[With Resolution of July 21, 1961]

Mariano versus Royal Interocean Lines

The Case

This is the case of Mariano versus Royal Interocean Lines, an appeal brought by an employee against her former employer and its Philippine manager. The employee, who had served the company for many years, was dismissed after she wrote a letter to the company's managing directors in Hongkong complaining about the conduct of the local manager. She sued for damages, and the central question is whether her dismissal gave rise to a cause of action. The case matters for two reasons. First, it fixes the rule that an employer keeps his inherent right to discipline and dismiss employees, and that dismissal becomes unfair labor practice only when it is used as an instrument of discrimination against union or self-organization activities. Second, and just as important for the reviewee, the resolution of July 1961 teaches a sharp lesson on the effect of a repeal: when the old Code of Commerce was repealed by the new Civil Code, the employee's right to notice or to one month salary on dismissal disappeared until Republic Act Number 1052 brought it back in June 1954.

Procedural History

The employee first brought an action for recovery of damages before the Court of First Instance of Manila. The trial court ruled in her favor, holding that her dismissal was summary, unreasonable and arbitrary, and ordered the defendants to pay her basic salary, cost of living allowance, Christmas bonuses and automatic increases, moral damages, and attorney's fees. Separately, at her instance, the acting chief prosecutor of the Court of Industrial Relations filed a complaint charging the company with unfair labor practice for dismissing her. The Court of Industrial Relations found the company guilty, ordered her reinstatement with backpay, and the company elevated that judgment to the Supreme Court by petition for certiorari. The Supreme Court reversed the industrial court, holding that the dismissal was not unfair labor practice because the charges she filed had no relation to union activities. The company then appealed the damages judgment to the Supreme Court, and because the amount involved did not exceed two hundred thousand pesos the appeal would ordinarily have gone to the Court of Appeals, but since the parties had stipulated on the facts and there was no dispute as to them, the Supreme Court rendered judgment itself. The employee moved for reconsideration, which the Supreme Court denied in its resolution of July 1961.

Facts

The employee worked for the company as stenographer-typist and filing clerk from January 1932 until the outbreak of the war in December 1941, when her employment was interrupted. She returned in March 1948 and served until October 1953, when she was dismissed. At the time of her dismissal she was receiving a basic salary of 312 pesos and a cost of living allowance of 206 pesos, or a total of 518 pesos a month.

On 5 October 1953 she sent a letter to the managing directors of the company in Hongkong, coursed through the local manager, complaining against his inconsiderate and untactful attitude toward the employees and the clients of the company. On 19 October 1953 the manager advised her that the letter had been forwarded to Hongkong, that the managing directors shared his view that it was impossible to keep her in the service, and that although they believed they were justified in dismissing her, out of generosity they were willing to grant her a sum equivalent to three months salary. They suggested that she resign effective 31 October 1953, failing which she would be considered dismissed.

On 23 October 1953 she sent a letter of resignation, stating that she was compelled to do so much to her dislike and disappointment after almost twenty-two years of employment. The company refused to accept the resignation and on the same date sent her a letter by registered mail dismissing her from the service, which she received on 27 October 1953. She sought reconsideration from the managing directors in Hongkong through five letters, but received no answer. In December 1953 the company offered a compromise of 3,108 pesos, equivalent to six months salary, on condition that she sign a quit claim releasing the company and its officers from all liability. Not satisfied, she brought this action in February 1954.

Issues

• Whether or not the employee's dismissal by the company constituted unfair labor practice, such that she would have a cause of action against the company.
• Whether or not the employee is entitled to the damages awarded by the trial court, or only to the amount offered by the company.
• Whether or not, on reconsideration, the employee may still claim the benefits of the company's regulations on local staff allowances and retirement, given the finality of the trial court's ruling on that point.

Applicable Provisions

Section 4, subsection (a), paragraph 5 of Republic Act Number 875, the Industrial Peace Act, provides:

It shall be unfair labor practice for an employer to dismiss, discharge, or otherwise prejudice or discriminate against an employee for having filed charges or for having given or being about to give testimony under this Act.

This is the provision the Court construes, and it bears on the case because the employee's dismissal must be measured against it to determine whether she has a cause of action.

Article 302 of the Code of Commerce, which the resolution discusses as having been repealed, provided for dismissal upon thirty days notice or payment of one month salary. The resolution explains that this article was repealed by the new Civil Code effective 30 August 1950, and that the employee's right was revived only when Republic Act Number 1052 was enacted on 12 June 1954. This bears on the case because the dismissal took place on 23 October 1953, within the period when the old right did not exist.

Ruling

On the first issue, the Court held that there was no unfair labor practice. The employer, despite the employees' right to self-organization, still retains his inherent right to discipline his employees and 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. The Court read the phrase under this Act as modifying all three acts enumerated, so that the charges filed must be related to the right to self-organization. Since the employee's dismissal had no relation to union activities, she had no cause of action.

On the second issue, the Court nevertheless held that the dismissal was without cause, because the inefficiency claimed by the company as the ground for dismissal was belied by the successive increases in her compensation. For that reason, the amount of 3,108 pesos for six months salary, as offered by the company, should be paid to her. The judgment of the trial court was modified accordingly.

On the third issue, in the resolution of July 1961, the Court denied reconsideration. It held that on the date of dismissal the new Civil Code had repealed article 302 of the Code of Commerce, so that an employee engaged without a fixed period could be dismissed even without cause and was not entitled to thirty days notice or one month salary. As to the claim for retirement and old age allowance, the trial court had found that she had not completed ten successive years in permanent service, and her attempt to appeal that finding failed because her record on appeal was filed late. That part of the judgment had therefore become final and was res judicata against her.

Doctrine

An employer retains his inherent right to discipline his employees and his normal prerogative to hire or dismiss them. Dismissal constitutes unfair labor practice only when it is used as an instrument of discrimination, interference or oppression because of the employee's labor or union activities. The charges referred to in the Industrial Peace Act must be related to the right to self-organization and collective bargaining. A dismissal without cause, however, may still give rise to liability for the amount offered by the employer. Finally, a right that has been repealed and not yet revived cannot be invoked, and a judgment that has become final cannot be reopened.

Disposition

The company prevailed on the question of liability for unfair labor practice, and the Court modified the judgment below by ordering the company to pay the employee 3,108 pesos without interest, denying her motion for reconsideration.

Remember This

The single line worth memorizing is that the employer keeps his inherent right to dismiss, and unfair labor practice arises only when dismissal is used as an instrument of discrimination against union activities. Examiners like to use this case to test the meaning of the phrase under this Act in the Industrial Peace Act, and to test the effect of the repeal of article 302 of the Code of Commerce before Republic Act Number 1052 revived the employee's right to notice or one month salary.