LABOR LAW I

I. THE CONSTITUTION AND PROTECTION

OF LABOR
 Constitutional Rights of Workers

A. 1987 Constitution (State Policies, Bill of Rights & Social Justice)

Article II – Declaration of Principles and State Policies

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate
social services, promote full employment, a rising standard of living, and an improved quality of life for
all.

Section 10. The State shall promote social justice in all phases of national development.

Social Justice, according to Dr. Jose P. Laurel in Calalang v. Williams 70 Pjil 726 (1940), is neither communism, nor
despotism , nor atomism nor anarchy, but the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception may at least be approximated.
Social justice means the promotion of the welfare of all the people, the adoption by the government of measures
calculated to insure economic stability of all the component elements of society through the maintenance of
proper economic and social equilibrium in the interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers
underlying the existence of all governments, on the time-honored principle of saluspopuliestsupremalex.

A forthright pronouncement by our Supreme Court way back in 1949 states:

Social Justice does not champion division of property or equality of economic status; what it and the Constitution
do guaranty are equality of opportunity, equality of political rights, equality before the law, equality between
values given and received, and equitable sharing of the social and material goods on the basis of efforts exerted in
their production. (Guido vs. Rural Progress Administration, L-2089, October 31, 1949)

Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.
Section 20. The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.

Article III - BILL OF RIGHTS

Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the
right of the people peaceably to assemble and petition the government for redress of grievances.

Section 8. The right of the people, including those employed in the public and private sectors, to form
unions, associations, or societies for purposes not contrary to law shall not be abridged.

Section 10. No law impairing the obligation of contracts shall be passed.

Section 16. All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-
judicial, or administrative bodies.

Section 18. (2) No involuntary servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.

ARTICLE XIII - SOCIAL JUSTICE AND HUMAN RIGHTS

Section 2. The promotion of social justice shall include the commitment to create economic opportunities
based on freedom of initiative and self-reliance.

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all.

Section 13. The State shall establish a special agency for disabled persons for their rehabilitation, self-
development, and self-reliance, and their integration into the mainstream of society.

Section 14. The State shall protect working women by providing safe and healthful working conditions,
taking into account their maternal functions, and such facilities and opportunities that will enhance their
welfare and enable them to realize their full potential in the service of the nation.
GARCIA vs. PAL (GR No. 164856, January 20, 2009)
FACTS:

G.R. No. 164856 January 20, 2009 JUANITO A. GARCIA and ALBERTO J. DUMAGO, Petitioners, vs.
PHILIPPINE AIRLINES, INC., Respondent. FACTS: An administrative charge was filed by PAL against its
employees-herein petitioners after they were allegedly caught in the act of sniffing shabu when a team
of company security personnel and law enforcers raided the PAL Technical Center’s Toolroom Section.
After due notice, PAL dismissed petitioners for transgressing the PAL Code of Discipline, prompting them
to file a complaint for illegal dismissal and damages which was resolved by the Labor Arbiter in their
favor, thus ordering PAL to immediately comply with the reinstatement aspect of the decision. Prior to
the promulgation of the Labor Arbiter’s decision, the SEC placed PAL which was suffering from severe
financial losses. From the Labor Arbiter’s decision, PAL appealed to the NLRC which reversed said
decision of the Labor Arbiter and dismissed petitioners’ complaint for lack of merit. Petitioners’ Motion
for Reconsideration was denied and Entry of Judgment was issued. Subsequently, the Labor Arbiter
issued a Writ of Execution respecting the reinstatement aspect of his decision, and he issued a Notice of
Garnishment. PAL thereupon moved to quash the Writ and to lift the Notice while petitioners moved to
release the garnished amount. In a related move, PAL filed an Urgent Petition for Injunction with the
NLRC which affirmed the validity of the Writ and the Notice issued by the Labor Arbiter but suspended
and referred the action to the Rehabilitation Receiver for appropriate action. PAL elevated the matter to
the appellate court which reversed the NLRC’s decision. Hence, this petition.

ISSUES:

(1) whether or not a subsequent finding of a valid dismissal removes the basis for implementing the
reinstatement aspect of a labor arbiter’s decision?

(2) whether or not the impossibility to comply with the reinstatement order due to corporate
rehabilitation provides a reasonable justification for the failure to exercise the options under Article 223
of the Labor Code?

HELD:

Since petitioners’ claim against PAL is a money claim for their wages during the pendency of PAL’s
appeal to the NLRC, this should have been suspended pending the rehabilitation proceedings. It was
then suspended while ongoing rehabilitation. In view of the termination of the rehabilitation
proceedings, the Court now proceeds to resolve the remaining issue for consideration. As to the first
issue, the court held that a subsequent finding of a valid dismissal removes the basis for implementing
the reinstatement aspect of a labor arbiter’s decision. Based on jurisprudential trend applying par 3 of
Article 223 of the Labor Code which provides that “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, 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 view as maintained in a number of cases is that
“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 dismissed employee during the period of appeal
until reversal by the higher court.” On the other hand, if the employee has been reinstated during the
appeal period and such reinstatement order is reversed with finality, the employee is not required to
reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services
during the period. The provision of Article 223 is clear that an award for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the employer shall not stay
the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of
reinstatement immediately enforceable, even pending appeal. To require the application for and
issuance of a writ of execution as prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of Article 223. The reason is simple. As to
the second issue, the Court held that the peculiar predicament of a corporate rehabilitation rendered it
impossible for respondent to exercise its option under the circumstances. The spirit of the rule on
reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision
containing an order of reinstatement. Reinstatement pending appeal necessitates its immediate
execution during the pendency of the appeal, if the law is to serve its noble purpose. At the same time,
any attempt on the part of the employer to evade or delay its execution, should not be countenanced.
After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from
collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal
was without fault on the part of the employer. The new NLRC Rules of Procedure, now require the
employer to submit a report of compliance within 10 calendar days from receipt of the Labor Arbiter’s
decision, disobedience to which clearly denotes a refusal to reinstate. It is apparent that there was
inaction on the part of respondent to reinstate them, but whether such omission was justified depends
on the onset of the exigency of corporate rehabilitation. It is settled that upon appointment by the SEC
of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the
corporation shall ipso jure be suspended. Case law recognizes that unless there is a restraining order,
the implementation of the order of reinstatement is ministerial and mandatory. This injunction or
suspension of claims by legislative fiat partakes of the nature of a restraining order that constitutes a
legal justification for respondent’s noncompliance with the reinstatement order. Respondent’s failure to
exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified.
Such being the case, respondent’s obligation to pay the salaries pending appeal, as the normal effect of
the non-exercise of the options, did not attach.

Abbott Laboratories v. Alcaraz (GR No. 192571, April 22, 2014)

Subject: Labor Law – Probationary employees – Standards to qualify as a regular employee

Decision (Perlas-Bernarbe, J.)
Dissent (Brion, J.)
FACTS:
On June 27, 2004, Abbott Laboratories, Philippines (Abbott) caused the publication in a major
broadsheet newspaper of its need for a Medical and Regulatory Affairs Manager who would: (a) be
responsible for drug safety surveillance operations, staffing, and budget; (b) lead the development and
implementation of standard operating procedures/policies for drug safety surveillance and vigilance;
and (c) act as the primary interface with internal and external customers regarding safety operations
and queries.
Alcaraz – who was then a Regulatory Affairs and Information Manager at Aventis Pasteur Philippines,
Incorporated (another pharmaceutical company like Abbott) – showed interest and submitted her
application on October 4, 2004.
On December 7, 2004, Abbott formally offered Alcaraz the above-mentioned position which was an item
under the company’s Hospira Affiliate Local Surveillance Unit (ALSU) department.

In Abbott’s offer sheet, it was stated that Alcaraz was to be employed on a probationary basis.
Later that day, she accepted the said offer and received an electronic mail (e-mail) from Abbott’s
Recruitment Officer, Teresita C. Bernardo (Bernardo), confirming the same. Attached to Bernardo’s e-
mail were Abbott’s organizational chart and a job description of Alcaraz’s work.
On February 12, 2005, Alcaraz signed an employment contract which stated that she was to be placed
on probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005.
During Alcaraz’s pre-employment orientation, Allan G. Almazar, Hospira’s Country Transition
Manager, briefed her on her duties and responsibilities as Regulatory Affairs Manager:

(a) she will handle the staff of Hospira ALSU and will directly report to Almazar on matters regarding
Hopira’s local operations, operational budget, and performance evaluation of the Hospira ALSU Staff
who are on probationary status;
(b) she must implement Abbott’s Code of Good Corporate Conduct (Code of Conduct), office policies on
human resources and finance, and ensure that Abbott will hire people who are fit in the organizational
discipline;
(c) Kelly Walsh, Manager of the Literature Drug Surveillance Drug Safety of Hospira, will be her
immediate supervisor;
(d) she should always coordinate with Abbott’s human resource officers in the management and
discipline of the staff;
(e) Hospira ALSU will spin off from Abbott in early 2006 and will be officially incorporated and known as
Hospira, Philippines; and
(f) the processing of information and/or raw material data subject of Hospira ALSU operations will be
strictly confined and controlled under the computer system and network being maintained and operated
from the United States. For this purpose, all those involved in Hospira ALSU are required to use two
identification cards: one, to identify them as Abbott’s employees and another, to identify them as
Hospira employees.

On March 3, 2005, Maria Olivia T. Yabut-Misa, Abbott’s Human Resources (HR) Director, sent Alcaraz an
e-mail which contained an explanation of the procedure for evaluating the performance of probationary
employees and further indicated that Abbott had only one evaluation system for all of its
employees. Alcaraz was also given copies of Abbott’s Code of Conduct and Probationary Performance
Standards and Evaluation (PPSE) and Performance Excellence Orientation Modules (Performance
Modules) which she had to apply in line with her task of evaluating the Hospira ALSU staff.
Abbott’s PPSE procedure mandates that the job performance of a probationary employee should be
formally reviewed and discussed with the employee at least twice: first on the third month and second
on the fifth month from the date of employment. The necessary Performance Improvement Plan should
also be made during the third-month review in case of a gap between the employee’s performance and
the standards set. These performance standards should be discussed in detail with the employee within
the first two (2) weeks on the job. It was equally required that a signed copy of the PPSE form must be
submitted to Abbott’s Human Resources Department (HRD) and shall serve as documentation of the
employee’s performance during his/her probationary period. This shall form the basis for
recommending the confirmation or termination of the probationary employment.
On April 20, 2005, Alcaraz had a meeting with Cecille Terrible, Abbott’s former HR Director, to discuss
certain issues regarding staff performance standards. In the course thereof, Alcaraz accidentally saw a
printed copy of an e-mail sent by Walsh to some staff members which essentially contained queries
regarding the former’s job performance. Alcaraz asked if Walsh’s action was the normal process of
evaluation. Terrible said that it was not.
On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible where she was informed that
she failed to meet the regularization standards for the position of Regulatory Affairs Manager.
Thereafter, Walsh and Terrible requested Alcaraz to tender her resignation, else they be forced to
terminate her services. She was also told that, regardless of her choice, she should no longer report for
work and was asked to surrender her office identification cards. She requested to be given one week to
decide on the same, but to no avail.
On May 17, 2005, Alcaraz told her administrative assistant, Claude Gonzales (Gonzales), that she would
be on leave for that day. However, Gonzales told her that Walsh and Terrible already announced to the
whole Hospira ALSU staff that Alcaraz already resigned due to health reasons.
On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating that her
services had been terminated effective May 19, 2005. The letter detailed the reasons for Alcaraz’s
termination – particularly, that Alcaraz:

(a) did not manage her time effectively;

(b) failed to gain the trust of her staff and to build an effective rapport with them;
(c) failed to train her staff effectively; and
(d) was not able to obtain the knowledge and ability to make sound judgments on case processing and
article review which were necessary for the proper performance of her duties.

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal
dismissal and damages against Abbott and its officers, namely, Misa, Bernardo, Almazar, Walsh, Terrible,
and Feist. She claimed that she should have already been considered as a regular and not a probationary
employee given Abbott’s failure to inform her of the reasonable standards for her regularization upon
her engagement as required under Article 295 of the Labor Code. In this relation, she contended that
while her employment contract stated that she was to be engaged on a probationary status, the same
did not indicate the standards on which her regularization would be based. She further averred that the
individual petitioners maliciously connived to illegally dismiss her when:

(a) they threatened her with termination;

(b) she was ordered not to enter company premises even if she was still an employee thereof; and
(c) they publicly announced that she already resigned in order to humiliate her.

Abbott maintained that Alcaraz was validly terminated from her probationary employment given her
failure to satisfy the prescribed standards for her regularization which were made known to her at the
time of her engagement.

The Labor Arbiter ruled in Abbott’s favor. The NLRC reversed, upholding Alcaraz’s allegations. The CA
affirmed the NLRC decision.

ISSUES:

1) WON Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular
employee

HELD:
MAJORITY: YES. Abbott clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs
Manager prior to, during the time of her engagement, and the incipient stages of her employment. On
this score, the Court finds it apt to detail not only the incidents which point out to the efforts made by
Abbott but also those circumstances which would show that Alcaraz was well-apprised of her employer’s
expectations that would, in turn, determine her regularization:

(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of its need for a
Regulatory Affairs Manager, indicating therein the job description for as well as the duties and
responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit her application to
Abbott on October 4, 2004;

(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a
probationary status;

(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia,
that she was to be placed on probation for a period of six (6) months beginning February 15, 2005 to
August 14, 2005;

(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her (d) On the day Alcaraz
accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s organizational structure and
her job description through e-mail;

(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed her that she
had to implement Abbott’s Code of Conduct and office policies on human resources and finance and that
she would be reporting directly to Walsh;

(f) Alcaraz was also required to undergo a training program as part of her orientation;

(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from Misa who
explained to her the procedure for evaluating the performance of probationary employees; she was
further notified that Abbott had only one evaluation system for all of its employees; and

(h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to
have an “extensive training and background” to acquire the necessary skills for her job.

Considering the totality of the above-stated circumstances, Alcaraz was well-aware that her
regularization would depend on her ability and capacity to fulfill the requirements of her position as
Regulatory Affairs Manager and that her failure to perform such would give Abbott a valid cause to
terminate her probationary employment. Verily, basic knowledge and common sense dictate that the
adequate performance of one’s duties is, by and of itself, an inherent and implied standard for a
probationary employee to be regularized; such is a regularization standard which need not be literally
spelled out or mapped into technical indicators in every case.

DISSENT (Brion, J.): NO. The Offer Sheet was designed to inform Alcaraz of the compensation and
benefits package offered to her by Abbott and can in no way be read as a statement of the applicable
probationary employment standard. It was communicated even prior to engagement when the parties
were negotiating, not at the point of engagement as the law requires.
The pre-employment orientation on Alcaraz’s duty to implement Abbott’s Code of Conduct, office
policies and training program likewise cannot be characterized as performance standards; they simply
related to activities aimed at acquainting and training Alcaraz on her duties and not for the purpose of
informing her of the performance standards applicable to her. What stands out is that they do not
pertain specifically to Alcaraz and the required performance standard applicable for her qualification for
regular employment; they related to the staff Alcaraz managed and supervised. Additionally, these were
all relayed prior to or after Alcaraz was engaged by Abbott.
An important distinction to remember at this point is that Alcaraz’s knowledge of the duties that her
work entailed, and her knowledge of the employer’s performance standard, are two distinct matters
separately requiring the presentation of independent proof.

MAJORITY: Keeping with [the Omnibus Rules Implementing the Labor Code], an employer is deemed to
have made known the standards that would qualify a probationary employee to be a regular employee
when it has exerted reasonable efforts to apprise the employee of what he is expected to do to
accomplish during the trial of probation.This goes without saying that the employee is sufficiently made
aware of his probationary status as well as the length of time of the probation.
The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of
maids, cooks, drivers, or messengers. Also in Aberdeen Court, Inc v. Agustin, it has been held that the
rule on notifying a probationary employee of the standards of regularization should not be used to
exculpate an employee in a manner contrary to basic knowledge and common sense in regard to which
there is no need to spell out a policy or standard to be met. In the same light, an employee’s failure to
perform the duties and responsibilities which have been clearly made known to him constitutes a
justifiable basis for a probationary employee’s non-regularization.

DISSENT (Brion, J.): Based on these premises, the ponencia then deftly argues that because the duties
and responsibilities of the position have been explained to Alcaraz, an experienced human resource
specialist, she should have known what was expected for her to attain regular status. The ponencia’s
reasoning, however, is badly flawed.
1st. The ponencia impliedly admits that no performance standards were expressly given but argues that
because Alcaraz had been informed of her duties and responsibilities (a fact that was and is not
disputed), she should be deemed to know what was expected of her for purposes of regularization. This
is a major flaw that the ponencia satisfies only via an assumption. The ponencia apparently forgets that
knowledge of duties and responsibilities is different from the measure of how these duties and
responsibilities should be delivered. They are separate elements and the latter element is missing in the
present case.
2nd. Theponencia glosses over the communication aspect. Not only must there be express performance
standards; there must be effective communication. If no standards were provided, what would be
communicated?
3rd. The ponencia badly contradicts itself in claiming that actual communication of specific standards
might not be necessary “when the job is self-descriptive in nature, for instance, in the case of maids,
cooks, drivers, or messengers.” Alcaraz, in the first place, was never a maid, cook, driver or a messenger
and cannot be placed under this classification; she was hired and employed as a human resources
manager, in short, a managerial employee. Plain and common sense reasoning by one who ever had
been in an employment situation dictates that the job of a manager cannot be self-explanatory, in the
way the ponencia implied; the complexity of a managerial job must necessarily require that the level of
performance to be delivered must be specified and cannot simply be assumed based on the
communication of the manager’s duties and responsibilities.
4th. The ponencia also forgets that what these “performance standards” or measures cannot simply be
assumed because they are critically important in this case, or for that matter, in any case involving jobs
whose duties and responsibilities are not simple or self-descriptive. If Alcaraz had been evaluated or
assessed in the manner that the company’s internal rules require, these standards would have been the
basis for her performance or lack of it. Last but not the least, Alcaraz’s services were terminated on the
basis of the performance standards that, by law, the employer set or prescribed at the time of the
employee’s engagement. If none had been prescribed in the first place, under what basis could the
employee then be assessed for purposes of termination or regularization?

ISSUES:

2) WON Alcaraz was validly terminated from her employment

HELD:

MAJORITY: NO. Abbott failed to follow the above-stated procedure in evaluating Alcaraz. For one, there
lies a hiatus of evidence that a signed copy of Alcaraz’s PPSE form was submitted to the HRD. It was not
even shown that a PPSE form was completed to formally assess her performance. Neither was the
performance evaluation discussed with her during the third and fifth months of her employment. Nor
did Abbott come up with the necessary Performance Improvement Plan to properly gauge Alcaraz’s
performance with the set company standards.
The Court modified Agabon v. NLRC in the case of Jaka Food Processing Corporation v. Pacot where it
created a distinction between procedurally defective dismissals due to a just cause, on one hand, and
those due to an authorized cause, on the other.
If the dismissal is based on a just cause under Article 296 of the Labor Code but the employer failed to
comply with the notice requirement, the sanction to be imposed upon him should be tempered because
the dismissal process was, in effect, initiated by an act imputable to the employee
If the dismissal is based on an authorized cause under Article 297 but the employer failed to comply with
the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the
employer’s exercise of his management prerogative.
Alcaraz’s dismissal proceeded from her failure to comply with the standards required for her
regularization. As such, it is undeniable that the dismissal process was, in effect, initiated by an act
imputable to the employee, akin to dismissals due to just causesunder Article 296 of the Labor Code.
Therefore, the Court deems it appropriate to fix the amount of nominal damages at the amount of
P30,000.00, consistent with its rulings in both Agabon and Jaka.

DISSENT (Brion, J.): YES. Alcaraz was dismissed as she “failed to qualify as regular employee in
accordance with the prescribed standards set by the Company.” Even granting for the sake of argument
that Abbott had apprised Alcaraz of an applicable performance standard, the evidence failed to show
that Alcaraz did not meet this standard in a manner and to the extent equivalent to the “just cause” that
the law requires.
In defense of Abbott’s failure to observe the two-notice requirement, the ponencia argues that a
different procedure applies when terminating a probationary employee; the usual two-notice
requirement does not govern, citing for this purpose Section 2, Rule I, Book VI of the Implementing
Rules of the Labor Code. The ponencia, however, forgets that the single notice rule applies only if the
employee is validly on probationary basis; it does not apply where the employee is deemed a regular
employee for the company’s failure to provide and to communicate a prescribed performance standard
applicable to the probationary employee.

ISSUES:

3) WON the individual petitioners herein are liable

HELD:

MAJORITY: NO. Other than her unfounded assertions on the matter, there is no evidence to support the
fact that the individual petitioners herein, in their capacity as Abbott’s officers and employees, acted in
bad faith or were motivated by ill will in terminating Alcaraz’s services. The fact that Alcaraz was made
to resign and not allowed to enter the workplace does not necessarily indicate bad faith on Abbott’s
part since a sufficient ground existed for the latter to actually proceed with her termination. On the
alleged loss of her personal belongings, records are bereft of any showing that the same could be
attributed to Abbott or any of its officers.

DISSENT (Brion, J.): YES. The NLRC exhaustively discussed Abbott’s bad faith, as demonstrated by the
actions of the individual petitioners:
First, Alcaraz was pressured to resign:

(1) she was threatened with termination, which will surely damage her reputation in the pharmaceutical
industry;

(2) she was asked to evacuate her Commission and ordered not to enter the Company’s premises even if
she was still an Abbott employee; and

(3) Terrible and Walsh made a public announcement to the staff that Alcaraz already resigned even if in
reality she did not.

The CA also described in detail the abrupt and oppressive manner in which Alcaraz’s employment was
dismissed by Abbott:

On May 23, 2005, Alcaraz still reported for work since Abbott had not yet handed the termination notice
to her. However, the security guard did not allow her to enter the Hospira ALSU office pursuant to
Walsh[’s] instruction. She requested Walsh that she be allowed to enter the company premises to
retrieve her last remaining things in her office which are mostly her personal belongings. She was
allowed to enter. However, she was surprised to see her drawers already unlocked and, when she opened
the same, she discovered that her small brown envelope x xx, white pouch containing the duplicate keys,
and the staff’s final evaluation sheets were missing.Alcaraz informed Bernardo about the incident. The
latter responded by saying she was no longer an employee of the company since May 19, 2005.
Alcaraz reported the matter to the Pasig Police Station and asked for help regarding the theft of her
properties. The Pasig Police incident report stated as follows:
x xxx When confronted by the suspect, in the presence of one SOCO officer and staff, named Christian
Perez, Kelly Walsh allegedly admitted that she was the one who opened the drawer and got the green
folders containing the staff evaluations. The Reportee was told by Kelly Walsh that her Rolex wristwatch
will be returned to her provided that she will immediately vacate her office.

On the same date, Alcaraz’s termination letter dated May 19, 2005 was handed to her by Walsh,
Almazar and Bernardo.

RESULT: CA reversed. In favor of Abbott.

 B. CIVIL CODE

SECTION 2. - Contract of Labor (n)

Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts are
subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects.

Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or
convenience of the public.

Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.

Art. 1703. No contract which practically amounts to involuntary servitude, under any guise whatsoever,
shall be valid.

DAVAO INTEGRATED PORT STEVEDORING SERVICES v. RUBEN V.

ABARQUEZ [ GR No. 102132, Mar 19, 1993 ]

Facts:

Petitioner and private respondent and the exclusive collective bargaining agent of the rank and file
workers entered into collective bargaining agreement under Sections 1 and 3, Article VIII thereof,
provide for sick leave with pay benefits each year to its employees who have rendered at least one (1)
year of service with the company, thus:

Section 1. Sick Leaves — The Company agrees to grant 15 days sick leave with pay each year to every
regular non-intermittent worker who already rendered at least one year of service with the company.
However, such sick leave can only be enjoyed upon certification by a company designated physician, and
if the same is not enjoyed within one year period of the current year, any unenjoyed portion thereof,
shall be converted to cash and shall be paid at the end of the said one year period. And provided
however, that only those regular workers of the company whose work are not intermittent, are entitled
to the herein sick leave privilege.
Section 3. — All intermittent field workers of the company who are members of the Regular Labor Pool
shall be entitled to vacation and sick leaves per year of service with pay under the following schedule
based on the number of hours rendered including overtime.
Hours of Service Per Calendar Year Vacation Leave Sick Leave
Less than 750 NII NII
751-825 6 days 6 days
826-900 7 7
901-925 8 8
926-1,050 9 9
1,051-1,125 10 10
1,126-1,200 11 11
1,201-1,275 12 12
1,276-1,350 13 13
1,351-1,425 14 14
1,426-1,500 15 15

Upon its renewal, the coverage of the said benefits was expanded to include the "present Regular Extra
Labor Pool as of the signing of this Agreement." Section 3, Article VIII, as revised, provides, thus:

"Section 3. — All intermittent field workers of the company who are members of the Regular Labor Pool
and present Regular Extra Labor Pool as of the signing of this agreement shall be entitled to vacation
and sick leaves per year of service with pay under the following schedule based on the number of hours
rendered including overtime.

Also, all the field workers of petitioner who are members of the regular labor pool and the present
regular extra labor pool hours were extended sick leave with pay benefits. Any unenjoyed portion
thereof at the end of the current year was converted to cash and paid at the end of the said one-year
period pursuant to Sections 1 and 3, Article VIII of the CBA.

The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-company
under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the
latter's resignation), stopped the payment of its cash equivalent on the ground that they are not entitled
to the said benefits under Sections 1 and 3 of the 1989 CBA.

The Union objected said discontinuance because it would violate the principle in labor laws that benefits
already extended shall not be taken away and that it would result in discrimination between the non-
intermittent and the intermittent workers of the petitioner-company. The Union brought it before the
National Conciliation and Mediation Board and said public respondent issued an award in favour of the
Union. Hence, this instant petition.

Issue:

Whether or not the intermittent field workers are entitled to conversion to cash of any unused sick
leave.
Held:

The Supreme Court dismissed the petition. It was said that CBA is not an ordinary contract but
impressed with public interest, thus it must yield to the common good.

It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to
two (2) distinct classes of workers in petitioner's company, namely: (1) the regular non-intermittent
workers or those workers who render a daily eight-hour service to the company and are governed by
Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of the
regular labor pool and the present regular extra labor pool as of the signing of the agreement on April
15, 1989 or those workers who have irregular working days and are governed by Section 3, Article VIII of
the 1989 CBA.

It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other related
section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the
discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed
portion of the sick leave benefit to regular intermittent workers because well-settled is it that the said
privilege of commutation or conversion to cash, being an existing benefit, the petitioner-company may
not unilaterally withdraw, or diminish such benefits.

It is a fact that petitioner-company had, on several instances in the past, granted and paid the cash
equivalent of the unenjoyed portion of the sick leave benefits of some intermittent workers. Under the
circumstances, these may be deemed to have ripened into company practice or policy which cannot be
peremptorily withdrawn.

B. Nature of Labor Contracts

BREW MASTER INTERNATIONAL INC. V NATIONAL FEDERATION OF

LABOR UNIONS (NAFLU)

DAVIDE, JR; April 17, 1997

NATURE

A special civil action for certiorari seeking the reversal of the decision of the National Labor Relations
Commission (NLRC) which modified the decision of the Labor Arbiter by directing the reinstatement of
private respondent Antonio D. Estrada, the complainant, without loss of seniority rights and benefits.
FACTS :

- Private respondent NAFLU, a co-complainant in the labor case, is a labor union of which complainant is
a member.Complainant was first employed by Brew Master on 16 September 1991 as route helper with
the latest daily wage of P119.00. From 19 April 1993 up to 19 May 1993, for a period of 1 month,
complainant went on absent without permission (AWOP). On 20 May 1993, Brew master sent him a
Memo: “Please explain in writing within 24 hours of your receipt of this memo why no disciplinary
action should be taken against you for the following offense: You were absent since April 19, 1993 up to
May 19, 1993.”In answer to the aforesaid memo, complainant explained:

“Sa dahilanponaako ay hindinakapagpaalamsainyodahilinuwikoangmgaanakkosa Samar

dahilangasawako ay lumayas at walang mag-aalagasamgaanakko. Kaya namanhindiakonaka long
distance or telegramadahilwalaakongpera at ibinilikonggamot ay puroutang pa.”

- Finding said explanation unsatisfactory, the company issued a Notice of Termination: “...we regret to
inform you that we do not consider it valid. You are aware of the company Rules and Regulations that
absence without permission for 6 consecutive working days is considered abandonment of work.
Complainants contend that individual complainant’s dismissal was done without just cause; that it was
not sufficiently established that individual complainant’s absence from April 19, 1993 to June 16, 1993
are unjustified; that the penalty of dismissal for such violation is too severe; that in imposing such
penalty, respondent should have taken into consideration complainant’s length of service and as a first
offender, a penalty less punitive will suffice such as suspension for a definite period.Upon the other
hand, respondent contends that individual complainant was dismissed for cause allowed by the
company Rules and Regulations and the Labor Code; that the act of complainant in absenting from work
for 1 month without official leave is deleterious to the business of respondent; that it will result to
stoppage of production which will not only destructive to respondent’s interests but also to the interest
of its employees in general; that the dismissal of complainant from the service is legal.

The Labor Arbiter dismissed the complaint for lack of merit, citing the principle of managerial control,
which recognizes the employer’s prerogative to prescribe reasonable rules and regulations to govern the
conduct of his employees. He relied on Shoemart, Inc. vs. NLRC: “...that individual complainant has
indeed abandoned his work... therefore, under the law and jurisprudence which upholds the right of an
employer to discharge an employee who incurs frequent, prolonged and unexplained absences as being
grossly remiss in his duties to the employer and is therefore, dismissed for cause. An employee is
deemed to have abandoned his position or to have resigned from the same, whenever he has been
absent therefrom without previous permission of the employer for three consecutive days or more. “

The NLRC modified the Labor Arbiter's decision and held that complainant’s dismissal was invalid for the
following reasons:Complainant-appellant’s prolonged absences, although unauthorized, may not
amount to gross neglect or abandonment of work to warrant outright termination of employment.
Dismissal is too severe a penalty...Reliance on the ruling enunciated in the cited case of Shoemart is
quite misplaced because of the obvious dissimilarities-- complainant in the Shoemart Case was “an
inveterate absentee who does not deserve reinstatement” compared to herein complainant-appellant
who is a first offender

ISSUE:

WON the NLRC committed grave abuse of discretion in modifying the decision of the Labor Arbiter

HELD:

NO

a) Petitioner’s finding that complainant was guilty of abandonment is misplaced. Abandonment as a just
and valid ground for dismissal requires the deliberate, unjustified refusal of the employee to resume his
employment. Two elements must then be satisfied: (1) the failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever the employer-employee
relationship.

b) Verily, relations between capital and labor are not merely contractual. They are impressed with
public interest and labor contracts must, perforce, yield to the common good.

While the employer is not precluded from prescribing rules and regulations to govern the conduct of his
employees, these rules and their implementation must be fair, just and reasonable.

Reasoning

- complainant’s absence was precipitated by a grave family problem as his wife unexpectedly deserted
him and abandoned the family. Considering that he had a full-time job, there was no one to whom he
could entrust the children and he was thus compelled to bring them to the province. He was then under
emotional, psychological, spiritual and physical stress and strain. The reason for his absence is, under
these circumstances, justified. While his failure to inform and seek petitioner's approval was an
omission which must be corrected and chastised, he did not merit the severest penalty of dismissal from
the service. The elements of abandonment are not present here. First, as held above, complainant's
absence was justified under the circumstances. As to the second requisite, complainant immediately
complied with the memo requiring him to explain his absence, and upon knowledge of his termination,
immediately sued for illegal dismissal. These plainly refuted any claim that he was no longer interested
in returning to work.Our Constitution looks with compassion on the workingman and protects his rights
not only under a general statement of a state policy, but under the Article on Social Justice and Human
Rights, thus placing labor contracts on a higher plane and with greater safeguards. While we do not
decide here the validity of petitioner's Rules and Regulations on continuous, unauthorized absences,
what is plain is that it was wielded with undue haste resulting in a deprivation of due process, thus not
allowing for a determination of just cause or abandonment. In this light, petitioner's dismissal was
illegal. This is not to say that his absence should go unpunished, as impliedly noted by the NLRC in
declining to award back wages.

Disposition petition is hereby DISMISSED and the decision of the NLRC is hereby AFFIRMED.
NORMA MABEZA, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, PETER NG/HOTEL SUPREME, respondents
FACTS:

Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an inspection was
made by the Department of Labor and Employment (DOLE) at Hotel Supreme and the DOLE inspectors
discovered several violations by the hotel management. Immediately, the owner of the hotel, Peter Ng,
directed his employees to execute an affidavit which would purport that they have no complaints
whatsoever against Hotel Supreme particularly the latter's compliance with minimum wage and other
labor standard provisions of law. Mabeza signed the affidavit but she refused to certify it with the
prosecutor’s office.

MABEZA’S CONTENTION

That same day, as she refused to go to the City Prosecutor’s Office, she was ordered by the hotel
management to turn over the keys to her living quarters and to remove her belongings to the hotel’s
premises. She then filed a leave of absence which was denied by her employer. She attempted to return
to work but the hotel’s cashier told her that she should not report to work and instead continue with
her unofficial leave of absence.

Three days after her attempt to return to work, she filed a complaint against the management for illegal
dismissal before the Arbitration Branch of the NLRC in Baguio City. In addition to that, she alleged
underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay,
night differential and other benefits.

NG’S CONTENTION

Peter Ng, in their Answer, argued that her unauthorized leave of absence from work is the ground for
her dismissal. He even maintained that her allegation of underpayment and non-payment of benefits
had no legal basis. He raises a new ground of loss of confidence, which was supported by his filing of
criminal case for the alleged qualified theft of the petitioner (Peter Ng filed a criminal complaint against
Mabeza as he alleged that she had stolen a blanket and some other stuff from the hotel)

LA’S DECISION

The Labor Arbiter ruled in favor of the hotel management on the ground of loss of confidence. She
appealed to the NLRC which affirmed the Labor Arbiter’s decision. Hence, this petition.

MAIN ISSUE:

Whether or not Mabeza’s certain facilities may be deducted from her wage

No.

The labor arbiter’s contention that the reason for the monetary benefits received by the petitioner
between 1981 to 1987 were less than the minimum wage was because petitioner did not factor in the
meals, lodging, electric consumption and water she received during the period of computations.
Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not
be deducted without the employer complying first with certain legal requirements. Without satisfying
these requirements, the employer simply cannot deduct the value from the employee’s wages.

First, proof must be shown that such facilities are customarily furnished by the trade. Second, the
provision of deductible facilities must be voluntary accepted in writing by the employee. Finally, facilities
must be charged at fair and reasonable value. These requirements were not met in the instant case.
Private respondent failed to present any company policy to show that the meal and lodging are part of
the salary. He also failed to provide proof of the employee’s written authorization and he failed to show
how he arrived at the valuations. More significantly, the food and lodging, or electricity and water
consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an
employee for the convenience of the employer is not a facility. The criterion in making a distinction
between the two not so much lies in the kind but the purpose. Considering, therefore, that hotel
workers are required to work on different shifts and are expected to be available at various odd hours,
their ready availability is a necessary matter in the operations of a small hotel, such as the private
respondent’s hotel.

OTHER ISSUES

Whether or not there is unfair labor practice.

Yes

The pivotal question in any case where unfair labor practice on the part of the employer is alleged is
whether or not the employer has exerted pressure, in the form of restraint, interference or coercion,
against his employee’s right to institute concerted action for better terms and conditions of
employment. Without doubt, the act of compelling employees to sign an instrument indicating that the
employer observed labor standard provisions of the law when he might not have, together with the act
of terminating or coercing those who refuse to cooperate with the employees’ scheme constitutes
unfair labor practice.

Whether or not there is abandonment.

No

Abandonment is not present. Mabeza returned several times to inquire about the status of her work or
her employment status. She even asked for a leave but was not granted. Her asking for leave is a clear
indication that she has no intention to abandon her work with the hotel. Even the employer knows that
his purported reason of dismissing her due to abandonment will not fly so he amended his reply to
indicate that it is actually “loss of confidence” that led to Mabeza’s dismissal.

Whether or not there is loss of confidence as a valid ground for dismissal.

No

It is true that loss of confidence is a valid ground to dismiss an employee. But this is ideally only applied
to workers whose positions require a certain level or degree of trust particularly those who are
members of the managerial staff. Evidently, an ordinary chambermaid who has to sign out for linen and
other hotel property from the property custodian each day and who has to account for each and every
towel or bedsheet utilized by the hotel’s guests at the end of her shift would not fall under any of these
two classes of employees for which loss of confidence, if ably supported by evidence, would normally
apply. Further, the suspicious filing by Peter Ng of a criminal case against Mabeza long after she initiated
her labor complaint against him hardly warrants serious consideration of loss of confidence as a ground
of Mabeza’s dismissal.

International School Alliance of Educators v. Quisumbing

Doctrine: The basic test of an asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the exercise of their collective
bargaining rights.

FACTS:

1. International School pursuant to PD 732 is a domestic educational institution established primarily

for dependents of foreign diplomatic personnel and other temporary residents. Sec. 2(c) of said
PD authorizes the School to employ its own teaching and management personnel selected by it
either locally or abroad, from Philippine or other nationalities.
2. The school hires both foreign and local teachers as members of its faculty, classifying the same
into two: foreign hires and local hires.
3. The School employs four tests to determine whether a faculty member should be classified as a
foreign or local hire:
a. What is one’s domicile?
b. Where is one’s home economy?
c. To which country does one owe economic allegiance?
d. Was the individual hired abroad specifically to work in the School and was the School
responsible for bringing that individual to the Philippines?
4. Should the answer to any of these queries point to the Philippines, the faculty member is
classified as a local hire; otherwise, he or she is deemed a foreign hire.
5. The School grants foreign hires certain benefits not accorded local hires: housing, transportation,
shipping costs, taxes, home leave travel allowance and a salary rate of 25% more than local hires.
The school justifies the difference on 2 “significant economic disadvantages” foreign hires have to
endure: dislocation factor and limited tenure.
a. The "dislocation factor": Would need to uproot himself from his home country, leave his
family and friends, and take the risk of deviating from a promising career path-all for the
purpose of pursuing his profession as an educator, but this time in a foreign land.
b. Limited tenure: He will eventually and inevitably return to his home country where he will
have to confront the uncertainty of obtaining suitable employment after a long period in a
foreign land.
 c. The School explains further that: The compensation scheme is simply the School's adaptive
measure to remain competitive on an international level in terms of attracting competent
professionals in the field of international education.
6. When negotiations for a new collective bargaining agreement were held on June 1995,
International School Alliance of Educators (ISAE), a legitimate labor union and the collective
bargaining representative of all faculty members of the School, contested the difference in salary
rates between foreign and local hires.

ISSUE:

WON the point-of-hire classification employed by the school is discriminatory to Filipinos. - YES.

WON the foreign hires and the local hires can be grouped together for the purpose of collective
bargaining? – NO

HELD:

1. Public policy abhors inequality and discrimination. The Constitution, Article 19 of the Civil Code,
General Principles of law such as principles of equity, The Universal Declaration of Human Rights,
the International Covenant on Economic, Social, and Cultural Rights, the International Convention
on the Elimination of All Forms of Racial Discrimination, the Convention against Discrimination in
Education, the Convention (No. 111) Concerning Discrimination in Respect of Employment and
Occupation — all embody the general principle against discrimination, the very antithesis of
fairness and justice. Similarly, the Constitution, the Labor Code and the International Covenant on
Economic, Social, and Cultural Rights impregnably institutionalize in this jurisdiction the long
honored legal truism of "equal pay for equal work."
2. Persons who work with substantially equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. This rule applies to the School, its "international
character" notwithstanding.
3. The School contends that petitioner has not adduced evidence that local-hires perform work
equal to that of foreign-hires.
a. The argument is without merit. If an employer accords employees the same position and
rank, the presumption is that these employees perform equal work. The employer in this
case has failed to discharge this burden. There is no evidence that foreign- hires perform
25% more efficiently or effectively than the local-hires. Both groups have similar functions
and responsibilities, which they perform under similar working conditions.
b. Salaries should not be used as an enticement to the prejudice of local-hires. The local-hires
perform the same services as foreign-hires and they ought to be paid the same salaries as
the latter. The dislocation factor and limited tenure affecting foreign-hires are adequately
compensated by certain benefits which are not enjoyed by local-hires, such as housing,
transportation, shipping costs, taxes and home leave travel allowances.
4. In this case, the point-of-hire classification employed by Int’l School to justify the distinction in the
salary rates of foreign-hires and local hires is an invalid classification. There is no reasonable
 distinction between the services rendered by foreign-hires and local-hires. The practice of the
School of according higher salaries to foreign-hires contravenes public policy.
5. As for bargaining unit, foreign hires do not belong to the same bargaining unit as the local hires.
6. A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of
the entire body of employees, consistent with equity to the employer indicate to be the best
suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.
7. The factors in determining the appropriate collective bargaining unit are
a. the will of the employees (Globe Doctrine)
b. affinity and unity of the employees' interest, such as substantial similarity of work and
duties, or similarity of compensation and working conditions (Substantial Mutual Interests
Rule)
c. prior collective bargaining history; and
d. similarity of employment status
8. The basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally
the combination which will best assure to all employees the exercise of their collective bargaining
rights
9. It does not appear that foreign-hires have indicated their intention to be grouped together with
local-hires for purposes of collective bargaining. The collective bargaining history in the School
also shows that these groups were always treated separately. Foreign-hires have limited tenure;
local-hires enjoy security of tenure. Although foreign-hires perform similar functions under the
same working conditions as the local-hires, foreign-hires are accorded certain benefits not
granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and
home leave travel allowance, are reasonably related to their status as foreign-hires, and justify
the exclusion of the former from the latter. To include foreign-hires in a bargaining unit with local-
hires would not assure either group the exercise of their respective collective bargaining rights.

D. Doctrine of Co-Determination

G.R. No. 85985 August 13, 1993

PHILIPPINE AIRLINES, INC. (PAL) vs. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA and
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA)

FACTS:

On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of Discipline. The
Code was circulated among the employees and was immediately implemented, and some employees
were forthwith subjected to the disciplinary measures embodied therein.
on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint before the
National Labor Relations Commission (NLRC) for unfair labor practice with the following remarks: “ULP
with arbitrary implementation of PAL’s Code of Discipline without notice and prior discussion with Union
by Management”. In its position paper, PALEA contended that PAL, by its unilateral implementation of
the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article
253 of the Labor Code. PALEA alleged that copies of the Code had been circulated in limited numbers;
that being penal in nature the Code must conform with the requirements of sufficient publication, and
that the Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that
implementation of the Code be held in abeyance; that PAL should discuss the substance of the Code
with PALEA; that employees dismissed under the Code be reinstated and their cases subjected to further
hearing; and that PAL be declared guilty of unfair labor practice and be ordered to pay damages.

PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe rules
and regulations regarding employess’ conduct in carrying out their duties and functions, and alleging
that by implementing the Code, it had not violated the collective bargaining agreement (CBA) or any
provision of the Labor Code.

Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed to
appear at the scheduled date. Interpreting such failure as a waiver of the parties’ right to present
evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, a decision
was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that no unfair labor
practice had been committed. However, the arbiter held that PAL was “not totally fault free”
considering that while the issuance of rules and regulations governing the conduct of employees is a
“legitimate management prerogative” such rules and regulations must meet the test of
“reasonableness, propriety and fairness.”

PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with
Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no evidence of
unfair labor practice committed by PAL and affirmed the dismissal of PALEA’s charge.

PAL then filed the instant petition for certiorari charging public respondents with grave abuse of
discretion

ISSUE:

Whether management may be compelled to share with the union or its employees its prerogative of
formulating a code of discipline.

HELD:

Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211
of the Labor Code, that the law explicitly considered it a State policy “(t)o ensure the participation of
workers in decision and policy-making processes affecting the rights, duties and welfare.” However,
even in the absence of said clear provision of law, the exercise of management prerogatives was never
considered boundless.
San Miguel Brewery vsOple: So long as a company’s management prerogatives are exercised in good
faith for the advancement of the employer’s interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements, this Court will
uphold them.

UST vs NLRC: All this points to the conclusion that the exercise of managerial prerogatives is not
unlimited. It is circumscribed by limitations found in law, a collective bargaining agreement, or the
general principles of fair play and justice.

a line must be drawn between management prerogatives regarding business operations per se and
those which affect the rights of the employees. In treating the latter, management should see to it that
its employees are at least properly informed of its decisions or modes action. PAL asserts that all its
employees have been furnished copies of the Code. Public respondents found to the contrary, which
finding, to say the least is entitled to great respect.

the collective bargaining agreement may not be interpreted as cession of employees’ rights to
participate in the deliberation of matters which may affect their rights and the formulation of policies
relative thereto. And one such mater is the formulation of a code of discipline.

industrial peace cannot be achieved if the employees are denied their just participation in the discussion
of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D. 442) was amended
by Republic Act No. 6715, it was already declared a policy of the State, “(d) To promote the
enlightenment of workers concerning their rights and obligations . . . as employees.” This was, of course,
amplified by Republic Act No 6715 when it decreed the “participation of workers in decision and policy
making processes affecting their rights, duties and welfare.” PAL’s position that it cannot be saddled
with the “obligation” of sharing management prerogatives as during the formulation of the Code,
Republic Act No. 6715 had not yet been enacted (Petitioner’s Memorandum, p. 44; Rollo, p. 212),
cannot thus be sustained. While such “obligation” was not yet founded in law when the Code was
formulated, the attainment of a harmonious labor-management relationship and the then already
existing state policy of enlightening workers concerning their rights as employees demand no less than
the observance of transparency in managerial moves affecting employees’ rights.

II – GENERAL PROVISIONS
ARTICLE 1. Name of Decree. - This Decree shall be known as the "Labor Code of the Philippines".

ART. 2. Date of effectivity. - This Code shall take effect six (6) months after its promulgation.

ART. 3. Declaration of basic policy. - The State shall afford protection to labor, promote full employment,
ensure equal work opportunities regardless of sex, race or creed and regulate the relations between
workers and employers. The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work.
ART. 4. Construction in favor of labor. - All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved
in favor of labor.

ART. 5. Rules and regulations. - The Department of Labor and other government agencies charged with
the administration and enforcement of this Code or any of its parts shall promulgate the necessary
implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days
after announcement of their adoption in newspapers of general circulation.

ART. 6. Applicability. - All rights and benefits granted to workers under this Code shall, except as may
otherwise be provided herein, apply alike to all workers, whether agricultural or non-agricultural. (As
amended by Presidential Decree No. 570-A, November 1, 1974).

Chapter II

EMANCIPATION OF TENANTS

ART. 7. Statement of Objectives. Inasmuch as the old concept of land ownership by a few has spawned
valid and legitimate grievances that gave rise to violent conflict and social tension and the redress of
such legitimate grievances being one of the fundamental objectives of the New Society, it has become
imperative to start reformation with the emancipation of the tiller of the soil from his bondage.

ART. 8. Transfer of lands to tenant-workers. - Being a vital part of the labor force, tenant-farmers on
private agricultural lands primarily devoted to rice and corn under a system of share crop or lease
tenancy whether classified as landed estate or not shall be deemed owner of a portion constituting a
family-size farm of five (5) hectares, if not irrigated and three (3) hectares, if irrigated.

In all cases, the land owner may retain a n area of not more than seven (7) hectares if such landowner is
cultivating such area or will now cultivate it.

ART. 9. Determination of land value. - For the purpose of determining the cost of the land to be
transferred to the tenant-farmer, the value of the land shall be equivalent to two and one-half (2-1/2)
times the average harvest of three (3) normal crop years immediately preceding the promulgation of
Presidential Decree No. 27 on October 21, 1972.

The total cost of the land, including interest at the rate of six percent (6%) per annum, shall be paid by
the tenant in fifteen (15) years of fifteen (15) equal annual amortizations.

In case of default, the amortization due shall be paid by the farmers’ cooperative in which the
defaulting tenant-farmer is a member, with the cooperative having a right of recourse against him.

The government shall guarantee such amortizations with shares of stock in government-owned and
government-controlled corporations.
ART. 10. Conditions of ownership. - No title to the land acquired by the tenant-farmer under Presidential
Decree No. 27 shall be actually issued to him unless and until he has become a full-fledged member of a
duly recognized farmers’ cooperative.

Title to the land acquired pursuant to Presidential Decree No. 27 or the Land Reform Program of the
Government shall not be transferable except by hereditary succession or to the Government in
accordance with the provisions of Presidential Decree No. 27, the Code of Agrarian Reforms and other
existing laws and regulations.

ART. 11. Implementing agency. - The Department of Agrarian Reform shall promulgate the necessary
rules and regulations to implement the provisions of this Chapter.

BOOK ONE

PRE-EMPLOYMENT

ART. 12. Statement of objectives. - It is the policy of the State:

a) To promote and maintain a state of full employment through improved manpower training, allocation
and utilization;chanroblesvirtuallawlibrary

b) To protect every citizen desiring to work locally or overseas by securing for him the best possible terms
and conditions of employment; chanroblesvirtuallawlibrary

c) To facilitate a free choice of available employment by persons seeking work in conformity with the
national interest;

d) To facilitate and regulate the movement of workers in conformity with the national interest;

e) To regulate the employment of aliens, including the establishment of a registration and/or work
permit system;

f) To strengthen the network of public employment offices and rationalize the participation of the private
sector in the recruitment and placement of workers, locally and overseas, to serve national development
objectives; chanroblesvirtuallawlibrary

g) To insure careful selection of Filipino workers for overseas employment in order to protect the good
name of the Philippines abroad.

Title I

RECRUITMENT

AND

PLACEMENT OF WORKERS
Chapter I

GENERAL PROVISIONS

ART. 13. Definitions. - (a) "Worker" means any member of thelabor force, whether employed or
unemployed.

(b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which,
in any manner, offers or promises for a fee, employment to two or more persons shall be deemed
engaged in recruitment and placement.

(c) "Private fee-charging employment agency" means any person or entity engaged in recruitment and
placement of workers for a fee which is charged, directly or indirectly, from the workers or employers or
both.

(d) "License" means a document issued by the Department ofLabor authorizing a person or entity to
operate a private employment agency.

(e) "Private recruitment entity" means any person or association engaged in the recruitment and
placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the
workers or employers.

(f) "Authority" means a document issued by the Department ofLabor authorizing a person or association
to engage in recruitment and placement activities as a private recruitment entity.

(g) "Seaman" means any person employed in a vessel engaged in maritime navigation.

(h) "Overseas employment" means employment of a worker outside the

Philippines. chanroblesvirtuallawlibrary

(i) "Emigrant" means any person, worker or otherwise, whoemigrates to a foreign country by virtue of an
immigrant visa or resident permit or its equivalent in the country of destination.

ART. 14. Employment promotion. - The Secretary of Labor shall have the power and authority:

(a) To organize and establish new employment offices in addition to the existing employment offices
under the Department of Labor as the need arises;

(b) To organize and establish a nationwide job clearance and information system to inform applicants
registering with a particular employment office of job opportunities in other parts of the country as well
as job opportunities abroad;
(c) To develop and organize a program that will facilitate occupational, industrial and geographical
mobility of labor and provide assistance in the relocation of workers from one area to another; and

(d) To require any person, establishment, organization or institution to submit such employment
information as may be prescribed by the Secretary of Labor.

ART. 15. Bureau of Employment Services. - (a) The Bureau of Employment Services shall be primarily
responsible for developing and monitoring a comprehensive employment program. It shall have the
power and duty:

1. To formulate and develop plans and programs to implement the employment promotion objectives of
this Title;

2. To establish and maintain a registration and/or licensing system to regulate private sector
participation in the recruitment and placement of workers, locally and overseas, and to secure the best
possible terms and conditions of employment for Filipino contract workers and compliance therewith
under such rules and regulations as may be issued by the Minister of Labor;

3. To formulate and develop employment programs designed to benefit disadvantaged groups and
communities; chanroblesvirtuallawlibrary

4. To establish and maintain a registration and/or work permit system to regulate the employment of
aliens;

5. To develop a labor market information system in aid of proper manpower and development planning;

6. To develop a responsive vocational guidance and testing system in aid of proper human resources
allocation; and

7. To maintain a central registry of skills, except seamen.

(b) The regional offices of the Ministry of Labor shall have the original and exclusive jurisdiction over all
matters or cases involving employer-employee relations including money claims, arising out of or by
virtue of any law or contracts involving Filipino workers for overseas employment except seamen:
Provided, That the Bureau of Employment Services may, in the case of the National Capital Region,
exercise such power, whenever the Minister of Labor deems it appropriate. The decisions of the regional
offices of the Bureau of Employment Services, if so authorized by the Minister of Labor as provided in this
Article, shall be appealable to the National LaborRelations Commission upon the same grounds provided
in Article 223 hereof. The decisions of the National LaborRelations Commission shall be final
and inappealable. (Superseded by Exec. Order 797, May 1, 1982).

(c) The Minister of Labor shall have the power to impose and collect fees based on rates recommended
by the Bureau of Employment Services. Such fees shall be deposited in the National Treasury as a special
account of the General Fund, for the promotion of the objectives of the Bureau of Employment Services,
subject to the provisions of Section 40 of Presidential Decree No. 1177.

ART. 16. Private recruitment. - Except as provided in Chapter II of this Title, no person or entity other than
the public employment offices, shall engage in the recruitment and placement of workers.
ART. 17. Overseas Employment Development Board. - An Overseas Employment Development Board is
hereby created to undertake, in cooperation with relevant entities and agencies, a systematic program
for overseas employment of Filipino workers in excess of domestic needs and to protect their rights to
fair and equitable employment practices. It shall have the power and duty:

1. To promote the overseas employment of Filipino workers through a comprehensive market promotion
and development program;

2. To secure the best possible terms and conditions of employment of Filipino contract workers on a
government-to-government basis and to ensure compliance therewith;

3. To recruit and place workers for overseas employment on a government-to-government arrangement

and in such other sectors as policy may dictate; and chanroblesvirtuallawlibrary

4. To act as secretariat for the Board of Trustees of the Welfare and Training Fund for Overseas Workers.

ART. 18. Ban on direct-hiring. - No employer may hire a Filipino worker for overseas employment except
through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the
diplomatic corps, international organizations and such other employers as may be allowed by the
Secretary of Labor is exempted from this provision.

ART. 19. Office of Emigrant Affairs. - (a) Pursuant to the national policy to maintain close ties with
Filipino migrant communities and promote their welfare as well as establish a data bank in aid of
national manpower policy formulation, an Office of Emigrant Affairs is hereby created in the Department
of Labor. The Office shall be a unit at the Office of the Secretary and shall initially be manned and
operated by such personnel and through such funding as are available within the Department and its
attached agencies. Thereafter, its appropriation shall be made part of the regular General
Appropriations Decree.

(b) The office shall, among others, promote the well-being of emigrants and maintain their close link to
the homeland by:

1) serving as a liaison with migrant communities;

2) provision of welfare and cultural services;

3) promote and facilitate re-integration of migrants into the national mainstream;

4) promote economic; political and cultural ties with the communities; and

5) generally to undertake such activities as may be appropriate to enhance such cooperative links.

ART. 20. National Seamen Board. - (a) A National Seamen Board is hereby created which shall develop
and maintain a comprehensive program for Filipino seamen employed overseas. It shall have the power
and duty:

1. To provide free placement services for seamen;

2. To regulate and supervise the activities of agents or representatives of shipping companies in the
hiring of seamen for overseas employment and secure the best possible terms of employment for
contract seamen workers and secure compliance therewith;

3. To maintain a complete registry of all Filipino seamen.

(b) The Board shall have original and exclusive jurisdiction over all matters or cases including money
claims, involving employer-employee relations, arising out of or by virtue of any law or contracts
involving Filipino seamen for overseas employment. The decisions of the Board shall be appealable to the
National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The
decisions of the National Labor Relations Commission shall be final andinappealable.

ART. 21. Foreign service role and participation. - To provide ample protection to Filipino workers abroad,
the labor attaches, the labor reporting officers duly designated by the Secretary ofLabor and the
Philippine diplomatic or consular officials concerned shall, even without prior instruction or advice from
the home office, exercise the power and duty: chanroblesvirtuallawlibrary

(a) To provide all Filipino workers within their jurisdiction assistance on all matters arising out of
employment;

(b) To insure that Filipino workers are not exploited or discriminated against;

(c) To verify and certify as requisite to authentication that the terms and conditions of employment in
contracts involving Filipino workers are in accordance with the Labor Code and rules and regulations of
the Overseas Employment Development Board and National Seamen Board;

(d) To make continuing studies or researches and recommendations on the various aspects of the
employment market within their jurisdiction;

(e) To gather and analyze information on the employment situation and its probable trends, and to make
such information available; and

(f) To perform such other duties as may be required of them from time to time.

ART. 22. Mandatory remittance of foreign exchange earnings.- It shall be mandatory for all Filipino
workers abroad to remit a portion of their foreign exchange earnings to their families, dependents,
and/or beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary
of Labor.

ART. 23. Composition of the Boards. - (a) The OEDB shall be composed of the Secretary of Labor and
Employment as Chairman, the Undersecretary of Labor as Vice-Chairman, and a representative each of
the Department of Foreign Affairs, the Department of National Defense, the Central Bank, the
Department of Education, Culture and Sports, the National Manpower and Youth Council, the Bureau of
Employment Services, a workers’ organization and an employers’ organization and the Executive
Director of the OEDB as members.

(b) The National Seamen Board shall be composed of the Secretary of Labor and Employment as
Chairman, the Undersecretary of Labor as Vice-Chairman, the Commandant of the Philippine Coast
Guard, and a representative each of the Department of Foreign Affairs, the Department of Education,
Culture and Sports, the Central Bank, the Maritime Industry Authority, the Bureau of Employment
Services, a national shipping association and the Executive Director of the NSB as members.

The members of the Boards shall receive allowances to be determined by the Board which shall not be
more than P2,000.00 per month.

(c) The Boards shall be attached to the Department of Labor for policy and program coordination. They
shall each be assisted by a Secretariat headed by an Executive Director who shall be a Filipino citizen with
sufficient experience in manpower administration, including overseas employment activities. The
Executive Director shall be appointed by the President of the Philippines upon the recommendation of the
Secretary of Laborand shall receive an annual salary as fixed by law. The Secretary of Labor shall appoint
the other members of the Secretariat.

(d) The Auditor General shall appoint his representative to the Boards to audit their respective accounts
in accordance with auditing laws and pertinent rules and regulations.

ART. 24. Boards to issue rules and collect fees. - The Boards shall issue appropriate rules and regulations
to carry out their functions. They shall have the power to impose and collect fees from employers
concerned, which shall be deposited in the respective accounts of said Boards and be used by them
exclusively to promote their objectives.

Labor standards - refers to that part of labor law which prescribes the minimum terms and conditions of
employment which the employer is required to grant to its employees. Examples: Books One to Four of
the Labor Code as well as Book VI thereof which deal with working conditions, wages, hours of work,
holiday pay and other benefits, conditions of employment of women, minors, househelpers and
homeworkers, medical and dental services, occupational health and safety, termination of employment
and retirement.