Constitutional Provisions Inapplicable to Labor

I.

[G.R. NO. 158693 : November 17, 2004]

JENNY M. AGABON and VIRGILIO C. AGABON, Petitioners, v. NATIONAL LABOR RELATIONS

COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and VICENTE ANGELES,Respondents.

DECISION

YNARES-SANTIAGO, J.:

This Petition for Review seeks to reverse the decision1 of the Court of Appeals dated January 23, 2003, in
CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR
Case No. 023442-00.

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing
ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as
gypsum board and cornice installers on January 2, 19922 until February 23, 1999 when they were dismissed
for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claims3 and on December 28,
1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent
to pay the monetary claims. The dispositive portion of the decision states:

WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly,
respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93

2. Virgilio C. Agabon - 56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service
from date of hiring up to November 29, 1999.

Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for
the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio
Agabon's 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00)
Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT
& 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT
HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation
of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR.

SO ORDERED.4

On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their
work, and were not entitled to backwages and separation pay. The other money claims awarded by the
Labor Arbiter were also denied for lack of evidence.5

Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of
Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had
abandoned their employment but ordered the payment of money claims. The dispositive portion of the
decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it
dismissed petitioner's money claims. Private respondents are ordered to pay petitioners holiday pay for four
(4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and
to pay the balance of petitioner Virgilio Agabon's 13th month pay for 1998 in the amount of P2,150.00.

SO ORDERED.6

Hence, this Petition for Review on the sole issue of whether petitioners were illegally dismissed.7

Petitioners assert that they were dismissed because the private respondent refused to give them
assignments unless they agreed to work on a "pakyaw" basis when they reported for duty on February 23,
1999. They did not agree on this arrangement because it would mean losing benefits as Social Security
System (SSS) members. Petitioners also claim that private respondent did not comply with the twin
requirements of notice and hearing.8

Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned
their work.9 In fact, private respondent sent two letters to the last known addresses of the petitioners
advising them to report for work. Private respondent's manager even talked to petitioner Virgilio Agabon by
telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving
40,000 square meters of cornice installation work. However, petitioners did not report for work because they
had subcontracted to perform installation work for another company. Petitioners also demanded for an
increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for
work and filed the illegal dismissal case.10

It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect
but even finality if the findings are supported by substantial evidence. This is especially so when such
findings were affirmed by the Court of Appeals.11 However, if the factual findings of the NLRC and the Labor
Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself
the questioned findings.12

Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners' dismissal was for
a just cause. They had abandoned their employment and were already working for another employer.

To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins
the employer to give the employee the opportunity to be heard and to defend himself.13 Article 282 of the
Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or the latter's representative in
connection with the employee's work; (b) gross and habitual neglect by the employee of his duties; (c)
fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized
representative; (d) commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representative; and (e) other causes analogous
to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.14 It is a
form of neglect of duty, hence, a just cause for termination of employment by the employer.15 For a valid
finding of abandonment, these two factors should be present: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with
the second as the more determinative factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work. The intent to discontinue the employment must
be shown by clear proof that it was deliberate and unjustified.16

In February 1999, petitioners were frequently absent having subcontracted for an installation work for
another company. Subcontracting for another company clearly showed the intention to sever the employer-
employee relationship with private respondent. This was not the first time they did this. In January 1996,
they did not report for work because they were working for another company. Private respondent at that
time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the
warning and exhibited a clear intention to sever their employer-employee relationship. The record of an
employee is a relevant consideration in determining the penalty that should be meted out to him.17
In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented from work without
leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have
abandoned his job. We should apply that rule with more reason here where petitioners were absent because
they were already working in another company.

The law imposes many obligations on the employer such as providing just compensation to workers,
observance of the procedural requirements of notice and hearing in the termination of employment. On the
other hand, the law also recognizes the right of the employer to expect from its workers not only good
performance, adequate work and diligence, but also good conduct19 and loyalty. The employer may not be
compelled to continue to employ such persons whose continuance in the service will patently be inimical to
his interests.20

After establishing that the terminations were for a just and valid cause, we now determine if the procedures
for dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules
Implementing the Labor Code:

Standards of due process: requirements of notice. - In all cases of termination of employment, the following
standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to
said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him; and cralawli bra ry

(c) A written notice of termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the employee's last known address.

Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals
based on authorized causes involve grounds under the Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires payment of separation pay. When the
termination of employment is declared illegal, reinstatement and full backwages are mandated under Article
279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss;
and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give
the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity
of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article
284, and due process was observed; (2) the dismissal is without just or authorized cause but due process
was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4)
the dismissal is for just or authorized cause but due process was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee
is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive
of allowances, and other benefits or their monetary equivalent computed from the time the compensation
was not paid up to the time of actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the
procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work for another company. Private respondent,
however, did not follow the notice requirements and instead argued that sending notices to the last known
addresses would have been useless because they did not reside there anymore. Unfortunately for the
private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the
employee's last known address.21 Thus, it should be held liable for non-compliance with the procedural
requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various
rulings on employment termination in the light of Serrano v. National Labor Relations Commission.22

Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any
notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,23 we reversed this long-
standing rule and held that the dismissed employee, although not given any notice and hearing, was not
entitled to reinstatement and backwages because the dismissal was for grave misconduct and
insubordination, a just ground for termination under Article 282. The employee had a violent temper and
caused trouble during office hours, defying superiors who tried to pacify him. We concluded that reinstating
the employee and awarding backwages "may encourage him to do even worse and will render a mockery of
the rules of discipline that employees are required to observe."24 We further held that:

Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He
has no right to return to his former employment.

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his
right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal
of an employee must be for just or authorized cause and after due process. Petitioner committed an
infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal
notice and conduct an investigation as required by law before dismissing petitioner from employment.
Considering the circumstances of this case petitioner must indemnify the private respondent the amount of
P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission
committed by the employer.25

The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the
due process requirement, the dismissal may be upheld but the employer will be penalized to pay an
indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule.

On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the
violation by the employer of the notice requirement in termination for just or authorized causes was not a
denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer
must pay full backwages from the time of termination until it is judicially declared that the dismissal was for
a just or authorized cause.

The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases
involving dismissals without requisite notices. We concluded that the imposition of penalty by way of
damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required
payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a
just or authorized cause.

Serrano was confronting the practice of employers to "dismiss now and pay later" by imposing full
backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor
Code which states:

ART. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An 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.

This means that the termination is illegal only if it is not for any of the justified or authorized causes
provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if the
employee was unjustly dismissed.

The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has
prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights
based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed
fundamental to a civilized society as conceived by our entire history. Due process is that which comports
with the deepest notions of what is fair and right and just.26 It is a constitutional restraint on the legislative
as well as on the executive and judicial powers of the government provided by the Bill of Rights.

Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the
valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the
manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules
of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2,
as amended by Department Order Nos. 9 and 10.27 Breaches of these due process requirements violate the
Labor Code. Therefore statutory due process should be differentiated from failure to comply
with constitutional due process.

Constitutional due process protects the individual from the government and assures him of his rights in
criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and
Implementing Rules protects employees from being unjustly terminated without just cause after notice and
hearing.

In Sebuguero v. National Labor Relations Commission,28 the dismissal was for a just and valid cause but the
employee was not accorded due process. The dismissal was upheld by the Court but the employer was
sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the facts of
each case and the gravity of the omission committed by the employer.

In Nath v. National Labor Relations Commission,29 it was ruled that even if the employee was not given due
process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just
cause, albeit without due process, did not entitle the employee to reinstatement, backwages, damages and
attorney's fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations
Commission,30 which opinion he reiterated in Serrano, stated:

C. Where there is just cause for dismissal but due process has not been properly observed by an employer,
it would not be right to order either the reinstatement of the dismissed employee or the payment of
backwages to him. In failing, however, to comply with the procedure prescribed by law in terminating the
services of the employee, the employer must be deemed to have opted or, in any case, should be made
liable, for the payment of separation pay. It might be pointed out that the notice to be given and the hearing
to be conducted generally constitute the two-part due process requirement of law to be accorded to the
employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to
undertake the above steps would be no more than a useless formality and where, accordingly, it would not
be imprudent to apply the res ipsa loquiturrule and award, in lieu of separation pay, nominal damages to the
employee. x x x.31
After carefully analyzing the consequences of the divergent doctrines in the law on employment termination,
we believe that in cases involving dismissals for cause but without observance of the twin requirements of
notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that
the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be
stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by
dispensing justice not just to employees, but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying
with statutory due process may have far-reaching consequences.

This would encourage frivolous suits, where even the most notorious violators of company policy are
rewarded by invoking due process. This also creates absurd situations where there is a just or authorized
cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case
where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal,
who has fled and cannot be found, or where serious business losses demand that operations be ceased in
less than a month. Invalidating the dismissal would not serve public interest. It could also discourage
investments that can generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers.
The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when
it is in the right, as in this case.32 Certainly, an employer should not be compelled to pay employees for work
not actually performed and in fact abandoned.

The employer should not be compelled to continue employing a person who is admittedly guilty of
misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law
protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer.33

It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment,
which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social
Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an
injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition
of the necessity of interdependence among diverse units of a society and of the protection that should be
equally and evenly extended to all groups as a combined force in our social and economic life, consistent
with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all
persons, and of bringing about "the greatest good to the greatest number."34

This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related
cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and
circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations
and dispense justice with an even hand in every case:

We have repeatedly stressed that social justice - or any justice for that matter - is for the deserving,
whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable
doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy
and compassion. But never is it justified to give preference to the poor simply because they are poor, or
reject the rich simply because they are rich, for justice must always be served for the poor and the rich
alike, according to the mandate of the law.35

Justice in every case should only be for the deserving party. It should not be presumed that every case of
illegal dismissal would automatically be decided in favor of labor, as management has rights that should be
fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building,
labor and management need each other to foster productivity and economic growth; hence, the need to
weigh and balance the rights and welfare of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not
nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the
employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations
Commission.36 The indemnity to be imposed should be stiffer to discourage the abhorrent practice of
"dismiss now, pay later," which we sought to deter in the Serrano ruling. The sanction should be in the
nature of indemnification or penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer.

Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.37

As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an employer is liable to
pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such
dismissal, the employer fails to comply with the requirements of due process. The Court, after considering
the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employee's one
month salary. This indemnity is intended not to penalize the employer but to vindicate or recognize the
employee's right to statutory due process which was violated by the employer.39

The violation of the petitioners' right to statutory due process by the private respondent warrants the
payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the
sound discretion of the court, taking into account the relevant circumstances.40 Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages
would serve to deter employers from future violations of the statutory due process rights of employees. At
the very least, it provides a vindication or recognition of this fundamental right granted to the latter under
the Labor Code and its Implementing Rules.

Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners' holiday
pay, service incentive leave pay and 13th month pay.

We are not persuaded.

We affirm the ruling of the appellate court on petitioners' money claims. Private respondent is liable for
petitioners' holiday pay, service incentive leave pay and 13th month pay without deductions.

As a general rule, one who pleads payment has the burden of proving it. Even where the employee must
allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather
than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files,
payrolls, records, remittances and other similar documents - which will show that overtime, differentials,
service incentive leave and other claims of workers have been paid - are not in the possession of the worker
but in the custody and absolute control of the employer.41

In the case at bar, if private respondent indeed paid petitioners' holiday pay and service incentive leave pay,
it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the
petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers
showing payments of the benefit in the years disputed.42 Allegations by private respondent that it does not
operate during holidays and that it allows its employees 10 days leave with pay, other than being self-
serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby
making it liable for such claims to the petitioners.

Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month
pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant
an additional income in the form of the 13th month pay to employees not already receiving the same43so as
"to further protect the level of real wages from the ravages of world-wide inflation."44 Clearly, as additional
income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to
wit:

(f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of
being expressed in terms of money whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee' "

from which an employer is prohibited under Article 11345 of the same Code from making any deductions
without the employee's knowledge and consent. In the instant case, private respondent failed to show that
the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabon's 13th month pay
was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner
Virgilio Agabon included the same as one of his money claims against private respondent.

The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the
private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in
the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and
the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated
January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny and Virgilio Agabon abandoned
their work, and ordering private respondent to pay each of the petitioners holiday pay for four regular
holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in
the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount
of P2,150.00 is AFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements,
Inc. is further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for
non-compliance with statutory due process.

No costs.

SO ORDERED.

II.
[G.R. No. 117040. January 27, 2000.]

RUBEN SERRANO, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION and ISETANN

DEPARTMENT STORE, Respondents.

DECISION

MENDOZA, J.:

This is a petition seeking review of the resolutions, dated March 30, 1994 and August 26, 1994, of the
National Labor Relations Commission (NLRC) which reversed the decision of the Labor Arbiter and dismissed
petitioner Ruben Serrano’s complaint for illegal dismissal and denied his motion for reconsideration. The
facts are as follows:
chan robles v irt ua| |aw |ibrary

Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend
shoplifters and prevent pilferage of merchandise. 1 Initially hired on October 4, 1984 on contractual basis,
petitioner eventually became a regular employee on April 4, 1985. In 1988, he became head of the Security
Checkers Section of private Respondent. 2

Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security
section and engage the services of an independent security agency. For this reason, it wrote petitioner the
following memorandum: 3

October 11, 1991

MR. RUBEN SERRANO

PRESENT

Dear Mr. Serrano,

In view of the retrenchment program of the company, we hereby reiterate our verbal notice to you of your
termination as Security Section Head effective October 11, 1991.

Please secure your clearance from this office.

Very truly yours,

[Sgd.] TERESITA A. VILLANUEVA

Human Resources Division Manager

The loss of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal
dismissal, illegal layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and
overtime pay. 4

The parties were required to submit their position papers, on the basis of which the Labor Arbiter defined
the issues as follows: 5

Whether or not there is a valid ground for the dismissal of the complainant.

Whether or not complainant is entitled to his monetary claims for underpayment of wages, nonpayment of
salaries, 13th month pay for 1991 and overtime pay.

Whether or not Respondent is guilty of unfair labor practice.

Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision finding petitioner
to have been illegally dismissed. He ruled that private respondent failed to establish that it had retrenched
its security section to prevent or minimize losses to its business; that private respondent failed to accord
due process to petitioner; that private respondent failed to use reasonable standards in selecting employees
whose employment would be terminated; that private respondent had not shown that petitioner and other
employees in the security section were so inefficient so as to justify their replacement by a security agency,
or that "cost-saving devices [such as] secret video cameras (to monitor and prevent shoplifting) and secret
code tags on the merchandise” could not have been employed; instead, the day after petitioner’s dismissal,
private respondent employed a safety and security supervisor with duties and functions similar to those of
petitioner.
c han robles. com : virtualaw li bra ry

Accordingly, the Labor Arbiter ordered: 6

WHEREFORE, above premises considered, judgment is hereby decreed: chan rob 1es vi rtual 1aw lib rary

(a) Finding the dismissal of the complainant to be illegal and concomitantly, Respondent is ordered to pay
complainant full backwages without qualification or deduction in the amount of P74,740.00 from the time of
his dismissal until reinstatement (computed till promulgation only) based on his monthly salary of
P4,040.00/month at the time of his termination but limited to (3) three years;

(b) Ordering the Respondent to immediately reinstate the complainant to his former position as security
section head or to a reasonably equivalent supervisorial position in charges of security without loss of
seniority rights, privileges and benefits. This order is immediately executory even pending appeal;

(c) Ordering the Respondent to pay complainant unpaid wages in the amount of P2,020.73 and
proportionate 13th month pay in the amount of P3,198.30;

(d) Ordering the Respondent to pay complainant the amount of P7,995.91, representing 10% attorney’s fees
based on the total judgment award of P79,959.12.
All other claims of the complainant whether monetary or otherwise is hereby dismissed for lack of merit.

SO ORDERED. chanroblesvi rt ual|awlib rary

Private respondent appealed to the NLRC which, in its resolution of March 30, 1994, reversed the decision of
the Labor Arbiter and ordered petitioner to be given separation pay equivalent to one month pay for every
year of service, unpaid salary, and proportionate 13th month pay. Petitioner filed a motion for
reconsideration, but his motion was denied.

The NLRC held that the phase-out of private respondent’s security section and the hiring of an independent
security agency constituted an exercise by private respondent of" [a] legitimate business decision whose
wisdom we do not intend to inquire into and for which we cannot substitute our judgment" ; that the
distinction made by the Labor Arbiter between "retrenchment" and the employment of "cost-saving devices”
under Art. 283 of the Labor Code was insignificant because the company official who wrote the dismissal
letter apparently used the term "retrenchment” in its "plain and ordinary sense: to layoff or remove from
one’s job, regardless of the reason therefor”; that the rule of "reasonable criteria” in the selection of the
employees to be retrenched did not apply because all positions in the security section had been abolished;
and that the appointment of a safety and security supervisor referred to by petitioner to prove bad faith on
private respondent’s part was of no moment because the position had long been in existence and was
separate from petitioner’s position as head of the Security Checkers Section.

Hence this petition. Petitioner raises the following issue: chan robles v irt ual lawl ibra ry

IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT TO REPLACE ITS
CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF THE EMPLOYEES CLASSED UNDER
THE LATTER? 7

Petitioner contends that abolition of private respondent’s Security Checkers Section and the employment of
an independent security agency do not fall under any of the authorized causes for dismissal under Art. 283
of the Labor Code.

Petitioner Laid Off for Cause

Petitioner’s contention has no merit. Art. 283 provides: cha nrob 1es vi rtual 1aw li bra ry

Closure of establishment and reduction of personnel. — The employer may also terminate the employment
of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operations of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure
or cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered as one (1) whole year. chanrob lesvi rtual|awl ibra ry

In De Ocampo v. National Labor Relations Commission, 8 this Court upheld the termination of employment
of three mechanics in a transportation company and their replacement by a company rendering maintenance
and repair services. It held: chanro b1es vi rtual 1aw lib rary

In contracting the services of Gemac Machineries, as part of the company’s cost-saving program, the
services rendered by the mechanics became redundant and superfluous, and therefore properly terminable.
The company merely exercised its business judgment or management prerogative. And in the absence of
any proof that the management abused its discretion or acted in a malicious or arbitrary manner, the court
will not interfere with the exercise of such prerogative. 9

In Asian Alcohol Corporation v. National Labor Relations Commission, 10 the Court likewise upheld the
termination of employment of water pump tenders and their replacement by independent contractors. It
ruled that an employer’s good faith in implementing a redundancy program is not necessarily put in doubt
by the availment of the services of an independent contractor to replace the services of the terminated
employees to promote economy and efficiency.

Indeed, as we pointed out in another case, the" [management of a company] cannot be denied the faculty
of promoting efficiency and attaining economy by a study of what units are essential for its operation. To it
belongs the ultimate determination of whether services should be performed by its personnel or contracted
to outside agencies . . . [While there] should be mutual consultation, eventually deference is to be paid to
what management decides." 11 Consequently, absent proof that management acted in a malicious or
arbitrary manner, the Court will not interfere with the exercise of judgment by an employer. 12

In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section,
private respondent’s real purpose was to avoid payment to the security checkers of the wage increases
provided in the collective bargaining agreement approved in 1990. 13 Such an assertion is not a sufficient
basis for concluding that the termination of petitioner’s employment was not a bona fide decision of
management to obtain reasonable return from its investment, which is a right guaranteed to employers
under the Constitution. 14 Indeed, that the phase-out of the security section constituted a "legitimate
business decision” is a factual finding of an administrative agency which must be accorded respect and even
finality by this Court since nothing can be found in the record which fairly detracts from such finding. 15

Accordingly, we hold that the termination of petitioner’s services was for an authorized cause, i.e.,
redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation pay at the
rate of one month pay for every year of service.

Sanctions for Violations of

the Notice Requirement chan roble s.com.p h:red

Art. 283 also provides that to terminate the employment of an employee for any of the authorized causes
the employer must serve "a written notice on the workers and the Department of Labor and Employment at
least one (1) month before the intended date thereof.” In the case at bar, petitioner was given a notice of
termination on October 11, 1991. On the same day, his services were terminated. He was thus denied his
right to be given written notice before the termination of his employment, and the question is the
appropriate sanction for the violation of petitioner’s right.

To be sure, this is not the first time this question has arisen. In Sebuguero v. NLRC, 16 workers in a
garment factory were temporarily laid off due to the cancellation of orders and a garment embargo. The
Labor Arbiter found that the workers had been illegally dismissed and ordered the company to pay
separation pay and backwages. The NLRC, on the other hand, found that this was a case of retrenchment
due to business losses and ordered the payment of separation pay without backwages. This Court sustained
the NLRC’s finding. However, as the company did not comply with the 30-day written notice in Art. 283 of
the Labor Code, the Court ordered the employer to pay the workers P2,000.00 each as indemnity.

The decision followed the ruling in several cases involving dismissals which, although based on any of the
just causes under Art. 282, 17 were effected without notice and hearing to the employee as required by the
implementing rules. 18 As this Court said: "It is now settled that where the dismissal of one employee is in
fact for a just and valid cause and is so proven to be but he is not accorded his right to due process, i.e., he
was not furnished the twin requirements of notice and opportunity to be heard, the dismissal shall be upheld
but the employer must be sanctioned for non-compliance with the requirements of, or for failure to observe,
due process." 19

The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a
just cause or the termination of employment is for an authorized cause, the dismissal or termination is
illegal if effected without notice to the employee. The shift in doctrine took place in 1989 in Wenphil Corp. v.
NLRC. 20 In announcing the change, this Court said: 21

The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of
seniority and the payment of his wages during the period of his separation until his actual reinstatement but
not exceeding three (3) years without qualification or deduction, when it appears he was not afforded due
process, although his dismissal was found to be for just and authorized cause in an appropriate proceeding
in the Ministry of Labor and Employment, should be re-examined. It will be highly prejudicial to the interests
of the employer to impose on him the services of an employee who has been shown to be guilty of the
charges that warranted his dismissal from employment. Indeed, it will demoralize the rank and file if the
undeserving, if not undesirable, remains in the service.
 x x x

However, the petitioner must nevertheless be held to account for failure to extend to private respondent his
right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal
of an employee must be for just or authorized cause and after due process. Petitioner committed an
infraction of the second requirement. Thus; it must be imposed a sanction for its failure to give a formal
notice and conduct an investigation as required by law before dismissing petitioner from employment.
Considering the circumstances of this case petitioner must indemnify the private respondent the amount of
P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission
committed by the employer. ch anroble s virtual lawlib rary: red

The fines imposed for violations of the notice requirement have varied from P1,000.00 22 to P2,000.00 23
to P5,000.00 24 to P10,000.00.25 cralaw:red

Need for Reexamining the Wenphil Doctrine

Today, we once again consider the question of appropriate sanctions for violations of the notice requirement
in light of our experience during the last decade or so with the Wenphil doctrine. The number of cases
involving dismissals without the requisite notice to the employee, although effected for just or authorized
causes, suggests that the imposition of fine for violation of the notice requirement has not been effective in
deterring violations of the notice requirement. Justice Panganiban finds the monetary sanctions "too
insignificant, too niggardly, and sometimes even too late.” On the other hand, Justice Puno says there has in
effect been fostered a policy of "dismiss now, pay later” which moneyed employers find more convenient to
comply with than the requirement to serve a 30-day written notice (in the case of termination of
employment for an authorized cause under Arts. 283-284) or to give notice and hearing (in the case of
dismissals for just causes under Art. 282).

For this reason, they regard any dismissal or layoff without the requisite notice to be null and void even
though there are just or authorized causes for such dismissal or layoff. Consequently, in their view, the
employee concerned should be reinstated and paid backwages.

Validity of Petitioner’s Layoff Not

Affected by Lack of Notice

We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the sanction
of fine for an employer’s disregard of the notice requirement. We do not agree, however, that disregard of
this requirement by an employer renders the dismissal or termination of employment null and void. Such a
stance is actually a reversion to the discredited pre-Wenphil rule of ordering an employee to be reinstated
and paid backwages when it is shown that he has not been given notice and hearing although his dismissal
or layoff is later found to be for a just or authorized cause. Such rule was abandoned in Wenphil because it
is really unjust to require an employer to keep in his service one who is guilty, for example, of an attempt
on the life of the employer or the latter’s family, or when the employer is precisely retrenching in order to
prevent losses.

The need is for a rule which, while recognizing the employee’s right to notice before he is dismissed or laid
off, at the same time acknowledges the right of the employer to dismiss for any of the just causes
enumerated in Art. 282 or to terminate employment for any of the authorized causes mentioned in Arts.
283-284. If the Wenphil rule imposing a fine on an employer who is found to have dismissed an employee
for cause without prior notice is deemed ineffective in deterring employer violations of the notice
requirement, the remedy is not to declare the dismissal void if there are just or valid grounds for such
dismissal or if the termination is for an authorized cause. That would be to uphold the right of the employee
but deny the right of the employer to dismiss for cause. Rather, the remedy is to order the payment to the
employee of full backwages from the time of his dismissal until the court finds that the dismissal was for a
just cause. But, otherwise, his dismissal must be upheld and he should not be reinstated. This is because his
dismissal is ineffectual.

For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a
labor-saving device, but the employer did not give him and the DOLE a 30-day written notice of termination
in advance, then the termination of his employment should be considered ineffectual and he should be paid
backwages. However, the termination of his employment should not be considered void but he should simply
be paid separation pay as provided in Art. 283 in addition to backwages.

Justice Puno argues that an employer’s failure to comply with the notice requirement constitutes a denial of
the employee’s right to due process. Prescinding from this premise, he quotes the statement of Chief Justice
Concepcion in Vda. de Cuaycong v. Vda. de Sengbengco 26 that "acts of Congress, as well as of the
Executive, can deny due process only under the pain of nullity, and judicial proceedings suffering from the
same flaw are subject to the same sanction, any statutory provision to the contrary notwithstanding.”
Justice Puno concludes that the dismissal of an employee without notice and hearing, even if for a just
cause, as provided in Art. 282, or for an authorized cause, as provided in Arts. 283-284, is a nullity. Hence,
even if just or authorized causes exist, the employee should be reinstated with full back pay. On the other
hand, Justice Panganiban quotes from the statement in People v. Bocar 27 that" [w]here the denial of the
fundamental right of due process is apparent, a decision rendered in disregard of that right is void for lack of
jurisdiction."
cralaw virtua1aw l ibra ry

Violation of Notice Requirement

Not a Denial of Due Process

The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process by the
State, which is not the case here. There are three reasons why, on the other hand, violation by the
employer of the notice requirement cannot be considered a denial of due process resulting in the nullity of
the employee’s dismissal or layoff.

The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does
not apply to the exercise of private power, such as the termination of employment under the Labor Code.
This is plain from the text of Art. III, §1 of the Constitution, viz.: "No person shall be deprived of life, liberty,
or property without due process of law. . . .” The reason is simple: Only the State has authority to take the
life, liberty, or property of the individual. The purpose of the Due Process Clause is to ensure that the
exercise of this power is consistent with what are considered civilized methods.

The second reason is that notice and hearing are required under the Due Process Clause before the power of
organized society are brought to bear upon the individual. This is obviously not the case of termination of
employment under Art. 283. Here the employee is not faced with an aspect of the adversary system. The
purpose for requiring a 30-day written notice before an employee is laid off is not to afford him an
opportunity to be heard on any charge against him, for there is none.The purpose rather is to give him time
to prepare for the eventual loss of his job and the DOLE an opportunity to determine whether economic
causes do exist justifying the termination of his employment. chanrob les vi rtual lawlib rary

Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not to
comply with Due Process Clause of the Constitution. The time for notice and hearing is at the trial stage.
Then that is the time we speak of notice and hearing as the essence of procedural due process. Thus,
compliance by the employer with the notice requirement before he dismisses an employee does not
foreclose the right of the latter to question the legality of his dismissal. As Art. 277 (b) provides, "Any
decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or
legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission." cralaw virtua 1aw lib rary

Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook
the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882 which gave either
party to the employer-employee relationship the right to terminate their relationship by giving notice to the
other one month in advance. In lieu of notice, an employee could be laid off by paying him a mesada
equivalent to his salary for one month. 28 This provision was repealed by Art. 2270 of the Civil Code, which
took effect on August 30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise known as the Termination
Pay Law, was enacted reviving the mesada. On June 21, 1957, the law was amended by R.A. No. 1787
providing for the giving of advance notice or the payment of compensation at the rate of one-half month for
every year of service. 29

The Termination Pay Law was held not to be a substantive law but a regulatory measure, the purpose of
which was to give the employer the opportunity to find a replacement or substitute, and the employee the
equal opportunity to look for another job or source of employment. Where the termination of employment
was for a just cause, no notice was required to be given to the employee. 30 It was only on September 4,
1981 that notice was required to be given even where the dismissal or termination of an employee was for
cause. This was made in the rules issued by the then Minister of Labor and Employment to implement B.P.
Blg. 130 which amended the Labor Code. And it was still much later when the notice requirement was
embodied in the law with the amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989. It cannot be
that the former regime denied due process to the employee. Otherwise, there should now likewise be a rule
that, in case an employee leaves his job without cause and without prior notice to his employer, his act
should be void instead of simply making him liable for damages.

The third reason why the notice requirement under Art. 283 can not be considered a requirement of the Due
Process Clause is that the employer cannot really be expected to be entirely an impartial judge of his own
cause. This is also the case in termination of employment for a just cause under Art. 282 (i.e., serious
misconduct or willful disobedience by the employee of the lawful orders of the employer, gross and habitual
neglect of duties, fraud or willful breach of trust of the employer, commission of crime against the employer
or the latter’s immediate family or duly authorized representatives, or other analogous cases).

Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won by
employees before the grievance committees manned by impartial judges of the company.” The grievance
machinery is, however, different because it is established by agreement of the employer and the employees
and composed of representatives from both sides. That is why, in Batangas Laguna Tayabas Bus Co. v.
Court of Appeals, 31 which Justice Puno cites, it was held that "Since the right of [an employee] to his labor
is in itself a property and that the labor agreement between him and [his employer] is the law between the
parties, his summary and arbitrary dismissal amounted to deprivation of his property without due process of
law.” But here we are dealing with dismissals and layoffs by employers alone, without the intervention of
any grievance machinery. Accordingly in Montemayor v. Araneta University Foundation, 32 although a
professor was dismissed without a hearing by his university, his dismissal for having made homosexual
advances on a student was sustained, it appearing that in the NLRC, the employee was fully heard in his
defense.

Lack of Notice Only Makes

Termination Ineffectual

Not all notice requirements are requirements of due process. Some are simply part of a procedure to be
followed before a right granted to a party can be exercised. Others are simply an application of the Justinian
precept, embodied in the Civil Code, 33 to act with justice, give everyone his due, and observe honesty and
good faith toward one’s fellowmen. Such is the notice requirement in Arts. 282-283. The consequence of the
failure either of the employer or the employee to live up to this precept is to make him liable in damages,
not to render his act (dismissal or resignation, as the case may be) void. The measure of damages is the
amount of wages the employee should have received were it not for the termination of his employment
without prior notice. If warranted, nominal and moral damages may also be awarded. ELC

We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employer’s failure to comply with
the notice requirement does not constitute a denial of due process but a mere failure to observe a procedure
for the termination of employment which makes the termination of employment merely ineffectual. It is
similar to the failure to observe the provisions of Art. 1592, in relation to Art. 1191, of the Civil Code 34 in
rescinding a contract for the sale of immovable property. Under these provisions, while the power of a party
to rescind a contract is implied in reciprocal obligations, nonetheless, in cases involving the sale of
immovable property, the vendor cannot exercise this power even though the vendee defaults in the
payment of the price, except by bringing an action in court or giving notice of rescission by means of a
notarial demand. 35 Consequently, a notice of rescission given in the letter of an attorney has no legal
effect, and the vendee can make payment even after the due date since no valid notice of rescission has
been given. 36

Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can
make the dismissal of an employee illegal. This is clear from Art. 279 which provides: chan rob1e s virtual 1aw l ibra ry

Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An 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. 37

Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and,
therefore, the employee should be reinstated and paid backwages. To contend, as Justices Puno and
Panganiban do, that even if the termination is for a just or authorized cause the employee concerned should
be reinstated and paid backwages would be to amend Art. 279 by adding another ground for considering a
dismissal illegal. What is more, it would ignore the fact that under Art. 285, if it is the employee who fails to
give a written notice to the employer that he is leaving the service of the latter, at least one month in
advance, his failure to comply with the legal requirement does not result in making his resignation void but
only in making him liable for damages. 38 This disparity in legal treatment, which would result from the
adoption of the theory of the minority cannot simply be explained by invoking President Ramon Magsaysay’s
motto that "he who has less in life should have more in law." That would be a misapplication of this noble
phrase originally from Professor Thomas Reed Powell of the Harvard Law School.

Justice Panganiban cites Pepsi Cola Bottling Co. v. NLRC, 39 in support of his view that an illegal dismissal
results not only from want of legal cause but also from the failure to observe "due process." The Pepsi-Cola
case actually involved a dismissal for an alleged loss of trust and confidence which, as found by the Court,
was not proven. The dismissal was, therefore, illegal, not because there was a denial of due process, but
because the dismissal was without cause. The statement that the failure of management to comply with the
notice requirement "taints the dismissal with illegality” was merely a dictum thrown in as additional grounds
for holding the dismissal to be illegal.
cha nrob les vi rtual lawlib rary

Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the
payment of backwages for the period when the employee is considered not to have been effectively
dismissed or his employment terminated. The sanction is not the payment alone of nominal damages as
Justice Vitug contends.

Unjust Results of Considering Dismissals/

Layoffs Without Prior Notice As Illegal

The refusal to look beyond the validity of the initial action taken by the employer to terminate employment
either for an authorized or just cause can result in an injustice to the employer. For not giving notice and
hearing before dismissing an employee, who is otherwise guilty of, say, theft, or even of an attempt against
the life of the employer, an employer will be forced to keep in his employ such guilty employee. This is
unjust.

It is true the Constitution regards labor as "a primary social economic force." 40 But so does it declare that
it "recognizes the indispensable role of the private sector, encourages private enterprise, and provides
incentives to needed investment." 41 The Constitution bids the State to "afford full protection to labor." 42
But it is equally true that "the law, in protecting the rights of the laborer, authorizes neither oppression nor
self-destruction of the employer." 43 And it is oppression to compel the employer to continue in employment
one who is guilty or to force the employer to remain in operation when it is not economically in his interest
to do so.

In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of
employment was due to an authorized cause, then the employee concerned should not be ordered
reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must be
granted separation pay in accordance with Art. 283, to wit: chan rob 1es vi rtual 1aw lib rary

In case of termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one
month for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six months shall be
considered one (1) whole year.

If the employee’s separation is without cause, instead of being given separation pay, he should be
reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid full
backwages if he has been laid off without written notice at least 30 days in advance.

On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was
dismissed for any of the just causes mentioned in said Art 282, then, in accordance with that article, he
should not be reinstated. However, he must be paid backwages from the time his employment was
terminated until it is determined that the termination of employment is for a just cause because the failure
to hear him before he is dismissed renders the termination of his employment without legal effect.

WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is
MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation pay
equivalent to one (1) month pay for every year of service, his unpaid salary, and his proportionate 13th
month pay and, in addition, full backwages from the time his employment was terminated on October 11,
1991 up to the time the decision herein becomes final. For this purpose, this case is REMANDED to the Labor
Arbiter for computation of the separation pay, backwages, and other monetary awards to petitioner. c han roblesv irt ual|awlib rary

SO ORDERED.

III.

[G.R. NO. 162994 : September 17, 2004]

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, Petitioners, v. 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 (' ) month pay for every year of
service, or a total of P50,000.00 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:

. . . In this case, petitioner's transfer to another place of assignment was merely in 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 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 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

WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.

IV

[G.R. NO. 168081 : October 17, 2008]

ARMANDO G. YRASUEGUI, Petitioners, v. 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 commitment3 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 ruled13 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 P651,000.00;

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 Certiorariunder Rule 65 of the 1997 Rules of Civil Procedure.30

By Decision dated August 31, 2004, the CA reversed31 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"33in evaluating the evidence of the parties. Contrary to the NLRC ruling, the
weight standards of PAL are meant to be a continuing qualificationfor 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) cra lawlib rary

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 hiringbecause 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,52 decided 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."80 It 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,89which 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,"94there 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 case97 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.

V.

[G.R. NOS. 170384-85 : March 9, 2007]

 LORNA DISING PUNZAL, Petitioner, v. ETSI TECHNOLOGIES, INC., WERNER GEISERT, and
CARMELO D. REMUDARO, Respondents.

DECISION

CARPIO MORALES, J.:

Petitioner, Lorna Dising Punzal, had been working for respondent, ETSI Technologies, Inc. (ETSI), for 12
years prior to the termination of her services on November 26, 2001 on which date she was holding the
position of Department Secretary.

On October 30, 2001, petitioner sent an electronic mail (e-mail) message to her officemates announcing the
holding of a Halloween party that was to be held in the office the following day. The e-mail message read
verbatim:

Dear ETSI-JMT Colleagues,

Good day!

As you all know, tomorrow is the day before HALLOWEEN. And many of our kids will go around "TRICK OR
TREATING". We will be dressing them up in costumes of all sorts, from cute to outrageous, from wild to
"scary."

What we want to have is a similar activity here in the office. So we invite you to participate in this effort.
You can also dress your kids up in funny costumes. Also the kids will then go around the office Trick or
Treating. So, we ask you to prepare your Treats, like candies, biscuits, cookies, etc., (Cash is also welcome
for parents like me . . . he he he)

Why are we doing this? Well, we just want the kids to have a good time. Kung gusto ninyo, mag-costume
din kayo.

Alright! See you tomorrow morning, [October 31, 2001].1 (Underscoring supplied) c ralawl ibra ry

Petitioner's immediate superior, respondent Carmelo Remudaro (Remudaro), who was one of those to whom
the e-mail message was sent, advised petitioner to first secure the approval of the Senior Vice President,
respondent Werner Geisert (Geisert), for the holding of the party in the office.

Petitioner soon learned that Geisert did not approve of the plan to hold a party in the office. She thereupon
sent also on October 30, 2001 another e-mail message to her officemates, reading verbatim:

Sorry for the mail that I sent you, unfortunately the SVP of ETSI Technologies, Inc. did not agree to our idea
to bring our children in the office for the TRICK or TREATING. He was so unfair para bang palagi siyang
iniisahan sa trabaho' bakit most of the parents na mag-joined ang anak ay naka-VL naman. Anyway, solohin
na lang niya bukas ang office.

Anyway, to those parents who would like to bring their Kids in Megamall there will be Trick or Treating at Mc
Donalds Megamall Bldg. A at 10:00 AM tomorrow and let's not spoil the fun for our kids.2(Underscoring
supplied)cra lawlib rary

Remudaro and Arnold Z. David (David), the Assistant Vice President of Human Resources/TQM of ETSI, later
informed petitioner, by letter of November 13, 2001, that Geisert got a copy of her e-mail message and that
he required her to explain in writing within 48 hours why she

. . . should not be given disciplinary action for committing Article IV, No. 5 & 8 Improper conduct or
acts of discourtesy or disrespect and Making malicious statements concerning Company
Officer, whereby such offenses may be subject to suspension to termination depending upon the gravity of
the offense/s as specified in our ETSI's Code of Conduct and Discipline.3 (Emphasis in the original)
Petitioner replied by letter of November 14, 2001 that she had no malicious intention in sending the second
e-mail message and that she "never expected such kind of words can be called as 'acts of discourtesy or
disrespect.' " 4

On November 19, 2001, Geisert and Remudaro conferred with petitioner to give her a chance to explain her
side.5

David and Remudaro subsequently sent petitioner a letter on November 26, 2001, finding her explanation
"not acceptable" and terminating her services, effective immediately, "for committing Article IV, No[s]. 5 &
8, Improper conduct or act of discourtesy or disrespect and making malicious statements concerning
company officer."6

On February 11, 2002, petitioner filed before the National Labor Relations Commission (NLRC) a
complaint7 for illegal dismissal against ETSI, Geisert, and Remudaro.

By Order of November 26, 2002, the Labor Arbiter dismissed petitioner's complaint, finding that she was
legally dismissed for serious misconduct, and that she was afforded due process.8

On petitioner's appeal, the NLRC, by Resolution9 dated October 27, 2003, found that while she was indeed
guilty of misconduct, the penalty of dismissal was disproportionate to her infraction.10 The NLRC thus
ordered that petitioner was entitled to reinstatement which, however, was no longer feasible due to strained
relations. The NLRC thus ordered that petitioner be awarded separation pay equivalent to one month pay for
every year of service, a period of at least six months to be considered one whole year.11

Noting that petitioner was not entirely faultless, the NLRC denied her prayer for backwages12 as well as her
prayer for exemplary and moral damages and attorney's fees in the absence of the legal conditions
justifying their award.13

Both parties filed their respective motions for reconsideration14 which the NLRC denied.15 Both parties
thereupon filed their respective petitions for certiorari 16 with the Court of Appeals.

In the petition of petitioner, docketed as CA-G.R. SP No. 83296, she questioned the denial of her prayer for
backwages.17 Upon the other hand, in the petition of respondent ETSI, et al., docketed as CA-G.R. SP No.
83205, they questioned the finding of illegal dismissal, the grant of separation pay, and the imputation of
liability to Geisert and Remudaro.18

In her comment to the petition of ETSI, et al. in CA-G.R. SP No. 83205, petitioner raised the issue of due
process, alleging that her employer did not inform her of her right to be assisted by counsel during the
conference with respondents Geisert and Remudaro.19

By Decision20 of May 13, 2005, the Court of Appeals, which priorly consolidated the petitions of both parties,
held that petitioner's dismissal was in order:21

The gravity of Punzal's infraction is borne by the fact that her e-mail message to the workers of ETSI tended
to cast scorn and disrespect toward a senior vice president of the company. The message itself resounds of
subversion and undermines the authority and credibility of management.

x x x

Also, this message was not a mere expression of dissatisfaction privately made by one person to another,
but was circulated to everyone in the work area. The message was sent close at the heels of SVP Geisert's
disapproval of Punzal's plan to hold a Halloween affair in the office, because the said event would disrupt the
operations and peace and order in the office. Punzal therefore displayed a tendency to act without
management's approval, and even against management's will, as she invited her co-workers to join a trick
or treating activity at another venue during office hours.
The message also comes across as an encouragement to ignore SVP Geisert's authority, and portrayed him
as unworthy of respect because of his unpopular personality.

This is in clear violation of Article IV, Section 5 of the company's Code of Conduct and Discipline, which
clearly imposes the penalty of "suspension to dismissal, depending upon the gravity of the offense" in cases
where an employee displays "improper conduct or acts of discourtesy or disrespect to fellow employees,
visitors, guests, clients, at any time."

The imposition of the penalty of dismissal is proper, because of the gravity of Punzal's misconduct, as earlier
pointed out, and considering that:

(1) Punzal's statements were discourteous and disrespectful not only to a mere co-employee, but to a high
ranking executive official of the company;

(2) Punzal's statements tended to ridicule and undermine the credibility and authority of SVP Geisert, and
even encouraged disobedience to the said officer;

(3) Punzal's message was sent to a great number of employees of ETSI, which tended to sow dissent and
disrespect to management among a great number of employees of ETSI;

(4) Punzal's message could not have been made in good faith, because the message itself used language
that placed SVP Geisert in ridicule and portrayed him as an object of scorn, betraying the sender's bad faith.

Given these circumstances, the fact that Punzal's infraction occurred only once should be largely
insignificant. The gravity and publicity of the offense as well as its adverse impact in the workplace is more
than sufficient to place the same in the level of a serious misconduct.22 (Underscoring supplied) cra lawlib rary

Contrary to petitioner's contention, the Court of Appeals also found that due process was observed in her
dismissal.23

The Court of Appeals thus reinstated the Labor Arbiter's Order. Thus it disposed:

WHEREFORE, premises considered, the petition filed by Lorna Dising Punzal in CA-G.R. SP No. 83296 is
hereby DISMISSED, while the petition filed by ETSI, Werner Geisert and Carmelo D. Remudaro is hereby
GRANTED. The assailed Resolutions, dated October 27, 2003 and January 28, 2004, of the respondent
National Labor Relations Commission are hereby SET ASIDE. In lieu thereof, the Decision of Labor Arbiter
Joel S. Lustria, dated November 26, 2002, dismissing the complaint filed by Lorna Dising Punzal is hereby
REINSTATED.

SO ORDERED.24 (Underscoring supplied) c ralawl ibra ry

Hence, petitioner's present Petition for Review on Certiorari,25 faulting the appellate court to have erred

. . . WHEN IT RULED THAT PETITIONER'S STATEMENT WAS DISCOURTEOUS AND DISRESPECTFUL

CONSTITUTING GROSS DISRESPECT AND SERIOUS MISCONDUCT;

. . . WHEN IT FOUND THAT DUE PROCESS WAS ACCORDED THE PETITIONER;

. . . WHEN IT FAILED TO AWARD THE PETITIONER HER RIGHT TO REINSTATEMENT AND BACKWAGES. 26

Petitioner posits that her second e-mail message was merely an exercise of her right to freedom of
expression without any malice on her part.27

On the other hand, ETSI, et al. maintain that petitioner's second e-mail message was tainted with bad faith
and constituted a grave violation of the company's code of discipline.28
In Philippines Today, Inc. v. NLRC,29 this Court, passing on the attitude or respect that an employee is
expected to observe towards an employer, held:

Alegre's choice of words and way of expression betray his allegation that the memorandum was simply an
"opportunity to open the eyes of (Petitioner) Belmonte to the work environment in petitioner's newspaper
with the end in view of persuading (her) to take a hand at improving said environment." Apprising his
employer (or top-level management) of his frustrations in his job and differences with his immediate
superior is certainly not done in an abrasive, offensive, and disrespectful manner. A cordial or, at the very
least, civil attitude, according due deference to one's superiors, is still observed, especially among high-
ranking management officers. The Court takes judicial notice of the Filipino values
of pakikisama and paggalang which are not only prevalent among members of a family and community but
within organizations as well, including work sites. An employee is expected to extend due respect to
management, the employer being the "proverbial hen that lays the golden egg," so to speak. An aggrieved
employee who wants to unburden himself of his disappointments and frustrations in his job or relations with
his immediate superior would normally approach said superior directly or otherwise ask some other officer
possibly to mediate and discuss the problem with the end in view of settling their differences without
causing ferocious conflicts. No matter how [much] the employee dislikes the employer professionally, and
even if he is in a confrontational disposition, he cannot afford to be disrespectful and dare to talk with an
unguarded tongue and/or with a bileful pen.30 (Underscoring supplied) c ralawli bra ry

A scrutiny of petitioner's second e-mail message shows that her remarks were not merely an expression of
her opinion about Geisert's decision; they were directed against Geisert himself, viz: "He was so unfair . .
. para bang palagi siyang iniisahan sa trabaho. . . Anyway, solohin na lang niya bukas ang office."
(Emphasis supplied)31

As the Court of Appeals noted, petitioner, in her closing statement - "Anyway, to those parents who would
like to bring their Kids in Megamall there will be Trick or Treating at Mc Donalds x x x tomorrow and let's not
spoil the fun for our kids"32 - even invited her co-workers to join a trick or treating activity at another
venue during office hours33 (10:00 AM), October 31, 2001 being a Wednesday and there is no showing that
it was declared a holiday, encouraging them to ignore Geisert's authority.

Additionally, petitioner sent the e-mail message in reaction to Geisert's decision which he had all the right to
make. That it has been a tradition in ETSI to celebrate occasions such as Christmas, birthdays, Halloween,
and others34 does not remove Geisert's prerogative to approve or disapprove plans to hold such celebrations
in office premises and during company time. It is settled that

x x x it is the prerogative of management to regulate, according to its discretion and judgment, all aspects
of employment. This flows from the established rule that labor law does not authorize the substitution of the
judgment of the employer in the conduct of its business. Such management prerogative may be availed of
without fear of any liability so long as it is exercised in good faith for the advancement of the employers'
interest and not for the purpose of defeating or circumventing the rights of employees under special laws or
valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out
of malice or spite.35 (Underscoring supplied) c ralawli bra ry

In the case at bar, the disapproval of the plan to hold the Halloween party on October 31, 2001 may not be
considered to have been actuated by bad faith. As the Labor Arbiter noted:

It may not be ignored that holding a trick or treat party in the office premises of respondent ETSI would
certainly affect the operations of the office, since children will be freely roaming around the office
premises, things may get misplaced and the noise in the office will simply be too hard to ignore. Contrary to
complainant's position, it is immaterial if the parents of the children who will participate in the trick or treat
will be on vacation leave, since it is the work of the employees who will not be on leave and who will be
working on that day which will be disrupted, possibly resulting in the disruption of the operations of the
company.36 (Underscoring supplied) cra lawlib rary

Given the reasonableness of Geisert's decision that provoked petitioner to send the second e-mail message,
the observations of the Court of Appeals that "the message x x x resounds of subversion and undermines
the authority and credibility of management"37 and that petitioner "displayed a tendency to act without
management's approval, and even against management's will" are well taken.38
Moreover, in circulating the second e-mail message, petitioner violated Articles III (8) and IV (5) of ETSI's
Code of Conduct on "making false or malicious statements concerning the Company, its officers and
employees or its products and services"39 and "improper conduct or acts of discourtesy or disrespect to
fellow employees, visitors, guests, clients, at any time."40

Petitioner invokes Samson v. National Labor Relations Commission41 where this Court held that the dismissal
of the therein petitioner was too harsh a penalty for uttering "Si EDT [Epitacio D. Titong, the General
Manager and President of the employer], bullshit yan," "sabihin mo kay EDT yan" and "sabihin mo kay EDT,
bullshit yan," while making the "dirty finger" gesture, and warning that the forthcoming national sales
conference of the company would be a "very bloody one."

Petitioner's reliance on Samson is misplaced. First, in that case, this Court found that the misconduct
committed was not related with the employee's work as the offensive remarks were verbally made during an
informal Christmas gathering of the employees, an occasion "where tongues are more often than not
loosened by liquor or other alcoholic beverages"42 and "it is to be expected x x x that employees freely
express their grievances and gripes against their employers."43

In petitioner's case, her assailed conduct was related to her work. It reflects an unwillingness to comply with
reasonable management directives.

While in Samson, Samson was held to be merely expressing his dissatisfaction over a management
decision,44 in this case, as earlier shown, petitioner's offensive remarks were directed against Geisert.

Additionally, in Samson, this Court found that unlike in Autobus Workers' Union (AWU) v. NLRC45 where
dismissal was held to be an appropriate penalty for uttering insulting remarks to the supervisor,46Samson
uttered the insulting words against EDT in the latter's absence.47 In the case at bar, while petitioner did not
address her e-mail message to Geisert, she circulated it knowing - or at least, with reason to know - that it
would reach him. As ETSI notes, "[t]hat [petitioner] circulated this e-mail message with the knowledge that
it would reach the eyes of management may be reasonably concluded given that the first e-mail message
reached her immediate supervisor's attention."48

Finally, in Samson, this Court found that the "lack of urgency on the part of the respondent company in
taking any disciplinary action against [the employee] negates its charge that the latter's misbehavior
constituted serious misconduct."49 In the case at bar, the management acted 14 days after petitioner
circulated the quoted e-mail message.50

Petitioner asks that her 12 years of service to ETSI during which, so she claims, she committed no other
offense be taken as a mitigating circumstance.51 This Court has held, however, that "the longer an employee
stays in the service of the company, the greater is his responsibility for knowledge and compliance with the
norms of conduct and the code of discipline in the company."52

In fine, petitioner, having been dismissed for just cause, is neither entitled to reinstatement nor to
backwages.

Petitioner's contention that she was denied due process is well-taken however, as the records do not show
that she was informed of her right to be represented by counsel during the conference with Geisert and
Remudaro.

The protestations of ETSI, et al. that the right to be informed of the right to counsel does not apply to
investigations before administrative bodies and that law and jurisprudence merely give the employee the
option to secure the services of counsel in a hearing or conference53 fall in light of the clear provision of
Article 277 (b) of the Labor Code that

the employer xxx shall afford [the worker whose employment is sought to be terminated] ample opportunity
to be heard and to defend himself with the assistance of his representatives if he so desiresin accordance
with company rules and regulations pursuant to guidelines set by the Department of Labor and Employment,
and this Court's explicit pronouncement that "[a]mple opportunity connotes every kind of assistance that
management must accord the employee to enable him to prepare adequately for his defense including legal
representation."54

Following Agabon, et al. v. National Labor Relations Commission,55 the violation of petitioner's statutory due
process right entitles her to an award of nominal damage, which this Court fixes at P30,000.56

WHEREFORE, the petition is in part GRANTED. The questioned decision is AFFIRMED with
the MODIFICATION that respondent ETSI Technologies, Inc. is ordered to pay petitioner, Lorna Punzal,
nominal damages in the amount of P30,000.

SO ORDERED.

VI.

[G.R. No. L-25018. May 26, 1969.]

ARSENIO PASCUAL, JR., Petitioner-Appellee, v. BOARD OF MEDICAL EXAMINERS, respondent-

appellant, SALVADOR GATBONTON and ENRIQUETA GATBONTON, Intervenors-Appellants.

Conrado B. Enriquez for Petitioner-Appellee.

Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio A. Torres and Solicitor
Pedro A. Ramirez for Respondent-Appellant.

Bausa, Ampil & Suarez for Intervenors-Appellants.

SYLLABUS

1. CONSTITUTIONAL LAW; RIGHTS OF AN ACCUSED; RIGHT AGAINST SELF- INCRIMINATION;

APPLICABILITY THEREOF IN ADMINISTRATIVE PROCEEDINGS. — Where petitioner was the respondent in
the malpractice charge filed against him with the Board of Medical Examiners, the said Board cannot compel
him to take the witness stand as a witness for the complainants. The principle against self-incrimination is
equally applicable to a proceeding that could possibly result in the loss of the privilege to practice the
medical profession.

2. ID.; ID.; ID.; RIGHT INCLUDES RIGHT TO SILENCE. — The constitutional guarantee against self-
incrimination is not limited to that of allowing a witness to object to questions the answers to which could
lead to a penal liability being subsequently incurred. The constitutional guarantee protects as well the right
to silence.

3. ID.; ID.; ID.; ID.; REASON. — Why the constitutional guarantee against self-incrimination protects as
well the right to silence should be thus is not difficult to discern. The constitutional guarantee, along with
other rights granted an accused, stands for a belief that while crime should not go unpunished and that the
truth must be revealed, such desirable objectives should not be accomplished according to means or
methods offensive to the high sense of respect accorded the human personality. More and more in line with
the democratic creed, the deference accorded an individual even those suspected of the most heinous
crimes is given due weight.

4. ID.; ID.; ID.; SAID RIGHT IS IDENTIFIED WITH RIGHT TO PRIVACY. — It is of interest to note that while
earlier decisions stressed the principle of humanity on which the right against self-incrimination is
predicated, precluding as it does all resort to force or compulsion, whether physical or mental, current
judicial opinion places equal emphasis on its identification with the right to privacy.

DECISION
 FERNANDO, J.:

The broad, all-embracing sweep of the self-incrimination clause, 1 whenever appropriately invoked, has
been accorded due recognition by this Court ever since the adoption of the Constitution. 2 Bermudez v.
Castillo, 3 decided in 1937, was quite categorical. As we there stated: "This Court is of the opinion that in
order that the constitutional provision under consideration may prove to be a real protection and not a dead
letter, it must be given a liberal and broad interpretation favorable to the person invoking it." As phrased by
Justice Laurel in his concurring opinion: "The provision, as doubtless it was designed, would be construed
with the utmost liberality in favor of the right of the individual intended to be served." 4

Even more relevant, considering the precise point at issue, is the recent case of Cabal v. Kapunan, 5 where
it was held that a respondent in an administrative proceeding under the Anti-Graft Law 6 cannot be required
to take the witness stand at the instance of the complainant. So it must be in this case, where petitioner
was sustained by the lower court in his plea that he could not be compelled to be the first witness of the
complainants, he being the party proceeded against in an administrative charge for malpractice. That was a
correct decision; we affirm it on appeal.

Arsenio Pascual, Jr., petitioner-appellee, filed on February 1, 1965 with the Court of First Instance of Manila
an action for prohibition with prayer for preliminary injunction against the Board of Medical Examiners, now
respondent-appellant. It was alleged therein that at the initial hearing of an administrative case 7 for alleged
immorality, counsel for complainants announced that he would present as his first witness herein petitioner-
appellee, who was the respondent in such malpractice charge. Thereupon, petitioner-appellee, through
counsel, made of record his objection, relying on the constitutional right to be exempt from being a witness
against himself. Respondent-appellant, the Board of Examiners, took note of such a plea, at the same time
stating that at the next scheduled hearing, on February 12, 1965, petitioner-appellee would be called upon
to testify as such witness, unless in the meantime he could secure a restraining order from a competent
authority.

Petitioner-appellee then alleged that in thus ruling to compel him to take the witness stand, the Board of
Examiners was guilty, at the very least, of grave abuse of discretion for failure to respect the constitutional
right against self-incrimination, the administrative proceeding against him, which could result in forfeiture or
loss of a privilege, being quasi-criminal in character. With his assertion that he was entitled to the relief
demanded consisting of perpetually restraining the respondent Board from compelling him to testify as
witness for his adversary and his readiness or his willingness to put a bond, he prayed for a writ of
preliminary injunction and after a hearing or trial, for a writ of prohibition.

On February 9, 1965, the lower court ordered that a writ of preliminary injunction issue against the
respondent Board commanding it to refrain from hearing or further proceeding with such an administrative
case, to await the judicial disposition of the matter upon petitioner-appellee posting a bond in the amount of
P500.00.

The answer of respondent Board, while admitting the facts stressed that it could call petitioner-appellee to
the witness stand and interrogate him, the right against self-incrimination being available only when a
question calling for an incriminating answer is asked of a witness. It further elaborated the matter in the
affirmative defenses interposed, stating that petitioner-appellee’s remedy is to object once he is in the
witness stand, for respondent "a plain, speedy and adequate remedy in the ordinary course of law,"
precluding the issuance of the relief sought. Respondent Board, therefore, denied that it acted with grave
abuse of discretion.

There was a motion for intervention by Salvador Gatbonton and Enriqueta Gatbonton, the complainants in
the administrative case for malpractice against petitioner-appellee, asking that they be allowed to file an
answer as intervenors. Such a motion was granted and an answer in intervention was duly filed by them on
March 23, 1965 sustaining the power of respondent Board, which for them is limited to compelling the
witness to take the stand, to be distinguished, in their opinion, from the power to compel a witness to
incriminate himself. They likewise alleged that the right against self- incrimination cannot be availed of in an
administrative hearing.

A decision was rendered by the lower court on August 2, 1965, finding the claim of petitioner-appellee to be
well-founded and prohibiting respondent Board "from compelling the petitioner to act and testify as a
witness for the complainant in said investigation without his consent and against himself." Hence this appeal
both by respondent Board and intervenors, the Gatbontons. As noted at the outset, we find for
the Petitioner-Appellee.

1. We affirm the lower court decision on appeal as it does manifest fealty to the principle announced by us in
Cabal v. Kapunan. 8 In that proceeding for certiorari and prohibition to annul an order of Judge Kapunan, it
appeared that an administrative charge for unexplained wealth having been filed against petitioner under
the Anti-Graft Act, 9 the complainant requested the investigating committee that petitioner be ordered to
take the witness stand, which request was granted. Upon petitioner’s refusal to be sworn as such witness, a
charge for contempt was filed against him in the sala of respondent Judge. He filed a motion to quash and
upon its denial, he initiated this proceeding. We found for the petitioner in accordance with the well-settled
principle that "the accused in a criminal case may refuse, not only to answer incriminatory questions, but,
also, to take the witness stand."cralaw virt ua1aw lib rary

It was noted in the opinion penned by the present Chief Justice that while the matter referred to an
administrative charge of unexplained wealth, with the Anti-Graft Act authorizing the forfeiture of whatever
property a public officer or employee may acquire, manifestly out of proportion to his salary and his other
lawful income, there is clearly the imposition of a penalty. The proceeding for forfeiture while administrative
in character thus possesses a criminal or penal aspect. The case before us is not dissimilar; petitioner would
be similarly disadvantaged. He could suffer not the forfeiture of property but the revocation of his license as
medical practitioner, for some an even greater deprivation.

To the argument that Cabal v. Kapunan could thus be distinguished, it suffices to refer to an American
Supreme Court opinion highly persuasive in character. 10 In the language of Justice Douglas: "We conclude
.. that the Self-Incrimination Clause of the Fifth Amendment has been absorbed in the Fourteenth, that it
extends its protection to lawyers as well as to other individuals, and that it should not be watered down by
imposing the dishonor of disbarment and the deprivation of a livelihood as a price for asserting it." We
reiterate that such a principle is equally applicable to a proceeding that could possibly result in the loss of
the privilege to practice the medical profession.

2. The appeal apparently proceeds on the mistaken assumption by respondent Board and intervenors-
appellants that the constitutional guarantee against self-incrimination should be limited to allowing a witness
to object to questions the answers to which could lead to a penal liability being subsequently incurred. It is
true that one aspect of such a right, to follow the language of another American decision, 11 is the
protection against "any disclosures which the witness may reasonably apprehend could be used in a criminal
prosecution or which could lead to other evidence that might be so used." If that were all there is then it
becomes diluted.

The constitutional guarantee protects as well the right to silence. As far back as 1905, we had occasion to
declare: "The accused has a perfect right to remain silent and his silence cannot be used as a presumption
of his guilt." 12 Only last year, in Chavez v. Court of Appeals, 13 speaking through Justice Sanchez, we
reaffirmed the doctrine anew that is the right of a defendant "to forego testimony, to remain silent, unless
he chooses to take the witness stand—with undiluted, unfettered exercise of his own free genuine will." cralaw vi rtua 1aw lib rary

Why it should be thus is not difficult to discern. The constitutional guarantee, along with other rights granted
an accused, stands for a belief that while crime should not go unpunished and that the truth must be
revealed, such desirable objectives should not be accomplished according to means or methods offensive to
the high sense of respect accorded the human personality. More and more in line with the democratic creed,
the deference accorded an individual even those suspected of the most heinous crimes is given due weight.
To quote from Chief Justice Warren, "the constitutional foundation underlying the privilege is the respect a
government . . . must accord to the dignity and integrity of its citizens." 14

It is likewise of interest to note that while earlier decisions stressed the principle of humanity on which this
right is predicated, precluding as it does all resort to force or compulsion, whether physical or mental,
current judicial opinion places equal emphasis on its identification with the right to privacy. Thus according
to Justice Douglas: "The Fifth Amendment in its Self-Incrimination clause enables the citizen to create a
zone of privacy which government may not force to surrender to his detriment." 15 So also with the
observation of the late Judge Frank who spoke of "a right to a private enclave where he may lead a private
life. That right is the hallmark of our democracy." 16

In the light of the above, it could thus clearly appear that no possible objection could be legitimately raised
against the correctness of the decision now on appeal. We hold that in an administrative hearing against a
medical practitioner for alleged malpractice, respondent Board of Medical Examiners cannot, consistently
with the self-incrimination clause, compel the person proceeded against to take the witness stand without
his consent.

WHEREFORE, the decision of the lower court of August 2, 1965 is affirmed. Without pronouncement as to
costs.

Reyes, J.B.L. (Acting C.J.), Dizon, Makalintal, Zaldivar, Sanchez and Capistrano, JJ., concur.

Teehankee and Barredo, JJ., took no part.

Concepcion, C.J. and Castro, J., are on official leave.

VII.
[G.R. No. L-19052. December 29, 1962.]

MANUEL F. CABAL, Petitioner, v. HON. RUPERTO KAPUNAN, JR., and THE CITY FISCAL OF
MANILA, Respondents.

Francisco Carreon for Petitioner.

Assistant City Fiscal Manuel T . Reyes for respondents City of Manila.

SYLLABUS

1. ANTI-GRAFT LAW; FORFEITURE OF UNEXPLAINED WEALTH; NATURE OF FORFEITURE AS PENALTY. — The

purpose of the charge against petitioner is to apply the provisions of Republic Act No. 1379, as amended,
otherwise known as the Anti-Graft Law, which authorizes the forfeiture to the State of property of a public
officer or employee which is manifestly out of proportion to his salary as such public officer or employee and
his other lawful income and the income from legitimately acquired property. Such forfeiture has been held,
however, to partake of the nature of a penalty.

2. ID.; EXEMPTION OF DEFENDANTS FROM OBLIGATION TO BE WITNESS AGAINST THEMSELVES. —

Proceedings for forfeiture of property are deemed criminal or penal, and hence, the exemption of defendants
in criminal cases from the obligation to be witness against themselves are applicable thereto.

3. ID.; FORFEITURE OF PROPERTY IN SUBSTANCE IS A CRIMINAL PROCEEDING FOR THE PURPOSE OF

PROTECTION OF THE RIGHTS OF THE DEFENDANT AGAINST SELF-INCRIMINATION; CASE OF BOYD v. U.S.
and THURSTON v. CLARK, CITED. — In Boyd v. U.S. (116 U.S. 616, 29 L. ed., 746), it was held that the
information, in a proceeding to declare a forfeiture of certain property because of the evasion of a certain
revenue law, "though technically a civil proceeding, is in substance and effect a criminal one", and that suits
for penalties and forfeitures are within the reason of criminal proceedings for the purposes of that portion of
the Fifth Amendment of the Constitution of the U.S. which declares that no person shall be compelled in a
criminal to be a witness against himself. Similarly, a proceeding for the removal of an officer was held, in
Thurston v. Clark (107 Cal. 285, 40 pp. 435, 437), to be in substance criminal, for said portion of the Fifth
Amendment applies "to all cases in which the action prosecuted is not to establish, recover or redress
private and civil rights, but to try and punish persons charged with the commission of public offenses" and
"a criminal case is an action, suit or cause instituted to punish an infraction of the criminal laws, and, with
this object in view, it matters not in what form a statute may clothe it; it is still a criminal case . . . ."
cralaw virtua1aw l ibra ry

4. ID.; ID.; CASE OF ALMEDA v. PEREZ, DISTINGUISHED. — In Almeda v. Perez, L-18428 (August 30,
1962) the theory that, after the filing of respondents’ answer to a petition for forfeiture under Republic Act
No. 1379, said petition may not be amended as to substance pursuant to our rules of criminal procedure,
was rejected by this Court upon the ground that said forfeiture proceeding is civil in nature. This doctrine
refers, however, to the purely procedural aspect of said proceeding, and has no bearing on the substantial
rights of the respondents therein, particularly their constitutional right against self-incrimination.
 DECISION

CONCEPCION, J.:

This is an original petition for certiorari and prohibition with preliminary injunction, to restrain the Hon.
Ruperto Kapunan, Jr., as Judge of the Court of First Instance of Manila, from further proceeding in Criminal
Case No. 60111 of said court, and to set aside an order of said respondent, as well as the whole proceedings
in said criminal case.

On or about August 2, 1961, Col. Jose C. Maristela of the Philippine Army filed with the Secretary of National
Defense a letter-complaint charging petitioner Manuel F. Cabal, then Chief of Staff of the Armed Forces of
the Philippines, with "graft, corrupt practices, unexplained wealth, conduct unbecoming of an officer and
gentleman, dictatorial tendencies, giving false statements of his assets and liabilities in 1958 and other
equally reprehensible acts." On September 6, 1961, the President of the Philippines created a committee of
five (5) members, consisting of former Justice Marceliano R. Montemayor, as Chairman, former Justices
Buenaventura Ocampo and Sotero Cabahug, and Generals Basilio J. Valdez and Guillermo B. Francisco, to
investigate the charge of unexplained wealth contained in said letter-complaint and submit its report and
recommendations as soon as possible. At the beginning of the investigation, on September 15, 1961, the
Committee, upon request of complainant, Col. Maristela, ordered petitioner herein to take the witness stand
and be sworn to as witness for Maristela, in support of his aforementioned charge of unexplained wealth.
Thereupon, petitioner objected, personally and through counsel, to said request of Col. Maristela and to the
aforementioned order of the Committee, invoking his constitutional right against self-incrimination. The
Committee insisted that petitioner take the witness stand and be sworn to, subject to his right to refuse to
answer such questions as may be incriminatory. This notwithstanding, petitioner respectfully refused to be
sworn to as a witness or take the witness stand. Hence, in a communication dated September 18, 1961, the
Committee referred the matter to respondent City Fiscal of Manila, for such action as he may deem proper.
On September 28, 1961, the City Fiscal filed with the Court of First Instance of Manila a "charge" reading as
follows:jgc:c hanrobles. com.ph

"The undersigned hereby charges Manuel F. Cabal with contempt under section 580 of the Revised
Administrative Code in relation to sections 1 and 7, Rule 64 of the Rules of Court, committed as follows: chan rob1e s virtual 1aw lib rary

That on or about September 15, 1961, in the investigation conducted at the U.P. Little Theater, Padre Faura,
Manila, by the Presidential Committee, which was created by the President of the Republic of the Philippines
in accordance with law to investigate the charges of alleged acquisition by respondent of unexplained wealth
and composed of Justice Marceliano Montemayor, as Chairman, and Justices Buenaventura Ocampo and
Sotero Cabahug and Generals Basilio Valdez and Guillermo Francisco, as members, with the power, among
others, to compel the attendance of witnesses and take their testimony under oath, respondent who was
personally present at the time before the Committee in compliance with a subpoena duly issued to him, did
then and there willfully, unlawfully, and contumaciously, without any justifiable cause or reason, refuse and
fail and still refuse and fail to obey the lawful order of the Committee to take the witness stand, be sworn
and testify as witness in said investigation, in utter disregard of the lawful authority of the Committee and
thereby obstructing and degrading the proceedings before said body.’

"Wherefore, it is respectfully prayed that respondent be summarily adjudged guilty of contempt of the
Presidential Committee and accordingly disciplined as in contempt of court by imprisonment until such time
as he shall obey the subject order of said Committee." cralaw virtua1aw l ibra ry

This charge, docketed as Criminal Case No. 60111 of said court, was assigned to Branch XVIII thereof,
presided over by respondent Judge. On October 2, 1961, the latter issued an order requiring petitioner to
show cause and/or answer the charge filed against him within ten (10) days. Soon thereafter, or on October
4, 1961, petitioner filed with respondent Judge a motion to quash the charge and/or order to show cause,
upon the ground: (1) that the City Fiscal has neither authority nor personality to file said charge and the
same is null and void, for, if criminal, the charge has been filed without a preliminary investigation, and, if
civil, the City Fiscal may not file it, his authority in respect of civil cases being limited to representing the
City of Manila; (2) that the facts charged constitute no offense, for section 580 of the Revised Administrative
Code, upon which the charge is based, violates due process, in that it is vague and uncertain as regards the
offense therein defined and the fine imposable therefor and that it fails to specify whether said offense shall
be treated as contempt of an inferior court or of a superior court; (3) that more than one offense is charged,
for the contempt imputed to petitioner is sought to be punished as contempt of an inferior court, as
contempt of a superior court and as contempt under section 7 of Rule 64 of the Rules of Court; (4) that the
Committee had no power to order and require petitioner to take the witness stand and be sworn to, upon
the request of Col. Maristela, as witness for the latter, inasmuch as said order violates petitioner’s
constitutional right against self-incrimination.

By resolution dated October 14, 1961, respondent Judge denied said motion to quash. Thereupon, or on
October 20, 1961, petitioner began the present action for the purpose adverted to above, alleging that,
unless restrained by this Court, respondent Judge may summarily punish him for contempt, and that such
action would not be appealable.

In their answer, respondents herein allege, inter alia, that the investigation being conducted by the
Committee above referred to is administrative, not criminal, in nature; that the legal provision relied upon
by petitioner in relation to preliminary investigations (Section 38-C, Republic Act No. 409, as amended by
Republic Act No. 1201) is inapplicable to contempt proceedings; that, under section 580, of the Revised
Administrative Code, contempt against an administrative officer is to be dealt with as contempt of a superior
court; that petitioner herein is charged with only one offense; and that, under the constitutional guarantee
against self-incrimination, petitioner herein may refuse, not to take the witness stand, but to answer
incriminatory questions.

At the outset, it is not disputed that the accused in a criminal case may refuse, not only to answer
incriminatory questions, but, also, to take the witness stand (3 Wharton’s Criminal Evidence, pp. 1959-
1960; 98 C.J.S., p. 264). Hence, the issue before us boils down to whether or not the proceedings before
the aforementioned Committee is civil or criminal in character.

In this connection, it should be noted that, although said Committee was created to investigate the
administrative charge of unexplained wealth, there seems to be no question that Col. Maristela does not
seek the removal of petitioner herein as Chief of Staff of the Armed Forces of the Philippines. As a matter of
fact he no longer holds such office. It seems, likewise, conceded that the purpose of the charge against
petitioner is to apply the provisions of Republic Act No. 1379, as amended, otherwise known as the Anti-
Graft Law, which authorizes the forfeiture to the State of property of a public officer or employee which is
manifestly out of proportion to his salary as such public officer or employee and his other lawful income and
the income from legitimately acquired property. Such forfeiture has been held, however, to partake of the
nature of a penalty.

"In a strict signification, a forfeiture is a divestiture of property without compensation, in consequence of a

default or an offense, and the term is used in such a sense in this article. A forfeiture, as thus defined, is
imposed by way of punishment not by the mere convention of the parties, but by the lawmaking power, to
insure a prescribed course of conduct. It is a method deemed necessary by the legislature to restrain the
commission of an offense and to aid in the prevention of such an offense. The effect of such a forfeiture is to
transfer the title to the specific thing from the owner to the sovereign power (23 Am. Jur. 599) (Emphasis
ours.)

"In Black’s Law Dictionary a ‘forfeiture’ is defined to be ‘the incurring of a liability to pay a definite sum of
money as the consequence of violating the provisions of some statute or refusal to comply with some
requirement of law.’ It may be said to be a penalty imposed for misconduct or breach of duty.’" (Com. v.
French, 114 S.W. 255.)

As a consequence, proceedings for forfeiture of property are deemed criminal or penal, and, hence, the
exemption of defendants in criminal case from the obligation to be witnesses against themselves are
applicable thereto.

"Generally speaking, informations for the forfeiture of goods that seek no judgment of fine or imprisonment
against any person are deemed to be civil proceedings in rem. Such proceedings are criminal in nature to
the extent that where the person using the res illegally is the owner of rightful possessor of it, the forfeiture
proceeding is in the nature of a punishment. They have been held to be so far in the nature of criminal
proceedings that a general verdict on several counts in an information is upheld if one count is good.
According to the authorities such proceedings, where the owner of the property appears, are so far
considered as quasicriminal proceedings as to relieve the owner from being a witness against himself and to
prevent the compulsory production of his books and papers. . . ." (23 Am. Jur. 612; Emphasis ours.)
"Although the contrary view formerly obtained, the later decisions are to the effect that suits for forfeitures
incurred by the commission of offenses against the law are so far of a quasi-criminal nature as to be within
the reason of criminal proceedings for all purposes of . . . that portion of the Fifth Amendment which
declares that no person shall be compelled in any criminal case to be a witness against himself . . . . It has
frequently been held upon constitutional grounds under the various State Constitution that a witness or
party called as a witness cannot be made to testify against himself as to matters which would subject his
property to forfeiture. At early common law no person could be compelled to testify against himself or to
answer any question which would have had a tendency to expose his property to a forfeiture, or to form a
link in a chain of evidence for that purpose as well as to incriminate him. Under this common-law doctrine of
protection against compulsory disclosures which would tend to subject the witness to a forfeiture, such
protection was claimed and availed of in some early American cases without placing the basis of the
protection upon constitutional grounds." (23 Am. Jur. 616; Emphasis ours.)

"Proceedings for forfeitures are generally considered to be civil and in the nature of proceedings in rem. The
statute providing that no judgment or other proceedings in civil cases shall be arrested or reversed for any
defect or want of form is applicable to them. In some aspects, however, suits for penalties and forfeitures
are of quasi-criminal nature and within the reason of criminal proceedings for all the purposes of . . . that
portion of the Fifth Amendment which declares that no person shall be compelled in any criminal case to be
a witness against himself . The proceeding is one against the owner, as well as against the goods; for it is
his breach of the laws which has to be proved to establish the forfeiture and his property is sought to be
forfeited." (15 Am. Jur., Sec. 104, p. 368; Emphasis ours.)

"The rule protecting a person from being compelled to furnish evidence which would incriminate him exists
not only when he is liable criminally to prosecution and punishment, but also when his answer would tend to
expose him to a . . . forfeiture . . . (58 Am. Jur., Sec. 43, p. 48; Emphasis ours.)

"As already observed, the various constitutions provide that no person shall be compelled in any criminal
case to be a witness against himself. This prohibition against compelling a person to take the stand as a
witness against himself applies only to criminal, quasi-criminal, and penal proceedings, including a
proceeding civil in form for forfeiture of property by reason of the commission of an offense, but not a
proceeding in which the penalty recoverable is civil or remedial in nature, . . ." (58 Am. Jur., Sec. 44, p. 49;
Emphasis ours.)

"The privilege of a witness not to incriminate himself is not infringed by merely asking the witness a
question which he refuses to answer. The privilege is simply an option of refusal, and not a prohibition of
inquiry. A question is not improper merely because the answer may tend to criminate but, where a witness
exercises his constitutional right not to answer, a question by counsel as to whether the reason for refusing
to answer is because the answer may tend to incriminate the witness is improper.

"The possibility that the examination of the witness will be pursued to the extent of requiring self
incrimination will not justify the refusal to answer questions. However, where the position of the witness is
virtually that of an accused on trial, it would appear that he may invoke the privilege in support of a blanket
refusal to answer one and all questions." (98 C.J.S., p. 252; Emphasis ours.)

"A person may not be compelled to testify in an action against him for a penalty or to answer any question
as a witness which would subject him to a penalty or forfeiture, where the penalty or forfeiture is imposed
as a vindication of the public justice of the state.

"In general, both at common law and under a constitutional provision against compulsory self-incrimination,
a person may not be compelled to answer any question as a witness which would subject him to a penalty or
forfeiture, or testify in an action against him for a penalty.

"The privilege applies where the penalty or forfeiture is recoverable, or is imposed in vindication of the
public justice of the state, as a statutory fine or penalty, or a fine or penalty for violation of a municipal
ordinance, even though the action or proceeding for its enforcement is not brought in a criminal court but is
prosecuted through the modes of procedure applicable to an ordinary civil remedy." (98 C.J.S., pp. 275-6.)

Thus, in Boyd v. U.S. (116 U.S. 616, 29 L. ed. 746), it was held that the information, in a proceeding to
declare a forfeiture of certain property because of the evasion of a certain revenue law, "though technically
a civil proceeding, is in substance and effect a criminal one", and that suits for penalties and forfeitures are
within the reason of criminal proceedings for the purposes of that portion of the Fifth Amendment of the
Constitution of the U.S. which declares that no person shall be compelled in a criminal case to be a witness
against himself. Similarly, a proceeding for the removal of an officer was held, in Thurston v. Clark (107 Cal.
285, 40 pp. 435, 437), to be in substance criminal, for said portion of the Fifth Amendment applies "to all
cases in which the action prosecuted is not to establish, recover or redress private and civil rights, but to try
and punish persons charged with the commission of public offenses" and "a criminal case is an action, suit or
cause instituted to punish an infraction of the criminal laws, and, with this object in view, it matters not in
what form a statute may clothe it; it is still a criminal case . . .." This view was, in effect confirmed in Lees
v. U.S. (37 L. ed. 1150-1151). Hence, the Lawyers Reports Annotated (Vol. 29, p. 8), after an extensive
examination of pertinent cases, concludes that said constitutional provision applies whenever the proceeding
is not "purely remedial", or intended "as a redress for a private grievance", but primarily to punish "a
violation of duty or a public wrong and to deter others from offending in a like manner . . ." cralaw virtua 1aw lib rary

We are not unmindful of the doctrine laid down in Almeda v. Perez, L-18428 (August 30, 1962) in which the
theory that, after the filing of respondents’ answer to a petition for forfeiture under Republic Act No. 1379,
said petition may not be amended as to substance pursuant to our rules of criminal procedure, was rejected
by this Court upon the ground that said forfeiture proceeding is civil in nature. This doctrine refers, however,
to the purely procedural aspect of said proceeding, and has no bearing on the substantial rights of the
respondents therein, particularly their constitutional right against self-incrimination.

WHEREFORE, the writ prayed for is granted and respondent Judge hereby enjoined permanently from
proceeding further in Criminal Case No. 60111 of the Court of First Instance of Manila. It is so ordered.

Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ.,
concur.

Bengzon, C.J., is on leave.

VIII.
[G.R. No. 113271. October 16, 1997.]

WATEROUS DRUG CORPORATION and MS. EMMA CO, Petitioners, v. NATIONAL LABOR RELATIONS
COMMISSION and ANTONIA MELODIA CATOLICO, Respondents.

DECISION

DAVIDE, JR., J.:

"Nor is he a true Servant [who] buys dear to share in the Profit with the Seller." 1

This petition for certiorari under Rule 65 of the Rules of Court seeks to declare private respondent Antonia
Melodia Catolico (hereafter Catolico) not a "true Servant," thereby assailing the 30 September 1993 decision
2 and 2 December 1993 Resolution 3 of the National Labor Relations Commission (NLRC) in NLRC-NCR CA
No. 005160-93, which sustained the reinstatement and monetary awards in favor of private respondent 4
and denied the petitioner’s motion for reconsideration. 5

The facts are as follows:chanrob 1es vi rtua l 1aw lib rary

Catolico was hired as a pharmacist by petitioner Waterous Drug Corporation (hereafter WATEROUS) on 15
August 1988.

On 31 July 1989, Catolico received a memorandum 6 from WATEROUS Vice President-General Manager
Emma R. Co warning her not to dispense medicine to employees chargeable to the latter’s accounts because
the same was a prohibited practice. On the same date, Co issued another memorandum 7 to Catolico
warning her not to negotiate with suppliers of medicine without consulting the Purchasing Department, as
this would impair the company’s control of purchases and, besides she was not authorized to deal directly
with the suppliers.
As regards the first memorandum, Catolico did not deny her responsibility but explained that her act was
"due to negligence," since fellow employee Irene Soliven "obtained the medicines in bad faith and through
misrepresentation when she claimed that she was given a charge slip by the Admitting Dept." Catolico then
asked the company to look into the fraudulent activities of Soliven. 8

In a memorandum 9 dated 21 November 1989, WATEROUS Supervisor Luzviminda E. Bautro warned

Catolico against the "rush delivery of medicines without the proper documents." cralaw virt ua1aw li bra ry

On 29 January 1990, WATEROUS Control Clerk Eugenio Valdez informed Co that he noticed an irregularity
involving Catolico and Yung Shin Pharmaceuticals, Inc. (hereafter YSP), which he described as follows: c hanrob1es vi rt ual 1aw li bra ry

. . . A case in point is medicine purchased under our Purchase Order (P.O.) No. 19045 with YSP Sales
Invoice No. 266 representing purchase of ten (10) bottles of Voren tablets at P384.00 per unit. Previous
P.O.’s issued to YSP, Inc. showed that the price per bottle is P320.00 while P.O. No. 19045 is priced at
P384.00 or an over price of P64.00 per bottle (or total of P640.00). WDRC paid the amount of P3,840.00
thru MBTC Check No. 222832 dated December 15, 1988, Verification was made to YSP, Inc. to determine
the discrepancy and it was found that the cost per bottle was indeed overpriced. YSP, Inc. Accounting
Department (Ms. Estelita Reyes) confirmed that the difference represents refund of jack-up price of ten
bottles of Voren tablets per sales invoice no. 266 as per their check voucher no. 629552 (shown to the
undersigned), which was paid to Ms. Catolico through China Bank check no. 892068 dated November 9,
1989 . . .

The undersigned talked to Ms. Catolico regarding the check but she denied having received it and that she is
unaware of the overprice. However, upon conversation with Ms. Saldana, EDRC Espana Pharmacy Clerk, she
confirmed that the check amounting to P640.00 was actually received by Ms. Catolico. As a matter of fact,
Ms. Catolico even asked Ms. Saldana if she opened the envelope containing the check but Ms. Saldana
answered her "talagang ganyan, bukas." It appears that the amount in question (P640.00) had been
pocketed by Ms. Catolico. 10 chanrobles. com : virtual lawl ib rary

Forthwith, in her memorandum 11 dated 31 January 1990, Co asked Catolico to explain, within twenty-four
hours, her side of the reported irregularity. Catolico asked for additional time to give her explanation, 12
and she was granted a 48-hour extension from 1 to 3 February 1990. However, on 2 February 1990, she
was informed that effective 6 February 1990 to 7 March 1990, she would be placed on preventive
suspension to protect the interests of the company. 13

In a letter dated 2 February 1990, Catolico requested access to the file containing Sales Invoice No. 266 for
her to be able to make a satisfactory explanation. In said letter she protested Saldaña’s invasion of her
privacy when Saldaña opened an envelope addressed to Catolico. 14

In a letter 15 to Co dated 10 February 1990, Catolico, through her counsel, explained that the check she
received from YSP was a Christmas gift and not a "refund of overprice." She also averred that the preventive
suspension was ill-motivated, as it sprang from an earlier incident between her and Co’s secretary, Irene
Soliven.

On 5 March 1990, WATEROUS Supervisor Luzviminda Bautro, issued a memorandum 16 notifying Catolico of
her termination; thus:chan rob1es v irt ual 1aw l ibra ry

We received your letter of explanation and your lawyer’s letter dated Feb. 2, 1990 and Feb. 10, 1990
respectively regarding our imposition of preventive suspension on you for acts of dishonesty. However, said
letters failed to rebut the evidences [sic] in our possession which clearly shows that as a Pharmacist
stationed at Espana Branch, you actually made Purchase Orders at YSP Phils., Inc. for 10 bottles of Voren
tablets at P384.00/bottle with previous price of P320.00/bottle only. A check which you received in the
amount of P640.00 actually represents the refund of over price of said medicines and this was confirmed by
Ms. Estelita Reyes, YSP Phils., Inc. Accounting Department.

Your actuation constitutes an act of dishonesty detrimental to the interest of the company. Accordingly, you
are hereby terminated effective March 8, 1990.

On 5 May 1990, Catolico filed before the Office of the Labor Arbiter a complaint for unfair labor practice,
illegal dismissal, and illegal suspension. 17
In his decision 18 of 10 May 1993, Labor Arbiter Alex Arcadio Lopez found no proof of unfair labor practice
against petitioners. Nevertheless, he decided in favor of Catolico because petitioners failed to "prove what
[they] alleged as complainant’s dishonesty," and to show that any investigation was conducted. Hence, the
dismissal was without just cause and due process. He thus declared the dismissal and suspension illegal but
disallowed reinstatement, as it would not be to the best interest of the parties. Accordingly, he awarded
separation pay to Catolico computed at one-half month’s pay for every year of service; back wages for one
year; and the additional sum of P2,000.00 for illegal suspension "representing 30 days work." Arbiter Lopez
computed the award in favor of Catolico as follows: chanrob 1es vi rtua l 1aw lib rary

30 days Preventive Suspension P2,000.00

Backwages 26,858.50

1/12 of P26,858.50 2,238.21

Separation pay (3 years) 4,305.15

—————

TOTAL AWARD: P35,401.86

—————

Petitioners seasonably appealed from the decision and urged the NLRC to set it aside because the Labor
Arbiter erred in finding that Catolico was denied due process and that there was no just cause to terminate
her services.

In its decision 19 of 30 September 1993, the NLRC affirmed the findings of the Labor Arbiter on the ground
that petitioners were not able to prove a just cause for Catolico’s dismissal from her employment. It found
that petitioner’s evidence consisted only of the check of P640.00 drawn by YSP in favor of complainant,
which her co-employee saw when the latter opened the envelope. But, it declared that the check was
inadmissible in evidence pursuant to Sections 2 and 3(1 and 2) of Article III of the Constitution. 20 It
concluded: chan rob 1es vi rtual 1aw lib rary

With the smoking gun evidence of respondents being rendered inadmissible, by virtue of the constitutional
right invoked by complainants, respondents’ case falls apart as it is bereft of evidence which cannot be used
as a legal basis for complainant’s dismissal.

The NLRC then dismissed the appeal for lack of merit, but modified the dispositive portion of the appealed
decision by deleting the award for illegal suspension as the same was already included in the computation of
the aggregate of the awards in the amount of P35,401.86.

Their motion for reconsideration having been denied, petitioners filed this special civil action for certiorari,
which is anchored on the following grounds: chan rob 1es vi rtual 1aw lib rary

I. Public respondent committed grave abuse of discretion in its finding of facts.

II. Due process was duly accorded to private Respondent.

III. Public respondent gravely erred in applying Section 3, Article III of the 1987 Constitution.

As to the first and second grounds, petitioners insist that Catolico had been receiving "commissions" from
YSP, or probably from other suppliers, and that the check issued to her on 9 November 1989 was not the
first or the last. They also maintained that Catolico occupied a confidential position and that Catolico’s
receipt of YSP’s check, aggravated by her "propensity to violate company rules," constituted breach of
confidence. And contrary to the findings of NLRC, Catolico was given ample opportunity to explain her side
of the controversy.

Anent the third ground, petitioners submit that, in light of the decision in the People v. Marti, 21 the
constitutional protection against unreasonable searches and seizures refers to the immunity of one’s person
from interference by government and cannot be extended to acts committed by private individuals so as to
bring it within the ambit of alleged unlawful intrusion by the government.
In its Manifestation in Lieu of Comment, the Office of the Solicitor General (OSG) disagreed with the NLRC’s
decision, as it was of the persuasion that (a) the conclusions reached by public respondent are inconsistent
with its findings of fact; and (b) the incident involving the opening of envelope addressed to private
respondent does not warrant the application of the constitutional provisions. It observed that Catolico was
given "several opportunities" to explain her side of the check controversy, and concluded that the
opportunities granted her and her subsequent explanation "satisfy the requirements of just cause and due
process." The OSG was also convinced that Catolico’s dismissal was based on just cause and that Catolico’s
admission of the existence of the check, as well as her "lame excuse" that it was Christmas gift from YSP,
constituted substantial evidence of dishonesty. Finally, the OSG echoed petitioners’ argument that there was
no violation of the right of privacy of communication in this case, 22 adding that petitioner WATEROUS was
justified in opening an envelope from one of its regular suppliers as it could assume that the letter was a
business communication in which it had an interest.

In its Comment which we required to be filed in view of the adverse stand of the OSG, the NLRC contends
that petitioners miserably failed to proved their claim that it committed grave abuse of discretion in its
findings of fact. It then prays that we dismiss this petition.
chanrob lesvi rtua llawlib ra ry:red

In her Comment, Catolico assets that petitioners’ evidence is too "flimsy" to justify her dismissal. The check
in issue was given to her, and she had no duty to turn it over to her employer. Company rules do not
prohibit an employee from accepting gifts from clients, and there is no indication in the contentious check
that it was meant as a refund for overpriced medicines. Besides, the check was discovered in violation of the
constitutional provision on the right to privacy and communication; hence, as correctly held by the NLRC, it
was inadmissible in evidence.

Catolico likewise disputes petitioners’ claim that the audit report and her initial response that she never
received a check were sufficient to justify her dismissal. When she denied having received a check from YSP,
she meant that she did not receive any refund of overprice, consistent with her position that what she
received was a token gift. All that can be gathered from the audit report is that there was apparently an
overcharge, with no basis to conclude that Catolico pocketed the amount in collusion with YSP. She thus
concluded that her dismissal was based on a mere suspicion.

Finally, Catolico insists that she could not have breached the trust and confidence of WATEROUS because,
being merely a pharmacist, she did not handle "confidential information or sensitive properties." She was
doing the task of a saleslady: selling drugs and making requisitions when supplies were low.

A thorough review of the record leads us to no other conclusion than that, except as to the third ground, the
instant petition must fail.

Concededly, Catolico was denied due process. Procedural due process requires that an employee be apprised
of the charge against him, given reasonable time to answer the charge, allowed amply opportunity to be
heard and defend himself, and assisted by a representative if the employee so desires. 23 Ample
opportunity connotes every kind of assistance that management must accord the employee to enable him to
prepare adequately for his defense, including legal representation. 24

In the case at bar, although Catolico was given an opportunity to explain her side, she was dismissed from
the service in the memorandum of 5 March 1990 issued by her Supervisor after receipt of her letter and that
of her counsel. No hearing was ever conducted after the issues were joined through said letters. The
Supervisor’s memorandum spoke of "evidences [sic] in [WATEROUS] possession," which were not, however,
submitted. What the "evidences" [sic] other than the sales invoice and the check were, only the Supervisor
knew.

Catolico was also unjustly dismissed. It is settled that the burden is on the employer to prove just and valid
cause for dismissing an employee, and its failure to discharge that burden would result in a finding that the
dismissal is unjustified. 25 Here, WATEROUS proved unequal to the task.

It is evident from the Supervisor’s memorandum that Catolico was dismissed because of an alleged
anomalous transaction with YSP. Unfortunately for petitioners, their evidence does not establish that there
was an overcharge. Control Clerk Eugenio C. Valdez, who claims to have discovered Catolico’s inappropriate
transaction, stated in his affidavit: 26

4. My findings revealed that on or before the month of July 31, 1989, Ms. Catolico in violation of the
[company] procedure, made an under the table deal with YSP Phils. to supply WDRC needed medicines like
Voren tablets at a jack-up price of P384.00 per bottle of 50 mg. which has a previous price of only P320.00;

5. I verified the matter to YSP Phils. to determine the discrepancy and I found out that the cost per bottle
was indeed overpriced. The Accounting Department of YSP Phils. through Ms. Estelita Reyes confirmed that
there was really an overprice and she said that the difference was refunded through their check voucher no.
629552 which was shown to me and the payee is Melodia Catolico, through a China Bank Check No. 892068
dated November 9, 1989.

It clearly appears then that Catolico’s dismissal was based on hearsay information. Estelita Reyes never
testified nor executed an affidavit relative to this case; thus, we have to reject the statements attributed to
her by Valdez. Hearsay evidence carries no probative value. 27

Besides, it was never shown that petitioners paid for the Voren tablets. While Valdez informed Co, through
the former’s memorandum 28 of 29 January 1990, that WATEROUS paid YSP P3,840.00 "thru MBTC Check
No. 222832," the said check was never presented in evidence, nor was any receipt from YSP offered by
petitioners.
c hanro bles vi rt ual lawli bra ry

Moreover, the two purchase orders for Voren tablets presented by petitioners do not indicate an overcharge.
The purchase order dated 16 August 1989 29 stated that the Voren tablets cost P320.00 per box, while the
purchase order dated 5 October 1989 30 priced the Voren tablets at P384.00 per bottle. The difference in
price may then be attributed to the different packaging used in each purchase order.

Assuming that there was an overcharge, the two purchase orders for the Voren tablets were recommended
by Director-MMG Mario R. Panuncio, verified by AVP-MNG Noli M. Lopez and approved by Vice President-
General Manager Emma R. Co. The purchase orders were silent as to Catolico’s participation in the
purchase. If the price increase was objectionable to petitioners, they or their officers should have
disapproved the transaction. Consequently, petitioners had no one to blame for their predicament but
themselves. This set of facts emphasizes the exceedingly incredible situation proposed by petitioners.
Despite the memorandum warning Catolico not to negotiate with suppliers of medicine, there was no proof
that she ever transacted, or that she had the opportunity to transact, with the said suppliers. Again, as the
purchase orders indicate, Catolico was not at all involved in the sale of the Voren tablets. There was no
occasion for Catolico to initiate, much less benefit from, what Valdez called an "under the table deal" with
YSP.

Catolico’s dismissal then was obviously grounded on mere suspicion, which in no case can justify an
employee’s dismissal. Suspicion is not among the valid causes provided by the Labor Code for the
termination of employment; 31 and even the dismissal of an employee for loss of trust and confidence must
rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices, or suspicion. 32
Besides, Catolico was not shown to be a managerial employee, to which class of employees the term "trust
and confidence" is restricted. 33

As regards the constitutional violation upon which the NLRC anchored its decision, we find no reason to
revise the doctrine laid down in People v. Marti 34 that the Bill of Rights does not protect citizens from
unreasonable searches and seizures perpetrated by private individuals. It is not true, as counsel for Catolico
claims, that the citizens have no recourse against such assaults. On the contrary, and as said counsel
admits, such an invasion gives rise to both criminal and civil liabilities.

Finally, since it has been determined by the Labor Arbiter that Catolico’s reinstatement would not be to the
best interest of the parties, he correctly awarded separation pay to Catolico. Separation pay in lieu of
reinstatement is computed at one month’s salary for every year of service. 35 In this case, however, Labor
Arbiter Lopez computed the separation pay at one-half month’s salary for every year of service. Catolico did
not oppose or raise an objection. As such, we will uphold the award of separation pay as fixed by the Labor
Arbiter.

WHEREFORE, the instant petition is hereby DISMISSED and the challenged decision and resolution of the
National Labor Relations Commission dated 30 September 1993 and 2 December 1993, respectively, in
NLRC-NCR CA No. 005160-93 are AFFIRMED, except as to its reason for upholding the Labor Arbiter’s
decision, viz., that the evidence against private respondent was inadmissible for having been obtained in
violation of her constitutional rights of privacy of communication and against unreasonable searches and
seizures which is hereby set aside.
Costs against petitioners.

SO ORDERED.