Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 163512             February 28, 2007

DAISY B. TIU, Petitioner 
vs.
PLATINUM PLANS PHIL., INC., Respondent.

DECISION

QUISUMBING, J.:

For review on certiorari are the Decision1 dated January 20, 2004 of the Court of Appeals in CA-G.R.
CV No. 74972, and its Resolution2 dated May 4, 2004 denying reconsideration. The Court of Appeals
had affirmed the decision3 dated February 28, 2002 of the Regional Trial Court (RTC) of Pasig City,
Branch 261, in an action for damages, ordering petitioner to pay respondent ₱100,000 as liquidated
damages.

The relevant facts are as follows:

Respondent Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need
industry. From 1987 to 1989, petitioner Daisy B. Tiu was its Division Marketing Director.

On January 1, 1993, respondent re-hired petitioner as Senior Assistant Vice-President and Territorial
Operations Head in charge of its Hongkong and Asean operations. The parties executed a contract
of employment valid for five years.4

On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became the
Vice-President for Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-
need industry.

Consequently, respondent sued petitioner for damages before the RTC of Pasig City, Branch 261.
Respondent alleged, among others, that petitioner’s employment with Professional Pension Plans,
Inc. violated the non-involvement clause in her contract of employment, to wit:

8. NON INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her
engagement with EMPLOYER and in case of separation from the Company, whether voluntary or for
cause, he/she shall not, for the next TWO (2) years thereafter, engage in or be involved with any
corporation, association or entity, whether directly or indirectly, engaged in the same business or
belonging to the same pre-need industry as the EMPLOYER. Any breach of the foregoing provision
shall render the EMPLOYEE liable to the EMPLOYER in the amount of One Hundred Thousand
Pesos (P100,000.00) for and as liquidated damages. 5

Respondent thus prayed for ₱100,000 as compensatory damages; ₱200,000 as moral damages;
₱100,000 as exemplary damages; and 25% of the total amount due plus ₱1,000 per counsel’s court
appearance, as attorney’s fees.
Petitioner countered that the non-involvement clause was unenforceable for being against public
order or public policy: First, the restraint imposed was much greater than what was necessary to
afford respondent a fair and reasonable protection. Petitioner contended that the transfer to a rival
company was an accepted practice in the pre-need industry. Since the products sold by the
companies were more or less the same, there was nothing peculiar or unique to protect. Second,
respondent did not invest in petitioner’s training or improvement. At the time petitioner was recruited,
she already possessed the knowledge and expertise required in the pre-need industry and
respondent benefited tremendously from it. Third, a strict application of the non-involvement clause
would amount to a deprivation of petitioner’s right to engage in the only work she knew.

In upholding the validity of the non-involvement clause, the trial court ruled that a contract in restraint
of trade is valid provided that there is a limitation upon either time or place. In the case of the pre-
need industry, the trial court found the two-year restriction to be valid and reasonable. The
dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant,
ordering the latter to pay the following:

1. the amount of One Hundred Thousand Pesos (P100,000.00) for and as damages, for the
breach of the non-involvement provision (Item No. 8) of the contract of employment;

2. costs of suit.

There being no sufficient evidence presented to sustain the grant of attorney’s fees, the Court
deems it proper not to award any.

SO ORDERED.6

On appeal, the Court of Appeals affirmed the trial court’s ruling. It reasoned that petitioner entered
into the contract on her own will and volition. Thus, she bound herself to fulfill not only what was
expressly stipulated in the contract, but also all its consequences that were not against good faith,
usage, and law. The appellate court also ruled that the stipulation prohibiting non-employment for
two years was valid and enforceable considering the nature of respondent’s business.

Petitioner moved for reconsideration but was denied. Hence, this appeal by certiorari where
petitioner alleges that the Court of Appeals erred when:

A.

… [IT SUSTAINED] THE VALIDITY OF THE NON-INVOLVEMENT CLAUSE IN PETITIONER’S

CONTRACT CONSIDERING THAT THE PERIOD FIXED THEREIN IS VOID FOR BEING
OFFENSIVE TO PUBLIC POLICY

B.

… [IT SUSTAINED] THE AWARD OF LIQUIDATED DAMAGES CONSIDERING THAT IT BEING IN

THE NATURE OF A PENALTY THE SAME IS EXCESSIVE, INIQUITOUS OR UNCONSCIONABLE 7

Plainly stated, the core issue is whether the non-involvement clause is valid.
Petitioner avers that the non-involvement clause is offensive to public policy since the restraint
imposed is much greater than what is necessary to afford respondent a fair and reasonable
protection. She adds that since the products sold in the pre-need industry are more or less the
same, the transfer to a rival company is acceptable. Petitioner also points out that respondent did
not invest in her training or improvement. At the time she joined respondent, she already had the
knowledge and expertise required in the pre-need industry. Finally, petitioner argues that a strict
application of the non-involvement clause would deprive her of the right to engage in the only work
she knows.

Respondent counters that the validity of a non-involvement clause has been sustained by the
Supreme Court in a long line of cases. It contends that the inclusion of the two-year non-involvement
clause in petitioner’s contract of employment was reasonable and needed since her job gave her
access to the company’s confidential marketing strategies. Respondent adds that the non-
involvement clause merely enjoined her from engaging in pre-need business akin to respondent’s
within two years from petitioner’s separation from respondent. She had not been prohibited from
marketing other service plans.

As early as 1916, we already had the occasion to discuss the validity of a non-involvement clause. In
Ferrazzini v. Gsell,8 we said that such clause was unreasonable restraint of trade and therefore
against public policy. In Ferrazzini, the employee was prohibited from engaging in any business or
occupation in the Philippines for a period of five years after the termination of his employment
contract and must first get the written permission of his employer if he were to do so. The Court ruled
that while the stipulation was indeed limited as to time and space, it was not limited as to trade. Such
prohibition, in effect, forces an employee to leave the Philippines to work should his employer refuse
to give a written permission.

In G. Martini, Ltd. v. Glaiserman, 9 we also declared a similar stipulation as void for being an
unreasonable restraint of trade. There, the employee was prohibited from engaging in any business
similar to that of his employer for a period of one year. Since the employee was employed only in
connection with the purchase and export of abaca, among the many businesses of the employer, the
Court considered the restraint too broad since it effectively prevented the employee from working in
any other business similar to his employer even if his employment was limited only to one of its
multifarious business activities.

However, in Del Castillo v. Richmond,10 we upheld a similar stipulation as legal, reasonable, and not
contrary to public policy. In the said case, the employee was restricted from opening, owning or
having any connection with any other drugstore within a radius of four miles from the employer’s
place of business during the time the employer was operating his drugstore. We said that a contract
in restraint of trade is valid provided there is a limitation upon either time or place and the restraint
upon one party is not greater than the protection the other party requires.

Finally, in Consulta v. Court of Appeals,11 we considered a non-involvement clause in accordance

with Article 130612 of the Civil Code. While the complainant in that case was an independent agent
and not an employee, she was prohibited for one year from engaging directly or indirectly in activities
of other companies that compete with the business of her principal. We noted therein that the
restriction did not prohibit the agent from engaging in any other business, or from being connected
with any other company, for as long as the business or company did not compete with the principal’s
business. Further, the prohibition applied only for one year after the termination of the agent’s
contract and was therefore a reasonable restriction designed to prevent acts prejudicial to the
employer.
Conformably then with the aforementioned pronouncements, a non-involvement clause is not
necessarily void for being in restraint of trade as long as there are reasonable limitations as to time,
trade, and place.

In this case, the non-involvement clause has a time limit: two years from the time petitioner’s
employment with respondent ends. It is also limited as to trade, since it only prohibits petitioner from
engaging in any pre-need business akin to respondent’s. 1awphi1.net

More significantly, since petitioner was the Senior Assistant Vice-President and Territorial
Operations Head in charge of respondent’s Hongkong and Asean operations, she had been privy to
confidential and highly sensitive marketing strategies of respondent’s business. To allow her to
engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable
especially in a highly competitive marketing environment. In sum, we find the non-involvement
clause not contrary to public welfare and not greater than is necessary to afford a fair and
reasonable protection to respondent.13

In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.

Article 115914 of the same Code also provides that obligations arising from contracts have the force
of law between the contracting parties and should be complied with in good faith. Courts cannot
stipulate for the parties nor amend their agreement where the same does not contravene law,
morals, good customs, public order or public policy, for to do so would be to alter the real intent of
the parties, and would run contrary to the function of the courts to give force and effect thereto. 15 Not
being contrary to public policy, the non-involvement clause, which petitioner and respondent freely
agreed upon, has the force of law between them, and thus, should be complied with in good faith. 16

Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay respondent
₱100,000 as liquidated damages. While we have equitably reduced liquidated damages in certain
cases,17 we cannot do so in this case, since it appears that even from the start, petitioner had not
shown the least intention to fulfill the non-involvement clause in good faith.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated January 20, 2004, and
the Resolution dated May 4, 2004, of the Court of Appeals in CA-G.R. CV No. 74972, are
AFFIRMED. Costs against petitioner.

SO ORDERED.

LEONARDO A. QUISUMBING
Associate Justice
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 109583 September 5, 1997

TRANS ACTION OVERSEAS CORPORATION, petitioner, 

vs.
THE HONORABLE SECRETARY OF LABOR, ROSELLE CASTIGADOR, JOSEFINA MAMON,
JENELYN CASA, PEACHY LANIOG, VERDELINA BELGIRA, ELMA FLORES, RAMONA
LITURCO, GRACE SABANDO, GLORIA PALMA, AVELYN ALVAREZ, CANDELARIA NONO,
NITA BUSTAMANTE, CYNTHIA ARANDILLO, SANDIE AGUILAR, DIGNA PANAGUITON,
VERONICA BAYOGOS, JULIANITA ARANADOR, LEONORA CABALLERO, NANCY BOLIVAR,
NIMFA BUCOL, ZITA GALINDO, ESTELITA BIOCOS, MARJORIE MACATE, RUBY SEPULVIDA,
ROSALIE SONDIA, NORA MAQUILING, PAULINA CORDERO, LENIROSE ABANGAN, SELFA
PALMA, ANTONIA NAVARRO, ELSIE PENARUBIA, IRMA SOBREQUIL, SONY JAMUAT,
CLETA MAYO, respondents.

ROMERO, J.:

The issue presented in the case at bar is whether or not the Secretary of Labor and Employment has
jurisdiction to cancel or revoke the license of a private fee-charging employment agency.

From July 24 to September 9, 1987, petitioner Trans Action Overseas Corporation, a private fee-
charging employment agency, scoured Iloilo City for possible recruits for alleged job vacancies in
Hongkong. Private respondents sought employment as domestic helpers through petitioner's
employees, Luzviminda Aragon, Ben Hur Domincil and his wife Cecille. The applicants paid
placement fees ranging from P1,000.00 to P14,000.00, but petitioner failed to deploy them. Their
demands for refund proved unavailing; thus, they were constrained to institute complaints against
petitioner for violation of Articles 32 and 34(a)   of the Labor Code, as amended.
1

Petitioner denied having received the amounts allegedly collected from respondents, and averred
that Aragon, whose only duty was to pre-screen and interview applicants, and the spouses Domincil
were not authorized to collect fees from the applicants. Accordingly, it cannot be held liable for the
money claimed by respondents. Petitioner maintains that it even warned respondents not to give any
money to unauthorized individuals.

POEA Regional Extension Unit Coordinator Edgar Somes testified that although he was aware that
petitioner collected fees from respondents, the latter insisted that they be allowed to make the
payments on the assumption that it could hasten their deployment abroad. He added that Mrs.
Honorata Manliclic, a representative of petitioner tasked to oversee the conduct of the interviews,
told him that she was leaving behind presigned receipts to Aragon as she cannot stay in Iloilo City
for the screening of the applicants. Manliclic, however, denied this version and argued that it was
Somes who instructed her to leave the receipts behind as it was perfectly alright to collect fees.
On April 5, 1991, then Labor Undersecretary Nieves R. Confesor rendered the assailed order, the
dispositive portion of which reads:

WHEREFORE, respondents are hereby ordered to pay, jointly and severally, the
following claims:

1. Rosele Castigador P14,000.00

2. Josefina Mamon 3,000.00

3. Jenelyn Casa 3,000.00

4. Peachy Laniog 13,500.00

5. Verdelina Belgira 2,000.00

6. Elma Flores 2,500.00

7. Ramona Liturco 2,500.00

8. Grace Sabando 3,500.00

9. Gloria Palma 1,500.00

10. Avelyn Alvarez 1,500.00

11. Candelaria Nono 1,000.00

12. Nita Bustamante 5,000.00

13. Cynthia Arandillo 1,000.00

14. Sandie Aguilar 3,000.00

15. Digna Panaguiton 2,500.00

16. Veronica Bayogos 2,000.00

17. Sony Jamuat 4,500.00

18. Irma Sobrequil 2,000.00

19. Elsie Penarubia 2,000.00

20. Antonia Navarro 2,000.00

21. Selfa Palma 3,000.00

22. Lenirose Abangan 13,300.00

 23. Paulina Cordero 1,400.00

24. Nora Maquiling 2,000.00

25. Rosalie Sondia 2,000.00

26. Ruby Sepulvida 3,500.00

27. Marjorie Macate 1,500.00

28. Estelita Biocos 3,000.00

29. Zita Galindo 3,500.00

30. Nimfa Bucol 1,000.00

31. Nancy Bolivar 2,000.00

32. Leonora Caballero 13,900.00

33. Julianita Aranador 14,000.00

The complaints of Ma. Luz Alingasa, Nimfa Perez, and Cleta Mayo are hereby
dismissed in view of their desistance.

The following complaints are hereby dismissed for failure to appear/prosecute:

1. Jiyasmin Bantillo 6. Edna Salvante

2. Rosa de Luna Senail 7. Thelma Beltiar

3. Elnor Bandojo 8. Cynthia Cepe

4. Teresa Caldeo 9. Rosie Pavillon

5. Virginia Castroverde

The complaints filed by the following are hereby dismissed for lack of evidence:

1. Aleth Palomaria 5. Mary Ann Beboso

2. Emely Padrones 6. Josefina Tejero

3. Marybeth Aparri 7. Bernadita Aprong

4. Lenia Biona 8. Joji Lull

Respondent agency is liable for twenty eight (28) counts of violation of Article 32 and
five (5) counts of Article 34 (a) with a corresponding suspension in the aggregate
 period of sixty six (66) months. Considering however, that under the schedule of
penalties, any suspension amounting to a period of 12 months merits the imposition
of the penalty of cancellation, the license of respondent TRANS ACTION
OVERSEAS CORPORATION to participate in the overseas placement and
recruitment of workers is hereby ordered CANCELLED, effective immediately.

SO ORDERED.  (Emphasis supplied)

2

On April 29, 1991, petitioner filed its Motion for Temporary Lifting of Order of Cancellation alleging,
among other things, that to deny it the authority to engage in placement and recruitment activities
would jeopardize not only its contractual relations with its foreign principals, but also the welfare,
interests, and livelihood of recruited workers scheduled to leave for their respective assignments.
Finally, it manifested its willingness to post a bond to insure payment of the claims to be awarded,
should its appeal or motion be denied.

Finding the motion to be well taken, Undersecretary Confesor provisionally lifted the cancellation of
petitioner's license pending resolution of its Motion for Reconsideration filed on May 6, 1991. On
January 30, 1992, however, petitioner's motion for reconsideration was eventually denied for lack of
merit, and the April 5, 1991, order revoking its license was reinstated.

Petitioner contends that Secretary; Confesor acted with grave abuse of discretion in rendering the
assailed orders on alternative grounds, viz.: (1) it is the Philippine Overseas Employment
Administration (POEA) which has the exclusive and original jurisdiction to hear and decide illegal
recruitment cases, including the authority to cancel recruitment licenses, or (2) the cancellation order
based on the 1987 POEA Schedule of Penalties is not valid for non-compliance with the Revised
Administrative Code of 1987 regarding its registration with the U.P. Law Center.

Under Executive Order No. 797  (E.O. No. 797) and Executive Order No. 247 (E.O. No. 247),  the
3 4

POEA was established and mandated to assume the functions of the Overseas Employment
Development Board (OEDB), the National Seamen Board (NSB), and the overseas employment
function of the Bureau of Employment Services (BES). Petitioner theorizes that when POEA
absorbed the powers of these agencies, Article 35 of the Labor Code, as amended, was rendered
ineffective.

The power to suspend or cancel any license or authority to recruit employees for overseas
employment is vested upon the Secretary of Labor and Employment. Article 35 of the Labor Code,
as amended, which provides:

Art. 5. Suspension and/or Cancellation of License or Authority — The Minister of

Labor shall have the power to suspend or cancel any license or authority to recruit
employees for overseas employment for violation of rules and regulations issued by
the Ministry of Labor, the Overseas Employment Development Board, and the
National Seamen Board, or for violation of the provisions of this and other applicable
laws, General Orders and Letters of Instructions.

In the case of Eastern Assurance and Surety Corp. v. Secretary of 

Labor,  we held that:
5

The penalties of suspension and cancellation of license or authority are prescribed

for violations of the above quoted provisions, among others. And the Secretary of
Labor has the power under Section 35 of the law to apply these sanctions, as well as
the authority, conferred by Section 36, not only to "restrict and regulate the
 recruitment and placement activities of all agencies," but also to "promulgate rules
and regulations to carry out the objectives and implement the provisions" governing
said activities. Pursuant to this rule-making power thus granted, the Secretary of
Labor gave the POEA,  "on its own initiative or upon filing of a complaint or report or
6

upon request for investigation by any aggrieved person, . . (authority to) conduct the
necessary proceedings for the suspension or cancellation of the license or authority
of any agency or entity" for certain enumerated offenses including —

1) the imposition or acceptance, directly or indirectly, of any amount of money, goods

or services, or any fee or bond in excess of what is prescribed by the Administration,
and

2) any other violation of pertinent provisions of the Labor Code and other relevant
laws, rules and regulations.7

The Administrator was also given the power to "order the dismissal of the case of the
suspension of the license or authority of the respondent agency or contractor or
recommend to the Minister the cancellation thereof."   (Emphasis supplied)
8

This power conferred upon the Secretary of Labor and Employment was echoed in People
v. Diaz,  viz.:
9

A non-licensee or non-holder of authority means any person, corporation or entity

which has not been issued a valid license or authority to engage in recruitment and
placement by the Secretary of Labor, or whose license or authority has been
suspended, revoked or cancelled by the POEA or the Secretary. (Emphasis
supplied)

In view of the Court's disposition on the matter, we rule that the power to suspend or cancel any
license or authority to recruit employees for overseas employment is concurrently vested with the
POEA and the Secretary of Labor.

As regards petitioner's alternative argument that the non-filing of the 1987 POEA Schedule of
Penalties with the UP Law Center rendered it ineffective and, hence, cannot be utilized as basis for
penalizing them, we agree with Secretary Confesor's explanation, to wit:

On the other hand, the POEA Revised Rules on the Schedule of Penalties was
issued pursuant to Article 34 of the Labor Code, as amended. The same merely
amplified and particularized the various violations of the rules and regulations of the
POEA and clarified and specified the penalties therefore (sic). Indeed, the
questioned schedule of penalties contains only a listing of offenses. It does not
prescribe additional rules and regulations governing overseas employment but only
detailed the administrative sanctions imposable by this Office for some enumerated
prohibited acts.

Under the circumstances, the license of the respondent agency was cancelled on the
authority of Article 35 of the Labor Code, as amended, and not pursuant to the 1987
POEA Revised Rules on Schedule of Penalties.  10

WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED. Accordingly, the
decision of the Secretary of Labor dated April 5, 1991, is AFFIRMED. No costs.
SO ORDERED.

Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.

THIRD DIVISION

February 24, 2016

G.R. No. 187417

CHRISTINE JOY CAPIN-CADIZ, Petitioner, 

vs.
BRENT HOSPITAL AND COLLEGES, INC., Respondent.

DECISION

REYES, J.:

This is a petition for review on certiorari  under Rule 45 of the Rules of Court assailing the
1

Resolutions dated July 22, 2008  and February 24, 2009  of the Court of Appeals (CA) in CA-GR. SP
2 3

No. 02373-MIN, which dismissed the petition filed by petitioner Christine Joy Capin-Cadiz (Cadiz) on
the following grounds: (1) incomplete statement of material dates; (2) failure to attach registry
receipts; and (3) failure to indicate the place of issue of counsel's Professional Tax Receipt (PTR)
and Integrated Bar of the Philippines (IBP) official receipts.

Antecedent Facts

Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent) at
the time of her indefinite suspension from employment in 2006. The cause of suspension was
Cadiz's Unprofessionalism and Unethical Behavior Resulting to Unwed Pregnancy. It appears that
Cadiz became pregnant out of wedlock, and Brent imposed the suspension until such time that she
marries her boyfriend in accordance with law.

Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice, Constructive
Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement. 4

Ruling of the Labor Tribunals

In its Decision  dated April 12, 2007, the LA found that Cadiz's indefinite suspension amounted to a
5

constructive dismissal; nevertheless, the LA ruled that Cadiz was not illegally dismissed as there
was just cause for her dismissal, that is, she engaged in premarital sexual relations with her
boyfriend resulting in a pregnancy out of wedlock.   The LA further stated that her "immoral conduct x
6

x x [was] magnified as serious misconduct not only by her getting pregnant as a result thereof before
and without marriage, but more than that, also by the fact that Brent is an institution of the Episcopal
Church in the Philippines operating both a hospital and college where [Cadiz] was employed."  The7

LA also ruled that she was not entitled to reinstatement "at least until she marries her boyfriend," to
backwages and vacation/sick leave pay. Brent, however, manifested that it was willing to pay her
13th month pay. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered, ordering [Brent] to pay [Cadiz] 13th month pay in the
sum of Seven Thousand Nine Hundred Seventy & 11/100 Pesos (P7,970.11).

All other charges and claims are hereby dismissed for lack of merit.

SO ORDERED. 8

Cadiz appealed to the National Labor Relations Commission (NLRC), which affirmed the LA decision
in its Resolution  dated December 10, 2007. Her motion for reconsideration having been denied by
9

the NLRC in its Resolution  dated February 29, 2008, Cadiz elevated her case to the CA on petition
10

for certiorari under Rule 65.

Ruling of the CA

The CA, however, dismissed her petition outright due to technical defects in the petition: (1)
incomplete statement of material dates; (2) failure to attach registry receipts; and (3) failure to
indicate the place of issue of counsel's PTR and IBP official receipts.   Cadiz sought reconsideration
11

of the assailed CA Resolution dated July 22, 2008 but it was denied in the assailed Resolution dated
February 24, 2009.   The CA further ruled that "a perusal of the petition will reveal that public
12

respondent NLRC committed no grave abuse of discretion amounting to lack or excess of jurisdiction
x x x holding [Cadiz's] dismissal from employment valid." 
13

Hence, the present petition.

Cadiz argues that -

THE HONORABLE [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT HELD THAT
[CADIZ'S] IMPREGNATION OUTSIDE OF WEDLOCK IS A GROUND FOR THE TERMINATION OF
[CADIZ'S] EMPLOYMENT 14

II

THE [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT UPHELD THE DISMISSAL
OF [CADIZ] ON THE GROUND THAT THE INDEFINITE SUSPENSION WAS VALID AND
REQUIRED [CADIZ] TO FIRST ENTER INTO MARRIAGE BEFORE SHE CAN BE ADMITTED
BACK TO HER EMPLOYMENT 15

III

RESPONDENT [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED [CADIZ'S]

CLAIM FOR BACKWAGES, ALLOWANCES, SICK LEAVE PAY, MATERNITY PAY AND MORAL
AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES  16

IV
THE [CA] MISPLACED APPLICATION OF THE MATERIAL DATA RULE RESULTING TO GRAVE
ABUSE OF DISCRETION WHEN IT DISMISSED THE APPEAL 17

Cadiz contends, among others, that getting pregnant outside of wedlock is not grossly immoral,
especially when both partners do not have any legal impediment to marry. Cadiz surmises that the
reason for her suspension was not because of her relationship with her then boyfriend but because
of the resulting pregnancy. Cadiz also lambasts Brent's condition for her reinstatement - that she
gets married to her boyfriend - saying that this violates the stipulation against marriage under Article
136 of the Labor Code. Finally, Cadiz contends that there was substantial compliance with the rules
of procedure, and the CA should not have dismissed the petition.  18

Brent, meanwhile, adopts and reiterates its position before the LA and the NLRC that Cadiz's
arguments are irrational and out of context. Brent argues, among others, that for Cadiz to limit acts
of immorality only to extra-marital affairs is to "change the norms, beliefs, teachings and practices of
BRENT as a Church institution of the x x x Episcopal Church in the Philippines."  19

Ruling of the Court

Ordinarily, the Court will simply gloss over the arguments raised by Cadiz, given that the main matter
dealt with by the CA were the infirmities found in the petition and which caused the dismissal of her
case before it. In view, however, of the significance of the issues involved in Cadiz's dismissal from
employment, the Court will resolve the petition including the substantial grounds raised herein.

The issue to be resolved is whether the CA committed a reversible error in ruling that: (1) Cadiz's
petition is dismissible on ground of technical deficiencies; and (2) the NLRC did not commit grave
abuse of discretion in upholding her dismissal from employment.

Rules of procedure are mere tools

designed to facilitate the attainment
of justice

In dismissing outright Cadiz's petition, the CA found the following defects: (1) incomplete statement
of material dates; (2) failure to attach registry receipts; and (3) failure to indicate the place of issue of
counsel's PTR and IBP official receipts.

Rule 46, Section 3 of the Rules of Court states the contents of a petition filed with the CA under Rule
65, viz, "the petition shall x x x indicate the material dates showing when notice of the judgment or
final order or resolution subject thereof was received, when a motion for new trial or reconsideration,
if any, was filed and when notice of the denial thereof was received." The rationale for this is to
enable the CA to determine whether the petition was filed within the period fixed in the
rules.   Cadiz's failure to state the date of receipt of the copy of the NLRC decision, however, is not
20

fatal to her case since the more important material date which must be duly alleged in a petition is
the date of receipt of the resolution of denial of the motion for reconsideration,  which she has duly
21

complied with.  22

The CA also dismissed the petition for failure to attach the registry receipt in the affidavit of
service.  Cadiz points out, on the other hand, that the registry receipt number was indicated in the
23

petition and this constitutes substantial compliance with the requirement. What the rule requires,
however, is that the registry receipt must be appended to the paper being served.  Clearly, mere
24

indication of the registry receipt numbers will not suffice. In fact, the absence of the registry receipts
amounts to lack of proof of service.  Nevertheless, despite this defect, the Court finds that the ends
25

of substantial justice would be better served by relaxing the application of technical rules of
procedure.  With regard to counsel's failure to indicate the place where the IBP and PTR receipts
26

were issued, there was substantial compliance with the requirement since it was indicated in the
verification and certification of non-forum shopping, as correctly argued by Cadiz's lawyer.  27

Time and again, the Court has emphasized that rules of procedure are designed to secure
substantial justice. These are mere tools to expedite the decision or resolution of cases and if their
strict and rigid application would frustrate rather than promote substantial justice, then it must be
avoided.28

Immorality as a just cause for

termination of employment

Both the LA and the NLRC upheld Cadiz's dismissal as one attended with just cause. The LA, while
ruling that Cadiz's indefinite suspension was tantamount to a constructive dismissal, nevertheless
found that there was just cause for her dismissal. According to the LA, "there was just cause
therefor, consisting in her engaging in premarital sexual relations with Carl Cadiz, allegedly her
boyfriend, resulting in her becoming pregnant out of wedlock."  The LA deemed said act to be
29

immoral, which was punishable by dismissal under Brent's rules and which likewise constituted
serious misconduct under Article 282(a) of the Labor Code. The LA also opined that since Cadiz was
Brent's Human Resource Officer in charge of implementing its rules against immoral conduct, she
should have been the "epitome of proper conduct."  The LA ruled:
30

[Cadiz's] immoral conduct by having premarital sexual relations with her alleged boy friend, a former
Brent worker and her co-employee, is magnified as serious misconduct not only by her getting
pregnant as a result thereof before and without marriage, but more than that, also by the fact that
Brent is an institution of the Episcopal Church in the Philippines x x x committed to "developing
competent and dedicated professionals x x x and in providing excellent medical and other health
services to the community for the Glory of God and Service to Humanity." x x x As if these were not
enough, [Cadiz] was Brent's Human Resource Officer charged with, among others, implementing the
rules of Brent against immoral conduct, including premarital sexual relations, or fornication x x x. She
should have been the epitome of proper conduct, but miserably failed. She herself engaged in
premarital sexual relations, which surely scandalized the Brent community.xx x. 31

The NLRC, for its part, sustained the LA's conclusion.

The Court, however, cannot subscribe to the labor tribunals' conclusions.

Admittedly, one of the grounds for disciplinary action under Brent's policies is immorality, which is
punishable by dismissal at first offense.  Brent's Policy Manual provides:
32

CATEGORY IV

In accordance with Republic Act No. 1052,  the following are just cause for terminating an
33

employment of an employee without a definite period:

xxxx

2. Serious misconduct or willful disobedience by the employee of the orders of his employer or
representative in connection with his work, such as, but not limited to the following:

xxxx
b. Commission of immoral conduct or indecency within the company premises, such as an act of
lasciviousness or any act which is sinful and vulgar in nature.

c. Immora1ity, concubinage, bigamy.  34

Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such as scandalous
behaviour, acts of lasciviousness against any person (patient, visitors, co-workers) within hospital
premises"  as a ground for discipline and discharge. Brent also relied on Section 94 of the Manual of
35

Regulations for Private Schools (MRPS), which lists "disgraceful or immoral conduct" as a cause for
terminating employment.  36

Thus, the question that must be resolved is whether Cadiz's premarital relations with her boyfriend
and the resulting pregnancy out of wedlock constitute immorality. To resolve this, the Court makes
reference to the recently promulgated case of Cheryll Santos Leus v. St. Scholastica’s College
Westgrove and/or Sr. Edna Quiambao, OSB. 37

Leus involved the same personal circumstances as the case at bench, albeit the employer was a
Catholic and sectarian educational institution and the petitioner, Cheryll Santos Leus (Leus ), worked
as an assistant to the school's Director of the Lay Apostolate and Community Outreach Directorate.
Leus was dismissed from employment by the school for having borne a child out of wedlock. The
Court ruled in Leus that the determination of whether a conduct is disgraceful or immoral involves a
two-step process: first, a consideration of the totality of the circumstances surrounding the conduct;
and second, an assessment of the said circumstances vis-a-vis the prevailing norms of
conduct, i.e., what the society generally considers moral and respectable.

In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she was
employed as a human resources officer in an educational and medical institution of the Episcopal
Church of the Philippines; she and her boyfriend at that time were both single; they engaged in
premarital sexual relations, which resulted into pregnancy. The labor tribunals characterized these
as constituting disgraceful or immoral conduct. They also sweepingly concluded that as Human
Resource Officer, Cadiz should have been the epitome of proper conduct and her indiscretion
"surely scandalized the Brent community." 38

The foregoing circumstances, however, do not readily equate to disgraceful and immoral conduct.
Brent's Policy Manual and Employee's Manual of Policies do not define what constitutes immorality;
it simply stated immorality as a ground for disciplinary action. Instead, Brent erroneously relied on
the standard dictionary definition of fornication as a form of illicit relation and proceeded to conclude
that Cadiz's acts fell under such classification, thus constituting immorality. 
39

Jurisprudence has already set the standard of morality with which an act should be gauged - it is
public and secular, not religious.   Whether a conduct is considered disgraceful or immoral should be
40

made in accordance with the prevailing norms of conduct, which, as stated in Leus, refer to those
conducts which are proscribed because they are detrimental to conditions upon which depend
the existence and progress of human society. The fact that a particular act does not conform to
the traditional moral views of a certain sectarian institution is not sufficient reason to qualify such act
as immoral unless it, likewise, does not conform to public and secular standards. More importantly,
there must be substantial evidence to establish that premarital sexual relations and pregnancy out
of wedlock is considered disgraceful or immoral. 41

The totality of the circumstances of this case does not justify the conclusion that Cadiz committed
acts of immorality. Similar to Leus, Cadiz and her boyfriend were both single and had no legal
impediment to marry at the time she committed the alleged immoral conduct. In fact, they eventually
married on April 15, 2008.  Aside from these, the labor tribunals' respective conclusion that Cadiz's
42

"indiscretion" "scandalized the Brent community" is speculative, at most, and there is no proof
adduced by Brent to support such sweeping conclusion. Even Brent admitted that it came to know of
Cadiz's "situation" only when her pregnancy became manifest.  Brent also conceded that "[a]t the
43

time [Cadiz] and Carl R. Cadiz were just carrying on their boyfriend-girlfriend relationship, there was
no knowledge or evidence by [Brent] that they were engaged also in premarital sex."  This only goes
44

to show that Cadiz did not flaunt her premarital relations with her boyfriend and it was not carried on
under scandalous or disgraceful circumstances. As declared in Leus, "there is no law which
penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual sexual
activity between two unmarried persons; that neither does such situation contravene[s] any
fundamental state policy enshrined in the Constitution. "  The fact that Brent is a sectarian institution
45

does not automatically subject Cadiz to its religious standard of morality absent an express
statement in its manual of personnel policy and regulations, prescribing such religious standard as
gauge as these regulations create the obligation on both the employee and the employer to abide by
the same.  46

Brent, likewise, cannot resort to the MRPS because the Court already stressed in Leus that
"premarital sexual relations between two consenting adults who have no impediment to marry each
other, and, consequently, conceiving a child out of wedlock, gauged from a purely public and secular
view of morality, does not amount to a disgraceful or immoral conduct under Section 94(e) of the
1992 MRPS." 47

Marriage as a condition for

reinstatement

The doctrine of management prerogative gives an employer the right to "regulate, according to his
own discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, the time, place and manner of work, work supervision, transfer of employees, lay-
off of workers, and discipline, dismissal, and recall of employees."  In this case, Brent imposed on
48

Cadiz the condition that she subsequently contract marriage with her then boyfriend for her to be
reinstated. According to Brent, this is "in consonance with the policy against encouraging illicit or
common-law relations that would subvert the sacrament of marriage." 49

Statutory law is replete with legislation protecting labor and promoting equal opportunity in
employment. No less than the 1987 Constitution mandates that 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."  The Labor Code of the Philippines, meanwhile, provides:
50

Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.

With particular regard to women, Republic Act No. 9710 or the Magna Carta of Women  protects 51

women against discrimination in all matters relating to marriage and family relations, including
the right to choose freely a spouse and to enter into marriage only with their free and full
consent. 52

Weighed against these safeguards, it becomes apparent that Brent's condition is coercive,
oppressive and discriminatory. There is no rhyme or reason for it.  It forces Cadiz to marry for
1âwphi1

economic reasons and deprives her of the freedom to choose her status, which is a privilege that
inheres in her as an intangible and inalienable right.  While a marriage or no-marriage qualification
53

may be justified as a "bona fide occupational qualification," Brent must prove two factors
necessitating its imposition, viz: (1) that the employment qualification is reasonably related to the
essential operation of the job involved; and (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be unable to properly perform the duties of
the job.  Brent has not shown the presence of neither of these factors. Perforce, the Court cannot
54

uphold the validity of said condition.

Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option, separation pay should be
awarded as an alternative and as a form of financial assistance.   In the computation of separation
55

pay, the Court stresses that it should not go beyond the date an employee was deemed to
have been actually separated from employment, or beyond the date when reinstatement was
rendered impossible.  In this case, the records do not show whether Cadiz already severed her
56

employment with Brent or whether she is gainfully employed elsewhere; thus, the computation of
separation pay shall be pegged based on the findings that she was employed on August 16, 2002,
on her own admission in her complaint that she was dismissed on November 17, 2006, and that she
was earning a salary of P9,108.70 per month,  which shall then be computed at a rate of one (1)
57

month salary for every year of service,  as follows:

58

Monthly salary P9,108.70

multiplied by number of
x
years
in service (Aug 02 to Nov 06) 4

 
P36,434.80

The Court also finds that Cadiz is only entitled to limited backwages. Generally, the computation of
backwages is reckoned from the date of illegal dismissal until actual reinstatement.   In case
59

separation pay is ordered in lieu of reinstatement or reinstatement is waived by the employee,

backwages is computed from the time of dismissal until the finality of the decision ordering
separation pay.   Jurisprudence further clarified that the period for computing the backwages during
60

the period of appeal should end on the date that a higher court reversed the labor arbitration ruling of
illegal dismissal.   If applied in Cadiz's case, then the computation of backwages should be from
61

November 17, 2006, which was the time of her illegal dismissal, until the date of promulgation of this
decision. Nevertheless, the Court has also recognized that the constitutional policy of providing full
protection to labor is not intended to oppress or destroy management.   The Court notes that at the
62

time of Cadiz's indefinite suspension from employment, Leus was yet to be decided by the Court.
Moreover, Brent was acting in good faith and on its honest belief that Cadiz's pregnancy out of
wedlock constituted immorality. Thus, fairness and equity dictate that the award of backwages shall
only be equivalent to one (1) year or P109,304.40, computed as follows:

Monthly salary P9,108.70

multiplied by one
x
year
or 12 months 12
  
P109,304.40

Finally, with regard to Cadiz's prayer for moral and exemplary damages, the Court finds the same
without merit. A finding of illegal dismissal, by itself, does not establish bad faith to entitle an
employee to moral damages.   Absent clear and convincing evidence showing that Cadiz's dismissal
63

from Brent's employ had been carried out in an arbitrary, capricious and malicious manner, moral
and exemplary damages cannot be awarded. The Court nevertheless grants the award of attorney's
fees in the amount of ten percent (10%) of the total monetary award, Cadiz having been forced to
litigate in order to seek redress of her grievances.
64

WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and February 24,
2009 of the Court of Appeals in CA-G.R. SP No. 02373-MIN are REVERSED and SET ASIDE, and
a NEW ONE ENTERED finding petitioner Christine Joy Capin-Cadiz to have been dismissed without
just cause.

Respondent Brent Hospital and Colleges, Inc. is hereby ORDERED TO PAY petitioner Christine Joy
Capin-Cadiz:

(1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100 (Pl 09,304.40) as
backwages;

(2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100 (P36,434.80) as
separation pay; and

(3) Attorney's fees equivalent to ten percent (10%) of the total award.

The monetary awards granted shall earn legal interest at the rate of six percent (6%) per
annum from the date of the finality of this Decision until fully paid.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice