FIRST DIVISION

[ G.R. No. 114337, September 29, 1995 ]

NITTO ENTERPRISES, PETITIONER, VS. NATIONAL LABOR
RELATIONS COMMISSION, AND ROBERTO CAPILI, RESPONDENTS.

DECISION

KAPUNAN, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking to annul the
decision[1] rendered by public respondent National Labor Relations Commission, which
reversed the decision of the Labor Arbiter.

Briefly, the facts of the case are as follows:

Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum
products, hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder
and core maker as evidenced by an apprenticeship agreement[2] for a period of six (6)
months from May 28, 1990 to November 28, 1990 with a daily wage rate of P66.75
which was 75% of the applicable minimum wage.

At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass
which he was working on, accidentally hit and injured the leg of an office secretary who
was treated at a nearby hospital.

Later that same day, after office hours, private respondent entered a workshop within the
office premises which was not his work station.  There, he operated one of the power
press machines without authority and in the process injured his left thumb.  Petitioner
spent the amount of P1,023.04 to cover the medication of private respondent.

The following day, Roberto Capili was asked to resign in a letter[3] which reads:

August 2, 1990

Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung papaano
gamitin and "TOOL" sa pagbuhat ng salamin, sarili niyang desisyon ang paggamit ng
tool at may disgrasya at nadamay pa ang isang sekretarya ng kompanya.
Sa araw ding ito limang (5) minuto ang nakakalipas mula alas-singko ng hapon siya ay
pumasok sa shop na hindi naman sakop ng kanyang trabaho.  Pinakialaman at kinalikot
ang makina at nadisgrasya niya ang kanyang sariling kamay.

Nakagastos ang kompanya ng mga sumusunod:

Emergency and doctor fee      P715.00

Medecines (sic) and others        317.04

Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang matanggal ang
tahi ng kanyang kamay.

Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng
Agosto, 1990.

Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang

kamay, pagkatapos ng siyam na araw mula ika-2 ng Agosto.

Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon, kasama

ng kanyang confirmasyon at pag-ayon na ang lahat ng nakasulat sa itaas ay totoo.

**************************

Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking pagkakasala
sa hindi pagsunod sa alintuntunin ng kompanya.

(Sgd.)  Roberto Capili

           Roberto Capili

On August 3, 1990 private respondent executed a Quitclaim and Release in favor of

petitioner for and in consideration of the sum of P1,912.79.[4]

Three days after, or on August 6, 1990, private respondent formally filed before the
NLRC Arbitration Branch, National Capital Region a complaint for illegal dismissal and
payment of other monetary benefits.

On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of
private respondent as valid and dismissing the money claim for lack of merit.  The
dispositive portion of the ruling reads:

WHEREFORE, premises considered, the termination is valid and for cause, and the
money claims dismissed for lack of merit.
The respondent however is ordered to pay the complainant the amount of P500.00 as
financial assistance.

SO ORDERED.[5]

Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of
Roberto Capili was valid.  First, private respondent who was hired as an apprentice
violated the terms of their agreement when he acted with gross negligence resulting in the
injury not only to himself but also to his fellow worker.  Second, private respondent had
shown that "he does not have the proper attitude in employment particularly the handling
of machines without authority and proper training."[6]

On July 26, 1993, the National Labor Relations Commission issued an order reversing
the decision of the Labor Arbiter, the dispositive portion of which reads:

WHEREFORE, the appealed decision is hereby set aside.  The respondent is hereby
directed to reinstate complainant to his work last performed with backwages computed
from the time his wages were withheld up to the time he is actually reinstated.  The
Arbiter of origin is hereby directed to further hear complainant's money claims and to
dispose them on the basis of law and evidence obtaining.

SO ORDERED.[7]

The NLRC declared that private respondent was a regular employee of petitioner by
ruling thus:

As correctly pointed out by the complainant, we cannot understand how an

apprenticeship agreement filed with the Department of Labor only on June 7, 1990 could
be validly used by the Labor Arbiter as basis to conclude that the complainant was hired
by respondent as a plain `apprentice' on May 28, 1990.  Clearly, therefore, the
complainant was respondent's regular employee under Article 280 of the Labor Code, as
early as May 28, 1990, who thus enjoyed the security of tenure guaranteed in Section 3,
Article XIII of our 1987 Constitution.

The complaint being for illegal dismissal (among others) it then behooves upon
respondent, pursuant to Art. 277(b) and as ruled in Edwin Gesulgon vs. NLRC, et al.
(G.R. No. 90349, March 5, 1993, 3rd Div., Feliciano, J.) to prove that the dismissal of
complainant was for a valid cause.  Absent such proof, we cannot but rule that the
complainant was illegally dismissed.[8]

On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private
respondent's representative was present.
On April 22, 1994, a Writ of Execution was issued, which reads:

NOW, THEREFORE, finding merit in [private respondent's] Motion for Issuance of the
Writ, you are hereby commanded to proceed to the premises of [petitioner] Nitto
Enterprises and Jovy Foster located at No.1 74 Araneta Avenue, Portero, Malabon, Metro
Manila or at any other places where their properties are located and effect the
reinstatement of herein [private respondent] to his work last performed or at the option of
the respondent by payroll reinstatement.

You are also to collect the amount of P122,690.85 representing his backwages as called
for in the dispositive portion, and turn over such amount to this Office for proper
disposition.

Petitioner filed a motion for reconsideration but the same was denied.

Hence, the instant petition- for certiorari.

The issues raised before us are the following:

WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE

OF DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN
APPRENTICE.

II

WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE

OF DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY
PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE
SERVICE OF PRIVATE RESPONDENT.

We find no merit in the petition.

Petitioner assails the NLRC's finding that private respondent Roberto Capili cannot
plainly be considered an apprentice since no apprenticeship program had yet been filed
and approved at the time the agreement was executed.

Petitioner further insists that the mere signing of the apprenticeship agreement already
established an employer-apprentice relationship.

Petitioner's argument is erroneous.

The law is clear on this matter. Article 61 of the Labor Code provides:

Contents of apprenticeship agreement. - Apprenticeship agreements, including the main

rates of apprentices, shall conform to the rules issued by the Minister of Labor and
Employment. The period of apprenticeship shall not exceed six months.  Apprenticeship
agreements providing for wage rates below the legal minimum wage, which in no case
shall start below 75% per cent of the applicable minimum wage, may be entered into
only in accordance with apprenticeship program duly approved by the Minister of
Labor and Employment.  The Ministry shall develop standard model programs of
apprenticeship.  (emphasis supplied)

In the case at bench, the apprenticeship agreement between petitioner and private
respondent was executed on May 28, 1990 allegedly employing the latter as an apprentice
in the trade of "care maker/molder.".  On the same date, an apprenticeship program was
prepared by petitioner and submitted to the Department of Labor and Employment.
However, the apprenticeship Agreement was filed only on June 7, 1990. 
Notwithstanding the absence of approval by the Department of Labor and Employment,
the apprenticeship agreement was enforced the day it was signed.

Based on the evidence before us, petitioner did not comply with the requirements of the
law.  It is mandated that apprenticeship agreements entered into by the employer and
apprentice shall be entered only in accordance with the apprenticeship program duly
approved by the Minister of Labor and Employment.

Prior approval by the Department of Labor and Employment of the proposed

apprenticeship program is, therefore, a condition sine qua non before an apprenticeship
agreement can be validly entered into.

The act of filing the proposed apprenticeship program with the Department of Labor and
Employment is a preliminary step towards its final approval and does not instantaneously
give rise to an employer-apprentice relationship.

Article 57 of the Labor Code provides that the State aims to "establish a national
apprenticeship program through the participation of employers, workers and government
and non-government agencies" and "to establish apprenticeship standards for the
protection of apprentices." To translate such objectives into existence, prior approval of
the DOLE to any apprenticeship program has to be secured as a condition sine qua
non before any such apprenticeship agreement can be fully enforced.  The role of the
DOLE in apprenticeship programs and agreements cannot be debased.

Hence, since the apprenticeship agreement between petitioner and private respondent has
no force and effect in the absence of a valid apprenticeship program duly approved by the
DOLE, private respondent's assertion that he was hired not as an apprentice but as a
delivery boy ("kargador" or "pahinante") deserves credence. He should rightly be
considered as a regular employee of petitioner as defined by Article 280 of the Labor
Code:

ART. 280.  Regular and Casual Employment. —  The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project
or undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists. (Emphasis supplied)

and pursuant to the constitutional mandate to "protect the rights of workers and promote
their welfare."[9]

Petitioner further argues that, there is a valid cause for the dismissal of private
respondent.

There is an abundance of cases wherein the Court ruled that the twin requirements of due
process, substantive and procedural, must be complied with, before valid dismissal exists.
[10]
 Without which, the dismissal becomes void.

The twin requirements of notice and hearing constitute the essential elements of due
process.  This simply means that the employer shall afford the worker ample opportunity
to be heard and to defend himself with the assistance of his representative, if he so
desires.

Ample opportunity connotes every kind of assistance that management must accord the
employee to enable him to prepare adequately for his defense including legal
representation.[11]

As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC:[12]

The law requires that the employer must furnish the worker sought to be dismissed with
two (2) written notices before termination of employee can be legally effected: (1) notice
which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employer's
decision to dismiss him (Sec. 13, BP130; Sec. 2-6 Rule XIV, Book V, Rules and
Regulations Implementing the Labor Code as amended).  Failure to comply with the
requirements taints the dismissal with illegality. This procedure is mandatory; in the
absence of which, any judgment reached by management is void and inexistent (Tingson,
Jr. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs. NLRC, 168 SCRA 122;
Ruffy vs. NLRC. 182 SCRA 365 [1990]).

The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only
three days after he was made to sign a Quitclaim, a clear indication that such resignation
was not voluntary and deliberate.

Private respondent averred that he was actually employed by petitioner as a delivery boy
("kargador" or "pahinante").

He further asserted that petitioner "strong-armed" him into signing the aforementioned
resignation letter and quitclaim without explaining to him the contents thereof.  Petitioner
made it clear to him that anyway, he did not have a choice.[13]

Petitioner cannot disguise the summary dismissal of private respondent by orchestrating

the latter's alleged resignation and subsequent execution of a Quitclaim and Release.  A
judicious examination of both events belies any spontaneity on private respondent's part.

WHEREFORE, finding no abuse of discretion committed by public respondent National

Labor Relations Commission, the appealed decision is hereby AFFIRMED.

SO ORDERED.

SECOND DIVISION
[ G.R. No. 152894, August 17, 2007 ]
CENTURY CANNING CORPORATION, PETITIONER, VS. COURT OF
APPEALS AND GLORIA C. PALAD, RESPONDENTS.

DECISION

CARPIO, J.:

The Case
This is a petition for review[1] of the Decision[2] dated 12 November 2001 and the
Resolution dated 5 April 2002 of the Court of Appeals in CA-G.R. SP No. 60379.

The Facts

On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad)
as "fish cleaner" at petitioner's tuna and sardines factory. Palad signed on 17 July 1997
an apprenticeship agreement[3] with petitioner. Palad received an apprentice allowance
of P138.75 daily. On 25 July 1997, petitioner submitted its apprenticeship program for
approval to the Technical Education and Skills Development Authority (TESDA) of the
Department of Labor and Employment (DOLE). On 26 September 1997, the TESDA
approved petitioner's apprenticeship program.[4]

According to petitioner, a performance evaluation was conducted on 15 November

1997, where petitioner gave Palad a rating of N.I. or "needs improvement" since she
scored only 27.75% based on a 100% performance indicator. Furthermore, according to
the performance evaluation, Palad incurred numerous tardiness and absences. As a
consequence, petitioner issued a termination notice [5] dated 22 November 1997 to
Palad, informing her of her termination effective at the close of business hours of 28
November 1997.

Palad then filed a complaint for illegal dismissal, underpayment of wages, and non-
payment of pro-rated 13th month pay for the year 1997.

On 25 February 1999, the Labor Arbiter dismissed the complaint for lack of merit but
ordered petitioner to pay Palad her last salary and her pro-rated 13th month pay. The
dispositive portion of the Labor Arbiter's decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring that

the complaint for illegal dismissal filed by the complainant against the respondents in
the above-entitled case should be, as it is hereby DISMISSED for lack of merit. However,
the respondents are hereby ordered to pay the complainant the amount of ONE
THOUSAND SIX HUNDRED THIRTY-TWO PESOS (P1,632.00), representing her last salary
and the amount of SEVEN THOUSAND TWO HUNDRED TWENTY EIGHT (P7,228.00)
PESOS representing her prorated 13th month pay.
All other issues are likewise dismissed.

SO ORDERED.[6]
On appeal, the National Labor Relations Commission (NLRC) affirmed with
modification the Labor Arbiter's decision, thus:

WHEREFORE, premises considered, the decision of the Arbiter dated 25 February

1999 is hereby MODIFIED in that, in addition, respondents are ordered to pay
complainant's backwages for two (2) months in the amount of P7,176.00 (P138.75 x 26 x
2 mos.). All other dispositions of the Arbiter as appearing in the dispositive portion of his
decision are AFFIRMED.

SO ORDERED.[7]
Upon denial of Palad's motion for reconsideration, Palad filed a special civil action
for certiorari with the Court of Appeals. On 12 November 2001, the Court of Appeals
rendered a decision, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the questioned decision of the NLRC is

hereby SET ASIDE and a new one entered, to wit:

a. finding the dismissal of petitioner to be illegal;

b. ordering private respondent to pay petitioner her underpayment in wages;

c. ordering private respondent to reinstate petitioner to her former position

without loss of seniority rights and to pay her full backwages computed from the
time compensation was withheld from her up to the time of her reinstatement;

d. ordering private respondent to pay petitioner attorney's fees equivalent to ten

(10%) per cent of the monetary award herein; and

e. ordering private respondent to pay the costs of the suit.

SO ORDERED.[8]
The Ruling of the Court of Appeals

The Court of Appeals held that the apprenticeship agreement which Palad signed was
not valid and binding because it was executed more than two months before the TESDA
approved petitioner's apprenticeship program. The Court of Appeals cited Nitto
Enterprises v. National Labor Relations Commission, [9]  where it was held that prior
approval by the DOLE of the proposed apprenticeship program is a condition sine qua
non before an apprenticeship agreement can be validly entered into.

The Court of Appeals also held that petitioner illegally dismissed Palad. The Court of
Appeals ruled that petitioner failed to show that Palad was properly apprised of the
required standard of performance. The Court of Appeals likewise held that Palad was
not afforded due process because petitioner did not comply with the twin requirements
of notice and hearing.

The Issues
Petitioner raises the following issues:

1. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING

THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE; and

2. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING

THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID
CAUSE IN TERMINATING THE SERVICE OF PRIVATE RESPONDENT.[10]

The Ruling of the Court

The petition is without merit.

Registration and Approval by the TESDA of Apprenticeship Program Required

Before Hiring of Apprentices

The Labor Code defines an apprentice as a worker who is covered by a written

apprenticeship agreement with an employer.[11] One of the objectives of Title II (Training
and Employment of Special Workers) of the Labor Code is to establish apprenticeship
standards for the protection of apprentices. [12] In line with this objective, Articles 60 and
61 of the Labor Code provide:

ART. 60. Employment of apprentices. --Only employers in the highly technical

industries may employ apprentices and only in apprenticeable occupations approved
by the Minister of Labor and Employment. (Emphasis supplied)

ART. 61. Contents of apprenticeship agreements. -- Apprenticeship agreements,

including the wage rates of apprentices, shall conform to the rules issued by the
Minister of Labor and Employment. The period of apprenticeship shall not exceed six
months. Apprenticeship agreements providing for wage rates below the legal
minimum wage, which in no case shall start below 75 percent of the applicable
minimum wage, may be entered into only in accordance with apprenticeship
programs duly approved by the Minister of Labor and Employment. The Ministry shall
develop standard model programs of apprenticeship. (Emphasis supplied)
In Nitto Enterprises v. National Labor Relations Commission, [13] the Court cited
Article 61 of the Labor Code and held that an apprenticeship program should first be
approved by the DOLE before an apprentice may be hired, otherwise the person hired
will be considered a regular employee. The Court held:

In the case at bench, the apprenticeship agreement between petitioner and

private respondent was executed on May 28, 1990 allegedly employing the latter as an
apprentice in the trade of "care maker/molder." On the same date, an apprenticeship
program was prepared by petitioner and submitted to the Department of Labor and
Employment. However, the apprenticeship agreement was filed only on June 7, 1990.
Notwithstanding the absence of approval by the Department of Labor and Employment,
the apprenticeship agreement was enforced the day it was signed.

Based on the evidence before us, petitioner did not comply with the requirements of
the law. It is mandated that apprenticeship agreements entered into by the employer
and apprentice shall be entered only in accordance with the apprenticeship program
duly approved by the Minister of Labor and Employment.

Prior approval by the Department of Labor and Employment of the proposed

apprenticeship program is, therefore, a condition sine qua non before an
apprenticeship agreement can be validly entered into.

The act of filing the proposed apprenticeship program with the Department of Labor
and Employment is a preliminary step towards its final approval and does not
instantaneously give rise to an employer-apprentice relationship.

Article 57 of the Labor Code provides that the State aims to "establish a national
apprenticeship program through the participation of employers, workers and
government and non-government agencies" and "to establish apprenticeship standards
for the protection of apprentices." To translate such objectives into existence, prior
approval of the DOLE to any apprenticeship program has to be secured as a
condition sine qua non before any such apprenticeship agreement can be fully enforced.
The role of the DOLE in apprenticeship programs and agreements cannot be debased.

Hence, since the apprenticeship agreement between petitioner and private respondent
has no force and effect in the absence of a valid apprenticeship program duly approved
by the DOLE, private respondent's assertion that he was hired not as an apprentice but
as a delivery boy ("kargador" or "pahinante") deserves credence. He should rightly be
considered as a regular employee of petitioner as defined by Article 280 of the Labor
Code x x x. (Emphasis supplied)[14]
Republic Act No. 7796[15] (RA 7796), which created the TESDA, has transferred the
authority over apprenticeship programs from the Bureau of Local Employment of the
DOLE to the TESDA.[16] RA 7796 emphasizes TESDA's approval of the apprenticeship
program as a pre-requisite for the hiring of apprentices. Such intent is clear under
Section 4 of RA 7796:

SEC. 4. Definition of Terms. -- As used in this Act:

xxx

j) "Apprenticeship" training within employment with compulsory related theoretical

instructions involving a contract between an apprentice and an employer on an
approved apprenticeable occupation;

k) "Apprentice" is a person undergoing training for an approved apprenticeable

occupation during an established period assured by an apprenticeship agreement;

l) "Apprentice Agreement" is a contract wherein a prospective employer binds himself

to train the apprentice who in turn accepts the terms of training for a recognized
apprenticeable occupation emphasizing the rights, duties and responsibilities of each
party;

m) "Apprenticeable Occupation" is an occupation officially endorsed by a tripartite body

and approved for apprenticeship by the Authority [TESDA]; (Emphasis supplied)
In this case, the apprenticeship agreement was entered into between the parties
before petitioner filed its apprenticeship program with the TESDA for approval.
Petitioner and Palad executed the apprenticeship agreement on 17 July 1997 wherein it
was stated that the training would start on 17 July 1997 and would end approximately in
December 1997.[17] On 25 July 1997, petitioner submitted for approval its apprenticeship
program, which the TESDA subsequently approved on 26 September 1997. [18] Clearly, the
apprenticeship agreement was enforced even before the TESDA approved petitioner's
apprenticeship program. Thus, the apprenticeship agreement is void because it lacked
prior approval from the TESDA.

The TESDA's approval of the employer's apprenticeship program is required before the
employer is allowed to hire apprentices. Prior approval from the TESDA is necessary to
ensure that only employers in the highly technical industries may employ apprentices
and only in apprenticeable occupations.[19] Thus, under RA 7796, employers can only hire
apprentices for apprenticeable occupations which must be officially endorsed by a
tripartite body and approved for apprenticeship by the TESDA. This is to ensure the
protection of apprentices and to obviate possible abuses by prospective employers who
may want to take advantage of the lower wage rates for apprentices and circumvent the
right of the employees to be secure in their employment.

The requisite TESDA approval of the apprenticeship program prior to the hiring of
apprentices was further emphasized by the DOLE with the issuance of Department
Order No. 68-04 on 18 August 2004. Department Order No. 68-04, which provides the
guidelines in the implementation of the Apprenticeship and Employment Program of the
government, specifically states that no enterprise shall be allowed to hire apprentices
unless its apprenticeship program is registered and approved by TESDA. [20]

Since Palad is not considered an apprentice because the apprenticeship agreement was
enforced before the TESDA's approval of petitioner's apprenticeship program, Palad is
deemed a regular employee performing the job of a "fish cleaner." Clearly, the job of a
"fish cleaner" is necessary in petitioner's business as a tuna and sardines factory. Under
Article 280[21] of the Labor Code, an employment is deemed regular where the employee
has been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer.

Illegal Termination of Palad

We shall now resolve whether petitioner illegally dismissed Palad.

Under Article 279[22] of the Labor Code, an employer may terminate the services of an
employee for just causes[23] or for authorized causes.[24] Furthermore, under Article
277(b)[25] of the Labor Code, the employer must send the employee who is about to be
terminated, a written notice stating the causes for termination and must give the
employee the opportunity to be heard and to defend himself. Thus, to constitute valid
dismissal from employment, two requisites must concur: (1) the dismissal must be for a
just or authorized cause; and (2) the employee must be afforded an opportunity to be
heard and to defend himself.[26]

In this case, the Labor Arbiter held that petitioner terminated Palad for habitual
absenteeism and poor efficiency of performance. Under Section 25, Rule VI, Book II of
the Implementing Rules of the Labor Code, habitual absenteeism and poor efficiency of
performance are among the valid causes for which the employer may terminate the
apprenticeship agreement after the probationary period.

However, the NLRC reversed the finding of the Labor Arbiter on the issue of the legality
of Palad's termination:

As to the validity of complainant's dismissal in her status as an apprentice, suffice

to state that the findings of the Arbiter that complainant was dismissed due to failure to
meet the standards is nebulous. What clearly appears is that complainant already
passed the probationary status of the apprenticeship agreement of 200 hours at the
time she was terminated on 28 November 1997 which was already the fourth month of
the apprenticeship period of 1000 hours. As such, under the Code, she can only be
dismissed for cause, in this case, for poor efficiency of performance on the job or in the
classroom for a prolonged period despite warnings duly given to the apprentice.

We noted that no clear and sufficient evidence exist to warrant her dismissal as an
apprentice during the agreed period. Besides the absence of any written warnings
given to complainant reminding her of "poor performance," respondents' evidence in
this respect consisted of an indecipherable or unauthenticated xerox of the
performance evaluation allegedly conducted on complainant. This is of doubtful
authenticity and/or credibility, being not only incomplete in the sense that appearing
thereon is a signature (not that of complainant) side by side with a date indicated
as "1/16/98". From the looks of it, this signature is close to and appertains to the
typewritten position of "Division/Department Head", which is below the signature of
complainant's immediate superior who made the evaluation indicated as "11-15-97."

The only conclusion We can infer is that this evaluation was made belatedly,
specifically, after the filing of the case and during the progress thereof in the Arbitral
level, as shown that nothing thereon indicate that complainant was notified of the
results. Its authenticity therefor, is a big question mark, and hence lacks any
credibility. Evidence, to be admissible in administrative proceedings, must at least
have a modicum of authenticity. This, respondents failed to comply with. As such,
complainant is entitled to the payment of her wages for the remaining two (2) months
of her apprenticeship agreement.[27] (Emphasis supplied)

Indeed, it appears that the Labor Arbiter's conclusion that petitioner validly
terminated Palad was based mainly on the performance evaluation allegedly
conducted by petitioner. However, Palad alleges that she had no knowledge of the
performance evaluation conducted and that she was not even informed of the result
of the alleged performance evaluation. Palad also claims she did not receive a notice
of dismissal, nor was she given the chance to explain. According to petitioner, Palad
did not receive the termination notice because Palad allegedly stopped reporting for
work after being informed of the result of the evaluation.

Under Article 227 of the Labor Code, the employer has the burden of proving that
[28]
the termination was for a valid or authorized cause.  Petitioner failed to
substantiate its claim that Palad was terminated for valid reasons. In fact, the
NLRC found that petitioner failed to prove the authenticity of the performance
evaluation which petitioner claims to have conducted on Palad, where Palad
received a performance rating of only 27.75%. Petitioner merely relies on the
performance evaluation to prove Palad's inefficiency. It was likewise not shown that
petitioner ever apprised Palad of the performance standards set by the company.
When the alleged valid cause for the termination of employment is not clearly
[29]
proven, as in this case, the law considers the matter a case of illegal dismissal.

Furthermore, Palad was not accorded due process. Even if petitioner did conduct a
performance evaluation on Palad, petitioner failed to warn Palad of her alleged
poor performance. In fact, Palad denies any knowledge of the performance
evaluation conducted and of the result thereof. Petitioner likewise admits that Palad
[30] 
did not receive the notice of termination because Palad allegedly stopped
reporting for work. The records are bereft of evidence to show that petitioner ever
gave Palad the opportunity to explain and defend herself. Clearly, the two requisites
for a valid dismissal are lacking in this case.

WHEREFORE, we AFFIRM the Decision dated 12 November 2001 and the

Resolution dated 5 April 2002 of the Court of Appeals in CA-G.R. SP No. 60379.

SO ORDERED. THIRD DIVISION

 [ G.R. No. 187320, January 26, 2011 ]
ATLANTA INDUSTRIES, INC. AND/OR ROBERT CHAN, PETITIONERS,
VS. APRILITO R. SEBOLINO, KHIM V. COSTALES, ALVIN V. ALMOITE,
AND JOSEPH S. SAGUN, RESPONDENTS.

DECISION

BRION, J.:

For resolution is the petition for review on certiorari[1] assailing the decision[2] and

the resolution[3] of the Court of Appeals (CA) rendered on November 4, 2008 and March
25, 2009, respectively, in CA-G.R. SP. No. 99340.[4]

The Antecedents

The facts are summarized below.

In the months of February and March 2005, complainants Aprilito R. Sebolino, Khim V.
Costales, Alvin V. Almoite, Joseph S. Sagun, Agosto D. Zaño, Domingo S. Alegria, Jr.,
Ronie Ramos, Edgar Villagomez, Melvin Pedregoza, Teofanes B. Chiong, Jr., Leonardo L.
dela Cruz, Arnold A. Magalang, and Saturnino M. Mabanag filed several complaints for
illegal dismissal, regularization, underpayment, nonpayment of wages and other money
claims, as well as claims for moral and exemplary damages and attorney's fees against
the petitioners Atlanta Industries, Inc. (Atlanta) and its President and Chief Operating
Officer Robert Chan. Atlanta is a domestic corporation engaged in the manufacture of
steel pipes.

The complaints were consolidated and were raffled to Labor Arbiter Daniel Cajilig, but
were later transferred to Labor Arbiter Dominador B. Medroso, Jr.

The complainants alleged that they had attained regular status as they were allowed to
work with Atlanta for more than six (6) months from the start of a purported
apprenticeship agreement between them and the company. They claimed that they
were illegally dismissed when the apprenticeship agreement expired.

In defense, Atlanta and Chan argued that the workers were not entitled to
regularization and to their money claims because they were engaged as apprentices
under a government-approved apprenticeship program. The company offered to hire
them as regular employees in the event vacancies for regular positions occur in the
section of the plant where they had trained. They also claimed that their names did not
appear in the list of employees (Master List)[5] prior to their engagement as apprentices.

On May 24, 2005, dela Cruz, Magalang, Zaño and Chiong executed a Pagtalikod at
Pagwawalang Saysay before Labor Arbiter Cajilig.

The Compulsory Arbitration Rulings

On April 24, 2006, Labor Arbiter Medroso dismissed the complaint with respect to dela
Cruz, Magalang, Zaño and Chiong, but found the termination of service of the remaining
nine to be illegal.[6] Consequently, the arbiter awarded the dismissed workers
backwages, wage differentials, holiday pay and service incentive leave pay amounting to
P1,389,044.57 in the aggregate.

Atlanta appealed to the National Labor Relations Commission (NLRC). In the meantime,
or on October 10, 2006, Ramos, Alegria, Villagomez, Costales and Almoite allegedly
entered into a compromise agreement with Atlanta. [7] The agreement provided that
except for Ramos, Atlanta agreed to pay the workers a specified amount as settlement,
and to acknowledge them at the same time as regular employees.

On December 29, 2006,[8] the NLRC rendered a decision, on appeal, modifying the ruling
of the labor arbiter, as follows: (1) withdrawing the illegal dismissal finding with respect
to Sagun, Mabanag, Sebolino and Pedregoza; (2) affirming the dismissal of the
complaints of dela Cruz, Zaño, Magalang and Chiong; (3) approving the compromise
agreement entered into by Costales, Ramos, Villagomez, Almoite and Alegria, and (4)
denying all other claims.

Sebolino, Costales, Almoite and Sagun  moved for the reconsideration of the decision,
but the NLRC denied the motion in its March 30, 2007[9] resolution. The four then sought
relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court.
They charged that the NLRC committed grave abuse of discretion in: (1) failing to
recognize their prior employment with Atlanta; (2) declaring the second apprenticeship
agreement valid; (3) holding that the dismissal of Sagun, Mabanag, Sebolino and Melvin
Pedregoza is legal; and (4) upholding the compromise agreement involving Costales,
Ramos, Villagomez, Almoite and Alegria.
 The CA Decision

The CA granted the petition based on the following findings: [10]

1. The respondents were already employees of the company before they entered into
the first and second apprenticeship agreements - Almoite and Costales were employed
as early as December 2003 and, subsequently, entered into a first apprenticeship
agreement from May 13, 2004 to October 12, 2004; before this first agreement expired,
a second apprenticeship agreement, from October 9, 2004 to March 8, 2005 was
executed. The same is true with Sebolino and Sagun, who were employed by Atlanta as
early as March 3, 2004. Sebolino entered into his first apprenticeship agreement with
the company from March 20, 2004 to August 19, 2004, and his second apprenticeship
agreement from August 20, 2004 to January 19, 2005. Sagun, on the other hand,
entered into his first agreement from May 28, 2004 to October 8, 2004, and the second
agreement from October 9, 2004 to March 8, 2005.

2. The first and second apprenticeship agreements were defective as they were
executed in violation of the law and the rules.[11] The agreements did not indicate the
trade or occupation in which the apprentice would be trained; neither was the
apprenticeship program approved by the Technical Education and Skills Development
Authority (TESDA).

3. The positions occupied by the respondents - machine operator, extruder operator

and scaleman - are usually necessary and desirable in the manufacture of plastic
building materials, the company's main business. Costales, Almoite, Sebolino and Sagun
were, therefore, regular employees whose dismissals were illegal for lack of a just or
authorized cause and notice.

4. The compromise agreement entered into by Costales and Almoite, together with
Ramos, Villagomez and Alegria, was not binding on Costales and Almoite because they
did not sign the agreement.

The petitioners themselves admitted that Costales and Almoite were initially planned to
be a part of the compromise agreement, but their employment has been regularized as
early as January 11, 2006; hence, the company did not pursue their inclusion in the
compromise agreement.[12]
The CA faulted the NLRC for failing to appreciate the evidence regarding the
respondents' prior employment with Atlanta. The NLRC recognized the prior
employment of Costales and Almoite on Atlanta's monthly report for December 2003
for the CPS Department/Section dated January 6, 2004.[13] This record shows that
Costales and Almoite were assigned to the company's first shift from 7:00 a.m. to 3:00
p.m. The NLRC ignored Sebolino and Sagun's prior employment under the company's
Production and Work Schedule for March 7 to 12, 2005 dated March 3, 2004, [14]  as they
had been Atlanta's employees as early as March 3, 2004, with Sebolino scheduled to
work on March 7-12, 2005 at 7:00 a.m. to 7:00 p.m., while Sagun was scheduled to work
for the same period but from 7:00 p.m. to 7:00 a.m. The CA noted that Atlanta failed to
challenge the authenticity of the two documents before it and the labor authorities.

Atlanta and Chan moved for reconsideration, but the CA denied the motion in a
resolution rendered on March 25, 2009.[15] Hence, the present petition.

The Petition

Atlanta seeks a reversal of the CA decision, contending that the appellate court erred in
(1) concluding that Costales, Almoite, Sebolino and Sagun were employed by Atlanta
before they were engaged as apprentices; (2) ruling that a second apprenticeship
agreement is invalid; (3) declaring that the respondents were illegally dismissed; and (4)
disregarding the compromise agreement executed by Costales and Almoite. It submits
the following arguments:

First. The CA's conclusion that the respondent workers were company employees
before they were engaged as apprentices was primarily based on the Monthly
Report[16] and the Production and Work Schedule for March 7-12, 2005,[17] in total
disregard of the Master List[18] prepared by the company accountant, Emelita M.
Bernardo. The names of Costales, Almoite, Sebolino and Sagun do not appear as
employees in the Master List which "contained the names of all the persons who were
employed by and at petitioner."[19]

Atlanta faults the CA for relying on the Production and Work Schedule and the Monthly
Report which were not sworn to, and in disregarding the Master List whose veracity was
sworn to by Bernardo and by Alex Go who headed the company's accounting division. It
maintains that the CA should have given more credence to the Master List.

Second. In declaring invalid the apprenticeship agreements it entered into with the
respondent workers, the CA failed to recognize the rationale behind the law on
apprenticeship. It submits that under the law,[20] apprenticeship agreements are valid,
provided they do not exceed six (6) months and the apprentices are paid the
appropriate wages of at least 75% of the applicable minimum wage.

The respondents initially executed a five-month apprenticeship program with Atlanta, at

the end of which, they "voluntarily and willingly entered into another apprenticeship
agreement with the petitioner for the training of a second skill" [21] for five months; thus,
the petitioners committed no violation of the apprenticeship period laid down by the
law.

Further, the apprenticeship agreements, entered into by the parties, complied with the
requisites under Article 62 of the Labor Code; the company's authorized representative
and the respondents signed the agreements and these were ratified by the company's
apprenticeship committee. The apprenticeship program itself was approved and
certified by the TESDA.[22] The CA, thus, erred in overturning the NLRC's finding that the
apprenticeship agreements were valid.

Third. There was no illegal dismissal as the respondent workers' tenure ended with the
expiration of the apprenticeship agreement they entered into. There was, therefore, no
regular employer-employee relationship between Atlanta and the respondent workers.

The Case for Costales, Almoite, Sebolino and Sagun

In a Comment filed on August 6, 2009,[23] Costales, Almoite, Sebolino and Sagun pray for
a denial of the petition for being procedurally defective and for lack of merit.

The respondent workers contend that the petition failed to comply with Section 4, Rule
45 of the Rules of Court which requires that the petition be accompanied by supporting
material portions of the records. The petitioners failed to attach to the petition a copy of
the Production and Work Schedule despite their submission that the CA relied heavily
on the document in finding the respondent workers' prior employment with Atlanta.
They also did not attach a copy of the compromise agreement purportedly executed by
Costales and Almoite. For this reason, the respondent workers submit that the petition
should be dismissed.

The respondents posit that the CA committed no error in holding that they were already
Atlanta's employees before they were engaged as apprentices, as confirmed by the
company's Production and Work Schedule.[24] They maintain that the Production and
Work Schedule meets the requirement of substantial evidence as the petitioners failed
to question its authenticity. They  point out that the schedule was prepared by Rose A.
Quirit and approved by Adolfo R. Lope, head of the company's PE/Spiral Section. They
argue that it was highly unlikely that the head of a production section of the company
would prepare and assign work to the complainants if the latter had not been company
employees.

The respondent workers reiterate their mistrust of the Master List [25] as evidence that
they were not employees of the company at the time they became apprentices. They
label the Master List as "self-serving, dubious and even if considered as authentic, its
content contradicts a lot of petitioner's claim and allegations," [26] thus -

1. Aside from the fact that the Master List is not legible, it contains only the names of
inactive employees. Even those found by the NLRC to have been employed in the
company (such as Almoite, Costales and Sagun) do not appear in the list. If Costales and
Almoite had been employed with Atlanta since January 11, 2006, as the company
claimed,[27] their names would have been in the list, considering that the Master List
accounts for all employees "as of May 2006" - the notation carried on top of each page
of the document.

2. There were no entries of employees hired or resigned in the years 2005 and 2006
despite the "as of May 2006" notation; several pages making up the Master List contain
names of employees for the years 1999 - 2004.

3. The fact that Atlanta presented the purported Master List instead of the payroll
raised serious doubts on the authenticity of the list.

In sum, the respondent workers posit that the presentation of the Master List revealed
the "intention of the herein petitioner[s] to perpetually hide the fact of [their] prior
employment."[28]

On the supposed apprenticeship agreements they entered into, Costales, Almoite,

Sebolino and Sagun refuse to accept the agreements' validity, contending that the
company's apprenticeship program is merely a ploy "to continually deprive [them] of
their rightful wages and benefits which are due them as regular employees." [29] They
submit the following "indubitable facts and ratiocinations:" [30]
1. The apprenticeship agreements were submitted to TESDA only in 2005 (with dates of
receipt on "1/4/05" & "2/22/05"[31]), when the agreements were supposed to have been
executed in April or May 2004. Thus, the submission was made long after the starting
date of the workers' apprenticeship or even beyond the agreement's
completion/termination date, in violation of Section 23, Rule VI, Book II of the Labor
Code.

2. The respondent workers were made to undergo apprenticeship for occupations

different from those allegedly approved by TESDA. TESDA approved Atlanta's
apprenticeship program on "Plastic Molder"[32] and not for extrusion molding process,
engineering, pelletizing process and mixing process.

3. The respondents were already skilled workers prior to the apprenticeship program as
they had been employed and made to work in the different job positions where they
had undergone training. Sagun and Sebolino, together with Mabanag, Pedregoza, dela
Cruz, Chiong, Magalang and Alegria were even given production assignments and work
schedule at the PE/Spiral Section from May 11, 2004 to March 23, 2005, and some of
them were even assigned to the 3:00 p.m. - 11:00 p.m. and graveyard shifts (11:00 p.m.
- 7:00 a.m.) during the period.[33]

4. The respondent workers were required to continue as apprentices beyond six

months. The TESDA certificate of completion indicates that the workers' apprenticeship
had been completed after six months. Yet, they were suffered to work as apprentices
beyond that period.

Costales, Almoite, Sebolino and Sagun resolutely maintain that they were illegally
dismissed, as the reason for the termination of their employment - notice of the
completion of the second apprenticeship agreement - did not constitute either a just or
authorized cause under Articles 282 and 283 of the Labor Code.

Finally, Costales and Almoite refuse to be bound by the compromise agreement [34] that
Atlanta presented to defeat the two workers' cause of action. They claim that the
supposed agreement is invalid as against them, principally because they did not sign it.

The Court's Ruling

The procedural issue

The respondent workers ask that the petition be dismissed outright for the petitioners'
failure to attach to the petition a copy of the Production and Work Schedule and a copy
of the compromise agreement Costales and Almoite allegedly entered into -- material
portions of the record that should accompany and support the petition, pursuant to
Section 4, Rule 45 of the Rules of Court.

In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J. Garchitorena [35]  where the
Court addressed essentially the same issue arising from Section 2(d), Rule 42 of the
Rules of Court,[36] we held that the phrase "of the pleadings and other material portions
of the record xxx as would support the allegation of the petition clearly contemplates
the exercise of discretion on the part of the petitioner in the selection of documents
that are deemed to be relevant to the petition. The crucial issue to consider then is
whether or not the documents accompanying the petition sufficiently supported the
allegations therein."[37]

As in Mariners,  we find that the documents attached to the petition sufficiently support
the petitioners' allegations. The accompanying CA decision [38] and resolution,[39] as well
as those of the labor arbiter[40] and the NLRC,[41] referred to the parties' position papers
and even to their replies and rejoinders. Significantly, the CA decision narrates the
factual antecedents, defines the complainants' cause of action, and cites the arguments,
including the evidence the parties adduced.  If any, the defect in the petition lies in the
petitioners' failure to provide legible copies of some of the material documents
mentioned, especially several pages in the decisions of the labor arbiter and of the
NLRC. This defect, however, is not fatal as the challenged CA decision clearly
summarized the labor tribunal's rulings.  We, thus, find no procedural obstacle in
resolving the petition on the merits.

The merits of the case

We find no merit in the petition. The CA committed no reversible error in nullifying the
NLRC decision[42] and in affirming the labor arbiter's ruling, [43] as it applies to Costales,
Almoite, Sebolino and Sagun. Specifically, the CA correctly ruled that the four were
illegally dismissed because (1) they were already employees when they were required to
undergo apprenticeship and (2) apprenticeship agreements were invalid.

The following considerations support the CA ruling.

First. Based on company operations at the time material to the case, Costales, Almoite,
Sebolino and Sagun were already rendering service to the company as employees
before they were made to undergo apprenticeship. The company itself recognized the
respondents' status through relevant operational records - in the case of Costales and
Almoite, the CPS monthly report for December 2003 [44] which the NLRC relied upon and,
for Sebolino and Sagun, the production and work schedule for March 7 to 12,
2005[45] cited by the CA.

Under the CPS monthly report, Atlanta assigned Costales and Almoite to the first shift
(7:00 a.m. to 3:00 p.m.) of the Section's work. The Production and Work Schedules, in
addition to the one noted by the CA, showed that Sebolino and Sagun were scheduled
on different shifts vis-à-vis the production and work of the company's PE/Spiral Section
for the periods July 5-10, 2004;[46] October 25-31, 2004;[47] November 8-14, 2004;
[48]
 November 16-22, 2004;[49] January 3-9, 2005;[50] January 10-15, 2005;[51] March 7-12,
2005[52] and March 17-23, 2005.[53]

We  stress  that the  CA  correctly recognized  the  authenticity of the  operational 
documents,  for the failure of Atlanta to raise a challenge against these  documents 
before  the labor  arbiter, the NLRC and the CA itself. The  appellate  court,  thus, found
the said  documents  sufficient  to establish the employment of the respondents before
their engagement as apprentices.

Second. The Master List[54] (of employees) that the petitioners heavily rely upon as proof
of their position that the respondents were not Atlanta's employees, at the time they
were engaged as apprentices, is unreliable and does not inspire belief.

The list, consisting of several pages, is hardly legible. It requires extreme effort to sort
out the names of the employees listed, as well as the other data contained in the list.
For this reason alone, the list deserves little or no consideration. As the respondents
also pointed out, the list itself contradicts a lot of Atlanta's claims and allegations, thus:
it lists only the names of inactive employees; even the names of those the NLRC found
to have been employed by Atlanta, like Costales and Almoite, and those who even
Atlanta claims attained regular status on January 11, 2006, [55] do not appear in the list
when it was supposed to account for all  employees "as of May 6, 2006."  Despite the
"May 6, 2006" cut off date, the list contains no entries of employees who were hired or
who resigned in 2005 and 2006. We note that the list contains the names of employees
from 1999 to 2004.

We cannot fault the CA for ignoring the Master List even if Bernardo, its head office
accountant, swore to its correctness and authenticity. [56] Its substantive unreliability
gives it very minimal probative value. Atlanta would have been better served, in terms
of reliable evidence, if true copies of the payroll (on which the list was based, among
others, as Bernardo claimed in her affidavit) were presented instead.

Third. The fact that Costales, Almoite, Sebolino and Sagun were already rendering
service to the company when they were made to undergo apprenticeship (as
established by the evidence) renders the apprenticeship agreements irrelevant as far as
the four are concerned. This reality is highlighted by the CA finding that the respondents
occupied positions such as machine operator, scaleman and extruder operator - tasks
that are usually necessary and desirable in Atlanta's usual business or trade as
manufacturer of plastic building materials.[57] These tasks and their nature characterized
the four as regular employees under Article 280 of the Labor Code.  Thus, when they
were dismissed without just or authorized cause, without notice, and without the
opportunity to be heard, their dismissal was illegal under the law. [58]

Even if we recognize the company's need to train its employees through apprenticeship,
we can only consider the first apprenticeship agreement for the purpose. With the
expiration of the first agreement and the retention of the employees, Atlanta had, to all
intents and purposes, recognized the completion of their training and their acquisition
of a regular employee status. To foist upon them the second apprenticeship agreement
for a second skill which was not even mentioned in the agreement itself, [59] is a violation
of the Labor Code's implementing rules[60] and is an act manifestly unfair to the
employees, to say the least. This we cannot allow.

Fourth. The compromise agreement[61] allegedly entered into by Costales and Almoite,

together with Ramos, Villagomez and Alegria, purportedly in settlement of the case
before the NLRC, is not binding on Costales and Almoite because they did not sign it.
The company itself admitted[62] that while Costales and Almoite were initially intended
to be a part of the agreement, it did not pursue their inclusion "due to their
regularization as early as January 11, 2006."[63]

WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The

assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs against
the petitioner Atlanta Industries, Inc.

SO ORDERED.

THIRD DIVISION
[ G.R. No. 75112, August 17, 1992 ]
FILAMER CHRISTIAN INSTITUTE, PETITIONER, VS. HON.
INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P. SUPLICO, IN
HIS CAPACITY AS JUDGE OF THE REGIONAL TRIAL COURT, BRANCH
XIV, ROXAS CITY AND POTENCIANO KAPUNAN, SR., RESPONDENTS.

RESOLUTION

GUTIERREZ, JR., J.:

The private respondents, heirs of the late Pontenciano Kapunan, seek reconsideration of

the decision rendered by this Court on October 16, 1990 (Filamer Christian Institute v.
Court Appeals, 190 SCRA 477) reviewing the appellate court's conclusion
that there exists an employer-employee relationship between the petitioner and its co-
defendant Funtecha. The Court ruled that the petitioner is not liable for the injuries
caused by Funtecha on the grounds that the latter was not an authorized driver for whose
acts the petitioner shall be directly and primarily answerable, and that Funtecha was
merely a working scholar who, under Section 14, Rule X, Book III of the Rules and
Regulations Implementing the Labor Code is not considered an employee of the
petitioner.

The private respondents assert that the circumstances obtaining in the present case call
for the application of Article 2180 of the Civil Code since Funtecha is no doubt
an employee of the petitioner. The private respondent maintain that under Article 2180 an
injured party shall have recourse against the servant as well as the petitioner for whom, at
the time of the incident, the servant was performing an act in furtherance of the interest
and for the benefit of the petitioner. Funtecha allegedly did not steal the school jeep nor
use it for a joy ride without the knowledge of the school authorities.

After a re-examination of the laws relevant to the facts found by the trial court and the
appellate court, the Court reconsiders its decision. We reinstate the Court of Appeals'
decision penned by the late Justice Desiderio Jurado and concurred in by Justices Jose C.
Campos, Jr. and Serafin E. Camilon. Applying Civil Code provisions, the appellate court
affirmed the trial court decision which ordered the payment of the P20,000.00 liability in
the Zenith Insurance Corporation policy, P10,000.00 moral damages, P4,000.00 litigation
and actual expenses, and P3,000.00 attorney's fees.

It is undisputed that Funtecha was a working student, being a part-time janitor and a
scholar of petitioner Filamer. He was, in relation to the school, an employee even if he
was assigned to clean the school premises for only two (2) hours in the morning of each
school day.

Having a student driver's license, Funtecha requested the driver, Allan Masa, and was
allowed, to take over the vehicle while the latter was on his way home one late afternoon.
It is significant to note that the place where Allan lives is also the house of his father, the
school president, Agustin Masa. Moreover, it is also the house where
Funtecha was allowed free board while he was a student of Filamer Christian Institute.

Allan Masa turned over the vehicle to Funtecha only after driving down a road,
negotiating a sharp dangerous curb, and viewing that the road was clear. (TSN, April 4,
1983, pp. 78-79) According to Allan's testimony, a fast moving truck with glaring lights
nearly hit them so that they had to swerve to the right to avoid a collision. Upon
swerving, they heard a sound as if something had bumped against the vehicle, but they
did not stop to check. Actually, the Pinoy jeep swerved towards the pedestrian,
Potenciano Kapunan who was walking in his lane in the direction against vehicular
traffic, and hit him. Allan affirmed that Funtecha followed his advise to swerve to the
right. (Ibid., p. 79) At the time of the incident (6:30 P.M.) in Roxas City, the jeep had
only one functioning headlight.

Allan testified that he was the driver and at the same time a security guard of the
petitioner-school. He further said that there was no specific time for him to be off-duty
and that after driving the students home at 5:00 in the afternoon, he still had to go back to
school and then drive home using the same vehicle.

Driving the vehicle to and from the house of the school president where both Allan and
Funtecha reside is an act in furtherance of the interest of the petitioner-school. Allan's job
demands that he drive home the school jeep so he can use it to fetch students in the
morning of the next school day.

It is indubitable under the circumstances that the school president had knowledge that the
jeep was routinely driven home for the said purpose. Moreover, it is not improbable that
the school president also had knowledge of Funtecha's possession of a student driver's
license and his desire to undergo driving lessons during the time that he was not in his
classrooms.
In learning how to drive while taking the vehicle home in the direction of Allan's house,
Funtecha definitely was not having a joy ride. Funtecha was not driving for the purpose
of his enjoyment or for a "frolic of his own" but ultimately, for the service for which the
jeep was intended by the petitioner school. (See L. Battistoni v. Thomas, Can SC 144, 1
D.L.R. 577, 80 ALR 722 [1932]; See also Association of Baptists for World Evangelism,
Inc. v. Fieldmen's Insurance Co., Inc. 124 SCRA 618 [1983]). Therefore, the Court is
constrained to conclude that the act of Funtecha in taking over the steering wheel was one
done for and in behalf of his employer for which act the petitioner-school cannot deny
any responsibility by arguing that it was done beyond the scope of his janitorial duties.
The clause "within the scope of their assigned tasks" for purposes of raising the
presumption of liability of an employer, includes any act done by an employee, in
furtherance of the interests of the employer or for the account of the employer at the time
of the infliction of the injury or damage. (Manuel Casada, 190 Va 906, 59 SE 2d 47
[1950]) Even if somehow, the employee driving the vehicle derived some benefit from
the act, the existence of a presumptive liability of the employer is determined by
answering the question of whether or not the servant was at the time of the accident
performing any act in furtherance of his master's business. (Kohlman v. Hyland, 210 NW
643, 50 ALR 1437 [1926]; Jameson v. Gavett, 71 P 2d 937 [1937])

Section 14, Rule X, Book III of the Rules implementing the Labor Code, on which the
petitioner anchors its defense, was promulgated by the Secretary of Labor and
Employment only for the purpose of administering and enforcing the provisions of the
Labor Code on conditions of employment. Particularly, Rule X of Book III provides
guidelines on the manner by which the powers of the Labor Secretary shall be exercised;
on what records should be kept, maintained and preserved; on payroll; and on the
exclusion of working scholars from, and inclusion of resident physicians in the
employment coverage as far as compliance with the substantive labor provisions on
working conditions, rest periods, and wages, is concerned.

In other words, Rule X is merely a guide to the enforcement of the substantive law on
labor. The Court, thus, makes the distinction and so holds that Section 14, Rule X, Book
III of the Rules is not the decisive law in a civil suit for damages instituted by an injured
person during a vehicular accident against a working student of a school and against the
school itself.

The present case does not deal with a labor dispute on conditions of employment between
an alleged employee and an alleged employer. It invokes a claim brought by one for
damages for injury caused by the patently negligent acts of a person, against both doer-
employee and his employer. Hence, the reliance on the implementing rule on labor to
disregard the primary liability of an employer under Article 2180 of the Civil Code is
misplaced. An implementing rule on labor cannot be used by an employer as a shield to
avoid liability under the substantive provisions of the Civil Code.
There is evidence to show that there exists in the present case an extra-contractual
obligation arising from the negligence or reckless imprudence of a person "whose acts or
omissions are imputable, by a legal fiction, to other(s) who are in a position to exercise an
absolute or limited control over (him)." (Bahia v. Litonjua and Leynes, 30 Phil. 624
[1915])

Funtecha is an employee of petitioner Filamer. He need not have an official appointment

for a driver's position in order that the petitioner may be held responsible for his grossly
negligent act, it being sufficient that the act of driving at the time of the incident was for
the benefit of the petitioner. Hence, the fact that Funtecha was not the school driver or
was not acting within the scope of his janitorial duties does not relieve the petitioner of
the burden of rebutting the presumption juris tantum that there was negligence on its part
either in the selection of a servant or employee, or in the supervision over him. The
petitioner has failed to show proof of its having exercised the required diligence of a
good father of a family over its employees Funtecha and Allan.

The Court reiterates that supervision includes the formulation of suitable rules and
regulation for the guidance of its employees and the issuance of proper instructions
intended for the protection of the public and persons with whom the employer has
relations through his employees. (Bahia v. Litonjud and Leynes, supra, at p. 628; Phoenix
Construction, Inc. v. Intermediate Appellate Court, 148 SCRA 353 [1987])

An employer is expected to impose upon its employees the necessary discipline called for
in the performance of any act indispensable to the business and beneficial to their
employer.

In the present case, the petitioner has not shown that it has set forth such rules and
guidelines as would prohibit any one of its employees from taking control over its
vehicles if one is not the official driver or prohibiting the driver and son of the Filamer
president from authorizing another employee to drive the school vehicle. Furthermore,
the petitioner has failed to prove that it had imposed sanctions or warned its employees
against the use of its vehicles by persons other than the driver.

The petitioner, thus, has an obligation to pay damages for injury arising from the
unskilled manner by which Funtecha drove the vehicle. (Cangco v. Manila Railroad Co.,
38 Phil. 768, 772 [1918]) In the absence of evidence that the petitioner had exercised the
diligence of a good father of a family in the supervision of its employees, the law
imposes upon it the vicarious liability for acts or omissions of its employees. (Umali v.
Bacani, 69 SCRA 263 [1976); Poblete v. Fabros, 93 SCRA 200 [1979]; Kapalaran Bus
Liner v. Coronado, 176 SCRA 792 [1989]; Franco v. Intermediate Appellate Court, 178
SCRA 331 [1989]; Pantranco North Express, Inc. v. Baesa, 179, SCRA 384 [1989]) The
liability of the employer is, under Article 2180, primary and solidary. However, the
employer shall have recourse against the negligent employee for whatever damages are
paid to the heirs of the plaintiff.

It is an admitted fact that the actual driver of the school jeep, Allan Masa, was not made a
party defendant in the civil case for damages. This is quite understandable considering
that as far as the injured pedestrian, plaintiff Potenciano Kapunan, was concerned, it was
Funtecha who was the one driving the vehicle and presumably was one authorized by the
school to drive. The plaintiff and his heirs should not now be left to suffer without
simultaneous recourse against the petitioner for the consequent injury caused by a janitor
doing a driving chore for the petitioner even for a short while. For the purpose of
recovering damages under the prevailing circumstances, it is enough that the plaintiff and
the private respondent heirs were able to establish the existence of employer-employee
relationship between Funtecha and petitioner Filamer and the fact that Funtecha was
engaged in an act not for an independent purpose of his own but in furtherance of the
business of his employer. A position of responsibility on the part of the petitioner has
thus been satisfactorily demonstrated.

WHEREFORE, the motion for reconsideration of the decision dated October 16, 1990 is
hereby GRANTED. The decision of the respondent appellate court affirming the trial
court decision is REINSTATED.

SO ORDERED.

THIRD DIVISION
[ G.R. No. 122917, July 12, 1999 ]
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID,
DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND
M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M.
YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M.
TABAQUERO, CORAZON C. DELOS REYES, ROBERT G. NOORA,
MILAGROS O. LEQUIGAN, ADRIANA F. TATLONGHARI, IKE
CABANDUCOS, COCOY NOBELLO, DORENDA CANTIMBUHAN,
ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. SALES,
ISABEL MAMAUAG, VIOLETA G. MONTES, ALBINO TECSON, MELODY
V. GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R.
CORTEZ, MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA
MATA, ARIEL DEL PILAR, MARGARET CECILIA CANOZA, THELMA
SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE RAMIL, ROZAIDA
PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO
& RICO TIMOSA, PETITIONERS VS. NATIONAL LABOR RELATIONS
 COMMISSION & FAR EAST BANK AND TRUST COMPANY,
RESPONDENTS.

DECISION

PANGANIBAN, J.:

The Magna Carta for Disabled Persons mandates that qualified disabled persons be
granted the same terms and conditions of employment as qualified able-bodied
employees. Once they have attained the status of regular workers, they should be
accorded all the benefits granted by law, notwithstanding written or verbal contracts to
the contrary. This treatment is rooted not merely on charity or accommodation, but on
justice for all.

The Case

Challenged in the Petition for Certiorari[1] before us is the June 20, 1995 Decision[2] of

the National Labor Relations Commission (NLRC),[3] which affirmed the August, 22
1994 ruling of Labor Arbiter Cornelio L. Linsangan. The labor arbiter's Decision
disposed as follows:[4]
"WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint
for lack of merit."
Also assailed is the August 4, 1995 Resolution[5] of the NLRC, which denied the Motion
for Reconsideration.

The Facts

The facts were summarized by the NLRC in this wise:[6]

"Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on
various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money
Sorters and Counters through a uniformly worded agreement called `Employment
Contract for Handicapped Workers'. (pp. 68 & 69, Records) The full text of said
agreement is quoted below:

`EMPLOYMENT CONTRACT FOR HANDICAPPED WORKERS

This Contract, entered into by and between:

FAR EAST BANK AND TRUST COMPANY, a universal banking corporation duly
organized and existing under and by virtue of the laws of the Philippines, with business
address at FEBTC Building, Muralla, Intramuros, Manila, represented herein by its
Assistant Vice President, MR. FLORENDO G. MARANAN, (hereinafter referred to as
the `BANK');
- and -

________________, ________________ years old, of legal age, _____________, and

residing at __________________ (hereinafter referred to as the (`EMPLOYEE').

WITNESSETH: That

WHEREAS, the BANK, cognizant of its social responsibility, realizes that there is a need
to provide disabled and handicapped persons gainful employment and opportunities to
realize their potentials, uplift their socio-economic well being and welfare and make them
productive, self-reliant and useful citizens to enable them to fully integrate in the
mainstream of society;

WHEREAS, there are certain positions in the BANK which may be filled-up by disabled
and handicapped persons, particularly deaf-mutes, and the BANK ha[s] been approached
by some civic-minded citizens and authorized government agencies [regarding] the
possibility of hiring handicapped workers for these positions;

WHEREAS, the EMPLOYEE is one of those handicapped workers who [were]

recommended for possible employment with the BANK;

NOW, THEREFORE, for and in consideration of the foregoing premises and in

compliance with Article 80 of the Labor Code of the Philippines as amended, the BANK
and the EMPLOYEE have entered into this Employment Contract as follows:

1. The BANK agrees to employ and train the EMPLOYEE, and the
EMPLOYEE agrees to diligently and faithfully work with the
BANK, as Money Sorter and Counter.

2. The EMPLOYEE shall perform among others, the following duties

and responsibilities:

i. Sort out bills according to color;

ii. Count each denomination per hundred, either manually or

with the aid of a counting machine;

iii. Wrap and label bills per hundred;

iv. Put the wrapped bills into bundles; and

v. Submit bundled bills to the bank teller for verification.

3. The EMPLOYEE shall undergo a training period of one (1) month,
after which the BANK shall determine whether or not he/she should
be allowed to finish the remaining term of this Contract.

4. The EMPLOYEE shall be entitled to an initial compensation of

P118.00 per day, subject to adjustment in the sole judgment of the
BANK, payable every 15th and end of the month.

5. The regular work schedule of the EMPLOYEE shall be five (5) days
per week, from Mondays thru Fridays, at eight (8) hours a day. The
EMPLOYEE may be required to perform overtime work as
circumstance may warrant, for which overtime work he/she [shall]
be paid an additional compensation of 125% of his daily rate if
performed during ordinary days and 130% if performed during
Saturday or [a] rest day.

6. The EMPLOYEE shall likewise be entitled to the following benefits:

i. Proportionate 13th month pay based on his basic daily wage.

ii. Five (5) days incentive leave.

iii. SSS premium payment.

7. The EMPLOYEE binds himself/herself to abide [by] and comply

with all the BANK Rules and Regulations and Policies, and to
conduct himself/herself in a manner expected of all employees of the
BANK.

8. The EMPLOYEE acknowledges the fact that he/she had been

employed under a special employment program of the BANK, for
which reason the standard hiring requirements of the BANK were
not applied in his/her case. Consequently, the EMPLOYEE
acknowledges and accepts the fact that the terms and conditions of
the employment generally observed by the BANK with respect to
the BANK's regular employee are not applicable to the
EMPLOYEE, and that therefore, the terms and conditions of the
EMPLOYEE's employment with the BANK shall be governed solely
and exclusively by this Contract and by the applicable rules and
regulations that the Department of Labor and Employment may issue
 in connection with the employment of disabled and handicapped
workers. More specifically, the EMPLOYEE hereby acknowledges
that the provisions of Book Six of the Labor Code of the Philippines
as amended, particularly on regulation of employment and
separation pay are not applicable to him/her.

9. The Employment Contract shall be for a period of six (6) months or

from ____ to ____ unless earlier terminated by the BANK for any
just or reasonable cause. Any continuation or extension of this
Contract shall be in writing and therefore this Contract will
automatically expire at the end of its terms unless renewed in writing
by the BANK.

IN WITNESS WHEREOF, the parties, have hereunto affixed their signature[s] this ____
day of _________________, ____________ at Intramuros, Manila, Philippines.'
"In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2);
in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one (21).
Their employment[s] were renewed every six months such that by the time this case
arose, there were fifty-six (56) deaf-mutes who were employed by respondent under the
said employment agreement. The last one was Thelma Malindoy who was employed in
1992 and whose contract expired on July 1993.

xxxxxxxxx

"Disclaiming that complainants were regular employees, respondent Far East Bank and
Trust Company maintained that complainants who are a special class of workers - the
hearing impaired employees were hired temporarily under [a] special employment
arrangement which was a result of overtures made by some civic and political
personalities to the respondent Bank; that complainant[s] were hired due to `pakiusap'
which must be considered in the light of the context of the respondent Bank's corporate
philosophy as well as its career and working environment which is to maintain and
strengthen a corps of professionals trained and qualified officers and regular employees
who are baccalaureate degree holders from excellent schools which is an unbending
policy in the hiring of regular employees; that in addition to this, training continues so
that the regular employee grows in the corporate ladder; that the idea of hiring
handicapped workers was acceptable to them only on a special arrangement basis; that it
adopted the special program to help tide over a group of handicapped workers such as
deaf-mutes like the complainants who could do manual work for the respondent Bank;
that the task of counting and sorting of bills which was being performed by tellers could
be assigned to deaf-mutes; that the counting and sorting of money are tellering works
which were always logically and naturally part and parcel of the tellers' normal functions;
that from the beginning there have been no separate items in the respondent Bank
plantilla for sorters or counters; that the tellers themselves already did the sorting and
counting chore as a regular feature and integral part of their duties (p. 97, Records); that
through the `pakiusap' of Arturo Borjal, the tellers were relieved of this task of counting
and sorting bills in favor of deaf-mutes without creating new positions as there is no
position either in the respondent or in any other bank in the Philippines which deals with
purely counting and sorting of bills in banking operations."
Petitioners specified when each of them was hired and dismissed, viz:[7] 
"NAME OF
WORKPLACE Date Hired Date Dismissed
PETITIONER
       
1. MARITES
Intramuros 12 NOV 90 17 NOV 93
BERNARDO
2. ELVIRA GO
Intramuros 24 JAN 90 11 JAN 94
DIAMANTE
3. REBECCA E.
Intramuros 16 APR 90 23 OCT 93
DAVID
4. DAVID P.
Bel-Air 15 OCT 88 21 NOV 94
PASCUAL
5. RAQUEL
Intramuros 2 JUL 92 4 JAN 94
ESTILLER
6. ALBERT
West 4 JAN 91 9 JAN 94
HALLARE
7. EDMUND M.
Bel-Air 15 JAN 91 3 DEC 93
CORTEZ
8. JOSELITO O.
Intramuros 5 NOV 90 17 NOV 93
AGDON
9. GEORGE P.
Intramuros 6 SEPT 89 19 JAN 94
LIGUTAN, JR.
10. CELSO M.
Intramuros 8 FEB 93 8 AUG 93
YAZAR
11. ALEX G.
Intramuros 15 FEB 93 15 AUG 93
CORPUZ
12. RONALD M.
Intramuros 22 FEB 93 22 AUG 93
DELFIN
13. ROWENA M.
Intramuros 22 FEB 93 22 AUG 93
TABAQUERO
14. CORAZON C.
Intramuros 8 FEB 93 8 AUG 93
DELOS REYES
15. ROBERT G.
Intramuros 15 FEB 93 15 AUG 93
NOORA
16. MILAGROS O.
Intramuros 1 FEB 93 1 AUG 93
LEQUIGAN
17. ADRIANA F.
Intramuros 22 JAN 93 22 JUL 93
TATLONGHARI
18. IKE
Intramuros 24 FEB 93 24 AUG 93
CABANDUCOS
19. COCOY Intramuros 22 FEB 93 22 AUG 93
NOBELLO
20. DORENDA
Intramuros 15 FEB 93 15 AUG 93
CATIMBUHAN
21. ROBERT West 31 JUL 93[8] 1 AUG 93
MARCELO
22. LILIBETH Q.
West 15 JUN 90 21 NOV 93
MARMOLEJO
23. JOSE E. SALES West 6 AUG 92 12 OCT 93
24. ISABEL
West 8 MAY 92 10 NOV 93
MAMAUAG
25. VIOLETA G.
Intramuros 2 FEB 90 15 JAN 94
MONTES
26. ALBINO
Intramuros 7 NOV 91 10 NOV 93
TECSON
27. MELODY V.
West 28 OCT 91 3 NOV 93
GRUELA
28. BERNADETH D.
West 19 DEC 90 27 DEC 93
AGERO
29. CYNTHIA DE
Bel-Air 26 JUN 90 3 DEC 93
VERA
30. LANI R. CORTEZ Bel-Air 15 OCT 88 10 DEC 93
31. MA. ISABEL B.
West 6 SEPT 90 6 FEB 94
CONCEPCION
32. DINDO
Intramuros 30 MAY 93 30 NOV 93
VALERIO
33. ZENAIDA MATA Intramuros 10 FEB 93 10 AUG 93
34. ARIEL DEL
Intramuros 24 FEB 93 24 AUG 93
PILAR
35. MARGARET
Intramuros 27 JUL 90 4 FEB 94
CECILIA CANOZA
36. THELMA
Intramuros 12 NOV 90 17 NOV 93
SEBASTIAN
37. MA. JEANETTE
West 6 JUN 92 7 DEC 93
CERVANTES
38. JEANNIE RAMIL Intramuros 23 APR 90 12 OCT 93
39. ROZAIDA
Bel-Air 20 APR 89 29 OCT 93
PASCUAL
40. PINKY
West 3 JUN 91 2 DEC 93
BALOLOA
41. ELIZABETH
West 12 MAR 90 FEB 94 [SIC]
VENTURA
42. GRACE S.
West 4 APR 90 13 MAR 94
PARDO
43. RICO TIMOSA Intramuros 28 APR 93 28 OCT 93"
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein
petitioners. Hence, this recourse to this Court.[9]
 The Ruling of the NLRC

In affirming the ruling of the labor arbiter that herein petitioners could not be deemed
regular employees under Article 280 of the Labor Code, as amended, Respondent
Commission ratiocinated as follows:
"We agree that Art. 280 is not controlling herein. We give due credence to the conclusion
that complainants were hired as an accommodation to [the] recommendation of civic
oriented personalities whose employment[s] were covered by xxx Employment
Contract[s] with special provisions on duration of contract as specified under Art. 80.
Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the
law between the parties."[10]
The NLRC also declared that the Magna Carta for Disabled Persons was not applicable,
"considering the prevailing circumstances/milieu of the case."

Issues

In their Memorandum, petitioners cite the following grounds in support of their cause:
"I. The Honorable Commission committed grave abuse of discretion in holding that the
petitioners - money sorters and counters working in a bank - were not regular employees.

"II. The Honorable Commission committed grave abuse of discretion in holding that the
employment contracts signed and renewed by the petitioners - which provide for a period
of six (6) months - were valid.

"III. The Honorable Commission committed grave abuse of discretion in not applying the
provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on proscription
against discrimination against disabled persons."[11]
In the main, the Court will resolve whether petitioners have become regular employees.

This Court's Ruling

The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal
from employment was illegal.

Preliminary Matter:
Propriety of Certiorari

Respondent Far East Bank and Trust Company argues that a review of the findings of
facts of the NLRC is not allowed in a petition for certiorari. Specifically, it maintains that
the Court cannot pass upon the findings of public respondents that petitioners were not
regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in
a certiorari proceeding. In resolving whether the petitioners have become regular
employees, we shall not change the facts found by the public respondent. Our task is
merely to determine whether the NLRC committed grave abuse of discretion in applying
the law to the established facts, as above-quoted from the assailed Decision.

Main Issue:
Are Petitioners Regular Employees?

Petitioners maintain that they should be considered regular employees, because their task
as money sorters and counters was necessary and desirable to the business of respondent
bank. They further allege that their contracts served merely to preclude the application of
Article 280 and to bar them from becoming regular employees.

Private respondent, on the other hand, submits that petitioners were hired only as "special
workers and should not in any way be considered as part of the regular complement of
the Bank."[12] Rather, they were "special" workers under Article 80 of the Labor Code.
Private respondent contends that it never solicited the services of petitioners, whose
employment was merely an "accommodation" in response to the requests of government
officials and civic-minded citizens. They were told from the start, "with the assistance of
government representatives," that they could not become regular employees because
there were no plantilla positions for "money sorters," whose task used to be performed by
tellers. Their contracts were renewed several times, not because of need "but merely for
humanitarian reasons." Respondent submits that "as of the present, the `special position'
that was created for the petitioners no longer exist[s] in private respondent [bank], after
the latter had decided not to renew anymore their special employment contracts."

At the outset, let it be known that this Court appreciates the nobility of private
respondent's effort to provide employment to physically impaired individuals and to
make them more productive members of society. However, we cannot allow it to elude
the legal consequences of that effort, simply because it now deems their employment
irrelevant. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled
Persons, indubitably show that the petitioners, except sixteen of them, should be deemed
regular employees. As such, they have acquired legal rights that this Court is duty-bound
to protect and uphold, not as a matter of compassion but as a consequence of law and
justice.

The uniform employment contracts of the petitioners stipulated that they shall be trained
for a period of one month, after which the employer shall determine whether or not they
should be allowed to finish the 6-month term of the contract. Furthermore, the employer
may terminate the contract at any time for a just and reasonable cause. Unless renewed in
writing by the employer, the contract shall automatically expire at the end of the term.
According to private respondent, the employment contracts were prepared in accordance
with Article 80 of the Labor Code, which provides:
"ART. 80. Employment agreement. - Any employer who employs handicapped workers
shall enter into an employment agreement with them, which agreement shall include:

(a) The names and addresses of the handicapped workers to be employed;

(b) The rate to be paid the handicapped workers which shall be not less than seventy five
(75%) per cent of the applicable legal minimum wage;

(c) The duration of employment period; and

(d) The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his
duly authorized representatives."
The stipulations in the employment contracts indubitably conform with the aforecited
provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for
Disabled Persons),[13] however, justify the application of Article 280 of the Labor Code.

Respondent bank entered into the aforesaid contract with a total of 56 handicapped
workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988
to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of
others lead to the conclusion that their tasks were beneficial and necessary to the bank.
More important, these facts show that they were qualified to perform the responsibilities
of their positions. In other words, their disability did not render them unqualified or unfit
for the tasks assigned to them.

In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled
employee should be given the same terms and conditions of employment as
a qualified able-bodied person. Section 5 of the Magna Carta provides:
"Section 5. Equal Opportunity for Employment.--No disabled person shall be denied
access to opportunities for suitable employment. A qualified disabled employee shall be
subject to the same terms and conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied
person."
The fact that the employees were qualified disabled persons necessarily removes the
employment contracts from the ambit of Article 80. Since the Magna Carta accords them
the rights of qualified able-bodied persons, they are thus covered by Article 280 of the
Labor Code, which provides:
"ART. 280. Regular and Casual Employment. -- The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered as regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists."
The test of whether an employee is regular was laid down in De Leon v. NLRC,[14] in
which this Court held:
"The primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the
usual trade or business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The connection can
be determined by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also if the employee has been
performing the job for at least one year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business.
Hence, the employment is considered regular, but only with respect to such activity, and
while such activity exists."
Without a doubt, the task of counting and sorting bills is necessary and desirable to the
business of respondent bank. With the exception of sixteen of them, petitioners
performed these tasks for more than six months. Thus, the following twenty-seven
petitioners should be deemed regular employees: Marites Bernardo, Elvira Go Diamante,
Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez,
Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel
Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero,
Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza,
Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky
Baloloa, Elizabeth Ventura and Grace S. Pardo.

As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the
pernicious practice of making permanent casuals of our lowly employees by the simple
expedient of extending to them probationary appointments, ad infinitum."[15] The contract
signed by petitioners is akin to a probationary employment, during which the bank
determined the employees' fitness for the job. When the bank renewed the contract after
the lapse of the six-month probationary period, the employees thereby became regular
employees.[16] No employer is allowed to determine indefinitely the fitness of its
employees.
As regular employees, the twenty-seven petitioners are entitled to security of tenure; that
is, their services may be terminated only for a just or authorized cause. Because
respondent failed to show such cause,[17] these twenty-seven petitioners are deemed
illegally dismissed and therefore entitled to back wages and reinstatement without loss of
seniority rights and other privileges.[18] Considering the allegation of respondent that the
job of money sorting is no longer available because it has been assigned back to the
tellers to whom it originally belonged,[19] petitioners are hereby awarded separation pay in
lieu of reinstatement.[20]

Because the other sixteen worked only for six months, they are not deemed regular
employees and hence not entitled to the same benefits.

Applicability of the
Brent Ruling

Respondent bank, citing Brent School v. Zamora[21] in which the Court upheld the
validity of an employment contract with a fixed term, argues that the parties entered into
the contract on equal footing. It adds that the petitioners had in fact an advantage,
because they were backed by then DSWD Secretary Mita Pardo de Tavera and
Representative Arturo Borjal.

We are not persuaded. The term limit in the contract was premised on the fact that the
petitioners were disabled, and that the bank had to determine their fitness for the position.
Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier,
petitioners proved themselves to be qualified disabled persons who, under the Magna
Carta for Disabled Persons, are entitled to terms and conditions of employment enjoyed
by qualified able-bodied individuals; hence, Article 80 does not apply because petitioners
are qualified for their positions. The validation of the limit imposed on their contracts,
imposed by reason of their disability, was a glaring instance of the very mischief sought
to be addressed by the new law.

Moreover, it must be emphasized that a contract of employment is impressed with public

interest.[22] Provisions of applicable statutes are deemed written into the contract, and the
"parties are not at liberty to insulate themselves and their relationships from the impact of
labor laws and regulations by simply contracting with each other."[23] Clearly, the
agreement of the parties regarding the period of employment cannot prevail over the
provisions of the Magna Carta for Disabled Persons, which mandate that petitioners must
be treated as qualified able-bodied employees.

Respondent's reason for terminating the employment of petitioners is instructive. Because

the Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the
BSP during business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime
sorting and counting of money. Thus, it reasons that this task "could not be done by deaf
mutes because of their physical limitations as it is very risky for them to travel at
night."[24] We find no basis for this argument. Travelling at night involves risks to
handicapped and able-bodied persons alike. This excuse cannot justify the termination of
their employment.

Other Grounds Cited by Respondent

Respondent argues that petitioners were merely "accommodated" employees. This fact
does not change the nature of their employment. As earlier noted, an employee is regular
because of the nature of work and the length of service, not because of the mode or even
the reason for hiring them.

Equally unavailing are private respondent's arguments that it did not go out of its way to
recruit petitioners, and that its plantilla did not contain their positions. In L. T. Datu v.
NLRC,[25] the Court held that "the determination of whether employment is casual or
regular does not depend on the will or word of the employer, and the procedure of hiring
x x x but on the nature of the activities performed by the employee, and to some extent,
the length of performance and its continued existence."

Private respondent argues that the petitioners were informed from the start that they could
not become regular employees. In fact, the bank adds, they agreed with the stipulation in
the contract regarding this point. Still, we are not persuaded. The well-settled rule is that
the character of employment is determined not by stipulations in the contract, but by the
nature of the work performed.[26] Otherwise, no employee can become regular by the
simple expedient of incorporating this condition in the contract of employment.

In this light, we iterate our ruling in Romares v. NLRC:[27]

"Article 280 was emplaced in our statute books to prevent the circumvention of the
employee's right to be secure in his tenure by indiscriminately and completely ruling out
all written and oral agreements inconsistent with the concept of regular employment
defined therein. Where an employee has been engaged to perform activities which are
usually necessary or desirable in the usual business of the employer, such employee is
deemed a regular employee and is entitled to security of tenure notwithstanding the
contrary provisions of his contract of employment.

"x x x x x x x x x

"At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As
reaffirmed in subsequent cases, this Court has upheld the legality of fixed-term
employment. It ruled that the decisive determinant in `term employment' should not be
the activities that the employee is called upon to perform but the day certain agreed upon
the parties for the commencement and termination of their employment relationship. But
this Court went on to say that where from the circumstances it is apparent that the periods
have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down or disregarded as contrary to public policy and morals."
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor
of the working class, but also the concern of the State for the plight of the disabled. The
noble objectives of Magna Carta for Disabled Persons are not based merely on charity or
accommodation, but on justice and the equal treatment of qualified persons, disabled or
not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to
their work. The eloquent proof of this statement is the repeated renewal of their
employment contracts. Why then should they be dismissed, simply because they are
physically impaired? The Court believes, that, after showing their fitness for the work
assigned to them, they should be treated and granted the same rights like any other
regular employees.

In this light, we note the Office of the Solicitor General's prayer joining the petitioners'
cause.[28]

WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20,

1995 Decision and the August 4, 1995 Resolution of the NLRC
are REVERSED and SET ASIDE. Respondent Far East Bank and Trust Company is
hereby ORDERED to pay back wages and separation pay to each of the following
twenty-seven (27) petitioners, namely, Marites Bernardo, Elvira Go Diamante, Rebecca
E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund M. Cortez, Joselito
O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag,
Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de
Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma
Sebastian, Ma. Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa,
Elizabeth Ventura and Grace S. Pardo. The NLRC is hereby directed to compute the
exact amount due each of said employees, pursuant to existing laws and regulations,
within fifteen days from the finality of this Decision. No costs.

SO ORDERED.

THIRD DIVISION
[ G.R. No. 168081, October 17, 2008 ]
ARMANDO G. YRASUEGUI, PETITIONER, VS. PHILIPPINE AIRLINES,
INC., RESPONDENT.

DECISION
REYES, R.T., J.:

THIS case portrays the peculiar story of an international flight steward who was
dismissed because of his failure to adhere to the weight standards of the airline company.

He is now before this Court via a petition for review on certiorari claiming that he was
illegally dismissed. To buttress his stance, he argues that (1) his dismissal does not fall
under 282(e) of the Labor Code; (2) continuing adherence to the weight standards of the
company is not a bona fide occupational qualification; and (3) he was discriminated
against
because other overweight employees were promoted instead of being disciplined.

After a meticulous consideration of all arguments pro and con, We uphold the legality of

dismissal. Separation pay, however, should be awarded in favor of the employee as an act
of social justice or based on equity. This is so because his dismissal is not for serious
misconduct. Neither is it reflective of his moral character.

The Facts

Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine

Airlines, Inc. (PAL). He stands five feet and eight inches (5'8") with a large body frame.
The proper weight for a man of his height and body structure is from 147 to 166
pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual[1] of PAL.

The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go
on an extended vacation leave from December 29, 1984 to March 4, 1985 to address his
weight concerns. Apparently, petitioner failed to meet the company's weight standards,
prompting another leave without pay from March 5, 1985 to November 1985.

After meeting the required weight, petitioner was allowed to return to work. But
petitioner's weight problem recurred. He again went on leave without pay from October
17, 1988 to February 1989.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In
line with company policy, he was removed from flight duty effective May 6, 1989 to July
3, 1989. He was formally requested to trim down to his ideal weight and report for weight
checks on several dates. He was also told that he may avail of the services of the
company physician should he wish to do so. He was advised that his case will be
evaluated on July 3, 1989.[2]

On February 25, 1989, petitioner underwent weight check. It was discovered that he
gained, instead of losing, weight. He was overweight at 215 pounds, which is 49 pounds
beyond the limit. Consequently, his off-duty status was retained.

On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner
at his residence to check on the progress of his effort to lose weight. Petitioner
weighed 217 pounds, gaining 2 pounds from his previous weight. After the visit,
petitioner made a commitment[3] to reduce weight in a letter addressed to Cabin Crew
Group Manager Augusto Barrios. The letter, in full, reads:
Dear Sir:

I would like to guaranty my commitment towards a weight loss from 217 pounds to 200

pounds from today until 31 Dec. 1989.

From thereon, I promise to continue reducing at a reasonable percentage until such time
that my ideal weight is achieved.

Likewise, I promise to personally report to your office at the designated time schedule
you will set for my weight check.

Respectfully Yours,

F/S Armando Yrasuegui[4]

Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner
remained overweight. On January 3, 1990, he was informed of the PAL decision for him
to remain grounded until such time that he satisfactorily complies with the weight
standards. Again, he was directed to report every two weeks for weight checks.

Petitioner failed to report for weight checks. Despite that, he was given one more month
to comply with the weight requirement. As usual, he was asked to report for weight check
on different dates. He was reminded that his grounding would continue pending
satisfactory compliance with the weight standards.[5]

Again, petitioner failed to report for weight checks, although he was seen submitting his
passport for processing at the PAL Staff Service Division.

On April 17, 1990, petitioner was formally warned that a repeated refusal to report for
weight check would be dealt with accordingly. He was given another set of weight check
dates.[6] Again, petitioner ignored the directive and did not report for weight checks. On
June 26, 1990, petitioner was required to explain his refusal to undergo weight checks. [7]

When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he
was still way over his ideal weight of 166 pounds.
From then on, nothing was heard from petitioner until he followed up his case requesting
for leniency on the latter part of 1992. He weighed at 219 pounds on August 20, 1992
and 205 pounds on November 5, 1992.

On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge
for violation of company standards on weight requirements. He was given ten (10) days
from receipt of the charge within which to file his answer and submit controverting
evidence.[8]

On December 7, 1992, petitioner submitted his Answer.[9] Notably, he did not deny being
overweight. What he claimed, instead, is that his violation, if any, had already been
condoned by PAL since "no action has been taken by the company" regarding his case
"since 1988." He also claimed that PAL discriminated against him because "the company
has not been fair in treating the cabin crew members who are similarly situated."

On December 8, 1992, a clarificatory hearing was held where petitioner manifested that
he was undergoing a weight reduction program to lose at least two (2) pounds per week
so as to attain his ideal weight.[10]

On June 15, 1993, petitioner was formally informed by PAL that due to his inability to
attain his ideal weight, "and considering the utmost leniency" extended to him "which
spanned a period covering a total of almost five (5) years," his services were considered
terminated "effective immediately."[11]

His motion for reconsideration having been denied,[12] petitioner filed a complaint for
illegal dismissal against PAL.

Labor Arbiter, NLRC and CA Dispositions

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled[13] that petitioner was
illegally dismissed. The dispositive part of the Arbiter ruling runs as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the
complainant's dismissal illegal, and ordering the respondent to reinstate him to his former
position or substantially equivalent one, and to pay him:

a. Backwages of Php10,500.00 per month from his dismissal on June 15, 1993
until reinstated, which for purposes of appeal is hereby set from June 15,
1993 up to August 15, 1998 at P651,000.00;

b. Attorney's fees of five percent (5%) of the total award.

SO ORDERED.[14]
The Labor Arbiter held that the weight standards of PAL are reasonable in view of the
nature of the job of petitioner.[15] However, the weight standards need not be complied
with under pain of dismissal since his weight did not hamper the performance of his
duties.[16] Assuming that it did, petitioner could be transferred to other positions where his
weight would not be a negative factor.[17] Notably, other overweight employees, i.e., Mr.
Palacios, Mr. Cui, and Mr. Barrios, were promoted instead of being disciplined. [18]

Both parties appealed to the National Labor Relations Commission (NLRC). [19]

On October 8, 1999, the Labor Arbiter issued a writ of execution directing the
reinstatement of petitioner without loss of seniority rights and other benefits.[20]

On February 1, 2000, the Labor Arbiter denied[21] the Motion to Quash Writ of

Execution[22] of PAL.

On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC. [23]

On June 23, 2000, the NLRC rendered judgment[24] in the following tenor:
WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November
1998 as modified by our findings herein, is hereby AFFIRMED and that part of the
dispositive portion of said decision concerning complainant's entitlement to backwages
shall be deemed to refer to complainant's entitlement to his full backwages, inclusive of
allowances and to his other benefits or their monetary equivalent instead of simply
backwages, from date of dismissal until his actual reinstatement or finality hereof.
Respondent is enjoined to manifests (sic) its choice of the form of the reinstatement of
complainant, whether physical or through payroll within ten (10) days from notice failing
which, the same shall be deemed as complainant's reinstatement through payroll and
execution in case of non-payment shall accordingly be issued by the Arbiter. Both
appeals of respondent thus, are DISMISSED for utter lack of merit.[25]
According to the NLRC, "obesity, or the tendency to gain weight uncontrollably
regardless of the amount of food intake, is a disease in itself."[26] As a consequence, there
can be no intentional defiance or serious misconduct by petitioner to the lawful order of
PAL for him to lose weight.[27]

Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable.
However, it found as unnecessary the Labor Arbiter holding that petitioner was not
remiss in the performance of his duties as flight steward despite being overweight.
According to the NLRC, the Labor Arbiter should have limited himself to the issue of
whether the failure of petitioner to attain his ideal weight constituted willful defiance of
the weight standards of PAL.[28]

PAL moved for reconsideration to no avail.[29] Thus, PAL elevated the matter to the Court
of Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure.[30]

By Decision dated August 31, 2004, the CA reversed[31] the NLRC:

WHEREFORE, premises considered, we hereby GRANT the petition. The assailed
NLRC decision is declared NULL and VOID and is hereby SET ASIDE. The private
respondent's complaint is hereby DISMISSED. No costs.

SO ORDERED.[32]
The CA opined that there was grave abuse of discretion on the part of the NLRC because
it "looked at wrong and irrelevant considerations"[33] in evaluating the evidence of the
parties. Contrary to the NLRC ruling, the weight standards of PAL are meant to be
a continuing qualification for an employee's position.[34] The failure to adhere to the
weight standards is an analogous cause for the dismissal of an employee under Article
282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the
NLRC seemed to suggest.[35] Said the CA, "the element of willfulness that the NLRC
decision cites is an irrelevant consideration in arriving at a conclusion on whether the
dismissal is legally proper."[36] In other words, "the relevant question to ask is not one of
willfulness but one of reasonableness of the standard and whether or not the employee
qualifies or continues to qualify under this standard."[37]

Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL
are reasonable.[38] Thus, petitioner was legally dismissed because he repeatedly failed to
meet the prescribed weight standards.[39] It is obvious that the issue of discrimination was
only invoked by petitioner for purposes of escaping the result of his dismissal for being
overweight.[40]

On May 10, 2005, the CA denied petitioner's motion for reconsideration.[41] Elaborating

on its earlier ruling, the CA held that the weight standards of PAL are a bona fide
occupational qualification which, in case of violation, "justifies an employee's separation
from the service."[42]

Issues

In this Rule 45 petition for review, the following issues are posed for resolution:
I.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING

THAT PETITIONER'S OBESITY CAN BE A GROUND FOR DISMISSAL UNDER
PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR CODE OF THE PHILIPPINES;

II.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING

THAT PETITIONER'S DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE
"BONA FIDE OCCUPATIONAL QUALIFICATION (BFOQ) DEFENSE";

III.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING

THAT PETITIONER WAS NOT UNDULY DISCRIMINATED AGAINST WHEN HE
WAS DISMISSED WHILE OTHER OVERWEIGHT CABIN ATTENDANTS WERE
EITHER GIVEN FLYING DUTIES OR PROMOTED;

IV.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT

BRUSHED ASIDE PETITIONER'S CLAIMS FOR REINSTATEMENT [AND]
WAGES ALLEGEDLY FOR BEING MOOT AND ACADEMIC.[43] (Underscoring
supplied)
Our Ruling

I. The obesity of petitioner is a ground for dismissal under Article 282(e) [44] of the
Labor Code.

A reading of the weight standards of PAL would lead to no other conclusion than that
they constitute a continuing qualification of an employee in order to keep the job. Tersely
put, an employee may be dismissed the moment he is unable to comply with his ideal
weight as prescribed by the weight standards. The dismissal of the employee would thus
fall under Article 282(e) of the Labor Code. As explained by the CA:
x x x [T]he standards violated in this case were not mere "orders" of the employer; they
were the "prescribed weights" that a cabin crew must maintain in order to qualify for
and keep his or her position in the company. In other words, they were standards that
establish continuing qualifications for an employee's position. In this sense, the failure
to maintain these standards does not fall under Article 282(a) whose express terms
require the element of willfulness in order to be a ground for dismissal. The failure to
meet the employer's qualifying standards is in fact a ground that does not squarely fall
under grounds (a) to (d) and is therefore one that falls under Article 282(e) - the "other
causes analogous to the foregoing."

By its nature, these "qualifying standards" are norms that apply prior to and after an
employee is hired. They apply prior to employment because these are the standards a job
applicant must initially meet in order to be hired. They apply after hiring because an
employee must continue to meet these standards while on the job in order to keep his job.
Under this perspective, a violation is not one of the faults for which an employee can be
dismissed pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed
simply because he no longer "qualifies" for his job irrespective of whether or not the
failure to qualify was willful or intentional. x x x[45]
Petitioner, though, advances a very interesting argument. He claims that obesity is a
"physical abnormality and/or illness."[46] Relying on Nadura v. Benguet Consolidated,
Inc.,[47] he says his dismissal is illegal:
Conscious of the fact that Nadura's case cannot be made to fall squarely within the
specific causes enumerated in subparagraphs 1(a) to (e), Benguet invokes the provisions
of subparagraph 1(f) and says that Nadura's illness - occasional attacks of asthma - is a
cause analogous to them.

Even a cursory reading of the legal provision under consideration is sufficient to

convince anyone that, as the trial court said, "illness cannot be included as an analogous
cause by any stretch of imagination."

It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others
expressly enumerated in the law are due to the voluntary and/or willful act of the
employee. How Nadura's illness could be considered as "analogous" to any of them is
beyond our understanding, there being no claim or pretense that the same was contracted
through his own voluntary act.[48]
The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially
different from the case at bar. First, Nadura was not decided under the Labor Code. The
law applied in that case was Republic Act (RA) No. 1787. Second, the issue of flight
safety is absent in Nadura, thus, the rationale there cannot apply here. Third, in Nadura,
the employee who was a miner, was laid off from work because of illness, i.e., asthma.
Here, petitioner was dismissed for his failure to meet the weight standards of PAL. He
was not dismissed due to illness. Fourth, the issue in Nadura is whether or not the
dismissed employee is entitled to separation pay and damages. Here, the issue centers on
the propriety of the dismissal of petitioner for his failure to meet the weight standards of
PAL. Fifth, in Nadura, the employee was not accorded due process. Here, petitioner was
accorded utmost leniency. He was given more than four (4) years to comply with the
weight standards of PAL.

In the case at bar, the evidence on record militates against petitioner's claims that obesity
is a disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that
it is possible for him to lose weight given the proper attitude, determination, and self-
discipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner
himself claimed that "[t]he issue is could I bring my weight down to ideal weight which
is 172, then the answer is yes. I can do it now."[49]

True, petitioner claims that reducing weight is costing him "a lot of
expenses."[50] However, petitioner has only himself to blame. He could have easily
availed the assistance of the company physician, per the advice of PAL. [51] He chose to
ignore the suggestion. In fact, he repeatedly failed to report when required to undergo
weight checks, without offering a valid explanation. Thus, his fluctuating weight
indicates absence of willpower rather than an illness.

Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health,

Retardation and Hospitals,[52] decided by the United States Court of Appeals (First
Circuit). In that case, Cook worked from 1978 to 1980 and from 1981 to 1986 as an
institutional attendant for the mentally retarded at the Ladd Center that was being
operated by respondent. She twice resigned voluntarily with an unblemished record. Even
respondent admitted that her performance met the Center's legitimate expectations. In
1988, Cook re-applied for a similar position. At that time, "she stood 5'2" tall and
weighed over 320 pounds." Respondent claimed that the morbid obesity of plaintiff
compromised her ability to evacuate patients in case of emergency and it also put her at
greater risk of serious diseases.

Cook contended that the action of respondent amounted to discrimination on the basis of
a handicap. This was in direct violation of Section 504(a) of the Rehabilitation Act of
1973,[53] which incorporates the remedies contained in Title VI of the Civil Rights Act of
1964. Respondent claimed, however, that morbid obesity could never constitute a
handicap within the purview of the Rehabilitation Act. Among others, obesity is a
mutable condition, thus plaintiff could simply lose weight and rid herself of concomitant
disability.

The appellate Court disagreed and held that morbid obesity is a disability under the
Rehabilitation Act and that respondent discriminated against Cook based on "perceived"
disability. The evidence included expert testimony that morbid obesity is a physiological
disorder. It involves a dysfunction of both the metabolic system and the neurological
appetite - suppressing signal system, which is capable of causing adverse effects within
the musculoskeletal, respiratory, and cardiovascular systems. Notably, the Court stated
that "mutability is relevant only in determining the substantiality of the limitation flowing
from a given impairment," thus "mutability only precludes those conditions that an
individual can easily and quickly reverse by behavioral alteration."

Unlike Cook, however, petitioner is not morbidly obese. In the words of the District
Court for the District of Rhode Island, Cook was sometime before 1978 "at least one
hundred pounds more than what is considered appropriate of her height." According to
the Circuit Judge, Cook weighed "over 320 pounds" in 1988. Clearly, that is not the case
here. At his heaviest, petitioner was only less than 50 pounds over his ideal weight.

In fine, We hold that the obesity of petitioner, when placed in the context of his work as
flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that
justifies his dismissal from the service. His obesity may not be unintended, but is
nonetheless voluntary. As the CA correctly puts it, "[v]oluntariness basically means that
the just cause is solely attributable to the employee without any external force influencing
or controlling his actions. This element runs through all just causes under Article 282,
whether they be in the nature of a wrongful action or omission. Gross and habitual
neglect, a recognized just cause, is considered voluntary although it lacks the element of
intent found in Article 282(a), (c), and (d)."[54]

II. The dismissal of petitioner can be predicated on the bona fide occupational
qualification defense.

Employment in particular jobs may not be limited to persons of a particular sex, religion,
or national origin unless the employer can show that sex, religion, or national origin is an
actual qualification for performing the job. The qualification is called a bona fide
occupational qualification (BFOQ).[55] In the United States, there are a few federal and
many state job discrimination laws that contain an exception allowing an employer to
engage in an otherwise unlawful form of prohibited discrimination when the action is
based on a BFOQ necessary to the normal operation of a business or enterprise. [56]

Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no
statute providing for it.[57] Further, there is no existing BFOQ statute that could justify his
dismissal.[58]

Both arguments must fail.

First, the Constitution,[59] the Labor Code,[60] and RA No. 7277[61] or the Magna Carta for
Disabled Persons[62] contain provisions similar to BFOQ.

Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The

British Columbia Government and Service Employee's Union (BCGSEU),[63] the Supreme
Court of Canada adopted the so-called "Meiorin Test" in determining whether an
employment policy is justified. Under this test, (1) the employer must show that it
adopted the standard for a purpose rationally connected to the performance of the job;
[64]
 (2) the employer must establish that the standard is reasonably necessary [65] to the
accomplishment of that work-related purpose; and (3) the employer must establish that
the standard is reasonably necessary in order to accomplish the legitimate work-related
purpose. Similarly, in Star Paper Corporation v. Simbol,[66] this Court held that in order
to justify a BFOQ, the employer must prove that (1) the employment qualification is
reasonably related to the essential operation of the job involved; and (2) that there is
factual basis for believing that all or substantially all persons meeting the qualification
would be unable to properly perform the duties of the job.[67]

In short, the test of reasonableness of the company policy is used because it is parallel to
BFOQ.[68] BFOQ is valid "provided it reflects an inherent quality reasonably necessary
for satisfactory job performance."[69]
In Duncan Association of Detailman-PTGWTO v. Glaxo Wellcome Philippines, Inc.,
[70]
 the Court did not hesitate to pass upon the validity of a company policy which
prohibits its employees from marrying employees of a rival company. It was held that the
company policy is reasonable considering that its purpose is the protection of the interests
of the company against possible competitor infiltration on its trade secrets and
procedures.

Verily, there is no merit to the argument that BFOQ cannot be applied if it has no
supporting statute. Too, the Labor Arbiter,[71] NLRC,[72] and CA[73] are one in holding that
the weight standards of PAL are reasonable. A common carrier, from the nature of its
business and for reasons of public policy, is bound to observe extraordinary diligence for
the safety of the passengers it transports.[74] It is bound to carry its passengers safely as far
as human care and foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances.[75]

The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it
is only logical to hold that the weight standards of PAL show its effort to comply with the
exacting obligations imposed upon it by law by virtue of being a common carrier.

The business of PAL is air transportation. As such, it has committed itself to safely
transport its passengers. In order to achieve this, it must necessarily rely on its
employees, most particularly the cabin flight deck crew who are on board the aircraft.
The weight standards of PAL should be viewed as imposing strict norms of discipline
upon its employees.

In other words, the primary objective of PAL in the imposition of the weight standards
for cabin crew is flight safety. It cannot be gainsaid that cabin attendants must maintain
agility at all times in order to inspire passenger confidence on their ability to care for the
passengers when something goes wrong. It is not farfetched to say that airline companies,
just like all common carriers, thrive due to public confidence on their safety records.
People, especially the riding public, expect no less than that airline companies transport
their passengers to their respective destinations safely and soundly. A lesser performance
is unacceptable.

The task of a cabin crew or flight attendant is not limited to serving meals or attending to
the whims and caprices of the passengers. The most important activity of the cabin crew
is to care for the safety of passengers and the evacuation of the aircraft when an
emergency occurs. Passenger safety goes to the core of the job of a cabin attendant.
Truly, airlines need cabin attendants who have the necessary strength to open emergency
doors, the agility to attend to passengers in cramped working conditions, and the stamina
to withstand grueling flight schedules.

On board an aircraft, the body weight and size of a cabin attendant are important factors
to consider in case of emergency. Aircrafts have constricted cabin space, and narrow
aisles and exit doors. Thus, the arguments of respondent that "[w]hether the airline's
flight attendants are overweight or not has no direct relation to its mission of transporting
passengers to their destination"; and that the weight standards "has nothing to do with
airworthiness of respondent's airlines," must fail.

The rationale in Western Air Lines v. Criswell[76] relied upon by petitioner cannot apply to
his case. What was involved there were two (2) airline pilots who were denied
reassignment as flight engineers upon reaching the age of 60, and a flight engineer who
was forced to retire at age 60. They sued the airline company, alleging that the age-60
retirement for flight engineers violated the Age Discrimination in Employment Act of
1967. Age-based BFOQ and being overweight are not the same. The case of overweight
cabin attendants is another matter. Given the cramped cabin space and narrow aisles and
emergency exit doors of the airplane, any overweight cabin attendant would certainly
have difficulty navigating the cramped cabin area.

In short, there is no need to individually evaluate their ability to perform their task. That
an obese cabin attendant occupies more space than a slim one is an unquestionable fact
which courts can judicially recognize without introduction of evidence.[77] It would also
be absurd to require airline companies to reconfigure the aircraft in order to widen the
aisles and exit doors just to accommodate overweight cabin attendants like petitioner.

The biggest problem with an overweight cabin attendant is the possibility of impeding
passengers from evacuating the aircraft, should the occasion call for it. The job of a cabin
attendant during emergencies is to speedily get the passengers out of the aircraft
safely. Being overweight necessarily impedes mobility. Indeed, in an emergency
situation, seconds are what cabin attendants are dealing with, not minutes. Three lost
seconds can translate into three lost lives. Evacuation might slow down just because a
wide-bodied cabin attendant is blocking the narrow aisles. These possibilities are not
remote.

Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were
made known to him prior to his employment. He is presumed to know the weight limit
that he must maintain at all times.[78] In fact, never did he question the authority of PAL
when he was repeatedly asked to trim down his weight. Bona fides exigit ut quod
convenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao
ay tapat kanyang tutuparin ang napagkasunduan.

Too, the weight standards of PAL provide for separate weight limitations based on height
and body frame for both male and female cabin attendants. A progressive discipline is
imposed to allow non-compliant cabin attendants sufficient opportunity to meet the
weight standards. Thus, the clear-cut rules obviate any possibility for the commission of
abuse or arbitrary action on the part of PAL.
 III. Petitioner failed to substantiate his claim that he was discriminated against by
PAL.

Petitioner next claims that PAL is using passenger safety as a convenient excuse to
discriminate against him.[79] We are constrained, however, to hold otherwise. We agree
with the CA that "[t]he element of discrimination came into play in this case as a
secondary position for the private respondent in order to escape the consequence of
dismissal that being overweight entailed. It is a confession-and-avoidance position that
impliedly admitted the cause of dismissal, including the reasonableness of the applicable
standard and the private respondent's failure to comply."[80] It is a basic rule in evidence
that each party must prove his affirmative allegation.[81]

Since the burden of evidence lies with the party who asserts an affirmative allegation,
petitioner has to prove his allegation with particularity. There is nothing on the records
which could support the finding of discriminatory treatment. Petitioner cannot establish
discrimination by simply naming the supposed cabin attendants who are allegedly
similarly situated with him. Substantial proof must be shown as to how and why they are
similarly situated and the differential treatment petitioner got from PAL despite the
similarity of his situation with other employees.

Indeed, except for pointing out the names of the supposed overweight cabin attendants,
petitioner miserably failed to indicate their respective ideal weights; weights over their
ideal weights; the periods they were allowed to fly despite their being overweight; the
particular flights assigned to them; the discriminating treatment they got from PAL; and
other relevant data that could have adequately established a case of discriminatory
treatment by PAL. In the words of the CA, "PAL really had no substantial case of
discrimination to meet."[82]

We are not unmindful that findings of facts of administrative agencies, like the Labor
Arbiter and the NLRC, are accorded respect, even finality.[83] The reason is simple:
administrative agencies are experts in matters within their specific and specialized
jurisdiction.[84] But the principle is not a hard and fast rule. It only applies if the findings
of facts are duly supported by substantial evidence. If it can be shown that administrative
bodies grossly misappreciated evidence of such nature so as to compel a conclusion to the
contrary, their findings of facts must necessarily be reversed. Factual findings of
administrative agencies do not have infallibility and must be set aside when they fail the
test of arbitrariness.[85]

Here, the Labor Arbiter and the NLRC inexplicably misappreciated evidence. We thus
annul their findings.

To make his claim more believable, petitioner invokes the equal protection clause
guaranty[86] of the Constitution. However, in the absence of governmental interference,
the liberties guaranteed by the Constitution cannot be invoked.[87] Put differently, the Bill
of Rights is not meant to be invoked against acts of private individuals. [88] Indeed, the
United States Supreme Court, in interpreting the Fourteenth Amendment,[89] which is the
source of our equal protection guarantee, is consistent in saying that the equal protection
erects no shield against private conduct, however discriminatory or wrongful. [90] Private
actions, no matter how egregious, cannot violate the equal protection guarantee. [91]

IV. The claims of petitioner for reinstatement and wages are moot.

As his last contention, petitioner avers that his claims for reinstatement and wages have
not been mooted. He is entitled to reinstatement and his full backwages, "from the time
he was illegally dismissed" up to the time that the NLRC was reversed by the CA. [92]

At this point, Article 223 of the Labor Code finds relevance:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.
The law is very clear. Although an award or order of reinstatement is self-executory and
does not require a writ of execution,[93] the option to exercise actual reinstatement or
payroll reinstatement belongs to the employer. It does not belong to the employee, to the
labor tribunals, or even to the courts.

Contrary to the allegation of petitioner that PAL "did everything under the sun" to
frustrate his "immediate return to his previous position,"[94] there is evidence that PAL
opted to physically reinstate him to a substantially equivalent position in accordance with
the order of the Labor
Arbiter.[95] In fact, petitioner duly received the return to work notice on February 23,
2001, as shown by his signature.[96]

Petitioner cannot take refuge in the pronouncements of the Court in a case[97] that "[t]he
unjustified refusal of the employer to reinstate the dismissed employee entitles him to
payment of his salaries effective from the time the employer failed to reinstate him
despite the issuance of a writ of execution"[98] and ""even if the order of reinstatement of
the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the employee during the period of appeal until reversal by
the higher court."[99] He failed to prove that he complied with the return to work order of
PAL. Neither does it appear on record that he actually rendered services for PAL from
the moment he was dismissed, in order to insist on the payment of his full backwages.

In insisting that he be reinstated to his actual position despite being overweight, petitioner

in effect wants to render the issues in the present case moot. He asks PAL to comply with
the impossible. Time and again, the Court ruled that the law does not exact compliance
with the impossible.[100]

V. Petitioner is entitled to separation pay.

Be that as it may, all is not lost for petitioner.

Normally, a legally dismissed employee is not entitled to separation pay. This may be
deduced from the language of Article 279 of the Labor Code that "[a]n employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement." Luckily
for petitioner, this is not an ironclad rule.

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

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

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

WHEREFORE, the appealed Decision of the Court of Appeals

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

SO ORDERED.

THIRD DIVISION
[ G.R. No. 194561, September 14, 2016 ]
DRUGSTORES ASSOCIATION OF THE PHILIPPINES, INC. AND
NORTHERN LUZON DRUG CORPORATION, PETITIONERS, VS.
NATIONAL COUNCIL ON DISABILITY AFFAIRS; DEPARTMENT OF
HEALTH; DEPARTMENT OF FINANCE; BUREAU OF INTERNAL
 REVENUE; DEPARTMENT OF THE INTERIOR AND LOCAL
GOVERNMENT; AND DEPARTMENT OF SOCIAL WELFARE AND
DEVELOPMENT, RESPONDENTS.

DECISION

PERALTA, J.:

Before us is a Petition for Review on Certiorari[1] with a Prayer for a Temporary

Restraining Order and/or Writ of Preliminary Injunction which seeks to annul and set
aside the Decision[2] dated July 26, 2010, and the Resolution[3] dated November 19, 2010
of the Court of Appeals (CA) in CA-G.R. SP No. 109903. The CA dismissed petitioners'
Petition for Prohibition[4] and upheld the constitutionality of the mandatory twenty
percent (20%) discount on the purchase of medicine by persons with disability (PWD).

The antecedents are as follows:

On March 24, 1992, Republic Act (R.A.) No. 7277, entitled "An Act Providing for the
Rehabilitation, Self-Development and Self-Reliance of Disabled Persons and their
Integration into the Mainstream of Society and for Other Purposes," otherwise known as
the "Magna Carta for Disabled Persons," was passed into law.[5] The law defines
"disabled persons", "impairment" and "disability" as follows:
SECTION 4. Definition of Terms. - For purposes of this Act, these terms are defined as
follows:

(a) Disabled Persons are those suffering from restriction of different abilities, as a result

of a mental, physical or sensory impairment, to perform an activity in the manner or
within the range considered normal for a human being;

(b) Impairment is any loss, diminution or aberration of psychological, physiological, or

anatomical structure of function;

(c) Disability shall mean (1) a physical or mental impairment that substantially limits one
or more psychological, physiological or anatomical function of an individual or activities
of such individual; (2) a record of such an impairment; or (3) being regarded as having
such an impairment.[6]
On April 30, 2007, Republic Act No. 9442[7] was enacted amending R.A. No. 7277. The
Title of R.A. No. 7277 was amended to read as "Magna Carta for Persons with
Disability" and all references on the law to "disabled persons" were amended to read as
"persons with disability" (PWD).[8] Specifically, R.A. No. 9442 granted the PWDs a
twenty (20) percent discount on the purchase of medicine, and a tax deduction scheme
was adopted wherein covered establishments may deduct the discount granted from gross
income based on the net cost of goods sold or services rendered:
CHAPTER 8. Other Privileges and Incentives. SEC. 32. Persons with disability shall be
entitled to the following:

xxxx
 
(d) At least twenty percent (20%) discount for the purchase of medicines in all drugstores for
the exclusive use or enjoyment of persons with disability;

xxxx

The abovementioned privileges are available only to persons with disability who are
Filipino citizens upon submission of any of the following as proof of his/her entitlement
thereto:

(i) An identification card issued by the city or municipal mayor or the barangay captain of the
place where the person with disability resides;
(ii) The passport of the person with disability concerned; or
(ii) Transportation discount fare Identification Card (ID) issued by the National Council for the
Welfare of Disabled Persons (NCWDP).

xxxx

The establishments may claim the discounts granted in subsections (a), (b), (c), (f) and
(g) as tax deductions based on the net cost of the goods sold or services
rendered: Provided, however, That the cost of the discount shall be allowed as deduction
from gross income for the same taxable year that the discount is granted: Provided,
further, That the total amount of the claimed tax deduction net of value-added tax if
applicable, shall be included in their gross sales receipts for tax purposes and shall be
subject to proper documentation and to the provisions of the National Internal Revenue
Code (NIRC), as amended.[9]
The Implementing Rules and Regulations (IRR) of R.A. No. 9442[10] was jointly
promulgated by the Department of Social Welfare and Development (DSWD),
Department of Education, Department of Finance (DOF), Department of Tourism,
Department of Transportation and Communication, Department of the Interior and Local
Government (DILG) and Department of Agriculture. Insofar as pertinent to this petition,
the salient portions of the IRR are hereunder quoted:[11]
RULE III. DEFINITION OF TERMS

Section 5. Definition of Terms. For purposes of these Rules and Regulations, these terms
are defined as follows:

5.1. Persons with Disability - are those individuals defined under Section 4 of RA 7277
"An Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons
with Disability as amended and their integration into the Mainstream of Society and for
Other Purposes". This is defined as a person suffering from restriction or different
abilities, as a result of a mental, physical or sensory impairment, to perform an activity in
a manner or within the range considered normal for human being. Disability shall mean
(1) a physical or mental impairment that substantially limits one or more psychological,
physiological or anatomical function of an individual or activities of such individual; (2)
a record of such an impairment; or (3) being regarded as having such an impairment.

xxxx

RULE IV. PRIVILEGES AND INCENTIVES FOR THE PERSONS WITH

DISABILITY

Section 6. Other Privileges and Incentives. Persons with disability shall be entitled to the
following:

xxxx

6.1.d. Purchase of Medicine - at least twenty percent (20%) discount on the purchase of

medicine for the exclusive use and enjoyment of persons with disability. All drugstores,
hospital, pharmacies, clinics and other similar establishments selling medicines are
required to provide at least twenty percent (20%) discount subject to the guidelines issued
by DOH and PHILHEALTH.[12]

xxxx

6.11 The abovementioned privileges are available only to persons with disability who are
Filipino citizens upon submission of any of the following as proof of his/her entitlement
thereto subject to the guidelines issued by the NCWDP in coordination with DSWD,
DOH and DILG.
6.11.1 An identification card issued by the city or municipal mayor or the barangay
captain of the place where the person with disability resides;

6.11.2 The passport of the persons with disability concerned; or

6.11.3 Transportation discount fare Identification Card (ID) issued by the National
Council for the Welfare of Disabled Persons (NCWDP). However, upon effectivity of
this Implementing Rules and Regulations, NCWDP will already adopt the Identification
Card issued by the Local Government Unit for purposes of uniformity in the
implementation. NCWDP will provide the design and specification of the identification
card that will be issued by the Local Government Units.[13]
6.14. Availmenl of Tax Deductions by Establishment Granting Twenty Percent. 20%
Discount - The establishments may claim the discounts granted in sub-sections (6.1),
(6.2), (6.4), (6.5) and (6.6) as tax deductions based on the net cost of the goods sold or
services rendered: Provided, however, that the cost of the discount shall be allowed as
deduction from gross income for the same taxable year that the discount is granted:
Provided, further, That the total amount of the claimed tax deduction net of value-added
tax if applicable, shall be included in their gross sales receipts for tax purposes and shall
be subject to proper documentation and to the provisions of the National Internal
Revenue Code, as amended.
On April 23, 2008, the National Council on Disability Affairs (NCDA)[14] issued
Administrative Order (A.O.) No. 1, Series of 2008,[15] prescribing guidelines which
should serve as a mechanism for the issuance of a PWD Identification Card (IDC) which
shall be the basis for providing privileges and discounts to bona fide PWDs in accordance
with R.A. 9442:
IV. INSTITUTIONAL ARRANGEMENTS

A. The Local Government Unit of the City or Municipal Office shall

implement these guidelines in the issuance of the PWD-IDC

xxxx

D. Issuance of the appropriate document to confirm the medical condition of the

applicant is as follows:
Disability Document Issuing Entity
Licensed Private or Government
Apparent Disability Medical Certificate
Physician
Licensed Teacher duly signed by
  School Assessment
the School Principal
Certificate of Disability Head of the Business
  Establishment or Head of Non-
Government Organization
Licensed Private or Government
Non-Apparent Disability Medical Certificate
Physician
E. PWD Registration Forms and ID Cards shall be issued and signed by the City or
Municipal Mayor, or Barangay Captain.

xxxx
V. IMPLEMENTING GUIDELINES AND PROCEDURES
Any bonafide person with permanent disability can apply for the issuance of the PWD-
IDC. His/her caregiver can assist in the application process. Procedures for the issuance
of the ID Cards are as follows:
A. Completion of the Requirements. Complete and/or make available the following
requirements:

1. Two "1x1" recent ID pictures with the names, and signatures or

thumbmarks at the back of the picture

2. One (1) Valid ID

3. Document to confirm the medical or disability condition (See

Section IV, D for the required document).

On December 9, 2008, the DOF issued Revenue Regulations No. 1-2009[16] prescribing

rules and regulations to implement R.A. 9442 relative to the tax privileges of PWDs and
tax incentives for establishments granting the discount. Section 4 of Revenue Regulations
No. 001-09 states that drugstores can only deduct the 20% discount from their gross
income subject to some conditions.[17]

On May 20, 2009, the DOH issued A.O. No. 2009-0011[18] specifically stating that the
grant of 20% discount shall be provided in the purchase of branded medicines and
unbranded generic medicines from all establishments dispensing medicines for the
exclusive use of the PWDs.[19] It also detailed the guidelines for the provision of medical
and related discounts and special privileges to PWDs pursuant to R.A. 9442. [20]

On July 28, 2009, petitioners filed a Petition for Prohibition with application for a
Temporary Restraining Order and/or a Writ of Preliminary Injunction[21] before the Court
of Appeals to annul and enjoin the implementation of the following laws:
1) Section 32 of R.A. No. 7277 as amended by R.A. No. 9442;

2) Section 6, Rule IV of the Implementing Rules and Regulations of R.A. No. 9442;

3) NCDA A.O. No. 1;

4) DOF Revenue Regulation No. 1-2009;

5) DOH A.O. No. 2009-0011.

On July 26, 2010, the CA rendered a Decision upholding the constitutionality of R.A.
7277 as amended, as well as the assailed administrative issuances. However, the CA
suspended the effectivity of NCDA A.O. No. 1 pending proof of respondent NCDA's
compliance with filing of said administrative order with the Office of the National
Administrative Register (ONAR) and its publication in a newspaper of general
circulation. The dispositive portion of the Decision states:
WHEREFORE, the petition is PARTLY GRANTED. The effectivity of NCDA
Administrative Order No. 1 is hereby SUSPENDED pending Respondent's compliance
with the proof of filing of NCDA Administrative Order No. 1 with the Office of the
National Administrative Register and its publication in a newspaper of general
circulation.
Respondent NCDA filed a motion for reconsideration before the CA to lift the suspension
of the implementation of NCDA A.O. No. 1 attaching thereto proof of its publication in
the Philippine Star and Daily Tribune on August 12, 2010, as well as a certification from
the ONAR showing that the same was filed with the said office on October 22, 2009.
[22]
 Likewise, petitioners filed a motion for reconsideration of the CA Decision.

In a Resolution dated November 19, 2010, the CA dismissed petitioners' motion for
reconsideration and lifted the suspension of the effectivity of NCDA A.O. No. 1
considering the filing of the same with ONAR and its publication in a newspaper of
general circulation.

Hence, the instant petition raising the following issues:

I. THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT
RULED THAT THE MANDATED PWD DISCOUNT IS A VALID EXERCISE OF
POLICE POWER. ON THE CONTRARY, IT IS AN INVALID EXERCISE OF THE
POWER OF EMINENT DOMAIN BECAUSE IT FAILS TO PROVIDE JUST
COMPENSATION TO PETITIONERS AND OTHER SIMILARLY SITUATED
DRUGSTORES;

II. THE CA SERIOUSLY ERRED WHEN IT RULED THAT SECTION 32 OF RA

7277 AS AMENDED BY RA 9442, NCDA AO 1 AND THE OTHER
IMPLEMENTING REGULATIONS DID NOT VIOLATE THE DUE PROCESS
CLAUSE;

III. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE DEFINITIONS OF

DISABILITIES UNDER SECTION 4(A), SECTION 4(B) AND SECTION 4(C) OF RA
7277 AS AMENDED BY RA 9442, RULE 1 OF THE IMPLEMENTING RULES AND
REGULATIONS[23] OF RA 7277, SECTION 5.1 OF THE IMPLEMENTING RULES
AND REGULATIONS OF RA 9442, NCDA AO 1 AND DOH AO 2009-11 ARE NOT
VAGUE, AMBIGUOUS AND UNCONSTITUTIONAL;

IV. THE CA SERIOUSLY ERRED WHEN IT RULED THAT THE MANDATED

PWD DISCOUNT DOES NOT VIOLATE THE EQUAL PROTECTION CLAUSE.
We deny the petition.

The CA is correct when it applied by analogy the case of Carlos Superdrug Corporation
et al. v. DSWD, et al.[24] wherein We pronouced that Section 4 of R.A. No. 9257 which
grants 20% discount on the purchase of medicine of senior citizens is a legitimate
exercise of police power:
The law is a legitimate exercise of police power which, similar to the power of eminent
domain, has general welfare for its object. Police power is not capable of an exact
definition, but has been purposely veiled in general terms to underscore its
comprehensiveness to meet all exigencies and provide enough room for an efficient and
flexible response to conditions and circumstances, thus assuring the greatest benefits.
[25]
 Accordingly, it has been described as the most essential, insistent and the least
limitable of powers, extending as it does to all the great public needs.[26] It is [t]he power
vested in the legislature by the constitution to make, ordain, and establish all manner of
wholesome and reasonable laws, statutes, and ordinances, either with penalties or
without, not repugnant to the constitution, as they shall judge to be for the good and
welfare of the commonwealth, and of the subjects of the same.[27]

For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because property rights, though sheltered
by due process, must yield to general welfare.[28]

Police power as an attribute to promote the common good would be diluted considerably
if on the mere plea of petitioners that they will suffer loss of earnings and capital, the
questioned provision is invalidated. Moreover, in the absence of evidence demonstrating
the alleged confiscatory effect of the provision in question, there is no basis for its
nullification in view of the presumption of validity which every law has in its favor.[29]
Police power is the power of the state to promote public welfare by restraining and
regulating the use of liberty and property. On the other hand, the power of eminent
domain is the inherent right of the state (and of those entities to which the power has been
lawfully delegated) to condemn private property to public use upon payment of just
compensation. In the exercise of police power, property rights of private individuals are
subjected to restraints and burdens in order to secure the general comfort, health, and
prosperity of the state.[30] A legislative act based on the police power requires the
concurrence of a lawful subject and a lawful method. In more familiar words, (a) the
interests of the public generally, as distinguished from those of a particular class, should
justify the interference of the state; and (b) the means employed are reasonably necessary
for the accomplishment of the purpose and not unduly oppressive upon individuals.[31]

R.A. No. 7277 was enacted primarily to provide full support to the improvement of the
total well-being of PWDs and their integration into the mainstream of society. The
priority given to PWDs finds its basis in the Constitution:
ARTICLE XII

NATIONAL ECONOMY AND PATRIMONY

xxxx

Section 6. The use of property bears a social function, and all economic agents shall
contribute to the common good. Individuals and private groups, including corporations,
cooperatives, and similar collective organizations, shall have the right to own, establish,
and operate economic enterprises, subject to the duty of the State to promote distributive
justice and to intervene when the common good so demands.[32]

ARTICLE XIII

SOCIAL JUSTICE AND HUMAN RIGHTS

xxxx

Section 11. The State shall adopt an integrated and comprehensive approach to health
development which shall endeavor to make essential goods, health and other social
services available to all the people at affordable cost. There shall be priority for the
needs of the underprivileged, sick, elderly, disabled, women, and children. The State shall
endeavor to provide free medical care to paupers.[33]
Thus, R.A. No. 7277 provides:
SECTION 2. Declaration of Policy. The grant of the rights and privileges for disabled
persons shall be guided by the following principles:

(a). Disabled persons are part of the Philippine society, thus the Senate shall give full
support to the improvement of the total well-being of disabled persons and their
integration into the mainstream of society.

Toward this end, the State shall adopt policies ensuring the rehabilitation, self-
development and self-reliance of disabled persons.

It shall develop their skills and potentials to enable them to compete favorably for
available opportunities.

(b). Disabled persons have the same rights as other people to take their proper place in
society. They should be able to live freely and as independently as possible. This must be
the concern of everyone - the family, community and all government and non-
government organizations.

Disabled person's rights must never be perceived as welfare services by the Government.
xxxx

(d). The State also recognizes the role of the private sector in promoting the welfare of
disabled persons and shall encourage partnership in programs that address their needs and
concerns.[34]
To implement the above policies, R.A. No. 9442 which amended R.A. No. 7277 grants
incentives and benefits including a twenty percent (20%) discount to PWDs in the
purchase of medicines; fares for domestic air, sea and land travels including public
railways and skyways; recreation and amusement centers including theaters, food chains
and restaurants.[35] This is specifically stated in Section 4 of the IRR of R.A. No. 9442:
Section 4. Policies and Objectives - It is the objective of Republic Act No. 9442 to
provide persons with disability, the opportunity to participate fully into the
mainstream of society by granting them at least twenty percent (20%) discount in
all basic services. It is a declared policy of RA 7277 that persons with disability are part
of Philippine society, and thus the State shall give full support to the improvement of
their total wellbeing and their integration into the mainstream of society. They have
the same rights as other people to take their proper place in society. They should be able
to live freely and as independently as possible. This must be the concern of everyone the
family, community and all government and non-government organizations. Rights of
persons with disability must never be perceived as welfare services. Prohibitions on
verbal, non-verbal ridicule and vilification against persons with disability shall always be
observed at all times.[36]
Hence, the PWD mandatory discount on the purchase of medicine is supported by a valid
objective or purpose as aforementioned. It has a valid subject considering that the concept
of public use is no longer confined to the traditional notion of use by the public, but held
synonymous with public interest, public benefit, public welfare, and public convenience.
As in the case of senior citizens,[37] the discount privilege to which the PWDs are entitled
is actually a benefit enjoyed by the general public to which these citizens belong. The
means employed in invoking the active participation of the private sector, in order to
achieve the purpose or objective of the law, is reasonably and directly related. [38] Also, the
means employed to provide a fair, just and quality health care to PWDs are reasonably
related to its accomplishment, and are not oppressive, considering that as a form of
reimbursement, the discount extended to PWDs in the purchase of medicine can be
claimed by the establishments as allowable tax deductions pursuant to Section 32 of R.A.
No. 9442 as implemented in Section 4 of DOF Revenue Regulations No. 1-2009.
Otherwise stated, the discount reduces taxable income upon which the tax liability of the
establishments is computed.

Further, petitioners aver that Section 32 of R.A. No. 7277 as amended by R.A. No. 9442
is unconstitutional and void for violating the due process clause of the Constitution since
entitlement to the 20% discount is allegedly merely based on any of the three documents
mentioned in the provision, namely: (i) an identification card issued by the city or
municipal mayor or the barangay captain of the place where the PWD resides; (ii) the
passport of the PWD; or (iii) transportation discount fare identification card issued by
NCDA. Petitioners, thus, maintain that none of the said documents has any relation to a
medical finding of disability, and the grant of the discount is allegedly without any
process for the determination of a PWD in accordance with law.

Section 32 of R.A. No. 7277, as amended by R.A. No. 9442, must be read with its IRR
which stated that upon its effectivity, NCWDP (which is the government agency tasked
to ensure the implementation of RA 7277), would adopt the IDC issued by the local
government units for purposes of uniformity in the implementation.[39] Thus, NCDA A.O.
No. 1 provides the reasonable guidelines in the issuance of IDCs to PWDs as proof of
their entitlement to the privileges and incentives under the law[40] and fills the details in
the implementation of the law.

As stated in NCDA A.O. No. 1, before an IDC is issued by the city or municipal mayor
or the barangay captain,[41] or the Chairman of the NCDA,[42] the applicant must first
secure a medical certificate issued by a licensed private or government physician that will
confirm his medical or disability condition. If an applicant is an employee with apparent
disability, a "certificate of disability" issued by the head of the business establishment or
the head of the non-governmental organization is needed for him to be issued a PWD-
IDC. For a student with apparent disability, the "school assessment" issued by the teacher
and signed by the school principal should be presented to avail of a PWD-ID.

Petitioners' insistence that Part IV (D) of NCDA Administrative Order No. 1 is void
because it allows allegedly non-competent persons like teachers, head of establishments
and heads of Non-Governmental Organizations (NGOs) to confirm the medical condition
of the applicant is misplaced. It must be stressed that only for apparent disabilities can the
teacher or head of a business establishment validly issue the mentioned required
document because, obviously, the disability is easily seen or clearly visible. It is,
therefore, not an unqualified grant of authority for the said non-medical persons as it is
simply limited to apparent disabilities. For a non-apparent disability or a disability
condition that is not easily seen or clearly visible, the disability can only be validated by a
licensed private or government physician, and a medical certificate has to be presented in
the procurement of an IDC. Relative to this issue, the CA validly ruled, thus:
We agree with the Office of the Solicitor General's (OSG) ratiocination that teachers,
heads of business establishments and heads of NGOs can validly confirm the medical
condition of their students/employees with apparent disability for obvious reasons as
compared to non-apparent disability which can only be determined by licensed
physicians. Under the Labor Code, disabled persons are eligible as apprentices or
learners provided that their handicap are not as much as to effectively impede the
performance of their job. We find that heads of business establishments can validly issue
certificates of disability of their employees because aside from the fact that they can
obviously validate the disability, they also have medical records of the employees as
a pre-requisite in the hiring of employees. Hence, Part IV (D) of NCDA AO No. 1 is
logical and valid.[43]
Furthermore, DOH A.O. No. 2009-11 prescribes additional guidelines for the 20%
discount in the purchase of all medicines for the exclusive use of PWD. [44] To avail of the
discount, the PWD must not only present his I.D. but also the doctor's prescription
stating, among others, the generic name of the medicine, the physician's address, contact
number and professional license number, professional tax receipt number and narcotic
license number, if applicable. A purchase booklet issued by the local social/health office
is also required in the purchase of over-the-counter medicines. Likewise, any single
dispensing of medicine must be in accordance with the prescription issued by the
physician and should not exceed a one (1) month supply. Therefore, as correctly argued
by the respondents, Section 32 of R.A. No. 7277 as amended by R.A. No. 9442 complies
with the standards of substantive due process.

We are likewise not persuaded by the argument of petitioners that the definition of
"disabilities" under the subject laws is vague and ambiguous because it is allegedly so
general and broad that the person tasked with implementing the law will undoubtedly
arrive at different interpretations and applications of the law. Aside from the definitions
of a "person with disability" or "disabled persons" under Section 4 of R.A. No. 7277 as
amended by R.A. No. 9442 and in the IRR of RA 9442, NCDA A.O. No. 1 also provides:

4. Identification Cards shall be issued to any bonafide PWD with permanent

disabilities due to any one or more of the following conditions:
psychosocial, chronic illness, learning, mental, visual, orthopedic, speech
and hearing conditions. This includes persons suffering from disabling
diseases resulting to the person's limitations to do day to day activities as
normally as possible such as but not limited to those undergoing dialysis,
heart disorders, severe cancer cases and such other similar cases resulting to
temporary or permanent disability.[45]

Similarly, DOH A.O. No. 2009-0011 defines the different categories of disability as
follows:
Rule IV, Section 4, Paragraph B of the Implementing Rules and Regulations (IRR) of this
Act required the Department of Health to address the health concerns of seven (7)
different categories of disability, which include the following: (1) Psychological and
behavioral disabilities (2) Chronic illness with disabilities (3)Learning(cognitive or
intellectual) disabilities (4) Mental disabilities (5) Visual/seeing disabilities (6)
Orthopedic/moving, and (7) communication deficits.[46]
Elementary is the rule that when laws or rules are clear, when the law is unambiguous
and unequivocal, application not interpretation thereof is imperative. However, where the
language of a statute is vague and ambiguous, an interpretation thereof is resorted to. A
law is deemed ambiguous when it is capable of being understood by reasonably well-
informed persons in either of two or more senses. The fact that a law admits of different
interpretations is the best evidence that it is vague and ambiguous. [47]

In the instant case, We do not find the aforestated definition of terms as vague and
ambiguous. Settled is the rule that courts will not interfere in matters which are addressed
to the sound discretion of the government agency entrusted with the regulation of
activities coming under the special and technical training and knowledge of such agency.
[48]
 As a matter of policy, We accord great respect to the decisions and/or actions of
administrative authorities not only because of the doctrine of separation of powers but
also for their presumed knowledge, ability, and expertise in the enforcement of laws and
regulations entrusted to their jurisdiction. The rationale for this rule relates not only to the
emergence of the multifarious needs of a modern or modernizing society and the
establishment of diverse administrative agencies for addressing and satisfying those
needs; it also relates to the accumulation of experience and growth of specialized
capabilities by the administrative agency charged with implementing a particular statute.
[49]

Lastly, petitioners contend that R.A. No. 7227, as amended by R.A. No. 9442, violates
the equal protection clause of the Constitution because it fairly singles out drugstores to
bear the burden of the discount, and that it can hardly be said to "rationally" meet a
legitimate government objective which is the purpose of the law. The law allegedly
targets only retailers such as petitioners, and that the other enterprises in the drug industry
are not imposed with similar burden. This same argument had been raised in the case
of Carlos Superdrug Corp., et al. v. DSWD, et al.,[50] and We reaffirm and apply the
ruling therein in the case at bar:
The Court is not oblivious of the retail side of the pharmaceutical industry and the
competitive pricing component of the business. While the Constitution protects property
rights, petitioners must accept the realities of business and the State, in the exercise of
police power, can intervene in the operations of a business which may result in an
impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the
Constitution provides the precept for the protection of property, various laws and
jurisprudence, particularly on agrarian reform and the regulation of contracts and public
utilities, continuously serve as a reminder that the right to property can be relinquished
upon the command of the State for the promotion of public good.[51]
Under the equal protection clause, all persons or things similarly situated must be treated
alike, both in the privileges conferred and the obligations imposed. Conversely, all
persons or things differently situated should be treated differently.[52] In the case
of ABAKADA Guro Party List, et al. v. Hon. Purisima, et al.,[53] We held:
Equality guaranteed under the equal protection clause is equality under the same
conditions and among persons similarly situated; it is equality among equals, not
similarity of treatment of persons who are classified based on substantial differences in
relation to the object to be accomplished. When things or persons are different in fact or
circumstance, they may be treated in law differently. In Victoriano v. Elizalde Rope
Workers' Union, this Court declared:
The guaranty of equal protection of the laws is not a guaranty of equality in the
application of the laws upon all citizens of the State. It is not, therefore, a requirement, in
order to avoid the constitutional prohibition against inequality, that every man, woman
and child should be affected alike by a statute. Equality of operation of statutes does not
mean indiscriminate operation on persons merely as such, but on persons according to the
circumstances surrounding them. It guarantees equality, not identity of rights. The
Constitution does not require that things which are different in fact be treated in
law as though they were the same. The equal protection clause does not forbid
discrimination as to things that are different. It does not prohibit legislation which is
limited either in the object to which it is directed or by the territory within which it is
to operate.

The equal protection of the laws clause of the Constitution allows classification.
Classification in law, as in the other departments of knowledge or practice, is the
grouping of things in speculation or practice because they agree with one another in
certain particulars. A law is not invalid because of simple inequality. The very idea of
classification is that of inequality, so that it goes without saying that the mere fact of
inequality in no manner determines the matter of constitutionality. All that is required of
a valid classification is that it be reasonable, which means that the classification
should be based on substantial distinctions which make for real differences, that it
must be germane to the purpose of the law; that it must not be limited to existing
conditions only; and that it must apply equally to each member of the class. This
Court has held that the standard is satisfied if the classification or distinction is
based on a reasonable foundation or rational basis and is not palpably arbitrary.

In the exercise of its power to make classifications for the purpose of enacting laws over
matters within its jurisdiction, the state is recognized as enjoying a wide range of
discretion. It is not necessary that the classification be based on scientific or marked
differences of things or in their relation. Neither is it necessary that the classification be
made with mathematical nicety. Hence, legislative classification may in many cases
properly rest on narrow distinctions, for the equal protection guaranty does not preclude
the legislature from recognizing degrees of evil or harm, and legislation is addressed to
evils as they may appear.
The equal protection clause recognizes a valid classification, that is, a classification that
has a reasonable foundation or rational basis and not arbitrary.[54] With respect to R.A.
No. 9442, its expressed public policy is the rehabilitation, self-development and self-
reliance of PWDs. Persons with disability form a class separate and distinct from the
other citizens of the country. Indubitably, such substantial distinction is germane and
intimately related to the purpose of the law. Hence, the classification and treatment
accorded to the PWDs fully satisfy the demands of equal protection. Thus, Congress may
pass a law providing for a different treatment to persons with disability apart from the
other citizens of the country.

Subject to the determination of the courts as to what is a proper exercise of police power
using the due process clause and the equal protection clause as yardsticks, the State may
interfere wherever the public interests demand it, and in this particular, a large discretion
is necessarily vested in the legislature to determine, not only what interests of the public
require, but what measures are necessary for the protection of such interests. [55] Thus, We
are mindful of the fundamental criteria in cases of this nature that all reasonable doubts
should be resolved in favor of the constitutionality of a statute.[56] The burden of proof is
on him who claims that a statute is unconstitutional. Petitioners failed to discharge such
burden of proof.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated
July 26, 2010, and the Resolution dated November 19, 2010, in CA-G.R. SP No. 109903
are AFFIRMED.

SO ORDERED.

EN BANC
[ G.R. No. 199669, April 25, 2017 ]
SOUTHERN LUZON DRUG CORPORATION, PETITIONER, V. THE
DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT, THE
NATIONAL COUNCIL FOR THE WELFARE OF DISABLED PERSONS,
THE DEPARTMENT OF FINANCE, AND THE BUREAU OF INTERNAL
REVENUE, RESPONDENTS.

DECISION

REYES, J.:

Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of
Court, assailing the Decision[2] dated June 17, 2011, and Resolution[3] dated November 25,
2011 of the Court of Appeals (CA) in CA-G.R. SP No. 102486, which dismissed the
petition for prohibition filed by Southern Luzon Drug Corporation (petitioner) against the
Department of Social Welfare and Development (DSWD), the National Council for the
Welfare of Disabled Persons (NCWDP) (now National Council on Disability Affairs or
NCDA), the Department of Finance (DOF) and the Bureau of Internal Revenue
(collectively, the respondents), which sought to prohibit the implementation of Section
4(a) of Republic Act (R.A.) No. 9257, otherwise known as the "Expanded Senior
Citizens Act of 2003" and Section 32 of R.A. No. 9442, which amends the "Magna Carta
for Disabled Persons," particularly the granting of 20% discount on the purchase of
medicines by senior citizens and persons with disability (PWD), respectively, and
treating them as tax deduction.

The petitioner is a domestic corporation engaged in the business of drugstore operation in

the Philippines while the respondents are government agencies, office and bureau tasked
to monitor compliance with R.A. Nos. 9257 and 9442, promulgate implementing rules
and regulations for their effective implementation, as well as prosecute and revoke
licenses of erring establishments.

Factual Antecedents

On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the Contribution of
Senior Citizens to Nation-Building, Grant Benefits and Special Privileges and For Other
Purposes," was enacted. Under the said law, a senior citizen, who must be at least 60
years old and has an annual income of not more than P60,000.00, [4] may avail of the
privileges provided in Section 4 thereof, one of which is 20% discount on the purchase of
medicines. The said provision states:

Sec. 4. Privileges for the Senior Citizen. – x x x:

a) the grant of twenty percent (20%) discount from all establishments relative to
utilization of transportation services, hotels and similar lodging establishment, restaurants
and recreation centers and purchase of medicine anywhere in the country: Provided,
That private establishments may claim the cost as tax credit[.]

x x x x (Emphasis ours)

To recoup the amount given as discount to qualified senior citizens, covered

establishments can claim an equal amount as tax credit which can be applied against the
income tax due from them.

On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A. No. 9257,
amending some provisions of R.A. No. 7432. The new law retained the 20% discount on
the purchase of medicines but removed the annual income ceiling thereby qualifying all
senior citizens to the privileges under the law. Further, R.A. No. 9257 modified the tax
treatment of the discount granted to senior citizens, from tax credit to tax deduction from
gross income, computed based on the net cost of goods sold or services rendered. The
pertinent provision, as amended by R.A. No. 9257, reads as follows:

SEC. 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the
following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the
utilization of services in hotels and similar lodging establishments, restaurants and
recreation centers, and purchase of medicines in all establishments for the exclusive use
or enjoyment of senior citizens, including funeral and burial services for the death of
senior citizens;

xxxx
The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax
deduction based on the net cost of the goods sold or services rendered: Provided,
That the cost of the discount shall be allowed as deduction from gross income for the
same taxable year that the discount is granted. Provided, further, That the total amount of
the claimed tax deduction net of value added tax if applicable, shall be included in their
gross sales receipts for tax purposes and shall be subject to proper documentation and to
the provisions of the National Internal Revenue Code, as amended. (Emphasis ours)

On May 28, 2004, the DSWD issued the Implementing Rules and Regulations (IRR) of
R.A. No. 9257. Article 8 of Rule VI of the said IRR provides:

Article 8. Tax Deduction of Establishments. - The establishment may claim the discounts
granted under Rule V, Section 4 – Discounts for Establishments; Section 9, Medical and
Dental Services in Private Facilities and Sections 10 and 11 – Air, Sea and Land
Transportation as tax deduction based on the net cost of the goods sold or services
rendered. Provided, That the cost of the discount shall be allowed as deduction from
gross income for the same taxable year that the discount is granted; Provided,
further, That the total amount of the claimed tax deduction net of value-added tax if
applicable, shall be included in their gross sales receipts for tax purposes and shall be
subject to proper documentation and to the provisions of the National Internal Revenue
Code, as amended; Provided, finally, that the implementation of the tax deduction shall
be subject to the Revenue Regulations to be issued by the Bureau of Internal Revenue
(BIR) and approved by the Department of Finance (DOF). (Emphasis ours)

The change in the tax treatment of the discount given to senior citizens did not sit well
with some drug store owners and corporations, claiming it affected the profitability of
their business. Thus, on January 13, 2005, Carlos Superdrug Corporation (Carlos
Superdrug), together with other corporation and proprietors operating drugstores in the
Philippines, filed a Petition for Prohibition with Prayer for Temporary Restraining Order
(TRO) and/or Preliminary Injunction before this Court, entitled Carlos Superdrug
Corporation v. DSWD,[5] docketed as G.R. No. 166494, assailing the constitutionality of
Section 4(a) of R.A. No. 9257 primarily on the ground that it amounts to taking of private
property without payment of just compensation. In a Decision dated June 29, 2007, the
Court upheld the constitutionality of the assailed provision, holding that the same is a
legitimate exercise of police power. The relevant portions of the decision read, thus:

The law is a legitimate exercise of police power which, similar to the power of eminent
domain, has general welfare for its object. Police power is not capable of an exact
definition, but has been purposely veiled in general terms to underscore its
comprehensiveness to meet all exigencies and provide enough room for an efficient and
flexible response to conditions and circumstances, thus assuring the greatest benefits.
Accordingly, it has been described as "the most essential, insistent and the least limitable
of powers, extending as it does to all the great public needs." It is "[t]he power vested in
the legislature by the constitution to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare of the
commonwealth, and of the subjects of the same."

For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because property rights, though sheltered
by due process, must yield to general welfare.

xxxx

Moreover, the right to property has a social dimension. While Article XIII of the
Constitution provides the precept for the protection of property, various laws and
jurisprudence, particularly on agrarian reform and the regulation of contracts and public
utilities, continuously serve as a reminder that the right to property can be relinquished
upon the command of the State for the promotion of public good.

Undeniably, the success of the senior citizens program rests largely on the support
imparted by petitioners and the other private establishments concerned. This being the
case, the means employed in invoking the active participation of the private sector, in
order to achieve the purpose or objective of the law, is reasonably and directly related.
Without sufficient proof that Section 4(a) of R.A. No. 9257 is arbitrary, and that the
continued implementation of the same would be unconscionably detrimental to
petitioners, the Court will refrain from quashing a legislative act.

WHEREFORE, the petition is DISMISSED for lack of merit.[6] (Citations omitted)

On August 1, 2007, Carlos Superdrug filed a motion for reconsideration of the foregoing
decision. Subsequently, the Court issued Resolution dated August 21, 2007, denying the
said motion with finality.[7]

Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna Carta for
Disabled Persons" was enacted, codifying the rights and privileges of PWDs. Thereafter,
on April 30, 2007, R.A. No. 9442 was enacted, amending R.A. No. 7277. One of the
salient amendments in the law is the insertion of Chapter 8 in Title 2 thereof, which
enumerates the other privileges and incentives of PWDs, including the grant of 20%
discount on the purchase of medicines. Similar to R.A. No. 9257, covered establishments
shall claim the discounts given to PWDs as tax deductions from the gross income, based
on the net cost of goods sold or services rendered. Section 32 of R.A. No. 9442 reads:

CHAPTER 8. Other Privileges and Incentives

SEC. 32. Persons with disability shall be entitled to the following:

xxxx

(c) At least twenty percent (20%) discount for the purchase of medicines in all drugstores
for the exclusive use or enjoyment of persons with disability;

xxxx

The establishments may claim the discounts granted in sub-sections (a), (b), (c), (e),
(f) and (g) as tax deductions based on the net cost of the goods sold or services
rendered: Provided, however, That the cost of the discount shall be allowed as deduction
from gross income for the same taxable year that the discount is granted: Provided,
further, That the total amount of the claimed tax deduction net of value-added tax if
applicable, shall be included in their gross sales receipts for tax purposes and shall be
subject to proper documentation and to the provisions of the National Internal Revenue
Code (NIRC), as amended. (Emphasis ours)

Pursuant to the foregoing, the IRR of R.A. No. 9442 was promulgated by the DSWD,
Department of Education, DOF, Department of Tourism and the Department of
Transportation and Communications.[8] Sections 5.1 and 6.1.d thereof provide:

Sec. 5. Definition of Terms. For purposes of these Rules and Regulations, these terms are
defined as follows:

5.1. Persons with Disability are those individuals defined under Section 4 of RA 7277,

"An Act Providing for the Rehabilitation, Self-Development and Self-Reliance of Persons
with Disability as amended and their integration into the Mainstream of Society and for
Other Purposes." This is defined as a person suffering from restriction or different
abilities, as a result of a mental, physical or sensory impairment, to perform an activity in
a manner or within the range considered normal for human being. Disability shall mean:
(1) a physical or mental impairment that substantially limits one or more psychological,
physiological or anatomical function of an individual or activities of such individual; (2)
a record of such an impairment; or (3) being regarded as having such an impairment.

xxxx

6.1.d Purchase of Medicine – At least twenty percent (20%) discount on the purchase of

medicine for the exclusive use and enjoyment of persons with disability. All drug stores,
hospital, pharmacies, clinics and other similar establishments selling medicines are
required to provide at least twenty percent (20%) discount subject to the guidelines issued
by DOH and PHILHEALTH.

On February 26, 2008, the petitioner filed a Petition for Prohibition with Application for
TRO and/or Writ of Preliminary Injunction [9] with the CA, seeking to declare as
unconstitutional (a) Section 4(a) of R.A. No. 9257, and (b) Section 32 of R.A. No. 9442
and Section 5.1 of its IRR, insofar as these provisions only allow tax deduction on the
gross income based on the net cost of goods sold or services rendered as compensation to
private establishments for the 20% discount that they are required to grant to senior
citizens and PWDs. Further, the petitioner prayed that the respondents be permanently
enjoined from implementing the assailed provisions.

Ruling of the CA

On June 17, 2011, the CA dismissed the petition, reiterating the ruling of the Court
in Carlos Superdrug[10] particularly that Section 4(a) of R.A. No. 9257 was a valid
exercise of police power. Moreover, the CA held that considering that the same question
had been raised by parties similarly situated and was resolved in Carlos Superdrug, the
rule of stare decisis stood as a hindrance to any further attempt to relitigate the same
issue. It further noted that jurisdictional considerations also compel the dismissal of the
action. It particularly emphasized that it has no original or appellate jurisdiction to pass
upon the constitutionality of the assailed laws, [11] the same pertaining to the Regional
Trial Court (RTC). Even assuming that it had concurrent jurisdiction with the RTC, the
principle of hierarchy of courts mandates that the case be commenced and heard by the
lower court.[12] The CA further ruled that the petitioner resorted to the wrong remedy as a
petition for prohibition will not lie to restrain the actions of the respondents for the simple
reason that they do not exercise judicial, quasi-judicial or ministerial duties relative to the
issuance or implementation of the questioned provisions. Also, the petition was wanting
of the allegations of the specific acts committed by the respondents that demonstrate the
exercise of these powers which may be properly challenged in a petition for prohibition.
[13]

The petitioner filed its Motion for Reconsideration [14] of the Decision dated June 17, 2011
of the CA, but the same was denied in a Resolution[15] dated November 25, 2011.

Unyielding, the petitioner filed the instant petition, raising the following assignment of
errors, to wit:

THE CA SERIOUSLY ERRED WHEN IT RULED THAT A PETITION FOR

PROHIBITION FILED WITH THE CA IS AN IMPROPER REMEDY TO
ASSAIL THE CONSTITUTIONALITY OF THE 20% SALES DISCOUNT FOR
SENIOR CITIZENS AND PWDs;

II
THE CA SERIOUSLY ERRED WHEN IT HELD THAT THE SUPREME
COURT'S RULING IN CARLOS SUPERDRUG CONSTITUTES STARE DECISIS;

III

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT

RULED THAT THE 20% SALES DISCOUNT FOR SENIOR CITIZENS AND
PWDs IS A VALID EXERCISE OF POLICE POWER. ON THE CONTRARY, IT
IS AN INVALID EXERCISE OF THE POWER OF EMINENT DOMAIN
BECAUSE IT FAILS TO PROVIDE JUST COMPENSATION TO THE
PETITIONER AND OTHER SIMILARLY SITUATED DRUGSTORES;

IV

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT

RULED THAT THE 20% SALES DISCOUNT FOR SENIOR CITIZENS AND
PWDs DOES NOT VIOLATE THE PETITIONER'S RIGHT TO EQUAL
PROTECTION OF THE LAW; and

THE CA SERIOUSLY ERRED ON A QUESTION OF SUBSTANCE WHEN IT

RULED THAT THE DEFINITIONS OF DISABILITIES AND PWDs ARE NOT
VAGUE AND DO NOT VIOLATE THE PETITIONER'S RIGHT TO DUE
PROCESS OF LAW.[16]

Ruling of the Court

Prohibition may be filed to question

the constitutionality of a law

In the assailed decision, the CA noted that the action, although denominated as one for
prohibition, seeks the declaration of the unconstitutionality of Section 4(a) of R.A. No.
9257 and Section 32 of R.A. No. 9442. It held that in such a case, the proper remedy is
not a special civil action but a petition for declaratory relief, which falls under the
exclusive original jurisdiction of the RTC, in the first instance, and of the Supreme Court,
on appeal.[17]

The Court clarifies.

Generally, the office of prohibition is to prevent the unlawful and oppressive exercise of
authority and is directed against proceedings that are done without or in excess of
jurisdiction, or with grave abuse of discretion, there being no appeal or other plain,
speedy, and adequate remedy in the ordinary course of law. It is the remedy to prevent
inferior courts, corporations, boards, or persons from usurping or exercising a jurisdiction
or power with which they have not been vested by law. [18] This is, however, not the lone
office of an action for prohibition. In Diaz, et al. v. The Secretary of Finance, et al.,
[19]
 prohibition was also recognized as a proper remedy to prohibit or nullify acts of
executive officials that amount to usurpation of legislative authority. [20] And, in a number
of jurisprudence, prohibition was allowed as a proper action to assail the constitutionality
of a law or prohibit its implementation.

In Social Weather Stations, Inc. v. Commission on Elections,[21] therein petitioner filed a

petition for prohibition to assail the constitutionality of Section 5.4 of R.A. No. 9006, or
the "Fair Elections Act," which prohibited the publication of surveys within 15 days
before an election for national candidates, and seven days for local candidates. Included
in the petition is a prayer to prohibit the Commission on Elections from enforcing the
said provision. The Court granted the petition and struck down the assailed provision for
being unconstitutional.[22]

In Social Justice Society (SJS) v. Dangerous Drugs Board, et al.,[23] therein petitioner

assailed the constitutionality of paragraphs (c), (d), (f) and (g) of Section 36 of R.A. No.
9165, otherwise known as the "Comprehensive Dangerous Drugs Act of 2002," on the
ground that they constitute undue delegation of legislative power for granting unbridled
discretion to schools and private employers in determining the manner of drug testing of
their employees, and that the law constitutes a violation of the right against unreasonable
searches and seizures. It also sought to enjoin the Dangerous Drugs Board and the
Philippine Drug Enforcement Agency from enforcing the challenged provision. [24] The
Court partially granted the petition by declaring Section 36(f) and (g) of R.A. No. 9165
unconstitutional, and permanently enjoined the concerned agencies from implementing
them.[25]

In another instance, consolidated petitions for prohibitions [26] questioning the

constitutionality of the Priority Development Assistance Fund were deliberated upon by
this Court which ultimately granted the same.

Clearly, prohibition has been found an appropriate remedy to challenge the

constitutionality of various laws, rules, and regulations.

There is also no question regarding the jurisdiction of the CA to hear and decide a
petition for prohibition. By express provision of the law, particularly Section 9(1) of
Batas Pambansa Bilang 129,[27] the CA was granted "original jurisdiction to issue writs
of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary
writs or processes, whether or not in aid of its appellate jurisdiction." This authority the
CA enjoys concurrently with RTCs and this Court.
In the same manner, the supposed violation of the principle of the hierarchy of courts
does not pose any hindrance to the full deliberation of the issues at hand. It is well to
remember that "the judicial hierarchy of courts is not an iron-clad rule. It generally
applies to cases involving warring factual allegations. For this reason, litigants are
required to [refer] to the trial courts at the first instance to determine the truth or falsity of
these contending allegations on the basis of the evidence of the parties. Cases which
depend on disputed facts for decision cannot be brought immediately before appellate
courts as they are not triers of facts. Therefore, a strict application of the rule of hierarchy
of courts is not necessary when the cases brought before the appellate courts do not
involve factual but legal questions."[28]

Moreover, the principle of hierarchy of courts may be set aside for special and important
reasons, such as when dictated by public welfare and the advancement of public policy,
or demanded by the broader interest of justice. [29] Thus, when based on the good
judgment of the court, the urgency and significance of the issues presented calls for its
intervention, it should not hesitate to exercise its duty to resolve.

The instant petition presents an exception to the principle as it basically raises a legal
question on the constitutionality of the mandatory discount and the breadth of its rightful
beneficiaries. More importantly, the resolution of the issues will redound to the benefit of
the public as it will put to rest the questions on the propriety of the granting of discounts
to senior citizens and PWDs amid the fervent insistence of affected establishments that
the measure transgresses their property rights. The Court, therefore, finds it to the best
interest of justice that the instant petition be resolved.

The instant case is not barred by

stare decisis

The petitioner contends that the CA erred in holding that the ruling in Carlos
Superdrug constitutes as stare decisis or law of the case which bars the relitigation of the
issues that had been resolved therein and had been raised anew in the instant petition. It
argues that there are substantial differences between Carlos Superdrug and the
circumstances in the instant case which take it out from the operation of the doctrine
of stare decisis. It cites that in Carlos Superdrug, the Court denied the petition because
the petitioner therein failed to prove the confiscatory effect of the tax deduction scheme
as no proof of actual loss was submitted. It believes that its submission of financial
statements for the years 2006 and 2007 to prove the confiscatory effect of the law is a
material fact that distinguishes the instant case from that of Carlos Superdrug.[30]

The Court agrees that the ruling in Carlos Superdrug does not constitute stare decisis to
the instant case, not because of the petitioner's submission of financial statements which
were wanting in the first case, but because it had the good sense of including questions
that had not been raised or deliberated in the former case of Carlos Superdrug,
i.e., validity of the 20% discount granted to PWDs, the supposed vagueness of the
provisions of R.A. No. 9442 and violation of the equal protection clause.

Nonetheless, the Court finds nothing in the instant case that merits a reversal of the
earlier ruling of the Court in Carlos Superdrug. Contrary to the petitioner's claim, there is
a very slim difference between the issues in Carlos Superdrug and the instant case with
respect to the nature of the senior citizen discount. A perfunctory reading of the
circumstances of the two cases easily discloses marked similarities in the issues and the
arguments raised by the petitioners in both cases that semantics nor careful play of words
can hardly obscure.

In both cases, it is apparent that what the petitioners are ultimately questioning is not the
grant of the senior citizen discount per se, but the manner by which they were allowed to
recoup the said discount. In particular, they are protesting the change in the tax treatment
of the senior citizen discount from tax credit to being merely a deduction from gross
income which they claimed to have significantly reduced their profits.

This question had been settled in Carlos Superdrug, where the Court ruled that the
change in the tax treatment of the discount was a valid exercise of police power, thus:

Theoretically, the treatment of the discount as a deduction reduces the net income of the
private establishments concerned. The discounts given would have entered the coffers
and formed part of the gross sales of the private establishments, were it not for R.A. No.
9257.

xxxx

A tax deduction does not offer full reimbursement of the senior citizen discount. As such,
it would not meet the definition of just compensation.

Having said that, this raises the question of whether the State, in promoting the health and
welfare of a special group of citizens, can impose upon private establishments the burden
of partly subsidizing a government program.

The Court believes so.

The Senior Citizens Act was enacted primarily to maximize the contribution of senior
citizens to nation-building, and to grant benefits and privileges to them for their
improvement and well-being as the State considers them an integral part of our society.

The priority given to senior citizens finds its basis in the Constitution as set forth in the
law itself. Thus, the Act provides:

SEC. 2. [R.A.] No. 7432 is hereby amended to read as follows:

SEC. 1. Declaration of Policies and Objectives.— Pursuant to Article XV, Section 4 of
the Constitution, it is the duty of the family to take care of its elderly members while the
State may design programs of social security for them. In addition to this, Section 10 in
the Declaration of Principles and State Policies provides: "The State shall provide social
justice in all phases of national development." Further, Article XIII, Section 11, provides:
"The State shall adopt an integrated and comprehensive approach to health development
which shall endeavor to make essential goods, health and other social services available
to all the people at affordable cost. There shall be priority for the needs of the
underprivileged sick, elderly, disabled, women and children." Consonant with these
constitutional principles the following are the declared policies of this Act:

xxxx

(f) To recognize the important role of the private sector in the improvement of the
welfare of senior citizens and to actively seek their partnership.

To implement the above policy, the law grants a twenty percent discount to senior
citizens for medical and dental services, and diagnostic and laboratory fees; admission
fees charged by theaters, concert halls, circuses, carnivals, and other similar places of
culture, leisure and amusement; fares for domestic land, air and sea travel; utilization of
services in hotels and similar lodging establishments, restaurants and recreation centers;
and purchases of medicines for the exclusive use or enjoyment of senior citizens. As a
form of reimbursement, the law provides that business establishments extending the
twenty percent discount to senior citizens may claim the discount as a tax deduction.

The law is a legitimate exercise of police power which, similar to the power of eminent
domain, has general welfare for its object. Police power is not capable of an exact
definition, but has been purposely veiled in general terms to underscore its
comprehensiveness to meet all exigencies and provide enough room for an efficient and
flexible response to conditions and circumstances, thus assuring the greatest benefits.
Accordingly, it has been described as "the most essential, insistent and the least limitable
of powers, extending as it does to all the great public needs." It is "[t]he power vested in
the legislature by the constitution to make, ordain, and establish all manner of wholesome
and reasonable laws, statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare of the
commonwealth, and of the subjects of the same."

For this reason, when the conditions so demand as determined by the legislature, property
rights must bow to the primacy of police power because property rights, though sheltered
by due process, must yield to general welfare. [31] (Citations omitted and emphasis in the
original)
Verily, it is the bounden duty of the State to care for the elderly as they reach the point in
their lives when the vigor of their youth has diminished and resources have become
scarce. Not much because of choice, they become needing of support from the society for
whom they presumably spent their productive days and for whose betterment they
exhausted their energy, know-how and experience to make our days better to live.

In the same way, providing aid for the disabled persons is an equally important State
responsibility. Thus, the State is obliged to give full support to the improvement of the
total well-being of disabled persons and their integration into the mainstream of society.
[32]
 This entails the creation of opportunities for them and according them privileges if
only to balance the playing field which had been unduly tilted against them because of
their limitations.

The duty to care for the elderly and the disabled lies not only upon the State, but also on
the community and even private entities. As to the State, the duty emanates from its role
as parens patriae which holds it under obligation to provide protection and look after the
welfare of its people especially those who cannot tend to themselves. Parens
patriae means parent of his or her country, and refers to the State in its role as
"sovereign", or the State in its capacity as a provider of protection to those unable to care
for themselves.[33] In fulfilling this duty, the State may resort to the exercise of its inherent
powers: police power, eminent domain and power of taxation.

In Gerochi v. Department of Energy,[34] the Court passed upon one of the inherent powers
of the state, the police power, where it emphasized, thus:

[P]olice power is the power of the state to promote public welfare by restraining and
regulating the use of liberty and property. It is the most pervasive, the least limitable, and
the most demanding of the three fundamental powers of the State. The justification is
found in the Latin maxim salus populi est suprema lex (the welfare of the people is the
supreme law) and sic utere tuo ut alienum non laedas (so use your property as not to
injure the property of others). As an inherent attribute of sovereignty which virtually
extends to all public needs, police power grants a wide panoply of instruments through
which the State, as parens patriae, gives effect to a host of its regulatory powers. We
have held that the power to "regulate" means the power to protect, foster, promote,
preserve, and control, with due regard for the interests, first and foremost, of the public,
then of the utility and of its patrons.[35] (Citations omitted)

It is in the exercise of its police power that the Congress enacted R.A. Nos. 9257 and
9442, the laws mandating a 20% discount on purchases of medicines made by senior
citizens and PWDs. It is also in further exercise of this power that the legislature opted
that the said discount be claimed as tax deduction, rather than tax credit, by covered
establishments.
The petitioner, however, claims that the change in the tax treatment of the discount is
illegal as it constitutes taking without just compensation. It even submitted financial
statements for the years 2006 and 2007 to support its claim of declining profits when the
change in the policy was implemented.

The Court is not swayed.

To begin with, the issue of just compensation finds no relevance in the instant case as it
had already been made clear in Carlos Superdrug that the power being exercised by the
State in the imposition of senior citizen discount was its police power. Unlike in the
exercise of the power of eminent domain, just compensation is not required in wielding
police power. This is precisely because there is no taking involved, but only an
imposition of burden.

In Manila Memorial Park, Inc., et al. v. Secretary of the DSWD, et al.,[36] the Court ruled
that by examining the nature and the effects of R.A. No. 9257, it becomes apparent that
the challenged governmental act was an exercise of police power. It was held, thus:

[W]e now look at the nature and effects of the 20% discount to determine if it constitutes
an exercise of police power or eminent domain.

The 20% discount is intended to improve the welfare of senior citizens who, at their age,
are less likely to be gainfully employed, more prone to illnesses and other disabilities,
and, thus, in need of subsidy in purchasing basic commodities. It may not be amiss to
mention also that the discount serves to honor senior citizens who presumably spent the
productive years of their lives on contributing to the development and progress of the
nation. This distinct cultural Filipino practice of honoring the elderly is an integral part of
this law.

As to its nature and effects, the 20% discount is a regulation affecting the ability of
private establishments to price their products and services relative to a special class of
individuals, senior citizens, for which the Constitution affords preferential concern. In
turn, this affects the amount of profits or income/gross sales that a private establishment
can derive from senior citizens. In other words, the subject regulation affects the pricing,
and, hence, the profitability of a private establishment. However, it does not purport to
appropriate or burden specific properties, used in the operation or conduct of the business
of private establishments, for the use or benefit of the public, or senior citizens for that
matter, but merely regulates the pricing of goods and services relative to, and the amount
of profits or income/gross sales that such private establishments may derive from, senior
citizens.
The subject regulation may be said to be similar to, but with substantial distinctions from,
price control or rate of return on investment control laws which are traditionally regarded
as police power measures. x x x.[37] (Citations omitted)

In the exercise of police power, "property rights of private individuals are subjected to
restraints and burdens in order to secure the general comfort, health, and prosperity of the
State."[38] Even then, the State's claim of police power cannot be arbitrary or
unreasonable. After all, the overriding purpose of the exercise of the power is to promote
general welfare, public health and safety, among others. It is a measure, which by sheer
necessity, the State exercises, even to the point of interfering with personal liberties or
property rights in order to advance common good. To warrant such interference, two
requisites must concur: (a) the interests of the public generally, as distinguished from
those of a particular class, require the interference of the State; and (b) the means
employed are reasonably necessary to the attainment of the object sought to be
accomplished and not unduly oppressive upon individuals. In other words, the proper
exercise of the police power requires the concurrence of a lawful subject and a lawful
method.[39]

The subjects of R.A. Nos. 9257 and 9442, i.e., senior citizens and PWDs, are individuals
whose well-being is a recognized public duty. As a public duty, the responsibility for
their care devolves upon the concerted efforts of the State, the family and the community.
In Article XIII, Section 1 of the Constitution, the State is mandated to give highest
priority to the enactment of measures that protect and enhance the right of all the people
to human dignity, reduce social, economic, and political inequalities, and remove cultural
inequities by equitably diffusing wealth and political power for the common good. The
more apparent manifestation of these social inequities is the unequal distribution or
access to healthcare services. To abet in alleviating this concern, the State is committed to
adopt an integrated and comprehensive approach to health development which shall
endeavor to make essential goods, health and other social services available to all the
people at affordable cost, with priority for the needs of the underprivileged sick, elderly,
disabled, women, and children.[40]

In the same manner, the family and the community have equally significant duties to
perform in reducing social inequality. The family as the basic social institution has the
foremost duty to care for its elderly members. [41] On the other hand, the community,
which include the private sector, is recognized as an active partner of the State in
pursuing greater causes. The private sector, being recipients of the privilege to engage
business in our land, utilize our goods as well as the services of our people for proprietary
purposes, it is only fitting to expect their support in measures that contribute to common
good. Moreover, their right to own, establish and operate economic enterprises is always
subject to the duty of the State to promote distributive justice and to intervene when the
common good so demands.[42]
The Court also entertains no doubt on the legality of the method taken by the legislature
to implement the declared policies of the subject laws, that is, to impose discounts on the
medical services and purchases of senior citizens and PWDs and to treat the said
discounts as tax deduction rather than tax credit. The measure is fair and reasonable and
no credible proof was presented to prove the claim that it was confiscatory. To be
considered confiscatory, there must be taking of property without just compensation.

Illuminating on this point is the discussion of the Court on the concept of taking in City
of Manila v. Hon. Laguio, Jr.,[43] viz.:

There are two different types of taking that can be identified. A "possessory" taking
occurs when the government confiscates or physically occupies property. A "regulatory"
taking occurs when the government's regulation leaves no reasonable economically viable
use of the property.

xxxx

No formula or rule can be devised to answer the questions of what is too far and when
regulation becomes a taking. In Mahon, Justice Holmes recognized that it was "a question
of degree and therefore cannot be disposed of by general propositions." On many other
occasions as well, the U.S. Supreme Court has said that the issue of when regulation
constitutes a taking is a matter of considering the facts in each case. x x x.

What is crucial in judicial consideration of regulatory takings is that government

regulation is a taking if it leaves no reasonable economically viable use of property in a
manner that interferes with reasonable expectations for use. A regulation that
permanently denies all economically beneficial or productive use of land is, from the
owner's point of view, equivalent to a "taking" unless principles of nuisance or property
law that existed when the owner acquired the land make the use prohibitable. When the
owner of real property has been called upon to sacrifice all economically beneficial uses
in the name of the common good, that is, to leave his property economically idle, he has
suffered a taking.

xxxx

A restriction on use of property may also constitute a 'taking" if not reasonably necessary
to the effectuation of a substantial public purpose or if it has an unduly harsh impact on
the distinct investment-backed expectations of the owner.[44] (Citations omitted)

The petitioner herein attempts to prove its claim that the pertinent provisions of R.A.
Nos. 9257 and 9442 amount to taking by presenting financial statements purportedly
showing financial losses incurred by them due to the adoption of the tax deduction
scheme.
For the petitioner's clarification, the presentation of the financial statement is not of
compelling significance in justifying its claim for just compensation. What is imperative
is for it to establish that there was taking in the constitutional sense or that, in the
imposition of the mandatory discount, the power exercised by the state was eminent
domain.

According to Republic of the Philippines v. Vda. de Castellvi,[45] five circumstances must

be present in order to qualify "taking" as an exercise of eminent domain. First, the
expropriator must enter a private property. Second, the entrance into private property
must be for more than a momentary period. Third, the entry into the property should be
under warrant or color of legal authority. Fourth, the property must be devoted to a
public use or otherwise informally appropriated or injuriously affected. Fifth, the
utilization of the property for public use must be in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the property.[46]

The first requirement speaks of entry into a private property which clearly does not obtain
in this case. There is no private property that is invaded or appropriated by the State. As it
is, the petitioner precipitately deemed future profits as private property and then
proceeded to argue that the State took it away without full compensation. This seemed
preposterous considering that the subject of what the petitioner supposed as taking was
not even earned profits but merely an expectation of profits, which may not even occur.
For obvious reasons, there cannot be taking of a contingency or of a mere possibility
because it lacks physical existence that is necessary before there could be any taking.
Further, it is impossible to quantify the compensation for the loss of supposed profits
before it is earned.

The supposed taking also lacked the characteristics of permanence [47] and consistency.
The presence of these characteristics is significant because they can establish that the
effect of the questioned provisions is the same on all establishments and those losses are
indeed its unavoidable consequence. But apparently these indications are wanting in this
case. The reason is that the impact on the establishments varies depending on their
response to the changes brought about by the subject provisions. To be clear,
establishments are not prevented from adjusting their prices to accommodate the effects
of the granting of the discount and retain their profitability while being fully compliant to
the laws. It follows that losses are not inevitable because establishments are free to take
business measures to accommodate the contingency. Lacking in permanence and
consistency, there can be no taking in the constitutional sense. There cannot be taking in
one establishment and none in another, such that the former can claim compensation but
the other may not. Simply told, there is no taking to justify compensation; there is only
poor business decision to blame.

There is also no ousting of the owner or deprivation of ownership. Establishments are

neither divested of ownership of any of their properties nor is anything forcibly taken
from them. They remain the owner of their goods and their profit or loss still depends on
the performance of their sales.

Apart from the foregoing, covered establishments are also provided with a mechanism to
recoup the amount of discounts they grant the senior citizens and PWDs. It is provided in
Section 4(a) of R.A. No. 9257 and Section 32 of R.A. No. 9442 that establishments may
claim the discounts as "tax deduction based on the net cost of the goods sold or services
rendered." Basically, whatever amount was given as discount, covered establishments
may claim an equal amount as an expense or tax deduction. The trouble is that the
petitioner, in protesting the change in the tax treatment of the discounts, apparently seeks
tax incentive and not merely a return of the amount given as discounts. It premised its
interpretation of financial losses in terms of the effect of the change in the tax treatment
of the discount on its tax liability; hence, the claim that the measure was confiscatory.
However, as mentioned earlier in the discussion, loss of profits is not the inevitable result
of the change in tax treatment of the discounts; it is more appropriately a consequence of
poor business decision.

It bears emphasizing that the law does not place a cap on the amount of mark up that
covered establishments may impose on their items. This rests on the discretion of the
establishment which, of course, is expected to put in the price of the overhead costs,
expectation of profits and other considerations into the selling price of an item. In a
simple illustration, here is Drug A, with acquisition cost of P8.00, and selling price of
P10.00. Then comes a law that imposes 20% on senior citizens and PWDs, which
affected Establishments 1, 2 and 3. Let us suppose that the approximate number of
patrons who purchases Drug A is 100, half of which are senior citizens and PWDs.
Before the passage of the law, all of the establishments are earning the same amount from
profit from the sale of Drug A, viz.:

Before the passage of the law:

Drug A  
  Acquisition cost P8.00
  Selling price P10.00
     
  Number of Patrons 100
     
Sales:  
  100 x P10.00 = P1,000.00
     
Profit: P200.00  
After the passage of the law, the three establishments reacted differently. Establishment 1
was passive and maintained the price of Drug A at P8.00 which understandably resulted
in diminution of profits.

Establishment 1

Drug A  
  Acquisition cost P8.00
  Selling price P10.00
     
  Number of Patrons 100
  Senior Citizens/PWD 50
     
Sale:  
  100 x P10.00 = P1,000.00
     
Deduction: P100.00  
     
Profit: P100.00  

On the other hand, Establishment 2, mindful that the new law will affect the profitability
of the business, made a calculated decision by increasing the mark up of Drug A to
P3.20, instead of only P2.00. This brought a positive result to the earnings of the
company.

Establishment 2

Drug A  
  Acquisition cost P8.00
  Selling price P11.20
     
  Number of Patrons 100
  Senior Citizens/PWD 50
     
Sale:  
  100 x P11.20 = P1,120.00
     
Deduction: P112.00  
     
Profit: P208.00  

For its part, Establishment 3 raised the mark up on Drug A to only P3.00 just to even out
the effect of the law. This measure left a negligible effect on its profit, but Establishment
3 took it as a social duty to share in the cause being promoted by the government while
still maintaining profitability.

Establishment 3

Drug A  
  Acquisition cost P8.00
  Selling price P11.00
     
  Number of Patrons 100
  Senior Citizens/PWD 50
     
Sale:  
  100 x P11.00 = P1,100.00
     
Deduction: P110.00  
     
Profit: P190.00  

The foregoing demonstrates that it is not the law per se which occasioned the losses in
the covered establishments but bad business judgment. One of the main considerations in
making business decisions is the law because its effect is widespread and inevitable.
Literally, anything can be a subject of legislation. It is therefore incumbent upon business
managers to cover this contingency and consider it in making business strategies. As
shown in the illustration, the better responses were exemplified by Establishments 2 and
3 which promptly put in the additional costs brought about by the law into the price
of Drug A. In doing so, they were able to maintain the profitability of the business, even
earning some more, while at the same time being fully compliant with the law. This is not
to mention that the illustration is even too simplistic and not the most ideal since it dealt
only with a single drug being purchased by both regular patrons and senior citizens and
PWDs. It did not consider the accumulated profits from the other medical and non-
medical products being sold by the establishments which are expected to further curb the
effect of the granting of the discounts in the business.

It is therefore unthinkable how the petitioner could have suffered losses due to the
mandated discounts in R.A. Nos. 9257 and 9442, when a fractional increase in the prices
of items could bring the business standing at a balance even with the introduction of the
subject laws. A level adjustment in the pricing of items is a reasonable business measure
to take in order to adapt to the contingency. This could even make establishments earn
more, as shown in the illustration, since every fractional increase n the price of covered
items translates to a wider cushion to taper off the effect of the granting of discounts and
ultimately results to additional profits gained from the purchases of the same items by
regular patrons who are not entitled to the discount. Clearly, the effect of the subject laws
in the financial standing of covered companies depends largely on how they respond and
forge a balance between profitability and their sense of social responsibility. The
adaptation is entirely up to them and they are not powerless to make adjustments to
accommodate the subject legislations.

Still, the petitioner argues that the law is confiscatory in the sense that the State takes
away a portion of its supposed profits which could have gone into its coffers and utilizes
it for public purpose. The petitioner claims that the action of the State amounts to taking
for which it should be compensated.

To reiterate, the subject provisions only affect the petitioner's right to profit, and not
earned profits. Unfortunately for the petitioner, the right to profit is not a vested right or
an entitlement that has accrued on the person or entity such that its invasion or
deprivation warrants compensation. Vested rights are "fixed, unalterable, or
irrevocable."[48] More extensively, they are depicted as follows:

Rights which have so completely and definitely accrued to or settled in a person that they
are not subject to be defeated or cancelled by the act of any other private person, and
which it is right and equitable that the government should recognize and protect, as being
lawful in themselves, and settled according to the then current rules of law, and of which
the individual could not be deprived arbitrarily without injustice, or of which he could not
justly be deprived otherwise than by the established methods of procedure and for the
public welfare. x x x A right is not 'vested' unless it is more than a mere expectation
based on the anticipated continuance of present laws; it must be an established interest in
property, not open to doubt. x x x To be vested in its accurate legal sense, a right must be
complete and consummated, and one of which the person to whom it belongs cannot be
divested without his consent. x x x.[49] (Emphasis ours)

Right to profits does not give the petitioner the cause of action to ask for just
compensation, it being only an inchoate right or one that has not fully developed [50] and
therefore cannot be claimed as one's own. An inchoate right is a mere expectation, which
may or may not come into existence. It is contingent as it only comes "into existence on
an event or condition which may not happen or be performed until some other event may
prevent their vesting."[51] Certainly, the petitioner cannot claim confiscation or taking of
something that has yet to exist. It cannot claim deprivation of profit before the
consummation of a sale and the purchase by a senior citizen or PWD.

Right to profit is not an accrued right; it is not fixed, absolute nor indefeasible. It does not
come into being until the occurrence or realization of a condition precedent. It is a mere
"contingency that might never eventuate into a right. It stands for a mere possibility of
profit but nothing might ever be payable under it."[52]
The inchoate nature of the right to profit precludes the possibility of compensation
because it lacks the quality or characteristic which is necessary before any act of taking or
expropriation can be effected. Moreover, there is no yardstick fitting to quantify a
contingency or to determine compensation for a mere possibility. Certainly, "taking"
presupposes the existence of a subject that has a quantifiable or determinable value,
characteristics which a mere contingency does not possess.

Anent the question regarding the shift from tax credit to tax deduction, suffice it is to say
that it is within the province of Congress to do so in the exercise of its legislative power.
It has the authority to choose the subject of legislation, outline the effective measures to
achieve its declared policies and even impose penalties in case of non-compliance. It has
the sole discretion to decide which policies to pursue and devise means to achieve them,
and courts often do not interfere in this exercise for as long as it does not transcend
constitutional limitations. "In performing this duty, the legislature has no guide but its
judgment and discretion and the wisdom of experience." [53] In Carter v. Carter Coal Co.,
[54]
 legislative discretion has been described as follows:

Legislative congressional discretion begins with the choice of means, and ends with the

adoption of methods and details to carry the delegated powers into effect. x x x [W]hile
the powers are rigidly limited to the enumerations of the Constitution, the means which
may be employed to carry the powers into effect are not restricted, save that they must be
appropriate, plainly adapted to the end, and not prohibited by, but consistent with, the
letter and spirit of the Constitution. x x x.[55] (Emphasis ours)

Corollary, whether to treat the discount as a tax deduction or tax credit is a matter
addressed to the wisdom of the legislature. After all, it is within its prerogative to enact
laws which it deems sufficient to address a specific public concern. And, in the process of
legislation, a bill goes through rigorous tests of validity, necessity and sufficiency in both
houses of Congress before enrolment. It undergoes close scrutiny of the members of
Congress and necessarily had to surpass the arguments hurled against its passage. Thus,
the presumption of validity that goes with every law as a form of deference to the process
it had gone through and also to the legislature's exercise of discretion. Thus, in Ichong,
etc., et al. v. Hernandez, etc., and Sarmiento,[56] the Court emphasized, thus:

It must not be overlooked, in the first place, that the legislature, which is the
constitutional repository of police power and exercises the prerogative of determining the
policy of the State, is by force of circumstances primarily the judge of necessity,
adequacy or reasonableness and wisdom, of any law promulgated in the exercise of
the police power, or of the measures adopted to implement the public policy or to
achieve public interest. x x x.[57] (Emphasis ours)

The legislature may also grant rights and impose additional burdens. It may also regulate
industries, in the exercise of police power, for the protection of the public. R.A. Nos.
9257 and 9442 are akin to regulatory laws, the issuance of which is within the ambit of
police power. The minimum wage law, zoning ordinances, price control laws, laws
regulating the operation of motels and hotels, laws limiting the working hours to eight,
and the like fall under this category.[58]

Indeed, regulatory laws are within the category of police power measures from which
affected persons or entities cannot claim exclusion or compensation. For instance, private
establishments cannot protest that the imposition of the minimum wage is confiscatory
since it eats up a considerable chunk of its profits or that the mandated remuneration is
not commensurate for the work done. The compulsory nature of the provision for
minimum wages underlies the effort of the State, as R.A. No. 6727 [59] expresses it, to
promote productivity-improvement and gain-sharing measures to ensure a decent
standard of living for the workers and their families; to guarantee the rights of labor to its
just share in the fruits of production; to enhance employment generation in the
countryside through industry dispersal; and to allow business and industry reasonable
returns on investment, expansion and growth, and as the Constitution expresses it, to
affirm labor as a primary social economic force.[60]

Similarly, the imposition of price control on staple goods in R.A. No. 7581 [61] is likewise
a valid exercise of police power and affected establishments cannot argue that the law
was depriving them of supposed gains. The law seeks to ensure the availability of basic
necessities and prime commodities at reasonable prices at all times without denying
legitimate business a fair return on investment. It likewise aims to provide effective and
sufficient protection to consumers against hoarding, profiteering and cartels with respect
to the supply, distribution, marketing and pricing of said goods, especially during periods
of calamity, emergency, widespread illegal price manipulation and other similar
situations.[62]

More relevantly, in Manila Memorial Park, Inc.,[63] it was ruled that it is within the
bounds of the police power of the state to impose burden on private entities, even if it
may affect their profits, such as in the imposition of price control measures. There is no
compensable taking but only a recognition of the fact that they are subject to the
regulation of the State and that all personal or private interests must bow down to the
more paramount interest of the State.

This notwithstanding, the regulatory power of the State does not authorize the destruction
of the business. While a business may be regulated, such regulation must be within the
bounds of reason, i.e., the regulatory ordinance must be reasonable, and its provision
cannot be oppressive amounting to an arbitrary interference with the business or calling
subject of regulation. A lawful business or calling may not, under the guise of regulation,
be unreasonably interfered with even by the exercise of police power. [64] After all,
regulation only signifies control or restraint, it does not mean suppression or absolute
prohibition. Thus, in Philippine Communications Satellite Corporation v. Alcuaz,[65] the
Court emphasized:

The power to regulate is not the power to destroy useful and harmless enterprises, but is
the power to protect, foster, promote, preserve, and control with due regard for the
interest, first and foremost, of the public, then of the utility and of its patrons. Any
regulation, therefore, which operates as an effective confiscation of private property or
constitutes an arbitrary or unreasonable infringement of property rights is void, because it
is repugnant to the constitutional guaranties of due process and equal protection of the
laws.[66] (Citation omitted)

Here, the petitioner failed to show that R.A. Nos. 9257 and 9442, under the guise of
regulation, allow undue interference in an otherwise legitimate business. On the contrary,
it was shown that the questioned laws do not meddle in the business or take anything
from it but only regulate its realization of profits.

The subject laws do not violate the

equal protection clause

The petitioner argues that R.A. Nos. 9257 and 9442 are violative of the equal protection
clause in that it failed to distinguish between those who have the capacity to pay and
those who do not, in granting the 20% discount. R.A. No. 9257, in particular, removed
the income qualification in R.A. No. 7432 of P60,000.00 per annum before a senior
citizen may be entitled to the 20% discount.

The contention lacks merit.

The petitioner's argument is dismissive of the reasonable qualification on which the

subject laws were based. In City of Manila v. Hon. Laguio Jr.,[67] the Court emphasized:

Equal protection requires that all persons or things similarly situated should be treated
alike, both as to rights conferred and responsibilities imposed. Similar subjects, in other
words, should not be treated differently, so as to give undue favor to some and unjustly
discriminate against others. The guarantee means that no person or class of persons shall
be denied the same protection of laws which is enjoyed by other persons or other classes
in like circumstances.[68] (Citations omitted)

"The equal protection clause is not infringed by legislation which applies only to those
persons falling within a specified class. If the groupings are characterized by substantial
distinctions that make real differences, one class may be treated and regulated differently
from another."[69] For a classification to be valid, (1) it must be based upon substantial
distinctions, (2) it must be germane to the purposes of the law, (3) it must not be limited
to existing conditions only, and (4) it must apply equally to all members of the same
class.[70]

To recognize all senior citizens as a group, without distinction as to income, is a valid

classification. The Constitution itself considered the elderly as a class of their own and
deemed it a priority to address their needs. When the Constitution declared its intention to
prioritize the predicament of the underprivileged sick, elderly, disabled, women, and
children,[71] it did not make any reservation as to income, race, religion or any other
personal circumstances. It was a blanket privilege afforded the group of citizens in the
enumeration in view of the vulnerability of their class.

R.A. No. 9257 is an implementation of the avowed policy of the Constitution to enact
measures that protect and enhance the right of all the people to human dignity, reduce
social, economic, and political inequalities.[72] Specifically, it caters to the welfare of all
senior citizens. The classification is based on age and therefore qualifies all who have
attained the age of 60. Senior citizens are a class of their own, who are in need and should
be entitled to government support, and the fact that they may still be earning for their
own sustenance should not disqualify them from the privilege.

It is well to consider that our senior citizens have already reached the age when work
opportunities have dwindled concurrently as their physical health. They are no longer
expected to work, but there are still those who continue to work and contribute what they
can to the country. Thus, to single them out and take them out of the privileges of the law
for continuing to strive and earn income to fend for themselves is inimical to a welfare
state that the Constitution envisions. It is tantamount to penalizing them for their
persistence. It is commending indolence rather than rewarding diligence. It encourages
them to become wards of the State rather than productive partners.

Our senior citizens were the laborers, professionals and overseas contract workers of the
past. While some may be well to do or may have the capacity to support their sustenance,
the discretion to avail of the privileges of the law is up to them. But to instantly tag them
as undeserving of the privilege would be the height of ingratitude; it is an outright
discrimination.

The same ratiocination may be said of the recognition of PWDs as a class in R.A. No.
9442 and in granting them discounts. It needs no further explanation that PWDs have
special needs which, for most, last their entire lifetime. They constitute a class of their
own, equally deserving of government support as our elderlies. While some of them
maybe willing to work and earn income for themselves, their disability deters them from
living their full potential. Thus, the need for assistance from the government to augment
the reduced income or productivity brought about by their physical or intellectual
limitations.
There is also no question that the grant of mandatory discount is germane to the purpose
of R.A. Nos. 9257 and 9442, that is, to adopt an integrated and comprehensive approach
to health development and make essential goods and other social services available to all
the people at affordable cost, with special priority given to the elderlies and the disabled,
among others. The privileges granted by the laws ease their concerns and allow them to
live more comfortably.

The subject laws also address a continuing concern of the government for the welfare of
the senior citizens and PWDs. It is not some random predicament but an actual,
continuing and pressing concern that requires preferential attention. Also, the laws apply
to all senior citizens and PWDs, respectively, without further distinction or reservation.
Without a doubt, all the elements for a valid classification were met.

The definitions of "disabilities" and

"PWDs" are clear and unequivocal

Undeterred, the petitioner claims that R.A. No. 9442 is ambiguous particularly in
defining the terms "disability" and "PWDs," such that it lack comprehensible standards
that men of common intelligence must guess at its meaning. It likewise bewails the
futility of the given safeguards to prevent abuse since government officials who are
neither experts nor practitioners of medicine are given the authority to issue identification
cards that authorizes the granting of the privileges under the law.

The Court disagrees.

Section 4(a) of R.A. No. 7277, the precursor of R.A. No. 9442, defines "disabled
persons" as follows:

(a) Disabled persons are those suffering from restriction or different abilities, as a result

of a mental, physical or sensory impairment, to perform an activity in the manner or
within the range considered normal for a human being[.]

On the other hand, the term "PWDs" is defined in Section 5.1 of the IRR of R.A. No.
9442 as follows;

5.1. Persons with Disability are those individuals defined under Section 4 of [R.A. No.]
7277 [or] An Act Providing for the Rehabilitation, Self-Development and Self-Reliance
of Persons with Disability as amended and their integration into the Mainstream of
Society and for Other Purposes. This is defined as a person suffering from restriction or
different abilities, as a result of a mental, physical or sensory impairment, to perform an
activity in a manner or within the range considered normal for human being. Disability
shall mean (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical function of an individual or activities of such
individual; (2) a record of such an impairment; or (3) being regarded as having such an
impairment.

The foregoing definitions have a striking conformity with the definition of "PWDs" in
Article 1 of the United Nations Convention on the Rights of Persons with
Disabilities which reads:

Persons with disabilities include those who have long-term physical, mental, intellectual
or sensory impairments which in interaction with various barriers may hinder their full
and effective participation in society on an equal basis with others. (Emphasis and italics
ours)

The seemingly broad definition of the terms was not without good reasons. It recognizes
that "disability is an evolving concept"[73] and appreciates the "diversity of PWDs." [74] The
terms were given comprehensive definitions so as to accommodate the various forms of
disabilities, and not confine it to a particular case as this would effectively exclude other
forms of physical, intellectual or psychological impairments.

Moreover, in Estrada v. Sandiganbayan,[75] it was declared, thus:

A statute is not rendered uncertain and void merely because general terms are used
therein, or because of the employment of terms without defining them; much less do we
have to define every word we use. Besides, there is no positive constitutional or statutory
command requiring the legislature to define each and every word in an enactment.
Congress is not restricted in the form of expression of its will, and its inability to so
define the words employed in a statute will not necessarily result in the vagueness or
ambiguity of the law so long as the legislative will is clear, or at least, can be gathered
from the whole act x x x.[76] (Citation omitted)

At any rate, the Court gathers no ambiguity in the provisions of R.A. No. 9442. As
regards the petitioner's claim that the law lacked reasonable standards in determining the
persons entitled to the discount, Section 32 thereof is on point as it identifies who may
avail of the privilege and the manner of its availment. It states:

Sec. 32. x x x

The abovementioned privileges are available only to persons with disability who are
Filipino citizens upon submission of any of the following as proof of his/her entitlement
thereto:

(I) An identification card issued by the city or municipal mayor or the barangay captain
of the place where the persons with disability resides;
(II) The passport of the persons with disability concerned; or

(III) Transportation discount fare Identification Card (ID) issued by the National Council
for the Welfare of Disabled Persons (NCWDP).

It is, however, the petitioner's contention that the foregoing authorizes government
officials who had no medical background to exercise discretion in issuing identification
cards to those claiming to be PWDs. It argues that the provision lends to the
indiscriminate availment of the privileges even by those who are not qualified.

The petitioner's apprehension demonstrates a superficial understanding of the law and its
implementing rules. To be clear, the issuance of identification cards to PWDs does not
depend on the authority of the city or municipal mayor, the DSWD or officials of the
NCDA (formerly NCWDP). It is well to remember that what entitles a person to the
privileges of the law is his disability, the fact of which he must prove to qualify. Thus, in
NCDA Administrative Order (A.O.) No. 001, series of 2008, [77] it is required that the
person claiming disability must submit the following requirements before he shall be
issued a PWD Identification Card:

1. Two "1x 1" recent ID pictures with the names, and signatures or thumb marks at
the back of the picture.
2. One (1) Valid ID
3. Document to confirm the medical or disability condition[78]

To confirm his disability, the person must obtain a medical certificate or assessment, as
the case maybe, issued by a licensed private or government physician, licensed teacher or
head of a business establishment attesting to his impairment. The issuing entity depends
on whether the disability is apparent or non-apparent. NCDA A.O. No. 001 further
provides:[79]

DISABILITY DOCUMENT ISSUING ENTITY

Apparent Disability Medical Certificate
  School Assessment
 
Certificate of Disability
Licensed Private or Government
Physician
Licensed Teacher duly signed by
the School Principal
 Head of the Business
Establishment
 Head of Non-Government
Organization

Non-Apparent Medical Certificate Licensed Private or Government

Disability Physician
To provide further safeguard, the Department of Health issued A.O. No. 2009-0011,
providing guidelines for the availment of the 20% discount on the purchase of medicines
by PWDs. In making a purchase, the individual must present the documents enumerated
in Section VI(4)(b), to wit:

i. PWD identification card x x x

ii. Doctor's prescription stating the name of the PWD, age, sex, address, date, generic
name of the medicine, dosage form, dosage strength, quantity, signature over
printed name of physician, physician's address, contact number of physician or
dentist, professional license number, professional tax receipt number and narcotic
license number, if applicable. To safeguard the health of PWDs and to prevent
abuse of [R.A. No.] 9257, a doctor's prescription is required in the purchase of
over-the-counter medicines. x x x.
iii. Purchase booklet issued by the local social/health office to PWDs for free
containing the following basic information:

a) PWD ID number
b) Booklet control number
c) Name of PWD
d) Sex
e) Address
f) Date of Birth
g) Picture
h) Signature of PWD
i) Information of medicine purchased:

i.1 Name of medicine

i.2 Quantity
i.3 Attending Physician
i.4 License Number
i.5 Servicing drug store name
i.6 Name of dispensing pharmacist

j) Authorization letter of the PWD x x x in case the medicine is bought by the

representative or caregiver of the PWD.

The PWD identification card also has a validity period of only three years which facilitate
in the monitoring of those who may need continued support and who have been relieved
of their disability, and therefore may be taken out of the coverage of the law.

At any rate, the law has penal provisions which give concerned establishments the option
to file a case against those abusing the privilege. Section 46(b) of R.A. No. 9442 provides
that "[a]ny person who abuses the privileges granted herein shall be punished with
imprisonment of not less than six months or a fine of not less than Five Thousand pesos
(P5,000.00), but not more than Fifty Thousand pesos (P50,000.00), or both, at the
discretion of the court." Thus, concerned establishments, together with the proper
government agencies, must actively participate in monitoring compliance with the law so
that only the intended beneficiaries of the law can avail of the privileges.

Indubitably, the law is clear and unequivocal, and the petitioner's claim of vagueness to
cast uncertainty in the validity of the law does not stand.

WHEREFORE, in view of the foregoing disquisition, Section 4(a) of Republic Act No.
9257 and Section 32 of Republic Act No. 9442 are hereby
declared CONSTITUTIONAL.

SO ORDERED.

SECOND DIVISION
[ G.R. No. 146053, April 30, 2008 ]
DIOSCORO F. BACSIN, PETITIONER, VS. EDUARDO O. WAHIMAN,
RESPONDENT.

DECISION

In this Petition for Review on Certiorari, petitioner Dioscoro F. Bacsin questions the
Decision[1] dated August 23, 2000 of the First Division of the Court of Appeals (CA) in
CA-G.R. SP No. 51900, which affirmed Resolution No. 98-0521 dated March 11, 1998
and Resolution No. 99-0273 dated January 28, 1999, both issued by the Civil Service
Commission (CSC), dismissing petitioner from the service for Grave Misconduct.

Facts of the Case

Petitioner is a public school teacher of Pandan Elementary School, Pandan, Mambajao,

Camiguin Province. Respondent Eduardo O. Wahiman is the father of AAA, an
elementary school student of the petitioner.

AAA claimed that on August 16, 1995, petitioner asked her to be at his office to do an
errand.[2] Once inside, she saw him get a folder from one of the cartons on the floor near
his table, and place it on his table. He then asked her to come closer, and when she did,
held her hand, then touched and fondled her breast. She stated that he fondled her breast
five times, and that she felt afraid.[3] A classmate of hers, one Vincent B. Sorrabas,
claiming to have witnessed the incident, testified that the fondling incident did happen
just as AAA related it.[4]

Petitioner was charged with Misconduct in a Formal Charge dated February 12, 1996 by
Regional Director Vivencio N. Muego, Jr. of the CSC.[5]

In his defense, petitioner claimed that the touching incident happened by accident, just as
he was handing AAA a lesson book.[6] He further stated that the incident happened in
about two or three seconds, and that the girl left his office without any complaint. [7]

Resolution of the CSC

In Resolution No. 98-0521 dated March 11, 1998, the CSC found petitioner guilty of
Grave Misconduct (Acts of Sexual Harassment), and dismissed him from the service.
[8]
 Specifically, the CSC found the petitioner to have committed an act constituting sexual
harassment, as defined in Sec. 3 of Republic Act No. (RA) 7877, the Anti-Sexual
Harassment Act of 1995.

Petitioner filed a motion for reconsideration, but the same was denied in Resolution No.
99-0273 dated January 28, 1999.

Decision of the Court of Appeals

Petitioner then brought the matter to the CA under Rule 43 of the 1997 Rules of Civil
Procedure, the recourse docketed as CA-G.R. SP No. 51900.

Petitioner raised the following issues before the CA:

1. Whether or not there were efforts by [AAA], her parents and the Honorable
Civil Service Commission to magnify the accidental touching incident on
August 16, 1995;

2. Whether or not the guilt of the petitioner was supported by the evidence on
record; and

3. Whether or not there was irregularity in the imposition of the penalty of

removal.[9]

In resolving the case, the CA determined that the issue revolved around petitioner's right
to due process, and based on its finding that petitioner had the opportunity to be heard,
found that there was no violation of that right. The CA ruled that, even if petitioner was
formally charged with "disgraceful and immoral conduct and misconduct," the CSC
found that the allegations and evidence sufficiently proved petitioner's guilt of grave
misconduct, punishable by dismissal from the service.

The Issues Before Us

The petitioner now raises the following issues in the present petition:

1. Whether or not the petitioner could be guilty of acts of sexual harassment,

grave misconduct, which was different from or an offense not alleged in the
formal charge filed against him at the inception of the administrative case.

2. Assuming petitioner was guilty of disgraceful and immoral conduct and

misconduct as charged by complainant, whether or not the penalty of
dismissal from the service imposed by the Civil Service Commission and
affirmed by the Court of Appeals is in accord with Rule XIV, Section (23)
of the Omnibus Civil Service Rules and applicable rulings.

3. Whether or not the charge of Misconduct, a lesser offense, includes the

offense of Grave Misconduct; a greater offense.

The petition is without merit.

Petitioner argues that the CSC cannot validly adjudge him guilty of an offense, such as
"Grave Misconduct (Acts of Sexual Harassment)," different from that specified in the
formal charge which was "Misconduct." He further argues that the offense of
"Misconduct" does not include the graver offense of "Grave Misconduct."

This argument is unavailing.

As Dadubo v. Civil Service Commission teaches:

The charge against the respondent in an administrative case need not be drafted with the
precision of an information in a criminal prosecution. It is sufficient that he is apprised of
the substance of the charge against him; what is controlling is the allegation of the acts
complained of, not the designation of the offense.[10]
It is clear that petitioner was sufficiently informed of the basis of the charge against him,
which was his act of improperly touching one of his students. Thus informed, he
defended himself from such charge. The failure to designate the offense specifically and
with precision is of no moment in this administrative case.

The formal charge, while not specifically mentioning RA 7877, The Anti-Sexual

Harassment Act of 1995, imputes on the petitioner acts covered and penalized by said
law. Contrary to the argument of petitioner, the demand of a sexual favor need not be
explicit or stated. In Domingo v. Rayala,[11] it was held, "It is true that this provision calls
for a `demand, request or requirement of a sexual favor.' But it is not necessary that the
demand, request, or requirement of a sexual favor be articulated in a categorical oral or
written statement. It may be discerned, with equal certitude, from the acts of the
offender." The CSC found, as did the CA, that even without an explicit demand from
petitioner his act of mashing the breast of AAA was sufficient to constitute sexual
harassment. Moreover, under Section 3 (b) (4) of RA 7877, sexual harassment in an
education or training environment is committed "(w)hen the sexual advances result in an
intimidating, hostile or offensive environment for the student, trainee or apprentice."
AAA even testified that she felt fear at the time petitioner touched her. [12] It cannot then
be said that the CSC lacked basis for its ruling, when it had both the facts and the law.
The CSC found the evidence presented by the complainant sufficient to support a finding
of grave misconduct. It is basic that factual findings of administrative agencies, when
supported by substantial evidence, are binding upon the Court.

Leaving aside the discrepancy of the designation of the offense in the formal charge, it
must be discussed whether or not petitioner is indeed guilty, as found by the CA and
CSC, of "Grave Misconduct," as distinguished from "Simple Misconduct." From the
findings of fact of the CSC, it is clear that there is misconduct on the part of petitioner.
The term "misconduct" denotes intentional wrongdoing or deliberate violation of a rule of
law or standard of behavior.[13]

We agree with the rulings of the CSC and the CA.

In grave misconduct, the elements of corruption, clear intent to violate the law, or
flagrant disregard of established rule must be manifest.[14] The act of petitioner of
fondling one of his students is against a law, RA 7877, and is doubtless inexcusable. The
particular act of petitioner cannot in any way be construed as a case of simple
misconduct. Sexually molesting a child is, by any norm, a revolting act that it cannot but
be categorized as a grave offense. Parents entrust the care and molding of their children
to teachers, and expect them to be their guardians while in school. Petitioner has violated
that trust. The charge of grave misconduct proven against petitioner demonstrates his
unfitness to remain as a teacher and continue to discharge the functions of his office.

Petitioner's second argument need not be discussed further, as he was rightly found guilty
of grave misconduct. Under Rule IV, Section 52 of the CSC Uniform Rules on
Administrative Cases, "Grave Misconduct" carries with it the penalty of dismissal for the
first offense. Thus, the penalty imposed on petitioner is in accordance with the Rules.

Petitioner was not denied due process of law, contrary to his claims. The essence of due
process is simply an opportunity to be heard, or, as applied to administrative proceedings,
an opportunity to explain one's side or an opportunity to seek for a reconsideration of the
action or ruling complained of.[15] These elements are present in this case, where
petitioner was properly informed of the charge and had a chance to refute it, but failed.
A teacher who perverts his position by sexually harassing a student should not be
allowed, under any circumstance, to practice this noble profession. So it must be here.

WHEREFORE, in view of the foregoing, this petition is hereby DISMISSED, and the

decision of the CA in CA-G.R. SP No. 51900 is hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

FIRST DIVISION
[ G.R. NO. 166379, October 20, 2005 ]
LAKPUE DRUG, INC., LA CROESUS PHARMA, INC., TROPICAL
BIOLOGICAL PHILS., INC. (ALL KNOWN AS LAKPUE GROUP OF
COMPANIES) AND/OR ENRIQUE CASTILLO, JR., PETITIONERS, VS. MA.
LOURDES BELGA, RESPONDENT.

DECISION

YNARES-SANTIAGO, J.:

Before us is a petition for review of the July 28, 2004 Decision [1] of the Court of
Appeals in CA-G.R. SP No. 80616 which reversed and set aside the April 14, 2003
Decision[2] of the National Labor Relations Commission (NLRC) in NLRC NCR 00-09-
04981-01; and its December 17, 2004 Resolution [3] denying the motion for
reconsideration.

Petitioner Tropical Biological Phils., Inc. (Tropical), a subsidiary of Lakpue Group of

Companies, hired on March 1, 1995 respondent Ma. Lourdes Belga (Belga) as
bookkeeper and subsequently promoted as assistant cashier. On March 19, 2001, Belga
brought her daughter to the Philippine General Hospital (PGH) for treatment of
broncho-pneumonia. On her way to the hospital, Belga dropped by the house of
Marylinda O. Vegafria, Technical Manager of Tropical, to hand over the documents she
worked on over the weekend and to give notice of her emergency leave.

While at the PGH, Belga who was pregnant experienced labor pains and gave birth on
the same day. On March 22, 2001, or two days after giving birth, Tropical summoned
Belga to report for work but the latter replied that she could not comply because of her
situation. On March 30, 2001, Tropical sent Belga another memorandum ordering her to
report for work and also informing her of the clarificatory conference scheduled on April
2, 2001. Belga requested that the conference be moved to April 4, 2001 as her newborn
was scheduled for check-up on April 2, 2001. When Belga attended the clarificatory
conference on April 4, 2001, she was informed of her dismissal effective that day.

Belga thus filed a complaint with the Public Assistance and Complaint Unit (PACU) of the
Department of Labor and Employment (DOLE). Attempts to settle the case failed, hence
the parties brought the case before the NLRC-NCR.

Tropical, for its part, averred that it hired Belga on March 1, 1995 as a bookkeeper and
later promoted to various positions the last of which was as "Treasury Assistant".
Tropical claimed that this position was not merely clerical because it included duties
such as assisting the cashier in preparing deposit slips, bills purchased, withdrawal slips,
provisional receipts, incoming and outgoing bank transactions, postdated checks,
supplier's checklist and issuance of checks, authorities to debit and doing liaison work
with banks.

Tropical also alleged that Belga concealed her pregnancy from the company. She did not
apply for leave and her absence disrupted Tropical's financial transactions. On March
21, 2001, it required Belga to explain her unauthorized absence and on March 30, 2001,
it informed her of a conference scheduled on April 2, 2001. Tropical claimed that Belga
refused to receive the second memorandum and did not attend the conference. She
reported for work only on April 4, 2001 where she was given a chance to explain.

On April 17, 2001, Tropical terminated Belga on the following grounds: (1) Absence
without official leave for 16 days; (2) Dishonesty, for deliberately concealing her
pregnancy; (3) Insubordination, for her deliberate refusal to heed and comply with the
memoranda sent by the Personnel Department on March 21 and 30, 2001 respectively.
[4]

The Labor Arbiter ruled in favor of Belga and found that she was illegally dismissed,
thus:
WHEREFORE, the termination of complainant is hereby declared illegal.
ACCORDINGLY, she should be reinstated with full backwages, which as of May 31, 2002,
now amounts to P122, 248.71.

Ten (10%) percent of the total monetary award as attorney's fees is likewise ordered.

SO ORDERED.[5]
Tropical appealed to the NLRC, which reversed the findings of the labor arbiter in
its Decision dated April 14, 2003, thus:
WHEREFORE, in the light of the foregoing, the assailed Decision is REVERSED and
SET ASIDE. We thereby render judgment:

(1) declaring complainant-appellee's dismissal valid; and

(2) nullifying complainant-appellee's monetary claims.

SO ORDERED.[6]
Upon denial of the motion for reconsideration on September 24, 2003, [7] Belga
filed a petition for certiorari with the Court of Appeals which found in favor of Belga,
thus:
WHEREFORE, premises considered, the Decision promulgated on April 14, 2003
and the Resolution promulgated on September 24, 2003 of the public respondent
National Labor Relations Commission are hereby REVERSED and SET ASIDE. The decision
of the Labor Arbiter dated June 15, 2002 is hereby REINSTATED.

SO ORDERED.[8]
Hence, Tropical filed the instant petition claiming that:
I.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN HOLDING THAT

RESPONDENT WAS ILLEGALLY DISMISSED.

II.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN DISREGARDING

THE FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION.[9]
The petition lacks merit.

Tropical's ground for terminating Belga is her alleged concealment of pregnancy. It

argues that such non-disclosure is tantamount to dishonesty and impresses upon this
Court the importance of Belga's position and the gravity of the disruption her
unexpected absence brought to the company. Tropical also charges Belga with
insubordination for refusing to comply with its directives to report for work and to
explain her absence.

Tropical cites the following paragraphs of Article 282 of the Labor Code as legal basis for
terminating Belga:
Article 282. Termination by employer. - An employer may terminate an
employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;

....

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative; ....
We have defined misconduct as a transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. The misconduct to be serious must be
of such grave and aggravated character and not merely trivial and unimportant. Such
misconduct, however serious, must, nevertheless, be in connection with the employee's
work to constitute just cause for his separation. [10]

In the instant case, the alleged misconduct of Belga barely falls within the situation
contemplated by the law. Her absence for 16 days was justified considering that she had
just delivered a child, which can hardly be considered a forbidden act, a dereliction of
duty; much less does it imply wrongful intent on the part of Belga. Tropical harps on the
alleged concealment by Belga of her pregnancy. This argument, however, begs the
question as to how one can conceal a full-term pregnancy. We agree with respondent's
position that it can hardly escape notice how she grows bigger each day. While there
may be instances where the pregnancy may be inconspicuous, it has not been
sufficiently proven by Tropical that Belga's case is such.

Belga's failure to formally inform Tropical of her pregnancy can not be considered as

grave misconduct directly connected to her work as to constitute just cause for her
separation.
The charge of disobedience for Belga's failure to comply with the memoranda must
likewise fail. Disobedience, as a just cause for termination, must be willful or intentional.
Willfulness is characterized by a wrongful and perverse mental attitude rendering the
employee's act inconsistent with proper subordination. [11] In the instant case, the
memoranda were given to Belga two days after she had given birth. It was thus
physically impossible for Belga to report for work and explain her absence, as ordered.

Tropical avers that Belga's job as Treasury Assistant is a position of responsibility since
she handles vital transactions for the company. It adds that the nature of Belga's work
and the character of her duties involved utmost trust and confidence.

Time and again, we have recognized the right of employers to dismiss employees by
reason of loss of trust and confidence. However, we emphasize that such ground is
premised on the fact that the employee concerned holds a position of responsibility or
trust and confidence.[12] In order to constitute a just cause for dismissal, the act
complained of must be "work-related" such as would show the employee concerned to
be unfit to continue working for the employer.[13] More importantly, the loss of trust and
confidence must be based on the willful breach of the trust reposed in the employee by
his employer. A breach of trust is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently.[14]

Belga was an assistant cashier whose primary function was to assist the cashier in such
duties as preparation of deposit slips, provisional receipts, post-dated checks, etc. As
correctly observed by the Court of Appeals, these functions are essentially clerical. For
while ostensibly, the documents that Belga prepares as Assistant Cashier pertain to her
employer's property, her work does not call for independent judgment or discretion.
Belga simply prepares the documents as instructed by her superiors subject to the
latter's verification or approval. Hence, her position cannot be considered as one of
responsibility or imbued with trust and confidence.

Furthermore, Tropical has not satisfactorily shown how and to what extent it had
suffered damages because of Belga's absences. For while it may be true that the
company was caught unprepared and unable to hire a temporary replacement, we are
not convinced that Belga's absence for 16 days has wreaked havoc on Tropical's
business as to justify her termination from the company. On the other hand, it is
undisputed that Belga has worked for Tropical for 7 years without any blemish on her
service record. In fact, the company admitted in its petition that she "has rendered
seven (7) years of service in compliance with [the company's] rules". [15] And her fidelity
to her work is evident because even in the midst of an emergency, she managed to
transmit to the company the documents she worked on over the weekend so that it
would not cause any problem for the company.

All told, we find that the penalty of dismissal was too harsh in light of the circumstances
obtaining in this case. While it may be true that Belga ought to have formally informed
the company of her impending maternity leave so as to give the latter sufficient time to
find a temporary replacement, her termination from employment is not commensurate
to her lapse in judgment.

Even assuming that there was just cause for terminating Belga, her dismissal is
nonetheless invalid for failure of Tropical to observe the twin-notice requirement. The
March 21, 2001 memorandum merely informed her to report for work and explain her
absences. The March 30, 2001 memorandum demanded that she report for work and
attend a clarificatory conference. Belga received the first memorandum but allegedly
refused to receive the second.

In Electro System Industries Corporation v. National Labor Relations Commission,[16] we

held that, in dismissing an employee, the employer has the burden of proving that the
worker has been served two notices: (1) one to apprise him of the particular acts or
omissions for which his dismissal is sought, and (2) the other to inform him of his
employer's decision to dismiss him. The first notice must state that the dismissal is
sought for the act or omission charged against the employee, otherwise the notice
cannot be considered sufficient compliance with the rules. It must also inform outright
that an investigation will be conducted on the charges particularized therein which, if
proven, will result to his dismissal. Further, we held that a notation in the notice that the
employee refused to sign is not sufficient proof that the employer attempted to serve
the notice to the employee.

An employee who was illegally dismissed from work is entitled to reinstatement without
loss of seniority rights, and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual
reinstatement.[17] Thus, Belga is entitled to be reinstated to her former or equivalent
position and to the payment of full backwages from the time she was illegally dismissed
until her actual reinstatement.

WHEREFORE, the instant petition is DENIED. The July 28, 2004 Decision of the Court of
Appeals in CA-G.R. SP No. 80616 and its December 17, 2004 Resolution
are AFFIRMED in toto.

SO ORDERED.

THIRD DIVISION
[ G.R. No. 155831, February 18, 2008 ]
MA. LOURDES T. DOMINGO, Petitioner, vs. ROGELIO I. RAYALA,
Respondent.

G.R. No. 155840

ROGELIO I. RAYALA, Petitioner, vs. OFFICE OF THE PRESIDENT;

RONALDO V. ZAMORA, in his capacity as Executive Secretary; ROY V.
SENERES, in his capacity as Chairman of the National Labor Relations
Commission (in lieu of RAUL T. AQUINO, in his capacity as Acting Chairman
of the National labor Relations Commission); and MA. LOURDES T.
DOMINGO, Respondents.

G.R. No. 158700

The REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF THE

PRESIDENT; and ALBERTO G. ROMULO, in his capacity as Executive
Secretary, Petitioners, vs. ROGELIO I. RAYALA, Respondent.

DECISION

NACHURA, J.:

Sexual harassment is an imposition of misplaced “superiority” which is enough to

dampen an employee’s spirit and her capacity for advancement. It affects her sense of
judgment; it changes her life.[1]

Before this Court are three Petitions for Review on Certiorari assailing the October 18,
2002 Resolution of the CA’s Former Ninth Division[2] in CA-G.R. SP No. 61026. The
Resolution modified the December 14, 2001 Decision[3] of the Court of Appeals’
Eleventh Division, which had affirmed the Decision of the Office of the President (OP)
dismissing from the service then National Labor Relations Commission (NLRC)
Chairman Rogelio I. Rayala (Rayala) for disgraceful and immoral conduct.

All three petitions stem from the same factual antecedents.

On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then Stenographic

Reporter III at the NLRC, filed a Complaint for sexual harassment against Rayala before
Secretary Bienvenido Laguesma of the Department of Labor and Employment (DOLE).

To support the Complaint, Domingo executed an Affidavit narrating the incidences of

sexual harassment complained of, thus:
xxxx

4. Sa simula ay pabulong na sinasabihan lang ako ni Chairman Rayala ng mga

salitang “Lot, gumaganda ka yata?”

5. Sa ibang mga pagkakataon nilalapitan na ako ni Chairman at hahawakan

ang aking balikat sabay pisil sa mga ito habang ako ay nagta-type at habang
nagbibigay siya ng diktasyon. Sa mga pagkakataong ito, kinakabahan ako.
Natatakot na baka mangyari sa akin ang mga napapabalitang insidente na
nangyari na noon tungkol sa mga sekretarya niyang nagbitiw gawa ng mga
mahahalay na panghihipo ni Chairman.

6. Noong ika-10 ng Setyembre, 1998, nang ako ay nasa 8th Floor, may nagsabi
sa akin na kailangan akong bumaba sa 7th Floor kung nasaan ang aming
opisina dahil sa may koreksyon daw na gagawin sa mga papel na tinayp ko.
Bumaba naman ako para gawin ito. Habang ginagawa ko ito, lumabas si
Chairman Rayala sa silid ni Mr. Alex Lopez. Inutusan ako ni Chairman na
sumunod sa kaniyang silid. Nang nasa silid na kami, sinabi niya sa akin:

Chairman Lot, I like you a lot. Naiiba ka sa lahat.

:
At pagkatapos ako ay kaniyang inusisa tungkol sa mga personal na bagay sa aking buhay.
Ang ilan dito ay tungkol sa aking mga magulang, kapatid, pag-aaral at kung may
boyfriend na raw ba ako.
Chairman May boyfriend ka na ba?
:
Lourdes: Dati nagkaroon po.
Chairman Nasaan na siya?
:
Lourdes: Nag-asawa na ho.
 Chairman Bakit hindi kayo nagkatuluyan?
:
Lourdes: Nainip po.
Chairman Pagkatapos mo ng kurso mo ay kumuha ka ng Law at ako
: ang bahala sa iyo, hanggang ako pa ang Chairman dito.
Pagkatapos ay kumuha siya ng pera sa kaniyang amerikana at inaabot sa akin.
Chairman Kuhanin mo ito.
:
Lourdes: Huwag na ho hindi ko kailangan.
Chairman Hindi sige, kuhanin mo. Ayusin mo ang dapat ayusin.
:
Tinanggap ko po ang pera ng may pag-aalinlangan. Natatakot at kinakabahan na kapag
hindi ko tinanggap ang pera ay baka siya magagalit kasabay na rito ang pagtapon sa akin
kung saan-saan opisina o kaya ay tanggalin ako sa posisyon.
Chairman Paglabas mo itago mo ang pera. Ayaw ko ng may makaka-
: alam nito. Just the two of us.
Lourdes: Bakit naman, Sir?
Chairman Basta. Maraming tsismosa diyan sa labas. But I don’t give
: them a damn. Hindi ako mamatay sa kanila.
Tumayo na ako at lumabas. Pumanhik na ako ng 8th Floor at pumunta ako sa officemate
ko na si Agnes Magdaet. Ikinwento ko ang nangyari sa akin sa opisina ni Chairman.
Habang kinikwento ko ito kay Agnes ay binilang namin ang pera na nagkakahalaga ng
tatlong libong piso (PHP 3,000). Sinabi ni Agnes na isauli ko raw ang pera, pero ang sabi
ko ay natatakot ako baka magalit si Sir. Nagsabi agad kami kay EC Perlita Velasco at
sinalaysay ko ang nangyari. Sinabi niya na isauli ko ang pera at noong araw ding iyon ay
nagpasiya akong isauli na nga ito ngunit hindi ako nagkaroon ng pagkakataon dahil
marami siyang naging bisita. Isinauli ko nga ang pera noong Lunes, Setyembre 14, 1998.

7. Noong huling linggo ng Setyembre, 1998, ay may tinanong din sa akin si

Chairman Rayala na hindi ko masikmura, at sa aking palagay at tahasang
pambabastos sa akin.

Chairman Lot, may ka live-in ka ba?

:
Lourdes: Sir, wala po.
Chairman Bakit malaki ang balakang mo?
:
Lourdes: Kayo, Sir ha! Masama sa amin ang may ka live-in.
Chairman Bakit, ano ba ang relihiyon ninyo?
:
Lourdes: Catholic, Sir. Kailangan ikasal muna.
Chairman Bakit ako, hindi kasal.
:
Lourdes: Sir, di magpakasal kayo.
Chairman Huh. Ibahin na nga natin ang usapan.
 :

8. Noong Oktubre 29, 1998, ako ay pumasok sa kwarto ni Chairman Rayala.

Ito ay sa kadahilanang ang fax machine ay nasa loob ng kaniyang kwarto.
Ang nag-aasikaso nito, si Riza Ocampo, ay naka-leave kaya ako ang nag-
asikaso nito noong araw na iyon. Nang mabigyan ko na ng fax tone yung
kausap ko, pagharap ko sa kanan ay nakaharang sa dadaanan ko si
Chairman Rayala. Tinitingnan ako sa mata at ang titig niya ay umuusad
mula ulo hanggang dibdib tapos ay ngumiti na may mahalay na
pakahulugan.

9. Noong hapon naman ng pareho pa ring petsa, may nag-aapply na sekretarya

sa opisina, sinabi ko ito kay Chairman Rayala:

Lourdes: Sir, si Pinky po yung applicant, mag-papainterview po yata

sa inyo.
Chairman Sabihin mo magpa-pap smear muna siya
:
Chairman O sige, i-refer mo kay Alex. (Alex Lopez, Chief of Staff).
:

10. Noong Nobyembre 9, 1998, ako ay tinawag ni Chairman Rayala sa

kaniyang opisina upang kuhanin ko ang diktasyon niya para kay ELA Oscar
Uy. Hindi pa kami nakakatapos ng unang talata, may pumasok na bisita si
Chairman, si Baby Pangilinan na sinamahan ni Riza Ocampo. Pinalabas
muna ako ni Chairman. Nang maka-alis na si Ms. Pangilinan, pinapasok na
niya ako ulit. Umupo ako. Lumapit sa likuran ko si Chairman, hinawakan
ang kaliwang balikat ko na pinipisil ng kanang kamay niya at sinabi:

Chairman:Saan na ba tayo natapos?

Palakad-lakad siya sa aking likuran habang nag-didikta. Huminto siya pagkatapos, at
nilagay niya ang kanang kamay niya sa aking kanang balikat at pinisil-pisil ito
pagkatapos ay pinagapang niya ito sa kanang bahagi ng aking leeg, at pinagapang
hanggang kanang tenga at saka kiniliti. Dito ko inalis ang kaniyang kamay sa
pamamagitan ng aking kaliwang kamay. At saka ko sinabi:
Lourdes: Sir, yung kamay ninyo alisin niyo!
Natapos ko rin ang liham na pinagagawa niya pero halos hindi ko na maintindihan ang
na-isulat ko dahil sa takot at inis na nararamdaman ko.[4]
After the last incident narrated, Domingo filed for leave of absence and asked to be
immediately transferred. Thereafter, she filed the Complaint for sexual harassment on the
basis of Administrative Order No. 250, the Rules and Regulations Implementing RA 7877
in the Department of Labor and Employment.
Upon receipt of the Complaint, the DOLE Secretary referred the Complaint to the OP,
Rayala being a presidential appointee. The OP, through then Executive Secretary
Ronaldo Zamora, ordered Secretary Laguesma to investigate the allegations in the
Complaint and create a committee for such purpose. On December 4, 1998, Secretary
Laguesma issued Administrative Order (AO) No. 280, Series of 1998, [5] constituting a
Committee on Decorum and Investigation (Committee) in accordance with Republic Act
(RA) 7877, the Anti-Sexual Harassment Act of 1995.[6]

The Committee heard the parties and received their respective evidence. On March 2,
2000, the Committee submitted its report and recommendation to Secretary Laguesma. It
found Rayala guilty of the offense charged and recommended the imposition of the
minimum penalty provided under AO 250, which it erroneously stated as suspension for
six (6) months.

The following day, Secretary Laguesma submitted a copy of the Committee Report and
Recommendation to the OP, but with the recommendation that the penalty should be
suspension for six (6) months and one (1) day, in accordance with AO 250.

On May 8, 2000, the OP, through Executive Secretary Zamora, issued AO 119, [7] the
pertinent portions of which read:
Upon a careful scrutiny of the evidence on record, I concur with the findings of the
Committee as to the culpability of the respondent [Rayala], the same having been
established by clear and convincing evidence. However, I disagree with the
recommendation that respondent be meted only the penalty of suspension for six (6)
months and one (1) day considering the circumstances of the case.

What aggravates respondent’s situation is the undeniable circumstance that he took

advantage of his position as the superior of the complainant. Respondent occupies the
highest position in the NLRC, being its Chairman. As head of said office, it was
incumbent upon respondent to set an example to the others as to how they should conduct
themselves in public office, to see to it that his subordinates work efficiently in
accordance with Civil Service Rules and Regulations, and to provide them with healthy
working atmosphere wherein co-workers treat each other with respect, courtesy and
cooperation, so that in the end the public interest will be benefited (City Mayor of
Zamboanga vs. Court of Appeals, 182 SCRA 785 [1990]).

What is more, public service requires the utmost integrity and strictest discipline (Gano
vs. Leonen, 232 SCRA 99 [1994]). Thus, a public servant must exhibit at all times the
highest sense of honesty and integrity, and “utmost devotion and dedication to duty”
(Sec. 4 (g), RA 6713), respect the rights of others and shall refrain from doing acts
contrary to law, and good morals (Sec. 4(c)). No less than the Constitution sanctifies the
principle that a public office is a public trust, and enjoins all public officers and
employees to serve with the highest degree of responsibility, integrity, loyalty and
efficiency (Section 1, Article XI, 1987 Constitution).

Given these established standards, I see respondent’s acts not just [as] a failure to give
due courtesy and respect to his co-employees (subordinates) or to maintain good conduct
and behavior but defiance of the basic norms or virtues which a government official must
at all times uphold, one that is contrary to law and “public sense of morality.” Otherwise
stated, respondent – to whom stricter standards must apply being the highest official [of]
the NLRC – had shown an attitude, a frame of mind, a disgraceful conduct, which renders
him unfit to remain in the service.

WHEREFORE, in view of the foregoing, respondent Rogelio I. Rayala, Chairman,

National Labor Relations Commission, is found guilty of the grave offense of disgraceful
and immoral conduct and is hereby DISMISSED from the service effective upon receipt
of this Order.

SO ORDER[ED].
Rayala filed a Motion for Reconsideration, which the OP denied in a Resolution[8] dated
May 24, 2000. He then filed a Petition for Certiorari and Prohibition with Prayer for
Temporary Restraining Order under Rule 65 of the Revised Rules on Civil Procedure
before this Court on June 14, 2000.[9] However, the same was dismissed in a Resolution
dated June 26, 2000 for disregarding the hierarchy of courts.[10] Rayala filed a Motion for

Reconsideration[11] on August 15, 2000. In its Resolution[12] dated September 4, 2000, the

Court recalled its June 26 Resolution and referred the petition to the Court of Appeals
(CA) for appropriate action.

The CA rendered its Decision[13] on December 14, 2001. It held that there was sufficient
evidence on record to create moral certainty that Rayala committed the acts he was
charged with. It said:
The complainant narrated her story complete with details. Her straightforward and
uninhibited testimony was not emasculated by the declarations of Commissioner Rayala
or his witnesses. x x x

Moreover, Commissioner Rayala has not proven any vicious motive for Domingo and her
witnesses to invent their stories. It is very unlikely that they would perjure themselves
only to accommodate the alleged conspiracy to oust petitioner from office. Save for his
empty conjectures and speculations, Rayala failed to substantiate his contrived
conspiracy. It is a hornbook doctrine that conspiracy must be proved by positive and
convincing evidence (People v. Noroña, 329 SCRA 502 [2000]). Besides, it is improbable
that the complainant would concoct a story of sexual harassment against the highest
official of the NLRC and thereby expose herself to the possibility of losing her job, or be
the subject of reprisal from her superiors and perhaps public ridicule if she was not telling
the truth.
It also held that Rayala’s dismissal was proper. The CA pointed out that Rayala was
dismissed for disgraceful and immoral conduct in violation of RA 6713, the Code of
Conduct and Ethical Standards for Public Officials and Employees. It held that the OP
was correct in concluding that Rayala’s acts violated RA 6713:
Indeed, [Rayala] was a public official, holding the Chairmanship of the National Labor
Relations Commission, entrusted with the sacred duty of administering justice.
Occupying as he does such an exalted position, Commissioner Rayala must pay a high
price for the honor bestowed upon him. He must comport himself at all times in such a
manner that the conduct of his everyday life should be beyond reproach and free from
any impropriety. That the acts complained of were committed within the sanctuary of
[his] office compounded the objectionable nature of his wrongdoing. By daring to violate
the complainant within the solitude of his chambers, Commissioner Rayala placed the
integrity of his office in disrepute. His disgraceful and immoral conduct warrants his
removal from office.[14]
Thus, it dismissed the petition, to wit:
IN VIEW OF ALL THE FOREGOING, the instant petition is hereby DISMISSED and
Administrative Order No. 119 as well [as] the Resolution of the Office of the President in
O.P. Case No. 00-E-9118 dated May 24, 2000 are AFFIRMED IN TOTO. No cost.

SO ORDERED.[15]
Rayala timely filed a Motion for Reconsideration. Justices Vasquez and Tolentino voted
to affirm the December 14 Decision. However, Justice Reyes dissented mainly because
AO 250 states that the penalty imposable is suspension for six (6) months and one (1)
day.[16] Pursuant to the internal rules of the CA, a Special Division of Five was
constituted.[17] In its October 18, 2002 Resolution, the CA modified its earlier Decision:
ACCORDINGLY, the Decision dated December [14], 2001 is MODIFIED to the effect
that the penalty of dismissal is DELETED and instead the penalty of suspension from
service for the maximum period of one (1) year is HEREBY IMPOSED upon the
petitioner. The rest of the challenged decision stands.

SO ORDERED.
Domingo filed a Petition for Review[18] before this Court, which we denied in our
February 19, 2003 Resolution for having a defective verification. She filed a Motion for
Reconsideration, which the Court granted; hence, the petition was reinstated.

Rayala likewise filed a Petition for Review[19] with this Court essentially arguing that he
is not guilty of any act of sexual harassment.

Meanwhile, the Republic filed a Motion for Reconsideration of the CA’s October 18,
2002 Resolution. The CA denied the same in its June 3, 2003 Resolution, the dispositive
portion of which reads:
ACCORDINGLY, by a majority vote, public respondents’ Motion for Reconsideration,
(sic) is DENIED.

SO ORDERED.
The Republic then filed its own Petition for Review.[20]

On June 28, 2004, the Court directed the consolidation of the three (3) petitions.

G.R. No. 155831

Domingo assails the CA’s resolution modifying the penalty imposed by the Office of the
President. She raises this issue:
The Court of Appeals erred in modifying the penalty for the respondent from dismissal to
suspension from service for the maximum period of one year. The President has the
prerogative to determine the proper penalty to be imposed on an erring Presidential
appointee. The President was well within his power when he fittingly used that
prerogative in deciding to dismiss the respondent from the service.[21]
She argues that the power to remove Rayala, a presidential appointee, is lodged with the
President who has control of the entire Executive Department, its bureaus and offices.
The OP’s decision was arrived at after affording Rayala due process. Hence, his dismissal
from the service is a prerogative that is entirely with the President.[22]

As to the applicability of AO No. 250, she argues that the same was not intended to cover
cases against presidential appointees. AO No. 250 refers only to the instances wherein the
DOLE Secretary is the disciplining authority, and thus, the AO does not circumscribe the
power of the President to dismiss an erring presidential appointee.

G.R. No. 155840

In his petition, Rayala raises the following issues:

I. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, THE

ACTS OF HEREIN PETITIONER DO NOT CONSTITUTE SEXUAL
HARASSMENT AS LAID DOWN BY THE En Banc RULING IN THE
CASE OF AQUINO vs. ACOSTA, ibid., AS WELL AS IN THE
APPLICATION OF EXISTING LAWS.

II. CONTRARY TO THE FINDINGS OF THE HONORABLE COURT OF

APPEALS, INTENT IS AN INDISPENSABLE ELEMENT IN A CASE
FOR SEXUAL HARASSMENT. THE HONORABLE COURT ERRED
IN ITS FINDING THAT IT IS AN OFFENSE THAT IS MALUM
PROHIBITUM.
 III. THE INVESTIGATION COMMITTEE, THE OFFICE OF THE
PRESIDENT, AND NOW, THE HONORABLE COURT OF APPEALS,
HAS MISAPPLIED AND EXPANDED THE DEFINITION OF SEXUAL
HARASSMENT IN THE WORKPLACE UNDER R.A. No. 7877, BY
APPLYING DOLE A.O. 250, WHICH RUNS COUNTER TO THE
RECENT PRONOUNCEMENTS OF THIS HONORABLE SUPREME
COURT.[23]

Invoking Aquino v. Acosta,[24] Rayala argues that the case is the definitive ruling on what
constitutes sexual harassment. Thus, he posits that for sexual harassment to exist under
RA 7877, there must be: (a) demand, request, or requirement of a sexual favor; (b) the
same is made a pre-condition to hiring, re-employment, or continued employment; or (c)
the denial thereof results in discrimination against the employee.

Rayala asserts that Domingo has failed to allege and establish any sexual favor, demand,
or request from petitioner in exchange for her continued employment or for her
promotion. According to Rayala, the acts imputed to him are without malice or ulterior
motive. It was merely Domingo’s perception of malice in his alleged acts – a “product of
her own imagination”[25] – that led her to file the sexual harassment complaint.

Likewise, Rayala assails the OP’s interpretation, as upheld by the CA, that RA 7877
is malum prohibitum such that the defense of absence of malice is unavailing. He argues
that sexual harassment is considered an offense against a particular person, not against
society as a whole. Thus, he claims that intent is an essential element of the offense
because the law requires as a conditio sine qua non that a sexual favor be first sought by
the offender in order to achieve certain specific results. Sexual harassment is committed
with the perpetrator’s deliberate intent to commit the offense.[26]

Rayala next argues that AO 250 expands the acts proscribed in RA 7877. In particular, he
assails the definition of the forms of sexual harassment:
Rule IV

FORMS OF SEXUAL HARASSMENT

Section 1. Forms of Sexual Harassment. – Sexual harassment may be committed in any

of the following forms:

a) Overt sexual advances;

b) Unwelcome or improper gestures of affection;

c) Request or demand for sexual favors including but not limited to going out on dates,
outings or the like for the same purpose;
d) Any other act or conduct of a sexual nature or for purposes of sexual gratification
which is generally annoying, disgusting or offensive to the victim.[27]
He posits that these acts alone without corresponding demand, request, or requirement do
not constitute sexual harassment as contemplated by the law.[28] He alleges that the rule-
making power granted to the employer in Section 4(a) of RA 7877 is limited only to
procedural matters. The law did not delegate to the employer the power to promulgate
rules which would provide other or additional forms of sexual harassment, or to come up
with its own definition of sexual harassment.[29]

G.R. No. 158700

The Republic raises this issue:

Whether or not the President of the Philippines may validly dismiss respondent
Rayala as Chairman of the NLRC for committing acts of sexual harassment.[30]
The Republic argues that Rayala’s acts constitute sexual harassment under AO 250. His
acts constitute unwelcome or improper gestures of affection and are acts or conduct of a
sexual nature, which are generally annoying or offensive to the victim. [31]

It also contends that there is no legal basis for the CA’s reduction of the penalty imposed
by the OP. Rayala’s dismissal is valid and warranted under the circumstances. The power
to remove the NLRC Chairman solely rests upon the President, limited only by the
requirements under the law and the due process clause.

The Republic further claims that, although AO 250 provides only a one (1) year
suspension, it will not prevent the OP from validly imposing the penalty of dismissal on
Rayala. It argues that even though Rayala is a presidential appointee, he is still subject to
the Civil Service Law. Under the Civil Service Law, disgraceful and immoral conduct,
the acts imputed to Rayala, constitute grave misconduct punishable by dismissal from the
service.[32] The Republic adds that Rayala’s position is invested with public trust and his
acts violated that trust; thus, he should be dismissed from the service.

This argument, according to the Republic, is also supported by Article 215 of the Labor
Code, which states that the Chairman of the NLRC holds office until he reaches the age
of 65 only during good behavior.[33] Since Rayala’s security of tenure is conditioned upon
his good behavior, he may be removed from office if it is proven that he has failed to live
up to this standard.

All the issues raised in these three cases can be summed up in two ultimate questions,
namely:
(1) Did Rayala commit sexual harassment?
(2) If he did, what is the applicable penalty?
Initially, however, we must resolve a procedural issue raised by Rayala. He accuses the
Office of the Solicitor General (OSG), as counsel for the Republic, of forum shopping
because it filed a motion for reconsideration of the decision in CA-G.R. SP No. 61026
and then filed a comment in G.R. No. 155840 before this Court.

We do not agree.

Forum shopping is an act of a party, against whom an adverse judgment or order has been
rendered in one forum, of seeking and possibly securing a favorable opinion in another
forum, other than by appeal or special civil action for certiorari.[34] It consists of filing
multiple suits involving the same parties for the same cause of action, either
simultaneously or successively, for the purpose of obtaining a favorable judgment. [35]

There is forum shopping when the following elements concur: (1) identity of the parties
or, at least, of the parties who represent the same interest in both actions; (2) identity of
the rights asserted and relief prayed for, as the latter is founded on the same set of facts;
and (3) identity of the two preceding particulars such that any judgment rendered in the
other action will amount to res judicata in the action under consideration or will
constitute litis pendentia.[36]

Reviewing the antecedents of these consolidated cases, we note that the CA rendered the
assailed Resolution on October 18, 2002. The Republic filed its Motion for
Reconsideration on November 22, 2002. On the other hand, Rayala filed his petition
before this Court on November 21, 2002. While the Republic’s Motion for
Reconsideration was pending resolution before the CA, on December 2, 2002, it was
directed by this Court to file its Comment on Rayala’s petition, which it submitted on
June 16, 2003.

When the CA denied the Motion for Reconsideration, the Republic filed its own Petition
for Review with this Court on July 3, 2003. It cited in its “Certification and Verification
of a Non-Forum Shopping” (sic), that there was a case involving the same facts pending
before this Court denominated as G.R. No. 155840. With respect to Domingo’s petition,
the same had already been dismissed on February 19, 2003. Domingo’s petition was
reinstated on June 16, 2003 but the resolution was received by the OSG only on July 25,
2003, or after it had filed its own petition.[37]

Based on the foregoing, it cannot be said that the OSG is guilty of forum shopping. We
must point out that it was Rayala who filed the petition in the CA, with the Republic as
the adverse party. Rayala himself filed a motion for reconsideration of the CA’s
December 21, 2001 Decision, which led to a more favorable ruling, i.e., the lowering of
the penalty from dismissal to one-year suspension. The parties adversely affected by this
ruling (Domingo and the Republic) had the right to question the same on motion for
reconsideration. But Domingo directly filed a Petition for Review with this Court, as did
Rayala. When the Republic opted to file a motion for reconsideration, it was merely
exercising a right. That Rayala and Domingo had by then already filed cases before the
SC did not take away this right. Thus, when this Court directed the Republic to file its
Comment on Rayala’s petition, it had to comply, even if it had an unresolved motion for
reconsideration with the CA, lest it be cited for contempt.

Accordingly, it cannot be said that the OSG “file[d] multiple suits involving the same
parties for the same cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment.”

We now proceed to discuss the substantive issues.

It is noteworthy that the five CA Justices who deliberated on the case were unanimous in
upholding the findings of the Committee and the OP. They found the assessment made by
the Committee and the OP to be a “meticulous and dispassionate analysis of the
testimonies of the complainant (Domingo), the respondent (Rayala), and their respective
witnesses.” [38] They differed only on the appropriate imposable penalty.

That Rayala committed the acts complained of – and was guilty of sexual harassment –
is, therefore, the common factual finding of not just one, but three independent bodies:
the Committee, the OP and the CA. It should be remembered that when supported by
substantial evidence, factual findings made by quasi-judicial and administrative bodies
are accorded great respect and even finality by the courts.[39] The principle, therefore,
dictates that such findings should bind us.[40]

Indeed, we find no reason to deviate from this rule. There appears no valid ground for
this Court to review the factual findings of the CA, the OP, and the Investigating
Committee. These findings are now conclusive on the Court. And quite significantly,
Rayala himself admits to having committed some of the acts imputed to him.

He insists, however, that these acts do not constitute sexual harassment, because
Domingo did not allege in her complaint that there was a demand, request, or requirement
of a sexual favor as a condition for her continued employment or for her promotion to a
higher position.[41] Rayala urges us to apply to his case our ruling in Aquino v. Acosta.[42]

We find respondent’s insistence unconvincing.

Basic in the law of public officers is the three-fold liability rule, which states that the
wrongful acts or omissions of a public officer may give rise to civil, criminal and
administrative liability. An action for each can proceed independently of the others.
[43]
 This rule applies with full force to sexual harassment.
The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof
defines work-related sexual harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual Harassment Defined. – Work,
education or training-related sexual harassment is committed by an employer, manager,
supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any
other person who, having authority, influence or moral ascendancy over another in a
work or training or education environment, demands, requests or otherwise requires any
sexual favor from the other, regardless of whether the demand, request or requirement for
submission is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the employment, re-
employment or continued employment of said individual, or in granting said individual
favorable compensation, terms, conditions, promotions, or privileges; or the refusal to
grant the sexual favor results in limiting, segregating or classifying the employee which
in a way would discriminate, deprive or diminish employment opportunities or otherwise
adversely affect said employee;

(2) The above acts would impair the employee’s rights or privileges under existing labor
laws; or

(3) The above acts would result in an intimidating, hostile, or offensive environment for
the employee.
This section, in relation to Section 7 on penalties, defines the criminal aspect of the
unlawful act of sexual harassment. The same section, in relation to Section 6, authorizes
the institution of an independent civil action for damages and other affirmative relief.

Section 4, also in relation to Section 3, governs the procedure for administrative

cases, viz.:
Sec. 4. Duty of the Employer or Head of Office in a Work-related, Education or Training
Environment. – It shall be the duty of the employer or the head of the work-related,
educational or training environment or institution, to prevent or deter the commission of
acts of sexual harassment and to provide the procedures for the resolution, settlement or
prosecution of acts of sexual harassment. Towards this end, the employer or head of
office shall:
(a) Promulgate appropriate rules and regulations in consultation with
and jointly approved by the employees or students or trainees,
through their duly designated representatives, prescribing the
procedure for the investigation or sexual harassment cases and the
administrative sanctions therefor.
Administrative sanctions shall not be a bar to prosecution in the
proper courts for unlawful acts of sexual harassment.
 The said rules and regulations issued pursuant to this section (a)
shall include, among others, guidelines on proper decorum in the
workplace and educational or training institutions.
(b) Create a committee on decorum and investigation of cases on
sexual harassment. The committee shall conduct meetings, as the
case may be, with other officers and employees, teachers,
instructors, professors, coaches, trainors and students or trainees to
increase understanding and prevent incidents of sexual harassment.
It shall also conduct the investigation of the alleged cases
constituting sexual harassment.
In the case of a work-related environment, the committee shall be composed of at least
one (1) representative each from the management, the union, if any, the employees from
the supervisory rank, and from the rank and file employees.

In the case of the educational or training institution, the committee shall be composed of
at least one (1) representative from the administration, the trainors, teachers, instructors,
professors or coaches and students or trainees, as the case maybe.

The employer or head of office, educational or training institution shall disseminate or

post a copy of this Act for the information of all concerned.
The CA, thus, correctly ruled that Rayala’s culpability is not to be determined solely on
the basis of Section 3, RA 7877, because he is charged with the administrative offense,
not the criminal infraction, of sexual harassment.[44] It should be enough that the CA,
along with the Investigating Committee and the Office of the President, found substantial
evidence to support the administrative charge.

Yet, even if we were to test Rayala’s acts strictly by the standards set in Section 3, RA
7877, he would still be administratively liable. It is true that this provision calls for a
“demand, request or requirement of a sexual favor.” But it is not necessary that the
demand, request or requirement of a sexual favor be articulated in a categorical oral or
written statement. It may be discerned, with equal certitude, from the acts of the offender.
Holding and squeezing Domingo’s shoulders, running his fingers across her neck and
tickling her ear, having inappropriate conversations with her, giving her money allegedly
for school expenses with a promise of future privileges, and making statements with
unmistakable sexual overtones – all these acts of Rayala resound with deafening clarity
the unspoken request for a sexual favor.

Likewise, contrary to Rayala’s claim, it is not essential that the demand, request or
requirement be made as a condition for continued employment or for promotion to a
higher position. It is enough that the respondent’s acts result in creating an intimidating,
hostile or offensive environment for the employee.[45] That the acts of Rayala generated
an intimidating and hostile environment for Domingo is clearly shown by the common
factual finding of the Investigating Committee, the OP and the CA that Domingo reported
the matter to an officemate and, after the last incident, filed for a leave of absence and
requested transfer to another unit.

Rayala’s invocation of Aquino v. Acosta[46] is misplaced, because the factual setting in

that case is different from that in the case at bench. In Aquino, Atty. Susan Aquino, Chief
of the Legal and Technical Staff of the Court of Tax Appeals (CTA), charged then CTA
Presiding Judge (now Presiding Justice) Ernesto Acosta of sexual harassment. She
complained of several incidents when Judge Acosta allegedly kissed her, embraced her,
and put his arm around her shoulder. The case was referred to CA Justice Josefina G.
Salonga for investigation. In her report, Justice Salonga found that “the complainant
failed to show by convincing evidence that the acts of Judge Acosta in greeting her with a
kiss on the cheek, in a `beso-beso’ fashion, were carried out with lustful and lascivious
desires or were motivated by malice or ill motive. It is clear from the circumstances that
most of the kissing incidents were done on festive and special occasions,” and they “took
place in the presence of other people and the same was by reason of the exaltation or
happiness of the moment.” Thus, Justice Salonga concluded:
In all the incidents complained of, the respondent's pecks on the cheeks of the
complainant should be understood in the context of having been done on the occasion of
some festivities, and not the assertion of the latter that she was singled out by Judge
Acosta in his kissing escapades. The busses on her cheeks were simply friendly and
innocent, bereft of malice and lewd design. The fact that respondent judge kisses other
people on the cheeks in the 'beso-beso' fashion, without malice, was corroborated by
Atty. Florecita P. Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili, who stated
that they usually practice 'beso-beso' or kissing on the cheeks, as a form of greeting on
occasions when they meet each other, like birthdays, Christmas, New Year's Day and
even Valentine's Day, and it does not matter whether it is Judge Acosta's birthday or their
birthdays. Theresa Cinco Bactat, a lawyer who belongs to complainant's department,
further attested that on occasions like birthdays, respondent judge would likewise greet
her with a peck on the cheek in a 'beso-beso' manner. Interestingly, in one of several
festive occasions, female employees of the CTA pecked respondent judge on the cheek
where Atty. Aquino was one of Judge Acosta's well wishers.

In sum, no sexual harassment had indeed transpired on those six occasions. Judge
Acosta's acts of bussing Atty. Aquino on her cheek were merely forms of greetings,
casual and customary in nature. No evidence of intent to sexually harass complainant was
apparent, only that the innocent acts of 'beso-beso' were given malicious connotations by
the complainant. In fact, she did not even relate to anyone what happened to her.
Undeniably, there is no manifest sexual undertone in all those incidents. [47]
This Court agreed with Justice Salonga, and Judge Acosta was exonerated.

To repeat, this factual milieu in Aquino does not obtain in the case at bench. While
in Aquino, the Court interpreted the acts (of Judge Acosta) as casual gestures of
friendship and camaraderie, done during festive or special occasions and with other
people present, in the instant case, Rayala’s acts of holding and squeezing Domingo’s
shoulders, running his fingers across her neck and tickling her ear, and the inappropriate
comments, were all made in the confines of Rayala’s office when no other members of
his staff were around. More importantly, and a circumstance absent in Aquino, Rayala’s
acts, as already adverted to above, produced a hostile work environment for Domingo, as
shown by her having reported the matter to an officemate and, after the last incident,
filing for a leave of absence and requesting transfer to another unit.

Rayala also argues that AO 250 does not apply to him. First, he argues that AO 250 does
not cover the NLRC, which, at the time of the incident, was under the DOLE only for
purposes of program and policy coordination. Second, he posits that even assuming AO
250 is applicable to the NLRC, he is not within its coverage because he is a presidential
appointee.

We find, however, that the question of whether or not AO 250 covers Rayala is of no real
consequence. The events of this case unmistakably show that the administrative charges
against Rayala were for violation of RA 7877; that the OP properly assumed jurisdiction
over the administrative case; that the participation of the DOLE, through the Committee
created by the Secretary, was limited to initiating the investigation process, reception of
evidence of the parties, preparation of the investigation report, and recommending the
appropriate action to be taken by the OP. AO 250 had never really been applied to
Rayala. If it was used at all, it was to serve merely as an auxiliary procedural guide to aid
the Committee in the orderly conduct of the investigation.

Next, Rayala alleges that the CA erred in holding that sexual harassment is an
offense malum prohibitum. He argues that intent is an essential element in sexual
harassment, and since the acts imputed to him were done allegedly without malice, he
should be absolved of the charges against him.

We reiterate that what is before us is an administrative case for sexual harassment. Thus,

whether the crime of sexual harassment is malum in se or malum prohibitum is
immaterial.

We also reject Rayala’s allegations that the charges were filed because of a conspiracy to
get him out of office and thus constitute merely political harassment. A conspiracy must
be proved by clear and convincing evidence. His bare assertions cannot stand against the
evidence presented by Domingo. As we have already ruled, the acts imputed to Rayala
have been proven as fact. Moreover, he has not proven any ill motive on the part of
Domingo and her witnesses which would be ample reason for her to conjure stories about
him. On the contrary, ill motive is belied by the fact that Domingo and her witnesses – all
employees of the NLRC at that time – stood to lose their jobs or suffer unpleasant
consequences for coming forward and charging their boss with sexual harassment.

Furthermore, Rayala decries the alleged violation of his right to due process. He accuses
the Committee on Decorum of railroading his trial for violation of RA 7877. He also
scored the OP’s decision finding him guilty of “disgraceful and immoral conduct” under
the Revised Administrative Code and not for violation of RA 7877. Considering that he
was not tried for “disgraceful and immoral conduct,” he argues that the verdict is a “sham
and total nullity.”

We hold that Rayala was properly accorded due process. In previous cases, this Court
held that:
[i]n administrative proceedings, due process has been recognized to include the
following: (1) the right to actual or constructive notice of the institution of proceedings
which may affect a respondent’s legal rights; (2) a real opportunity to be heard personally
or with the assistance of counsel, to present witnesses and evidence in one’s favor, and to
defend one’s rights; (3) a tribunal vested with competent jurisdiction and so constituted
as to afford a person charged administratively a reasonable guarantee of honesty as well
as impartiality; and (4) a finding by said tribunal which is supported by substantial
evidence submitted for consideration during the hearing or contained in the records or
made known to the parties affected.[48]
The records of the case indicate that Rayala was afforded all these procedural due process
safeguards. Although in the beginning he questioned the authority of the Committee to
try him,[49] he appeared, personally and with counsel, and participated in the proceedings.

On the other point raised, this Court has held that, even in criminal cases, the designation
of the offense is not controlling, thus:
What is controlling is not the title of the complaint, nor the designation of the offense
charged or the particular law or part thereof allegedly violated, these being mere
conclusions of law made by the prosecutor, but the description of the crime charged and
the particular facts therein recited. The acts or omissions complained of must be alleged
in such form as is sufficient to enable a person of common understanding to know what
offense is intended to be charged, and enable the court to pronounce proper judgment. No
information for a crime will be sufficient if it does not accurately and clearly allege the
elements of the crime charged. Every element of the offense must be stated in the
information. What facts and circumstances are necessary to be included therein must be
determined by reference to the definitions and essentials of the specified crimes. The
requirement of alleging the elements of a crime in the information is to inform the
accused of the nature of the accusation against him so as to enable him to suitably prepare
his defense.[50]
It is noteworthy that under AO 250, sexual harassment amounts to disgraceful and
immoral conduct.[51] Thus, any finding of liability for sexual harassment may also be the
basis of culpability for disgraceful and immoral conduct.

With the foregoing disquisitions affirming the finding that Rayala committed sexual
harassment, we now determine the proper penalty to be imposed.
Rayala attacks the penalty imposed by the OP. He alleges that under the pertinent Civil
Service Rules, disgraceful and immoral conduct is punishable by suspension for a period
of six (6) months and one (1) day to one (1) year. He also argues that since he is charged
administratively, aggravating or mitigating circumstances cannot be appreciated for
purposes of imposing the penalty.

Under AO 250, the penalty for the first offense is suspension for six (6) months and one
(1) day to one (1) year, while the penalty for the second offense is dismissal. [52] On the
other hand, Section 22(o), Rule XVI of the Omnibus Rules Implementing Book V of the
Administrative Code of 1987[53] and Section 52 A(15) of the Revised Uniform Rules on
Administrative Cases in the Civil Service[54] both provide that the first offense of
disgraceful and immoral conduct is punishable by suspension of six (6) months and one
(1) day to one (1) year. A second offense is punishable by dismissal.

Under the Labor Code, the Chairman of the NLRC shall hold office during good
behavior until he or she reaches the age of sixty-five, unless sooner removed for cause
as provided by law or becomes incapacitated to discharge the duties of the office.[55]

In this case, it is the President of the Philippines, as the proper disciplining authority, who
would determine whether there is a valid cause for the removal of Rayala as NLRC
Chairman. This power, however, is qualified by the phrase “for cause as provided by
law.” Thus, when the President found that Rayala was indeed guilty of disgraceful and
immoral conduct, the Chief Executive did not have unfettered discretion to impose a
penalty other than the penalty provided by law for such offense. As cited above, the
imposable penalty for the first offense of either the administrative offense of sexual
harassment or for disgraceful and immoral conduct is suspension of six (6) months and
one (1) day to one (1) year. Accordingly, it was error for the Office of the President to
impose upon Rayala the penalty of dismissal from the service, a penalty which can only
be imposed upon commission of a second offense.

Even if the OP properly considered the fact that Rayala took advantage of his high
government position, it still could not validly dismiss him from the service. Under
the Revised Uniform Rules on Administrative Cases in the Civil Service,[56] taking undue
advantage of a subordinate may be considered as an aggravating circumstance [57] and
where only aggravating and no mitigating circumstances are present, the maximum
penalty shall be imposed.[58] Hence, the maximum penalty that can be imposed on Rayala
is suspension for one (1) year.

Rayala holds the exalted position of NLRC Chairman, with the rank equivalent to a CA
Justice. Thus, it is not unavailing that rigid standards of conduct may be demanded of
him. In Talens-Dabon v. Judge Arceo,[59] this Court, in upholding the liability of therein
respondent Judge, said:
The actuations of respondent are aggravated by the fact that complainant is one of his
subordinates over whom he exercises control and supervision, he being the executive
judge. He took advantage of his position and power in order to carry out his lustful and
lascivious desires. Instead of he being in loco parentis over his subordinate employees,
respondent was the one who preyed on them, taking advantage of his superior position.
In yet another case, this Court declared:
As a managerial employee, petitioner is bound by more exacting work ethics. He failed to
live up to his higher standard of responsibility when he succumbed to his moral
perversity. And when such moral perversity is perpetrated against his subordinate, he
provides a justifiable ground for his dismissal for lack of trust and confidence. It is the
right, nay, the duty of every employer to protect its employees from oversexed superiors.
[60]

It is incumbent upon the head of office to set an example on how his employees should
conduct themselves in public office, so that they may work efficiently in a healthy
working atmosphere. Courtesy demands that he should set a good example.[61]

Rayala has thrown every argument in the book in a vain effort to effect his exoneration.
He even puts Domingo’s character in question and casts doubt on the morality of the
former President who ordered, albeit erroneously, his dismissal from the service.
Unfortunately for him, these are not significant factors in the disposition of the case. It is
his character that is in question here and sadly, the inquiry showed that he has been found
wanting.

WHEREFORE, the foregoing premises considered, the October 18, 2002 Resolution of
the Court of Appeals in CA-G.R. SP No. 61026 is AFFIRMED. Consequently, the
petitions in G.R. Nos. 155831, 155840, and 158700 are DENIED. No pronouncement as
to costs.

SO ORDERED.

THIRD DIVISION
[ G.R. No. 170661, December 04, 2009 ]
RAMON B. FORMANTES, PETITIONER, VS. DUNCAN
PHARMACEUTICALS, PHILS., INC., RESPONDENT.

DECISION
PERALTA, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court seeking to set aside the Decision[1] and the Resolution[2] of the Court of Appeals
(CA) in CA-G.R. SP No. 57528, which affirmed with modification the Resolutions
rendered by the National Labor Relations Commission (NLRC), Second Division, dated
October 19, 1999[3] and December 21, 1999,[4] respectively, in NLRC NCR CA 010480-96.

Petitioner Ramon B. Formantes was employed as a medical representative by

respondent Duncan Pharmaceuticals, Phils., Inc. on September 1, 1990. He later became
the Acting District Manager of respondent for the Ilocos District.

On March 18, 1994, petitioner received a long distance call from Rey Biscaro, Regional
Sales Manager of respondent, asking him to report at the head office on March 21,
1994. Thereafter, petitioner went to the head office and was confronted by said Mr.
Biscaro and Emeterio Shinyo, Marketing and Sales Director, due to his attempt to
sexually force himself upon his subordinate Cynthia Magat, one of the medical
representatives of respondent company. Petitioner and Ms. Magat separately related
their sides of the incident to the respondent company's officers. Petitioner was then
compelled by respondent to take a leave of absence.

Thereafter, Biscaro tried to induce petitioner to resign, which the latter refused.
Petitioner's salary was then withheld from him. He was not allowed to attend the
meetings and activities of the company. His subordinates no longer reported to him and
the company directed one of its district managers to take over his position and functions
without prior notice to him. Due to the foregoing, petitioner was constrained to file a
case for illegal suspension, constructive dismissal, payment of salaries, allowances,
moral and exemplary damages on April 13, 1994 before the NLRC, Regional Arbitration
Branch No. I, San Fernando, La Union.

On April 19, 1994, petitioner received a telegram from Lelet Fernando of the Human
Resources Department (HRD), advising him to report to the respondents' head office.
Petitioner advised her and Biscaro that he has not received his salary and
reimbursements for incurred expenses. He also informed them that he had already filed
a case for constructive dismissal against the respondent company.

On April 25, 1994, petitioner received a telegram[5] dated April 22, 1994 from
respondent, advising him that his reasons for not reporting were unacceptable, and
ordering him to report to the office in the morning of April 25, 1994. Petitioner was not
able to report due to time constraints, as it was physically impossible for him to report
on the very same day that he received the telegram ordering him to do so. Thereafter,
respondent sent several letters to petitioner. These letters, among others, include the
following: letter[6] charging him of grave misconduct on the attempted sexual abuse
upon the person of Ms. Cynthia Magat, and directing him to submit his written
explanation thereon; letter[7] recalling the company car issued to him; letter[8] informing
him of violation of Rule IV.5.a of the respondent's company rules by failing to turn over
the company car, and directing him to explain in writing why no further disciplinary
action should be given to him; letter[9] suspending him for one day for failure to carry
out instructions, and ordering him to report to the company's head office;
letter[10] placing him under suspension without pay for eight days for failure to return
the company car without explanation.

On May 19, 2004, petitioner received a letter[11] dated May 18, 1994, terminating his
employment with respondent company due to insubordination; for failure to report to
the respondent company; for failure to submit the required operations report; and for
failure to turn over the company car.

In the meantime, Executive Labor Arbiter (LA) Norma C. Olegario rendered a

decision[12] dated November 10, 1995, dismissing the complaint, finding that Formantes
was validly dismissed for an attempt to sexually abuse Cynthia Magat, but imposing a
penalty on respondent for its failure to give formal notice and conduct the necessary
investigation before dismissing petitioner. The LA found that when the first written
notice was sent to petitioner on April 25, 1994, regarding the incident with Cynthia
Magat, petitioner had already been dismissed, or at least, constructively dismissed,
because as early as March 23, 1994, he was no longer allowed to participate in the
activities of the company and his salary was withheld from him. The LA directed the
respondent to pay petitioner the amount of P1,000.00.

Dissatisfied with the Labor Arbiter's finding, petitioner appealed to the NLRC, on
grounds of grave abuse of discretion; serious errors of law; and serious errors in the
findings of facts, which, if not corrected, would cause irreparable damage to petitioner.
Petitioner alleged that the LA erred in ruling that he was legally dismissed for sexual
abuse, when the charge against him stated in the termination letter was
insubordination.
The NLRC, Second Division, in its Resolution[13] dated October 19, 1999 affirmed the
findings of the LA. Petitioner filed a motion for reconsideration, which the NLRC denied
in a Resolution[14] dated December 21, 1999.

Undaunted, petitioner filed a petition for certiorari under Rule 65 with the CA, alleging
that the NLRC gravely abused its discretion and acted in excess of its jurisdiction in
affirming the decision of the Labor Arbiter that petitioner's dismissal from employment
was justified on a ground not alleged in the notice of termination and not established by
substantial evidence. Petitioner further alleged that the NLRC erred in not holding that
petitioner was constructively dismissed by the respondent.

The CA, in its Decision dated July 18, 2005, affirmed the resolutions of the NLRC, but
with the modification that the sanction imposed on respondent company for non-
observance of due process be increased from P1,000.00 to P5,000.00.

Petitioner filed a Motion for Reconsideration, which the CA denied in a Resolution dated
November 23, 2005. Hence, the instant petition assigning the following errors:

THE JUDGMENT RENDERED [BY] THE NLRC [IS] NULL AND VOID ON THE GROUND
OF LACK OF DUE PROCESS TAKING INTO ACCOUNT THAT PETITIONER-APPELLANT WAS
UNKNOWINGLY DEPRIVED OF COMPETENT LEGAL ASSISTANCE OF COUNSEL AS IT
TURNED OUT THAT THE "COUNSEL" WHO REPRESENTED HIM WAS LATER FOUND NOT
TO BE A MEMBER OF THE BAR AS [HE REPRESENTED HIMSELF TO BE].

THE COURT A QUO GROSSLY ERRED AND DECIDED A QUESTION OF SUBSTANCE NOT IN

ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT
AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS IN NOT HOLDING THAT THE PETITIONER WAS CONSTRUCTIVELY
DISMISSED BY THE RESPONDENT COMPANY.

THE COURT A QUO GROSSLY ERRED AND DECIDED A QUESTION OF SUBSTANCE NOT IN

ACCORD WITH LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT
AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS WHEN IT AFFIRMED THE DECISION OF THE NLRC THAT PETITIONER'S
DISMISSAL FROM EMPLOYMENT WAS JUSTIFIED ON ANOTHER GROUND NOT ALLEGED
IN THE NOTICE OF TERMINATION AND WAS NOT ESTABLISHED BY SUBSTANTIAL
EVIDENCE.[15]
On the alleged deprivation of due process, petitioner alleged that he was not duly
represented by a competent counsel, as Rogelio Bacolor, who represented him in the
proceedings before the NLRC, was not a member of the bar, thereby depriving him of
his right to due process. Hence, he prayed that the case be remanded to the LA for
further proceedings.

We are not persuaded.

Records will show that aside from Mr. Bacolor, petitioner was represented by other
lawyers at the commencement of the action before the NLRC and during the
proceedings before the NLRC and the Court of Appeals.

Petitioner was duly represented by Atty. Jannette B. Ines in the filing of the Complaint,
[16]
 the Position Paper,[17] and the Reply[18] before the LA. He was also represented by the
same Atty. Ines during the initial stage of the hearing before the NLRC. [19] Further,
although Mr. Bacolor appeared in the several stages of the hearing before the LA and
filed petitioner's memorandum of appeal, he also retained the services of Guererro and
Turgano Law Office, as collaborating counsel. Atty. Arnel Alambra of said law office filed
a Supplemental Memorandum of Appeal[20] and Reply[21] to the respondent's answer to
the Supplemental Memorandum of Appeal in petitioner's behalf. Thereafter, upon
denial of the appeal by the NLRC, petitioner's motion for reconsideration [22] was filed by
Arnold V. Guerrero Law Offices, together with its battery of lawyers, which includes Atty.
Arnold V. Guerrero, Atty. Ma. Josefa C. Pinza, Atty. Carmencita M. Chua and Atty. Ma.
Loralie C. Cruz. Petitioner was also represented by said law office in the proceedings
before the CA, more particularly during the filing of the Petition for Certiorari[23] under
Rule 65, the Reply[24] and the Memorandum.[25] Upon denial of the petition before the
CA, petitioner was also represented by another law office in the name of Argue Law
Office, which filed the petitioner's motion for reconsideration and the present petition
before this court.

In fine, petitioner was fully represented by a barrage of competent lawyers. Thus, he

cannot claim that he was deprived of due process of law.

In Rizal Commercial Banking Corporation v. Commissioner of Internal Revenue,[26] this

Court held that:
 There is no question that the "essence of due process is a hearing before
conviction and before an impartial and disinterested tribunal" but due process as a
constitutional precept does not, always and in all situations, require a trial-type
proceeding. The essence of due process is to be found in the reasonable opportunity to
be heard and submit any evidence one may have in support of one's defense. "To be
heard" does not only mean verbal arguments in court; one may be heard also through
pleadings. Where opportunity to be heard, either through oral arguments or
pleadings, is accorded, there is no denial of procedural due process. (Emphasis
supplied.)

Further, in Fernandez v. National Labor Relations Commission,[27] respondents failed to

attend the hearing on the scheduled cross examination of the petitioner's witness. Due
to the foregoing, the LA deemed the case submitted for resolution. Respondents
claimed denial of due process due to non-reception of its evidence. On appeal, the NLRC
vacated the LA's Order and remanded the case for further proceedings. The issue is
whether the failure to attend hearings before the LA is a waiver of the right to present
evidence. This court held that:

Private respondents were able to file their respective position papers and the
documents in support thereof, and all these were duly considered by the labor arbiter.
Indeed, the requirements of due process are satisfied where the parties are given the
opportunity to submit position papers. In any event, Respondent NLRC and the labor
arbiter are authorized under the Labor Code to decide a case on the basis of the
position papers and documents submitted. The holding of an adversarial trial depends
on the discretion of the labor arbiter, and the parties cannot demand it as a matter of
right. In other words, the filing of position papers and supporting documents fulfilled
the requirements of due process. Therefore, there was no denial of this right because
private respondents were given the opportunity to present their side.

Taken altogether, although petitioner, during some parts of the trial proceedings before
the LA was not represented by a member of the bar, he was given reasonable
opportunity to be heard and submit evidence to support his arguments, through the
medium of pleadings filed in the labor tribunals. He was also able to present his version
of the Magat incident during his direct examination conducted by his lawyer Atty.
Jannette Inez.[28] Thus, he cannot claim that he was denied due process.

On the issue of petitioner's dismissal on another ground not alleged in the notice of
termination, petitioner argued that the LA's justification for his dismissal on the ground
of sexual abuse is not proper, as said ground is not alleged in the notice of termination.
The notice of termination stated that petitioner was dismissed due to failure to report
to the office; failure to submit reports; and failure to file written explanations despite
repeated instructions and notices.

The argument is not meritorious.

In Rubberworld (Phils.), Inc. v. NLRC,[29] we held that:

It is now axiomatic that if just cause for termination of employment actually

exists and is established by substantial evidence in the course of the proceedings before
the Labor Arbiter, the fact that the employer failed, prior to such termination, to accord
to the discharged employee the right of formal notice of the charge or charges against
him and a right to ventilate his side with respect thereto, will not operate to eradicate
said just cause so as to impose on the employer the obligation of reinstating the
employee and otherwise granting him such other concomitant relief as is appropriate in
the premises. x x x

Although petitioner was dismissed from work by the respondent on the ground of
insubordination, this Court cannot close its eyes to the fact that the ground of sexual
abuse committed against petitioner's subordinate actually exists and was established by
substantial evidence before the LA.

When petitioner filed the complaint for constructive dismissal on April 13, 1994, he was
still unsure of the actual ground for his suspension and constructive dismissal. The very
reason why he sought refuge in the labor tribunals was to ascertain the ground for his
termination. In keeping with its duties, the LA, in order to ascertain the petitioner's
cause for constructive dismissal, required the parties to submit their respective position
papers and their respective replies thereto. After analyzing the pleadings submitted
before her and the proceedings taken thereon, the LA made a finding that petitioner
was validly dismissed due to the sexual abuse committed against his subordinate.
However, the LA imposed a monetary penalty upon respondent for its failure to observe
procedural due process.

The LA would be rendered inutile if she would just seal her lips after finding that a just
cause for dismissal exists merely because the said ground was not stated in the notice of
termination.
Contrary to petitioner's allegation, We hold that there exists substantial evidence to
support the ground for his dismissal.

The findings of facts of quasi-judicial agencies, which have acquired expertise in the
specific matters entrusted to their jurisdiction, are accorded by this Court not only
respect but even finality if they are supported by substantial evidence. Only substantial,
not preponderance, of evidence is necessary. Section 5, Rule 133 of the Rules of Court,
provides that in cases filed before administrative or quasi-judicial bodies, a fact may be
deemed established if it is supported by substantial evidence, or that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.[30]

After a meticulous review of the records, We find that the Decision of the LA, as
affirmed by the NLRC and the CA, is supported by substantial evidence. The LA arrived at
her decision after a careful consideration of all the facts and evidence on record.

The LA anchored her decision upon the Sworn Statement[31] given by Cynthia Magat to
the Mangaldan Police Station, dated April 14, 1994, to wit:

xxxx
06.Q. - You have stated that you were attempted (sic) by you boss, MR. RAMON
B. FORMANTES, to sexually abuse you, will you relate briefly how the incident
took place?
A. - That we have a meeting at about 10:30 o'clock in the morning of March 9,
1994 at the Maraman Office at Caranglaan, Dagupan City. After the meeting, we
proceeded to my apartment at Anolid, Mangaldan, Pangasinan to get the data he
(Mr. Formantes) was asking.
07.Q. - Upon reaching you apartment at Anolid, Mangaldan, what happened, if
any?
A. - We entered the apartment and then while I was looking for the papers
needed, he asked permission to see the apartment and so I showed him the lower
portion. And then he asked again and wished to go upstairs, so I consented since
he is [an] outstanding friend and my boss without any malice to him and we went
upstairs.
08.Q. - Then, what happened, if any, when you were already upstairs of the
apartment?
A. -  
That he went inside my room looking at my things. When I told him we
better go downstairs since it is not proper got (sic) us to stay there because I am
alone, he suddenly opened my closet without my permission. I closed the closet
and as I persuading (sic) him to go downstairs, he started teasing me and holding
 my hands saying "Cheng, na-e-excite yata ako sa iyo." I resisted his touch and told
him not to tease me that way. Then finally, we went downstairs and I started
again to look for the papers I needed. As I was looking at my things, he suddenly
went upstairs so I ran after him. I caught up with him at the door of my room.
Then, he said, "Cheng, galing ako sa La Union pagod ako, pwede bang
magpahinga? Since I trusted him and he is like a brother to me, I said yes. I turned
on the electric fan and TV set and I went downstairs. Since it was hot, I decided to
buy coke, after which I went upstairs with the coke and my MBS reports. When I
entered the room, he was already wearing only his "kamiseta" since he said it was
hot. I was trying to give him a shirt but he said he was comfortable that way. I
gave him the coke and I asked him how to do my MBS reports. He taught me and
after that when I decided to do my reports downstairs, he stopped and suddenly
embraced me from behind and pulled me down to the bed.
09.Q. - And when you fell down on the bed, what did Mr. Ramon Formantes do, if
any?
A. - Then, he said "Cheng, na-mimiss lang kita at ang barkada natin, palambing
naman." I said that was not my idea of "lambing" and I resisted him. As I was
getting up, he then pulled me again to the bed, this time he pinned me to the bed,
he went on top of me and was asking for a kiss. He said, "Cheng isang kiss lang
titigil na ako." I was shocked. And then he was trying to get in between my legs,
but I kept on kicking him with my left leg. He was trying to get my mouth, but I
kept on banging my face on the bed. By then, my face was full of his saliva, as he
started kissing the right side of my face down to the neck. He then held my left
buttock and held my lower jaw with his left hand. He squeezed my left buttock
and started to put his tongue in my mouth. By now, I could not shout since he was
kissing my mouth, but before he got my mouth I told him, "Monching, don't do
this to me, you are my friend." He said "I'm also your boss." Since I was kicking
him and pushing him, I was finally able to get away from him. When I stood up, I
asked him "Bakit mo nagawa ito sa akin, kaibigan kita." He said, "Cheng, I'm sorry.
Nadala lang ako." He told me not to tell this to Art, my counterpart in Baguio.
Since I really wanted to get out of the house as fast as I could, so I just said, just
don't do it again. We went out and he went to La Union."

The same Sworn Statement further provides that:

10.Q. - Was there any more incident that transpired after the one you have just
related?
A - Yes, sir. On March 11, 1994, Friday, about 7:15 o'clock in the morning, Mr.
Ramon Formantes arrived at my apartment saying he came from Manila. He asked
me if he could sit down. I let him in and left the door open. Then he said, "May tao
ba sa taas?" I told him there was none though my fiancee was upstairs. Then he
started to hold my inner thigh saying, Cheng, maligo ka na hihintayin kita. I told
him I'll just meet him at Nipa or Maraman. I was resisting his touch, but he kept
on touching me and holding me at the back. Without my knowledge, my fiancee
 was seeing what was happening downstairs so he started to make noise and
Monching heard this and he got scared and left. Then on March 18, 1994, Friday,
Monching went to my apartment again at around 7:20 o'clock in the morning, but
this time I did not let him in, I just opened the door a little. He got irritated with
my defensiveness and left my place.

The evidence on record sufficiently supports the finding of sexual abuse against
petitioner. In addition to her sworn statement to the police, she sufficiently narrated
petitioner's attempt to sexually abuse her in her handwritten letter[32] dated March 23,
1994 addressed to Reynaldo Biscaro. She also narrated the same incident in another
letter[33] addressed to the president of the union, Joel Soco.

It may be trite to point out that the findings of a trial court on the credibility of
witnesses deserve great weight, given the clear advantage of a trial judge over an
appellate justice in the appreciation of testimonial evidence. [34] The LA, being in the
position to observe the demeanor of both the petitioner and Ms. Magat during their
testimony, gave more credence to the testimony[35] of Ms. Magat. On the other hand,
aside from his self-serving testimony, petitioner was not able to sufficiently contradict
the charge of sexual abuse against him. Moreover, the courts usually give credence to
the testimony of a woman who is a victim of sexual assault, because normally no
woman would be willing to undergo the humiliation of a public trial and testify on the
details of her ordeal if it be not to condemn an injustice. [36]

In Villarama v. National Labor Relations Commission,[37] wherein a managerial employee

committed sexual harassment against his subordinate, the Court held that sexual
harassment is a valid cause for separation from service.

As a managerial employee, petitioner is bound by a more exacting work ethic. He

failed to live up to this higher standard of responsibility when he succumbed to his
moral perversity. And when such moral perversity is perpetrated against his
subordinate, he provides a justifiable ground for his dismissal for lack of trust and
confidence. It is the right, nay, the duty of every employer to protect its employees from
over sexed superiors.

As a manager, petitioner enjoyed the full trust and confidence of respondent and his
subordinates. By committing sexual abuse against his subordinate, he clearly
demonstrated his lack of fitness to continue working as a managerial employee and
deserves the punishment of dismissal from the service.
Aside from the findings of sexual abuse, petitioner is also guilty of insubordination.
Records show that after filing a case for constructive dismissal on April 13, 1994 against
the respondent, petitioner continued working and performing his functions with the
respondent company until his termination on May 19, 1994.[38] However, despite receipt
of the various notices sent by respondent to him to report to the office and to submit
written explanations relative to his failure to follow instructions, the records of the case
are bereft of showing that he filed any written explanation to any of these notices. His
continued failure to carry out the reasonable oral or written instructions of his
supervisor is punishable by insubordination, which is provided under Rule IV.5.a of the
Operational Instruction OI-A-AP25, Work Rules.[39] While petitioner cannot be faulted in
believing that respondent constructively dismissed him from work, he was still, strictly
speaking, respondent's employee when he received the written notices. As an
employee, he should have at least responded thereto, as instructed.

We now come to the issue of constructive dismissal.

Constructive dismissal exists when an act of clear discrimination, insensibility or disdain

by an employer has become so unbearable to the employee leaving him with no option
but to forego with his continued employment.[40]

In the case at bar, petitioner, while still employed with the respondent, was compelled
to resign and forced to go on leave. He was not allowed to participate in the activities of
the company. His salary was no longer remitted to him. His subordinates were directed
not to report to him and the company directed one of its district managers to take over
his position and do his functions without prior notice to him.

These discriminatory acts were calculated to make petitioner feel that he is no longer
welcome nor needed in respondent company − short of sending him an actual notice of
termination. We, therefore, hold that respondent constructively dismissed petitioner
from the service.

Despite this, however, it is impractical and unjust to reinstate petitioner, as there was a
just cause for his dismissal from the service.

Thus, we hold the dismissal as valid, but we find that there was non-compliance with
the twin procedural requirements of notice and hearing for a lawful dismissal.
Well settled is the dictum that the twin requirements of notice and hearing constitute
the essential elements of due process in the dismissal of employees. It is a cardinal rule
in our jurisdiction that the employer must furnish the employee with two written
notices before the termination of employment can be affected: (a) the first apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (b)
the second informs the employee of the employer's decision to dismiss him. [41]

The barrage of letters[42] sent to petitioner, starting from a letter dated April 22, 1994
until his termination on May 19, 1994, was belatedly made and apparently done in an
effort to show that petitioner was accorded the notices required by law in dismissing an
employee. As observed by the LA in her decision, prior to those letters, petitioner was
already constructively dismissed.

Since the dismissal, although for a valid cause, was done without due process of law, the
employer should indemnify the employee with nominal damages. In Agabon v. National
Labor Relations Commission,[43] we found that the dismissal of the employees therein
was for valid and just cause because their abandonment of their work was firmly
established. Nonetheless, the employer therein was held liable, because it was proven
that it did not comply with the twin procedural requirements of notice and hearing for a
legal dismissal. However, in lieu of payment of backwages,

we ordered the employer to pay indemnity to the dismissed employees in the form of
nominal damages, thus:

The violation of the petitioners' right to statutory due process by the private
respondent warrants the payment of indemnity in the form of nominal damages. The
amount of such damages is addressed to the sound discretion of the court, taking into
account the relevant circumstances. x x x. We believe this form of damages would serve
to deter employers from future violations of the statutory due process rights of
employees. At the very least, it provides a vindication or recognition of this fundamental
right granted to the latter under the Labor Code and its Implementing Rules. [44]

Nominal damages are adjudicated in order that a right of the plaintiff that has been
violated or invaded by the defendant may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him. [45] Thus, for
respondent's violation of petitioner's statutory rights, respondent is sanctioned to pay
petitioner nominal damages in the amount of P30,000.00.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 57528 are AFFIRMED with the MODIFICATION that the
sanction imposed on respondent for non-compliance with statutory due process is
increased from P5,000.00 to P30,000.00.

SO ORDERED.

THIRD DIVISION
[ G.R. No. 187226, January 28, 2015 ]
CHERYLL SANTOS LEUS, PETITIONER, VS. ST. SCHOLASTICA’S
COLLEGE WESTGROVE AND/OR SR. EDNA QUIAMBAO, OSB,
RESPONDENTS.

DECISION

REYES, J.:

Cheryll Santos Leus (petitioner) was hired by St. Scholastica’s College Westgrove
(SSCW), a Catholic educational institution, as a non-teaching personnel, engaged in pre-
marital sexual relations, got pregnant out of wedlock, married the father of her child,
and was dismissed by SSCW, in that order. The question that has to be resolved is
whether the petitioner’s conduct constitutes a ground for her dismissal.

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to annul and set aside the Decision[1] dated September 24, 2008 and
Resolution[2] dated March 2, 2009 issued by the Court of Appeals (CA) in CA-G.R. SP No.
100188, which affirmed the Resolutions dated February 28, 2007 [3] and May 21,
2007[4] of the National Labor Relations Commission (NLRC) in NLRC CA No. 049222-06.

The Facts

SSCW is a catholic and sectarian educational institution in Silang, Cavite. In May

2001, SSCW hired the petitioner as an Assistant to SSCW’s Director of the Lay Apostolate
and Community Outreach Directorate.
Sometime in 2003, the petitioner and her boyfriend conceived a child out of wedlock.
When SSCW learned of the petitioner’s pregnancy, Sr. Edna Quiambao (Sr. Quiambao),
SSCW’s Directress, advised her to file a resignation letter effective June 1, 2003. In
response, the petitioner informed Sr. Quiambao that she would not resign from her
employment just because she got pregnant without the benefit of marriage. [5]

On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain in writing
why she should not be dismissed for engaging in pre-marital sexual relations and getting
pregnant as a result thereof, which amounts to serious misconduct and conduct
unbecoming of an employee of a Catholic school.[6]

In a letter[7] dated May 31, 2003, the petitioner explained that her pregnancy out of
wedlock does not amount to serious misconduct or conduct unbecoming of an
employee. She averred that she is unaware of any school policy stating that being
pregnant out of wedlock is considered as a serious misconduct and, thus, a ground for
dismissal. Further, the petitioner requested a copy of SSCW’s policy and guidelines so
that she may better respond to the charge against her.

On June 2, 2003, Sr. Quiambao informed the petitioner that, pending the promulgation
of a “Support Staff Handbook,” SSCW follows the 1992 Manual of Regulations for Private
Schools (1992 MRPS) on the causes for termination of employments; that Section 94(e)
of the 1992 MRPS cites “disgraceful or immoral conduct” as a ground for dismissal in
addition to the just causes for termination of employment provided under Article 282 of
the Labor Code.[8]

On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a letter, [9] which, in
part, reads:

To us, pre-marital sex between two consenting adults without legal impediment
to marry each other who later on married each other does not fall within the
contemplation of “disgraceful or immoral conduct” and “serious misconduct” of the
Manual of Regulations for Private Schools and the Labor Code of the Philippines.

Your argument that what happened to our client would set a bad example to the
students and other employees of your school is speculative and is more imaginary than
real. To dismiss her on that sole ground constitutes grave abuse of management
prerogatives.
Considering her untarnished service for two years, dismissing her with her present
condition would also mean depriving her to be more secure in terms of financial
capacity to sustain maternal needs.[10]

In a letter[11] dated June 6, 2003, SSCW, through counsel, maintained that pre-marital

sexual relations, even if between two consenting adults without legal impediment to
marry, is considered a disgraceful and immoral conduct or a serious misconduct, which
are grounds for the termination of employment under the 1992 MRPS and the Labor
Code. That SSCW, as a Catholic institution of learning, has the right to uphold the
teaching of the Catholic Church and expect its employees to abide by the same. They
further asserted that the petitioner’s indiscretion is further aggravated by the fact that
she is the Assistant to the Director of the Lay Apostolate and Community Outreach
Directorate, a position of responsibility that the students look up to as role model. The
petitioner was again directed to submit a written explanation on why she should not be
dismissed.

On June 9, 2003, the petitioner informed Sr. Quiambao that she adopts her counsel’s
letter dated June 4, 2003 as her written explanation. [12]

Consequently, in her letter[13] dated June 11, 2003, Sr. Quiambao informed the
petitioner that her employment with SSCW is terminated on the ground of serious
misconduct. She stressed that pre-marital sexual relations between two consenting
adults with no impediment to marry, even if they subsequently married, amounts to
immoral conduct. She further pointed out that SSCW finds unacceptable the scandal
brought about by the petitioner’s pregnancy out of wedlock as it ran counter to the
moral principles that SSCW stands for and teaches its students.

Thereupon, the petitioner filed a complaint for illegal dismissal with the Regional
Arbitration Branch of the NLRC in Quezon City against SSCW and Sr. Quiambao
(respondents). In her position paper,[14] the petitioner claimed that SSCW gravely abused
its management prerogative as there was no just cause for her dismissal. She
maintained that her pregnancy out of wedlock cannot be considered as serious
misconduct since the same is a purely private affair and not connected in any way with
her duties as an employee of SSCW. Further, the petitioner averred that she and her
boyfriend eventually got married even prior to her dismissal.

For their part, SSCW claimed that there was just cause to terminate the petitioner’s
employment with SSCW and that the same is a valid exercise of SSCW’s management
prerogative. They maintained that engaging in pre-marital sex, and getting pregnant as a
result thereof, amounts to a disgraceful or immoral conduct, which is a ground for the
dismissal of an employee under the 1992 MRPS.

They pointed out that SSCW is a Catholic educational institution, which caters
exclusively to young girls; that SSCW would lose its credibility if it would maintain
employees who do not live up to the values and teachings it inculcates to its students.
SSCW further asserted that the petitioner, being an employee of a Catholic educational
institution, should have strived to maintain the honor, dignity and reputation of SSCW
as a Catholic school.[15]

The Ruling of the Labor Arbiter

On February 28, 2006, the Labor Arbiter (LA) rendered a Decision,[16] in NLRC Case No. 6-
17657-03-C which dismissed the complaint filed by the petitioner. The LA found that
there was a valid ground for the petitioner’s dismissal; that her pregnancy out of
wedlock is considered as a “disgraceful and immoral conduct.” The LA pointed out that,
as an employee of a Catholic educational institution, the petitioner is expected to live up
to the Catholic values taught by SSCW to its students. Likewise, the LA opined that:

Further, a deep analysis of the facts would lead us to disagree with the
complainant that she was dismissed simply because she violate[d] a Catholic [teaching].
It should not be taken in isolation but rather it should be analyzed in the light of the
surrounding circumstances as a whole. We must also take into [consideration] the
nature of her work and the nature of her employer-school. For us, it is not just an
ordinary violation. It was committed by the complainant in an environment where her
strict adherence to the same is called for and where the reputation of the school is at
stake. x x x.[17]

The LA further held that teachers and school employees, both in their official and
personal conduct, must display exemplary behavior and act in a manner that is beyond
reproach.

The petitioner appealed to the NLRC, insisting that there was no valid ground for the
termination of her employment. She maintained that her pregnancy out of wedlock
cannot be considered as “serious misconduct” under Article 282 of the Labor Code since
the same was not of such a grave and aggravated character. She asserted that SSCW did
not present any evidence to establish that her pregnancy out of wedlock indeed eroded
the moral principles that it teaches its students. [18]

The Ruling of the NLRC

On February 28, 2007, the NLRC issued a Resolution,[19] which affirmed the LA Decision
dated February 28, 2006. The NLRC pointed out that the termination of the employment
of the personnel of private schools is governed by the 1992 MRPS; that Section 94(e)
thereof cites “disgraceful or immoral conduct” as a just cause for dismissal, in addition
to the grounds for termination of employment provided for under Article 282 of the
Labor Code. The NLRC held that the petitioner’s pregnancy out of wedlock is a
“disgraceful or immoral conduct” within the contemplation of Section 94(e) of the 1992
MRPS and, thus, SSCW had a valid reason to terminate her employment.

The petitioner sought reconsideration[20] of the Resolution dated February 28, 2007 but
it was denied by the NLRC in its Resolution [21] dated May 21, 2007.

Unperturbed, the petitioner filed a petition[22] for certiorari with the CA, alleging that the
NLRC gravely abused its discretion in ruling that there was a valid ground for her
dismissal. She maintained that pregnancy out of wedlock cannot be considered as a
disgraceful or immoral conduct; that SSCW failed to prove that its students were indeed
gravely scandalized by her pregnancy out of wedlock. She likewise asserted that the
NLRC erred in applying Section 94(e) of the 1992 MRPS.

The Ruling of the CA

On September 24, 2008, the CA rendered the herein assailed Decision, [23] which denied
the petition for certiorari filed by the petitioner. The CA held that it is the provisions of
the 1992 MRPS and not the Labor Code which governs the termination of employment
of teaching and non-teaching personnel of private schools, explaining that:

It is a principle of statutory construction that where there are two statutes that
apply to a particular case, that which was specially intended for the said case must
prevail. Petitioner was employed by respondent private Catholic institution which
undeniably follows the precepts or norms of conduct set forth by the Catholic Church.
Accordingly, the Manual of Regulations for Private Schools followed by it must prevail
over the Labor Code, a general statute. The Manual constitutes the private schools’
Implementing Rules and Regulations of Batas Pambansa Blg. 232 or the Education Act of
1982. x x x.[24]

The CA further held that the petitioner’s dismissal was a valid exercise of SSCW’s
management prerogative to discipline and impose penalties on erring employees
pursuant to its policies, rules and regulations. The CA upheld the NLRC’s conclusion that
the petitioner’s pregnancy out of wedlock is considered as a “disgraceful and immoral
conduct” and, thus, a ground for dismissal under Section 94(e) of the 1992 MRPS. The
CA likewise opined that the petitioner’s pregnancy out of wedlock is scandalous per se
given the work environment and social milieu that she was in, viz:

Under Section 94 (e) of the [MRPS], and even under Article 282 (serious
misconduct) of the Labor Code, “disgraceful and immoral conduct” is a basis for
termination of employment.

xxxx

Petitioner contends that her pre-marital sexual relations with her boyfriend and her
pregnancy prior to marriage was not disgraceful or immoral conduct sufficient for her
dismissal because she was not a member of the school’s faculty and there is no evidence
that her pregnancy scandalized the school community.

We are not persuaded. Petitioner’s pregnancy prior to marriage is scandalous in itself

given the work environment and social milieu she was in. Respondent school for young
ladies precisely seeks to prevent its students from situations like this, inculcating in
them strict moral values and standards. Being part of the institution, petitioner’s private
and public life could not be separated. Her admitted pre-marital sexual relations was a
violation of private respondent’s prescribed standards of conduct that views pre-marital
sex as immoral because sex between a man and a woman must only take place within
the bounds of marriage.

Finally, petitioner’s dismissal is a valid exercise of the employer-school’s management

prerogative to discipline and impose penalties on erring employees pursuant to its
policies, rules and regulations. x x x.[25] (Citations omitted)

The petitioner moved for reconsideration[26] but it was denied by the CA in its

Resolution[27] dated March 2, 2009.
Hence, the instant petition.

Issues

Essentially, the issues set forth by the petitioner for this Court’s decision are the
following: first, whether the CA committed reversible error in ruling that it is the 1992
MRPS and not the Labor Code that governs the termination of employment of teaching
and non-teaching personnel of private schools; and second, whether the petitioner’s
pregnancy out of wedlock constitutes a valid ground to terminate her employment.

The Ruling of the Court

The Court grants the petition.

First Issue: Applicability of the 1992 MRPS

The petitioner contends that the CA, in ruling that there was a valid ground to dismiss
her, erred in applying Section 94 of the 1992 MRPS. Essentially, she claims that the 1992
MRPS was issued by the Secretary of Education as the revised implementing rules and
regulations of Batas Pambansa Bilang 232 (BP 232) or the “Education Act of 1982.” That
there is no provision in BP 232, which provides for the grounds for the termination of
employment of teaching and non-teaching personnel of private schools. Thus, Section
94 of the 1992 MRPS, which provides for the causes of terminating an employment, is
invalid as it “widened the scope and coverage” of BP 232.

The Court does not agree.

The Court notes that the argument against the validity of the 1992 MRPS, specifically
Section 94 thereof, is raised by the petitioner for the first time in the instant petition for
review. Nowhere in the proceedings before the LA, the NLRC or the CA did the
petitioner assail the validity of the provisions of the 1992 MRPS.

“It is well established that issues raised for the first time on appeal and not raised in the
proceedings in the lower court are barred by estoppel. Points of law, theories, issues,
and arguments not brought to the attention of the trial court ought not to be
considered by a reviewing court, as these cannot be raised for the first time on appeal.
To consider the alleged facts and arguments belatedly raised would amount to
trampling on the basic principles of fair play, justice, and due process.” [28]

In any case, even if the Court were to disregard the petitioner’s belated claim of the
invalidity of the 1992 MRPS, the Court still finds the same untenable.

The 1992 MRPS, the regulation in force at the time of the instant controversy, was
issued by the Secretary of Education pursuant to BP 232. Section 70 [29] of BP 232 vests
the Secretary of Education with the authority to issue rules and regulations to
implement the provisions of BP 232. Concomitantly, Section 57 [30] specifically empowers
the Department of Education to promulgate rules and regulations necessary for the
administration, supervision and regulation of the educational system in accordance with
the declared policy of BP 232.

The qualifications of teaching and non-teaching personnel of private schools, as well as

the causes for the termination of their employment, are an integral aspect of the
educational system of private schools. Indubitably, ensuring that the teaching and non-
teaching personnel of private schools are not only qualified, but competent and efficient
as well goes hand in hand with the declared objective of BP 232 – establishing and
maintaining relevant quality education.[31] It is thus within the authority of the Secretary
of Education to issue a rule, which provides for the dismissal of teaching and non-
teaching personnel of private schools based on their incompetence, inefficiency, or
some other disqualification.

Moreover, Section 69 of BP 232 specifically authorizes the Secretary of Education to

“prescribe and impose such administrative sanction as he may deem reasonable and
appropriate in the implementing rules and regulations” for the “[g]ross inefficiency of
the teaching or non-teaching personnel” of private schools. [32] Accordingly, contrary to
the petitioner’s claim, the Court sees no reason to invalidate the provisions of the 1992
MRPS, specifically Section 94 thereof.

Second Issue: Validity of the Petitioner’s Dismissal

The validity of the petitioner’s dismissal hinges on the determination of whether

pregnancy out of wedlock by an employee of a catholic educational institution is a cause
for the termination of her employment.

In resolving the foregoing question, the Court will assess the matter from a strictly
neutral and secular point of view – the relationship between SSCW as employer and the
petitioner as an employee, the causes provided for by law in the termination of such
relationship, and the evidence on record. The ground cited for the petitioner’s dismissal,
i.e., pre-marital sexual relations and, consequently, pregnancy out of wedlock, will be
assessed as to whether the same constitutes a valid ground for dismissal pursuant to
Section 94(e) of the 1992 MRPS.

The standard of review in a Rule 45

petition from the CA decision in labor
cases.

In a petition for review under Rule 45 of the Rules of Court, such as the instant petition,
where the CA’s disposition in a labor case is sought to be calibrated, the Court’s review
is quite limited. In ruling for legal correctness, the Court has to view the CA decision in
the same context that the petition for certiorari it ruled upon was presented to it; the
Court has to examine the CA decision from the prism of whether it correctly determined
the presence or absence of grave abuse of discretion in the NLRC decision before it, not
on the basis of whether the NLRC decision on the merits of the case was correct. [33]

The phrase “grave abuse of discretion” is well-defined in the Court’s jurisprudence. It

exists where an act of a court or tribunal is performed with a capricious or whimsical
exercise of judgment equivalent to lack of jurisdiction. [34] The determination of the
presence or absence of grave abuse of discretion does not include an inquiry into the
correctness of the evaluation of evidence, which was the basis of the labor agency in
reaching its conclusion.[35]

Nevertheless, while a certiorari proceeding does not strictly include an inquiry as to the

correctness of the evaluation of evidence (that was the basis of the labor tribunals in
determining their conclusion), the incorrectness of its evidentiary evaluation should not
result in negating the requirement of substantial evidence. Indeed, when there is a
showing that the findings or conclusions, drawn from the same pieces of evidence,
were arrived at arbitrarily or in disregard of the evidence on record, they may be
reviewed by the courts. In particular, the CA can grant the petition for certiorari if it
finds that the NLRC, in its assailed decision or resolution, made a factual finding not
supported by substantial evidence. A decision that is not supported by substantial
evidence is definitely a decision tainted with grave abuse of discretion. [36]

The labor tribunals’ respective

conclusions that the petitioner’s pregnancy
is a “disgraceful or immoral conduct”
were arrived at arbitrarily.

The CA and the labor tribunals affirmed the validity of the petitioner’s dismissal
pursuant to Section 94(e) of the 1992 MRPS, which provides that:

Sec. 94. Causes of Terminating Employment – In addition to the just causes

enumerated in the Labor Code, the employment of school personnel, including faculty,
may be terminated for any of the following causes:
xxxx

e. Disgraceful or immoral conduct;

xxxx

The labor tribunals concluded that the petitioner’s pregnancy out of wedlock, per se, is
“disgraceful and immoral” considering that she is employed in a Catholic educational
institution. In arriving at such conclusion, the labor tribunals merely assessed the fact of
the petitioner’s pregnancy vis-à-vis the totality of the circumstances surrounding the
same.

However, the Court finds no substantial evidence to support the aforementioned

conclusion arrived at by the labor tribunals. The fact of the petitioner’s pregnancy out of
wedlock, without more, is not enough to characterize the petitioner’s conduct as
disgraceful or immoral. There must be substantial evidence to establish that pre-marital
sexual relations and, consequently, pregnancy out of wedlock, are indeed considered
disgraceful or immoral.

The totality of the circumstances

surrounding the conduct alleged to be
disgraceful or immoral must be assessed
against the prevailing norms of conduct.

In Chua-Qua v. Clave,[37] the Court stressed that to constitute immorality, the

circumstances of each particular case must be holistically considered and evaluated in
light of the prevailing norms of conduct and applicable laws.[38] Otherwise stated, it is
not the totality of the circumstances surrounding the conduct per se that determines
whether the same is disgraceful or immoral, but the conduct that is generally accepted
by society as respectable or moral. If the conduct does not conform to what society
generally views as respectable or moral, then the conduct is considered as disgraceful or
immoral. Tersely put, substantial evidence must be presented, which would establish
that a particular conduct, viewed in light of the prevailing norms of conduct, is
considered disgraceful or immoral.

Thus, the determination of whether a conduct is disgraceful or immoral involves a two-

step process: first, a consideration of the totality of the circumstances surrounding the
conduct; and second, an assessment of the said circumstances vis-à-vis  the prevailing
norms of conduct, i.e., what the society generally considers moral and respectable.

That the petitioner was employed by a Catholic educational institution per se does not
absolutely determine whether her pregnancy out of wedlock is disgraceful or immoral.
There is still a necessity to determine whether the petitioner’s pregnancy out of wedlock
is considered disgraceful or immoral in accordance with the prevailing norms of
conduct.

Public and secular morality should

determine the prevailing norms of conduct,
not religious morality. 

However, determining what the prevailing norms of conduct are considered disgraceful
or immoral is not an easy task. An individual’s perception of what is moral or
respectable is a confluence of a myriad of influences, such as religion, family, social
status, and a cacophony of others. In this regard, the Court’s ratiocination in Estrada v.
Escritor[39] is instructive.

In Estrada, an administrative case against a court interpreter charged with disgraceful

and immoral conduct, the Court stressed that in determining whether a particular
conduct can be considered as disgraceful and immoral, the distinction between public
and secular morality on the one hand, and religious morality, on the other, should be
kept in mind.[40] That the distinction between public and secular morality and religious
morality is important because the jurisdiction of the Court extends only to public and
secular morality.[41] The Court further explained that:

The morality referred to in the law is public and necessarily secular, not
religious x x x. “Religious teachings as expressed in public debate may influence the civil
public order but public moral disputes may be resolved only on grounds articulable in
secular terms.” Otherwise, if government relies upon religious beliefs in formulating
public policies and morals, the resulting policies and morals would require conformity
to what some might regard as religious programs or agenda. The non-believers would
therefore be compelled to conform to a standard of conduct buttressed by a religious
belief, i.e., to a “compelled religion,” anathema to religious freedom. Likewise, if
government based its actions upon religious beliefs, it would tacitly approve or endorse
that belief and thereby also tacitly disapprove contrary religious or non-religious views
that would not support the policy. As a result, government will not provide full religious
freedom for all its citizens, or even make it appear that those whose beliefs are
disapproved are second-class citizens. Expansive religious freedom therefore requires
that government be neutral in matters of religion; governmental reliance upon religious
justification is inconsistent with this policy of neutrality.

In other words, government action, including its proscription of immorality as

expressed in criminal law like concubinage, must have a secular purpose. That is, the
government proscribes this conduct because it is “detrimental (or dangerous) to those
conditions upon which depend the existence and progress of human society” and not
because the conduct is proscribed by the beliefs of one religion or the other. Although
admittedly, moral judgments based on religion might have a compelling influence on
those engaged in public deliberations over what actions would be considered a moral
disapprobation punishable by law. After all, they might also be adherents of a religion
and thus have religious opinions and moral codes with a compelling influence on them;
the human mind endeavors to regulate the temporal and spiritual institutions of society
in a uniform manner, harmonizing earth with heaven. Succinctly put, a law could be
religious or Kantian or Aquinian or utilitarian in its deepest roots, but it must have an
articulable and discernible secular purpose and justification to pass scrutiny of the
religion clauses. x x x.[42] (Citations omitted and emphases ours)

Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it
pertains to public and secular morality; it refers to those conducts which are proscribed
because they are detrimental to conditions upon which depend the existence and
progress of human society. Thus, in Anonymous v. Radam,[43] an administrative case
involving a court utility worker likewise charged with disgraceful and immoral conduct,
applying the doctrines laid down in Estrada, the Court held that:

For a particular conduct to constitute “disgraceful and immoral” behavior under

civil service laws, it must be regulated on account of the concerns of public and secular
morality. It cannot be judged based on personal bias, specifically those colored by
particular mores. Nor should it be grounded on “cultural” values not convincingly
demonstrated to have been recognized in the realm of public policy expressed in the
Constitution and the laws. At the same time, the constitutionally guaranteed rights
(such as the right to privacy) should be observed to the extent that they protect
behavior that may be frowned upon by the majority.

Under these tests, two things may be concluded from the fact that an unmarried
woman gives birth out of wedlock:

(1 if the father of the child is himself unmarried, the woman is not ordinarily
) administratively liable for disgraceful and immoral conduct. It may be a not-so-ideal
situation and may cause complications for both mother and child but it does not give cause
for administrative sanction. There is no law which penalizes an unmarried mother under
those circumstances by reason of her sexual conduct or proscribes the consensual sexual
activity between two unmarried persons. Neither does the situation contravene any
fundamental state policy as expressed in the Constitution, a document that accommodates
various belief systems irrespective of dogmatic origins.
(2 if the father of the child born out of wedlock is himself married to a woman other
) than the mother, then there is a cause for administrative sanction against either the father
or the mother. In such a case, the “disgraceful and immoral conduct” consists of having
extramarital relations with a married person. The sanctity of marriage is constitutionally
recognized and likewise affirmed by our statutes as a special contract of permanent union.
Accordingly, judicial employees have been sanctioned for their dalliances with married
persons or for their own betrayals of the marital vow of fidelity.

In this case, it was not disputed that, like respondent, the father of her child was
unmarried. Therefore, respondent cannot be held liable for disgraceful and immoral
conduct simply because she gave birth to the child Christian Jeon out of wedlock.
[44]
 (Citations omitted and emphases ours)

Both Estrada and Radam  are administrative cases against employees in the civil service.

The Court, however, sees no reason not to apply the doctrines enunciated
in Estrada and Radam in the instant case. Estrada  and Radam also required the Court to
delineate what conducts are considered disgraceful and/or immoral as would constitute
a ground for dismissal. More importantly, as in the said administrative cases, the instant
case involves an employee’s security of tenure; this case likewise concerns employment,
which is not merely a specie of property right, but also the means by which the
employee and those who depend on him live.[45]
It bears stressing that the right of an employee to security of tenure is protected by the
Constitution. Perfunctorily, a regular employee may not be dismissed unless for cause
provided under the Labor Code and other relevant laws, in this case, the 1992 MRPS. As
stated above, when the law refers to morality, it necessarily pertains to public and
secular morality and not religious morality. Thus, the proscription against “disgraceful or
immoral conduct” under Section 94(e) of the 1992 MRPS, which is made as a cause for
dismissal, must necessarily refer to public and secular morality. Accordingly, in order for
a conduct to be considered as disgraceful or immoral, it must be “‘detrimental (or
dangerous) to those conditions upon which depend the existence and progress of
human society’ and not because the conduct is proscribed by the beliefs of one religion
or the other.”

Thus, in Santos v. NLRC,[46] the Court upheld the dismissal of a teacher who had an extra-
marital affair with his co-teacher, who is likewise married, on the ground of disgraceful
and immoral conduct under Section 94(e) of the 1992 MRPS. The Court pointed out that
extra-marital affair is considered as a disgraceful and immoral conduct is an afront to
the sanctity of marriage, which is a basic institution of society, viz:

We cannot overemphasize that having an extra-marital affair is an afront to the

sanctity of marriage, which is a basic institution of society. Even our Family Code
provides that husband and wife must live together, observe mutual love, respect and
fidelity. This is rooted in the fact that both our Constitution and our laws cherish the
validity of marriage and unity of the family. Our laws, in implementing this constitutional
edict on marriage and the family underscore their permanence, inviolability and
solidarity.[47]

The petitioner’s pregnancy out of

wedlock is not a disgraceful or immoral
conduct since she and the father of her
child have no impediment to marry each
other.

In stark contrast to Santos, the Court does not find any circumstance in this case which
would lead the Court to conclude that the petitioner committed a disgraceful or
immoral conduct. It bears stressing that the petitioner and her boyfriend, at the time
they conceived a child, had no legal impediment to marry. Indeed, even prior to her
dismissal, the petitioner married her boyfriend, the father of her child. As the Court held
in Radam, there is no law which penalizes an unmarried mother by reason of her sexual
conduct or proscribes the consensual sexual activity between two unmarried persons;
that neither does such situation contravene any fundamental state policy enshrined in
the Constitution.

Admittedly, the petitioner is employed in an educational institution where the teachings

and doctrines of the Catholic Church, including that on pre-marital sexual relations, is
strictly upheld and taught to the students. That her indiscretion, which resulted in her
pregnancy out of wedlock, is anathema to the doctrines of the Catholic Church.
However, viewed against the prevailing norms of conduct, the petitioner’s conduct
cannot be considered as disgraceful or immoral; such conduct is not denounced by
public and secular morality. It may be an unusual arrangement, but it certainly is not
disgraceful or immoral within the contemplation of the law.

To stress, pre-marital sexual relations between two consenting adults who have no
impediment to marry each other, and, consequently, conceiving a child out of wedlock,
gauged from a purely public and secular view of morality, does not amount to a
disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS.

Accordingly, the labor tribunals erred in upholding the validity of the petitioner’s
dismissal. The labor tribunals arbitrarily relied solely on the circumstances surrounding
the petitioner’s pregnancy and its supposed effect on SSCW and its students without
evaluating whether the petitioner’s conduct is indeed considered disgraceful or immoral
in view of the prevailing norms of conduct. In this regard, the labor tribunals’ respective
haphazard evaluation of the evidence amounts to grave abuse of discretion, which the
Court will rectify.

The labor tribunals’ finding that the petitioner’s pregnancy out of wedlock despite the
absence of substantial evidence is not only arbitrary, but a grave abuse of discretion,
which should have been set right by the CA.

There is no substantial evidence to

prove that the petitioner’s pregnancy out of
wedlock caused grave scandal to SSCW
and its students.

SSCW claimed that the petitioner was primarily dismissed because her pregnancy out of
wedlock caused grave scandal to SSCW and its students. That the scandal brought about
by the petitioner’s indiscretion prompted them to dismiss her. The LA upheld the
respondents’ claim, stating that:

In this particular case, an “objective” and “rational evaluation” of the facts and
circumstances obtaining in this case would lead us to focus our attention x x x on the
impact of the act committed by the complainant. The act of the complainant x x
x eroded the moral principles being taught and project[ed] by the respondent
[C]atholic school to their young lady students.[48] (Emphasis in the original)

On the other hand, the NLRC opined that:

In the instant case, when the complainant-appellant was already conceiving a

child even before she got married, such is considered a shameful and scandalous
behavior, inimical to public welfare and policy. It eroded the moral doctrines which the
respondent Catholic school, an exclusive school for girls, is teaching the young girls.
Thus, when the respondent-appellee school terminated complainant-appellant’s
services, it was a valid exercise of its management prerogative. Whether or not she
was a teacher is of no moment. There is no separate set of rules for non-teaching
personnel. Respondents-appellees uphold the teachings of the Catholic Church on pre-
marital sex and that the complainant-appellant as an employee of the school was
expected to abide by this basic principle and to live up with the standards of their purely
Catholic values. Her subsequent marriage did not take away the fact that she had
engaged in pre-marital sex which the respondent-appellee school denounces as the
same is opposed to the teachings and doctrines it espouses. [49] (Emphasis ours)

Contrary to the labor tribunals’ declarations, the Court finds that SSCW failed to adduce
substantial evidence to prove that the petitioner’s indiscretion indeed caused grave
scandal to SSCW and its students. Other than the SSCW’s bare allegation, the records
are bereft of any evidence that would convincingly prove that the petitioner’s conduct
indeed adversely affected SSCW’s integrity in teaching the moral doctrines, which it
stands for. The petitioner is only a non-teaching personnel; her interaction with SSCW’s
students is very limited. It is thus quite impossible that her pregnancy out of wedlock
caused such a grave scandal, as claimed by SSCW, as to warrant her dismissal.

Settled is the rule that in termination cases, the burden of proving that the dismissal of
the employees was for a valid and authorized cause rests on the employer. It is
incumbent upon the employer to show by substantial evidence that the termination of
the employment of the employees was validly made and failure to discharge that duty
would mean that the dismissal is not justified and therefore illegal. [50] “Substantial
evidence is more than a mere scintilla of evidence. It means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other minds
equally reasonable might conceivably opine otherwise.”[51]

Indubitably, bare allegations do not amount to substantial evidence. Considering that

the respondents failed to adduce substantial evidence to prove their asserted cause for
the petitioner’s dismissal, the labor tribunals should not have upheld their allegations
hook, line and sinker. The labor tribunals’ respective findings, which were arrived
at sans any substantial evidence, amounts to a grave abuse of discretion, which the CA
should have rectified. “Security of tenure is a right which may not be denied on mere
speculation of any unclear and nebulous basis.”[52]

The petitioner’s dismissal is not a

valid exercise of SSCW’s management
prerogative.

The CA belabored the management prerogative of SSCW to discipline its employees. The
CA opined that the petitioner’s dismissal is a valid exercise of management prerogative
to impose penalties on erring employees pursuant to its policies, rules and regulations.

The Court does not agree.

The Court has held that “management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work assignments, working
methods, time, place and manner of work, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay off of
workers and discipline, dismissal and recall of workers. The exercise of management
prerogative, however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor.” Management cannot exercise its prerogative in a cruel,
repressive, or despotic manner.[53]

SSCW, as employer, undeniably has the right to discipline its employees and, if need be,
dismiss them if there is a valid cause to do so. However, as already explained, there is no
cause to dismiss the petitioner. Her conduct is not considered by law as disgraceful or
immoral. Further, the respondents themselves have admitted that SSCW, at the time of
the controversy, does not have any policy or rule against an employee who engages in
pre-marital sexual relations and conceives a child as a result thereof. There being no
valid basis in law or even in SSCW’s policy and rules, SSCW’s dismissal of the petitioner is
despotic and arbitrary and, thus, not a valid exercise of management prerogative.

In sum, the Court finds that the petitioner was illegally dismissed as there was no just
cause for the termination of her employment. SSCW failed to adduce substantial
evidence to establish that the petitioner’s conduct, i.e., engaging in pre-marital sexual
relations and conceiving a child out of wedlock, assessed in light of the prevailing norms
of conduct, is considered disgraceful or immoral. The labor tribunals gravely abused
their discretion in upholding the validity of the petitioner’s dismissal as the charge
against the petitioner lay not on substantial evidence, but on the bare allegations of
SSCW. In turn, the CA committed reversible error in upholding the validity of the
petitioner’s dismissal, failing to recognize that the labor tribunals gravely abused their
discretion in ruling for the respondents.

The petitioner is entitled to

separation pay, in lieu of actual
reinstatement, full backwages and
attorney’s fees, but not to moral
and exemplary damages.

Having established that the petitioner was illegally dismissed, the Court now determines
the reliefs that she is entitled to and their extent. Under the law and prevailing
jurisprudence, “an illegally dismissed employee is entitled to reinstatement as a matter
of right.”[54] Aside from the instances provided under Articles 283 [55] and 284[56] of the
Labor Code, separation pay is, however, granted when reinstatement is no longer
feasible because of strained relations between the employer and the employee. In cases
of illegal dismissal, the accepted doctrine is that separation pay is available in lieu of
reinstatement when the latter recourse is no longer practical or in the best interest of
the parties.[57]

In Divine Word High School v. NLRC,[58] the Court ordered the employer Catholic school
to pay the illegally dismissed high school teacher separation pay in lieu of actual
reinstatement since her continued presence as a teacher in the school “may well be met
with antipathy and antagonism by some sectors in the school community.” [59]

In view of the particular circumstances of this case, it would be more prudent to direct
SSCW to pay the petitioner separation pay in lieu of actual reinstatement. The continued
employment of the petitioner with SSCW would only serve to intensify the atmosphere
of antipathy and antagonism between the parties. Consequently, the Court awards
separation pay to the petitioner equivalent to one (1) month pay for every year of
service, with a fraction of at least six (6) months considered as one (1) whole year, from
the time of her illegal dismissal up to the finality of this judgment, as an alternative to
reinstatement.

Also, “employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the time of their actual
reinstatement but if reinstatement is no longer possible, the backwages shall be
computed from the time of their illegal termination up to the finality of the
decision.”[60] Accordingly, the petitioner is entitled to an award of full backwages from
the time she was illegally dismissed up to the finality of this decision.

Nevertheless, the petitioner is not entitled to moral and exemplary damages. “A

dismissed employee is entitled to moral damages when the dismissal is attended by bad
faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary
to good morals, good customs or public policy. Exemplary damages may be awarded if
the dismissal is effected in a wanton, oppressive or malevolent manner.” [61]

“Bad faith, under the law, does not simply connote bad judgment or negligence. It
imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, or
a breach of a known duty through some motive or interest or ill will that partakes of the
nature of fraud.”[62]

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

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

However, the petitioner is entitled to attorney’s fees in the amount of 10% of the total
monetary award pursuant to Article 111[67] of the Labor Code. “It is settled that where
an employee was forced to litigate and, thus, incur expenses to protect his rights and
interest, the award of attorney’s fees is legally and morally justifiable.” [68]

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

WHEREFORE, in consideration of the foregoing disquisitions, the petition

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

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

SO ORDERED.

SECOND DIVISION
[ G.R. No. 198587, January 14, 2015 ]
SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA J. BETIA,
PETITIONERS, VS. MA. JOPETTE M. REBESENCIO, MONTASSAH B.
SACAR-ADIONG, ROUEN RUTH A. CRISTOBAL AND LORAINE S.
SCHNEIDER-CRUZ, RESPONDENTS.
 DECISION

LEONEN, J.:

All Filipinos are entitled to the protection of the rights guaranteed in the
Constitution.

This is a Petition for Review on Certiorari with application for the issuance of a
temporary restraining order and/or writ of preliminary injunction under Rule 45 of the
1997 Rules of Civil Procedure praying that judgment be rendered reversing and setting
aside the June 16, 2011 Decision[1] and September 13, 2011 Resolution[2] of the Court of
Appeals in CA-G.R. SP. No. 113006.

Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation established and

existing under the laws of Jeddah, Kingdom of Saudi Arabia. It has a Philippine office
located at 4/F, Metro House Building, Sen. Gil J. Puyat Avenue, Makati City. [3] In its
Petition filed with this court, Saudia identified itself as follows:
1. Petitioner SAUDIA is a foreign corporation established and existing under the
Royal Decree No. M/24 of 18.07.1385H (10.02.1962G) in Jeddah, Kingdom of Saudi
Arabia ("KSA"). Its Philippine Office is located at 4/F Metro House Building, Sen, Gil J.
Puyat Avenue, Makati City (Philippine Office). It may be served with orders of this
Honorable Court through undersigned counsel at 4th and 6th Floors, Citibank Center
Bldg., 8741 Paseo de Roxas, Makati City.[4] (Emphasis supplied)
Respondents (complainants before the Labor Arbiter) were recruited and hired
by Saudia as Temporary Flight Attendants with the accreditation and approval of the
Philippine Overseas Employment Administration.[5] After undergoing seminars required
by the Philippine Overseas Employment Administration for deployment overseas, as
well as training modules offered by Saudia (e.g., initial flight attendant/training course
and transition training), and after working as Temporary Flight Attendants, respondents
became Permanent Flight Attendants. They then entered into Cabin Attendant contracts
with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on May 16, 1990; [6] Montassah B.
Sacar-Adiong (Montassah) and Rouen Ruth A. Cristobal (Rouen Ruth) on May 22, 1993;
[7]
 and Loraine Schneider-Cruz (Loraine) on August 27, 1995.[8]

Respondents continued their employment with Saudia until they were separated from
service on various dates in 2006.[9]
Respondents contended that the termination of their employment was illegal. They
alleged that the termination was made solely because they were pregnant. [10]

As respondents alleged, they had informed Saudia of their respective pregnancies and
had gone through the necessary procedures to process their maternity leaves. Initially,
Saudia had given its approval but later on informed respondents that its management in
Jeddah, Saudi Arabia had disapproved their maternity leaves. In addition, it required
respondents to file their resignation letters.[11]

Respondents were told that if they did not resign, Saudia would terminate them all the
same. The threat of termination entailed the loss of benefits, such as separation pay and
ticket discount entitlements.[12]

Specifically, Ma. Jopette received a call on October 16, 2006 from Saudia's Base
Manager, Abdulmalik Saddik (Abdulmalik).[13] Montassah was informed personally by
Abdulmalik and a certain Faisal Hussein on October 20, 2006 after being required to
report to the office one (1) month into her maternity leave. [14] Rouen Ruth was also
personally informed by Abdulmalik on October 17, 2006 after being required to report
to the office by her Group Supervisor.[15] Loraine received a call on October 12, 2006
from her Group Supervisor, Dakila Salvador.[16]

Saudia anchored its disapproval of respondents' maternity leaves and demand for their
resignation on its "Unified Employment Contract for Female Cabin Attendants" (Unified
Contract).[17] Under the Unified Contract, the employment of a Flight Attendant who
becomes pregnant is rendered void. It provides:
(H) Due to the essential nature of the Air Hostess functions to be physically fit on
board to provide various services required in normal or emergency cases on both
domestic/international flights beside her role in maintaining continuous safety and
security of passengers, and since she will not be able to maintain the required medical
fitness while at work in case of pregnancy, accordingly, if the Air Hostess becomes
pregnant at any time during the term of this contract, this shall render her
employment contract as void and she will be terminated due to lack of medical fitness.
[18]
 (Emphasis supplied)
In their Comment on the present Petition,[19] respondents emphasized that the
Unified Contract took effect on September 23, 2006 (the first day of Ramadan), [20] well
after they had filed and had their maternity leaves approved. Ma. Jopette filed her
maternity leave application on September 5, 2006.[21] Montassah filed her maternity
leave application on August 29, 2006, and its approval was already indicated in Saudia's
computer system by August 30, 2006.[22] Rouen Ruth filed her maternity leave
application on September 13, 2006,[23] and Loraine filed her maternity leave application
on August 22, 2006.[24]

Rather than comply and tender resignation letters, respondents filed separate appeal
letters that were all rejected.[25]

Despite these initial rejections, respondents each received calls on the morning of
November 6, 2006 from Saudia's office secretary informing them that their maternity
leaves had been approved. Saudia, however, was quick to renege on its approval. On
the evening of November 6, 2006, respondents again received calls informing them that
it had received notification from Jeddah, Saudi Arabia that their maternity leaves had
been disapproved.[26]

Faced with the dilemma of resigning or totally losing their benefits, respondents
executed handwritten resignation letters. In Montassah's and Rouen Ruth's cases, their
resignations were executed on Saudia's blank letterheads that Saudia had provided.
These letterheads already had the word "RESIGNATION" typed on the subject portions
of their headings when these were handed to respondents. [27]

On November 8, 2007, respondents filed a Complaint against Saudia and its officers for
illegal dismissal and for underpayment of salary, overtime pay, premium pay for holiday,
rest day, premium, service incentive leave pay, 13th month pay, separation pay, night
shift differentials, medical expense reimbursements, retirement benefits, illegal
deduction, lay-over expense and allowances, moral and exemplary damages, and
attorney's fees.[28] The case was initially assigned to Labor Arbiter Hermino V. Suelo and
docketed as NLRC NCR Case No. 00-11-12342-07.

Saudia assailed the jurisdiction of the Labor Arbiter. [29] It claimed that all the
determining points of contact referred to foreign law and insisted that the Complaint
ought to be dismissed on the ground of forum non conveniens.[30] It added that
respondents had no cause of action as they resigned voluntarily. [31]

On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-Franco rendered the
Decision[32] dismissing respondents' Complaint. The dispositive portion of this Decision
reads:
WHEREFORE, premises' considered, judgment is hereby
rendered DISMISSING the instant complaint for lack of jurisdiction/merit. [33]
On respondents' appeal, the National Labor Relations Commission's Sixth Division
reversed the ruling of Executive Labor Arbiter Jambaro-Franco. It explained that
"[considering that complainants-appellants are OFWs, the Labor Arbiters and the NLRC
has [sic] jurisdiction to hear and decide their complaint for illegal termination." [34] On the
matter of forum non conveniens, it noted that there were no special circumstances that
warranted its abstention from exercising jurisdiction. [35] On the issue of whether
respondents were validly dismissed, it held that there was nothing on record to support
Saudia's claim that respondents resigned voluntarily.

The dispositive portion of the November 19, 2009 National Labor Relations Commission
Decision[36] reads:
WHEREFORE, premises considered, judgment is hereby rendered finding the
appeal impressed with merit. The respondents-appellees are hereby directed to pay
complainants-appellants the aggregate amount of SR614,001.24 corresponding to their
backwages and separation pay plus ten (10%) percent thereof as attorney's fees. The
decision of the Labor Arbiter dated December 12, 2008 is hereby VACATED and SET
ASIDE. Attached is the computation prepared by this Commission and made an integral
part of this Decision.[37]
In the Resolution dated February 11, 2010,[38] the National Labor Relations
Commission denied petitioners' Motion for Reconsideration.

In the June 16, 2011 Decision,[39] the Court of Appeals denied petitioners' Rule 65
Petition and modified the Decision of the National Labor Relations Commission with
respect to the award of separation pay and backwages.

The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE, the instant petition is hereby DENIED. The Decision dated
November 19, 2009 issued by public respondent, Sixth Division of the National Labor
Relations Commission - National Capital Region is MODIFIED only insofar as the
computation of the award of separation pay and backwages. For greater clarity,
petitioners are ordered to pay private respondents separation pay which shall be
computed from private respondents' first day of employment up to the finality of this
decision, at the rate of one month per year of service and backwages which shall be
computed from the date the private respondents were illegally terminated until finality
of this decision. Consequently, the ten percent (10%) attorney's fees shall be based on
the total amount of the award. The assailed Decision is affirmed in all other respects.

The labor arbiter is hereby DIRECTED to make a recomputation based on the foregoing.

[40]

In the Resolution dated September 13, 2011,[41] the Court of Appeals denied

petitioners' Motion for Reconsideration.

Hence, this Appeal was filed.

The issues for resolution are the following:

First, whether the Labor Arbiter and the National Labor Relations Commission may
exercise jurisdiction over Saudi Arabian Airlines and apply Philippine law in adjudicating
the present dispute;

Second, whether respondents' voluntarily resigned or were illegally terminated; and

Lastly, whether Brenda J. Betia may be held personally liable along with Saudi Arabian
Airlines.

Summons were validly served on Saudia and jurisdiction over it validly acquired.

There is no doubt that the pleadings and summons were served on Saudia through its
counsel.[42] Saudia, however, claims that the Labor Arbiter and the National Labor
Relations Commission had no jurisdiction over it because summons were never served
on it but on "Saudia Manila."[43] Referring to itself as "Saudia Jeddah," it claims that
"Saudia Jeddah" and not "Saudia Manila" was the employer of respondents because:

First, "Saudia Manila" was never a party to the Cabin Attendant contracts entered into
by respondents;

Second, it was "Saudia Jeddah" that provided the funds to pay for respondents' salaries
and benefits; and
Lastly, it was with "Saudia Jeddah" that respondents filed their resignations. [44]

Saudia posits that respondents' Complaint was brought against the wrong party because
"Saudia Manila," upon which summons was served, was never the employer of
respondents.[45]

Saudia is vainly splitting hairs in its effort to absolve itself of liability. Other than its bare
allegation, there is no basis for concluding that "Saudia Jeddah" is distinct from "Saudia
Manila."

What is clear is Saudia's statement in its own Petition that what it has is a "Philippine
Office . . . located at 4/F Metro House Building, Sen. Gil J. Puyat Avenue, Makati
City."[46] Even in the position paper that Saudia submitted to the Labor Arbiter,[47] what
Saudia now refers to as "Saudia Jeddah" was then only referred to as "Saudia Head
Office at Jeddah, KSA,"[48] while what Saudia now refers to as "Saudia Manila" was then
only referred to as "Saudia's office in Manila."[49]

By its own admission, Saudia, while a foreign corporation, has a Philippine office.

Section 3(d) of Republic Act No.. 7042, otherwise known as the Foreign Investments Act
of 1991, provides the following:
The phrase "doing business" shall include . . . opening offices, whether called
"liaison" offices or branches; . . . and any other act or acts that imply a continuity of
commercial dealings or arrangements and contemplate to that extent the performance
of acts or works, or the exercise of some of the functions normally incident to, and in
progressive prosecution of commercial gain or of the purpose and object of the business
organization. (Emphasis supplied)
A plain application of Section 3(d) of the Foreign Investments Act leads to no
other conclusion than that Saudia is a foreign corporation doing business in the
Philippines. As such, Saudia may be sued in the Philippines and is subject to the
jurisdiction of Philippine tribunals.

Moreover, since there is no real distinction between "Saudia Jeddah" and "Saudia
Manila" — the latter being nothing more than Saudia's local office — service of
summons to Saudia's office in Manila sufficed to vest jurisdiction over Saudia's person in
Philippine tribunals.

II
Saudia asserts that Philippine courts and/or tribunals are not in a position to make an
intelligent decision as to the law and the facts. This is because respondents' Cabin
Attendant contracts require the application of the laws of Saudi Arabia, rather than
those of the Philippines.[50] It claims that the difficulty of ascertaining foreign law calls
into operation the principle of forum non conveniens, thereby rendering improper the
exercise of jurisdiction by Philippine tribunals. [51]

A choice of law governing the validity of contracts or the interpretation of its provisions
dees not necessarily imply forum non conveniens. Choice of law and forum non
conveniens are entirely different matters.

Choice of law provisions are an offshoot of the fundamental principle of autonomy of

contracts. Article 1306 of the Civil Code firmly ensconces this:
Article 1306. The contracting parties 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.
In contrast, forum non conveniens is a device akin to the rule against forum
shopping. It is designed to frustrate illicit means for securing advantages and vexing
litigants that would otherwise be possible if the venue of litigation (or dispute
resolution) were left entirely to the whim of either party.

Contractual choice of law provisions factor into transnational litigation and dispute
resolution in one of or in a combination of four ways: (1) procedures for settling
disputes, e.g., arbitration; (2) forum, i.e., venue; (3) governing law; and (4) basis for
interpretation. Forum non conveniens relates to, but is not subsumed by, the second of
these.

Likewise, contractual choice of law is not determinative of jurisdiction. Stipulating on

the laws of a given jurisdiction as the governing law of a contract does not preclude the
exercise of jurisdiction by tribunals elsewhere. The reverse is equally true: The
assumption of jurisdiction by tribunals does not ipso facto mean that it cannot apply and
rule on the basis of the parties' stipulation. In Hasegawa v. Kitamura:[52]
Analytically, jurisdiction and choice of law are two distinct concepts. Jurisdiction
considers whether it is fair to cause a defendant to travel to this state; choice of law
asks the further question whether the application of a substantive law V'hich will
determine the merits of the case is fair to both parties. The power to exercise
jurisdiction does not automatically give a state constitutional authority to apply forum
law. While jurisdiction and the choice of the lex fori will often, coincide, the "minimum
contacts" for one do not always provide the necessary "significant contacts" for the
other. The question of whether the law of a state can be applied to a transaction is
different from the question of whether the courts of that state have jurisdiction to enter
a judgment.[53]
As various dealings, commercial or otherwise, are facilitated by the progressive
ease of communication and travel, persons from various jurisdictions find themselves
transacting with each other. Contracts involving foreign elements are, however, nothing
new. Conflict of laws situations precipitated by disputes and litigation anchored on
these contracts are not totally novel.

Transnational transactions entail differing laws on the requirements Q for the validity of
the formalities and substantive provisions of contracts and their interpretation. These
transactions inevitably lend themselves to the possibility of various fora for litigation
and dispute resolution. As observed by an eminent expert on transnational law:
The more jurisdictions having an interest in, or merely even a point of contact
with, a transaction or relationship, the greater the number of potential fora for the
resolution of disputes arising out of or related to that transaction or relationship. In a
world of increased mobility, where business and personal transactions transcend
national boundaries, the jurisdiction of a number of different fora may easily be invoked
in a single or a set of related disputes.[54]
Philippine law is definite as to what governs the formal or extrinsic validity of
contracts. The first paragraph of Article 17 of the Civil Code provides that "[t]he forms
and solemnities of contracts . . . shall be governed by the laws of the country in which
they are executed"[55] (i.e., lex loci celebrationis).

In contrast, there is no statutorily established mode of settling conflict of laws situations

on matters pertaining to substantive content of contracts. It has been noted that three
(3) modes have emerged: (1) lex loci contractus or the law of the place of the making;
(2) lex loci solutionis or the law of the place of performance; and (3) lex loci
intentionis or the law intended by the parties.[56]

Given Saudia's assertions, of particular relevance to resolving the present dispute is lex
loci intentionis.

An author observed that Spanish jurists and commentators "favor lex loci

intentionis."[57] These jurists and commentators proceed from the Civil Code of Spain,
which, like our Civil Code, is silent on what governs the intrinsic validity of contracts, and
the same civil law traditions from which we draw ours.

In this jurisdiction, this court, in Philippine Export and Foreign Loan Guarantee v. V.P.
Eusebio Construction, Inc.,[58] manifested preference for allowing the parties to select
the law applicable to their contract":
No conflicts rule on essential validity of contracts is expressly provided for in our
laws. The rule followed by most legal systems, however, is that the intrinsic validity of a
contract must be governed by the lex contractus or "proper law of the contract." This is
the law voluntarily agreed upon by the parties (the lex loci voluntatis) or the law
intended by them either expressly or implicitly (the lex loci intentionis). The law selected
may be implied from such factors as substantial connection with the transaction, or the
nationality or domicile of the parties. Philippine courts would do well to adopt the first
and most basic rule in most legal systems, namely, to allow the parties to select the law
applicable to their contract, subject to the limitation that it is not against the law,
morals, or public policy of the forum and that the chosen law must bear a substantive
relationship to the transaction.[59] (Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant contracts require the
application of the laws of Saudi Arabia. It insists that the need to comply with these
stipulations calls into operation the doctrine of forum non conveniens and, in turn,
makes it necessary for Philippine tribunals to refrain from exercising jurisdiction.

As mentioned, contractual choice of laws factors into transnational litigation in any or a

combination of four (4) ways. Moreover, forum non conveniens relates to one of these:
choosing between multiple possible fora.

Nevertheless, the possibility of parallel litigation in multiple fora — along with the host
of difficulties it poses — is not unique to transnational litigation. It is a difficulty that
similarly arises in disputes well within the bounds of a singe jurisdiction.

When parallel litigation arises strictly within the context of a single jurisdiction, such
rules as those on forum shopping, litis pendentia, and res judicata come into operation.
Thus, in the Philippines, the 1997 Rules on Civil Procedure provide for willful and
deliberate forum shopping as a ground not only for summary dismissal with prejudice
but also for citing parties and counsels in direct contempt, as well as for the imposition
of administrative sanctions.[60] Likewise, the same rules expressly provide that a party
may seek the dismissal of a Complaint or another pleading asserting a claim on the
ground "[t]hat there is another action pending between the same parties for the same
cause," i.e., litis pendentia, or "[t]hat the cause of action is barred by a prior
judgment,"[61] i.e., res judicata.

Forum non conveniens, like the rules of forum shopping, litis pendentia, and res judicata,
is a means of addressing the problem of parallel litigation. While the rules of forum
shopping, litis pendentia, and res judicata are designed to address the problem of
parallel litigation within a single jurisdiction, forum non conveniens is a means devised to
address parallel litigation arising in multiple jurisdictions.

Forum non conveniens literally translates to "the forum is inconvenient." [62] It is a

concept in private international law and was devised to combat the "less than
honorable" reasons and excuses that litigants use to secure procedural advantages,
annoy and harass defendants, avoid overcrowded dockets, and select a "friendlier"
venue.[63] Thus, the doctrine of forum non conveniens addresses the same rationale that
the rule against forum shopping does, albeit on a multijurisdictional scale.

Forum non conveniens, like res judicata,[64] is a concept originating in common law.

[65]
 However, unlike the rule on res judicata, as well as those on litis pendentia and forum
shopping, forum non conveniens finds no textual anchor, whether in statute or in
procedural rules, in our civil law system. Nevertheless, jurisprudence has applied forum
non conveniens as basis for a court to decline its exercise of jurisdiction. [66]

Forum non conveniens is soundly applied not only to address parallel litigation and
undermine a litigant's capacity to vex and secure undue advantages by engaging in
forum shopping on an international scale. It is also grounded on principles of comity and
judicial efficiency.

Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction

on account of forum non conveniens is a deferential gesture to the tribunals of another
sovereign. It is a measure that prevents the former's having to interfere in affairs which
are better and more competently addressed by the latter. Further, forum non
conveniens entails a recognition not only that tribunals elsewhere are better suited to
rule on and resolve a controversy, but also, that these tribunals are better positioned to
enforce judgments and, ultimately, to dispense justice. Forum non conveniens prevents
the embarrassment of an awkward situation where a tribunal is rendered incompetent
in the face of the greater capability — both analytical and practical — of a tribunal in
another jurisdiction.

The wisdom of avoiding conflicting and unenforceable judgments is as much a matter of

efficiency and economy as it is a matter of international courtesy. A court would
effectively be neutering itself if it insists on adjudicating a controversy when it knows full
well that it is in no position to enforce its judgment. Doing so is not only an exercise in
futility; it is an act of frivolity. It clogs the dockets of a.tribunal and leaves it to waste its
efforts on affairs, which, given transnational exigencies, will be reduced to mere
academic, if not trivial, exercises.

Accordingly, under the doctrine of forum non conveniens, "a court, in conflicts of law
cases, may refuse impositions on its jurisdiction where it is not the most 'convenient' or
available forum and the parties are not precluded from seeking remedies
elsewhere."[67] In Puyat v. Zabarte,[68] this court recognized the following situations as
among those that may warrant a court's desistance from exercising jurisdiction:
1 The belief that the matter can be better tried and decided elsewhere, either because
) the main aspects of the case transpired in a foreign jurisdiction or the material witnesses have
their residence there;
2 The belief that the non-resident plaintiff sought the forum[,] a practice known
) as forum shopping[,] merely to secure procedural advantages or to convey or harass the
defendant;
3 The unwillingness to extend local judicial facilities to non residents or aliens when the
) docket may already be overcrowded;
4 The inadequacy of the local judicial machinery for effectuating the right sought to be
) maintained; and
5 The difficulty of ascertaining foreign law. [69]
)
In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of
Appeals,[70] this court underscored that a Philippine court may properly assume
jurisdiction over a case if it chooses to do so to the extent: "(1) that the Philippine Court
is one to which the parties may conveniently resort to; (2) that the Philippine Court is in
a position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have power to enforce its decision." [71]

The use of the word "may" (i.e., "may refuse impositions on its jurisdiction"[72]) in the
decisions shows that the matter of jurisdiction rests on the sound discretion of a court.
Neither the mere invocation of forum non conveniens nor the averment of foreign
elements operates to automatically divest a court of jurisdiction. Rather, a court should
renounce jurisdiction only "after 'vital facts are established, to determine whether
special circumstances' require the court's desistance." [73] As the propriety of
applying forum non conveniens is contingent on a factual determination, it is, therefore,
a matter of defense.[74]

The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil Procedure is
exclusive in its recital of the grounds for dismissal that are exempt from the omnibus
motion rule: (1) lack of jurisdiction over the subject matter; (2) litis pendentia; (3) res
judicata; and (4) prescription. Moreover, dismissal on account of  forum non
conveniens is a fundamentally discretionary matter. It is, therefore, not a matter for a
defendant to foist upon the court at his or her own convenience; rather, it must be
pleaded at the earliest possible opportunity.

On the matter of pleading forum non conveniens, we state the rule, thus: Forum non
conveniens must not only be clearly pleaded as a ground for dismissal; it must be
pleaded as such at the earliest possible opportunity. Otherwise, it shall be deemed
waived.

This court notes that in Hasegawa,[75] this court stated that forum non conveniens is not
a ground for a motion to dismiss.[76] The factual ambience of this case however does not
squarely raise the viability of this doctrine. Until the opportunity comes to review the
use of motions to dismiss for parallel litigation, Hasegawa remains existing doctrine.

Consistent with forum non conveniens as fundamentally a factual matter, it is imperative

that it proceed from & factually established basis. It would be improper to dismiss an
action pursuant to forum non conveniens based merely on a perceived, likely, or
hypothetical multiplicity of fora. Thus, a defendant must also plead and show that a
prior suit has, in fact, been brought in another jurisdiction.

The existence of a prior suit makes real the vexation engendered by duplicitous
litigation, the embarrassment of intruding into the affairs of another sovereign, and the
squandering of judicial efforts in resolving a dispute already lodged and better resolved
elsewhere. As has been noted:
A case will not be stayed o dismissed on [forum] non conveniens grounds unless
the plaintiff is shown to have an available alternative forum elsewhere. On this, the
moving party bears the burden of proof.
A number of factors affect the assessment of an alternative forum's adequacy. The
statute of limitations abroad may have run, of the foreign court may lack either subject
matter or personal jurisdiction over the defendant. . . . Occasionally, doubts will be
raised as to the integrity or impartiality of the foreign court (based, for example, on
suspicions of corruption or bias in favor of local nationals), as to the fairness of its
judicial procedures, or as to is operational efficiency (due, for example, to lack of
resources, congestion and delay, or interfering circumstances such as a civil unrest). In
one noted case, [it was found] that delays of 'up to a quarter of a century' rendered the
foreign forum... inadequate for these purposes. [77]
We deem it more appropriate and in the greater interest of prudence that a
defendant not only allege supposed dangerous tendencies in litigating in this
jurisdiction; the defendant must also show that such danger is real and present in that
litigation or dispute resolution has commenced in another jurisdiction  and that a foreign
tribunal has chosen to exercise jurisdiction.

III

Forum non conveniens finds no application and does not operate to divest Philippine
tribunals of jurisdiction and to require the application of foreign law.

Saudia invokes forum non conveniens to supposedly effectuate the stipulations of the

Cabin Attendant contracts that require the application of the laws of Saudi Arabia.

Forum non conveniens relates to forum, not to the choice of governing law. Thai forum
non conveniens may ultimately result in the application of foreign law is merely an
incident of its application. In this strict sense, forum non conveniens is not applicable. It
is not the primarily pivotal consideration in this case.

In any case, even a further consideration of the applicability of forum non conveniens on
the incidental matter of the law governing respondents' relation with Saudia leads to
the conclusion that it is improper for Philippine tribunals to divest themselves of
jurisdiction.

Any evaluation of the propriety of contracting parties' choice of a forum and'its incidents
must grapple with two (2) considerations: first, the availability and adequacy of recourse
to a foreign tribunal; and second, the question of where, as between the forum court
and a foreign court, the balance of interests inhering in a dispute weighs more heavily.
The first is a pragmatic matter. It relates to the viability of ceding jurisdiction to a foreign
tribunal and can be resolved by juxtaposing the competencies and practical
circumstances of the tribunals in alternative fora. Exigencies, like the statute of
limitations, capacity to enforce orders and judgments, access to records, requirements
for the acquisition of jurisdiction, and even questions relating to the integrity of foreign
courts, may render undesirable or even totally unfeasible recourse to a foreign court. As
mentioned, we consider it in the greater interest of prudence that a defendant show, in
pleading forum non conveniens, that litigation has commenced in another jurisdiction
and that a foieign tribunal has, in fact, chosen to exercise jurisdiction.

Two (2) factors weigh into a court's appraisal of the balance of interests inhering in a
dispute: first, the vinculum which the parties and their relation have to a given
jurisdiction; and second, the public interest that must animate a tribunal, in its capacity
as an agent of the sovereign, in choosing to assume or decline jurisdiction. The first is
more concerned with the parties, their personal circumstances, and private interests;
the second concerns itself with the state and the greater social order.

In considering the vinculum, a court must look into the preponderance of linkages which
the parties and their transaction may have to either jurisdiction. In this respect, factors,
such as the parties' respective nationalities and places of negotiation, execution,
performance, engagement or deployment, come into play.

In considering public interest, a court proceeds with a consciousness that it is an organ

of the state. It must, thus, determine if the interests of the sovereign (which acts
through it) are outweighed by those of the alternative jurisdiction. In this respect, the
court delves into a consideration of public policy. Should it find that public interest
weighs more heavily in favor of its assumption of jurisdiction, it should proceed in
adjudicating the dispute, any doubt or .contrary view arising from the preponderance of
linkages notwithstanding.

Our law on contracts recognizes the validity of contractual choice of law provisions.
Where such provisions exist, Philippine tribunals, acting as the forum court, generally
defer to the parties' articulated choice.

This is consistent with the fundamental principle of autonomy of contracts. Article 1306
of the Civ:l Code expressly provides that "[t]he contracting parties may establish 'such
stipulations, clauses, terms and conditions as they may deem
convenient."[78] Nevertheless, while a Philippine tribunal (acting as the forum court) is
called upon to respect the parties' choice of governing law, such respect must not be so
permissive as to lose sight of considerations of law, morals, good customs, public order,
or public policy that underlie the contract central to the controversy.

Specifically with respect to public policy, in Pakistan International Airlines Corporation v.

Ople,[79] this court explained that:
counter-balancing the principle of autonomy of contracting parties is the equally
general rule that provisions of applicable law, especially provisions relating to matters
affected with public policy, are deemed written inta the contract. Put a little differently,
the governing principle is that parties may not contract away applicable provisions of
law especially peremptory provisions dealing with matters heavily impressed with public
interest.[80] (Emphasis supplied)
Article II, Section 14 of the 1987 Constitution provides that "[t]he State ... shall
ensure the fundamental equality before the law of women and men." Contrasted with
Article II, Section 1 of the 1987 Constitution's statement that "[n]o person shall ... be
denied the equal protection of the laws," Article II, Section 14 exhorts the State to
"ensure." This does not only mean that the Philippines shall not countenance nor lend
legal recognition and approbation to measures that discriminate on the basis of one's
being male or female. It imposes an obligation to actively engage in securing the
fundamental equality of men and women.

The Convention on the Elimination of all Forms of Discrimination against Women

(CEDAW), signed and ratified by the Philippines on July 15, 1980, and on August 5, 1981,
respectively,[81] is part of the law of the land. In view of the widespread signing and
ratification of, as well as adherence (in practice) to it by states, it may even be said that
many provisions of the CEDAW may have become customary international law. The
CEDAW gives effect to the Constitution's policy statement in Article II, Section 14. Article
I of the CEDAW defines "discrimination against women" as:
any distinction, exclusion or restriction made on the basis of sex which has the
effect or purpose of impairing or nullifying the recognition, enjoyment or exercise by
women, irrespective of their marital status, on a basis of equality of men and women, of
human rights and fundamental freedoms in the political, economic, social, cultural, civil
or any other field.[82]
The constitutional exhortation to ensure fundamental equality, as illumined by its
enabling law, the CEDAW, must inform and animate all the actions of all personalities
acting on behalf of the State. It is, therefore, the bounden duty of this court, in
rendering judgment on the disputes brought before it, to ensure that no discrimination
is heaped upon women on the mere basis of their being women. This is a point so basic
and central that all our discussions and pronouncements — regardless of whatever
averments there may be of foreign law — must proceed from this premise.

So informed and animated, we emphasize the glaringly discriminatory nature of Saudia's

policy. As argued by respondents, Saudia's policy entails the termination of employment
of flight attendants who become pregnant. At the risk of stating the obvious, pregnancy
is an occurrence that pertains specifically to women. Saudia's policy excludes from and
restricts employment on the basis of no other consideration but sex.

We do not lose sight of the reality that pregnancy does present physical limitations that
may render difficult the performance of functions associated with being a flight
attendant. Nevertheless, it would be the height of iniquity to view pregnancy as a
disability so permanent and immutable that, it must entail the termination of one's
employment. It is clear to us that any individual, regardless of gender, may be subject to
exigencies that limit the performance of functions. However, we fail to appreciate how
pregnancy could be such an impairing occurrence that it leaves no other recourse but
the complete termination of the means through which a woman earns a living.

Apart from the constitutional policy on the fundamental equality before the law of men
and women, it is settled that contracts relating to labor and employment are impressed
with public interest. Article 1700 of the Civil Code provides that "[t]he relation between
capital and labor are not merely contractual. They are so impressed with public interest
that labor contracts must yield to the common good."

Consistent with this, this court's pronouncements in Pakistan International Airlines

Corporation[83] are clear and unmistakable:
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement
which specifies, firstly, the law of Pakistan as the applicable law of the agreement, and,
secondly, lays the venue for settlement of any dispute arising out of or in connection
with the agreement "only [in] courts of Karachi, Pakistan". The first clause of paragraph
10 cannot be invoked to prevent the application of Philippine labor laws and'regulations
to the subject matter of this case, i.e., the employer-employee relationship between
petitioner PIA and private respondents. We have already pointed out that the
relationship is much affected with public interest and that the otherwise applicable
Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon
some other law to govern their relationship. . . . Under these circumstances, paragraph
10 of the employment agreement cannot be given effect so as to oust Philippine
agencies and courts of the jurisdiction vested upon them by Philippine law. [84] (Emphasis
supplied)
As the present dispute relates to (what the respondents allege to be) the illegal
termination of respondents' employment, this case is immutably a matter of public
interest and public policy. Consistent with clear pronouncements in law and
jurisprudence, Philippine laws properly find application in and govern this case.
'Moreover, as this premise for Saudia's insistence on the application forum non
conveniens has been shattered, it follows that Philippine tribunals may properly assume
jurisdiction over the present controversy. Philippine jurisprudence provides ample
illustrations of when a court's renunciation of jurisdiction on account of forum non
conveniens is proper or improper.'

In Philsec Investment Corporation v. Court of Appeals,[85] this court noted that the trial
court failed to consider that one of the plaintiffs was a domestic corporation, that one of
the defendants was a Filipino, and that it was the extinguishment of the latter's debt
that was the object of the transaction subject of the litigation. Thus, this court held,
among others, that the trial court's refusal to assume jurisdiction was not justified
by forum non conveniens and remanded the case to the trial court.

In Raytheon International, Inc. v. Rouzie, Jr.,[86] this court sustained the trial court's
assumption of jurisdiction considering that the trial court could properly enforce
judgment on the petitioner which was a foreign corporation licensed to do business in
the Philippines.

In Pioneer International, Ltd. v. Guadiz, Jr.,[87] this court found no reason to disturb the
trial court's assumption of jurisdiction over a case in which, as noted by the trial court,
"it is more convenient to hear and decide the case in the Philippines because Todaro
[the plaintiff] resides in the Philippines and the contract allegedly breached involve[d]
employment in the Philippines."[88]

In Pacific Consultants International Asia, Inc. v. Schonfeld,[89] this court held that the fact
that the complainant in an illegal dismissal case was a Canadian citizen and a repatriate
did not warrant the application of forum non conveniens considering that: (1) the Labor
Code does not include forum non conveniens as a ground for the dismissal of a
complaint for illegal dismissal; (2) the propriety of dismissing a case based on forum non
conveniens requires a factual determination; and (3) the requisites for assumption of
jurisdiction as laid out in Bank of America, NT&SA[90] were all satisfied.

In contrast, this court ruled in The Manila Hotel Corp. v. National Labor Relations
Commission[91] that the National Labor Relations Q Commission was a seriously
inconvenient forum. In that case, private respondent Marcelo G. Santos was working in
the Sultanate of Oman when he received a letter from Palace Hotel recruiting him for
employment in Beijing, China. Santos accepted the offer. Subsequently, however, he
was released from employment supposedly due to business reverses arising from
political upheavals in China (i.e., the Tiananmen Square incidents of 1989). Santos later
filed a Complaint for illegal dismissal impleading Palace Hotel's General Manager, Mr.
Gerhard Schmidt, the Manila Hotel International Company Ltd. (which was, responsible
for training Palace Hotel's personnel and staff), and the Manila Hotel Corporation (which
owned 50% of Manila Hotel International Company Ltd.'s capital stock).

In ruling against the National Labor Relations Commission's exercise of jurisdiction, this
court noted that the main aspects of the case transpired in two (2) foreign jurisdictions,
Oman and China, and that the case involved purely foreign elements. Specifically,
Santos was directly hired by a foreign employer through correspondence sent to Oman.
Also, the proper defendants were neither Philippine nationals nor engaged in business
in the Philippines, while the main witnesses were not residents of the Philippines.
Likewise, this court noted that the National Labor Relations Commission was in no
position to conduct the following: first, determine the law governing the employment
contract, as it was entered into in foreign soil; second, determine the facts, as Santos'
employment was terminated in Beijing; and third, enforce its judgment, since Santos'
employer, Palace Hotel, was incorporated under the laws of China and was not even
served with summons.

Contrary to Manila Hotel, the case now before us does not entail a preponderance of
linkages that favor a foreign jurisdiction.

Here, the circumstances of the parties and their relation do not approximate the
circumstances enumerated in Puyat,[92] which this court recognized as possibly justifying
the desistance of Philippine tribunals from exercising jurisdiction.

First, there is no basis for concluding that the case can be more conveniently tried
elsewhere. As established earlier, Saudia is doing business in the Philippines. For their
part, all four (4) respondents are Filipino citizens maintaining residence in the
Philippines and, apart from their previous employment with Saudia, have no other
connection to the Kingdom of Saudi Arabia. It would even be to respondents'
inconvenience if this case were to be tried elsewhere.

Second, the records are bereft of any indication that respondents filed their Complaint
in an effort to engage in forum shopping or to vex and inconvenience Saudia.

Third, there is no indication of "unwillingness to extend local judicial facilities to non-

residents or aliens."[93] That Saudia has managed to bring the present controversy all the
way to this court proves this.

Fourth, it cannot be said that the local judicial machinery is inadequate for effectuating
the right sought to be maintained. Summons was properly served on Saudia and
jurisdiction over its person was validly acquired.

Lastly, there is not even room for considering foreign law. Philippine law properly
governs the present dispute.

As the question of applicable law has been settled, the supposed difficulty of
ascertaining foreign law (which requires the application of forum non conveniens)
provides no insurmountable inconvenience or special circumstance that will justify
depriving Philippine tribunals of jurisdiction.

Even if we were to assume, for the sake of discussion, that it is the laws of Saudi Arabia
which should apply, it does not follow that Philippine tribunals should refrain from
exercising jurisdiction. To. recall our pronouncements in Puyat, [94] as well as in Bank of
America, NT&SA,[95] it is not so much the mere applicability of foreign law which calls
into operation forum non conveniens. Rather, what justifies a court's desistance from
exercising jurisdiction is "[t]he difficulty of ascertaining foreign law"[96] or the inability of
a "Philippine Court to make an intelligent decision as to the law[.]" [97]

Consistent with lex loci intentionis, to the extent that it is proper and practicable (i.e.,
"to make an intelligent decision"[98]), Philippine tribunals may apply the foreign law
selected by the parties. In fact, (albeit without meaning to make a pronouncement on
the accuracy and reliability of respondents' citation) in this case, respondents
themselves have made averments as to the laws of Saudi Arabia. In their Comment,
respondents write:
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is illegal and
unlawful to terminate the employment of any woman by virtue of pregnancy. The law in
Saudi Arabia is even more harsh and strict [sic] in that no employer can terminate the
employment of a female worker or give her a warning of the same while on Maternity
Leave, the specific provision of Saudi Labor Laws on the matter is hereto quoted as
follows:
"An employer may not terminate the employment of a female worker or give her
a warning of the same while on maternity leave." (Article 155, Labor Law of the Kingdom
of Saudi Arabia, Royal Decree No. M/51.)[99]
All told, the considerations for assumption of jurisdiction by Philippine tribunals
as outlined in Bank of America, NT&SA[100] have been satisfied. First, all the parties are
based in the Philippines and all the material incidents transpired in this jurisdiction.
Thus, the parties may conveniently seek relief from Philippine tribunals. Second,
Philippine tribunals are in a position to make an intelligent decision as to the law and
the facts. Third, Philippine tribunals are in a position to enforce their decisions. There is
no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the contrary, the
immense public policy considerations attendant to this case behoove Philippine
tribunals to not shy away from their duty to rule on the case.

IV

Respondents were illegally terminated.

In Bilbao v. Saudi Arabian Airlines,[101] this court defined voluntary resignation as "the

voluntary act of an employee who is in a situation where one believes that personal
reasons cannot be sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a formal pronouncement
or relinquishment of an office, with the intention of relinquishing the office
accompanied by the act of relinquishment." [102] Thus, essential to the act of resignation
is voluntariness. It must be the result of an employee's exercise of his or her own will.

In the same case of Bilbao, this court advanced a means for determining whether an
employee resigned voluntarily:
As the intent to relinquish must concur with the overt act of relinquishment, the
acts of the employee before and after the alleged resignation must be considered in
determining whether he or she, in fact, intended, to sever his or her employment.
[103]
 (Emphasis supplied)
On the other hand, constructive dismissal has been defined as "cessation of work
because 'continued employment is rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank or a diminution in pay' and other benefits." [104]

In Penaflor v. Outdoor Clothing Manufacturing Corporation,[105] constructive dismissal

has been described as tantamount to "involuntarily [sic] resignation due to the harsh,
hostile, and unfavorable conditions set by the employer." [106] In the same case, it was
noted that "[t]he gauge for constructive dismissal is whether a reasonable person in the
employee's position would feel compelled to give up his employment under the
prevailing circumstances."[107]

Applying the cited standards on resignation and constructive dismissal, it is clear that
respondents were constructively dismissed. Hence, their termination was illegal.

The termination of respondents' employment happened when they were pregnant and
expecting to incur costs on account of child delivery and infant rearing. As noted by the
Court of Appeals, pregnancy is a time when they need employment to sustain their
families.[108] Indeed, it goes against normal and reasonable human behavior to abandon
one's livelihood in a time of great financial need.

It is clear that respondents intended to remain employed with Saudia. All they did was
avail of their maternity leaves. Evidently, the very nature of a maternity leave means
that a pregnant employee will not report for work only temporarily and that she will
resume the performance of her duties as soon as the leave allowance expires.

It is also clear that respondents exerted all efforts to' remain employed with Saudia.
Each of them repeatedly filed appeal letters (as much as five [5] letters in the case of
Rebesencio[109]) asking Saudia to reconsider the ultimatum that they resign or be
terminated along with the forfeiture of their benefits. Some of them even went to
Saudia's office to personally seek reconsideration.[110]

Respondents also adduced a copy of the "Unified Employment Contract for Female
Cabin Attendants."[111] This contract deemed void the employment of a flight attendant
who becomes pregnant and threatened termination due to lack of medical fitness.
[112]
 The threat of termination (and the forfeiture of benefits that it entailed) is enough to
compel a reasonable person in respondents' position to give up his or her employment.

Saudia draws attention to how respondents' resignation letters were supposedly made
in their own handwriting. This minutia fails to surmount all the other indications
negating any voluntariness on respondents' part. If at all, these same resignation letters
are proof of how any supposed resignation did not arise from respondents' own
initiative. As earlier pointed out, respondents' resignations were executed on Saudia's
blank letterheads that Saudia had provided. These letterheads already had the word
"RESIGNATION" typed on the subject portion of their respective headings when these
were handed to respondents.[113]

"In termination cases, the burden of proving just or valid cause for dismissing an
employee rests on the employer."[114] In this case, Saudia makes much of how
respondents supposedly completed their exit interviews, executed quitclaims, received
their separation pay, and took more than a year to file their Complaint. [115] If at all,
however, these circumstances prove only the fact of their occurrence, nothing more.
The voluntariness of respondents' departure from Saudia is non sequitur.

Mere compliance with standard procedures or processes, such as the completion of

their exit interviews, neither negates compulsion nor indicates voluntariness.

As with respondent's resignation letters, their exit interview forms even support their
claim of illegal dismissal and militates against Saudia's arguments. These exit interview
forms, as reproduced by Saudia in its own Petition, confirms the unfavorable conditions
as regards respondents' maternity leaves. Ma. Jopette's and Loraine's exit interview
forms are particularly telling:
a. From Ma. Jopette's exit interview form:

    3. In what respects has the job met or failed to meet your expectations?

THE SUDDEN TWIST OF DECISION REGARDING THE MATERNITY LEAVE. [116]

b. From Loraine's exit interview form:

    1. What are your main reasons for leaving Saudia? What company are you joining?

        xxx xxx xxx

        Others

CHANGING POLICIES REGARDING MATERNITY LEAVE (PREGNANCY) [117]

As to respondents' quitclaims, in Phil. Employ Services and Resources, Inc. v.
Paramio,[118] this court noted that "[i]f (a) there is clear proof that the waiver was
wangled from an unsuspecting or gullible person; or (b) the terms of the settlement are
unconscionable, and on their face invalid, such quitclaims must be struck down as
invalid or illegal."[119] Respondents executed their quitclaims after having been unfairly
given an ultimatum to resign or be terminated (and forfeit their benefits).

Having been illegally and unjustly dismissed, respondents are entitled to full backwages
and benefits from the time of their termination until the finality of this Decision. They
are likewise entitled to separation pay in the amount of one (1) month's salary for every
year of service until the fmality of this Decision, with a fraction of a year of at least six
(6) months being counted as one (1) whole year.

Moreover, "[m]oral damages are awarded in termination cases where the employee's
dismissal was attended by bad faith, malice or fraud, or where it constitutes an act
oppressive to labor, or where it was done in a manner contrary to morals, good customs
or public policy."[120] In this case, Saudia terminated respondents' employment in a
manner that is patently discriminatory and running afoul of the public interest that
underlies employer-employee relationships. As such, respondents are entitled to moral
damages.

To provide an "example or correction for the public good"[121] as against such

discriminatory and callous schemes, respondents are likewise entitled to exemplary
damages.

In a long line of cases, this court awarded exemplary damages to illegally dismissed
employees whose "dismissal[s were] effected in a wanton, oppressive or malevolent
manner."[122] This court has awarded exemplary damages to employees who were
terminated on such frivolous, arbitrary, and unjust grounds as membership in or
involvement with labor unions,[123] injuries sustained in the course of employment,
[124]
 development of a medical condition due to the employer's own violation of the
employment contract,[125] and lodging of a Complaint against the employer.
[126]
 Exemplary damages were also awarded to employees who were deemed illegally
dismissed by an employer in an attempt to evade compliance with statutorily
established employee benefits.[127] Likewise, employees dismissed for supposedly just
causes, but in violation of due process requirements, were awarded exemplary
damages.[128]

These examples pale in comparison to the present controversy. Stripped of all

unnecessary complexities, respondents were dismissed for no other reason than simply
that they were pregnant. This is as wanton, oppressive, and tainted with bad faith as
any reason for termination of employment can be. This is no ordinary case of illegal
dismissal. This is a case of manifest gender discrimination. It is an affront not only to our
statutes and policies on employees' security of tenure, but more so, to the
Constitution's dictum of fundamental equality between men and women. [129]

The award of exemplary damages is, therefore, warranted, not only to remind
employers of the need to adhere to the requirements of procedural and substantive due
process in termination of employment, but more importantly, to demonstrate that
gender discrimination should in no case be countenanced.

Having been compelled to litigate to seek reliefs for their illegal and unjust dismissal,
respondents are likewise entitled to attorney's fees in the amount of 10% of the total
monetary award.[130]

VI

Petitioner Brenda J. Betia may not be held liable.

A corporation has a personality separate and distinct from those of the persons
composing it. Thus, as a rule, corporate directors and officers are not liable for the illegal
termination of a corporation's employees. It is only when they acted in bad faith or with
malice that they become solidarity liable with the corporation. [131]

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever

Electrical,[132] this court clarified that "[b]ad faith does not connote bad judgment or
negligence; it imports a dishonest purpose or some moral obliquity and conscious doing
of wrong; it means breach of a known duty through some motive or interest or ill will; it
partakes of the nature of fraud."[133]
Respondents have not produced proof to show that Brenda J. Betia acted in bad faith or
with malice as regards their termination. Thus, she may not be held solidarity liable with
Saudia.

WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J. Betia is not

solidarity liable with petitioner Saudi Arabian Airlines, and second, that petitioner Saudi
Arabian Airlines is liable for moral and exemplary damages. The June 16, 2011 Decision
and the September 13, 2011 Resolution of the Court of Appeals in CA-G.R. SP. No.
113006 are hereby AFFIRMED in all other respects. Accordingly, petitioner Saudi
Arabian Airlines is ordered to pay respondents:

(1 Full backwages and all other benefits computed from the respective dates in which
) each of the respondents were illegally terminated until the finality of this Decision;
(2 Separation pay computed from the respective dates in which each of the respondents
) commenced employment until the finality of this Decision at the rate of one (1) month's
salary for every year of service, with a fraction of a year of at least six (6) months being
counted as one (1) whole year;
(3 Moral damages in the amount of P100,000.00 per respondent;
)
(4 Exemplary damages in the amount of P200,000.00 per respondent; and
)
(5 Attorney's fees equivalent to 10% of the total award.
)

Interest of 6% per annum shall likewise be imposed on the total judgment award from
the finality of this Decision until full satisfaction thereof.

This case is REMANDED to the Labor Arbiter to make a detailed computation of the
amounts due to respondents which petitioner Saudi Arabian Airlines should pay without
delay.

SO ORDERED.

THIRD DIVISION
[ G.R. No. 187417, February 24, 2016 ]
CHRISTINE JOY CAPIN-CADIZ, PETITIONER, VS. BRENT HOSPITAL
AND COLLEGES, INC., RESPONDENT.
 DECISION

REYES, J.:

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

assailing the Resolutions dated July 22, 2008[2] and February 24, 2009[3] of the Court of
Appeals (CA) in CA-G.R. SP 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[5] dated April 12, 2007, the LA found that Cadiz's indefinite suspension
amounted to a 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.
[6]
 The LA further stated that her "immoral conduct x x x [was] magnified as serious
misconduct not only by heir 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."[7] The 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 1311 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[9] dated December 10, 2007. Her motion for reconsideration
having been denied by the NLRC in its Resolution[10] dated February 29, 2008, Cadiz
elevated her case to the CA on petition 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.[11] Cadiz sought reconsideration of the assailed CA Resolution dated July 22,
2008 but it was denied in the assailed Resolution dated February 24, 2009. [12] The CA
further ruled that "a perusal of the petition will reveal that public 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 TFIAT
[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. [20] Cadiz's failure to state the
date of receipt of the copy of the NLRC decision, however, is not 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, [21] which she has
duly complied with.[22]

The CA also dismissed the petition for failure to attach the registry receipt in the
affidavit of service.[23] Cadiz points out, on the other hand, that the registry receipt
number was indicated in the 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.[24] Clearly, mere indication of the registry receipt
numbers will not suffice. In fact, the absence of the registry receipts amounts to lack of
proof of service.[25] Nevertheless, despite this defect, the Court finds that the ends of
substantial justice would be better served by relaxing the application of technical rules
of procedure.[26] With regard to counsel's failure to indicate the place where the IBP and
PTR receipts 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."[29] The LA deemed said act to be 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 ITuman
Resource Officer in charge of implementing its rules against immoral conduct, she
should have been the "epitome of proper conduct." [30] The LA ruled:

[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 xxx committed to "developing competent and
dedicated professionals xxx 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 xxx. 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, x x 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 [32] Brent's Policy Manual
provides:
 CATEGORY IV

In accordance with Republic Act No. 1052,[33] the following are just cause for terminating
an 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. Immorality, 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"[35] as a ground for discipline and discharge. Brent also
relied on Section 94 of the Manual of 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 Lens 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, Cheryl
1 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.[40] Whether a conduct is considered
disgraceful or immoral should be 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.[42] Aside from these, the
labor tribunals' respective conclusion that Cadiz's "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.[43] Brent also conceded that "[a]t
the 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."[44] This only goes 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." [45] The fact that Brent is a
sectarian institution 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."[48] In this case, Brent imposed on 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."[50] The Labor Code of the Philippines, meanwhile, provides:

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[51] protects 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 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.
[53]
 While a marriage or no-marriage qualification 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.[54] Brent has not shown the presence of neither
of these factors. Perforce, the Court cannot 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.[55] In the computation of separation 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.[56] In this case, the records do not show whether Cadiz already severed her
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,[57] which shall then be computed at a rate of one (1) month salary for every year
of service,[58] as follows:

Monthly salary P9,108.70

multiplied by number of years  x
 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.[59] In case 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. [60] Jurisprudence
further clarified that the period for computing the backwages during the period of
appeal should end on the date that a higher court reversed the labor arbitration ruling
of illegal dismissal.[61] If applied in Cadiz's case, then the computation of backwages
should be from 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.[62] The Court notes that at the 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 year x        x
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.[63] Absent clear and convincing evidence
showing that Cadiz's dismissal 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 often 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-M1N 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
(P109,304.40) 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

FIRST DIVISION
[ G.R. No. 87210, July 16, 1990 ]
FILOMENA BARCENAS, PETITIONER, VS. THE NATIONAL LABOR
RELATIONS COMMISSION (NLRC), REV. SIM DEE, THE PRESENT HEAD
MONK OF THE MANILA BUDDHA TEMPLE, MANUEL CHUA, IN HIS
CAPACITY AS THE PRESIDENT AND CHAIRMAN OF THE BOARD OF
DIRECTORS OF THE POH TOH BUDDHIST ASSOCIATION OF THE
PHILIPPINES, INC., AND IN HIS PRIVATE CAPACITY, RESPONDENTS.

DECISION

MEDIALDEA, J.:

This petition for review on certiorari (which We treat as a special civil action

for certiorari) seeks to annul the decision of the National Labor Relations Commission
dated November 29, 1988, which reversed the decision of the Labor Arbiter dated
February 10, 1988 in NLRC-NCR Case No. 12-4861-86 (Filomena Barcenas v.
Rev. Sim See, etc., et al.) on the ground that no employer-employee relationship exists
between the parties.
Petitioner alleged in her position paper the following facts:

In 1978, Chua Se Su (Su, for short) in his capacity as the Head Monk of the Buddhist
Temple of Manila and Baguio City and as President and Chairman of the Board of
Directors of the Poh Toh Buddhist Association of the Phils. Inc. hired the petitioner who
speaks the Chinese language as secretary and interpreter.  Petitioner's position required
her to receive and assist Chinese visitors to the temple, act as tourist guide for foreign
Chinese visitors, attend to the callers of the Head Monk as well as to the food for the
temple visitors, run errands for the Head Monk such as paying the Meralco,
PLDT, MWSS bills and act as liaison in some government offices.  Aside from her pay
and allowances under the law, she received an amount of P500.00 per month plus free
board and lodging in the temple.  In December, 1979, Su assumed the responsibility of
paying for the education of petitioner's nephew.  In 1981, Su and petitioner had amorous
relations.  In May, 1982, or five months before giving birth to the alleged son of Su
on October 12, 1982, petitioner was sent home to Bicol.  Upon the death of Su in July,
1983, complainant remained and continued in her job.  In 1985, respondent Manuel Chua
(Chua, for short) was elected President and Chairman of the Board of
the Poh Toh Buddhist Association of the Philippines, Inc. and Rev. Sim Dee (Dee, for
short) was elected Head Buddhist Priest.  Thereafter, Chua and Dee discontinued
payment of her monthly allowance and the additional P500.00 effective 1983.  In
addition, petitioner and her son were evicted forcibly from their quarters in the temple by
six police officers.  She was brought first to the Police precinct in Tondo and then
brought to Aloha Hotel where she was compelled to sign a written undertaking not to
return to the Buddhist temple in consideration of the sum of P10,000.00.  Petitioner
refused and Chua shouted threats against her and her son.  Her personal belongings
including assorted jewelries were never returned by respondent Chua.

Chua and Dee, on the other hand, claimed that petitioner was never an employee of
the Poh Toh Temple but a servant who confined herself to the temple and to the personal
needs of the late Chua Se Su and thus, her position is co-terminous with that of her
master.

On February 10, 1988, the Labor Arbiter rendered a decision, the dispositive portion of

which states:

"WHEREFORE, premises considered, judgment is hereby rendered in favor of the

complainant Filomena Barcenas, and the respondent corporation is hereby ordered to
pay her the following:
“1.     P26,575.00 backwages from August 9, 1986 up to date hereof;
“2.     P14,650.00 as separation pay;
“3.     P18,000.00 as unpaid wages from August, 1983 up to August 8, 1986; and
“4.     P10,000.00 moral damages.
 "Complainant's charge of unfair labor practice is hereby dismissed for lack of
merit.
"SO ORDERED." [1]

Respondents appealed to the National Labor Relations Commission which, as earlier

stated, reversed the above decision of the Labor Arbiter.  Hence, this instant petition.

A painstaking review of the records compels Us to dismiss the petition.

At the outset, however, We agree with the petitioner's claim that she was a regular
employee of the Manila Buddhist Temple as secretary and interpreter of its Head Monk,
Su.  As Head Monk, President and Chairman of the Board of Directors of
the Poh Toh Buddhist Association of the Philippines, Su was empowered to hire the
petitioner under Article V of the By-laws of the Association which states:

"x x x (T)he President or in his absence, the Vice President shall represent the

Association in all its dealings with the public, subject to the Board, shall have the power
to enter into any contract or agreement in the name of the Association, shall manage
the active business operation of the Association, shall deal with the bank or banks
x x x."
[2]

Respondent NLRC represented by its Legal Officer  argues that since petitioner was
[3]

hired without the approval of the Board of Directors of the Poh Toh Buddhist Association

of the Philippines, Inc., she was not an employee of respondents.  This argument is
specious.  The required Board approval would appear to relate to the acts of the President
in representing the association "in all its dealings with the public." And, even granting
that prior Board approval is required to confirm the hiring of the petitioner, the same was
already granted, albeit, tacitly.  It must be noted that petitioner was hired in 1978 and no
whimper of protest was raised until this present controversy.

Moreover, the work that petitioner performed in the temple could not be categorized as
mere domestic work.  Thus, We find that petitioner, being proficient in the Chinese
language, attended to the visitors, mostly Chinese, who came to pray or seek advice
before Buddha for personal or business problems; arranged meetings between these
visitors and Su and supervised the preparation of the food for the temple visitors; acted as
tourist guide of foreign visitors; acted as liaison with some government offices; and made
the payment for the temple's Meralco, MWSS and PLDT bills.  Indeed, these tasks may
not be deemed activities of a household helper.  They were essential and important to the
operation and religious functions of the temple.

In spite of this finding, her status as a regular employee ended upon her return to Bicol in
May, 1982 to await the birth of her lovechild allegedly by Su.  The records do not show
that petitioner filed any leave from work or that a leave was granted her.  Neither did she
return to work after the birth of her child on October 12, 1982, whom she named Robert
Chua alias Chua Sim Tiong.  The NLRC found that it was only in July, 1983 after Su
died that she went back to the Manila Buddhist Temple.  Petitioner's pleadings failed to
rebut this finding.  Clearly, her return could not be deemed as a resumption of her old
position which she had already abandoned.  Petitioner herself supplied the reason for her
return.  She stated:

"... (I)t was the death-bed instruction to her by Chua Se Su to stay at the temple
and to take care of the two boys and to see to it that they finish their studies to become
monks and when they are monks to eventually take over the two temples as their
inheritance from their father Chua Se Su." [4]

Thus, her return to the temple was no longer as an employee but rather as Su's mistress
who is bent on protecting the proprietary and hereditary rights of her son and nephew.  In
her pleadings, the petitioner claims that they were forcefully evicted from
the temple, harassed and threatened by respondents and that the Poh Toh Buddhist
Association is a trustee corporation with the children as cestui que trust.  These claims are
not proper in this labor case.  They should be appropriately threshed out in the complaints
already filed by the petitioner before the civil courts.  Due to these claims, We view the
respondents' offer of P10,000.00 as indicative more of their desire to evict the
petitioner and her son from the temple rather than an admission of an employer-employee
relations.

Anent the petitioner's claim for unpaid wages since May, 1982 which she filed only in
1986, We hold that the same has already prescribed.  Under Article 292 of the Labor
Code, all money claims arising from employer-employee relations must be filed within
three years from the time the cause of action accrued, otherwise they shall forever be
barred.

Finally, while petitioner contends that she continued to work in the temple after Su died,
there is, however, no proof that she was re-hired by the new Head Monk.  In fact, she
herself manifested that respondents made it clear to her in no uncertain terms that her
services as well as her presence and that of her son were no longer needed.  However,
[5]

she persisted and continued to work in the temple without receiving her salary because
she expected Chua and Dee to relent and permit the studies of the two boys.
 Consequently, under these circumstances, no employer-employee relationship could
[6]

have arisen.

ACCORDINGLY, the decision of the National Labor Relations Commission

dated November 29, 1988 is hereby AFFIRMED for the reasons aforestated.  No costs.

SO ORDERED.
 FIRST DIVISION
[ G.R. No. 94951, April 22, 1991 ]
APEX MINING COMPANY, INC., PETITIONER, VS. NATIONAL LABOR
RELATIONS COMMISSION AND SINCLITICA CANDIDO,
RESPONDENTS.

DECISION

GANCAYCO, J.:

Is the househelper in the staff houses of an industrial company a domestic helper

or a regular employee of the said firm?  This is the novel issue raised in this petition.

Private respondent Sinclitica Candido was employed by petitioner Apex Mining

Company, Inc. on May 18, 1973 to perform laundry services at its staff house located at
Masara, Maco, Davao del Norte.  In the beginning, she was paid on a piece rate basis. 
However, on January 17, 1982, she was paid on a monthly basis at P250.00 a month
which was ultimately increased to P575.00 a month.

On December 18, 1987, while she was attending to her assigned task and she was
hanging her laundry, she accidentally slipped and hit her back on a stone.  She reported
the accident to her immediate supervisor Mila de la Rosa and to the personnel officer,
Florendo D. Asirit.  As a result of the accident she was not able to continue with her
work.  She was permitted to go on leave for medication.  De la Rosa offered her the
amount of P2,000.00 which was eventually increased to P5,000.00 to persuade her to
quit her job, but she refused the offer and preferred to return to work.  Petitioner did
not allow her to return to work and dismissed her on February 4, 1988.

On March 11, 1988, private respondent filed a request for assistance with the
Department of Labor and Employment.  After the parties submitted their position
papers as required by the labor arbiter assigned to the case on August 24, 1988 the
latter rendered a decision, the dispositive part of which reads as follows:
"WHEREFORE, Conformably With The Foregoing, judgment is hereby rendered
ordering the respondent, Apex Mining Company, Inc., Masara, Davao del Norte, to pay
the complainant, to wit:
 1. Salary Differential — P16,289.20  
2. Emergency Living — 12,430.00  
Allowance 
3. 13th Month Pay — 1,322.32  
Differential
4. Separation Pay  
(One-month for every year of
service (1973-1988)  — 25,119.90
or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND
42/100 (P55,161.42).

SO ORDERED."[1]
Not satisfied therewith, petitioner appealed to the public respondent National
Labor Relations Commission (NLRC), wherein in due course a decision was rendered by
the Fifth Division thereof on July 20, 1989 dismissing the appeal for lack of merit and
affirming the appealed decision.  A motion for reconsideration thereof was denied in a
resolution of the NLRC dated June 29, 1990.

Hence, the herein petition for review by certiorari, which appropriately should be a
special civil action for certiorari, and which in the interest of justice, is hereby treated as
such.[2] The main thrust of the petition is that private respondent should be treated as a
mere househelper or domestic servant and not as a regular employee of petitioner.

The petition is devoid of merit.

Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms
"househelper" or "domestic servant" are defined as follows:
"The  term 'househelper' as used herein is synonymous to the term ‘domestic
servant' and shall refer to any person, whether male or female, who renders services in
and about the employer's home and which services are usually necessary or desirable
for the maintenance and enjoyment thereof, and ministers exclusively to the personal
comfort and enjoyment of the employer's family." [3]
The foregoing definition clearly contemplates such househelper or domestic
servant who is employed in the employer's home to minister exclusively to the personal
comfort and enjoyment of the employer's family.  Such definition covers family drivers,
domestic servants, laundry women, yayas, gardeners, houseboys and other similar
househelps.

The definition cannot be interpreted to include househelp or laundrywomen working in

staffhouses of a company, like petitioner who attends to the needs of the company's
guests and other persons availing of said facilities.  By the same token, it cannot be
considered to extend to the driver, houseboy, or gardener exclusively working in the
company, the staffhouses and its premises.  They may not be considered as within the
meaning of a "househelper" or "domestic servant" as above-defined by law.

The criteria is the personal comfort and enjoyment of the family of the employer in the
home of said employer.  While it may be true that the nature of the work of a
househelper, domestic servant or laundrywoman in a home or in a company staffhouse
may be similar in nature, the difference in their circumstances is that in the former
instance they are actually serving the family while in the latter case, whether it is a
corporation or a single proprietorship engaged in business or industry or any other
agricultural or similar pursuit, service is being rendered in the staffhouses or within the
premises of the business of the employer.  In such instance, they are employees of the
company or employer in the business concerned entitled to the privileges of a regular
employee.

Petitioner contends that it is only when the househelper or domestic servant is assigned
to certain aspects of the business of the employer that such househelper or domestic
servant may be considered as such an employee.  The Court finds no merit in making
any such distinction.  The mere fact that the househelper or domestic servant is working
within the premises of the business of the employer and in relation to or in connection
with its business, as in its staffhouses for its guests or even for its officers and
employees, warrants the conclusion that such househelper or domestic servant is and
should be considered as a regular employee of the employer and not as a mere family
househelper or domestic servant as contemplated in Rule XIII, Section 1 (b), Book 3 of
the Labor Code, as amended.

Petitioner denies having illegally dismissed private respondent and maintains that
respondent abandoned her work.  This argument notwithstanding, there is enough
evidence to show that because of an accident which took place while private
respondent was performing her laundry services, she was not able to work and was
ultimately separated from the service.  She is, therefore, entitled to appropriate relief as
a regular employee of petitioner.  Inasmuch as private respondent appears not to be
interested in returning to her work for valid reasons, the payment of separation pay to
her is in order.
WHEREFORE, the petition is DISMISSED and the appealed decision and resolution of
public respondent NLRC are hereby AFFIRMED.  No pronouncement as to costs.

SO ORDERED.