitted their respective written explanations for the
shortage. Respondents placed both complainants under preventive suspension for the alleged shortages.
Thereafter, respondents conducted an administrative investigation. Finding the explanation of the
complainants to be unsatisfactory, respondent dismissed the complainants from the service. Aggrieved,
complainant instituted this present action .The Labor Arbiter directed the respondents to reinstate
complainants to service with full backwages and without loss of seniority rights.Isetann and John Go
appealed the aforesaid decision to the NLRC. The NLRC found that the complainants were validly
dismissed for lack of condence.
ISSUE

Whether or not the petitioners were validly dismissed.

HELD/RATIO
Yes. The NLRC did not act with grave abuse of discretion in declaring that petitioners were legally
dismissed from employment. The failure of petitioners to report to the management the aforementioned
irregularities constitute fraud or willful breach of the trust reposed in them by their employer or duly
authorized representative one of the just causes in terminating employment as provided for by paragraph
(c),Article 282 of the Labor Code, as amended.
First, it must pointed out that the petitioners remark that there was laxity in the accounting procedures of the
company is a matter addressed to the respondent employer. However, this does not excuse dishonesty of
employees and should not in any case hamper the right of the employer to terminate the employment of
petitioners on the ground of loss of confidence or breach of trust. Precisely, the accounting procedure which
called for improvements was based primarily on trust and confidence.
Secondly, it must be noted that the herein petitioners were store cashiers and as such, a special and
unique employment relationship exists between them and the respondent company. More than most key
positions, that of cashier calls for the utmost trust and confidence because their primary function involves
basically the handling of a highly essential property of the respondent employer --- the sales and revenues
of the store. Employers are consequently given wider latitude of discretion in terminating the employment of
managerial employees or other personnel occupying positions of responsibility, such as in the instant case,
than in the case of ordinary rank-and-file employees, whose termination on the basis of these same
grounds requires proof of involvement in the malfeasance in question. Mere uncorroborated assertions and
accusations by the employer will not suffice.
The employer cannot be compelled to retain employees who were guilty of malfeasance as their continued
employment will be prejudicial to the former's best interest. The law, in protecting the rights of the
employees, authorizes neither oppression nor self-destruction of the employer.
WHEREFORE, the assailed decision of the National Labor Relations Commission in is hereby AFFIRMED,
Notes
ART. 282. Termination by Employer.- An employer may terminate an employment for any of the following
causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
2J 2016-2017 (BELTEJAR)

LABSTAND Doctrine: The 1987 Constitution provides that the civil service embraces all
branches, subdivisions, instrumentalities, and agencies of the Government, including
Case #3 government-owned or controlled corporations with original charter.

By clear implication, the Civil Service does not include government-owned or

controlled corporations which are organized as subsidiaries of government-owned or
controlled corporations under the general corporation law.

TITLE: G.R. No. L-69870

NATIONAL SERVICE CORPORATION (NASECO)
AND ARTURO L. PEREZ, petitioners,
vs.
Date: November 29, 1988
THE HONORABLE THIRD DIVISION, NATIONAL
LABOR RELATIONS COMMISSION, MINISTRY OF Ponente: Padilla, J.
LABOR AND EMPLOYMENT, MANILA AND
EUGENIA C. CREDO, respondents.

Petitioner: NASECO Respondent: NLRC and Eugenia Credo

Nature of the case: Illegal dismissal case
FACTS
Eugenia Credo was an employee of the National Service Corporation (NASECO). She was charged with an
administrative case for non-compliance with a company memo issued by her superior and for her
disrespect to the latter in the presence of other co-workers. NASECOs Committee on Personnel Affairs
recommended her termination from work with forfeiture of benefits and was later given a notice of
termination. Hence Credo filed a complaint for illegal dismissal. The Labor Arbiter dismissed Credos
complaint and directed NASECO to pay her separation pay.
Both appealed to the NLRC to which rendered a decision ordering NASECO to reinstate Credo and pay her
back wages but not granting Credos claim for attorneys fee, moral and exemplary damages. Hence, this
appeal. NASECO contends that, as a government corporation by virtue of its being a subsidiary of the
National Investment and Development Corporation , a subsidiary wholly owned by the Philippine National
Bank, which in turn is a government owned corporation), the terms and conditions of employment of its
employees are governed by the Civil Service Law, rules and regulations.
ISSUE

Whether or not the Labor Code apply to an illegal dismissal case between a government owned and/or
controlled corporation WITHOUT an original charter and its employee
HELD/RATIO
YES, the Labor Code applies to employees of government owned and/or controlled corporation, provided
that such corporation is without original charter such as NASECO in the case at bar. Therefore, the
provisions of the Labor Code applies in this case and the NLRC has the jurisdiction to decide over the case.
Unlike in the case of NCH vs. NLRC, which was governed by the 1973 Constitution, it is the 1987
constitution that governs the instant case. The 1987 Constitution provides that The civil service embraces
all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned
or controlled corporations with original charter, hence, by clear implication, the Civil Service does not
include government-owned or controlled corporations which are organized as subsidiaries of government-
owned or controlled corporations under the general corporation law.

WHEREFORE, Petitioners are ordered to: 1) reinstate Eugenia C. Credo to her former position at the time
of her termination, or if such reinstatement is not possible, to place her in a substantially equivalent
position, with three (3) years backwages, from 1 December 1983, without qualification or deduction, and
without loss of seniority rights and other privileges appertaining thereto, and 2) pay Eugenia C. Credo
P5,000.00 for moral damages and P5,000.00 for attorney's fees.
If reinstatement in any event is no longer possible because of supervening events, petitioners in G.R. No.
69870, who are the private respondents in G.R. No. 70295 are ordered to pay Eugenia C. Credo, in
addition to her backwages and damages as above described, separation pay equivalent to one-half
month's salary for every year of service, to be computed on her monthly salary at the time of her
termination on 1 December 1983.
Notes
By the term "original charters," it means that they were created by law, by an act of Congress, or by
special law and not under the general corporation law.
2J 2016-2017 (BONAOBRA)

LABSTAND
Case #4
TITLE G.R. No. 98107
 BENJAMIN C. JUCO, petitioner, DATE August 18, 1997
vs. PONENTE HERMOSISIMA, JR., J
NATIONAL LABOR RELATIONS COMMISSION
and NATIONAL HOUSING CORPORATION,
respondents.
Petitioner Benjamin Juco National Labor Relations Commission
National House Corporation
Nature of the case: Illegal dismissal case
FACTS
Herein petitioner, Benjamin Juco was hired by private respondent, National Housing Corporation (NHC), as
a project engineer from 1970-1975. He was implicated in a crime of theft and malversation of public funds
which caused him to be dismissed from work. Petitioner then filed with the DOLE a complaint for illegal
dismissal.

The Labor Arbiter dismissed the case, stating that NLRC had no jurisdiction over the matter. Juco then
elevated the case to the NLRC which reversed the decision of the Labor Arbiter.

NHC then appealed the NLRC decision before the Supreme Court. The Court granted the petition of NHC
and thereby setting aside the NLRC decision and reinstating the labor arbiters decision of dismissing the
case.

Juco was prompted to file with the Civil Service Commission a complaint for illegal dismissal, with
preliminary mandatory injunction. NHC moved for the dismissal of the complaint on the ground that the Civil
Service Commission has no jurisdiction over the case. CSC granted the motion to dismiss on the ground of
lack of jurisdiction due to the fact that NHC is a government corporation without an original charter but was
created under the Corporation Code.

Juco then filed again with the NLRC a complaint for illegal dismissal with preliminary mandatory injunction
against NHC. The case was assigned to a different labor arbiter. After due deliberation, the Labor Arbiter
found NHC guilty of illegal dismissal. NHC filed an appeal before the NLRC. The NLRC decision reversed
the decision of Labor Arbiter on the ground of lack of jurisdiction. Thus, this appeal.

ISSUE

Whether or not the labor case involving NHC is within the jurisdiction of the Labor Code (NLRC)
HELD/RATIO
Yes. Under the laws then in force, employees of government-owned and/or controlled (GOCC) corporations
were governed by the Civil Service Law and not by the Labor Code. Although in National Housing
Corporation v. Juco, it was held that employees of GOCCs, whether created by special law or formed as
subsidiaries under the general Corporation Law, are governed by the Civil Service Law and not by the
Labor Code, this ruling has been supplanted by the 1987 Constitution which states that the civil service
embraces all branches, subdivisions,instrumentalities, and agencies of the Government, including GOCCs
with original charter.
In National Service Corporation (NASECO) v National Labor Relations Commission, it was held that the
NLRC has jurisdiction over the employees of NASECO on the ground that it is the 1987 Constitution that
governs because it is the Constitution in place at the time of the decision. It was further held that the new
phrase "with original charter" means that government-owned and controlled corporations refer to
corporations chartered by special law as distinguished from corporations organized under the Corporation
Code. Thus, NASECO which had been organized under the general incorporation statute and a subsidiary
of the National Investment Development Corporation, which in turn was a subsidiary of the Philippine
National Bank, is excluded from the purview of the Civil Service Commission. The above doctrine applies in
this case. In the case at bench, the National Housing Corporation is a government owned corporation
organized in 1959 in accordance with Executive OrderNo. 399, otherwise known as the Uniform Charter of
Government Corporation, dated January 1, 1959. Its shares of stock are and have been one hundred
percent (100%) owned by the Government from its incorporation under Act 1459, the former corporation
law. The government entities that own its shares of stock are the Government Service Insurance System,
the Social Security System, the Development Bank of the Philippines,the National Investment and
Development Corporation and the People's Homesite and Housing Corporation. Considering the fact that
the NHA had been incorporated under Act No. 1459, the former corporation law, it is but correct to say that
it is a government-owned or controlled corporation whose employees are subject to the provisions of the
Labor Code. This observation is reiterated in the recent case of Trade Union of the Philippines and Allied
Services (TUPAS) v National Housing Corporation, where the SC held that the NHA is now within the
jurisdiction of the Department of Labor and Employment, it being a government-owned and/or controlled
corporation without an original charter. Furthermore, the Court previously ruled that the workers or
employees of the NHC (now NHA) undoubtedly have the right to form unions or employees organization
and that there is no impediment to the holding of a certification election among them as they are covered by
the Labor Code.
WHEREFORE,
The decision of the NLRC in NLRC NCR-04-02036089 dated March 14, 1991 is hereby
REVERSED and the Decision of the Labor Arbiter dated May 21, 1990 is REINSTATED
2J 2016-2017 (BONIFACIO)

LABSTAND Doctrine: In labor law context, arbitration is the reference of a labor dispute to an
impartial third person for determination on the basis of evidence and arguments
Case # 5 presented by such parties who have bound themselves to accept the decision of
the arbitrator as final and binding.

Luzon Development Bank GR No. 120319

(LDB) vs. Association of
LDB Employees (ALDBE) Date: Oct. 6, 1995
and Atty. Ester Garcia

Ponente: Romero, J.

Petitioner: LDB Respondent: ALDBE

Nature of the case: Arbitration

FACTS

From a submission agreement of the LDB and the ALDBE arose an arbitration case to resolve the following
issue: Whether or not the company has violated the Collective Bargaining Agreement provision and the
Memorandum of Agreement dated April 1994, on promotion.

At a conference, the parties agreed on the submission of their respective Position Papers. Atty. Ester S.
Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper. LDB, on the other hand,
failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. No
Position Paper had been filed by LDB.

Without LDB's Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining Agreement
provision nor the Memorandum of Agreement on promotion.

Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator
and to prohibit her from enforcing the same.

ISSUE

Whether or not the Voluntary Arbiters decision is appealable to the Court of Appeals and not to the Supreme
Court?

HELD/RATIO

YES
The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite limited
compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the National Labor
Relations Commission (NLRC) for that matter.

In Oceanic Bic Division (FFW), et al. v. Romero, et al., this Court ruled that "a voluntary arbitrator by the nature
of her functions acts in a quasi-judicial capacity." It follows that the voluntary arbitrator, whether acting solely or
in a panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the NLRC
since his decisions are not appealable to the latter.

Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall
exercise:

xxx xxx xxx

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions
of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of
Section 17 of the Judiciary Act of 1948.

The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him
under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided for
in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein. A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions
enumerated therein.
WHEREFORE, the Court has resolved to refer this case to the Court of Appeals.

Notes

Two Types of Arbitration:

1. Compulsory Arbitration - a system whereby the parties to a dispute are compelled by the government to
forego their right to strike and are compelled to accept the resolution of their dispute through arbitration by a
third party
2. Voluntary Arbitration - referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause
in their collective agreement, to an impartial third person for a final and binding resolution

2J 2016-2017 (BRINAS)
LABSTAND Doctrine: Civil Service Commission which states that prior to the enactment
by Congress of applicable laws concerning strike by government employees
enjoins under pain of administrative sanctions, all government officers and
Case #6 employees from staging strikes, demonstrations, mass leaves, walk-outs and
other forms of mass action which will result in temporary stoppage or
disruption of public service.
TITLE GR No. 85279
SOCIAL SECURITY SYSTEM EMPLOYEES Date: July 28, 1989
ASSOCIATION, DIONISION BAYLON, RAMON
MODESTO, JUANITO MADURA, REUBEN Ponente: Cortes, J.
ZAMORA, etc. v. CA, SSS, HON. CEZAR
PERALEJO
Petitioner: SSSEA Respondent: CA
Nature of the case:
FACTS
On June 11, 1987, the SSS filed with the RTC of QC a complaint for damages with a prayer for a writ of
preliminary injunction against petitioners, alleging that on June 9, the officers and members of the SSSEA
staged an illegal strike and baricaded the entrances of SSS Bldg., preventing non-striking employees to
from reporting for work and SSS members to transact business. The strike was reported to Public Sector
Labor - Mgt. Council, which order the strikers to return to work. The SSS suffered damages as a result of
the strike. The complaint prayed that a writ of preliminary injuction be issued to enjoin the strike and that
the strikers be ordered to return to work; that the strikers be ordered to pay damages; and that the strike be
declared illegal. The RTC issued a temporary restraining order. CA promulgated its decision on the
referred case, that since the employees of the SSS, are goverment employees, they are not allowed to
strike, and may be enjoined by the RTC which had jurisdiction over the SSS complaint for damages, from
continuing with their strike. Petitioners moved to recall the decision of the CA but was also denied. Hence,
the instant petition to review the decision of the CA.
The petitioners contend that the RTC has no jurisdiction to hear the case initiated by the SSS and to issue
the restraining order and the writ of preliminary injunction, as jurisdiction lay with the DOLE or the NLRC,
since the case involves a labor dispute.
On the other hand, the SSS advances the contrary view, on the ground that the employees of the SSS are
covered by civil service laws and rules and regulations, not the Labor Code.
ISSUE

Whether or not SSS employers have the right to strike

Whether or not the CA erred in taking jurisdiction over the subject matter.
HELD/RATIO
The Constitutional provisions enshrined on Human Rights and Social Justice provides guarantee among
workers with the right to organize and conduct peaceful concerted activities such as strikes. On one hand,
Section 14 of E.O No. 180 provides that the Civil Service law and rules governing concerted activities and
strikes in the government service shall be observed,
subject to any legislation that may be enacted by Congress referring to Memorandum Circular No. 6, s.
1987 of the Civil Service Commission which states that prior to the enactment by Congress of applicable
laws concerning strike by government employees enjoins under pain of administrative sanctions, all
government officers and employees from staging strikes, demonstrations, mass leaves, walk-outs and other
forms of mass action which will result in temporary stoppage or disruption of public service. Therefore in
the absence of any legislation allowing govt. employees to strike they are prohibited from doing so.
In Sec. 1 of E.O. No. 180 the employees in the civil service are denominated as government employees
and that the SSS is one such government-controlled corporation with an original charter, having been
created under R.A. No. 1161, its employees are part of the civil service and are covered by the Civil
Service Commissions memorandum prohibiting strikes.
Neither the DOLE nor the NLRC has jurisdiction over the subject matter but instead it is the Public Sector
Labor-Management Council which is not granted by law authority to issue writ of injunction in labor disputes
within its jurisdiction thus the resort of SSS before the general court for the issuance of a writ of injunction
to enjoin the strike is appropriate.
WHEREFORE, no reversible error having been committed by the CA, the instant petition for review
is hereby DENIED and the decision of the appellate court is AFFIRMED.
Notes

2J 2016-2017 (CABANGBANG)

LABSTAND Doctrine: The interpretation here adopted should give more force to the
campaign against illegal recruitment and placement
TITLE GR No. . L-58674-77
PEOPLE OF THE PHILIPPINES, vs. Date: July 11, 1990
HON. DOMINGO PANIS Presiding Judge of the
Court of First Instance of Zambales & Olongapo Ponente: Cruz
City, Branch III and SERAPIO ABUG
Petitioner: People of the Philippines Respondent: Hon. Domingo Panis and Serapia
Sabug
Nature of the case:
FACTS

Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and
Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a
license from the Ministry of Labor as a holder of authority to operate a fee-charging employment
agency, did then and there wilfully, unlawfully and criminally operate a private fee charging
employment agency by charging fees and expenses (from) and promising employment in Saudi
Arabia" to four separate individuals named therein, in violation of Article 16 in relation to Article 39 of
the Labor Code.

Abug filed a motion to quash on the ground that the informations did not charge an offense because
he was accused of illegally recruiting only one person in each of the four informations. Under the
proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever two or more
persons are in any manner promised or offered any employment for a fee. "
The view of the private respondents is that to constitute recruitment and placement, all the acts
mentioned in this article should involve dealings with two or mre persons as an indispensable
requirement. On the other hand, the petitioner argues that the requirement of two or more persons
is imposed only where the recruitment and placement consists of an offer or promise of employment
 to such persons and always in consideration of a fee.
ISSUE
Whether Abug can be considered as a recruiter under the Labor Code
HELD/RATIO
YES. The presumption is that the individual or entity is engaged in recruitment and placement whenever he
or it is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of
employment is made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring (of) workers. " The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) win
constitute recruitment and placement even if only one prospective worker is involved. The proviso merely
lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of
employment to two or more prospective workers, the individual or entity dealing with them shall be deemed
to be engaged in the act of recruitment and placement. The words "shall be deemed" create that
presumption.

WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four
informations against the private respondent reinstated. No costs
Notes

2J 2016-2017 (DEIPARINE)

LABSTAND Doctrine: The subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired
portion of one year or more in their contracts, but none on the claims of other OFWs
or local workers with fixed-term employment. The subject clause singles out one
classification of OFWs and burdens it with a peculiar disadvantage.
TITLE GR No. 179532
Yap v. Thenamaris Ships Management Date: May 30, 2011
Ponente: Nachura, J.
Petitioner: Claudio S. Yap Respondent: Thenamaris Ships Management
and Intermare Maritime Agencies Inc.
Nature of the case: Petition for Review on Certiorari / Illegal Dismissal
FACTS
Yap was employed as electrician of a vessel by Intermare Maritime Agencies, Inc. in behalf of its principal,
Vulture Shipping Limited. The contract of employment was for a duration of 12 months. Yap then started
working however, 3 months later the vessel was sold. The employees were later informed of said sale and
were informed about an advisory, which asked them if they wished to be transferred to other vessels, or if
not, their prospected time for re-embarkation. Petitioner received his seniority bonus, vacation bonus, extra
bonus along with the scrapping bonus. However, with respect to the payment of his wage, he refused to
accept the payment of one-month basic wage. He insisted that he was entitled to the payment of the
unexpired portion of his contract since he was illegally dismissed from employment. He alleged that he
opted for immediate transfer but none was made.
Respondents however, contended that Yap was not illegally dismissed. They further alleged that following
the sale of the vessel, petitioner signed off from the vessel and was paid his wages corresponding to the
months he worked plus his seniority bonus, vacation bonus and extra bonus. Respondents also contend
that Yaps employment contract was validly terminated due to the sale of the vessel and no arrangement
was made for Yaps transfer to Thenamaris other vessels. A complaint was then filed by Yap.
The Labor Arbiter a decision in favor of petitioner, finding Yap to have been constructively and illegally
dismissed by respondents. Moreover, the arbiter found that respondents acted in bad faith when they
assured petitioner of re-embarkation, but actually he was not able to board one despite of respondents
numerous vessels. Also it was opined that since the unexpired portion of petitioners contract was less than
one year, petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine
months.
The NLRC affirmed the decision. However, the NLRC held that instead of an award of salaries
corresponding to nine months, petitioner was only entitled to salaries for three months as provided under
Section 10 of R.A. 8042. A Motion for Partial Reconsideration was filed by both parties. The NLRC granted
Yaps prayer and modified the decision by stating that he was entitled to his salary for the unexpired portion
of employment contract (9 months). An appeal was the filed to the CA, but the latter merely affirmed the two
earlier decisions, but the salary to be paid was reduced to 3 months (R.A. 8042).
A petition was the filed by petitioner assailing Section 10 of R.A. 8042, on the ground that it affords an
illegally dismissed migrant worker the lesser benefits. In the meantime, while this case was pending before
this Court, we declared as unconstitutional the clause assailed by Yap. Respondents prayed that the
aforementioned ruling on the laws unconstitutionality to not be retroactively applied in this case. They also
pray for the tanker allowance to be excluded from the definition of the term "salary."
ISSUE

1. Is the law unconstitutional?

2. Should the law be applied to the case?
3. Should the tanker allowance be included in the computation of the lump-sum salary to be awarded
to petitioner?
HELD/RATIO
YES. Said provision is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs)
to equal protection of the laws. The Court held that the subject clause contains a suspect classification in
that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their
contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject
clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.
NO. Generally, an unconstitutional act is not a law. An exception to this is the doctrine of operative fact
applied when a declaration of unconstitutionality will impose an undue burden on those who have relied on
the invalid law. This case should not be included in the exception. It was not the fault of petitioner that he
lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be
iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers
and recruitment/manning agencies may violate an OFWs security of tenure which an employment contract
embodies and actually profit from such violation based on an unconstitutional provision of law.
YES. It is only at this late stage, that respondents are raising this issue. Hence, fair play, justice, and due
process dictate that this Court cannot now, for the first time on appeal, pass upon this question. Further,
The word salaries in Section 10(5) does not include overtime and leave pay. However, a close perusal of
the contract reveals that the tanker allowance was not categorized as a bonus but was rather encapsulated
in the basic salary clause, hence, forming part of the basic salary of petitioner.
WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision dated February 28, 2007 and
Resolution dated August 30, 2007 are hereby MODIFIED to the effect that petitioner is AWARDED his
salaries for the entire unexpired portion of his employment contract consisting of nine months computed at
the rate of US$1,430.00 per month. All other awards are hereby AFFIRMED. No costs.
Notes
Sec. 10. MONEY CLAIMS. x x x.
In case of termination of overseas employment without just, valid or authorized cause as defined
by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less. (Emphasis and underscoring supplied.)
2J 2016-2017 (DIMACULANGAN)

LABSTAND Doctrine: 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
TITLE GR No. 167614
Serrano vs Gallant Maritime
Date: March 24, 2009
Ponente: AUSTRIA-MARTINEZ, J.
Petitioner: ANTONIO M. SERRANO Respondent: Gallant MARITIME SERVICES, INC.
and MARLOW NAVIGATION CO., INC.
Nature of the case: Money claims
FACTS
Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow
Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief Officer, with
the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per
month.

On the date of his departure, Serrano was constrained to accept a downgraded employment contract upon
the assurance and representation of respondents that he would be Chief Officer by the end of April 1998.

Respondents did not deliver on their promise to make Serrano Chief Officer.

Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines, serving only
two months and 7 days, leaving an unexpired portion of nine months and twenty-three days.

Upon complaint filed by Serrano before the Labor Arbiter (LA), the dismissal was declared illegal.

On appeal, the NLRC modified the LA decision based on the provision of RA 8042.

Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the
last clause in the 5th paragraph of Section 10 of RA 8042.
ISSUE

1. Whether or not the petitioner entitled to his monetary claim which is the lump-sum salary for the
entire unexpired portion of his 12-month employment contract, and not just for a period of three
 months
2. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-
impairment of contracts
HELD/RATIO
1. YES. 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. 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.

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally
discharged were treated alike in terms of the computation of their money claims: they were uniformly
entitled to their salaries for the entire unexpired portions of their contracts.
But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed
OFWs with an unexpired portion of one year or more in their employment contract have since been
differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is
imposed on local workers with fixed-term employment.

The Court concludes that the subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their
contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The
subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

The Court further holds that the subject clause violates petitioner's right to substantive due process, for it
deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose.
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.

2. NO. Petitioners claim that the subject clause unduly interferes with the stipulations in his contract on the
term of his employment and the fixed salary package he will receive is not tenable.

The subject clause may not be declared unconstitutional on the ground that it impinges on the impairment
clause, for the law was enacted in the exercise of the police power of the State to regulate a business,
profession or calling, particularly the recruitment and deployment of OFWs, with the noble end in view of
ensuring respect for the dignity and well-being of OFWs wherever they may be employed.

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
DECLAREDUNCONSTITUTIONAL; 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.
Notes

2J 2016-2017 (DESUASIDO)
LABSTAND Doctrine: The subject clause contains a suspect classification in that, in the
computation of the monetary benefits of fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired
portion of one year or more in their contracts, but none on the claims of other OFWs
or local workers with fixed-term employment. The subject clause singles out one
classification of OFWs and burdens it with a peculiar disadvantage.
TITLE GR No. 179532
Yap v. Thenamaris Ships Management Date: May 30, 2011
Ponente: Nachura, J.
Petitioner: Claudio S. Yap Respondent: Thenamaris Ships Management
and Intermare Maritime Agencies Inc.
Nature of the case: Petition for Review on Certiorari / Illegal Dismissal
FACTS
Yap was employed as electrician of a vessel by Intermare Maritime Agencies, Inc. in behalf of its principal,
Vulture Shipping Limited. The contract of employment was for a duration of 12 months. Yap then started
working however, 3 months later the vessel was sold. The employees were later informed of said sale and
were informed about an advisory, which asked them if they wished to be transferred to other vessels, or if
not, their prospected time for re-embarkation. Petitioner received his seniority bonus, vacation bonus, extra
bonus along with the scrapping bonus. However, with respect to the payment of his wage, he refused to
accept the payment of one-month basic wage. He insisted that he was entitled to the payment of the
unexpired portion of his contract since he was illegally dismissed from employment. He alleged that he
opted for immediate transfer but none was made.
Respondents however, contended that Yap was not illegally dismissed. They further alleged that following
the sale of the vessel, petitioner signed off from the vessel and was paid his wages corresponding to the
months he worked plus his seniority bonus, vacation bonus and extra bonus. Respondents also contend
that Yaps employment contract was validly terminated due to the sale of the vessel and no arrangement
was made for Yaps transfer to Thenamaris other vessels. A complaint was then filed by Yap.
The Labor Arbiter a decision in favor of petitioner, finding Yap to have been constructively and illegally
dismissed by respondents. Moreover, the arbiter found that respondents acted in bad faith when they
assured petitioner of re-embarkation, but actually he was not able to board one despite of respondents
numerous vessels. Also it was opined that since the unexpired portion of petitioners contract was less than
one year, petitioner was entitled to his salaries for the unexpired portion of his contract for a period of nine
months.
The NLRC affirmed the decision. However, the NLRC held that instead of an award of salaries
corresponding to nine months, petitioner was only entitled to salaries for three months as provided under
Section 10 of R.A. 8042. A Motion for Partial Reconsideration was filed by both parties. The NLRC granted
Yaps prayer and modified the decision by stating that he was entitled to his salary for the unexpired portion
of employment contract (9 months). An appeal was the filed to the CA, but the latter merely affirmed the two
earlier decisions, but the salary to be paid was reduced to 3 months (R.A. 8042).
A petition was the filed by petitioner assailing Section 10 of R.A. 8042, on the ground that it affords an
illegally dismissed migrant worker the lesser benefits. In the meantime, while this case was pending before
this Court, we declared as unconstitutional the clause assailed by Yap. Respondents prayed that the
aforementioned ruling on the laws unconstitutionality to not be retroactively applied in this case. They also
pray for the tanker allowance to be excluded from the definition of the term "salary."
ISSUE

4. Is the law unconstitutional?

 5. Should the law be applied to the case?
6. Should the tanker allowance be included in the computation of the lump-sum salary to be awarded
to petitioner?
HELD/RATIO
YES. Said provision is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs)
to equal protection of the laws. The Court held that the subject clause contains a suspect classification in
that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their
contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject
clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.
NO. Generally, an unconstitutional act is not a law. An exception to this is the doctrine of operative fact
applied when a declaration of unconstitutionality will impose an undue burden on those who have relied on
the invalid law. This case should not be included in the exception. It was not the fault of petitioner that he
lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be
iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers
and recruitment/manning agencies may violate an OFWs security of tenure which an employment contract
embodies and actually profit from such violation based on an unconstitutional provision of law.
YES. It is only at this late stage, that respondents are raising this issue. Hence, fair play, justice, and due
process dictate that this Court cannot now, for the first time on appeal, pass upon this question. Further,
The word salaries in Section 10(5) does not include overtime and leave pay. However, a close perusal of
the contract reveals that the tanker allowance was not categorized as a bonus but was rather encapsulated
in the basic salary clause, hence, forming part of the basic salary of petitioner.
WHEREFORE, the Petition is GRANTED. The Court of Appeals Decision dated February 28, 2007 and
Resolution dated August 30, 2007 are hereby MODIFIED to the effect that petitioner is AWARDED his
salaries for the entire unexpired portion of his employment contract consisting of nine months computed at
the rate of US$1,430.00 per month. All other awards are hereby AFFIRMED. No costs.
Notes
Sec. 10. MONEY CLAIMS. x x x.
In case of termination of overseas employment without just, valid or authorized cause as defined
by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less. (Emphasis and underscoring supplied.)
2J 2016-2017 (DIMACULANGAN)
LABSTAND Doctrine: To justify an employees dismissal, the employer has the burden of
proving the presence of just cause and due process. An illegally dismissed worker
whose employment is for a fixed period is entitled to payment of his salaries
corresponding to the unexpired portion of his contract.
TITLE GR No. 113911
Vinta Maritime Co. and Elkano Ship Date: January 23, 1998
Management, Inc. v NLRC and Leonides
Basconcillo Ponente: Panganiban, J.

Petitioner: Vinta Maritime Co. and Elkano Ship Respondent: NLRC and Leonides Basconcillo
Management, Inc.
Nature of the case: Illegal dismissal
FACTS
On February 13, 1987, Leonides Basconcillo, a licensed Marine Engineer since 1970, was hired as Chief
Engineer for M.V. Boracay by the shipping company, Vinta Maritime Company, Incorporated, thru its
accredited manning agent, the Elkano Ship Management, Inc.
The crew contract for his employment was effective for a fixed duration of one (1) year, with a stipulated
monthly basic pay of $1,375.00 U.S. Dollars, and fixed overtime pay of $402.50 U.S. Dollars a month, or a
total of $1,787.50 U.S. Dollars per month, with an additional 2 days leave a month. So on February 18,
1987, Basconcillo joined the vessel at the port of Rotterdam, the Netherlands, and assumed his duties and
responsibilities as Chief Engineer.
On April 2, 1987, or barely three (3) months after boarding the vessel, private respondent was informed by
Captain Jose B. Orquinaza, the ships Master, that he was relieved of his duties per recommendation of the
Marine Superintendent, Mr. Peter Robinson, due to his poor performance. He was in effect terminated from
the service. This came after Basconcillo had a verbal altercation with Robinson, a British national, regarding
the discipline or lack thereof of the Filipino crew under private respondents supervision. No inquiry or
investigation, however, regarding his supposed incompetence or negligence was ever conducted; neither
was private respondent furnished with a notice or memorandum regarding the cause of his dismissal.
Private respondent was made to disembark at the port of Oslo, Norway, and immediately repatriated to the
country.
On April 20, 1987, Leonides C. Basconcillo filed a complaint with the Philippine Overseas Employment
Administration (POEA) Workers Assistance and Adjudication Office for illegal dismissal. In their answer,
they alleged that private respondent was dismissed for his gross negligence and incompetent performance
as chief engineer of the M/V Boracay. The parties submitted their position papers and despite an
unopposed motion for hearing filed by Vinta Maritime, the POEA considered the case submitted for
resolution by mutual agreement of the parties. In his decision dated March 9, 1990, POEA Administrator
Tomas D. Achacoso ruled that Basconcillo was illegally dismissed and ordered petitioners to pay, jointly
and severally, US$17,875.00 or its peso equivalent at the time of actual payment, representing his salaries
for the unexpired portion of his employment contract at US$1,787.50 per month.
On appeal, the National Labor Relations Commission affirmed en toto the POEA Administrators decision.
ISSUE

Whether or not the petitioner was illegally dismissed?

HELD/RATIO
Yes. The petitioners (Vinta Maritime and Elkano Ship Management) failed to prove the elements of a valid
dismissal, namely: (1) just cause and (2) due process.
Procedural Due Process: Trial is Not Indispensable in Administrative Due Process
Petitioners claim that the Commission gravely abused its discretion in upholding the POEAs decision. They
insist that a hearing was an indispensable condition before a judgment could be rendered in this case.The
requirements of due process are deemed to have been satisfied when parties are given the opportunity to
submit position papers. The holding of an adversarial trial is discretionary on the labor arbiter and the
parties cannot demand it as a matter of right.
Substantive: Private Respondent Was Illegally Dismissed
Where there is no showing of a clear, valid, and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal. Verily, the burden is on the employer to prove that the
termination was for a valid or authorized cause. For an employees dismissal to be valid, (1) the
dismissal must be for a valid cause and (2) the employee must be afforded due process. Article 282
of the Labor Code lists the following causes for termination of employment by the employer: (1) serious
misconduct or willful disobedience of lawful orders in connection with his or her work, (2) gross and habitual
neglect of duties, (3) fraud or willful breach of trust, (4) commission of a crime or an offense against the
person of the employer or his immediate family member or representative, and (5) analogous cases.
The absence of a valid cause for termination in this case is patent. Petitioners allege that private
respondent was dismissed because of his incompetence. However, this is contradicted by private
respondents seamans book which states that his discharge was due to an emergency leave. Moreover, his
alleged incompetence is belied by the remarks made by petitioners in the same book that private
respondents services were highly recommended and that his conduct and ability were rated very good. It
was incumbent upon the petitioners to clearly establish that the discharge was for a just cause before they
could legitimately terminate the private respondents services.
The alleged incidents of incompetence were unsupported by relevant and convincing evidence. Without
factual basis are their contentions which are as follows: (1) private respondent had been inactive and
unemployed for five years prior to his employment; and (2) developments in ship technology, equipment
and damage control measures, during the five years he was unemployed, gravely affected his expertise.
Petitioners failed to specify these alleged advanced equipment and measures. Neither did they explain that
the instances where private respondent allegedly endangered the ship and its crew involved any of these
advanced equipment and measures.
Due process, the second element for a valid dismissal, requires notice and hearing. Before the employee
can be dismissed under Article 282, the Code requires the service of a written notice containing a
statement of the cause(s) of termination and giving said employee ample opportunity to be heard and to
defend himself. A notice of termination in writing is further required if the employees dismissal is decided
upon. The employer must furnish the worker with two written notices before termination of employment can
be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his
dismissal is sought and (2) subsequent notice which informs the employee of the employers decision to
dismiss him. The twin requirements of notice and hearing constitute the essential elements of due process,
and neither of these elements can be eliminated without running afoul of the constitutional guaranty.
Using these legal criteria, the private respondent was illegally dismissed. No notice was ever given to him
prior to his dismissal. This fact alone disproves petitioners allegation that private respondent was given fair
warning and enough opportunity to explain his side [regarding] the incidents that led to his dismissal.
Illegally dismissed workers are entitled to the payment of their salaries corresponding to the unexpired
portion of their employment where the employment is for a definite period. Conformably, the administrator
and the Respondent Commission properly awarded private respondent salaries for the period beginning
April 9, 1987, the date of his illegal dismissal, until February 18, 1988, the expiration of his contract.

WHEREFORE, WHEREFORE, the petition is hereby DISMISSED. The challenged Decision and Resolution
are AFFIRMED. Costs against petitioners.
Notes
Please check the case for the claims of incompetence and contents of seamans book.
2J 2016-2017 (GAMO)