PAL v. PALEA, G.R. No. L-24626, June 28, 1974, 57 SCRA 489

9/5/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 057
VOL. 57, JUNE 28, 1974 489

Philippine Air Lines, Inc. vs. Philippine Air Lines
Employees Association (PALEA)
*
No. L-24626. June 28, 1974.
PHILIPPINE AIR LINES, INC., petitioner, vs.

PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION
(PALEA), PHILIPPINE AIR LINES SUPERVISORS
ASSOCIATION (PALSA) and COURT OF INDUSTRIAL
RELATIONS, respondents.
Labor relations; Employers and employees; Right of employer

to select or discharge employees; Authority of the Court of
lndustrial Relations to order the readmission of discharged
employee.—"The whole controversy is centered around the right of
the Court of Industrial Relations to order the readmission of a
laborer who, it is admitted, had been found derelict in' the
performance of his duties towards his employer. We concede that
the right of an employer to freely select or discharge his
employees, is subject to regulation by the State basically in the
exercise of its paramount police power (Com. Act Nos. 103 and
213). But much as we should expand beyond economic orthodoxy,
we hold that an employer cannot legally be compelled to continue
with the employment of a person who admittedly was guilty of
misfeasance or malfeasance towards his employer, and whose
continuance in the service of the latter is patently inimical to his
interests."
Same; Same; Same;. Same.—lts tone of certitude is
unwarranted. The very excerpt cited speaks of the paramount
police power as a limitation on the right of an employer to freely
select or discharge his employees. Moreover, while there was an
admission that misfeasance or malfeasance could be a ground for
dismissal, the last sentence thereof reads: "The law, in protecting
the rights of the laborer, authorizes neither oppression nor self-
destruction of the employer." Where, therefore, it could be shown
that the result would be neither oppressive nor self-destructive, it
cannot be asserted dogmatically that an outright termination of
employment is justified.
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Courts; Court of Industrial Relations; Findings of fact; When

conclusive upon the Supreme Court.—"Such findings 'are
conclusive and will not be disturbed in the absence of a showing
{of abuse of] discretion.'"
Constitutional law; Under the new Constitution, the State has
the duty to assure workers security of tenure.—The futility of this
appeal becomes even more apparent considering the express
_________________
* SECOND DIVISION.
490
490 SUPREME COURT REPORTS ANNOTATED
provision in the Constitution requiring the State to assure

workers "security of tenure." It was not that specific in the 1935
Charter. The mandate was limited to the State affording
"protection to labor, especially to working women and minors, x x
x." If by virtue of the above, it would not be legally justifiable to
reverse the order of reinstatement, it becomes even more readily
apparent that such a conclusion is even more unwarranted now.
To reach it would be to show lack of fealty to a constitutional
command.
PETITION for review by certiorari of a resolution of the

Court of Industrial Relations.
The facts are stated in the opinion of the Court.

Siguion Reyna, Montecillo & Ongsiako for petitioner.
Mariano V. Ampil, Jr. for respondent Employees
Association (PALEA).
Vicente T. Ocampo for respondent Philippine Air
Lines Supervisors Association (PALSA).
Alfonso A. Reyes for respondent Court of Industrial
Relations.
FERNANDO, J.:
This appeal by certiorari from a resolution of Court of

Industrial Relations, if typical, yields the impression that
in the realm of management there is not too-marked an

appreciation for the quality of mercy. What is sought is a
reversal of an order of respondent Court reinstating one
Fidel Gotangco dismissed by his employer, petitioner
Philippine Air Lines, for having been found guilty of the
breach of trust and violation of the rules and regulations of
the company. So it was decreed, considering what was felt
to be the severity of dismissal. Petitioner, however, is firm
and unyielding in its insistence that this was an
appropriate case for terminating employment. It would
support its stand by an invocation
1
of Manila Trading and
Supply Company v. Zulueta. As will hereinafter be shown,
such a reliance is misplaced not only in terms of the
opinion therein rendered but likewise in the light of the
trend of later rulings of this Tribunal. What poses an even
more insurmountable obstacle is that such an attitude of
firm and unyielding insistence on the traditional concept of
_______________
1 69 Phil. 485 (1940).
491
VOL. 57, JUNE 28, 1974 491

management rights is at war with the new 2provision on

security of tenure in the present Constitution. There is no
occasion for reversal then.
There is no dispute as to the facts. The order now sought
to be reviewed started with the nature of the case as one
seeking authority for the dismissal of Fidel Gotangco, with
the employer, petitioner Philippine Air Lines, presenting in
evidence an exhibit referring to the confiscation of a piece
of lead material from his person at one of the gates of the
PAL Airfield compound and a signed statement by him,
taken at an investigation, wherein he admitted his
apprehension by a company security guard with a lead
material he intended to take home for his personal use.
Then the order continues: "On the whole, the evidence of
respondent is uncontroverted. And no question, Fidel
Gotango is guilty of breach of trust and violation of the
rules and regulations of his employer. But respondent
seeks authority to dismiss him on the basis of such guilt. It
is believed, however, that in this particular case dismissal
is too severe a penalty to impose on Fidel Gotangco for
trying to slip out a lead material belonging to respondent.

Because (1) it is his first time to commit the charge in
question for the duration of his 17 years of service with
respondent; (2) the cost of said material, considering its
size, is negligible (8" x 10" x 1/2"); (3) respondent did not
lose anything after all as the lead material was retrieved in
time; (4) the ignominy and mental torture undergone by
Gotangco is practically punishment in itself; and (5) he has
been under preventive suspension to date. For which
reason, it would
3
seem more equitable to retain than
dismiss him."
Petitioner was therefore ordered "to reinstate
4
Fidel
Gotangco immediately, without backwages." So it decided
the matter. There appears to be nothing unreasonable. An
offense was committed. It was not condoned. A penalty was
imposed, but one proportionate to the gravity of the
misdeed. Petitioner, as indicated by his appeal, appears to
be unsatisfied. It insists
________________
2 According to Article II, Section 9 of the Constitution; "The State shall

assure the rights of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work."
3 Order, Annex C of Petition, 2-3.
4 Ibid.
492

on dismissal. We do not see it that way.

So rigid an approach must find its justification in a
statute, of which there is none, or in a pronouncement of
this Court that speaks unequivocally. Petitioner is hopeful
that Manila Trading and Supply Company v. Zulueta did
so. It is laboring under a misapprehension. A more careful
analysis ought to have made that clear. There is nothing in
it that requires us to hold that on the matter of termination
of employment, management must have its way and
respondent Court ignored. Our later decisions, especially so
those penned by the same illustrious Justice Laurel,
indicate the contrary. The pith of the matter is then simply
this, that when respondent Court after a conscientious
appraisal of the facts did reach a conclusion that was far
from arbitrary and was impressed with an element of
generosity to which the law should not be a stranger, there

is no valid ground for us to hold otherwise. Even on the
assumption that it were not thus before, it is so now. There
is, as noted, in the Constitution the guarantee of security of
tenure. The appeal must fail then.
1. The sole error assigned by petitioner is that
respondent Court should not order the reinstatement of
Fidel Gotangco in the light of its undisputed f inding that
he "is guilty of breach of trust5 and violation of the rules and
regulations of his employer." It sought to lend plausibility
to such a contention by asserting in its brief: "The principle
that the Court of Industrial Relations cannot arrogate upon
itself the authority to order an employer to reinstate a
dismissed employee who admittedly has breached the trust
of his employer is now so well woven in our jurisprudence
that only a grave abuse of judicial discretion can unsettle
the rule. This principle was so clearly articulated in one
case (Manila Trading & Supply Co. v. Zulueta, 69 Phil. 486)
where this Honorable Court, through the late J. Laurel,
declared—The whole controversy is centered around the
right of the Court of Industrial Relations to order the
readmission of a laborer who, it is admitted, had been
found derelict in the performance of his duties towards his
employer. We concede that the right of an employer to
freely select or discharge his employees, is subject to
regulation by the State basically in the exercise of its
paramount police power. (Com. Act Nos. 103 and 213). But
much as we should
________________
5 Brief for the Petitioner,4.
493
VOL. 57, JUNE 28, 1974 493

expand beyond economic orthodoxy, we hold that an

employer cannot legally be compelled to continue with the
employment of a person who admittedly was guilty of
misfeasance or malfeasance towards his employer, and
whose continuance in the service
6
of the latter is patently
inimical to his interests.' " Its tone of certitude is
unwarranted. The very excerpt cited speaks of the
paramount police power as a limitation on the right of an
employer to f freely select or discharge his employees.
Moreover, while there was an admission that misfeasance

or malfeasance could be a ground for dismissal, the last
sentence thereof reads: "The law, in protecting the rights of
the laborer, authorizes neither
7
oppression nor self-
destruction of the employer." Where, therefore, it could be
shown that the result would be neither oppressive nor self-
destructive, it cannot be asserted dogmatically that an
outright termination of employment is justified.
The Manila Trading decision was promulgated on
January 30, 1940. Before the end of the year, in another
Manila Trading Company case,8
Manila Trading Supply Co.
v. Philippine Labor Union, the same Justice Laurel made
clear that the earlier doctrine did not call for automatic
application. Thus: "It is admitted, however, that an
employer cannot legally be compelled to continue an
employee or laborer in the service when a justifiable cause
for his discharge exists, but since under section 19 of
Commonwealth Act No. 103 the authority of the Court of
Industrial Relations to require his continuance in the
service is incidental to the pendency of an industrial
dispute before it, it necessarily follows that the said court
has the power to determine whether such cause exists. In
the instant case, the Court of Industrial Relations having
reached the conclusion that the dismissal of Andres
Dimapiles is groundless and unjustified, the doctrine in
Manila Trading & Supply Co. v. Zulueta, et al., G.R. No.
46853, promulgated January 30, 1940, is not applicable.
Upon the other hand, and as was observed in the case of
Ang Tibay v. The Court of Industrial Relations, G.R. No.
46496, promulgated May 29, 1939, 'the policy of laissez
faire has to some extent given way to
________________
6 Ibid, 5-6.
7 Ibid, 6.
8 70 Phil. 539 (1940).
494

the assumption by the Government of the right of

intervention even 9
in contractual relations affected with
public interest' " What
10
is more, three other cases before
the end of the year, the opinions in which were penned by
the same distinguished jurist, left no doubt as to the

flexibility of the approach to be followed whenever the first
Manila Trading Supply decision was invoked. For each and
every one of them, he sustained respondent Court of
Industrial Relations in its conclusion that dismissal was
not warranted. After liberation, in a 1948 decision,
11
Manila
Hotel Co. v. Court of Industrial Relations, one of his
equally discerning colleagues, likewise a former delegate to
the 1934 Constitutional Convention, Justice Briones, did
announce in unmistakable language, that the first Manila
Trading Company decision should not lend itself as a
justification for outright dismissal independently of the
circumstances of each case. For him, speaking as ponente,
"es, sin embargo, también cierto que hay casos en que la
destitución o suspension de un empleado resulta
caprichosa, o injustificada, o de otro modo ilegal, en cuyo
caso el obrero debe ser protegido por el Estado mediante la
agencia o instrumento que tenga para ello que12 en nuestro
caso es la Corte de Relaciones Industriales." A host of
later decisions attests to the acceptance by this Court of the
conclusion reached by the Court of Industrial Relations in
the discharge
13
of the task assigned to it.to protect the rights
of labor. Nor is this all. As
_____________________
9 Ibid, 549.
10 Manila Electric Co. v. National Labor Union, 70 Phil. 617 (1940);
Manila Trading Supply Co. v. Philippine Labor Union, 70 Phil. 539 (1940);
Mindanao Bus Co. v. Mindanao Bus Co. Employees Association, 71 Phil.
168(1940).
11 80 Phil. 145 (1948).
12 Ibid, 147.
13 Cf. National Waterworks and Sewerage Authority v. NWSA
Consolidated Union, L-26894-96, February 28, 1969, 27 SCRA 227;
Alhambra Industries, Inc. v. Court of Industrial Relations, L-22219,
August 28,1969,29 SCRA 138; Cruz v. Philippine Association of Free
Labor Unions, L-26519, October 29, 1971, 42 SCRA 68; National Power
Corporation v. NPC Employees and Workers Association, L33472,
December 29, 1971, 42 SCRA 692; Compania Maritima v. Compania
Maritima Labor Union, L-29504, February 29, 1972, 43 SCRA 464;
Bulakeña Restaurant and Caterer v. Court of Industrial Relations, L-
26796, May 25, 1972, 45 SCRA 87; Philippine American
495
VOL. 57, JUNE 28, 1974 495

pointed out in Phil.14 Educational Institution v. MLQSEA

Faculty Association: "It was Justice Laurel who, in the
first decision, promulgated in 1939, concerning the scope of
the power of this Court to alter factual conclusions reached
by the Court of Industrial Relations, expressed the view
that we should not disturb 'the findings of facts made by
the Court of Industrial Relations * * *.' A year and two
months later on November, 1940, he was much more
definite. Such findings 'are conclusive and will not be
disturbed in15 the absence of a showing [of abuse of]
discretion.' " Such a formulation was followed in twenty-
nine later decisions, the latest of which, prior to Philippine
Educational Institution,
16
was Laguna College v. Court of
Industrial Relations, the ponente being the present Chief
Justice.
Greater familiarity therefore with the approach
consistently followed by Justice Laurel in labor
controversies ought to have cautioned petitioner against
the misplaced reliance on the excerpt from the first Manila
Trading case, which as made clear in the foregoing, was not
even subjected to an accurate appraisal. The sole assigned
error is therefore without merit.
2. The futility of this appeal becomes even more
apparent considering the express provision in the
Constitution already noted, 17requiring the State to assure
workers "security of tenure." It was not that specific in the
1935 Charter. The mandate was limited to the State
affording "protection
18
to labor, especially to working women
and minors, * * *." If by virtue of the above, it would not
be legally justifiable to reverse the order of reinstatement,
it becomes even more readily
______________
Management Co., Inc. v. Philippine American Management Employees

Association, L-35254, January 29. 1973, 49 SCRA 194; B. F. Goodrich
Philippines v. B. F. Goodrich Confidential and Salaried Employees Union,
L-34069, February 28, 1973, 49 SCRA 532.
14 L-24019, November 29,1968,26 SCRA 272.
15 Ibid, 276.
16 L-28927, September 25, 1968, 25 SCRA 167.
17 Article II, Section 9 of the Constitution.
18 According to Article XIV, Section 6 of the 1935 Constitution:
"The State shall afford protection to labor, especially to working women and
minors, and shall regulate the relations between landowner and tenant, and
between labor and capital in industry and in agriculture. The State may provide
for compulsory arbitration."
496

apparent that such a conclusion is even more unwarranted

now. To reach it would be to show lack of fealty to a
constitutional command. This is not to say that dismissal
for cause is now outlawed. No such thing is intimated in
this opinion. It is merely no stress that where respondent
Court of Industrial Relations, in the light of all the
circumstances disclosed, particularly that it was a first
offense after seventeen years of service, reached the
conclusion, neither arbitrary nor oppressive, that dismissal
was too severe a penalty, this Court should not view the
matter differently. That is to conform to the ideal of the
New Society, the establishment of which was so felicitously
referred19 to by the First Lady as the Compassionate
Society.
3. Much less should the result reached by this Court
lend itself to the interpretation that there has been a
condonation of theft. From the facts as found by respondent
Court accepted by petitioner, the offense was "breach of
trust and violation of the rules and regulations of the
company." A lead material of negligible size, in the opinion
of respondent Court, its measurement being eight inches by
ten inches, with thickness of one-half inch, not shown to be
of any use to the company, hardly of any pecuniary worth,
was picked up by the employee in question, but thereafter
taken from him by a security guard.
That was all that transpired. It would be too harsh an
appraisal to view it as constituting theft. So the parties
have considered the matter. It stress is laid on this aspect
of the case, it-is only to ward off any unwarranted inference
that this Court was not properly mindful of the more
serious consequences that should ordinarily follow a
dishonest act amounting to a crime.
WHEREFORE, the appealed order of respondent Court
of April 12, 1965, reinstating Fidel Gotangco without
backwages, as sustained in a resolution of May 19, 1965, is
affirmed. Costs against Philippine Air Lines.
Zaldivar (Chairman), Barredo, Antonio, Fernandez

and Aquino, JJ., concur.
Order affirmed.
Notes.—a) Right of employer to select employees.—The
_______________
19 Cf. Imelda Romualdez-Marcos, The Compassionate Society 17 (1973).
497
VOL. 57, JUNE 28, 1974 497

City of Manila vs. Entote
conclusion draws its force from the right of an employer to

select his employees and to decide when to engage them
guaranteed by our Constitution which can only be
restricted by law through the proper exercise of police
power (Visayan Transportation Co., Inc. vs. Java, L-6111,
October 22, 1953). The employer's right to hire laborers is
not absolute. This privilege of hiring and firing ad libitum
is, of course, being subjected to restraints today. Statutes
are cutting in on it. (Chuan & Sons, Inc. vs. Court of
Industrial Relations, L-2216, January 31, 1950).
b) Right of employer to discipline employees.—Despite
the employees' right to self-organization, the employer
therefor still retains his inherent right to discipline his
employees, his normal prerogative to hire or dismiss them.
The prohibition is directed only against the use of the right
to employ or discharge as an instrument of discrimination,
interference or oppression because of one's labor or union
activities (Royal Inter-ocean Lines vs. Court of Industrial
Relations, L-11745, October 31, 1960).
LEGAL RESEARCH SERVICE
See SCRA Quick Index-Digest, volume one, page 5 on

Abuse of Discretion; page 501 on Courts; and page 794 on
Employer and Employee.
See also SCRA Quick Index-Digest, volume two, page
1167 on Labor Law.
Carlos, G.R. and Fernando, E.M., Labor and Social
Legislation in the Philippines, 1964 Edition.
Fernandez, P.V. and Quiason, C.D., Labor and Social
Legislation, 2 vols., 1963-64 Editions with 1971
Supplement.
Quiason, C.D. and Fernandez, P.V., Labor Law Series, 5
series, 1964 to 1971 Editions.
———o0o———
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9/5/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 057

VOL. 57, JUNE 28, 1974 489

PHILIPPINE AIR LINES, INC., petitioner, vs.

Labor relations; Employers and employees; Right of employer

Courts; Court of Industrial Relations; Findings of fact; When

490 SUPREME COURT REPORTS ANNOTATED

Philippine Air Lines, Inc. vs. Philippine Air Lines

Employees Association (PALEA)

provision in the Constitution requiring the State to assure

PETITION for review by certiorari of a resolution of the

The facts are stated in the opinion of the Court.

This appeal by certiorari from a resolution of Court of

in the realm of management there is not too-marked an

1 69 Phil. 485 (1940).

VOL. 57, JUNE 28, 1974 491

management rights is at war with the new 2provision on

trying to slip out a lead material belonging to respondent.

2 According to Article II, Section 9 of the Constitution; "The State shall

492 SUPREME COURT REPORTS ANNOTATED

on dismissal. We do not see it that way.

generosity to which the law should not be a stranger, there

5 Brief for the Petitioner,4.

VOL. 57, JUNE 28, 1974 493

expand beyond economic orthodoxy, we hold that an

Moreover, while there was an admission that misfeasance

494 SUPREME COURT REPORTS ANNOTATED

the assumption by the Government of the right of

the same distinguished jurist, left no doubt as to the

VOL. 57, JUNE 28, 1974 495

Employees Association (PALEA)

pointed out in Phil.14 Educational Institution v. MLQSEA

Management Co., Inc. v. Philippine American Management Employees

496 SUPREME COURT REPORTS ANNOTATED

apparent that such a conclusion is even more unwarranted

Zaldivar (Chairman), Barredo, Antonio, Fernandez

Notes.—a) Right of employer to select employees.—The

19 Cf. Imelda Romualdez-Marcos, The Compassionate Society 17 (1973).

VOL. 57, JUNE 28, 1974 497

conclusion draws its force from the right of an employer to

LEGAL RESEARCH SERVICE

See SCRA Quick Index-Digest, volume one, page 5 on

© Copyright 2021 Central Book Supply, Inc. All rights reserved.

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