G.R. No.

160233 August 8, 2007 Withheld Commission

ROGELIO REYES, Petitioner, November 1997 30,000.00
vs. Salary Overpaid ( 834.59)
NATIONAL LABOR RELATIONS COMMISSION, Fifth Division, and UNIVERSAL ROBINA Lost Pager ( 6,295.00)
CORPORATION GROCERY DIVISION, Respondents.
DECISION TOTAL Php 200,322.21
YNARES-SANTIAGO, J.:

This computation is pursuant to Company policy and practice. We are unable to agree with your
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to reverse the suggested basis of computation as they are without legal basis. Also, we regret that we cannot
November 14, 2002 Decision1 of the Court of Appeals in CA-G.R. SP No. 64799, affirming the pay you the Sales Commission and Tax Refund ahead of the other payments.
Decision of the National Labor Relations Commission (NLRC) which modified the Decision of the
Labor Arbiter as regards the awards of retirement pay and 13th month pay, and deleted the
award of attorney’s fees; as well as the August 19, 2003 Resolution 2 denying the motion for Kindly get in touch with us at 671-7098 if you have any questions.
reconsideration.
Very truly yours,
Petitioner was employed as a salesman at private respondent’s Grocery Division in Davao City
on August 12, 1977. He was eventually appointed as unit manager of Sales Department-South (SGD) ATTY. MANUEL R. DEL ROSARIO
Mindanao District, a position he held until his retirement on November 30, 1997.3 Thereafter, he Group Human Resources Director
received a letter regarding the computation of his separation pay, to wit:
cc: Mr. Lance Gokongwei
September 10, 1998 Atty. Danny Bolos
Mr. Al Bacleon4
MR. ROGELIO J. REYES
#2 San Nicolas Street Insisting that his retirement benefits and 13th month pay must be based on the average monthly
Skyline Village, Catalunan Grande salary of ₱42,766.19, which consists of ₱10,919.22 basic salary and ₱31,846.97 average monthly
Davao City 8000 commission, petitioner refused to accept the check5 issued by private respondent in the amount
of ₱200,322.21.6 Instead, he filed a complaint before the arbitration branch of the NLRC for
Dear Mr. Reyes, retirement benefits, 13th month pay, tax refund, earned sick and vacation leaves, financial
assistance, service incentive leave pay, damages and attorney’s fees.7
This is in reply to your letter dated August 10, 1998, a copy of which was received by the
undersigned only on September 2, 1998. On March 15, 1999, Labor Arbiter Miriam A. Libron-Barroso rendered a decision holding that
sales commission is part of the basic salary of a unit manager, thus:
We wish to advise you that per our computation, your separation pay amounts to:
WHEREFORE, JUDGMENT IS HEREBY RENDERED ordering respondent Universal Robina
Corporation-Grocery Division to pay complainant the net amount of PESOS: NINE HUNDRED
Retirement benefit (computed at 50% pay for every year of service, a ELEVEN THOUSAND SIX HUNDRED NINETY NINE AND 92/100 (₱911,699.92) representing his
Php 109,192.20
fraction of at least 6 months considered as 1 year) retirement benefits, 13th month pay for 1997, 13th month pay differential for 1996 and 1995,
VL and SL Cash conversion, withheld commission for 1997, financial assistance and tax refund
VL Cash Conversion (144 hours) 7,511.31 plus attorney’s fees equivalent to 5% of the total award.
SL Cash Conversion (120 hours) 3,129.72
All other claims are dismissed for lack of basis.
Financial Assistance (as approved by LY Gokongwei in Memo dated
November 4, 1997) 30,000.00
SO ORDERED.8
Final Accountability/Accounting
Tax Refund 16,699.35
13th Month Pay 10,919.22 50,488.98
On appeal, the NLRC modified the decision of the Labor Arbiter by excluding the overriding
commission in the computation of the retirement benefits and 13th month pay and deleted the
award of attorney’s fees, thus:
WHEREFORE, judgment is rendered:
1. Affirming with modification the decision appealed from insofar as the award of
retirement pay and 13th month pay to the effect that same be computed based on the
₱10,919.22 basic salary to the exclusion of the overriding commissions of complainant.
2. Affirming in toto the award of VL cash conversion, SL cash conversion, tax refund,
withheld commission and financial assistance.
3. Deleting the award of attorney’s fees for lack of merit.
SO ORDERED.9
Both parties moved for reconsideration of the NLRC decision but were denied by the NLRC for
lack of merit. Only petitioner filed a petition for certiorari before the Court of Appeals but was
dismissed for lack of merit.
Petitioner’s motion for reconsideration was denied; hence this petition raising the sole issue:
WHETHER OR NOT THE AVERAGE MONTHLY SALES COMMISSION OF THIRTY ONE THOUSAND
EIGHT HUNDRED FORTY SIX AND 97/100 (Php 31,846.97) SHOULD BE INCLUDED IN THE
COMPUTATION OF HIS RETIREMENT BENEFITS AND 13th MONTH PAY.10
Petitioner contends that the commissions form part of the basic salary, citing the case of
Philippine Duplicators, Inc. v. National Labor Relations Commission,11 wherein the Court held
that commissions earned by salesmen form part of their basic salary.12
Private respondent counters that petitioner knew that the overriding commission is not included
in the basic salary because it had not been considered as such for a long time in the computation
of the 13th month pay, leave commissions, absences and tardiness. Petitioner himself stated in
the complaint that his basic salary is ₱10,919.22, thus, he is estopped from claiming otherwise.
Moreover, in Boie-Takeda Chemicals, Inc. v. De la Serna,13 the Supreme Court held that the fixed
or guaranteed wage is patently "the basic salary" for this is what the employee receives for a
standard work period, and that commissions are given for extra efforts exerted in consummating
sales or other transactions. Also, in Soriano v. National Labor Relations Commission, 14 the Court
clarified that overriding commission is not properly includible in the basic salary as it must be
earned by actual market transactions attributable to the claimant. Thus, as a unit manager who
supervised the salesmen under his control and did not enter into actual sale transactions,
petitioner’s overriding commissions must not be considered in the computation of the
retirement benefits and 13th month pay.15
The petition lacks merit. Any seeming inconsistencies between Philippine Duplicators and Boie-
Takeda had been clarified by the Court in the Resolution dated February 15, 1995 in the
Philippine Duplicators case.16
The Court thus clarified that in Philippine Duplicators, the salesmen’s commissions, comprising
a pre-determined percentage of the selling price of the goods sold by each salesman, were
properly included in the term basic salary for purposes of computing the 13th month pay. The
salesmen’s commission are not overtime payments, nor profit-sharing payments nor any other
fringe benefit,17 but a portion of the salary structure which represents an automatic increment
to the monetary value initially assigned to each unit of work rendered by a salesman. 18
Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical
representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji
Xerox Co., were excluded from the term basic salary because these were paid to the medical
representatives and rank-and-file employees as productivity bonuses, which are generally tied
to the productivity, or capacity for revenue production, of a corporation and such bonuses closely
resemble profit-sharing payments and have no clear direct or necessary relation to the amount
of work actually done by each individual employee.19 Further, commissions paid by the Boie-
Takeda Company to its medical representatives could not have been sales commissions in the
same sense that Philippine Duplicators paid the salesmen their sales commissions. Medical
representatives are not salesmen; they do not effect any sale of any article at all.20
In fine, whether or not a commission forms part of the basic salary depends upon the
circumstances or conditions for its payment, which indubitably are factual in nature for they will
require a re-examination and calibration of the evidence on record. Thus, our review thereof in
the case at bar would violate the settled rule that findings of facts of quasi-judicial bodies like the
NLRC, and affirmed by the Court of Appeals in due course, are conclusive on this Court, which is
not a trier of facts.21 Nevertheless, should petitioner’s commissions be considered in the
computation of his retirement benefits and 13th month pay?
We rule in the negative.
Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The
New Retirement Law,22 provides:
Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
xxxx
In the absence of a retirement plan or agreement providing for retirement benefits of employees
in the establishment, an employee upon reaching the age of sixty (60) years or more, but not
beyond sixty five (65) years which is hereby declared the compulsory retirement age, who has
served at least five (5) years in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall
mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of
not more than five (5) days of service incentive leaves.
And, Section 5 of Rule II of the Rules Implementing the New Retirement Law, provides:
RULE II
Retirement Benefits
xxxx
Section 5. Retirement Benefits.
5.1 In the absence of an applicable agreement or retirement plan, an employee who retires
pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole
year.
5.2 Components of One-half (1/2) Month Salary. – For the purpose of determining the minimum
retirement pay due an employee under this Rule, the term "one-half-month salary" shall include
all the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used
herein, the term "salary" includes all remunerations paid by an employer to his
employees for services rendered during normal working days and hours, whether such
payments are fixed or ascertained on a time, task, piece or commission basis, or other
method of calculating the same, and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of food, lodging, or other
facilities customarily furnished by the employer to his employees. The term does not
include cost of living allowance, profit-sharing payments and other monetary benefits
which are not considered as part of or integrated into the regular salary of the
employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave.
(c) One-twelfth of the 13 month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be
included in the computation of the employee’s retirement pay. (Emphasis supplied)
The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes
place at age 65, while the second is primarily determined by the collective bargaining agreement
or other employment contract or employer’s retirement plan. In the absence of any provision on
optional retirement in a collective bargaining agreement, other employment contract, or
employer’s retirement plan, an employee may optionally retire upon reaching the age of 60 years
or more, but not beyond 65 years, provided he has served at least five years in the establishment
concerned.
For the purpose of computing retirement pay, "one-half month salary" shall include all of the
following:
1) 15 days salary based on the latest salary rate;
2) cash equivalent of 5 days of service incentive leave (or vacation leave);
3) 1/12 of the 13th month pay;
4) other benefits as may be agreed upon by employer and employee for inclusion.
But, it shall not include the following:
1) cost of living allowance;
2) profit-sharing payments; and
3) other monetary benefits which are not considered as part of or integrated into the
regular salary of the employees
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in
computing his retirement benefits is his latest salary rate of ₱10,919.22 as the commissions he
received are in the form of profit-sharing payments specifically excluded by the foregoing rules.
As aptly observed by the Court of Appeals:
In fine, Boie-Takeda and Philippine Duplicator particularize the types of earnings and
remuneration that should or should not properly be included or integrated in the basic salary
and which questions are to be resolved or determined on a case-to-case basis, in the light of the
specific and detailed facts of each case. In other words, when these earnings and remuneration
are closely akin to fringe benefits, overtime pay or profit-sharing statements, they are properly
excluded in computing retirement pay. However, sales commissions which are effectively an
integral portion of the basic salary structure of an employee, shall be included in determining the
retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of ₱10,919.22 as salary
corresponding to his position as Unit Manager. Thus, as correctly ruled by public respondent
NLRC, the "overriding commissions" paid to him by Universal Robina Corp. could not have been
‘sales commissions’ in the same sense that Philippine Duplicators paid its salesmen sales
commissions. Unit Managers are not salesmen; they do not effect any sale of article at all.
Therefore, any commission which they receive is certainly not the basic salary which measures
the standard or amount of work of complainant as Unit Manager. Accordingly, the additional
payments made to petitioner were not in fact sales commissions but rather partook of the nature WHEREFORE, the petition is DENIED. The November 14, 2002 Decision of the Court of Appeals
of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals in CA-G.R. SP No. 64799, affirming the Decision of the National Labor Relations Commission,
and Philippine Fuji Xerox Corporation, which pronounced that commissions are additional pay which modified the Decision of the Labor Arbiter with respect to the awards of retirement pay
that does not form part of the basic salary, applies to the present case.23 and 13th month pay, and deleted the award of attorney’s fees is AFFIRMED in toto.

Aside from the fact that as unit manager petitioner did not enter into actual sale transactions, but SO ORDERED.
merely supervised the salesmen under his control, the disputed commissions were not regularly
received by him. Only when the salesmen were able to collect from the sale transactions can
petitioner receive the commissions. Conversely, if no collections were made by the salesmen,
then petitioner would receive no commissions at all.24 In fine, the commissions which petitioner
received were not part of his salary structure but were profit-sharing payments and had no clear,
direct or necessary relation to the amount of work he actually performed. The collection made
by the salesmen from the sale transactions was the profit of private respondent from which
petitioner had a share in the form of a commission.

It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more
sale transactions; however, it is not the criterion which would entitle him to a commission, but
the actual sale transactions brought about by the individual efforts of the salesmen.

Insofar as what constitutes "basic salary," the foregoing discussions equally apply to the
computation of petitioner’s 13th month pay. As held in San Miguel Corporation v. Inciong:25

Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is
used as the basis in the determination of his 13th-month pay. Any compensations or
remunerations which are deemed not part of the basic pay is excluded as basis in the
computation of the mandatory bonus.

Under the Rules and Regulations Implementing Presidential Decree 851, the following
compensations are deemed not part of the basic salary:

a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of

Instruction No. 174;

b) Profit sharing payments;

c) All allowances and monetary benefits which are not considered or integrated as part
of the regular basic salary of the employee at the time of the promulgation of the Decree
on December 16, 1975. (Emphasis supplied)

Finally, considering that the computations, as well as the propriety of the awards, are
unquestionably factual issues that have been discussed and ruled upon by NLRC and affirmed by
the Court of Appeals, we cannot depart from such findings. Findings of fact of administrative
agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only respect, but finality when affirmed
by the Court of Appeals. Such findings deserve full respect and, without justifiable reason, ought
not to be altered, modified or reversed.26

G.R. No. 85073 August 24, 1993
DAVAO FRUITS CORPORATION, petitioner,
vs.
ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rank-and-file
workers/employees of DAVAO FRUITS CORPORATION and NATIONAL LABOR RELATIONS
COMMISSION, respondents.
Dominguez & Paderna Law Offices for petitioners.
The Solicitor General for public respondents.
QUIASON, J.:
Commission (NLRC), dismissing for lack of merit petitioner's appeal from the decision of the
Labor Arbiter in NLRC Case No. 1791-MC-X1-82.
On December 28, 1982 respondent Associated Labor Unions (ALU), for and in behalf of all the
rank-and-file workers and employees of petitioner, filed a complaint (NLRC Case No. 1791-MC-
XI-82) before the Ministry of Labor and Employment, Regional Arbitration Branch XI, Davao City,
against petitioner, for "Payment of the Thirteenth-Month Pay Differentials." Respondent ALU
sought to recover from petitioner the thirteenth month pay differential for 1982 of its rank-and-
file employees, equivalent to their sick, vacation and maternity leaves, premium for work done
on rest days and special holidays, and pay for regular holidays which petitioner, allegedly in
disregard of company practice since 1975, excluded from the computation of the thirteenth
month pay for 1982.
In its answer, petitioner claimed that it erroneously included items subject of the complaint in
the computation of the thirteenth month pay for the years prior to 1982, upon a doubtful and
difficult question of law. According to petitioner, this mistake was discovered only in 1981 after
the promulgation of the Supreme Court decision in the case of San Miguel Corporation v.
Inciong (103 SCRA 139).
A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos, in favor of
respondent ALU. The dispositive portion of the decision reads as follows:
WHEREFORE, in view of all the foregoing considerations, judgment is hereby
rendered ordering respondent to pay the 1982 — 13th month pay differential
to all its rank-and-file workers/employees herein represented by
complainant Union (Rollo, p. 32).
Petitioner appealed the decision of the Labor Arbiter to the NLRC, which affirmed the said
decision accordingly dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition for review under Rule 45 of the Revised
Rules of Court. This error notwithstanding and in the interest of justice, this Court resolved to
treat the instant petition as a special civil action for certiorari under Rule 65 of the Revised Rules
of Court (P.D. No. 1391, Sec. 5; Rules Implementing P.D. No. 1391, Rule II, Sec. 7; Cando v. National
Labor Relations Commission, 189 SCRA 666 [1990]: Pearl S. Buck Foundation, Inc. v. National
Labor Relations Commission, 182 SCRA 446 [1990]).
The crux of the present controversy is whether in the computation of the thirteenth month pay
given by employers to their employees under P.D.
No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days
and special holidays, and pay for regular holidays may be excluded in the computation and
payment thereof, regardless of long-standing company practice.
Presidential Decree No. 851, promulgated on December 16, 1975, mandates all employers to pay
their employees a thirteenth month pay. How this pay shall be computed is set forth in Section 2
of the "Rules and Regulations Implementing Presidential Decree No. 851," thus:
SECTION 2. . . .
(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary
of an employee within a calendar year.
(b) "Basic Salary" shall include all renumerations or earnings paid by an
employer to an employee for services rendered but may not include cost of
living allowances granted pursuant to Presidential Decree No. 525 or Letter
of Instructions No. 174, profit-sharing payments, and all allowances and
monetary benefits which are not considered or integrated as part of the
regular or basic salary of the employee at the time of the promulgation of the
Decree on December 16, 1975.
The Department of Labor and Employment issued on January 16, 1976 the "Supplementary Rules
and Regulations Implementing P.D. No. 851" which in paragraph 4 thereof further defines the
term "basic salary," thus:
4. Overtime pay, earnings and other renumerations which are not part of the
basic salary shall not be included in the computation of the 13th month pay.
Clearly, the term "basic salary" includes renumerations or earnings paid by the employer to
employee, but excludes cost-of-living allowances, profit-sharing payments, and all allowances
and monetary benefits which have not been considered as part of the basic salary of the employee
as of December 16, 1975. The exclusion of cost-of-living allowances and profit sharing payments
shows the intention to strip "basic salary" of payments which are otherwise considered as
"fringe" benefits. This intention is emphasized in the catch all phrase "all allowances and
monetary benefits which are not considered or integrated as part of the basic salary." Basic
salary, therefore does not merely exclude the benefits expressly mentioned but all payments
which may be in the form of "fringe" benefits or allowances (San Miguel Corporation v.
Inciong, supra, at 143-144). In fact, the Supplementary Rules and Regulations Implementing P.D.
No. 851 are very emphatic in declaring that overtime pay, earnings and other renumerations
shall be excluded in computing the thirteenth month pay.
In other words, whatever compensation an employee receives for an eight-hour work daily or
the daily wage rate in the basic salary. Any compensation or remuneration other than the daily
wage rate is excluded. It follows therefore, that payments for sick, vacation and maternity leaves,
premium for work done on rest days special holidays, as well as pay for regular holidays, are
likewise excluded in computing the basic salary for the purpose of determining the thirteen
month pay.
Petitioner claims that the mistake in the interpretation of "basic salary" was caused by the
opinions, orders and rulings rendered by then Acting Labor Secretary Amado C. Inciong,
expressly including the subject items in computing the thirteenth month pay. The inclusion of
these items is clearly not sanctioned under P.D. No. 851, the governing law and its implementing
rules, which speak only of "basis salary" as the basis for determining the thirteenth month pay.
Moreover, whatever doubt arose in the interpretation of P.D. No. 851 was erased by the
Supplementary Rules and Regulations which clarified the definition of "basic salary."
As pointed out in San Miguel Corporation v. Inciong, (supra):
While doubt may have been created by the prior Rules and Regulations and
Implementing Presidential Decree 851 which defines basic salary to
include all remunerations or earnings paid by an employer to an employee,
this cloud is dissipated in the later and more controlling Supplementary Rules
and Regulations which categorically, exclude from the definition of basic
salary earnings and other remunerations paid by employer to an employee. A
cursory perusal of the two sets of Rules indicates that what has hitherto been
the subject of broad inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the seeming tendency of the
former rules to include all remunerations and earnings within the definition
of basic salary.
Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without
excluding the subject items therein until 1981. Petitioner continued its practice in December
1981, after promulgation of the afore-quoted San Miguel decision on February 24, 1981, when
petitioner purportedly "discovered" its mistake.
From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the
computation of its employees' thirteenth month pay, the payments for sick, vacation and
maternity leaves, premiums for work done on rest days and special holidays, and pay for regular
holidays. The considerable length of time the questioned items had been included by petitioner
indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of
mistake.
A company practice favorable to the employees had indeed been established and the payments
made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement
being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by
the employer, by virtue of Section 10 of the Rules and Regulations Implementing P.D. No. 851,
and Article 100 of the labor of the Philippines, which prohibit the diminution or elimination by
the employer of the employees' existing benefits (Tiangco v. Leogardo, Jr., 122 SCRA 267, [1983]).
Petitioner cannot invoke the principle of solutio indebiti which as a civil law concept that is not
applicable in Labor Law. Besides, in solutio indebiti, the obligee is required to return to the
obligor whatever he received from the latter (Civil Code of the Philippines, Arts. 2154 and 2155).
Petitioner in the instant case, does not demand the return of what it paid respondent ALU from
1975 until 1981; it merely wants to "rectify" the error it made over these years by excluding
unilaterally from the thirteenth month pay in 1982 the items subject of litigation. Solutio indebiti,
therefore, is not applicable to the instant case.
WHEREFORE, finding no grave abuse of discretion on the part of the NLRC, the petition is hereby
DISMISSED, and the questioned decision of respondent NLRC is AFFIRMED accordingly.

The all-embracing phrase "earnings and other remunerations which are

deemed not part of the basic salary includes within its meaning payments for
sick, vacation, or maternity leaves, premium for work performed on rest days
and special holidays, pay for regular holidays and night differentials. As such
they are deemed not part of the basic salary and shall not be considered in the
computation of the 13th-month pay. If they were not so excluded, it is hard to
find any "earnings and other remunerations" expressly excluded in
computation of the 13th month-pay. Then the exclusionary provision would
prove to be idle and with purpose.

The "Supplementary Rules and Regulations Implementing P.D. No. 851," which put to rest all
doubts in the computation of the thirteenth month pay, was issued by the Secretary of Labor as
early as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and its

G.R. No. 140689 February 17, 2004
BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC., respondents.
DECISION
CARPIO MORALES, J.:
The present Petition for Review on Certiorari under Rule 45 of the Rules of Court raises the issue
of whether the unilateral adoption by an employer of an upgraded salary scale that increased the
hiring rates of new employees without increasing the salary rates of old employees resulted in
wage distortion within the contemplation of Article 124 of the Labor Code.
Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II, Level III, Level
IV, and Level V. On May 28, 1993, its Board of Directors approved a "New Salary Scale", made
retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the industry’s
labor market. The "New Salary Scale" increased the hiring rates of new employees, to wit: Levels
I and V by one thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos
(P900.00). Accordingly, the salaries of employees who fell below the new minimum rates were
also adjusted to reach such rates under their levels.
Bankard’s move drew the Bankard Employees Union-WATU (petitioner), the duly certified
exclusive bargaining agent of the regular rank and file employees of Bankard, to press for the
increase in the salary of its old, regular employees.
Bankard took the position, however, that there was no obligation on the part of the management
to grant to all its employees the same increase in an across-the-board manner.
As the continued request of petitioner for increase in the wages and salaries of Bankard’s regular
employees remained unheeded, it filed a Notice of Strike on August 26, 1993 on the ground of
discrimination and other acts of Unfair Labor Practice (ULP).
A director of the National Conciliation and Mediation Board treated the Notice of Strike as a
"Preventive Mediation Case" based on a finding that the issues therein were "not strikeable".
Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to bargain,
discrimination, and other acts of ULP - union busting. The strike was averted, however, when the
dispute was certified by the Secretary of Labor and Employment for compulsory arbitration.
The Second Division of the NLRC, by Order of May 31, 1995, finding no wage distortion, dismissed
the case for lack of merit.
Petitioner’s motion for reconsideration of the dismissal of the case was, by Resolution of July 28,
1995, denied.
Petitioner thereupon filed a petition for certiorari before this Court, docketed as G.R. 121970. In
accordance with its ruling in St. Martin Funeral Homes v. NLRC,1 the petition was referred to the
Court of Appeals which, by October 28, 1999, denied the same for lack of merit.
Hence, the present petition which faults the appellate court as follows:
(1) It misapprehended the basic issues when it concluded that under Bankard’s new
wage structure, the old salary gaps between the different classification or level of
employees were "still reflected" by the adjusted salary rates2; and
(2) It erred in concluding that "wage distortion does not appear to exist", which
conclusion is manifestly contrary to law and jurisprudence.3
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others,
Article 124 of the Labor Code) on June 9, 1989, the term "wage distortion" was explicitly defined
as:
... a situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical bases of differentiation. 4
Prubankers Association v. Prudential Bank and Trust Company5 laid down the four elements of
wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant increase in
the salary rate of a higher one; (3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country.
Normally, a company has a wage structure or method of determining the wages of its employees.
In a problem dealing with "wage distortion," the basic assumption is that there exists a grouping
or classification of employees that establishes distinctions among them on some relevant or
legitimate bases.6
Involved in the classification of employees are various factors such as the degrees of
responsibility, the skills and knowledge required, the complexity of the job, or other logical basis
of differentiation. The differing wage rate for each of the existing classes of employees reflects
this classification.
Petitioner maintains that for purposes of wage distortion, the classification is not one based on It is thus clear that there is no hierarchy of positions between the newly hired and regular
"levels" or "ranks" but on two groups of employees, the newly hired and the old, in each and employees of Bankard, hence, the first element of wage distortion provided in Prubankers is
every level, and not between and among the different levels or ranks in the salary structure. wanting.lawphi1.nêt

Public respondent National Labor Relations Commission (NLRC) refutes petitioner’s position,
however. It, through the Office of the Solicitor General, essays in its Comment of April 12, 2000
as follows:
To determine the existence of wage distortion, the "historical" classification of the employees
prior to the wage increase must be established. Likewise, it must be shown that as between the
different classification of employees, there exists a "historical" gap or difference.
xxx
While seniority may be a factor in determining the wages of employees, it cannot be made
the sole basis in cases where the nature of their work differs.
Moreover, for purposes of determining the existence of wage distortion, employees cannot create
their own independent classification and use it as a basis to demand an across-the-board increase
in salary.
As National Federation of Labor v. NLRC, et al.10 teaches, the formulation of a wage structure
through the classification of employees is a matter of management judgment and discretion.

The classification preferred by petitioner is belied by the wage structure of private respondent [W]hether or not a new additional scheme of classification of employees for compensation
as shown in the new salary scale it adopted on May 28, 1993, retroactive to April 1, 1993, which purposes should be established by the Company (and the legitimacy or viability of the bases of
provides, thus: distinction there embodied) is properly a matter of management judgment and discretion,
and ultimately, perhaps, a subject matter for bargaining negotiations between employer
and employees. It is assuredly something that falls outside the concept of "wage
distortion."11 (Emphasis and underscoring supplied)
Hiring Minimum Maximum

Level From To From To From To As did the Court of Appeals, this Court finds that the third element provided in Prubankers is also
wanting. For, as the appellate court explained:
I 3,100 4,100 3,200 4,200 7,200 9,250
In trying to prove wage distortion, petitioner union presented a list of five (5) employees
II 3,200 4,100 3,300 4,200 7,500 9,500 allegedly affected by the said increase:
III 3,300 4,200 3,400 4,300 8,000 10,000

IV 3,500 4,400 3,600 4,500 8,500 10,500 Pay of Old/ Pay of Newly Difference
V 3,700 4,700 3,800 4,800 9,000 11,000 Regular Employees Hired Employees

A. Prior to April 1, 1993

Thus the employees of private respondent have been "historically" classified into levels, i.e. I
to V, and not on the basis of their length of service. Put differently, the entry of new Level I P4,518.75 P3,100 P1,418.75
employees to the company ipso facto place[s] them under any of the levels mentioned in the new (Sammy Guce)
salary scale which private respondent adopted retroactive [to] April 1, 1993. Petitioner cannot
make a contrary classification of private respondent’s employees without encroaching upon Level II P6,242.00 P3,200 P3,042.00
recognized management prerogative of formulating a wage structure, in this case, one based (Nazario Abello)
on level.7 (Emphasis and underscoring supplied)
Level III P4,850.00 P3,300 P1,550.00
The issue of whether wage distortion exists being a question of fact that is within the jurisdiction (Arthur Chavez)
of quasi-judicial tribunals,8 and it being a basic rule that findings of facts of quasi-judicial
Level IV P5,339.00 P3,500 P1,839.00
agencies, like the NLRC, are generally accorded not only respect but at times even finality
Melissa Cordero)
if they are supported by substantial evidence, as are the findingsin the case at bar, they must be
respected. For these agencies have acquired expertise, their jurisdiction being confined to
specific matters.9
 Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found
Level V P7,090.69 P3,700 P3,390.69
in CHAPTER V on "WAGE STUDIES, WAGE AGREEMENTS AND WAGE
(Ma. Lourdes Dee)
DETERMINATION" which principally deals with the fixing of minimum wage. Article 124 should
B. Effective April 1, 1993 thus be construed and correlated in relation to minimum wage fixing, the intention of the law
being that in the event of an increase in minimum wage, the distinctions embodied in the wage
Level I P4,518.75 P4,100 P418.75 structure based on skills, length of service, or other logical bases of differentiation will be
Sammy Guce) preserved.

Level II P6,242.00 P4,100 P2,142.00 If the compulsory mandate under Article 124 to correct "wage distortion" is applied to voluntary
(Nazario Abello) and unilateralincreases by the employer in fixing hiring rates which is inherently a business
judgment prerogative, then the hands of the employer would be completely tied even in cases
Level III P4,850.00 P4,200 P650.00 where an increase in wages of a particular group is justified due to a re-evaluation of the high
(Arthur Chavez) productivity of a particular group, or as in the present case, the need to increase the
competitiveness of Bankard’s hiring rate. An employer would be discouraged from adjusting the
Level IV P5,330.00 P4,400 P939.00
salary rates of a particular group of employees for fear that it would result to a demand by all
(Melissa Cordero)
employees for a similar increase, especially if the financial conditions of the business cannot
Level V P7,090.69 P4,700 P2,390.69 address an across-the-board increase.
(Ma. Lourdes Dee)
Petitioner cites Metro Transit Organization, Inc. v. NLRC13 to support its claim that the obligation
to rectify wage distortion is not confined to wage distortion resulting from government decreed
Even assuming that there is a decrease in the wage gap between the pay of the old employees law or wage order.
and the newly hired employees, to Our mind said gap is not significant as
to obliterate or result in severe contraction of the intentional quantitative differences in the
Reliance on Metro Transit is however misplaced, as the obligation therein to rectify the wage
salary rates between the employee group. As already stated, the classification under the wage
distortion was not by virtue of Article 124 of the Labor Code, but on account of a then existing
structure is based on the rank of an employee, not on seniority. For this reason, ,wage distortion
"company practice" that whenever rank-and-file employees were paid a statutorily mandated
does not appear to exist.12 (Emphasis and underscoring supplied)
salary increase, supervisory employees were, as a matter of practice, also paid the same amount
plus an added premium. Thus this Court held in said case:
Apart from the findings of fact of the NLRC and the Court of Appeals that some of the elements of
wage distortion are absent, petitioner cannot legally obligate Bankard to correct the alleged
We conclude that the supervisory employees, who then (i.e., on April 17, 1989) had, unlike the
"wage distortion" as the increase in the wages and salaries of the newly-hired was not due to a
rank-and-file employees, no CBA governing the terms and conditions of their employment, had
prescribed law or wage order.
the right to rely on the company practice of unilaterally correcting the wage distortion effects
of a salary increase given to the rank-and-file employees, by giving the supervisory employees a
The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds corresponding salary increase plus a premium. . . .14 (Emphasis supplied)
of wage adjustments, then the language of the law should have been broad, not restrictive as it is
currently phrased:
Wage distortion is a factual and economic condition that may be brought about by different
causes. In Metro Transit, the reduction or elimination of the normal differential between the
Article 124. Standards/Criteria for Minimum Wage Fixing. wage rates of rank-and-file and those of supervisory employees was due to the granting to the
former of wage increase which was, however, denied to the latter group of employees.
xxx
The mere factual existence of wage distortion does not, however, ipso facto result to an obligation
Where the application of any prescribed wage increase by virtue of a law or Wage Order to rectify it, absent a law or other source of obligation which requires its rectification.
issued by any Regional Board results in distortions of the wage structure within an
establishment, the employer and the union shall negotiate to correct the distortions. Any dispute Unlike in Metro Transit then where there existed a "company practice," no such management
arising from the wage distortions shall be resolved through the grievance procedure under their practice is herein alleged to obligate Bankard to provide an across-the-board increase to all its
collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. regular employees.

x x x (Italics and emphasis supplied)

Bankard’s right to increase its hiring rate, to establish minimum salaries for specific jobs, and to
adjust the rates of employees affected thereby is embodied under Section 2, Article V (Salary and
Cost of Living Allowance) of the parties’ Collective Bargaining Agreement (CBA), to wit:

Section 2. Any salary increase granted under this Article shall be without prejudice to the right
of the Company to establish such minimum salaries as it may hereafter find appropriate for specific
jobs, and to adjust the rates of the employees thereby affected to such minimum salaries thus
established.15 (Italics and underscoring supplied)

This CBA provision, which is based on legitimate business-judgment prerogatives of the

employer, is a valid and legally enforceable source of rights between the parties.

In fine, absent any indication that the voluntary increase of salary rates by an employer was done
arbitrarily and illegally for the purpose of circumventing the laws or was devoid of any legitimate
purpose other than to discriminate against the regular employees, this Court will not step in to
interfere with this management prerogative. Employees are of course not precluded from
negotiating with its employer and lobby for wage increases through appropriate channels, such
as through a CBA.

This Court, time and again, has shown concern and compassion to the plight of workers in
adherence to the Constitutional provisions on social justice and has always upheld the right of
workers to press for better terms and conditions of employment. It does not mean, however, that
every dispute should be decided in favor of labor, for employers correspondingly have rights
under the law which need to be respected.

WHEREFORE, the present petition is hereby DENIED.

SO ORDERED.

G.R. No. 144619 November 11, 2005
C. PLANAS COMMERCIAL and/or MARCIAL COHU, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division), ALFREDO OFIALDA,
DIOLETO MORENTE and RUDY ALLAUIGAN, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari filed by C. Planas Commercial and/or Marcial Cohu,
(petitioners) assailing the Decision of the Court of Appeals (CA) dated January 19, 2000 1 which
affirmed in toto the decision of the National Labor Relations Commission (NLRC) and the
Resolution dated August 15, 20002 denying petitioners’ motion for reconsideration.
On September 14, 1993, Dioleto Morente, Rudy Allauigan and Alfredo Ofialda (private
respondents) together with 5 others3 filed a complaint for underpayment of wages, nonpayment
of overtime pay, holiday pay, service incentive leave pay and premium pay for holiday and rest
day and night shift differential against petitioners with the Arbitration Branch of the NLRC. The
case was docketed as NLRC Case No. 00-09-05804-93.4
In their position paper, private respondents alleged that petitioner Cohu, owner of C. Planas
Commercial, is engaged in wholesale of plastic products and fruits of different kinds with more
than 24 employees; that private respondents were hired by petitioners on January 14, 1990, May
14, 1990 and July 1, 1991, respectively, as helpers/laborers; that they were paid below the
minimum wage law for the past 3 years; that they were required to work for more than 8 hours
a day without overtime pay; that they never enjoyed holiday pay and did not have a rest day as
they worked for 7 days a week; and they were not paid service incentive leave pay although they
had been working for more than one year. Private respondent Ofialda asked for night shift
differential as he had worked from 8 p.m. to 8 a.m. the following day for more than one year.
Petitioners filed their comment admitting that private respondents were their helpers who used
to accompany the delivery trucks and helped in the loading and unloading of merchandise being
distributed to clients; that they usually started their work from 10 a.m. to 6 p.m.; that private
respondents stopped working with petitioners sometime in September 1993 as they were
already working in other establishments/stalls in Divisoria; that they only worked for 6 days a
week; that they were not entitled to holiday and service incentive leave pays for they were
employed in a retail and service establishment regularly employing less than ten workers.
On December 6, 1994, a decision5 was rendered by the Labor Arbiter dismissing private
respondents’ money claims for lack of factual and legal basis. He made the following findings:
The basic issue raised before us is whether or not complainants are entitled to the money claims.
The rule in this jurisdiction is that employers who are regularly employing not more than ten
workers in retail establishments are exempt from the coverage of the minimum wage law.
In connection therewith and in consonance with Sec. 1, Rule 131 of the Rules of Court, it is
incumbent upon the party to support affirmative allegation that an employer regularly employs
more than ten (10) workers.
In the case at bar, complainants failed to substantiate their claim that the respondent
establishment regularly employs twenty (sic) (24) workers.
Accordingly, we have no factual basis to grant salary differentials to complainants. In the same
context, under Sec. 1 (b), Rule IV and Sec. 1(g), Rule V of the Implementing Rules of the Labor
Code, complainants are not entitled to legal holiday pay and service incentive leave pay.
We also do not have sufficient factual basis to award overtime pay and premium pay for holiday
and rest day because complainants failed to substantiate that they rendered overtime and during
rest days.6
Private respondents filed their appeal with the NLRC which was opposed by petitioners.
However, pending the appeal, private respondents Morente7 and Allauigan8 filed their respective
motions to dismiss with release and quitclaim before the NLRC.
On September 30, 1997, the NLRC rendered its decision,9 the dispostive portion of which reads:
WHEREFORE, in view of all the foregoing considerations, the decision appealed from should be,
as it is hereby, MODIFIED by directing the respondent to pay Alfredo Ofialda, Diolito Morente
and Rudy Allauigan the total amount of Seventy-Five Thousand One Hundred Twenty Five Pesos
(P75,125.00) representing their combined salary differentials, holiday pay, and service incentive
leave pay.
The NLRC made the following ratiocinations:
… On claims for underpayment/non-payment of legally mandated wages and fringe benefits
where exemption from coverage of the minimum wage law is put up as a defense, he who invokes
such an exemption (usually the employer) has the burden of showing the basis for the exemption
like for instance the fact of employing regularly less than ten workers.
In the instant case, complainants alleged that despite employing more than twenty-four (24)
workers in his establishment, hence covered by the minimum wage law, nevertheless the
individual respondent did not pay his workers the legal rates and benefits due them since their
employment. By way of answer, respondents countered that they employ less than ten (10)
persons, hence the money claims of complainants lack factual and legal basis.
Stated differently, against complainants’ charge of underpayment in wages and non-payment of
fringe benefits legally granted to them, the respondents raised the defense of exemption from
coverage of the minimum wage law and in support thereof alleged that they regularly employed
less than ten (10) workers to serve as basis for their exemption under the law, they
(respondents) must prove that they employed less than ten workers, instead of more than
twenty-four (24) workers as alleged by the complainants.
However, apart from their allegation, respondents presented no evidence to show the number of
workers they employed regularly. This failure is fatal to respondents’ defense. This in turn brings
us to the question of whether the complainants were underpaid and unpaid of legal holiday pay
and service incentive leave pay due them.
Stated earlier are the different amounts that each complainant was receiving by way of salary on
certain periods of their employment with respondents, which amounts according to
complainants are "way below the minimum wage then prevailing." Considering that respondents
failed to present the payrolls or vouchers which could prove otherwise, the money claims
deserve favorable consideration.
Taking note of the 3 year prescription, the period covered is from September 14, 1990 to
September 14, 1993 when the instant case was filed, and based on a 6-day work per week, the
underpayment (salary differential), legal holiday pay, and service incentive leave pay due to
complainants, as computed, are as follows:
Salary Diff. Holiday Pay SILP
1. A. OFIALDA P14,934.00 P2,362.00 P1,180.00
2. D. MORENTE 23,964.00 3,258.00 1,730.00
3. R. ALLAUIGAN 22,609.00 3,258.00 1,730.00
With respect to the other claims, i.e., overtime pay and premium pay for holiday and rest day, We
find no reason to disturb the Labor Arbiter’s ruling thereon, that there is no sufficient factual
basis to award the claims because complainants failed to substantiate that they rendered
overtime and during rest days. These claims, unlike claims for underpayment and non-payment
of fringe benefits mandated by law, need to be proven by the claimants. 10
Petitioners filed a petition for certiorari11 with prayer for temporary restraining order and
preliminary injunction before this Court on November 26, 1997. Respondents were required to
file their Comment but only public respondent NLRC, through the Solicitor General, complied
therewith. In a Resolution dated June 28, 1999,12 the petition was referred to the CA pursuant to
our ruling in St. Martin Funeral Homes vs. NLRC.
On January 19, 2000,13 the CA denied the petition for lack of merit and affirmed in toto the NLRC
decision. It said:
Having claimed exemption from the coverage of the minimum wage laws or order, it was
incumbent upon petitioner to prove such claim. Apart from simply denying private respondents’
allegation that it employs more than 24 workers in its business, petitioner failed to adduce
evidence to prove that it is, indeed, a "retail establishment" which employs less than ten (10)
employees. Its failure to present records of its workers and their respective wages gives rise to
the presumption that these are adverse to its claims. Indeed, it is hard to believe that petitioner
does not keep such records. More so, considering private respondents claim that petitioner
"employs more than twenty four (24) employees and engaged in both wholesale and retail
business of fruits by volume on CONTAINER BASIS, not by price of fruit, but by container size
retail, involving millions of pesos capital, fruits coming from China, Australia and the United
States" (p. 170, Rollo).
Needless to say, the inclusion of respondents Morente and Allauigan in the NLRC award is in
order. In its decision, public respondent awarded ₱75,125.00, representing the combined salary
differentials, holiday pay and service incentive leave pay of all three (3) private respondents. Of
this, ₱28,952.00 is earmarked for respondent Morente, and ₱27,597.00 for respondent Allauigan,
both of whom executed quitclaims after receiving ₱3,000.00 and ₱6,000.00 respectively, from
petitioner.
On this score, the Court quotes with approval the arguments advanced by the Solicitor General
thus:
While a compromise agreement or amicable settlement is not against public policy per se it must
be shown however that it was "voluntarily entered into and represents a reasonable settlement,
and the consideration for the quitclaim is credible and reasonable" (Santiago v. NLRC, 198 SCRA
111 [1991]). For the law usually looks with disfavor upon quitclaims and releases executed by
employees usually resulting from a compromise with their employers. (Velasco v. DOLE, 200
SCRA 201 [1991]). This is so because the employers and the employees obviously do not stand
on equal footing. Driven against the wall by the employer, the employee is in no position to resist
the money offered. (Lopez Sugar Corp v. FFW-PLU, 189 SCRA 179 [1990]).
Thus, Fuentes v. NLRC, 167 SCRA 767 (1988) enunciates:
In the absence of any showing that the compromise settlement and the quitclaims and releases
entered into and made by the employees were free, fair and reasonable- especially as to the
amount or consideration given by the employer in exchange therefore, the fact that they executed
the same and received their monetary benefits thereunder does not militate against them. The
Law does not consider as valid any agreement to receive less compensation than what a worker
is entitled to receive.
In the case at bar, it will be noticed that the vouchers dated September 13, 1995 and September
20, 1996 (pp. 194 and 197, NLRC Record), submitted by petitioners (pp. 191-192, Record), show
that private respondent Allauigan was only paid ₱6,000.00 and Morente, ₱3,000.00 --- when they
are legally entitled to receive ₱28,952.00 and ₱27,597.00, respectively. Under the circumstances,
subject compromise settlements cannot be considered valid and binding upon the NLRC as they
do not represent fair and reasonable settlements, nor do they demonstrate voluntariness on the
part of private respondents Morente and Allauigan. These employees should still be paid the full
amounts of their salary differentials, holiday pay and service incentive leave pay less the amounts
they had already received under the compromise settlements with petitioners (pp. 174-175,
Rollo).
Parenthetically, the Court notes that petitioner availed itself of this remedy without first seeking
a reconsideration of the assailed decision. As a general rule, certiorari will not lie unless an
inferior court, has through a motion for reconsideration, a chance to correct the errors imputed
to it. While the rule admits of exceptions, petitioner has not shown any reason for this Court not
to apply said rule, which would have justified outright dismissal of the petition were it not for
the Court’s desire to resolve the case not on a technicality but on the merits.14
Petitioners’ motion for reconsideration was denied in a Resolution dated August 15, 2000.15
Hence, the instant petition for review on certiorari filed by petitioners.
Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the
sale of plastic products and fruits to the customers for personal use, thus exempted from the
application of the minimum wage law; that it merely leases and occupies a stall in the Divisoria
Market and the level of its business activity requires and sustains only less than ten employees
at a time. Petitioners contend that private respondents were paid over and above the minimum
wage required for a retail establishment, thus the Labor Arbiter is correct in ruling that private
respondents’ claim for underpayment has no factual and legal basis. Petitioners claim that since
private respondents alleged that petitioners employed 24 workers, it was incumbent upon them
to prove such allegation which private respondents failed to do.
Petitioners also contend that the CA erred in applying strictly the rules of evidence against them
by holding that it was incumbent upon them to prove that their company is exempted from the
minimum wage law. They contend that they could not present records of their workers and their
respective wages because by the very nature of their business, the system of management is very
loose and informal, thus salaries and wages are paid by merely handing the money to the worker
without the latter being required to sign anything as proof of receipt. Thus, it would be
unreasonable to insist upon petitioner to present documents that they do not possess or keep in
the first place.
We are not persuaded.
R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage
rate of all workers and employees in the private sector. Section 4 of the Act provides for
exemption from the coverage, thus:
Sec. 4.
...
(c) Exempted from the provisions of this Act are household or domestic helpers and persons
employed in the personal service of another, including family drivers.
Retail/service establishments regularly employing not more than ten (10) workers may be
exempted from the applicability of this Act upon application with and as determined by the
appropriate Regional Board in accordance with the applicable rules and regulations issued by
the Commission. Whenever an application for exemption has been duly filed with the appropriate
Regional Board, action on any complaint for alleged non-compliance with this Act shall be
deferred pending resolution of the application for exemption by the appropriate Regional Board.
In the event that applications for exemptions are not granted, employees shall receive the
appropriate compensation due them as provided for by this Act plus interest of one percent (1%)
per month retroactive to the effectivity of this Act.
Clearly, for a retail/service establishment to be exempted from the coverage of the minimum
wage law, it must be shown that the establishment is regularly employing not more than ten (10)
workers and had applied for exemptions with and as determined by the appropriate Regional
Board in accordance with the applicable rules and regulations issued by the Commission.
Petitioners’ main defense in controverting private respondents’ claim for underpayment of
wages is that they are exempted from the application of the minimum wage law, thus the burden
of proving16such exemption rests on petitioners. Petitioners had not shown any evidence to show
that they had applied for such exemption and if they had applied, the same was granted.
In Murillo vs. Sun Valley Realty, Inc.17 where the respondents claim that petitioners therein are
not entitled to service incentive leave pay inasmuch as establishment employing less than ten
(10) employees are exempted by the Labor Code and the Implementing Rules from paying
service incentive leave pay, we held:
…..the clear policy of the Labor Code is to include all establishments, except a few classes, under
the coverage of the provision granting service incentive leave to workers. Private respondents'
claim is that they fell within the exception. Hence, it was incumbent upon them to prove that they
belonged to a class excepted by law from the general rule. Specifically, it was the duty of
respondents, not of petitioners, to prove that there were less than ten (10) employees in the
company. Having failed to discharge its task, private respondents must be deemed to be covered
by the general rule, notwithstanding the failure of petitioners to allege the exact number of
employees of the corporation. In other words, petitioners must be deemed entitled to service
incentive leave.18
Moreover, in C. Planas Commercial vs. NLRC,19 where herein petitioners are also involved in a
case filed by one of its employees, we ruled:
Petitioners invoke the exemption provided by law for retail establishments which employ not
more than ten (10) workers to justify their non-liability for the salary differentials in question.
They insist that PLANAS is a retail establishment leasing a very small and cramped stall in the
Divisoria market which cannot accommodate more than ten (10) workers in the conduct of its
business.
We are unconvinced. The records disclose de los Reyes' clear entitlement to salary differentials.
Well-settled is the rule that factual findings of labor officials who are deemed to have acquired
expertise in matters within their jurisdiction are generally accorded not only respect but even
finality and bind this Court when supported by substantial evidence or that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion. Thus, as long
as their decisions are devoid of any unfairness or arbitratriness in the process of their deduction
from the evidence proferred by the parties before them, all that is left is our stamp of finality by
affirming the factual findings made by them. In this case, the award of salary differentials by the
NLRC in favor of de los Reyes was made pursuant to RA 6727 otherwise known as the Wage
Rationalization Act, and the Rules Implementing Wage Order Nos. NCR-01 and NCR-01-A and
Wage Order Nos. NCR-02 and NCR-02-A.
Petitioners claim exemption under the aforestated law. However, the best proof that they could
have adduced was their approved application for exemption in accordance with applicable
guidelines issued by the Commission. Section 4, subpar. (c) of RA 6727 categorically provides:
Retail/service establishments regularly employing not more than ten (10) workers may be
exempted from the applicability of this Act upon application with and as determined by the
appropriate Regional Board in accordance with the applicable rules and regulations issued by
the Commission. Whenever an application for exemption has been duly filed with the appropriate
Regional Board, action on any complaint for alleged non-compliance with this Act shall be
deferred pending resolution of the application for exemption by the appropriate Regional Board.
In the event that applications for exemptions are not granted, employees shall receive the
appropriate compensation due them as provided for by this Act plus interest of one percent (1%)
per month retroactive to the effectivity of this Act (emphasis supplied).
Extant in the records is the fact that petitioners had persistently raised the matter of their
exemption from any liability for underpayment without substantiating it by showing compliance
with the aforecited provision of law. It bears stressing that the NLRC affirmed the Labor Arbiter’s
award of salary differentials due to underpayment on the ground that de los Reyes' claim therefor
was not even denied or rebutted by petitioners.
More importantly, NLRC correctly upheld the Labor Arbiter's finding that PLANAS employed
around thirty (30) workers. We have every reason to believe that petitioners need at least thirty
(30) persons to conduct their business considering that Manager Cohu did not submit any
employment record to prove otherwise. As employer, Manager Cohu ought to be the keeper of
the employment records of all his workers. Thus, it was well within his means to refute any
monetary claim alleged to be unpaid. His inability to produce the payrolls from their files without
any satisfactory explanation can be interpreted no less as suppression of vital evidence adverse
to PLANAS.
Petitioners aver that the CA erred in ruling that private respondents Morente and Allauigan are
still entitled to monetary awards despite the latter’s execution of release and quitclaims because
the settlement was not voluntarily entered into by private respondents. Petitioners insist that
both private respondents Morente and Allauigan voluntarily entered into an amicable settlement
with them on September 17 and 18, 1995, respectively; that they were the ones who initiated the
talks for settlement and who pegged the amount; that they both voluntarily appeared before the
Labor Arbiter to move for the dismissal of their case insofar as their claims are concerned as well
as submitted to the Labor Arbiter their respective quitclaims and releases which were duly
subscribed before the Labor Arbiter and duly notarized.
We find merit in petitioners’ argument.
It has been held that not all quitclaims are per se invalid or against public policy, except (1) where
there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2)
where the terms of settlement are unconscionable on their face. In these cases, the law will step
in to annul the questionable transactions.20 Such quitclaim and release agreements are regarded
as ineffective to bar the workers from claiming the full measure of their legal rights. 21
We find these two instances not present in private respondents Allauigan and Morente’s case.
They failed to refute petitioners’ allegation that the settlement was voluntarily made as they had
not filed any pleadings before the CA. Notably, we have required private respondents to file their
comment on the instant petition, however, they failed to do so. They were then required to show
cause why they should not be disciplinarily dealt with or held in contempt. 22However, they still
failed to file their comment, thus, they were imposed a fine of ₱1,000.00 23 which was
subsequently increased to ₱2,000.00 as there was still no compliance. In a Resolution dated July
22, 2002, the Court ordered the National Bureau of Investigation to arrest and detain private
respondents and the private respondents to file their comment.24 As private respondents could
not be located at their given address and they are not known in their locality, the order of arrest
and commitment was returned unserved,25 thus the Court required the Office of the Solicitor
General to file the comment in behalf of all the respondents.26 The Court finds such inaction on
the part of private respondents Allauigan and Morente an indication that they already relented
in their claims and gives credence to petitioners’ claim that they had voluntarily executed the
release and quitclaim and the motion to dismiss.
The CA found that the subject compromise agreements are not valid considering that they did
not represent the fair and reasonable settlements, i.e., that private respondent Allauigan was only
paid ₱6,000.00 and Morente, ₱3,000.00 --- when they are legally entitled to receive ₱28,952.00
and ₱27,597.00, respectively.
We do not agree. It bears stressing that at the time of the execution of the release and quitclaim,
the case filed by private respondents against petitioners was already dismissed by the Labor
Arbiter and it was pending appeal before the NLRC. Private respondents could have executed the
release and quitclaim because of a possibility that their appeal with the NLRC may not be
successful. Since there was yet no decision rendered by the NLRC when the quitclaims were
executed, it could not be said that the amount of the settlement is unconscionable. In any event,
no deception has been established that would justify the annulment of private respondents
quitclaims.27 In Mercer vs. NLRC,28 we held that:
In Samaniego v. NLRC, we ruled that: "A quitclaim executed in favor of a company by an employee
amounts to a valid and binding compromise agreement between them."
Recently, we held that in the absence of any showing that petitioner was "coerced or tricked" into
signing the above-quoted Quitclaim and Release or that the consideration thereof was very low,
she is bound by the conditions thereof.
As computed by the NLRC, private respondent Alfredo Ofialda is entitled to the payment of
₱14,934.00 as salary differential, ₱2,362.00 as legal holiday pay and ₱1,180.00 as service
incentive leave pay, all in the total amount of ₱18,476.00.
WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated
January 19, 2000 and its Resolution dated August 15, 2000
are AFFIRMED with MODIFICATION that petitioners are ordered to pay private respondent
Alfredo Ofialda the total amount of ₱18,476.00 and the monetary awards in favor of private
respondents Rudy Allauigan and Dioleto Morente are hereby DELETED. SO ORDERED.
G.R. No. 175869 April 18, 2016
ROBINA FARMS CEBU/UNIVERSAL ROBINA CORPORATION, Petitioner,
vs.
ELIZABETH VILLA, Respondent.
DECISION
BERSAMIN, J.:
The employer appeals the decision promulgated on September 27, 2006, 1 whereby the Court of
Appeals (CA) dismissed its petition for certiorari and affirmed with modification the adverse
decision of the National Labor Relations Commission (NLRC) declaring it liable for the illegal
dismissal of respondent employee.
Antecedents
Respondent Elizabeth Villa brought against the petitioner her complaint for illegal suspension,
illegal dismissal, nonpayment of overtime pay, and nonpayment of service incentive leave pay in
the Regional Arbitration Branch No. VII of the NLRC in Cebu City.
In her verified position paper, 2 Villa averred that she had been employed by petitioner Robina
Farms as sales clerk since August 1981; that in the later part of 2001, the petitioner had enticed
her to avail herself of the company's special retirement program; that on March 2, 2002, she had
received a memorandum from Lily Ngochua requiring her to explain her failure to issue invoices
for unhatched eggs in the months of January to February 2002; that she had explained that the
invoices were not delivered on time because the delivery receipts were delayed and overlooked;
that despite her explanation, she had been suspended for 10 days from March 8, 2012 until March
19, 2002; that upon reporting back to work, she had been advised to cease working because her
application for retirement had already been approved; that she had been subsequently informed
that her application had been disapproved, and had then been advised to tender her resignation
with a request for financial assistance; that she had manifested her intention to return to work
but the petitioner had confiscated her gate pass; and that she had since then been prevented from
entering the company premises and had been replaced by another employee.
The petitioner admitted that Villa had been its sales clerk at Robina Farms. It stated that on
December 12, 2001, she had applied for retirement under the special privilege program offered
to its employees in Bulacan and Anti polo who had served for at least 10 years; that in February
2002, her attention had been called by Anita Gabatan of the accounting department to explain
her failure to issue invoices for the unhatched eggs for the month of February; that she had
explained that she had been busy; that Gabatan had referred the matter to Florabeth Zanoria who
had in turn relayed the matter to Ngochua; and that the latter had then given Villa the chance to
explain, which she did.
The petitioner added that after the administrative hearing Villa was found to have violated the
company rule on the timely issuance of the invoices that had resulted in delay in the payment of
buyers considering that the payment had depended upon the receipt of the invoices; that she had
been suspended from her employment as a consequence; that after serving the suspension, she
had returned to work and had followed up her application for retirement with Lucina de Guzman,
who had then informed her that the management did not approve the benefits equivalent to 86%
of her salary rate applied for, but only Yz month for every year of service; and that disappointed
with the outcome, she had then brought her complaint against the petitioners.3
Ruling of the Labor Arbiter
On April 21, 2003, Labor Arbiter Violeta Ortiz-Bantug rendered her Decision4 finding that Villa
had not been dismissed from employment, holding thusly:
Complainant's application, insofar the benefits are concerned, was not approved which means
that while her application for retirement was considered, management was willing to give her
retirement benefits equivalent only to half-month pay for every year of service and not 86% of
her salary for every year of service as mentioned in her application. Mrs. De Guzman suggested
that if she wanted to pursue her supposed retirement despite thereof, she should submit a
resignation letter and include therein a request for financial assistance. We do not find anything
illegal or violative in the suggestion made by Mrs. De Guzman. There was no compulsion since
the choice was left entirely to the complainant whether to pursue it or not. 5
Although ordering Villa's reinstatement, the Labor Arbiter denied her claim for backwages and
overtime pay because she had not adduced evidence of the overtime work actually performed.
The Labor Arbiter declared that Villa was entitled to service incentive leave pay for the period of
the last three years counted from the filing of her complaint because the petitioner did not refute
her claim thereon. Thus, the Labor Arbiter disposed as follows:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondents
ROBINA FARMS CEBU (a Division of UNIVERSAL ROBINA CORPORATION) and LILY NGOCHUA
to REINSTATE complainant to her former position without loss of seniority rights and privileges
within ten (10) days from receipt of this decision but without payment of backwages.
Respondents are also ordered to pay complainant SEVEN THOUSAND ONE HUNDRED NINETY
FOUR PESOS (P7, 194.00) as service incentive leave pay benefits.
The other claims are dismissed for lack of merit.
SO ORDERED.6
The parties respectively appealed to the NLRC.
Judgment of the NLRC
On February 23, 2005, the NLRC rendered its judgment dismissing the appeal by the petitioner
but granting that of Villa,7 to wit:
WHEREFORE, premises considered, the appeal of respondents is hereby DISMISSED for non-
perfection while the appeal of complainant is hereby GRANTED. The decision of the Labor
Arbiter is REVERSED and SET ASIDE and a new one ENTERED declaring complainant to have
been illegally dismissed. Consequently, respondents arc hereby directed to immediately
reinstate complainant to her former position without loss of seniority rights and other privileges
within ten (10) days from receipt of this decision and to pay complainant the following sums, to
wit:
1. Backwages P119,900.00
2. SILP P 7,194.00
3. Overtime Pay P 3,445.00
Total P130,539.00
4. Attorney's fees (10%) 13,053.90
Grand Total P143,592.91
SO ORDERED.8
According to the NLRC, the petitioner's appeal was fatally defective and was being dismissed
outright because it lacked the proper verification and certificate of non-forum shopping. The
NLRC held the petitioner liable for the illegal dismissal of Villa, observing that because Villa's
retirement application had been subject to the approval of the management, her act of applying
therefor did not indicate her voluntary intention to sever her employment relationship but only
her opting to retire by virtue of her having qualified under the plan; that upon informing her
about the denial of her application, the petitioner had advised her to tender her resignation and
to request for financial assistance; that although she had signified her intention to return to work,
the petitioner had prevented her from doing so by confiscating her gate pass and informing her
that she had already been replaced by another employee; and that the petitioner neither disputed
her allegations thereon, nor adduced evidence to controvert the same.9
After the denial of its motion for reconsideration, 10 the petitioner filed a petition for certiorari in
the CA.
Decision of the CA
The petitioner alleged in its petition for certiorari the following jurisdictional errors of the NLRC,
to wit:
I NLRC that the petitioner had illegally dismissed Villa. It deemed the advice by Ngochua and de
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN IT DISMISSED
PETITIONERS APPEAL MEMORANDUM ON A MERE TECHNICALITY AND NOT
RESOLVE IT ON THE MERITS.
II.
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN IT DID NOT DISMISS
PRIVATE RESPONDENT'S MEMORANDUM ON APPEAL EVEN THOUGH IT LACKED THE
PROPER VERIFICATION AND PROCEEDED TO RESOLVE HER APPEAL ON THE MERITS.
III.
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN IT RULED THAT
THERE WAS ILLEGAL DISMISSAL AND THAT PRIVATE RESPONDENT BE
IMMEDIATELY REINSTATED WITHOUT LOSS OF SENIORITY RIGHTS.
IV.
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION WHEN IT DIRECTED
PETITIONERS INCLUDING PETITIONER LILY NGOCHUA TO PAY PRIVATE
RESPONDENT BACKWAGES, SERVICE INCENTIVE LEAVE PAY, OVERTIME PAY AND
ATTORNEY'S FEES. 11
On September 27, 2006, the CA promulgated its assailed decision dismissing the petition
for certiorari, 12 decreeing as follows:
WHEREFORE, premises considered, the instant petition is hereby ordered DISMISSED for lack
of merit. The assailed decision is AFFIRMED with MODIFICATION, in that petitioner Lily
Ngochua should not be held liable with petitioner corporation. The other aspects of the assailed
decision remains. Consequently, the prayer for a temporary restraining order and/or
preliminary injunction is NOTED.
SO ORDERED. 13
The CA treated the petitioner's appeal as an unsigned pleading because the petitioner did not
present proof showing that Florabeth P. Zanoria, its Administrative Officer and Chief Accountant
who had signed the verification, had been authorized to sign and file the appeal. It opined that
the belated submission of the secretary's certificate showing the authority of Bienvenido S.
Bautista to represent the petitioner, and the special power of attorney executed by Bautista to
authorize Zanoria to represent the petitioner did not cure the defect. It upheld the finding of the
Guzman for Villa to resign and to request instead for financial assistance was a strong and
unequivocal indication of the petitioner's desire to sever the employer-employee relationship
with Villa.
The CA later denied the motion for reconsideration. 14
Issues
Hence, this appeal in which the petitioner submits that:
I dismissal, was fatal to the petition. There is no question that the non-compliance with the
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT DID NOT RULE THAT
THERE WAS NO VERIFICATION ATTACHED TO RESPONDENT VILLA'S NOTICE OF APPEAL AND
MEMORANDUM ON APPEAL DATED MAY 29, 2003 AND THAT IT WAS AN UNSIGNED PLEADING
AND WITHOUT LEGAL EFFECT, MOREOVER, IT COMMITTED UNFAIR TREATMENT
II
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT DID NOT RULE THAT THE
NATIONAL LABOR RELATIONS COMMISSION FOURTH DIVISION HAD NO JURISDICTION TO
REVERESE AND SET ASIDE THE DECISION OF THE LABOR ARBITER DA TED APRIL 21, 2003
WHICH HAD ALREA[D]Y BECOME FINAL AND IMMUTABLE AS r AR AS RESPONDENT IS
CONCERNED
III
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT COMMITTED
MISAPPREHENSION OF THE FACTS AND ISSUED ITS DECISION AND RESOLUTION CONTRARY
TO THE EVIDENCE ON RECORD AND FINDINGS OF THE LABOR ARBITER. 15
Ruling of the Court
The appeal lacks merit.
The petitioner prays that Villa's appeal should be treated as an unsigned pleading because she
had accompanied her appeal with the same verification attached to her position paper.
The petitioner cannot be sustained. The NLRC justifiably gave due course to Villa's appeal.
Section 4(a), Rule VI of the Amended NLRC Rules of Procedure requires an appeal to be verified by
the appellant herself. The verification is a mere formal requirement intended to secure and to
give assurance that the matters alleged in the pleading are true and correct. The requirement is
complied with when one who has the ample knowledge to swear to the truth of the allegations
in the complaint or petition signs the verification, or when the matters contained in the petition
have been alleged in good faith or are true and correct. 16 Being a mere formal requirement, the
courts may even simply order the correction of improperly verified pleadings, or act on the same
upon waiving the strict compliance with the rules of procedure. 17 It is the essence of the NLRC
Rules of Procedure to extend to every party-litigant the amplest opportunity for the proper and
just determination of his cause, free from the constraints of technicalities. 18 Accordingly, the
substantial compliance with the procedural rules is appreciated in favor of Villa.
We cannot rule in the same way for the petitioner. For one, it belatedly submitted proof of
Zanoria' s authority to verify the pleading for the petitioner. Also, it did not submit the
certification of non-forum shopping at the time of the filing of the appeal. The filing of the
certification with the initiatory pleading was mandatory, and the failure to do so could not be
cured by a later submission. 19 The non-submission of the certification, being a ground for
requirement for the certification, or a defect in the certification, would not be cured by the
subsequent submission or the correction of the certification, except in cases of substantial
compliance or upon compelling reasons.20 Accordingly, the dismissal of the petitioner's appeal
cannot be reversed or undone.
The petitioner next submits that the CA erred in holding that Villa had been illegally dismissed;
that it had no intention to terminate her; that de Guzman had merely suggested to her that she
should be filing the letter of resignation with the request for financial assistance because the
management had disapproved her application for the 86% salary rate as basis for her retirement
benefits; that it was Villa who had the intention to sever the employer-employee relationship
because she had kept on following up her application for retirement; that she had prematurely
filed the complaint for illegal dismissal; that she had voluntarily opted not to report to her work;
and that she had not presented proof showing that it had prevented her from working and
entering its premises.21
The petitioner's submissions are bereft of merit.
We note that the CA and the NLRC agreed on their finding that the petitioner did not admit Villa
back to work after the completion of her 10-day suspension. In that regard, the CA observed:
It is undeniable that private respondent was suspended for ten (10) days beginning March 8,
2002 to March 19, 2002. Ordinarily, after an employee [has] served her suspension, she should
be admitted back to work and to continue to receive compensation for her services. In the case
at bar, it is clear that private respondent was not admitted immediately after her
suspension. Records show that when private respondent reported back after her suspension,
she was advised by Lucy de Guzman not to report back anymore as her application was approved,
which was latter [sic] on disapproved. It is at this point that, said Lucy de Guzman had advised
private respondent to tender a resignation letter with request for financial assistance. Not only
Lucy De Guzman has advised her to tender her resignation letter. The letter of petitioner Lily
Ngochua dated April 11, 2002 to private respondent which reads:
"As explained by Lucy de Guzman xxx your request for special retirement with financial
assistance of 86%/year of service has not been approved. Because this offer was for employees
working in operations department and not in Adm. & Sales.
"However, as per Manila Office, you can be given financial assistance of V2 per year of service if
you tender letter of resignation with request for financial assistance."
shows that petitioner Lily Ngochua has also advised private respondent to the same. These acts
are strong indication that petitioners wanted to severe [sic] the employer-employee relationship
between them and that of private respondent. This is buttressed by the fact that when private
respondent signified her intention to return back to work after learning of the disapproval of her
application, she was prevented to enter the petitioner's premises by confiscating her ID and
informing her that a new employee has already replaced her.
It should be noted that when private respondent averred this statement in her position paper
submitted before the Labor Arbiter petitioners did not refute the same. Neither did they contest
this allegation in their supposed Appeal Memorandum nor in their Motion for Reconsideration
of the assailed decision of public respondent. Basic is the rule that matters not controverted are
deemed admitted. To contest this allegation at this point of proceeding is not allowed for it is a
settled rule that matters, theories or arguments not brought out in the original proceedings
cannot be considered on review or appeal where they arc raised for the first time. To consider
the alleged facts and arguments raised belatedly would amount to trampling on the basic
principles of fair play, justice and due process.22
Neither did Villa's application for early retirement manifest her intention to sever the employer-
employee relationship. Although she applied for early retirement, she did so upon the belief that
she would receive a higher benefit based on the petitioner's offer. As such, her consent to be
retired could not be fairly deemed to have been knowingly and freely given.
Retirement is the result of a bilateral act of both the employer and the employee based on
their voluntary agreement that upon reaching a certain age, the employee agrees to sever his
employment.23 The difficulty in the case of Villa arises from determining whether the retirement
was voluntary or involuntary. The line between the two is thin but it is one that the Court has
drawn. On one hand, voluntary retirement cuts the employment ties leaving no residual
employer liability; on the other, involuntary retirement amounts to a discharge, rendering the
employer liable for termination without cause. The employee's intent is decisive. In determining
such intent, the relevant parameters to consider are the fairness of the process governing the
retirement decision, the payment of stipulated benefits, and the absence of badges of
intimidation or coercion.24
In case of early retirement programs, the offer of benefits must be certain while the acceptance
to be retired should be absolute.25 The acceptance by the employees contemplated herein must
be explicit, voluntary, free and uncompelled.26 In Jaculbe v. Silliman University, 27 we elucidated
that:
[A]n employer is free to impose a retirement age less than 65 for as long as it has the employees'
consent.1âwphi1 Stated conversely, employees are free to accept the employer's offer to
lower the retirement age if they feel they can get a better deal with the retirement plan
presented by the employer. Thus, having terminated petitioner solely on the basis of a
provision of a retirement plan which was not freely assented to by her, respondent was
guilty of illegal dismissal.28 (bold emphasis supplied)
Under the circumstances, the CA did not err in declaring the petitioner guilty of illegal dismissal
for violating Article 28229 of the Labor Code and the twin notice rule.30
The petitioner posits that the CA erroneously affirmed the giving of overtime pay and service
incentive leave pay to Villa; that she did not adduce proof of her having rendered actual ove1iime
work; that she had not been authorized to render overtime work; and that her availment of
vacation and sick leaves that had been paid precluded her claiming the service incentive leave
pay.
We partly agree with the petitioner's position.
Firstly, entitlement to overtime pay must first be established by proof that the overtime work
was actually performed before the employee may properly claim the benefit.31 The burden of
proving entitlement to overtime pay rests on the employee because the benefit is not incurred in
the normal course of business.32 Failure to prove such actual performance transgresses the
principles of fair play and equity.
And, secondly, the NLRC's reliance on the daily time records (DTRs) showing that Villa had stayed
in the company's premises beyond eight hours was misplaced. The DTRs did not substantially
prove the actual performance of overtime work. The petitioner correctly points out that any
employee could render overtime work only when there was a prior authorization therefor by the
management.33 Without the prior authorization, therefore, Villa could not validly claim having
performed work beyond the normal hours of work. Moreover, Section 4(c), Rule I, Book III of
the Omnibus Rules Implementing the Labor Code relevantly states as follows:
Section 4. Principles in determining hours worked. – The following general principles shall govern
in determining whether the time spent by an employee is considered hours worked for purposes
of this Rule:
(a) x x x.
(b) x x x.
(c) If the work performed was necessary, or it benefited the employer, or the employee
could not abandon his work at the end of his normal working hours because he had no
replacement, all time spent for such work shall be considered as hours worked, if
the work was with the knowledge of his employer or immediate supervisor. (bold
emphasis supplied)
(d) x x x.
We uphold the grant of service incentive leave pay.
Although the grant of vacation or sick leave with pay of at least five days could be credited as
compliance with the duty to pay service incentive leave,34 the employer is still obliged to prove
that it fully paid the accrued service incentive leave pay to the employee.
The Labor Arbiter originally awarded the service incentive leave pay because the petitioner did
not present proof showing that Villa had been justly paid.35 The petitioner submitted the
affidavits of Zanoria explaining the payment of service incentive leave after the Labor Arbiter had
rendered her decision.36 But that was not enough, for evidence should be presented in the
proceedings before the Labor Arbiter, not after the rendition of the adverse decision by the Labor
Arbiter or during appeal. Such a practice of belated presentation cannot be tolerated because it
defeats the speedy administration of justice in matters concerning the poor workers. 37
WHEREFORE, the Court DENIES the petition for review on certiorari for lack of
merit; AFFIRMS the decision promulgated on September 27, 2006 by the Court of Appeals, with
the MODIFICATION that the award of overtime pay in favor of respondent Elizabeth Villa
is DELETED; and ORDERS the petitioner to pay the costs of suit. SO ORDERED.
G.R. No. 162994 September 17, 2004
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners,
vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.
RESOLUTION
TINGA, J.:
Confronting the Court in this petition is a novel question, with constitutional overtones, involving
the validity of the policy of a pharmaceutical company prohibiting its employees from marrying
employees of any competitor company.
This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003 and
the Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP No. 62434.2
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc.
(Glaxo) as medical representative on October 24, 1995, after Tecson had undergone training and
orientation.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he
agrees to study and abide by existing company rules; to disclose to management any existing or
future relationship by consanguinity or affinity with co-employees or employees of competing
drug companies and should management find that such relationship poses a possible conflict of
interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to
inform management of any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies. If management perceives a conflict of
interest or a potential conflict between such relationship and the employee’s employment with
the company, the management and the employee will explore the possibility of a "transfer to
another department in a non-counterchecking position" or preparation for employment outside
the company after six months.
Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte
sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals3(Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay.
She supervised the district managers and medical representatives of her company and prepared
marketing strategies for Astra in that area.
Even before they got married, Tecson received several reminders from his District Manager
regarding the conflict of interest which his relationship with Bettsy might engender. Still, love
prevailed, and Tecson married Bettsy in September 1998.
In January 1999, Tecson’s superiors informed him that his marriage to Bettsy gave rise to a
conflict of interest. Tecson’s superiors reminded him that he and Bettsy should decide which one
of them would resign from their jobs, although they told him that they wanted to retain him as
much as possible because he was performing his job well.
Tecson requested for time to comply with the company policy against entering into a relationship
with an employee of a competitor company. He explained that Astra, Bettsy’s employer, was
planning to merge with Zeneca, another drug company; and Bettsy was planning to avail of the
redundancy package to be offered by Astra. With Bettsy’s separation from her company, the
potential conflict of interest would be eliminated. At the same time, they would be able to avail
of the attractive redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the problem. In September 1999,
Tecson applied for a transfer in Glaxo’s milk division, thinking that since Astra did not have a
milk division, the potential conflict of interest would be eliminated. His application was denied
in view of Glaxo’s "least-movement-possible" policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur
sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied.
Tecson sought Glaxo’s reconsideration regarding his transfer and brought the matter to Glaxo’s
Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon until
February 7, 2000 to comply with the transfer order. Tecson defied the transfer order and
continued acting as medical representative in the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid his salary, but was not issued
samples of products which were competing with similar products manufactured by Astra. He was
also not included in product conferences regarding such products.
Because the parties failed to resolve the issue at the grievance machinery level, they submitted
the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-half (½) month
pay for every year of service, or a total of ₱50,000.00 but he declined the offer. On November 15,
2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as
valid Glaxo’s policy on relationships between its employees and persons employed with
competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the
NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for
Review on the ground that the NCMB did not err in rendering its Decision. The appellate court
held that Glaxo’s policy prohibiting its employees from having personal relationships with
employees of competitor companies is a valid exercise of its management prerogatives. 4
Tecson filed a Motion for Reconsideration of the appellate court’s Decision, but the motion was
denied by the appellate court in its Resolution dated March 26, 2004.5
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in
affirming the NCMB’s finding that the Glaxo’s policy prohibiting its employees from marrying an
employee of a competitor company is valid; and (ii) the Court of Appeals also erred in not finding
that Tecson was constructively dismissed when he was transferred to a new sales territory, and
deprived of the opportunity to attend products seminars and training sessions.6
Petitioners contend that Glaxo’s policy against employees marrying employees of competitor
companies violates the equal protection clause of the Constitution because it creates invalid
distinctions among employees on account only of marriage. They claim that the policy restricts
the employees’ right to marry.7
They also argue that Tecson was constructively dismissed as shown by the following
circumstances: (1) he was transferred from the Camarines Sur-Camarines Norte sales area to the
Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) he was excluded from
attending seminars and training sessions for medical representatives, and (4) he was prohibited
from promoting respondent’s products which were competing with Astra’s products.8
In its Comment on the petition, Glaxo argues that the company policy prohibiting its employees
from having a relationship with and/or marrying an employee of a competitor company is a valid
exercise of its management prerogatives and does not violate the equal protection clause; and
that Tecson’s reassignment from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City and Agusan del Sur sales area does not amount to constructive dismissal.9
Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products,
it has a genuine interest in ensuring that its employees avoid any activity, relationship or interest
that may conflict with their responsibilities to the company. Thus, it expects its employees to
avoid having personal or family interests in any competitor company which may influence their
actions and decisions and consequently deprive Glaxo of legitimate profits. The policy is also
aimed at preventing a competitor company from gaining access to its secrets, procedures and
policies.10
It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing
or future relationships with employees of competitor companies, and is therefore not violative
of the equal protection clause. It maintains that considering the nature of its business, the
prohibition is based on valid grounds.11
According to Glaxo, Tecson’s marriage to Bettsy, an employee of Astra, posed a real and potential
conflict of interest. Astra’s products were in direct competition with 67% of the products sold by
Glaxo. Hence, Glaxo’s enforcement of the foregoing policy in Tecson’s case was a valid exercise of
its management prerogatives.12 In any case, Tecson was given several months to remedy the
situation, and was even encouraged not to resign but to ask his wife to resign form Astra
instead.13
Glaxo also points out that Tecson can no longer question the assailed company policy because
when he signed his contract of employment, he was aware that such policy was stipulated
therein. In said contract, he also agreed to resign from respondent if the management finds that
his relationship with an employee of a competitor company would be detrimental to the interests
of Glaxo.14
Glaxo likewise insists that Tecson’s reassignment to another sales area and his exclusion from
seminars regarding respondent’s new products did not amount to constructive dismissal.
It claims that in view of Tecson’s refusal to resign, he was relocated from the Camarines Sur-
Camarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur sales area. Glaxo
asserts that in effecting the reassignment, it also considered the welfare of Tecson’s family. Since
Tecson’s hometown was in Agusan del Sur and his wife traces her roots to Butuan City, Glaxo
assumed that his transfer from the Bicol region to the Butuan City sales area would be favorable
to him and his family as he would be relocating to a familiar territory and minimizing his travel
expenses.15
In addition, Glaxo avers that Tecson’s exclusion from the seminar concerning the new anti-
asthma drug was due to the fact that said product was in direct competition with a drug which
was soon to be sold by Astra, and hence, would pose a potential conflict of interest for him. Lastly,
the delay in Tecson’s receipt of his sales paraphernalia was due to the mix-up created by his
refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new sales
area instead of Naga City because the supplier thought he already transferred to Butuan). 16
The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in
ruling that Glaxo’s policy against its employees marrying employees from competitor companies
is valid, and in not holding that said policy violates the equal protection clause of the Constitution;
(2) Whether Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecson’s contract of employment with Glaxo being questioned by petitioners
provides:
…
10. You agree to disclose to management any existing or future relationship you may
have, either by consanguinity or affinity with co-employees or employees of competing
drug companies. Should it pose a possible conflict of interest in management discretion,
you agree to resign voluntarily from the Company as a matter of Company policy.
…17
The same contract also stipulates that Tescon agrees to abide by the existing company rules of
Glaxo, and to study and become acquainted with such policies.18 In this regard, the Employee
Handbook of Glaxo expressly informs its employees of its rules regarding conflict of interest:
1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may run
counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or
unconsciously influence their actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of
Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.
c. To avoid outside employment or other interests for income which would
impair their effective job performance.
d. To consult with Management on such activities or relationships that may
lead to conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or affinity with
co-employees of competing drug companies are expected to disclose such relationship
to the Management. If management perceives a conflict or potential conflict of interest,
every effort shall be made, together by management and the employee, to arrive at a
solution within six (6) months, either by transfer to another department in a non-
counter checking position, or by career preparation toward outside employment after
Glaxo Wellcome. Employees must be prepared for possible resignation within six (6)
months, if no other solution is feasible.19
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy
prohibiting an employee from having a relationship with an employee of a competitor company
is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors, especially so that it and Astra
are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees is reasonable under the circumstances because relationships
of that nature might compromise the interests of the company. In laying down the assailed
company policy, Glaxo only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than
the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect
its right to reasonable returns on investments and to expansion and growth.20 Indeed, while our
laws endeavor to give life to the constitutional policy on social justice and the protection of labor,
it does not mean that every labor dispute will be decided in favor of the workers. The law also
recognizes that management has rights which are also entitled to respect and enforcement in the
interest of fair play.21
As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business
confidentiality and protect a competitive position by even-handedly disqualifying from jobs male
and female applicants or employees who are married to a competitor. Consequently, the court
ruled than an employer that discharged an employee who was married to an employee of an
active competitor did not violate Title VII of the Civil Rights Act of 1964.23 The Court pointed out
that the policy was applied to men and women equally, and noted that the employer’s business
was highly competitive and that gaining inside information would constitute a competitive
advantage.
The challenged company policy does not violate the equal protection clause of the Constitution
as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its
authority.24 Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the
equal protection clause erects no shield against merely private conduct, however, discriminatory
or wrongful.25 The only exception occurs when the state29 in any of its manifestations or actions
has been found to have become entwined or involved in the wrongful private
conduct.27 Obviously, however, the exception is not present in this case. Significantly, the
company actually enforced the policy after repeated requests to the employee to comply with the
policy. Indeed, the application of the policy was made in an impartial and even-handed manner,
with due regard for the lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the company merely seeks to
avoid is a conflict of interest between the employee and the company that may arise out of such
relationships. As succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not aimed
at restricting a personal prerogative that belongs only to the individual. However, an
employee’s personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success. . .28
The Court of Appeals also correctly noted that the assailed company policy which forms part of
respondent’s Employee Code of Conduct and of its contracts with its employees, such as that
signed by Tescon, was made known to him prior to his employment. Tecson, therefore, was
aware of that restriction when he signed his employment contract and when he entered into a
relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of
employment with Glaxo, the stipulations therein have the force of law between them and, thus,
should be complied with in good faith."29 He is therefore estopped from questioning said policy.
The Court finds no merit in petitioners’ contention that Tescon was constructively dismissed
when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-
Surigao City-Agusan del Sur sales area, and when he was excluded from attending the company’s
seminar on new products which were directly competing with similar products manufactured by
Astra. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion
in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee.30 None of these conditions are present in the
instant case. The record does not show that Tescon was demoted or unduly discriminated upon
by reason of such transfer. As found by the appellate court, Glaxo properly exercised its
management prerogative in reassigning Tecson to the Butuan City sales area:
areas where the need for pushing its products is great. More so if such reassignments
are part of the employment contract.33
As noted earlier, the challenged policy has been implemented by Glaxo impartially and
disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave
Tecson several chances to eliminate the conflict of interest brought about by his relationship with
Bettsy. When their relationship was still in its initial stage, Tecson’s supervisors at Glaxo
constantly reminded him about its effects on his employment with the company and on the
company’s interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by
either resigning from the company or asking his wife to resign from Astra. Glaxo even expressed
its desire to retain Tecson in its employ because of his satisfactory performance and suggested
that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his repeated
requests for more time to resolve the conflict of interest. When the problem could not be resolved
after several years of waiting, Glaxo was constrained to reassign Tecson to a sales area different
from that handled by his wife for Astra. Notably, the Court did not terminate Tecson from
employment but only reassigned him to another area where his home province, Agusan del Sur,
was included. In effecting Tecson’s transfer, Glaxo even considered the welfare of Tecson’s
family. Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the part of
Glaxo.34

. . . In this case, petitioner’s transfer to another place of assignment was merely in WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.
keeping with the policy of the company in avoidance of conflict of interest, and thus
valid…Note that [Tecson’s] wife holds a sensitive supervisory position as Branch SO ORDERED.
Coordinator in her employer-company which requires her to work in close
coordination with District Managers and Medical Representatives. Her duties include
monitoring sales of Astra products, conducting sales drives, establishing and furthering
relationship with customers, collection, monitoring and managing Astra’s
inventory…she therefore takes an active participation in the market war characterized
as it is by stiff competition among pharmaceutical companies. Moreover, and this is
significant, petitioner’s sales territory covers Camarines Sur and Camarines Norte while
his wife is supervising a branch of her employer in Albay. The proximity of their areas
of responsibility, all in the same Bicol Region, renders the conflict of interest not only
possible, but actual, as learning by one spouse of the other’s market strategies in the
region would be inevitable. [Management’s] appreciation of a conflict of interest is
therefore not merely illusory and wanting in factual basis…31

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved a
complaint filed by a medical representative against his employer drug company for illegal
dismissal for allegedly terminating his employment when he refused to accept his reassignment
to a new area, the Court upheld the right of the drug company to transfer or reassign its employee
in accordance with its operational demands and requirements. The ruling of the Court therein,
quoted hereunder, also finds application in the instant case:

By the very nature of his employment, a drug salesman or medical representative is

expected to travel. He should anticipate reassignment according to the demands of their
business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or to

G.R. No. 164774 April 12, 2006
STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners,
vs.
RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents.
DECISION
PUNO, J.:
We are called to decide an issue of first impression: whether the policy of the employer banning
spouses from working in the same company violates the rights of the employee under the
Constitution and the Labor Code or is a valid exercise of management prerogative.
At bar is a Petition for Review on Certiorari of the Decision of the Court of Appeals dated August
3, 2004 in CA-G.R. SP No. 73477 reversing the decision of the National Labor Relations
Commission (NLRC) which affirmed the ruling of the Labor Arbiter.
Petitioner Star Paper Corporation (the company) is a corporation engaged in trading –
principally of paper products. Josephine Ongsitco is its Manager of the Personnel and
Administration Department while Sebastian Chua is its Managing Director.
The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N.
Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company.1
Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an
employee of the company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco
advised the couple that should they decide to get married, one of them should resign pursuant to
a company policy promulgated in 1995,2 viz.:
1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to
[the] 3rd degree of relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another female)
developed a friendly relationship during the course of their employment and then
decided to get married, one of them should resign to preserve the policy stated above.3
Simbol resigned on June 20, 1998 pursuant to the company policy.4
Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee,
whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company
policy, one must resign should they decide to get married. Comia resigned on June 30, 2000.5
Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker. Petitioners
stated that Zuñiga, a married man, got Estrella pregnant. The company allegedly could have
terminated her services due to immorality but she opted to resign on December 21, 1999. 6
The respondents each signed a Release and Confirmation Agreement. They stated therein that
they have no money and property accountabilities in the company and that they release the latter
of any claim or demand of whatever nature.7
Respondents offer a different version of their dismissal. Simbol and Comia allege that they did
not resign voluntarily; they were compelled to resign in view of an illegal company policy. As to
respondent Estrella, she alleges that she had a relationship with co-worker Zuñiga who
misrepresented himself as a married but separated man. After he got her pregnant, she
discovered that he was not separated. Thus, she severed her relationship with him to avoid
dismissal due to the company policy. On November 30, 1999, she met an accident and was
advised by the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days. She
returned to work on December 21, 1999 but she found out that her name was on-hold at the gate.
She was denied entry. She was directed to proceed to the personnel office where one of the staff
handed her a memorandum. The memorandum stated that she was being dismissed for immoral
conduct. She refused to sign the memorandum because she was on leave for twenty-one (21)
days and has not been given a chance to explain. The management asked her to write an
explanation. However, after submission of the explanation, she was nonetheless dismissed by the
company. Due to her urgent need for money, she later submitted a letter of resignation in
exchange for her thirteenth month pay.8
Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation
pay and attorney’s fees. They averred that the aforementioned company policy is illegal and
contravenes Article 136 of the Labor Code. They also contended that they were dismissed due to
their union membership.
On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of
merit, viz.:
[T]his company policy was decreed pursuant to what the respondent corporation perceived as
management prerogative. This management prerogative is quite broad and encompassing for it
covers hiring, work assignment, working method, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
workers. Except as provided for or limited by special law, an employer is free to regulate,
according to his own discretion and judgment all the aspects of employment.9 (Citations omitted.)
On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter on January 11,
2002. 10
Respondents filed a Motion for Reconsideration but was denied by the NLRC in a
Resolution11 dated August 8, 2002. They appealed to respondent court via Petition for Certiorari.
In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC
decision, viz.:
WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of the National Labor
Relations Commission is hereby REVERSED and SET ASIDE and a new one is entered as follows:
(1) Declaring illegal, the petitioners’ dismissal from employment and ordering private
respondents to reinstate petitioners to their former positions without loss of seniority
rights with full backwages from the time of their dismissal until actual reinstatement;
and
(2) Ordering private respondents to pay petitioners attorney’s fees amounting to 10%
of the award and the cost of this suit.13
On appeal to this Court, petitioners contend that the Court of Appeals erred in holding that:
1. x x x the subject 1995 policy/regulation is violative of the constitutional rights
towards marriage and the family of employees and of Article 136 of the Labor Code;
and
2. x x x respondents’ resignations were far from voluntary.14
We affirm.
The 1987 Constitution15 states our policy towards the protection of labor under the following
provisions, viz.:
Article II, Section 18. The State affirms labor as a primary social economic force. It shall protect
the rights of workers and promote their welfare.
xxx
Article XIII, Sec. 3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment opportunities for
all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the right of
enterprises to reasonable returns on investments, and to expansion and growth.
The Civil Code likewise protects labor with the following provisions:
Art. 1700. The relation between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good. Therefore,
such contracts are subject to the special laws on labor unions, collective bargaining, strikes and
lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.
Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.
The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar
involves Article 136 of the Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require as a condition of employment or
continuation of employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.
Respondents submit that their dismissal violates the above provision. Petitioners allege that its
policy "may appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning
if read together with the first paragraph of the rule. The rule does not require the woman
employee to resign. The employee spouses have the right to choose who between them should
resign. Further, they are free to marry persons other than co-employees. Hence, it is not the
marital status of the employee, per se, that is being discriminated. It is only intended to carry out
its no-employment-for-relatives-within-the-third-degree-policy which is within the ambit of the
prerogatives of management.16
It is true that the policy of petitioners prohibiting close relatives from working in the same
company takes the nature of an anti-nepotism employment policy. Companies adopt these
policies to prevent the hiring of unqualified persons based on their status as a relative, rather
than upon their ability.17 These policies focus upon the potential employment problems arising
from the perception of favoritism exhibited towards relatives.
With more women entering the workforce, employers are also enacting employment policies
specifically prohibiting spouses from working for the same company. We note that two types of
employment policies involve spouses: policies banning only spouses from working in the same
company (no-spouse employment policies), and those banning all immediate family members,
including spouses, from working in the same company (anti-nepotism employment
policies).18
Unlike in our jurisdiction where there is no express prohibition on marital
discrimination,19 there are twenty state statutes20 in the United States prohibiting marital
discrimination. Some state courts21 have been confronted with the issue of whether no-spouse
policies violate their laws prohibiting both marital status and sex discrimination.
In challenging the anti-nepotism employment policies in the United States, complainants utilize
two theories of employment discrimination: the disparate treatment and the disparate
impact. Under the disparate treatment analysis, the plaintiff must prove that an employment
policy is discriminatory on its face. No-spouse employment policies requiring an employee of
a particular sex to either quit, transfer, or be fired are facially discriminatory. For example, an
employment policy prohibiting the employer from hiring wives of male employees, but not
husbands of female employees, is discriminatory on its face.22
On the other hand, to establish disparate impact, the complainants must prove that a facially
neutral policy has a disproportionate effect on a particular class. For example, although most
employment policies do not expressly indicate which spouse will be required to transfer or leave
the company, the policy often disproportionately affects one sex.23
The state courts’ rulings on the issue depend on their interpretation of the scope of marital status
discrimination within the meaning of their respective civil rights acts. Though they agree that the
term "marital status" encompasses discrimination based on a person's status as either married,
single, divorced, or widowed, they are divided on whether the term has a broader meaning.
Thus, their decisions vary.24
The courts narrowly25 interpreting marital status to refer only to a person's status as married,
single, divorced, or widowed reason that if the legislature intended a broader definition it would
have either chosen different language or specified its intent. They hold that the relevant inquiry
is if one is married rather than to whom one is married. They construe marital status
discrimination to include only whether a person is single, married, divorced, or widowed and not
the "identity, occupation, and place of employment of one's spouse." These courts have upheld
the questioned policies and ruled that they did not violate the marital status discrimination
provision of their respective state statutes.
The courts that have broadly26 construed the term "marital status" rule that it encompassed the
identity, occupation and employment of one's spouse. They strike down the no-spouse
employment policies based on the broad legislative intent of the state statute. They reason that
the no-spouse employment policy violate the marital status provision because it arbitrarily
discriminates against all spouses of present employees without regard to the actual effect on the
individual's qualifications or work performance.27 These courts also find the no-spouse
employment policy invalid for failure of the employer to present any evidence of business
necessity other than the general perception that spouses in the same workplace might adversely
affect the business.28 They hold that the absence of such a bona fide occupational
qualification29 invalidates a rule denying employment to one spouse due to the current
employment of the other spouse in the same office.30 Thus, they rule that unless the employer
can prove that the reasonable demands of the business require a distinction based on marital
status and there is no better available or acceptable policy which would better accomplish the
business purpose, an employer may not discriminate against an employee based on the identity
of the employee’s spouse.31 This is known as the bona fide occupational qualification
exception.
We note that since the finding of a bona fide occupational qualification justifies an employer’s
no-spouse rule, the exception is interpreted strictly and narrowly by these state courts. There
must be a compelling business necessity for which no alternative exists other than the
discriminatory practice.32 To justify a bona fide occupational qualification, the employer must
prove two factors: (1) that the employment qualification is reasonably related to the essential
operation of the job involved; and, (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be unable to properly perform the
duties of the job.33
The concept of a bona fide occupational qualification is not foreign in our jurisdiction. We employ
the standard of reasonableness of the company policy which is parallel to the bona fide
occupational qualification requirement. In the recent case of Duncan Association of
Detailman-PTGWO and Pedro Tecson v. Glaxo Wellcome Philippines, Inc.,34 we passed on
the validity of the policy of a pharmaceutical company prohibiting its employees from marrying
employees of any competitor company. We held that Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and information
from competitors. We considered the prohibition against personal or marital relationships with
employees of competitor companies upon Glaxo’s employees reasonable under the
circumstances because relationships of that nature might compromise the interests of Glaxo. In
laying down the assailed company policy, we recognized that Glaxo only aims to protect its
interests against the possibility that a competitor company will gain access to its secrets and
procedures.35
The requirement that a company policy must be reasonable under the circumstances to qualify
as a valid exercise of management prerogative was also at issue in the 1997 case of Philippine
Telegraph and Telephone Company v. NLRC.36 In said case, the employee was dismissed in
violation of petitioner’s policy of disqualifying from work any woman worker who contracts
marriage. We held that the company policy violates the right against discrimination afforded all
women workers under Article 136 of the Labor Code, but established a permissible
exception, viz.:
[A] requirement that a woman employee must remain unmarried could be justified as a "bona
fide occupational qualification," or BFOQ, where the particular requirements of the job would
justify the same, but not on the ground of a general principle, such as the desirability of spreading
work in the workplace. A requirement of that nature would be valid provided it reflects an
inherent quality reasonably necessary for satisfactory job performance.37(Emphases supplied.)
The cases of Duncan and PT&T instruct us that the requirement of reasonableness must
be clearly established to uphold the questioned employment policy. The employer has the
burden to prove the existence of a reasonable business necessity. The burden was successfully
discharged in Duncan but not in PT&T.
We do not find a reasonable business necessity in the case at bar.
Petitioners’ sole contention that "the company did not just want to have two (2) or more of its
employees related between the third degree by affinity and/or consanguinity"38 is lame. That the
second paragraph was meant to give teeth to the first paragraph of the questioned rule 39 is
evidently not the valid reasonable business necessity required by the law.
It is significant to note that in the case at bar, respondents were hired after they were found fit reinstatement. We have held that in voluntary resignation, the employee is compelled by
for the job, but were asked to resign when they married a co-employee. Petitioners failed to show personal reason(s) to dissociate himself from employment. It is done with the intention of
how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee relinquishing an office, accompanied by the act of abandonment. 44 Thus, it is illogical for Estrella
of the Repacking Section, could be detrimental to its business operations. Neither did petitioners to resign and then file a complaint for illegal dismissal. Given the lack of sufficient evidence on
explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper the part of petitioners that the resignation was voluntary, Estrella’s dismissal is declared illegal.
in the Selecting Department, who married Howard Comia, then a helper in the cutter-machine.
The policy is premised on the mere fear that employees married to each other will be less IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R. SP No. 73477 dated August
efficient. If we uphold the questioned rule without valid justification, the employer can create 3, 2004 is AFFIRMED.1avvphil.net
policies based on an unproven presumption of a perceived danger at the expense of an
employee’s right to security of tenure.
SO ORDERED.
Petitioners contend that their policy will apply only when one employee marries a co-employee,
but they are free to marry persons other than co-employees. The questioned policy may not
facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under
the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it
is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of
petitioners to prove a legitimate business concern in imposing the questioned policy cannot
prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes
of married persons working together in one company.40

Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction
cannot benefit the petitioners. The protection given to labor in our jurisdiction is vast and
extensive that we cannot prudently draw inferences from the legislature’s silence41 that married
persons are not protected under our Constitution and declare valid a policy based on a prejudice
or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable
business necessity, we rule that the questioned policy is an invalid exercise of management
prerogative. Corollarily, the issue as to whether respondents Simbol and Comia resigned
voluntarily has become moot and academic.

As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the singular fact
that her resignation letter was written in her own handwriting. Both ruled that her resignation
was voluntary and thus valid. The respondent court failed to categorically rule whether Estrella
voluntarily resigned but ordered that she be reinstated along with Simbol and Comia.

Estrella claims that she was pressured to submit a resignation letter because she was in dire need
of money. We examined the records of the case and find Estrella’s contention to be more in accord
with the evidence. While findings of fact by administrative tribunals like the NLRC are generally
given not only respect but, at times, finality, this rule admits of exceptions,42 as in the case at bar.

Estrella avers that she went back to work on December 21, 1999 but was dismissed due to her
alleged immoral conduct. At first, she did not want to sign the termination papers but she was
forced to tender her resignation letter in exchange for her thirteenth month pay.

The contention of petitioners that Estrella was pressured to resign because she got impregnated
by a married man and she could not stand being looked upon or talked about as immoral 43 is
incredulous. If she really wanted to avoid embarrassment and humiliation, she would not have
gone back to work at all. Nor would she have filed a suit for illegal dismissal and pleaded for
SHARON S. ALEGRIA, A.M. No. RTJ-06-2019
Complainant, [Formerly A.M. No. 06-7-418-RTC]
Present:
- versus - QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
JUDGE MANUEL N. DUQUE, TINGA, and
RTC, Branch 197, VELASCO, JR., JJ.
Las Pias City,
Respondent.
Promulgated:
April 4, 2007
x----------------------------------------------------------------------------x
RESOLUTION
TINGA, J.:
It is well to remind judges that this Court has adopted a zero-tolerance policy towards
erring members of the judiciary as part of its effort to cleanse its ranks and improve the
administration of justice.[1] In the implementation of this policy, however, the Court ensures that
the requirements of due process are observed, such that substantial evidence is required to prove
the charge against a judge. Side by side with the observance of due process is this Courts bestowal
of bounden respect for the sensibilities of complainant. All these considered, the Court will not
hesitate to do its duty to discipline a judge or even dismiss him from the service when his guilt is
proven by the required quantum of evidence. Conversely, this Court is bound to absolve a judge
when the charge against him is baseless or otherwise does not meet the substantial evidence
standard.
On 27 July 2005, Sharon Sanson-Alegria (complainant) then Clerk III, Regional Trial Court (RTC),
Br. 197, Las Pias City, filed with the Office of the Clerk of Court, RTC, Las Pias City, an Affidavit-
Complaint[2] charging Judge Manuel N. Duque (respondent) for commit[ting] acts insulting to and
belittling [her] morals and decency. On 28 July 2005, Zandra T. Bato, Clerk of Court VI, forwarded
to Joselito dj. Vibandor, Executive Judge, RTC, Las Pias City, said Affidavit-Complaint.[3]
The Committee on Decorum and Investigation (Committee) took cognizance of the case and
docketed it as Case No. LP-05-002. Finding the complaint sufficient in form and substance, the
Committee directed respondent to file an answer under oath.[4] On 8 August 2005, respondent
filed his Answer.[5]
A pre-hearing conference was conducted on 7 March 2006, after which the Committee issued a
Pre-Hearing Order[6] containing the stipulation of facts, issue, and list of the pre-marked exhibits
for the parties.
On 14 March 2006, complainant filed an Urgent Motion to order the preventive suspension of
respondent and his inhibition from the criminal cases being handled by complainants counsel
and tried by respondent.[7] On 4 April 2006, respondent filed his comment to this motion by
complainant. On the same day, the Committee issued an Order directing the parties to submit
their respective position papers with the affidavits of their witnesses.[8] Before the Committee
could take any further action in the case, on 8 May 2006, it forwarded the records of the case to
the Office of the Court Administrator pursuant to this Courts Resolution dated 7 March
2006 (A.M. No. 05-12-757-RTC) excluding complaints for sexual harassment against Judges of
Regular and Special Courts and Justices of the Court of Appeals, the Sandiganbayan and the Court
of Tax Appeals from the jurisdiction of the Committee.[9]
In a Memorandum dated 26 June 2006, Court Administrator Christopher O. Lock recommended
that the complaint against respondent judge be docketed as a regular administrative case and
that the same be referred to one of the consultants of his office for investigation, report and
recommendation within sixty (60) days from receipt of the records.[10] On 6 September 2006, the
Court noted the Memorandum of the Court Administrator and adopted his
recommendations.[11] The complaint was re-docketed as an administrative case against
respondent and the same was referred to a consultant for investigation, report and
recommendation.
Despite four (4) resettings,[12] complainant and her counsel failed to appear at the 16 January
2007 scheduled hearing. Respondent judge, on the other hand, appeared and submitted an
Opposition to Postponement and Consider this Case Submitted for Resolution. [13] Thus, Hearing
Officer Designate Romulo S. Quimbo issued an Order considering the case submitted for
resolution.[14]
The version of complaint as found by the Hearing Officer Designate is as follows:
In her complaint[,] complainant averred that in early February 2005,
she went on leave for one week. She had notified Atty. Jeanette Tolentino, the
Branch Clerk of RTC Branch 197. She had gone on leave because of a personal
problem which was affecting her work. When she returned to work, she was
told that respondent Judge wanted to talk to her. When the latter arrived, he
called for her. Before she went to respondents office, she was warned by her
office mates to distance herself from the respondent because the latter had
earlier kissed Atty. Ma. Jeanette Baccay-Tolentino on the lips. Complainant
said that she did not think the respondent Judge would do the same to her
considering that he knew her father who was a chief of police.
Upon entering the respondents office, complainant alleged that she
sat on the chair facing him. Respondent asked complainant to relate her
problem and not to be ashamed because he treated as a daughter. She averred
that she cried and because she related her problem in a rather loud voice, the
respondent Judge told her to keep her voice low so as not to be heard outside.
Respondent Judge then stood up and locked the door to his office so that no
one would disturb their conversation. Respondent Judge then sat down beside
her and because she was covering her mouth with her two hands while she
was crying, respondent Judge took her hands away because according to him
he could not understand what she was saying. Immediately after he had
removed her hands from covering her mouth, he kissed her on the lips with
his tongue out. This surprised her. Respondent Judge then repeated his act of
kissing her with his tongue out. That was when complainant regained her
composure and she told him that his son is outside. Before she left, the
respondent Judge said I love you and told her not to relate what happened to
anyone. She did not mind what he said because she was then crying.
According to the complainant, she went down to the office of her
daddy who saw her crying. He asked her why she was crying, she told him that
her husband did not come home. She did this to prevent any untoward
incident and she thought the incident with the respondent Judge would not be
repeated. From her daddys office she returned to the court but she was at a
loss as to what she would do. During lunch at the canteen, she met their
branch sheriff who noticed that she had been crying. The latter asked her why
she was weeping, she related to him what had happened but she asked him to
keep the story to himself.
During the last week of February 2005, the complainant declared
that she was asked by respondent Judge to bring certain folders for his study.
As she gave the folders to him, the respondent immediately embraced her. She
pushed him away and respondent took hold of his baril. He asked her if they
could go out on a date. Because of her fear, complainant said that she agreed
to the respondents invitation. He set it for 08 March but she demurred
because it was her birthday. Respondent suggested 10 March and
complainant agreed. After that she went back to her office.
Complainant further declared that respondent Judge called her at
the office to remind her of their date. They tried to record the call by using the
cell phone of her officemate but it did not work. On 09 March, the day after
her birthday, complainant did not report to her office. Ronaldo Esguerra, a
nephew of the respondent Judge, sent her a text message that the respondent
was calling for her. She called the respondent who asked her why she was
absent. She replied that she had overslept. He reminded her of their date the
next day. He suggested that they meet at Citimotors after the raffle because he
was the duty judge. She said yes and the respondent warned her that if she
will not appear, she better not return to the office ever at the same time
banging the phone. For this reason complainant stated that she did not report
to the office anymore because she knew that she will be the recipient of a
series of memoranda because that is what happens when the respondent
Judge does not get what he wants. This same thing had happened to her office
mates who do not want to talk for fear of losing their jobs. Because of his
several memoranda her salary and other benefits were withheld. That is the
reason she could not immediately filed her complaint. Moreover, she realized
that she was the underdog because respondent Judge knew many high and
mighty people.[15]
In his Answer,[16] respondent denies the averments in the affidavit-complaint and
refuted in detail the alleged act of sexual harassment. According to respondent, sometime in
February 2005, after he learned that complainant had reported back for work after a prolonged
absence, he talked to her over the phone that he wanted to see and talk to her about her neglected
work as civil case clerk-in-charge. Complainant came to his office already trembling, crying and
appeared hysterical. The door to respondents chamber was only half-closed with respondents
son standing by the door.[17]
Complainant confessed that her husband, who had already become a drug addict, had
another woman, no longer reported for work, and was no longer coming home. Complainant
further informed respondent that her own father was likewise estranged from her mother and
was also living with another woman. To this revelation, respondent merely advised complainant
to work punctually everyday and to take an interest in her work for her to forget her family
problems. Complainant allegedly apologized and promised not to repeat being absent.[18]
A few days later, on 8 March 2005, complainant called respondent asking permission
for her to be absent as it was her birthday. Respondent told her that it was her privilege but that
she had to notify the Branch Clerk of Court.[19]
With respect to the other incident, respondent asserts that at the time complainant
delivered the voluminous folders and records of three cases, she was accompanied by Ronaldo
Esguerra, the process server who carried the said records and waited with complainant in
respondents chambers while the latter went over the said records. Complainant and Esguerra
thereafter left together.[20]
In addition to his denial and refutation of the alleged acts of sexual harassment,
respondent further stated other matters with respect to complainants appointment,
performance, and efficiency as Clerk of his court. Respondent states that complainant was
appointed to the position of Clerk in Branch 197 upon his recommendation. [21] Despite this, he
criticizes her performance as docket clerk. According to respondent, several memoranda were
issued by the Branch Clerk of Court relative to complainants performance of her duties, to wit:
(1) Memorandum[22] dated 17 April 2002 directing complainant to immediately submit all
pleadings, motions, memoranda, and other papers to avoid delay and adverse consequences, (2)
Memorandum[23] dated 19 April 2002 directing complainant to attach the registry receipts and
return cards to the records of the case to which they pertained, (3) Memorandum[24] dated 9
February 2005, requiring complainant to explain why she did not furnish the parties with copies
of the decision dated 5 November 2004 in Civil Case No. 01-0148, and (4)
Memorandum[25] dated 2 December 2004 ordering complainant to explain her failure to prepare
the order in LRC LP-04-0097.
Complainant also frequently absented herself from September to February 2005,
seriously neglecting her work to the detriment and prejudice of the service. [26] On at least three
occasions too, complainant failed to follow respondents instructions with respect to the release
of orders or decisions in various cases assigned to him,[27] as well as to properly keep case
records.[28] The Branch Clerk of Court also found further irregularities in complainants
performance of her duties in four more cases and informed respondent about
these.[29] Complainant, in response to the Memorandum dated 2 December 2004, admitted that
she had a domestic problem that consumed all her time and effort and which also wore her down
due to stress.[30]
According to respondent, complainant was no longer reporting for work since 9 March
2005 and that they have not received any notice or information as to the reason for her prolonged
absence.[31] Because of these prolonged absences, the Branch Clerk of Court wrote the Leave
Division, Office of the Court Administrator on 1 July 2005, requesting for the immediate dropping
of complainant from the roll of employees so that her position can be declared vacant for the
Court to indorse a new employee in her place.[32] Another letter was addressed to the Office of
the Clerk of Court, RTC, Las Pias City requesting said office to hold all checks payable to
complainant representing salaries, benefits and other remunerations.[33]
On 29 June 2005, Caridad A. Pabello, Officer-in-Charge, Administrative Services, Office of the
Court Administrator, wrote complainant requiring her to explain her unauthorized absences
within five (5) days from receipt of the letter, favorably endorsed by the Presiding/Executive
Judge otherwise they will be constrained to recommend that complainant be dropped from the
rolls.[34]
Respondent surmises that it was because of this letter that complainant filed the instant
administrative complaint against him, dragging the names of the other personnel of the branch.
The malicious prosecution against respondent was also designed to cover up her misfeasance
which had been discovered.[35]
On 22 February 2007, the Hearing Officer Designate transmitted to this Court, through the Office
of the Court Administrator, five (5) copies of his Report, recommending the dismissal of the case.
In making his recommendations, the Hearing Officer Designate took note of the following
circumstances:[36]
1. Several months (from February) passed before the
complainant filed this case on 27 July 2005.
2. Complainants father was then Chief of Police of Las Pias and his
office and respondents office were on the same building. Immediately after
she was assaulted, complainant left respondents chambers and proceeded to
her fathers. Why then did she not immediately confide in him what had
happened to her[?] On the other hand[,] she rather freely told their branch
sheriff whom she met at the canteen.
3. Complainant stated that before she went in the chambers of the
respondent when she was called in early February, she was warned by her
office mates not to be too close to respondent as he had earlier kissed Atty.
Tolentino. Complainant had conveniently omitted to mention who were these
office mates who had warned her.
4. The complainant had been a habitual absentee even before the
alleged sexual harassment. The respondent had sought her removal from his
court. To this end, his Branch Clerk of Court had written the Court
Administrator, through the leave section, to report complainants delinquency
and asking that her name be dropped from the roll of employees.
5. Respondent also took steps to prevent complainant from
collecting her salary for the periods she was absent. To this end, letters were
written to the Court Administrator and to the Clerk of Court for the Las Pias
Regional Trial Court to withhold any check or other benefit that would accrue
to the complainant.
6. It was not until these letters were written that the complaint
for sexual harassment surfaced.
After reviewing the records of the instant administrative case, we find the above
observations and conclusions of the Hearing Officer Designate to be well-taken as they are
adequately substantiated by evidence and are anchored on applicable law and jurisprudence.
Sexual harassment in the workplace is not about a man taking advantage of a woman
by reason of sexual desire it is about power being exercised by a superior over his women
subordinates. That power emanates from the fact that he can remove them if they refuse his
amorous advances.[37] Under Sec. 3 of A.M. No. 03-03-13-SC (Re: Rule on Administrative Procedure
in Sexual Harassment Cases and Guidelines on Proper Work Decorum in the Judiciary), work-
related sexual harassment is committed by an official or employee in the Judiciary who, having
authority, influence or moral ascendancy over another in a work environment, demands,
requests or otherwise requires any sexual favor from the other, regardless of whether the
demand, request or requirement for submission is accepted by the latter. It is committed when
the sexual favor is made as a condition in the hiring or in the employment, re-employment or
continued employment of said individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in any way would discriminate, deprive
or diminish employment opportunities or otherwise adversely affect said employee. [38]
In the case at bar, while it is true that the element of moral ascendancy is present,
respondent being the person who recommended complainant to her present position,
complainant has failed to prove the alleged sexual advances by evidence other than her bare
allegations in the affidavit-complaint. Even her own actions or omissions operate to cast doubt
on her claim.
With no witnesses presented to prove or refute the allegations of the complaint, the
case becomes a battle of complainants word against respondents.
It should be remembered that the case was referred to a Hearing Officer who is not
connected with the Las Pias court but with the Office of the Court Administrator affording a more
neutral venue for both parties. However, despite four (4) resettings[39] of the hearing,
complainant and her counsel failed to appear at the 16 January 2007 scheduled hearing, thereby
denying the Hearing Officer the opportunity to question her and validate her accusation against
respondent. Her dereliction enfeebles her allegations.
 With respect to respondent judge, his version of the events is not totally implausible.
Crucially, he does not admit to having committed any positive act that can be construed as an
untoward sexual advance. All told, there is no inherent weakness in the version he proffers.

Most damaging to complainants cause is that, based on the records and

contemporaneous circumstances, there appears to be a strong motive on her part to make up
charges against respondent judge. It should be remembered that even before the alleged incident,
complainant was already in hot water, being the recipient of at least four memoranda from the
Branch Clerk of Court, all of which called her to task for her poor performance as clerk in charge
of civil cases. In addition, a month before complainant filed the instant case, the Office of the Court
Administrator had directed complainant to explain her unauthorized absences and to include in
said explanation a favorable endorsement from the Presiding/Executive Judge. Complainant was
further warned that upon her failure to comply with these directives will constrain said office to
recommend her dropping from the rolls.

The circumstances being as they are, it is easy to engender the belief that the filing of
the administrative case against respondent was a belated, vain, and futile attempt by
complainant to cover up for her own misfeasance, i.e., prolonged leave of absence without official
leave, among others, and a chance to get back at respondent judge for initiating the
administrative inquiry against her which resulted in the
withholding of her salaries and benefits as well as the rise of the possibility of her being dropped
from the rolls.[40] Considering that complainant has failed to substantiate her allegations, failing
even to attest to her claims before the investigator appointed by this Court, elementary justice
dictates respondents exoneration of the charge.

WHEREFORE, premises considered, the Court resolves to DISMISS the instant

administrative case against Judge Manuel N. Duque, Regional Trial Court, Branch 197, Las Pias
City for lack of merit.

SO ORDERED.
G.R. No. 155831 February 18, 2008 5. Sa ibang mga pagkakataon nilalapitan na ako ni Chairman at hahawakan ang aking
MA. LOURDES T. DOMINGO, petitioner, balikat sabay pisil sa mga ito habang ako ay nagta-type at habang nagbibigay siya ng
vs. diktasyon. Sa mga pagkakataong ito, kinakabahan ako. Natatakot na baka mangyari sa
ROGELIO I. RAYALA, respondent. akin ang mga napapabalitang insidente na nangyari na noon tungkol sa mga sekretarya
x-------------------------x niyang nagbitiw gawa ng mga mahahalay na panghihipo ni Chairman.
G.R. No. 155840 February 18, 2008
ROGELIO I. RAYALA, petitioner, 6. Noong ika-10 ng Setyembre, 1998, nang ako ay nasa 8th Floor, may nagsabi sa akin na
vs. kailangan akong bumaba sa 7th Floor kung nasaan ang aming opisina dahil sa may
OFFICE OF THE PRESIDENT; RONALDO V. ZAMORA, in his capacity as Executive Secretary; koreksyon daw na gagawin sa mga papel na tinayp ko. Bumaba naman ako para gawin
ROY V. SENERES, in his capacity as Chairman of the National Labor Relations Commission ito. Habang ginagawa ko ito, lumabas si Chairman Rayala sa silid ni Mr. Alex Lopez.
(in lieu of RAUL T. AQUINO, in his capacity as Acting Chairman of the National labor Inutusan ako ni Chairman na sumunod sa kaniyang silid. Nang nasa silid na kami, sinabi
Relations Commission); and MA. LOURDES T. DOMINGO, respondents. niya sa akin:
x-------------------------x
G.R. No. 158700 February 18, 2008
The REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF THE PRESIDENT; and Chairman: Lot, I like you a lot. Naiiba ka sa lahat.
ALBERTO G. ROMULO, in his capacity as Executive Secretary, petitioners,
vs. At pagkatapos ako ay kaniyang inusisa tungkol sa mga personal na bagay sa aking
ROGELIO I. RAYALA, respondent. buhay. Ang ilan dito ay tungkol sa aking mga magulang, kapatid, pag-aaral at kung may
DECISION boyfriend na raw ba ako.
NACHURA, J.:
Chairman: May boyfriend ka na ba?
Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an
employee’s spirit and her capacity for advancement. It affects her sense of judgment; it changes Lourdes: Dati nagkaroon po.
her life.1
Chairman: Nasaan na siya?
Before this Court are three Petitions for Review on Certiorari assailing the October 18, 2002
Resolution of the CA’s Former Ninth Division2 in CA-G.R. SP No. 61026. The Resolution modified
the December 14, 2001 Decision3 of the Court of Appeals’ Eleventh Division, which had affirmed Lourdes: Nag-asawa na ho.
the Decision of the Office of the President (OP) dismissing from the service then National Labor
Relations Commission (NLRC) Chairman Rogelio I. Rayala (Rayala) for disgraceful and immoral Chairman: Bakit hindi kayo nagkatuluyan?
conduct.
Lourdes: Nainip po.
All three petitions stem from the same factual antecedents.
Chairman: Pagkatapos mo ng kurso mo ay kumuha ka ng Law at ako ang bahala
On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then Stenographic Reporter III at sa iyo, hanggang ako pa ang Chairman dito.
the NLRC, filed a Complaint for sexual harassment against Rayala before Secretary Bienvenido
Laguesma of the Department of Labor and Employment (DOLE). Pagkatapos ay kumuha siya ng pera sa kaniyang amerikana at inaabot sa akin.

To support the Complaint, Domingo executed an Affidavit narrating the incidences of sexual Chairman: Kuhanin mo ito.
harassment complained of, thus:
Lourdes: Huwag na ho hindi ko kailangan.
xxxx
Chairman: Hindi sige, kuhanin mo. Ayusin mo ang dapat ayusin.
4. Sa simula ay pabulong na sinasabihan lang ako ni Chairman Rayala ng mga salitang
"Lot, gumaganda ka yata?"
Tinanggap ko po ang pera ng may pag-aalinlangan. Natatakot at kinakabahan na kapag
hindi ko tinanggap ang pera ay baka siya magagalit kasabay na rito ang pagtapon sa
akin kung saan-saan opisina o kaya ay tanggalin ako sa posisyon.
Chairman: Paglabas mo itago mo ang pera. Ayaw ko ng may makaka-alam nito.
Just the two of us.
Lourdes: Bakit naman, Sir?
Chairman: Basta. Maraming tsismosa diyan sa labas. But I don’t give them a
damn. Hindi ako mamatay sa kanila.
Tumayo na ako at lumabas. Pumanhik na ako ng 8th Floor at pumunta ako sa officemate
ko na si Agnes Magdaet. Ikinwento ko ang nangyari sa akin sa opisina ni Chairman.
Habang kinikwento ko ito kay Agnes ay binilang namin ang pera na nagkakahalaga ng
tatlong libong piso (PHP 3,000). Sinabi ni Agnes na isauli ko raw ang pera, pero ang sabi
ko ay natatakot ako baka magalit si Sir. Nagsabi agad kami kay EC Perlita Velasco at
sinalaysay ko ang nangyari. Sinabi niya na isauli ko ang pera at noong araw ding iyon
ay nagpasiya akong isauli na nga ito ngunit hindi ako nagkaroon ng pagkakataon dahil
marami siyang naging bisita. Isinauli ko nga ang pera noong Lunes, Setyembre 14, 1998.
7. Noong huling linggo ng Setyembre, 1998, ay may tinanong din sa akin si Chairman
Rayala na hindi ko masikmura, at sa aking palagay at tahasang pambabastos sa akin.
Chairman: Lot, may ka live-in ka ba?
Lourdes: Sir, wala po.
Chairman: Bakit malaki ang balakang mo?
Lourdes: Kayo, Sir ha! Masama sa amin ang may ka live-in.
Chairman: Bakit, ano ba ang relihiyon ninyo?
Lourdes: Catholic, Sir. Kailangan ikasal muna.
Chairman: Bakit ako, hindi kasal.
Lourdes: Sir, di magpakasal kayo.
Chairman: Huh. Ibahin na nga natin ang usapan.
8. Noong Oktubre 29, 1998, ako ay pumasok sa kwarto ni Chairman Rayala. Ito ay sa
kadahilanang ang fax machine ay nasa loob ng kaniyang kwarto. Ang nag-aasikaso nito,
si Riza Ocampo, ay naka-leave kaya ako ang nag-asikaso nito noong araw na iyon. Nang
mabigyan ko na ng fax tone yung kausap ko, pagharap ko sa kanan ay nakaharang sa
dadaanan ko si Chairman Rayala. Tinitingnan ako sa mata at ang titig niya ay umuusad
mula ulo hanggang dibdib tapos ay ngumiti na may mahalay na pakahulugan.
9. Noong hapon naman ng pareho pa ring petsa, may nag-aapply na sekretarya sa
opisina, sinabi ko ito kay Chairman Rayala:
Lourdes: Sir, si Pinky po yung applicant, mag-papainterview po yata sa inyo.
Chairman: Sabihin mo magpa-pap smear muna siya
Chairman: O sige, i-refer mo kay Alex. (Alex Lopez, Chief of Staff).
10. Noong Nobyembre 9, 1998, ako ay tinawag ni Chairman Rayala sa kaniyang opisina
upang kuhanin ko ang diktasyon niya para kay ELA Oscar Uy. Hindi pa kami
nakakatapos ng unang talata, may pumasok na bisita si Chairman, si Baby Pangilinan
na sinamahan ni Riza Ocampo. Pinalabas muna ako ni Chairman. Nang maka-alis na si
Ms. Pangilinan, pinapasok na niya ako ulit. Umupo ako. Lumapit sa likuran ko si
Chairman, hinawakan ang kaliwang balikat ko na pinipisil ng kanang kamay niya at
sinabi:
Chairman: Saan na ba tayo natapos?
Palakad-lakad siya sa aking likuran habang nag-didikta. Huminto siya pagkatapos, at
nilagay niya ang kanang kamay niya sa aking kanang balikat at pinisil-pisil ito
pagkatapos ay pinagapang niya ito sa kanang bahagi ng aking leeg, at pinagapang
hanggang kanang tenga at saka kiniliti. Dito ko inalis ang kaniyang kamay sa
pamamagitan ng aking kaliwang kamay. At saka ko sinabi:
Lourdes: Sir, yung kamay ninyo alisin niyo!
Natapos ko rin ang liham na pinagagawa niya pero halos hindi ko na maintindihan ang
na-isulat ko dahil sa takot at inis na nararamdaman ko.4
After the last incident narrated, Domingo filed for leave of absence and asked to be immediately
transferred. Thereafter, she filed the Complaint for sexual harassment on the basis of
Administrative Order No. 250, the Rules and Regulations Implementing RA 7877 in the
Department of Labor and Employment.
Upon receipt of the Complaint, the DOLE Secretary referred the Complaint to the OP, Rayala being
a presidential appointee. The OP, through then Executive Secretary Ronaldo Zamora, ordered
Secretary Laguesma to investigate the allegations in the Complaint and create a committee for
such purpose. On December 4, 1998, Secretary Laguesma issued Administrative Order (AO) No.
280, Series of 1998,5 constituting a Committee on Decorum and Investigation (Committee) in
accordance with Republic Act (RA) 7877, the Anti-Sexual Harassment Act of 1995.6
The Committee heard the parties and received their respective evidence. On March 2, 2000, the
Committee submitted its report and recommendation to Secretary Laguesma. It found Rayala
guilty of the offense charged and recommended the imposition of the minimum penalty provided
under AO 250, which it erroneously stated as suspension for six (6) months.
The following day, Secretary Laguesma submitted a copy of the Committee Report and
Recommendation to the OP, but with the recommendation that the penalty should be suspension
for six (6) months and one (1) day, in accordance with AO 250.
On May 8, 2000, the OP, through Executive Secretary Zamora, issued AO 119, 7 the pertinent
portions of which read:
Upon a careful scrutiny of the evidence on record, I concur with the findings of the
Committee as to the culpability of the respondent [Rayala], the same having been
established by clear and convincing evidence. However, I disagree with the
recommendation that respondent be meted only the penalty of suspension for six (6)
months and one (1) day considering the circumstances of the case.
What aggravates respondent’s situation is the undeniable circumstance that he took
advantage of his position as the superior of the complainant. Respondent occupies the
highest position in the NLRC, being its Chairman. As head of said office, it was
incumbent upon respondent to set an example to the others as to how they should
conduct themselves in public office, to see to it that his subordinates work efficiently in
accordance with Civil Service Rules and Regulations, and to provide them with healthy
working atmosphere wherein co-workers treat each other with respect, courtesy and
cooperation, so that in the end the public interest will be benefited (City Mayor of
Zamboanga vs. Court of Appeals, 182 SCRA 785 [1990]).
What is more, public service requires the utmost integrity and strictest discipline (Gano
vs. Leonen, 232 SCRA 99 [1994]). Thus, a public servant must exhibit at all times the
highest sense of honesty and integrity, and "utmost devotion and dedication to duty"
(Sec. 4 (g), RA 6713), respect the rights of others and shall refrain from doing acts
contrary to law, and good morals (Sec. 4(c)). No less than the Constitution sanctifies the
principle that a public office is a public trust, and enjoins all public officers and
employees to serve with the highest degree of responsibility, integrity, loyalty and
efficiency (Section 1, Article XI, 1987 Constitution).
Given these established standards, I see respondent’s acts not just [as] a failure to give
due courtesy and respect to his co-employees (subordinates) or to maintain good
conduct and behavior but defiance of the basic norms or virtues which a government
official must at all times uphold, one that is contrary to law and "public sense of
morality." Otherwise stated, respondent – to whom stricter standards must apply being
the highest official [of] the NLRC – had shown an attitude, a frame of mind, a disgraceful
conduct, which renders him unfit to remain in the service.
WHEREFORE, in view of the foregoing, respondent Rogelio I. Rayala, Chairman,
National Labor Relations Commission, is found guilty of the grave offense of disgraceful
and immoral conduct and is hereby DISMISSED from the service effective upon receipt
of this Order.
SO ORDER[ED].
Rayala filed a Motion for Reconsideration, which the OP denied in a Resolution 8 dated May 24,
2000. He then filed a Petition for Certiorari and Prohibition with Prayer for Temporary
Restraining Order under Rule 65 of the Revised Rules on Civil Procedure before this Court on
June 14, 2000.9 However, the same was dismissed in a Resolution dated June 26, 2000 for
disregarding the hierarchy of courts.10 Rayala filed a Motion for
Reconsideration11 on August 15, 2000. In its Resolution12 dated September 4, 2000, the Court
recalled its June 26 Resolution and referred the petition to the Court of Appeals (CA) for
appropriate action.
The CA rendered its Decision13 on December 14, 2001. It held that there was sufficient evidence
on record to create moral certainty that Rayala committed the acts he was charged with. It said:
The complainant narrated her story complete with details. Her straightforward and
uninhibited testimony was not emasculated by the declarations of Commissioner
Rayala or his witnesses. x x x
Moreover, Commissioner Rayala has not proven any vicious motive for Domingo and
her witnesses to invent their stories. It is very unlikely that they would perjure
themselves only to accommodate the alleged conspiracy to oust petitioner from office.
Save for his empty conjectures and speculations, Rayala failed to substantiate his
contrived conspiracy. It is a hornbook doctrine that conspiracy must be proved by
positive and convincing evidence (People v. Noroña, 329 SCRA 502 [2000]). Besides, it is
improbable that the complainant would concoct a story of sexual harassment against
the highest official of the NLRC and thereby expose herself to the possibility of losing
her job, or be the subject of reprisal from her superiors and perhaps public ridicule if
she was not telling the truth.
It also held that Rayala’s dismissal was proper. The CA pointed out that Rayala was dismissed for
disgraceful and immoral conduct in violation of RA 6713, the Code of Conduct and Ethical
Standards for Public Officials and Employees. It held that the OP was correct in concluding that
Rayala’s acts violated RA 6713:
Indeed, [Rayala] was a public official, holding the Chairmanship of the National Labor
Relations Commission, entrusted with the sacred duty of administering justice.
Occupying as he does such an exalted position, Commissioner Rayala must pay a high
price for the honor bestowed upon him. He must comport himself at all times in such a
manner that the conduct of his everyday life should be beyond reproach and free from
any impropriety. That the acts complained of were committed within the sanctuary of
[his] office compounded the objectionable nature of his wrongdoing. By daring to
violate the complainant within the solitude of his chambers, Commissioner Rayala
 placed the integrity of his office in disrepute. His disgraceful and immoral conduct
warrants his removal from office.14
Thus, it dismissed the petition, to wit:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby DISMISSED and
Administrative Order No. 119 as well [as] the Resolution of the Office of the President
in O.P. Case No. 00-E-9118 dated May 24, 2000 are AFFIRMED IN TOTO. No cost.
SO ORDERED.15
Rayala timely filed a Motion for Reconsideration. Justices Vasquez and Tolentino voted to affirm
the December 14 Decision. However, Justice Reyes dissented mainly because AO 250 states that
the penalty imposable is suspension for six (6) months and one (1) day.16 Pursuant to the internal
rules of the CA, a Special Division of Five was constituted.17 In its October 18, 2002 Resolution,
the CA modified its earlier Decision:
ACCORDINGLY, the Decision dated December [14], 2001 is MODIFIED to the effect that
the penalty of dismissal is DELETED and instead the penalty of suspension from service
for the maximum period of one (1) year is HEREBY IMPOSED upon the petitioner. The
rest of the challenged decision stands.
SO ORDERED.
Domingo filed a Petition for Review18 before this Court, which we denied in our February 19,
2003 Resolution for having a defective verification. She filed a Motion for Reconsideration, which
the Court granted; hence, the petition was reinstated.
Rayala likewise filed a Petition for Review19 with this Court essentially arguing that he is not
guilty of any act of sexual harassment.
Meanwhile, the Republic filed a Motion for Reconsideration of the CA’s October 18, 2002
Resolution. The CA denied the same in its June 3, 2003 Resolution, the dispositive portion of
which reads:
ACCORDINGLY, by a majority vote, public respondents’ Motion for Reconsideration,
(sic) is DENIED.
SO ORDERED.
The Republic then filed its own Petition for Review.20
On June 28, 2004, the Court directed the consolidation of the three (3) petitions.
G.R. No. 155831
Domingo assails the CA’s resolution modifying the penalty imposed by the Office of the President.
She raises this issue:
The Court of Appeals erred in modifying the penalty for the respondent from dismissal
to suspension from service for the maximum period of one year. The President has the
prerogative to determine the proper penalty to be imposed on an erring Presidential
appointee. The President was well within his power when he fittingly used that
prerogative in deciding to dismiss the respondent from the service.21
She argues that the power to remove Rayala, a presidential appointee, is lodged with the
President who has control of the entire Executive Department, its bureaus and offices. The OP’s
decision was arrived at after affording Rayala due process. Hence, his dismissal from the service
is a prerogative that is entirely with the President.22
As to the applicability of AO No. 250, she argues that the same was not intended to cover cases
against presidential appointees. AO No. 250 refers only to the instances wherein the DOLE
Secretary is the disciplining authority, and thus, the AO does not circumscribe the power of the
President to dismiss an erring presidential appointee.
G.R. No. 155840
In his petition, Rayala raises the following issues:
I. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, THE ACTS OF
HEREIN PETITIONER DO NOT CONSTITUTE SEXUAL HARASSMENT AS LAID DOWN
BY THE En Banc RULING IN THE CASE OF AQUINO vs. ACOSTA, ibid., AS WELL AS IN
THE APPLICATION OF EXISTING LAWS.
II. CONTRARY TO THE FINDINGS OF THE HONORABLE COURT OF APPEALS,
INTENT IS AN INDISPENSABLE ELEMENT IN A CASE FOR SEXUAL HARASSMENT.
THE HONORABLE COURT ERRED IN ITS FINDING THAT IT IS AN OFFENSE THAT IS
MALUM PROHIBITUM.
III. THE INVESTIGATION COMMITTEE, THE OFFICE OF THE PRESIDENT, AND NOW,
THE HONORABLE COURT OF APPEALS, HAS MISAPPLIED AND EXPANDED THE
DEFINITION OF SEXUAL HARASSMENT IN THE WORKPLACE UNDER R.A. No. 7877,
BY APPLYING DOLE A.O. 250, WHICH RUNS COUNTER TO THE RECENT
PRONOUNCEMENTS OF THIS HONORABLE SUPREME COURT.23
Invoking Aquino v. Acosta,24 Rayala argues that the case is the definitive ruling on what
constitutes sexual harassment. Thus, he posits that for sexual harassment to exist under RA 7877,
there must be: (a) demand, request, or requirement of a sexual favor; (b) the same is made a pre-
condition to hiring, re-employment, or continued employment; or (c) the denial thereof results
in discrimination against the employee.
Rayala asserts that Domingo has failed to allege and establish any sexual favor, demand, or
request from petitioner in exchange for her continued employment or for her promotion.
According to Rayala, the acts imputed to him are without malice or ulterior motive. It was merely
Domingo’s perception of malice in his alleged acts – a "product of her own imagination"25 – that
led her to file the sexual harassment complaint.
Likewise, Rayala assails the OP’s interpretation, as upheld by the CA, that RA 7877 is malum
prohibitum such that the defense of absence of malice is unavailing. He argues that sexual
harassment is considered an offense against a particular person, not against society as a whole.
Thus, he claims that intent is an essential element of the offense because the law requires as
a conditio sine qua non that a sexual favor be first sought by the offender in order to achieve
certain specific results. Sexual harassment is committed with the perpetrator’s deliberate intent
to commit the offense.26
Rayala next argues that AO 250 expands the acts proscribed in RA 7877. In particular, he assails
the definition of the forms of sexual harassment:
Rule IV
FORMS OF SEXUAL HARASSMENT
Section 1. Forms of Sexual Harassment. – Sexual harassment may be committed in any
of the following forms:
a) Overt sexual advances;
b) Unwelcome or improper gestures of affection;
c) Request or demand for sexual favors including but not limited to going out on dates,
outings or the like for the same purpose;
d) Any other act or conduct of a sexual nature or for purposes of sexual gratification
which is generally annoying, disgusting or offensive to the victim.27
He posits that these acts alone without corresponding demand, request, or requirement do not
constitute sexual harassment as contemplated by the law.28 He alleges that the rule-making
power granted to the employer in Section 4(a) of RA 7877 is limited only to procedural matters.
The law did not delegate to the employer the power to promulgate rules which would provide
other or additional forms of sexual harassment, or to come up with its own definition of sexual
harassment.29
G.R. No. 158700
The Republic raises this issue:
Whether or not the President of the Philippines may validly dismiss respondent
Rayala as Chairman of the NLRC for committing acts of sexual harassment.30
The Republic argues that Rayala’s acts constitute sexual harassment under AO 250. His acts
constitute unwelcome or improper gestures of affection and are acts or conduct of a sexual
nature, which are generally annoying or offensive to the victim.31
It also contends that there is no legal basis for the CA’s reduction of the penalty imposed by the
OP. Rayala’s dismissal is valid and warranted under the circumstances. The power to remove the
NLRC Chairman solely rests upon the President, limited only by the requirements under the law
and the due process clause.
The Republic further claims that, although AO 250 provides only a one (1) year suspension, it
will not prevent the OP from validly imposing the penalty of dismissal on Rayala. It argues that
even though Rayala is a presidential appointee, he is still subject to the Civil Service Law. Under
the Civil Service Law, disgraceful and immoral conduct, the acts imputed to Rayala, constitute
grave misconduct punishable by dismissal from the service.32 The Republic adds that Rayala’s
position is invested with public trust and his acts violated that trust; thus, he should be dismissed
from the service.
This argument, according to the Republic, is also supported by Article 215 of the Labor Code,
which states that the Chairman of the NLRC holds office until he reaches the age of 65 only during
good behavior.33 Since Rayala’s security of tenure is conditioned upon his good behavior, he may
be removed from office if it is proven that he has failed to live up to this standard.
All the issues raised in these three cases can be summed up in two ultimate questions, namely:
(1) Did Rayala commit sexual harassment?
(2) If he did, what is the applicable penalty?
Initially, however, we must resolve a procedural issue raised by Rayala. He accuses the Office of
the Solicitor General (OSG), as counsel for the Republic, of forum shopping because it filed a
motion for reconsideration of the decision in CA-G.R. SP No. 61026 and then filed a comment in
G.R. No. 155840 before this Court.
We do not agree.
Forum shopping is an act of a party, against whom an adverse judgment or order has been
rendered in one forum, of seeking and possibly securing a favorable opinion in another forum,
other than by appeal or special civil action for certiorari.34 It consists of filing multiple suits
involving the same parties for the same cause of action, either simultaneously or successively,
for the purpose of obtaining a favorable judgment.35
There is forum shopping when the following elements concur: (1) identity of the parties or, at
least, of the parties who represent the same interest in both actions; (2) identity of the rights
asserted and relief prayed for, as the latter is founded on the same set of facts; and (3) identity of
the two preceding particulars such that any judgment rendered in the other action will amount
to res judicata in the action under consideration or will constitute litis pendentia.36
Reviewing the antecedents of these consolidated cases, we note that the CA rendered the assailed
Resolution on October 18, 2002. The Republic filed its Motion for Reconsideration on November
22, 2002. On the other hand, Rayala filed his petition before this Court on November 21, 2002.
While the Republic’s Motion for Reconsideration was pending resolution before the CA, on
December 2, 2002, it was directed by this Court to file its Comment on Rayala’s petition, which it
submitted on June 16, 2003.
When the CA denied the Motion for Reconsideration, the Republic filed its own Petition for
Review with this Court on July 3, 2003. It cited in its "Certification and Verification of a Non-
Forum Shopping" (sic), that there was a case involving the same facts pending before this Court
denominated as G.R. No. 155840. With respect to Domingo’s petition, the same had already been
dismissed on February 19, 2003. Domingo’s petition was reinstated on June 16, 2003 but the
resolution was received by the OSG only on July 25, 2003, or after it had filed its own petition. 37
Based on the foregoing, it cannot be said that the OSG is guilty of forum shopping. We must point
out that it was Rayala who filed the petition in the CA, with the Republic as the adverse party.
Rayala himself filed a motion for reconsideration of the CA’s December 21, 2001 Decision, which
led to a more favorable ruling, i.e., the lowering of the penalty from dismissal to one-year
suspension. The parties adversely affected by this ruling (Domingo and the Republic) had the
right to question the same on motion for reconsideration. But Domingo directly filed a Petition
for Review with this Court, as did Rayala. When the Republic opted to file a motion for
reconsideration, it was merely exercising a right. That Rayala and Domingo had by then already
filed cases before the SC did not take away this right. Thus, when this Court directed the Republic
to file its Comment on Rayala’s petition, it had to comply, even if it had an unresolved motion for
reconsideration with the CA, lest it be cited for contempt.
Accordingly, it cannot be said that the OSG "file[d] multiple suits involving the same parties for
the same cause of action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment."
We now proceed to discuss the substantive issues.
It is noteworthy that the five CA Justices who deliberated on the case were unanimous in
upholding the findings of the Committee and the OP. They found the assessment made by the
Committee and the OP to be a "meticulous and dispassionate analysis of the testimonies of the
complainant (Domingo), the respondent (Rayala), and their respective witnesses." 38 They
differed only on the appropriate imposable penalty.
That Rayala committed the acts complained of – and was guilty of sexual harassment – is,
therefore, the common factual finding of not just one, but three independent bodies: the
Committee, the OP and the CA. It should be remembered that when supported by substantial
evidence, factual findings made by quasi-judicial and administrative bodies are accorded great
respect and even finality by the courts.39 The principle, therefore, dictates that such findings
should bind us.40
Indeed, we find no reason to deviate from this rule. There appears no valid ground for this Court
to review the factual findings of the CA, the OP, and the Investigating Committee. These findings
are now conclusive on the Court. And quite significantly, Rayala himself admits to having
committed some of the acts imputed to him.
He insists, however, that these acts do not constitute sexual harassment, because Domingo did
not allege in her complaint that there was a demand, request, or requirement of a sexual favor as
a condition for her continued employment or for her promotion to a higher position. 41 Rayala
urges us to apply to his case our ruling in Aquino v. Acosta.42
We find respondent’s insistence unconvincing.
Basic in the law of public officers is the three-fold liability rule, which states that the wrongful acts
or omissions of a public officer may give rise to civil, criminal and administrative liability. An
action for each can proceed independently of the others.43 This rule applies with full force to
sexual harassment.
The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof defines
work-related sexual harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual Harassment Defined. – Work,
education or training-related sexual harassment is committed by an employer,
manager, supervisor, agent of the employer, teacher, instructor, professor, coach,
trainor, or any other person who, having authority, influence or moral ascendancy over
another in a work or training or education environment, demands, requests or
otherwise requires any sexual favor from the other, regardless of whether the demand,
request or requirement for submission is accepted by the object of said Act.
(a) In a work-related or employment environment, sexual harassment is committed
when:
(1) The sexual favor is made as a condition in the hiring or in the employment, re-
employment or continued employment of said individual, or in granting said individual
favorable compensation, terms, conditions, promotions, or privileges; or the refusal to
grant the sexual favor results in limiting, segregating or classifying the employee which
in a way would discriminate, deprive or diminish employment opportunities or
otherwise adversely affect said employee;
(2) The above acts would impair the employee’s rights or privileges under existing
labor laws; or
(3) The above acts would result in an intimidating, hostile, or offensive environment for
the employee.
This section, in relation to Section 7 on penalties, defines the criminal aspect of the unlawful act
of sexual harassment. The same section, in relation to Section 6, authorizes the institution of an
independent civil action for damages and other affirmative relief.
Section 4, also in relation to Section 3, governs the procedure for administrative cases, viz.:
Sec. 4. Duty of the Employer or Head of Office in a Work-related, Education or Training
Environment. – It shall be the duty of the employer or the head of the work-related,
educational or training environment or institution, to prevent or deter the commission
of acts of sexual harassment and to provide the procedures for the resolution,
settlement or prosecution of acts of sexual harassment. Towards this end, the employer
or head of office shall:
(a) Promulgate appropriate rules and regulations in consultation with and
jointly approved by the employees or students or trainees, through their duly
designated representatives, prescribing the procedure for the investigation or
sexual harassment cases and the administrative sanctions therefor.
Administrative sanctions shall not be a bar to prosecution in the proper courts
for unlawful acts of sexual harassment.
The said rules and regulations issued pursuant to this section (a) shall include,
among others, guidelines on proper decorum in the workplace and
educational or training institutions.
(b) Create a committee on decorum and investigation of cases on sexual
harassment. The committee shall conduct meetings, as the case may be, with
other officers and employees, teachers, instructors, professors, coaches,
trainors and students or trainees to increase understanding and prevent
incidents of sexual harassment. It shall also conduct the investigation of the
alleged cases constituting sexual harassment.
In the case of a work-related environment, the committee shall be composed of at least
one (1) representative each from the management, the union, if any, the employees
from the supervisory rank, and from the rank and file employees.
In the case of the educational or training institution, the committee shall be composed
of at least one (1) representative from the administration, the trainors, teachers,
instructors, professors or coaches and students or trainees, as the case maybe.
The employer or head of office, educational or training institution shall disseminate or
post a copy of this Act for the information of all concerned.
The CA, thus, correctly ruled that Rayala’s culpability is not to be determined solely on the basis
of Section 3, RA 7877, because he is charged with the administrative offense, not the criminal
infraction, of sexual harassment.44 It should be enough that the CA, along with the Investigating
Committee and the Office of the President, found substantial evidence to support the
administrative charge.
Yet, even if we were to test Rayala’s acts strictly by the standards set in Section 3, RA 7877, he
would still be administratively liable. It is true that this provision calls for a "demand, request or
requirement of a sexual favor." But it is not necessary that the demand, request or requirement
of a sexual favor be articulated in a categorical oral or written statement. It may be discerned,
with equal certitude, from the acts of the offender. Holding and squeezing Domingo’s shoulders,
running his fingers across her neck and tickling her ear, having inappropriate conversations with
her, giving her money allegedly for school expenses with a promise of future privileges, and
making statements with unmistakable sexual overtones – all these acts of Rayala resound with
deafening clarity the unspoken request for a sexual favor.
Likewise, contrary to Rayala’s claim, it is not essential that the demand, request or requirement
be made as a condition for continued employment or for promotion to a higher position. It is
enough that the respondent’s acts result in creating an intimidating, hostile or offensive
environment for the employee.45 That the acts of Rayala generated an intimidating and hostile
environment for Domingo is clearly shown by the common factual finding of the Investigating
Committee, the OP and the CA that Domingo reported the matter to an officemate and, after the
last incident, filed for a leave of absence and requested transfer to another unit.
Rayala’s invocation of Aquino v. Acosta46 is misplaced, because the factual setting in that case is
different from that in the case at bench. In Aquino, Atty. Susan Aquino, Chief of the Legal and
Technical Staff of the Court of Tax Appeals (CTA), charged then CTA Presiding Judge (now
Presiding Justice) Ernesto Acosta of sexual harassment. She complained of several incidents
when Judge Acosta allegedly kissed her, embraced her, and put his arm around her shoulder. The
case was referred to CA Justice Josefina G. Salonga for investigation. In her report, Justice Salonga
found that "the complainant failed to show by convincing evidence that the acts of Judge Acosta
in greeting her with a kiss on the cheek, in a `beso-beso’ fashion, were carried out with lustful
and lascivious desires or were motivated by malice or ill motive. It is clear from the
circumstances that most of the kissing incidents were done on festive and special occasions," and
they "took place in the presence of other people and the same was by reason of the exaltation or
happiness of the moment." Thus, Justice Salonga concluded:
In all the incidents complained of, the respondent's pecks on the cheeks of the
complainant should be understood in the context of having been done on the occasion
of some festivities, and not the assertion of the latter that she was singled out by Judge
Acosta in his kissing escapades. The busses on her cheeks were simply friendly and
innocent, bereft of malice and lewd design. The fact that respondent judge kisses other
people on the cheeks in the 'beso-beso' fashion, without malice, was corroborated by
Atty. Florecita P. Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili, who stated that
they usually practice 'beso-beso' or kissing on the cheeks, as a form of greeting on
occasions when they meet each other, like birthdays, Christmas, New Year's Day and
even Valentine's Day, and it does not matter whether it is Judge Acosta's birthday or
their birthdays. Theresa Cinco Bactat, a lawyer who belongs to complainant's
department, further attested that on occasions like birthdays, respondent judge would
likewise greet her with a peck on the cheek in a 'beso-beso' manner. Interestingly, in
 one of several festive occasions, female employees of the CTA pecked respondent judge
on the cheek where Atty. Aquino was one of Judge Acosta's well wishers.
In sum, no sexual harassment had indeed transpired on those six occasions. Judge
Acosta's acts of bussing Atty. Aquino on her cheek were merely forms of greetings,
casual and customary in nature. No evidence of intent to sexually harass complainant
was apparent, only that the innocent acts of 'beso-beso' were given malicious
connotations by the complainant. In fact, she did not even relate to anyone what
happened to her. Undeniably, there is no manifest sexual undertone in all those
incidents.47
This Court agreed with Justice Salonga, and Judge Acosta was exonerated.
To repeat, this factual milieu in Aquino does not obtain in the case at bench. While in Aquino, the
Court interpreted the acts (of Judge Acosta) as casual gestures of friendship and camaraderie,
done during festive or special occasions and with other people present, in the instant case,
Rayala’s acts of holding and squeezing Domingo’s shoulders, running his fingers across her neck
and tickling her ear, and the inappropriate comments, were all made in the confines of Rayala’s
office when no other members of his staff were around. More importantly, and a circumstance
absent in Aquino, Rayala’s acts, as already adverted to above, produced a hostile work
environment for Domingo, as shown by her having reported the matter to an officemate and,
after the last incident, filing for a leave of absence and requesting transfer to another unit.
Rayala also argues that AO 250 does not apply to him. First, he argues that AO 250 does not cover
the NLRC, which, at the time of the incident, was under the DOLE only for purposes of program
and policy coordination. Second, he posits that even assuming AO 250 is applicable to the NLRC,
he is not within its coverage because he is a presidential appointee.
We find, however, that the question of whether or not AO 250 covers Rayala is of no real
consequence. The events of this case unmistakably show that the administrative charges against
Rayala were for violation of RA 7877; that the OP properly assumed jurisdiction over the
administrative case; that the participation of the DOLE, through the Committee created by the
Secretary, was limited to initiating the investigation process, reception of evidence of the parties,
preparation of the investigation report, and recommending the appropriate action to be taken by
the OP. AO 250 had never really been applied to Rayala. If it was used at all, it was to serve merely
as an auxiliary procedural guide to aid the Committee in the orderly conduct of the investigation.
Next, Rayala alleges that the CA erred in holding that sexual harassment is an offense malum
prohibitum. He argues that intent is an essential element in sexual harassment, and since the acts
imputed to him were done allegedly without malice, he should be absolved of the charges against
him.
We reiterate that what is before us is an administrative case for sexual harassment. Thus,
whether the crime of sexual harassment is malum in se or malum prohibitum is immaterial.
We also reject Rayala’s allegations that the charges were filed because of a conspiracy to get him
out of office and thus constitute merely political harassment. A conspiracy must be proved by
clear and convincing evidence. His bare assertions cannot stand against the evidence presented
by Domingo. As we have already ruled, the acts imputed to Rayala have been proven as fact.
Moreover, he has not proven any ill motive on the part of Domingo and her witnesses which
would be ample reason for her to conjure stories about him. On the contrary, ill motive is belied
by the fact that Domingo and her witnesses – all employees of the NLRC at that time – stood to
lose their jobs or suffer unpleasant consequences for coming forward and charging their boss
with sexual harassment.
Furthermore, Rayala decries the alleged violation of his right to due process. He accuses the
Committee on Decorum of railroading his trial for violation of RA 7877. He also scored the OP’s
decision finding him guilty of "disgraceful and immoral conduct" under the Revised
Administrative Code and not for violation of RA 7877. Considering that he was not tried for
"disgraceful and immoral conduct," he argues that the verdict is a "sham and total nullity."
We hold that Rayala was properly accorded due process. In previous cases, this Court held that:
[i]n administrative proceedings, due process has been recognized to include the
following: (1) the right to actual or constructive notice of the institution of proceedings
which may affect a respondent’s legal rights; (2) a real opportunity to be heard
personally or with the assistance of counsel, to present witnesses and evidence in one’s
favor, and to defend one’s rights; (3) a tribunal vested with competent jurisdiction and
so constituted as to afford a person charged administratively a reasonable guarantee of
honesty as well as impartiality; and (4) a finding by said tribunal which is supported by
substantial evidence submitted for consideration during the hearing or contained in the
records or made known to the parties affected.48
The records of the case indicate that Rayala was afforded all these procedural due process
safeguards. Although in the beginning he questioned the authority of the Committee to try
him,49 he appeared, personally and with counsel, and participated in the proceedings.
On the other point raised, this Court has held that, even in criminal cases, the designation of the
offense is not controlling, thus:
What is controlling is not the title of the complaint, nor the designation of the offense
charged or the particular law or part thereof allegedly violated, these being mere
conclusions of law made by the prosecutor, but the description of the crime charged
and the particular facts therein recited. The acts or omissions complained of must be
alleged in such form as is sufficient to enable a person of common understanding to
know what offense is intended to be charged, and enable the court to pronounce proper
judgment. No information for a crime will be sufficient if it does not accurately and
clearly allege the elements of the crime charged. Every element of the offense must be
stated in the information. What facts and circumstances are necessary to be included
therein must be determined by reference to the definitions and essentials of the
specified crimes. The requirement of alleging the elements of a crime in the information
 is to inform the accused of the nature of the accusation against him so as to enable him
to suitably prepare his defense.50
It is noteworthy that under AO 250, sexual harassment amounts to disgraceful and immoral
conduct.51 Thus, any finding of liability for sexual harassment may also be the basis of culpability
for disgraceful and immoral conduct.
With the foregoing disquisitions affirming the finding that Rayala committed sexual harassment,
we now determine the proper penalty to be imposed.
Rayala attacks the penalty imposed by the OP. He alleges that under the pertinent Civil Service
Rules, disgraceful and immoral conduct is punishable by suspension for a period of six (6)
months and one (1) day to one (1) year. He also argues that since he is charged administratively,
aggravating or mitigating circumstances cannot be appreciated for purposes of imposing the
penalty.
Under AO 250, the penalty for the first offense is suspension for six (6) months and one (1) day
to one (1) year, while the penalty for the second offense is dismissal.52 On the other hand, Section
22(o), Rule XVI of the Omnibus Rules Implementing Book V of the Administrative Code of
198753 and Section 52 A(15) of the Revised Uniform Rules on Administrative Cases in the Civil
Service54 both provide that the first offense of disgraceful and immoral conduct is punishable by
suspension of six (6) months and one (1) day to one (1) year. A second offense is punishable by
dismissal.
Under the Labor Code, the Chairman of the NLRC shall hold office during good behavior until
he or she reaches the age of sixty-five, unless sooner removed for cause as provided by law or
becomes incapacitated to discharge the duties of the office.55
In this case, it is the President of the Philippines, as the proper disciplining authority, who would
determine whether there is a valid cause for the removal of Rayala as NLRC Chairman. This
power, however, is qualified by the phrase "for cause as provided by law." Thus, when the
President found that Rayala was indeed guilty of disgraceful and immoral conduct, the Chief
Executive did not have unfettered discretion to impose a penalty other than the penalty provided
by law for such offense. As cited above, the imposable penalty for the first offense of either the
administrative offense of sexual harassment or for disgraceful and immoral conduct is
suspension of six (6) months and one (1) day to one (1) year. Accordingly, it was error for the
Office of the President to impose upon Rayala the penalty of dismissal from the service, a penalty
which can only be imposed upon commission of a second offense.
Even if the OP properly considered the fact that Rayala took advantage of his high government
position, it still could not validly dismiss him from the service. Under the Revised Uniform Rules
on Administrative Cases in the Civil Service,56 taking undue advantage of a subordinate may be
considered as an aggravating circumstance57 and where only aggravating and no mitigating
circumstances are present, the maximum penalty shall be imposed.58Hence, the maximum
penalty that can be imposed on Rayala is suspension for one (1) year.
Rayala holds the exalted position of NLRC Chairman, with the rank equivalent to a CA Justice.
Thus, it is not unavailing that rigid standards of conduct may be demanded of him. In Talens-
Dabon v. Judge Arceo,59 this Court, in upholding the liability of therein respondent Judge, said:
The actuations of respondent are aggravated by the fact that complainant is one of his
subordinates over whom he exercises control and supervision, he being the executive
judge. He took advantage of his position and power in order to carry out his lustful and
lascivious desires. Instead of he being in loco parentis over his subordinate employees,
respondent was the one who preyed on them, taking advantage of his superior position.
In yet another case, this Court declared:
As a managerial employee, petitioner is bound by more exacting work ethics. He failed
to live up to his higher standard of responsibility when he succumbed to his moral
perversity. And when such moral perversity is perpetrated against his subordinate, he
provides a justifiable ground for his dismissal for lack of trust and confidence. It is the
right, nay, the duty of every employer to protect its employees from oversexed
superiors.60
It is incumbent upon the head of office to set an example on how his employees should conduct
themselves in public office, so that they may work efficiently in a healthy working atmosphere.
Courtesy demands that he should set a good example.61
Rayala has thrown every argument in the book in a vain effort to effect his exoneration. He even
puts Domingo’s character in question and casts doubt on the morality of the former President
who ordered, albeit erroneously, his dismissal from the service. Unfortunately for him, these are
not significant factors in the disposition of the case. It is his character that is in question here and
sadly, the inquiry showed that he has been found wanting.
WHEREFORE, the foregoing premises considered, the October 18, 2002 Resolution of the Court
of Appeals in CA-G.R. SP No. 61026 is AFFIRMED. Consequently, the petitions in G.R. Nos.
155831, 155840, and 158700 are DENIED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 49549 August 30, 1990
EVELYN CHUA-QUA, petitioner,
vs.
HON. JACOBO C. CLAVE, in his capacity as Presidential Executive Assistant, and TAY TUNG
HIGH SCHOOL, INC., respondents.
William C. Gunitang and Jaime Opinion for petitioner.
Laogan Law Offices for private respondent.
REGALADO, J.:
This would have been just another illegal dismissal case were it not for the controversial and
unique situation that the marriage of herein petitioner, then a classroom teacher, to her student
who was fourteen (14) years her junior, was considered by the school authorities as sufficient
basis for terminating her services.
Private respondent Tay Tung High School, Inc. is an educational institution in Bacolod City.
Petitioner had been employed therein as a teacher since 1963 and, in 1976 when this dispute
arose, was the class adviser in the sixth grade where one Bobby Qua was enrolled. Since it was
the policy of the school to extend remedial instructions to its students, Bobby Qua was imparted
such instructions in school by petitioner. 1 In the course thereof, the couple fell in love and on
December 24, 1975, they got married in a civil ceremony solemnized in Iloilo City by Hon.
Cornelio G. Lazaro, City Judge of Iloilo.2 Petitioner was then thirty (30) years of age but Bobby
Qua being sixteen (16) years old, consent and advice to the marriage was given by his mother,
Mrs. Concepcion Ong.3 Their marriage was ratified in accordance with the rites of their religion
in a church wedding solemnized by Fr. Nick Melicor at Bacolod City on January 10, 1976. 4
On February 4, 1976, private respondent filed with the sub-regional office of the Department of
Labor at Bacolod City an application for clearance to terminate the employment of petitioner on
the following ground: "For abusive and unethical conduct unbecoming of a dignified school
teacher and that her continued employment is inimical to the best interest, and would
downgrade the high moral values, of the school." 5
Petitioner was placed under suspension without pay on March 12, 1976. Executive Labor
6 conclusion of the Arbiter, we could not deduce anything immoral or
Arbiter Jose Y. Aguirre, Jr. of the National Labor Relations Commission, Bacolod City, to whom
the case was certified for resolution, required the parties to submit their position papers and
supporting evidence. Affidavits 7 were submitted by private respondent to bolster its contention
that petitioner, "defying all standards of decency, recklessly took advantage of her position as
school teacher, lured a Grade VI boy under her advisory section and 15 years her junior into an
amorous relation." 8 More specifically, private respondent raised issues on the fact that
petitioner stayed alone with Bobby Qua in the classroom after school hours when everybody had
gone home, with one door allegedly locked and the other slightly open.
On September 17, 1976, Executive Labor Arbiter Jose Y. Aguirre, Jr., without conducting any
formal hearing, rendered an "Award" in NLRC Case No. 956 in favor of private respondent
granting the clearance to terminate the employment of petitioner. It was held therein that —
The affidavits . . . although self-serving but were never disputed by the
respondent pointed out that before the marriage of respondent to Bobby Qua,
fourteen (14) years her junior and during her employment with petitioner, an
amorous relationship existed between them. In the absence of evidence to the
contrary, the undisputed written testimonies of several witnesses
convincingly picture the circumstances under which such amorous
relationship was manifested within the premises of the school, inside the
classroom, and within the sight of some employees. While no direct evidences
have been introduced to show that immoral acts were committed during these
times, it is however enough for a sane and credible mind to imagine and
conclude what transpired and took place during these times. . . . 9
Petitioner, however, denied having received any copy of the affidavits referred to. 10
On October 7, 1976, petitioner appealed to the National Labor Relations Commission claiming
denial of due process for not having been furnished copies of the aforesaid affidavits relied on by
the labor arbiter. She further contended that there was nothing immoral, nor was it abusive and
unethical conduct unbecoming of a dignified school teacher, for a teacher to enter into lawful
wedlock with her student.11
On December 27, 1976, the National Labor Relations Commission unanimously reversed the
Labor Arbiter's decision and ordered petitioner's reinstatement with backwages, with the
following specific findings:
Affiant Maselliones deposed and said that he saw appellant and Qua sitting on
the student desk inside a classroom after classes. The depositions of affiants
Despi and Chin are of the same tenor. No statements whatever were sworn by
them that they were eyewitnesses to immoral or scandalous acts.
xxx xxx xxx
Even if we have to strain our sense of moral values to accommodate the
scandalous about a girl and a boy talking inside a room after classes with lights
on and with the door open.
xxx xxx xxx
Petitioner-appellee naively insisted that the clearance application was
precipitated by immoral acts which did not lend dignity to the position of
appellant. Aside from such gratuitous assertions of immoral acts or conduct
by herein appellant, no evidence to support such claims was introduced by
petitioner-appellee. We reviewed the the sequence of events from the
beginning of the relationship between appellant Evelyn Chua and Bobby Qua
up to the date of the filing of the present application for clearance in search of
evidence that could have proved detrimental to the image and dignity of the
school but none has come to our attention. . . . 12
The case was elevated by private respondent to the Minister of Labor who, on March 30, 1977,
reversed the decision of the National Labor Relations Commission. The petitioner was, however,
awarded six (6) months salary as financial assistance. 13
On May 20, 1977, petitioner appealed the said decision to the Office of the President of the
Philippines. 14 After the corresponding exchanges, on September 1, 1978 said office, through
Presidential Executive Assistant Jacobo C. Clave, rendered its decision reversing the appealed
decision. Private respondent was ordered to reinstate petitioner to her former position without
loss of seniority rights and other privileges and with full back wages from the time she was not
allowed to work until the date of her actual reinstatement. 15
Having run the gamut of three prior adjudications of the case with alternating reversals, one
would think that this decision of public respondent wrote finis to petitioner's calvary. However,
in a resolution dated December 6, 1978, public respondent, acting on a motion for
reconsideration 16 of herein private respondent and despite opposition thereto, 17 reconsidered
and modified the aforesaid decision, this time giving due course to the application of Tay Tung
High School, Inc. to terminate the services of petitioner as classroom teacher but giving her
separation pay equivalent to her six (6) months salary. 18
In thus reconsidering his earlier decision, public respondent reasoned out in his
manifestation/comment filed on August 14, 1979 in this Court in the present case:
That this Office did not limit itself to the legal issues involved in the case, but
went further to view the matter from the standpoint of policy which involves
the delicate task of rearing and educating of children whose interest must be
held paramount in the school community, and on this basis, this Office deemed
it wise to uphold the judgment and action of the school authorities in
terminating the services of a teacher whose actuations and behavior, in the
belief of the school authorities, had spawned ugly rumors that had cast serious
doubts on her integrity, a situation which was considered by them as not
healthy for a school campus, believing that a school teacher should at all times
act with utmost circumspection and conduct herself beyond reproach and
above suspicion; 19
In this petition for certiorari, petitioner relies on the following grounds for the reversal of the
aforesaid resolution of public respondent, viz.:
1. The dismissal or termination of petitioner's employment, despite Tay
Tung's claim to the contrary, was actually based on her marriage with her
pupil and is, therefore, illegal.
2. Petitioner's right to due process under the Constitution was violated when
the hearsay affidavits of Laddy Maselliones, Eleuterio Despi, Pina D. Chiu, and
Ong Lee Bing, were admitted and considered in evidence without presenting
the affiants as witnesses and affording the petitioner the right to confront and
cross-examine them.
3. No sufficient proofs were adduced to show that petitioner committed
serious misconduct or breached the trust reposed on her by her employer or
committed any of the other grounds enumerated in Article 283 (Now Article
282) of the Labor Code which will justify the termination of her
employment. 20
We first dispose of petitioner's claim that her right to due process was violated. We do not agree.
There is no denial of due process where a party was afforded an opportunity to present his side.
Also, the procedure by which issues are resolved based on position papers, affidavits and other
documentary evidence is recognized as not violative of such right. Moreover, petitioner could
have insisted on a hearing to confront and cross-examine the affiants but she did not do so,
obviously because she was convinced that the case involves a question of law. Besides, said
affidavits were also cited and discussed by her in the proceedings before the Ministry of Labor.
Now, on the merits. Citing its upright intention to preserve the respect of the community toward
the teachers and to strengthen the educational system, private respondent submits that
petitioner's actuations as a teacher constitute serious misconduct, if not an immoral act, a breach
of trust and confidence reposed upon her and, thus, a valid and just ground to terminate her
services. It argues that as a school teacher who exercises substitute parental authority over her
pupils inside the school campus, petitioner had moral ascendancy over Bobby Qua and, therefore,
she must not abuse such authority and respect extended to her. Furthermore, it charged
petitioner with having allegedly violated the Code of Ethics for teachers the pertinent provision
of which states that a "school official or teacher should never take advantage of his/her position
to court a pupil or student." 21
On the other hand, petitioner maintains that there was no ground to terminate her services as
there is nothing wrong with a teacher falling in love with her pupil and, subsequently, contracting
a lawful marriage with him. She argued that she was dismissed because of her marriage with
Bobby Qua This contention was sustained in the aforesaid decision of the National Labor
Relations Commission thus:
. . . One thing, however, has not escaped our observation: That the application
for clearance was filed only after more than one month elapsed from the date
of appellant's marriage to Bobby Qua Certainly, such belated application for
clearance weakens instead of strengthening the cause of petitioner-appellee.
The alleged immoral acts transpired before the marriage and if it is these
alleged undignified conduct that triggered the intended separation, then why
was the present application for clearance not filed at that time when the
alleged demoralizing effect was still fresh and abrasive? 22
After a painstaking perusal of the records, we are of the considered view that the determination
of the legality of the dismissal hinges on the issue of whether or not there is substantial evidence
to prove that the antecedent facts which culminated in the marriage between petitioner and her
student constitute immorality and/or grave misconduct. To constitute immorality, the
circumstances of each particular case must be holistically considered and evaluated in the light
of prevailing norms of conduct and the applicable law. Contrary to what petitioner had insisted
on from the very start, what is before us is a factual question, the resolution of which is better
left to the trier of facts.
Considering that there was no formal hearing conducted, we are constrained to review the
factual conclusions arrived at by public respondent, and to nullify his decision through the
extraordinary writ of certiorari if the same is tainted by absence or excess of jurisdiction or grave
abuse of discretion. The findings of fact must be supported by substantial evidence; otherwise,
this Court is not bound thereby.23
We rule that public respondent acted with grave abuse of discretion. As vividly and forcefully
observed by him in his original decision:
Indeed, the records relied upon by the Acting Secretary of Labor (actually the
records referred to are the affidavits attached as Annexes "A" to "D" of the
position paper dated August 10, 1976 filed by appellee at the arbitration
proceedings) in arriving at his decision are unbelievable and unworthy of
credit, leaving many question unanswered by a rational mind. For one thing,
the affidavits refer to certain times of the day during off school hours when
appellant and her student were found together in one of the classrooms of the
school. But the records of the case present a ready answer: appellant was
giving remedial instruction to her student and the school was the most
convenient place to serve the purpose. What is glaring in the affidavits is the
complete absence of specific immoral acts allegedly committed by appellant
and her student. For another, and very important at that, the alleged acts
complained of invariably happened from September to December, 1975, but
the disciplinenary action imposed by appellee was sought only in February,
1976, and what is more, the affidavits were executed only in August, 1976 and
from all indications, were prepared by appellee or its counsel. The affidavits
heavily relied upon by appellee are clearly the product of after-thought. . . .
The action pursued by appellee in dismissing appellant over one month after
her marriage, allegedly based on immoral acts committed even much earlier,
is open to basis of the action sought seriously doubted; on the question. The
basis of the action sought is seriously doubted; on the contrary, we are more
inclined to believe that appellee had certain selfish, ulterior and undisclosed
motives known only to itself. 24
As earlier stated, from the outset even the labor arbiter conceded that there was no direct
evidence to show that immoral acts were committed. Nonetheless, indulging in a patently unfair
conjecture, he concluded that "it is however enough for a sane and credible mind to imagine and
conclude what transpired during those times." 25 In reversing his decision, the National Labor
Relations Commission observed that the assertions of immoral acts or conducts are gratuitous
and that there is no direct evidence to support such claim, 26 a finding which herein public
respondent himself shared.
We are, therefore, at a loss as to how public respondent could adopt the volte-face in the
questioned resolution, which we hereby reject, despite his prior trenchant observations
hereinbefore quoted. What is revealing however, is that the reversal of his original decision is
inexplicably based on unsubstantiated surmises and non sequiturs which he incorporated in his
assailed resolution in this wise:
. . . While admittedly, no one directly saw Evelyn Chua and Bobby Qua doing
immoral acts inside the classroom it seems obvious and this Office is
convinced that such a happening indeed transpired within the solitude of the
classrom after regular class hours. The marriage between Evelyn Chua and
Bobby Qua is the best proof which confirms the suspicion that the two
indulged in amorous relations in that place during those times of the day. . .
. 27
With the finding that there is no substantial evidence of the imputed immoral acts, it follows that
the alleged violation of the Code of Ethics governing school teachers would have no basis. Private
respondent utterly failed to show that petitioner took advantage of her position to court her
student. If the two eventually fell in love, despite the disparity in their ages and academic levels,
this only lends substance to the truism that the heart has reasons of its own which reason does
not know. But, definitely, yielding to this gentle and universal emotion is not to be so casually
equated with immorality. The deviation of the circumstances of their marriage from the usual
societal pattern cannot be considered as a defiance of contemporary social mores.
It would seem quite obvious that the avowed policy of the school in rearing and educating
children is being unnecessarily bannered to justify the dismissal of petitioner. This policy,
however, is not at odds with and should not be capitalized on to defeat the security of tenure
granted by the Constitution to labor. In termination cases, the burden of proving just and valid
cause for dismissing an employee rests on the employer and his failure to do so would result in
a finding that the dismissal is unjustified.
The charge against petitioner not having been substantiated, we declare her dismissal as
unwarranted and illegal. It being apparent, however, that the relationship between petitioner
and private respondent has been inevitably and severely strained, we believe that it would
neither be to the interest of the parties nor would any prudent purpose be served by ordering
her reinstatement.
WHEREFORE, the petition for certiorari is GRANTED and the resolution of public respondent,
dated December 6, 1978 is ANNULLED and SET ASIDE. Private respondent Tay Tung High School,
Inc. is hereby ORDERED to pay petitioner backwages equivalent to three (3) years, without any
deduction or qualification, and separation pay in the amount of one (1) month for every year of
service.
SO ORDERED.
G.R. No. 187226 January 28, 2015
CHERYLL SANTOS LEUS, Petitioner,
vs.
ST. SCHOLASTICA'S COLLEGE WESTGROVE and/or SR. EDNA QUIAMBAO,
OSB, Respondents.
DECISION
REYES, J.:
Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove (SSCW), a
Catholic educational institution, as a non-teaching personnel, engaged in pre-marital sexual
relations, got pregnant out of wedlock, married the father of her child, and was dismissed by
SSCW, in that order. The question that has to be resolved is whether the petitioner's conduct
constitutes a ground for her dismissal.
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
to annul and set aside the Decision1 dated September 24, 2008 and Resolution2 dated March 2,
2009 issued by the Court of Appeals (CA) in CA-G.R. SP No. 100188, which affirmed the
Resolutions dated February 28, 20073 and May 21, 20074 of the National Labor Relations
Commission (NLRC)in NLRC CA No. 049222-06.
The Facts
SSCW is a catholic and sectarian educational institution in Silang, Cavite. In May 2001, SSCW
hired the petitioner as an Assistant to SSCW’s Director of the Lay Apostolate and Community
Outreach Directorate.
Sometime in 2003, the petitioner and her boyfriend conceived a child out of wedlock. When SSCW
learned of the petitioner’s pregnancy, Sr. Edna Quiambao (Sr. Quiambao), SSCW’s Directress,
advised her to file a resignation letter effective June 1, 2003. In response, the petitioner informed
Sr. Quiambao that she would not resign from her employment just because she got pregnant
without the benefit of marriage.5
On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain in writing why she
should not be dismissed for engaging in pre-marital sexual relations and getting pregnant as a
result thereof, which amounts to serious misconduct and conduct unbecoming of an employee of
a Catholic school.6
In a letter7 dated May 31, 2003, the petitioner explained that her pregnancy out of wedlock does
not amount to serious misconduct or conduct unbecoming of an employee. She averred that she
is unaware of any school policy stating that being pregnant out of wedlock is considered as a
serious misconduct and, thus, a ground for dismissal. Further, the petitioner requested a copy of
SSCW’s policy and guidelines so that she may better respond to the charge against her. On June
2, 2003, Sr. Quiambao informed the petitioner that, pending the promulgation of a "Support Staff
Handbook," SSCW follows the 1992 Manual of Regulations for Private Schools (1992 MRPS) on
the causes for termination of employments; that Section 94(e) of the 1992 MRPS cites
"disgraceful or immoral conduct" as a ground for dismissal in addition to the just causes for
termination of employment provided under Article 282 of the Labor Code.8
On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a letter,9 which, in part, reads:
To us, pre-marital sex between two consenting adults without legal impediment to marry each
other who later on married each other does not fall within the contemplation of "disgraceful or
immoral conduct" and "serious misconduct" of the Manual of Regulations for Private Schools and
the Labor Code of the Philippines.
Your argument that what happened to our client would set a bad example to the students and
other employees of your school is speculative and is more imaginary than real. To dismiss her on
that sole ground constitutes grave abuse of management prerogatives.
Considering her untarnished service for two years, dismissing her with her present condition
would also mean depriving her to be more secure in terms of financial capacity to sustain
maternal needs.10
In a letter11 dated June 6, 2003, SSCW, through counsel, maintained that pre-marital sexual
relations, evenif between two consenting adults without legal impediment to marry, is
considered a disgraceful and immoral conduct or a serious misconduct, which are grounds for
the termination of employment under the 1992 MRPS and the Labor Code. That SSCW, as a
Catholic institution of learning, has the right to uphold the teaching of the Catholic Church and
expect its employees to abide by the same. They further asserted that the petitioner’s
indiscretion is further aggravated by the fact that she is the Assistant to the Director of the Lay
Apostolate and Community Outreach Directorate, a position of responsibility that the students
look up to as rolemodel. The petitioner was again directed to submit a written explanation on
why she should not be dismissed.
On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts her counsel’s letter dated
June 4, 2003 as her written explanation.12
Consequently, in her letter13 dated June 11, 2003, Sr. Quiambao informed the petitioner that her
employment with SSCW is terminated on the ground of serious misconduct. She stressed that
pre-marital sexual relations between two consenting adults with no impediment to marry, even
if they subsequently married, amounts to immoral conduct. She further pointed out that SSCW
finds unacceptable the scandal brought about by the petitioner’s pregnancy out of wedlock as it
ran counter to the moral principles that SSCW stands for and teaches its students.
Thereupon, the petitioner filed a complaint for illegal dismissal with the Regional Arbitration
Branch of the NLRC in Quezon City against SSCW and Sr. Quiambao (respondents). In her position
paper,14 the petitioner claimed that SSCW gravely abused its management prerogative as there
was no just cause for her dismissal. She maintained that her pregnancy out of wedlock cannot be
considered as serious misconduct since the same is a purely private affair and not connected in
any way with her duties as an employee of SSCW. Further, the petitioner averred that she and
her boyfriend eventually got married even prior to her dismissal.
For their part, SSCW claimed that there was just cause to terminate the petitioner’s employment
with SSCW and that the same is a valid exercise of SSCW’s management prerogative. They
maintained that engaging in pre-marital sex, and getting pregnant as a result thereof, amounts to
a disgraceful or immoral conduct, which is a ground for the dismissal of an employee under the
1992 MRPS.
They pointed out that SSCW is a Catholic educational institution, which caters exclusively to
young girls; that SSCW would lose its credibility if it would maintain employees who do not live
up to the values and teachings it inculcates to its students. SSCW further asserted that the
petitioner, being an employee of a Catholic educational institution, should have strived to
maintain the honor, dignity and reputation of SSCW as a Catholic school.15
The Ruling of the Labor Arbiter
On February 28, 2006, the Labor Arbiter (LA) rendered a Decision,16 in NLRC Case No. 6-17657-
03-C which dismissed the complaint filed by the petitioner. The LA found that there was a valid
ground for the petitioner’s dismissal; that her pregnancy out of wedlock is considered as a
"disgraceful and immoral conduct." The LA pointed out that, as an employee of a Catholic
educational institution, the petitioner is expected to live up to the Catholic values taught by SSCW
to its students. Likewise, the LA opined that:
Further, a deep analysis of the facts would lead us to disagree with the complainant that she was
dismissed simply because she violate[d] a Catholic [teaching]. It should not be taken in isolation
but rather it should be analyzed in the lightof the surrounding circumstances as a whole. We must
also take into [consideration] the nature of her work and the nature of her employer-school. For
us, it is not just an ordinary violation. It was committed by the complainant in an environment
where her strict adherence to the same is called for and where the reputation of the school is at
stake. x x x.17
The LA further held that teachers and school employees, both in their official and personal
conduct, must display exemplary behavior and act in a manner that is beyond reproach.
The petitioner appealed to the NLRC, insisting that there was no valid ground for the termination
of her employment. She maintained that her pregnancy out of wedlock cannot be considered as
"serious misconduct" under Article 282 of the Labor Code since the same was not of such a grave
and aggravated character. She asserted that SSCW did not present any evidence to establish that
her pregnancy out of wedlock indeed eroded the moral principles that it teaches its students. 18
The Ruling of the NLRC
On February 28, 2007, the NLRC issued a Resolution,19 which affirmed the LA Decision dated
February 28, 2006. The NLRC pointed out that the termination of the employment of the
personnel of private schools is governed by the 1992 MRPS; that Section 94(e) thereof cites
"disgraceful or immoral conduct" as a just cause for dismissal, in addition to the grounds for
termination of employment provided for under Article 282 of the Labor Code. The NLRC held
that the petitioner’s pregnancy out of wedlock is a "disgraceful or immoral conduct" within the
contemplation of Section 94(e) of the 1992 MRPS and, thus, SSCW had a valid reason to terminate
her employment.
The petitioner sought reconsideration20 of the Resolution dated February 28, 2007 but it was
denied by the NLRC in its Resolution21 dated May 21, 2007.
Unperturbed, the petitioner filed a petition22 for certiorari with the CA, alleging that the NLRC
gravely abused its discretion in ruling that there was a valid ground for her dismissal. She
maintained that pregnancy out of wedlock cannot be considered as a disgraceful or immoral
conduct; that SSCW failed to prove that its students were indeed gravely scandalized by her
pregnancy out of wedlock. She likewise asserted that the NLRC erred in applying Section 94(e)
of the 1992 MRPS.
The Ruling of the CA
On September 24, 2008, the CA rendered the herein assailed Decision, 23 which denied the
petition for certiorari filed by the petitioner. The CA held that it is the provisions of the 1992
MRPS and not the Labor Code which governs the termination of employment of teaching and
non-teaching personnel of private schools, explaining that:
It is a principle of statutory construction that where there are two statutes that apply to a
particular case, that which was specially intended for the said case must prevail. Petitioner was
employed by respondent private Catholic institution which undeniably follows the precepts or
norms of conduct set forth by the Catholic Church. Accordingly, the Manual of Regulations for
Private Schools followed by it must prevail over the Labor Code, a general statute. The Manual
constitutes the private schools’ Implementing Rules and Regulations of Batas Pambansa Blg. 232
or the Education Act of 1982. x x x.24
The CA further held that the petitioner’s dismissal was a valid exercise of SSCW’s management
prerogative to discipline and impose penalties on erring employees pursuant toits policies, rules
and regulations. The CA upheld the NLRC’s conclusion that the petitioner’s pregnancy out of
wedlock is considered as a "disgraceful and immoral conduct" and, thus, a ground for dismissal
under Section 94(e) of the 1992 MRPS. The CA likewise opined that the petitioner’s pregnancy
out of wedlock is scandalous per segiven the work environment and social milieu that she was
in, viz:
Under Section 94 (e) of the [MRPS], and even under Article 282 (serious misconduct) of the Labor
Code, "disgraceful and immoral conduct" is a basis for termination of employment.
xxxx
Petitioner contends that her pre-marital sexual relations with her boyfriend and her pregnancy
prior to marriage was not disgraceful or immoral conduct sufficient for her dismissal because
she was not a member of the school’s faculty and there is no evidence that her pregnancy
scandalized the school community.
We are not persuaded. Petitioner’s pregnancy prior to marriage is scandalous in itself given the
work environment and social milieu she was in. Respondent school for young ladies precisely
seeks to prevent its students from situations like this, inculcating in them strict moral values and
standards. Being part of the institution, petitioner’sprivate and public life could not be separated.
Her admitted pre-marital sexual relations was a violation of private respondent’s prescribed
standards of conduct that views pre-marital sex as immoral because sex between a man and a
woman must only take place within the bounds of marriage.
Finally, petitioner’s dismissal is a valid exercise of the employer-school’s management
prerogative to discipline and impose penalties on erring employees pursuant to its policies, rules
and regulations. x x x.25 (Citations omitted)
The petitioner moved for reconsideration26 but it was denied by the CA in its Resolution27 dated
March 2, 2009.
Hence, the instant petition.
Issues
Essentially, the issues set forth by the petitioner for this Court’s decision are the following: first,
whether the CA committed reversible error in ruling that it is the 1992 MRPS and not the Labor
Code that governs the termination of employment of teaching and non-teaching personnel of
private schools; and second, whether the petitioner’spregnancy out of wedlock constitutes a
valid ground to terminate her employment.
The Ruling of the Court
The Court grants the petition.
First Issue: Applicability of the 1992 MRPS
The petitioner contends that the CA, in ruling that there was a valid ground to dismiss her, erred
in applying Section 94 of the 1992 MRPS. Essentially, she claims that the 1992 MRPS was issued
by the Secretary of Education as the revised implementing rules and regulations of Batas
Pambansa Bilang 232 (BP 232) or the "Education Act of 1982." That there is no provision in BP
232, which provides for the grounds for the termination of employment of teaching and non-
teaching personnel of private schools. Thus, Section 94 of the 1992 MRPS, which provides for the
causes of terminating an employment, isinvalid as it "widened the scope and coverage" of BP 232.
The Court does not agree.
The Court notes that the argument against the validity of the 1992 MRPS, specifically Section 94
thereof, is raised by the petitioner for the first time in the instant petition for review. Nowhere in
the proceedings before the LA, the NLRC or the CA did the petitioner assail the validity of the
provisions of the 1992 MRPS.
"It is well established that issues raised for the first time on appeal and not raised in the
proceedings in the lower court are barred by estoppel. Points of law, theories, issues, and
arguments not brought to the attention of the trial court ought not to be considered by a
reviewing court, as these cannot be raised for the first time on appeal. To consider the alleged
facts and arguments belatedly raised would amount to trampling on the basic principles of fair
play, justice, and due process."28
In any case, even if the Court were to disregard the petitioner’s belated claim of the invalidity of
the 1992 MRPS, the Court still finds the same untenable.
The 1992 MRPS, the regulation in force at the time of the instant controversy, was issued by the
Secretary of Education pursuant to BP 232. Section 7029 of BP 232 vests the Secretary of
Education with the authority to issue rules and regulations to implement the provisions of BP
232. Concomitantly, Section 5730 specifically empowers the Department of Education to
promulgate rules and regulations necessary for the administration, supervision and regulation
of the educational system in accordance with the declared policy of BP 232.
The qualifications of teaching and non-teaching personnel of private schools, as well as the
causes for the termination of their employment, are an integral aspect of the educational system
of private schools. Indubitably, ensuring that the teaching and non-teaching personnel of private
schools are not only qualified, but competent and efficient as well goes hand in hand with the
declared objective of BP 232 – establishing and maintaining relevant quality education.31 It is
thus within the authority of the Secretary of Education to issue a rule, which provides for the
dismissal of teaching and non-teaching personnel of private schools based on their
incompetence, inefficiency, or some other disqualification.
Moreover, Section 69 of BP 232 specifically authorizes the Secretary of Education to "prescribe
and impose such administrative sanction as he may deem reasonable and appropriate in the
implementing rules and regulations" for the "[g]ross inefficiency of the teaching or non-teaching
personnel" of private schools.32 Accordingly, contrary to the petitioner’s claim, the Court sees no
reason to invalidate the provisions of the 1992 MRPS, specifically Section 94 thereof. Second
Issue: Validity of the Petitioner’s Dismissal
The validity of the petitioner’s dismissal hinges on the determination of whether pregnancy out
of wedlock by an employee of a catholic educational institution is a cause for the termination of
her employment.
In resolving the foregoing question,the Court will assess the matter from a strictly neutral and
secular point of view – the relationship between SSCW as employer and the petitioner as an
employee, the causes provided for by law in the termination of suchrelationship, and the
evidence on record. The ground cited for the petitioner’s dismissal, i.e., pre-marital sexual
relations and, consequently, pregnancy outof wedlock, will be assessed as to whether the same
constitutes a valid ground for dismissal pursuant to Section 94(e) of the 1992 MRPS.
The standard of review in a Rule 45
petition from the CA decision in
labor cases.
In a petition for review under Rule 45 of the Rules of Court, such as the instant petition, where
the CA’s disposition in a labor case is sought to be calibrated, the Court’s review isquite limited.
In ruling for legal correctness, the Court has to view the CA decision in the same context that the
petition for certiorari it ruled upon was presented to it; the Court has to examine the CA decision
from the prism of whether it correctly determined the presence or absence of grave abuse of
discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the
merits of the case was correct.33
The phrase "grave abuse of discretion" is well-defined in the Court’s jurisprudence. It exists
where an act of a court or tribunal is performed with a capricious or whimsical exercise
ofjudgment equivalent to lack of jurisdiction.34 The determination of the presence or absence of
grave abuse of discretion does not include an inquiry into the correctness of the evaluation of
evidence, which was the basis of the labor agency in reaching its conclusion.35
Nevertheless, while a certiorari proceeding does not strictly include an inquiry as to the
correctness of the evaluation of evidence (that was the basis of the labor tribunals in determining
their conclusion), the incorrectness of its evidentiary evaluation should not result in negating the
requirement of substantial evidence. Indeed, when there is a showing that the findings or
conclusions, drawn from the same pieces of evidence, were arrived at arbitrarily or in disregard
of the evidence on record, they may be reviewed by the courts. In particular, the CA can grant the
petition for certiorariif it finds that the NLRC, in its assailed decision or resolution, made a factual
finding not supported by substantial evidence. A decision that is not supported by substantial
evidence is definitely a decision tainted with grave abuse of discretion.36
The labor tribunals’ respective
conclusions that the petitioner’s
pregnancy is a "disgraceful or
immoral conduct" were arrived at
arbitrarily.
The CA and the labor tribunals affirmed the validity of the petitioner’s dismissal pursuant to
Section 94(e) of the 1992 MRPS, which provides that:
Sec. 94. Causes of Terminating Employment – In addition to the just causes enumerated in the
Labor Code, the employment of school personnel, including faculty, may be terminated for any of
the following causes:
xxxx
e. Disgraceful or immoral conduct;
xxxx
The labor tribunals concluded that the petitioner’s pregnancy out of wedlock, per se, is
"disgraceful and immoral"considering that she is employed in a Catholic educational institution.
In arriving at such conclusion, the labor tribunals merely assessed the fact of the petitioner’s
pregnancy vis-à-visthe totality of the circumstances surrounding the same.
However, the Court finds no substantial evidence to support the aforementioned conclusion
arrived at by the labor tribunals. The fact of the petitioner’s pregnancy out of wedlock, without
more, is not enough to characterize the petitioner’s conduct as disgraceful or immoral. There
must be substantial evidence to establish that pre-marital sexual relations and, consequently,
pregnancy outof wedlock, are indeed considered disgraceful or immoral.
The totality of the circumstances
surrounding the conduct alleged to
be disgraceful or immoral must be
assessed against the prevailing
norms of conduct.
In Chua-Qua v. Clave,37 the Court stressed that to constitute immorality, the circumstances of
each particular case must be holistically considered and evaluated in light of the prevailing norms
of conductand applicable laws.38Otherwise stated, it is not the totality of the circumstances
surrounding the conduct per se that determines whether the same is disgraceful or immoral, but
the conduct that is generally accepted by society as respectable or moral. If the conduct does not
conform to what society generally views as respectable or moral, then the conduct is considered
as disgraceful or immoral. Tersely put, substantial evidence must be presented, which would
establish that a particular conduct, viewed in light of the prevailing norms of conduct, is
considered disgraceful or immoral.
Thus, the determination of whether a conduct is disgraceful or immoral involves a two-step
process: first, a consideration of the totality of the circumstances surrounding the conduct; and
second, an assessment of the said circumstances vis-à-visthe prevailing norms of conduct, i.e.,
what the society generally considers moral and respectable.
That the petitioner was employed by a Catholic educational institution per se does not absolutely
determine whether her pregnancy out of wedlock is disgraceful or immoral. There is still a
necessity to determine whether the petitioner’s pregnancy out of wedlock is considered
disgraceful or immoral in accordance with the prevailing norms of conduct.
Public and secular morality should
determine the prevailing norms of
conduct, not religious morality.
However, determining what the prevailing norms of conduct are considered disgraceful or
immoral is not an easy task. An individual’s perception of what is moral or respectable is a
confluence of a myriad of influences, such as religion, family, social status, and a cacophony of
others. In this regard, the Court’s ratiocination in Estrada v. Escritor39 is instructive.
In Estrada, an administrative case against a court interpreter charged with disgraceful and
immoral conduct, the Court stressed that in determining whether a particular conduct can be
considered as disgraceful and immoral, the distinction between public and secular morality on
the one hand, and religious morality, on the other, should be kept in mind.40 That the distinction
between public and secular morality and religious morality is important because the jurisdiction
of the Court extends only to public and secular morality.41 The Court further explained that:
The morality referred to in the law is public and necessarily secular, not religiousx x x. "Religious
teachings as expressed in public debate may influence the civil public order but public moral
disputes may be resolved only on grounds articulable in secular terms." Otherwise, if government
relies upon religious beliefs in formulating public policies and morals, the resulting policies and
morals would require conformity to what some might regard as religious programs or
agenda.The non-believers would therefore be compelled to conform to a standard of conduct
buttressed by a religious belief, i.e., to a "compelled religion," anathema to religious freedom.
Likewise, if government based its actions upon religious beliefs, it would tacitly approve or
endorse that belief and thereby also tacitly disapprove contrary religious or non-religious views
that would not support the policy. As a result, government will not provide full religious freedom
for all its citizens, or even make it appear that those whose beliefs are disapproved are second-
class citizens. Expansive religious freedom therefore requires that government be neutral in
matters of religion; governmental reliance upon religious justification is inconsistent with this
policy of neutrality.
In other words, government action, including its proscription of immorality as expressed in
criminal law like concubinage, must have a secular purpose. That is, the government proscribes
this conduct because it is "detrimental (or dangerous) to those conditions upon which depend
the existence and progress of human society" and not because the conduct is proscribed by the
beliefs of one religion or the other. Although admittedly, moral judgments based on religion
might have a compelling influence on those engaged in public deliberations over what actions
would be considered a moral disapprobation punishable by law. After all, they might also be
adherents of a religion and thus have religious opinions and moral codes with a compelling
influence on them; the human mind endeavors to regulate the temporal and spiritual institutions
of society in a uniform manner, harmonizing earth with heaven. Succinctly put, a law could be
religious or Kantian or Aquinian or utilitarian in its deepest roots, but it must have an articulable
and discernible secular purpose and justification to pass scrutiny of the religion clauses.x x
x.42(Citations omitted and emphases ours)
Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it pertains to
public and secular morality; it refers to those conducts which are proscribed because they are
detrimental to conditions upon which depend the existence and progress of human society. Thus,
in Anonymous v. Radam,43 an administrative case involving a court utility worker likewise
charged with disgraceful and immoral conduct, applying the doctrines laid down in Estrada, the
Court held that:
For a particular conduct to constitute "disgraceful and immoral" behavior under civil service
laws, it must be regulated on account of the concerns of public and secular morality. It cannot be
judged based on personal bias, specifically those colored by particular mores. Nor should it be
grounded on "cultural" values not convincingly demonstrated to have been recognized in the
realm of public policy expressed in the Constitution and the laws. At the same time, the
constitutionally guaranteed rights (such as the right to privacy) should be observed to the extent
that they protect behavior that may be frowned upon by the majority.
Under these tests, two things may be concluded from the fact that an unmarried woman gives
birth out of wedlock:
(1) if the father of the child is himself unmarried, the woman is not ordinarily
administratively liable for disgraceful and immoral conduct.It may be a not-so-ideal
situation and may cause complications for both mother and child but it does not give
cause for administrative sanction. There is no law which penalizes an unmarried
mother under those circumstances by reason of her sexual conduct or proscribes the
consensual sexual activity between two unmarried persons. Neither does the situation
contravene any fundamental state policy as expressed in the Constitution, a document
that accommodates various belief systems irrespective of dogmatic origins.
(2) if the father of the child born out of wedlock is himself married to a woman other
thanthe mother, then there is a cause for administrative sanction against either the
father or the mother. In sucha case, the "disgraceful and immoral conduct" consists of
having extramarital relations with a married person. The sanctity of marriage is
constitutionally recognized and likewise affirmed by our statutes as a special contract
of permanent union. Accordingly, judicial employees have been sanctioned for their
dalliances with married persons or for their own betrayals of the marital vow of fidelity.
In this case, it was not disputed that, like respondent, the father of her child was unmarried.
Therefore, respondent cannot be held liable for disgraceful and immoral conduct simply because
she gave birth to the child Christian Jeon out of wedlock.44 (Citations omitted and emphases ours)
Both Estrada and Radamare administrative cases against employees in the civil service. The
Court, however, sees no reason not to apply the doctrines enunciated in Estrada and Radamin
the instant case. Estrada and Radamalso required the Court to delineate what conducts are
considered disgraceful and/or immoral as would constitute a ground for dismissal. More
importantly, as in the said administrative cases, the instant case involves an employee’s security
of tenure; this case likewise concerns employment, which is not merely a specie of property right,
but also the means by which the employee and those who depend on him live.45
It bears stressing that the right of an employee to security of tenure is protected by the
Constitution. Perfunctorily, a regular employee may not be dismissed unless for cause provided
under the Labor Code and other relevant laws, in this case, the 1992 MRPS. As stated above, when
the law refers to morality, it necessarily pertains to public and secular morality and not religious
morality. Thus, the proscription against "disgraceful or immoral conduct" under Section 94(e) of
the 1992 MRPS, which is made as a cause for dismissal, must necessarily refer to public and
secular morality. Accordingly, in order for a conduct tobe considered as disgraceful or immoral,
it must be "‘detrimental (or dangerous) to those conditions upon which depend the existence and
progress of human society’ and not because the conduct is proscribed by the beliefs of one
religion or the other."
Thus, in Santos v. NLRC,46 the Court upheld the dismissal of a teacher who had an extra-marital
affair with his co-teacher, who is likewise married, on the ground of disgraceful and immoral
conduct under Section 94(e) of the 1992 MRPS. The Court pointed out that extra-marital affair is
considered as a disgraceful and immoral conduct is an afront to the sanctity of marriage, which
is a basic institution of society, viz:
We cannot overemphasize that having an extra-marital affair is an afront to the sanctity of
marriage, which is a basic institution of society. Even our Family Code provides that husband and
wife must live together, observe mutual love, respect and fidelity. This is rooted in the fact that
both our Constitution and our laws cherish the validity of marriage and unity of the family. Our
laws, in implementing this constitutional edict on marriage and the family underscore their
permanence, inviolability and solidarity.47
The petitioner’s pregnancy out of
wedlock is not a disgraceful or
immoral conduct since she and the
father of her child have no
impediment to marry each other.
In stark contrast to Santos, the Court does not find any circumstance in this case which would
lead the Court to conclude that the petitioner committed a disgraceful or immoral conduct. It
bears stressing that the petitioner and her boyfriend, at the time they conceived a child, had no
legal impediment to marry. Indeed, even prior to her dismissal, the petitioner married her
boyfriend, the father of her child. As the Court held in Radam, there is no law which penalizes an
unmarried mother by reason of her sexual conduct or proscribes the consensual sexual activity
between two unmarried persons; that neither does such situation contravene any fundamental
state policy enshrined in the Constitution.
Admittedly, the petitioner is employed in an educational institution where the teachings and
doctrines of the Catholic Church, including that on pre-marital sexual relations, is strictly upheld
and taught to the students. That her indiscretion, which resulted in her pregnancy out of wedlock,
is anathema to the doctrines of the Catholic Church. However, viewed against the prevailing
norms of conduct, the petitioner’s conduct cannot be considered as disgraceful or immoral; such
conduct is not denounced by public and secular morality. It may be an unusual arrangement, but
it certainly is not disgraceful or immoral within the contemplation of the law.
To stress, pre-marital sexual relations between two consenting adults who have no impediment
to marry each other, and, consequently, conceiving a child out of wedlock, gauged from a purely
public and secular view of morality, does not amount to a disgraceful or immoral conduct under
Section 94(e) of the 1992 MRPS.
Accordingly, the labor tribunals erred in upholding the validity of the petitioner’s dismissal. The
labor tribunals arbitrarily relied solely on the circumstances surrounding the petitioner’s
pregnancy and its supposed effect on SSCW and its students without evaluating whether the
petitioner’s conduct is indeed considered disgraceful or immoral in view of the prevailing norms
of conduct. In this regard, the labor tribunals’ respective haphazard evaluation of the evidence
amounts to grave abuse of discretion, which the Court will rectify.
The labor tribunals’ finding that the petitioner’s pregnancy out of wedlock despite the absence
of substantial evidence is not only arbitrary, but a grave abuse of discretion, which should have
been set right by the CA.
There is no substantial evidence to
prove that the petitioner’s pregnancy
out of wedlock caused grave scandal
to SSCW and its students.
SSCW claimed that the petitioner was primarily dismissed because her pregnancy out of wedlock
caused grave scandal to SSCW and its students. That the scandal brought about by the petitioner’s
indiscretion prompted them to dismiss her. The LA upheld the respondents’ claim, stating that:
In this particular case, an "objective" and "rational evaluation" of the facts and circumstances
obtaining in this case would lead us to focus our attention x x x on the impact of the act committed
by the complainant. The act of the complainant x x x eroded the moral principles being taught
and project[ed] by the respondent [C]atholic school to their young lady students.48 (Emphasis in
the original)
On the other hand, the NLRC opined that:
In the instant case, when the complainant-appellant was already conceiving a child even before
she got married, such is considered a shameful and scandalous behavior, inimical to public
welfare and policy. It eroded the moral doctrines which the respondent Catholic school, an
exclusive school for girls, is teaching the young girls. Thus, when the respondent-appellee school
terminated complainant-appellant’s services, it was a valid exercise of its management
prerogative. Whether or not she was a teacher is of no moment. There is no separate set of rules
for non-teaching personnel. Respondents-appellees uphold the teachings of the Catholic Church
on pre-marital sex and that the complainant-appellant as an employee of the school was expected
to abide by this basic principle and to live up with the standards of their purely Catholic values.
Her subsequent marriage did not take away the fact that she had engaged in pre-marital sex
which the respondent-appellee school denounces as the same is opposed to the teachings and
doctrines it espouses.49 (Emphasis ours)
Contrary to the labor tribunals’ declarations, the Court finds that SSCW failed to adduce
substantial evidence to prove that the petitioner’s indiscretion indeed caused grave scandal to
SSCW and its students. Other than the SSCW’s bare allegation, the records are bereft of any
evidence that would convincingly prove that the petitioner’s conduct indeed adversely affected
SSCW’s integrity in teaching the moral doctrines, which it stands for. The petitioner is only a non-
teaching personnel; her interaction with SSCW’s students is very limited. Itis thus quite
impossible that her pregnancy out of wedlock caused such a grave scandal, as claimed by SSCW,
as to warranther dismissal.
Settled is the rule that in termination cases, the burden of proving that the dismissal of the
employees was for a valid and authorized cause rests on the employer. It is incumbent upon the
employer to show by substantial evidence that the termination of the employment of the
employees was validly made and failure to discharge that duty would mean that the dismissal is
not justified and therefore illegal.50 "Substantial evidence is more than a mere scintilla of
evidence. It means such relevant evidence as a reasonable mind might accept as adequateto
support a conclusion, even if other minds equally reasonable mightconceivably opine
otherwise."51
Indubitably, bare allegations do not amount to substantial evidence. Considering that the
respondents failed to adduce substantial evidence to prove their asserted cause for the
petitioner’s dismissal, the labor tribunals should not have upheld their allegations hook, line and
sinker. The labor tribunals’ respective findings, which were arrived at sans any substantial
evidence, amounts to a grave abuse of discretion, which the CA should have rectified. "Security
of tenure is a right which may not be denied on mere speculation of any unclearand nebulous
basis."52
The petitioner’s dismissal is not a
valid exercise of SSCW’s
management prerogative.
The CA be labored the management prerogative of SSCW to discipline its employees. The CA
opined that the petitioner’s dismissal is a valid exercise of management prerogative to impose
penalties on erring employees pursuant to its policies, rules and regulations.
The Court does not agree.
The Court has held that "management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal
and recall of workers. The exercise of management prerogative, however, is not absolute as it
must beexercised in good faith and with due regard to the rights of labor." Management cannot
exercise its prerogative in a cruel, repressive, or despotic manner.53
SSCW, as employer, undeniably has the right to discipline its employees and, if need be, dismiss
themif there is a valid cause to do so. However, as already explained, there is no cause to dismiss
the petitioner. Her conduct is not considered by law as disgraceful or immoral. Further, the
respondents themselves have admitted that SSCW, at the time of the controversy, does not have
any policy or rule against an employee who engages in pre-marital sexual relations and conceives
a child as a result thereof. There being no valid basis in law or even in SSCW’s policy and rules,
SSCW’s dismissal of the petitioner is despotic and arbitrary and, thus, not a valid exercise of
management prerogative.
In sum, the Court finds that the petitioner was illegally dismissed as there was no just cause for
the termination of her employment. SSCW failed to adduce substantial evidence to establish that
the petitioner’s conduct, i.e., engaging in pre-marital sexual relations and conceiving a child out
of wedlock, assessed in light of the prevailing norms of conduct, is considered disgraceful or
immoral. The labor tribunals gravely abused their discretion in upholding the validity of the
petitioner’s dismissal as the charge against the petitioner lay not on substantial evidence, but on
the bare allegations of SSCW. In turn, the CA committed reversible error in upholding the validity
of the petitioner’s dismissal, failing torecognize that the labor tribunals gravely abused their
discretion in ruling for the respondents.
The petitioner is entitled to
separation pay, in lieu of actual
reinstatement, full backwages and
attorney’s fees, but not to moral and
exemplary damages.
Having established that the petitioner was illegally dismissed, the Court now determines the
reliefs thatshe is entitled to and their extent. Under the law and prevailing jurisprudence, "an
illegally dismissed employee is entitled to reinstatement as a matter of right." 54 Aside from the
instances provided under Articles 28355 and 28456 of the Labor Code, separation pay is, however,
granted when reinstatement is no longer feasible because of strained relations between the
employer and the employee. In cases of illegal dismissal, the accepted doctrine is that separation
pay is available in lieu of reinstatement when the latter recourse is no longer practical or in the
best interest of the parties.57
In Divine Word High School v. NLRC,58 the Court ordered the employer Catholic school to pay the
illegally dismissed high school teacher separation pay in lieu of actual reinstatement since her
continued presence as a teacher in the school "may well bemet with antipathy and antagonism
by some sectors in the school community."59
In view of the particular circumstances of this case, it would be more prudent to direct SSCW to
pay the petitioner separation pay inlieu of actual reinstatement. The continued employment of
the petitioner with SSCW would only serve to intensify the atmosphere of antipathy and
antagonism between the parties. Consequently, the Court awards separation pay to the
petitioner equivalent to one (1) month pay for every year of service, with a fraction of at least six
(6) months considered as one (1) whole year, from the time of her illegal dismissal up to the
finality of this judgment, as an alternative to reinstatement.
Also, "employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time their actual
compensation was withheld from them up to the time of their actual reinstatement but if
reinstatement is no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision."60 Accordingly, the petitioner is entitled to
an award of full backwages from the time she was illegally dismissed up to the finality of this
decision.
Nevertheless, the petitioner is not entitled to moral and exemplary damages. "A dismissed
employee isentitled to moral damages when the dismissal is attended by bad faith or fraud or
constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good
customs or public policy. Exemplary damages may be awarded if the dismissal is effected in a
wanton, oppressive or malevolent manner."61
"Bad faith, under the law, does not simply connote bad judgment or negligence.1âwphi1 It
imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, or a breach
of a known duty through some motive or interest or ill will that partakes of the nature of fraud."62

"It must be noted that the burden of proving bad faith rests on the one alleging it"63 since basic
is the principle that good faith is presumed and he who alleges bad faith has the duty to prove
the same.64 "Allegations of bad faith and fraud must be proved by clear and convincing
evidence."65

The records of this case are bereft of any clear and convincing evidence showing that the
respondents acted in bad faith or in a wanton or fraudulent manner in dismissing the petitioner.
That the petitioner was illegally dismissed is insufficient to prove bad faith. A dismissal may be
contrary to law but by itself alone, it does not establish bad faith to entitle the dismissed
employee to moral damages. The award of moral and exemplary damages cannot be justified
solely upon the premise that the employer dismissed his employee without cause. 66

However, the petitioner is entitled to attorney’s fees in the amount of 10% of the total monetary
award pursuant to Article 11167 of the Labor Code. "It is settled that where an employee was
forced to litigate and, thus, incur expenses to protect his rights and interest, the award of
attorney’s fees is legally and morally justifiable."68

Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of six
percent (6%) per annumfrom the finality of this judgment until fully paid.69

WHEREFORE, in consideration of the foregoing disquisitions, the petition is GRANTED. The

Decision dated September 24, 2008 and Resolution dated March 2, 2009 of the Court of Appeals
in CA-G.R. SP No. 100188 are hereby REVERSED and SET ASIDE.

The respondent, St. Scholastica’s College Westgrove, is hereby declared guilty of illegal dismissal
and is hereby ORDERED to pay the petitioner, Cheryll Santos Leus, the following: (a) separation
pay in lieu of actual reinstatement equivalent to one (1) month pay for every year of service, with
a fraction of at least six (6) months considered as one (1) whole year from the time of her
dismissal up to the finality of this Decision; (b) full backwages from the time of her illegal
dismissal up to the finality of this Decision; and (c) attorney’s fees equivalent to ten percent
(10%) of the total monetary award. The monetary awards herein granted shall earn legal interest
at the rate of six percent (6%) per annumfrom the date of the finality of this Decision untilfully
paid. The case is REMANDED to the Labor Arbiter for the computation of petitioner’s monetary
awards.

SO ORDERED.
G.R. No. 168081 October 17, 2008
ARMANDO G. YRASUEGUI, petitioners,
vs.
PHILIPPINE AIRLINES, INC., respondents.
DECISION
REYES, R.T., J.:
THIS case portrays the peculiar story of an international flight steward who was dismissed
because of his failure to adhere to the weight standards of the airline company.
He is now before this Court via a petition for review on certiorari claiming that he was illegally
dismissed. To buttress his stance, he argues that (1) his dismissal does not fall under 282(e) of
the Labor Code; (2) continuing adherence to the weight standards of the company is not a bona
fide occupational qualification; and (3) he was discriminated against because other overweight
employees were promoted instead of being disciplined.
After a meticulous consideration of all arguments pro and con, We uphold the legality of
dismissal. Separation pay, however, should be awarded in favor of the employee as an act of
social justice or based on equity. This is so because his dismissal is not for serious misconduct.
Neither is it reflective of his moral character.
The Facts
Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines,
Inc. (PAL). He stands five feet and eight inches (5’8") with a large body frame. The proper weight
for a man of his height and body structure is from 147 to 166 pounds, the ideal weight being 166
pounds, as mandated by the Cabin and Crew Administration Manual1 of PAL.
The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an
extended vacation leave from December 29, 1984 to March 4, 1985 to address his weight
concerns. Apparently, petitioner failed to meet the company’s weight standards, prompting
another leave without pay from March 5, 1985 to November 1985.
After meeting the required weight, petitioner was allowed to return to work. But petitioner’s
weight problem recurred. He again went on leave without pay from October 17, 1988 to February
1989.
On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with
company policy, he was removed from flight duty effective May 6, 1989 to July 3, 1989. He was
formally requested to trim down to his ideal weight and report for weight checks on several
dates. He was also told that he may avail of the services of the company physician should he wish
to do so. He was advised that his case will be evaluated on July 3, 1989.2
On February 25, 1989, petitioner underwent weight check. It was discovered that he gained,
instead of losing, weight. He was overweight at 215 pounds, which is 49 pounds beyond the limit.
Consequently, his off-duty status was retained.
On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his
residence to check on the progress of his effort to lose weight. Petitioner weighed 217 pounds,
gaining 2 pounds from his previous weight. After the visit, petitioner made a commitment 3 to
reduce weight in a letter addressed to Cabin Crew Group Manager Augusto Barrios. The letter, in
full, reads:
Dear Sir:
I would like to guaranty my commitment towards a weight loss from 217 pounds to 200
pounds from today until 31 Dec. 1989.
From thereon, I promise to continue reducing at a reasonable percentage until such time that my
ideal weight is achieved.
Likewise, I promise to personally report to your office at the designated time schedule you will
set for my weight check.
Respectfully Yours,
F/S Armando Yrasuegui4
Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained
overweight. On January 3, 1990, he was informed of the PAL decision for him to remain grounded
until such time that he satisfactorily complies with the weight standards. Again, he was directed
to report every two weeks for weight checks.
Petitioner failed to report for weight checks. Despite that, he was given one more month to
comply with the weight requirement. As usual, he was asked to report for weight check on
different dates. He was reminded that his grounding would continue pending satisfactory
compliance with the weight standards.5
Again, petitioner failed to report for weight checks, although he was seen submitting his passport
for processing at the PAL Staff Service Division.
On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight
check would be dealt with accordingly. He was given another set of weight check dates. 6 Again,
petitioner ignored the directive and did not report for weight checks. On June 26, 1990, petitioner
was required to explain his refusal to undergo weight checks.7
When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he was still
way over his ideal weight of 166 pounds.
From then on, nothing was heard from petitioner until he followed up his case requesting for
leniency on the latter part of 1992. He weighed at 219 pounds on August 20, 1992 and 205
pounds on November 5, 1992.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for
violation of company standards on weight requirements. He was given ten (10) days from receipt
of the charge within which to file his answer and submit controverting evidence.8
On December 7, 1992, petitioner submitted his Answer.9 Notably, he did not deny being
overweight. What he claimed, instead, is that his violation, if any, had already been condoned by
PAL since "no action has been taken by the company" regarding his case "since 1988." He also
claimed that PAL discriminated against him because "the company has not been fair in treating
the cabin crew members who are similarly situated."
On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he was
undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain
his ideal weight.10
On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his
ideal weight, "and considering the utmost leniency" extended to him "which spanned a period
covering a total of almost five (5) years," his services were considered terminated "effective
immediately."11
His motion for reconsideration having been denied,12 petitioner filed a complaint for illegal
dismissal against PAL.
Labor Arbiter, NLRC and CA Dispositions
On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled 13 that petitioner was illegally
dismissed. The dispositive part of the Arbiter ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the complainant’s
dismissal illegal, and ordering the respondent to reinstate him to his former position or
substantially equivalent one, and to pay him:
a. Backwages of Php10,500.00 per month from his dismissal on June 15, 1993 until reinstated,
which for purposes of appeal is hereby set from June 15, 1993 up to August 15, 1998 at
₱651,000.00;
b. Attorney’s fees of five percent (5%) of the total award.
SO ORDERED.14
The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of
the job of petitioner.15 However, the weight standards need not be complied with under pain of
dismissal since his weight did not hamper the performance of his duties.16 Assuming that it did,
petitioner could be transferred to other positions where his weight would not be a negative
factor.17 Notably, other overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were
promoted instead of being disciplined.18
Both parties appealed to the National Labor Relations Commission (NLRC).19
On October 8, 1999, the Labor Arbiter issued a writ of execution directing the reinstatement of
petitioner without loss of seniority rights and other benefits.20
On February 1, 2000, the Labor Arbiter denied21 the Motion to Quash Writ of Execution22 of PAL.
On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC. 23
On June 23, 2000, the NLRC rendered judgment24 in the following tenor:
WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November 1998 as
modified by our findings herein, is hereby AFFIRMED and that part of the dispositive portion of
said decision concerning complainant’s entitlement to backwages shall be deemed to refer to
complainant’s entitlement to his full backwages, inclusive of allowances and to his other benefits
or their monetary equivalent instead of simply backwages, from date of dismissal until his actual
reinstatement or finality hereof. Respondent is enjoined to manifests (sic) its choice of the form
of the reinstatement of complainant, whether physical or through payroll within ten (10) days
from notice failing which, the same shall be deemed as complainant’s reinstatement through
payroll and execution in case of non-payment shall accordingly be issued by the Arbiter. Both
appeals of respondent thus, are DISMISSED for utter lack of merit.25
According to the NLRC, "obesity, or the tendency to gain weight uncontrollably regardless of the
amount of food intake, is a disease in itself."26 As a consequence, there can be no intentional
defiance or serious misconduct by petitioner to the lawful order of PAL for him to lose weight.27
Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable. However,
it found as unnecessary the Labor Arbiter holding that petitioner was not remiss in the
performance of his duties as flight steward despite being overweight. According to the NLRC, the
Labor Arbiter should have limited himself to the issue of whether the failure of petitioner to
attain his ideal weight constituted willful defiance of the weight standards of PAL. 28
PAL moved for reconsideration to no avail.29 Thus, PAL elevated the matter to the Court of
Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.30
By Decision dated August 31, 2004, the CA reversed 31 the NLRC:
WHEREFORE, premises considered, we hereby GRANT the petition. The assailed NLRC decision
is declared NULL and VOID and is hereby SET ASIDE. The private respondent’s complaint is
hereby DISMISSED. No costs.
SO ORDERED.32
The CA opined that there was grave abuse of discretion on the part of the NLRC because it "looked
at wrong and irrelevant considerations"33 in evaluating the evidence of the parties. Contrary to
the NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an
employee’s position.34 The failure to adhere to the weight standards is an analogous cause for
the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a).
It is not willful disobedience as the NLRC seemed to suggest.35 Said the CA, "the element of
willfulness that the NLRC decision cites is an irrelevant consideration in arriving at a conclusion
on whether the dismissal is legally proper."36 In other words, "the relevant question to ask is not
one of willfulness but one of reasonableness of the standard and whether or not the employee
qualifies or continues to qualify under this standard."37
Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL are
reasonable.38 Thus, petitioner was legally dismissed because he repeatedly failed to meet the
prescribed weight standards.39 It is obvious that the issue of discrimination was only invoked by
petitioner for purposes of escaping the result of his dismissal for being overweight. 40
On May 10, 2005, the CA denied petitioner’s motion for reconsideration. 41 Elaborating on its
earlier ruling, the CA held that the weight standards of PAL are a bona fide occupational
qualification which, in case of violation, "justifies an employee’s separation from the service."42
Issues
In this Rule 45 petition for review, the following issues are posed for resolution:
I.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONER’S OBESITY CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e) OF
ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES;
II.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING
THAT PETITIONER’S DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE "BONA FIDE
OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE";
III.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER
WAS NOT UNDULY DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE OTHER
OVERWEIGHT CABIN ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR PROMOTED;
IV.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED ASIDE
PETITIONER’S CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT
AND ACADEMIC.43 (Underscoring supplied)
Our Ruling
I. The obesity of petitioner is a ground for dismissal under Article 282(e) 44 of the Labor
Code.
A reading of the weight standards of PAL would lead to no other conclusion than that they
constitute a continuing qualification of an employee in order to keep the job. Tersely put, an
employee may be dismissed the moment he is unable to comply with his ideal weight as
prescribed by the weight standards. The dismissal of the employee would thus fall under Article
282(e) of the Labor Code. As explained by the CA:
x x x [T]he standards violated in this case were not mere "orders" of the employer; they were the
"prescribed weights" that a cabin crew must maintain in order to qualify for and keep his or
her position in the company. In other words, they were standards that establish continuing
qualifications for an employee’s position. In this sense, the failure to maintain these standards
does not fall under Article 282(a) whose express terms require the element of willfulness in
order to be a ground for dismissal. The failure to meet the employer’s qualifying standards is in
fact a ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls
under Article 282(e) – the "other causes analogous to the foregoing."
By its nature, these "qualifying standards" are norms that apply prior to and after an employee
is hired. They apply prior to employment because these are the standards a job applicant must
initially meet in order to be hired. They apply after hiring because an employee must continue
to meet these standards while on the job in order to keep his job. Under this perspective, a
violation is not one of the faults for which an employee can be dismissed pursuant to pars. (a) to
(d) of Article 282; the employee can be dismissed simply because he no longer "qualifies" for his
job irrespective of whether or not the failure to qualify was willful or intentional. x x x45
Petitioner, though, advances a very interesting argument. He claims that obesity is a "physical
abnormality and/or illness."46 Relying on Nadura v. Benguet Consolidated, Inc.,47 he says his
dismissal is illegal:
Conscious of the fact that Nadura’s case cannot be made to fall squarely within the specific causes
enumerated in subparagraphs 1(a) to (e), Benguet invokes the provisions of subparagraph 1(f)
and says that Nadura’s illness – occasional attacks of asthma – is a cause analogous to them.
Even a cursory reading of the legal provision under consideration is sufficient to convince anyone
that, as the trial court said, "illness cannot be included as an analogous cause by any stretch of
imagination."
It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others expressly
enumerated in the law are due to the voluntary and/or willful act of the employee. How Nadura’s
illness could be considered as "analogous" to any of them is beyond our understanding, there
being no claim or pretense that the same was contracted through his own voluntary act.48
The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from
the case at bar. First, Nadura was not decided under the Labor Code. The law applied in that case
was Republic Act (RA) No. 1787. Second, the issue of flight safety is absent in Nadura, thus, the
rationale there cannot apply here. Third, in Nadura, the employee who was a miner, was laid off
from work because of illness, i.e., asthma. Here, petitioner was dismissed for his failure to meet
the weight standards of PAL. He was not dismissed due to illness. Fourth, the issue in Nadura is
whether or not the dismissed employee is entitled to separation pay and damages. Here, the issue
centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards
of PAL. Fifth, in Nadura, the employee was not accorded due process. Here, petitioner was
accorded utmost leniency. He was given more than four (4) years to comply with the weight
standards of PAL.
In the case at bar, the evidence on record militates against petitioner’s claims that obesity is a
disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible
for him to lose weight given the proper attitude, determination, and self-discipline. Indeed,
during the clarificatory hearing on December 8, 1992, petitioner himself claimed that "[t]he issue
is could I bring my weight down to ideal weight which is 172, then the answer is yes. I can do it
now."49
True, petitioner claims that reducing weight is costing him "a lot of expenses."50 However,
petitioner has only himself to blame. He could have easily availed the assistance of the company
physician, per the advice of PAL.51 He chose to ignore the suggestion. In fact, he repeatedly failed
to report when required to undergo weight checks, without offering a valid explanation. Thus,
his fluctuating weight indicates absence of willpower rather than an illness.
Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation
and Hospitals,52decided by the United States Court of Appeals (First Circuit). In that case, Cook
worked from 1978 to 1980 and from 1981 to 1986 as an institutional attendant for the mentally
retarded at the Ladd Center that was being operated by respondent. She twice resigned
voluntarily with an unblemished record. Even respondent admitted that her performance met
the Center’s legitimate expectations. In 1988, Cook re-applied for a similar position. At that time,
"she stood 5’2" tall and weighed over 320 pounds." Respondent claimed that the morbid obesity
of plaintiff compromised her ability to evacuate patients in case of emergency and it also put her
at greater risk of serious diseases.
Cook contended that the action of respondent amounted to discrimination on the basis of a
handicap. This was in direct violation of Section 504(a) of the Rehabilitation Act of 1973,53 which
incorporates the remedies contained in Title VI of the Civil Rights Act of 1964. Respondent
claimed, however, that morbid obesity could never constitute a handicap within the purview of
the Rehabilitation Act. Among others, obesity is a mutable condition, thus plaintiff could simply
lose weight and rid herself of concomitant disability.
The appellate Court disagreed and held that morbid obesity is a disability under the
Rehabilitation Act and that respondent discriminated against Cook based on "perceived"
disability. The evidence included expert testimony that morbid obesity is a physiological
disorder. It involves a dysfunction of both the metabolic system and the neurological appetite –
suppressing signal system, which is capable of causing adverse effects within the
musculoskeletal, respiratory, and cardiovascular systems. Notably, the Court stated that
"mutability is relevant only in determining the substantiality of the limitation flowing from a
given impairment," thus "mutability only precludes those conditions that an individual can easily
and quickly reverse by behavioral alteration."
Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court for the
District of Rhode Island, Cook was sometime before 1978 "at least one hundred pounds more
than what is considered appropriate of her height." According to the Circuit Judge, Cook weighed
"over 320 pounds" in 1988. Clearly, that is not the case here. At his heaviest, petitioner was only
less than 50 pounds over his ideal weight.
In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight
attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his
dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As
the CA correctly puts it, "[v]oluntariness basically means that the just cause is solely attributable
to the employee without any external force influencing or controlling his actions. This element
runs through all just causes under Article 282, whether they be in the nature of a wrongful action
or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although
it lacks the element of intent found in Article 282(a), (c), and (d)."54
II. The dismissal of petitioner can be predicated on the bona fide occupational qualification
defense.
Employment in particular jobs may not be limited to persons of a particular sex, religion, or
national origin unless the employer can show that sex, religion, or national origin is an actual
qualification for performing the job. The qualification is called a bona fide occupational
qualification (BFOQ).55 In the United States, there are a few federal and many state job
discrimination laws that contain an exception allowing an employer to engage in an otherwise
unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the
normal operation of a business or enterprise.56
Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute
providing for it.57 Further, there is no existing BFOQ statute that could justify his dismissal.58
Both arguments must fail.
First, the Constitution,59 the Labor Code,60 and RA No. 727761 or the Magna Carta for Disabled
Persons62 contain provisions similar to BFOQ.
Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British
Columbia Government and Service Employee’s Union (BCGSEU),63 the Supreme Court of Canada
adopted the so-called "Meiorin Test" in determining whether an employment policy is justified.
Under this test, (1) the employer must show that it adopted the standard for a purpose rationally
connected to the performance of the job;64 (2) the employer must establish that the standard is
reasonably necessary65 to the accomplishment of that work-related purpose; and (3) the
employer must establish that the standard is reasonably necessary in order to accomplish the
legitimate work-related purpose. Similarly, in Star Paper Corporation v. Simbol,66 this Court held
that in order to justify a BFOQ, the employer must prove that (1) the employment qualification
is reasonably related to the essential operation of the job involved; and (2) that there is factual
basis for believing that all or substantially all persons meeting the qualification would be unable
to properly perform the duties of the job.67
In short, the test of reasonableness of the company policy is used because it is parallel to
BFOQ.68 BFOQ is valid "provided it reflects an inherent quality reasonably necessary for
satisfactory job performance."69
In Duncan Association of Detailman-PTGWTO v. Glaxo Wellcome Philippines, Inc.,70 the Court did
not hesitate to pass upon the validity of a company policy which prohibits its employees from
marrying employees of a rival company. It was held that the company policy is reasonable
considering that its purpose is the protection of the interests of the company against possible
competitor infiltration on its trade secrets and procedures.
Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting
statute. Too, the Labor Arbiter,71 NLRC,72 and CA73 are one in holding that the weight standards
of PAL are reasonable. A common carrier, from the nature of its business and for reasons of public
policy, is bound to observe extraordinary diligence for the safety of the passengers it
transports.74 It is bound to carry its passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard for all the
circumstances.75
The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only
logical to hold that the weight standards of PAL show its effort to comply with the exacting
obligations imposed upon it by law by virtue of being a common carrier.
The business of PAL is air transportation. As such, it has committed itself to safely transport its
passengers. In order to achieve this, it must necessarily rely on its employees, most particularly
the cabin flight deck crew who are on board the aircraft. The weight standards of PAL should be
viewed as imposing strict norms of discipline upon its employees.
In other words, the primary objective of PAL in the imposition of the weight standards for cabin
crew is flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times
in order to inspire passenger confidence on their ability to care for the passengers when
something goes wrong. It is not farfetched to say that airline companies, just like all common
carriers, thrive due to public confidence on their safety records. People, especially the riding
public, expect no less than that airline companies transport their passengers to their respective
destinations safely and soundly. A lesser performance is unacceptable.
The task of a cabin crew or flight attendant is not limited to serving meals or attending to the
whims and caprices of the passengers. The most important activity of the cabin crew is to care
for the safety of passengers and the evacuation of the aircraft when an emergency
occurs. Passenger safety goes to the core of the job of a cabin attendant. Truly, airlines need cabin
attendants who have the necessary strength to open emergency doors, the agility to attend to
passengers in cramped working conditions, and the stamina to withstand grueling flight
schedules.
On board an aircraft, the body weight and size of a cabin attendant are important factors to
consider in case of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit
doors. Thus, the arguments of respondent that "[w]hether the airline’s flight attendants are
overweight or not has no direct relation to its mission of transporting passengers to their
destination"; and that the weight standards "has nothing to do with airworthiness of
respondent’s airlines," must fail.
The rationale in Western Air Lines v. Criswell76 relied upon by petitioner cannot apply to his case.
What was involved there were two (2) airline pilots who were denied reassignment as flight
engineers upon reaching the age of 60, and a flight engineer who was forced to retire at age 60.
They sued the airline company, alleging that the age-60 retirement for flight engineers violated
the Age Discrimination in Employment Act of 1967. Age-based BFOQ and being overweight are
not the same. The case of overweight cabin attendants is another matter. Given the cramped
cabin space and narrow aisles and emergency exit doors of the airplane, any overweight cabin
attendant would certainly have difficulty navigating the cramped cabin area.
In short, there is no need to individually evaluate their ability to perform their task. That an obese
cabin attendant occupies more space than a slim one is an unquestionable fact which courts can
judicially recognize without introduction of evidence.77 It would also be absurd to require airline
companies to reconfigure the aircraft in order to widen the aisles and exit doors just to
accommodate overweight cabin attendants like petitioner.
The biggest problem with an overweight cabin attendant is the possibility of impeding
passengers from evacuating the aircraft, should the occasion call for it. The job of a cabin
attendant during emergencies is to speedily get the passengers out of the aircraft safely. Being
overweight necessarily impedes mobility. Indeed, in an emergency situation, seconds are what
cabin attendants are dealing with, not minutes. Three lost seconds can translate into three lost
lives. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the
narrow aisles. These possibilities are not remote.
Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made
known to him prior to his employment. He is presumed to know the weight limit that he must
maintain at all times.78 In fact, never did he question the authority of PAL when he was repeatedly
asked to trim down his weight. Bona fides exigit ut quod convenit fiat. Good faith demands that
what is agreed upon shall be done. Kung ang tao ay tapat kanyang tutuparin ang
napagkasunduan.
Too, the weight standards of PAL provide for separate weight limitations based on height and
body frame for both male and female cabin attendants. A progressive discipline is imposed to
allow non-compliant cabin attendants sufficient opportunity to meet the weight standards. Thus,
the clear-cut rules obviate any possibility for the commission of abuse or arbitrary action on the
part of PAL.
III. Petitioner failed to substantiate his claim that he was discriminated against by PAL.
Petitioner next claims that PAL is using passenger safety as a convenient excuse to discriminate
against him.79 We are constrained, however, to hold otherwise. We agree with the CA that "[t]he
element of discrimination came into play in this case as a secondary position for the private
respondent in order to escape the consequence of dismissal that being overweight entailed. It is
a confession-and-avoidance position that impliedly admitted the cause of dismissal, including the
reasonableness of the applicable standard and the private respondent’s failure to comply." 80It is
a basic rule in evidence that each party must prove his affirmative allegation. 81
Since the burden of evidence lies with the party who asserts an affirmative allegation, petitioner
has to prove his allegation with particularity. There is nothing on the records which could
support the finding of discriminatory treatment. Petitioner cannot establish discrimination by
simply naming the supposed cabin attendants who are allegedly similarly situated with him.
Substantial proof must be shown as to how and why they are similarly situated and the
differential treatment petitioner got from PAL despite the similarity of his situation with other
employees.
Indeed, except for pointing out the names of the supposed overweight cabin attendants,
petitioner miserably failed to indicate their respective ideal weights; weights over their ideal
weights; the periods they were allowed to fly despite their being overweight; the particular
flights assigned to them; the discriminating treatment they got from PAL; and other relevant data
that could have adequately established a case of discriminatory treatment by PAL. In the words
of the CA, "PAL really had no substantial case of discrimination to meet."82
We are not unmindful that findings of facts of administrative agencies, like the Labor Arbiter and
the NLRC, are accorded respect, even finality.83 The reason is simple: administrative agencies are
experts in matters within their specific and specialized jurisdiction.84 But the principle is not a
hard and fast rule. It only applies if the findings of facts are duly supported by substantial
evidence. If it can be shown that administrative bodies grossly misappreciated evidence of such
nature so as to compel a conclusion to the contrary, their findings of facts must necessarily be
reversed. Factual findings of administrative agencies do not have infallibility and must be set
aside when they fail the test of arbitrariness.85
Here, the Labor Arbiter and the NLRC inexplicably misappreciated evidence. We thus annul their
findings.
To make his claim more believable, petitioner invokes the equal protection clause guaranty86 of
the Constitution. However, in the absence of governmental interference, the liberties guaranteed
by the Constitution cannot be invoked.87 Put differently, the Bill of Rights is not meant to be
invoked against acts of private individuals.88 Indeed, the United States Supreme Court, in
interpreting the Fourteenth Amendment,89 which is the source of our equal protection
guarantee, is consistent in saying that the equal protection erects no shield against private
conduct, however discriminatory or wrongful.90 Private actions, no matter how egregious,
cannot violate the equal protection guarantee.91
IV. The claims of petitioner for reinstatement and wages are moot.
As his last contention, petitioner avers that his claims for reinstatement and wages have not been
mooted. He is entitled to reinstatement and his full backwages, "from the time he was illegally
dismissed" up to the time that the NLRC was reversed by the CA.92
At this point, Article 223 of the Labor Code finds relevance:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated
in the payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein.
The law is very clear. Although an award or order of reinstatement is self-executory and does not
require a writ of execution,93 the option to exercise actual reinstatement or payroll reinstatement
belongs to the employer. It does not belong to the employee, to the labor tribunals, or even to the
courts.
Contrary to the allegation of petitioner that PAL "did everything under the sun" to frustrate his
"immediate return to his previous position,"94 there is evidence that PAL opted to physically
reinstate him to a substantially equivalent position in accordance with the order of the Labor
Arbiter.95 In fact, petitioner duly received the return to work notice on February 23, 2001, as
shown by his signature.96
Petitioner cannot take refuge in the pronouncements of the Court in a case 97 that "[t]he
unjustified refusal of the employer to reinstate the dismissed employee entitles him to payment
of his salaries effective from the time the employer failed to reinstate him despite the issuance of
a writ of execution"98 and ""even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the employee
during the period of appeal until reversal by the higher court."99 He failed to prove that he
complied with the return to work order of PAL. Neither does it appear on record that he actually
rendered services for PAL from the moment he was dismissed, in order to insist on the payment
of his full backwages.
In insisting that he be reinstated to his actual position despite being overweight, petitioner in
effect wants to render the issues in the present case moot. He asks PAL to comply with the
impossible. Time and again, the Court ruled that the law does not exact compliance with the
impossible.100
V. Petitioner is entitled to separation pay.
Be that as it may, all is not lost for petitioner.
Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced
from the language of Article 279 of the Labor Code that "[a]n employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement." Luckily for petitioner, this is not an ironclad rule.

Exceptionally, separation pay is granted to a legally dismissed employee as an act "social

justice,"101 or based on "equity."102 In both instances, it is required that the dismissal (1) was not
for serious misconduct; and (2) does not reflect on the moral character of the employee. 103

Here, We grant petitioner separation pay equivalent to one-half (1/2) month’s pay for every year
of service.104 It should include regular allowances which he might have been receiving.105 We are
not blind to the fact that he was not dismissed for any serious misconduct or to any act which
would reflect on his moral character. We also recognize that his employment with PAL lasted for
more or less a decade.

WHEREFORE, the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in
that petitioner Armando G. Yrasuegui is entitled to separation pay in an amount equivalent to
one-half (1/2) month’s pay for every year of service, which should include his regular allowances.

SO ORDERED.