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1.

People v. Julio Pomar

FACTS:
Defendant (Pomar) runs a tobacco manufacturing company; People & Macaria (DefendantAppellant) is an employee of the former. Pomar is accused of not paying Macaria what is due to
her, regular wages, as she was on pregnancy leave (P80). Pomar is arguing that the provisions of
Act 3071, is void and unconstitutional. CFI ruled in favor of Macaria, P50, and imprisonment if
insolvent. Pomar now appeals, raising that CFI erred in not declaring Sec. 13 to be
unconstitutional, Sec 13 gives women the right to be paid while on pregnancy, 30 days prior and
another 30 post-pregnancy. Defendants main argument is that he is deprived of his liberty to
contract, which the constitution of the Philippine Islands guarantees to every citizen his liberty
and one of his liberties is the liberty to contract.
ISSUE:
Whether or not the provisions of sections 13 and 15 of Act No. 3071 are a reasonable and lawful
exercise of the police power of the state?
RULING:
Unconstitutional, CFIs ruling revoked. The rule in this jurisdiction is, that the contracting parties
may establish any agreements, terms, and conditions they may deem advisable, provided they are
not contrary to law, morals or public policy. (Art. 1255, Civil Code.)
The police power of the state is a growing and expanding power. As civilization develops and
public conscience becomes awakened, the police power may be extended, as has been
demonstrated in the growth of public sentiment with reference to the manufacture and sale of
intoxicating liquors. But that power cannot grow faster than the fundamental law of the state, nor
transcend or violate the express inhibition of the people's law the constitution. If the people
desire to have the police power extended and applied to conditions and things prohibited by the
organic law, they must first amend that law.
In other words, said section creates a term or condition in every contract made by every person,
firm, or corporation with any woman who may, during the course of her employment, become
pregnant, and a failure to include in said contract the terms fixed to a fine and imprisonment.

Clearly, therefore, the law has deprived, every person, firm, or corporation owning or managing
a factory, shop or place of labor of any description within the Philippine Islands, of his right to
enter into contracts of employment upon such terms as he and the employee may agree upon.
The law creates a term in every such contract, without the consent of the parties.

2.

WEST COAST HOTEL Co. v. PARRISH

FACTS:
In 1913, the state of Washington enacted a minimum to protect women and minorities. The
Respondent (Elsie Parrish), an employee of the Petitioner (West Coast Hotel Co.), was paid subminimum wage and filed suit to recover the balance between her wage and the minimum wage
set by state statute. The lower state courts ruled the statute unconstitutional, but the Washington
State Supreme Court overturned this decision and ruled in favor of Parrish. The Petitioner
appealed this decision to the United States Supreme Court on the basis that a state set minimum
wage violates the "liberty of contract constructed by the Fifth Amendment of the U.S.
Constitution as applied by the Fourteenth Amendment.
ISSUE:
Does the minimum wage law violate the liberty of contract construed under the Fifth
Amendment as applied by the Fourteenth Amendment?
RULING:
HUGHES: This case calls for a re-examination of the precedent established by Adkins v.
Childrens Hospital (1923) which overturned Washington D.C.s minimum wage under the Fifth
Amendment due to the change in economic conditions (the Great Depression).Both cases involve
the freedom of contract, however the 4th and the 14th Amendment does not mention contracts,
it only speaks of liberty and places a limit on liberty by due process of law. As such, regulation
which is reasonable in relation to its subject and is adopted in the interests of the community is
due process. This limitation of liberty in particular governs the freedom of contract. There is no
absolute freedom to do as one wills or to contract as one chooses, because liberty implies the
absence of arbitrary restraint, not immunity from reasonable regulation imposed in the interests
of the community. This allows for state intervention when the state holds a particular interest of
protection; especially when the parties to a contact do not stand one quality, such as in an
employer/employee relationship.

3.

ACCFA v. ACCFA WORKERS ASSOCIATION & CRI

FACTS:
The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a government
agency created under Republic Act No. 821. The Land Reform Code (Republic Act No. 3844)
reorganized and changed its name to the Agricultural Credit Administration. A collective
bargaining agreement was entered into between ACCFA and its two unions. The Union declared
a strike and, together with its mother union, the Confederation of Unions in Government
Corporations and Offices (CUGCO) filed a case with the Court of Industrial Relations (CIR) for
unfair labor practice. During the pendency of this case, the unions filed a petition for certification
election with the CIR. In both instances, ACCFA challenges the jurisdiction of the CIR arguing
that is engaged in governmental functions
ISSUE:
Whether or not ACA is a government entity, therefore its UNION may not strike?
RULING:
YES. The Unions have no bargaining rights with ACA. EO 75 placed ACA under the LRPA and
by virtue of RA 3844 the implementation of the Land Reform Program of the government is a
governmental function NOT a proprietary function. Being such, ACA can no longer step down to
deal privately with said unions as it may have been doing when it was still ACCFA. However,
the growing complexities of modern society have rendered the classification of the governmental
functions as unrealistic, if not obsolete. Ministerial and governmental functions continue to lose
their well-defined boundaries and are absorbed within the activities that the government must
undertake in its sovereign capacity if it to meet the increasing social challenges of the times and
move towards a greater socialization of economic forces.
This is contrary to Section 11 of Republic Act No. 875, which provides:
"SEC. 11. Prohibition Against Strike in the Government. The terms and conditions of
employment in the Government, including any political subdivision or instrumentality thereof,
are governed by law and it is declared to be the policy of this Act that employees therein shall
not strike for the purposes of securing changes or modification in their terms and conditions of

employment. Such employees may belong to any labor organization which does not impose the
obligation to strike or to join in strike: Provided, However, that this section shall apply only to
employees employed in governmental functions of the Government including but not limited to
governmental corporations."

4.

Bengzon vs. Drilon

FACTS:
Republic Act No. 1797, as amended, was enacted to provide the Justices of the Supreme Court
and of the Court of Appeals retirement pensions. Eventually, President Marcos issued
Presidential Decree 644 modifying the pensions to be fixed to the then prevailing salary rates,
instead of giving them automatic readjustment feature (i.e. pension to increase or decrease as the
salary at the time increases or decreases), like what they had previously in RA 1797. Having the
impression that PD 644 repealed RA 1797, which resulted to the discrimination against retired
members of the Judiciary in terms of pension rates; Congress approved House Bill No. 16297
(HB 16297) to restore the automatic readjustment feature. However, President Aquino vetoed the
bill for it would allegedly disrupt the compensation standardization. It turned out however, that
absent its publication, PD 644 has never become a valid law, making HB 16297 superfluous for
RA 1797 was still in effect. Additionally, the veto on HB 16297 produced no effect. Pursuant to
such, Congress included in the General Appropriations Bill (GAB) for Fiscal Year 1992 certain
appropriations for the Judiciary intended for the payment of the adjusted pension rates. President
Aquino vetoed particular provisions in GAB.
ISSUE:
Whether or not the veto deprives the retired Justices of their rights to the pensions due them?
RULING:
Retired Justices have vested right to the accrued pensions due to them pursuant to RA 1791.
Compliance with the statutory prerequisite for retirement grants vested right to retire and draw
salary, and may not, thereafter, be revoked or impaired.
As Justice Cruz aptly stated in Teodoro J. Santiago v. COA, (G.R. No. 92284, July 12, 1991):
"Retirement laws should be interpreted liberally in favor of the retiree because their intention is
to provide for his sustenance, and hopefully even comfort, when he no longer has the stamina to
continue earning his livelihood. After devoting the best years of his life to the public service, he
deserves the appreciation of a grateful government as best concretely expressed in a generous
retirement gratuity commensurate with the value and length of his services. That generosity is the

least he should expect now that his work is done and his youth is gone. Even as he feels the
weariness in his bones and glimpses the approach of the lengthening shadows, he should be able
to luxuriate in the thought that he did his task well, and was rewarded for it."
For as long as these retired Justices are entitled under laws which continue to be effective, the
government cannot deprive them of their vested right to the payment of their pensions.
Article II State Policies
Section 10. The State shall promote social justice in all phases of national development.
This policy mandates the state to promote social justice in all phases of national development. In
the fulfillment of this duty, the state must give preferential attention to the welfare of the less
fortunate members of the community the poor, the underprivileged, whose who have less in
life.
It is discussed fully under Article XIII (Social Justice and Human Rights.)
Section 18. The State affirms labor as a primary social economic force. It shall protect the rights
of workers and promote their welfare.

(Art. XIII, Sec. 3) The state shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The state shall promote the principle of shared responsibility between workers and employers
and the preferential use of voluntary modes in settling disputes. Including conciliation and shall
enforce their mutual compliance therewith to foster industrial peace.
The state shall regulate the relations between workers and employers, recognizing th right of
labor to its just share in the fruits of production and the right of enterprises to reasonable returns
on investments, and to expansion and growth.

5.

Calalang v. Williams

FACTS:
Road Schedule adjustments. Calalang assails that CA 548, Section 1 gives the Director of Public
Works, with the approval of the Secretary of Public Works and Communications Authorization to
promulgate rules and regulations for the regulation and control of the use of and traffic on
national roads and streets, as being unconstitutional, because it constitutes undue delegation of
legislative power.
ISSUE:
Whether or not the rules and regulations complained of infringe upon the constitutional precept
regarding the promotion of social justice to insure the well-being and economic security of all
the people
RULING:
The promotion of social justice, however, is to be achieved not through a mistaken sympathy
towards any given group. Social justice is "neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of social and economic forces by the
State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the adoption
by the Government of measures calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally, through the adoption of
measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying
the existence of all governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence
among divers and diverse units of a society and of the protection that should be equally and
evenly extended to all groups as a combined force in our social and economic life, consistent
with the fundamental and paramount objective of the state of promoting the health, comfort, and
quiet of all persons, and of bringing about "the greatest good to the greatest number.6.

Globe

Mackay v. NLRC
FACTS:
Tobias (PR) is an employee of the Globe Mackay and Radio Co. (Mackay). Mackay discovered
fictitious purchases and fraudulent transactions, upon reporting he was confronted by Hendry
(P), and accused him for the crime, and ordered him to take a forced leave. The police
investigation concluded that PR was innocent, unsatisfied, P hired a private investigator w/c
concluded that P was guilty but highly recommended that further investigations be made. A
second laboratory crime report was generated by the police, reiterating their previous findings.
Notwithstanding, P Sued PR for estafa, which were all ultimately dismissed. P was later
terminated, which he appealed to the NLRC, which later on both parties compromised. PR then
tried for other employment, but then P told the new company that Tobias was dismissed for
dishonesty, therefore P filed a civil case for damages on alleged malicious, oppressive, and
abusive acts of P. RTC Manila ruled in favor of P, CA affirmed.
ISSUE:
Whether or not P is liable for damages?
RULING:
Affirmed. The trial court, after making a computation of the damages incurred by Tobias [See
RTC Decision, pp. 7-8; Rollo, pp. 154-155], awarded him the following: eighty thousand pesos
(P80,000.00) as actual damages; two hundred thousand pesos (P200,000.00) as moral damages;
twenty thousand pesos (P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00)
as attorney's fees; and, costs. It must be underscored that petitioners have been guilty of
committing several actionable tortious acts, i.e., the abusive manner in which they dismissed
Tobias from work including the baseless imputation of guilt and the harassment during the

investigations; the defamatory language heaped on Tobias as well as the scornful remark on
Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible
employment; and, the malicious filing of the criminal complaints. Considering the extent of the
damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the amount
of damages awarded to Tobias was reasonable under the circumstances.
This principle damnum absque injuria, finds no application in this case. It bears repeating that
even granting that petitioners might have had the right to dismiss Tobias from work, the abusive
manner in which that right was exercised amounted to a legal wrong for which petitioners must
now be held liable. Moreover, the damage incurred by Tobias was not only in connection with
the abusive manner in which he was dismissed but was also the result of several other quasidelictual acts committed by petitioners.

7.

BREW MASTER v. NAFLU, ESTRADA & NLRC

FACTS:
Estrada (PC) is member of NAFLU (Union), was dismissed by Brew Master (P) because of his
unsatisfactory answer to a month long absence (AWOP), PC reasoned that he had to bring his
children to the province because his wife abandoned them and that he was unable to report his
absence because he lacks financially. The Labor Arbiter (LA) dismissed the complaint citing
managerial control. Upon appeal to the NLRC, which reversed LAs decision, citing that
prolonged absences, although unauthorized, may not amount to gross neglect or abandonment of
work to warrant outright termination of employment, as a first offender.
ISSUE:
Whether or not the NLRC committed grave abuse of discretion?
RULING:
Dismissed. Petitioner's finding that complainant was guilty of abandonment is misplaced.
Abandonment as a just and valid ground for dismissal requires the deliberate, unjustified refusal
of the employee to resume his employment. Two elements must then be satisfied: (1) the failure
to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever
the employer-employee relation. The second element is the more determinative factor and must
be evinced by overt acts. Likewise, the burden of proof is on the employer to show the
employee's clear and deliberate intent to discontinue his employment without any intention of
returning, mere absence is not sufficient. 9 These elements are not present here. First, as held
above, complainant's absence was justified under the circumstances. As to the second requisite,
we are not convinced that complainant ever intended to sever the employer-employee
relationship. Complainant immediately complied with the memo requiring him to explain his
absence, and upon knowledge of his termination, immediately sued for illegal dismissal. These
plainly refuted any claim that he was no longer interested in returning to work. Without doubt,
the intention is lacking.
While the employer is not precluded from prescribing rules and regulations to govern the
conduct of his employees, these rules and their implementation must be fair, just and reasonable.

It must be underscored that no less than our Constitution looks with compassion on the
workingman and protects his rights not only under a general statement of a state policy, but
under the Article on Social Justice and Human Rights, thus placing labor contracts on a higher
plane and with greater safeguards. Verily, relations between capital and labor are not merely
contractual. They are impressed with public interest and labor contracts must, perforce, yield to
the common good.

8.

FUENTES v. NLRC & AGUSAN PLANTATION

FACTS:
Petitioners, 75 of them, was terminated by PR because of retrenchment measures. PR contended
that they conducted themselves properly before terminating. LA ordered PR to pay P salary
differentials and attorneys fees. NLRC reversed upon appeal by PR. P argues now that their
dismissal or retrenchment did not comply with the requirement of Art. 283 of the Labor Code.
ISSUE:
Whether or not the NLRC committed grave abuse of discretion?
RULING:
We agree with the conclusion of the Labor Arbiter that the termination of the services of
petitioners was illegal as there was no valid retrenchment. Respondent NLRC committed grave
abuse of discretion in reversing the findings of the Labor Arbiter and ruling that there was
substantial compliance with the law. This Court firmly holds that measures should be strictly
implemented to ensure that such constitutional mandate on protection to labor is not rendered
meaningless by an erroneous interpretation of applicable laws.
There is no question that an employer may reduce its work force to prevent losses. However,
these losses must be serious, actual and real. Otherwise, this ground for termination of
employment would be susceptible to abuse by scheming employers who might be merely
feigning losses in their business ventures in order to ease out employees
Indeed, private respondents failed to prove their claim of business losses. What they submitted to
the Labor Arbiter were mere self-serving documents and allegations. Private respondents never
adduced evidence which would show clearly the extent of losses they suffered as a result of lack
of capital funding, which failure is fatal to their cause.
We uphold the monetary award of the Labor Arbiter for: (a) the balance of the separation pay
benefits of petitioners equivalent to fifteen (15) days for every year of service after finding that
reinstatement is no longer feasible under the circumstances, and (b) the salary differentials for
complainants who were relieved during the pendency of the case before the Labor Arbiter and
full back wages for the rest of the complainants. This is in accord with Art. 279 of the Labor

Code as amended by R.A. 6715 under which petitioners who were unjustly dismissed from work
shall be entitled to full back wages inclusive of allowances and other benefits or their monetary
equivalent computed from the time their compensation was withheld up to the date of this
decision.

9.

JAMER & AMORTIZADO v. NLRC & ISETANN

FACTS:
Both P are dismissed by PR on alleged dishonesty, because of shortage on sales accounting, they
did not report the incident immediately, trying to reconcile the same, but to no avail. Suspended,
and after finding their answers unsatisfactory, PR dismissed them both. Ps also avers that that
there are others who have access to the vault. LA ruled in favor of Ps, on their claim that they
were illegally dismissed, , and ordered their reinstatement. PR appealed, and after due reshuffling of the case, LA Espiritu Jr. ruled that there were no justification for their dismissal,
with back wages. Dissatisfied PR re-appealed to the NLRC which now dismissed the complaint.
Hence this petition.
ISSUE:
Whether or not the NLRC committed Grave Abuse of Discretion?
RULING:
NO. NLRC did not act with grave abuse of discretion in declaring that petitioners were legally
dismissed from employment. The failure of petitioners to report to management the
aforementioned irregularities constitute "fraud or willful breach of the trust reposed in them by
their employer or duly authorized representative" one of the just causes in terminating
employment as provided for by paragraph (c), Article 282 of the Labor Code, as amended. From
the foregoing premises, it is crystal clear that the failure of petitioners to report the aforequoted
shortages and overages to management as soon as they arose resulted in the breach of the
fiduciary trust reposed in them by respondent company, thereby causing the latter to lose
confidence in them. This warrants their dismissal.
The cause of social justice is not served by upholding the interest of petitioners in disregard of
the right of private respondents. Social justice ceases to be an effective instrument for the
"equalization of the social and economic forces" by the State when it is used to shield
wrongdoing. 29 While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects one's source or means
of livelihood, it should not be overlooked that the benefits accorded to labor do not include

compelling an employer to retain the services of an employee who has been shown to be a gross
liability to the employer. It should be made clear that when the law tilts the scale of justice in
favor of labor, it is but a recognition of the inherent economic inequality between labor and
management. The intent is to balance the scale of justice; to put the two parties on relatively
equal positions. There may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result is an injustice to the
employer, Justicia remini regarda est (Justice is to be denied to none).

10.

Marcopper Mining vs. NLRC

FACTS:
The case arose with the correct interpretation of the CBA between petitioner company and the
respondent union. Art. XII which provides a severance pay for the employees in the event that
any employee leaves the company other than for cause before qualifying for early retirement.
Thereafter, three employees died who were covered by the said CBA. The employees were given
their other monetary claims, however, when the union demanded the severance benefits under
the CBA, the company denied the demand and the union filed a case before the Labor Arbiter.
The Labor Arbiter adjudged in favor of the union as well as the NLRC. Hence, this petition.
ISSUE:
Whether or not, the employees were covered by the CBA due to the fact that their death is
considered as leave other than for cause before qualifying for early retirement?
RULING:
YES. "Leave" should be given a literal or dictionary interpretation as signifying "willful
departure with intent to remain away and not temporary absence with intention of returning." 4
The word should be understood as referring to a positive and voluntary act of departure and does
not include death, which is involuntary. In fact, the Pilipino equivalent of the word "leave" as
used in the official translation of the CBA, is "aalis."
Assuming arguendo that the provision is not really clear, Article 4 of the Labor Code should not
have been resorted to as this applies only in case of doubt in the interpretation and
implementation of the provisions of the Labor Code and its implementing rules and regulations.
The CBA being a contract, the rules embodied in the Civil Code on interpretation of contracts
should govern. The intent of the parties should be ascertained by considering relevant provisions
of the CBA on the retirement plan, the group life insurance, and bereavement assistance together
with Section 1 in the light of Article 1374 of the Civil Code.

They also contend that the NLRC correctly applied not only Article 4 of the Labor Code but also
Article 1702 of the Civil Code, which applies not only to labor legislation but also to labor
contracts, thus:
Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in
favor of the safety and decent living for the laborer.
The private respondents point out that there is nothing in the CBA which states that insurance
benefits and severance pay are mutually exclusive, unlike retirement and severance pay under
Section 2, Article XII. Furthermore, it is the insurance company that pays the insurance benefits
while it is the company or employer that is liable for severance benefits. Since the primary
purpose of the CBA is to provide more benefits to workers, the contract would be rendered more
effectual if the heirs were awarded both insurance benefits and severance pay.

11.

PLDT vs. NLRC

FACTS:
Private respondent Lettie Corpuz was employed as traffic operator at the Manila International
Traffic Division (MITD) by the Philippine Long Distance Telephone Company (PLDT) for ten
years and nine months, from September 19, 1978, until her dismissal on June 17, 1989. Her
primary task was to facilitate requests for incoming and outgoing international calls through the
use of a digital switchboard. Sometime in December 1987, PLDTs rank-and-file employees and
telephone operators went on strike, prompting the supervisors of the MITD to discharge the
formers duties to prevent a total shutdown of its business operations. While in the course of their
emergency assignments, two supervisors almost simultaneously received two different requests
for overseas calls bound for different Middle East countries and both callers reported the same
calling number (98-68-16).[1] The tone verifications having yielded negative results, the callers
were advised to hang up their telephones to enable the supervisors to effect an alternative
verification system by calling the same number again. As in the first instance, the number
remained unverified. Investigating the seemingly anomalous incident, the matter was reported to
the Quality Control Inspection Department (QCID) which revealed that the subject number was
temporarily disconnected on June 10, 1987, and permanently on September 24, 1987. It also
showed that 439 overseas calls were made through the same number between May and
November 1987. Due these circumstances, the private respondent were dismissed by the
company as she was one of the operators who received one of the highest call from the said
disconnected telephone line. The Labor Arbiter decided in favor of the private respondent as well
as the NLRC. Hence, this present recourse by petitioner.
ISSUE:
Whether or not the dismissal of private respondent is valid?
RULING:
NO. Time and again, this Court has reminded employers that while the power to dismiss is a
normal prerogative of the employer, the same is not without limitations.[3] The right of an
employer to freely discharge his employees is subject to regulation by the State, basically

through the exercise of its police power. This is so because the preservation of the lives of
citizens is a basic duty of the State, an obligation more vital than the preservation of corporate
profits.
The records show, however, that the subject phone calls were neither unusual nor coincidental as
other operators shared similar experiences. A certain Eric Maramba declared that it is not
impossible for an operator to receive continuous calls from the same telephone number. He
testified that at one time, he was a witness to several calls consistently effected from 9:30 p.m. to
5:30 a.m. The calls having passed the verification tone system, the incident was undoubtedly
alarming enough but there was no way that he or his co-operators could explain the same.
This Court agrees with the labor arbiter when he stated that the more frequent handling by the
respondent of overseas calls from the same calling number than other operators does not give
rise to the conclusion that, indeed, respondent was a party to such anomalous transaction.
As regards petitioners claim that no call can be filed through a disconnected line, a certain Ms.
Bautista averred getting the same subject number after going through the standard verification
procedures. She added that this complexity extends even to other disconnected telephone lines.
Equally important is the fact that on February 7, 1989, or about two years after it was
permanently disconnected, telephone number 98-68-16 was used in calling an international
number, 561-6800, that lasted for 46 minutes.[5] Telephone operator number 448 seems to have
been spared from any administrative sanction considering that this lapse has aggravated the
persistent problem concerning telephone number 98-68-16.
It should be borne in mind that in termination cases, the employer bears the burden of proving
that the dismissal is for just cause failing which would mean that the dismissal is not justified
and the employee is entitled to reinstatement.[8] The essence of due process in administrative
proceedings is the opportunity to explain ones side or a chance to seek reconsideration of the
action or ruling complained of.[9] 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.[10] In the instant case, the petitioner failed to convincingly establish valid bases
on the alleged serious misconduct and loss of trust and confidence.
In carrying out and interpreting the Labor Codes provisions and its implementing regulations, the
workingmans welfare should be the primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal and compassionate spirit of the law as
provided for in Article 4 of the Labor Code, as amended, which states that all doubts in the
implementation and interpretation of the provisions of the Labor Code including its
implementing rules and regulations shall be resolved in favor of labor,[11] as well as the
Constitutional mandate that the State shall afford full protection to labor and promote full
employment opportunities for all. Likewise, it shall guarantee the rights of all workers to security
of tenure. Such constitutional right should not be denied on mere speculation of any unclear and
nebulous basis.

12.

JMM Promotions vs. CA

FACTS:
Following the death of Maricris Siosan, President Corazon Aquino ordered a total ban against
deployement of performers overseas. This order was assailed by leaders of overseas employment
industry. In its place, the government, through the Secretary of Labor and Employment,
subsequently issued Department Order No. 28, creating the Entertainment Industry Advisory
Council (EIAC), which was tasked with issuing guidelines on the training, testing certification
and deployment of performing artists abroad. Pursuant to the EIAC's recommendations, 1 the
Secretary of Labor, on January 6, 1994, issued Department Order No. 3 establishing various
procedures and requirements for screening performing artists under a new system of training,
testing, certification and deployment of the former. Performing artists successfully hurdling the
test, training and certification requirement were to be issued an Artist's Record Book (ARB), a
necessary prerequisite to processing of any contract of employment by the POEA. Upon request
of the industry, implementation of the process, originally scheduled for April 1, 1994, was moved
to October 1, 1994. The Federation of Entertainment Talent Managers of the Philippines filed a
case assailing this order. The petitioner filed a motion for intervention.
ISSUE:
Whether or not the assailed order is constitutional?
RULING:
YES. A thorough review of the facts and circumstances leading to the issuance of the assailed
orders compels us to rule that the Artist Record Book requirement and the questioned
Department Order related to its issuance were issued by the Secretary of Labor pursuant to a
valid exercise of the police power.
In 1984, the Philippines emerged as the largest labor sending country in Asia dwarfing the labor
export of countries with mammoth populations such as India and China. According to the
National Statistics Office, this diaspora was augmented annually by over 450,000 documented
and clandestine or illegal (undocumented) workers who left the country for various destinations

abroad, lured by higher salaries, better work opportunities and sometimes better living
conditions.
Of the hundreds of thousands of workers who left the country for greener pastures in the last few
years, women composed slightly close to half of those deployed, constituting 47% between
1987-1991, exceeding this proportion (58%) by the end of 1991, 6 the year former President
Aquino instituted the ban on deployment of performing artists to Japan and other countries as a
result of the gruesome death of Filipino entertainer Maricris Sioson.
It was during the same period that this Court took judicial notice not only of the trend, but also of
the fact that most of our women, a large number employed as domestic helpers and entertainers,
worked under exploitative conditions "marked by physical and personal abuse." 7 Even then, we
noted that "[t]he sordid tales of maltreatment suffered by migrant Filipina workers, even rape and
various forms of torture, confirmed by testimonies of returning workers" compelled "urgent
government action." 8
Pursuant to the alarming number of reports that a significant number of Filipina performing
artists ended up as prostitutes abroad (many of whom were beaten, drugged and forced into
prostitution), and following the deaths of number of these women, the government began
instituting measures aimed at deploying only those individuals who met set standards which
would qualify them as legitimate performing artists. In spite of these measures, however, a
number of our countrymen have nonetheless fallen victim to unscrupulous recruiters, ending up
as virtual slaves controlled by foreign crime syndicates and forced into jobs other than those
indicated in their employment contracts. Worse, some of our women have been forced into
prostitution.
Clearly, the welfare of Filipino performing artists, particularly the women was paramount in the
issuance of Department Order No. 3. Short of a total and absolute ban against the deployment of
performing artists to "high risk" destinations, a measure which would only drive recruitment
further underground, the new scheme at the very least rationalizes the method of screening
performing artists by requiring reasonable educational and artistic skills from them and limits
deployment to only those individuals adequately prepared for the unpredictable demands of

employment as artists abroad. It cannot be gainsaid that this scheme at least lessens the room for
exploitation by unscrupulous individuals and agencies.
Obviously, protection to labor does not indicate promotion of employment alone. Under the
welfare and social justice provisions of the Constitution, the promotion of full employment,
while desirable, cannot take a backseat to the government's constitutional duty to provide
mechanisms for the protection of our workforce, local or overseas. As this Court explained in
Philippine Association of Service Exporters (PASEI) v. Drilon, 11 in reference to the recurring
problems faced by our overseas workers:
What concerns the Constitution more paramountly is that such an employment be above all,
decent, just, and humane. It is bad enough that the country has to send its sons and daughters to
strange lands because it cannot satisfy their employment needs at home. Under these
circumstances, the Government is duty-adequate protection, personally and economically, while
away from home.
We now go to petitioners' assertion that the police power cannot, nevertheless, abridge the right
of our performing workers to return to work abroad after having earlier qualified under the old
process, because, having previously been accredited, their accreditation became a "property
right," protected by the due process clause. We find this contention untenable.

13.

PASEI vs. Drilon

FACTS:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm
"engaged principally in the recruitment of Filipino workers, male and female, for overseas
placement," 1 challenges the Constitutional validity of Department Order No. 1, Series of 1988,
of the Department of Labor and Employment, in the character of "GUIDELINES GOVERNING
THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. Specifically, the
measure is assailed for "discrimination against males or females;" 2 that it "does not apply to all
Filipino workers but only to domestic helpers and females with similar skills;" 3 and that it is
violative of the right to travel. It is held likewise to be an invalid exercise of the lawmaking
power, police power being legislative, and not executive, in character.
ISSUE:
Whether or not the assaid order is valid?
RULING:
YES. The petitioner has shown no satisfactory reason why the contested measure should be
nullified. There is no question that Department Order No. 1 applies only to "female contract
workers," 14 but it does not thereby make an undue discrimination between the sexes. It is wellsettled that "equality before the law" under the Constitution 15 does not import a perfect Identity
of rights among all men and women. It admits of classifications, provided that (1) such
classifications rest on substantial distinctions; (2) they are germane to the purposes of the law;
(3) they are not confined to existing conditions; and (4) they apply equally to all members of the
same class. These requirements were complied with by the said assailed order as per shown in
the specific facts disclosing that there is a need for the state to protect labor.

14.

LVN Pictures v. Philippine Musicians Guild & CIR

FACTS:
LVN and Sampaguita (P) seeks to de-certify CIRs (PR) certification that PFW as the sole and
exclusive bargaining agency of all musicians working with P. P also maintains that the
certification cannot be granted since there is no Employee-Employer relationship, PR argues
otherwise.
ISSUE:
(1) WON the musicians working for P are its employees;
(2) WON there could be any legal relationship between the P and the musicians.
RULING:
YES. The musical directors in the instant case have no control over the musicians involved in the
present case. Said directors control neither the music to be played, nor the musicians playing it.
The film companies summon the musicians to work, through the musical directors. The film
companies, through the musical directors, provide the transportation to and from the studio. The
film companies furnish meal at dinner time. The motion picture director who is an employee of
the company not the musical director supervises the recording of the musicians and tells
them what to do in every detail, and solely directs the performance of the musicians before the
camera. Held: An employer-employee relationship exists between the musicians and the film
companies. The relationship exists where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the means to be used in
reaching such end. (Alabama Highway Express Co. vs. Local, 612, 108 S. 2d 350.)

15.

Rosario Brothers Inc. v. Ople & NLRC

FACTS:
P argues that there exists no EER between them and PR, it is Ps submission, because of the series
of memorandas issued by them from 1973-77, which reveals that P had no control and/or
supervision over the work of the PRs. PR are workers in the clothing business of P, where they
are working under a Piece-Work basis; SSS registered through P; members of the UNION
acknowledged by P. PR then claimed that P violated PD 851 and 525 (13th month pay &
Emergency Living Allowance), LA favored P and declared that there is no EER. NLRC affirmed,
Minister of Labor ruled otherwise. Hence this.
ISSUE:
Whether or not there is an EER?
RULING:
Affirmed. As held in Mafinco Trading Corporation vs. Ople, 70 SCRA 139, the existence of
employer-employee relationship is determined by the following elements, namely: (1) the
selection and engagement of the employee (done by PR); (2) the payment of wages (Weekly
wages on a piece-work basis [Art 97(F) Labor Code; (3) the power of dismissal (as in the
memorandas issued by PR); and (4) the power to control employees' conduct (Operation
Conduct) although the latter is the most important element. On the other hand, an independent
contractor is one who exercises independent employment and contracts to do a piece of work
according to his own methods and without being subjected to control of his employer except as
to the result of his work.

16.

Manila Golf v. IAC & Llamar

FACTS:
Caddies of P, are demanding that they be included in the coverage of the Social Security System
through the SSC, arguing that they are employees of P. P on the other hand, they have no direct
control over PR. SSC Dismissed the Petition. IAC ruled for P, hence this petition.
ISSUE:
Whether or not there is EER?
RULING:
As long as it is, the list made in the appealed decision detailing the various matters of conduct,
dress, language, etc. covered by the petitioner's regulations, does not, in the mind of the Court, so
circumscribe the actions or judgment of the caddies concerned as to leave them little or no
freedom of choice whatsoever in the manner of carrying out their services. In the very nature of
things, caddies must submit to some supervision of their conduct while enjoying the privilege of
pursuing their occupation within the premises and grounds of whatever club they do their work
in. For all that is made to appear, they work for the club to which they attach themselves on
sufferance but, on the other hand, also without having to observe any working hours, free to
leave anytime they please, to stay away for as long as they like. It is not pretended that if found
remiss in the observance of said rules, any discipline may be meted them beyond barring them
from the premises which, it may be supposed, the Club may do in any case even absent any
breach of the rules, and without violating any right to work on their part. All these considerations
clash frontally with the concept of employment. The IAC would point to the fact that the Club
suggests the rate of fees payable by the players to the caddies as still another indication of the
latter's status as employees. It seems to the Court, however, that the intendment of such fact is to
the contrary, showing that the Club has not the measure of control over the incidents of the
caddies' work and compensation that an employer would possess. The Court agrees with
petitioner that the group rotation system so-called, is less a measure of employee control than an
assurance that the work is fairly distributed, a caddy who is absent when his turn number is
called simply losing his turn to serve and being assigned instead the last number for the day.

17.

La Suerte Cigar v. Director of BLR

FACTS:
P argues that 14 of the alleged members of the UNION, whose petitioning for certification to
become a recognized labor union in the company, are not employees of P, but where independent
contractors, which is necessary to meet the 30% consent requirement. Med Arbiter dismissed Ps
petition. Director of BLR reversed, hence this petition.
ISSUE:
Whether or not the 14 dealers are employees or independent contractors?
RULING:
They are Dealers or Independent Contractors. Accordingly, after considering the terms and
stipulations of the Dealership Contracts which are clear and leave no doubt upon the intention of
the contracting parties in establishing the relationship between the dealers on one hand and the
company on the other as that of buyer and seller, the Supreme Court finds that the status thereby
created is one of independent contractorship, pursuant to the first rule in the interpretation of
contracts that the literal meaning of the stipulations shall control. (Article 1370, New Civil Code)
The Supreme Court rulings in Mafinco Trading Corp. vs. Ople, 70 SCRA 139, where the Court
reiterated the "control test" earlier laid down in Investment Planning Corp. vs. Social Security
System, 21 SCRA 924 and Social Security System vs. Hon. Court of Appeals and Shrino (Phils.)
Inc., 37 SCRA 579 are authoritative and controlling. In the Shrino case, the Court held that the
common law rule of determining the existence of employer-employee relationship, principally
the "control is test" applies in this jurisdiction. Where the element of control is absent; where a
person who words for another does so more or less at his own pleasure and is not subject to
definite hours or conditions of work, and in turn is compensated according to the result of his
efforts and not the amount thereof, relationship of employer and employee does not exist.

18.

Tabas v. CMC

FACTS:
P demands reinstatement and benefits. CMC filed to dismiss, claiming that there is no EER since
Ps are promotional merchandisers pursuant to a manpower supply agreement with LIVI
manpower services, w/c agreement provided that CMC has no control or supervision whatsoever
over Ps. On the other hand it is also stipulated that cola and holidays will be charged directly to
CMC, whose payroll will be delivered through LIVI at CMC. Ps now claims that they became
regular CMC employees. LA ruled that there is no EER in light of the manpower supply contract.
ISSUE:
Whether or not there is an EER?
RULING:
Reversed. The fact that the petitioners have been hired on a "temporary or seasonal" basis merely
is no argument either. As we held in Philippine Bank of Communications v. NLRC, a temporary
or casual employee, under Article 218 of the Labor Code, becomes regular after service of one
year, unless he has been contracted for a specific project. And we cannot say that merchandising
is a specific project for the obvious reason that it is an activity related to the day-to-day
operations of California. The records show that the petitioners had been given an initial sixmonth contract, renewed for another six months. Accordingly, under Article 281 of the Code,
they had become regular employees of California and had acquired a secure tenure. Hence, they
cannot be separated without due process of law.
It has been likewise held, based on Article 106 of the Labor Code, that notwithstanding the
absence of a direct employer-employee relationship between the employer in whose favor work
had been contracted out by a "labor-only" contractor, and the employees, the former has the
responsibility, together with the "labor-only" contractor, for any valid labor claims, by operation
of law. The reason, so we held, is that the "labor-only" contractor is considered "merely an agent
of the employer," and liability must be shouldered by either one or shared by both.
The nature of one's business is not determined by self-serving appellations one attaches thereto
but by the tests provided by statute and prevailing case law. The bare fact that Livi maintains a

separate line of business does not extinguish the equal fact that it has provided California with
workers to pursue the latter's own business.

19.

Insular Life v. NLRC & Basiao

FACTS:
PR entered into a contract to solicit for insurance applications in 1968 later, on 1972, they
entered into an Agency Management Contract (AMC) P later terminated the AMC, w/c
prompted PR to sue, which led to P terminating also his original contract. Basiao complained for
the unclaimed commissions to the MOL, P argues that MOL has no jurisdiction and that since PR
is an independent contractor. LA found for PR, NLRC affirmed, hence this.
ISSUE:
Whether or not PR had become the Companys employee?
Ruling:
Reversed. What is germane is Basiao's status under the contract of July 2, 1968, not the length of
his relationship with the Company to justify employment relationship. Basiao was not an
employee but a commission agent, an independent contractor whose claim for unpaid
commissions should have been litigated in an ordinary civil action.
The rules that merely serve as guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in attaining it do not create employeremployee relationship. While, the rules that control or fix the methodology and bind or restrict
the party hired to the use of such means create employer-employee relationship.
Rules and regulations governing the conduct of the business are provided for in the Insurance
Code and enforced by the Insurance Commissioner. It is usual and expected for an insurance
company to promulgate a set of rules to guide its commission agents in selling its policies that
they may not run afoul of the law and what it requires or prohibits. But none of these really
invades the agent's contractual prerogative to adopt his own selling methods or to sell insurance
at his own time and convenience, hence cannot justifiably be said to establish an employeremployee relationship between him and the company.

20.

Sonza v. NLRC

FACTS:
ABS-CBN entered into an agreement w/ MEL&JAY Management and Development Corp.
(MJMDC) to host a TV program, there will be a monthly talent fee of 310K for the 1st year
and 317 for the 2nd and 3rd year. Sonza later wrote to ABS-CBN for the rescission of the
agreement in view of PRs failure to pay him his salaries and other benefits. LA ruled in favor of
PR, which NLRC affirmed and the CA dismissed.
ISSUE:
Whether or not Sonza is an Employee of ABS-CBN.
RULING:
Petition denied. Unique skills, talent and celebrity status not possessed by ordinary employees
are indicative of an independent contractor; The power to bargain talent fees way above the
salary scales of ordinary employees indicates an independent contractual relationship A
radio/television broadcast specialist who works under minimal supervision is an independent
contractor; The KBP code applies to broadcasters, not to employees of radio and television
stations; Not all rules imposed by the hiring party on the hired party indicate that the latter is an
employee of the former; In the broadcast industry, exclusivity is not necessarily the same as
control; Three parties involved in labor- only contracting; Talents as Independent Contractors
If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not
have entered into the Agreement with SONZA but would have hired him through its personnel
department just like any other employee.
Applying the control test, SONZA is not an employee but an independent contractor. The greater
the supervision and control the hirer exercises, the more likely the worker is deemed an
employee. The converse holds true as well the less control the hirer exercises, the more likely
the worker is considered an independent contractor.

21.

Brotherhood Labor Unity Movement of the Philippines v. Zamora

FACTS:
Ps are cargadores and pahinantes working on for as long as 7 years on average, on a piece rate
basis working to load, unload, or piling of bottles produced by SMC. 140 organized and
affiliated themselves to BLUMP (PR), they later striked, and SMC refused to bargain w/ them,
alleging that they are not employees, rather they were independent contractors they were later
denied work. Sued for illegal dismissal, SMC moved for dismissal. LA and NLRC ruled for
SMC, hence this.
ISSUE:
Whether or not there exists an EER?
RULING:
Petition Granted, reinstatement w/ back wages. Payment by piece does not define the essence of
employment relation. In this case, the alleged independent contractors were paid a lump sum
representing only the salaries the workers were entitled to, arrived at by adding the salaries of
each worker which depend on the volume of work they had accomplished individually.
The existence of an independent contractor relationship is generally established by the following
criteria: "whether or not the contractor is carrying on an independent business; the nature and
extent of the work; the skill required; the term and duration of the relationship; the right to assign
the performance of a specified piece of work; the control and supervision of the work to another;
the employer's power with respect to the hiring, firing and payment of the contractor's workers;
the control of the premises; the duty to supply the premises tools, appliances, materials and
labor; and the mode, manner and terms of payment"
In this case, none of the above criteria exists. Highly unusual and suspect is the absence of a
written contract to specify the performance of a specified piece of work, the nature and extent of
the work and the term and duration of the relationship.
Also, for an average of seven (7) years, each of the workers had worked continuously and
exclusively for the company's shipping and warehousing department. Thus, they were engaged to

perform activities necessary or desirable in the usual business or trade of the respondent, and are
therefore regular employees.

22.

SMC v. NLRC

FACTS:
Vega (PR) and employee of P, submitted a proposal to render the product of PR to be a more
sustainable product (Beer). P dismissed his proposal and denied him of the cash award that is
mandatory to any employee who can deliver such advancement. PR sued, P in MOLE, claiming
that P is using his proposal and is claiming the cash award. P on the other hand claimed that PRs
submission was turned down because it lacks originality, and claims that the LA had no
jurisdiction, because PR bypassed Ps grievance machinery. LA turned down PR, NLRC ruled
otherwise, hence this.
ISSUE:
Whether or not the LA and NLRC had Jurisdiction?
RULING:
Set Aside. The important principle that runs through these three (3) cases is that where the claim
to the principal relief sought is to be resolved not by reference to the Labor Code or other labor
relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction
over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the
NLRC. In such situations, resolution of the dispute requires expertise, not in labor management
relations nor in wage structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area of competence or
expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting
jurisdiction over such claims to these agencies disappears.
While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose
that the entire universe of money claims that might be asserted by workers against their
employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. It is
evident that there is a unifying element which runs through paragraphs 1 to 5 of Art. 217 and that
is, that they all refer to cases or disputes arising out of or in connection with an employeremployee relationship. This is, in other words, a situation where the rule of noscitur a sociis may

be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article
217 of the Labor Code, as amended.
Thus, whether or not an enforceable contract, albeit implied and innominate, had arisen between
petitioner Corporation and private respondent Vega in the circumstances of this case, and if so,
whether or not it had been breached, are preeminently legal questions, questions not to be
resolved by referring to labor legislation and having nothing to do with wages or other terms and
conditions of employment, but rather having recourse to our law on contracts.

23.

PEPSI Cola v. Gallang

FACTS:
PRs were employees of the petitioner who were suspected of irregular disposition of empty Pepsi
Cola bottles, they were criminally charged which was dismissed, in the course they were
terminated from employment. PRs lodged a complaint with NLRC Tacloban, they also sued for
malicious criminal prosecution in RTC Tacloban. P claimed that since there is now a case with
the LA, civil suit should be dismissed. Dismissed, but was reconsidered by PR judge, hence this.
ISSUE:
Whether or not RTC Leyte has jurisdiction?
RULING:
Dismissed. It must be stressed that not every controversy involving workers and their employers
can be resolved only by the labor arbiters. This will be so only if there is a "reasonable causal
connection" between the claim asserted and employee-employer relations to put the case under
the provisions of Article 217. Absent such a link, the complaint will be cognizable by the regular
courts of justice in the exercise of their civil and criminal jurisdiction.
The case now before the Court involves a complaint for damages for malicious prosecution
which was filed with the Regional Trial Court of Leyte by the employees of the defendant
company. It does not appear that there is a "reasonable causal connection" between the complaint
and the relations of the parties as employer and employees. The complaint did not arise from
such relations and in fact could have arisen independently of an employment relationship
between the parties. No such relationship or any unfair labor practice is asserted. What the
employees are alleging is that the petitioners acted with bad faith when they filed the criminal
complaint which the Municipal Trial Court said was intended "to harass the poor employee" and
the dismissal of which was affirmed by the Provincial Prosecutor "for lack of evidence to
establish even a slightest probability that all the respondents herein have committed the crime
imputed against them." This is a matter which the labor arbiter has no competence to resolve as
the applicable law is not the Labor Code but the Revised Penal Code.

24.

Medina vs. Castro Bartolome

FACTS:
Ps former employees of PRs company, alleging that PR Aboitiz dismissed and publicly
humiliated Ps w/o provocation. Ps sued. PR argues that CFI Makati had no jurisdiction, w/c was
denied, pending litigation the Labor Code was amended, PR now re-raised their jurisdiction
contention basing from Art. 217(b), PR judge granted. Hence this petition.
ISSUE:
Whether or not the Labor Code has any relevance to the relief sought?
RULING:
Granted. It is obvious from the complaint that the plaintiffs have not alleged any unfair labor
practice. Theirs is a simple action for damages for tortious acts allegedly committed by the
defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code.
It results that the orders under review are based on a wrong premise.
Where plaintiffs' complaint for damages arising from the alleged disgraceful termination of
employment does not allege any unfair labor practice, theirs is a simple action for damages for
tortious acts allegedly committed by the defendants.

ALU-TUCP vs. NLRC and NSC [G.R. No. 109902. August 02, 1994]
Ponente: FELICIANO, J.
FACTS:
Petitioners, as employees of private respondent National Steel Corporation (NSC), filed separate
complaints for unfair labor practice, regularization and monetary benefits with the NLRC, SubRegional Arbitration Branch XII, Iligan City. The complaints were consolidated and after
hearing, the Labor Arbiter declared petitioners regular project employees who shall continue
their employment as such for as long as such [project] activity exists, but entitled to the salary
of a regular employee pursuant to the provisions in the collective bargaining agreement. It also
ordered payment of salary differentials.
The NLRC in its questioned resolutions modified the Labor Arbiters decision. It affirmed the
Labor Arbiters holding that petitioners were project employees since they were hired to perform
work in a specific undertaking the Five Years Expansion Program, the completion of which
had been determined at the time of their engagement and which operation was not directly
related to the business of steel manufacturing. The NLRC, however, set aside the award to
petitioners of the same benefits enjoyed by regular employees for lack of legal and factual basis.
The law on the matter is Article 280 of the Labor Code, where the petitioners argue that they are
regular employees of NSC because: (i) their jobs are necessary, desirable and work-related to
private respondents main business, steel-making; and (ii) they have rendered service for six (6)
or more years to private respondent NSC.
ISSUE:
Whether or not petitioners are considered permanent employees as opposed to being only
project employees of NSC.

HELD:
NO. Petition for Certiorari dismissed for lack of merit. NLRC Resolutions affirmed.
RATIO:
Function of the proviso. Petitioners are not considered permanent employees. However,
contrary to petitioners apprehensions, the designation of named employees as project
employees and their assignment to a specific project are effected and implemented in good
faith, and not merely as a means of evading otherwise applicable requirements of labor laws.
On the claim that petitioners service to NSC of more than six (6) years should qualify them as
regular employees, the Supreme Court believed this claim is without legal basis. The simple
fact that the employment of petitioners as project employees had gone beyond one (1) year, does
not detract from, or legally dissolve, their status as project employees. The second paragraph
of Article 280 of the Labor Code, quoted above, providing that an employee who has served for
at least one (1) year, shall be considered a regular employee, relates to casual employees, not to
project employees.

50.

Ver buiser vs gte directories

Facts:
Petitioners were employed by the private respondent GENERAL TELEPHONE DIRECTORY
COMPANY as sales representatives and charged with the duty of soliciting advertisements for
inclusion in a telephone directory. petitioners Iluminada Ver Buiser and Ma. Mercedes P.
Intengan entered into an "Employment Contract (on Probationary Status)". private respondent, a
corporation engaged in the business of publication and circulation of the directory of the
Philippine Long Distance Telephone Company. The company employs the employee as
telephone representative on a probationary status for a period of eighteen (18) months.
The Employee may be terminated at the pleasure of the company without the necessity of giving
notice of termination or the payment of termination pay. The private respondent prescribed sales
quotas to be accomplished or met by the petitioners. Failing to meet their respective sales quotas,
the petitioners were dismissed from the service by the private respondent. petitioners filed
complaint for illegal dismissal The Regional Director of said ministry, dismissed the complaints
of the petitioners, On appeal the order of the regional director was affirmed it was ruled that the
petitioners have not attained permanent status since private respondent was justified in requiring
a longer period of probation, and that the termination of petitioners' services was valid since the
latter failed to meet their sales quotas. Hence, this petition for certiorari
ISSUE:
won petitioners are entitled to security of tenure while under said probation for 18 months.?
HELD:
We reject petitioners' contentions. They have no basis in law.
the probationary period of employment is limited to six (6) months. The exception to this general
rule is When the parties to an employment contract may agree otherwise, such as when the same
is established by company policy or when the same is required by the nature of work to be
performed by the employee. In the latter case, there is recognition of the exercise of managerial
prerogatives in requiring a longer period of probationary employment, such as in the present case
where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October,

1981 inclusive, especially where the employee must learn a particular kind of work such as
selling, or when the job requires certain qualifications, skills, experience or training.
In the case at bar, it is shown that private respondent Company needs at least eighteen (18)
months to determine the character and selling capabilities of the petitioners as sales
representatives. an eighteen month probationary period is recognized by the Labor Union in the
private respondent company, which is Article V of the Collective Bargaining Agreement, ... thus:
Probationary Period New employees hired for regular or permanent shall undergo a
probationary or trial period of six (6) months, except in the cases of telephone or sales
representatives where the probationary period shall be eighteen (I 8) months.
And as indicated earlier, the very contracts of employment signed and acquiesced to by the
petitioners specifically indicate that "the company hereby employs the employee as telephone
sales representative on a probationary status for a period of eighteen (18) months, i.e. from May
1980 to October 1981, inclusive. This stipulation is not contrary to law, morals and public policy.

51.

MARIWASA MANUFACTURING, INC. vs. LEOGARDO, JR.

FACTS:
Joaquin A. Dequila (or Dequilla) was hired on probation by Mariwasa Manufacturing, Inc. as a
general utility worker on January 10, 1979. After 6 months, he was informed that his work was
unsatisfactory and had failed to meet the required standards. To give him another chance, and
with Dequilas written consent, Mariwasa extended Dequilas probationary period for another
three months: from July 10 to October 9, 1979. Dequilas performance, however, did not
improve and Mariwasa terminated his employment at the end of the extended period.
Dequila filed a complaint for illegal dismissal against Mariwasa and its VP for Administration,
Angel T. Dazo, and violation of Presidential Decrees Nos. 928 and 1389.
DIRECTOR OF MINISTRY OF LABOR: Complaint is dismissed. Termination is justified.
Thus, Dequila appeals to the Minister of Labor.
MINISTER OF LABOR: Deputy Minister Vicente Leogardo, Jr. held that Dequila was already a
regular employee at the time of his dismissal, thus, he was illegally dismissed. (Initial order:
Reinstatement with full backwages. Later amended to direct payment of Dequilas backwages
from the date of his dismissal to December 20, 1982 only.)
ISSUE:
WON employer and employee may, by agreement, extend the probationary period of
employment beyond the six months prescribed in Art. 282 of the Labor Code?
RULING:
YES, agreements stipulating longer probationary periods may constitute lawful exceptions to the
statutory prescription limiting such periods to six months.
The SC in its decision in Buiser vs. Leogardo, Jr. (1984) said that Generally, the probationary
period of employment is limited to six (6) months. The exception to this general rule is when the
parties to an employment contract may agree otherwise, such as when the same is established by
company policy or when the same is required by the nature of work to be performed by the
employee. In the latter case, there is recognition of the exercise of managerial prerogatives in
requiring a longer period of probationary employment, such as in the present case where the

probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981
inclusive, especially where the employee must learn a particular kind of work such as selling, or
when the job requires certain qualifications, skills experience or training.
In this case, the extension given to Dequila could not have been pre-arranged to avoid the legal
consequences of a probationary period satisfactorily completed. In fact, it was ex gratia, an act
of liberality on the part of his employer affording him a second chance to make good after having
initially failed to prove his worth as an employee. Such an act cannot now unjustly be turned
against said employers account to compel it to keep on its payroll one who could not perform
according to its work standards.
By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any
benefit attaching to the completion of said period if he still failed to make the grade during the
period of extension. By reasonably extending the period of probation, the questioned agreement
actually improved the probationary employees prospects of demonstrating his fitness for regular
employment.
Petition granted. Order of Deputy Minister Leogardo reversed.

53.

Sameer Overseas Placement Agency, Inc. vs. NLRC

Facts:
Sometime in 1999, petitioner company Sameer Overseas Placement Agency, Inc. deployed
respondents Maricel N. Bajaro (Bajaro), Pamela P. Morilla (Morilla), Daisy L. Magdaong, Leah
J. Tabujara, Lea M. Cancino, Michiel D. Meliang, Raquel Sumigcay (Sumigcay), Rose R. Saria,
Leona L. Angulo and Melody B. Ingal to Taiwan to work as operators for its foreign principal,
Mabuchi Motors Company, Ltd. under individual two-year employment contracts, with a
monthly salary of Taiwan Dollars (NT$) 15,840.00 each. Prior to their deployment, each
respondent paid petitioner company the amount of P47,900.00 as placement fee.
However, after working for only a period of eleven (11) months and before the expiration
of the two-year period, respondents employment contracts were terminated and they were
repatriated to the Philippines. This prompted the filing of a complaint for illegal dismissal against
petitioner company and its President and General Manager, individual petitioner Rizalina
Lamson, with allegations of illegal deductions and illegal collection of placement fees.
Respondents Bajaro, Morilla and Sumigcay likewise sought reimbursement of the amount they
personally expended for their plane tickets for their return flight, alleging that their employment
contracts provided for free transportation expenses in going to and from Taiwan. Collectively,
respondents prayed for the award of damages as well as attorneys fees.
In defense, petitioners claimed that respondents were validly retrenched due to severe
business losses suffered by their foreign principal. They denied the alleged deductions amounting
to NT$7,500.00 from petitioners monthly salaries and that, consequently, petitioners are not
entitled to damages and attorneys fees.
Issue:
WON the Labor Arbiter failed to consider the applicability of private international laws
and the labor standard laws of the Republic of China in the proper interpretation of the
employment contracts.

Held:
No, No.
Ratio:
Records show that petitioners never advanced this issue at the first opportunity before the
Labor Arbiter, and even in the subsequent proceedings before the NLRC and the CA. Instead,
petitioners arguments consistently centered on the existence of a valid retrenchment and
compliance with the requirements to legally effect the same. It bears stressing that issues not
raised in the proceedings below cannot be raised for the first time on appeal. Specifically, points
of law, theories and arguments not raised before the appellate court will not be considered by the
Court.
The Court, therefore, shall limit the resolution of this case on the sole question of whether
the Labor Arbiters Decision, as reinstated in toto by the CA, properly applied and interpreted
Section 10 of R.A. 8042, the pertinent portions of which state:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any law
or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages.
In case of termination of overseas employment without just, valid or authorized cause as
defined by law or
Contract.
Indisputably, respondents illegal dismissal complaint with money claims is anchored on
the overseas employment contracts with petitioners and the allegations that they were dismissed
without just, valid or authorized cause. With these allegations, Section 10 afore-quoted clearly
applies in this case. As petitioners failed to establish a valid retrenchment, respondents were
clearly dismissed without just, valid or authorized cause.

54.

Dela cruz v NLRC December 11 2003

FACTS:
Petitioner Florencio M. de la Cruz, Jr. was hired by private respondent Shemberg Marketing
Corporation (Shemberg) as senior sales manager. Shemberg was engaged in the business of
manufacturing, trading, distributing and importing various consumer products. His duties
included, among others, the supervision and control of the sales force of the company.
The senior sales manager was also vested with some discretion to decide on matters within the
scope of his functions, including the appointment of district sales representatives and the
reshuffling of salesmen to achieve sales targets. on September 14, 1996, Shembergs human
resource department manager, Ms. Lilybeth Y. Llanto, summoned petitioner and informed him of
the managements decision to terminate his services.
Petitioner asked Llanto for the reason but the latter merely informed him that it had something to
do with the drop in the companys sales. Petitioner then requested a meeting with Shembergs vice
president, Ernesto U. Dacay, Jr., but was told that the decision of the management was final. His
request to be furnished a 30-day written notice was also denied by the management. Hence,
petitioner filed a complaint for illegal dismissal, non-payment of salary, backwages, 13 th month
pay and damages against Shemberg, Ernesto Dacay, Jr. and Lilybeth Llanto.
Respondents answered that petitioners dismissal was premised on the following: (1) his poor
performance as evidenced by the steady and substantial drop in company sales since his
assumption as senior sales manager; (2) the dissatisfaction of his subordinates over his
management style and dealings with the companys distributors which resulted in the low morale
of Shembergs sales force, as evidenced by the joint affidavit of two of his subordinates, Ruel O.
Salgado and Joel D. Sol; (3) his unauthorized use of company cellular phone for overseas
personal calls[5] and (4) the unauthorized reimbursement of the plane tickets of his wife and child.
In short, petitioner was terminated for his failure to meet the required company standards and for
loss of trust and confidence.
labor arbiter ruled that petitioner Florencio de la Cruz was illegally dismissed and granted his
claim for separation pay, backwages and unpaid wages: On appeal by respondents, the NLRC
dismissed the appeal.Respondents moved for reconsideration the NLRC partially granted the

motion for reconsideration and modified its previous resolution. Petitioner elevated the case to
the Court of Appeals on a petition for certiorari but it was dismissed for lack of merit Hence, this
petition.
ISSUE:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT REFUSED TO
AWARD

BACKWAGES

NOTWITHSTANDING

ITS

FACTUAL

FINDING

THAT

RESPONDENTS FAILED TO COMPLY WITH THE TWO-NOTICE REQUIREMENT


HELD:
The petition is without merit. Petitioner was holding a managerial position in which he was
tasked to perform key functions in accordance with an exacting work ethic. His position required
the full trust and confidence of his employer. While petitioner could exercise some discretion,
this obviously did not cover acts for his own personal benefit.
As found by the court a quo, he committed a transgression that betrayed the trust and confidence
of his employer reimbursing his familys personal travel expenses out of company funds.
Petitioner failed to present any persuasive evidence or argument to prove otherwise. His act
amounted to fraud or deceit which led to the loss of trust and confidence of his employer. We
reiterate the well-established rule that findings of fact of the Court of Appeals are conclusive on
the parties and are not generally reviewable by this Court when supported by substantial
evidence.
The rationale is that this Court, not being a trier of facts, relies in good part on the assessment
and evaluation of evidence by the lower courts. We thus subscribe to the following findings of
the Court of Appeals in affirming the NLRC decision, that petitioners dismissal was for a just
cause:
With respect to the unauthorized use of company funds, there appears to be substantial evidence
to show that petitioner indeed is guilty of the same but only with respect to the reimbursement of
plane ticket fares.
Petitioner was hired by respondent Shemberg Marketing Corporation on May 27, 1996 and was
terminated on September 14, 1996. Article 281 of the Labor Code provides:

Probationary employment Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards, made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
Petitioner vigorously contends that he was not a probationary employee since Shemberg failed to
disclose to him the reasonable standards for qualifying as a regular employee. the evidence on
record clearly showing that petitioner was well informed of the standards to be met before he
could qualify as a regular employee
A probationary employee is one who, for a given period of time, is under observation and
evaluation to determine whether or not he is qualified for permanent employment. During the
probationary period, the employer is given the opportunity to observe the skill, competence and
attitude of the employee while the latter seeks to prove to the employer that he has the
qualifications to meet the reasonable standards for permanent employment.
The length of time is immaterial in determining the correlative rights of both the employer and
the employee in dealing with each other during said period. There is no dispute that petitioner, as
a probationary employee, enjoyed only temporary employment status. As long as the
termination was made before the expiration of the six-month probationary period, the employer
was well within his rights to sever the employer-employee relationship. A contrary interpretation
would defect the clear meaning of the term probationary. In this case, respondent Shemberg had
good reason to terminate petitioners employment and that was his dishonesty.

55.

CENTRAL NEGROS ELECTRIC COOPERATIVE, INC CENECO vs. NLRC

FACTS:
Private respondents are employees of petitioner, an electric cooperative company. They have
worked

for

petitioner

from

high

of

four

and

one

half

(4 1/2) years to a low of ten (10) months. Their work forms an integral part of the business of
petitioner. Despite the length of their service, they were extended permanent appointments only
on July 13, 1988, retroactive to June 16, 1988.
Though they were made permanent in 1988, private respondents demanded payment of the three
hundred fifty pesos (P350.00) wage increase for the year 1987 as provided by the above
collective bargaining agreement. Petitioner denied their demand. As called for by the parties'
collective bargaining agreement, the demand was treated as a grievance. The grievance remained
unsettled until their collective bargaining agreement expired on April 1, 1990.
Private respondents then filed their complaint with the Labor Arbiter dismissed the complaint
for lack of merit Decision was, however, reversed by the NLRC It held that: (1) private
respondents became regular employees six (6) months after hiring, and hence, entitled to the
across-the-board wage increase for the first year of the collective bargaining agreement starting
from April 1, 1987 to March 1988; and (2) private respondents' complaint has not prescribed.
petition for certiorari,
ISSUE:
won the private respondents became regular employees?
HELD:
Petitioner contends that its collective bargaining agreement clearly excludes "temporary or
probationary employees . It stresses that private respondents were extended appointments as
permanent workers only on July 13, 1988 retroactive to June 16, 1988.
The contention overlooks Articles 280 and 281 of the Labor Code, It cannot be denied that
private respondents attained the status of regular employees even before 1988. Firstly, they
perform activities which are necessary or desirable in the usual business of the petitioner as an
electric cooperative. They are meter inspectors, PABX operators, utility men, disconnectors,

linemen, messengers, secretaries, clerks, typists, plumbers, mechanics, draftsmen, HRD


personnel, collectors and electricians. Indeed, their appointments would not have been
regularized if their jobs were not indispensable in the daily operation of the petitioner's business.
Secondly, they had worked for petitioner for more than six (6) months before they were given
regular appointments.
They had been hired on various dates starting from 1984. Petitioner's insistence that private
respondents became regular employees only when they were extended appointments on July 13,
1988 is deplorable. Articles 280 and 281 of our Labor Code, supra, 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. On the other hand, Article
280, supra, defined when an employment shall be regular notwithstanding any written agreement
to the contrary. In other words, the graduation of an employee from casual or probationary to
regular does not depend on the arbitrary will of his employer.
Petitioner's too niggard a regard to the rights of its employees becomes more evident with its
contention that even if private respondents were to be considered regular employees under
Article 280 of the Labor Code, still, they can only claim security of tenure but not the benefits of
the said collective bargaining agreement. Petitioner's contention does not convince for it will
result in an anomalous situation where we have to categorize regular employees into two (2)
kinds one entitled to security of tenure plus the benefits of the parties' collective bargaining
agreement, and the other, entitled to security of tenure alone. Such a classification finds no
sanction under the Labor Code for it distinguishes where there is no difference. he petition is
dismissed there being no grave abuse of discretion on the part of public respondent in its
Decision

56.

DE LEON vs NATIONAL LABOR RELATIONS

Facts:
Petitioner was employed by private respondent La Tonde;a Inc. on December 11, 1981, at the
Maintenance Section of its Engineering Department in Tondo, Manila. His work consisted
mainly of painting company building and equipment, and other odd jobs relating to maintenance.
He was paid on a daily basis through petty cash vouchers. In the early part of January, 1983, after
a service of more than one (1) year, petitioner requested from respondent company that he be
included in the payroll of regular workers, instead of being paid through petty cash vouchers.
Private respondent's response to this request was to dismiss petitioner from his employment on
January 16, 1983. Having been refused reinstatement despite repeated demands, petitioner filed a
complaint for illegal dismissal, reinstatement and payment of back wages before the Office of the
Labor Arbiter of the then Ministry now Department of Labor and Employment. Petitioner alleged
that he was dismissed following his request to be treated as a regular employee; that his work
consisted of painting company buildings and maintenance chores like cleaning and operating
company equipment, assisting Emiliano Tanque Jr., a regular maintenance man; and that weeks

after his dismissal, he was re-hired by the respondent company indirectly through the VitasMagsaysay Village Livelihood Council, a labor agency of respondent company, and was made to
perform the tasks which he used to do. Emiliano Tanque Jr. corroborated these averments of
petitioner in his affidavit. On the other hand, private respondent claimed that petitioner was not a
regular employee but only a casual worker hired allegedly only to paint a certain building in the
company premises, and that his work as a painter terminated upon the completion of the painting
job.
Issue:
Whether or not a casual employee who perform odd jobs from time to time as assigned aside
from the performing his original task in for being employed for more one year can be considered
as regular employee?
Held:
The Court held, the law on the matter is Article 281 of the Labor Code which defines regular
andcasual employment as follows:
Art. 281. Regular and casual employment. The provisions of a written agreement to the contrary
notwithstanding and regardless of the oral agreements 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 actually exists
This provision reinforces the Constitutional mandate to protect the interest of labor. Its language
evidently manifests the intent to safeguard the tenurial interest of the worker who may be denied

the rights and benefits due a regular employee by virtue of lopsided agreements with the
economically powerful employer who can maneuver to keep an employee on a casual status for
as long as convenient. Thus, contrary agreements notwithstanding, an employment is deemed
regular when the activities performed by the employee are usually necessary or desirable in the
usual business or trade of the employer. Not considered regular are the so-called "project
employment" the completion or termination of which is more or less determinable at the time of
employment, such as those employed in connection with a particular construction project and
seasonal employment which by its nature is only desirable for a limited period of time. However,
any employee who has rendered at least one year of service, whether continuous or intermittent,
is deemed regular with respect to the activity he performed and while such activity actually
exists.
The primary standard, therefore, of determining a regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual
business or trade 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 or merely intermittent, the law deems the 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 also considered regular, but only with respect to such activity and
while such activity exists. In the case at bar, the respondent company, which is engaged in the
business of manufacture and distillery of wines and liquors, claims that petitioner was contracted
on a casual basis specifically to paint a certain company building and that its completion
rendered petitioner's employment terminated.

This may have been true at the beginning, and had it been shown that petitioner's activity was
exclusively limited to painting that certain building, respondent company's theory of casual
employment would have been worthy of consideration.
However, during petitioner's period of employment, the records reveal that the tasks assigned to
him included not only painting of company buildings, equipment and tools but also cleaning and
oiling machines, even operating a drilling machine, and other odd jobs assigned to him when he
had no painting job. A regular employee of respondent company, Emiliano Tanque Jr., attested in
his affidavit that petitioner worked with him as a maintenance man when there was no painting
job.
Therefore, all things considered, the petitioners status of employment became regular hence
private respondent is ordered to reinstate petitioner as a regular maintenance man and to pay
petitioner back wages, ECOLA, and 13th Month Pay.

57.

KIMBERLY INDEPENDENT LABOR UNIONV DRILON

FACTS
- Kimberly-Clark Philippines, Inc. (KIMBERLY)executed a three-year collective bargaining
agreement (CBA) with United Kimberly-Clark Employees Union-Philippine Transport and
General Workers' Organization(UKCEUPTGWO) which expired on June 30,1986.- Within the
60-day freedom period prior to the expiration of and during the negotiations for the renewal of
the aforementioned CBA, some members of the bargaining unit formed another union called
"Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor
Association inline Industries and Agriculture (KILUSAN-OLALIA)
- April 21, 1986, KILUSAN-OLALIA filed a petition for certification election. KIMBERLY and
UKCEU-PTGWO did not object to the holding of a certification election but objected to the
inclusion of the so-called contractual workers whose employment with KIMBERLY was coursed
through an independent contractor, Rank Manpower Company (RANK, for short), as among the
qualified voters.
- On June 2, 1986, Med-Arbiter Bonifacio I. Marasigan, who was handling the certification
election case issued an order declaring the following as eligible to vote in the certification
election, thus:1) regular rank-and-file laborers/employees of the respondent company; 2) casuals
who have worked at least six (6) months; 3)Contractual employees who are allegedly in the
employ of an independent contractor and who have also worked for at least six (6)months
- During the pre-election conference, 64casual workers were challenged by KIMBERLY and
UKCEU-PTGWO on the ground that they are not employees of KIMBERLY but of RANK. It
was agreed by all the parties that the 64voters shall be allowed to cast their votes but that their
ballots shall be segregated and subject to challenge proceedings.- After the elections, UKCEUPTGWO won over KILUSAN-OLALIA by 20 votes. This count considered the votes of the 64
employees as separate.- In a case regarding the status of the 64employees in relation to the
certification election, it was held by med-arbiter Sanchezt hat:2)The other casual employees
not performing janitorial and yard maintenance services were deemed labor-only contractuals
and since labor-only contracting is prohibited, such employees were held to have attained the

status of regular employees, the regularization being effective as of the date of the decision;3.
UKCEU-PTGWO, having garnered more votes than KILUSAN-OLALIA, was certified as the
exclusive bargaining representative of KlMBERLY's employees;- Since the members were
only considered regular at the time of the decision, their votes were not re-considered as regards
the election.- winning union and company executed a CBA- KIMBERLY-OLALIA filed for a
TRO on the CBA and included the question of the status of the64 members in question.
ISSUE
WON the 64 employees were regular employees at the time of the certification election
HELD
YES- A280LC provides for two kinds of regular employees: (1) those who are engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service, whether continuous or
broken, with respect to the activity in which they are employed- The individual petitioners herein
who have been adjudged to be regular employees (bylaw) fall under the second category.
These are the mechanics, electricians, machinists, machine shop helpers, warehouse helpers,
painters, carpenters, pipefitters and masons It is not disputed that these workers have been in the
employ of KIMBERLY for more than one year at the time of the filing of the petition for
certification election by KILUSAN-OLALIA.
- While the actual regularization of these employees entails the mechanical act of issuing regular
appointment papers and compliance with such other operating procedures as may be adopted by
the employer, it is more in keeping with the intent and spirit of the law to rule that the status of
regular employment attaches to the casual Hizon, King James Carlo C.IA worker on the day
immediately after the end of his first year of service- The law is explicit. As long as the employee
has rendered at least one year of service, he becomes a regular employee with respect to the
activity in which he is employed.

The law does not provide the qualification that the employee must first be issued a regular
appointment or must first be formally declared as such before he can acquire a regular status.
Obviously, where the law does not distinguish, no distinction should be drawn.- On the basis of
the foregoing circumstances, and as a consequence of their status as regular employees, those
workers not perforce janitorial and yard maintenance service were performance entitled to the
payment of salary differential, cost of living allowance, 13th month pay, and such the benefits
extended to regular employees under the CBA, from the day immediately following their first
year of service in the company.
-These regular employees are likewise entitled to vote in the certification election held in July 1,
1986. Consequently, the votes cast by those employees not performing janitorial and yard
maintenance service, which forms part of the 64 challenged votes, should be opened, counted
and considered for the purpose of determining the certified bargaining representative.

58. Ferrochrome Philippines v. NLRC


FACTS:
Bartsch was assigned to the Philippines as a consultant-engineer of petitioner Ferrochrome, a
subsidiary of Voest-Alpine. His contract of employment His contract of employment provided
that he would be employed at Ferrochrome for a period of three (3) months.
After Bartsch's employment expired on May 15, 1988, his services were still engaged by
petitioner Ferrochrome. However, his continued employment was no longer covered by any
written contract.
From July 12-15, 1988, Bartsch was confined at the Capitol College General Hospital in
Misamis Oriental for treatment of a psychological disorder.
petitioner granted Bartsch a vacation leave. Bartsch returned to the Philippines on September 28,
1988. On October 1, 1988, he assumed his former position at Ferrochrome.
Ferrochrome terminated his services in a letter, dated January 30, 1989, stating that it became
apparent that his services as consultant to the Senior VP-Operations are presently no longer
needed and a discontinuation in the meantime was agreed upon.
June 5, 1989, Bartsch filed a complaint against petitioners for unpaid salary, non-payment of
vacation leave, separation pay and 13th month pay, plus damages and attorney's fees before the
NLRC, After hearing, the complaint was dismissed. granted a ten thousand peso (P10,000.00)
financial assistance in favor of private respondent Bartsch. The labor arbiter ruled that: Bartsch
was fully paid his salary from February 15, 1988 until the termination of his consultancy contract
on February 1989; that Bartsch's employment expired on May 15, 1988, as per the Consultancy
Agreement between the parties; that since there was no evidence on record which showed that
Bartsch's employment period was extended for a definite term, his continued employment with
Ferrochrome acquired a contractual character, renewable of a monthly basis. Thus, it was the
prerogative of Ferrochorme to terminate Bartsch's consultancy services whenever the former
deemed necessary. On appeal, public respondent NLRC reversed the decision of the labor arbiter
and ruled that Bartsch was illegally dismissed by Ferrochrome. Hence the petition
Issue : WON NLRC COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT RULED
THAT FERROCHROME ILLEGALLY DISMISSED BARTSCH.

HELD:
In the termination letter served by petitioner, the latter claims that the services of private
respondent were no longer needed and that management intends to hire him again "when the
equipment for the new dedusting facility is ready for installation and other projects have arrived
at the implementation stage." It would thus appear that at the time the termination letter was
made, petitioner company did not consider private respondent Bartsch as one of its regular
employees. Hence, it would appear from said letter that Bartsch's services were terminated for
they were no longer deemed necessary.
However, during the proceedings before the labor arbiter, petitioner company alleged a new
ground for terminating Bartsch's employment. Petitioner claimed that the "real" reason for
Bartsch's dismissal was the latter's psychological illness.
It is this vacillating position of petitioner corporation regarding the cause of private respondent's
termination which worked against it. As correctly found by the NLRC, petitioner's wavering
stance showed its bad faith in terminating the services of private respondent.
Thus, under the circumstances, petitioner should have complied with the due process
requirements of notice and hearing before terminating the services of private respondent. An
employee should be notified of his employer's intent to dismiss him and the true reasons
therefor. 12 Unfortunately, these basic requisites were not met. It was not shown that private
respondent was informed of the alleged "real" reason for his dismissal. Neither was he given an
opportunity to air his side and defend himself.
In view of the illegality of private respondent's dismissal from service, the latter is entitled to the
award of Christmas bonus and salary bonus for the year 1988 given by petitioner to all its other
regular employees.

59.

Singer Sewing Machine Company v. Drilon

Facts:
Union filed petition for direct certification as the sole and exclusive bargaining agent of all
collectors of the SSMC Baguio City Branch.
Company opposed on the ground that the union members are not employees but are independent
contractors as evidenced by the collection agency agreement which they signed.
Med-Arbiter Chaguile found employer-employee relationship exists so certification election was
granted. On appeal, Sec. of Labor Drilon affirmed Med-Arbiters decision.
Union contends that they are employees because of Art. 280 citing that they perform the most
desirable and necessary activitites for the continuous and effective operations of the business of
the Company.
Issue:
WON an employer-employee relationship exists which will give them the right to organize for
purposes of bargaining
Held:
No, the union members are not employees of the company. The following elements are generally
considered in the determination of employer-employee relationship: 1) Selection and
engagement of the employee; 2) Payment of wages; 3) Power of dismissal; 4) Power to control
the employees conduct.
The Agreement confirms the status of the collecting agent in this case as an independent
contractor not only because he is explicitly described as such but also because the provisions
permit him to perform collection services for the company without being subject to the control of
the latter except only as to the result of his work.
The collection agent does his work more or less at his own pleasure without a regular daily time
frame imposed on him. There is nothing in the agreement which implies control by company not
only over the end to be achieved but also over the means and methods in achieving the end.

60.

Magsalin v. National Organization of Working Men

Facts:
1. The private respondents worked as sales route helpers for the petitioner (Coca Cola) for 5
months and thereafter they were hired on a daily basis. According to the petitioner, the
respondents were merely hired as substitutes for regular helpers when the latter were unavailable
or due to shortage of manpower/high volume of work. These workers would then wait every
morning outside the gates and if hired, they would be paid their wages at the end of the day.
2. The respondents asked the petitioner to make them regular but the latter refused. Hence, 23 of
these temporary workers filed a case for illegal dismissal.
Issue:
W/N the respondents' work is deemed necessary and desirable in the usual business or trade of
the petitioner
RULING:
Yes. The repeated hiring of the respondent workers and continuing need of their daily services
clearly attest to the necessity or desirability of their services in the regular conduct of the
business/trade of petitioner.
In determining whether employment is regular or not, the applicable test is the reasonable
connection between a particular activity performed in relation to the usual business or trade of
the employer. The nature of work must be viewed from the perspective of the business in its
entirety and not confined scope.

61.

BRENT SCHOOL vs. ZAMORA

FACTS:
Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner Brent
School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its
existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July
17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and
September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those
contained in the original contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent School with the
Department of Labor advising of the termination of his services effective on July 16, 1976. The
stated ground for the termination was "completion of contract, expiration of the definite period of
employment." Although protesting the announced termination stating that his services were
necessary and desirable in the usual business of his employer, and his employment lasted for 5
years - therefore he had acquired the status of regular employee - Alegre accepted the amount of
P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for
the period May 16, to July 17, 1976 as full payment of contract."
The Regional Director considered Brent School's report as an application for clearance to
terminate employment (not a report of termination), and accepting the recommendation of the
Labor Conciliator, refused to give such clearance and instead required the reinstatement of
Alegre, as a "permanent employee," to his former position without loss of seniority rights and
with full back wages.
ISSUE:
Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed period
employment" or employment for a term.

RULING:
Respondent Alegre's contract of employment with Brent School having lawfully terminated with
and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to
reinstatement.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a
time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. At that
time, the validity of term employment was impliedly recognized by the Termination Pay Law,
R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce (Article 302)
which governed employment without a fixed period, and also implicitly acknowledged the
propriety of employment with a fixed period. The Civil Code of the Philippines, which was
approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations
with a period. No prohibition against term-or fixed-period employment is contained in any of its
articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre,
it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof
Stipulations for a term were explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under
the Labor Code (PD 442), which went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment began to take place at
about this time.
Article 320 originally stated that the "termination of employment of probationary employees and
those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of
Labor may prescribe." Article 321 prescribed the just causes for which an employer could
terminate "an employment without a definite period." And Article 319 undertook to define
"employment without a fixed period" in the following manner: 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 service to be performed is seasonal in nature
and the employment is for the duration of the season.
Subsequently, the foregoing articles regarding employment with "a definite period" and "regular"
employment were amended by Presidential Decree No. 850, effective December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by
eliminating the reference to persons "employed with a fixed period," and was renumbered
(becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not
only fails to exhaust the gamut of employment contracts to which the lack of a fixed period
would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right
of an employee to freely stipulate with his employer the duration of his engagement, it logically
follows that such a literal interpretation should be eschewed or avoided. The law must be given a
reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept
of term employment and subverting to boot the principle of freedom of contract to remedy the
evil of employer's using it as a means to prevent their employees from obtaining security of
tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by
lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of
employment as still good rulea rule reaffirmed in the recent case of Escudero vs. Office of the
President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being
served by her school a notice of termination following the expiration of the last of three
successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment
was probationary, contractual in nature, and one with a definitive period. At the expiration of the
period stipulated in the contract, her appointment was deemed terminated and the letter
informing her of the non-renewal of her contract is not a condition sine qua non before Reyes
may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder
that Reyes' contract of employment was due to expire and that the contract would no longer be
renewed. It is not a letter of termination.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the

expiration of his last contract with Brent School on July 16, 1976 without the necessity of any
notice. The advance written advice given the Department of Labor with copy to said petitioner
was a mere reminder of the impending expiration of his contract, not a letter of termination, nor
an application for clearance to terminate which needed the approval of the Department of Labor
to make the termination of his services effective. In any case, such clearance should properly
have been given, not denied.

62.

PAKISTAN INTERNATIONAL AIRLINES vs. OPLE

FACTS:
On 2 December 1978, petitioner Pakistan International Airlines Corporation (PIA), a foreign
corporation licensed to do business in the Philippines, executed in Manila 2 separate contracts of
employment, one with private respondent Farrales and the other with private respondent
Mamasig. 1 The contracts, which became effective on 9 January 1979, provided in pertinent
portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of 3 years, but can be extended by the mutual consent of the
parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this
agreement at any time by giving the EMPLOYEE notice in writing in advance one month before
the intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent to one
months salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed under and by the laws of Pakistan, and only the
Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or
under this agreement.
Farrales & Mamasig (employees) were hired as flight attendants after undergoing training. Base
station was in Manila and flying assignments to different parts of the Middle East and Europe.
Roughly 1 year and 4 months prior to the expiration of the contracts of employment, PIA through
Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent separate letters,
informing them that they will be terminated effective September 1, 1980.
Farrales and Mamasig jointly instituted a complaint, for illegal dismissal and non-payment of
company benefits and bonuses, against PIA with the then Ministry of Labor and Employment
(MOLE).

PIAs Contention: The PIA submitted its position paper, but no evidence, and there claimed that
both private respondents were habitual absentees; that both were in the habit of bringing in from
abroad sizeable quantities of personal effects; and that PIA personnel at the Manila
International Airport had been discreetly warned by customs officials to advise private
respondents to discontinue that practice. PIA further claimed that the services of both private
respondents were terminated pursuant to the provisions of the employment contract.
Favorable decision for the respondents. The Order stated that private respondents had attained
the status of regular employees after they had rendered more than a year of continued service;
that the stipulation limiting the period of the employment contract to 3 years was null and void as
violative of the provisions of the Labor Code and its implementing rules and regulations on
regular and casual employment; and that the dismissal, having been carried out without the
requisite clearance from the MOLE, was illegal and entitled private respondents to reinstatement
with full backwages.
Decision sustained on appeal. Hence, this petition for certiorari
ISSUE: (Relative to the subject)
Which law should govern over the case? Which court has jurisdiction?
HELD:
Philippine Law and Philippine courts
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.
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.
the contract was not only executed in the Philippines, it was also performed here, at least
partially; private respondents are Philippine citizens and respondents, while petitioner, although a
foreign corporation, is licensed to do business (and actually doing business) and hence resident

in the Philippines; lastly, private respondents were based in the Philippines in between their
assigned flights to the Middle East and Europe. All the above contacts point to the Philippine
courts and administrative agencies as a proper forum for the resolution of contractual disputes
between the parties.
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.
Finally, and in any event, the petitioner PIA did not undertake to plead and prove the contents of
Pakistan law on the matter; it must therefore be presumed that the applicable provisions of the
law of Pakistan are the same as the applicable provisions of Philippine law.
[DOCTRINE OF PROCESSUAL PRESUMPTION, eh?]
Petition denied.

63.

Cielo vs. NLRC

Facts:
The petitioner is a truck driver who claims he was illegally dismissed by the private respondent,
the Henry Lei Trucking Company. Petitioner were made to sign an agreement with the private
respondent that they dont have an employer-employee relationship but in an affidavit that
petitioner is being forced to sign states that he received his salary and allowanced from the
private respondent. Upon refusal to sign, private respondent dismissed petitioner on the basis of
disrespect and insubordination.
Issue:
Whether or not petitioner was legally dismissed?
Held:
The private respondent's argument that the petitioner could at least be considered on probation
basis only and therefore separable at will is self-defeating. The Labor Code clearly provides as
follows: Art. 281. Probationary employment. Probationary employment shall not exceed six
(6) months from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee. There is no question that the
petitioner was not engaged as an apprentice, being already an experienced truck driver when he
began working for the private respondent. Neither has it been shown that he was informed at the
time of his employment of the reasonable standards under which he could qualify as a regular
employee. It is plain that the petitioner was hired at the outset as a regular employee. At any rate,
even assuming that the original employment was probationary, the Labor Arbiter found that the
petitioner had completed more than six month's service with the trucking company and so had
acquired the status of a regular employee at the time of his dismissal.
64.

PHILIPPINE VILLAGE HOTEL vs. NLRC

FACTS:
It appears on record that private respondents Juanito Acuin, Mamerta Mangubat, Raul Sonon,
Elgar Pemis, Orlando Paraguison, Ferdinand Velasco, Mike Astulero, Magno Decalso, Nenita
Orosea, Jose Timing, Antonio Manalili, Rodelio Queria and Reynaldo Santos were employees of
petitioner Philippine Village Hotel. However, on May 19, 1986, petitioner had to close and
totally discontinue its operations due to serious financial and business reverses resulting in the
termination of the services of its employees.
Thereafter, the Philippine Village Hotel Employees and Workers Union filed against petitioner a
complaint for separation pay, unfair labor practice and illegal lock-out.
On May 27, 1987, the Labor Arbiter issued and Order finding the losses suffered by petitioner to
be actual, genuine and of such magnitude as to validly terminate the services of private
respondents but directed petitioner "to give priority to the complainants (herein private
respondents) in [the] hiring of personnel should they resume their business operations in the
future." 2
On appeal, the NLRC affirmed the validity of the closure of petitioner but ordered petitioner to
pay private respondent separation pay at the rate of 1/2 month pay every year of service.
However, there is nothing in the records to show that private respondents received their
separation pay as the decision of the NLRC remained unenforced as of this date.
On February 1, 1989, petitioner decided to have a one (1) month dry-run operation to ascertain
the feasibility of resuming its business operations. In order to carry out its dry-run operation,
petitioner hired casual workers, including private respondents, for a one (1) month period, or
from February 1, 1989 to March 1, 1989, as evidenced by the latter's Contract of Employment. 3
After evaluating the individual performance of all the employees and upon the lapse of the
contractual one-month period or on March 2, 1989, petitioner terminated the services of private
respondents.

On April 6, 1989, private respondents and Tupas Local Chapter No. 1362 filed a complaint
against petitioner for illegal dismissal and unfair labor practice with the NLRC-NCR Arbitration
Branch in NLRC Case No. 00-04-01665-89.
On December 19, 1989, the Labor Arbiter rendered a decision, wherein the judgment was
hereby rendered dismissing the same.
Thereafter, private respondents appealed to the public respondent NLRC.
On November 7, 1991, public NLRC reversed the decision of the Labor Arbiter,
On March 5, 1992, petitioners Motion for Reconsideration was denied for lack of merit.
Hence, this petition
ISSUE:
Whether or not there is grave abuse of discretion on the part of the public respondent NLRC in
finding that private respondents are regular employees of petitioner considering that the latter's
services were already previously terminated in 1986 and that their employment contracts
specifically provided only for a temporary one-month period of employment.
HELD:
The petition is impressed with merit.
An examination of the contents of the private respondents' contracts of employment shows that
indeed private respondents voluntarily and knowingly agreed to be employed only for a period of
one (1) month or from February 1, 1989 to March 1, 1989.
In upholding the validity of a contract of employment with a fixed or specific period, we have
held 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 by the parties for the
commencement and termination of their employment relationship, a day certain being
understood to be that which must necessarily come, although it may not be known when. The

termperiod was further defined to be the length of existence; duration. A point of time marking a
termination as of a cause or an activity; an end, a limit, a bound; conclusion; termination. A
series of years, months or days in which something is completed. A time of definite length or the
period from one fixed date to another fixed date. This ruling is only in consonance with Article
280 of the Labor Code which provides:.
Inasmuch as private respondents' contracts of employment categorically provided a fixed period
and their termination had already been agreed upon at the time of their engagement, private
respondents' employment was one with a specific period or day certain agreed upon by the
parties.
As can be gleaned from the said case (Brent School, Inc. vs. Zamora, 181 SCRA 702), the two
guidelines by which fixed contracts of employments can be said NOT to circumvent security of
tenure, are either:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties,
without any force, duress or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former on the latter."
In the instant case, private respondents were validly terminated by the petitioner when the latter
had to close its business due to financial losses. Following the directives of the NLRC to give
priority in hiring private respondents should it resume its business, petitioner hired private
respondents during their one (1) month dry-run operation. However, this does not mean that
private respondents were deemed to have continued their regular employment status, which they
had enjoyed before their aforementioned termination due to petitioner's financial losses.
WHEREFORE, this petition for certiorari is GRANTED and the questioned of the public
respondent NLRC is hereby SET ASIDE thereby dismissing the complaint against petitioner.

65.

VIOLETA V NLRC

FACTS:
Petitioner Violeta worked in Construction and Development Corporation of the Philippines
(CDCP), a sister corporation of private respondent, at its project in CDCP Mines, Basay, Negros
Oriental from December 15, 1980 up to February 15, 1981. Private respondent then hired him as
Erector II at the formers project for Philphos in Isabel, Leyte on November 10, 1982 until the
termination of the project on December 3, 1984. On January 21, 1985, he was reassigned as
Erector II for Five Stand TCM Project, with vacation and sick leaves, and was designated as a
regular project employee at private respondents project for National Steel Corporation (NSC) in
Iligan City. After receiving a salary adjustment, he was again hired on June 6, 1989 as
Handyman for the civil works of a construction project for NSC,
On February 10, 1992, he was appointed for project employment, again as Handyman, to NSC
ETL #3 Civil Works by private respondent. Due to the completion of the particular item of work
he was assigned to, private respondent terminated the services of petitioner Violeta on March 15,
1992.
Petitioner Baltazar started in the employ of CDCP. Like petitioner Violeta, he was transferred
from one project to another as a regular project employee. [3] On November 28, 1991, he was
hired as Leadman II in ETL #3 Civil Works by private respondent in its project for NSC, but he
was separated from such employment on December 20, 1991 as a result of the completion of said
item of work.
Upon their separation, petitioners executed a quitclaim wherein they declared that they have no
claim against private respondent and supposedly discharged private respondent from any liability
arising from their employment.
Contending that they are already regular employees who cannot be dismissed on the ground of
completion of the particular project where they are engaged, petitioners filed two separate
complaints for illegal dismissal against private respondent, with a prayer for reinstatement and
back wages plus damages.
ISSUE: whether petitioners are regular (non-project) employees or project employees

HELD:
The source of the definition of a regular employee vis--vis a project employee is found in 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 beenfixed 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
service to be performed is seasonal in nature and the employment is for the duration of the
season.
An employee 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. (Emphases
ours).
Article 280 was emplaced in our statute books to prevent the circumvention of the employees
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. [12] 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
The principal test for determining whether particular employees are properly characterized as
project employees, as distinguished from regular employees, is whether or not the project
employees were assigned to carry out a specific project or undertaking, the duration (and scope)
of which were specified at the time the employees were engaged for that project. As defined,
project employees are those workers hired (1) for a specific project or undertaking, and (2) the
completion or termination of such project or undertaking has been determined at the time of
engagement of the employee.

Based on the above criteria, we find petitioners to be regular employees of private respondent,
and not project employees as postulated by respondent NLRC. Petitioners dismissal, therefore,
could not be justified by the completion of their items of work.
The predetermination of the duration or period of a project employment is important in resolving
whether one is a project employee or not. On this score, the term period has been defined to be a
length of existence; duration. A point of time marking a termination as of a cause or an activity;
an end, a limit, a bound; conclusion; termination. A series of years, months or days in which
something is completed. A time of definite length or the period from one fixed date to another
fixed date.[

66.

CHUA TEE DEE VS. CA

Facts:
J.C. Agricom Development Corporation, Inc. (Agricom), is the owner of a rubber plantation
located at Davao City. Agricom planned to lease the plantation. Chua Tee Dee, married to Amado
Dee, is a businesswoman doing business under the name of Pioneer Enterprises (Pioneer).
Manuel G. Alba, the president of Agricom, had a business meeting in Davao City with Amado
Dee where they discussed the possibility of leasing the rubber plantation to Chua Tee
Dee/Pioneer.
A contract of lease was entered into by Agricom, represented by Alba, and Chua Tee Dee doing
business under the name and style Pioneer. Lillian Carriedo, a stockholder of Agricom, also
signed the contract. Thereafter, Alba informed the employees of the rubber plantation of the
impending termination of their employment due to the companys contract of lease with Chua
Tee Dee. The employees were told that they would be given separation pay. On June 3, 1985,
Amado Dee delivered the amount of Php 270,000.00 to the Spouses Alba as deposit for the lease.
In the meantime, Agricom sent letters to the said employees, confirming the termination of their
employment and informing of their separation pay. The severed employees filed a complaint for
illegal dismissal and unfair labor practice against Agricom, Amado Dee and Pioneer. The labor
arbiter rendered his decision holding that the termination of the complainants employment was
illegal, but the complaint for unfair labor practice was dismissed for lack of merit. On May 24,
1990, the counsel of the Carriedo heirs, the stockholders-owners of Agricom, sent a telegraphic
note to Amado Dee demanding payment of long overdue rentals. Pioneer sent a letter to Agricom
complaining of facts and events which disrupted its operations in the plantation. Pioneer claimed
that it was dragged into labor disputes not of its own making and complained of being pestered
by some individuals who claimed portions of the plantation as their own property. Some of them
went to its office and even presented tax declarations to prove their claims. Agricom informed
Pioneer that, after due investigation, it concluded that the latters complaints were unfounded. It
also demanded the payment of back rentals for June, July and August 1990.
As Pioneer was unable to pay its monthly rentals, Agricom filed, on September 4, 1990, a civil
action for sum of money, damages and attorneys fees against Chua Tee Dee. In her Answer,
Chua Tee Dee asserted that Agricom had no cause of action against her. She claimed that it was

Agricom which failed to comply with the terms and conditions of the contract of lease when it
failed to settle the labor dispute with its former employees, and that Agricom failed to maintain
her in the quiet and peaceful possession and enjoyment of the leased premises during the
effectivity of the lease contract. The RTC rendered judgment dismissing the complaint and
declaring the lease contract terminated for failure of Agricom to implement the terms thereof.
Agricom then filed a Motion for Reconsideration, which was granted by the RTC. Judgment was
rendered ordering Chua Tee Dee to pay to Agricom several amounts due as back rentals,
including the first 3 years of the lease. The CA affirmed the order of the lower court, with
modification as to the award of attorneys fees. Hence, this petition filed by Chua Tee Dee.
Issue:
Did Agricom fail to maintain Chua Tee Dee in a quiet and peaceful enjoyment of the leased
premises?
Ruling:
The Supreme Court held that Agricom did not deprived Chua Tee Dee of the quiet and peaceful
enjoyment of the leased premises. As lessor, Agricom had the duty to maintain Chua Tee Dee in
the peaceful and adequate enjoyment of the leased premises. Such duty was made as part of the
contract of lease entered into by the parties. Even if it had not been so, the lessor is still dutybound under Art.1654of the Civil Code. The duty to maintain the lessee in the peaceful and
adequate enjoyment of the lease for the duration of the contract mentioned in No. 3 of the
article is merely a warranty that the lessee shall not be disturbed in his legal, and not physical,
possession. In the case at bar, Chua Tee Dee claims that several people presented tax declarations
to her and claimed some portions of the leased premises. However, no case was filed by any of
the said claimants against her or her lessor during the time she occupied the premises.
Patently, then, Chua Tee Dee had not been disturbed in her legal possession of the property in
derogation of Article 1654 of the New Civil Code. When Chua Tee Dees representative saw that
a portion of the leased premises was being fenced by the claimants, she had all the right to sue
the intruders who had disturbed her physical possession as provided for in Article 1654 of the
New Civil Code. However, the petitioner did not file any suit against any of the claimants. Thus,
it cannot be said that Agricom violated the contract of lease Chua Tee Dee failed to prove that

she suffered any loss from the labor case that was filed against her enterprise and her husband.
True, the labor case was instituted during the effectivity of the lease contract until the case was
finally resolved on August 22, 1986. Surprisingly, however, during the interregnum, appellant
regularly paid the monthly rentals for the years 1985 to 1989. It was after the labor case has been
resolved that appellant started to fail to pay her rentals, strongly indicating that the labor case has
not dampened her peaceful and adequate possession of the leased premises. The NLRC case did
not deter the continuance of the possession and occupation of the leased premises. In sum, then,
the petitioner failed to prove that the private respondent breached any of the provisions of the
contract of lease.
Thus, the petitioner had no valid reason to suspend the payment of rentals under Art. 1658 Chua
Tee Dees obligation to pay back rentals should cover only the period of July 1990until the time
that she vacated the leased premises. The CA, thus, erred when it affirmed the order of the trial
court ordering the petitioner to pay back rentals, including the first three (3) years of the lease, as
that period had already been paid by the petitioner. The petitioner should also be credited for the
amount of Php 270,000.00 she paid to the private respondent as deposit for the lease.

67.

CARTAGENAS V. ROMAGO ELECTRIC COMPANY

FACTS:
Respondent Romago is a general contractor engaged in contracting and sub-contracting of
specific building construction projects or undertaking such as electrical, mechanical and civil
engineering aspects in the repair of buildings and from other kindred services.2.Individual
complainants and Lawrence Deguit were temporarily laid-off by virtue of a memorandum issued
by the respondent. In said memorandum they were also informed that a meeting regarding the
resumption of operation will be held on July16, 1986 and that they will be notified as to when
they will resume work.3.On July 28, 1986, complainants filed the instant case for illegal
dismissal but before the respondent could receive a copy of the complaint and the notification
and summons issued by the NLRC National Capital Region (actually received only on August
22, 1986, page 4, records) individual complainants re-applied with the respondent and were
assigned to work with its project at Robinson-EDSA.
ISSUE:
Whether the petitioners are project employees of the private respondent Romago Electric
Company, Inc., as found by the National Labor Relations Commission, or regular employees as
found by the Labor Arbiter.
HELD:
As an electrical contractor, the private respondent depends for its business on the contracts it is
able to obtain from real estate developers and builders of buildings. Since its work depends on
the availability of such contracts or "projects," necessarily the duration of the employment of its
work force is not permanent but co-terminus with the projects to which they are assigned and
from whose payrolls they are paid. It would be extremely burdensome for their employer who,
like them, depends on the availability of projects, if it would have to carry them as permanent
employees and pay them wages even if there are no projects for them to work on. We hold,
therefore, that the NLR did not abuse its discretion in finding, based on substantial evidence in
the records, that the petitioners are only project workers of the private respondent

68.

FERNANDEZ vs. NATIONAL LABOR RELATIONS COMMISSION

FACTS:
Petitioners, who are employees of private respondent Agencia Cebuana-H. Lhuillier and/or
Margueritte Lhuillier, filed a complaint before Dept. of Labor for illegal dismissal and payment
of backwages when the latter denied them their demand to increase their salaries and
subsequently terminated their employment.
Labor Arbiter favored petitioners but NLRC vacated the labor arbiters order. MR denied. Hence,
this petition.
In her opinion, SG recommended that the labor arbiters decision be reinstated substantially, that
the award of service incentive leave be limited to three years. This is based on Article 291 of the
Labor

Code

which

provides:

ART. 291. Money Claims. All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the time the
cause of action accrued; otherwise they shall be forever barred.
SC ruled that the petitioners, except Lim and Canonigo,were illegally dismissed so it had to rule
now on the money claims.
ISSUE:
WON the claim for service incentive leaves may be limited to a certain number of
years.
HELD:
No. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that every
employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
To limit the award to three years is to unduly restrict such right. The law does not prohibit its
commutation.

SGs recommendation is contrary to the ruling of the Court in Bustamante et al. vs. NLRC et al.
lifting the three-year restriction on the amount of backwages and other allowances that may be
awarded an illegally dismissed employee, thus: Therefore, in accordance with R.A. No. 6715,
petitioners are entitled to their full backwages, inclusive of allowances and other benefits or their
monetary equivalent, from the time their actual compensation was withheld from them up to the
time of their actual reinstatement.
Notes:
*** Implementing Rules clearly state that entitlement to benefit provided under this Rule shall
start December 16, 1975, the date the amendatory provision of the [Labor] Code took
effect.Hence, petitioners, except Lim and Canonigo, should be entitled to service incentive
leave pay from December 16, 1975 up to their actual reinstatement.
***Full backwages, including the accrued thirteenth month pay, are also awarded to the nine
petitioners from the date of their illegal dismissal to the time of their actual reinstatement

69.

ALU-TUCP vs. NLRC and NSC

FACTS:
Petitioners, as employees of private respondent National Steel Corporation (NSC), filed separate
complaints for unfair labor practice, regularization and monetary benefits with the NLRC, SubRegional Arbitration Branch XII, Iligan City. The complaints were consolidated and after
hearing, the Labor Arbiter declared petitioners regular project employees who shall continue
their employment as such for as long as such [project] activity exists, but entitled to the salary
of a regular employee pursuant to the provisions in the collective bargaining agreement. It also
ordered payment of salary differentials.
The NLRC in its questioned resolutions modified the Labor Arbiters decision. It affirmed the
Labor Arbiters holding that petitioners were project employees since they were hired to perform
work in a specific undertaking the Five Years Expansion Program, the completion of which
had been determined at the time of their engagement and which operation was not directly
related to the business of steel manufacturing. The NLRC, however, set aside the award to
petitioners of the same benefits enjoyed by regular employees for lack of legal and factual basis.
The law on the matter is Article 280 of the Labor Code, where the petitioners argue that they are
regular employees of NSC because: (i) their jobs are necessary, desirable and work-related to
private respondents main business, steel-making; and (ii) they have rendered service for six (6)
or more years to private respondent NSC.
ISSUE:
Whether or not petitioners are considered permanent employees as opposed to being only
project employees of NSC.
HELD:
NO. Petition for Certiorari dismissed for lack of merit. NLRC Resolutions affirmed.
RATIO:

Function of the proviso. Petitioners are not considered permanent employees. However,
contrary to petitioners apprehensions, the designation of named employees as project
employees and their assignment to a specific project are effected and implemented in good
faith, and not merely as a means of evading otherwise applicable requirements of labor laws.
On the claim that petitioners service to NSC of more than six (6) years should qualify them as
regular employees, the Supreme Court believed this claim is without legal basis. The simple
fact that the employment of petitioners as project employees had gone beyond one (1) year, does
not detract from, or legally dissolve, their status as project employees. The second paragraph
of Article 280 of the Labor Code, quoted above, providing that an employee who has served for
at least one (1) year, shall be considered a regular employee, relates to casual employees, not to
project employees.

70.

Mercado v. NLRC

Facts:
Petitioners were agricultural workers for a sugar plantation. Their employment with the private
respondent was seasonal which means their services are usually utilized during the planting
season and during harvest season of sugar cane. Petitioners filed a complaint for illegal
dismissal, underpayment of wages, nonpayment of overtime pay, holiday pay, service incentive
leave benefits, emergency cost of living allowances and 13th month pay against private
respondents.
Petitioners alleged in their complaint that they were agricultural workers utilized by private
respondents in all the agricultural phases of work on the sugar land of the respondents and that
they worked in the farm since 1949 to 1979.
Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said
petitioners were her regular employees and instead averred that she engaged their services,
through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons
who take charge in supplying the number of workers needed by owners of various farms, but
only to do a particular phase of agricultural work necessary in rice production and/or sugar cane
production, after which they would be free to render services to other farm owners who need
their services.
Petitioners submit that it would be unjust, if not unlawful, to consider them as casual workers
since they have been doing all phases of agricultural work for so many years, activities which are
undeniably necessary, desirable and indispensable in the rice and sugar cane production business
of the private respondents citing Art. 280 of the Labor Code specifically on paragraph 2. 5
The Labor Arbiter, as affirmed by the NLRC, ruled in favor of private respondents and held that
petitioners were not regular and permanent workers of the private respondents, for the nature of
the terms and conditions of their hiring reveal that they were required to perform phases of
agricultural work for a definite period of time after which their services would be available to
any other farm owner.

Issue: Whether or not petitioners are regular and permanent farm workers and therefore entitled
to the benefits which they pray for?
Held:
The Court held, petitioners contention that the provision in the second paragraph of Art. 280
applicability to their case and should have been considered as regular employees by virtue of
said provision is without merit. The first paragraph of Art. 280 of the Labor Code answered the
question of who are employees. It states that, regardless of any written or oral agreement to the
contrary, an employee is deemed regular where he is engaged in necessary or desirable activities
in the usual business or trade of the employer, except for project employees. A project employee
has been defined to be one whose 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 service to be performed is seasonal in nature
and the employment is for the duration of the season as in the present case. The second
paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan
under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as
regular employees those "casual" employees who have rendered at least one year of service
regardless of the fact that such service may be continuous or broken. The general rule is that a
provision is to qualify or modify only the phrase immediately preceding it or restrain or limit the
generality of the clause that it immediately follows. Thus, it has been held that a provision is to
be construed with reference to the immediately preceding part of the provision to which it is
attached, and not to the statute itself or to other sections thereof. The only exception to this rule
is where the clear legislative intent is to restrain or qualify not only the phrase immediately
preceding it but also earlier provisions of the statute or even the statute itself as a whole. Clearly,
therefore, petitioners being project employees, or, to use the correct term, seasonal employees,
their employment legally ends upon completion of the project or the season. The termination of
their employment cannot and should not constitute an illegal dismissal.

71.

Hacienda Fatima v. NFSW Food

Facts:
The petitioner disfavored the fact that the private respondent employees have formed a union.
When the union became the collective bargaining representative in the certification election, the
petitioner refused to sit down to negotiate a CBA. Moreover, the respondents were not given
work for a month amounting to unjustified dismissal. As a result, the complainants staged a
strike to protest but was settled through a memorandum of agreement which contained a list of
those considered as regular employees for the payroll.
The NLRC held that there was illegal dismissal and this was affirmed by the Court of Appeals.
Issue: W/N the employees are regular workers
HELD:
Yes, they are regular and not seasonal employees. For them to be excluded as regulars, it is not
enough that they perform work that is seasonal in nature but they also are employed for the
duration of one season. The evidence only proved the first but not the second requirement.
The ruling in Mercado v. NLRC is not applicable since in that case, the workers were merely
required to perform phases of agricultural work for a definite period of time, after which, their
services are available to other employers. The management's sudden change of assignment reeks
of bad faith, it is likewise guilty of ULP.

72. VASSAR INDUSTRIAL EMPLOYEES UNION V ESTRELLA


FACTS:
There was in existence a collective bargaining agreement between private respondents
Associated Labor Unions and Vassar Industries, Inc. which expired on May 15, 1977. Prior to
such date, 111 of a total number of 150 employees of such firm disaffiliated from the former
labor organization and formed their own union. Thereafter, they filed an application for
registration of their union with the Bureau of Labor Relations, complying with an the
requirements of both the Labor Code and its implementing regulations. While such application
was pending, petitioner Union filed a petition for certification as bargaining agent for the rankand-file employees of the company.
The Med-Arbiter, on May 24, 1977, denied their plea on the ground that the union was not duly
registered with the Department of Labor. Then came a motion for reconsideration praying that
the dismissal be set aside until action be taken on its pending application for registration. On July
5, 1977, respondent Estrella, then Acting Director of the Bureau of Labor Relations, denied, as
previously noted, the application for registration "on the ground that there is a registered
collective bargaining agent in the company."
Hence this petition. It should also be noted that there is this submission in the comment of the
then Acting Solicitor General Vicente V. Mendoza: "It may not be amiss to mention herein that
before filing the instant comment, prior consultation was made with Director Carmelo C. Noriel
of the Bureau of Labor Relations, and he shares our view on the matter leaving it to the
undersigned to make the appropriate recommendation in the premises to this Honorable Court."
ISSUE: won the director of bureau of labor relations erred in denying the application on the
ground that there is already a registered collective bargaining agent in the company.
HELD:

The petition, to repeat, is impressed with merit. certiorari lies.


"Employees shall have the right to self-organization and to form, join or assist labor
organizations of their own choosing for the purpose of collective bargaining through
representatives of their own choosing and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection." The new Labor Code is equally explicit
on the matter. Thus: "The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure and just and humane conditions of work."
It is quite obvious that when the two parties entered into such a collective bargaining agreement,
such a move was motivated by the desire to impart a moot and academic aspect to this petition. It
should not therefore elicit the approval of this Court, especially so as upon the expiration oil the
collective contract, it is made "the duty of both parties to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement during the sixty-day
period and/or until a new agreement is reached by the parties." 16 With a pending petition for
certification, any such agreement entered into by management with a labor organization is
fraught with the risk that such a labor union may not be chosen thereafter as the collective
bargaining representative. That is the situation that is confronted by private respondents. Any
other view would render nugatory the clear statutory policy to favor certification election as the
means of ascertaining a true expression of the will of the workers as to which labor organization
would represent them.

73.
TROPICAL HUT EMPLOYEES UNION-CGW vs. TROPICAL HUT FOOD
MARKET, INC.

FACTS:
January 2, 1968, the rank and file workers of the Tropical Hut Food Market Incorporated,
referred to herein as respondent company, organized a local union called the Tropical Hut
Employees Union, known for short as the THEU, elected their officers, adopted their constitution
and by-laws and immediately sought affiliation with the National Association of Trade Unions
(NATU). On January 3, 1968, the NATU accepted the THEU application for affiliation.
Following such affiliation with NATU, Registration Certificate No. 5544-IP was issued by the
Department of Labor in the name of the Tropical Hut Employees Union NATU. It appears,
however, that NATU itself as a labor federation, was not registered with the Department of
Labor.
Collective Bargaining Agreement was concluded between the parties on April 1, 1968, the term
of which expired on March 31, 1971.
Sec. 1. The COMPANY recognizes the UNION as the sole and exclusive collective bargaining
agent for all its workers and employees in all matters concerning wages, hours of work, and other
terms and conditions of employment.
Sec. 1 . . . Employees who are already members of the UNION at the time of the signing of
this Agreement or who become so thereafter shall be required to maintain their membership
therein as a conditionof continued employment. xxx
Sec. 3Any employee who is expelled from the UNION for joining another federation or
forming another union, or who fails or refuses to maintain his membership therein as required, . .
. shall, upon written request of the UNION be discharged by the COMPANY.

May 21, 1971, respondent company and THEU-NATU entered into a new Collective Bargaining
Agreement which ended on March 31, 1974. This new CBA incorporated the previous unionshop security clause and the attached checkoff authorization form.
NATU received a letter dated December 15, 1973, jointly signed by the incumbent officers of the
local union informing the NATU that THEU was disaffiliating from the NATU federation.
Secretary of the THEU, Nemesio Barro, made an announcement in an open letter to the general
membership of the THEU, concerning the latters disaffiliation from the NATU and its affiliation
with the Confederation of General Workers (CGW). The letter was passed around among the
members of the THEU-NATU, to which around one hundred and thirtyseven (137) signatures
appeared as having given their consent to and acknowledgment of the decision to disaffiliate the
THEU from the NATU.
so-called THEU-CGW held its annual election of officers, with Jose Encinas elected as
President. On January 3, 1974, Encinas, in his capacity as THEU-CGW President, informed the
respondent company of the result of the elections. On January 9, 1974, Pacifico Rosal, President
of the Confederation of General Workers (CGW), wrote a letter in behalf of complainant THEUCGWto the respondent company demanding the remittance of the union dues collected by the
Tropical Hut Food Mart, Incorporated to the THEU-CGW, but this was refused by the
respondent company.
request made by the NATU federation to the respondent company to dismiss him (Encinas) in
view of his violation of Section 3 of Article III of the Collective Bargaining Agreement.
request of NATU, respondent company applied for clearance with the Secretary of Labor to
dismiss the other officers and members of THEU-CGW. The company also suspended them
effective that day. NLRC Case No. LR-2521 was filed by THEU-CGW and individual
complainants against private respondents for unfair labor practices.
acting as temporary chairman, presided over the election of officers of the remaining THEUNATU in an emergency meeting pending the holding of a special election to be called at a later
date.
THEU-CGW asked the employees to affirm their membership. Some did not abidenso theybwere
informed that they will be dismissed under the CBA.

President/General Manager of respondent company, upon Dilags request, suspended twenty four
(24) workers on March 5, 1974,another thirty seven (37) on March 8, 1974 and two (2) more on
March 11, 1974, pending approval by the Secretary of Labor of the application for their
dismissal.
Labor Arbiter, Arbitrator Daniel Lucas issued an orderdated March 21, 1974, holding that the
issues raised by the parties became moot and academic with the issuance of NLRC Order dated
February 25, 1974 in NLRC Case No. LR-2670, which directed the holding of a certification
election among the rank and file workers of the respondent company between the THEU-NATU
and THEUCGW. He also ordered: a) the reinstatement of all complainants; b) for the respondent
company to cease and desist from committing further acts of dismissals without previous order
from the NLRC and for the complainant Tropical Hut Employees UNION-CGW to file
representation cases on a case to case basis during the freedom period provided for by the
existing CBA between the parties.
NLRC reversed the decision. Secretary of Labor rendered a decision affirming the findings of the
Commission.
ISSUE:
1) whether or not the petitioners failed to exhaust administrative remedies when they
immediately elevated the case to this Court without an appeal having been made to the Office of
the President;
2) whether or not the disaffiliation of the local union from the national federation was valid; and
3) whether or not the dismissal of petitioner employees resulting from their unions disaffiliation
for the mother federation was illegal and constituted unfair labor practice on the part of
respondent company and federation
HELD:
1)

remedy of appeal from the Secretary of Labor to the Office of the President is not a
mandatory requirement before resort to courts can be had, but an optional relief provided by
law to parties seeking expeditious disposition of their labor disputes. Failure to avail of such
relief shall not in any way served as an impediment to judicial intervention. And where the
issue is lack of power or arbitrary or improvident exercise thereof, decisions of the Secretary
of Labor may be questioned in a certiorari proceeding without prior appeal to the President.

2) local union, being a separate and voluntary association, is free to serve the interest of all its
members including the freedom to disaffiliate when circumstances warrant. This right is
consistent with the constitutional guarantee of freedom of association. All employees enjoy
the right to self organization and to form and join labor organizations of their own choosing
for the purpose of collective bargaining and to engage in concerted activities for their mutual
aid or protection. This is a fundamental right of labor that derives its existence from the
Constitution.
The inclusion of the word NATU after the name of the local union THEU in the registration
with the Department of Labor is merely to stress that the THEU is NATUs affiliate at the
time of the registration. It does not mean that the said local union cannot stand on its own.
Neither can it be interpreted to mean that it cannot pursue its own interests independently of
the federation. A local union owes its creation and continued existence to the will of its
members and not to the federation to which it belongs. When the local union withdrew from
the old federation to join a new federation, it was merely exercising its primary right to labor
organization for the effective enhancement and protection of common interests. In the
absence of enforceable provisions in the federations constitution preventing disaffiliation of
a local union a local may sever its relationship with its parent. Nothing in the constitution
and by laws of THEU NATU, prohibits the disaffiliation from NATU. Besides NATU is not
even recognized as a national federation.
3) When the THEU disaffiliated from its mother federation, the former did not lose its legal
personality as the bargaining union under the CBA. Moreover, the union security clause
embodied in the agreements cannot be used to justify the dismissals meted to petitioners
since it is not applicable to the circumstances obtaining in this case. The CBA imposes
dismissal only in case an employee is expelled from the union for joining another federation
or for forming another union or who fails or refuses to maintain membership therein. The
case at bar does not involve the withdrawal of merely some employees from the union but of
the whole THEU itself from its federation. Clearly, since there is no violation of the union
security provision in theCBA, there was no sufficient ground to terminate the employment of
petitioners.

74.

Rance vs. N.L.R.C.

FACTS:
A close shop agreement was established in the C.B.A. between the parties. One of the grounds
for dismissal is loyalty. Petitioners herein were among the members of the respondent union who
were expelled by the latter for disloyalty in that they allegedly joined the NAFLU a large
federation. Because of the expulsion, petitioners were dismissed by respondent Corporation.
Petitioners sued for reinstatement and backwages stating their dismissal was without due
process. Losing both in the decisions of the Labor Arbiter and the National Labor Relations
Commission (NLRC), they elevated their cause to the Supreme Court.
Respondent Polybag Workers Union as already stated expelled 125 members on the ground of
disloyalty and acts inimical to the interests of the Union (Resolution No. 84, series of 1982,
Rollo, p. 16) based on the findings and recommendations of the panel of investigators. Both the
Labor Arbiter and the NLRC found the Collective Bargaining Agreement and the "Union
Security Clause" valid and considered the termination of the petitioners justified thereunder, for
having committed an act of disloyalty to the Polybag Workers Union by having affiliated with
and having joined the NAFLU, another labor union claiming jurisdiction similar to the former,
while still members of respondent union

ISSUE:
Whether or not the dismissal is proper?
RULLING:

NO. In any event, even if petitioners who were complainants in NLRC-AB Case No. 6-4275-82
appeared in the supposed investigation proceedings to answer the charge of disloyalty against
them, it could not have altered the fact that the proceedings were violative of the elementary rule
of justice and fair play. The Board of Directors of respondent union would have acted as
prosecutor, investigator and judge at the same time. The proceeding would have been a farce
under the circumstances (Lit Employees Association v. Court of Industrial Relations, 116 SCRA
459 [1982] citing Kapisanan ng Mga Manggagawa sa MRR v. Rafael Hernandez, 20 SCRA 109).
The filing of the charge of disloyalty against petitioners was instigated by the Chairman of the
Board of Directors and Acting Union President, Ponciano Fernandez, in the special meeting of
the members of the Board of Directors as convened by the Union President on August 16, 1982
(Rollo, p. 213). The Panel of Investigators created under the Board's Resolution No. 83, s. 1982
was composed of the Chairman of the Board, Ponciano Fernandez, and two (2) members of the
Board, Samson Yap and Carmen Garcia (Rollo, p. 214). It is the same Board that expelled its 125
members in its Resolution No. 84, s. of 1982 (Rollo, p. 219).
All told, it is obvious, that in the absence of any full blown investigation of the expelled
members of the Union by an impartial body, there is no basis for respondent Union's accusations.
It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec.
3 of the New Constitution, Section 9, Article II of the 1973 Constitution). The guarantee is an act
of social justice. When a person has no property, his job may possibly be his only possession or
means of livelihood. Therefore, he should be protected against any arbitrary deprivation of his
job. Article 280 of the Labor Code has construed security of tenure as meaning that "the
employer shall not terminate the services of an employee except for a just cause or when
authorized by" the code (Bundoc v. People's Bank and Trust Company, 103 SCRA 599 [1981]).
Dismissal is not justified for being arbitrary where the workers were denied due process (Reyes
v. Philippine Duplicators, Inc., 109 SCRA 489 [1981] and a clear denial of due process, or
constitutional right must be safeguarded against at all times, (De Leon v. National Labor
Relations Commission, 100 SCRA 691 [1980]). This is especially true in the case at bar where
there were 125 workers mostly heads or sole breadwinners of their respective families.

Time and again, this Court has reminded employers that while the power to dismiss is a normal
prerogative of the employer, the same is not without limitations. The employer is bound to
exercise caution in terminating the services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective Bargaining Agreement, as in the instant
case. Dismissals must not be arbitrary and capricious. Due process must be observed in
dismissing an employee because it affects not only his position but also his means of livelihood.
Employers should, therefore, respect and protect the rights of their employees, which include the
right to labor

75.

Sampang vs. Inciong

FACTS:
Natividad Sampang has been working for the Yebana company for 31 years. Upon the request of
the members of the union, Sampang as the president of the union, sent a letter for cut off of the
overtime work. However, it was unheeded. On January 12, 1978, the members of the union
conducted a strike from night until the next day which caused loss of profits for the company in
the amount of P2, 761.00. The company then dismissed petitioner Sampang on the ground that
she instigated the said strike.
ISSUE:
Whether or not the dismissal is proper?
RULING:
NO. The first decision interpreting the security of tenure provision is Philippine Air Lines, Inc.
v. Philippine Air Lines Employees Association. After referring to the aforesaid security of tenure
provision in the present Constitution, the opinion of the Court went on to state: 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, ... 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. This is not to say that dismissal for cause is now outlawed. No such
thing is intimated in this opinion. It is merely to stress that where respondent Court of Industrial
Relations, in the fight 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.
It would imply at the very least that where a penalty less punitive would suffice, whatever
missteps may be committed by labor ought not to be visited with a consequence so severe. It is
not only because of the law's concern for the workingman. There is, in addition, his family to
consider. Unemployment brings untold hardships and sorrows on those dependent on the wageearner. The misery and pain attendant on the loss of jobs then could be avoided if there be

acceptance of the view that under all the circumstances of this case, petitioners should not be
deprived of their means of livelihood.
In the recent case of Bustillos v. Inciong, it was held that petitioner, who had been employed by
private respondent for eighteen years ought not to have been dismissed and that a two-year
suspension would suffice. The opinion likewise noted: "The length of service was accorded due
consideration in decisions of this Tribunal ordering reinstatement, twenty years in De Leon v.
National Labor Relations Commission and Reyes v. Philippine Duplicators and twenty-two years
in Union of Supervisors v. Secretary of labor." How then justify a dismissal in this case.
Considering all the circumstances, even a two-year period of suspension might be considered
excessive.
It is thus evident that the case could be decided without considering the points raised by counsel
for petitioner. It suffices to state that the competence of the Deputy Minister of Labor to pass
upon the appeal cannot be disputed. He acted by "authority of" the Minister of Labor. A more
extended inquiry into the factual aspects could have shed more light on the environmental
circumstances. Nonetheless, since the appealed decision could be set aside, there being a
violation of the security of tenure provision, the claim that; procedural due process was not
observed does not call for any further discussion, Suffice it to state that the motion for
reconsideration. not to mention the appeal, was curative in character as held by this Court in a
number of cases.

76. Philippine Skylanders Inc. vs. NLRC


FACTS:
Philippine Skylanders Employees Association PAFLU (PSEA PAFLU) won the certification
of election. Its rival union, PSEA WATU protested the said election. During the pendency of
the protest, PSEA disaffiliated from PAFLU and affiliated with National Congress of Workers
(PSEA NCW). PSEA NCW then entered into a C.B.A. with the company Philippine
Skylanders Inc. (PSI). Thereafter, the secretary general of PAFLU sent a request to PSI for its
audited financial statement but fell on deaf ears. Agitated by PSIs recognition of PSEA NCW,
PAFLU filed a case before the L.A. for unfair labor practice which was granted by it and was
affirmed by the N.L.R.C. Hence, this petition.
ISSUE:
Whether or not the disaffiliation of PSEA from PAFLU despite the pendency of the protest of
election is valid?

RULING:
YES. The right of a local union to disaffiliate from its mother federation is not a novel thesis
unillumined by case law. In the landmark case of Liberty Cotton Mills Workers Union vs. Liberty
Cotton Mills, Inc. we upheld the right of local unions to separate from their mother federation on
the ground that as separate and voluntary associations, local unions do not owe their creation and
existence to the national federation to which they are affiliated but, instead, to the will of their
members. The sole essence of affiliation is to increase, by collective action, the common
bargaining power of local unions for the effective enhancement and protection of their
interests. Admittedly, there are times when without succor and support local unions may find it
hard, unaided by other support groups, to secure justice for themselves.
Yet the local unions remain the basic units of association, free to serve their own interests subject
to the restraints imposed by the constitution and by-laws of the national federation, and free also
to renounce the affiliation upon the terms laid down in the agreement which brought such
affiliation into existence.

Such dictum has been punctiliously followed since then.


Upon an application of the aforecited principle to the issue at hand, the impropriety of the
questioned Decisions becomes clearly apparent. There is nothing shown in the records nor is it
claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the
federation nor were there any conditions imposed for a valid breakaway. As such, the pendency
of an election protest involving both the mother federation and the local union did not constitute
a bar to a valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the
120 members of the local union, or an equivalent of 92.5% of the total union membership
supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting any
complaint in their behalf. Surely, this is not a case where one (1) or two (2) members of the local
union decided to disaffiliate from the mother federation, but it is a case where almost all local
union members decided to disaffiliate.
Policy considerations dictate that in weighing the claims of a local union as against those of a
national federation, those of the former must be preferred. Parenthetically though, the desires of
the mother federation to protect its locals are not altogether to be shunned. It will however be to
err greatly against the Constitution if the desires of the federation would be favored over those of
its members. That, at any rate, is the policy of the law. For if it were otherwise, instead of
protection, there would be disregard and neglect of the lowly workingmen.

77.

UST Faculty Union vs. Bitonio

FACTS:
On September 21, 1996, Collantes, the Secretary General of the University of Santo Tomas
Faculty Union (USTFU) notified all the members of the union that there will be an election of
October 5, 1996 for the next set of officers of their union. It was also contained in the
notification that there was a COMELEC for the election. On October 1, 1996, the petitioners
filed a case before the Med arbiter for temporary restraining order of the election to be held on
October 5, 1996 contending that the COMELEC was not constituted in accordance with the
unions constitution and by laws (CBL). The T.R.O. was granted. On October 4, 1996, there
was a general assembly convened by the petitioners with other faculty members and faculty
members who are not members of the USTFU. The purpose of the assembly was for convocation
only. However, and despite the T.R.O. issued by the Med arbiter, an election was conducted
and the petitioners were elected. The private respondents then assailed the election contending
that the election violated their CBL. On the other hand, the petitioners contended that since there
has been a subsequent CBA between them and the UST, the issue on election has been rendered
moot and academic. The BLR adjudged in favour of private respondents. Hence, this petition.
ISSUE:
Whether or not the election that was conducted on October 4, 1996 is valid?
RULING:
NO. The constitutional right to self-organization is better understood in the context of ILO
Convention No. 87 (Freedom of Association and Protection of Right to Organize), to which the
Philippines is signatory. Article 3 of the Convention provides that workers' organizations shall
have the right to draw up their constitution and rules and to elect their representatives in full
freedom, free from any interference from public authorities. The freedom conferred by the
provision is expansive; the responsibility imposed on union members to respect the constitution
and rules they themselves draw up equally so. The point to be stressed is that the union's CBL is
the fundamental law that governs the relationship between and among the members of the union.
It is where the rights, duties and obligations, powers, functions and authority of the officers as

well as the members are defined. It is the organic law that determines the validity of acts done by
any officer or member of the union. Without respect for the CBL, a union as a democratic
institution degenerates into nothing more than a group of individuals governed by mob rule.
A union election is held pursuant to the union's constitution and bylaws, and the right to vote in it
is enjoyed only by union members. A union election should be distinguished from a certification
election, which is the process of determining, through secret ballot, the sole and exclusive
bargaining agent of the employees in the appropriate bargaining unit, for purposes of collective
bargaining. Specifically, the purpose of a certification election is to ascertain whether or not a
majority of the employees wish to be represented by a labor organization and, in the affirmative
case, by which particular labor organization.
In a certification election, all employees belonging to the appropriate bargaining unit can
vote. Therefore, a union member who likewise belongs to the appropriate bargaining unit is
entitled to vote in said election. However, the reverse is not always true; an employee belonging
to the appropriate bargaining unit but who is not a member of the union cannot vote in the union
election, unless otherwise authorized by the constitution and bylaws of the union. Verily, union
affairs and elections cannot be decided in a non-union activity.
In both elections, there are procedures to be followed. Thus, the October 4, 1996 election cannot
properly be called a union election, because the procedure laid down in the USTFU's CBL for the
election of officers was not followed. It could not have been a certification election either,
because representation was not the issue, and the proper procedure for such election was not
followed. The participation of non-union members in the election aggravated its irregularity.

78.

Victoriano vs. Elizalde

FACTS:
Benjamin Victoriano, a member of Iglesia ni Cristo, had been in the employe of Elizalde Rope
Factory Inc. and also a member of the Elizalde Workers union. The union had a close shop
agreement with the company. Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to
its amendment by Republic Act No. 3350, the employer was not precluded "from making an
agreement with a labor organization to require as a condition of employment membership
therein, if such labor organization is the representative of the employees." On June 18, 1961,
however, Republic Act No. 3350 was enacted, introducing an amendment to paragraph (4)
subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but such agreement shall not
cover members of any religious sects which prohibit affiliation of their members in any such
labor organization. As a member of INC, Victoriano presented his resignation in the union and in
September 3, 1974, he resigned therefrom. The union then wrote a demand letter to the company
recommending the dismissal of Victoriano pursuant to the close shop agreement. The company
dismissed Victoriano. Subsequently, Victoriano filed a case before the Court of First Instance
which was granted. Hence, this present recourse.
ISSUE:
Whether or not the amendment on Republic Act No. 3350 violates the right to self organization?
RULING:
NO. Employee to sign up with any association.
The right to refrain from joining labor organizations recognized by Section 3 of the Industrial
Peace Act is, however, limited. The legal protection granted to such right to refrain from joining
is withdrawn by operation of law, where a labor union and an employer have agreed on a closed
shop, by virtue of which the employer may employ only member of the collective bargaining
union, and the employees must continue to be members of the union for the duration of the
contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its
amendment by Republic Act No. 3350, provides that although it would be an unfair labor

practice for an employer "to discriminate in regard to hire or tenure of employment or any term
or condition of employment to encourage or discourage membership in any labor organization"
the employer is, however, not precluded "from making an agreement with a labor organization to
require as a condition of employment membership therein, if such labor organization is the
representative of the employees". By virtue, therefore, of a closed shop agreement, before the
enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes to
be employed or to keep his employment, he must become a member of the collective bargaining
union. Hence, the right of said employee not to join the labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350
introduced an exception, when it added to Section 4 (a) (4) of the Industrial Peace Act the
following proviso: "but such agreement shall not cover members of any religious sects which
prohibit affiliation of their members in any such labor organization". Republic Act No. 3350
merely excludes ipso jure from the application and coverage of the closed shop agreement the
employees belonging to any religious sects which prohibit affiliation of their members with any
labor organization. What the exception provides, therefore, is that members of said religious
sects cannot be compelled or coerced to join labor unions even when said unions have closed
shop agreements with the employers; that in spite of any closed shop agreement, members of
said religious sects cannot be refused employment or dismissed from their jobs on the sole
ground that they are not members of the collective bargaining union. It is clear, therefore, that the
assailed Act, far from infringing the constitutional provision on freedom of association, upholds
and reinforces it. It does not prohibit the members of said religious sects from affiliating with
labor unions. It still leaves to said members the liberty and the power to affiliate, or not to
affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said
religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to
their religious faith, they refuse to sign up, they can do so; the law does not coerce them to join;
neither does the law prohibit them from joining; and neither may the employer or labor union
compel them to join. Republic Act No. 3350, therefore, does not violate the constitutional
provision on freedom of association.

79.

Kapatiran sa Meat & Canning Division vs. Calleja

FACTS:
TUPAS local chapter (union) is a union which has a C.B.A. with Robina. After the expiration of
the C.B.A., it demanded a re negotiation of a new C.B.A. with Robina. They succeeded in re
negotiating a new CBA with Robina. On the other hand, NEW ULO (another union) composed
mostly of members of INC, claiming to have the majority status of the employee of Robina, filed
a certification of election before the BLR. TUPAS moved to dismiss the petition for being
defective in form and that the members of the NEW ULO were mostly members of the Iglesia ni
Kristo sect which three (3) years previous refused to affiliate with any labor union. It also
accused the company of using the NEW ULO to defeat TUPAS' bargaining rights. The med
arbiter dismiss the motion filed by TUPAS. TUPAS appealed before the BLR for the dismissal of
certification of election of NEW ULO but the BLR adjudged in favour of NEW ULO. Hence,
this petition.
ISSUE:
Whether or not the NEW ULO, composed mostly of INC, is prohibited from making a union?
RULING:
NO. After deliberating on the petition and the documents annexed thereto, We find no merit in
the Petition. The public respondent did not err in dismissing the petitioner's appeal in BLR Case
No. A-12-389-87. This Court's decision inVictoriano vs. Elizalde Rope Workers' Union, 59
SCRA 54, upholding the right of members of the IGLESIA NI KRISTO sect not to join a labor
union for being contrary to their religious beliefs, does not bar the members of that sect from
forming their own union. The public respondent correctly observed that the "recognition of the
tenets of the sect ... should not infringe on the basic right of self-organization granted by the
constitution to workers, regardless of religious affiliation."
The fact that TUPAS was able to negotiate a new CBA with ROBINA within the 60-day freedom
period of the existing CBA, does not foreclose the right of the rival union, NEW ULO, to
challenge TUPAS' claim to majority status, by filing a timely petition for certification election on

October 13, 1987 before TUPAS' old CBA expired on November 15, 1987 and before it signed a
new CBA with the company on December 3, 1987. As pointed out by Med-Arbiter Abdullah, a
"certification election is the best forum in ascertaining the majority status of the contending
unions wherein the workers themselves can freely choose their bargaining representative thru
secret ballot." Since it has not been shown that this order is tainted with unfairness, this Court
will not thwart the holding of a certification election.

80.

United Pepsi Cola vs. Laguesma

FACTS:
Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed
a petition for certification election on behalf of the route managers at Pepsi-Cola Products
Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the
Secretary of Labor and Employment, on the ground that the route managers are managerial
employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of
the Labor Code, which provides: Ineligibility of managerial employees to join any labor
organization; right of supervisory employees. Managerial employees are not eligible to join,
assist or form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own.
ISSUE:
1ST issue: Whether or not route managers are managerial employees?
2nd issue: Whether or not Art. 245, insofar as it prohibits managerial employees from forming,
joining or assisting labor unions, violates Art. III section 8 of the Constitution (Right to selforganize).
RULING:
1st issue: YES. Earlier in this opinion, reference was made to the distinction between
managers per se (top managers and middle managers) and supervisors (first-line managers). That
distinction is evident in the work of the route managers which sets them apart from supervisors
in general. Unlike supervisors who basically merely direct operating employees in line with set
tasks assigned to them, route managers are responsible for the success of the company's main
line of business through management of their respective sales teams. Such management
necessarily involves the planning, direction, operation and evaluation of their individual teams
and areas which the work of supervisors does not entail.
The route managers cannot thus possibly be classified as mere supervisors because their work
does not only involve, but goes far beyond, the simple direction or supervision of operating

employees to accomplish objectives set by those above them. They are not mere functionaries
with simple oversight functions but business administrators in their own right.
2nd issue: NO. Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban
against managerial employees forming a union. The right guaranteed in Art. III, 8 is subject to
the condition that its exercise should be for purposes "not contrary to law." In the case of Art.
245, there is a rational basis for prohibiting managerial employees from forming or joining labor
organizations. As Justice Davide, Jr., himself a constitutional commissioner, said in
his ponencia inPhilips Industrial Development, Inc. v. NLRC:31
In the first place, all these employees, with the exception of the service engineers and the sales
force personnel, are confidential employees. Their classification as such is not seriously disputed
by PEO-FFW; the five (5) previous CBAs between PIDI and PEO-FFW explicitly considered
them as confidential employees. By the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential matters of, persons who exercise
managerial functions in the field of labor relations. As such, the rationale behind the ineligibility
of managerial employees to form, assist or joint a labor union equally applies to them.
In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this rationale,
thus:
. . . The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the
latter might not be assured of their loyalty to the Union in view of evident
conflict of interests. The Union can also become company-dominated with
the presence of managerial employees in Union membership.32
To be sure, the Court in Philips Industrial was dealing with the right of confidential employees to
organize. But the same reason for denying them the right to organize justifies even more the ban
on managerial employees from forming unions. After all, those who qualify as top or middle
managers are executives who receive from their employers information that not only is
confidential but also is not generally available to the public, or to their competitors, or to other
employees. It is hardly necessary to point out that to say that the first sentence of Art. 245 is
unconstitutional would be to contradict the decision in that case.

81.

NATU RPB vs. Torres

FACTS:
On October 5, 1990, petitioner union filed before the Department of Labor and Employment
(DOLE) a Petition for Direct Certification or Certification Election among the supervisors and
exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and
Otis. On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with
Memorandum on Appeal, pointing out, among others, the Med-Arbiter's error in grouping
together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit,
and in including supervisory levels 3 and above whose positions are confidential in nature.
Undersecretary Laguesma granted the motion filed by San Miguel and ruled that since
Supervisory employees from level 1 4 are considered confidential employees, they are
prohibited from participating in certification of election.
ISSUE:
Whether or not the supervisory employees and exempt employees of SMC are confidential
employees?
RULING:
NO. There is no question that the said employees, supervisors and the exempt employees, are not
vested with the powers and prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are, therefore, not
qualified to be classified as managerial employees who, under Article 245 4 of the Labor Code,
are not eligible to join, assist or form any labor organization. In the very same provision, they are
not allowed membership in a labor organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own. The only question that need be
addressed is whether these employees are properly classified as confidential employees or not.
Confidential employees are those who (1) assist or act in a confidential capacity, (2) to persons
who formulate, determine, and effectuate management policies in the field of labor

relations. 5 The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee that is, the confidential relationship must exist between
the employee and his supervisor, and the supervisor must handle the prescribed responsibilities
relating tolabor relations.
The exclusion from bargaining units of employees who, in the normal course of their duties,
become aware of management policies relating to labor relations is a principal objective sought
to be accomplished by the ''confidential employee rule." The broad rationale behind this rule is
that employees should not be placed in a position involving a potential conflict of
interests. 7 "Management should not be required to handle labor relations matters through
employees who are represented by the union with which the company is required to deal and
who in the normal performance of their duties may obtain advance information of the company's
position with regard to contract negotiations, the disposition of grievances, or other labor
relations matters.
Granting arguendo that an employee has access to confidential labor relations information but
such is merely incidental to his duties and knowledge thereof is not necessary in the performance
of such duties, said access does not render the employee a confidential employee. 16 "If access to
confidential labor relations information is to be a factor in the determination of an employee's
confidential status, such information must relate to the employer's labor relations policies. Thus,
an employee of a labor union, or of a management association, must have access to confidential
labor relations information with respect to his employer, the union, or the association, to be
regarded a confidential employee, and knowledge of labor relations information pertaining to the
companies with which the union deals, or which the association represents, will not cause an
employee to be excluded from the bargaining unit representing employees of the union or
association." Access to information which is regarded by the employer to be confidential from
the business standpoint, such as financial information or technical trade secrets, will not render
an employee a confidential employee.
It is evident that whatever confidential data the questioned employees may handle will have to
relate to their functions. From the foregoing functions, it can be gleaned that the confidential
information said employees have access to concern the employer's internal business operations.

As held in Westinghouse Electric Corporation v. National Labor Relations Board, "an employee
may not be excluded from appropriate bargaining unit merely because he has access to
confidential information concerning employer's internal business operations and which is not
related to the field of labor relations."
In the case at bar, supervisors 3 and above may not be considered confidential employees merely
because they handle "confidential data" as such must first be strictly classified as pertaining to
labor relations for them to fall under said restrictions. The information they handle are properly
classifiable as technical and internal business operations data which, to our mind, has no
relevance to negotiations and settlement of grievances wherein the interests of a union and the
management are invariably adversarial. Since the employees are not classifiable under the
confidential type, this Court rules that they may appropriately form a bargaining unit for
purposes of collective bargaining. Furthermore, even assuming that they are confidential
employees, jurisprudence has established that there is no legal prohibition against confidential
employees who are not performing managerial functions to form and join a union.

82. San Miguel Corporation Supervisors v. Laguesma


FACTS:
On October 5, 1990, petitioner union filed before the Department of Labor and Employment
(DOLE) a Petition for District Certification or Certification Election among the supervisors and
exempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and
Otis. On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal with
Memorandum on Appeal, pointing out, among others, the Med-Arbiters error in grouping
together all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit,
and in including supervisory levels 3 and above whose positions are confidential in nature. The
public respondent, Undersecretary Laguesma, granted respondent companys Appeal and ordered
the remand of the case to the Med-Arbiter of origin for determination of the true classification of
each of the employees sought to be included in the appropriate bargaining unit. Upon petitionerunions motion, Undersecretary Laguesma granted the reconsideration prayed for and directed
the conduct of separate certification elections among the supervisors ranked as supervisory levels
1 to 4 (S1 to S4) and the exempt employees in each of the three plants at Cabuyao, San Fernando
and Otis.
ISSUE:
Whether Supervisory employees 3 and 4 and the exempt employees of the company are
considered confidential employees, hence ineligible from joining a union.
RULLING:
This Court rules that said employees do not fall within the term confidential employees who may
be prohibited from joining a union. There is no question that the said employees, supervisors and
the exempt employees, are not vested with the powers and prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge or dismiss
employees. They are, therefore, not qualified to be classified as managerial employees who,
under Article 245[4] of the Labor Code, are not eligible to join, assist or form any labor

organization. In the very same provision, they are not allowed membership in a labor
organization of the rank-and-file employeesbut may join, assist or form separate labor
organizations of their own. The only question that need be addressed is whether these employees
are properly classified as confidential employees or not. We rule that the distance among the
three plants is not productive of insurmountable difficulties in the administration of union affairs.
Neither are there regional differences that are likely to impede the operations of a single
bargaining representative.

83. Sugbuanon Rural Bank v. Hon. Undersecretary Bienvenido E. Laguesma

FACTS:
Petitioner Sugbuanon Rural Bank, Inc., (SRBI, for brevity) is a duly-registered banking
institution with principal office in Cebu City and a branch in Mandaue City. Private respondent
SRBI Association of Professional, Supervisory, Office, and Technical Employees Union
(APSOTEU) is a legitimate labor organization affiliated with the Trade Unions Congress of the
Philippines (TUCP). On October 26, 1993, the union filed a petition for certification election of
the supervisory employees of SRBI. It alleged, among others, that: (1) APSOTEU-TUCP was a
labor organization duly-registered with the Labor Department; (2) SRBI employed 5 or more
supervisory employees; (3) a majority of these employees supported the petition: (4) there was
no existing collective bargaining agreement (CBA) between any union and SRBI; and (5) no
certification election had been held in SRBI during the past 12 months prior to the petition. On
November 12, 1993, SRBI filed a motion to dismiss the union's petition. It sought to prevent the
holding of a certification election. The union filed its opposition to the motion to dismiss on
December 1, 1993. It argued that its members were not managerial employees but merely
supervisory employees. On April 22, 1994, respondent DOLE Undersecretary denied SRBI's
appeal for lack of merit. He ruled that APSOTEU-TUCP was a legitimate labor organization. As
such, it was fully entitled to all the rights and privileges granted by law to a legitimate labor
organization, including the right to file a petition for certification election. He also held that until
and unless a final order is issued cancelling APSOTEU-TUCP's registration certificate, it had the
legal right to represent its members for collective bargaining purposes.
ISSUE:
Whether or not the members of the respondent union are managerial employees and/or highlyplaced confidential employees, hence prohibited by law from joining labor organizations and
engaging in union activities?

RULLING:
Article 212 (m) of the Labor Code defines the terms "managerial employee" and "supervisory
employees" as follows:
Art. 212. Definitions (m) "Managerial employee" is one who is vested with powers or
prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees. Supervisory employees are those who, in the
interest of the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of the above definitions are considered rank-andfile employees for purposes of this Book.
Petitioner's reliance on Panday is equally misplaced. There, we held that a branch accountant is a
managerial employee because the said employee had managerial powers, similar to the
supervisor in Tabaculera. Their powers included recommending the hiring and appointment of
his subordinates, as well as the power to recommend any promotion and/or increase.
Here, we find that the Cashiers, Accountant, and Acting Chief of the Loans Department of the
petitioner did not possess managerial powers and duties. We are, therefore, constrained to
conclude that they are not managerial employees.
Here, we find that the Cashiers, Accountant, and Acting Chief of the Loans Department of the
petitioner did not possess managerial powers and duties. We are, therefore, constrained to
conclude that they are not managerial employees.
Now may the said bank personnel be deemed confidential employees? Confidential employees
are those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate,
determine, and effectuate management policies [specifically in the field of labor relations. The
two criteria are cumulative, and both must be met if an employee is to be considered a
confidential employee that is, the confidential relationship must exist between the employee

and his superior officer; and that officer must handle the prescribed responsibilities relating to
labor relations
84.

COOPERATIVE RURAL BANK OF DAVAO CITY, INC V. PURA FERRER-

CALLEJA
FACTS:
The record of the case discloses that the herein petitioner Cooperative Rural Bank of Davao City,
Inc. is a cooperative banking corporation operating in Davao City. It is owned in part by the
Government and its employees are members and co-owners of the same. The petitioner has
around 16 rank-and-file employees. As of August, 1986, there was no existing collective
bargaining agreement between the said employees and the establishment. On August 27, 1986,
the private respondent filed with the Davao City Regional Office of the then Ministry of Labor
and Employment a verified Petition for certification election among the rank-and-file employees
of the petitioner. On February 11, 1987, the herein public respondent Bureau of Labor Relations
Director Pura Ferrer-Calleja issued a Resolution affirming the Order of the Med-Arbiter and
dismissing the Appeal
ISSUE:
Whether or not the employees of a cooperative can organize themselves for purposes of
collective bargaining.
RULLING:
A cooperative is by its nature different from an ordinary business concern, being run either by
persons, partnerships, or corporations. Its owners and/or members are the ones who run and
operate the business while the others are its employees. As above stated, irrespective of the
number of shares owned by each member they are entitled to cast one vote each in deciding upon
the affairs of the cooperative. Their share capital earn limited interests. They enjoy special
privileges as exemption from income tax and sales taxes, preferential right to supply their
products to State agencies and even exemption from the minimum wages laws.

An employee therefore of such a cooperative who is a member and co-owner thereof cannot
invoke the right to collective bargaining for certainly an owner cannot bargain with himself or
his co-owners. In the opinion of August 14, 1981 of the Solicitor General he correctly opined that
employees of cooperatives who are themselves members of the cooperative have no right to form
or join labor organizations for purposes of collective bargaining for being themselves co-owners
of the cooperative.
However, in so far as it involves cooperatives with employees who are not members or coowners thereof, certainly such employees are entitled to exercise the rights of all workers to
organization, collective bargaining, negotiations and others as are enshrined in the Constitution
and existing laws of the country.

85.

PABLO ARIZALA V. THE COURT OF APPEALS

FACTS:
The petitioners occupied supervisory positions in the GSIS. Pablo Arizala and Sergio Maribao
were, respectively, the Chief of the Accounting Division, and the Chief of the Billing Section of
said Division Demands were made on all four of them to resign from the GSIS Employees
Association, in view of their supervisory positions. They refused to do so. Consequently, two (2)
criminal cases for violation of the Industrial Peace Act were lodged against them in the City
Court of Cebu: one involving Arizala and Maribao 6 and the other, Joven and Bulandus.
ISSUE:
Whether or not the petitioners' criminal liability for a violation of the Industrial Peace Act may
be deemed to have been obliterated in virtue of subsequent legislation and the provisions of the
1973 and 1987 Constitutions.
RULLING:
Under RA 875 (the Industry Peace Act), 12 persons "employed in proprietary functions of the
Government, including but not limited to governmental corporations," had the right of selforganization and collective bargaining, including the right to engage in concerted activities to
attain their objectives, e.g. strikes.
But those "employed in governmental functions" were forbidden to "strike for the purpose of
securing changes or modification in their terms and conditions of employment" or join labor
organizations which imposed on their members the duty to strike. The reason obviously was that
the terms and conditions of their employment were "governed by law" and hence could not be
fixed, altered or otherwise modified by collective bargaining.
Supervisory employees were forbidden to join labor organizations composed of employees under
them, but could form their own unions. Considered "supervisors' were those 'having authority in
the interest of an employer to hire, transfer, suspend, lay-off, recall, discharge, assign,
recommend, or discipline other employees, or responsibly to direct them, and to adjust their
grievance or effectively to recommend such acts if, in connection with the foregoing, the

exercise of such authority is not merely routinary or clerical in nature but requires the use of
independent judgment."
In other words, the right of Government employees to deal and negotiate with their respective
employers is not quite as extensive as that of private employees. Excluded from negotiation by
government employees are the "terms and conditions of employment ... that are fixed by law," it
being only those terms and conditions not otherwise fixed by law that "may be subject of
negotiation between the duly recognized employees' organizations and appropriate government
authorities.

86.

SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA) V. CA

FACTS:
On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a complaint for
damages with a prayer for a writ of preliminary injunction against petitioners, alleging that on
June 9, 1987, the officers and members of SSSEA staged an illegal strike and baricaded the
entrances to the SSS Building, preventing non-striking employees from reporting for work and
SSS members from transacting business with the SSS; that the strike was reported to the Public
Sector Labor - Management Council, which ordered the strikers to return to work; that the
strikers refused to return to work; and that the SSS suffered damages as a result of the strike. The
complaint prayed that a writ of preliminary injunction be issued to enjoin the strike and that the
strikers be ordered to return to work; that the defendants (petitioners herein) be ordered to pay
damages; and that the strike be declared illegal.
It appears that the SSSEA went on strike after the SSS failed to act on the union's demands,
which included: implementation of the provisions of the old SSS-SSSEA collective bargaining
agreement (CBA) on check-off of union dues; payment of accrued overtime pay, night
differential pay and holiday pay; conversion of temporary or contractual employees with six (6)
months or more of service into regular and permanent employees and their entitlement to the
same salaries, allowances and benefits given to other regular employees of the SSS; and payment
of the children's allowance of P30.00, and after the SSS deducted certain amounts from the
salaries of the employees and allegedly committed acts of discrimination and unfair labor
practices.
ISSUE:
Whether or not employees of the Social Security System (SSS) have the right to strike.
RULLING:
The 1987 Constitution, in the Article on Social Justice and Human Rights, provides that the State
"shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law" [Art. XIII, Sec. 31].

Resort to the intent of the framers of the organic law becomes helpful in understanding the
meaning of these provisions. A reading of the proceedings of the Constitutional Commission that
drafted the 1987 Constitution would show that in recognizing the right of government employees
to organize, the commissioners intended to limit the right to the formation of unions or
associations only, without including the right to strike.
Considering that under the 1987 Constitution "the civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the Government, including government-owned or
controlled corporations with original charters" [Art. IX(B), Sec. .2(l) see also Sec. 1 of E.O. No.
180 where the employees in the civil service are denominated as "government employees"] and
that the SSS is one such government-controlled corporation with an original charter, having been
created under R.A. No. 1161, its employees are part of the civil service [NASECO v. NLRC,
G.R. Nos. 69870 & 70295, November 24,1988] and are covered by the Civil Service
Commission's memorandum prohibiting strikes. This being the case, the strike staged by the
employees of the SSS was illegal.

87.

ATLAS LITHOGRAPHIC SERVICES V. LAGUESMA

FACTS:
On July 16, 1990, the supervisory, administrative personnel, production, accounting and
confidential employees of the petitioner Atlas Lithographic Services, Inc. (ALSI) affiliated with
private respondent Kaisahan ng Manggagawang Pilipino, a national labor organization. The local
union adopted the name Atlas Lithographic Services, Inc. Supervisory, Administrative,
Personnel, Production, Accounting and Confidential Employees Association or ALSISAPPACEA-KAMPIL in short and which we shall hereafter refer to as the "supervisors" union.
Shortly thereafter, private respondent Kampil-Katipunan filed on behalf of the "supervisors"
union a petition for certification election so that it could be the sole and exclusive bargaining
agent of the supervisory employees.
The petitioners opposed the private respondent's petition claiming that under Article 245 of the
Labor bode the private respondent cannot represent the supervisory employees for collective
bargaining purposeless because the private respondent also represents the rank-and-file
employees' union.
ISSUE:
Whether or not, under Article 245 of the Labor Code, a local union of supervisory employees
may be allowed to affiliate with a national federation of labor organizations of rank-and-file
employees and which national federation actively represents its affiliates in collective bargaining
negotiations with the same employer of the supervisors and in the implementation of resulting
collective bargaining agreements.
RULLING:
The Court construes Article 245 to mean that, as in Section 3 of the Industrial Peace Act,
supervisors shall not be given an occasion to bargain together with the rank-and-file against the
interests of the employer regarding terms and conditions of work
Second, the national union in the Adamson case did not actively represent its local chapters. In
the present case, the local union is actively represented by the national federation. In fact, it was

the national federation, theKAMPIL-KATIPUNAN, which initially filed a petition for


certification in behalf of the respondent union.
Thus, if the intent of the law is to avoid a situation where supervisors would merge with the rank
and-file or where the supervisors' labor organization would represent conflicting interests, then a
local supervisors' union should not be allowed to affiliate with the national federation of union of
rank-and-file employees where that federation actively participates in union activity in the
company.
The prohibition against a supervisors' union joining a local union of rank-and-file is replete with
jurisprudence. The Court emphasizes that the limitation is not confined to a case of supervisors
wanting to join a rank-and-file local union. The prohibition extends to a supervisors' local union
applying for membership in a national federation the members of which include local unions of
rank-and-file employees. The intent of the law is clear especially where, as in the case at bar, the
supervisors will be co-mingling with those employees whom they directly supervise in their own
bargaining unit.
There is no question about this intendment of the law. There is, however, in the present case, no
violation of such a guarantee to the employee. Supervisors are not prohibited from forming their
own union. What the law prohibits is their membership in a labor organization of rank-and-file
employees (Art. 245, Labor Code) or their joining a national federation of rank-and-file
employees that includes the very local union which they are not allowed to directly join.

88.

PHILPOS V. TORRES

FACTS: : Philphos Movement for Progress, Inc. (PMPI for brevity), filed with the Department
of Labor and Employment a petition for certification election among the supervisory employees
of petitioner, alleging that as a supervisory union duly registered with the Department of Labor
and Employment it was seeking to represent the supervisory employees of Philippine Phosphate
Fertilizer Corporation. Mediator-Arbiter Rodolfo S. Milado issued an order directing the holding
of a certification election among the supervisory employees of petitioner, excluding therefrom
the superintendents and the professional and technical employees. However, the PMPI filed an
amended petition with the Mediator-Arbiter wherein it sought to represent not only the
supervisory employees of petitioner but also its professional/technical and confidential
employees. The parties therein agreed to submit their respective position papers and to consider
the amended petition submitted for decision on the basis thereof and relateddocuments.
Mediator-Arbiter Milado issued an order granting the petition and directing the holding of a
certification election among the "supervisory, professional (engineers, analysts, mechanics,
accountants, nurses, midwives, etc.), technical, and confidential employees. PHILPHOS
appealed the order to the Secretary of Labor and Employment who rendered a decision through
Undersecretary Bienvenido Laguesma dismissing the appeal. PHILPHOS moved for
reconsideration but the same was denied; hence, the instant petition alleging denial of due
process on the part of the DOLE to which the mediator-arbiter was under.
ISSUE:
Whether or Not there was denial of due process.
RULLING:
There was no denial of due process. 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 a reconsideration of the action or ruling complained of petitioner PHILPHOS
agreed to file its position paper with the Mediator-Arbiter and to consider the case submitted for
decision on the basis of the position papers filed by the parties, there was sufficient compliance
with the requirement of due process, as petitioner was afforded reasonable opportunity to present

its side. Moreover, petitioner could have, if it so desired, insisted on a hearing to confront and
examine the witnesses of the other party. But it did not; instead it opted to submit its position
paper with the Mediator-Arbiter. Besides, petitioner had all the opportunity to ventilate its
arguments in its appeal to the Secretary of Labor.

89.

PHILIPS V. NLRC

FACTS:
PIDI is a domestic corporation engaged in the manufacturing and marketing of electronic
products. Since 1971, it had a total of 6 collective bargaining agreements with private respondent
Philips Employees Organization-FFW (PEO-FFW), a registered labor union and the certified
bargaining agent of all rank and file employees of PIDI.- In the first CBA, the supervisors
(referred to in RA 875), confidential employees, security guards, temporary employees and sales
representatives were excluded in the bargaining unit. In the second to the fifth, the sales force,
confidential employees and heads of small units, together with the managerial employees,
temporary employees and security personnel were excluded from the bargaining unit. The
confidential employees are the division secretaries of light/telecom/data and consumer
electronics, marketing managers, secretaries of the corporate planning and business manager,
fiscal and financial system manager and audit and EDP manager, and the staff of both the
General Management and the Personnel Department.- In the sixth CBA, it was agreed that the
subject of inclusion or exclusion of service engineers, sales personnel and confidential
employees in the coverage of the bargaining unit would be submitted for arbitration. The parties
failed to agree on a voluntary arbitrator and the Bureau of Labor Relations endorsed the petition
to the Executive Labor Arbiter of the NCR for compulsory arbitration.- March 1998,
Labor Arbiter: A referendum will be conducted to determine the will of the service engineers and
sales representatives as to their inclusion or exclusion in the bargaining unit. It was also declared
that the Division Secretaries and all staff of general management, personnel and industrial
relations department, secretaries of audit, EDP, financial system are confidential employees are
deemed excluded in the bargaining unit.- PEO-FFW appealed to the NLRC; NLRC declared
PIDI's Service Engineers, Sales Force, division secretaries, all Staff of General Management,
Personnel and Industrial Relations Department, Secretaries of Audit, EDP and Financial Systems
are included within the rank and file bargaining unit, citing the Implementing Rules of E.O 111
and Article 245 of the Labor Code (all workers, except managerial employees and security
personnel, are qualified to join or be a part of the bargaining unit).

ISSUES:
1)Whether service engineers, sales representatives and confidential employees of petitioner are
qualified to be part of the existing bargaining unit.
2)Whether the "Globe Doctrine" should be applied.
RULLING:
NLRC decision is set aside while the decision of the Executive Labor Arbiter is reinstated.
Confidential employees are excluded from the bargaining unit while a referendum will be
conducted to determine the will of the service engineers and sales representatives as to their
inclusion or exclusion from the bargaining unit, but those who are holding supervisory positions
or functions are ineligible to join a labor organization of the rank and file employees but may
join, assist or form a separate labor organization of their own. Ratio:The exclusion of
confidential employees: The rationale behind the ineligibility of managerial employees to form,
assist or join a labor union equally applies to confidential employees. With the presence of
managerial employees in a union, the union can become company-dominated as their loyalty
cannot be assured. In Golden Farms vs Calleja, the Court states that confidential employees, who
have access to confidential information, may become the source of undue advantage
As regards to the sales representatives and service engineers, according to the OSG, there is no
doubt that they are entitled to form a union as they are not disqualified by law from doing so.
Globe Doctrine: Globe Doctrine states that in determining the proper bargaining unit, the express
will or desire of the employees shall be considered, they should be allowed to determine for
themselves what union to join or form. The best way is through a referendum, as decreed by the
Executive Labor Arbiter. However, in this case, since the only issue is the employees' inclusion
in or exclusion from the bargaining unit in question, the Globe Doctrine has no application in this
case. The doctrine applies only in instance of evenly balanced claims by competitive groups for
the right to be established as the bargaining unit.

90.

VILLAR V. INCIONG

FACTS:
AEU under FUR attempted to have a certification election but due to the opposition of AEUPAFLU, the petition was denied by the Med-Arbiter.
AEU-PAFLU then called a special meeting among members and it was there decided that an
investigation of certain people would be held pursuant to the constitution and by-laws of the
Federation, of all of the petitioners and one Felipe Manlapao, for "continuously maligning,
libelling and slandering not only the incumbent officers but even the union itself and the
federation;" spreading 'false propaganda' that the union officers were 'merely appointees of the
management', and for causing divisiveness in the union.
A Trial Committee was then formed to investigate the local union's charges against the
petitioners for acts of disloyalty. AEU-PAFLU and the Company concluded a new CBA which,
besides granting additional benefits to the workers, also reincorporated the same provisions of
the existing CBA, including the union security clause reading, to wit:
All members of the UNION as of the signing of this Agreement shall remain members thereof in
good standing. Therefore, any members who shall resign, be expelled, or shall in any manner
cease to be a member of the UNION, shall be dismissed from his employment upon written
request of the UNION to the Company.
The petitioners were summoned to appear before the PAFLU Trial Committee for the aforestated
investigation of the charges filed against them but they did not attend and instead requested for a
"Bill of Particulars" of the charges which had been formalized by the AEU-PAFLU officers; they
contend that their actions were merely exercise of the right to freedom of association.
Not recognizing PAFLU's jurisdiction over their case, petitioners again refused to participate in
the investigation rescheduled and conducted. Instead, they merely appeared to file their Answer
to the charges and moved for a dismissal.
Based on the findings and recommendations of the PAFLU trial committee, the PAFLU President
found the petitioners guilty of the charges against them and it was requested that they be
terminated in conformity with the security clause in the CBA. Meanwhile, they were placed
under preventive suspension and denied access to the workplace.

ISSUE:
Whether or not the Minister acted with grave abuse of discretion when he affirmed the decision
of the RO4-Officer-in-Charge allowing the preventive suspension and subsequent dismissal of
petitioners by reason of the exercise of their right to freedom of association.
RULLING:
It is true that disaffiliation from a labor union is not open to legal objection. It is implicit in the
freedom of association ordained by the Constitution. However, a closed shop is a valid form of
union security, and such provision in a CBA is not a restriction of the right of freedom of
association guaranteed by the Constitution.
Here, the Company and the AEU-PAFLU entered into a CBA with a union security clause and
the stipulation for closed-shop is clear and unequivocal and it leaves no room for doubt that the
employer is bound, under the collective bargaining agreement, to dismiss the employees, herein
petitioners, for non-union membership.
Petitioners became non-union members upon their expulsion from the general membership of the
AEU-PAFLU pursuant to the Decision of the PAFLU national president.
PAFLU had the authority to investigate petitioners on the charges filed by their co-employees in
the local union and after finding them guilty as charged, to expel them from the roll of
membership under the constitution of the PAFLU to which the local union was affiliated.
According to the OIC: tripped of non-essentials, the basic and fundamental issue in this case
tapers down to the determination of whether or not paflu had the authority to investigate
oppositors and, thereafter, expel them from the roll of membership of the amigoemployees
union-paflu.
Recognized and salutary is the principle that when a labor union affiliates with a mother union, it
becomes bound by the laws and regulations of the parent organization.
When a labor union affiliates with a parent organization or mother union, or accepts a charter
from a superior body, it becomes subject to the laws of the superior body under whose authority
the local union functions. The constitution, by-laws and rules of the parent body, together with
the charter it issues pursuant thereto to the subordinate union, constitute an enforceable contract
between the parent body and the subordinate union, and between the members of the subordinate
union inter se.

'Due process' simply means that the parties were given the opportunity to be heard. In the instant
case, ample and unmistakable evidence exists to show that the oppositors were afforded the
opportunity to present their evidence, but they themselves disdained or spurned the said
opportunity given to them.
Inherent in every labor union, or any organization, is the right of self-preservation. When
members of a labor union, therefore, sow the seeds of dissension and strife within the union;
when they seek the disintegration and destruction of the very union to which they belong, they
thereby forfeit their rights to remain as members of the union which they seek to destroy.
We, therefore, hold and rule that petitioners, although entitled to disaffiliate from their union and
form a new organization of their own, must, however, suffer the consequences of their separation
from the union under the security clause of the CBA.

91.

PROGRESSIVE DEVELOPMENT V. SECRETARY

FACTS:
On June 19, 1990, respondent Pambansang Kilusan ng Paggawa (KILUSAN) -TUCP
(hereinafter referred to as Kilusan) filed with the Department of Labor and Employment (DOLE)
a petition for certification election among the rank-and-file employees of the petitioner alleging
that it is a legitimate labor federation and its local chapter, Progressive Development Employees
Union, was issued charter certificate No. 90-6-1-153. Kilusan claimed that there was no existing
collective bargaining agreement and that no other legitimate labor organization existed in the
bargaining unit. Petitioner PDC filed its motion to dismiss dated July 11, 1990 contending that
the local union failed to comply with Rule II Section 3, Book V of the Rules Implementing the
Labor Code, as amended, which requires the submission of: (a) the constitution and by-laws; (b)
names, addresses and list of officers and/or members; and (c) books of accounts.
ISSUE:
When does a branch, local or affiliate of a federation become a legitimate labor organization?
RULLING:
When an unregistered union becomes a branch, local or chapter of a federation, some of the
aforementioned requirements for registration are no longer required. The provisions governing
union affiliation are found in Rule II, Section 3, Book V of the Implementing Rules, the relevant
portions of which are cited below:
Sec. 3. Union affiliation; direct membership with national union. An affiliate of a labor
federation or national union may be a local or chapter thereof or an independently registered
union.
a) The labor federation or national union concerned shall issue a charter certificate indicating the
creation or establishment of a local or chapter, copy of which shall be submitted to the Bureau of
Labor Relations within thirty (30) days from issuance of such charter certificate.
b) An independently registered union shall be considered an affiliate of a labor federation or
national union after submission to the Bureau of the contract or agreement of affiliation within
thirty (30) days after its execution.

xxx xxx xxx


e) The local or chapter of a labor federation or national union shall have and maintain a
constitution and bylaws, set of officers and books and accounts. For reporting purposes, the
procedure governing the reporting of independently registered unions, federations or national
unions shall be observed.
Paragraph (a) refers to the local or chapter of a federation which did not undergo the rudiments
of registration while paragraph (b) refers to an independently registered union which affiliated
with a federation. Implicit in the foregoing differentiation is the fact that a local or chapter need
not be independently registered. By force of law (in this case, Article 212[h]); such local or
chapter becomes a legitimate labor organization upon compliance with the aforementioned
provisions of Section 3.
Thus, several requirements that are otherwise required for union registration are omitted, to wit:
(1) The requirement that the application for registration must be signed by at least 20% of the
employees in the appropriate bargaining unit;
2) The submission of officers' addresses, principal address of the labor organization, the minutes
of organizational meetings and the list of the workers who participated in such meetings;
3) The submission of the minutes of the adoption or ratification of the constitution and by the
laws and the list of the members who participated in it.
Undoubtedly, the intent of the law in imposing lesser requirements in the case of the branch or
local of a registered federation or national union is to encourage the affiliation of a local union
with the federation or national union in order to increase the local union's bargaining powers
respecting terms and conditions of labor.

92.

PAGPALAIN HAULERS INC VS TRAJANO

FACTS:
On May 14, 1997, respondent Integrated Labor Organization-Pagpalain Haulers Workers Union
(hereafter referred to as ILO-PHILS), in a bid to represent the rank-and-file drivers and helpers
of petitioner Pagpalain Haulers, Inc. (hereafter referred to as Pagpalain), filed a petition for
certification election with the Department of Labor and Employment. ILO-PHILS attached to the
petition copies of its charter certificate, its constitution and by-laws, its books of account, and a
list of its officers and their addresses. On July 10, 1997, Pagpalain filed a motion to dismiss the
petition, alleging that ILO-PHILS was not a legitimate labor organization due to its failure to
comply with the requirements for registration under the Labor Code. Specifically, it claimed that
the books of account submitted by ILO-PHILS were not verified under oath by its treasurer and
attested to by its president, a required by Rule II, Book V of the Omnibus Rules Implementing
the Labor Code.
ISSUE:
W/N that ILO-PHILS was not a legitimate labor organization due to its failure to comply with
the requirements for registration under the Labor Code, .specifically, it claimed that the books of
account submitted by ILO-PHILS were not verified under oath by its treasurer and attested to by
its president?
RULLING:
Article 274 of the Labor Code empowers the Secretary of Labor or his duly authorized
representative to inquire into the financial activities of legitimate labor organizations upon the
filing of a complaint under oath duly supported by the written consent of 20% of the total
membership of the labor organization concerned, as well as to examine their books of accounts
and other records to determine compliance or non-compliance with the law. All of these
provisions are designed to safeguard the funds of a labor organization that they may not be
squandered or frittered away by its officers or by third persons to the detriment of its members.
Lastly, Department Order No. 9 only dispenses with books of account as a requirement for
registration of a local or chapter of a national union or federation. As provided by Article 241 (h)

and (j), a labor organization must still maintain books of account, but it need not submit the same
as a requirement for registration. Given the foregoing disquisition, we find no cogent reason to
declare Department Order No. 9 null and void, as well as to reverse the assailed resolution of the
Secretary of Labor.

122.

PHILIPPINE FRUITS AND VEGETABLE INDUSTRIES vs. TORRES

FACTS:
On October 13, 1988, Med-Arbiter Basa issued an Order granting the petition for Certification
election filed by the Trade Union of the Philippines and Allied Services (TUPAS). Said order
directed the holding of a certification election among the regular and seasonal workers of the
Philippine Fruits and Vegetables, Inc. (p. 42, NLRC, Records).
After a series of pre-election conferences, all issues relative to the conduct of the certification
election were threshed out except that which pertains to the voting qualifications of the hundred
ninety four (194) workers enumerated in the lists of qualified voters submitted by TUPAS.
After a late submission by the parties of their respective position papers, Med-Arbiter Basa
issued an Order dated December 9, 1988 allowing 184 of the 194 questioned workers to vote,
subject to challenge, in the certification election to be held on December 16, 1989. Copies of said
Order were furnished the parties (p. 118, NLRC, Records) and on December 12, 1988 the notice
of certification election was duly posted. One hundred sixty eight (168) of the questioned
workers actually voted on election day.
In the scheduled certification election, petitioner objected to the proceeding, through a
Manifestation (p. 262, NLRC, Records) filed with the Representation Officer before the close of
the election proceedings. Said Manifestation pertinently reads:
The posting of the list of eligible voters authorized to participate in the
certification election was short of the five (5) days provided by law considering
that it was posted only on December 12, 1988 and the election was held today,
December 16, 1988 is only four days prior to the scheduled certification election.
By agreement of petitioner and TUPAS, workers whose names were inadvertently omitted in the
list of qualified voters were allowed to vote, subject to challenge (p. 263, NLRC, Records).
Thirty eight of them voted on election day.
Initial tally of the election results excluding the challenged votes showed the following:

Total No. of the Votes 291


Yes

votes

40

No

votes

38

Spoiled
Challenged

7
(Regular)

38

Total No. of Votes Cast 123


On January 6, 1989, Management and TUPAS agreed to have the 36 challenged votes of the
regular rank-and-file employees opened and a canvass thereof showed:
Yes

votes

20

No

votes

14

Spoiled

Total 38
Added to the initial election results of December 16, 1988, the canvass of results showed:
Yes

60

No

52

Spoiled

11

Total 123
Based on the foregoing results, the yes votes failed to obtain the majority of the votes cast in said
certification election, hence, the necessity of opening the 168 challenged votes to determine the
true will of the employees.
On January 20, 1989, petitioner filed a position paper arguing against the opening of said votes
mainly because said voters are not regular employees nor seasonal workers for having allegedly
rendered work for less than 180 days.

Trade Union of the Philippines and Allied Services (TUPAS), on the other hand, argued that the
employment status of said employees has been resolved when Labor Arbiter Ricardo N.
Martinez, in his Decision dated November 26, 1988 rendered in NLRC Case No. Sub-Rab-0109-7-0087-88, declared that said employees were illegally dismissed.
In an Order dated February 2, 1989 (pp. 278-280, NLRC, Records) Med-Arbiter Basa ordered
the opening of said 168 challenged votes upon his observation that said employees were illegally
dismissed in accordance with the foregoing Decision of Labor Arbiter Martinez. As canvassed,
the results showed
Yes

votes

No

165

votes

Spoiled

Total 168
On

February

23,

1989,

petitioner

formally

filed

Protest

(pp.

284-287, NLRC, Records) claiming that the required five day posting of notice was not allegedly
complied with and that the list of qualified voters so posted failed to include fifty five regular
workers agreed upon by the parties as qualified to vote. The Protest further alleged that voters
who were ineligible to vote were allowed to vote.
ISSUES:
1. Whether or not the protest against the canvassing of the votes cast by 168 dismissed workers
was filed beyond the reglementary period.
2. whether or not non-regular seasonal workers who have long been separated from employment
prior to the filing of the petition for certification election would be allowed to vote and
participate in a certification election.
RULING:
1. Sections 3 and 4, Rule VI, Book V of the Implementing Rules of the Labor Code, the
following requirements in order that a protest filed thereunder would prosper, to wit:

(1) The protest must be filed with the representation officer and made of record in
the minutes of the proceedings before the close of election proceedings, and
(2) The protest must be formalized before the Med-Arbiter within five (5) days
after the close of the election proceedings.
The records before Us quite clearly disclose the fact that petitioner, after filing a manifestation of
protest on December 16, 1988, election day, only formalized the same on February 20, 1989, or
more than two months after the close of election proceedings (i.e., December 16, 1988). We are
not persuaded by petitioner's arguments that election proceedings include not only casting of
votes but necessarily includes canvassing and appreciation of votes cast and considering that the
canvassing and appreciation of all the votes cast were terminated only on February 16, 1989, it
was only then that the election proceedings are deemed closed, and thus, when the formal protest
was filed on February 20, 1989, the five-day period within which to file the formal protest still
subsisted and its protest was therefore formalized within the reglementary period.
2. At any rate, it is now well-settled that employees who have been improperly laid off but who
have a present, unabandoned right to or expectation of re-employment, are eligible to vote in
certification elections. 10 Thus, and to repeat, if the dismissal is under question, as in the case
now at bar whereby a case of illegal dismissal and/or unfair labor practice was filed, the
employees concerned could still qualify to vote in the elections.

123.

NATIONAL MINES AND ALLIED WORKERS UNION (NAMAWU-MIF) vs.

SECRETARY OF LABOR
FACTS:
Petitioner and respondent FFW-SMQCC are local chapters of labor federations duly registered
with the Department of Labor and Employment (DOLE). Petitioner is the exclusive bargaining
agent of all the rank and file workers of respondent QCC, a domestic corporation engaged in the
metal industry.
On September 27, 1991, 38 days before the expiration of the Collective Bargaining Agreement
between petitioner and respondent QCC, respondent FFW-SMQCC through Reynito de Pedro
filed with the DOLE Industrial Relations Division, National Capital Region (NCR-OD-M-91-09106) a petition for certification election. The petition was accompanied by a list of signatures of
company employees, who signified their consent to a certification election among the rank and
file employees of QCC (Rollo, pp. 79-83).
Petitioner herein moved to dismiss the petition of respondent FFW-SMQCC on the grounds that:
(a) the required consent to the certification election of at least 25% of the rank and file
employees had not been met; (b) the petition was not verified as required by law; and (c) Reynito
de Pedro, who was also the president of petitioner, had no personality to file the petition on
behalf of FFW-SMQCC.
On October 30, 1991, respondent FFW-SMQCC, filed a second petition for certification election,
this time signed and verified by De Pedro (NCR-OD-91-10-131).
On January 24, 1992, the Med-Arbiter granted the petition for certification election of
respondent FFW-SMQCC
ISSUES:
1. Whether or not Reynito de Pedro is not the authorized representative of respondent FFWSMQCC, he being the duly elected president of petitioner;

2. Whether or not. the filing of the second petition for certification election did not cure, much
less correct, the defects in the first petition
3. Whether or not the signatures of the 141 employees, who signified their support thereto, were
either forged or pre-maturely obtained prior to the 60-day period before the expiration of the
existing collective bargaining agreement.
RULING:
1. Although Reynito de Pedro was the duly elected president of petitioner, he had disaffiliated
himself therefrom and joined respondent FFW-SMQCC before the petition for certification
election was filed on September 27, 1991. The eventual dismissal of De Pedro from the company
is of no moment, considering that the petition for certification election was filed before his
dismissal on August 22, 1992.
2. Verification of a pleading is a formal, not jurisdictional requisite (Buenaventura v. Uy, 149
SCRA 22 [1987]; In the Matter of the Change of Name of Antonina B. Oshita, 19 SCRA 700
[1967]). Even if verification is lacking and the pleading is formally defective, the courts may
dispense with the requirement in the interest of justice and order of correction of the pleading
accordingly. Generally, technical and rigid rules of procedure are not binding in labor cases; and
this rule is specifically applied in certification election proceedings, which are non-litigious but
merely investigative and non-adversarial in character (Associated Labor Unions v. FerrerCalleja, 179 SCRA 127 [1989]); Tanduay Distillery Labor Union v. NLRC, 149 SCRA 470
[1987]). Nevertheless, whatever formal defects existed in the first petition were cured and
corrected in the second petition for certification election.
3. Granting that 36 signatures were falsified and that 13 was disowned, this leaves 92 undisputed
signatures which is definitely more than 75 i.e., 25% of the total number of company
employees required by law to support a petition for certification election. The disclaimer of 13
employees by their respective signatures covers only their own personal participation and cannot
in any way be extended to include the rest of those who did not question the same.
Moreover, the fact that the list of signatures is undated does not necessarily mean that the
signatures were obtained prior to the 60-day period before the expiration of the existing

collective bargaining agreement. What is important is that the petition for certification election
must be filed during the freedom period and that the 25% requirement of supporting signatures
be met upon the filing thereof. These requirements have been compiled by respondent FFWSMQCC in their first and second petitions, and it was thus incumbent upon the Med-Arbiter to
order a certification election to be conducted among the rank and file employees of the company

124.

Militante vs. NLRC

FACTS:
On January 25, 1993, a complaint was filed by Danilo Q. Militante against Lorenzo Zamora,
Doa Nena Zamora and Doa Pacing Zamora for illegal lockout, illegal dismissal, nonremittance of SSS deduction, deduction for burial benefits, non-payment of premium pay for rest
day, thirteenth-month pay and separation pay with a prayer for reinstatement, upgrading of SSS
payments, payment of separation pay, thirteenth-month pay and premium pay for rest day
(NLRC NCR Case No. 00-01-00618-93).
On March 9, 1993, another complaint was filed by Miguel C. Salonga against respondent
Company, Lorenzo Zamora, Doa Nena Zamora and Doa Pacing Zamora, for illegal dismissal
and non-payment of retirement benefits with a prayer for payment of retirement benefits and
other benefits (NLRC NCR Case No. 00-03-01784-93).
On March 15, 1993, private respondents filed a motion to dismiss the complaints on the grounds
of res judicataand prescription, arguing that the NLRC decision in NLRC NCR CA No. 00319492 barred these subsequent complaints.
ISSUE:
Whether or not there is res judicata
RULING:
Res Judicata has the following elements: (1) that the previous judgment has become final; (2)
that the prior judgment was rendered by a court having jurisdiction over the subject matter and
the parties; (3) that the first judgment was rendered on the merits; and (4) that there was
substantial identity of parties, subject matter and causes of action, as between the prior and
subsequent actions (Diwa v. Donato, 234 SCRA 608 [1994]).
It is undisputed that the NLRC decision in NLRC NCR CA No. 003194-92 was decided on the
merits and has already become final.

Petitioners insist, however, that they, being members of the rival union PACIWU-TUCP, were
not parties in the first case filed by GTEWU-ANGLO (Rollo, p. 12). Such claim is not supported
by the records of the case.
Article 255 of the Labor Code of the Philippines, as amended. Said article provides:
Exclusive bargaining representation and workers participation in policy and
decision making. The labor organization designated or selected by the majority
of the employees in an appropriate collective bargaining unit shall be the
exclusive representative of the employees in such unit for the purpose of
collective bargaining. . . . .
Inasmuch as GTEWU-ANGLO was certified as the exclusive bargaining agent in the consent
election conducted on March 17, 1989, petitioners cannot now claim that they were not parties in
the first case filed by GTEWU-ANGLO, which represented not only PACIWU-TUCP but also
GTEWU-ANGLO. Hence, all the requisites of res judicata being present, said principle should
be made to apply, thus barring any subsequent action such as the consolidated cases subject of
this petition.

125.

Sandoval Shipyards Inc vs. Pepito

FACTS:
Sometime in 1992, the National Federation of Labor (NFL) filed with the Department of Labor
and Employment (DOLE) a petition for certification election, alleging that its members, which
included private respondents Prisco Pepito, et al., were regular employees of petitioner Sandoval
Shipyards, Inc. (SSI). Finding that the NFL members were rank-and-file employees of SSI, the
Med-Arbiter issued an order directing that a certification election be held.
However, in a Resolution dated 25 November 1992, then Undersecretary Bienvenido Laguesma
reversed the Med-Arbiters Order and ruled that there was a valid subcontracting agreement
between SSI and its subcontractors, and that no employer-employee relationship existed between
SSI and private respondents, since the latter were the employees of the subcontractors.2
In 1993, several cases for illegal dismissal were filed by private respondents against SSI and its
President, petitioner Vicente Sandoval. Private respondents alleged that they were employees of
SSI and that sometime in 1985, some sections of the company were temporarily closed while
others remained open. Later, some of them were told to secure a Mayors Permit then were made
parties to contracts with SSI stipulating that they were labor-only contractors. They averred
further that after they organized a workers union in 1992 to protect themselves against SSIs
persistent violation of labor standards, the company did not allow them to report for work.
Consequently, SSIs employees, including private respondent, went on strike on March 26, 1992.
On April 6, 1992, SSI accepted its employees back to work, except those who were identified as
officers and members of the union. The company claimed that these persons were not its
employees but those of the contractors. In their complaint, private respondents prayed for
reinstatement with backwages, damages and attorneys fees.
ISSUE:
Whether or not decision in a certification election case regarding the existence of an employeremployee relationship forecloses all further dispute between the parties as to the existence or
non-existence of such relationship
RULING:

Our pronouncement in the Manila Golf case that the decision in a certification election case, by
the very nature of such proceeding, does not foreclose further dispute regarding the existence or
non-existence of an employer-employee relationship, was not obiter dictum as petitioners
suggest, but rather was part of the resolution of the main issue in said case.
Manila Golf involved three separate proceedings initiated by a group of caddies against Manila
Golf and Country Club, Inc.: (1) a petition for certification election, (2) a petition for compulsory
arbitration, and (3) a petition for compulsory social security coverage. In the certification
election proceeding, the Med-Arbiter found that an employer-employee relationship existed
between the golf club and the caddies. On the other hand, the petition for compulsory arbitration
was dismissed by the Labor Arbiter upon finding that no employer-employee relationship existed
between Manila Golf and the caddies, which dismissal was later affirmed by the NLRC. The
Social Security Commission also dismissed the caddies petition for compulsory social security
coverage, stating that the caddies were not employees of the golf club, but this ruling was later
reversed by the Intermediate Appellate Court.
Moreover, the appellate court found that: (1) the so-called subcontractors do not have a license to
engage in subcontracting; (2) the salaries of private respondents are actually paid by SSI and are
given to the subcontractors who in turn give the salaries to the private respondents; (3) it was SSI
which hired the private respondents and placed them under their respective subcontractors; and
(4) private respondents use SSIs tools and equipment in their work.Based on these findings, the
Court of Appeals was correct in declaring that the alleged subcontractors are in effect "laboronly" contractors and are thus mere agents of petitioner SSI.

126. CENTRAL NEGROS ELECTRIC COOPERATIVE (CENECO) vs. SECRETARY


FACTS:
It appears from the records that on August 15, 1987, CENECO entered into a collective
bargaining agreement with CURE, a labor union representing its rank-and-file employees,
providing for a term of three years retroactive to April 1, 1987 and extending up to March 31,
1990. On December 28, 1989, CURE wrote CENECO proposing that negotiations be conducted
for a new collective bargaining agreement (CBA).
On January 18, 1990, CENECO denied CURE's request on the ground that, under applicable
decisions of the Supreme Court, employees who at the same time are members of an electric
cooperative are not entitled to form or join a union.
Prior to the submission of the proposal for CBA renegotiation, CURE members, in a general
assembly held on December 9, 1989, approved Resolution No. 35 whereby it was agreed that
'tall union members shall withdraw, retract, or recall the union members' membership from
Central Negros Electric Cooperative, Inc. in order to avail (of) the full benefits under the existing
Collective Bargaining Agreement entered into by and between CENECO and CURE, and the
supposed benefits that our union may avail (of) under the renewed CBA. This was ratified by
259 of the 362 union members. CENECO and the Department of Labor and Employment,
Bacolod District, were furnished copies of this resolution.
However, the withdrawal from membership was denied by CENECO on February 27, 1990
under Resolution No. 90 "for the reason that the basis of withdrawal is not among the grounds
covered by Board Resolution No. 5023, dated November 22, 1989 and that said request is
contrary to Board Resolution No. 5033 dated December 13, 1989, ..." 4
By reason of CENECO's refusal to renegotiate a new CBA, CURE filed a petition for direct
recognition or for certification election, supported by 282 or 72% of the 388 rank-and-file
employees in the bargaining unit of CENECO.

ISSUE:
Whether or not employees who at the same time are members of an electric cooperative are not
entitled to form or join unions for purposes of collective bargaining agreement, for certainly an
owner cannot bargain with himself or his co-owners
RULING:
Membership in an electric cooperative which merely vests in the member a right to vote during
the annual meeting becomes too trivial and insubstantial vis-a-vis the primordial and more
important constitutional right of an employee to join a union of his choice. Besides, the 390
employees of CENECO, some of whom have never been members of the cooperative, represent
a very small percentage of the cooperative's total membership of 44,000. It is inconceivable how
the withdrawal of a negligible number of members could adversely affect the business concerns
and operations of CENECO.
In addition, membership in the cooperative is on a voluntary basis. Hence, withdrawal therefrom
cannot be restricted unnecessarily. The right to join an organization necessarily includes the
equivalent right not to join the same. The right of the employees to self-organization is a
compelling reason why their withdrawal from the cooperative must be allowed. As pointed out
by CURE, the resignation of the member- employees is an expression of their preference for
union membership over that of membership in the cooperative.
We rule, however, that the direct certification ordered by respondent Secretary is not proper. By
virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct
certification originally allowed under Article 257 of the Labor Code has apparently been
discontinued as a method of selecting the exclusive bargaining agent of the workers. This
amendment affirms the superiority of the certification election over the direct certification which
is no longer available now under the change in said provision. 8
We have said that where a union has filed a petition for certification election, the mere fact that
no opposition is made does not warrant a direct certification. While there may be some factual
variances, the rationale therein is applicable to the present case in the sense that it is not alone
sufficient that a union has the support of the majority. What is equally important is that everyone

be given a democratic space in the bargaining unit concerned. The most effective way of
determining which labor organization can truly represent the working force is by certification
election.

127.

ILAW AT BUKLOD NG MANGGAGAWA (IBM) vs. FERRER-CALLEJA

FACTS:
On September 7, 1987, petitioner Union, formerly registered with the Labor Organization
Division of the Bureau of Labor Relations, as the San Miguel Corporation Sales Force Union
Calasiao Beer Region-IBM Local No. 56, a local union of Ilaw at Buklod ng Manggagawa
(IBM), which is a national union, requested San Miguel Corporationfor voluntary recognition as
the sole and exclusive bargaining representative of all the covered employees which consist of
the monthly and daily-paid employees of the Calasiao Sales Office, now Dagupan Sales Office.
As the territorial coverage of the Calasiao Beer Region embraces the regional sales office and the
six (6) sales offices in Calasiao, Carmen, Alaminos, Tarlac, Cabanatuan and San Isidro, SMC
denied the union's request and instead, suggested that it avail of a certification election. So, on
November 27, 1987, SMC, through its North-Central Luzon Sales Operations Manager, filed a
petition for certification election among the sales personnel of the Region only, excluding the
daily-paid and monthly paid employees, but including the sales offices of the entire beer region.
The Union filed a motion to dismiss alleging that the petition for certification election was
premature as it did not ask SMC to bargain collectively with it.
ISSUE:
Whether or not Director of the BLR gravely abused her discretion in ordering the holding of a
certification election.
RULING:
The petition has no merit. Ordinarily, in an unorganized establishment like the SMC Calasiao
Beer Region, it is the union that files a petition for a certification election if there is no certified
bargaining agent for the workers in the establishment. If a union asks the employer to voluntarily
recognize it as the bargaining agent of the employees, as the petitioner did, it in effect asks the
employer to certify it as the bargaining representative of the employees a certification which

the employer has no authority to give, for it is the employees' prerogative (not the employer's) to
determine whether they want a union to represent them, and, if so, which one it should be.
The petitioner's request for voluntary recognition as the bargaining representative of the
employees was in effect a request to bargain collectively, or the first step in that direction, hence,
the employer's request for a certification election was in accordance with Article 258 of the
Labor Code, and the public respondents did not abuse their discretion in granting the request.

128.

ALGIRE vs. DE MESA

FACTS:
Universal Robina Textile Monthly Salaried Employees Union, (URTMSEU), through private
respondent Regalado de Mesa, filed on September 4, 1990 a petition for the holding of an
election of union officers with the Arbitration Branch of the Department of Labor and
Employment (DOLE). Acting thereon, DOLE's med-arbiter Rolando S. de la Cruz issued an
Order dated October 19, 1990 directing that such an election be held.
In the pre-election conference, it was agreed that the election by secret ballot be conducted on
November 15, 1990 between petitioners (Catalino Algire, et al.) and private respondents
(Regalado de Mesa, et al.) under the supervision of DOLE through its duly appointed
representation officer.
On November 19, 1990, Catalino Algire filed a Petition and/or Motion (RO 400-9009-AU-002),
which DOLE's Med Arbitration unit treated as a protest, to the effect that one of the ballots
wherein one voter placed two checks inside the box opposite the phrase "Lino Algire and his
officers," hereinafter referred to as the "questioned ballot," should not have been declared
spoiled, as the same was a valid vote in their favor. The group argued that the two checks made
even clearer the intention of the voter to exercise his political franchise in favor of Algire's
group.
During the schedules hearing thereof, both parties agreed to open the envelope containing the
spoiled ballots and it was found out that, indeed, one ballot contained two (2) checks in the box
opposite petitioner Algire's name and his officers.
On December 20, 1990, med-arbiter de la Cruz issued an order declaring the questioned ballot
valid, thereby counting the same in Algire's favor and accordingly certified petitioner's group as
the union's elected officers. 2
Regalado de Mesa, et al. appealed from the decision of the med-arbiter to the Secretary of Labor
in Case No. OS-A-1-37-91 (RO 400-9009-AU-002). On January 31, 1991, the latter's office

granted the appeal and reversed the aforesaid Order. In its stead, it entered a new one ordering
"the calling of another election of officers of the Universal Robina Textile Monthly Salaried
Employees

Union

(URTMSEU),

with

the

same

choices

as

in

the

election

of

15 November, 1990, after the usual pre-election conference." 3


Director Maximo B. Lim of the Industrial Relations Division, Regional Office No. IV of the
DOLE set the hearing for another pre-election conference on March 22, 1991, reset to April 2,
1991, and finally reset to April 5, 1991.
ISSUE:
W/N the election held at the companys premises was a certification election?
RULING:
To resolve the issue of union representation at the Universal Robina Textile plant, what was
agreed to be held at the companys premises and which became the root of this controversy, was
a consent election, not a certification election.
It is unmistakable that the election held on November 15, 1990 was a consent election and not a
certification election. It was an agreed one, the purpose being merely to determine the issue of
majority representation of all the workers in the appropriate collective bargaining unit. It is a
separate and distinct process and has nothing to do with the import and effort of a certification
election.
The ruling of DOLEs representative in that election that the questioned ballot is spoiled is not
based on any legal provision or rule justifying or requiring such action by such officer but simply
in pursuance of the intent of the parties, expressed in the written instructions contained in the
ballot, which is to prohibit unauthorized markings thereon other than a check or a cross,
obviously intended to identify the votes in order to preserve the sanctity of the ballot, which is in
fact the objective of the contending parties.
If indeed petitioners group had any opposition to the representation officers ruling that the
questioned ballot was spoiled, it should have done so seasonably during the canvass of votes. Its
failure or inaction to assail such ballots validity shall be deemed a waiver of any defect or
irregularity arising from said election. Moreover, petitioners even question at this stage the clear
instruction to mark a check or cross opposite the name of the candidates group, arguing that

such instruction was not clear, as two checks may be interpreted that a voter may vote for Lino
Algire but not with (sic) his officers or viceversa,[6] notwithstanding the fact that a pre-election
conference had already been held where no such question was raised. In any event, the choice by
the majority of employees of the union officers that should best represent them in the
forthcoming collective bargaining negotiations should be achieved through the democratic
process of an election, the proper forum where the true will of the majority may not be
circumvented but clearly defined. The workers must be allowed to freely express their choice
once and for all in a determination where everything is open to their sound judgment and the
possibility of fraud and misrepresentation is minimized, if not eliminated, without any
unnecessary delay and/or maneuvering.

129.

CONFEDERATION OF CITIZENS LABOR UNIONS vs. NORIEL

FACTS:
On August 7, 1980, a certification election was held in the premises of the corporation from
eight-twenty in the morning to five-thirty in the afternoon. Out of the 831 votes cast, CCLU
garnered 356 votes; ALU 338 votes; NATU, 82 votes and GATCORD 42 votes. Eight votes were
spoiled and five votes were challenged or segregated.
As no union obtained a majority vote, CCLU and ALU, which had the two largest number of
votes, agreed in a pre-election conference on September 2, 1980 that a run-off election would be
held on November 6, 1980 from six o'clock in the morning to six o'clock in the evening. CCLU
requested that the certification election be conducted for two days but ALU objected to that
request.
On November 6, 1980, Margarita C. Enriquez, Reynaldo F. de Luna and one Francisco, three
election supervisors from the Ministry of Labor and Employment, arrived at around seven
o'clock in the morning near the Redson Textile compound but they were not allowed by the
security guard to enter the company premises in spite of the heavy rain. So, after consulting
through the phone with their chief, a certain Attorney Padilla. the said election supervisors
decided to hold the certification election "outside the premises of the company in a small store
outside of the annex building" (Annex C, Rollo, p. 27). They used as ballot box "an improvised
carton box." The union representatives did not object to the improvised polling place and ballot
box.
Voting started at eleven o'clock. During the election and just before it was closed at six-thirty in
the evening, the ALU representative, Sebastian P. Taneo, executed a written protest or
manifestation, alleging that the management of Redson Textile did not allow the run-off election
to be held within its premises; that the company prevented fifty percent of the workers from
voting by not allowing them to get out of the company premises and inducing them to work
overtime; that its security guards "manhandled" the ALU vice-president and that their "active
intervention" caused "chaos and confusion" for around thirty minutes; that the company refused

to furnish election paraphernalia like the polling place and the ballot box and that the election
supervisors declared the election closed in spite of ALU's objection.
Taneo prayed that the votes should not be counted, that another day be scheduled for the
continuation of the election and that the company be ordered to allow its workers to vote (Rollo
pp. 29-35).
At around seven-thirty in the evening, the votes cast were canvassed. Of the 692 votes cast, ALU
got 366 votes as against CCLU's 313 votes, or a margin of 53 votes. There were 1,010 voters.
Because ALU won, its representative, Taneo, withdrew his protest or manifestation by writing on
the minutes of the proceeding that his protest or manifestation was withdrawn "before the close
of the proceedings". On the other hand, the CCLU representatives refused to sign the minutes of
the election.
On the following day, November 7, CCLU through its representative, Juan L. Fresnoza filed with
the Bureau of Labor Relations a protest wherein he prayed that the November 6 certification
election as well as the "continuation of the election" on November 7 be annulled.
ISSUE:
w/n run off election is valid
RULING:
No, We hold that the certification election is invalid because of certain irregularities such as that
(1) the workers on the night shift (ten p.m. to six a.m.) and some of those in the afternoon shift
were not able to vote, so much so that out of 1,010 voters only 692 voted and about 318 failed to
vote (p. 88, Rollo); (2) the secrecy of the ballot was not safeguarded; (3) the election supervisors
were remiss in their duties and were apparently "intimidated" by a union representative and (4)
the participating unions were overzealous in wooing the employees to vote in their favor by
resorting to such tactics as giving free tricycle rides and T-shirts.
The purpose of a certification election is to give the employees "true representation in their
collective bargaining with an employer" (51 C.J.S. 969). That purpose was not achieved in the

run-off election because many employees or union members were not able to vote and the
employer, through apathy or deliberate intent, did not render assistance in the holding of the
election.
It should be noted that ALU's written protest (later withdrawn) was based on the same grounds
invoked by CCLU in its protest. That fact alone should have alerted Noriel to disregard the
technicality that CCLU's protest was not filed on time.

130.

NACUSIP-TUCP vs. TRAJANO

FACTS:
On June 21, 1982, petitioner union filed a petition for deadlock in collective bargaining with the
Ministry of Labor and Employment (now Department of Labor and Employment). In order to
obviate friction and tension, the parties agreed to submit the petition for deadlock to compulsory
arbitration on July 14, 1982 and was docketed as RAB Case No. VI-0220-82.
On July 21, 1982, private respondent FUR-TUCP filed with the Regional Office No. VI, MOLE
(now DOLE), Iloilo City a petition for certification election among the rank and file employees
of private respondent company, alleging that: (1) about forty-five percent (45%) of private
respondent company's employees had disaffiliated from petitioner union and joined private
respondent union; (2) no election had been held for the past twelve (12) months; and (3) while
petitioner union had been certified as the sole collective bargaining agent, for over a year it failed
to conclude a collective bargaining agreement with private respondent company. Petitioner union
filed a motion to intervene in the petition for certification election filed by private respondent
union.
By order dated July 23, 1982, the Acting Med-Arbiter Pacifico V. Militante dismissed the
petition for certification election for lack of merit since the petition is barred by a pending
bargaining deadlock.
ISSUE:
Whether or not a petition for certification election may be filed during the pendency of a
bargaining deadlock submitted to arbitration or conciliation.
RULING:
No, The law on the matter is Section 3, Book V, Rule V of the Omnibus Rules Implementing the
Labor Code, to wit:
Sec. 3. When to file. In the absence of a collective bargaining agreement duly registered in
accordance with Article 231 of the Code, a petition for certification election may be filed at any
time. However, no certification election may be held within one year from the date of issuance of

a final certification election result. Neither may a representation question be entertained if,
before the filing of a petition for certification election, a bargaining deadlock to which an
incumbent or certified bargaining agent is a party had been submitted to conciliation or
arbitration or had become the subject of valid notice or strike or lockout.
If a collective bargaining agreement has been duly registered in accordance with Article 231 of
the Code, a petition for certification election or a motion for intervention can only be entertained
within sixty (60) days prior to the expiry date of such agreement.
The clear mandate of the aforequoted section is that a petition for certification election may be
filed at any time, in the absence of a collective bargaining agreement. Otherwise put, the rule
prohibits the filing of a petition for certification election in the following cases:
(1)

during the existence of a collective bargaining agreement except within the freedom

period;
(2)

within one (1) year from the date of issuance of declaration of a final certification

election result; or
(3)

during the existence of a bargaining deadlock to which an incumbent or certified

bargaining agent is a party and which had been submitted to conciliation or arbitration or had
become the subject of a valid notice of strike or lockout.
The Deadlock Bar Rule simply provides that a petition for certification election can only be
entertained if there is no pending bargaining deadlock submitted to conciliation or arbitration or
had become the subject of a valid notice of strike or lockout. The principal purpose is to ensure
stability in the relationship of the workers and the management.

131.

Capitol Medical Center ACE vs. Laguesma

FACTS:
Respondent union filed petition for certification election. The Med-Arbiter granted the petition
for certification election. Respondent Capitol Medical Center (CMC) appealed to the Office of
the Secretary. But the Order granting the certification election was affirmned.
On December 9, 1992, elections were held with respondent union garnering 204 votes, 168 in
favor of no union and 8 spoiled ballots out of a total of 380 votes cast. Med-Arbiter issued an
Order certifying respondent union as the sole and exclusive bargaining representative of the rank
and file employees at CMC.
Respondent CMC again appealed to the Office of the Secretary of Labor the result of the
election, it was denied. MR also denied. Respondent CMCs contention was the supposed
pendency of its petition for cancellation of respondent unions certificate of registration. In the
said case, the Med-Arbiter therein issued an Order which declared respondent unions certificate
of registration as null and void. However, this order was reversed on appeal by the Officer-inCharge of the BLR in her Order. The said Order dismissed CMCs motion for cancellation of the
certificate of registration of respondent union and declared that it was not only a bona fide
affiliate or local of a federation, but a duly registered union as well.
Respondent union, after being declared as the certified bargaining agent of the rank-and-file
employees of respondent CMC, presented proposals for the negotiation of a CBA. However,
CMC contended that CBA negotiations should be suspended in view of the Order declaring the
registration of respondent union as null and void. In spite of the refusal of respondent CMC,
respondent union still persisted in its demand for CBA negotiations, claiming that it has already
been declared as the sole and exclusive bargaining agent of the rank-and-file employees of the
hospital.
Due to respondent CMCs refusal to bargain collectively, respondent union filed a notice of strike
and later staged a strike on April 15, 1993. The case was certified to the NLRC for compulsory
arbitration.

It is at this point that petitioner union, on March 24, 1994, filed a petition for certification
election among the regular rank-and-file employees of the Capitol Medical Center Inc. It alleged
in its petition that: 1) three hundred thirty one (331) out of the four hundred (400) total rank-andfile employees of respondent CMC signed a petition to conduct a certification election; and 2)
that the said employees are withdrawing their authorization for the said union to represent them
as they have joined and formed the union Capitol Medical Center Alliance of Concerned
Employees (CMC-ACE). They also alleged that a certification election can now be conducted as
more that 12 months have lapsed since the last certification election was held.
Respondent union opposed the petition and moved for its dismissal. It contended that it is the
certified bargaining agent of the rank-and-file employees of the Hospital, which was confirmed
by the Secretary of DOLE and by this Court. It also alleged that it was not negligent in asserting
its right as the certified bargaining agent for it continuously demanded the negotiation of a CBA
with the hospital despite the latters avoidance to bargain collectively.
May 12, 1994, Med-Arbiter Brigida Fadrigon, issued an Order granting the petition for
certification election among the rank and file employees. On appeal by respondent union, the
public respondent Laguesma reversed and favored the respondent union. Hence this petition.
ISSUE:
Was there a bargaining deadlock between CMC and respondent union.
RULING:
While it is true that one year had lapsed since the time of declaration of a final certification
result, and that there is no collective bargaining deadlock, public respondent did not commit
grave abuse of discretion when it ruled in respondent unions favor since the delay in the forging
of the CBA could not be attributed to the fault of the latter.
After respondent union was certified as the bargaining agent of CMC, it invited the employer
hospital to the bargaining table by submitting its economic proposal for a CBA. However, CMC
refused to negotiate with respondent union and instead challenged the latters legal personality

through a petition for cancellation of the certificate of registration which eventually reached this
Court. The decision affirming the legal status of respondent union should have left CMC with no
other recourse but to bargain collectively; but still it did not. Respondent union was left with no
other recourse but to file notice of strike against CMC for unfair labor practice with the NCMB.
This eventually led to a strike.
A deadlock is the counteraction of things producing entire stoppage; There is a deadlock when
there is a complete blocking or stoppage resulting from the action of equal and opposed forces.
The word is synonymous with the word impasse, which presupposes reasonable effort at good
faith bargaining which, despite noble intentions, does not conclude in agreement between the
parties.
Although there is no deadlock in its strict sense as there is no counteraction of forces present
in this case nor reasonable effort at good faith bargaining, such can be attributed to CMCs
fault as the bargaining proposals of respondent union were never answered by CMC. In fact,
what happened in this case is worse than a bargaining deadlock for CMC employed all legal
means to block the certification of respondent union as the bargaining agent of the rank-and-file;
and use it as its leverage for its failure to bargain with respondent union. We can only conclude
that CMC was unwilling to negotiate and reach an agreement with respondent union. CMC has
not at any instance shown willingness to discuss the economic proposals given by respondent
union.
It is only just and equitable that the circumstances in this case should be considered as similar in
nature to a bargaining deadlock when no certification election could be held. This is also to
make sure that no floodgates will be opened for the circumvention of the law by unscrupulous
employers to prevent any certified bargaining agent from negotiating a CBA. Thus, Section 3,
Rule V, Book V of the Implement Rules should be interpreted liberally so as to include a
circumstance, e.g. where a CBA could not be concluded due to the failure of one party to
willingly perform its duty to bargain collectively.
WHEREFORE, the petition is hereby DISMISSED.

132. NACUSIP-TUCP vs. Ferrer-Calleja


FACTS:
Dacongcong Sugar and Rice Milling Co. in Negros Occ. Employs about 500 workers during
milling season, and 300workers during off milling season. Dacongcong has 2 competing labor
unions for these workers. Nov. 14, 1984 Dacongcong entered into a CBA with Priv. Res. Natl
Federation, effective three years./ until Nov 14, 1987.
The CBA was renewed, extended for another 3years, BUT with reservation for amendments
regarding wage increases, hours of work, and other terms of conditions of employment. The
negotiation for the reservations in the CBA, went into a deadlock. The parties agreed to a
suspension and cooling off period. Meanwhile (Dec 5, 1988) Pet. National Congress,
FILED: direct certification/certification election (They filed beyond the freedom period of
60days before CBA expiry)
OPPOSED: National Federation moved to dismiss the petition because, (1) it was filed out of
time, (2) there was still the deadlocked CBA.
ANSWER: Dacongcong, petition to dismiss.6. Med-Arbiter: Directed the conduct of the
Certification Election.Dir. BLR/Res: Reversed, dismissed the petition for being filed out of time.
(beyond freedom pd.)
ISSUE:
w/n a petition for certification election may be filed after the 60-day freedom period?
RULING:
NO. It should be dismissed outright based on RuleV 6 BookV of the labor codes IRR.That the
CBA was in deadlock is immaterial because CBAs are deemed to continue to be in force until a
new CBA is executed. LC 253.

Pet. Stand: That IRR provisions should be liberally construed in favor of workers exercising their
right to self-org, Res. does not have jurisdiction, and that Res. ignored SC case of Kapisanan ng
mga Mangagawa sa La Suerte-FOITAF v. Noriel. (Court only touched upon the first
contention)Res. Stand: Petition was filed out of time(More than a year after CBA expired) and
should be dismissed outright.
A careful perusal of the provision (RuleV 6 BookV) shows that there is a clear mandate that the
petition should be dismissed outright for having been filed outside the 60-day freedom period.
Only a certified CBA may serve as a bar to certification elections. (3 RuleV, BookV and
PAFLU v. Estrella 170 S 378)
a. Here BLR certified the CBA executed in 1984, hence the contract bar rule is applicable.
b. petition for certification election or a motion for intervention can only be entertained
withinsixty days prior to the expiry date of an existing collective bargaining agreement
c. OR Rule prohibits the filing of a petition for certification election during the existence of a
collective bargaining agreement except within the freedom period, as it is called, when the said
agreement is about to expire
d. PURPOSE: is to ensure stability in the relationships of the workers and the management by
preventing frequent modifications of any collective bargaining agreement earlier entered into by
them in good faith and for the stipulated original period (ALU-TUCP v. Trajano).
Despite the lapse of the formal effectivity of the CBA the law still considers the same as
continuing in force and effect until a new CBA shall have been validly executed.
a. As held in Lopez Sugar Corp. v. Federation of Free Workers citing Art. 253 of the Labor code:
that "(i)t shall be the duty of both parties to keep the statusquo and to continue in full force and
effect the terms and conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties." WHEREFORE Pet. DENIED. Certification Election
was not allowed.

133.

ASSOCIATED LABOR UNIONS (ALU) vs. FERRER-CALLEJA

FACTS:
The associated Labor Unions (ALU) thru its regional Vice-Presidents Teofanio C. Nuez, in a
letter dated May 7, 1986 (ANNEX C) informed GAW Trading, Inc. that majority of the latter's
employees have authorized ALU to be their sole and exclusive bargaining representative, and
requested GAW Trading Inc., in the same Letter for a conference for the execution of an initial
Collective Bargaining Agreement (CBA);
GAW Trading Inc. received the Letter of ALU aforesaid on the same day of May 7, 1986 as
acknowledged thereunder and responded (sic) ALU in a letter dated May 12, 1986 (Annex D)
indicating its recognition of ALU as the sole and exclusive bargaining agent for the majority of
its employees and for which it set the time for conference and/or negotiation at 4:00 P.M. on May
12, 1986 at the Pillsbury Office, Aboitiz Building Juan Luna Street, Cebu City;
On the following day of May13, 1986, ALU in behalf of the majority of the employees of GAW
Trading Inc. signed and excuted the Collective Bargaining (ANNEX F) ...
On May 15, 1986, ALU in behalf of the majority of the employees of GAW Trading Inc. and
GAW Trading Inc. signed and executed the Collective Bargaining Agreements (ANNEX F) . . . .
In the meantime, at about 1:00 P.M. of May 9, 1986, the Southern Philippines Federation of
Labor (SPFL) together with Nagkahiusang Mamumuo sa GAW (NAMGAW) undertook a ...
Strike ... after it failed to get the management of GAW Trading Inc. to sit for a conference
respecting its demands presented at 11: A.M. on the same day in an effort to pressure GAW
Trading Inc. to make a turnabout of its standign recognition of ALU as the sole and exclusive
bargaining representative of its employees, as to which strike GAW Trading Inc. filed a petition
for Restraining Order/Preliminary Injunction, dfated June 1, 1986 (Annex H) and which strike
Labor Arbiter Bonifacio B. Tumamak held as illegal in a decision dated August 5, 1986
(ANNEX I);
On May 19, 1986, GAW Lumad Labor Union (GALLU-PSSLU) Federation ... filed a
Certification Election petition (ANNEX J), but as found by Med-Arbiter Candido M. Cumba in

its (sic) Order dated Ju ne 11, 1986 (ANNEX K), without having complied (sic) the subscription
requirement for which it was merely considered an intervenor until compliance thereof in the
other petition for direct recogbnition as bargaining agent filed on MAy 28, 1986 by southern
Philippines Federation of Labor (SPFL) as found in the same order (ANNEX K);
Int he meantime, the Collective Bargaining Agreement executed by ALU and GAW Trading Inc.
(ANNEX F) was duly filed May 27, 1986 with the Ministry of Labor and Employment in Region
VII, Cebu city;
Nevertheless, Med-Arbiter Candido M. Cumba in his order of June 11, 1986 (Annex K) ruled
for the holding of a ceritfication election in all branches of GAW Trading Inc. in Cebu City, as to
which ALU filed a Motion for Reconsideration dated June 19, 1986 (ANNEX L) which was
treated as an appeal on that questioned Order for which reason the entire record of subject
certification case was forwarded for the Director, Bureau of LAbor Relations, Ministry of Labor
and Employment, Manila (ANNEX M);
Bureau of Labor Relations Director Cresencio B. Trajano, rendered a Decision on August 13,
1986 (Annex B) granting ALU's appeal (Motion for Reconsideration) and set aside the
questioned Med-Arbiter Order of June 11, 1986 (Annex K), on the ground that the CBA has been
effective and valid and the contract bar rule applicable;
ISSUE:
w/n the collective bargaining agreement involved herein is defective because it "was not duly
submitted in accordance with Section I, Rule IX, Book V of the Implementing Rules of Batas
Pambansa Blg. 130.",hence, the "contract bar rule" relied upon by her predecessor does not apply
in the present controversy.
RULING:
Yes, We find no reversible error in the challenged decision of respondent director. A careful
consideration of the facts culled from the records of this case, especially the allegations of
petitioner itself as hereinabove quoted, yields the conclusion that the collective bargaining

agreement in question is indeed defective hence unproductive of the legal effects attributed to it
by the former director in his decision which was subsequently and properly reversed.
We have previously held that the mechanics of collective bargaining are set in motion only when
the following jurisdictional preconditions are present, namely, (1) possession of the status of
majority representation by the employees' representative in accordance with any of the means of
selection and/or designation provided for by the Labor Code; (2) proof of majority
representation; and (3) a demand to bargain under Article 251, paragraph (a), of the New Labor
Code.
The Court has long since declared that:
... Basic to the contract bar rule is the proposition that the delay of the right to select
representatives can be justified only where stability is deemed paramount. Excepted from the
contract which do not foster industrial stability, such as contracts where the identity of the
representative is in doubt. Any stability derived from such contracts must be subordinated to the
employees' freedom of choice because it does nto establish the type of industrial peace
contemplated by the law.
Additionally, the inapplicability of the contract bar rule is further underscored by the fact that
when the disputed agreement was filed before the Labor Regional Office on May 27, 1986, a
petition for certification election had already been filed on May 19, 1986. Although the petition
was not supported by the signatures of thirty percent (30%) of the workers in the bargaining unit,
the same was enough to initiate said certification election

134.

Firestone vs. Estrella

FACTS:
It is petitioner's contention that the issue of whether or not there was an existing contract or
collective agreement to validity bar the holding of a certification election should have been
resolved by respondent Acting Director in BLR Case No. A-070-76, as it was already intertwined
with the issue of petitioner's legal personality as assailed in BLR Case No. 2106-76. According
to petitioner, 'if the petition for certification election in this case is not barred by the contract in
question, then the registration certificate of petitioner, acquired as it was within the sixty-day
freedom period of such contract must, of necessity, be likewise not barred or denied as
premature." Likewise, petitioner alleges that 'there being no pronouncement on the applicability
of the 'contract bar' rule in this case, the cancellation of the registration certificate of petitioner is
devoid of legal basis, hence it was done by the respondent BLR Acting Director in grave abuse
of discretion."
Further, it is petitioner's stand that the Acting Director erred in concluding that the collective
bargaining agreement was to expire on January 31, 1977, for which n he held that petitioner's
application for registration was premature. The expiry date of January 31, 1977, according to
petitioner, was unauthorized because the extension of the contract for a period of one year was
not certified by the Department of Labor and was "used to foil the constitutional right of the
workers to self-organization and to engage in collective bargaining."
RULING:
We find this petition meritorious. In BLR Case No. 2160-76, Director Carmelo C. Noriel,
resolving the pivotal issue of whether or not the failure of FEU to submit "a sworn statement ...
to the effect that there is no recognized or certified collective bargaining agent in the bargaining
unit condemned warrants the revocation of its registration, said:
This Bureau answers in the negative.
... notwithstanding the existence of a certified or recognized collective bargaining agent, the
policy of this Office sanctions a registration of new union during the freedom period especially if
it has become apparent that a substantial number of union members has decide(, to form a new

labor organization, as aptly illustrated in the case at bar. If the rule were otherwise, no recourse
whatsoever hall be accorded to members of a bargaining unit who would like to make a free
choice of their bargaining representative, thereby placing the constitutional rights of the workers
to self-organization and collective bargaining in mockery, if not, in utter illusion.
This view is supported by precedents, it seems to be the better view that a contract does not
operate as a bar to representation proceedings, where it is shown that because of a schism in the
union the contract can no longer serve to promote industrial stability, and the direction of the
election is in the interest of industrial stability as well as in the interest of the employees' right in
the selection of their bargaining representatives. 4 Basic to the contract bar rule is the proposition
that the delay of the right to select representatives can be justified only where stability is deemed
paramount. Excepted from the contract bar rule are certain types of contracts which do not foster
industrial stability, such as contracts where the Identity of the representative is in doubt. Any
stability derived from such contracts must be subordinated to the employees' freedom of choice
because it does not establish the type of industrial peace contemplated by the law.
In the case at bar, it is doubtful if any contract that may have been entered into between
respondent ALU and respondent Company will foster stability in the bargaining unit, in view of
the fact that a substantial number of the employees therein have resigned from ALU and joined
petitioner FEU. At any rate, this is a matter that must be finally determined by means of a
certification election.
In Foamtex Labor Union-TUPAS vs. Noriel, We said:
... The question of whether or not the disaffiliation was validly made appears not to be of much
significance, considering that the petition for direct certification is supported by eighty (80) out
of a total of one hundred twenty (120) of the rank and file employees of the unit. Pursuant to
Article 256 of the Labor Code, 'if there is any reasonable doubt as to whom the employees have
chosen as their representative for the purpose of collective bargaining, the Bureau shall order a
secret ballot election to be conducted by the Bureau to ascertain who is the freely chosen
representative of the employees concerned, ... It is very clear from the aforementioned
circumstances that there is actually a reasonable doubt as to whom the employees have chosen as
their representative for the purpose of collective bargaining.
As to whether or not the disaffiliation was actually and validly made, or whether Foamtex Labor
Union of respondent Belga is the true collective bargaining representative of the employee are

questions that need not be resolved independently of each other. Such questions may be
answered once and for all the moment is determined, by means of the secret ballot election, the
union to which the majority of the employees have really reposed their allegiance. The important
factor here is the true choice of the employees, and . the most expeditious and effective manner
of determining this is by means of the certification election, as it is for this very reason that such
procedure has been incorporated in the law. To order that a separate secret ballot election be
conducted for the purpose of determining the question of policy, i.e., whether or not the majority
of the employees desire to disaffiliate from the mother union, should be merely a circuitous way
of ascertaining the majority's true choice.
As observed PAFLU v. Bureau of labor Relation (69 SCRA 132, 139), a certification election for
the collective bargaining process is one of the fairest and most effective way of determining
which labor organization can truly represent the working force. It is a fundamental postulate that
the will of the majority, if given in an honest election with freedom on the part of the voters to
make their choice, is controlling. No better device can assure the institution of industrial
democracy with the two parties to a business enterprise, management and labor, establishing a
regime of self-rule.
Similarly, in Philippine Labor Alliance Council (PLAC) vs. Bureau of Labor Relations, et al., it
was held that once the fact of disaffiliation has been demonstrated beyond doubt, a certification
election is the most expeditious way of determining which labor organization is to be the
exclusive bargaining representative.
It appearing that the extension of the life of the collective bargaining agreement for a period of
one year was not certified by the Bureau of Labor Relations, it cannot, therefore, also bar the
certification election. Only a certified collective bargaining agreement would serve as a bar to
such election.
Corollarily, therefore, petitioner's application for registration was not premature, as it need not
have waited for the expiration of the one-year extension, the agreement having expired on
January 31, 1976.

135.

United CMC vs. BLR

FACTS:
Petitioner is a legitimate labor organization, the incumbent collective bargaining representative
of all rank and file workers of CENTEX since 1956. Respondent PAFLU is also a legitimate
labor organization seeking representation as the bargaining agent of the rank and file workers of
CENTEX.
On August 31, 1978, petitioner filed a complaint for Unfair Labor Practice (R4-LRD-C-8-149378) (the ULP Case, for brevity) against CENTEX and PAFLU alleging that CENTEX had
helped and cooperated in the organization of the Central Textile Mills, Inc. Local PAFLU by
allowing the organizing members of the PAFLU to solicit signatures of employees of the
company who are members of the complainant union to disaffiliate from complainant union and
join the respondent PAFLU, during company time and inside the company premises on August
21, 1978 and the following days thereafter.[1] While the ULP Case was pending, PAFLU, on
September 5, 1978, filed a Petition for Certification Election (R4-LRD-M-9432-78) (the
Certification Case, for short) among the rank and file workers of CENTEX, alleging that: 1)
there has been no certification election during the 12 months period prior to the filing of the
petition; 2) the petition is supported by signatures of 603 workers, or more than 30% of the rank
and file workers of CENTEX; 3) the collective bargaining agreement between CENTEX and
petitioner will expire on October 31, 1978; 4) the petition is filed within the 60-day-freedomperiod immediately preceding the expiration of the CBA, and 6) there is no legal impediment to
the filing of the petition.[2] Petitioner intervened in the Certification Case and filed a Motion to
Dismiss on September 27, 1978 on the grounds that: 1) the ULP Case charging that PAFLU is a
company-dominated union is a prejudicial question and bars the holding of the certification
election; and 2) PAFLU failed to comply with the 30% requirement for mandatory certification
election since only 440 of the 603 are valid signatures and that 719 signatories are required as
constitutive of 30% of the rank and file workers totalling 2,397 and not 1,900 as alleged by
PAFLU.[3]
On October 16, 1978, petitioner filed a Notice of Strike with the Bureau of Labor Relations for
deadlock in the CBA negotiations with CENTEX. The parties having failed to effect a

conciliation, the Labor Minister assumed jurisdiction on November 9, 1978 in Case No. AJML033-78[4] (referred to hereafter as the Deadlock Case).
A Supplemental Motion to Dismiss in the Certification Case was filed by petitioner on December
7, 1978 alleging that the Labor Minister had already taken cognizance of the deadlock in the
CBA negotiations and constituted an impediment to the holding of a certification election.[5] On
December 18, 1978, in the Deadlock Case, the Deputy Minister of Labor released a Decision
directing petitioner and CENTEX to execute and sign a CBA to take effect on November 1, 1978
up to October 30, 1981 based on the guidelines enumerated therein, and to furnish the Office of
the Minister of Labor with a signed copy of the renewed agreement not later than January 31,
1979.[6] On January 23, 1979, in the Certification Case, the Med-Arbiter issued an Order for the
holding of a certification election among CENTEX rank and file workers, whereby qualified
voters could choose either PAFLU or petitioner as the collective bargaining representative or No
Union at all.[7] This was affirmed by respondent Director of the Bureau of Labor Relations on
appeal, in the challenged Resolution, dated May 25, 1979, stating that: 1) the Bureau has
discretion to order certification election where several unions are contending for representation
and when there is doubt as to whether the 30% requirement has been met; and 2) to preclude the
filing of a petition for certification election the notice of strike for deadlock in CBA negotiations
must occur prior to the petition.[8] A Motion for Reconsideration filed by petitioner was denied
for lack of merit in the Resolution of August 20, 1979,[9] also assailed herein. Hence, this
petition
ISSUE:
The question to resolve is whether or not public respondent acted with grave abuse of discretion
in affirming the Order of the Med-Arbiter calling for a certification election despite: (a) the
pendency of an unfair labor practice case filed by petitioner charging respondent PAFLU as
being company-dominated;
(b) the existence of a deadlock in negotiations for renewal of the collective bargaining agreement
between petitioner and the Central Textile Mills, Inc. (CENTEX, for short); and
(c) a reasonable doubt as to whether the 30% requirement for holding a certification election has
been met.

RULING:
The case can be resolved on the basis of the first issue alone, which must be answered in the
affirmative. Under settled jurisprudence, the pendency of a formal charge of company
domination is a prejudicial question that, until decided, bars proceedings for a certification
election 10 , the reason being that the votes of the members of the dominated union would not be
free. 11 The ULP Case herein was filed on August 31, 1978, or anterior to the Certification Case,
which was presented on September 5, 1978. The pendency of the charge was known to
respondent public official by virtue of the Motion to Dismiss filed by petitioner as intervenor in
the Certification Case. No allegation has been made that said ULP Case was instituted in bad
faith to forestall the Certification Case.
The rationale for the suspension of the election proceedings has been further amplified as
follows:
"What is settled law, dating from the case of Standard Cigarette Workers Union v. Court of
Industrial Relations (101 Phil. 126), decided in 1957, is that if it were a labor organization
objecting to the participation in a certification election of a company-dominated union, as a
result of which a complaint for an unfair labor practice case against the employer was filed, the
status of the latter union must be first cleared in such a proceeding before such voting could take
place. In the language of Justice J.B.L. Reyes as ponente: `As correctly pointed out by Judge
Lanting in his dissenting opinion on the denial of petitioners motion for reconsideration, a
complaint for unfair labor practice may be considered a prejudicial question in a proceeding for
certification election when it is charged therein that one or more labor unions participating in the
election are being aided, or are controlled, by the company or employer. The reason is that the
certification election may lead to the selection of an employer-dominated or company union as
the employees bargaining representative, and when the court finds that said union is employerdominated in the unfair labor practice case, the union selected would be decertified and the
whole election proceedings would be rendered useless and nugatory. (Ibid., 128). The next year,
the same jurist had occasion to reiterate such doctrine in Manila Paper Mills Employees and
Workers Association v. Court of Industrial Relations (104 Phil. 10 [1958]), thus: `We agree with
the CIR on the reasons given in its order that only a formal charge of company domination may
serve as a bar to and stop a certification election, the reason being that if there is a union
dominated by the Company, to which some of the workers belong, an election among the

workers and employees of the company would not reflect the true sentiment and wishes of the
said workers and employees from the standpoint of their welfare and interest, because as to the
members of the company dominated union, the vote of the said members in the election would
not be free. It is equally true, however, that the opposition to the holding of a certification
election due to a charge of company domination can only be filed and maintained by the labor
organization which made the charge of company domination, because it is the entity that stands
to lose and suffer prejudice by the certification election, the reason being that its members might
be overwhelmed in the voting by the other members controlled and dominated by the Company,
(Ibid., 15). It is easily understandable why it should be thus. There would be an impairment of
the integrity of the collective bargaining process if a company-dominated union were allowed to
participate in a certification election. The timid, the timorous, and the faint-hearted in the ranks
of labor could easily be tempted to cast their votes in favor of the choice of management. Should
it emerge victorious, and it becomes the exclusive representative of labor at the conference table,
there is a frustration of the statutory scheme. It takes two to bargain. There would be instead a
unilateral imposition by the employer. There is need therefore to inquire as to whether a labor
organization that aspires to be the exclusive bargaining representative is company-dominated
before the certification election."
With the suspension of the certification proceedings clearly called for by reason of a prejudicial
question, the necessity of passing upon the remaining issues is obviated.

136.

Progressive Development vs. Secretary

FACTS:
On July 9, 1993, Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan (respondent Union)
filed a petition for certification election with the Department of Labor (National Capital Region)
in behalf of the rank and file employees of the Progressive Development Corporation (Pizza Hut)
Petitioner filed on August 20, 1993, a verified Motion to Dismiss the petition alleging fraud,
falsification and misrepresentation in the respondent. Unions registration making it void and
invalid: a) respondent Unions registration was tainted with false, forged, double or multiple
signatures of those who allegedly took part in the ratification of the respondent Unions
constitution and by-laws and in the election of its officers that there were two sets of supposed
attendees to the alleged organizational meeting that was alleged to have taken place on June 26,
1993; that the alleged chapter is claimed to have been supported by 318 members when in fact
the persons who actually signed their names were much less; and b) while the application for
registration of the charter was supposed to have been approved in the organizational meeting
held on June 27, 1993, the charter certification issued by the federation KATIPUNAN was dated
June 26, 1993or one (1) day prior to the formation of the chapter, thus, there were serious
falsities in the dates of the issuance of the charter certification and the organization meeting of
the alleged chapter.
On August 30, 1993, petitioner filed a Petition seeking the cancellation of the Unions
registration on the grounds of fraud and falsification, docketed as BIR Case No. 8-21-83. Motion
was likewise filed by petitioner with the Med-Arbiter requesting suspension of proceedings in
the certification election case until after the prejudicial question of the Unions legal personality
is determined in the proceedings for cancellation of registration.
However, in an Order dated September29, 1993,6Med-Arbiter Rasidali C. Abdullah directed the
holding of a certification election among petitioners rank and file employees.
Appeal to the office of the Secretary of Labor, Labor Undersecretary Bienvenido E. Laguesma in
a Resolution dated December 29, 1993 denied the same. motion for reconsideration of the public
respondents resolution was denied.

ISSUE:
The question that now arises is: when does a branch, local or affiliate of a federation become a
legitimate labor organization?
RULING:
The Court has repeatedly stressed that the holding of a certification election is based on a
statutory policy that cannot be circumvented. The workers must be allowed to freely express
their choice in a determination where everything is open to their sound judgment and the
possibility of fraud and misrepresentation is eliminated.
But while Article 257 cited by the Solicitor General directs the automatic conduct of a
certification election in an unorganized establishment, it also requires that the petition for
certification election must be filed by a legitimate labor organization. Article 242 enumerates the
exclusive rights of a legitimate labor organization among which is the right to be certified as the
exclusive representative of all the employees in an appropriate collective bargaining unit for
purposes of collective bargaining.
Meanwhile, Article 212(h) defines a legitimate labor organization as "any labor organization duly
registered with the DOLE and includes any branch or local thereof." Rule I, Section 1 (j), Book
V of the Implementing Rules likewise defines a legitimate labor organization as "any labor
organization duly registered with the DOLE and includes any branch, local or affiliate thereof.
Ordinarily, a labor organization acquires legitimacy only upon registration with the BLR. Under
Article 234 (Requirements of Registration):
Any applicant labor organization, association or group of unions or workers shall acquire legal
personality and shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration based on the following
requirements:
(a)

Fifty-pesos (P50.00) registration fee;

(b)

The names of its officers, their addresses, the principal address of the labor organization,

the minutes of the organizational meeting and the list of the workers who participated in such
meetings;
(c)

The names of all its members comprising at least twenty 20% percent of all the

employees in the bargaining unit where it seek to operate;

(d)

If the applicant has been in existence for one or more years, copies , of its annual

financial reports; and


(e)

Four copies of the constitution and by-laws of the applicant union, the minutes of its

adoption or ratification and the list of the members who participated in it.
And under Article 235 (Action on Application)
The Bureau shall act on all applications for registration within thirty (30) days from filing.
All requisite documents and papers shall be certified under oath by the secretary or the treasurer
of the organization, as the case may be, and attested to by its president.
Moreover, section 4 of Rule II, Book V of the Implementing Rules requires that the application
should be signed by at least twenty percent (20%) of the employees in the appropriate bargaining
unit and be accompanied by a sworn statement of the applicant union that there is no certified
bargaining agent or, where there is an existing collective bargaining agreement duly submitted to
the DOLE, that the application is filed during the last sixty (60) days of the agreement.
But when an unregistered union becomes a branch, local or chapter of a federation, some of the
aforementioned requirements for registration are no longer required. The provisions governing
union affiliation are found in Rule II, Section 3, Book V of the Implementing Rules, the relevant
portions of which are cited below:
Sec. 3. Union affiliation; direct membership with national union. An affiliate of a labor
federation or national union may be a local or chapter thereof or an independently registered
union.
a)

The labor federation or national union concerned shall issue a charter certificate

indicating the creation or establishment of a local or chapter, copy of which shall be submitted to
the Bureau of Labor Relations within thirty (30) days from issuance of such charter certificate.
b)

An independently registered union shall be considered an affiliate of a labor federation or

national union after submission to the Bureau of the contract or agreement of affiliation within
thirty (30) days after its execution.
xxx

xxx

xxx

e)

The local or chapter of a labor federation or national union shall have and maintain a

constitution and by laws, set of officers and books and accounts. For reporting purposes, the
procedure governing the reporting of independently registered unions, federations or national
unions shall be observed.

Paragraph (a) refers to the local or chapter of a federation which did not undergo the rudiments
of registration while paragraph (b) refers to an independently registered union which affiliated
with a federation. Implicit in the foregoing differentiation is the fact that a local or chapter need
not be independently registered. By force of law (in this case, Article 212[h]); such local or
chapter becomes a legitimate labor organization upon compliance with the aforementioned
provisions of Section 3.
Thus, several requirements that are otherwise required for union registration are omitted, to wit:
(1)

The requirement that the application for registration must be signed by at least 20% of the

employees in the appropriate bargaining unit;


2)

The submission of officers' addresses, principal address of the labor organization, the

minutes of organizational meetings and the list of the workers who participated in such meetings;
3)

The submission of the minutes of the adoption or ratification of the constitution and by

the laws and the list of the members who participated in it.
Undoubtedly, the intent of the law in imposing lesser requirements in the case of the branch or
local of a registered federation or national union is to encourage the affiliation of a local union
with the federation or national union in order to increase the local union's bargaining powers
respecting terms and conditions of labor.
The policy of the law in conferring greater bargaining power upon labor unions must be balanced
with the policy of providing preventive measures against the commission of fraud.
A local or chapter therefore becomes a legitimate labor organization only upon submission of
the following to the BLR:
1)

A charter certificate, within 30 days from its issuance by the labor federation or national

union, and
2)

The constitution and by-laws, a statement on the set of officers, and the books of

accounts all of which are certified under oath by the secretary or treasurer, as the case may be,
of such local or chapter, and attested to by its president.
Absent compliance with these mandatory requirements, the local or chapter does not become a
legitimate labor organization.
In the case at bar, the failure of the secretary of PDEU-Kilusan to certify the required documents
under oath is fatal to its acquisition of a legitimate status.

At this juncture, it is important to clarify the relationship between the mother union and the local
union. In the case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., 66 SCRA
512 [1975]), the Court held that the mother union, acting for and in behalf of its affiliate, had the
status of an agent while the local union remained the basic unit of the association, free to serve
the common interest of all its members subject only to the restraints imposed by the constitution
and by-laws of the association. Thus, where as in this case the petition for certification election
was filed by the federation which is merely an agent, the petition is deemed to be filed by the
chapter, the principal, which must be a legitimate labor organization. The chapter cannot merely
rely on the legitimate status of the mother union.

137.

TUCP vs. Laguesma

FACTS:
On March 23, 1990 TUPAS-FSM filed a petition for certification election with the Regional
Office No. IV of the Department of Labor and Employment (DOLE), for the purpose of choosing
a bargaining representative for the rank-and-file employees of Transunion Corporation's
industrial plant, situated in Canlubang, Laguna, known as the Transunion CorporationGlassware

Division.

Petitioner

had

then

secured

Certification

dated

March 22, 1990, issued by Tomas B. Bautista, Jr., Director IV of DOLE (Region IV), that
"Transunion Corporation" has no existing collective bargaining agreement with any labor
organization.
It appears, however, that before the filing of said petition, or on November 15, 1989, Integrated
Labor Organization (ILO-Phils.) was duly certified by DOLE as the sole and exclusive
bargaining agent of the rank-and-file employees of Transunion Corporation-Glassware
Division. 3 On November 28, 1989, a collective bargaining agreement (CBA) was the forged
between Transunion-Glassware Division and ILO-Phils. covering the company's rank-and-file
employees, The CBA, with a five-year term from December 1, 1989 to December 1, 1994, was
ratified by a great majority of the rank-and -filers on December 8, 1989. 4 In the meantime, the
President of ILO-PHILS died. An inter-union conflict followed and the subject CBA was filed
with DOLE, for registration purposes, only on March 14, 1990, more or less, three (3) months
from its execution. Finally, on May 4, 1990, the Certification of Registration was issued by
DOLE through Regional Director Romeo A. Young.
ILO-Phils., intervened in the certification election proceedings initiated by TUPAS-FSM. It
opposed the petition in view of the existing CBA between ILO and the Transunion CorporationGlassware Division. It stresses that the petition for certification election should be entertained
only during the freedom period, or sixty day before the expiration of the CBA. Med-Arbiter
Orlando S. deal Cruz dismissed the petition on the ground of prematurity.
ISSUE:
WON the CBA was filed beyond the 30 day period.
RULING:

It appears that the procedural requirement of filing the CBA within 30 days from date of
execution under Article 231 was not met. The subject CBA was executed on November 28, 1989.
It was ratified on December 8, 1989, and then filed with DOLE for registration purposes on
March 14, 1990. Be that as it may, the delay in the filing of the CBA was sufficiently
explained, i.e., there was an inter-union conflict on who would succeed to the presidency of ILOPHILS. The CBA was registered by the DOLE only on May 4, 1990. It would be injudicious for
us to assume, as what petitioner did, that the said CBA was filed only on April 30, 1990, or five
(5) days before its registration, on the unsupported surmise that it was done to suit the law that
enjoins Regional Offices of Dole to act upon an application for registration of a CBA within five
(5) days from its receipt thereof. In the absence of any substantial evidence that DOLE officials
or personnel, in collusion with private respondent, had antedated the filing date of the CBA, the
presumption on regularity in the performance of official functions hold. More importantly, noncompliance with the cited procedural requirement should not adversely affect the substantive
validity of the CBA between ILO-PHILS and the Transunion Corporation-Glassware Division
covering the company's rank and file employees. A collective bargaining agreement is more than
a contract

138.

DAVAO INTEGRATED PORT STEVEDORING SERVICES vs. RUBEN V.

ABARQUEZ
FACTS:
Petitioner and private respondent, THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP),
entered into a CBA providing for 2 sections on sick leave with pay benefits which apply to both
the regular non-intermittent workers or those workers who render a daily eight-hour service to
the company as governed by Section 1, Article VIII of the 1989 CBA, and the intermittent field
workers who are members of the regular labor pool and the present regular extra labor pool, as
governed by Sec. 3 thereof.
Sec. 1, however, of said CBA had a proviso that only those regular workers of the company
whose work are not intermittent, are entitled to the commutation of sick leave privilege.A
proviso not found in Sec. 3. This caused the new assistant manager to discontinue the
commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash.
The Union objected and brought the matter for voluntary arbitration before the National
Conciliation and Mediation Board with respondent Abarquez acting as voluntary arbitrator who
later issued an award in favor of the Union. Hence, the instant petition.
ISSUE:
WON

intermittent(irregular)

workers

are

entitled

to

commutation

of

their

unenjoyed sick leave with pay benefits.


RULING:
Yes.The CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct
classes of workers in petitioners company, namely: (1) the regular non-intermittent workers or
those workers who render a daily eight-hour service to the company and (2) intermittent field
workers who are members of the regular labor pool and the present regular extra labor pool.

Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave
and vacation leave benefits, among others, are by their nature, intended to be replacements for
regular income which otherwise would not be earned because an employee is not working during
the period of said leaves. They are non-contributory in nature, in the sense that the employees
contribute nothing to the operation of the benefits. By their nature, upon agreement of the parties,
they are intended to alleviate the economic condition of the workers.
Petitioner-company is of the mistaken notion that since the privilege of commutation or
conversion to cash of the unenjoyed portion of the sick leave with pay benefits is found in
Section 1, Article VIII, only the regular non-intermittent workers and no other can avail of the
said privilege because of the proviso found in the last sentence thereof.

139.

E. RAZON, INC.vs. SECRETARY OF LABOR

FACTS:
Petitioner E. Razon, Inc. (ERI) is a corporation organized in 1962 principally to bid for the right
tooperate arrastre services in Manila. Through public bidding on January 18, 1974, ERI and the
government, through the Philippine Ports Authority (PPA), executed a management contract
covering all the piers in South Harbor, Manila for a term of five years renewable for another five
years (p. 127, Rollo; Decision of June 22, 1987 in G.R. No. 75197, "E. Razon, Inc., et al. vs.
Philippine Ports Authority, et al.").
ERI became Metro Port Services, Inc. (MPSI) in 1978 when parties close to then Presient
Marcos, specifically his brother-in-law, Alfredo "Bejo" Romualdez, allegedly coerced Enrique
Razon, who owned 93% of ERI's equity, into endorsing in blank stock certificates covering 60%
of such equity. Upon the expiration of the management contract in 1978, it was extented to June
30, 1980. The PPA then executed a new contract with ERI/MPSI for a term of eight (8) years
beginning July 1, 1980 (p. 129, Rollo).
On July 19, 1986 or two years before the expiration of the eight-year term, the PPA cancelled the
management contract for alleged violations thereof. PPA took over the cargo-handling operations
as well as all the equipment of MPSI (p. 138, Rollo).
Two days later or on July 21, 1986, the PPA issued Permit No. 104286 for cargo-handling
services to Marina Port Services, Inc. (MARINA) (p. 78, Rollo). The permit, which was to take
effect for one-year period or until July 20, 1987, 1 contained the following pertinent paragraph as
part of the additional terms and conditions appended as Annex B to the permit:
7. Labor and personnel of previous operator, except those positions of trust and
confidence, shall be absorbed by grantee. Labor or employees benefits provided
for under existing CBA shall likewise be honored. (p. 79, Rollo.)
Thus, MARINA began the arrastre services and required all workers of ERI/MPSI to accomplish
individual information sheets. Weeks later, the bulk of the 2,700 employees concerned
discovered that they had been hired by MARINA as new employees effective July 21, 1986.

Hence, they clamored for the payment of their separation pay but both the MARINA and
ERI/MPSI refused to be liable therefor. In a bid to prevent disruption of work, PPA authorized
MARINA to deduct P2,000,000.00 from the amount due the MPSI as MARINA's rentals for
MPSI equipment, as partial payment of the employees' separation pay (p. 138, Rollo).
Still dissatisfied, the employees who were members of the Associated Workers Union (AWU)
filed a notice of strike on October 12, 1987. This move prompted the PPA, MARINA, ERI, and
representatives of the AWU, Associated Port Checkers Workers Union (ASTEU), and Marina
Management Employees (MARINE ME) to meet and forge an Agreement on November 3, 1987
for the "immediate and reasonable resolution of the long standing claim of separation benefits
which resulted in impending labor strikes". (p. 51, Rollo.) The agreement provided that the
separation benefits would be computed at "one (1) month for every year of service". (pp. 51 and
192,Rollo.) Another provision of the Agreement stated:
4. That Metro Port Services, Inc. and MARINA without admitting liability of the
labor claims of the workers agreed that PPA through MARINA shall disburse the
amount of P5 million directly to the workers. Said amount partakes of the nature
of rental subject to the determination of the fair and reasonable rental of
equipment from the date of take-over of MARINA and of the fair market value
thereof by independent MARINA, and Metro Port Services, Inc. (p. 192, Rollo.)
Although the Agreement specifically stated that the remaining balance of the separation benefits
shall be paid in full before December 24, 1987, the workers went on strike on December 22,
1987 because they were apprehensive that the said benefits would not be paid as the appraisal of
the pieces of equipment and machinery of MPSI had not been completed. The members of the
AWU were joined by the APCWU, the ASTEU, and the MARINA ME
ISSUE:
MARINA became its successor-employer on July 20, 1986 and, therefore, bound itself to honor
the worker's rights to security of tenure and seniority priviledges, despite the provision of
Paragraph 7 of the permit to operate
RULING:

By absorbing ERI/MPSI employees and honoring the terms and conditions in the collective
bargaining agreement between ERI/MPSI and the employees, MARINA did not assume the
responsibility of ERI/MPSI to pay separation pay to its employees. As correctly put by public
respondent, Paragraph 7, insofar as it refers to employees' benefits, should be applied
prospectively with respect to MARINA. This conclusion is supported by Paragraph 14 of Permit
No. 104286 granted to MARINA which states:
14. Grantee shall be responsible for all obligations, liabilities or claims arising out
of any transactions or undertakings in connections with their cargo handling
operations as of the actual date of transfer thereof to grantee. (Emphasis
supplied.)
MARINA might have been impelled not only by compassion for the employees but also by their
tested skills in hiring them back upon their separation from the employment of ERI/MPSI. It
should be recalled, however, there is no law that requires the purchaser to absorb the employees
of the selling corporation (San Felipe Neri School of Mandaluyong, Inc. vs. NLRC, 201 SCRA
478 [1991], citing MDII Supervisors and Confidential Employees Association (FFW) vs.
Presidential Assistant on Legal Affairs, 79 SCRA 40 [1977]). As such, when MARINA rehired
the ERI/MPSI employees, it had all the right to consider them as new ones. On the other hand,
ERI/MPSI, to whom years of service had been rendered by its suddenly jobless employees, had
the corresponding obligation to grant them what is theirs under the law and the collective
bargaining agreement. After all, a collective bargaining agreement is the law between the parties
(Plastic Town Center Corporation vs. NLRC, 172 SCRA580 [1989]; Roche [Phil.] vs, NLRC,
178 SCRA 386 [1989]), and compliance therewith is mandated by the express policy of the law
(Meycauayan College vs. Drilon, 185 SCRA 50 [1990]).

140.

Liberty Flour Mills Employees vs Liberty Flour

FACTS:
On February 6, 1974, respondent Philippine Labor Alliance Council (PLAC) and Liberty Flour
entered into a 3-year CBA effective January 1, 1974 providing for a daily wage increase of
PhP2.00 for 1974, PhP1.00 for 1975 and PhP1.00 for 1976. The parties also agreed to establish a
union shop by imposing membership in good standing for the duration of CBA as a condition
for continued employment of workers. PLAC complained against the company for non-payment
of E-COLA under P.D. 525. A similar complaint was filed on March 4, 1975, this time by
petitioners who apparently were veering away from PLAC. Evaristo and Biascan, after
organizing a union, filed for a certification election among rank-and-file employees. PLAC then
expelled the two for disloyalty and demanded their dismissal by the respondent company, who
complied on May 20, 1975. The claims for E-COLA was dismissed as it was already absorbed by
the wage increase. The termination case in relation to back wages was also dismissed.
ISSUE:
Whether or not E_COLA was also absorbed in the wage increases and won dismissal of Evaristo
and Biascan was illegal.
RULING:
The company agreed to grant the emergency allowance even before the obligation was imposed
by government (P.D. 525). What the petitioners claim they are being made to waive is the
additional allowance but the truth is they are not entitled to because they are already enjoying the
stipulated increases.
As with the case of illegal dismissal, the CBA concluded in 1974 was certifiable and in fact
certified in April 11, 1975 while the two were dismissed on may 20, 1975. Evidence show that
after the cancellation of the registration certificate of the Federation of Democratic Labor
Unions, no other union contested the exclusive representation of the PLAC, consequently there
was no more legal impediment that stood on the way of its validity and enforceability of the

provisions of the collective bargaining agreement entered into by and between respondent
corporation and respondent union. Once it was duly entered into and signed by the parties, a
collective bargaining agreement becomes effective as between the parties regardless of won the
same has been certified by the BLR.

141.

Metrobank Union vs NLRC

FACTS:
Metrobank entered into a CBA with Petitioner, granting a P900 increase in wages. Subsequently,
a law was passed increasing the minimum wage. Metrobank classified employees into those
receiving less than 100 per day and those receiving more. Those receiving more were not
covered by the implementation of the new law but only the increase as agreed upon in the CBA.
Petitioners argue that the method of implementation created a wage distortion within the
employees of Metrobank because the differences in the salaries of the employee classifications
were substantially reduced.
ISSUE:
Whether or not there was wage distortion?
RULING:
There was wage distortion. Wage Distortion means a situation where an increase in prescribed
wage rates results in the elimination or severe contradiction of intentional quantitative
differences in wage or salary rates between and among employee groups in an establishment as
to effectively obliterate the distinctions embodied in such wage structure based on skills, length
of service, or other logical bases of differentiation.
The "intentional quantitative differences" in wage among employees of the bank has been set by
the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived at
through the collective bargaining process to which the parties are thereby concluded. 11 The
Solicitor General, in recommending the grant of due course to the petition, has correctly
emphasized that the intention of the parties, whether the benefits under a collective bargaining
agreement should be equated with those granted by law or not, unless there are compelling
reasons otherwise, must prevail and be given effect. 12
In keeping then with the intendment of the law and the agreement of the parties themselves,
along with the often repeated rule that all doubts in the interpretation and implementation of

labor laws should be resolved in favor of labor, 13 we must approximate an acceptable


quantitative difference between and among the CBA agreed work levels. We, however, do not
subscribe to the labor arbiter's exacting prescription in correcting the wage distortion. Like the
majority of the members of the NLRC, we are also of the view that giving the employees an
across-the-board increase of P750 may not be conducive to the policy of encouraging "employers
to grant wage and allowance increases to their employees higher than the minimum rates of
increases prescribed by statute or administrative regulation," particularly in this case where both
Republic Act 6727 and the CBA allow a credit for voluntary compliance.

142.

SMTFM-UWP vs. NLRC

FACTS:
Petitioner Samahang Manggagawa sa Top Form Manufacturing United Workers of the
Philippines (SMTFM) was the certified collective bargaining representative of all regular rank
and file employees of private respondent Top Form Manufacturing Philippines, Inc. At the
collective bargaining negotiation held at the Milky Way Restaurant in Makati, Metro Manila on
February 27, 1990, the parties agreed to discuss unresolved economic issues. According to the
minutes of the meeting, Article VII of the collective bargaining agreement was discussed.
On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of
P17.00 per day in the salary of workers. This was followed by Wage Order No. 02 dated
December 20, 1990 providing for a P12.00 daily increase in salary.
As expected, the union requested the implementation of said wage orders. However, they
demanded that the increase be on an across-the-board basis. Private respondent refused to accede
to that demand. Instead, it implemented a scheme of increases purportedly to avoid wage
distortion. Thus, private respondent granted the P17.00 increase under Wage Order No. 01 to
workers/employees receiving salary of P125.00 per day and below. The P12.00 increase
mandated by Wage Order No. 02 was granted to those receiving the salary of P140.00 per day
and below. For employees receiving salary higher than P125.00 or P140.00 per day, private
respondent granted an escalated increase ranging from P6.99 to P14.30 and from P6.00 to
P10.00, respectively.
On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter
demanding that it should fulfill its pledge of sincerity to the union by granting an across-theboard wage increases (sic) to all employees under the wage orders. The union reiterated that it
had agreed to retain the old provision of CBA on the strength of private respondents promise
and assurance of an across-the-board salary increase should the government mandate salary
increases. Several conferences between the parties notwithstanding, private respondent
adamantly maintained its position on the salary increases it had granted that were purportedly
designed to avoid wage distortion.

Consequently, the union filed a complaint with the NCR NLRC alleging that private respondents
act of reneging on its undertaking/promise clearly constitutes act of unfair labor practice
through bargaining in bad faith. It charged private respondent with acts of unfair labor practices
or violation of Article 247 of the Labor Code, as amended, specifically bargaining in bad faith,
and prayed that it be awarded actual, moral and exemplary damages. In its position paper, the
union added that it was charging private respondent with violation of Article 100 of the Labor
Code.
Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01 and
02, it had avoided the existence of a wage distortion that would arise from such
implementation. It emphasized that only after a reasonable length of time from the
implementation of the wage orders that the union surprisingly raised the question that the
company should have implemented said wage orders on an across-the-board basis. It asserted
that there was no agreement to the effect that future wage increases mandated by the government
should be implemented on an across-the-board basis. Otherwise, that agreement would have been
incorporated and expressly stipulated in the CBA.
On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the complaint
for lack of merit.
petitioner appealed to the NLRC that, in turn, promulgated the assailed Resolution of April 29,
1993 9 dismissing the appeal for lack of merit. Still dissatisfied, petitioner sought reconsideration
which, however, was denied by the NLRC in the Resolution dated January 17, 1994. Hence, the
instant petition for certiorari
ISSUE:
whether or not an employer committed an unfair labor practice by bargaining in bad faith and
discriminating against its employees.
RULING:
To start with, if there was indeed a promise or undertaking on the part of private respondent to
obligate itself to grant an automatic across-the-board wage increase, petitioner union should have
requested or demanded that such promise or undertaking be incorporated in the CBA. After all,

petitioner union has the means under the law to compel private respondent to incorporate this
specific economic proposal in the CBA. It could have invoked Article 252 of the Labor Code
defining duty to bargain, thus, the duty includes executing a contract incorporating such
agreements if requested by either party. Petitioner unions assertion that it had insisted on the
incorporation of the same proposal may have a factual basis considering the allegations in the
aforementioned joint affidavit of its members. However, Article 252 also states that the duty to
bargain does not compel any party to agree to a proposal or make any concession. Thus,
petitioner union may not validly claim that the proposal embodied in the Minutes of the
negotiation forms part of the CBA that it finally entered into with private respondent.

143.

LAKAS NG MANGAGAGAWANG MAKABAYAN VS MARCELO ENTERPRISE

FACTS:
On May 23, 1967, the Lakas had existing CBAs within the bargaining units in the respective
companies comprising Marcelo Companies. The said CBAs were entered into while they were
affiliated with a national federation, Phil Social Security Labor Union.
Two of the CBAs were about to expire in May and June 1967. The other one faced conflict as
there was a rival union.
On March 14, 1967, the management of Marcelo Steel received a letter requesting negotiation of
a new CBA from PSSLU in behalf of UNWU. There were also proposals from the unions in
Marcelo Tire and Marcelo Rubber as the existing CBA was about to expire. Same day, the union
oin Marcelo Tire disauthorized PSSLU as their agent. Afterwards, the rival union submitted ita
own proposals.
Another requests were received on May 3, 1967 and May 23, 1967 from two different unions.
As the management was confused as to which of the union really represents the workers, the
president asked for the proof of authorization from the unions and they were informed of the
conflicting claims and suggested that they file for certification election and the decision of the
court shall be followed and respected.
PSSLU refused the suggestion of the management and said that they will file ULP for refusing to
bargain with them. All of the unuons subsequently filed a Notice of Strike.
MUEWA was certified as the bargaining agent as it represents the majority of the workers in
Marcelo Tire and that there were no oppositions from the other union or interested persons.
Notices of Strike were withdrawn and the management agreed to sit down in a conference for the
bargaining. On the fourth conference, Lakas declared a strike against Marcelo Companies. Acts
of violence and vandalism attended by picketing, the premises were blocked, windows of the
plants were bad.y damaged.

Cases were filed against the strikers and a Return to Work order was agreed upon. Marcelo
Companies resumed its operations and strikers went back to work.
Marcelo Companies and Lakas resumed their bargaining negotiations.
On Oct. 13, 1967 the negotiations reached its final stage. Then Lakas declared another strike
without filing a notice of strike resulting to complete paralyzation of the business.
Notices to return to work were posted and some of the strikers started working again. The
management required the workers to fill up forms so that they may be given a schedule.
However, the workers refused and insisted that they be admitted without complying to the said
requirement.
Lakas then filed a ULP case based on the alleged fact of non readmission of striking members.
The trial court ruled that the Marcelo Companies were not remiss in their obligation to bargain
and that the strikes conducted were illegal. However, it was decided that there was ULP in not
readmitting all the strikers.
ISSUE:
Whether or not Marcelo Companies are guilty of ULP
RULING:
The SC ruled in favor of Marcelo Companies. Lakas was not the bargaining representative, yet
the management did not ignore the demand for collective bargaining neither it was refused.
Marcelo Companies may rightfully demand for reasonable proof of majority representation on
the part of the supposed or putative bargaining agent as it is a natural consequence of the
employers duty to bargain with the bargaining agent who represents the majority of the workers.
It is, however, necessary that such demand is made in good faith and not as a pretext of delay or
evasion.
Marcelo Companies did not commit ULP. The facts of the case shows that the strikers were
readmitted to work and the form required was intended for proper scheduling and not to prevent

workers from coming back to work. It is only those who did not report back to work who are not
readmitted.

144.

NATIONAL UNION OF RESTAURANT WORKERS V CIR 10 SCRA 843

FACTS:
On June 9, 1960, a complaint for unfair labor practice was lodged against the owners of Tres
Hermanas Restaurant, particularly Mrs. Felisa Herrera, on the ground, among others, that
respondents refused to bargain collectively with the complaining union; respondents made a
counter-proposal in the sense that they would bargain with said union and would accept its
demands if the same would become a company union, and one Martin Briones, an employee,
was separated from the service because he was found to be the organizer and adviser of the
complaining union.
Responents denied the charges, and they were exonerated. The judge found that the charges were
not proven and dismissed the complaint.
ISSUES:
1. WON respondents refused to bargain collectively with the union and committed unfair labor
practice
2. WON respondents interfered, coerced or restrained their employees in the exercise of their
right to join the complaining union
3. WON respondents dismissed said employee because he was found to be the organizer and
adviser of the complaining union.
RULING:
1. NO. Reasoning The court cited several instances that showed respondents willingness to
bargain with the union. It is true that under Sec 14, RA 875 whenever a party serves a written
notice upon the employer making some demands the latter shall reply thereto not later than 10
days from receipt thereof, but this condition is merely procedural, and as much its noncompliance cannot be deemed to be an act of unfair labor practice. The fact is respondents did
not ignore the letter sent by the union so much so that they called a meeting to discuss its

demands. The court also pointed out the markings on the letter made by respondent in the
meeting with the union on May 3, 1960 at their restaurant in Quezon City, indicating the
willingness and actual bargaining made with the union. (Check for agreement, a cross for
disapproval and a circle for demands left open for further discussion) It is contended that
respondents refused to bargain with the complaining union as such even if they called a meeting
of its officers and employees hereby concluding that they did not desire to enter into a bargaining
agreement with said union. It is belied by the fact that respondents did actually agree and bargain
with the representatives of the union.
Respondents were of the impression that before a union could have that capacity it must first be
certified by the CIR as the duly authorized bargaining unit, which they also stated in their answer
to the petition for certification filed by said union before the CIR. In that case, another union
known as the International Labor and Marine Union of the Philippines claimed to represent the
majority of the employees of respondent restaurant, and this is what it alleged in a letter sent to
the manager of respondents dated May 25, 1962.
2. NO. Reasoning On this document certain notations were made by one Ernesto Tan which are
indeed derogatory and which were allegedly made by him upon instructions of respondent Felisa
Herrera. Thus, the pertinent notation on which the union relies is one which states that
respondent Herrera would be willing to recognize the union "if union would become company
union", which would indeed show that Mrs.
Herrera interfered with the employees' right to self-organization. But respondents denied that
they ever authorized Ernesto Tan to make such notation or to represent them in the negotiations.
Although Tan was the nephew of respondent Herrera, in the company, he was merely a
bookkeeper whose duties were confined to the keeping and examination of their books of
accounts and sales invoices. It appears that he was not even invited to the meeting but merely
volunteered to be present and made those notations on his own account and initiative.
3. NO. Reasoning. Respondents maintain that Briones was dismissed because of the
smouldering embers of hatred that Briones had against Mrs. Herrera, the threats he made, and

her fear for her own safety being always together with in her car driven by Briones during
business routine.
Petitioners maintain that Briones was dismissed because of his union activities. It appears in
Briones testimony that he is not the only one who organized the union, yet the members who are
more active in the union and serve as its officers are still employed at the restaurant.
Disposition CIR decision AFFIRMED.

145.

ASSOCIATED LABOR UNIONS (ALU) vs. FERRER-CALLEJA

FACTS:
ALU, through a letter dated May 7, 1986, informed GAW Trading, Inc. that majority of the
latter's employees have authorized ALU to be their sole and exclusive bargaining agent (SEBA),
and requested a conference with GAW for the execution of an initial Collective Bargaining
Agreement (CBA). ALU received a letter dated May 12th from GAW, which letter set the
meeting on the same date. The following day, May 13th, ALU transmitted to GAW copies of the
proposed CBA. 2 days later, ALU and GAW executed the CBA. In the meantime, on May 9th, 2
unions in the company went on strike.
After the signing of the CBA, one of the striking unions filed a petition for certification election,
which petition was eventually granted by the Bureau of Labor Relations. Hence the present
action by ALU, which invokes the CBA it made with GAW and, thus, the applicability of the
contract bar rule.
ISSUE:
WON the contract bar rule applies
RULING:
NO. The subject CBA is defective. The mechanics of collective bargaining are set in motion
only when the following jurisdictional preconditions are present, namely, (1) possession of the
status of majority representation by the employees' representative; (2) proof of majority
representation; and (3) a demand to bargain. The standing of ALU as SEBA is dubious, to say the
least. The only express recognition of ALU as SEBA in the records is in the CBA. There was
precipitate haste on the part of GAW in recognizing ALU, which recognition appears to have
been based on the self-serving claim of ALU that it had the support of the majority of the
employees in the bargaining unit. Furthermore, at the time of the supposed recognition, GAW
was obviously aware that there were other unions existing in the unit.

There was also failure to post the CBA in conspicuous places in the establishment before its
ratification, as required by the implementing rules of the Labor Code. Also, BLR found that
about 64% of the workers who "ratified" the CBA now strongly repudiate the alleged negotiation
and ratification of the CBA.

146.

KIOK LOY VS. NLRC

FACTS:
The Pambansang Kilusang Paggawa the sole and exclusive bargaining agent of the rank-and-file
employees of Sweden Ice Cream Plant furnished the Company of its proposed collective
bargaining agreement and for its counter proposals. However the request was ignored twice and
remained unacted upon by the Company.
All attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to
certify the case to the National Labor Relations Commission (NLRC) for compulsory arbitration
pursuant to Presidential Decree No. 823, as amended.
On July 18, 1979, labor arbiter Andres rendered its decision finding respondent Sweden Ice
Cream is hereby declared guilty of unjustified refusal to bargain, in violation of Section (g)
Article 248 (now Article 249), of P.D. 442, as amended.
NLRC, likewise ordered that the draft proposal for a collective bargaining agreement to be
declared as the collective agreement which should govern the relationship between the parties.

ISSUES:
1

WON there is unfair labor practice, when the company refused to bargain.

WON draft proposal for collective bargaining agreement may be deemed enforceable
between parties.

RULING:

Company is GUILTY of unfair labor practice


The Companys refusal to make counter proposal indicates bad faith. Its approach and attitudestalling the negotiation by a series of postponements, non-appearance at the hearing conducted,
and undue delay in submitting its financial statements, lead to no other conclusion except that it
is unwilling to negotiate and reach an agreement with the Union. Petitioner company has not at
any instance, evinced good faith or willingness to discuss freely and fully the claims and
demands set forth by the Union much less justify its opposition thereto.
In the Herald Delivery Carriers Union (PAFLU) vs. Herald Publications the rule had been laid
down that "unfair labor practice is committed when it is shown that the respondent employer,
after having been served with a written bargaining proposal by the petitioning Union, did not
even bother to submit an answer or reply to the said proposal .
The doctrine was reiterated in Bradman vs. Court of Industrial Relations wherein it was further
ruled that "while the law does not compel the parties to reach an agreement, it does contemplate
that both parties will approach the negotiation with an open mind and make a reasonable effort to
reach a common ground of agreement.

Proposed CBA binding to parties


An erring party should not be tolerated and allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures.
The Companys allegation that it will face the prospect of closing down because it has to pay a
staggering amount of economic benefits to the Union as stipulated in the Proposed CBA.
Accordingly such a stand and the evidence should have been presented before the Labor Arbiter
on the first instance.

147.

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO vs. CONFESOR

FACTS:
On June 28, 1990, petitioner-union San Miguel Corporation Employees Union PTGWO
entered into a Collective Bargaining Agreement (CBA) with private respondent San Miguel
Corporation (SMC) to take effect upon the expiration of the previous CBA or on June 30, 1989.
Meanwhile, in keeping with their vision and long term strategy for business expansion, SMC
management informed its employees that the company would undergo a restructuring.
Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and
became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San
Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and
effect.
After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and
Article 253-A of the Labor Code. Negotiations started sometime in July, 1992 with the two
parties submitting their respective proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still
include the employees of the spun-off corporations: Magnolia and SMFI; and that the
renegotiated terms of the CBA shall be effective only for the remaining period of two years or
until June 30, 1994.
SMC, on the other hand, contended that the members/employees who had moved to Magnolia
and SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the
CBA should be effective for three years in accordance with Art. 253-A of the Labor Code.

ISSUES:

1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three
years or for only two years; and
2) Whether or not the bargaining unit of SMC includes also the employees of the Magnolia and
SMFI.

RULING:
Effectivity of the renegotiated terms of the CBA shall be for three (3) years
Legislators, the framers of the law intend to have the period of effectivity for three (3) years
insofar as the economic as well as non-economic provisions are concerned, except
representation. This is to maintain industrial peace and stability by having both management and
labor work harmoniously together without any disturbance.

Magnolia and SMFI became distinct entities with separate juridical personalities, they can
not belong to a single bargaining unit
Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991.
Management saw the need for these transformations in keeping with the companys vision and
long term strategy.
The transformation of the companies was a management prerogative and business judgment. Not
contrary to law, public policy or morals and neither done in bad faith on the part.
In determining an appropriate bargaining unit, the test of grouping is mutuality or commonality
of interests. The employees sought to be represented by the collective bargaining agent must
have substantial mutual interests in terms of employment and working conditions as evinced by
the type of work they performed. Considering the spin-offs, the companies would consequently
have their respective and distinctive concerns in terms of the nature of work, wages, hours of

work and other conditions of employment. Interests of employees in the different companies
perforce differ. SMC is engaged in the business of the beer manufacturing. Magnolia is involved
in the manufacturing and processing of diary products while SMFI is involved in the production
of feeds and the processing of chicken. The nature of their products and scales of business may
require different skills which must necessarily be commensurated by different compensation
packages. The different companies may have different volumes of work and different working
conditions. For such reason, the employees of the different companies see the need to group
themselves together and organize themselves into distinctive and different groups. It would then
be best to have separate bargaining units for the different companies where the employees can
bargain separately according to their needs and according to their own working conditions.

148.

MINDANAO TERMINAL AND BROKERAGE SERVICE vs. CONFESSOR,

FACTS:
Petitioner Mindanao Terminal and Brokerage Service, Inc., (Company) and respondent
Associated Labor Unions, (Union) entered into a collective bargaining agreement for a period of
five (5) years, starting on August 1, 1989, and ending July 31, 1994.
On the third year of the CBA the Company and the Union met to renegotiate the provisions of
the CBA for the fourth and fifth years. The parties, however, failed to resolve some of their
differences, as a result of which a deadlock developed.
On November 12, 1992, a formal notice of deadlock was sent to the Company on the following
issues: wages, vacation leave, sick leave, hospitalization, optional retirement, 13th month pay
and signing bonus.
On November 18, 1992, the Company announced a cost-cutting or retrenchment program.
On December 18, 1992, as a result of a conference called by the NCMB, the Union and the
Company went back to the bargaining.
The NCMB tried to settle the issues of creditability and retroactivity, however the conciliation
was proved futile, hence Secretary of Secretary of Labor assumed jurisdiction over the dispute.
Secretary of Labor issued an Order dated May 14, 1993, ordering the Company and the Union to
incorporate into their existing collective bargaining agreement all improvements reached by them
in the course of renegotiations. The Secretary of Labor held that the wage increases for the fourth
and fifth years of the CBA were not to be credited as compliance with future mandated increases.
In addition, the fourth year wage increase was to be retroactive to August 1992 and was to be
implemented until July 31, 1993, while the fifth year wage increase was to take effect on August
1, 1993 until the expiration of the CBA.

ISSUE:
WON the Secretary of Labor has authority to decree retroaction of, Wage Increase, CBA
provision.

RULING:
The Court finds that "as early as January 14, 1993, well within the six (6) month period provided
by law, the Company and the Union have perfected their agreement."
The order of the Secretary of Labor may be considered in the nature of an arbitral award,
pursuant to Art. 263(g) of the Labor Code, and, therefore, binding on the parties. After all, the
Secretary of Labor assumed jurisdiction over the dispute because petitioner asked the Secretary
of Labor to do so after the NCMB failed to make the parties come to an agreement.
Accordingly, making a belated issue of "creditability," petitioner is correctly said to have
"delay[ed] the agreement beyond the six (6) month period so as to minimize its expenses to the
detriment of its workers" and its conduct to smack of "bad faith and [to run counter] to the good
faith required in Collective Bargaining." If petitioner wanted to be given credit for the wage
increases in the event of future mandated wage increases, it should have expressly stated its
reservation during the early part of the CBA negotiations.

149.

UNIVERSITY OF THE IMMACULATE CONCEPCION, INC. vs. SECRETARY

OF LABOR AND EMPLOYMENT


FACTS:
Petitioner and the Union, through the auspices of the National Conciliation and Mediation Board
(NCMB), met to negotiate a CBA.
"On June 20, 1994, the Union filed with the NCMB a Notice of Strike, the first in a series of
three (3) notices of strike, alleging deadlock in the CBA negotiations and unfair labor practices
on the part of the petitioner in the form of "mass termination of teaching and non-teaching
employees, interference with union activities, discrimination, and harassments."
"On November 8, 1994, the panel of voluntary arbitrators rendered a decision excluding the
secretaries, registrars, cashiers, guidance counselors and the chief of the accounting department
of the petitioner from the coverage of the bargaining unit.
Twenty (20) days later, or on November 28, 1994, petitioner presented to the Union a draft of the
CBA. After a study thereof, the Union rejected the draft on the ground that the manner of
computing the net incremental proceeds has yet to be agreed upon by the parties.
On December 9, 1994, the Union filed its Second Notice of Strike with the NCMB, therein
alleging bargaining deadlock on "allocation of 5% (CBA) and distribution/computation of 70%
incremental proceeds (RA6728)", and unfair labor practice by the petitioner in the form of
"harassments, union busting and correct implementation of COLA.
Three (3) days after the Union's filing of its Second Notice of Strike, petitioner terminated the
employment of union member Gloria Bautista. Later, or on December 27, 1994, petitioner
likewise terminated the employment of union board member Corazon Fernandez. As a
consequence, Bautista and Fernandez filed their complaints for illegal dismissal before the
Regional Arbitration Branch No. XI of the National Labor Relations Commission based in
Davao City.
"On January 4, 1995, petitioner filed with the NLRC Regional Arbitration Branch No. XI in
Davao City a complaint against the Union and its officers for unfair labor.
The conciliation conference called by the NCMB on January 4, 1995 failed to bridge the
differences between the parties.

Hence, the Secretary of Labor issued an order assuming

jurisdiction over the labor dispute. He further issued return to work and cease and desist orders.

ISSUE:
WON a new collective bargaining agreement was concluded through the conciliation proceeding
before the NCMB.
RULING:
A collective bargaining agreement (CBA) refers to the negotiated contract between a legitimate
labor organization and the employer concerning wages, hours of work and all other terms and
conditions of employment in a bargaining unit, including mandatory provisions for grievances
and arbitration machineries. As in all other contracts, there must be clear indications that the
parties reached a meeting of the minds.
In this case, no CBA could be concluded because of what the union perceived as illegal
deductions from the 70% employees' share in the tuition fee increase from which the salary
increases shall be charged. Also, the manner of computing the net incremental proceeds was yet
to be agreed upon by the parties.
Although it is true that the university and the union may have reached an agreement on the issues
raised during the collective bargaining negotiations, still no agreement was concluded by them
because, among other reasons, the DOLE Secretary, who assumed jurisdiction on January 23,
1995 only was set to resolve the distribution of the salary increase of the covered employees. The
Court of Appeals found that "there are many items in the draft-CBA that were not even
mentioned in the minutes of the July 20, 1994 conference."
Considering the parties failed to reach an agreement regarding certain items of the CBA, they
still have the duty to negotiate a new collective bargaining agreement in good faith, pursuant to
the applicable provisions of the Labor Code.

150.

Divine Word University of Tacloban vs. SECRETARY OF LABOR

FACTS:
On March 7, 1985, Divine Word University Employees Union (DWUEU) the sole and exclusive
bargaining agent of the Divine Word University submitted its collective bargaining proposal.
In reply, the university requested for a conference. However before the conference could occur,
DWUEUs resigned vise president Mr. Brigido Urminita wrote a letter addresses to the
University unilaterally withdrawing the CBA proposal. Consequently the conference was
cancelled.
After almost 3 years, DWUEU (now affiliated with ALU) requested conference with the
University for the purposes of continuing collective bargaining negotiations.
However, despite repeated letters, the University persisted in maintaining silence.
On April 25, 1988, DWUEU-ALU filed with the NCMB of the DOLE a notice of strike on the
grounds of bargaining deadlock and unfair labor practice, specifically, refusal to bargain,
discrimination and coercion on employees.
Consequently the Union and the University came into an agreement, however before the
conclusion of the said agreement, the University filed a petition for certification election with the
Region VIII office of DOLE.

While DWUEU-ALU, in consonance with the agreement

submitted its CBA proposal.


Proposed CBA was ignored by the University, thereafter NCMB Region VIII conducted
marathon conciliation conferences to settle the dispute, but to no avail.
Secretary of Labor, assumed jurisdiction and issued order directing workers to return to work and
for University to accept them back. On the same date the Order directing the conduct of
certificate election was released.
Union filed an urgent motion seeking Med-Arb from acting on the matter of the cerficate
election, which was granted by the Secretary of Labor and directing Med-Arb to hold in
abeyance any and all certification proceedings pending resolution of the labor dispute.
ISSUES:
1

WON University/management request for certificate election may be granted.

WON CBA may be unilaterally imposed on the ground that a collective bargaining
agreement is a contract wherein the consent of both parties is indispensable is devoid of
merit.

RULING:
When bargaining deadlock exist

petition certification election may not be granted

(Secretary of Labor affirmed by SC)


To grants its prayer would put an unjustified premium on bad faith bargaining
-

Supreme Court -

Employer may file a petition for certification election. But once an employer has filed said
petition, its active role ceases and it becomes a mere bystander.
However Art 258 of the Labor Code states that an employer who is requested to bargain may file
a petition for certification election anytime except on clear showing that one of these two
instances exists:
a

The petition is filed within one year from the date of issuance of a final certification

election result; and


When a bargaining deadlock had been submitted to conciliation or arbitration or had
become the subject of valid notice of strike or lockout.

While consent is primordial consideration in bargaining process, the inaction and


insincerity of the University has forfeited whatever rights it could have asserted as an
employer.
Petitioner University may not validly assert that it consent should be a primordial consideration
in the bargaining process. Accordingly, by its acts, no less that its inaction which bespeaks its
insincerity, it has forfeited

whatever rights it could have asserted as employer.

SC further stated that, an erring party should not be tolerated and allowed with impunity to resort
to schemes feigning negotiations by going through empty gestures.
SC ruled that union draft CBA proposal may be declared as the collective agreement which
should govern the relationship between parties, present the following factor;
a
b
c

The union is the duly certified bargaining agent;


It made a definite request to bargain and submit its collective bargaining proposals, and
The University made no counter proposal.

151.

NESTL

PHILIPPINES,

INC.

vs

NLRC

FACTS:
Four (4) collective bargaining agreements separately covering the petitioner's employees in its:
1. Alabang/Cabuyao factories;
2. Makati Administration Office. (Both Alabang/Cabuyao factories and Makati office
were represented by the respondent, Union of Filipro Employees [UFE]);
3. Cagayan de Oro Factory represented by WATU; and
4. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and
Allied Services (TUPAS),
In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon
collective bargaining negotiations between the parties ensued.
On September 2, 1987, the UFE declared a bargaining deadlock.
On September 8, 1987, the Secretary of Labor assumed jurisdiction and issued a return to work
order. In spite of that order, the union struck, without notice, at the Alabang/Cabuyao factory, the
Makati office and Cagayan de Oro factory on September 11, 1987 up to December 8, 1987. The
company retaliated by dismissing the union officers and members of the negotiating panel who
participated in the illegal strike. The NLRC affirmed the dismissals on November 2, 1988.
On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and
unfair labor practices. However, on March 30, 1988, the company was able to conclude a CBA
with the union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro
factory workers. The union assailed the validity of those agreements and filed a case of unfair
labor practice against the company on November 16, 1988.
After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded
negative results, the dispute was certified to the NLRC by the Secretary of Labor on October 28,
1988.
ISSUES:
WON employees have vested or demandable right over existing benefits voluntarily granted to
them by their employer (retirement plan)

RULING:
Employees do have a vested and demandable right over existing benefits voluntarily
granted to them by their employer
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing
to the operation of the plan, does not make it a non-issue in the CBA negotiations.
Employees do have a vested and demandable right over existing benefits voluntarily granted to
them by their employer. The latter may not unilaterally withdraw, eliminate or diminish such
benefits (Art. 100, Labor Code; Tiangco, et al. vs. Hon. Leogardo, et al., 122 SCRA 267).

152.

MACTAN WORKERS UNION vs. DON RAMON ABOITIZ

FACTS:
Cebu Shipyard & Engineering Works, Inc. in Lapulapu City is employing laborers and
employees belonging to two rival labor unions. Seventy-two of these employees or laborers
whose names appear in the complaint are affiliated with the Mactan Workers Union while the
rest are members of the intervenor Associated Labor Union.
On November 28, 1964, the defendant Cebu Shipyard & Engineering Works, Inc. and the
Associated Labor Union entered into a 'Collective Bargaining Agreement' ... the pertinent part of
which, Article XIII thereof, [reads thus]: '... If a laborer or employee of the [Company] does not
want to accept the profit-sharing bonus which the said employee or laborer is entitled under this
Agreement, it shall be the duty of the [Associated Labor Union] to return the money received by
[it] as profit-sharing bonus to the [Company] within a period of sixty (60) days from the receipt
by the [Union] from the [Company] of the said profit-sharing bonus.'"
In March, 1965 the defendant Cebu Shipyard & Engineering Works, Inc. delivered to the ALU
for distribution to the laborers or employees working with the defendant corporation to the
profit-sharing bonus corresponding to the first installment for the year 1965.
Again in June 1965 the defendant corporation delivered to the Associated Labor Union the
profit-sharing bonus corresponding to the second installment for 1965. The members of the
Mactan Workers Union failed to receive their shares in the second installment of bonus because
they did not like to go to the office of the ALU to collect their shares.
In accordance with the terms of the collective bargaining after 60 days, the uncollected shares of
the plaintiff union members was returned by the ALU to the defendant corporation. At the same
time the defendant corporation was advised by the ALU not to deliver the said amount to the
members of the Mactan Workers Union unless ordered by the Court, otherwise the ALU will take
such step to protect the interest of its members ... . Because this warning given by the intervenor

union the defendant corporation did not pay to the plaintiffs the sum of P4,035.82 which was
returned by the Associated Labor Union, but instead, deposited the said amount with the Labor
Administrator. For the recovery of this amount this case was filed with the lower court."

ISSUES:
1

WON literal compliance with the terms of a collective bargaining contract supersedes
rights of its employees stated in the CBA.

WON a non member of SEBA may avail rights and privileges stated in the CBA.

RULING:
The rights of the members of plaintiff Mactan Workers Union, is violated it a grievance
that called for redress
The terms and conditions of a collective bargaining contract constitute the law between the
parties. Those who are entitled to its benefits can invoke its provisions. In the event that an
obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court for
redress.

Non-Members have equal rights


It is a well-settled doctrine that the benefits of a collective bargaining agreement extend to the
laborers and employees in the collective bargaining unit, including those who do not belong to

the chosen bargaining labor organization. Any other view would be a discrimination on which
the law frowns.
The labor union that gets the majority vote as the exclusive bargaining representative does not
act for its members alone. It represents all the employees in such a bargaining unit. It is not to be
indulged in any attempt on its part to disregard the rights of non-members.

153.

JUAT vs. COURT OF INDUSTRIAL RELATIONS

FACTS:
On December 1, 1959, a collective bargaining agreement was entered into between the Bulaklak
Publications and the BUSOCOPE LABOR UNION, to remain in effect for 3 years, and
renewable for another term of 3 years. Section 4 of said agreement contains a closed shop
proviso.
By virtue of the above-mentioned collective bargaining agreement the management of the latter
required Santos Juat to become a member of the former. However, Santos Juat refused to be
affiliated to the union, stating that he is an old employee and not covered by the new CBA
provision of closed shop.
Because of the refusal of Santos Juat to become a member of said Union, Mr. Juan N.
Evangelists, the executive officer of respondent company, suspended him for 15 days. After the
expiration of the suspension of Santos Juat, Mr. Evangelista addressed a letter to the former,
ordering him to report back for duty, and in spite of said letter, Santos Juat did not report for
work, consequently, Santos Juat was dropped from the service of the company.

ISSUE:
WON an old employee, not a member of SEBA be compelled to join union in compliance to its
closed shop provision under the CBA.

HELD:

The closed-shop proviso in a collective bargaining agreement between employer and


employee is sanctioned by law.
The pertinent provision of the law, says:
Provided, that nothing in this Act or in any Act or statute of the Republic of the
Philippines shall preclude an employer from making an agreement with a labor
organization to require as a condition of employment membership therein, if such labor
organization is the representative of the employees as provided in said section
twelve; ... ." (Section 4, subsection [a] par. 4 of Republic Act No. 875, known as the
Industrial Peace Act).
A closed-shop agreement has been considered as one form of union security whereby only union
members can be hired and workers must remain union members as a condition of continued
employment. The requirement for employees or workers to become members of a union as a
condition for employment redounds to the benefit and advantage of said employees because by
holding out to loyal members a promise of employment in the closed-shop the union wields
group solidarity. In fact, it is said that "the closed-shop contract is the most prized achievement
of unionism" (National Labor Union vs. Aguinaldo's-Echague, Inc. et al., supra).
In the case of Freeman Shirt Manufacturing Co., Inc., et al. vs. Court of Industrial Relations, et
al., G.R. No. L-16561, Jan. 28, 1961, that the closed-shop proviso of a collective bargaining
agreement entered into between an employer and a duly authorized labor union is applicable not
only to the employees or laborers that are employed after the collective bargaining agreement
had been entered into but also to old employees who are not members of any labor union at the
time the said collective bargaining agreement was entered into.
The closed-shop proviso of a collective bargaining agreement entered into between an employer
and a duly authorized labor union applies, and should be applied, to old employees or workers
who are non-members of any labor union at the time the collective bargaining agreement was
entered into. In other words, the old employees or workers can be obliged by his employer to
join the labor union which had entered into a collective bargaining agreement that provides for a

closed-shop as a condition for his continuance in his employment, otherwise his refusal to join
the contracting labor union would constitute a justifiable basis for his dismissal.

154.

RIZAL LABOR UNION vs. RIZAL CEMENT COMPANY

FACTS:
On February 13, 1958, Carlos Santos and 14 other employees of the Rizal Cement company,
while still members of the Binangonan Labor Union Local 104, formed and organized the Rizal
Labor Union. The company was notified thereof on March 18, 1958. Prior to this date or on
March 15, 1958, Carlos Santos and Teofines Minguillan, president and secretary, respectively, of
the newly-organized Rizal Labor Union, received identical letters from the Binangonan Labor
Union, requiring them to explain in 48 hours why they should not be expelled for disloyalty.
Although Santos and Minguillan requested for the convocation of a general meeting of the
members of the Binangonan Labor Union to explain their side, the 15 organizers of the new
union were expelled from their original union on March 21, 1958. On the same day, it demanded
the dismissal of the expelled members from employment, which the company did on March 22,
1958.

ISSUE:
WON implied provisions regarding membership to union be construed strictly as closed shop
provision in CBA.

RULING:
In order that an employer may be deemed bound, under a collective bargaining agreement, to
dismiss employees for non-union membership, the stipulation to this effect must be so clear and
unequivocal as to leave no room for doubt thereon. An undertaking of this nature is so harsh that
it must be strictly construed, and doubts must be resolved against the existence of "closed shop."

Membership in respondent union is not a condition for the continuation of said relation or for
the retention of a laborer or employee engaged either before said agreement or while he was a
member of said union.

155.

FERRER vs. NATIONAL LABOR RELATIONS COMMISSION

FACTS:
Petitioners were regular and permanent employees of the Occidental Foundry Corporation,
employed therein for about ten years at the time of their dismissal in 1989.
On January 5, 1989, the Samahang Manggagawa ng Occidental Foundry Corporation-FFW
(SAMAHAN) and the OFC entered into a collective bargaining agreement (CBA) which would
be effective for the three-year period between October 1, 1988 and September 30, 1991
(Memorandum for OFC and Hui Kam Chang, p. 6, Rollo; p. 551). Article II thereof provides for
a union security clause thus:
Sec. 1 The company agrees that all permanent and regular factory
workers in the company who are members in good standing of the union
or who thereafter may become members, shall as a condition of continued
employment, maintain their membership in the union in good standing for
the duration of the agreement.
xxx xxx xxx
Sec. 3 The parties agree that failure to retain membership in good
standing with the UNION shall be ground for the operation of paragraph 1
hereof and the dismissal by the company of the aforesaid employee upon
written request by the union. The aforesaid request shall be accompanied
by a verified carbon original of the Board of (sic) Resolution by the
UNION signed by at least a majority of its officers/directors. (p.
562, Rollo.)

An intraunion squabble came to a head when, on September 11, 1989, a resolution expelling
petitioners from the SAMAHAN was issued by the aforesaid union officials headed by Capitle,
together with board members George Ignas, Pio Domingo, and Jaime Baynado.
The following day, Capitle sent OFC the following letter, requesting dismissal of Ferrel et al on
the ground of failure to retain membership in good standing. And based on such request OFC
dismissed Ferrer et al.

ISSUE:
WON the dismissal of petitioners are valid exercise of management prerogative and within the
scope of the CBA.

RULING:
A CBA is the law between the company and the union and compliance therewith is
mandated by the express policy to give protection to labor. Said policy should be given
paramount consideration unless otherwise provided for by law.

However, in the

implementation of the provisions of the CBA, both parties thereto should see to it that no
right is violated or impaired.
In the case at bar, while it is true that the CBA between OFC and the SAMAHAN provided for
the dismissal of employees who have not maintained their membership in the union, the manner
in which the dismissal was enforced left much to be desired in terms of respect for the right of
petitioners to procedural due process.

The need for a company investigation is founded on the consistent ruling of this Court that the
twin requirements of notice and hearing which are essential elements of due process must be met
in employment-termination cases. The employee concerned must be notified of the employer's
intent to dismiss him and of the reason or reasons for the proposed dismissal. The hearing affords
the employee an opportunity to answer the charge or charges against him and to defend himself
therefrom before dismissal is effected.
While the law recognizes the right of an employer to dismiss employees in warranted cases, it
frowns upon arbitrariness as when employees are not accorded due process.

156.

MSMG-UWP vs. RAMOS

FACTS:
The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B) (MSMG),
hereinafter referred to as the "local union", is an affiliate of the private respondent, United
Lumber and General Workers of the Philippines (ULGWP), referred to as the "federation".
The collective bargaining agreement between MSMG and M. Greenfield, Inc., includes a Union
Security Clause.
On November 21, 1988, federation expelled the officers of the ULGWP on the said union for
committing acts of disloyalty and/or acts inimical to the interest and violative to the Constitution
and by-laws of the federation.
On the same day, the federation advised respondent company of the expulsion of the 30 union
officers and demanded their separation from employment pursuant to the Union Security Clause
in their collective bargaining agreement.
On March 7, 1989, under the pressure of a threatened strike, respondent company terminated the
30 union officers from employment.
On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition, docketed as
Case No. NCMB-NCR-NS-03-216-89, with the Office of the Secretary of the Department of
Labor and Employment praying for the suspension of the effects of their termination from
employment. However, the petition was dismissed by then Secretary Franklin Drilon on April 11,
1989.
On March 13 and 14, 1989, a total of 78 union shop stewards were placed under preventive
suspension by respondent company. This prompted the union members to again stage a walk-out
and resulted in the official declaration of strike at around 3:30 in the afternoon of March 14,

1989. The strike was attended with violence, force and intimidation on both sides resulting to
physical injuries to several employees, both striking and non-striking, and damage to company
properties.
The employees who participated in the strike and allegedly figured in the violent incident were
placed under preventive suspension by respondent company. The company also sent return-towork notices to the home addresses of the striking employees thrice successively, on March 27,
April 8 and April 31, 1989, respectively. However, respondent company admitted that only 261
employees were eventually accepted back to work. Those who did not respond to the return-towork notice were sent termination letters dated May 17, 1989,
On August 7, 1989, the petitioners filed a verified complaint with the Arbitration Branch,
National Capital Region, DOLE, Manila, docketed as Case No. NCR-00-09-04199-89, charging
private respondents of unfair labor practice which consists of union busting, illegal dismissal,
illegal suspension, interference in union activities, discrimination, threats, intimidation, coercion,
violence, and oppression.

ISSUE:
WON the dismissal of union officers upon federations recommendation is tantamount to ULP.

RULING:
While respondent company may validly dismiss the employees expelled by the union for
disloyalty under the union security clause of the collective bargaining agreement upon the
recommendation by the union, this dismissal should not be done hastily and summarily thereby
eroding the employees' right to due process, self-organization and security of tenure. The
enforcement of union security clauses is authorized by law provided such enforcement is not
characterized by arbitrariness, and always with due process.16 Even on the assumption that the

federation had valid grounds to expel the union officers, due process requires that these union
officers be accorded a separate hearing by respondent company.
Anent public respondent's finding that there was no unfair labor practice on the part of
respondent company and federation officers, the Court sustains the same. As earlier discussed,
union security clauses in collective bargaining agreements, if freely and voluntarily entered into,
are valid and binding. Corollary, dismissals pursuant to union security clauses are valid and legal
subject only to the requirement of due process, that is, notice and hearing prior to dismissal.
Thus, the dismissal of an employee by the company pursuant to a labor union's demand in
accordance with a union security agreement does not constitute unfair labor practice.
However, the dismissal was invalidated in this case because of respondent company's failure to
accord petitioners with due process, that is, notice and hearing prior to their termination. Also,
said dismissal was invalidated because the reason relied upon by respondent Federation was not
valid. Nonetheless, the dismissal still does not constitute unfair labor practice.

157.

BENGUET CONSOLIDATED vs. BCI EMPLOYEES and WORKERS UNION-

PAFLU

FACTS:
On June 23, 1959, the Benguet-Balatoc Workers Union ("BBWU"), for and in behalf of all
BENGUET employees in its mines and milling establishment entered into a Collective
Bargaining Contract, with Benguet Consolidated Inc. (BENGUET), said CONTRACT is
effective for a period of four and a half (4-) years, or from June 23, 1959 to December 23,
1963. It likewise embodied a No-Strike, No-Lockout clause.
About three years later, or on April 6, 1962, a certification election was conducted by the
Department of Labor among all the rank and file employees of Benguet Consolidated Inc in the
same collective bargaining units. UNION obtained more than 50% of the total number of votes,
defeating BBWU, and accordingly, UNION was certified as the sole and exclusive collective
bargaining agent of all BENGUET employees as regards rates of pay, wages, hours of work and
such other terms and conditions of employment allowed them by law or contract.
Subsequently, separate meetings were conducted on November 22, 23 and 24, 1962 at Antamok,
Balatoc and Acupan Mines respectively by UNION. The result thereof was the approval by
UNION members of a resolution 2directing its president to file a notice of strike against
BENGUET for:
1. [Refusal] to grant any amount as monthly living allowance for the workers;
2. Violation of Agreements reached in conciliation meetings among which is the taking
down of investigation [sic] and statements of employees without the presence of union
representative;
3. Refusal to dismiss erring executive after affidavits had been presented, thereby
company showing [sic] bias and partiality to company personnel;

4. Discrimination against union members in the enforcement of disciplinary actions.


The Notice of Strike 3 was filed on December 28, 1962. Three months later, in the evening of
March 2, 1963, UNION members who were BENGUET employees in the mining camps at
Acupan, Antamok and Balatoc, went on strike.
On May 2, 1963, the parties agreed to end the raging dispute. Accordingly, BENGUET and
UNION executed the AGREEMENT, Exh. 1. PAFLU placed its conformity thereto and said
agreement was attested to by the Director of the Bureau of Labor Relations. About a year later or
on January 29, 1964, a collective bargaining contract was finally executed between UNIONPAFLU and BENGUET.
Meanwhile, as a result, allegedly, of the strike staged by UNION and its members, BENGUET
had to incur expenses for the rehabilitation of mine openings, repair of mechanical equipment,
cost of pumping water out of the mines, value of explosives, tools and supplies lost and/or
destroyed, and other miscellaneous expenses, all amounting to P1,911,363.83. So, BENGUET
sued UNION, PAFLU and their respective Presidents to recover said amount in the Court of First
Instance of Manila, on the sole premise that said defendants breached their undertaking in the
existing CONTRACT not to strike during the effectivity thereof .
In answer to BENGUET's complaint, defendants unions and their respective presidents put up
the following defenses: (1) they were not bound by the CONTRACT which BBWU, the defeated
union, had executed with BENGUET; (2) the strike was due, inter alia, to unfair labor practices
of BENGUET; and (3) the strike was lawful and in the exercise of the legitimate rights of
UNION-PAFLU under Republic Act 875.

ISSUE:
WON the CBA executed between BENGUET and BBWU automatically bind UNION-PAFLU
upon its certification as sole bargaining representative of all BENGUET employees.

RULING:
NO.
The rule of vicarious liability has, since the passage of Republic Act 875, been expressly
legislated out.
The standing rule now is that for a labor union and/or its officials and members to be liable, there
must be clear proof of actual participation in, or authorization or ratification of the illegal acts.

158.

VIVIERO vs. COURT OF APPEALS

FACTS:
Petitioner Vivero, a licensed seaman, is a member of the Associated Marine Officers and
Seamen's Union of the Philippines (AMOSUP) who subsequently entered into a Collective
Bargaining Agreement with private respondents.
On grounds of very poor performance and conduct, refusal to perform his job, refusal to report to
the Captain or the vessels Engineers or cooperate with other ship officers about the problem in
cleaning the cargo holds or of the shipping pump and his dismal relations with the Captain of the
vessel, complainant was repatriated on 15 July 1994.
On 01 August 1994, complainant filed a complaint for illegal dismissal at Associated Marine
Officers and Seamans Union of the Philippines (AMOSUP) of which complainant was a
member. Pursuant to Article XII of the Collective Bargaining Agreement, grievance proceedings
were conducted; however, parties failed to reach and settle the dispute amicably, thus, on 28
November 1994, complainant filed [a] complaint with the Philippine Overseas Employment
Administration (POEA).
On 21 January 1997 Labor Arbiter Jovencio Ll. Mayor Jr., on the basis of the pleadings and
documents available on record, rendered a decision dismissing the Complaint for want of
jurisdiction. According to the Labor Arbiter, since the CBA of the parties provided for the
referral to a Voluntary Arbitration Committee should the Grievance Committee fail to settle the
dispute, and considering the mandate of Art. 261 of the Labor Code on the original and exclusive
jurisdiction of Voluntary Arbitrators, the Labor Arbiter clearly had no jurisdiction over the case.5
Petitioner (complainant before the Labor Arbiter) appealed the dismissal of his petition to the
NLRC. On 28 May 1998 the NLRC set aside the decision of the Labor Arbiter on the ground that
the record was clear that petitioner had exhausted his remedy by submitting his case to the
Grievance Committee of AMOSUP. Considering however that he could not obtain any settlement
he had to ventilate his case before the proper forum, i.e., the Philippine Overseas Employment
Administration. The NLRC further held that the contested portion in the CBA providing for the

intercession of a Voluntary Arbitrator was not binding upon petitioner since both petitioner and
private respondents had to agree voluntarily to submit the case before a Voluntary Arbitrator or
Panel of Voluntary Arbitrators. This would entail expenses as the Voluntary Arbitrator chosen by
the parties had to be paid. Inasmuch however as petitioner chose to file his Complaint originally
with POEA, then the Labor Arbiter to whom the case was transferred would have to take
cognizance of the case.
The NLRC then remanded the case to the Labor Arbiter for further proceedings. On 3 July 1998
respondents filed a Motion for Reconsideration which was denied by the NLRC on 23 July 1998.
Thus, private respondents raised the case to the Court of Appeals contending that the provision in
the CBA requiring a dispute which remained unresolved by the Grievance Committee to be
referred to a Voluntary Arbitration Committee, was mandatory in character in view of the CBA
between the parties. They stressed that "since it is a policy of the state to promote voluntary
arbitration as a mode of settling labor disputes, it is clear that the public respondent gravely
abused its discretion in taking cognizance of a case which was still within the mantle of the
Voluntary Arbitration Commitees jurisdiction.
ISSUE:
WON the dismissal of an employee constitute a "grievance between the parties," as defined
under the provisions of the CBA, and consequently, within the exclusive original jurisdiction of
the Voluntary Arbitrators, thereby rendering the NLRC without jurisdiction to decide the case?
RULING:
CBA "is the law between the parties and compliance therewith is mandated by the express policy
of the law."
Hence, petitioner should have followed the provision in the CBA requiring the submission of the
dispute to the Voluntary Arbitration Committee once the Grievance Committee failed to settle the
controversy.

However, while the parties did agree to make termination disputes the proper subject of
voluntary arbitration, such submission remains discretionary upon the parties. A perusal of the
CBA provisions shows that Sec. 6, Art. XII (Grievance Procedure) of the CBA is the general
agreement of the parties to refer grievances, disputes or misunderstandings to a grievance
committee, and henceforth, to a voluntary arbitration committee.
The use of the word "may" shows the intention of the parties to reserve the right to submit the
illegal termination dispute to the jurisdiction of the Labor Arbiter, rather than to a Voluntary
Arbitrator. Petitioner validly exercised his option to submit his case to a Labor Arbiter when he
filed his Complaint before the proper government agency.

159 SANYO PHILIPPINES WORKERS UNION-PSSLU vs. CANIZARES

FACTS:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1,
1989 to June 30, 1994. The same CBA contained a union security clause.
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to
Sanyo recommending the dismissal of the following non-union workers: Bernardo Yap, Arnel
Salvo, Renato Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito Valencia, and Allan
Misterio, allegedly because: 1) they were engaged and were still engaging in anti-union
activities; 2) they willfully violated the pledge of cooperation with PSSLU which they signed
and executed on February 14, 1990; and 3) they threatened and were still threatening with bodily
harm and even death the officers of the union (pp. 37-38, Rollo).
Pursuant to the above letter of the union, the company suspended and subsequently dismissed the
above mentioned employees.
On May 20, 1991, the dismissed employees filed a complaint with the NLRC for illegal
dismissal. Named respondent were PSSLU and Sanyo.
ISSUE:
WON grievances arising from the interpretation or implementation of CBA and those arising
from the interpretation or enforcement of company personnel policies, may be subjected to
voluntary arbitration.
RULING:
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or
resolution of grievances arising from the interpretation or implementation of their CBA and those
arising from the interpretation or enforcement of company personnel policies is mandatory. The

law grants to voluntary arbitrators original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of the Collective
Bargaining Agreement and those arising from the interpretation or enforcement of company
personnel policies (Art. 261, Labor Code).
The failure of the parties to the CBA to establish the grievance machinery and its unavailability
is not an excuse for the Labor Arbiter to assume jurisdiction over disputes arising from the
implementation and enforcement of a provision in the CBA.
All that needs to be done to set the machinery into motion is to call for the convening thereof.
However, We hold that the Labor Arbiter and not the Grievance Machinery provided for in the
CBA has the jurisdiction to hear and decide the complaints of the private respondents. While it
appears that the dismissal of the private respondents was made upon the recommendation of
PSSLU pursuant to the union security clause provided in the CBA, We are of the opinion that
these facts do not come within the phrase "grievances arising from the interpretation or
implementation of (their) Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies," the jurisdiction of which pertains
to the Grievance Machinery or thereafter, to a voluntary arbitrator or panel of voluntary
arbitrators. Article 260 of the Labor Code on grievance machinery and voluntary arbitrator states
that "(t)he parties to a Collective Bargaining Agreement shall include therein provisions that will
ensure the mutual observance of its terms and conditions. They shall establish a machinery for
the adjustment and resolution of grievances arising from the interpretation or implementation of
their Collective Bargaining Agreement and those arising from the interpretation or enforcement
of company personnel policies." It is further provided in said article that the parties to a CBA
shall name or designate their respective representatives to the grievance machinery and if the
grievance is not settled in that level, it shall automatically be referred to voluntary arbitrators (or
panel of voluntary arbitrators) designated in advance by the parties. It need not be mentioned that
the parties to a CBA are the union and the company. Hence, only disputes involving the union
and the company shall be referred to the grievance machinery or voluntary arbitrators.

In the instant case, both the union and the company are united or have come to an agreement
regarding the dismissal of private respondents. No grievance between them exists which could be
brought to a grievance machinery. The problem or dispute in the present case is between the
union and the company on the one hand and some union and non-union members who were
dismissed, on the other hand. The dispute has to be settled before an impartial body. The
grievance machinery with members designated by the union and the company cannot be
expected to be impartial against the dismissed employees. Due process demands that the
dismissed workers grievances be ventilated before an impartial body. Since there has already
been an actual termination, the matter falls within the jurisdiction of the Labor Arbiter.

160.

SAN MIGUEL CORPORATION vs. NLRC

FACTS:
In July 1990, San Miguel Cooperation, alleging the need to streamline its operations due to
financial loses, shut down some of its plants and declared 55 positions as redundant.
Consequently, the private respondent union filed several grievance cases for the said retrenched
employees, praying for the redeployment of the said employees to the other divisions of the
company.
The grievance proceedings were conducted pursuant their Collective Bargaining Agreement.
During the grievance proceedings, however, most of the employees were redeployed, while
others accepted early retirement. As a result only 17 employees remained when the parties
proceeded to the third level (Step 3) of the grievance procedure. In a meeting on October 26,
1990, petitioner informed private respondent union that if by October 30, 1990, the remaining 17
employees could not yet be redeployed, their services would be terminated on November 2,
1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II, a representative of the
union, declared that there was nothing more to discuss in view of the deadlock.
On November 7, 1990, the private respondent filed with the National Conciliation and Mediation
Board (NCMB) of the Department of Labor and Employment (DOLE) a notice of strike on the
following grounds: a) bargaining deadlock; b) union busting; c) gross violation of the Collective
Bargaining Agreement (CBA), such as non-compliance with the grievance procedure; d) failure
to provide private respondent with a list of vacant positions pursuant to the parties side
agreement that was appended to the 1990 CBA; and e) defiance of voluntary arbitration award.
Petitioner on the other hand, moved to dismiss the notice of strike but the NCMB failed to act on
the motion.
On December 21, 1990, petitioner SMC filed a complaint with the respondent NLRC, praying
for: (1) the dismissal the notice of strike; (2) an order compelling the respondent union to submit

to grievance and arbitration the issue listed in the notice of strike; (3) the recovery of the
expenses of litigation.
ISSUE:
1

WON an aggrieve union can go on strike based on the ground of alleged deadlock due to
unresolved grievance.

WON Union respondent violated the CBA when it file a notice of strike for apparent
deadlock and violation of petitioner company of the CBA.

RULING:
Deadlock is non-existent, hence notice of stike is inappropriate
Collective Bargaining Deadlock is defined as "the situation between the labor and the
management of the company where there is failure in the collective bargaining negotiations
resulting in a stalemate" 11 This situation, is non-existent in the present case since there is a Board
assigned on the third level (Step 3) of the grievance machinery to resolve the conflicting views of
the parties. Instead of asking the Conciliation Board composed of five representatives each from
the company and the union, to decide the conflict, petitioner declared a deadlock, and thereafter,
filed a notice of strike. For failing to exhaust all the steps in the grievance machinery and
arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike
should have been dismissed by the NLRC and private respondent union ordered to proceed with
the grievance and arbitration proceedings.
Union violated the CBA
In abandoning the grievance proceedings and stubbornly refusing to avail of the remedies under
the CBA. Private respondent violated the mandatory provisions of the collective bargaining
agreement.

161.

MANEJA vs. NATIONAL LABOR RELATIONS COMMISSION

FACTS:
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning
January, 1985 as a telephone operator. She was a member of the National Union of Workers in
Hotels, Restaurants and Allied Industries (NUWHRAIN) with an existing Collective Bargaining
Agreement (CBA) with private respondent.
On March 7, 1990, the chief telephone operator issued a memorandum to petitioner and Loleng
directing the two to explain the February 15 incident. Petitioner and Loleng thereafter submitted
their written explanation.
On March 20, 1990, a written report 5 was submitted by the chief telephone operator, with the
recommendation that the offenses committed by the operators concerned covered violations of
the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01: forging, falsifying official
document(s), and (2) OSDA 1.11: culpable carelessness negligence or failure to follow
specific instruction(s) or established procedure(s).
On March 23, 1990, petitioner was served a notice of dismissal effective April 1, 1990. Petitioner
refused to sign the notice and wrote therein "under protest."
Meanwhile, a criminal case 7 for Falsification of Private Documents and Qualified Theft was
filed before the Office of the City Prosecutor of Manila by private respondent againts Loleng and
petitioner. However, the resolution recommending the filing of a case for estafa was reversed by
2nd Asst. City Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for illegal dismissal against private respondent
before the Labor Arbiter. The complaint was later amended to include a claim for unpaid wages,
unpaid vacation leave conversion and moral damages.

ISSUE:
WON an illegal dismissal stipulated in grievance machinery of CBA may be directly submitted
to Labor Arbiter instead of voluntary arbitration
RULING:
The dismissal of petitioner does not fall within the phrase "grievance arising from the
interpretation or implementation of collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies," the jurisdiction of which pertains
to the grievance machinery or thereafter, to a voluntary arbitrator or panel of voluntary
arbitrators. It is to be stressed that under Article 260 of the Labor Code, which explains the
function of the grievance machinery and voluntary arbitrator. "(T)he parties to a Collective
Bargaining Agreement shall include therein provisions that will ensure the mutual observance of
its terms and conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company personnel
policies." Article 260 further provides that the parties to a CBA shall name or designate their
respective representative to the grievance machinery and if the grievance is unsettled in that
level, it shall automatically be referred to the voluntary arbitrators designated in advance by the
parties to a CBA of the union and the company. It can thus be deduced that only disputes
involving the union and the company shall be referred to the grievance machinery or voluntary
arbitrators.
In the case at bar, the union does not come into the picture, not having objected or voiced any
dissent to the dismissal of the herein petitioner. The reason for this, according to petitioner is that
"the practice in said Hotel in cases of termination is that the latter cases are not referred anymore
to the grievance committee;" and that "the terminated employee who wishes to question the
legality of his termination usually goes to the Labor Arbiter for arbitration, whether the
termination arose from the interpretation or enforcement of the company personnel policies or
otherwise."

162.

LUDO & LUYM CORPORATION vs. SAORNIDO

FACTS:
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation
engaged in the manufacture of coconut oil, corn starch, glucose and related products. It operates
a manufacturing plant located at Tupas Street, Cebu City and a wharf where raw materials and
finished products are shipped out.
In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu
Arrastre Services (CLAS) for the loading and unloading of its finished products at the wharf.
Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by
LUDO.
These arrastre workers were subsequently hired, on different dates, as regular rank-and-file
employees of LUDO every time the latter needed additional manpower services. Said employees
thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the
exclusive bargaining agent of the rank-and-file employees.
On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO
which provides certain benefits to the employees, the amount of which vary according to the
length of service rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members period of service the time
during which they rendered arrastre services to LUDO through the CLAS so that they could get
higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary
arbitration.
ISSUE:
WON a voluntary arbitrator can award benefits not claimed in the submission agreement.

RULING:
Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power
to make a final settlement since arbitration is the final resort for the adjudication of disputes.
The Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral
awards. CA ruled that under the equitable principle of estoppel, it will be the height of
injustice if we will brush aside the employees claims on a mere technicality, especially when it
is petitioners own action that prevented them from interposing the claims within the prescribed
period.
More so in this case, where the Voluntary Arbitrator had received the evidence of the parties
first-hand and found that prescription has not as yet set in to bar the respondents claims for the
monetary benefits awarded to them.

163.

SIME DARBY PILIPINAS vs. MAGSALIN s.

FACTS:
On 31 July 1989, the Sime Darby Salaried Employees Association- ALU (SDSEA-ALU) wrote
petitioner demanding the implementation of a provision Identical to the above contained in their
own CBA with petitioner. Subsequently, petitioner called both respondent SDEA and SDEAALU to a meeting wherein the former explained that it was unable to grant the performance
bonus corresponding to the fiscal year 1988-1989 on the ground that the workers' performance
during said period did not justify the award of such bonus. On 27 July 1989, private respondent
SDEA filed with the National Conciliation and Mediation Board (NCMB) an urgent request for
preventive conciliation between private respondent and petitioner.
However, before petitioner could submit its Reply to the union's Position Paper, the Voluntary
Arbitrator on 17 August 1989 issued an award which declared respondent union entitled to a
performance bonus equivalent to 75% of the monthly basic pay of its members. In that award,
the Voluntary Arbitrator held that a reading of the CBA provision on the performance bonus
would show that said provision was mandatory hence the only issue to be resolved was the
amount of performance bonus. The Voluntary Arbitrator further stated that petitioner company's
financial statements as of 30 June 1988 revealed retained earnings in the amount of P
324,370,372.32. From the foregoing, the Voluntary Arbitrator concluded that petitioner company
could well afford to give members of respondent union a substantial performance bonus. The
Voluntary Arbitrator also stated that there was evidence to show that the company has given
performance bonuses to its managerial and non-unionized employees as well as to monthly paid
workers of the year 1988-1989.
Petitioner filed a motion for reconsideration which motion was not entertained by the Voluntary
Arbitrator upon the ground that under the ruling of this Court in Solidbank v. Bureau of Labor
Relations, (G.R. No. 64926, promulgated 8 October 1984; unpublished) he, the Voluntary
Arbitrator, had automatically lost jurisdiction over the arbitration case upon the issuance of the
award.

ISSUE:
WON the Voluntary arbitrator can validly award amount of performance bonus when the issue
before him is only for the grant thereof.
RULING:
Voluntary Arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate
and to determine the scope of his own authority subject only, in a proper case, to the
certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his authority as
embracing not merely the determination of the abstract question of whether or not a performance
bonus was to be granted but also, in the affirmative case, the amount thereof.

164.

IMPERIAL TEXTILE MILLS vs. SAMPANG

FACTS:
On March 20, 1987, petitioner Imperial Textile Mills, Inc. (the Company) and respondent
Imperial Textile Mills-Monthly Employees Association (the Union) entered into a collective
bargaining agreement providing across-the-board salary increases and other benefits retroactive
to November 1, 1986.
On August 21, 1987, they executed another agreement on the job classification and wage
standardization plan. This was also to take effect retroactively on November 1, 1986.
A dispute subsequently arose in the interpretation of the two agreements. The parties then
submitted it to arbitration and designated public respondent Vladimir P.L. Sampang as the
Voluntary Arbitrator. The understanding was that his decision would be final, executory and
inappealable.
The Company maintained that the wage of a particular employee subject of possible adjustment
on base pay should be the pay with the first year CBA increase already integrated therein.
The Union argued that the CBA increases should not be included in adjusting the wages to the
base pay level, as it was separate and distinct from the increases resulting from the job
classification and standardization scheme.
ISSUE:
WON the decision of a Voluntary Arbitrator in labor dispute be subject to motion for
reconsideration and subsequent revision.
RULING:
When the parties submitted their grievance to arbitration, they expressly agreed that the decision
of the Voluntary Arbitrator would be final, executory and inappealable. In fact, even without this

stipulation, the first decision had already become so by virtue of Article 263 of the Labor Code
making voluntary arbitration awards or decisions final and executory.
The philosophy underlying this rule was explained by Judge Freedman in the case of La Vale
Plaza, Inc., v. R.S. Noonan, Inc., 2 thus:
It is an equally fundamental common law principle that once an arbitrator has
made and published a final award, his authority is exhausted and be is functus
officio and can do nothing more in regard to the subject matter of the arbitration.
The policy which lies behind this is an unwillingness to permit one who not a is
judicial officer and who acts informally and sporadically, to re-examine a final
decision which he has already rendered, because of the potential evil of outside
communication and unilateral influence which might affect a new conclusion. The
continuity of judicial office and the tradition which surround judicial conduct is
lacking in the isolated activity of an arbitrator, although even here the vast
increase in the arbitration of labor disputes has created the office of the
specialized provisional arbitrator. (Washington-Baltimore N.G., Loc. 35 v.
Washington Post Co., 442 F. 2d 1234 (1971], pp. 1238-1239)
In the case of The Consolidated Bank & Trust Corporation (SOLIDBANK) v. Bureau of Labor
Relations, et al., 3this Court held that the Voluntary Arbitrator lost jurisdiction over the case
submitted to him the moment be rendered his decision. Therefore, he could no longer entertain a
motion for reconsideration of the decision for its reversal or modification.

165.

CONTINENTAL MARBLE CORP. vs. NLRC

FACTS:
Private respondent Rodito Nasayao claimed that was appointed plant manager of the petitioner
corporation, with an alleged compensation of P3,000.00, a month, or 25% of the monthly net
income of the company, whichever is greater, and when the company failed to pay his salary for
the months of May, June, and July 1974, Rodito Nasayao filed a complaint with the National
Labor Relations Commission, Branch IV, for the recovery of said unpaid varies.
Answering, the herein petitioners denied that Rodito Nasayao was employed in the company as
plant manager with a fixed monthly salary of P3,000.00. They claimed that the undertaking
agreed upon by the parties was a joint venture, a sort of partnership, wherein Rodito Nasayao
was to keep the machinery in good working condition and, in return, he would get the contracts
from end-users for the installation of marble products, in which the company would not interfere.
In addition, private respondent Nasayao was to receive an amount equivalent to 25% of the net
profits that the petitioner corporation would realize, should there be any. Petitioners alleged that
since there had been no profits during said period, private respondent was not entitled to any
amount.
The case was submitted for voluntary arbitration and the parties selected the herein respondent
Jose T. Collado as voluntary arbitrator. In the course of the proceedings, however, the herein
petitioners challenged the arbitrator's capacity to try and decide the case fairly and judiciously
and asked him to desist from further hearing the case. But, the respondent arbitrator refused. In
due time, or on 29 December 1975, he rendered judgment in favor of the complainant, ordering
the herein petitioners to pay Rodito Nasayao the amount of P9,000.00, within 10 days from
notice. 1
ISSUE:
WON a decision of voluntary arbitrator in labor dispute be subject of appeal.

RULING:
SC ruled that where there is patent and manifest abuse of discretion, the rule on unappealability
of awards of a voluntary arbitrator becomes flexible and it is the inherent power of the Courts to
maintain the people's faith in the administration of justice.
Accordingly, the question of the finality and unappealability of a decision and/or award of a
voluntary arbitrator had been laid to rest in Oceanic Bic Division (FFW) vs. Romero, and
reiterated in Mantrade FMMC Division Employees and Workers Union vs. Bacungan. The Court
therein ruled that it can review the decisions of voluntary arbitrators, thusWe agree with the petitioner that the decisions of voluntary arbitrators must be given the highest
respect and as a general rule must be accorded a certain measure of finality. . Inspite of
statutory provisions making 'final' the decisions of certain administrative agencies, we have taken
cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or erroneous interpretation of
the law were brought to our attention.. ...

166.

LUZON

DEVELOPMENT

BANK

vs.

ASSOCIATION

OF

LUZON

DEVELOPMENT BANK EMPLOYEES


FACTS:
Luzon Development Bank (LDB) and the Association of Luzon Development Bank Employees
(ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining Agreement
provision and the Memorandum of Agreement dated April 1994, on promotion.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision
disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the
Collective Bargaining Agreement provision nor the Memorandum of Agreement
on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the
Voluntary Arbitrator and to prohibit her from enforcing the same.
ISSUE:
WON decision of voluntary arbitrator be a subject of petition for certiorari directly to SC.
RULING:
The award or decision of the voluntary arbitrator with that of the regional trial court.
Consequently, in a petition for certiorari from that award or decision, the Court of Appeals
must be deemed to have concurrent jurisdiction with the Supreme Court.
The jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite
limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of
the National Labor Relations Commission (NLRC) for that matter. The state of our present law
relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary Arbitrator

. . . shall be final and executory after ten (10) calendar days from receipt of the copy of the award
or decision by the parties," 5 while the "(d)ecision, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders." 6 Hence, while there is an express mode
of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an
appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and
imposes an unnecessary burden upon it.
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within
the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact
that his functions and powers are provided for in the Labor Code does not place him within the
exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It
will be noted that, although the Employees Compensation Commission is also provided for in the
Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative
Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court
of Appeals under the foregoing rationalization, and this was later adopted by Republic Act No.
7902 in amending Sec. 9 of B.P. 129.

167.

THE INSULAR LIFE ASSURANCE CO., LTD., EMPLOYEES ASSOCIATION-

NATU, vs. THE INSULAR LIFE ASSURANCE CO., LTD.


FACTS:
The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU Insurance Group
Workers & Employees Association-NATU, and Insular Life Building Employees AssociationNATU (the Unions), while still members of the Federation of Free Workers (FFW), entered into
separate collective bargaining agreements with the Insular Life Assurance Co., Ltd. and the FGU
Insurance Group (the Companies).
In a letter dated September 16, 1957, the Unions jointly submitted proposals to the Companies
for a modified renewal of their respective collective bargaining contracts which were then due to
expire on September 30, 1957. The parties mutually agreed and to make whatever benefits could
be agreed upon retroactively effective October 1, 1957.
Thereafter, in the months of September and October 1957 negotiations were conducted on the
Union's proposals, but these were snagged by a deadlock on the issue of union shop, as a result
of which the Unions filed on January 27, 1958 a notice of strike for "deadlock on collective
bargaining." Several conciliation conferences were held under the auspices of the Department of
Labor wherein the conciliators urged the Companies to make reply to the Unions' proposals en
toto so that the said Unions might consider the feasibility of dropping their demand for union
security in exchange for other benefits. However, the Companies did not make any counterproposals but, instead, insisted that the Unions first drop their demand for union security,
promising money benefits if this was done. Thereupon, and prior to April 15, 1958, the petitioner
Insular Life Building Employees Association-NATU dropped this particular demand, and
requested the Companies to answer its demands, point by point, en toto. But the respondent
Insular Life Assurance Co. still refused to make any counter-proposals. In a letter addressed to
the two other Unions by the joint management of the Companies, the former were also asked to
drop their union security demand, otherwise the Companies "would no longer consider
themselves bound by the commitment to make money benefits retroactive to October 1, 1957."
By a letter dated April 17, 1958, the remaining two petitioner unions likewise dropped their

demand for union shop. April 25, 1958 then was set by the parties to meet and discuss the
remaining demands.
From April 25 to May 6, 1958, the parties negotiated on the labor demands but with no
satisfactory result due to a stalemate on the matter of salary increases. On May 13, 1958 the
Unions demanded from the Companies final counter-proposals on their economic demands,
particularly on salary increases. Instead of giving counter-proposals, the Companies on May 15,
1958 presented facts and figures and requested the Unions to submit a workable formula which
would justify their own proposals, taking into account the financial position of the former.
Forthwith the Unions voted to declare a strike in protest against what they considered the
Companies' unfair labor practices.
Meanwhile, eighty-seven (87) unionists were reclassified as supervisors without increase in
salary nor in responsibility while negotiations were going on in the Department of Labor after
the notice to strike was served on the Companies. These employees resigned from the Unions.
On May 20, 1958 the Unions went on strike and picketed the offices of the Insular Life Building
at Plaza Moraga.
On May 21, 1958 the Companies through their acting manager and president, the respondent
Jose M. Olbes (hereinafter referred to as the respondent Olbes), sent to each of the strikers a
letter to return to work and corresponding privilege that they may have by doing so.
ISSUES:
WON the respondent company committed ULP by interfering with the members of the Unions in
the exercise of their right to concerted action, by sending out individual letters to them urging
them to abandon their strike and return to work, with a promise of comfortable cots, free coffee
and movies, and paid overtime, and, subsequently by warning them that if they did not return to
work on or before June 2, 1958, they might be replaced.

WON the respondent company committed discriminating members of the Unions as regards
readmission to work after the strike on the basis of their union membership and degree of
participation in the strike.
RULING:
The actuations of the respondents before and after the issuance of the letters yield the clear
inference that the said letters formed of the respondents scheme to preclude if not destroy
unionism within them.
The act of a company president in writing letters to the strikers, urging their return to work on
terms inconsistent with their union membership, was adjudged as constituting interference with
the exercise of his employees' right to collective bargaining (Lighter Publishing, CCA 7th, 133
F2d 621). It is likewise an act of interference for the employer to send a letter to all employees
notifying them to return to work at a time specified therein, otherwise new employees would be
engaged to perform their jobs. Individual solicitation of the employees or visiting their homes,
with the employer or his representative urging the employees to cease union activity or cease
striking, constitutes unfair labor practice. All the above-detailed activities are unfair labor
practices because they tend to undermine the concerted activity of the employees, an activity to
which they are entitled free from the employer's molestation.
When the respondents offered reinstatement and attempted to "bribe" the strikers with
"comfortable cots," "free coffee and occasional movies," "overtime" pay for "work performed in
excess of eight hours," and "arrangements" for their families, so they would abandon the strike
and return to work, they were guilty of strike-breaking and/or union-busting and, consequently,
of unfair labor practice. It is equivalent to an attempt to break a strike for an employer to offer
reinstatement to striking employees individually, when they are represented by a union, since the
employees thus offered reinstatement are unable to determine what the consequences of
returning to work would be.
This is a clear act of discrimination practiced by the Companies in the process of rehiring
and is therefore a violation of sec. 4(a) (4) of the Industrial Peace Act.

The respondents did not merely discriminate against all the strikers in general. They separated
the active from the less active unionists on the basis of their militancy, or lack of it, on the picket
lines. Unionists belonging to the first category were refused readmission even after they were
able to secure clearances from the competent authorities with respect to the criminal charges
filed against them. It is significant to note in this connection that except for one union official
who deserted his union on the second day of the strike and who later participated in crashing
through the picket lines, not a single union officer was taken back to work. Discrimination
undoubtedly exists where the record shows that the union activity of the rehired strikers has been
less prominent than that of the strikers who were denied reinstatement.

168.

PHILIPPINE STEAM NAVIGATION CO. vs. PHILIPPINE OFFICERS GUILD

FACTS:
The Philippine Steam Navigation Co., Inc., hereafter referred to as PHILSTEAM, is a domestic
corporation, with head offices in Cebu City, engaged in inter-island shipping. In the year 1954 it
had 16 vessels, with 8 officers to a vessel, or a total of 128 officers.
Philippine Marine Officers Guild, herein otherwise called PMOG, is a labor union affiliated with
the Federation of Free Workers (FFW), representing, and which represented in 1954, some of
PHILSTEAM's officers.
The Cebu Seamen's Association, CSA for short, is another labor union that represents and
likewise represented in 1954 some of PHILSTEAM's officers.
On June 15, 1954 PMOG sent PHILSTEAM a set of demands with a request for collective
bargaining. PHILSTEAM received the letter embodying the same on June 18, 1954.
Subsequently, or on June 29, 1954, PHILSTEAM transmitted its answer to PMOG, requiring the
latter to first prove its representation of a majority of PHILSTEAM's employees before its
demands will be considered as requested. PHILSTEAM, on the same date, started interrogating
and investigating its captains, deck officers, and engineers, to find out directly from them if they
had joined PMOG or authorized PMOG to represent them.
A reply was sent by PMOG to the answer of PHILSTEAM, insisting that PHILSTEAM consider
its requests and demands first before requiring proof of majority representation. This reply was
received by PHILSTEAM on July 6, 1954.
PMOG thereafter filed on July 17, 1954 a notice of intention to strike stating as reasons therefor
PHILSTEAM's alleged refusal to bargain and unspecified unfair labor practices. The Department
of Labor brought PHILSTEAM and PMOG to a conference on July 30, 1954, without any
success.

The CSA had meanwhile also transmitted its own set of demands to PHILSTEAM. On August
16, 1954 PHILSTEAM and CSA met. PHILSTEAM therein recognized CSA as representing the
majority of its employees and proceeded to consider CSA's demands.
Another PHILSTEAM-PMOG conference at the Department of Labor was held on August, 17,
1954, likewise to no avail.
Subsequently, on August 24, 1954, PHILSTEAM and CSA signed a collective bargaining
agreement. On the same date, PMOG declared a strike against PHILSTEAM. Although not the
subject of the present appeal, it should also be mentioned that the dispute included two other
shipping companies, namely, Compania Maritima and Madrigal Shipping, and that PMOG
simultaneously struck against all three companies.
Around 46 officers of PHILSTEAM joined PMOG's strike; 15 of these later returned to work,
leaving 31 PHILSTEAM officers on strike. Pier 4 of the North Harbor of the Port of Manila,
where PHILSTEAM vessels docked, was among the areas picketed during the strike.
A final conference at the Department of Labor between PHILSTEAM and PMOG on October 7,
1954 still failed to bring the parties to an agreement.
ISSUE:
WON the interrogation and investigation by PHILSTEAM's supervisory officials of its captains,
deck officers and engineers, to determine whether they had authorized PMOG to act as their
bargaining agent is tantamount to ULP.
WON the subjection of PMOG to vilification is tantamount to ULP.
WON the participation of PHILSTEAM's pier superintendent in soliciting membership for a
competing union is tantamount to ULP.
RULING:

PHILSTEAM's interrogation of its employees had in fact interfered with, restrained and
coerced the employees in the exercise of their rights to self-organization
An employer is not denied the privilege of interrogating its employees as to their union
affiliation, provided the same is for a legitimate purpose and assurance is given by the employer
that no reprisals would be taken against unionists. Nonetheless, any employer who engages in
interrogation does so with notice that he risks a finding of unfair labor practice if the
circumstances are such that his interrogation restrains or interferes with employees in the
exercise of their rights to self-organization. (Blue Flash Express Co., Inc., 109 NLRB 591.)
The rule in this jurisdiction is that subjection by the company of its employees to a series of
questionings regarding their membership in the union or their union activities, in such a way as
to hamper the exercise of free choice on their part, constitutes unfair labor practice (Scoty's
Department Store vs. Micaller, 52 O.G. 5119). PHILSTEAM's aforestated interrogation squarely
falls under this rule.
Beliso was speaking for or on behalf of the company, when he made the remarks
derogatory to PMOG and favorable to CSA. PHILSTEAM thereby interfered with
Feliciano's right to self-organization
PMOG's subjection to vilification is likewise borne out by substantial evidence. Santiago Beliso,
PHILSTEAM's purchasing agent, told Luis Feliciano, on August 6, 1954, that PMOG was a
"money-asking union," that "all the members of the FFW are low people" and that CSA "is a
good union." Fernando Guerrero, PHILSTEAM's inter-island manager, had authorized Beliso to
assist him in his investigation of PMOG membership. The statement of Beliso was made in the
presence of PHILSTEAM office manager Ernesto Maeru and PHILSTEAM pier superintendent
Jose Perez, and these supervisory officials did nothing to disavow Beliso's conduct as not
intended to represent PHILSTEAM's opinion. PHILSTEAM, through its supervisory officials,
obviously made it appear to Feliciano that Beliso was speaking for or on behalf of the company,
when he made the remarks derogatory to PMOG and favorable to CSA. PHILSTEAM thereby
interfered with Feliciano's right to self-organization.

A statement which amounts to support other CSAs membership solicitation drive, in effect
encouraged membership in the competing, union and indorsed CSA's solicitation.
Finally, of record also stands the fact that PHILSTEAM pier superintendent Valeriano Teves
helped bring about the affiliation of Diosdado Capilitan, a PMOG member, with CSA, by telling
him that his joining with CSA would not affect his PMOG affiliation. This incident was testified
to by PHILSTEAM witnesses themselves. While such a statement, if considered as an isolated
remark, may be a harmless expression of opinion, it in reality amounted to support of CSA's
membership solicitation drive, in the light of the circumstances in which it was made. For it in
effect encouraged membership in the competing, union and indorsed CSA's solicitation, it least
with respect to Capilitan.

169.

VISAYAN BICYCLE, MANUFACTURING CO., INC vs. NATIONAL LABOR

UNION and COURT OF INDUSTRIAL RELATIONS


FACTS:
On November 3, 1958, workers in the Visayan Bicycle Manufacturing Co., Inc. formed the
Visayan Bicycle Employees and Workers Union (VIBEMWU). Pedro Evangelista was its
president. On November 14, 1958, VIBEMWU and the company signed a collective bargaining
agreement. Among other things it provided for union security, checkoff, wage increases, fifteen
days vacation leave and fifteen days sick leave.
On February 27, 1960, through its executive board headed by Besana, acting as president,
VIBEMWU affiliated with the National Labor Union (NLU). Subsequently, on March 4, 1960,
the Constitution and By-laws of VIBEMWU were amended. On March 9, 1960, another election
was held and Besana was chosen president thereby replacing Evangelista.
On March 17, 1960, the national secretary of NLU, by a letter, informed the company of
VIBEMWU'S affiliation to NLU, and demanded enforcement of the collective bargaining
agreement. The company, however, did not accede to the demand. Consequently, on April 5,
1960, VIBEMWU filed a notice to strike.1wph1.t
The Department of Labor's Conciliation Service held several hearings on the union's demands
and strike notice, but the company still refused.
On April 25, 1960, the company dismissed Besana and Rodiel after they figured, on the same
day, in a fight with two other employees, within the premises and during working hours. Alleging
unfair labor practice, NLU, on behalf of VIBEMWU, as well as of Besana and Rodiel, filed on
May 6, 1960 a complaint against the company in the Court of Industrial Relations. The company
answered it on May 23, 1,960. It stated that the dismissal of Besana and Rodiel was due to
violation of a company rule that penalizes "Inciting or provoking a fight or fighting during
working hours or on company premises".

ISSUE:
WON the company's dismissal of Besana and Rodiel constitute unfair labor practice.
RULING:
Besana and Rodiel were in reality dismissed because of their union activities and not
because of their violation of a company rule against fights in the premises or during
working hours
The record shows that on April 25, 1960, Besana and Rodiel were provoked by Saturnino Reyes
and Silvestre Pacia into a pre-arranged fight pursuant to a strategy of the company designed to
provide an appparently lawful cause for their dismissal. Reyes and Pacia were hired only within
that week. 2Besana and Rodiel were not shown to have previously figured in similar incidents
before or to have violated company rules and regulations in their many years with the
company.. The company did not investigate the incident, and its manager, Co Hing, admitted that
Besana was dismissed because he was a "hard-headed leader of the union". It was this manager
who had warned VIBEMWU'S officers responsible for the affiliation that if they will not
withdraw VIBEMWU from theNLU, he would take " steps in order to dismiss them from work."
The findings of the Court of Industrial Relations to the foregoing effect are supported by
substantial evidence. No reason obtains to alter the conclusion that Besana and Rodiel were in
reality dismissed because of their union activities and not because of their violation of a
company rule against fights in the premises or during working hours. Furthermore, the so-called
violation of company rules having been brought about by the company itself, thru the recent
employment of Saturnino Reyes and Silvestre Pacia who provoked the fight as above indicated,
the same cannot be regarded as a ground to punish the aforementioned employees.
Such being the case, the dismissal of Besana and Rodiel constituted unfair labor practice under
Section 4(a) (1) and (4) of Republic Act 875:

170.

Judric Canning Vs Inciong

Facts:
The records show that the herein private respondents Norma Pineda, Vicky Penalosa, Leonila
Morales, Teresita Balmaceda, Adelina Valenzuela, and Juanita Reposar are employees of the
petitioner corporation and are members of the United Lumber and General Workers of the
Philippines (ULGWP). On August 19, 1978, the said complainants were allegedly not allowed to
report for work due to their union activities in soliciting membership in a union yet to be
organized in the company and their time cards were removed from the rack. As a result, the said
complainants and their labor union filed a complaint for unfair labor practice against the
petitioner with Region IV of the Ministry of Labor, seeking the reinstatement of the
complainants with full backwages.
Issue:
Whether or not there was unfair labor practice?
Ruling:
Yes, Moreover, there was no reason at all and none has been suggested by the petitioner, for the
private respondents to abandon their work. No employee with a family to support, like the
private respondents, would abandon their work knowing fully well of the acute unemployment
and underemployment problem and the difficulty of looking for a means of livelihood. As the
Solicitor General stated: "To get a job is difficult; to run from it is foolhardy."

171.

Manila Hotel Co. Vs Pines Hotel Employees Asso.

Facts:
These three appeals by certiorari filed on various dates in 1969 involve the same parties and
various incidents between them, commencing from an unfair labor practice charge originally
filed by respondent union against petitioner company and culminating in supplemental
proceedings to enjoin the abrupt dismissal and termination of employment of all eighty-six
employees at the Pines Hotel with its sudden sale on March 28, 1968 to a third party.
Petitioner-employer has appealed from the cease-and-desist order of respondent court of
industrial relations in its decision in the original unfair labor case as well as from the orders
issued by it to enforce the settlement of the supplemental dispute arising from the sudden sale of
the Pines Hotel and the abrupt dismissal of all its eighty-six employees with the award and
payment to them of gratuities as agreed to by the company itself and embodied in a formal
resolution of its board of directors, and from the court's en banc resolutions denying
reconsideration thereof.
Issue:
Whether or not there was unfair labor practice?
Ruling:
Yes, The Court finds no error in respondent court's rejection of petitioner's claims, when it held
that it "cannot agree to the contentions of respondents that their failure to implement the New
Minimum Wage Law was due to the interpretative bulletin of the Bureau of Labor Standards of
the Department of Labor, which in the opinion of the Office of the Economic Coordinator should
apply to the employees of the Pines Hotel because the said interpretative bulletin refers to daily
wage employees (prescribing a new minimum monthly salary of P157.00 for daily workers) and
not to monthly paid ones (such as the Pines Hotel employees) and, besides that, this is a mere
opinion. Likewise, the contention that the company finances do not warrant the revision of the
salary scales of the Pines Hotel employees is untenable considering that the employees of the
Manila Hotel and some employees of the Taal Vista Lodge where there is no existing labor
organization were given salary adjustments beginning the fiscal period July 1, 1965, and that

despite the alleged financial reverses suffered by the company, the latter was able to grant yearend bonus to two of its employees, which in effect belies the contention of the company that they
are in a financial strait. Furthermore, the Taal Vista Lodge had always been losing in its operation
while the Pines Hotel makes profits at times. Yet, despite all these, the respondent company
granted salary adjustments to some employees of the former without strictly adhering to the
aforesaid interpretative bulletin, which in the Court's opinion was purposely done to discourage
the members of the complainant union." 10
Respondent court's finding of unfair and unjust discrimination in the granting of salary
adjustments pursuant to the two-peso increase ordained by the then new Minimum Wage Law is
amply borne out by the record, with the eight(8) employees at the Manila office being granted a
total of P18,000.00 in salary adjustments for the fiscal year July 1, 1965 to June 30, 1966,
whereas eighty (80) regular employees of Pines Hotel received only an aggregate salary
adjustment in the lesser amount of P15,000.00. Stated in another way, the total salary
adjustments given every ten Pines Hotel employees would not even equal the salary adjustment
given one single Manila office employee.
Hence, without in any way turning down or modifying the increases and high salary adjustments
which petitioner saw fit to grant to its Manila office employees, respondent court correctly
removed the unfair discrimination by granting the corresponding affirmative relief to the Pines
Hotel employees through ordering the payment to them by petitioner of the new minimum
monthly salary of P180.00 for monthly-paid employees to which they were entitled under
Republic Act 4180.

172.

Wise & Co. Vs Wise & Co. Employees Union

Facts:
On March 30, 1988, petitioner distributed the profit sharing benefit not only to managers and
supervisors but also to all other rank and file employees not covered by the CBA. This caused
the respondent union to file a notice of strike alleging that petitioner was guilty of unfair labor
practice because the union members were discriminated against in the grant of the profit sharing
benefits. Consequently, management refused to proceed with the CBA negotiations unless the
last notice of strike was first resolved. The union agreed to postpone discussions on the profit
sharing demand until a new CBA was concluded. After a series of conciliation conferences, the
parties agreed to settle the dispute through voluntary arbitration. After the parties submitted their
position papers, a rejoinder and reply, on March 20,1989 the voluntary arbitrator issued an award
ordering petitioner to likewise extend the benefits of the 1987 profit sharing scheme to the
members of respondent union.
Issue:
Whether or not there was unfair labor practice?
Ruling:
No, The grant by petitioner of profit sharing benefits to the employees outside the "bargaining
unit" falls under the ambit of its managerial prerogative. It appears to have been done in good
faith and without ulterior motive. More so when as in this case there is a clause in the CBA
where the employees are classified into those who are members of the union and those who are
not. In the case of the union members, they derive their benefits from the terms and conditions of
the CBA contract which constitute the law between the contracting parties. 8 Both the employer
and the union members are bound by such agreement.

173.

Sime Darby Pilipinas, Inc. Vs NLRC

Facts:
Since private respondent felt affected adversely by the change in the work schedule and
discontinuance of the 30-minute paid on call lunch break, it filed on behalf of its members a
complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability
pursuant to the resolution of this Court in Sime Darby International Tire Co., Inc. v. NLRC.
However, the Labor Arbiter dismissed the complaint on the ground that the change in the work
schedule and the elimination of the 30-minute paid lunch break of the factory workers
constituted a valid exercise of management prerogative and that the new work schedule, break
time and one-hour lunch break did not have the effect of diminishing the benefits granted to
factory workers as the working time did not exceed eight (8) hours.
Issue:
Whether or not there was unfair labor practice?
Ruling:
No, We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees
rests principally on their employer. In the instant case petitioner, as the employer, cites as reason
for the adjustment the efficient conduct of its business operations and its improved production.
[6]

It rationalizes that while the old work schedule included a 30-minute paid lunch break, the

employees could be called upon to do jobs during that period as they were on call. Even if
denominated as lunch break, this period could very well be considered as working time because
the factory employees were required to work if necessary and were paid accordingly for
working. With the new work schedule, the employees are now given a one-hour lunch break
without any interruption from their employer. For a full one-hour undisturbed lunch break, the
employees can freely and effectively use this hour not only for eating but also for their rest and
comfort which are conducive to more efficiency and better performance in their work. Since the
employees are no longer required to work during this one-hour lunch break, there is no more
need for them to be compensated for this period. We agree with the Labor Arbiter that the new
work schedule fully complies with the daily work period of eight (8) hours without violating the

Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated
whether they are union members or not

174.

Alhambra Industries vs CIR

Facts:
The complaint for unfair labor practice1 for violation of section 4 (a) subsections (4) and (6) of
the Industrial Peace Act, was filed by the acting prosecutor of respondent court against petitioner,
upon the charges of respondent union that fifteen of the union members, employed as drivers and
helpers of petitioner, were being discriminated against by petitioner's not affording the the
benefits and privileges enjoyed by all the other employees for no justifiable reason other than
their union membership; and that the union had asked petitioner to negotiate with respect to said
fifteen drivers and helpers who were being excluded from the benefits of their subsisting
collective bargaining agreement, but petitioner refused to do so. The union prayed for a
desistance order and that petitioner be ordered to bargain collectively in good faith and to grant
the drivers and helpers the same benefits and privileges extended to and enjoyed by all its other
employees.
Issue:
Whether or not there was unfair labor practice?
Ruling:
Yes, Failure on petitioner's part to live up in good faith to the terms of its collective bargaining
agreement by denying the privileges and benefits thereof to the fifteen drivers and helpers
through its device of trying to pass them off as "employees" of its salesmen and propagandists
was a serious violation of petitioner's duty to bargain collectively and constituted unfair labor
practice in any language.

175.

Balmar Farms vs NLRC

Facts:
On October 27, 1982, Med-Arbiter Antonino G. Jolejole issued an order certifying the ALU as
the sole and exclusive bargaining representative of the rank and file workers and employees of
BALMAR, Kapalong, Davao del Norte, it appearing that in the certification election held at the
premises of the employer Balmar on October 19, 1982, the ALU obtained the majority of the
votes cast
On February 25, 1983, BALMAR made a reply to the effect that it can not favorably act on their
request for the reason, among others, that it has been furnished a copy of the letter of Mr. Johnny
Luces, president of the Balmar Farms Employees Association, addressed to the Regional
Director of the Ministry of Labor and Employment (MOLE), about their "disaffiliation from
ALU". For alleged refusal to bargain, ALU filed a complaint for unfair labor practice and
damages against BALMAR docketed as NLRC Case No. 1114-LR-XI-83
Issue:
Whether or not there was unfair labor practice?
Ruling:
Yes, Procedurally, ALU sent a letter to BALMAR, attaching therewith its proposals for collective
bargaining agreement. In reply, BALMAR refused to negotiate with ALU allegedly because` it
received a copy of a letter purportedly written on November 12, 1982 by one Johnny Luces, who
claimed to be the president of Balmar Farms Employees Association, informing the Labor
Regional Director that more than a majority of them would like to negotiate directly with their
employer BALMAR. There is no showing, however, that said letter was favorably acted upon,
much less, is there an order superseding the Med-Arbiter's order of October 27, 1982 certifying
ALU as the sole and exclusive bargaining representative of the rank and file workerks of
BALMAR.

176.

Salunga vs CIR

Facts:
Petitioner was a member of the Union since 1953. For reasons later to be stated, on August 18,
1961, he tendered his resignation from the Union, which accepted it on August 26, 1961, and
transmitted it to the Company on August 29, 1961, with a request for the immediate
implementation of said section 3. The Company having informed him that his aforementioned
resignation would result in the termination of his employment, in view of said section, petitioner
wrote to the Union, on August 31, 1961, a letter withdrawing or revoking his resignation and
advising the Union to continue deducting his monthly union dues. He, moreover, furnished a
copy of this communication to the Company. The latter, in turn, notified the Union of the receipt
of said copy and that "in view thereof, we shall not take any action on this case and shall
consider Mr. Francisco Salunga still a member of your union and continue deducting his union
dues
Issue:
Whether or not there was unfair labor practice?
Ruling:
No, Under these circumstances, the Company was not "unfair" to the petitioner. On the contrary,
it did not merely show a commendable understanding of and sympathy for his plight. It even
tried to help him, although to such extent only as was consistent with its obligation to refrain
from interfering in purely internal affairs of the Union. At the same time, the Company could not
safely inquire into the motives of the Union officers, in refusing to allow the petitioner to
withdraw his resignation. Inasmuch as the true motives were not manifest, without such inquiry,
and petitioner had concededly tendered his resignation of his own free will, the arbitrary nature
of the decision of said officers was not such as to be apparent and to justify the company in
regarding said decision unreasonable. Upon the other hand, the Company can not be blamed for
assuming the contrary, for petitioner had appealed to the National Officers of the PAFLU and the
latter had sustained the Union. The Company was justified in presuming that the PAFLU had
inquired into all relevant circumstances, including the motives of the Union Officers.

177.

United vs Torres

Facts:
The case arose from a verified complaint for injunction with prayer for preliminary injunction
filed by Delta Development Corporation (Delta), against the Union on January 16, 1965. 1 It is
there averred that: Delta is the owner of the Makati Commercial Center situated at Makati, Rizal.
It is in the business of leasing portions thereof. The center has its own thoroughfares, pedestrian
lanes, parking areas for the benefit of customers and clients of its lessees. On the other hand, the
Union is an association of some employees of Sulo Restaurant, a lessee of Delta. On January 8,
1965, the Union sought permission from Delta to conduct picketing activities "on the private
property of plaintiff surrounding Sulo Restaurant." On January 11, Delta denied the request
because it "may be held liable for any incident that may happen in the picket lines, since the
picketing would be conducted on the private property owned by plaintiff." Despite the denial, the
Union picketed on Delta's property surrounding Sulo Restaurant on January 16 and continued to
conduct said activity. Such act of the Union is violative of the property rights of, and would
cause great and irreparable injury to, Delta. No employer-employee relationship exists between
Delta and the Union members. Delta then prayed that a writ of preliminary injunction issue and
that, after hearing, such injunction be made permanent.
Issue:
Whether or not there was unfair labor practice?
Ruling:
Yes, Indeed, petitioner Union's concerted activities designed to be recognized as the exclusive
bargaining agent of Sulo employees must come to a halt. 5 Collective bargaining cannot be the
appropriate objective of petitioning Union's continuation of their concerted activities. The record
before us does not reveal any other legitimate purpose. To allow said Union to continue picketing
for the purpose of drawing the employer to the collective bargaining table would obviously be to
disregard the results of the consent election. To further permit the Union's picketing activities
would be to flaunt at the will of the majority.

178.

Manila Mandarin Employees Union vs NLRC

Facts:
Herein private respondent, Melba C. Beloncio, an employee of Manila Mandarin Hotel since
1976 and at the time of her dismissal, assistant head waitress at the hotel's coffee shop, was
expelled from the petitioner Manila Mandarin Employees Union for acts allegedly inimical to the
interests of the union. The union demanded the dismissal from employment of Beloncio on the
basis of the union security clause of their collective bargaining agreement and the Hotel acceded
by placing Beloncio on forced leave effective August 10, 1984.
Issue:
Whether or not there was unfair labor practice?
Ruling:
Yes, A union member may not be expelled from her union, and consequently from her job, for
personal or impetuous reasons or for causes foreign to the closed-shop agreement and in a
manner characterized by arbitrariness and whimsicality.
This is particularly true in this case where Ms. Beloncio was trying her best to make a hotel bus
boy do his work promptly and courteously so as to serve hotel customers in the coffee shop
expeditiously and cheerfully. Union membership does not entitle waiters, janitors, and other
workers to be sloppy in their work, inattentive to customers, and disrespectful to supervisors. The
Union should have disciplined its erring and troublesome members instead of causing so much
hardship to a member who was only doing her work for the best interests of the employer, all its
employees, and the general public whom they serve.

179.

Gold City Integrated Port Services vs NLRC

Facts:
Private respondent felt insulted by the re-measurement and so the next day he went to the office
of the Chief Admeasurer, Rolando Guanaco, and there confronted Nigel Mabalacad, one of the
two (2) admeasurers who had re-checked his work, regarding the matter. Private respondent
quarreled with Mabalacad in the presence of Guanaco, their immediate superior, inside the
latter's office. Guanaco directed private respondent to stop provoking Mabalacad and told both
that being in his office, they should behave properly. Private respondent ignored this oral
directive and a fistfight erupted then and there between him and Mabalacad. Both were
eventually pacified by their co-workers.
Private respondent Bacalso was then charged with assaulting a co-employee and falsifying
reports and records of the company relative to the performance of his duties, and was
preventively suspended pending investigation of his case by the union-management grievance
committee
Private respondent Bacalso filed a complaint for illegal dismissal with the Regional Arbitration
Branch No. 10 of the Department of Labor and Employment on 25 May 1987. He controverted
the finding of insubordination, contending that there was no evidence he had wilfully disobeyed
any order given by his superior during the incident. He admitted assaulting his co-employee but
claimed that that did not constitute just cause for his dismissal under Article 282 (d) of the Labor
Code because that act was not an offense committed against his employer's duly authorized
representative. He prayed for reinstatement with backwages and damages.
Issue:
Whether or not there was illegal dismissal?

Ruling:

Yes, The Court considers that there was here at least a partial deprivation of private respondent's
right to procedural due process. He could not be expected adequately to defend himself as he was
not fully or correctly informed of the charges against him which management intended to prove.
It is less than fair for management to charge an employee with one offense and then to dismiss
him for having committed another offense with which he had not been charged and against
which he was therefore unable adequately to defend himself. Correct specification of private
respondent's alleged wrongdoing was obviously important here, since the penalty that could
appropriately be meted out depended upon what offense was charged and proven. It has been
stressed by the Court that the right of an employee to procedural due process consists of the twin
rights of notice and hearing.

180.

Lapanday Worker Union vs NLRC

Facts:
The Union filed on August 25, 1988, a Notice of Strike with the National Conciliation and
Mediation Board (NCMB). It accused the company of unfair labor practices consisting of
coercion of employees, intimidation of union members and union-busting. 2 These were the same
issues raised by the Union during the August 2, 1988 labor-management meeting.
On August 29, 1988, the NCMB called a conciliation conference. The conference yielded the
following agreement:
(1) Union officers, including the officials of KMU-ANGLO, and the Executive Director of the
NCMB would attend the HDIR seminar on September 5, 1988; and
(2) A committee shall convene on September 10, 1989, to establish guidelines governing the
guards.
The Union officials did attend the September 5, 1988 seminar. While they no longer objected to
the continuation of the seminar, they reiterated their demand for the deletion of the discussion
pertaining to the KMU-ANGLO.
With the apparent settlement of their differences, private respondents notified the NCMB that
there were no more bases for the notice of strike.
An unfortunate event brake the peace of the parties. On September 8, 1988, Danilo Martinez, a
member of the Board of Directors of the Union, was gunned down in his house in the presence of
his wife and children. The gunman was later identified as Eledio Samson, an alleged member of
the new security forces of private respondents.
On September 9, 1988, the day after the killing, most of the members of the Union refused to
report for work. They returned to work the following day but they did not comply with the
"quota system" adopted by the management to bolster production output. Allegedly, the Union

instructed the workers to reduce their production to thirty per cent (30%). Private respondents
charged the Union with economic sabotage through slowdown.
On September 14, 1988, Private respondents filed separate charges against the Union and its
members for illegal strike, unfair labor practice and damages, with prayer for injunction. These
cases were docketed as Case Nos. RAB-11-09-00612-888 and RAB No. 11-09-00613-88 before
Labor Arbiter Antonio Villanueva.
On September 17, 1988, petitioners skipped work to pay their last respect to the slain Danilo
Martinez who was laid to rest. Again, on September 23, 1988, petitioners did not report for work.
Instead, they proceeded to private respondents' office at Lanang, carrying placards and posters
which called for the removal of the security guards, the ouster of certain management officials,
and the approval of their mass leave application. Their mass action did not succeed.
In a last ditch effort to settle the deteriorating dispute between the parties, City Mayor Rodrigo
Duterte intervened. Dialogues were held on September 27 and 29, 1988 at the City Mayor's
Office. Again, the dialogues proved fruitless as private respondents refused to withdraw the cases
they earlier filed with public respondent.
On October 3, 1988, a strike vote was canducted among the members of the Union and those in
favor of the strike won overwhelming support from the workers. The result of the strike vote was
then submitted to the NCMB on October 10, 1988. Two days later, or on Ootober 12, 1988, the
Union struck.
Issue:
Whether or not the strike is illegal?
Ruling:
Yes, Applying the law to the case at bar, we rule that strike conducted by the union on October
12, 1988 is plainly illegal as it was held within th seven (7) day waiting period provided for by
paragraph (f), Article 263 of the Labor Code, as amended. The haste in holding the strike
prevented the Department of Labor and Employment from verifying whether it carried the
approval of the majority of the union members. It set to naught an important policy consideration

of our law on strike. Considering this finding, we need not exhaustively rule on the legality of
the work stoppage conducted by the union and some of their members on September 9 and 23,
1988. Suffice to state, that the ruling of the public respondent on the matter is supported by
substantial evidence.
We affirm the decision of the public respondent limiting the penalty of dismissal only to the
leaders of the illegal strike. especially the officers of the union who served as its major players.
They cannot claim good faith to exculpate themselves. They admitted knowledge of the law on
strike, including its procedure. They cannot violate the law which ironically was cast to promote
their interest.
We, likewise, agree with the public respondent that the union members who were merely
instigated to participate in the illegal strike should be treated differently from their leaders. Part
of our benign consideration for labor is the policy of reinstating rank-and-file workers who were
merely misled in supporting illegal strikes. Nonetheless, these reinstated workers shall not be
entitled to backwages as they should not be compensated for services skipped during the illegal
strike.

181.

Ilaw at Buklod vs SMC

Facts:
The controversy at bar had its origin in the "wage distortions" affecting the employees of
respondent San Miguel Corporation allegedly caused by Republic Act No. 6727, otherwise
known as the Wage Rationalization Act.
The Union's position (set out in the petition subsequently filed in this Court, infra) was that the
workers' refuse "to work beyond eight (8) hours everyday starting October 16, 1989" as a
legitimate means of compelling SMC to correct "the distortion in their wages brought about by
the implementation of the said laws (R.A. 6640 and R.A. 6727) to newly-hired employees. That
decision to observe the "eight hours work shift" was implemented on October 16, 1989 by "some
800 daily-paid workers at the Polo Plant's production line (of San Miguel Corporation [hereafter,
simply SMC]) joined by others at statistical quality control and warehouse, all members of . . .
IBM . . . " There ensued thereby a change in the work schedule which had been observed by
daily-paid workers at the Polo Plant for the past five (5) years, i.e., "ten (10) hours for the first
shift and ten (10) to fourteen (14) hours for the second shift, from Mondays to Fridays . . ; (and
on) Saturdays, . . eight (8) hours for both shifts" a work schedule which, SMC says, the
workers had "welcomed, and encouraged" because the automatic overtime built into the schedule
"gave them a steady source of extra-income," and pursuant to which it (SMC) "planned its
production targets and budgets.
This abandonment of the long-standing schedule of work and the reversion to the eight-hour shift
apparently caused substantial losses to SMC. Its claim is that there ensued "from 16 October
1989 to 30 November 1989 alone . . work disruption and lower efficiency . . (resulting in turn,
in) lost production of 2,004,105 cases of beer . . ; that (i)n "money terms, SMC lost
P174,657,598 in sales and P48,904,311 in revenues . . (and the) Government lost excise tax
revenue of P42 million, computed at the rate of P21 per case collectible at the plant. 6 These
losses occurred despite such measures taken by SMC as organizing "a third shift composed of
regular employees and some contractuals," and appeals "to the Union members, through letters
and memoranda and dialogues with their plant delegates and shop stewards," to adhere to the
existing work schedule.

Issue:
Whether or not the strike is illegal?
Ruling:
Yes, the concerted activity in question would still be illicit because contrary to the workers'
explicit contractual commitment "that there shall be no strikes, walkouts, stoppage or slowdown
of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down
strikes of any kind, sympathetic or general strikes, or any other interference with any of the
operations of the COMPANY during the term of . . . (their collective bargaining) agreement.16
What has just been said makes unnecessary resolution of SMC's argument that the workers'
concerted refusal to adhere to the work schedule in force for the last several years, is
a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike
clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement
with the petitioner's concept of a slowdown as a "strike on the installment plan;" as a wilfull
reduction in the rate of work by concerted action of workers for the purpose of restricting the
output of the employer, in relation to a labor dispute; as an activity by which workers, without a
complete stoppage of work, retard production or their performance of duties and functions to
compel management to grant their demands.17 The Court also agrees that such a slowdown is
generally condemned as inherently illicit and unjustifiable, because while the employees
"continue to work and remain at their positions and accept the wages paid to them," they at the
same time "select what part of their allotted tasks they care to perform of their own volition or
refuse openly or secretly, to the employer's damage, to do other work;" in other words, they
"work on their own terms. But whether or not the workers' activity in question their concerted
adoption of a different work schedule than that prescribed by management and adhered to for
several years constitutes a slowdown need not, as already stated, be gone into. Suffice it to
say that activity is contrary to the law, RA 6727, and the parties' collective bargaining agreement.

182.

ALU vs Borromeo

Facts:
On January 1, 1965, Associated Labor Union1 and Superior Gas and Equipment Co. of Cebu,
Inc.,2 entered into a collective bargaining contract. It was to expire on January 1, 1966. Prior to
the contract's expiry, Union and employer started negotiations for its renewal. Late in February,
1966, while bargaining was in progress, 12 of Sugeco's employees resigned from the Union.
Negotiations were broken. On March 1, 1966, the Union wrote Sugeco. There, request was made
that unless the 12 resigned employees 3 could produce a clearance from the Union, they be not
allowed in the meantime to report for work. On the same day, Sugeco's attorney rejected the
request. The reasons given are that irreparable injury would ensue, that the bargaining contract
had lapsed, and that the Company could no longer demand from its employees the requested
clearance. Sugeco made it understood that after the 12 men would have returned into the Union
fold, said company would then be "in a position to negotiate again for the renewal of the
collective bargaining contract." Also on the same day, March 1, the Union wrote Sugeco, charged
the latter with bargaining in bad faith, and its supervisors with "campaigning for the resignation
of members of this Union". The Union there served notice "that unless the aforementioned unfair
labor practice acts will immediately be stopped and a collective bargaining agreement be signed
between your company and this union immediately after receipt of this letter, this union will
declare a strike against your management and correspondingly establish picket lines in any place
where your business may be found". On March 3, 1966, counsel for Sugeco wrote the Union
stating that with the resignation of Union members aforesaid, the Union was no longer the
representative of the majority of the employees "for purposes of negotiation and recognition".
On March 4, the Union struck, picketed the Basak (Mandawe) plant of Sugeco.
The next day, March 5, 1966, Sugeco went to the Court of First Instance of Cebu (Case No. R9221, entitled "Superior Gas and Equipment Co. of Cebu, Inc., petitioner, vs. Associated Labor
Union, respondent"), praying that the Union be restrained from alleged illegal picketing activities
at its Basak plant, and also from, picketing Sugeco's offices at Juan Luna street, Cebu City, and
its other offices located elsewhere in the Philippines

Issue:
Whether or not the action of the Union is right?
Ruling:
Yes, The broad sweep of the law suggests that the coercion or cajolery of employees heretofore
described, by management or union, is unfair labor practice. 8 Therefore, the alleged act of
coercing or instigating union members to resign therefrom is clearly within the coverage of the
prescription. It is aimed at crippling the Union, throwing it off balance, destroying its bargaining
authority. It is an attack against the Magna Carta of Labor. By the same token, the charge
levelled by Sugeco against the Union that the latter "is coercing the resigned employees to rejoin
the Union" is no less an unfair labor practice.

183.

Panay Electric Company, Inc. Vs NLRC

Facts:
Respondent union, on 20 December 1990, filed a notice of strike. On 02 January 1990, a strike
vote was taken where 113 out of 149 union members voted; the result showed 108 "yes" votes, 1
"no" vote, and 4 abstentions. On 22 January 1991, the union went on strike. Forthwith, the
company filed a petition to declare the strike illegal. On 25 January 1991, upon receipt of an
order from the Secretary of Labor and Employment certifying the dispute to the NLRC, the
union lifted its strike and, on the day following, the striking employees, including Huyan,
reported for work.
In its position paper and memorandum before the NLRC, the union averred that the real reason
for ordering the transfer of Huyan was to penalize him for his union activities, particularly for
being the suspected "Mao," author of the column "Red Corner," in the Union's New Digest
which featured an item on alleged wrongdoings by top company officials at the power plant; that
in a letter, dated 10 October 1990, addressed by the Company's Operation Manager to the
General Manager, it was suggested that an investigation of "Mao's" real identity be conducted
and, once ascertained, to have him dismissed from the company; that the company had singled
out Huyan for transfer to the power plant; that the Personnel Manager's recommendation for such
transfer was made without Huyan's prior knowledge; that upon learning of his impending
reassignment, Huyan requested for a reconsideration but the Personnel Manager did not bother to
reply, that the transfer of Huyan was a demotion; and that, per the Company's Code Offenses, the
"insubordination" charged was punishable with dismissal only after a fourth commission of the
offense.
Petitioner company, in turn, maintained that Huyan's inexplicable refusal to assume his new
position was an act of insubordination for which reason he was aptly dismissed; that the
company's directive was a valid exercise of management prerogative; that in declaring a strike,
the Union, including its officers and members, committed a serious breach of the "no strike, no
lock out clause," of the Collective Bargaining Agreement ("CBA"); and that during the strike,
illegal acts were committed by the union officers and members,

Issue:
Whether or not the strike is illegal?
Ruling:
Yes, The State guarantees the right of all workers to self-organization, collective bargaining and
negotiations, as well as peaceful concerted activities, including the right to strike, in accordance
with law. 7 The right to strike, however, is not absolute. It has heretofore been held that a "no
strike, no lock-out" provision in the Collective Bargaining Agreement ("CBA") is a valid
stipulation although the clause may be invoked by an employer only when the strike is economic
in nature or one which is conducted to force wage or other concessions from the employer that
are not mandated to be granted by the law itself. 8 It would be inapplicable to prevent a strike
which is grounded on unfair labor practice. In this situation, it is not essential that the unfair
labor practice act has, in fact, been committed; it suffices that the striking workers are shown to
have acted honestly on an impression that the company has committed such unfair labor practice
and the surrounding circumstances could warrant such a belief in good faith.
In the instant case, the NLRC found Enrique Huyan and Prescilla Napiar, the "principal leaders"
of the strike, not to have acted in good faith. The NLRC said:
It is bad enough that the Union struck despite the prohibition in the CBA. What is
worse is that its principal leaders, Napiar and Huyan, cannot honestly claim that
they were in good faith in their belief that the Company was committing unfair
labor practice. The absence of good faith or the honest belief that the Company is
committing Unfair Labor Practice, therefore, is what inclines us to rule that the
strike conducted by the Union from January 22 to 25, 1991 is illegal for being in
violation of the "no strike, no lock-out" proviso and the failure to bring the union's
grievances under the grievance procedure in the CBA. It must be borne in mind
that prior to the dismissal of Huyan, there was sufficient time to have the matter
of Huyan's transfer subjected to the grievance procedure. That the Union
considered the procedure an exercise in futility is not reason enough to disregard
the same given the circumstances in this case. Whatever wrong the Union felt the

Company committed cannot be remedied by another wrong on the part of the


Union.
Given its own above findings, the NLRC's grant of separation benefits and damages to
Huyan and Napiar would indeed appear to be unwarranted. Article 264, Title VIII, Book
V, of the Labor Code provides that "(a)ny union officer who knowingly participates in an
illegal strike and any worker or union officer whoknowingly, participates in the
commission of illegal acts during a strike may be declared to have lost his employment
status."
In the case of the other union officers, however, the NLRC, having found no sufficient proof to
hold them guilty of "bad faith" in taking part in the strike or of perpetrating "serious disorders"
during the concerted activity, merely decreed suspension. We see no grave abuse of discretion by
the NLRC in this regard and in not thus ordering the dismissal of said officers.

184.

MSF Tire and Rubber, Inc. Vs CA

Facts:
A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private
respondent, Philtread Tire Workers Union (Union), as a result of which the Union filed on May
27, 1994 a notice of strike in the National Conciliation and Mediation Board-National Capital
Region charging Philtread with unfair labor practices for allegedly engaging in union-busting for
violation of the provisions of the collective bargaining agreement. This was followed by
picketing and the holding of assemblies by the Union outside the gate of Philtreads plant at Km.
21, East Service Road, South Superhighway, Muntinlupa, Metro Manila. Philtread, on the other
hand, filed a notice of lock-out on May 30, 1994 which it carried out on June 15, 1994.
Issue:
Whether or not the strike is illegal?
Ruling:
No, the right to picket as a means of communicating the facts of a labor dispute is a phase of the
freedom of speech guaranteed by the constitution. If peacefully carried out, it can not be
curtailed even in the absence of employer-employee relationship.
The right is, however, not an absolute one. While peaceful picketing is entitled to protection as
an exercise of free speech, we believe the courts are not without power to confine or localize the
sphere of communication or the demonstration to the parties to the labor dispute, including those
with related interest, and to insulate establishments or persons with no industrial connection or
having interest totally foreign to the context of the dispute. Thus the right may be regulated at the
instance of third parties or innocent bystanders if it appears that the inevitable result of its
exercise is to create an impression that a labor dispute with which they have no connection or
interest exists between them and the picketing union or constitute an invasion of their rights. In
one case decided by this Court, we upheld a trial courts injunction prohibiting the union from
blocking the entrance to a feed mill located within the compound of a flour mill with which the
union had a dispute. Although sustained on a different ground, no connection was found between
the two mills owned by two different corporations other than their being situated in the same

premises. It is to be noted that in the instances cited, peaceful picketing has not been totally
banned but merely regulated. And in one American case, a picket by a labor union in front of a
motion picture theater with which the union had a labor dispute was enjoined by the court from
being extended in front of the main entrance of the building housing the theater wherein other
stores operated by third persons were located.[12] (Emphasis added)
Thus, an innocent bystander, who seeks to enjoin a labor strike, must satisfy the court that
aside from the grounds specified in Rule 58 of the Rules of Court, it is entirely different from,
without any connection whatsoever to, either party to the dispute and, therefore, its interests are
totally foreign to the context thereof. For instance, in PAFLU v. Cloribel, supra, this Court held
that Wellington and Galang were entirely separate entities, different from, and without any
connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the strike
was directed, other than the incidental fact that they are the banks landlord and co-lessee housed
in the same building, respectively. Similarly, in Liwayway Publications, Inc. v. Permanent
Concrete Workers Union,[13] this Court ruled that Liwayway was an innocent bystander and thus
entitled to enjoin the unions strike because Liwayways only connection with the employer
company was the fact that both were situated in the same premises.

185. Complex Electronics Employees Association vs NLCR


Facts:
On March 13, 1992, Complex filed a notice of closure of the Lite-On Line with the Department
of Labor and Employment (DOLE) and the retrenchment of the ninety-seven (97) affected
employees.
On March 25, 1993, the Union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB).
Two days thereafter, or on March 27, 1993, the Union conducted a strike vote which resulted in a
"yes" vote.
In the evening of April 6, 1992, the machinery, equipment and materials being used for
production at Complex were pulled-out from the company premises and transferred to the
premises of Ionics Circuit, Inc. (Ionics) at Cabuyao, Laguna. The following day, a total closure
of company operation was effected at Complex.
A complaint was, thereafter, filed with the Labor Arbitration Branch of the NLRC for unfair
labor practice, illegal closure/illegal lockout, money claims for vacation leave, sick leave, unpaid
wages, 13th month pay, damages and attorney's fees. The Union alleged that the pull-out of the
machinery, equipment and materials from the company premises, which resulted to the sudden
closure of the company was in violation of Section 3 and 8, Rule XIII, Book V of the Labor
Code of the Philippines and the existing CBA. Ionics was impleaded as a party defendant
because the officers and management personnel of Complex were also holding office at Ionics
with Lawrence Qua as the President of both companies.
Complex, on the other hand, averred that since the time the Union filed its notice of strike, there
was a significant decline in the quantity and quality of the products in all of the production
lines. The delivery schedules were not met prompting the customers to lodge complaints against
them. Fearful that the machinery, equipment and materials would be rendered inoperative and

unproductive due to the impending strike of the workers, the customers ordered their pull-out
and transfer to Ionics. Thus, Complex was compelled to cease operations.
Ionics contended that it was an entity separate and distinct from Complex and had been in
existence since July 5, 1984 or eight (8) years before the labor dispute arose at Complex. Like
Complex, it was also engaged in the semi-conductor business where the machinery, equipment
and materials were consigned to them by their customers. While admitting that Lawrence Qua,
the President of Complex was also the President of Ionics, the latter denied having Qua as their
owner since he had no recorded subscription of P1,200,000.00 in Ionics as claimed by the
Union. Ionics further argued that the hiring of some displaced workers of Complex was an
exercise of management prerogatives. Likewise, the transfer of the machinery, equipment and
materials from Complex was the decision of the owners who were common customers of
Complex and Ionics.

Issue:
Whether or not the strike is illegal?
Ruling:
No, The fact that the pull-out of the machinery, equipment and materials was effected during
nighttime is not per se an indicia of bad faith on the part of respondent Qua since he had no other
recourse, and the same was dictated by the prevailing mood of unrest as the laborers were
already vandalizing the equipment, bent on picketing the company premises and threats to lock
out the company officers were being made. Such acts of respondent Qua were, in fact, made
pursuant to the demands of Complex's customers who were already alarmed by the pending labor
dispute and imminent strike to be stage by the laborers, to have their equipment, machinery and
materials pull out of Complex. As such, these acts were merely done pursuant to his official
functions and were not, in any way, made with evident bad faith.[26]
We perceive no intention on the part of Lawrence Qua and the other officers of Complex to
defraud the employees and the Union. They were compelled to act upon the instructions of their
customers who were the real owners of the equipment, materials and machinery. The prevailing

labor unrest permeating within the premises of Complex left the officers with no other choice but
to pull them out of Complex at night to prevent their destruction. Thus, we see no reason to
declare Lawrence Qua personally liable to the Union.
Anent the award of damages, we are inclined to agree with the NLRC that there is no basis for
such award. We again quote the respondent NLRC with favor:
By and large, we cannot hold respondents guilty of unfair labor practice as found by the Labor
Arbiter since the closure of operation of Complex was not established by strong evidence that the
purpose of said closure was to interfere with the employees' right to self-organization and
collective bargaining. As very clearly established, the closure was triggered by the customers'
pull-out of their equipment, machinery and materials, who were alarmed by the pending labor
dispute and the imminent strike by the union, and as a protection to their interest pulled-out of
business from Complex who had no recourse but to cease operation to prevent further losses. The
indiscretion committed by the Union in filing the notice of strike, which to our mind is not the
proper remedy to question the amount of benefits due the complainants who will be retrenched at
the closure of the Lite-On Line, gave a wrong signal to customers of Complex, which
consequently resulted in the loss of employment of not only a few but to all the of the workers. It
may be worth saying that the right to strike should only be a remedy of last resort and must not
be used as a show of force against the employer.

186.

Liwayway vs Permanent Concrete Workers Union

Facts:
On September 10, 1964, the employees of the Permanent Concrete Products, Inc. who are
representatives and members of the defendant union declared a strike against their company.
On October 3, 1964 for unknown reasons and without legal justification, Permanent Concrete
Workers Union and its members picketed, stopped and prohibited plaintiff's truck from entering
the compound to load newsprint from its bodega. The union members intimidated and threatened
with bodily harm the employees who were in the truck.
On October 6, 1964, union members stopped and prohibited the general manager, personnel
manager, bodega-in-charge and other employees of the plaintiff from getting newsprint in their
bodega.
Plaintiff made repeated demands to the defendants not to intimidate and threaten its employees
with bodily harm and not to blockade, picket or prohibit plaintiff's truck from getting newsprint
in their bodega. Defendants refused and continued to refuse to give in to the demands of the
plaintiff.
As a consequence thereof, plaintiff rented another bodega during the time members of the
defendant union prevented its employees from entering its bodega in the compound of
Permanent Concrete Products, Inc. and thus incurred expenses both in terms of bodega rentals
and in transporting newsprint from the pier to the temporary bodega.
Issue:
Whether or not the strike is illegal?
Ruling:
Yes, We cannot agree that the above rules cited by the appellants are controlling in the instant
case for as We said inPhil. Association of Free Labor Unions (PAFLU), et at. vs. Tan, 99 Phil.
854, that "with regard to activities that may be enjoined, in order to ascertain what court has
jurisdiction to issue the injunction, it is necessary to determine the nature of the controversy, "

(emphasis supplied) We find and hold that there is no connection between the appellee
Liwayway publications, Inc. and the striking Union, nor with the company against whom the
strikers staged the strike, and neither are the acts of the driver of the appellee, its general
manager, personnel manager, the man in-charge of the bodega and other employees of the
appellee in reaching the bodega to obtain newsprint therefrom to feed and supply its publishing
business interwoven with the labor dispute between the striking Union and the Permanent
Concrete Products company. If there is a connection between appellee publishing company and
the Permanent Concrete Products company; it is that both are situated in the same premises,
which can hardly be considered as interwoven with the labor dispute pending in the Court of
Industrial Relations between the strikers and their employer.

187.

Bascon vs CA

Facts:
The petitioners in the instant case were employees of private respondent Metro Cebu Community
Hospital, Inc. (MCCH) and members of the Nagkahiusang Mamumuo sa Metro Cebu
Community Hospital (NAMA-MCCH), a labor union of MCCH employees. Petitioner Elizabeth
C. Bascon had been employed as a nurse by respondent MCCH since May 1984. At the time of
her termination from employment in April 1996, she already held the position of Head Nurse.
The other petitioner, Noemi V. Cole, had been working as a nursing aide with MCCH since
August 1974. Both petitioners were dismissed by the respondent hospital for allegedly
participating in an illegal strike.
Issue:
Whether or not the strike is illegal?
Ruling:
Yes, Thus, while a union officer can be terminated for mere participation in an illegal strike, an
ordinary striking employee, like petitioners herein, must have participated in the commission
ofillegal acts during the strike (underscoring supplied). There must be proof that they committed
illegal acts during the strike.[14] But proof beyond reasonable doubt is not required. Substantial
evidence, which may justify the imposition of the penalty of dismissal, may suffice.
In this case, the Court of Appeals found that petitioners actual participation in the illegal
strike was limited to wearing armbands and putting up placards. There was no finding that the
armbands or the placards contained offensive words or symbols. Thus, neither such wearing of
armbands nor said putting up of placards can be construed as an illegal act. In fact, per se, they
are within the mantle of constitutional protection under freedom of speech.
Evidence on record shows that various illegal acts were committed by unidentified union
members in the course of the protracted mass action. And we commiserate with MCCH, patients,
and third parties for the damage they suffered. But we cannot hold petitioners responsible for
acts they did not commit. The law, obviously solicitous of the welfare of the common worker,

requires, before termination may be considered, that an ordinary union member must have
knowingly participated in the commission of illegal acts during a strike.
As regards the appellate courts finding that petitioners were justly terminated for gross
insubordination or willful disobedience, Article 282 of the Labor Code provides in part:
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.
However, willful disobedience of the employers lawful orders, as a just cause for dismissal of an
employee, envisages the concurrence of at least two requisites: (1) the employee's assailed
conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and
(2) the order violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge.
In this case, we find lacking the element of willfulness characterized by a perverse mental
attitude on the part of petitioners in disobeying their employers order as to warrant the ultimate
penalty of dismissal. Wearing armbands and putting up placards to express ones views without
violating the rights of third parties, are legal per se and even constitutionally protected. Thus,
MCCH could have done well to respect petitioners right to freedom of speech instead of
threatening them with disciplinary action and eventually terminating them.
Neither are we convinced that petitioners exercise of the right to freedom of speech should be
taken in conjunction with the illegal acts committed by other union members in the course of the
series of mass actions. It bears stressing that said illegal acts were committed by other union
members after petitioners were already terminated, not during the time that the latter wore
armbands and put up placards.
Finally, even if willful disobedience may be properly appreciated, still, the penalty of dismissal is
too harsh. Not every case of willful disobedience by an employee of a lawful work-connected
order of the employer may be penalized with dismissal. There must be reasonable proportionality

between, on the one hand, the willful disobedience by the employee and, on the other hand, the
penalty imposed therefor.[16] In this case, evidence is wanting on the depravity of conduct and
willfulness of the disobedience on the part of petitioners, as contemplated by law. Wearing
armbands to signify union membership and putting up placards to express their views cannot be
of such great dimension as to warrant the extreme penalty of dismissal, especially considering
the long years of service rendered by petitioners and the fact that they have not heretofore been
subject of any disciplinary action in the course of their employment with MCCH.

188.

Amalgamated Food Employees Union vs Logan Valley Plaza

Facts:
Respondent Weis Markets owns and operates a supermarket in a large shopping center complex
owned by respondent Logan Valley Plaza. In front of Weis' building is a covered porch and a
parcel pickup zone. Members of petitioner union picketed Weis' store, confining the picketing
almost entirely to the parcel pickup zone and the portion of the parking area adjacent thereto. The
picketing was peaceful, with some sporadic and infrequent congestion of the parcel pickup area.
A Pennsylvania Court of Common Pleas enjoined "picketing and trespassing upon . . . the [Weis]
storeroom, porch and parcel pick-up area . . . [and] the [Logan] parking area," thus preventing
picketing inside the shopping center. That court held the injunction justified in order to protect
respondents' property rights and because the picketing was unlawfully aimed at coercing Weis to
compel its employees to join a union. The Pennsylvania Supreme Court affirmed the issuance of
the injunction on the sole ground that petitioners' conduct constituted a trespass on respondents'
property.
Issue:
Whether or not the actions of the Union is right?
Ruling:
Yes, Since the shopping center serves as the community business block "and is freely accessible
and open to the people in the area and those passing through," Marsh v. Alabama, 326 U.S. 501,
508, the State may not delegate the power, through the use of trespass laws, wholly to exclude
those members of the public wishing to exercise their First Amendment rights on the premises in
a manner [p309] and for a purpose generally consonant with the use to which the property is
actually put.

189.

National Federation of Sugar Workers vs Ovejera

Facts:
This is a petition for prohibition seeking to annul the decision dated February 20, 1982 of Labor
Arbiter Ethelwoldo R. Ovejera of the National Labor Relations Commission (NLRC) with
station at the Regional Arbitration Branch No. VI-A, Bacolod City, which, among others,
declared illegal the ongoing strike of the National Federation of Sugar Workers (NFSW) at the
Central Azucarera de la Carlota (CAC), and to restrain the implementation thereof
Issue:
Whether or not the strike is illegal?
Ruling:
Yes, NFSW strike is illegal. The NFSW declared the strike six (6) days after filing a strike
notice, i.e., before the lapse of the mandatory cooling-off period. It also failed to file with the
MOLE beforelaunching the strike a report on the strike-vote, when it should have filed such
report "at least seven (7) days before the intended strike." Under the circumstances, we are
perforce constrained to conclude that the strike staged by petitioner is not in conformity with law.
This conclusion makes it unnecessary for us to determine whether the pendency of an arbitration
case against CAC on the same issue of payment of 13th month pay [R.A.B No. 512-81, Regional
Arbitration Branch No. VI-A, NLRC, Bacolod City, in which the National Congress of Unions in
the Sugar Industry of the Philippines (NACUSIP) and a number of CAC workers are the
complainants, with NFSW as Intervenor seeking the dismissal of the arbitration case as regards
unnamed CAC rank and file employees] has rendered illegal the above strike under Art. 265 of
the Labor Code which provides:
It shall likewise be unlawful to declare a strike or lockout after assumption of jurisdiction by the
President or the Minister, or after certification or submission of the dispute to compulsory or
voluntary arbitration or during the pendency of cases involving the same grounds for the strike or
lockout.

190.

First Interlink Transportation vs Confessor

Facts:
On May 27, 1986, the Fil Transit Employees Union filed a notice of strike with the Bureau of
Labor Relations (BLR) because of alleged unfair labor practice of petitioner. Despite several
conciliation conferences, the parties failed to reach an agreement, so that, on June 17, 1986, the
Union went on strike. As a result several workers were dismissed. The Union filed another notice
of strike alleging unfair labor practice, massive dismissal of union officers and members,
coercion of employees and violation of workers rights to self-organization. Conciliation
conferences were again held but, on July 27, 1986, the Union again went on strike, lifting their
picket only on August 2, 1986.
Issue:
Whether or not the strike is illegal?
Ruling:
Yes, To summarize, this Court holds that:
1) The respondent Secretary of Labor erred in declaring the strike legal. There is no evidence to
show that a strike vote had in fact been taken before a strike was called. Even assuming that a
strike vote had been taken, the strike called by the Union was illegal because of nonobservance
by the Union of the mandatory seven-day strike ban counted from the date the strike vote should
have been reported to the Department of Labor and Employment up to the time the Union staged
the strike on June 17, 1986. In accordance with Art. 264 of the Labor Code, any union officer
who knowingly participated in the illegal strike is deemed to have lost his employment status.
2) The commission of the illegal acts during the strike rendered it illegal. However, only officers
and leaders of the Union and workers guilty of illegal acts are liable. Such employees are
deemed to have lost their employment status in accordance with Art. 264 of the Labor Code.

3) Petitioner substantially complied with the Return to Work Order. The medical examination,
NBI, Police and Barangay Clearances as well as the drivers and conductors/conductress licenses
and photographs required as conditions for reinstatement were reasonable management
prerogatives. However, the other requirements imposed as condition for reinstatement were
unreasonable considering that the employees were not being hired for the first time, although the
imposition of such requirements did not amount to refusal on the part of the employer to comply
with the Return to Work Order or constitute illegal lockout so as to warrant payment of
backwages to the strikers. If at all, it is the employees refusal to return to work that may be
deemed a refusal to comply with the Return to Work Order resulting in loss of their employment
status. As both the employer and the employees were, in a sense, at fault or in pari delicto, the
nonreturning employees, provided they did not participate in illegal acts, should be considered
entitled to reinstatement. But since reinstatement is no longer feasible, they should be given
separation pay computed up to March 8, 1988 (the date set for the return of the employees) in
lieu of reinstatement.
4) Because the award of backwages was based on the alleged refusal of the employer to comply
with the Return to Work Order, the same should be set aside for being without basis.

191.

Philtread Workers vs Confessor

Facts:
On May 27, 1994, petitioner Philtread Tire Workers Union (PTWU), filed a notice of strike,
docketed as NCMB-NCR Case No. 05-281-94, on grounds of unfair labor practice, more
specifically union busting and violation of CBA. [2] On the other hand, on May 30, 1994, private
respondent Philtread Tire and Rubber Corporation filed a notice of lockout, docketed as NCMBNCR Case No. 05-013-94.[3] It also filed a petition to declare illegal the work slowdowns staged
by the petitioner Union. Both cases were then consolidated. Several conciliation meetings were
conducted but the parties failed to settle their dispute. Then on June 15, 1994, private
respondent declared a company wide lockout which continued until August 22, 1994.There were
about eighty union members who were consequently dismissed. This also brought about the
filing of the union members of a notice to strike in self-defense in NCMB-NCR Case No. 05281-94.
Issue:
Whether or not the strike is illegal?
Ruling:
Yes, On the second issue raised by the petitioners, We find that the Secretary of Labor did not act
with grave abuse of discretion in issuing the certification for compulsory arbitration. It had been
determined by the Labor Arbiter in NLRC-NCR Case No. 00-05-04156-94 that the work
slowdowns conducted by the petitioner amounted to illegal strikes. It was shown that every time
the respondent company failed to accede to the petitioners demands, production always
declined. This resulted to the significant drops in the figures of tires made, cured, and
warehoused. However, when the demand of the petitioner union for the restoration of overtime
work was allowed, production improved. The work slowdowns, which were in effect, strikes on
installment basis, were apparently a pattern of manipulating production depending on whether
the petitioner unions demands were met. These strikes, however, had greatly affected the
respondent company that on November 11, 1994, it had indefinitely ceased operations because of
tremendous financial losses.

192.

PSBA vs Noriel

Facts:
On September 8, 1987, respondent union, alleging the support of the majority of petitioner's nonacademic personnel in its Manila campus, filed with the Department of Labor and Employment a
petition for direct certification docketed as NLR-OD-M-9-642-87.On September 25, 1987, a
notice of strike docketed as BLR-NS-9-423-87 was filed by respondent union with the Bureau of
Labor Relations, alleging union busting, coercion of employees and harassment.
Issue:
Whether or not the strike is illegal?
Ruling:
Yes, The case filed by petitioner against respondent union in the National Labor Relations
Commission was not an isolated circumstance, but one in a series of cases filed by the parties.
Thus, it cannot be completely detached from the chain of events that led to the filing of the
instant petition in this Court. It will be recalled that respondent union filed a petition for direct
certification, that respondent union filed a notice of strike, alleging union-busting, coercion and
harassment; that petitioner opposed the petition for direct certification, citing a letter from
another group (PSBA-AL-GRO-WELL) that purportedly represented the majority of petitioner's
non-academic personnel; that conciliation conferences were held but the dispute remained
unresolved; that respondent union conducted a strike vote wherein its members voted to stage a
strike; that respondent union and its members subsequently staged a strike; that petitioner filed a
case against respondent union in the National Labor Relations Commission; that a civil case was
filed and an order was issued by the Regional Trial Court restraining respondent union from
picketing and barricading the main gate of the school; that petitioner refused to attend the
conciliation conferences called by labor authorities during the strike. These circumstances, taken
together, reveal the intensity of the dispute and how it had worsened, which virtually left the
Acting Secretary with no recourse but to assume jurisdiction over it, to prevent the situation from
getting out of hand.

193.

University of Immaculate Concepcion, Inc. Vs Secretary of Labor

Facts:
The UNION moved for the reconsideration of the above decision. Pending, however, the
resolution of its motion, on December 9, 1994, it filed a notice of strike with the National
Conciliation and Mediation Board (NCMB) of Davao City, on the grounds of bargaining
deadlock and unfair labor practice. During the thirty (30) day cooling-off period, two union
members were dismissed by petitioner. Consequently, the UNION went on strike on January 20,
1995.
On March 10, 1995, the UNION filed another notice of strike, this time citing as a reason the
UNIVERSITYs termination of the individual respondents. The UNION alleged that the
UNIVERSITYs act of terminating the individual respondents is in violation of the Order of the
Secretary of Labor dated January 23, 1995.
On March 28, 1995, the Secretary of Labor issued another Order reiterating the directives
contained in the January 23, 1995 Order. The Secretary also stated therein that the effects of the
termination from employment of these individual respondents be suspended pending the
determination of the legality thereof. Hence, the UNIVERSITY was directed to reinstate the
individual respondents under the same terms and conditions prevailing prior to the labor dispute.
Issue:
Whether or not the strike is illegal?
Ruling:
No. Indeed, it is clear that the act of the UNIVERSITY of dismissing the individual respondents
from their employment became the impetus for the UNION to declare a second notice of strike.
It is not a question anymore of whether or not the terminated employees, the individual
respondents herein, are part of the bargaining unit. Any act committed during the pendency of the
dispute that tends to give rise to further contentious issues or increase the tensions between the
parties should be considered an act of exacerbation and should not be allowed.

With respect to the Secretarys Order allowing payroll reinstatement instead of actual
reinstatement for the individual respondents herein, an amendment to the previous Orders issued
by her office, the same is usually not allowed. Article 263(g) of the Labor Code aforementioned
states that all workers must immediately return to work and all employers must readmit all of
them under the same terms and conditions prevailing before the strike or lockout. The phrase
under the same terms and conditions makes it clear that the norm is actual reinstatement. This is
consistent with the idea that any work stoppage or slowdown in that particular industry can be
detrimental to the national interest.

194.

TASLI-ALU vs. COURT OF APPEALS

FACTS:
Respondent Trans-Asia Shipping Lines, Inc. is a domestic corporation engaged in coastwise
shipping services for the transportation of passengers and cargoes. Petitioner TASLI-ALU is a
labor union of the respondent's rank-and-file employees, while petitioner TASLI-APSOTEU is a
labor union of its supervisory employees.
The two unions filed separate notices of strike with the National Conciliation and Mediation
Board against the respondent on the ground of unfair labor practice. Acting thereon and to avert
any work stoppage, then Secretary of Labor Laguesma intervened and issued the Order dated
July 20, 1999 certifying the labor dispute to the NLRC for compulsory arbitration pursuant to
Article 263(g) of the Labor Code and enjoining any strike or lock-out.
Despite the aforesaid order, the petitioners went on strike. The Secretary of Labor issued an
order directing all striking workers to return to work within 12 hours and for the Company to
accept them back under the same terms and conditions prevailing before the strike.
Twenty-one of the striking workers were dismissed from employment by the respondent for
alleged violation of the "cease-and-desist" by waging an illegal strike. The petitioners demanded
that the respondent issue "embarkation orders" to the positions they held prior to the strike before
they lift the pickets and barricades. The respondent refused, claiming that the assignment of an
employee to a post is purely a management prerogative.
The Secretary of Labor issued another order reiterating its earlier order and directing the striking
workers are directed to return to work immediately and the Company to accept them back under
the same terms and conditions of employment prevailing prior to the strike.
The respondent consequently reinstated the 21 employees. Despite their reinstatement, however,
the respondent continued to refuse to issue the said employees' "embarkation orders" to their
former ship assignments. The employees, thus, refused to report back for work.
The respondent forthwith filed with the CA a petition alleging grave abuse of discretion on the
part of the Secretary of Labor in issuing the reinstatement order of the dismissed employees. CA
issued a temporary restraining order enjoining the Secretary of Labor from implementing the
reinstatement order contained in his Order of July 27, 1999.

Bolstered by the temporary restraining order issued by the CA, the respondent issued a
memorandum terminating the employment of the subject 21 employees.
Thereafter, CA ruled in favor of the respondent, holding that the petitioners' demand that they be
issued "embarkation orders" could not be properly considered as "under the same terms and
conditions prevailing before the strike" because the same constituted undue interference with the
respondent's management prerogative. The CA held that the continuous refusal of the striking
workers to comply with the "return-to-work" order and the violence that erupted during the strike
justified the respondent's position not to reinstate the dismissed employees.
ISSUE:
Whether or not the decision of CA enjoining the Secretary of Labor in implementing its returnto-work order is valid.
HELD:
No. When the Secretary exercises these powers, he is granted "great breadth of discretion" in
order to find a solution to a labor dispute. The most obvious of these powers is the automatic
enjoining of an impending strike or lockout or the lifting thereof if one has already taken place.
Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same to
the NLRC for compulsory arbitration, always co-exists with an order for workers to return to
work immediately and for employers to readmit all workers under the same terms and conditions
prevailing before the strike or lockout.
Absent any showing that there was grave abuse of discretion on the part of the Secretary of
Labor in issuing the said orders, particularly the Order of July 27, 1999, the appellate court
patently erred in enjoining him from implementing the same. By so doing, the appellate court
unduly interfered with the powers granted to the Secretary of Labor under Article 263 (g) of the
Labor Code.

195.

PLDT vs. MANGGAGAWA NG KOMUNIKASYON SA PILIPNAS

FACTS:
PLDT is a domestic corporation engaged in the telecommunications business. Private
respondent Manggagawa ng Komunikasyon sa Pilipinas (MKP) is a labor union of rank and file
employees in PLDT.
The members of respondent union learned that a redundancy program would be implemented by
the petitioner. Thereupon it filed a Notice of Strike with NCMB on the ground of unfair labor
practice. DOLE Secretary certifies the labor dispute at the PLDT to the NLRC for compulsory
arbitration pursuant to Article 263(g) of the Labor Code as amended. Accordingly, the strike
staged by the Union was enjoined. All striking workers are directed to return to work
within except those who were terminated due to redundancy. The employer was enjoined to
accept the striking workers under the same terms and conditions prevailing prior to the strike.
A Motion for Partial Reconsideration was filed by the private respondent with the Office of the
Secretary. It alleged that the Order was issued by the Secretary with grave abuse of discretion. It
contended that those who were dismissed pursuant to the petitioners redundancy program
should not have been excluded.
ISSUE:
Whether or not the subject orders of the DOLE Secretary excluding from the return-to-work
order the workers dismissed due to redundancy program of PLDT are valid.
HELD:
No. The Secretarys power is broad and plenary, and is granted great breadth of discretion.
Secretary Sto. Tomas, in issuing the assailed orders, acted with appropriate discretion, because
she was secure in the knowledge that the courts have recognized her broad and plenary powers
under Art. 263(g).
When the Secretary exercises the powers granted by Article 263(g) of the Labor Code, he is,
indeed, granted great breadth of discretion. However, the application of this power is not without

limitation, lest the Secretary would be above the law. The discretion conferred upon officers by
law is not a capricious or arbitrary discretion, but an impartial discretion guided and controlled in
its exercise by fixed legal principles. It is not a mental discretion to be exercised ex gratia, but a
legal discretion to be exercised in conformity with the spirit of the law, and in a manner to
subserve and not to impede or defeat the ends of substantial justice. From the foregoing, it is
quite apparent that no matter how broad the exercise of discretion is, the same must be within the
confines of law. Thus, the wide latitude of discretion given the Secretary under Art. 263(g) shall
and must be within the sphere of law.
As Article 263(g) is clear and unequivocal in stating that ALL striking or locked out employees
shall immediately return to work and the employer shall immediately resume operations and
readmit ALL workers under the same terms and conditions prevailing before the strike or
lockout, then the unmistakable mandate must be followed by the Secretary.
Time and again, this Court has held that when an official bypasses the law on the asserted ground
of attaining a laudable objective, the same will not be maintained if the intendment or purpose of
the law would be defeated.
Records would show that the strike occurred on 23 December 2002. Article 263(g) directs that
the employer must readmit all workers under the same terms and conditions prevailing before the
strike. Since the strike was held on the aforementioned date, then the condition prevailing before
it, which was the condition present on 22 December 2002, must be maintained.
Undoubtedly, on 22 December 2002, the members of the private respondent who were dismissed
due to alleged redundancy were still employed by the petitioner and holding their respective
positions. This is the status quo that must be maintained.

196.

ST. SCHOLASTICAS COLLEGE VS TORRES

FACTS:
On 20 July 1990, petitioner St. Scholastica's College (COLLEGE) and private respondent
Samahan ng Manggagawang Pang-Edukasyon sa Sta. Eskolastika-NAFTEU (UNION) initiated
negotiations for a first-ever CBA. A deadlock in the negotiations prompted the UNION to file
Notice of Strike with the DOLE.
The UNION declared a strike which paralyzed the operations of the COLLEGE. DOLE
SECRETARY immediately assumed jurisdiction over the labor dispute and issued a return-towork order. The following day, the UNION filed a motion for reconsideration of the return-towork order questioning inter alia the assumption of jurisdiction by the SECRETARY over the
labor dispute. SECRETARY denied reconsideration of his return-to-work order and sternly
warned the striking employees to comply with its terms.
The UNION officers and members then tried to return to work but were no longer accepted by
the COLLEGE. The UNION moved for the enforcement of the return-to-work order before
respondent SECRETARY. The COLLEGE prayed that respondent SECRETARY uphold the
dismissal of the employees who defied his return-to-work order.
Respondent SECRETARY issued an Order which directed the reinstatement of striking UNION
members, premised on his finding that no violent or otherwise illegal act accompanied the
conduct of the strike. Nevertheless, the SECRETARY held UNION officers responsible for the
violation of the return-to-work orders and, correspondingly, sustained their termination.
ISSUE:
Whether or not the UNIONs non-compliance with the return-to-work order because they
questioned the assumption of jurisdiction of respondent SECRETARY is proper.

HELD:
No. Article 263 (g) of the Labor Code provides that if a strike has already taken place at the time
of assumption, "all striking . . . employees shall immediately return to work." This means that by
its very terms, a return-to-work order is immediately effective and executory notwithstanding the
filing of a motion for reconsideration. It must be strictly complied with even during the pendency
of any petition questioning its validity. After all, the assumption and/or certification order is
issued in the exercise of respondent SECRETARY's compulsive power of arbitration and, until
set aside, must therefore be immediately complied with.
Respondent UNION's failure to immediately comply with the return-to-work order, therefore,
cannot be condoned.

197.

INTERNATIONAL PHARMACEUTICALS vs. SECRETARY OF LABOR

FACTS:
Prior to the expiration of the CBA between petitioner International Pharmaceuticals, Inc.
(Company) and the Associated Labor Union (Union), the latter submitted to the Company its
economic and political demands. These were not met by the Company, hence a deadlock ensued.
The Union filed a notice of strike with NCMB. After all conciliation efforts had failed, the Union
went on strike.
Subsequently, three other labor cases were filed with the NLRC. Two of these cases were filed by
the Company against the UNION for illegal strike while the other one was filed by the UNION
against the COMPANY for unfair labor practice.
Considering that the Company belongs to an industry indispensable to national interest, then
Acting Secretary of Labor Castro, issued an order assuming jurisdiction over the case and
directing the parties to return to the status quo before the work stoppage.
The Union filed a motion in the case over which jurisdiction had been assumed by the Secretary
of Labor and Employment (Secretary), seeking the consolidation of the three NLRC cases with
the first stated case. Secretary granted the motion and ordered the consolidation of the three
NLRC cases.
Petitioner Company filed a petition in the Supreme Court assailing the aforesaid orders.
Petitioner Company submits that the exclusive jurisdiction to hear and decide the three NLRC
cases is vested in the labor arbiter as provided in paragraph (a) (1) and (5) of Article 217 of the
Labor Code.
ISSUE:
Whether or not the order of the respondent Secretary consolidating the three NLRC cases with
the labor dispute over which he had assumed jurisdiction is proper.

Held:
Yes. the Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to
assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, and decide the same accordingly. Necessarily, this
authority to assume jurisdiction over the said labor dispute must include and extend to all
questions and controversies arising therefrom, including cases over which the labor arbiter has
exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto.
This is evident from the opening proviso therein reading "(e)xcept as otherwise provided under
this Code . . ." Plainly, Article 263 (g) of the Labor Code was meant to make both the Secretary
(or the various regional directors) and the labor arbiters share jurisdiction, subject to certain
conditions. Otherwise, the Secretary would not be able to effectively and efficiently dispose of
the primary dispute. To hold the contrary may even lead to the absurd and undesirable result
wherein the Secretary and the labor arbiter concerned may have diametrically opposed rulings.
In fine, the issuance of the assailed orders is within the province of the Secretary as authorized
by Article 263 (g) of the Labor Code and Article 217 (a) (1) and (5) of the same Code, taken
conjointly and rationally construed to subserve the objective of the jurisdiction vested in the
Secretary.
By virtue of Article 263 (g) of the Labor Code, the Secretary has been conferred jurisdiction over
cases which would otherwise be under the original and exclusive jurisdiction of labor arbiters.
There was an existing labor dispute as a result of a deadlock in the negotiation for a collective
bargaining agreement and the consequent strike, over which the Secretary assumed jurisdiction
pursuant to Article 263 (g) of the Labor Code. The three NLRC cases were just offshoots of the
stalemate in the negotiations and the strike. The Supreme Court uphold the Secretary's order to
consolidate the NLRC cases with the labor dispute pending before him and his subsequent
assumption of jurisdiction over the said NLRC cases for him to be able to competently and
efficiently dispose of the dispute in its totality.

198.

UNION OF FILIPRO EMPLOYEES (UFE) vs. NESTL PHILIPPINES

FACTS:
UFE filed a notice of strike on with the BLR against Filipro (now Nestle). UFE also filed a
complaint for Unfair Labor Practice (ULP) against Nestle and its officials.
Acting on Nestle's petition seeking assumption of jurisdiction over the labor dispute or its
certification to the NLRC for compulsory arbitration, then Minister of Labor and Employment
Blas F. Ople issued assuming jurisdiction over the labor dispute. In line with this assumption a
strike, lockout, or any other form of concerted action such as slowdowns, sitdowns, noise
barrages during office hours, which tend to disrupt company operations, are strictly enjoined.
UFE filed a petition with the Supreme Court assailing the assumption of jurisdiction by the
Minister. UFE members did not return to their work. Notwithstanding the automatic injunction
against any concerted activity, and an absence of a restraining order, the union members, at the
instigation of its leaders, and in clear defiance of Minister Ople's Order, staged a strike and
continued to man picket lines at the Makati Administrative Office and all of Nestle's factories
and warehouses at Alabang, Muntinlupa, Cabuyao, Laguna, and Cagayan de Oro City.

ISSUE:
Whether or not the certification order and/or assumption of jurisdiction of DOLE Secretary
constitutes as a return-to-work order.

HELD:
Yes. An assumption and/or certification order of the Secretary of Labor automatically results in a
return-to-work of all striking workers, whether or not a corresponding order has been issued by
the Secretary of Labor. Thus, the striking workers erred when they continued with their strike
alleging

absence

of

return-to-work

order.

Article

264(g)

is

clear.

Once

an

assumption/certification order is issued, strikes are enjoined, or if one has already taken place, all
strikers shall immediately return to work.

A strike that is undertaken despite the issuance by the Secretary of Labor of an assumption or
certification order becomes a prohibited activity and thus illegal, pursuant to the second
paragraph of Art. 264 of the Labor Code. The Union officers and members, as a result, are
deemed to have lost their employment status for having knowingly participated in an illegal act.

199.

REFORMIST UNION VS. NLRC

FACTS:
Petitioner union was organized in May 1989 by affiliating itself with Lakas Manggagawa sa
Pilipinas (Lakas). Lakas filed a notice of strike on because of alleged acts of unfair labor
practice committed by the R.B. LINER, INC. Despite conciliation, the parties failed to reach an
agreement. Later, another act of unfair labor practice allegedly committed by the private
respondents impelled Reformist, with the authorization of Lakas, to go on strike.
R.B. Liner, Inc. petitioned then Secretary Drilon of DOLE to assume jurisdiction over the
ongoing dispute or certify it to the NLRC. Secretary Drilon certified the dispute to the NLRC for
compulsory arbitration and issued a return-to-work order.
The certified case was dismissed after the union and the company reached an agreement
providing, among other matters, for the holding of a certification election.
A certification election was held where Lakas won as the collective bargaining agent of the rankand-file employees. Lakas presented a proposal for a CBA but the company refused to bargain.
The petitioners filed with NLRC a complaint charging the private respondents with unfair labor
practice, i.e., illegal lock out. The private respondents countered which sought to declare as
illegal the union's strike, as well as other "work stoppages/boycotts" staged by the petitioners.
The two cases were consolidated and simultaneously tried.
Labor Arbiter found that Reformist staged an illegal strike. On appeal, the NLRC affirmed the
decision of the Labor Arbiter but allowed reinstatement of the dismissed employees.

ISSUE:
Whether or not the issue of legality of strike was already resolved when the parties entered into
an agreement in the compulsory arbitration.

HELD:
Yes. The private respondents can no longer contest the legality of the strike held by the
petitioners as the private respondents themselves sought compulsory arbitration in order to
resolve that very issue. The current strike by Lakas even before Certification Election could be
held could not be resolved by the NCR Conciliation-Mediation Division after six
meetings/conferences between the parties.
The dispute or strike was settled when the company and the union entered into an agreement on
where the private respondents agreed to accept all employees who by then, had not yet returned
to work. By acceding to the peaceful settlement brokered by the NLRC, the private respondents
waived the issue of the illegality of the strike.
The very nature of compulsory arbitration makes the settlement binding upon the private
respondents, for compulsory arbitration has been defined both as "the process of settlement of
labor disputes by a government agency which has the authority to investigate and to make an
award which is binding on all the parties," and as a mode of arbitration where the parties are
"compelled to accept the resolution of their dispute through arbitration by a third party." Clearly
then, the legality of the strike could no longer be reviewed by the Labor Arbiter, much less by the
NLRC, as this had already been resolved. It was the sole issue submitted for compulsory
arbitration by the private respondents, as is obvious from the portion of their letter quoted
above. The case certified by the Labor Secretary to the NLRC was dismissed after the union and
the company drew up the agreement mentioned earlier. This conclusively disposed of the strike
issue.

200.

SAN MIGUEL CORPORATION VS. NLRC

FACTS:
Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng Manggagawa
(IBM), exclusive bargaining agent of petitioners daily-paid rank and file employees, executed a
CBA under which they agreed to submit all disputes to grievance and arbitration proceedings.
The CBA also included a mutually enforceable no-strike no-lockout agreement. The pertinent
provisions of the said CBA are quoted hereunder:
IBM filed with the NCMB two notices of strike against petitioner. After several conciliation
meetings, NCMB Director found that the real issues involved are non-strikeable. Hence, he
issued separate letter-orders converting the unions notices of strike into preventive mediation.
While separate preventive mediation conferences were ongoing, the Colomeda group filed with
the NCMB a notice of holding a strike vote. Petitioner opposed invoking that no strike could be
legally declared during the pendency of preventive mediation. NCMB Director response issued
another letter to the Colomeda Group reiterating the conversion of the notice of strike into a case
of preventive mediation.
Meanwhile, the Galvez group filed its second notice of strike against petitioner. The NCMB
however found these grounds to be mere amplifications of those alleged in the first notice that
the group filed. It therefore ordered the consolidation of the second notice with the preceding one
that was earlier reduced to preventive mediation. On the same date, the group likewise notified
the NCMB of its intention to hold a strike vote.
On May 27, 1994, the Colomeda group notified the NCMB of the results of their strike vote,
which favored the holding of a strike. In reply, NCMB issued a letter again advising them that by
virtue of the PAL v. Drilon ruling, their notice of strike is deemed not to have been filed,
consequently invalidating any subsequent strike for lack of compliance with the notice
requirement. Despite this and the pendency of the preventive mediation proceedings, IBM went
on strike.
ISSUE:

Whether or not the strike is valid.


HELD:
No. Applying the PAL v. Drilon ruling to the case at bar, when the NCMB ordered the preventive
mediation, respondent had thereupon lost the notices of strike it had filed. Subsequently,
however, it still defiantly proceeded with the strike while mediation was ongoing, and
notwithstanding the letter-advisories of NCMB warning it of its lack of notice of strike.
Petitioners should have complied with the prohibition to strike ordered by the NCMB when the
latter dismissed the notices of strike after finding that the alleged acts of discrimination were not
ULP, hence not "strikeable." The refusal of the petitioners to heed said proscription of the NCMB
is reflective of bad faith.
Petitioner herein evinced its willingness to negotiate with the union by seeking for an order from
the NLRC to compel observance of the grievance and arbitration proceedings. Respondent
however resorted to force without exhausting all available means within its reach. Such
infringement of the aforecited CBA provisions constitutes further justification for the issuance of
an injunction against the strike. As we said long ago: "Strikes held in violation of the terms
contained in a collective bargaining agreement are illegal especially when they provide for
conclusive arbitration clauses. These agreements must be strictly adhered to and respected if
their ends have to be achieved.

201.

BASCON VS. COURT OF APPEALS

FACTS:
Petitioners were employees of private respondent Metro Cebu Community Hospital, Inc.
(MCCH) and members of the Nagkahiusang Mamumuo sa Metro Cebu Community Hospital
(NAMA-MCCH), a labor union of MCCH employees. Petitioners were dismissed by the
respondent hospital for allegedly participating in an illegal strike.
ISSUE:
Whether or not petitioners were legally dismissed by for participating in an illegal strike.
HELD:
No. While a union officer can be terminated for mere participation in an illegal strike, an
ordinary striking employee, must have participated in the commission of illegal acts during the
strike. There must be proof that they committed illegal acts during the strike
In this case, the Court of Appeals found that petitioners actual participation in the illegal strike
was limited to wearing armbands and putting up placards. There was no finding that the
armbands or the placards contained offensive words or symbols. Thus, neither such wearing of
armbands nor said putting up of placards can be construed as an illegal act. In fact, per se, they
are within the mantle of constitutional protection under freedom of speech.
Evidence on record shows that various illegal acts were committed by unidentified union
members in the course of the protracted mass action. Petitioners are not responsible for acts they
did not commit. The law, obviously solicitous of the welfare of the common worker, requires,
before termination may be considered, that an ordinary union member must have knowingly
participated in the commission of illegal acts during a strike.

203.

BACUS VS. OPLE

FACTS:
Findlay Millar Timber Company (Company), a domestic corporation is engaged in logging and
manufacture of plywood, veneer and other lumber products. The company employs
approximately 2,000 employees more or less, among whom are the herein petitioners.
About 1,400 employees, more or less, of the Company staged a mass walk-out, allegedly without
anybody leading them as it was a simultaneous, immediate and unanimous group action and
decision, to protest the non-payment of their salaries, wages and other benefits.
The Minister of Labor assumed jurisdiction over the labor dispute. The Company filed a
clearance to terminate the services of 22 employees, including the herein petitioners. As reasons
for such application, the Company alleges that some 1,000 workers from various wood
processing plants, administrative and technical services, staged on February 19, 1979 a strike by
refusing to work; that the 22 named workers who abandoned their jobs for seven consecutive
days were responsible in one way for another in coercing other workers by stoning threats and
intimidation along the national highway leading to the main gate in utter violation of PD 823 as
well as Rule 21 of the Company Rules and Regulations (1977) of the CBA with the Philippine
Labor Alliance Council, Local 237.
The Minister of Labor and Employment issued an order directing all striking employees to return
to work and management to accept them under the same terms and conditions prevailing before
the walkout. Management is granted authority to replace striking workers who fail to return to
work on deadline.
The following day, the Company filed another clearance to terminate the services of 19 more of
its employees for reasons substantially the same as the first clearance application.
Minister of Labor and Employment granted the clearance to terminate their employment, as a
consequence of their being instigators of the strike declared to be illegal.

ISSUE:
Whether or not the company may terminate the services of striking employees.
HELD:
No. A mere finding of the illegality of a strike should not be automatically followed by wholesale
dismissal of the strikers from their employment. What is more, the finding of the illegality of the
strike by respondent Minister of Labor and Employment is predicated on the evidence
ascertained through an irregular procedure conducted under the semblance of summary methods
and speedy disposition of labor disputes involving striking employees.
While it is time that administrative agencies exercising quasi-judicial functions are free from the
rigidities of procedure, it is equally well-settled in this jurisdiction that avoidance of such
technicalities of law or procedure in ascertaining objectively the facts in each case should not,
however, cause a denial of due process.
The requirements of procedural due process were not observed in the instant case. Petitioners
were not afforded full opportunity to be heard to warrant a drastic consequence like outright
dismissal from employment. Procedural due process, requires a hearing before condemnation,
with the investigation to proceed in an orderly manner, and judgment to be rendered only after
such inquiry.

204.

FIRST

CITY

INTERLINK

TRANSPORTATION

CO.

vs.

CONFESSOR

FACTS:
Petitioner First City Interlink Transportation Co., Inc., is a public utility corporation doing
business under the name and style Fil Transit. Respondent Nagkakaisang Manggagawa ng Fil
Transit-National Federation of Labor (NMF-NFL) is a labor union composed of employees of Fil
Transit.
The Union filed a notice of strike with the BLR because of alleged unfair labor practice of
petitioner. Despite several conciliation conferences, the parties failed to reach an agreement, so
that, the Union went on strike. As a result several workers were dismissed. The Union filed
another notice of strike alleging unfair labor practice, massive dismissal of union officers and
members, coercion of employees and violation of workers rights to self-organization.
Conciliation conferences were again held but the Union again went on strike.
The then Minister of Labor and Employment, after assuming jurisdiction over the dispute
ordered all striking employees to return to work and petitioner to accept all the returning
employees under the same terms and conditions prevailing previous to the dispute.
Petitioner filed a motion for reconsideration and later a supplemental motion for reconsideration,
contending that no strike vote had been obtained before the strike was called and the result of
strike vote was not reported to the Ministry of Labor and Employment.
ISSUE:
Whether or not the strikers, having engaged in violent, illegal and criminal acts, have lost their
employment status.
HELD:
No. Not every form of violence suffices to affix the seal of illegality on a strike as to cause the
loss of employment of the guilty party. Where acts of violence while the strike lasts are sporadic
and not pervasive by design and policy, responsibility therefore is individual and not collective.

The strike declared by the Union was attended by pervasive and widespread violence. The acts of
violence committed were not mere isolated incidents which could normally occur during any
strike Nevertheless, responsibility for these illegal acts must be on an individual and not
collective basis. Therefore, although the strike was illegal because of the commission of illegal
acts, only the union officers and strikers who engaged in violent, illegal and criminal acts against
the employer are deemed to have lost their employment status. Union members who were merely
instigated to participate in the illegal strike should be treated differently.

205.

TELEFUNKEN SEMICONDUCTORS EMPLOYEES UNION FFW vs.

SECRETARY OF LABOR

FACTS:
The COMPANY and the UNION reached a deadlock in their negotiations for a new CBA.
Hence, the UNION filed a Notice of Strike with NCMB. Then Acting Secretary of Labor and
Employment Brillantes, intervened and assumed jurisdiction over the. Nevertheless, the UNION
staged a strike. Two days later, Acting Secretary Brillantes ordered the striking workers to return
to work within twenty-four (24) hours. But the striking UNION members failed to return to
work; instead, they continued with their pickets. As a result, violence erupted in the picket lines.
The service bus ferrying non-striking workers was stoned causing injuries to its passengers.
Thereafter complaints for threats, defamation, illegal detention and physical injuries were filed
against the strikers.
Meanwhile, the COMPANY sent show cause memoranda to the UNION members who joined
the strike and defied the return-to-work orders, directing them to submit their written explanation
why they should not be disciplined or dismissed from employment. Not one reportedly submitted
an explanation. Still, a number of UNION members continued refusing to return to work. Thus,
the UNION members were placed under preventive suspension and asked to appear in the
administrative hearing that was conducted. Only two (2) workers appeared. Consequently, letters
of termination for cause were personally delivered to UNION members who failed to report for
work notwithstanding the assumption and return-to-work orders.
Acting Secretary Brillantes issued an order to accept back all striking workers, with the
exclusion of union officers, shop stewards and those with pending criminal charges, pending the
resolution of the issue involving the legality of the strike.
ISSUE:
Whether or not the dismissal of those who failed to comply with the assumption and return-towork orders is valid.

HELD:
No. It may be true that the workers struck after the Secretary of Labor and Employment had
assumed jurisdiction over the case and that they may have failed to immediately return to work
even after the issuance of a return-to-work order, making their continued strike illegal. For, a
return-to-work order is immediately effective and executory notwithstanding the filing of a
motion for reconsideration. But, the liability of each of the union officers and the workers, if any,
has yet to be determined. More so in the instant case where the UNION alleges inadequate
service upon the UNION leadership of the Assumption Order and the return-to-work
Order. Thus, did all or some of the UNION leaders knowingly participate in the illegal strike? Did
any

or

all

of

the

members

of

the

UNION

who

then

had

pending

criminal

charges knowingly participate in the commission, if any, of illegal acts during the strike? The
records do not bear the answers to these questions, but only expectedly so, for Atty. Genilo of the
DOLE has yet to hear and receive evidence on the matter, and to submit a report and
recommendation thereon.
Thus to exclude union officers, shop stewards and those with pending criminal charges in the
directive to the COMPANY to accept back the striking workers without first determining
whether they knowingly committed illegal acts would be tantamount to dismissal without due
process of law. The Honorable Secretary of Labor gravely abused his discretion in excluding
union officers, shop stewards and those with pending criminal charges in the order to the
COMPANY to accept back the striking workers pending resolution of the issue involving the
legality of the strike.

206.

PNOC DOCKYARD AND ENGINEERING CORPORATION vs. NLRC

FACTS:
Private respondent Kapisanan ng Malayang Manggagawa-PNOC Dockyard & Engineering
Corporation (KMM-PDEC0) filed with the DOLE a notice of strike against Phil. National Oil
Company (PNOC) on the ground of discrimination constituting unfair labor.
Acting Secretary Confesor certified the dispute subject of the notice of strike to NLRC for
compulsory arbitration. Accordingly, any strike or lock-out was ordered to be strictly enjoined.
The said Order however was not served to the respondent union's President, who is authorized to
receive notices. The process server of DOLE merely left the Order with the guard on duty at the
gate of the premises which is a distance away from the union office.
On the day when respondent union was poised to strike, its officers and members decided to
report for work but petitioner padlocked the gate and refused entry to the employees. Some
officers and members of respondent union were able to enter the premises of petitioner and
punch-in their timecards; however, they were immediately escorted back
Confesor issued a return to work order. The Union filed before the NLRC a complaint against
petitioner for Illegal Lock-out.
The President, Secretary, Auditor and Treasurer of the respondent union, respectively, after due
notice and investigation, were dismissed by petitioner from their employment on the ground,
among others of their participation in the work stoppage.
ISSUE:
Whether or not union officers were illegally dismissed.
HELD:
Yes. Having ruled that the strike staged by respondent unions was legal, the subsequent
dismissals of their officers due to their staging of said strike cannot be countenanced.

The NLRC correctly observed that, although petitioner averred that the dismissals of individual
respondent were due to infractions of company rules and regulations, the alleged infractions
actually arose from their participation in the strike. This is crystal clear from the charges leveled
against the union officers, such as "active participation in the illegal work stoppage." "disruption
of company operations resulting [in] losses." "violation of the 'NO STRIKE' clause of the
existing CBA," among others, cited in their similarly worded notices of investigation that
eventually led to their dismissals.
Furthermore, such investigations conducted by petitioner were in flagrant disregard of the
authority and jurisdiction of Respondent Commission and in defiance of the Memorandum of
Agreement with the striking unions, executed upon the order of then acting Labor Secretary
Confesor. The issues relating to the strike and lockout were already submitted before the NLRC
through the corresponding complaints filed by petitioner itself and private respondents. By filing
a formal complaint for illegal strike, it behooved petitioner to desist from undertaking its own
investigation on the same matter, concluding upon the illegality of the union activity and
dismissing outright the union officers involved. The latter objected, in fact, to the conduct of
such investigations precisely due to the pendency before the NLRC of an action based on the
same grounds. Instead, petitioner preempted the NLRC from ascertaining the merits of the
complaints.
The actions of petitioner are clearly tainted with abuse of power and with illegality. While
prerogative of management was recognized to regulate all aspects of employment, the power to
discipline and terminate an employee's services may not exercised in a despotic or whimsical
manner as to erode or render meaningless the constitutional guarantees of security of tenure and
due process.

207.

ESMALIN vs. NLRC

FACTS:
Esmalin has been employed by CARE Philippines as warehouseman of the company. Among his
duties and responsibilities were: to expedite dispatch of all CARE supplied commodities through
monitoring delivery orders; to dispatch and correct bag count; to coordinate with the shipping
clerk on all details concerning arriving shipments, and to make a report on all arrivals at
TRANSCON.
The private respondent, CARE Philippines, is a non-profit organization whose primary purpose
is to facilitate and maximize voluntary gifts or reliefs, rehabilitation and reconstruction materials
and other needed commodities, by individuals and organizations outside of the Philippines, to
individuals and organizations in the Philippines, designated by the donors.
The report on the loss of company commodities as wen as the involvement of Esmalin therein
was transmitted by the AFP to the Tanodbayan which in turn found a prima facie case against
Esmalin.
Then, Esmalin was relieved of his duties and responsibilities as warehouseman due to loss of
trust and confidence.
ISSUE:
Whether or not Esmalin's dismissal is justified.
HELD:
No. CARE Philippines did not conduct its own investigation on the petitioner but relied only on
the AFP investigation.
While it is true that suspension is different from dismissal and that it is only in cases of dismissal
wherein a formal investigation and a prior clearance from the Ministry of Labor is required, it
can be discerned from the records of the case as well as from the actions taken by CARE
Philippines, that indeed they sought not only the suspension of petitioner Esmalin but also his
dismissal.

The letter preventively suspending petitioner is in reality a dismissal, considering that on the
same day, private respondent filed with the Ministry of Labor an application for clearance to
dismiss the petitioner.
The Rules and Regulations implementing the Labor Code of the Philippines or P.D. 442 then
enforced, clearly states that no employer may dismiss an employee without a prior clearance
secured from the Ministry of Labor. A dismissal without said clearance shall be conclusively
presumed a termination without a just cause.
Dismissal of an employee without requisite prior clearance from the Ministry of Labor is
equivalent to arbitrary dismissal.
Verily, it is the prerogative of management to employ the services of a person and likewise to
discharge him. But this is not without limitations and restrictions. The dismissal of an employee
must be done with just cause and without abuse of discretion. It must NOT be done in an
arbitrary and despotic manner. To hold otherwise would render nugatory the security of tenure
clause enshrined in the Constitution.
The right to labor is a constitutional as well as a statutory light. Every man has a natural right to
the fruits of his own industry. A man who has been employed to undertake certain labor and has
put into it his time and effort is entitled to be protected. "The right of a person to his labor is
deemed to be property within the meaning of constitutional guarantees. That is his means of
livelihood. He cannot be deprived of his labor or work without due process of law.
Dismissal of an employee must be done without abuse of discretion. The right of an employer to
freely select or discharge his employees is regulated by the State, because the preservation of the
lives of the citizens is a basic duty of the State, more vital than the preservation of corporate
profit. The protection to labor and social justice provisions of the Constitution and the labor laws
and rules and regulations are interpreted in favor of the exercise of labor rights.

208.

NAVARRO III vs. DAMASCO

FACTS:
Petitioner was employed as typist of private respondent at its plant in Quezon, Bukidnon.
Petitioner was informed of the complaint against him and was placed under preventive
suspension. Nolito S. Densing, Jr. was instructed to investigate the incident. In his report dated
December 26, 1990, Densing recommended that the maximum penalty be meted out against
petitioner. Petitioner was dismissed from the service for having violated paragraph 3.B (Conduct
and Behavior) of the Code of Employee Discipline.
The President of the Mindanao Sugar Workers Union, for and in behalf of petitioner, and Jaime J.
Javier, Personnel Officer of private respondent, agreed to submit the case of petitioner to
voluntary arbitration. A decision was rendered by the Voluntary Arbitrator dismissing petitioner
from his employment.
Not satisfied with the decision, petitioner filed a petition before the Supreme Court. Petitioner
contends that the grievance procedure provided for in the Collective Bargaining Agreement was
not followed; hence, the Voluntary Arbitrator exceeded his authority when he took cognizance of
the labor case.
ISSUE:
Whether or not petioners dismissal is valid.
HELD:
Yes. The instant case is not a grievance that must be submitted to the grievance machinery. What
are subject of the grievance procedure for adjustment and resolution are grievances arising from
the interpretation or implementation of the collective bargaining agreement (Labor Code of the
Philippines, as amended by R.A. No. 6715, Art. 260).

The acts of petitioner involved a violation of the Code of Employee Discipline, particularly the
provision penalizing the immoral conduct of employees. Consequently, there was no justification
for petitioner to invoke the grievance machinery provisions of the CBA.
The case of petitioner was submitted to voluntary arbitration by agreement of the president of the
labor union to which petitioner belongs, and his employer, through its personnel officer.
Petitioner himself voluntarily submitted to the jurisdiction of the Voluntary Arbitrator when he,
through his counsel, filed his position paper with the Voluntary Arbitrator and even submitted
additional documentary evidence. In addition thereto, during the initial conference, the parties
manifested that they were not questioning the authority of the Voluntary Arbitrator.
It is the policy of the State to promote voluntary arbitration as a mode of settling labor disputes
Petitioner claims that he was denied due process of law because no hearing was held and he was
not given an opportunity to cross-examine the witnesses. 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 a reconsideration of the action or ruling complained of. A
formal or trial-type hearing is not at all times and in all instances essential. The requirements are
satisfied where the parties are fair and reasonable opportunity to explain their side of the
controversy at hand. What is frowned upon is the absolute lack of notice and hearing.

209.

MANEBO vs. NLRC

FACTS:
Respondent bus company served on petitioner notice dismissing him from the service for serious
misconduct committed against the firm's operation manager. Aggrieved, petitioner appealed the
matter to the grievance machinery committee. The Grievance Committee, directed petitioner to
report to the Personnel Office the following day for assignment. The bus firm's Personnel
Assistant reinstated petitioner to his former work.
It appears, however, that the company president was dissatisfied with the grievance committee's
resolution and the Personnel Department's order to reinstate Maebo to his former position.
Thus, while a scheduled Grievance Committee Hearing was about to start, petitioner was advised
to see that same day the company president at his Caloocan office. Apparently, the meeting was
arranged by the Personnel Manager, Alfonso, in order that the bus company president may be
given an opportunity to finally approve the latter's reinstatement.
Petitioner failed to follow instructions considering that he was then attending, as representative
of the union workers, a grievance machinery committee hearing. The following day, the
Personnel Manager issued a memorandum requiring Maebo to explain why he should not be
dealt with administratively "for refusing to obey the repeated instructions of the President of the
Company for conference and appropriate guidance
Petitioner filed his explanation. Respondent bus company dismissed petitioner on the ground of
willful disobedience of the order of the company president and serious misconduct committed
against the bus company's operations manager.
ISSUE:
Whether or not the petitioner was dismissed for just cause.

HELD:
No. The directive for the petitioner to go to Caloocan City to see the company president is
neither a reasonable order nor one connected with his duties. Even a wilful disobedience thereof
cannot be a valid ground for dismissal. Article 282 of the Labor Code. Wilful disobedience of the
employer's lawful orders, as a just cause for the dismissal of an employee, envisages the
concurrence of at least two (2) requisites: the employee's assailed conduct must have been wilful
or intentional, the wilfulness being characterized by a "wrongful and perverse attitude"; and the
other violated must have been reasonable, lawful, made known to the employee and must pertain
to the duties which he has been engaged to discharge.
In the instant case, the private respondents have not even endeavored to show that the directive
or order pertained to the regular duties of the petitioner as a comptroller. The purpose therefor
was not revealed to the petitioner. It was, as wittingly or unwittingly revealed in the
Supplemental Position Paper, to provide "an opportunity for the company president who
apparently objects to the Grievance Committee['s] and the Personnel Department's separate
resolutions

ordering

petitioner's

reinstatement," to

"finally

approve"

the

petitioner's

reinstatement, which was, of course, unnecessary since the reinstatement was not subject to such
final approval. It is highly plausible that the president wanted to extract from the petitioner, as a
condition to the "final approval", an apology for his past misdeeds.
The primary aim then of the directive was wholly unrelated to the petitioner's duties. It was to
extract a whimsical and oppressive condition. It was, as well, unreasonable and extremely
difficult to comply with since the petitioner was attending a conference of the Grievance
Committee held fifty kilometers away from where he was ordered to go. It was clearly a
peremptory summons meant to put the petitioner "in his proper place." Disobedience thereof,
even if wilful, cannot be a ground for the dismissal of the petitioner.

210.

AGUILAR vs. NLRC

FACTS:
In the course of its operation, Wack Wack Golf and Country Club (CLUB) employed petitioner
Estrellita Aguilar for 23 years prior to her dismissal. The last position she held was that of an
Accounting Clerk. Prior to August 1, 1986, the CLUB had been incurring continuous losses in its
restaurant and bar operations. On several occasions, petitioner, without the knowledge and
consent

of

the

CLUB

management,

ordered

and

consumed

food

from

the

CLUB restaurant/bar and charged them against the patronage fees some CLUB members.
The CLUB, upon discovery of petitioner's misconduct, sent a written notice of charges against
her, but she refused to receive it. The CLUB then conducted an investigation. Petitioner executed
a written statement explaining her side.
During the investigation, petitioner was reminded that she was not allowed under CLUB rules to
sign restaurant and bar bills/chits chargeable to the patronage fees of CLUB members.
Nonetheless, petitioner continued to do so. Thus, petitioner was dismissed for serious misconduct
and breach of trust.
ISSUE:
Whether or not petitioner was dismissed legally.
HELD:
Yes. Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an
employee, envisages the concurrence of at least two (2) requisites: the employee's assailed
conduct must have been willful or intentional, the willfulness being characterized by a "wrongful
and perverse attitude." The order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to discharge.
By petitioner's own admission, she continued signing the restaurant and Bar Grill bills or chits
chargeable to the patronage fee of the CLUB members Cepeda and Gonzales even after she had

been investigated for such misconduct and after she was already made aware that non-members
like her cannot sign chits for and in behalf of the CLUB members.
The acts of herein complainant is defiantly disobeying the rules of the company even after
investigation, shows her cavalier attitude which leaves the management no other recourse but to
terminate her services. To condone such conduct will certainly erode the discipline that an
employer would uniformly enforce so that it can expect compliance with said rules and
regulations by its other employees. Otherwise the rules necessary and proper for the operation of
its business would be rendered ineffectual. An employer cannot legally be compelled to continue
with the employment of a person who admitedly was guilty of misfeasance or malfeasance
towards his employer, and whose continuance in the service of the latter is patently inimical to
his interests.

211.

JARDINE DAVIES INC. (JDI) vs. NLRC

FACTS:
Respondent Salvador Salutin filed a complaint against petitioner JDI for illegal dismissal. The
complaint was decided by the Labor Arbiter in favor of respondent.
JDI appealed the case to the NLRC. It also reinstated Salutin, "on payroll only in compliance
with the writ of execution issued by the Labor Arbiter pursuant to Article 223, paragraph 3, of
the Labor Code. Shortly after the reinstatement of Salutin "on payroll only", JDI sent a letter to
Salutin directing him to report for work to their Bacolod Branch Manager. Salutin, as directed
reported. He did not stay long, however, since after fifteen minutes or so, he left and was
reported not to have thereafter returned for work. JDI forthwith stopped further payment of
salary to Salutin.
JDI filed a "Manisfestation and Motion" with the NLRC stating that Salutin be considered as
having abandoned his work considering his continuous absence of more than three (3) weeks
since he was required to report for work. Salutin opposed the motion, claiming that he was
forced to leave in haste because he was then suffering from a serious ailment. He submitted a
medical certificate to support his claim.
ISSUE:
Whether or not Salutin abandoned his work.
HELD:
No. For abandonment to constitute a valid cause for termination of employment, there must be a
deliberate unjustified refusal of the employee to resume his employment. This refusal must be
clearly shown. Mere absence is not sufficient; it must be accompanied by overt acts pointing to
the fact that the employee simply does not want to work anymore.
Abandonment of position is a matter of intention expressed in clearly certain and unequivocal
acts. In this instance, however, certain uncontroverted facts show just exactly the opposite.

Hence, Salutin did report, as directed, on 24 September 1991, but that he could not stay long
because he was ailing at that time; he, although perhaps belatedly made, did seek medical
consultation on 7 November 1991, at the Corazon Locsin Montelibano Memorial Regional
Hospital, for "peptic ulcer"; and on 11 December 1991, he did, in fact, manifest his desire to
assume his work with the petitioner.

212.

JACKSON BUILDING CONDOMINIUM CORPORATION vs. NLRC

FACTS:
Private respondent Gumogda was employed as a janitor by petitioner. Private respondent filed a
45-day leave of absence to undergo an appendectomy, which would necessitate complete bed rest
for about thirty days from the date of operation as shown by his medical certificate. This was
granted by petitioner. Thereafter, Gumogda informed the president of petitioner corporation, that
he was physically fit to assume his work. However, petitioners refused to accept him back
contending that he had abandoned his work.
ISSUE:
Whether or not private respondent abandoned hid work.
HELD:
No. For abandonment to be a valid ground for dismissal, two requisites must be present: the
intention by an employee to abandon coupled with an overt act from which it may be inferred
that the employee had no more intention to resume his work.
In the instant case, the said requisites are not present.
As found by the Labor Arbiter, private respondent's physician advised him to rest for 30 days
before reporting back for work in order to recuperate. Private respondent heeded this advise and
even exceeded the number of days recommended by his doctor for his recuperation. In fact, he
reported back for work 50 days after his operation. This would clearly show that private
respondent was ready to assume his responsibilities considering that he had fully recovered from
the operation. Furthermore, the filing of a complaint for illegal dismissal by private respondent is
inconsistent with the allegation of petitioners that he had abandoned his job. Surely, an
employee's posture will be illogical if he abandons his work and then immediately files an action
for his reinstatement

213.

ARC-MEN FOOD INDUSTRIES, INC. vs. NLRC

FACTS:
Private respondent Alcomendras alleges that he was a regular employee of petitioner firm as a
company driver until he was terminated on January 23, 1990. It was disclosed that petitioner
acted arbitrarily, unjustifiably and without any reason at all. Rising to their defense, petitioner]
belied the allegations of Alcomendras. They claimed that he was not illegally dismissed from his
employment but it was he who has abandoned his work.
Anent the issue of termination, petitioner disclosed that as per Summary of Plant Operations the
last time the plant operated in 1989 was December 1, 1989. From December 2, 1989 up to
February 25, 1990, the plant was not in full operation and employees directly connected with the
plant including herein complainant were advised of the shutdown and were told not to report for
work. To prove that Alcomendras, was not terminated on January 23, 1990 is the fact that on
January 29, 1990, he secured and was given a cash advance of P700.00. Another evidence that
Alcomendras was not dismissed is the fact that petitioner formally advised him to report for
work on February 25, 1990. Despite being advised to report for work, Alcomendras refused.
ISSUE:
Whether or not Alcomendras abandoned his work.
HELD:
Yes. . Undeniable is the over-reliance of both the Labor Arbiter and the NLRC on the notion that
the filing of a complaint for illegal dismissal is inconsistent with the employer's defense of
abandonment by the employee of his work. While the burden of refuting a complaint for illegal
dismissal is upon the employer, fair play as well requires that, where the employer proffers
substantial evidence of the fact that it had not, in the first place, terminated the employee but
simply laid him off due to valid reasons, neither the Labor Arbiter nor the NLRC may simply
ignore such evidence on the pretext that the employee would not have filed the complaint for

illegal dismissal if he had not indeed been dismissed. This is clearly a non sequitur reasoning that
can never validly take the place of the evidence of both the employer and the employee.
The Labor Arbiter and the NLRC, the records show, had taken note of (1) the Summary of Plant
Operations indubitably showing that petitioner's operations were shut down from December 2,
1989 to February 19, 1990; (2) the Temporary Cash Advance Slip signed by private respondent
showing that he requested and received on January 29, 1990 "cash advance against salary
deduction" for the amount of P700.00; (3) the return-to-work letter dated February 25,
1990 addressed to and directing private respondent to report for work on February 26, 1990; (4)
the Affidavit 15 executed by one Noli Paglinawan who thereby declared that he personally handed
to private respondent the aforementioned return-to-work letter who however refused to receive or
acknowledge the same; and (5) the letter request for cash advance of P700.00 dated January 23,
1990 signed by private respondent. All these documentary evidences sufficiently establish the
veracity of petitioner's insistent claim that it did not terminate private respondent but rather, the
latter refused to return to work after his temporary lay-off due to petitioner's plant shutdown.
The Labor Arbiter and the NLRC, instead of at least reviewing whatever countervailing evidence
private respondent had vis-a-vis petitioner's aforedescribed documentary proofs, simply swept
under the rug the issues of lay-off and abandonment of work, relying as they did on the earlier
mentioned notion of the inconsistency between the filing of a complaint for illegal dismissal and
the interposing of the defense of abandonment by the employee of his work.

214.

PHILIPPINE COMMERCIAL INTERNATIONAL BANK vs. NLRC

FACTS:
Private respondent Eduardo Maturan, a bank teller of petitioner bank's were terminated on July
18, 1991allegedly for incurring a cash shortage in the amount of P10,000.00, for failure to return
the P8,000.00 cash withdrawal of a client, and for extending unauthorized accommodations to
clients. A complaint for illegal dismissal was filed before the NLRC which thereafter rendered a
decision, declaring herein petitioner guilty of illegal dismissal and ordering the reinstatement of
respondent Maturan to his former position without loss of seniority rights and privileges.
ISSUE:
Whether or not Maturan was illegally dismissed.
HELD:
Yes. Respondent Maturan was involved in a single incident of cash shortage in the amount of
P10,000.00. By petitioner's own admission, the last shortage incurred by respondent prior to this
incident was way back in January, 1988. Respondent is not a habitual violator, which undesirable
category would have warranted his dismissal. This is aside from the similar findings made by the
labor arbiter and respondent NLRC that the dismissal was caused by respondent's active
involvement in union activities. Consequently, it is justifiedly believed that the dismissal of the
private respondent is not warranted under the circumstances.
In tellering, regardless of how long one has been in the trade, and how careful one is, there is no
guarantee that one can never incur cash shortage or overage. No teller for that matter can testify
that in his stint as such, everyday his actual cash on hand always tallies with the figure appearing
in the teller's validating machine tape as the 'should be cash on hand'. Cash shortages and
overages are but ordinary and normal banking activities." As a matter of fact, it is not disputed
that there were other shortages or overages incurred by the other tellers in petitioner's General
Santos City branch at about the same time that this particular infraction of private respondent
occurred.

However, these occurrences are subject to certain limitations, depending on the amount involved
as well as the number and the gravity of the infractions. As earlier explained, the infraction
committed by private respondent to be so grave as to warrant his dismissal.
To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach
of trust. And, as realistically stressed by the Solicitor General, unless based on a ground provided
by law and supported by substantial evidence, dismissal will be disallowed, for what is at stake is
not only the employee's position, but also his means of livelihood. Considering that private
respondent was acting in good faith, his dismissal would run counter to such established
doctrinal rulings.

215.

CONCORDE HOTEL vs. CA

FACTS:
Petitioner Concorde Hotel engaged in a mass hiring of personnel through a manpower service
agency to fill up positions in the hotel. Those recruited were subjected to a ten-day training and
screening period. One of those recruited is herein private respondent Roberto Parado who
applied and was hired by the hotel as assistant cook.
Petitioner discovered that some of its stocks and merchandise were missing and unaccounted for
in the inventory reports. When the hotel management conducted an inquiry among the
employees, it found out that some of its employees, singly or in conspiracy with each other, had
been bringing home canned goods, meat and poultry, plates, glasses, spoons and other utensils,
including cloth napkins.
An in-house investigation was thereafter initiated by the management. Those departments whose
stock inventories included items unaccounted for were asked to explain such irregularity. The
identities of those who were allegedly involved in the pilferage were gathered from the
employees. The Agency was furnished a list of the employees allegedly involved in the incident.
Those who were named in the list were called and asked to explain in writing on the same day.
When nobody submitted the required written explanation, petitioner and the Agency issued
separate notices of termination to the said employees including Parado.
ISSUE:
Whether or not Parados dismissal is valid.
HELD:
No. For an employee's dismissal to be valid, two requirements must be met: first, the employee
must be afforded due process, i.e., he must be given an opportunity to be heard and to defend
himself, and second, the dismissal must be for a valid cause. The burden of proving that the
dismissal of the employee was for a valid and authorized cause rests on the employer and the

employer's failure to discharge such burden would mean that the dismissal was not justified and
therefore illegal.
Under Article 282 of the Labor Code, an employer may terminate the services of an employee
for loss of trust and confidence. The Court, however, is cognizant of the fact that in numerous
dismissal cases, loss of trust and confidence has been indiscriminately used by employers to
justify almost every instance of termination and as a defense against claims of arbitrary
dismissal. In the case of General Bank and Trust Company vs. Court of Appeals, the Court came
up with the following guidelines for the application of the doctrine of loss of confidence:
(a) loss of confidence which should not be simulated;
(b) it should not be used as a subterfuge for causes which are improper, illegal or
unjustified;
(c) it should not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and
(d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
Hence, while an employer is at liberty to dismiss an employee for loss of trust and confidence, he
cannot use the same to feign what would otherwise be an illegal dismissal.
Loss of confidence applies only to cases involving employees who occupy positions of trust and
confidence, or to those situations where the employee is routinely charged with the care and
custody of the employer's money or property. It must be shown, or the employer must have
reasonable ground to believe, if not entertain, the moral conviction that the employee concerned
is responsible for the misconduct or infraction and that the nature of his participation therein
rendered him absolutely unworthy of the trust and confidence demanded by his position. To be a
valid ground for dismissal, the loss of confidence must be based on a willful breach of trust and
founded on clearly established or proven facts.
Petitioner is correct insofar as it considered the nature of private respondent's position as
assistant cook as a position of trust and confidence. As assistant cook, private respondent is

charged with the care of food preparation in the hotel's coffee shop. He is also responsible for the
custody of food supplies and must see to it that there is sufficient stock in the hotel kitchen. He
should not permit food or other materials to be taken out from the kitchen without the necessary
order slip or authorization as these are properties of the hotel. Thus, the nature of private
respondent's position as assistant cook places upon him the duty of care and custody of
Concorde's property.
However, the Supreme Court uphold the findings of the Court of Appeals that petitioner
Concorde Hotel failed to sufficiently establish the charge against private respondent which was
the basis for its loss of trust and confidence that warranted his dismissal.

216.

AURELIO vs. NLRC

FACTS:
Petitioner started as clinical instructor of the College of Nursing of Northwestern College
(NWC) in June 1917. In October 1979, petitioner was appointed Dean of the College of Nursing.
In September 1981, petitioner was promoted to College Administrator or Vice-President for
Administration, retaining concurrently her position of Dean of the College of Nursing. She was
later promoted to Executive Vice-President.
On April 10, 1988, petitioner's husband, Oscar Aurelio, a stockholder of respondent NWC, was
elected Auditor. On May 1, 1988, the individual respondents, as Board of Directors, took over
the management of respondent NWC. This new management unleashed a series of reorganization
affecting the petitioner and her husband, Oscar Aurelio. Oscar Aurelio was removed as Auditor
of the college. Petitioner was demoted in rank from Executive Vice-President to Vice-President
for Administration to Dean of the College of Nursing without prior notice Because of the
indignities and humiliation suffered by the petitioner, she wrote a letter informing the President
of Northwestern College that she was going on an indefinite leave.
Petitioner filed her complaint for illegal dismissal against private. The labor arbiter issued a
decision dismissing the complaint. Respondent had alleged and submitted evidence of
irregularities of complainant during her tenure at the college. The complainant instead of refuting
the charges cited alleged irregularities committed by the respondents in their respective offices.
Petitioner has not sufficiently explained the substantiated charges of Northwestern College anent
exaction of P25.00 from every student of the College of nursing, receipt of salaries for alleged
teaching services for which she did not have any teaching load and failure to remit nor liquidate
a total amount of P120,000.00.
ISSUE:
Whether or not petitioner was illegally dismissed.

HELD:
No. It must be emphasized that the rules of dismissal for managerial employees are different
from those governing ordinary employees for it would be unjust and inequitable to compel an
employer to continue with the employment of a person who occupies a managerial and sensitive
position despite loss of trust and confidence. At the very least, the relationship must be
considered seriously strained, foreclosing the remedy of reinstatement. We find that the
allegations of irregularities were sufficiently substantiated thus justifying petitioner's separation.
Moreover, and still on the issue of dismissal, the records disclose that in holding on to the two
positions, petitioner violated the Administrative Manual for Private Schools. Thus, the
respondent had no other recourse but to take away one of the positions from her or abolish the
same. Undoubtedly, the College Board of Directors has the authority to reorganize and
streamline the operations of the college with the end in view of minimizing expenditures.
Admittedly, complainant was a managerial employee who has to have the complete trust and
confidence of respondents. While it may be true that complainant was not strictly an accountable
employee primarily responsible for disbursement of whatever funds, respondents had some basis
in losing its trust and confidence in complainant. Respondents' evidence showed that under the
principle of command responsibility, complainant was in a sense responsible in the monitoring of
monetary transactions involving funds from library collections and from Related Learning
Science collection. For it has been held that in case of termination due to loss of trust and
confidence proof beyond reasonable doubt of misconduct is not necessary but some basis being
sufficient

217.

ETCUBAN vs. SULPICIO LINES

FACTS:
The petitioner was employed by the respondent until his dismissal on June 10, 1994 for loss of
trust and confidence. At the time of his dismissal, the petitioner was the Chief Purser of the M/V
Surigao Princess. As the Chief Purser, the petitioner handled the funds of the vessel and was the
custodian of all the passage tickets and bills of lading.
The newly designated jefe de viaje of the M/V Surigao Princess, in a surprise examination,
discovered a strong evidence of short-changing the company. As expected, he found inordinate
amount of ticket issuances for children at half the fare of P44.00 in Voyage 434 of the
vessel. When word of the anomaly reached the respondent, it waited for the petitioner to return to
Cebu City in the hope of shedding more light on the matter.
Shortly after disembarking from the M/V Surigao Princess at the port of Cebu, the petitioner
received a memorandum relative to the irregularity in the "alleged involvement in anomaly of
ticket issuance," instructing him to forthwith report to the main office and to explain in writing
why no disciplinary action should be meted on him or to submit himself to an investigation. It
also informed the petitioner of his immediate preventive suspension until further notice. The
petitioner, however, refused to acknowledge receipt of the memorandum which was personally
served on him, prompting the respondent to mail the same, and which the petitioner received
days later.
Meanwhile, upon his arrival at the office, the petitioner was questioned by the Senior Executive
Vice-President and General Manager of respondent. Thereafter, petitioner was preliminarily
investigated wherein his statements were taken down. After the initial investigation, the
petitioner was told to sign its minutes but he adamantly refused, claiming the same to be "selfincriminatory." The next day, the petitioner was replaced as the Chief Purser of the M/V Surigao
Princess. As a result of his replacement, the petitioner thought he was fired from his job.
Barely a week after the petitioners preventive suspension and pending his administrative
investigation, he filed a complaint against the respondent for illegal dismissal. The petitioner

alleged that the ground for his dismissal, i.e., loss of trust and confidence, was ill-motivated and
without factual basis.
ISSUE:
Whether or not petitioner was illegally dismissed.
HELD:
No. The anomalous entries in the tickets in his custody was sufficient basis for petitioner to lose
trust and confidence on private respondent.
In cases of dismissal for loss of trust and confidence, it is not required that there is proof beyond
reasonable doubt. It is sufficient that there is sufficient basis for loss of trust and confidence.
In the instant case, the Supreme Court holds that there was sufficient basis for petitioner to lose
trust and confidence in private respondent so as to justify his termination. It may be pertinent to
note that private respondents overall conduct is inconsistent with innocence. Private respondent
did not wait for the result of petitioners investigation and filed a complaint for illegal dismissal
despite private respondents admission that he was merely placed under preventive suspension.
Preventive suspension is allowed under Section 3, Rule XIV of the Implementing Rules of the
Labor Code. While it is true that no penalty should be attached to an employees recourse to the
NLRC, his immediate filing of the case in the light of the discovery of the anomalous tickets
only betrays his culpability.
It bears emphasis that private respondents position as purser was highly sensitive. As such, he
must demonstrate utmost honesty and fidelity to the trust reposed in him. On its part, petitioner
was well within its prerogative to require from its purser a high degree of uprightness and
probity. Their integrity was impaired by the tampered tickets in his possession. There was
sufficient basis for petitioner to lose trust and confidence in private respondent. Having lost its
trust and confidence, petitioner cannot be expected to allow private respondent to handle the
funds of the corporation. It would be highly unfair to require petitioner to continue employing
private respondent in such sensitive post in the absence of full trust and confidence.

218.

Worldwide Papermills vs. NLRC

FACTS:
Private respondent Edwin Sabuya was employed by petitioner as packer from 1982 to 1991. But
in the years 1986 1991, private respondent incurred a lot of absences. 'In 1986, he incurred a
total of 46 days without pay including AWOL but excluding 30 days VL and SL given to him.
The following year, 1987, he accumulated about 17. 5 days leave without pay including AWOL
after exhausting the 30 days VL/SL with pay. Followed by 1988, in which after exhausting the 30
days leave with pay, he again accumulated 60 days leave without pay, 12 days of which AWOL.
Finally, 1989 he acquired a total of 26 days leave without pay including 3 days AWOL after
exhausting the 30 days leave with pay. In the year 1991, private respondent again incurred
absences. After his suspension, he applied for sick leave. When the company nurse paid him a
visit, his son told the nurse that he was at the market riding a pedicab. The company then ordered
him to explain why should he have not mete a penalty. Unfortunately, private respondents
services were terminated. He then filed a case for illegal dismissal before the Labor Arbiter
which adjudged in his favor. But the NLRC found that the dismissal was based on just ground,
however it awarded separation pay. Hence, this petition.
ISSUE:
Whether or not the dismissal which was grounded on habitual absence/ tardiness is valid?
RULING:
YES. Article 282 of the Labor Code provides the grounds for which an employer may validly
dismiss an employee, among which is gross and habitual neglect by the employee of his duties.
In the case at bench, it is undisputed that respondent Edwin P. Sabuya had within a span of
almost six (6) years been repeatedly admonished, warned and suspended for incurring excessive
unauthorized absences. Worse, he was not at home but was out driving a pedicab to earn extra
income when the company nurse visited his residence after he filed an application for sick leave.
Such conduct of respondents Edwin P. Sabuya undoubtedly constitutes gross and habitual neglect
of duties.

219.

Austria vs. NLRC

FACTS:
A dispute between Pastor Austria and Pastor Rodrigo arises when the former assisted a certain
person to collect the payment for the debt of Pastor Rodrigo for the repair of his motor vehicle.
Subsequently, pastor Rodrigo had ill feelings against pastor Austria. Hearing that Pastor Rodrigo
will file a case against pastor Austria, pastor Austria went to Pastor Buhat and asked pastor Buhat
to convene the executive committee. Pastor Buhat denied the request of petitioner since some
committee members were out of town and there was no quorum. Thereafter, the two exchanged
heated arguments. Petitioner then left the office of Pastor Buhat. While on his way out, petitioner
overheard Pastor Buhat saying "Pastor daw inisog na ina iya (Pastor you are talking tough)."
Irked by such remark, petitioner returned to the office of Pastor Buhat, and tried to overturn the
latter's table, though unsuccessfully, since it was heavy. Thereafter, petitioner banged the attach
case of Pastor Buhat on the table, scattered the books in his office, and threw the phone. 7
Fortunately, private respondents Pastors Yonilo Leopoldo and Claudio Montao were around and
they pacified both Pastor Buhat and petitioner. The SDA terminated the services of pastor Austria
in the ground of serious misconduct. The L.A. found in favor of the petitioner. The NLRC,
affirmed, but reversed and reversed again, and found that the dismissal was valid. Hence, this
petition.
ISSUE:
Whether or not the dismissal on the ground of serious misconduct is valid?
RULING:
NO. Misconduct has been defined as improper or wrong conduct. It is the 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. 43 For misconduct to be considered
serious it must be of such grave and aggravated character and not merely trivial or unimportant.
44 Based on this standard, we believe that the act of petitioner in banging the attach case on the
table, throwing the telephone and scattering the books in the office of Pastor Buhat, although
improper, cannot be considered as grave enough to be considered as serious misconduct. After

all, as correctly observed by the Labor Arbiter, though petitioner committed damage to property,
he did not physically assault Pastor Buhat or any other pastor present during the incident of 16
October 1991. In fact, the alleged offense committed upon the person of the employer's
representatives was never really established or proven by private respondents. Hence, there is no
basis for the allegation that petitioner's act constituted serious misconduct or that the same was
an offense against the person of the employer's duly authorized representative. As such, the cited
actuation of petitioner does not justify the ultimate penalty of dismissal from employment. While
the Constitution does not condone wrongdoing by the employee, it nevertheless urges a
moderation of the sanctions that may be applied to him in light of the many disadvantages that
weigh heavily on him like an albatross on his neck. Where a penalty less punitive would suffice,
whatever missteps may have been committed by the worker ought not be visited with a
consequence so severe such as dismissal from employment. For the foregoing reasons, we
believe that the minor infraction committed by petitioner does not merit the ultimate penalty of
dismissal.

220.

Felix vs. Enertech Systems Industries, Inc.

FACTS:
Petitioner worked as a welder/fabricator with private respondent. He and his co employees
were assigned to the Big J Feedmills to work there. They put pm their Daily Time Record (DTR)
that they work 8 hours a day, in which their salary was computed based on that DTR. The
execution of the project wherein they were assigned was expected to last only for five days but
they have finished the said project for about 2 weeks. When respondent conducted an
investigation, the owner of the site Big J Feedmills and his engineer, and other employees
testified that the petitioner and his co employees do not work 8 hours a day but only an average
of 4 hours a day. After petitioner was subjected to preventive suspension, he was dismissed. The
L.A. found in favor pf petitioner but the NLRC and the C.A. reversed. Hence, this petition.
ISSUE:
Whether or not dismissal based on fraud and serious misconduct is valid?
RULING:
YES. For this reason, we find petitioner's dismissal to be in order. Falsification of time cards
constitutes serious misconduct and dishonesty or fraud, which are just causes for the termination
of employment under Art. 282(a) and (c) of the Labor Code which provides:
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;
As to the labor arbiter's observation that a timekeeper should have been assigned to the Big J
Feedmills, we think the Court of Appeals correctly disposed of the same, thus: Employees are
hired in order to foster the employer's business, and company rules and regulations are part of
such goal. If we adhere to the labor arbiter's view that a timekeeper should have been placed by
private respondent or to commission the latter's client to act as timekeeper, it would be an

additional burden not only on the part of private respondent but also on its client. It would be
contrary to every business motto that "clients should be given utmost satisfaction and
convenience." Moreover, if every time an assignment is given to an employee, the employer will
send out someone to spy, the atmosphere of harmonious relationship between the employer and
its employees will be beclouded, thundering forth suspicion and distrust among themselves.

221.

PAL vs. NLRC

FACTS:
Private respondent Salvador Gempis was charged by PAL of serious misconduct and suspension.
This was due to the fact that on February 27, 1980, he forced the two first officers A. Barcebal
and J. Ranches to drink 6 bottles of beers within 30 minutes. If they were not able to consume
the beers, the private respondent will box their stomachs. Unfortunately the FOs were not able to
consume the 6 beers. PAL filed before the MOLE a clearance for termination of employment
against Salvador Gempis, they contended that private respondent had full knowledge that the two
had flights the next day to wit: 7am and 12:00pm. The L.A. Found that dismissal is not proper
because the penalty pf demotion and suspension were the penalties enshrined to retribute the
wrongdoings. Hence, this present recourse.
ISSUE:
Whether or not dismissal is valid?
RULING:
YES. "Nevertheless, we find every piece of evidence on record to be more in support that
complainant did commit abuse of authority amounting to gross misconduct when he forced F/O's
A. Barcebal and J. Ranches to each consume three (3) bottles of beer within thirty (30) minutes
and when they failed, they were ordered to stand erect and boxed on their stomachs, at about
8:30 P.M. on 27, February 1980. It would be grossly unfair to order petitioners to reinstate him
back to his work as pilot. The nature of employment of herein private respondent necessitates
that he should not violate the liquor ban as provided for in the Basic Operations Manual in order
to protect not only the interest of the company but the public as well. Private respondent is a risk
and liability rather than an asset to petitioner PAL. The private respondent and those persons he
abused (F/Os A. Barcebal and J. Ranches) are pilots. The foremost consideration called for by
their position as pilots is the safety of the passengers. This is so because the duties of a pilot
consist of handling controls of the aircraft and to ensure that the flight is conducted safely and
economically . The respondent Commission committed a grave abuse of discretion amounting to
lack of jurisdiction in not imposing the appropriate penalty of dismissal as called for not only by

company regulations (BOM) but also by the CAA, when as borne by its own (NLRC) findings,
private respondent did commit the offense complained of. Under these facts, clearance to
terminate should have been given for the dismissal of private respondent. The business of
petitioner Philippine Airlines is such that whenever a passenger dies or is injured the
presumption is, it is at fault notwithstanding the fact that it has exercised due diligence of a good
father of a family in the selection and supervision of its employees. Thus, extraordinary measures
and diligence should be exercised by it for the safety of its passengers and their belongings.
Needless to state, a pilot must be sober all the time for he may be called upon to fly a plane even
before his regular scheduled hours, otherwise so many lives will be in danger if he is drunk. It
would be unjust for an employer like herein petitioner PAL to be compelled to continue with the
employment of a person whose continuance in the service is obviously inimical to its interests.

222.

JPL Marketing Promotions vs. NLRC

FACTS:
JPL Marketing and Promotions (hereinafter referred to as "JPL") is a domestic corporation
engaged in the business of recruitment and placement of workers. On the other hand, private
respondents Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as
merchandisers on separate dates and assigned at different establishments in Naga City and Daet,
Camarines Norte as attendants to the display of California Marketing Corporation (CMC), one of
petitioner's clients. On 13 August 1996, JPL notified private respondents that CMC would stop
its direct merchandising activity in the Bicol Region, Isabela, and Cagayan Valley effective 15
August 1996. 3 They were advised to wait for further notice as they would be transferred to other
clients. However, on 17 October 1996, private respondents Abesa and Gonzales filed before the
National Labor Relations Commission Regional Arbitration Branch (NLRC) Sub V complaints
for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay and
payment for moral damages. Aninipot filed a similar case thereafter. The L.A. adjudged in favor
of the petitioner, but the NLRC reversed. Hence, this petition.
ISSUE:
Whether or not there is authorized cause for termination of services?
RULING:
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of
dismissals due to any of these reasons: (a) installation of labor saving devices; (b) redundancy;
(c) retrenchment; (d) cessation of the employer's business; and (e) when the employee is
suffering from a disease and his continued employment is prohibited by law or is prejudicial to
his health and to the health of his co-employees. However, separation pay shall be allowed as a
measure of social justice in those cases where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character, but only when he was
illegally dismissed. In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to
Implement the Labor Code provides for the payment of separation pay to an employee entitled to
reinstatement but the establishment where he is to be reinstated has closed or has ceased

operations or his present position no longer exists at the time of reinstatement for reasons not
attributable to the employer. The common denominator of the instances where payment of
separation pay is warranted is that the employee was dismissed by the employer. In the instant
case, there was no dismissal to speak of. Private respondents were simply not dismissed at all,
whether legally or illegally. What they received from JPL was not a notice of termination of
employment, but a memo informing them of the termination of CMC's contract with JPL. As
clearly borne out by the records of this case, private respondents sought employment from other
establishments even before the expiration of the six (6)-month period provided by law. As they
admitted in their comment, all three of them applied for and were employed by another
establishment after they received the notice from JPL. JPL did not terminate their employment;
they themselves severed their relations with JPL. Thus, they are not entitled to separation pay. In
order for the termination to be an authorized cause, there must not be an intention to circumvent
the rights of the employees (tenurial). There is no intent to circumvent here because the
employees were given a floating status in which time they will be re assigned by the employer
to another business.

223.

Almodiel vs. NLRC

FACTS:
Petitioner was employed as a cost accounting manager by the Raytheon Philippines. In the
meantime, the standard cost accounting was installed and used by the Raytheon plants
worldwide. The accounting system was adopted in the Philippines. Thereafter, petitioner was
summoned by his boss and terminated his services on the ground of redundancy since his duties,
to wit: submission of periodic reports that would use computerized forms were replaced by
accounting system that was installed. The L.A. adjudged in favor of the petitioner, the NLRC
reversed. Hence, this petition.
ISSUE:
Whether or not dismissal on the ground of redundancy is valid?
RULING:
YES. Whether petitioner's functions as Cost Accounting Manager have been dispensed with or
merely absorbed by another is however immaterial. Thus, notwithstanding the dearth of evidence
on the said question, a resolution of this case can be arrived at without delving into this matter.
For even conceding that the functions of petitioner's position were merely transferred, no malice
or bad faith can be imputed from said act. A survey of existing case law will disclose that in
Wiltshire File Co., Inc. v. NLRC,

the position of Sales Manager was abolished on the ground of

redundancy as the duties previously discharged by the Sales Manager simply added to the duties
of the General Manager to whom the Sales Manager used to report. In adjudging said termination
as legal, this Court said that redundancy, for purposes of our Labor Code, exists where the
services of an employee are in excess of what is reasonably demanded by the actual requirements
of the enterprise. The characterization of an employee's services as no longer necessary or
sustainable, and therefore, properly terminable, was an exercise of business judgment on the part
of the employer. The wisdom or soundness of such characterization or decision was not subject
to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as
violation of law or merely arbitrary and malicious action is not shown.

In the case of International Macleod, Inc. v. Intermediate Appellate Court, this Court also
considered the position of Government Relations Officer to have become redundant in view of
the appointment of the International Heavy Equipment Corporation as the company's dealer with
the government. It held therein that the determination of the need for the phasing out of a
department as a labor and cost saving device because it was no longer economical to retain said
services is a management prerogative and the courts will not interfere with the exercise thereof
as long as no abuse of discretion or merely arbitrary or malicious action on the part of
management is shown.
Indeed, an employer has no legal obligation to keep more employees than are necessary for the
operation of its business. Petitioner does not dispute the fact that a cost accounting system was
installed and used at Raytheon subsidiaries and plants worldwide; and that the functions of his
position involve the submission of periodic reports utilizing computerized forms designed and
prescribed by the head officer with the installation of said accounting system. Petitioner attempts
to controvert these realities by alleging that some of the functions of his position were still
indispensable and were actually dispersed to another department. What these indispensable
functions that were dispersed, he failed however, to specify and point out. Besides, the fact that
the functions of a position were simply added to the duties of another does not affect the
legitimacy of the employer's right to abolish a position when done in the normal exercise of its
prerogative to adopt sound business practices in the management of its affairs.
Considering further that petitioner herein held a position which was definitely managerial in
character. Raytheon had a broad latitude of discretion in abolishing his position. An employer has
a much wider discretion in terminating employment relationship of managerial personnel
compared to rank and file employees.

The reason obviously is that officers in such key

positions perform not only functions which by nature require the employer's full trust and
confidence but also functions that spell the success or failure of an enterprise.

224.

Asia World Publishing House, Inc. vs. Ople

FACTS:
On March 17, 1975, the private respondent was hired by Asiaworld Publishing House, Inc., as its
advertising sales director. As such, she managed and supervised the petitioner's advertising sales
force, prepared advertising sales campaign programs, and solicited advertisements from local
and foreign advertisers. Due to the respondent's able management and hard work, Asiaworld's
income from sales advertising increased tremendously. Sometime in 1976, Vicente Pesayco, Jr.,
the corporation's president and private respondent's immediate superior, requested Ms. Joaquin
not to go on vacation leave because she was needed to help direct the advertising sales campaign
of Asia Forum, a magazine the petitioner had newly acquired. Respondent Joaquin acceded to
such request. She did not avail of her vacation leave benefits for three times at the request of
Pesayco. Meanwhile, in October of 1976, the respondent was eventually designated to take
charge of the advertising sales work for Asia Forum. In 1977, the private respondent was
appointed Vice President for marketing in a concurrent capacity and her monthly compensation
was increased to P2,300.00. On May 3, 1978, the petitioner advised the private respondent in
writing that her services would be terminated effective May 16, 1978 because of continued losses
and offered to pay her one (1) month's salary for her more than three (3) years of service. The
regional director adjudged in favor of the private respondent.
ISSUE:
Whether or not the dismissal is valid?
RULING:
NO. Even if we treat the instant petition captioned as "Petition for Review" as a petition for
certiorari, there is still no reason why we should arrive at different factual findings. In the first
place, the only justification presented by the petitioner for dismissing the private respondent was
its financial statement showing a loss of P196,087.83 for the year 1977. Asiaworld failed to show
that fair and reasonable standards were used in ascertaining who would be dismissed and who
would be retained among its employees. As the Solicitor General correctly stated, there must be
fair and reasonable criteria to be used in selecting employees to be dismissed, such as: (a) less

preferred status (e.g. temporary employee); (b) efficiency rating, and (c) seniority. (Fernandez,
P.V., The Law of Employee Dismissal, pp. 130-131, 1976 Ed.) In the case at bar, the petitioner
never denied the fact that the private respondent was performing her job satisfactorily so much
so that its income from sales advertising increased.
Secondly, both the Regional Director and the respondent Minister found that after the private
respondent's termination, the petitioner hired a new employee to take the former's position.
Although the petitioner belies the fact that the person who assumed the private respondent's job
was a new employee, it did not present any employment contract or other proof to support its
allegation. It merely presented BIR forms of the new employee showing reported income from
commissions given by the petitioner and its record of payment to the employee of sales
commission, gasoline allowances, and incentive bonus purportedly received for the years 1977
and 1978.

225.

Sebuguero vs. NLRC

FACTS:
The petitioners were among the thirty-eight (38) regular employees of private respondent GTI
Sportswear Corporation (hereinafter GTI), a corporation engaged in the manufacture and export
of ready-to-wear garments, who were given "temporary lay-off" notices by the latter on 22
January 1991 due to alleged lack of work and heavy losses caused by the cancellation of orders
from abroad and by the garments embargo of 1990. Believing that their "temporary lay-off" was
a ploy to dismiss them, resorted to because of their union activities and was in violation of their
right to security of tenure since there was no valid ground therefor, the 38 laid-off employees
filed with the Labor Arbiter's office in the National Capital Region complaints for illegal
dismissal, unfair labor practice, underpayment of wages under Wage Orders Nos. 01 and 02, and
non-payment of overtime pay and 13th month pay. L.A. reversed and the NLRC affirmed. The
petitioners filed a case assailing the NLRCs ground for affirming the dismissal as redundancy.
ISSUE:
Whether or not redundancy was used by the NLRC?
RULING:
NO. Retrenchment. The petitioners' first contention is based on a wrong premise or on a
miscomprehension of the statement of the NLRC. What the NLRC sustained and affirmed is not
redundancy, but retrenchment as a ground for termination of employment. They are not
synonymous but distinct and separate grounds under Article 283 of the Labor Code, as amended.
Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number of
factors, such as overhiring of workers, decreased volume of business, or dropping of a particular
product line or service activity previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the
termination of employment initiated by the employer through no fault of the employee's and
without prejudice to the latter, resorted to by management during periods of business recession,

industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders,


shortage of materials, conversion of the plant for a new production program or the introduction
of new methods or more efficient machinery, or of automation. Simply put, it is an act of the
employer of dismissing employees because of losses in the operation of a business, lack of work,
and considerable reduction on the volume of his business, a right consistently recognized and
affirmed by this Court.

226.

North Davao Mining vs. NLRC

FACTS:
Petitioner, North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100%
privately-owned company. Later, the Philippine National Bank (PNB) became part owner thereof
as a result of a conversion into equity of a portion of loans obtained by North Davao from said
bank. On June 30, 1986, PNB transferred all its loans to and equity in North Davao in favor of
the national government which, by virtue of Proclamation No. 50 dated December 8, 1986, later
turned them over to petitioner Asset Privatization Trust (APT). As of December 31, 1990 the
national government held 81.8% of the common stock and 100% of the preferred stock of said
company. When the company suffered serious net losses, it was forced to retrench its employees.
The employees were given a separation benefit of 12.5 of their salary a month for every year of
service. The employees filed a case before the L.A. that the separation pay be increased with
17.5 days pay. The L.A. Adjudged in favor of the employees and the NLRC affirmed such ruling.
Hence, this petition.
ISSUE:
Whether or not, separation pay is mandatory under Art. 283 on the ground retrenchment due to of
serious losses?
RULING:
NO. "Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination due
to the installation of labor saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due

to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year. The underscored
portion of Art. 283 governs the grant of separation benefits "in case of closures or cessation of
operation" of business establishments "NOT due to serious business losses or financial reverses.
Where, however, the closure was due to business losses as in the instant case, in which the
aggregate losses amounted to over P20 billion the Labor Code does not impose any obligation
upon the employer to pay separation benefits, for obvious reasons. There is no need to belabor
this point. Even the public respondents, in their Comment filed by the Solicitor General,
impliedly concede this point. In the instant case however, the company's practice of giving one
month's pay for every year of service could no longer be continued precisely because the
company could not afford it anymore. It was forced to close down on account of accumulated
losses of over P20 billion. This could not be said of BISSI. In the case of North Davao, it gave
30-days' separation pay to its employees when it was still a going concern even if it was already
losing heavily. As a going concern, its cash flow could still have sustained the payment of such
separation benefits. But when a business enterprise completely ceases operations, i.e., upon its
death as a going business concern, its vital lifeblood its cash flow literally dries up. Therefore,
the fact that less separation benefits were granted when the company finally met its business
death cannot be characterized as discrimination. Such action was dictated not by a discriminatory
management option but by its complete inability to continue its business life due to accumulated
losses. Indeed, one cannot squeeze blood out of a dry stone. Nor water out of parched land.

227.

Balasbas vs. NLRC

FACTS:
Private respondent Jamilla & Company, Inc., owns a security agency named Veterans Philippine
Scout Security Agency. On August 31, 1984, it hired Basilio Balasbas as operations supervisor
and assigned him in the security division. Part of his job was to issue orders relative to the
guards' assignments, direct work activities of the inspectors and re- screen guard applicants. On
April 12, 1988 or eight months after his employment, the company handed him a termination
notice advising him of his severance from the service effective immediately pursuant to a
retrenchment program that was being implemented. The petitioner filed a case before the Labor
Arbiter which granted it. When the case was elevated by the private respondent to NLRC, the
latter reversed the findings of the L.A. Hence, this petition.
ISSUE:
Whether or not the termination of the services of the petitioner based on retrenchment is valid?
RULING:
NO. Under Article 283 of the Labor Code, the closure of a business establishment or reduction of
personnel is a ground for the termination of the services of any employee unless the closing or
retrenching is for the purpose of circumventing the provision of the law. But while business
reverses can be a just cause for terminating employees, these must be sufficiently proved by the
employer. The case of Sugar Lopez Corporation v. Federation of Free Workers, lays down the
general standards under which an employer may retrench or reduce the number of his employees.
Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss
purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and
inconsequential in character, the bonafide nature of the retrenchment would appear to be
seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent,
as such imminence can be perceived objectively and in good faith by the employer. There should,
in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic
recourse with serious consequences for the livelihood of the employees retired or otherwise laidoff. Because of the far-reaching nature of retrenchment, it must, thirdly, be reasonably necessary

and likely to effectively prevent the expected losses. Lastly, but certainly not the least important,
the alleged losses if already incurred, and the expected imminent losses sought to be forestalled,
must be proved by sufficient and convincing evidence. In the case at bar, there is a dearth of
sufficient and convincing documentary evidence to bolster the claim of the respondent company
that it is indeed suffering from business losses of such magnitude as to impel the retrenchment of
petitioner Basilio Balasbas. The records are bereft of evidence of any application for a reduction
of employees of written notice to the Department of Labor. If indeed there were, it would have
been logical for the respondent company to have attached copies of the same. Interestingly, the
records, however, show that immediately after the petitioner's termination from work, the
respondent company advertised and hired another employee for the position of inspector or
investigator, indubitable proof that the alleged retrenchment was merely a cover-up to ease out
herein petitioner Basilio Balasbas.

229.

Businessday vs. NLRC

FACTS: BSSI was engaged in the manufacture and sale of computer forms. Due to financial
reverses, its creditors, the Development Bank of the Philippines (DBP) and the Asset
Privatization Trust (APT), took possession of its assets, including a manufacturing plant in
Marilao, Bulacan. As a retrenchment measure, some plant employees, including the private
respondents, were laid off on May 16, 1988, after prior notice, and were paid separation pay
equivalent to one- half (1/2) month pay for every year of service. Upon receipt of their separation
pay, the private respondents signed individual releases and quitclaims in favor of BSSI. BSSI
retained some employees in an attempt to rehabilitate its business as a trading company.
However, barely two and a half months later, these remaining employees were likewise
discharged because the company decided to cease business operations altogether. Unlike the
private respondents, that batch of employees received separation pay equivalent to a full month's
salary for every year of service plus mid-year bonus. Protesting against the discrimination in the
payment of their separation benefits, the twenty seven (27) private respondents filed three (3)
separate complaints against the BSSI and Raul Locsin. These cases were later consolidated. The
Labor Arbiter adjudged in favor of the private respondents (employees) and the NLRC affirmed.
Hence, this petition.
ISSUE:
Whether or not, petitioner is obligated to pay same separation benefits to the first batch of
retrenched employees?
RULING:
YES. Undoubtedly, petitioners' right to terminate employees on account of retrenchment to
prevent losses or closure of business operations, is recognized by law, but it may not pay
separation benefits unequally for such discrimination breeds resentment and ill-will among those
who have been treated less generously than others.
The following observations of the Commission are relevant:
"The respondents cited financial business difficulties to justify their termination of the
complainants' employment on 16 May 1988. They were given one-half (1/2) month of their

salary for every year of service. Due to continuing losses, which is a sign that business, after the
termination did not improve, they closed operations on 31 July 1989, where they dismissed the
second batch of employees who were given one (1) month pay for every year they served. The
third batch of employees were terminated on 28 February 1989, who were likewise given one (1)
monthly pay for every year of service. The business climate obtaining on 16 May 1988 when the
complainants were terminated did not at all defer improvement-wise, with that of 31 July 1988
nor to 28 February 1989. The internal between the dates of termination was so close to each
other, so that, no improvement in business may be likely expected. In fact, the respondents
suffered continuous losses, hence, there is no difference in the circumstances of the business to
distinguish. Clearly, there was impermissible discrimination against the private respondents in
the payment of their separation benefits. The law requires an employer to extend equal treatment
to its employees. It may not, in the guise of exercising management prerogatives, grant greater
benefits to some and less to others. Management prerogatives are not absolute prerogatives but
are subject to legal limits, collective bargaining agreements, or general principles of fair play and
justice.

230.

National Federation of Labor vs. NLRC

FACTS:
Petitioners were employed by herein private respondents who owned a 354 hectare estate which
is called Patalon Coconut Estate located at Patalon, Zamboanga City. In 1988, when the
Congress passed the Comprehensive Agrarian Reform Law (CARL), the statute mandated the
acquisition of all the covered agricultural lands. The estate of private respondents were included
in the acquisition. The large portion was awarded to Patalon Estate Agrarian Reform Association
(PEARA) which the petitioners are members. As a result, the operation in the said estate was
shut down. Petitioners not having received any separation pay, filed a case before the Regional
Arbitration Branch (RAB) of Zamboanga which adjudged in their favor. The NLRC reversed.
Hence, this petition.
ISSUE:
Whether or not petitioners are entitled to separation pay the fact that the closure was not a
unilateral and voluntary act of the private respondents?
RULING:
NO. It is clear that Article 283 of the Labor Code applies in cases of closures of establishment
and reduction of personnel. The peculiar circumstances in the case at bar, however, involves
neither the closure of an establishment nor a reduction of personnel as contemplated under the
aforesaid article. When the Patalon Coconut Estate was closed because a large portion of the
estate was acquired by DAR pursuant to CARP, the ownership of that large portion of the estate
was precisely transferred to PEARA and ultimately to the petitioners as members thereof and as
agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not applicable to the case at
bench. Even assuming, arguendo, that the situation in this case were a closure of the business
establishment

called

Patalon

Coconut

Estate

of

private

respondents,

still

the

petitioners/employees are not entitled to separation pay. The closure contemplated under Article
283 of the Labor Code is a unilateral and voluntary act on the part of the employer to close the
business establishment as may be gleaned from the wording of the said legal provision that "The
employer may also terminate the employment of any employee due to. The use of the word

"may," in a statute, denotes that it is directory in nature and generally permissive only. The "plain
meaning rule" or verba legis in statutory construction is thus applicable in this case. Where the
words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning
and applied without attempted interpretation. In other words, Article 283 of the Labor Code does
not contemplate a situation where the closure of the business establishment is forced upon the
employer and ultimately for the benefit of the employees.

231.

Cebu Royal Plant vs. Deputy

FACTS:
The original findings were contained in a one-page order reciting simply that "complainant was
employed on a probationary period of employment for six (6) months. After said period, he
underwent medical examination for qualification as regular employee but the results showed that
he is suffering from PTB minimal. Consequently, he was informed of the termination of his
employment by respondent." The order then concluded that the termination was "justified." The
Ministry of Labor held that the dismissal was valid but the Deputy Minister of Labor reversed
such findings. Hence, this appeal.
ISSUE:
Whether or not the dismissal of private respondent based on disease was valid?
RULING:
NO. The applicable rule on the ground for dismissal invoked against him is Section 8, Rule I,
Book VI, of the Rules and Regulations Implementing the Labor Code reading as follows: "Sec.
8. Disease as a ground for dismissal. Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his health or to the health of his coemployees, the employer shall not terminate his employment unless there is a certification by a
competent public health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical treatment. If the
disease or ailment can be cured within the period, the employer shall not terminate the employee
but shall ask the employee to take a leave. The employer shall reinstate such employee to his
former position immediately upon the restoration of his normal health." The record does not
contain the certification required by the above rule. The medical certificate offered by the
petitioner came from its own physician, who was not a "competent public health authority," and
merely stated the employee's disease, without more. We may surmise that if the required
certification was not presented, it was because the disease was not of such a nature or seriousness
that it could not be cured within a period of six months even with proper medical treatment. If so,
dismissal was unquestionably a severe and unlawful sanction.

232.

Manlimos vs. NLRC

FACTS:
Petitioners were employees of the former management of Mahoganu Plywood Corporation. They
had been hired as patchers, taper graders, and receivers dryers. On September 1, 1991, a new
management assumed the operations of the company. However, the employees continued
working for the company. They were also considered terminated with their conformity and they
signed quitclaims. Subsequently on December 27, 1991, the company sent notice to petitioners
that they are hiring and that the employees to be hired will be under probation. Petitioners who
has been re hired were again terminated their services for alleged inclusion of unrepaired
veneers and untaped corestock. Petitioners then file a case of illegal dismissal as they are already
regular employees of the company. The L.A. adjudged in favor of the petitioners but the NLRC
reversed. Hence, this petition.
ISSUE:
Whether or not, transfer of ownership notwithstanding the gap, makes the company free of any
liability from the employees?
RULING:
YES. We disagree with the Labor Arbiter's reliance on the case of Mobil Employees Association
vs. National Labor Relations Commission. The NLRC was correct in holding that Mobil was not
applicable because Mobil involved the termination of employment under Article 283 (before
Article 284) of the Labor Code and not termination of employment as a result of the change of
corporate ownership, as in the case of private respondent Super Mahogany Plywood Corporation.
In Mobil, the original employer, Mobil Oil Philippines, Inc., completely withdrew from business
and was even dissolved. In the case at bar, there was only a change of ownership of Super
Mahogany Plywood Corporation which resulted in a change of ownership. In short, the
corporation itself, as a distinct and separate juridical entity, continues to exist. The issue of
whether there was a closing or cessation of business operations which could have operated as a
just cause for the termination of employment was not material. The change in ownership of the
management was done bona fide and the petitioners did not for any moment before the filing of

their complaints raise any doubt on the motive for the change. On the contrary, upon being
informed thereof and of their eventual termination from employment, they freely and voluntarily
accepted their separation pay and other benefits and individually executed the Release or Waiver
which they acknowledged before no less than a hearing officer of the DOLE.
A change of ownership in a business concern is not proscribed by law. In Central Azaucarera del
Danao vs. Court of Appeals, this court stated: There can be no controversy for it is a principle
well-recognized, that it is within the employer's legitimate sphere of management control of the
business to adopt economic policies or make some changes or adjustments in their organization
or operations that would insure profit to itself or protect the investment of its stockholders. As in
the exercise of such management prerogative, the employer may merge or consolidate its
business with another, or sell or dispose all or substantially all of its assets and properties which
may bring about the dismissal or termination of its employees in the process. Such dismissal or
termination should not however be interpreted in such a manner as to permit the employer to
escape payment of termination pay. For such a situation is not envisioned in the law. It strikes at
the very concept of social justice. In a number of cases on this point, the rule has been laid down
that the sale or disposition must be motivated by good faith as an element of exemption from
liability. Indeed, an innocent transferee of a business establishment has no liability to the
employees of the transferor to continue employing them. Nor is the transferee liable for past
unfair labor practices of the previous owner, except, when the liability therefor is assumed by the
new employer under the contract of sale, or when liability arises because of the new owner's
participation in thwarting or defeating the rights of the employees. Where such transfer of
ownership is in good faith, the transferee is under no legal duty to absorb the transferor's
employees as there is no law compelling such absorption. The most that the transferee may do,
for reasons of public policy and social justice, is to give preference to the qualified separated
employees in the filling of vacancies in the facilities of the purchaser. Since the petitioners were
effectively separated from work due to a bona fide change of ownership and they were
accordingly paid their separation pay, which they freely and voluntarily accepted, the private
respondent corporation was under no obligation to employ them; it may, however, give them
preference in the hiring. The private respondent in fact hired, but on probationary basis, all the
petitioners, except Rosario Cuarto. The non-hiring of Cuarto was legally permissible. The hiring
of employees on a probationary basis is an exclusive management prerogative. The employer has

the right or privilege to choose who will be hired and who will be denied employment. It is
within the exercise of this right that the employers may set or fix a probationary period within
which it may test and observe the employee's conduct before hiring him permanently. It is
settled that while probationary employees do not enjoy permanent status, they are accorded the
constitutional protection of security of tenure. They may only be terminated for just cause or
when they fail to qualify as regular employees in accordance with reasonable standards made
known to them by the employer at the time of their engagement. This constitutional protection,
however, ends upon the expiration of the period provided for in their probationary contract of
employment. Thereafter, the parties are free to renew the contract or not.

233.

Sicangco vs. NLRC

FACTS:
In 1989, Sicangco was assigned to the legal staff of the mother company, First Pacific Metro
Corporation, under the supervision of its general counsel. In a letter dated June 2, 1989, the
company informed him that his position would be declared redundant effective July 2, 1989. He
was assured of benefits due him under the law. Sicangco did not protest and instead successfully
negotiated for higher separation benefits. The separation pay was only P93,436.10, but the
company agreed to write off his outstanding car loan of P162,000.00 as part of his separation
package. On July 18, 1989, Sicangco was paid an extra amount of P13,291.57, representing his
pay adjustment and proportionate bonuses for the period covering January to June 1989. All in
all, the separation benefits awarded to him amounted to P268,727.67. In accordance with his
agreement with the company and before the declared redundancy of his position took effect,
Sicangco tendered his resignation. On June 15, 1989, upon receipt of his separation benefits,
Sicangco signed a document entitled "Release, Waiver and Quitclaim." This document was
prepared by him and the other lawyers of the company. Before he signed it, its contents were
explained to him by another company lawyer, Atty. Elmer Nitura. Sicangco filed a case of illegal
dismissal which was affirmed by the L.A. but reversed by the NLRC. Hence, this petition.
ISSUE:
Whether or not Sicangcos services were terminated on the ground of redundancy?
RULING:
NO. Contrary to Sicangco's allegations, there is no indication in the record that he was coerced
into resigning from the company. It should be noted that the petitioner is a lawyer and specializes
in labor relations at that. There is every reason to suppose that he knows his basic rights as an
employee and, no less importantly, knows how to protect these rights as a lawyer. In fact, he used
this knowledge to his advantage when he negotiated successfully for higher separation benefits.
The petitioner was not illegally dismissed. It would appear that when he was informed that his
position had become redundant, he decided to resign and was allowed to do so before his
redundancy took effect. We have said that there is nothing illegal with the practice of allowing an

employee to resign instead of being separated for just cause, so as not to smear his employment
record.

234.

Santos vs. NLRC

FACTS:
Petitioner is a married man and is employed as a teacher by private respondent Hagonoy Institute
Inc. from June 1980 until his dismissal on June 1, 1991. Petitioner and Mrs. Arlene T. Martin,
also a teacher employed at Hagonoy Institute, fell in love and had an affair. Private respondent,
upon hearing of circulating rumors among faculty and school officials, of the illicit relationship
of petitioner and Mrs. Martin, advised the latter to take a leave of absence, Mrs. Martin ignored
such notice and was henceforth prevented from entering the campus of private respondent,
effectively dismissing her from work. Private respondent set-up a committee to investigate the
veracity of the rumors, after two weeks of investigation, the illicit relationship of petitioner and
Mrs. Martin was confirmed. Petitioner was charged administratively for immorality and asked to
present his side, on May 1991, petitioner was dismissed effective June 1, 1991. Petitioner filed a
complaint for illegal dismissal with the NLRC Regional Arbitration Branch No. III, San
Fernando, Pampanga and petitioners complaint was dismissed but awarded financial assistance
of PHP 13,750. On appeal, the NLRC affirmed the decision of the labor arbiter.
ISSUE:
Can the illicit relationship between the petitioner and Mrs. Martin be considered immoral as to
constitute a cause for termination under Art. 282 of the Labor Code?
RULING:
Court reiterates that to constitute a valid dismissal, two requisites must concur: (a) it must be for
any offense expressed in Art. 282 of the Labor Code, (b) employee must be accorded due
process, that is, the opportunity to be heard and to defend oneself. Art. 282 of the Labor Code
lists the following just causes to terminate an employee: (1) serious misconduct or willful
disobedience by employee of lawful orders of the employer or his representative in connection
with his work, (2) gross and habitual neglect by employee of his duties; (3) fraud or willful
breach, (4) commission of crime or offense of the person of his employer or his family or his
authorized representative, (5) other courses analogous to the foregoing. In addition, Section 94,
Manual of Regulations for Private Schools, paragraph E, lists disgraceful or immoral conduct

as ground for termination. Furthermore, the Court ruled that Art. 68 of the Family Code enjoins
the husband and wife to live together, observe mutual love, respect and fidelity, and render
mutual help and support. As a teacher, one stands in loco parentis to his students and must
therefore act with a high standard of integrity and honesty. It is settled therefore that a teacher
who engages in extra marital affairs, when both are married, amounts to gross immorality
justifying termination from employment. Petition is dismissed, NLRC decision is affirmed with
modification, deleting financial assistance.

235.

Chua- Qua vs Clave

FACTS:
This would have been just another illegal dismissal case were it not for the controversial and
unique situation that the marriage of herein petitioner, then a classroom teacher, to her student
who was fourteen (14) years her junior, was considered by the school authorities as sufficient
basis for terminating her services. The case was about an affair and marriage of 30 years old
teacher Evelyn Chua in Tay Tung High School in Bacolod City to her 16 years old student. The
petitioner teacher was suspended without pay and was terminated of his employment for Abusive
and Unethical Conduct Unbecoming of a Dignified School Teacher which was filed by a public
respondent as a clearance for termination.
ISSUE:
Whether or not there is substantial evidence to prove that the antecedent facts which culminated
in the marriage between petitioner and her student constitute immorality and or grave
misconduct?
RULING:
The Supreme Court declared the dismissal illegal saying: Private respondent utterly failed to
show that petitioner took advantage of her position to court her student. If the two eventually fell
in love, despite the disparity in their ages and academic levels, this only lends substance to the
truism that the heart has reasons of its own which reason does not know. But, definitely, yielding
to this gentle and universal emotion is not to be so casually equated with immorality. The
deviation of the circumstances of their marriage from the usual societal pattern cannot be
considered as a defiance of contemporary social mores. Finding that there is no substantial
evidence of the imputed immoral acts, it follows that the alleged violation of Code of Ethics
governing school teachers would have no basis. Private respondent utterly failed to show that
petitioner took advantage of her position to court her student. The deviation of the circumstances
of their marriage from the usual societal pattern cannot be considered as a defiance of
contemporary social mores.

236.

JRS BUSINESS vs NLRC

FACTS:
In September 1988, Fernando T. dela Cerna, petitioner's Internal Auditor, conducted an audit of
its Davao office. The audit revealed a shortage totaling P145,564.33 arising from undeposited
cash sales and unexplained cash shortages from charge sales. Milady J. Munoz, petitioner's
Treasurer, called private respondent's attention to the cash shortage. He was directed to explain in
writing within 72 hours from receipt of the notice why he should not be relieved from his
position. On October 2, 1988, the employees of petitioner: namely, Elizabeth Paulino, the office
cashier, her husband, Jaime, and Darwin Solis, signed statements which detailed the irregularities
committed by private respondent and his wife. On October 12, 1988, private respondent was
directed by Ernesto A. Gonzales to go on leave without pay effective October 15, 1988 until
further notice, in view of the on-going investigation. private respondent and his wife received
separate demand letters for the immediate restitution of the amount of P145,564.33. On February
6, 1988, considering his indefinite forced leave without pay as a constructive dismissal, private
respondent filed a complaint against petitioner with the Regional Arbitration Branch No. IX of
Davao City for illegal dismissal, reinstatement with back wages, vacation and sick leave pay,
moral and exemplary damages and attorney's fees.
Issue:
WON Petitioner violated the maximum 30 days preventive suspension
Ruling:
Yes. Sections 3 and 4, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code,
Termination of Employment, provide: Section 3. Preventive suspension. The employer may
place
the worker concerned under preventive suspension if his continued employment poses a serious
and imminent threat to the life or property of the employer or of his co-workers. Section 4.
Period of suspension. No preventive suspension shall last longer than 30 days. The employer
shall thereafter

reinstate the worker in his former or in a substantially equivalent position or the employer may
extend the period of suspension provided that during the period of extension, he pays the wages
and other benefits due to the worker. In such case, the worker shall not be bound to reimburse
the amount.
Petitioner having violated the maximum 30-day preventive suspension under Section 4, Rule
XIV, Book V of the Omnibus Rules Implementing the Labor Code, a sanction is imposed on him
in consonance with our ruling in Great Pacific Life Assurance Corporation vs. National Labor
Relations Commission, 187 SCRA 694 (1990). Petitioner must indemnify private respondent in
the amount of One Thousand Pesos (P1,000.00).

237.

Gaco vs NLRC

Facts:
Petitioner was hired by private respondent on April 17, 1974 for the position of Picker. In 1975,
after a year of service, she was promoted to the position of Production Recorder. She held this
position for a period of fourteen (14) years until the end of private respondent's working season
in 1989. In April, 1990, when petitioner reported for work at the start of the working season for
that year, she found out that her position was already occupied by another employee and that she
was being demoted to the position of Picker. Petitioner believed that, having been with private
respondent for fifteen (15) years without any derogatory record, her demotion was not justified.
Considering it as constructive dismissal, petitioner thus refused to report for work and filed a
complaint before the Labor Arbiter for payment of separation pay.
Issue:
Whether or not the demotion can be considered as a constructive dismissal?
Ruling:
Constructive dismissal as a quitting because continued employment is rendered impossible,
unreasonable or unlikely; as, an offer involving a demotion in rank and a diminution in pay. As
we have stated previously, both the Labor Arbiter and respondent NLRC arrived at a factual
finding that petitioner was demoted to her former position without any justifiable cause.
However, they differed in the conclusions they derived therefrom: the Labor Arbiter considered
petitioner's demotion as constructive dismissal whereas respondent NLRC held that constructive
dismissal could not deduced from the circumstances. On the basis of the foregoing jurisprudence
defining the term constructive dismissal, we sustain the ruling of the Labor Arbiter and his
rationalization thereon. Consequently, petitioner is entitled to her full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the time her
compensation was withheld from her up to the time of her actual reinstatement. Unjustified
demotion, in effect, constitutes constructive dismissal, which is illegal, and which would entitle
complainant to reinstatement and payment of backwages.

238.

Ledesma vs NLRC

Facts:
Private respondent was employed as a security guard by petitioner company in 1984 at its
Hacienda Teresa. On February 9, 1992, private respondent led a walkout after petitioner
company insisted that the workers at Hacienda Balaring, one of the haciendas also owned by it,
be allowed to vote in the referendum. On February 10, 1992, private respondent was prevented
from reporting for work by the hacienda administrator, Ceferino Nunez, and was told to wait for
petitioner Arturo Ledesma. On February 18, 1992, petitioner Ledesma told private respondent
that he did not want him to work in the hacienda anymore as private respondents loyalty was
with the workers and not with the petitioner company. On February 27, 1992, private respondent
filed with the Regional Arbitration Branch No. VI, Bacolod City, a complaint for illegal
dismissal, underpayment of wages and non-payment of service incentive leave and night shift
differential against petitioners.
Issue:
WON there is a constructive dismissal?
Ruling:
There is a constructive dismissal when the reassignment of an employee involves a demotion in
rank or a diminution in pay. In the case at bench, the demotion of private respondent is
tantamount to a constructive dismissal. One does not need to stretch his imagination to
distinguish the work of a security guard and that of a common agricultural laborer in a sugar
plantation. Likewise, there was a diminution of salary, for a security guard is paid on a monthly
basis while a laborer in the sugar plantation is paid either on a daily or piece work basis.
Laborers do not work year round but only when needed and on off-season months, they are not
required to work all.

239.

Phil-Am Life vs. Gramaje

Facts:
Petitioner was employed on October 28, 1997 by private respondent as Assistant Vice President
and Head of the Pensions Department and in concurrent capacity as Trust Officer of Philam
Savings Bank, a Philam Life subsidiary. She was to be paid P750,000.00 per annum and is
entitled to the benefits given by private respondent to its employees. Working as Assistant Vice
President of Pensions Department of Philamlife, petitioner was offered an additional position by
respondent Cuisia, which was then resolved and approved by Philam Savings Banks Board of
Directors, for the position of Head of Trust Banking Division or AVP-Trust Officer on a
concurrent capacity and under a separate compensation. On November 18, 1998, however,
private respondent through Centeno and Sotelo, offered her P250,000.00 for her to vacate her
position by December 1998. Petitioner declined the offer considering that there was no valid
reason for her to leave. Private respondents Centeno and Sotelo admonished her that her filing of
suit would prompt respondent Cuisia to blacklist her in companies where he holds directorships
and advised her that Philamlife is big and can stand the long ordeal of justice system, whereas
she may not withstand the phase of the trial. on December 23, 1998, petitioner filed the instant
case for illegal or constructive dismissal against herein private respondents.
Issue:
WON respondent was constructively dismissed?
Ruling:
No. The Labor Arbiter, in his Decision, held in part that complainants supposed transfer to the
Legal Department cannot be considered to be unbearable, nor inconvenient, nor prejudicial to the
employee, as it did not even involve a demotion in rank or diminution of her salaries, benefits
and other privileges. Complainant held the position AVP-Pensions. Her supposed transfer to the
Legal Department, still with the rank of AVP, and most importantly, with the same salaries and
benefits, cannot, by any stretch of imagination, be considered as amounting to a constructive
dismissal.

We do not agree in this finding of the Labor Arbiter. It may be true that in the transfer of
respondent from the Pensions Department to the Legal Department, there was no demotion in
rank nor diminution of the salaries, benefits and privileges. But this is not the only standard that
must be satisfied in order to substantiate the transfer. In the pursuit of its legitimate business
interests, management has the prerogative to transfer or assign employees from one office or area
of operation to another provided there is no demotion in rank or diminution of salary, benefits,
and other privileges; and the action is not motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause. Discrimination is the
unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248(e) of
the Labor Code. It is the failure to treat all persons equally when no reasonable distinction can be
found between those favored and those not favored.

240. Lucky Textile Mills vs NLRC


Facts:
Nestor J. Nolasco was employed for seventeen (17) years as property custodian of Eastern
Textile Mills. In 1982, EASTEX went on "temporary shutdown" and in the process, laid off some
of its employees. Shortly thereafter, the company suffered reverses and could not pay its
indebtedness of P5 million to its banks. In mid-February 1983, Nolasco was ordered to stop
working, the reason given being "temporary shutdown." On March 20, 1984, the Securities and
Exchange Commission issued SEC Registration No. 119736 to the new corporation named
Lucky Textile Mills, Inc. On April 26, 1984, the same firm was registered with the Bureau of
Domestic Trade. As of June 30, 1984, EASTEX completely ceased operations. Beginning July 1,
1984, LUCKY agreed to "operate the former business" utilizing the assets of EASTEX
foreclosed by DBP. At the resumption of operations, Nolasco was no hired by Lucky Nolasco
filed a case in the Department of Labor and Employment against both corporations (Eastex and
Lucky), alleging that since 1984, normal operations had been resumed but he was not given any
notice to report back for duty, which amounted to his termination without cause.
Issue:
WON Nolasco is illegally dismiss?
Ruling:
It is settled that when the bonafide suspension of operations of a business or undertaking exceeds
six (6) months, then the worker's employment shall be deemed terminated. Indeed, Nolasco's
"floating status" could not last for an unreasonable period. As it was established that he did not
abandon his work, his dismissal without cause, without prior notice and hearing, was illegal.

241.

Maya Farms Employees Org. vs. NLRC

Facts:
On January 17, 1992, the two companies sent letters to sixty-six (66) employees informing them
that their respective positions had been declared redundant. The notices likewise stated that their
services would be terminated effective thirty (30) days from receipt thereof. Separation benefits,
including the conversion of all earned leave credits and other benefits due under existing CBAs
were thereafter paid to those affected. On March 4, 1992, the parties were called to a hearing to
identify the issues involved in the case. Thereafter, they were ordered to submit their respective
position papers. In their position paper, petitioners averred that in the dismissal of sixty-six (66)
union officers and members on the ground of redundancy, private respondents circumvented the
provisions in their CBA, more particularly, Section 2, Article III thereof. Said provision reads:
Sec. 2. LIFO RULE. In all cases of lay-off or retrenchment resulting in termination of
employment in the line of work, the Last-In-First-Out (LIFO) Rule must always be strictly
observed. Invoking the workers' constitutional right to security of tenure, petitioners prayed for
the reinstatement of the sixty-six (66) employees and the payment of attorney's fees as they were
constrained to hire the services of counsel in order to protect the workers' right
Issue:
WON the private respondent violated the LIFO rule under Section 2, Article III of its CBA
Ruling:
No The NLRC correctly held that private respondents did not violate the LIFO rule under
Section 2, Article III of the CBA. It is not disputed that the LIFO rule applies to termination of
employment in the line of work. Verily, what is contemplated in the LIFO rule is that when there
are two or more employees occupying the same position in the company affected by the
retrenchment program, the last one employed will necessarily be the first to go. Moreover, the
reason why there was no violation of the LIFO rule was amply explained by public respondent.
The LIFO rule under the CBA is explicit. It is ordained that in cases of retrenchment resulting in
termination of employment in line of work, the employee who was employed on the latest date
must be the first one to go. The provision speaks of termination in the line of work. This

contemplates a situation where employees occupying the same position in the company are to be
affected by the retrenchment program. Since there ought to be a reduction in the number of
personnel in such positions, the length of service of each employees is the determining factor,
such that the employee who has a longer period of employment will be retained. In the case
under consideration, specifically with respect to Maya Farms, several positions were affected by
the special involuntary redundancy program. All the other packers employed after June 2, 1975
were separated from the service.

242.

JOEL MENDOZA VS. NLRC

FACTS:
Mendoza, a regular employee of San Miguel Corporation submitted thru its Sales Supervisor an
accident report involving Late report of short remittances and the overturning of a truck. Upon
investigation, it was found that there are inconsistencies in the time of the reporting of the
incident. Upon inquiry, Mendoza confessed that before they collect their remittances, they
watched first a PBA game and had a drink after. In a memorandum dated July 5, 1988, Mendoza
was relieved by SMC as tetra salesman of the Baguio Sales Office. On August 15, 1988, he was
served a letter of termination due to gross negligence in the performance of duties. Hence, filing
of complaint.

ISSUE:
W/N the totality of infraction is sufficient to terminate Mendoza? YES.

RULING:
The rules laid down by the company for the investigation of an employee before his termination
need not be observed to the letter. It is enough that there was due notice and a hearing before a
judgment or resolution thereof is made. Due process contemplates freedom from arbitrariness.
What it requires is fairness or justice; the substance' rather than the form being paramount. When
a party has been given the opportunity to be heard, then he was afforded due process.
Petitioner also assails the severity of the penalty imposed upon him alleging that he should have
merited a suspension only considering his past performance. Unfortunately, petitioner does not
appear to be a first offender. Aside from the infractions he was found to have committed, it

appears that petitioner falsified the truth when he made a false report about the incident to private
respondent SMC to cover up for his misdeeds. Moreover on previous occasions, petitioner
committed violations of company rules and regulations concerning pricing as a salesman of the
company in a way that is detrimental to his employer. On one occasion, he failed to remit
collections, so that in 1986, he was suspended for thirty days. Thus, the totality of the infractions
that petitioner has committed justifies the penalty of dismissal.

243.

JUAN P. VILLENO VS. NLRC

FACTS:
Villeno was employed as electrician in one of the vessels of Sulpicio Lines. On December 1988,
M/V Sulpicio Container XI after leaving Cebu was forced to return due to the death of the purser
on board. The crew members were instructed not to leave the vessel as it would pursue its
voyage immediately after turning over the body to the proper authorities. Villeno on the other
hand, without seeking permission, left the vessel purportedly to settle a marital problem. Before
leaving he disconnected the ship's steering line cable so that the vessel could not leave port
without him. The consequence of his action was that the departure of the vessel was further
delayed. He was investigated the following day and found guilty of intentionally sabotaging the
operation of the vessel, a serious misconduct, compounded by willful disobedience justifying the
penalty of dismissal. Hence, complaint for illegal dismissal.
Villeno stressed that the company set to naught his twenty-seven (27) years of service,
completely ignoring the fact that it was his first offense. He claims that the delay he caused to the
vessel was almost nil considering that it took him only thirty (30) minutes to return as compared
to the delay that the voyage had already incurred.

ISSUE:
W/N Villanos termination was justified? YES.

RULING:
Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work is a just cause for his termination. The misconduct

must be related to the performance of his duties and of such grave character rendering him unfit
to continue working for the employer.
As regards willful disobedience, two (2) requisites must concur: (1) the employee's assailed
conduct must have been willful or intentional, the willfulness being characterized by a "wrongful
and perverse attitude;" and, (2) the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had been engaged to discharge.
Granted that his act was without malice or willful intent to cause damage, this does not excuse
him for putting his personal interests over that of his employers in the sense that he unnecessarily
disrupted and prejudiced the normal operations of respondent to attend to personal matters. No
amount of good faith or lack of intention to cause damage can diminish the degree of
responsibility of complainant for his actuations. The offenses cannot be excused upon a plea of
their being "first offenses," or have not resulted in prejudice to the company in any way. That no
employer may rationally be expected to continue in employment a person whose lack of morals,
respect and loyalty to his employer, regard for his employer's rules, and appreciation of the
dignity and responsibility of his office, has so plainly and completely been bared.
Where the totality of the evidence was sufficient to warrant the dismissal of the employees the
law warrants their dismissal without making any distinction between a first offender and a
habitual delinquent. Under the law, respondent Minister is duly mandated to equally protect and
respect not only the labor or workers' side but also the management and/or employers' side. The
law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of
the employer.
Considerations of first offense and length of service are overshadowed by the seriousness of the
offense. As to whether an offense is minor or serious will have to be determined according to the
peculiar facts of each case. And to a shipping company engaged in the transportation of
passengers and cargoes any delay of its vessels may greatly affect its business and reputation and
expose the company to unmitigated lawsuits for breach of contract and damages.

244.

MANILA ELECTRIC COMPANY VS. NLRC

FACTS:
Cortez was employed by Meralco as lineman driver. Due to his numerous infractions, Cortez was
administratively investigated for violation of Meralco's Code on Employee Discipline,
particularly his repeated and unabated absence from work without prior notice from his
superiors. After such administrative investigation was conducted by petitioner, it concluded that
private respondent was found to have grossly neglected his duties by not attending to his work as
lineman from Aug. 2, 1989 to September 19, 1989 without notice to his superiors.
In a letter dated January 19, 1990, private respondent was notified of the investigation result and
consequent termination of his services effective January 19, 1990. Hence, complaint for illegal
dismissal.

ISSUE:
W/N Cortezs dismissal from service was illegal? NO.

RULING:
Article 283 of the Labor Code enumerates the just causes for termination. Among such causes
are the following:
a

Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work.

b) Gross and habitual neglect by the employee of his duties.

xxx xxx xxx


This cause includes gross inefficiency, negligence and carelessness. Such just causes is derived
from the right of the employer to select and engage his employees. For indeed, regulation of
manpower by the company clearly falls within the ambit of management prerogative.
Habitual absenteeism of an errant employee is not concordant with the public service that
petitioner has to assiduously provide. To have delayed power failure in a certain district simply
because a MERALCO employee assigned to such area was absent and cannot immediately be
replaced is a breach of public service of the highest order. A deep sense of duty would, therefore,
command that private respondent should, at the very least, limit his absence for justifiable
reasons.
The penchant of private respondent to continually incur unauthorized absences and/or a violation
of petitioner's sick leave policy finally rendered his dismissal as imminently proper. Private
respondent cannot expect compassion from this Court by totally disregarding his numerous
previous infractions and take into consideration only the period covering August 2, 1989 to
September 19, 1989. As ruled by this Court in the cases of Mendoza v.National Labor Relations
Commission, and National Service Corporation v. Leogardo, Jr., it is the totality, not the
compartmentalization, of such company infractions that private respondent had consistently
committed which justified his penalty of dismissal.
In the case at bar, it was established that complainant violated respondent's Code on Employee
Discipline, not only once, but ten (10) times. On the first occasion, complainant was simply
warned. On the second time, he was suspended for 5 days. With the hope of reforming the
complainant, respondent generously imposed penalties of suspension for his repeated
unauthorized absences and violations of sick leave policy which constitute violations of the
Code. On the ninth time, complainant was already warned that the penalty of dismissal will be
imposed for similar or equally serious violation.
In total disregard of respondent's warning, complainant, for the tenth time did not report for work
without prior authority from respondent; hence, unauthorized. Worse, in total disregard of his
duties as lineman, he did not report for work from August 1, 1989 to September 19, 1989; thus,

seriously affected respondent's operations as a public utility. This constitutes a violation of


respondent's Code and gross neglect of duty and serious misconduct under Article 283 of the
labor Code.
Habitual absenteeism should not and cannot be tolerated by petitioner herein which is a public
utility company engaged in the business of distributing and selling electric energy within its
franchise areas and that the maintenance of Meralco's distribution facilities (electric lines) by
responding to customer's complaints of power failure, interruptions, line trippings and other line
troubles is of paramount importance to the consuming public.
Hence, an employee's habitual absenteeism without leave, which violated company rules and
regulations is sufficient cause to justify termination from service.

245.

RENE P. VALIAO VS. CA

FACTS:
Valiao an employee of West Negros College (WNC) from 1990 to 1993 was terminated for
habitual tardiness/absenteeism. He was given many chances to explain his side until

the

investigation committee recommended his termination.


On 1995, petitioner filed a Complaint against WNC for illegal suspension, illegal dismissal,
backwages, salary differential for salary increases and other benefits granted after his dismissal
as well as for moral and exemplary damages and attorneys fees. In its Answer, WNC alleged
that petitioner was dismissed on charges of serious misconduct, and gross and willful neglect of
duty. WNC said his dismissal was effected after due notice and prior hearing.
Petitioner claims that his outright dismissal from employment was not valid and too harsh and
that he was not dismissed from employment because of tardiness or absences but because he was
among those apprehended in a raid.
ISSUE:
W/N Valiao was validly dismissed from employment on the ground of serious misconduct and
gross habitual neglect of duties, including habitual tardiness and absenteeism? YES.
RULING:
Petitioners repeated acts of absences without leave and his frequent tardiness reflect his
indifferent attitude to and lack of motivation in his work. More importantly, his repeated and
habitual infractions, committed despite several warnings, constitute gross misconduct
unexpected from an employee of petitioners stature.
However, petitioner claims that he was dismissed not for his tardiness or absences but for his
arrest as a suspected drug user. His claim, however, is merely speculative.
The decisions of the Labor Arbiter, the NLRC, and the Court of Appeals are indubitable. They
show that indeed petitioner had incurred numerous and repeated absences without any leave.
Moreover, he was not punctual in reporting for work. These unexplained absences and tardiness
were reflected on the summary reports submitted by WNC before the labor arbiter, but petitioner
failed to controvert said reports. Second, contrary to petitioners assertion, the NLRC did not

base its conclusions on the fact of the arrest of petitioner for violation of Rep. Act No. 6425 but
on the totality of the number of infractions incurred by the petitioner during the period of his
employment in different positions he occupied at WNC.
Indeed, even without the arrest incident, WNC had more than enough basis for terminating
petitioner from employment. It bears stressing that petitioners absences and tardiness were not
isolated incidents but manifested a pattern of habituality. In one case, we held that where the
records clearly show that the employee has not only been charged with the offense of
highgrading but also has been warned 21 times for absences without official leave, these repeated
acts of misconduct and willful breach of trust by an employee justify his dismissal and forfeiture
of his right to security of tenure. The totality of infractions or the number of violations
committed during the period of employment shall be considered in determining the penalty to be
imposed upon an erring employee. The offenses committed by him should not be taken singly
and separately but in their totality. Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character, conduct, and ability separate
and independent of each other.

246.

CENTURY TEXTILE MILLS, INC. VS. NLRC

FACTS:
Respondent after having been preventively suspended for 1 month, was terminated on the ground
that he plotted a crime against two of his supervisors. According to a witness, Torrena was seen
to be mixing some substance with the drinking water container where the two supervisors
regularly drank. Upon reporting the incident, the contents of the pitcher were subsequently
brought to and analyzed at the Camp Crame Laboratory who found therein presence of a toxic
chemical (formaldehyde). Upon investigation, Torrena confessed that Calangi instructed him and
he agreed. They did this to avenge their previous suspension from work which was instigated by
the 2 supervisors. After which, a criminal charge was instituted against them. Hence, filing of the
complaint for illegal dismissal.
Labor Arbiter - dismissed the complaint. NLRC reversed the decision.
ISSUE:
1) W/N there is illegal dismissal? YES.
2) Considering that respondent was illegally dismissed, w/n reinstatement is proper? NO.
RULING:
Respondent was denied his right to due process in that, prior to his preventive suspension and the
termination of his services, he had not been given the opportunity either to affirm or refute the
charges proferred against him by the Corporation.
The procedure that an employer wishing to terminate the services of an employee must follow, is
spelled out in the Labor Code:
"ART. 278.
xxx

Miscellaneous provisions.
xxx

xxx

However, the employer shall furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his representative if
he so desires in accordance with company rules and regulations promulgated pursuant to
guidelines set by the [Department] of Labor and Employment. Any decision taken by the

employer shall be without prejudice to the right of the worker to contest the validity and legality
of his dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or authorized cause shall
rest on the employer. The [Department] may suspend the effects of the termination pending
resolution of the case in the event of a prima facie finding by the ministry that the termination
may cause a serious labor dispute or is in implementation of a mass lay-off.
xxx

xxx

xxx" (Emphasis supplied)

Rule XIV, Book V of the Rules and Regulations Implementing the Labor Code reiterates the
above requirements:
xxx

xxx

xxx

Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a
written notice stating the particular acts or omission constituting the grounds for his dismissal. In
case of abandonment of work, the notice shall be served at the worker's last known address.
xxx

xxx

xxx

Sec. 5. Answer and hearing. The worker may answer the allegations stated against him in the
notice of dismissal within a reasonable period from receipt of such notice. 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.
SEC. 6.

Decision to dismiss. The employer shall immediately notify a worker in

writing of a decision to dismiss him stating clearly the reasons therefor.


xxx

xxx

xxx" (Emphasis supplied)

The twin requirements of notice and hearing constitute essential elements of due process in cases
of employee dismissal; the requirement of notice is intended to inform the employee concerned
of the employer's intent to dismiss and the reason for the proposed dismissal; upon the other
hand, the requirement of hearing affords the employee an opportunity to answer his employer's
charges against him and accordingly to defend himself therefrom before dismissal is effected.
Neither of these two requirements can be dispensed with without running afoul of the due
process requirement of the 1987 Constitution.
Respondent was never advised of the issue. Neither was there any hearing held for him to
confront his accusers.

It is important to stress that the rights of an employee whose services are sought to be terminated
to be informed beforehand of his proposed dismissal (or suspension) as well as of the reasons
therefor, and to be afforded an adequate opportunity to defend himself from the charges levelled
against him, are rights personal to the employee.
Obtaining the consent of or consulting with the labor union CANNOT substitute for actual
observance of those rights of an employee. The employee can waive those rights, if he so
chooses, but the union cannot waive them for him. That the private respondent simply "kept
silent" all the while, is not adequate to show an effective waiver of his rights. Notice and
opportunity to be heard must be accorded by an employer even though the employee does not
affirmatively demand them.
It is also worthy to note that during the police investigation, every one involved save the
respondent was interrogated. Even the testimony of Torrena should not be used unilaterally
against him. It must be corroborated by other competent and convincing evidence.
The burden of showing the existence of a just cause for terminating the services of private
respondent Calangi lay on the petitioners.
Art 280. Security of Tenure. In case of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights AND to his backwages computed from the time his compensation was withheld
from him up to the time of his reinstatement.
Both REINSTATEMENT, without loss of seniority rights, AND payment of BACKWAGES are
the normal consequences of a finding that an employee has been illegally dismissed, and which
remedies together make the dismissed employee whole.
It matters not that private respondent had omitted in his complaint a claim for reinstatement
without loss of seniority rights for he is entitled to such relief as the facts alleged and proved
warrant.
In view of the finding of illegal dismissal in this case, petitioner Corporation is liable to private
respondent Calangi for payment of the latter's backwages for three (3) years, without
qualification and deduction. Considering the circumstances of this case, however, the Court
believes that reinstatement of private respondent to his former position or to any other
equivalent position in the company will not serve the best interests of the parties involved.

Petitioner Corporation should not be compelled to take back in its fold an employee who, at
least in the minds of his employers, poses a significant threat to the lives and safety of company
workers. Consequently, we hold that private respondent should be given his separation pay in
lieu of such reinstatement. The amount of separation pay shall be equal to private respondent's
one-half (1/2) month's salary for every year of service, to be computed from 13 December 1974
(date of first employment) until 10 June 1986 (three years after date of illegal dismissal).

247.

RAMON M. ABIERA VS. NLRC

FACTS: Abiera was the Manager of Republic Planters Bank (RPB), Roxas City at the time of
his dismissal on the ground of loss of confidence.
The head office of RPB conducted an internal audit. During the audit, Abiera applied for a
vacation leave for about 2 weeks to take a much needed rest. Upon his return, he received a
memorandum requiring him to respond to the result of the internal audit which suggested his
possible participation in the violation therein noted. In the meantime, he was not allowed to
resume his position but instead, RPB extended his leave of absence for 3 months more. After
submitting her response, she received another memorandum charging her of violations of
company policy and was required to attend a preliminary hearing to explain why she should not
be held liable for such violations. Although allowed to bring a counsel, he waived the same
believing that it would only be an informal hearing. Afterwards, she was notified of his
preventive suspension of 1 month without pay. She protested the same claiming that the
preliminary hearing was defective. Additional charges were filed against him and was again
directed to file his answer which he also refuted. Thereafter, RPB upon recommendation of the
Investigating Committee, he was sent a notice of termination. Hence, filing of complaint for
illegal dismissal. The Labor Arbiter decided the case in his favour but eventually was reversed by
the NLRC.
ISSUE:
W/N the twin requirements of due process was complied with?
RULING:
The twin requirements of notice and hearing constitute the essential elements of due process.
The first element of NOTICE was not violated because the petitioner was duly notified of the
Specification of Charges and invited to appear at the hearing scheduled for their investigation.
He was even advised to bring a lawyer with him if he so desired.
The requirement for HEARING was also observed. The petitioner cannot say he was deprived of
this right because the record shows he was duly afforded ample opportunity to defend himself
and introduce evidence on his behalf.

Sec. 5 of Rule XIV, of the Implementing Rules and Regulations of the Labor Code, provides:
SECTION 5. Answer and Hearing. The worker may answer the allegations stated against him
in the notice of dismissal within a reasonable period from receipt of such notice. 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.
A formal trial-type hearing is not at all times and in all instances essential to due process. It is
enough that the parties are given a fair and reasonable opportunity to explain their respective
sides of the controversy and to present supporting evidence on which a fair decision can be
based. This type of hearing is not even mandatory in cases of complaints lodged before the Labor
Arbiter.
In Zaldivar vs. Sandiganbayan, it was held that due process as a constitutional precept does not,
always and in all situations, require trial-type proceedings. The essence of due process is to be
found in the reasonable opportunity to be heard and to 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.
It is true that the right of confrontation is embraced in due process and that the petitioner did
demand the appearance of the internal auditors so he could cross-examine them. It is also true
that this demand was rejected by the Investigating Committee. Nevertheless, the petitioner saw
fit not to insist on this right and in fact subsequently waived it when he agreed at the said hearing
on the above-discussed procedure.
Regarding the ground for his dismissal, the charges were either expressly admitted by him or
established by preponderant evidence. His conduct caused the private respondent to lose
confidence in his judgment and even his integrity and provided the just cause for his dismissal as
branch manager.
Article 282(c) of the Labor Code plainly states:
ARTICLE 282.

Termination by employer. An employer may terminate an employment

for any of the following causes:

xxx
(c)

xxx

xxx

Fraud or willful breach by the employee of the trust reposed in him by his employer or

duly authorized representative


There was justified loss of confidence in him by the respondent bank. In view of the nature of its
business, the bank had every reason to demand that the conduct of the petitioner, who was
holding a sensitive and responsible position, be entirely above- board and fully deserving of its
trust.

248.

DEL MONTE PHILIPPINES, INC. VS. MARIANO SALDIVAR

FACTS:
The Associated Labor Union (ALU) is the exclusive bargaining agent of plantation workers of
petitioner Del Monte Philippines, Inc. (Del Monte) in Bukidnon. Del Monte and ALU entered
into a Collective Bargaining Agreement (CBA) with an effective term of five (5) years
Respondents, were charged by ALU for disloyalty to the union, particularly for encouraging
defections to a rival union, the National Federation of Labor (NFL). The matter was referred to a
body within the ALU organization, ominously named "Disloyalty Board."
The charge against respondents were supported by affidavits of their co-employees as recruits
who allegedly participated in the seminar of rival union. Their answer was one of denial. The
Board concluded their guilt and recommended their expulsion from the union and likewise, her
dismissal from Del Monte in accordance with the Union Security Clause in the existing CBA
between ALU and Del Monte. The corporation adopted the recommendation of the union and
terminated them. Hence, filing of complaint for illegal dismissal.
The Labor Arbiter ruled that they were illegally dismissed. The NLRC reversed the decision. On
appeal, CA ruled that only Timbal was illegally dismissed. Hence, filing of petition with respect
to the case of Timbal.
ISSUE:
1) W/N there was sufficient cause for the dismissal of a rank-and-file employee effectuated
through the enforcement of a closed-shop provision in the Collective Bargaining Agreement
(CBA) between the employer and the union? YES.,
2) W/N the dismissal followed the rule on due process? NO.
RULING:
#1) The CBA obviously adopts a closed-shop policy which mandates, as a condition of
employment, membership in the exclusive bargaining agent. A "closed-shop" may be defined as
an enterprise in which, by agreement between the employer and his employees or their
representatives, no person may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member

in good standing of a union entirely comprised of or of which the employees in interest are a
part. A CBA provision for a closed-shop is a valid form of union security and it is not a
restriction on the right or freedom of association guaranteed by the Constitution.
Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when authorized by law.
Admittedly, the enforcement of a closed-shop or union security provision in the CBA as a ground
for termination finds no extension within any of the provisions under Title I, Book Six of the
Labor Code. Yet jurisprudence has consistently recognized, thus: "It is State policy to promote
unionism to enable workers to negotiate with management on an even playing field and with
more persuasiveness than if they were to individually and separately bargain with the employer.
For this reason, the law has allowed stipulations for 'union shop' and 'closed shop' as means of
encouraging workers to join and support the union of their choice in the protection of their rights
and interests vis-a-vis the employer."
#2) It has been held that substantive due process must be observed as a means of ensuring that
security of tenure is not infringed.
The Agabon case observed that due process under the Labor Code comprised of two aspects:
substantive and procedural. The controversy in Agabon centered on whether the failure to
observe procedural due process, through the non-observance of the two-notice rule, should lead
to the invalidation of the dismissals. The Court ruled, that the failure by the employer to observe
procedural due process did not invalidate the dismissals for just cause of the petitioners therein.
However, Agabon did not do away with the requirement of substantive due process, which is
essentially the existence of just cause provided by law for a valid dismissal. Thus, Agabon cannot
be invoked to validate a dismissal wherein substantive due process, or the proper determination
of just cause, was not observed.
Substantive due process, as it applies to all forms of dismissals, encompasses the proper
presentation and appreciation of evidence to establish that cause under law exists for the
dismissal of an employee. This holds true even if the dismissal is predicated on particular causes
for dismissal established not by the Labor Code, but by the CBA. Further, in order that any
CBA-mandated dismissal may receive the warrant of the courts and labor tribunals, the causes

for dismissal as provided for in the CBA must satisfy to the evidentiary threshold of the NLRC
and the courts.
In the matter at bar, the Labor Arbiter the proximate trier of facts and the Court of Appeals
both duly appreciated that the testimony of Artajo against Timbal could not be given credence,
especially in proving Timbal's disloyalty to ALU. This is due to the prior animosity between the
two engendered by the pending civil complaint filed by Timbal's husband against Artajo.
Considering that the civil complaint was filed just six (6) days prior to the execution of Artajo's
affidavit against Timbal, it would be plainly injudicious to presume that Artajo possessed an
unbiased state of mind as she executed that affidavit. Such circumstance was considered by the
Labor Arbiter, and especially the Court of Appeals, as they rendered a favorable ruling to Timbal.
The dismissal for cause of employees must be justified by substantial evidence, as appreciated by
an impartial trier of facts.
AS TO THE ISSUE OF BACKWAGES
It is now provided in 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." Thus, where reinstatement is adjudged, the award of backwages and other
benefits continues beyond the date of the labor arbiter's decision ordering reinstatement and
extends up to the time said order of reinstatement is actually carried out.
The rule before that a legally dismissed employee may now be paid his back wages,
allowances, and other benefits for the entire period he was out of work subject to the rule
enunciated before the Mercury Drug Rule, which is that the employer may, however, deduct any
amount which the employee may have earned during the period of his illegal termination.
Computation of full back wages and presentation of proof as to income earned elsewhere by the
illegally dismissed employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule
8 of the 1990 New Rules of Procedure of the National Labor Relations Commission.

It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has
made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but
perhaps Republic Act No. 6715 was enacted precisely for the employer to realize that the
employee must be immediately restored to his former position, and to impress the idea that
immediate reinstatement is tantamount to a cost-saving measure in terms of overhead expense
plus incremental productivity to the company which lies in the hands of the employer.
The Labor Arbiter's ruling, which entitled Timbal to claim full backwages and other allowances,
"without qualifications and diminutions, computed from the time [she was] illegally dismisse[d]
up to the time [she] will be actually reinstated," conforms to Article 279 of the Labor Code.
Hence, the Court of Appeals was correct in affirming the Labor Arbiter insofar as Timbal was
concerned.

249.

KING OF KINGS TRANSPORT, INC. VS. SANTIAGO O. MAMAC

FACTS:
Respondent was an employee of KKTI. Respondents duty was to accomplish a "Conductor's
Trip Report" and submit it to the company after each trip. Once an irregularity is discovered, the
company issues an "Irregularity Report" against the employee, indicating the nature and details
of the irregularity. Thereafter, the concerned employee is asked to explain the incident by making
a written statement or counter-affidavit at the back of the same Irregularity Report. After
considering the explanation of the employee, the company then makes a determination of
whether to accept the explanation or impose upon the employee a penalty for committing an
infraction. That decision shall be stated on said Irregularity Report and will be furnished to the
employee.
Upon audit it was discovered that respondent declared several sold tickets as returned tickets
causing KKTI to lose an income. While no irregularity report was prepared, KKTI nevertheless
asked respondent to explain the discrepancy. In his reply, respondent said that the irregularity
was unintentional. He explained that during that day's trip, the windshield of the bus assigned to
them was smashed; and they had to cut short the trip in order to immediately report the matter to
the police. As a result of the incident, he got confused in making the trip report.
After some time, respondent received a letter terminating his employment. It stated that he is
being dismissed due to fraud (loss of trust and confidence) and other offenses he allegedly
committed since 1999. Hence, filing of complaint for illegal dismissal.
Labor Arbiter dismissed respondents complaint for lack of merit. NLRC modified the judgment
in that there was a valid cause of dismissal but corporation did not comply with due process prior
termination ordering for payment of indemnity. The Court of Appeals affirmed NLRC.
ISSUE:
W/N the requirements of a valid termination was properly complied? NO.
RULING:

Due process under the Labor Code involves two aspects: first, substantive the valid and
authorized causes of termination of employment under the Labor Code; and second, procedural
the manner of dismissal.
Art. 277 of the Labor Code provides the manner of termination of employment, thus:
Art. 277.
(b)

Miscellaneous Provisions. . . .

Subject to the constitutional right of workers to security of tenure and their right to be

protected against dismissal except for a just and authorized cause without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in accordance with company
rules and regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer.
Accordingly, the implementing rule of the aforesaid provision states:
SEC. 2.

Standards of due process; requirements of notice. In all cases of termination of

employment, the following standards of due process shall be substantially observed:


I

For termination of employment based on just causes as defined in Article 282 of the
Code:

(a)

A written notice served on the employee specifying the ground or grounds for

termination, and giving said employee reasonable opportunity within which to explain his side.
(b)

A hearing or conference during which the employee concerned, with the assistance of

counsel if he so desires is given opportunity to respond to the charge, present his evidence, or
rebut the evidence presented against him.
(c)

A written notice of termination served on the employee, indicating that upon due

consideration of all the circumstances, grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee's last known
address.

To clarify, the following should be considered in terminating the services of employees:


1

The first written notice to be served on the employees should contain the specific causes
or grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days from receipt of the
notice to give the employees an opportunity to study the accusation against them, consult
a union official or lawyer, gather data and evidence, and decide on the defenses they will
raise against the complaint. Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should contain a detailed narration of
the facts and circumstances that will serve as basis for the charge against the employees.
A general description of the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which among the grounds under

Art. 282 is being charged against the employees.


After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and
clarify their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover,
this conference or hearing could be used by the parties as an opportunity to come to an

amicable settlement.
After determining that termination of employment is justified, the employers shall serve
the employees a written notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment.

Respondent was not issued a written notice charging him of committing an infraction. A verbal
appraisal of the charges against an employee does not comply with the first notice requirement.
The reports did not even state a company rule or policy that the employee had allegedly violated.
Likewise, there is no mention of any of the grounds for termination of employment under Art.

282 of the Labor Code. No hearing was conducted. Regardless of respondent's written
explanation, a hearing was still necessary in order for him to clarify and present evidence in
support of his defense. He was unaware that a dismissal proceeding was already being effected.
SANCTION FOR NON-COMPLIANCE WITH DUE PROCESS REQUIREMENTS
Section 3 of the Rules Implementing Presidential Decree No. 851 provides the exceptions in the
coverage of the payment of the 13th-month benefit. The provision states:
SEC. 3.
xxx
e)

Employers covered. The Decree shall apply to all employers except to:
xxx

xxx

Employers of those who are paid on purely commission, boundary, or task basis, and

those who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate basis in
which case the employer shall be covered by this issuance insofar as such workers are concerned.
Respondent admitted that he was paid on commission only. Moreover, this fact is supported by
his pay slips which indicated the varying amount of commissions he was receiving each trip.
Thus, he was excluded from receiving the 13th-month pay benefit.

250.

WENPHIL CORPORATION VS. NLRC (1989)

FACTS:
After having an altercation with a co-employee, respondent was suspended the next day and in
the afternoon of the same day was dismissed from service. Hence, filing a complaint for illegal
dismissal.
Labor Arbiter dismissed the complaint for lack of merit. The NLRC set aside the ruling and
ordered reinstatement of respondent with backwges. Hence, petition
It was the companys rule that a hearing will be conducted if the penalty which will be imposed
is higher than 15 days suspension. Petitioner contends that respondent waived his right to a
hearing when he failed to ask for it.
ISSUE:
W/N the requirements for termination was complied with? NO.
RULING:
Under Section 1, Rule XIV of the Implementing Regulations of the Labor Code, it is provided
that "No worker shall be dismissed except for just or authorized cause provided by law and after
due process" Sections 2, 5, 6, and 7 of the same rules require that before an employer may
dismiss an employee the latter must be given a written notice stating the particular act or
omission constituting the grounds thereof; that the employee may answer the allegations within a
reasonable period; that the employer shall afford him ample opportunity to be heard and to
defend himself with the assistance of his representative, if he so desires; and that it is only then
that the employer may dismiss the employee by notifying him of the decision in writing stating
clearly the reasons therefor. Such dismissal is without prejudice to the right of the employee to
contest its validity in the Regional Branch of the NLRC.
The contention of petitioner is untenable. The incident happened on May 20, 1985 and right then
and there as afore repeated on the following day private respondent was suspended in the
morning and was dismissed from the service in the afternoon. He received an official notice of
his termination four (4) days later.

The defiant attitude of private respondent immediately after the incident amounted to
insubordination. Nevertheless his refusal to explain his side under the circumstances cannot be
considered as a waiver of his right to an investigation.
Although in the Personnel Manual of the petitioner, it states that an erring employee must request
for an investigation it does not thereby mean that petitioner is thereby relieved of the duty to
conduct an investigation before dismissing private respondent. Indeed said provision of the
Personnel Manual of petitioner which may effectively deprive its employees of the right to due
process is clearly against the law and hence null and void. The security of tenure of a laborer or
employee is enshrined in the Constitution, the Labor Code and other related laws.
The failure of petitioner to give private respondent the benefit of a hearing before he was
dismissed constitutes an infringement of his constitutional right to due process of law and equal
protection of the laws. The standards of due process in judicial as well as administrative
proceedings have long been established. In its bare minimum due process of law simply means
giving notice and opportunity to be heard before judgment is rendered.
However, it is a matter of fact that when the private respondent filed a complaint against
petitioner he was afforded the right to an investigation by the labor arbiter. He presented his
position paper as did the petitioner. If no hearing was had, it was the fault of private respondent
as his counsel failed to appear at the scheduled hearings. The labor arbiter concluded that the
dismissal of private respondent was for just cause. He was found guilty of grave misconduct and
insubordination. This is borne by the sworn statements of witnesses. The Court is bound by this
finding of the labor arbiter. With such finding, it would be arbitrary and unfair to order his
reinstatement with back wages.
The Court holds that the policy of ordering the reinstatement to the service of an employee
without loss of seniority and the payment of his wages during the period of his separation until
his actual reinstatement but not exceeding three (3) years without qualification or deduction,
when it appears he was not afforded due process, although his dismissal was found to be for just
and authorized cause in an appropriate proceeding in the Ministry of Labor and Employment,
should be re-examined. It will be highly prejudicial to the interests of the employer to impose on
him the services of an employee who has been shown to be guilty of the charges that warranted
his dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if
not undesirable, remains in the service.

However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. Petitioner committed an
infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before dismissing petitioner from
employment. Considering the circumstances of this case petitioner must indemnify the private
respondent the amount of P1,000.00. The measure of this award depends on the facts of each
case and the gravity of the omission committed by the employer.

251.

RUBEN SERRANO VS. NLRC

FACTS:
Petitioner, a security guard was dismissed by Isetann due to retrenchment but failed to give
notice of termination 30 days prior to its effectivity. As a fact, a memorandum was issued
informing them of their termination effective immediately. Labor Arbiter held that petitioner
"was not afforded due process and was reinstated and paid full backwages and other monetary
benefits to which he was entitled. The NLRC reversed the Labor Arbiter's decision not because it
found that private respondent had complied with the notice requirement but only that petitioner's
employment had been terminated for a cause authorized by law hence, ordered petitioner to be
given separation pay in addition to the other monetary benefits to which he is entitled.
Isetann contends 1) notice is no longer required in authorized causes of termination and 2) that it
gave its employees 30 days pay in lieu of the 30 days notice hence, more advantageous to an
employee.
ISSUE:
W/N twin requirements was complied with? NO.
RULING:
The requirement to give a written notice of termination at least thirty (30) days in advance is a
requirement of the Labor Code.
Art. 283 provides:
Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Department of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or

cessation of operations of establishment or undertaking not due to serious business losses or


financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.
What the law requires is a written notice to the employees concerned and that requirement is
mandatory. The notice must also be given at least one month in advance of the intended date of
retrenchment to enable the employees to look for other means of employment and therefore to
ease the impact of the loss of their jobs and the corresponding income.
Nothing in the law gives private respondent the option to substitute the required prior written
notice with payment of thirty (30) days salary. Indeed, a job is more than the salary that it carries.
Payment of thirty (30) days salary cannot compensate for the psychological effect or the stigma
of immediately finding one's self laid off from work. It cannot be a fully effective substitute for
the thirty (30) days written notice required by law especially when, as in this case, the fact is that
no notice was given to the Department of Labor and Employment (DOLE).
The purpose of such previous notice is to give the employee some time to prepare for the
eventual loss of his job as well as the DOLE the opportunity to ascertain the verity of the alleged
authorized cause of termination.
By providing for the payment of full backwages for failure of an employer to give notice, seeks
to vindicate the employee's right to notice before he is dismissed or laid off, while recognizing
the right of the employer to dismiss for any of the just causes enumerated in Art. 282 or to
terminate employment for any of the authorized causes mentioned in Arts. 283-284. The order to
pay full backwages is a consequence of the employer's action in dismissing an employee without
notice which makes said dismissal ineffectual. The employee is considered not to have been
terminated from his employment until it is finally determined that his dismissal/termination of
employment was for cause and, therefore, he should be paid his salaries in the interim.
This eliminates guesswork in determining the degree of prejudice suffered by an employee
dismissed with cause but without notice since the penalty is measured by the salary he failed to
earn on account of his dismissal/termination of employment.

252.

JENNY M. AGABON and VIRGILIO C. AGABON vs. NLRC

FACTS:
Petitioners were frequently absent having subcontracted for an installation work for another
company. This was not the first time they did this. In January 1996, they did not report for work
because they were working for another company. They were then terminated due to
abandonment of work. Hence, filing of a complaint for illegal dismissal.
Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent
to pay backwages and separation pay in lieu of reinstatement. On appeal, the NLRC reversed the
Labor Arbiter because it found that the petitioners had abandoned their work, and were not
entitled to backwages and separation pay. The Court of Appeals in turn ruled that the dismissal
of the petitioners was not illegal because they had abandoned their employment but ordered the
payment of money claims (holiday pay, service incentive leave pay, and part of 13 th month pay).
Court of Appeals, ruled that petitioners' dismissal was for a just cause. They had abandoned their
employment and were already working for another employer.
ISSUE:
W/N the requirements for a valid dismissal was complied with? NO.
RULING:
To dismiss an employee, the law requires not only the existence of a just and valid cause but also
enjoins the employer to give the employee the opportunity to be heard and to defend himself.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.
It is a form of neglect of duty, hence, a just cause for termination of employment by the
employer. For a valid finding of abandonment, these two factors should be present: (1) the failure
to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever
employer-employee relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the employees has no more intention
to work. The intent to discontinue the employment must be shown by clear proof that it was
deliberate and unjustified.

An employee who deliberately absented from work without leave or permission from his
employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his
job. In this case, petitioners were absent because they were already working in another company.
The employer may not be compelled to continue to employ such persons whose continuance in
the service will patently be inimical to his interests. The petitioners cause of termination is valid.
PROCEDURAL DUE PROCESS
Standards of due process: requirements of notice. In all cases of termination of employment,
the following standards of due process shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Code:
(a)

A written notice served on the employee specifying the ground or grounds for

termination, and giving to said employee reasonable opportunity within which to explain his
side;
(b)

A hearing or conference during which the employee concerned, with the assistance of

counsel if the employee so desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and
(c)

A written notice of termination served on the employee indicating that upon due

consideration of all the circumstances, grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee's last known
address.
Dismissals based on JUST CAUSES contemplate acts or omissions attributable to the employee
while dismissals based on AUTHORIZED CAUSES involve grounds under the Labor Code
which allow the employer to terminate employees.
A termination for an authorized cause requires payment of separation pay. When the termination
of employment is declared illegal, reinstatement and full backwages are mandated under Article
279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be
granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to

be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized
causes under Articles 283 and 284, the employer must give the employee and the Department of
Labor and Employment written notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just
cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for
health reasons under Article 284, and due process was observed; (2) the dismissal is without just
or authorized cause but due process was observed; (3) the dismissal is without just or authorized
cause and there was no due process; and (4) the dismissal is for just or authorized cause but due
process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any
liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates that the
employee is entitled to reinstatement without loss of seniority rights and other privileges and full
backwages, inclusive of allowances, and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be
cured, it should not invalidate the dismissal. However, the employer should be held liable for
non-compliance with the procedural requirements of due process.
The present case squarely falls under the fourth situation. The dismissal should be upheld
because it was established that the petitioners abandoned their jobs to work for another company.
Private respondent, however, did not follow the notice requirements and instead argued that
sending notices to the last known addresses would have been useless because they did not reside
there anymore. Unfortunately for the private respondent, this is not a valid excuse because the
law mandates the twin notice requirements to the employee's last known address. Thus, it should
be held liable for non-compliance with the procedural requirements of due process.
A review and re-examination of the relevant legal principles is appropriate and timely to clarify
the various rulings on employment termination in the light of Serrano v. National Labor
Relations Commission.
1

PRIOR TO 1989, the rule was that a dismissal or termination is illegal if the employee
was not given any notice.

IN THE 1989 CASE OF WENPHIL (#1 was reversed), where the employer had a
valid reason to dismiss an employee but did not follow the due process requirement, the
dismissal may be upheld but the employer will be penalized to pay an indemnity to the

employee. This became known as the Wenphil or Belated Due Process Rule.
IN THE 2000 CASE OF SERRANO, the rule on the extent of the sanction was
changed. That the violation by the employer of the notice requirement in termination for
just or authorized causes was not a denial of due process that will nullify the termination.
However, the dismissal is ineffectual and the employer must pay full backwages from the
time of termination until it is judicially declared that the dismissal was for a just or

authorized cause.
AGABON DOCTRINE, Abandon Serrano rule, revert back to Wenphil but with stiffer
penalty.

The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant
number of cases involving dismissals without requisite notices. That the imposition of penalty by
way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we
now required payment of full backwages from the time of dismissal until the time the Court finds
the dismissal was for a just or authorized cause.
Serrano was confronting the practice of employers to "dismiss now and pay later" by imposing
full backwages.
That the ruling in Serrano did not consider the full meaning of Article 279 of the Labor
Code which states:
ART. 279.

Security of Tenure. In cases of regular employment, the employer shall not

terminate the services of an employee except for a just cause or when authorized by this Title.
An 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.
This means that the termination is illegal only if it is not for any of the justified or authorized
causes provided by law. Payment of backwages and other benefits, including reinstatement, is
justified only if the employee was unjustly dismissed.
It has now been held that in cases involving dismissals for cause but without observance of the
twin requirements of notice and hearing, THE BETTER RULE IS TO ABANDON THE

SERRANO DOCTRINE AND TO FOLLOW WENPHIL BY HOLDING THAT THE


DISMISSAL WAS FOR JUST CAUSE BUT IMPOSING SANCTIONS ON THE EMPLOYER.
Such sanctions, however, must be stiffer than that imposed in Wenphil.
The employer should not be compelled to continue employing a person who is admittedly guilty
of misfeasance or malfeasance and whose continued employment is patently inimical to the
employer. The law protecting the rights of the laborer authorizes neither oppression nor selfdestruction of the employer. It must be stressed that in the present case, the petitioners committed
a grave offense, i.e., abandonment, which, if the requirements of due process were complied
with, would undoubtedly result in a valid dismissal.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process
should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should
indemnify the employee for the violation of his statutory rights. The sanction should be in the
nature of indemnification or penalty and should depend on the facts of each case, taking into
special consideration the gravity of the due process violation of the employer.
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.
Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at
P30,000.00. 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.

253.

JAKA FOOD PROCESSING CORPORATION VS. DARWIN PACOT

FACTS:
Respondents were terminated by JAKA Foods Processing due to (retrenchment) financial
straits. Hence, filing of complaint for illegal dismissal for not serving written notices to DOLE
and employees at least one (1) month before the intended date of termination.
Labor Arbiter

- declared the termination illegal. Ordered reinstatement and payment of

full backwages, and separation pay if reinstatement is not possible.


NLRC - No backwages. But ordered payment of separation pay and indemnification for its
failure to observe due process in effecting the retrenchment.
Court of Appeals Ordered Backwages and separation pay and 13th month pay.
ISSUE:
What are the legal implications of a situation where an employee is dismissed for cause but such
dismissal was effected without the employer's compliance with the notice requirement under the
Labor Code?
RULING:
In Agabon, it was found that the employees committed a grave offense, i.e., abandonment, which
is a form of a neglect of duty which, in turn, is one of the just causes enumerated under Article
282 of the Labor Code. In said case, we upheld the validity of the dismissal despite noncompliance with the notice requirement of the Labor Code. However, we required the employer
to pay the dismissed employees the amount of P30,000.00, representing nominal damages for
non-compliance with statutory due process. The indemnity to be imposed should be stiffer to
discourage the abhorrent practice of 'dismiss now, pay later.' The sanction should be in the nature
of indemnification or penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer.
The difference between Agabon and the instant case is that in the former, the dismissal was based
on a just cause under Article 282 of the Labor Code while in the present case, respondents were
dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the
same Code.

At this point, we note that there are divergent implications of a dismissal for just cause under
Article 282, on one hand, and a dismissal for authorized cause under Article 283, on the other.
A dismissal for just cause under Article 282 implies that the employee concerned has committed,
or is guilty of, some violation against the employer, i.e. the employee has committed some
serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has
neglected his duties. Thus, it can be said that the employee himself initiated the dismissal
process.
On another breath, a dismissal for an authorized cause under Article 283 does not necessarily
imply delinquency or culpability on the part of the employee. Instead, the dismissal process is
initiated by the employer's exercise of his management prerogative, i.e. when the employer opts
to install labor saving devices, when he decides to cease business operations or when, as in this
case, he undertakes to implement a retrenchment program.
The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for
authorized cause under Article 283 is further reinforced by the fact that in the first, payment of
separation pay, as a rule, is not required, while in the second, the law requires payment of
separation pay.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282
but the employer failed to comply with the notice requirement, the sanction to be imposed upon
him should be tempered because the dismissal process was, in effect, initiated by an act
imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article
283 but the employer failed to comply with the notice requirement, the sanction should be stiffer
because the dismissal, process was initiated by the employer's exercise of his management
prerogative.
The records before us reveal that, indeed, JAKA was suffering from serious business losses at the
time it terminated respondents' employment. It is, therefore, established that there was ground for
respondents' dismissal, i.e., retrenchment, which is one of the authorized causes enumerated
under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with
the notice requirement under the same Article. Considering the factual circumstances in the
instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at
P50,000.00.

However, the Court of Appeals have been in error when it ordered JAKA to pay respondents
separation pay equivalent to one (1) month salary for every year of service. The rule is that in all
cases of business closure or cessation of operation or undertaking of the employer, the affected
employee is entitled to separation pay. This is consistent with the state policy of treating labor as
a primary social economic force, affording full protection to its rights as well as its welfare. The
exception is when the closure of business or cessation of operations is due to serious business
losses or financial reverses; duly proved, in which case, the right of affected employees to
separation pay is lost for obvious reasons.

254.

ROBERTO SEGISMUNDO AND ROGELIO MONTALVO VS. NLRC

FACTS:
Segismundo and Montalvo were regular employees of Associated Freight Consolidators, Inc., a
corporation engaged in the air freight forwarding business. Segismundo was a driver whereas
Montalvo was a loader/helper. They worked as a team, delivering packages to their respective
addresses or consignees. Sometime in 1988, private respondent began receiving complaints from
its client/consignees regarding missing items in their packages which were delivered by private
respondent's personnel. The investigation yielded the unfortunate result that the pilferages could
only have taken place while the packages were in the custody of private respondent's delivery
personnel.
In view of the results of the investigation, private respondent's General Manager called a meeting
on February 17, 1989 of all delivery personnel to discuss the pilferage incidents. During the
meeting, petitioners denied any involvement therein. They were allowed to inspect the records
gathered in the course of the company investigation. On the same day, petitioners were given
notices by management, placing them under preventive suspension effective February 18, 1989.
On March 15, 1989, private respondent formally terminated petitioner's services without first
conducting a hearing. Hence, complaint for illegal dismissal.

ISSUE:
W/N petitioners were illegally dismissed? NO.
What is the proof of evidence needed? SUBSTANTIAL EVIDENCE.

RULING:

The conclusion that petitioners were involved in the pilferages was solidly premised on the
tabulated complaints of consignees, the records of pilfered packages delivered by petitioner's
team and delivery receipts. No evidence was presented to show that private respondent was
motivated by any ill feeling or bad faith in dismissing petitioners.
Private respondent's documentary evidence showing the culpability of petitioners should prevail
over

petitioners'

uncorroborated

explanations

and

self-serving denials regarding their involvement in the pilferages. All administrative


determinations require only substantial proof and not clear and convincing evidence (Manalo v.
Roldan-Confesor, 215 SCRA 808). Proof beyond reasonable doubt of the employee's misconduct
is not required, it being sufficient that there is some basis for the same or that the employer has
reasonable ground to believe that the employee is responsible for the misconduct, and his
participation therein renders him unworthy of the trust and confidence demanded by his position
(Riker v. Ople, 155 SCRA 85). Thus, petitioners cannot assert that the public respondent closed
its eyes to their evidence. The latter's findings are supported by substantial evidence which goes
beyond the minimum evidentiary support required by law.
However, we find that petitioners were dismissed from employment without being accorded due
process. As correctly observed by the Solicitor General, non-compliance with the twin
requirements of notice and hearing is fatal because these requirements are conditions sine qua
non before a dismissal may be validly effected (Manebo vs. NLRC, G.R. No. 107721, January
10, 1994, citing Tiu v. NLRC, 215 SCRA 540). Neither of these two requirements can be
dispensed with without running afoul with the due process requirement of the Constitution
(Century Textile Mills, Inc. v. NLRC, 161 SCRA 528).
In the instant case, the records show that private respondent failed to give petitioners the benefit
of a hearing. The meeting called by the General Manager on February 17, 1989 does not qualify
as the hearing required by law since the same was apparently for the purpose of merely
informing the delivery personnel about the investigation conducted by the company on the
pilferages, and to serve petitioners and two other employees notices of their preventive
suspension. Barely a month later, petitioners were summarily dismissed.

While it may be true that petitioners were allowed to explain their side during the February 17,
1989 meeting, the fact remains that no hearing was actually conducted before petitioners'
services were terminated. The opportunity given to petitioners during the meeting to answer the
charges against them and to verify the records of the pilferage cases is not the kind of "ample
opportunity" contemplated by law, which connotes every kind of assistance that management
must accord to the employee to enable him to prepare adequately for his defense including legal
representation (Abiera v. NLRC, 215 SCRA 476).

256.

BUSTAMANTE VS. NLRC

FACTS:
Petitioners Paulino Bantayan, Fernando Bustamante, Mario Sumonod and Osmalik Bustamante
were employed as laborers and harvesters while petitioner Sabu Lamaran was employed as a
laborer and sprayer in respondent company's plantation. All the petitioners signed contracts of
employment for a period of six (6) months from 2 January 1990 to 2 July 1990, but they had
started working sometime in September 1989. Previously, they were hired to do the same work
for periods lasting a month or more, from 1985 to 1989. Before the contracts of employment
expired on 2 July 1990, petitioners' employments were terminated on 25 June 1990 on the
ground of poor performance on account of age, as not one of them was allegedly below forty
(40) years old. Hence, complaint for illegal dismissal.

ISSUE:
W/N petitioners are entitled to backwages assuming they are illegally terminated?

RULING:
It is undisputed that petitioners were illegally dismissed from employment. Article 280 of the
Labor Code states:
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 hired 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.
The provision enumerates two (2) kinds of employees, the regular employees and the casual
employees. The regular employees consist of the following:
1) those engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and
2) those who have rendered at least one year of service whether such service is continuous or
broken.
In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same
kind of work they were hired to perform in September 1989. Both the labor arbiter and the
respondent NLRC agree that petitioners were employees engaged to perform activities necessary
in the usual business of the employer. As laborers, harvesters or sprayers in an agricultural
establishment which produces high grade bananas, petitioners' tasks are indispensable to the
year-round operations of respondent company. They were hired and re-hired in a span of from
two to four years to do the same type of work which conclusively shows the necessity of
petitioners' service to the respondent company's business. Petitioners have, therefore, become
regular employees after performing activities which are necessary in the usual business of their
employer. But, even assuming that the activities of petitioners in respondent company's
plantation were not necessary or desirable to its business, we affirm the public respondent's
finding that all of the complainants (petitioners) have rendered non-continuous or broken service
for more than one (1) year and are consequently considered regular employees.

We do not sustain public respondent's theory that private respondent should not be made to
compensate petitioners for backwages because its termination of their employment was not made
in bad faith. The act of hiring and re-hiring the petitioners over a period of time without
considering them as regular employees evidences bad faith on the part of private respondent. The
public respondent made a finding to this effect when it stated that the subsequent rehiring of
petitioners on a probationary status "clearly appears to be a convenient subterfuge on the part of
management to prevent complainants (petitioners) from becoming regular employees."
Consequently, petitioners are entitled to their full backwages and other benefits from the time
their compensation was withheld from them up to the time of their actual reinstatement.

257.

ALEX FERRER, ET.AL.

AND FEDERATION OF DEMOCRATIC LABOR

UNIONS, (FEDLU) VS. NLRC, OCCIDENTAL FOUNDRY CORPORATION AND


FEDERATION OF FREE WORKERS

FACTS:
Petitioners were regular and permanent employees of the Occidental Foundry Corporation
(OFC). Both the company and the union merely complied with the collective bargaining
agreement provision sanctioning the termination of any employee who fails to retain membership
in good standing with the union

ISSUE:
W/N there is valid dismissal?

RULING:
A CBA is the law between the company and the union and compliance therewith is mandated by
the express policy to give protection to labor. Said policy should be given paramount
consideration unless otherwise provided for by law. A CBA provision for a closed shop is a valid
form of union security and it is not a restriction on the right or freedom of association guaranteed
by the Constitution. However, in the implementation of the provisions of the CBA, both parties
thereto should see to it that no right is violated or impaired. In the case at bar, while it is true that
the CBA between OFC and the SAMAHAN provided for the dismissal of employees who have
not maintained their membership in the union, the manner in which the dismissal was enforced
left much to be desired in terms of respect for the right of petitioners to procedural due process.

While it is true that petitioners' actions might have precipitated divisiveness and, later, showed
disloyalty to the union, still, the SAMAHAN should have observed its own constitution and bylaws by giving petitioners an opportunity to air their side and explain their moves. If, after an
investigation the petitioners were found to have violated union rules, then and only then should
they be subjected to proper disciplinary measures.
The need for a company investigation is founded on the consistent ruling of this Court that the
twin requirements of notice and hearing which are essential elements of due process must be met
in employment-termination cases. The employee concerned must be notified of the employer's
intent to dismiss him and of the reason or reasons for the proposed dismissal. The hearing affords
the employee an opportunity to answer the charge or charges against him and to defend himself
therefrom before dismissal is effected. Observance to the letter of company rules on investigation
of an employee about to be dismissed is not mandatory. It is enough that there is due notice and
hearing before a decision to dismiss is made. But even if no hearing is conducted, the
requirement of due process would have been met where a chance to explain a party's side of the
controversy had been accorded him
With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of
the Labor Code was amended to read as follows:
Security of Tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized
by this Title. An 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.
A legally dismissed employee may now be paid his back wages, allowances, and other benefits
for the entire period he was out of work subject to the rule enunciated before the Mercury Drug
Rule, which is that the employer may, however, deduct any amount which the employee may
have earned during the period of his illegal termination. Computation of full back wages and

presentation of proof as to income earned elsewhere by the illegally dismissed employee after his
termination and before actual reinstatement should be ventilated in the execution proceedings
before the Labor Arbiter concordant with Section 3, Rule 8 of the 1990 new Rules of Procedure
of the National Labor Relations Commission.
It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has
made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but
perhaps Republic Act No. 6715 was enacted precisely for the employer to realize that the
employee must be immediately restored to his former position, and to impress the idea that
immediate reinstatement is tantamount to a cost-saving measure in terms of overhead expense
plus incremental productivity to the company which lies in the hands of the employer.

258.

PIONEER TEXTURIZING CORP. and/or JULIANO LIM vs. NLRC, PIONEER

TEXTURIZING WORKERS UNION and LOURDES A. DE JESUS

FACTS:
De Jesus is Pioneers reviser/trimmer since 1980. Her assigned work is based on a paper note
posted by Pioneer. The posted paper which contains the corresponding price for the work to be
accomplished by a worker is identified by its P.O. Number. On August 1992, De Jesus was
charged for dishonesty and tampering of official records and documents with the intention of
cheating as PO No. 3853 required no trimming. She maintained that such action was merely a
mistake as it has the same style and design as with another PO. That she may have been
negligent in presuming that the same work was to be done but not for dishonesty. She was placed
under preventive suspension on August 19, 1992 and afterwards terminated from employment.
The notice of termination was sent on September 18, 1992. Hence, filing of complaint.

ISSUE:

W/N De Jesus was validly terminated? NO.


W/N an award or order of reinstatement is self-executory? YES.

RULING:
It must be emphasized that in termination cases the burden of proof rests upon the employer. In
the instant case, respondents' mere allegation that P.O. 3853 need not be trimmed does not satisfy
the proof required to warrant complainant's dismissal. Lack of a just cause in the dismissal from
service of an employee, as in this case, renders the dismissal illegal, despite the employer's
observance of procedural due process.
Likewise, the imposition of the extreme penalty of dismissal against de Jesus is certainly harsh
and grossly disproportionate to the negligence committed, especially where said employee holds
a faithful and an untarnished twelve-year service record. While an employer has the inherent
right to discipline its employees, this right must always be exercised humanely, and the penalty it
must impose should be commensurate to the offense involved and to the degree of its
infraction. The employer should bear in mind that, in the exercise of such right, what is at stake is
not only the employee's position but her livelihood as well.
Equally unmeritorious is petitioners' assertion that the dismissal is justified on the basis of loss of
confidence. While loss of confidence, as correctly argued by petitioners, is one of the valid
grounds for termination of employment, the same, however, cannot be used as a pretext to
vindicate each and every instance of unwarranted dismissal. To be a valid ground, it must be
shown that the employee concerned is responsible for the misconduct or infraction and that the
nature of his participation therein rendered him absolutely unworthy of the trust and confidence
demanded by his position. In this case, petitioners were unsuccessful in establishing their
accusations of dishonesty and tampering of records with intention of cheating. Indeed, even if
petitioners' allegations against de Jesus were true, they just the same failed to prove that her
position needs the continued and unceasing trust of her employers. The breach of trust must be
related

to

the

performance

of

the

employee's

functions. Surely, de Jesus who occupies the position of a reviser/trimmer does not require the
petitioners' perpetual and full confidence.
Article 224 states that the need for a writ of execution applies only within five (5) years from the
date a decision, an order or award becomes final and executory. It can not relate to an award or
order of reinstatement still to be appealed or pending appeal which Article 223 contemplates. The
provision of Article 223 is clear that an award for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer shall not stay the execution for
reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even pending appeal. To require the application for and issuance of a
writ of execution as prerequisites for the execution of a reinstatement award would certainly
betray and run counter to the very object and intent of Article 223, i.e., the immediate execution
of a reinstatement order. The reason is simple. An application for a writ of execution and its
issuance could be delayed for numerous reasons.
Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws
should be resolved in favor of labor. In ruling that an order or award for reinstatement does not
require a writ of execution the Court is simply adhering and giving meaning to this rule.
Henceforth, we rule that an award or order for reinstatement is self-executory.

259.

PIZZA INN/CONSOLIDATED FOODS CORP. VS. NLRC

FACTS:
Fontanilla was employed by Pizza Inn in its Quad Carpark Makati outlet on a probationary
status. Before the expiration of the 6-month probationary period, Fontanilla resigned. Claiming
that she was forced to resign by the petitioner, the former filed a complaint against the latter. The
Labor Arbiter directed the reinstatement of complainant Felicidad Fontanilla to her former or
equivalent position with full back wages from date of dismissal on up to actual date of
reinstatement without loss of seniority rights and privileges as she would receive had she not
been dismissed, and to pay her unpaid wages. NLRC affirmed such ruling of the LA. Hence,
petition.

ISSUE:
1) W/N Pizza Inn be ordered to reinstate Fontanilla after the closure of its branch where she was
previously employed? NO on the ground of business recession.
2) W/N back wages should be paid even after the date of closure and continuously without limit
considering that there was no way to reinstate the workers anymore? YES up to the date of
dissolution or closure (but not exceeding three years).

RULING:
The fact of closure was properly reported to the Municipal Treasurer of Makati wherein
petitioner paid the required closure fee. Their contract of lease with Ayala Corporation over said
premises was also terminated. Subsequently, Pizza's only two other remaining outlets in the
Philippines were also closed and its franchise surrendered to Pizza-Inn Texas, U.S.A. Hence, the

closure of the business rendered the reinstatement of complainant to her previous position
impossible but she is still entitled to the payment of backwages up to the date of dissolution or
closure.
An employer found guilty of unfair labor practice in dismissing his employee may not be ordered
so to pay backwages beyond the date of closure of business where such closure was due to
legitimate business reasons and not merely an attempt to defeat the order of reinstatement.
Where an employer suffered business recession, such that its commercial or financial
circumstances have changed forcing it to close one outlet or branch (and subsequently all other
outlets also closed shop), respondent Commission, assuming that petitioner was guilty of unfair
labor practice cannot compel the employer to reinstate private respondent if such reinstatement
may exceed the petitioner's needs under the altered conditions. Normally each outlet had only a
sufficient number of employees who served pizzas. It has its own "plantilla" and by
accommodating complainant, it might prejudice and displace other employees. Reinstatement
pre-supposes that the previous position from which one had been removed still exists or that
there is an unfilled position more or less of similar nature as the one previously occupied by the
employee. Admittedly, no such position is available. Reinstatement therefore becomes a legal
impossibility. The law cannot exact compliance with what is impossible. Moreover an employer
is privileged to go out of business by closing the same regardless of his reasons especially if
done in good faith and due to causes beyond his control like heavy business losses. To deprive
him of such privilege would be oppressive and inhuman. In such cases, the dismissed employee
can no longer be reinstated but shall be entitled to backwages up to the date of dissolution or
closure (but not exceeding three years).

260.

CONSUELO B. KUNTING vs. NLRC

FACTS:
Kunting was employed as a teacher from 1969 to 1987 wherein her contract was no longer
renewed. Hence, filing of complaint for illegal dismissal. The Executive Labor Arbiter declared
illegal Kunting's dismissal from employment and ordered St. Joseph School to pay her
backwages equivalent to six months' pay, separation pay, emergency cost of living allowance
differentials, 13th month pay and service incentive leave pay.
In its decision, the NLRC affirmed the finding of the Executive Labor Arbiter that Consuelo was
illegally dismissed on the ground that the twin requirements of notice and hearing, which
constitute essential elements of due process in cases of dismissal of employees, were not
complied with. Inasmuch as Consuelo was a regular employee under Art. 280 of the Labor Code,
the NLRC opined that her employment for more than sixteen (16) years could not be terminated
by the school on the pretext that her "teaching Contract" had expired. Notwithstanding its
findings of illegal dismissal, the NLRC nonetheless sustained the Executive Labor Arbiter's
ruling as regards the payment of separation pay in lieu of reinstatement due to the alleged
"strained relations" between the parties which existed as a result of the illegal dismissal, and the
alleged failure of Consuelo to refute the accusations leveled against her by her employer.
However, the NLRC modified the grant of six (6) months backwages and ordered instead the
payment of backwages without qualification and deduction, computed from the date of
promulgation of its decision, i.e. October 20, 1989. It further ordered that petitioner's length of
service be reckoned from 1969 up to the promulgation of its decision.

ISSUE:
W/N Kunting is entitled to reinstatement? YES.

W/N she is entitled to payment of full backwages? NO.

RULING:
Indeed, an illegally dismissed employee's right to reinstatement is not absolute. The Court has a
long line of decisions concerning non-reinstatement of illegally dismissed employees on various
grounds. One of these grounds is when there is a finding that the relationship between the parties
has become so strained and ruptured as to preclude a harmonious working relationship.
"Strained relations," must be of such a nature or degree as to preclude reinstatement. But, where
the differences between the parties are neither personal nor physical, nor serious, then there is no
reason why the illegally dismissed employee should not be reinstated rather than simply given
separation pay and backwages.
Whatever resentments had been harbored by petitioner upon her unceremonious dismissal after
having been employed by St. Joseph School for more than sixteen (16) years is understandable.
Such resentments, however, would not suffice to deny her reemployment because to do so would
render for naught her constitutional right to security of tenure and her corollary right to
reinstatement under Article 279 of the Labor Code. Petitioner is, after all, a permanent teacher as
she had rendered more than three years of satisfactory service (St. Theresita's Academy v. NLRC,
215 SCRA 181 [1992]). Given the fact that her employer is a religious institution, there can be
no room for antagonism between the parties even after the termination of this litigation.
Closely related to the right to reinstatement is the employee's right to receive backwages which
represent the compensation that an unjustly dismissed employee should have received had said
employee not been dismissed. Petitioner claims that she is entitled to full backwages (computed
from the date of dismissal until actual reinstatement) under Article 279 of the Labor Code. This
contention, however, is not supported by prevailing jurisprudence which limits the award of
backwages to three (3) years without qualification and deduction.

While Republic Act No. 6715 amending Sec. 279, of the Labor Code grants full backwages to
dismissed employees computed from the date of their illegal dismissal up to the date of actual
reinstatement, the same cannot be applied in the case at bar. This is because petitioner was
illegally dismissed on April 4, 1988, or before the effectivity of R.A. 6715 on March 21, 1989.
In Lantion v. NLRC (181 SCRA 513 [1990]), it was held that nothing in R.A. 6715 provides for
its retroactive application. Necessarily, awards of backwages in cases of illegal dismissal
initiated before the effectivity of R.A. 6715 will have to be resolved by applying the three-year
limit formulated in the case of Mercury, Drug Co., Inc. v. CIR (56 SCRA 694 [1974]; see Ferrer
v. NLRC, G.R. No. 100898, July 5. 1993).

261.

ACESITE CORP., HOLIDAY INN, JOHANN ANGERBAUER & PHIL KENNEDY

VS. NLRC AND LEO A. GONZALES

FACTS:
Gonzales was hired as Chief Security of Manila Pavillion Hotel. On 1995, Acesite took over the
operations of Manila Pavillion and renamed it Holiday Inn Manila wherein Gonzales was
retained in his position. Gonzales was terminated from work for alleged willful disobedience of
lawful order of employer. He answered that such failure to report immediately for work was due
to his illness which was duly communicated thru telegram and that such order of immediate
report dated May 4, 1998 was received by him only on the evening of May 7, 1998 hence, when
he returned to the office, he was barred from the premises. Labor Arbiter dismissed his
complaint. NLRC reversed the ruling. Hence, petition.

ISSUE:
W/N Gonzales is entitled to reinstatement? NO. (Strained relations)

RULING:
Article 277 of the Labor Code, as amended, provides:
ART. 277. Miscellaneous provisions. (a) x x x.
(b) Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for just and authorized cause and
without prejudice to the requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is sought to be terminated a

written notice containing a statement of the causes for termination and shall afford
the latter ample opportunity to be heard and defend himself with the assistance of
his representative if he so desires in accordance with company rules and
regulations promulgated pursuant to guidelines set by the Department of Labor
and Employment. The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer.
In the present case, the records do not show compliance by petitioners with the two (2)-notice
rule prescribed in the above provision of law. Although several telegrams were sent to private
respondent Gonzales, there is not one (1) telegram which contains a statement of the cause for
his termination. The telegram and the meeting held on May 4, 1998 requiring him to submit a
written explanation as to his absences did not apprise him that he was being considered for
termination. Moreover, he was not informed that an investigation was being conducted vis--vis
his continued absences and his non-disclosure of the fact that he was running for public office.
While it is recognized that company policies and regulations, unless they are oppressive or
contrary to law, are generally valid and binding on the parties and must be complied with, the
same cannot be exercised for the purpose of defeating the rights of the employees under the law.
In illegal dismissal cases, reinstatement to an illegally dismissed employees former position may
be excused on the ground of "strained relations." This may be invoked against employees whose
positions demand trust and confidence, or whose differences with their employer are of such
nature or degree as to preclude reinstatement. In the case at bar, Gonzales was Chief of Security,
whose duty was to "manage the operation of the security areas of the hotel to provide and ensure
the safety and security of the hotel guests, visitors, management, staff and their properties
according to company policies and local laws." It cannot be gainsaid that Gonzales position is
one of trust and confidence, he being in charge of the over-all security of said hotel. Thus,
reinstatement is no longer possible. In lieu thereof, Acesite is liable to pay separation pay of 1
month for every year of service.

262.

MANILA DIAMOND HOTEL EMPLOYEES UNION VS. CA

FACTS:
On November 1996, the petition for certification election filed by the Union was dismissed by
the DOLE. A few months thereafter, it sent a letter to the Hotel informing it of its desire to
negotiate for collective bargaining which was denied by the HRD Manager for failure to be
recognized as a bargaining agent. Failure to negotiate in behalf of its members and not for the
whole rank-and-file of the hotel, the Union staged a strike for alleged Unfair Labor Practice. Said
employees who participated in the strike were dismissed. Hence, complaint for illegal dismissal.
Secretary of Labor issued a return to work order. Upon Motion for Reconsideration filed by the
Hotel, Acting Secretary directed that the strikers be reinstated only in the payroll. The Union
moved for the reconsideration of this Order, but its motion was denied. Hence, petition for
certiorari. The Court of Appeals rendered a Decision dismissing the Unions petition and
affirming the Secretary of Labors Order for payroll reinstatement. The Court of Appeals held
that the challenged order is merely an error of judgment and not a grave abuse of discretion and
that payroll reinstatement is not prohibited by law, but may be "called for" under certain
circumstances.
ISSUE:
W/N petitioners should be actually reinstated and not just payroll reinstatement? YES.
RULING:
The Court of Appeals based its decision on this Courts ruling in University of Santo Tomas
(UST) v. NLRC which was made in the light of one very important fact: the teachers could not be
given back their academic assignments since the order of the Secretary for them to return to work
was given in the middle of the first semester of the academic year. The NLRC was, therefore,
faced with a situation where the striking teachers were entitled to a return to work order, but the
university could not immediately reinstate them since it would be impracticable and detrimental
to the students to change teachers at that point in time.

In the present case, there is no showing that the facts called for payroll reinstatement as an
alternative remedy. A strained relationship between the striking employees and management is
no reason for payroll reinstatement in lieu of actual reinstatement. Bitter labor disputes always
leave an aftermath of strong emotions and unpleasant situations. Nevertheless, the government
must still perform its function and apply the law, especially if, as in this case, national interest is
involved.
As a general rule, the State encourages an environment wherein employers and employees
themselves must deal with their problems in a manner that mutually suits them best. This is the
basic policy embodied in Article XIII, Section 3 of the Constitution, which was further echoed in
Article 211 of the Labor Code. Hence, a voluntary, instead of compulsory, mode of dispute
settlement is the general rule.
However, Article 263, paragraph (g) of the Labor Code, which allows the Secretary of Labor to
assume jurisdiction over a labor dispute involving an industry indispensable to the national
interest, provides an exception: Under Article 263(g), all workers must immediately return to
work and all employers must readmit all of them under the same terms and conditions prevailing
before the strike or lockout. This Court must point out that the law uses the precise phrase of
"under the same terms and conditions," revealing that it contemplates only actual reinstatement.
This is in keeping with the rationale that any work stoppage or slowdown in that particular
industry can be inimical to the national economy. It is clear that Article 263(g) was not written to
protect labor from the excesses of management, nor was it written to ease management from
expenses, which it normally incurs during a work stoppage or slowdown. It was an error on the
part of the Court of Appeals to view the assumption order of the Secretary as a measure to
protect the striking workers from any retaliatory action from the Hotel. This Court reiterates that
this law was written as a means to be used by the State to protect itself from an emergency or
crisis. It is not for labor, nor is it for management.
It is, therefore, evident from the foregoing that the Secretarys subsequent order for mere payroll
reinstatement constitutes grave abuse of discretion amounting to lack or excess of jurisdiction.
Indeed, this Court has always recognized the "great breadth of discretion" by the Secretary once
he assumes jurisdiction over a labor dispute. However, payroll reinstatement in lieu of actual
reinstatement is a departure from the rule in these cases and there must be showing of special
circumstances rendering actual reinstatement impracticable, as in the UST case aforementioned,

or otherwise not conducive to attaining the purpose of the law in providing for assumption of
jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national
interest.

263.

DOMINICO C. CONGSON VS. NLRC

FACTS:
Congson is the registered owner of Southern Fishing Industry. Private respondents were hired on
various dates by petition'er as regular piece-rate workers. They worked seven (7) days a week.
During the first week of June 1990, petitioner notified his workers of his proposal to reduce the
rate-per-tuna movement due to the scarcity of tuna. Private respondents resisted petitioner's
proposed rate reduction. When they reported for work the next day, they were informed that they
had been replaced by a new set of workers. Hence, complaint. Labor Arbiter ruled in favor of
the workers. NLRC affirmed the Arbiters ruling. Hence, petition.
ISSUE:
W/N workers are entitled to their separation pay? YES.
RULING:
A careful scrutiny of the records of the case at bench, however, readily discloses the existence of
strained relationship between the petitioner and private respondents.
On the issue of payment of separation pay in lieu of reinstatement, petitioner consistently refused
to re-admit private respondents in his establishment. In the case of Felix Esmalin vs. National
Labor Relations Commission (3rd Division) and CARE Philippines, we held that strained
relationship is fairly established if the records of the case showed consistent refusal of the
employer to accept the dismissed employee.
And secondly, private respondents themselves, from the very start, had already indicated their
aversion to their continued employment in petitioner's establishment. The very filing of their
second case specifically for separation pay is conclusive of private respondents' intention to
sever their working ties with petitioner. In the case of Arturo Lagniton, Sr. vs. National Labor
Relations Commission, et a1., it was ruled that the refusal of the dismissed employee to be readmitted is constitutive of strained relations.

264.

ALFREDO S. PAGUIO VS. PLDT

FACTS:
Paguio filed a complaint for illegal demotion when he was transferred from being Head of
PLDTs Garnet Exchange to a position in te Special Assignments. He based his contention on his
frequent criticisim of the manner officer are being ranked in their performance considering that
the old historical data applicable to a fifty-year old facility should not be used in determining the
performance of a division with newly installed facilities because of the discrepancies between
old and new facilities in terms of output, performance, and manpower required. Labor Arbiter
dismissed his complaint. NLRC reversed the ruling and ordered reassignment to his former
position plus salaries. CA deleted the portion of salary increase. Hence, petition.

ISSUE:
W/N petitioner is entitled to an amount equal to 16% of his monthly salary representing his
salary increase during the period of his demotion? NO.

RULING:
Undeniably, this particular award which petitioner is seeking is not based on any wage order or
decree but on an employees performance during a certain period, as evaluated according to a
specified criteria. Petitioner claims that there is a high probability that he would have been
granted the increase had he not been transferred from the Garnet Exchange of respondent PLDT.
Petitioner likens his claim to that for backwages in illegal dismissal cases.

Backwages are granted on grounds of equity to workers for earnings lost due to their illegal
dismissal from work. They are a reparation for the illegal dismissal of an employee based on
earnings which the employee would have obtained, either by virtue of a lawful decree or order,
as in the case of a wage increase under a wage order, or by rightful expectation, as in the case of
ones salary or wage.
Reinstatement, to which petitioner is lawfully entitled, must be given full effect and must restore
petitioner to his rightful place in the present organizational structure of respondent company
approximating his status before he was illegally transferred. As the position no longer exists,
petitioner should be restored to an equivalent position.
265.

ALEJANDRO ROQUERO VS. PHILIPPINE AIRLINES, INC.

FACTS:
Roquero, along with Rene Pabayo, were ground equipment mechanics of PAL which were
caught possessing and using shabu in a raid conducted by PAL security officers and NARCOM
personnel. They were subjected to a physical examination where the results showed that they
were positive of drugs. They were also brought to the security office of PAL where they executed
written confessions without the benefit of counsel. They were sent notice of charges for violating
the PAL Code of Discipline. They were required to answer the charges and were placed under
preventive suspension. In their reply, Roquero assailed their arrest and asserted that they were
instigated by PAL to take the drugs. Thereafter, Roquero was terminated. Hence, filing of
complaint for illegal dismissal. LA found both parties at fault. It upheld the dismissal of Roquero
but awarded separation pay. NLRC ruled in favor of Roquero and found PAL guilty of
instigation. It ordered their reinstatement but without backwages. CA reversed NLRC and
reinstated decision of Labor Arbiter. Hence, petition.

ISSUE:

W/N order of reinstatement pending appeal may be set aside? NO.

RULING:
The order of reinstatement is immediately executory. The unjustified refusal of the employer to
reinstate a 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. Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on
PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL
must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the
decision of the NLRC until the finality of the decision of this Court.
Technicalities have no room in labor cases where the Rules of Court are applied only in a
suppletory manner and only to effectuate the objectives of the Labor Code and not to defeat
them. Hence, even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court. On the other hand, if the employee
has been reinstated during the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever salary he received for he is entitled
to such, more so if he actually rendered services during the period.

266.

Primero v. IAC

Facts:
Petitioner Primero was discharged from his employment as bus driver of DM Transit
Corporation (hereafter, simply DM) in August, 1974 after having been employed therein for over
6 years. Undisputably, since August 1, 1974, appellee's bus dispatcher did not assign any bus to
be driven by appellant Primero. No reason or cause was given by the dispatcher to appellant for
not assigning a bus to the latter for 23 days, Also, for 23 days, appellant was given a run-around
from one management official to another, pleading that he be allowed to work as his family was
in dire need of money and at the same time inquiring (why) he was not allowed to work or drive
a bus of the company. Poor appellant did not only get negative results but was given cold
treatment, oftentimes evaded and given confusing information, or ridiculed, humiliated, or
sometimes made to wait in the offices of some management personnel of the appellee.
(The) General Manager and (the) Vice-President and Treasurer ... wilfully and maliciously made
said appellant ... seesaw or ... go back and forth between them for not less than ten (10) times
within a period of 23 days ... but (he) got negative results from both corporate officials. Worse,
on the 23rd day of his ordeal appellant was suddenly told by General Manager Briones to seek
employment with other bus companies because he was already dismissed from his job with
appellee (without having been) told of the cause of his hasty and capricious dismissal .
Appellant also advised (the) President of the oppressive, anti-social and inhumane acts of
subordinate officers ... (but) Munoz, Jr. did nothing to resolve appellant's predicament and ... just
told the latter to go back ... to ... Briones, who insisted that appellant seek employment with other
bus firms in Metro Manila ... (but) admitted that the appellant has not violated any company rule
or regulation.
... In pursuance (of) defendant's determination to oppress plaintiff and cause further loss,
irreparable injury, prejudice and damage, (D.M. Transit) in bad faith and with malice persuaded
other firms (California Transit, Pascual Lines, De Dios Transit, Negrita Corporation, and MD
Transit) not to employ (appellant) in any capacity after he was already unjustly dismissed by said
defendant ... (paragraph 8 of plaintiff's complaint).

These companies with whom appellant applied for a job called up the D.M. Transit Office
(which) ... told them ... that they should not accept (appellant) because (he) was dismissed from
that Office.
Primero instituted proceedings against DM with the Labor Arbiters of the Department of Labor,
for illegal dismissal, and for recovery of back wages and reinstatement. It is not clear from the
record whether these proceedings consisted of one or two actions separately filed. What is certain
is that he withdrew his claims for back wages and reinstatement, "with the end in view of filing a
damage suit" "in a civil court which has exclusive jurisdiction over his complaint for damages on
causes of action founded on tortious acts, breach of employment contract ... and consequent
effects (thereof )
Issue:
Whether or not, having recovered separation pay by judgment of the Labor Arbiter he may
subsequently recover moral damages by action in a regular court, upon the theory that the
manner of his dismissal from employment was tortious and therefore his cause of action was
intrinsically civil in nature.
Ruling:
Dismissed/court ruled in negative. Going by the literal terms of the law, it would seem clear that
at the time that Primero filed his complaints for illegal dismissal and recovery of backwages, etc.
with the Labor Arbiter, the latter possessed original and exclusive jurisdiction also over claims
for moral and other forms of damages; this, in virtue of Article 265. The legislative intent
appears clear to allow recovery in proceedings before Labor Arbiters of moral and other forms of
damages, in all cases or matters arising from employer-employee relations. This would no doubt
include, particularly, instances where an employee has been unlawfully dismissed. In such a case
the Labor Arbiter has jurisdiction to award to the dismissed employee not only the reliefs
specifically provided by labor laws, but also moral and other forms of damages governed by the
Civil Code. Moral damages would be recoverable, for example, where the dismissal of the
employee was not only effected without authorized cause and/or due process for which relief is
granted by the Labor Code but was attended by bad faith or fraud, or constituted an act
oppressive to labor, or was done in a manner contrary to morals, good customs or public policy

It is clear that the question of the legality of the act of dismissal is intimately related to the issue
of the legality of the manner by which that act of dismissal was performed. But while the Labor
Code treats of the nature of, and the remedy available as regards the first the employee's
separation from employment it does not at all deal with the second the manner of that
separation which is governed exclusively by the Civil Code. In addressing the first issue, the
Labor Arbiter applies the Labor Code; in addressing the second, the Civil Code. And this appears
to be the plain and patent intendment of the law. For apart from the reliefs expressly set out in the
Labor Code flowing from illegal dismissal from employment, no other damages may be awarded
to an illegally dismissed employee other than those specified by the Civil Code. Hence, the fact
that the issue-of whether or not moral or other damages were suffered by an employee and in the
affirmative, the amount that should properly be awarded to him in the circumstances-is
determined under the provisions of the Civil Code and not the Labor Code, obviously was not
meant to create a cause of action independent of that for illegal dismissal and thus place the
matter beyond the Labor Arbiter's jurisdiction.
Thus, an employee who has been illegally dismissed (i.e., discharged without just cause or being
accorded due process), in such a manner as to cause him to suffer moral damages (as determined
by the Civil Code), has a cause of action for reinstatement and recovery of back wages and
damages. When he institutes proceedings before the Labor Arbiter, he should make a claim for
all said reliefs. He cannot, to be sure, be permitted to prosecute his claims piecemeal. He cannot
institute proceedings separately and contemporaneously in a court of justice upon the same cause
of action or a part thereof. He cannot and should not be allowed to sue in two forums: one,
before the Labor Arbiter for reinstatement and recovery of back wages, or for separation pay,
upon the theory that his dismissal was illegal; and two, before a court of justice for recovery of
moral and other damages, upon the theory that the manner of his dismissal was unduly injurious,
or tortious. This is what in procedural law is known as splitting causes of action, engendering
multiplicity of actions. It is against such mischiefs that the Labor Code amendments just
discussed are evidently directed, and it is such duplicity which the Rules of Court regard as
ground for abatement or dismissal of actions, constituting either litis pendentia (auter action
pendant) or res adjudicata, as the case may be. 18 But this was precisely what Primero's counsel
did. He split Primero's cause of action; and he made one of the split parts the subject of a cause
of action before a court of justice. Consequently, the judgment of the Labor Arbiter granting

Primero separation pay operated as a bar to his subsequent action for the recovery of damages
before the Court of First Instance under the doctrine of res judicata, The rule is that the prior
"judgment or order is, with respect to the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive between the parties and their successors in
interest by title subsequent to the commencement of the action or special proceeding, litigating
for the same thing and under the same title and in the same capacity.

267.

Maglutac V NLRC

Facts:
Jose M. Maglutac, (complainant) was employed by Commart (Phils.), Inc. (Commart) sometime
in February, 1980 and rose to become the Manager of its Energy Equipment Sales. On October 3,
1984, he received a notice of termination signed by Joaquin S. Cenzon, Vice-President-General
Manager and Corporate Secretary of CMS International, a corporation controlled by Commart.
Thereafter, Jose Maglutac filed a complaint for illegal dismissal against Commart and Jesus T.
Maglutac, President and Chairman of the Board of Directors of Commart. The complainant
alleged that his dismissal was part of a vendetta drive against his parents who dared to expose the
massive and fraudulent diversion of company funds to the company president's private accounts,
stressing that complainant's efficiency and effectiveness were never put to question when very
suddenly he received his notice of termination.
Commart and Jesus T. Maglutac, on the other hand, justified the dismissal for lack of trust and
confidence brought about by complainant and his family's establishment of a company, MM
International, in direct competition with Commart. After the parties submitted their respective
position papers, the Labor Arbiter assigned to the case, Jose Collado, Jr., rendered a decision on
January 11, 1986 finding that complainant was illegally dismissed.
Issue:
w/n the complainant is entitled for moral and exemplary damages under the Civil Code because
of the Labor Arbiter and the NLRC's findings that his dismissal was not merely without just
cause but was also an act of vendetta, malice attended the act.
Ruling:
Affirmative. We held that in cases of illegal dismissal, in addition to the reliefs granted under the
Labor Code, other forms of damages under the Civil Code may be granted. Thus:
The legislative intent appears clear to allow recovery in proceedings before Labor
Arbiters of moral and other forms of damages, in all cases or matters arising from
employer-employee relations. This would no doubt include, particularly, instances where

an employee has been unlawfully dismissed. In such a case, the Labor Arbiter has
jurisdiction to award to the dismissed employee not only the reliefs specifically provided
by labor laws, but also moral and other forms of damages governed by the Civil Code.
Moral damages would be recoverable, for example, where the dismissal of the employee
was not only effected without authorized cause and /or due process for which relief is
granted by the Labor Code but was attended by bad faith or fraud, or constituted an act
oppressive to labor, or was done in a manner contrary to morals good customs or public
policy for which the obtainable relief is determined by the Civil Code (not the Labor
Code). Stated otherwise, if the evidence adduced by the employee before the Labor
Arbiter should establish that the employer did indeed terminate the employee's services
without just cause or without according him due process, the Labor Arbiter's judgment
shall be for the employer to reinstate the employee and pay him his backwages or,
exceptionally, for the employee simply to receive separation pay. These are reliefs
explicitly prescribed by the Labor Code. But any award of moral damages by the Labor
Arbiter obviously cannot be based on the Labor Code but should be grounded on the
Civil Code.
Moral damages may be awarded to compensate one for diverse injuries such as mental anguish,
besmirched reputation, wounded feelings and social humiliation. It is however not enough that
such injuries have arisen; it is essential that they have sprung from a wrongful act or omission of
the defendant which was the proximate cause thereof (Guita v. Court of Appeals, 139 SCRA 576)
From the findings of the Labor Arbiter as affirmed by the NLRC, there is sufficient basis for an
award of moral and exemplary damages in the instant case. The alleged loss of trust and
confidence on complainant because of his family's establishment of MM International, a
company allegedly in direct competition with Commart, was belied by the findings of the Labor
Arbiter. Moreover, the complainant was dismissed without due process. His dismissal was made
effective immediately and he was not given an opportunity to present his side.
Where the employee's dismissal was effected without procedural fairness, an award of exemplary
damages in her favor can only be justified if her dismissal was affected in a wanton, oppressive
or malevolent manner (National Service Corp., et al. v. NLRC, G.R. No. 69870, Nov. 29, 1988).
The Labor Arbiter justified the award of moral damages from its finding of the oppressive and
malevolent manner the complainant and his relatives were treated after Jesus T. Maglutac found

out that a derivative suit was filed by complainant's family with the Securities and Exchange
Commission accusing him and his wife of diverting corporation assets to their personal accounts.
The Labor Arbiter justified the award of damages, thus:
Complainant undoubtedly was exposed to undue humiliation as a result of his dismissal. From
the taunts and sleepless nights he suffered, the pain cannot be more than imagined. The
oppressive and malevolent treatment which respondents subjected him to, including the illconcealed attempt to deprive him of his rights to the car that he had acquired through the
company's car plan, not to mention the vindictive manner in which his mother was removed as a
director and his brother dismissed from CMS International, furnishes adequate basis for the
claim for moral and exemplary damages.

268.

Taganas v NLRC

Facts:
Petitioner Atty. Wilfredo E. Taganas represented herein private respondents in a labor suit for
illegal dismissal, underpayment and non-payment of wages, thirteenth-month pay, attorney's fees
and damages conditioned upon a contingent fee arrangement granting the equivalent of fifty
percent of the judgment award plus three hundred pesos appearance fee per hearing. The Labor
Arbiter ruled in favor of private respondents and ordered Ultra Clean Services (Ultra) and the
Philippine Tuberculosis Society, Inc., (PTSI) respondents therein, jointly and severally to
reinstate herein private respondents with full backwages, to pay wage differentials, emergency
cost of living allowance, thirteenth-month pay and attorney's fee, but disallowed the claim for
damages for lack of basis. This decision was appealed by Ultra and PTSI to the National Labor
Relations Commission (NLRC), and subsequently by PTSI to the Court but to no avail. During
the execution stage of the decision, petitioner moved to enforce his attorney's charging lien.
Private respondents, aggrieved for receiving a reduced award due to the attorney's charging lien,
contested the validity of the contingent fee arrangement they have with petitioner, albeit four of
the fourteen private respondents have expressed their conformity thereto.
Finding the arrangement excessive, the Labor Arbiter ordered the reduction of petitioner's
contingent fee from fifty percent of the judgment award to ten percent, except for the four private
respondents who earlier expressed their conformity.

Petitioner appealed to NLRC which

affirmed with modification the Labor Arbiter's order by ruling that the ten percent contingent fee
should apply also to the four respondents even if they earlier agreed to pay a higher percentage.
Petitioner's motion for reconsideration was denied, hence this petition for certiorari.
Issue:
The sole issue in this petition is whether or not the reduction of petitioner's contingent fee is
warranted.
Ruling:
Affirmative. A contingent fee arrangement is an agreement laid down in an express contract
between a lawyer and a client in which the lawyer's professional fee, usually a fixed percentage

of what may be recovered in the action is made to depend upon the success of the litigation. 7
This arrangement is valid in this jurisdiction. 8 It is, however, under the supervision and scrutiny
of the court to protect clients from unjust charges. 9 Section 13 of the Canons of Professional
Ethics states that "[a] contract for a contingent fee, where sanctioned by law, should be
reasonable under all the circumstances of the case including the risk and uncertainty of the
compensation, but should always be subject to the supervision of a court, as to its
reasonableness". Likewise, Rule 138, Section 24 of the Rules of Court provides:
Sec. 24.

Compensation of attorneys; agreement as to fees. An attorney shall be

entitled to have and recover from his client no more than a reasonable compensation for
his services, with a view to the importance of the subject-matter of the controversy, the
extent of the services rendered, and the professional standing of the attorney. No court
shall be bound by the opinion of attorneys as expert witnesses as to the proper
compensation but may disregard such testimony and base its conclusion on its own
professional knowledge. A written contract for services shall control the amount to be
paid therefor unless found by the court to be unconscionable or unreasonable.
When it comes, therefore, to the validity of contingent fees, in large measure it depends on the
reasonableness of the stipulated fees under the circumstances of each case. The reduction of
unreasonable attorney's fees is within the regulatory powers of the courts.
We agree with the NLRC's assessment that fifty percent of the judgment award as attorney's fees
is excessive and unreasonable. The financial capacity and economic status of the client have to
be taken into account in fixing the reasonableness of the fee. Noting that petitioner's clients were
lowly janitors who receive miniscule salaries and that they were precisely represented by
petitioner in the labor dispute for reinstatement and claim for backwages, wage differentials,
emergency cost of living allowance, thirteenth-month pay and attorney's fees to acquire what
they have not been receiving under the law and to alleviate their living condition, the reduction
of petitioner's contingent fee is proper. Labor cases, it should be stressed, call for compassionate
justice.
Furthermore, petitioner's contingent fee falls within the purview of Article 111 of the Labor
Code. This article fixes the limit on the amount of attorney's fees which a lawyer, like petitioner,
may recover in any judicial or administrative proceedings since the labor suit where he
represented private respondents asked for the claim and recovery of wages. In fact, We are not

even precluded from fixing a lower amount than the ten percent ceiling prescribed by the article
when circumstances warrant it.

Nonetheless, considering the circumstances and the able

handling of the case, petitioner's fee need not be further reduced.


The manifestation of petitioner's four clients indicating their conformity with the contingent fee
contract did not make the agreement valid. The contingent fee contract being unreasonable and
unconscionable the same was correctly disallowed by public respondent NLRC even with respect
to the four private respondents who agreed to pay higher percentage. Petitioner is reminded that
as a lawyer he is primarily an officer of the court charged with the duty of assisting the court in
administering impartial justice between the parties. When he takes his oath, he submits himself
to the authority of the court and subjects his professional fees to judicial control.

269.

Traders Royal Bank Employees union v NLRC

Facts:
Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel Noel
A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer agreement on
February 26, 1987 whereby the former obligated itself to pay the latter a monthly retainer fee of
P3,000.00 in consideration of the law firm's undertaking to render the services enumerated in
their contract.
During the existence of that agreement, petitioner union referred to private respondent the claims
of its members for holiday, mid-year and year-end bonuses against their employer, Traders Royal
Bank (TRB). After the appropriate complaint was filed by private respondent, the NLRC
rendered a decision in the foregoing case in favor of the employees, awarding them holiday pay
differential, mid-year bonus differential, and year-end bonus differential.
However, pending the hearing of the application for the writ of execution, TRB challenged the
decision of the NLRC before the Supreme Court. The Court, in its decision promulgated on
August 30, 1990, 6 modified the decision of the NLRC by deleting the award of mid-year and
year-end bonus differentials while affirming the award of holiday pay differential.
The bank voluntarily complied with such final judgment and determined the holiday pay
differential to be in the amount of P175,794.32. Petitioner never contested the amount thus found
by TRB. After private respondent received the above decision of the Supreme Court on
September 18, 1990, 10 he notified the petitioner union, the TRB management and the NLRC of
his right to exercise and enforce his attorney's lien over the award of holiday pay differential
through a letter.
Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for
the determination of his attorney's fees, praying that ten percent (10%) of the total award for
holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be
declared as his attorney's fees, and that petitioner union be ordered to pay and remit said amount
to him.
Issue:
w/n the respondent is entitled for 10% attorneys fee as stated under article 111 of the labor code?

Ruling:
Negative. Viewed from another aspect, since it is claimed that petitioner obtained respondent's
legal services and assistance regarding its claims against the bank, only they did not enter into a
special contract regarding the compensation therefor, there is at least the innominate contract of
facio ut des (I do that you may give). This rule of law, likewise founded on the principle against
unjust enrichment, would also warrant payment for the services of private respondent which
proved beneficial to petitioner's members. In any case, whether there is an agreement or not, the
courts can fix a reasonable compensation which lawyers should receive for their professional
services. 37 However, the value of private respondent's legal services should not be established
on the basis of Article 111 of the Labor Code alone. Said article provides:
Art. 111.

Attorney's fees. (a) In cases of unlawful withholding of wages the

culpable party may be assessed attorney's fees equivalent to ten percent of the amount of
the wages recovered.
The implementing provision of the foregoing article further states:
Sec. 11.

Attorney's fees. Attorney's fees in any judicial or administrative

proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The
fees may be deducted from the total amount due the winning party.
In the first place, the fees mentioned here are the extraordinary attorney's fees recoverable as
indemnity for damages sustained by and payable to the prevailing part. In the second place, the
ten percent (10%) attorney's fees provided for in Article 111 of the Labor Code and Section 11,
Rule VIII, Book III of the Implementing Rules is the maximum of the award that may thus be
granted. Article 111 thus fixes only the limit on the amount of attorney's fees the victorious party
may recover in any judicial or administrative proceedings and it does not even prevent the NLRC
from fixing an amount lower than the ten percent (10%) ceiling prescribed by the article when
circumstances warrant it.
The measure of compensation for private respondent's services as against his client should
properly be addressed by the rule of quantum meruit long adopted in this jurisdiction. Quantum
meruit, meaning "as much as he deserves," is used as the basis for determining the lawyer's
professional fees in the absence of a contract, but recoverable by him from his client.

Here, then, is the flaw we find in the award for attorney's fees in favor of private respondent.
Instead of adopting the above guidelines, the labor arbiter forthwith but erroneously set the
amount of attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on
the operation of Article 111 when he fixed the amount of attorney's fees at P17,574.43. 44
Observe the conclusion stated in his order.
As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's
fees in the nature of damages sustained by and awarded to the prevailing party. It may not be
used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client
for the legal services he rendered. Also, while it limits the maximum allowable amount of
attorney's fees, it does not direct the instantaneous and automatic award of attorney's fees in such
maximum limit.
It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case
at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases
calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a
hearing for the proper determination of attorney's fees. The criteria found in the Code of
Professional Responsibility are to be considered, and not disregarded, in assessing the proper
amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on
the matter and for the resolution of private respondent's fees.

270.

Lim vs NLRC

Facts:
The record shows that private respondent Victoria Calsado was hired by Sweet Lines, Inc. on
March 5, 1981, as Senior Branch Officer of its International Accounts Department for a fixed
salary and a stipulated 5 % commission on sales production. On December 1, 1983, after
tendering her resignation to accept another offer of employment, she was persuaded to remain
with an offer of her promotion to Manager of the Department with corresponding increase in
compensation, which she accepted. She was also allowed to buy a second-hand Colt Lancer
pursuant to a liberal car plan under which one-half of the cost was to be paid by the company and
the other half was to be deducted from her salary. Relations began to sour later, however, when
she repeatedly asked for payment of her commissions, which had accumulated and were long
overdue. She also complained of the inordinate demands on her time even when she was sick and
in the hospital. Finally, on July 16, 1985, she was served with a letter from Samuel Casas Lim,
the other petitioner, informing her that her "employment with Sweet Lines" would terminate on
August 5, 1985.
Issue:
w/n the respondent is entitled for both separation pay and payment of backwages?
Ruling:
Affirmative. The court hold that the contention of Sweet Lines that separation pay and back
wages are inconsistent with each other is not well-taken. Separation pay is granted where
reinstatement is no longer advisable because of strained relations between the employee and the
employer. Back wages represent compensation that should have been earned but were not
collected because of the unjust dismissal. The bases for computing the two are different, the first
being usually the length of the employee's service and the second the actual period when he was
unlawfully prevented from working.
We have ordered the payment of both in proper case as otherwise the employee might be
deprived of benefits justly due him. Thus, if an employee who has worked only one year is
sustained by the labor court after three years from his unjust dismissal, granting him separation

pay only would entitle him to only one month salary. There is no reason why he should not also
be paid three years back wages corresponding to the period when he could not return to his work
or could not find employment elsewhere.

271. Osias academy vs DOLE


Issue:
w/n The award by the respondent Minister of Labor of separation pay, on grounds of equity, to
two employees of petitioner Osias Academy despite the avowedly correct grant of clearance to it
to terminate the services of said employees on the ground of loss of confidence based on a
satisfactory showing of embezzlement of company funds, serious misconduct, is valid?
Ruling:
Negative. There should be no question that where it comes to such valid but not iniquitous causes
as failure to comply with work standards, the grant of separation pay to the dismissed employee
may be both just and compassionate, particularly if he has worked for some time with the
company. For example, a subordinate who has irreconcilable policy or personal differences with
his employer may be validly dismissed for demonstrated loss of confidence, which is an
allowable ground. A working mother who has to be frequently absent because she has also to
take care of her child may also be removed because of her poor attendance, this being another
authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his
work but on the other hand the company cannot be required to maintain him just the same at the
expense of the efficiency of its operations. He too may be validly replaced. Under these and
similar circumstances, however, the award to the employee of separation pay would be
sustainable under the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the generosity of
the law must be more discerning. There is no doubt it is compassionate to give separation pay to
a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such
generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere
incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless
subject to dismissal but may be allowed separation pay since his conduct, while inept, is not
depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of
duty and in the company premises, the situation is changed completely. This is not only
inefficiency but immorality and the grant of separation pay would be entirely unjustified.

We hold that henceforth separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious misconduct
or those reflecting on his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to give the dismissed employee
separation pay, or financial assistance, or whatever other name it is called, on the ground of
social justice.
A contrary rule would, as the petitioner correctly argues, have the effect of rewarding rather than
punishing the erring employee for his offense. And we do not agree that the punishment is his
dismissal only and that the separation pay has nothing to do with the wrong he has committed.
Of course it has. Indeed, if the employee who steals from the company is granted separation pay
even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a little leniency if he is again found out. This kind
of misplaced compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the
Constitution.
In light of the foregoing propositions, it is evident that the grant of separation pay to the private
respondents is unjustified, they having been dismissed for causes reflecting on their moral
character.

272.

Gustilo vs WYET phil.

Facts:
Alan D. Gustilo, petitioner, was employed by Wyeth Philippines, Inc., respondent company, as a
pharmaceutical territory manager. Eventually, he was placed in charge of its various branches in
Metro Bacolod City and Negros Occidental. To ensure a profitable sale of its pharmaceutical
products, he performed various functions, such as visiting hospitals, pharmacies, drugstores and
physicians concerned; preparing and submitting his pre-dated itinerary; and submitting periodic
reports of his daily call visits, monthly itinerary, and weekly locator and incurred expenses.
Subsequently, petitioner submitted to respondent company a plan of action dated February 6,
1996 where he committed to make an average of 18 daily calls to physicians; submit promptly all
periodic reports; and ensure 95% territory program performance for every cycle. However,
petitioner failed to achieve the above objectives, prompting respondent company to send him two
(2) separate notices dated February 20, 1996 and April 10, 1996, charging him with willful
violation of company rules and regulations and directing him to submit a written explanation. In
his explanation, petitioner stated that he was overworked and an object of reprisal by his
immediate supervisor. On May 22, 1996, upon recommendation of a Review Panel, respondent
company terminated the services of petitioner.
Issue:
w/n the petitioner (gustilo) is entitled for separation pay awarded by Court of appeals by reason
of several mitigating factors?
Ruling:
Negative. The rule embodied in the Omnibus Rules Implementing the Labor Code is that a
person dismissed for cause as defined therein is not entitled to separation pay.[7] However, in
PLDT vs. NLRC and Abucay,[8] we held:
x x x henceforth, separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the reason for the valid
dismissal is, x x x an offense involving moral turpitude x x x, the employer may not be

required to give the dismissed employee separation pay, or financial assistance, or


whatever other name it is called, on the ground of social justice.
Consequently, granting financial assistance to the strikers is clearly a specious inconsistency
(supra). We are of course aware that financial assistance may be allowed as a measure of social
justice in exceptional circumstances and as an equitable concession. We are likewise mindful that
financial assistance is allowed only in those instances where the employee is validly dismissed
for causes other than serious misconduct or those reflecting on his moral character (Zenco Sales,
Inc. vs. National Labor Relations Commission, 234 SCRA 689). x x x.
In the case at bar, we find no exceptional circumstances to warrant the grant of financial
assistance or separation pay to petitioner. It bears stressing that petitioner did not only violate
company disciplinary rules and regulations. As found by the Court of Appeals, he falsified his
employment application form by not stating therein that he is the nephew of Mr. Danao,
respondent Wyeths Nutritional Territory Manager. Also, on February 2, 1993, he was suspended
for falsifying a gasoline receipt. On June 28, 1993, he was warned for submitting a false report of
his trade outlet calls. On September 8, 1993, he was found guilty of unauthorized availment of
sick, vacation and emergency leaves. These infractions manifest his slack of moral principle. In
simple term, he is dishonest.

273. DBP vs NLRC


Facts:
Philippine Smelters Corporation (PSC), a corporation registered under Philippine law, obtained a
loan from the Development Bank of the Philippines, a government-owned financial, to finance
its iron smelting and steel manufacturing business. To secure said loan, PSC mortgaged to DBP
real properties with all the buildings and improvements thereon and chattels, with its President,
Jose T. Marcelo, Jr., as co-obligor.
By virtue of the said loan agreement, DBP became the majority stockholder of PSC, with
stockholdings in the amount of P31,000,000.00 of the total P60,226,000.00 subscribed and paid
up capital stock. Subsequently, it took over the management of PSC.
When PSC failed to pay its obligation with DBP, which amounted to P75,752,445.83 as of
March 31, 1986, DBP foreclosed and acquired the mortgaged real estate and chattels of PSC in
the auction sales .
On February 10, 1987, forty (40) petitioners filed a Petition for Involuntary Insolvency in the
Regional Trial Court, against PSC and DBP, impleading as co-respondents therein Olecram
Mining Corporation, Jose Panganiban Ice Plant and Cold Storage, Inc. and PISO Bank, with said
petitioners representing themselves as unpaid employees of said private respondents, except
PISO Bank.
On February 13, 1987, herein private respondents filed a complaint with the Department of
Labor against PSC for nonpayment of salaries, 13th month pay, incentive leave pay and
separation pay. On February 20, 1987, the complaint was amended to include DBP as party
respondent. The case was thereafter indorsed to the Arbitration Branch of the National Labor
Relations Commission (NLRC). DBP filed its position paper on September 7, 1987, invoking the
absence of employer-employee relationship between private respondents and DBP and
submitting that when DBP foreclosed the assets of PSC, it did so as a foreclosing creditor.
Issue:
The pivotal issue for resolution is whether DBP, as foreclosing creditor, could be held liable for
the unpaid wages, 13th month pay, incentive leave pay and separation pay of the employees of
PSC.

Ruling:
Negative. During the dates material to the foregoing proceedings, Article 110 of the Labor Code
read:
Art. 110.

Worker preference in case of bankruptcy. In the event of bankruptcy or

liquidation of an employer's business, his workers shall enjoy first preference as regards
wages due them for services rendered during the period prior to the bankruptcy or
liquidation, any provision of law to the contrary notwithstanding. Unpaid wages shall be
paid in full before other creditors may establish any claim to a share in the assets of the
employer.
In conjunction therewith, Section 10, Rule VIII, Book III of the Implementing Rules and
Regulations of the Labor Code provided:
Sec. 10.

Payment of wages in mm of bankruptcy.-Unpaid wages earned by the

employees before the declaration of bankruptcy or judicial liquidation of the employer's


business shall be given first preference and shall be paid in full before other creditors
may establish any claim to a share in the assets of the employer.
Republic Act No. 6715, which took effect on March 21, 1989, amended Article 110 of the Labor
Code to read as follows:
Art. 110.

Worker preference in case of bankruptcy. In the event of bankruptcy or

liquidation of an employer's business, his workers shall enjoy first preference as regards
their unpaid wages and other monetary claims, any provision of law to the contrary
notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the
claims of the Government and other creditors may be paid.
As a consequence, Section 1 0, Rule VIII, Book III of the Implementing Rules and Regulations
of the Labor Code was likewise amended, to wit:
Sec. 10.

Payment of wages and other monetary claims in case of bankruptcy. In

case of bankruptcy or liquidation of the employer's business, the unpaid wages and other
monetary claims of the employees shall be given first preference and shall be paid in full
before the claims of government and other creditors may be paid.
Despite said amendments, however, the same interpretation of Article 110 as applied in the
aforesaid case of Development Bank of the Philippines vs. Hon. Labor Arbiter Ariel C. Santos, et

al., supra, was adopted by this Court in the recent case of Development Bank of the Philippines
vs. National Labor Relations Commission, et. al., 7 For facility of reference, especially the
rationalization for the conclusions reached therein, we reproduce the salient portions of the
decision in this later case.
Notably, the terms "declaration" of bankruptcy or "judicial" liquidation have been eliminated.
Does this means then that liquidation proceedings have been done away with?
We opine m the negative, upon the following considerations:
1.

Because of its impact on the entire system of credit, Article 110 of the Labor Code cannot

be viewed in isolation but must be read in relation to the Civil Code scheme on classification and
preference of credits.
Article 110 of the Labor Code, in determining the reach of its terms, cannot be viewed in
isolation. Rather, Article 110 must be read in relation to the provisions of the Civil Code
concerning the classification, concurrence and preference of credits which provisions find
particular application in insolvency proceedings where the claims of all creditors, preferred or
non-preferred, may be adjudicated in a binding manner ... (Republic vs. Peralta (G.R. No. L56568, May 20, 1987, 150 SCRA 37).
2.

In the same way that the Civil Code provisions on classification of credits and the

Insolvency Law have been brought into harmony, so also must the kindred provisions of the
Labor Law be made to harmonize with those laws.
3.

In the event of insolvency, a principal objective should be to effect an equitable

distribution of the insolvent's property among his creditors. To accomplish this there must first be
some proceeding where notice to all of the insolvent's creditors may be given and where the
claims of preferred creditors may be bindingly adjudicated (De Barretto vs. Villanueva, No. L14938, December 29, 1962, 6 SCRA 928). The rationale therefor has been expressed in the
recent case of DBP vs. Secretary of Labor (G.R. No. 79351, 28 November 1989), which we
quote:
A preference of credit bestows upon the preferred creditor an advantage of having his
credit satisfied first ahead of other claims which may be established against the debtor.
Logically, it becomes material only when the properties and assets of the debtors are
insufficient to pay his debts in full; for if the debtor is amply able to pay his various
creditors, in full, how can the necessity exist to determine which of his creditors shall be

paid first or whether they shall be paid out of the proceeds of the sale of the debtor's
specific property? Indubitably, the preferential right of credit attains significance only
after the properties of the debtor have been inventoried and liquidated, and the claims
held by his various creditors have been established (Kuenzle & Streiff [Ltd.] vs.
Villanueva, 41 Phil. 611 [1916]; Barretto vs. Villanueva, G.R. No. 14038, 29 December
1962, 6 SCRA 928; Philippine Savings Bank vs. Lantin, G.R. 33929, 2 September
1983,124 SCRA 476).
4.

A distinction should be made between a preference of credit and a lien. A preference

applies only to claims which do not attach to specific properties. A hen creates a charge on a
particular property. The right of first preference as regards unpaid wages recognize by Article
110 does not constitute a hen on the property of the insolvent debtor in favor of workers. It is but
a preference of credit in their favor, a preference in application. It is a met-hod adopted to
determine and specify the order in which credits should be paid in the final distribution of the
proceeds of the insolvent's assets- It is a right to a first preference in the discharge of the funds of
the judgment debtor. in the words of Republic vs. Peralta, supra:
Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees
for unpaid wages either upon all of the properties or upon any particular property owned by their
employer. Claims for unpaid wages do not therefore fall at all within the category of specially
preferred claims established under Articles 2241 and 2242 of the Civil Code, except to the extent
that such claims for unpaid wages are already covered by Article 2241, number 6: 'claims for
laborers' wages, on the goods manufactured or the work done; or by Article 2242, number 3:
'claims of laborers and other workers engaged in the construction, reconstruction or repair of
buildings, canals and other works, upon said buildings, canals or other works.' To the extent that
claims for unpaid wages fall outside the scope of Article 2241, number 6 and Article 2242,
number 3, they would come within the ambit of the category of ordinary preferred credits under
Article 2244.'
5.

The DBP anchors its claim on a mortgage credit. A mortgage directly and immediately

subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment
of the obligation for whose security it was constituted (Article 2176, Civil Code). It creates a real
right which is enforceable against the whole world. It is a lien on an Identified immovable
property, which a preference is not. A recorded mortgage credit is a special preferred credit under

Article 2242 (5) of the Civil Code on classification of credits. The preference given by Article
110, when not falling within Article 2241 (6) and Article 2242 (3) of the Civil Code and not
attached to any specific property, is an ordinary preferred credit although its impact is to move it
from second priority to first priority in the order of preference established by Article 2244 of the
Civil Code (Republic vs. Peralta, supra).
In fact, under the Insolvency Law (Section 29) a creditor holding a mortgage or hen of any kind
as security is not permitted to vote in the election of the assignee in insolvency proceedings
unless the value of his security is first fixed or he surrenders all such property to the receiver of
the insolvent's estate.
6.

Even if Article 110 and its Implementing Rule, as amended, should be interpreted to

mean 'absolute preference,' the same should be given only prospective effect in line with the
cardinal rule that laws shall have no retroactive effect, unless the contrary is provided (Article 4,
Civil Code). Thereby, any infringement on the constitutional guarantee on non-impairment of
obligation of contracts (Section 10, Article III, 1987 Constitution) is also avoided. In point of
fact, DBP's mortgage credit antedated by several years the amendatory law, RA No. 6715. To
give Article 110 retroactive effect would be to wipe out the mortgage in DBPs favor and expose
it to a risk which it sought to protect itself against by requiring a collateral in the form of real
property.
In fine, the right to preference given to workers under Article 110 of the Labor Code cannot exist
in any effective way prior to the time of its presentation in distribution proceedings. It will find
application when, in proceedings such as insolvency, such unpaid wages shall be paid in full
before the 'claims of the Government and other creditors' may be paid. But, for an orderly
settlement of a debtor's assets, all creditors must be convened, their claims ascertained and
inventoried, and thereafter the preference determined in the course of judicial proceedings which
have for their object the subjection of the property of the debtor to the payment of his debts or
other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is
assured (Philippine Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA 476);
the adjudication made will be binding on all parties-in-interest, since those proceedings are
proceedings in rem; and the legal scheme of classification, concurrence and preference of credits
in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony.

On the foregoing considerations and it appearing that an involuntary insolvency proceeding has
been instituted against PSC, private respondents should properly assert their respective claims in
said proceeding. .

274.

DBP vs NLRC

Facts:
On 21 March 1977 private respondent Leonor A. Ang started employment as Executive Secretary
with Tropical Philippines Wood Industries, Inc. (TPWII), a corporation engaged in the
manufacture and sale of veneer, plywood and sawdust panel boards.
In September 1983 petitioner Development Bank of the Philippines, as mortgagee of TPWII,
foreclosed its plant facilities and equipment. Nevertheless TPWII continued its business
operations interrupted only by brief shutdowns for the purpose of servicing its plant facilities and
equipment. In January 1986 petitioner took possession of the foreclosed properties. From then on
the company ceased its operations. As a consequence private respondent was on 15 April 1986
verbally terminated from the service.
On 14 December 1987 aggrieved by the termination of her employment, private respondent filed
with the Labor Arbiter a complaint for separation pay, 13th month pay, vacation and sick leave
pay, salaries and allowances against TPWII, its General Manager, and petitioner.
Issue:
Is declaration of bankruptcy or judicial liquidation required before the worker's preference may
be invoked under Art. 110 of the Labor Code?
Ruling:
We hold that public respondent gravely abused its discretion in affirming the decision of the
Labor Arbiter. Art. 110 should not be treated apart from other laws but applied in conjunction
with the pertinent provisions of the Civil Code and the Insolvency Law to the extent that piecemeal distribution of the assets of the debtor is avoided. Art. 110, then prevailing, provides:
Art. 110.

Worker preference in case of bankruptcy. In the event of bankruptcy or

liquidation of an employer's business, his workers shall enjoy first preference as regards wages
due them for services rendered during the period prior to the bankruptcy or liquidation, any
provision to the contrary notwithstanding. Unpaid wages shall be paid in full before other
creditors may establish any claim to a share in the assets of the employer.
Complementing Art. 110, Sec. 10, Rule VIII, Book III, of the Revised Rules and Regulations
Implementing the Labor Code provides:

Sec. 10.

Payment of wages in case of bankruptcy. Unpaid wages earned by the

employees before the declaration of bankruptcy or judicial liquidation of the employer's


business shall be given first preference and shall be paid in full before other creditors
may establish any claim to a share in the assets of the employer.
We interpreted this provision in Development Bank of the Philippines v. Santos 4 to mean that
. . . a declaration of bankruptcy or a judicial liquidation must be present before the
worker's preference may be enforced. Thus, Article 110 of the Labor Code and its
implementing rule cannot be invoked by the respondents in this case absent a formal
declaration of bankruptcy or a liquidation order . . . . (Emphasis supplied).
The rationale is that to hold Art. 110 to be applicable also to extrajudicial proceedings would be
putting the worker in a better position than the State which could only assert its own prior
preference in case of a judicial proceeding.
Although the terms "declaration" (of bankruptcy) or "judicial" (liquidation) have been notably
eliminated, still in Development Bank of the Philippines v. NLRC, 6 this Court did not alter its
original position that the right to preference given to workers under Art. 110 cannot exist in any
effective way prior to the time of its presentation in distribution proceedings.

275.

Prudential Bank vs NLRC

Facts:
The records show that Interasia Container Industries, Inc. (INTERASIA), was embroiled in three
(3) labor cases which were eventually resolved against it. With the finality of the three (3)
decisions, writs of execution were issued. The Sheriff levied on execution personal properties
located in the factory of INTERASIA.
Petitioner filed an Affidavit of Third-Party Claim asserting ownership over the seized properties
on the strength of trust receipts executed by INTERASIA in its favor.
Issue:
w/n the trust receipt executed between Interasia and the petitioner (prudential bank) attaches a
lien, hence, created a preference on the part of the petitioner?
Ruling:
Affirmative. (A) trust receipt arrangement does not involve a simple loan transaction between a
creditor and debtor-importer. Apart from a loan feature, the trust receipt arrangement has a
security feature that is covered by the trust receipt itself. (Vintola v. Insular Bank of Asia and
America, 150 SCRA 578 [1987] That second feature is what provides the much needed financial
assistance to our traders in the importation or purchase of goods or merchandise through the use
of those goods or merchandise as collateral for the advancements made by a bank (Samo v.
People, 115 Phil 346 [1962]). The title of the bank to the security is the one sought to be
protected and not the loan which is a separate and distinct agreement.
More importantly, owing to the vital role trust receipts play in international and domestic
commerce, Sec. 12 of P.D. No. 115 9 assures the entruster of the validity of his claim against all
creditors
Sec. 12.

Validity of entruster's security interest as against creditors. The entruster's

security interest in goods, documents, or instruments pursuant to the written terms of a trust
receipt shall be valid as against all creditors of the entrustee for the duration of the trust receipt
agreement.

From the legal and jurisprudential standpoint it is clear that the security interest of the entruster is
not merely an empty or idle title. To a certain extent, such interest, such interest becomes a "lien"
on the goods because the entruster's advances will have to be settled first before the entrustee can
consolidate his ownership over the goods. A contrary view would be disastrous. For to refuse to
recognize the title of the banker under the trust receipt as security for the advance of the purchase
price would be to strike down a bona fide and honest transaction of great commercial benefit and
advantage founded upon a well-recognized custom by which banking credit is officially
mobilized for manufacturers and importers of small means. 10
The NLRC argues that inasmuch as petitioner did not cancel the Trust Receipt Agreements and
took possession of the properties it could not claim ownership of the properties.
We do not agree. Significantly, the law uses the word "may" in granting to the entruster the right
to cancel the trust and take possession of the goods. Consequently, petitioner has the discretion to
avail of such right or seek any alternative action, such as a third-party claim or a separate civil
action which it deems best to protect its right, at anytime upon default or failure of the entrustee
to comply with any of the terms and conditions of the trust agreement.
Besides, as earlier stated, the law warrants the validity of petitioner's security interest in the
goods pursuant to the written terms of the trust receipt as against all creditors of the trust receipt
agreement. The only exception to the rule is when the properties are in the hands of an innocent
purchaser for value and in good faith. The records however do not show that the winning bidder
is such purchaser. Neither can private respondents plead preferential claims to the properties as
petitioner has the primary right to them until its advances are fully paid.
In fine, we hold that under the law and jurisprudence the NLRC committed grave abuse of
discretion in disregarding the third-party claim of petitioner. Necessarily the auction sale held on
5 November 1992 should be set aside. For there would be neither justice nor equity in taking the
funds from the party whose means had purchased the property under the contract.

276.

MAM realty vs NLRC

Facts:
The case originated from a complaint filed with the Labor Arbiter by private respondent Celso B.
Balbastro against herein petitioners, MAM Realty Development Corporation ("MAM") and its
Vice President Manuel P. Centeno, for wage differentials, "ECOLA," overtime pay, incentive
leave pay, 13th month pay (for the years 1988 and 1989), holiday pay and rest day pay. Balbastro
alleged that he was employed by MAM as a pump operator in 1982 and had since performed
such work at its Rancho Estate, Marikina, Metro Manila. He earned a basic monthly salary of
P1,590.00 for seven days of work a week that started from 6:00 a.m. to up until 6:00 p.m. daily.
MAM countered that Balbastro had previously been employed by Francisco Cacho and Co., Inc.,
the developer of Rancho Estates. Sometime in May 1982, his services were contracted by MAM
for the operation of the Rancho Estates' water pump. He was engaged, however, not as an
employee, but as a service contractor, at an agreed fee of P1,590.00 a month. Similar
arrangements were likewise entered into by MAM with one Rodolfo Mercado and with a
security guard of Rancho Estates III Homeowners' Association. Under the agreement, Balbastro
was merely made to open and close on a daily basis the water supply system of the different
phases of the subdivision in accordance with its water rationing scheme. He worked for only a
maximum period of three hours a day, and he made use of his free time by offering plumbing
services to the residents of the subdivision. He was not at all subject to the control or supervision
of MAM for, in fact, his work could so also be done either by Mercado or by the security guard.
On 23 May 1990, prior to the filing of the complaint, MAM executed a Deed of Transfer, 1
effective 01 July 1990, in favor of the Rancho Estates Phase III Homeowners Association, Inc.,
conveying to the latter all its rights and interests over the water system in the subdivision.
Issue:
A prime focus in the instant petition is the question of when to hold a director or officer of a
corporation solidarily obligated with the latter for a corporate liability.

Ruling:
We agree with petitioners, however, that the NLRC erred in holding Centeno jointly and
severally liable with MAM. A corporation, being a juridical entity, may act only through its
directors, officers and employees. Obligations incurred by them, acting as such corporate agents,
are not theirs but the direct accountabilities of the corporation they represent. True, solidary
liabilities may at times be incurred but only when exceptional circumstances warrant such as,
generally, in the following cases:
1.

When directors and trustees or, in appropriate cases, the officers of a corporation

(a)

vote for or assent to patently unlawful acts of the corporation;

(b)

act in bad faith or with gross negligence in directing the corporate affairs;

(c)

are guilty of conflict of interest to the prejudice of the corporation, its stockholders or

members, and other persons.


2.

When a director or officer has consented to the issuance of watered stocks or who, having

knowledge thereof, did not forthwith file with the corporate secretary his written objection
thereto.
3.

When a director, trustee or officer has contractually agreed or stipulated to hold himself

personally and solidarily liable with the Corporation. 12


4

When a director, trustee or officer is made, by specific provision of law, personally liable

for his corporate action. 13


In labor cases, for instance, the Court has held corporate directors and officers solidarily liable
with the corporation for the termination of employment of employees done with malice or in bad
faith. 14
In the case at Bench, there is nothing substantial on record that can justify, prescinding from the
foregoing, petitioner Centeno's solidary liability with the corporation.

277.

Baez vs hon. Valdevilla

Facts:
Petitioner (Baez) was the sales operations manager of private respondent (ORO marketing) in its
branch in Iligan City. In 1993, private respondent "indefinitely suspended" petitioner and the
latter filed a complaint for illegal dismissal with the National Labor Relations Commission
("NLRC") in Iligan City. In a decision dated July 7, 1994, Labor Arbiter Nicodemus G. Palangan
found petitioner to have been illegally dismissed and ordered the payment of separation pay in
lieu of reinstatement, and of backwages and attorney's fees. The decision was appealed to the
NLRC, which dismissed the same for having been filed out of time.[2] Elevated by petition for
certiorari before this Court, the case was dismissed on technical grounds[3]; however, the Court
also pointed out that even if all the procedural requirements for the filing of the petition were
met, it would still be dismissed for failure to show grave abuse of discretion on the part of the
NLRC.
On November 13, 1995, private respondent (ORO marketing) filed a complaint for damages
before the Regional Trial Court ("RTC") of Misamis Oriental.
Issue:
The determining issue, however, is the issue of jurisdiction.
Ruling:
Article 217(a), paragraph 4 of the Labor Code, which was already in effect at the time of the
filing of this case, reads:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. --- (a) Except as otherwise
provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:
4. Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations;

The above provisions are a result of the amendment by Section 9 of Republic Act ("R.A.") No.
6715, which took effect on March 21, 1989, and which put to rest the earlier confusion as to who
between Labor Arbiters and regular courts had jurisdiction over claims for damages as between
employers and employees. Sppedjo
It will be recalled that years prior to R.A. 6715, jurisdiction over all money claims of workers,
including claims for damages, was originally lodged with the Labor Arbiters and the NLRC by
Article 217 of the Labor Code.[7] On May 1, 1979, however, Presidential Decree ("P.D.") No.
1367 amended said Article 217 to the effect that "Regional Directors shall not indorse and Labor
Arbiters shall not entertain claims for moral or other forms of damages."[8] This limitation in
jurisdiction, however, lasted only briefly since on May 1, 1980, P.D. No. 1691 nullified P.D. No.
1367 and restored Article 217 of the Labor Code almost to its original form. Presently, and as
amended by R.A. 6715, the jurisdiction of Labor Arbiters and the NLRC in Article 217 is
comprehensive enough to include claims for all forms of damages "arising from the employeremployee relations". Miso
Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article
217 to claims for damages filed by employees, we hold that by the designating clause "arising
from the employer-employee relations" Article 217 should apply with equal force to the claim of
an employer for actual damages against its dismissed employee, where the basis for the claim
arises from or is necessarily connected with the fact of termination, and should be entered as a
counterclaim in the illegal dismissal case.

278.

Marino vs Gamilla

Facts:
Sometime in May 1986, the UST Faculty Union (USTFU) entered into an initial collective
bargaining agreement with the University of Santo Tomas (UST) wherein UST undertook to
provide USTFU with a free office space at Room 302 of its Health Center Building.
On 21 September 1996, the officers and directors of USTFU scheduled a general membership
meeting on 5 October 1996 for the election of the union officers. However, respondent Gamilla
and some faculty members filed a Petition with the Med-Arbitration Unit of the Department of
Labor and Employment (DOLE) seeking to stop the holding of the USTFU election.
On 4 October 1996, Med-Arbiter Tomas Falconitin issued a temporary restraining order (TRO)
in Case No. NCR-OD-M-9610-001, enjoining the holding of the election of the USTFU officers
and directors. However, denying the TRO they themselves sought, Gamilla and some of the
faculty members present in the 4 October 1996 faculty convocation proceeded with the election
of the USTFU officers.
Two months later, on 4 December 1996, UST and USTFU, represented by Gamilla and his coofficers, entered into a collective bargaining agreement (CBA) for a period of five (5) years from
1 June 1996 up to 31 May 2001. The CBA was ratified on 12 December 1996.[9]
On 27 January 1997, at around eleven in the morning (11:00 a.m.), respondents Gamilla,
Cardenas and Aseron, with some other persons, served a letter of even date on petitioners Mario
and Alamis, demanding that the latter vacate the premises located at Room 302, Health Center
Building, USTthe Office of USTFU. However, only the office messenger was in the office at the
time. After coercing the office messenger to step out of the office, Gamilla and company
padlocked the door leading to the unions office.
On 5 February 1997, petitioners filed with the Regional Trial Court (RTC) of Manila a
Complaint[12] for injunction and damages with a prayer for preliminary injunction and
temporary restraining order over the use of the USTFU office.
Issue:
issue of the case was whether the RTC of Manila had jurisdiction over the subject matter?

Ruling:
Affirmative. Art. 254. Injunction prohibited.No temporary or permanent injunction or restraining
order in any case involving or growing out of labor disputes shall be issued by any court or other
entity, except as otherwise provided in Articles 218 and 264 of this Code.
As pointed out by petitioners, the Court of Appeals erroneously categorized the instant matter as
a labor dispute. Such labor dispute includes any controversy or matter concerning terms or
conditions of employment or the association or representation of persons in negotiating, fixing,
maintaining, changing or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and employee.[45]
Jurisdiction over labor disputes, including claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations is vested in Labor Arbiters and the
National Labor Relations Commission (NLRC).[46]
On the other hand, an intra-union dispute refers to any conflict between and among union
members. It encompasses all disputes or grievances arising from any violation of or
disagreement over any provision of the constitution and by-laws of a union, not excepting cases
arising from chartering or affiliation of labor organizations or from any violation of the rights
and conditions of union membership provided for in the Labor Code.[47]
In contrast, an inter-union dispute refers to any conflict between and among legitimate labor
organizations involving questions of representation for purposes of collective bargaining; it
includes all other conflicts which legitimate labor organizations may have against each other
based on any violations of their rights as labor organizations.[48] Like labor disputes, jurisdiction
over intra-union and inter-union disputes does not pertain to the regular courts. It is vested in the
Bureau of Labor Relations Divisions in the regional offices of the Department of Labor.
Fundamentally, the civil case a quo seeks two reliefs one is for the removal of the padlocks on
the office door and restraining respondents from blocking petitioners access to the premises,
while the other is for the recovery of moral and exemplary damages.
Let us go back to the claim for damages before the lower court. Art. 226 of the Labor Code
provides, thus:
The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the
Department of Labor shall have original and exclusive authority to act, at their own initiative or
upon request of either or both parties, on all inter-union and intra-union conflicts, and all

disputes, grievances or problems arising from or affecting labor-management relations in all


workplaces whether agricultural or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining agreements which shall be the subject
of grievance procedure and/or voluntary arbitration.
Thus, unlike the NLRC which is explicitly vested with the jurisdiction over claims for actual,
moral, exemplary and other forms of damages, the BLR is not specifically empowered to
adjudicate claims of such nature arising from intra-union or inter-union disputes. In fact, Art. 241
of the Labor Code ordains the separate institution before the regular courts of criminal and civil
liabilities arising from violations of the rights and conditions of union membership. The Court
has consistently held that where no employer-employee exists between the parties and no issue is
involved which may be resolved by reference to the Labor Code, other labor statutes, or any
collective bargaining agreement, it is the regional trial court that has jurisdiction.
Administrative agencies are tribunals of limited jurisdiction and as such, can exercise only those
powers which are specifically granted to them by their enabling statutes. Consequently, matters
over which they are not granted authority are beyond their competence.[56] While the trend is
towards vesting administrative bodies with the power to adjudicate matters coming under their
particular specialization, to ensure a more knowledgeable solution of the problems submitted to
them, this should not deprive the courts of justice their power to decide ordinary cases in
accordance with the general laws that do not require any particular expertise or training to
interpret and apply.[57] In their complaint in the civil case, petitioners do not seek any relief
under the Labor Code but the payment of a sum of money as damages on account of respondents
alleged tortuous conduct. The action is within the realm of civil law and, hence, jurisdiction over
the case belongs to the regular courts.

279.

Soliman Security Services inc., vs Ca

Facts:
Respondent Eduardo Valenzuela, a security guard, was a regular employee of petitioner Soliman
Security Services assigned at the BPI-Family Bank, Pasay City. On 09 March 1995, he received
a memorandum from petitioners relieving him from his post at the bank, said to be upon the
latters request, and requiring him to report to the security agency for reassignment. The
following month, or on 07 April 1995, respondent filed a complaint for illegal dismissal on the
ground that his services were terminated without a valid cause and that, during his tenure at the
bank, he was not paid his overtime pay, 13th month pay, and premium pay for services rendered
during holidays and rest days. He averred that, after receiving the memorandum of 09 March
1995, he kept on reporting to the office of petitioners for reassignment but, except for a brief stint
in another post lasting for no more than a week, he was put on a floating status.
Petitioners contended that the relief of respondent from his post, made upon request of the client,
was merely temporary and that respondent had been offered a new post but the latter refused to
accept it. Petitioners argued that respondents floating status for barely 29 days did not constitute
constructive dismissal.
Issue:
1. w/n the posting of bond was timely made by the petitioner (soliman security agency)
2. w/n the respondent was constructively dismissed by the petitioner
Ruling:
1. yes. An appeal to the NLRC is perfected once an appellant files the memorandum of
appeal, pays the required appeal fee and, where an employer appeals and a monetary
award is involved, the latter posts an appeal bond or submits a surety bond issued by a
reputable bonding company. In line with the desired objective of labor laws to have
controversies promptly resolved on their merits, the requirements for perfecting appeals
are given liberal interpretation and construction.

The records before the Court would show, however, that an appeal bond was posted with the
NLRC at the same time that the appeal memorandum of petitioners was filed on 16 October
1998. A certified true copy of the appeal bond would indicate that it was received by the
Commission on 16 October 1998, the date reflected by the stamp-mark thereon. The surety bond
issued by the Philippine Charter Insurance Corporation bore the date of 14 October 1998 or two
days before the appeal memorandum was seasonably filed on 16 October 1998. The Order,[4]
dated 11 November 1998, of the NLRC categorically stated that records [would] disclose that the
instant appeal [was] accompanied by a surety bond, as the Decision sought to be appealed
involved a monetary award. The NLRC, in fact, ordered petitioner to submit an affidavit to
confirm that its appeal bond was genuine and would be in force and effect until the final
disposition of the case. The Commissions declaration that the appeal was accompanied by a
surety bond indicated that there had been compliance with Article 223[5] of the Labor Code.
2. No. The question posed is not new. In the case of Superstar Security Agency, Inc., vs.
NLRC, this Court, addressing a similar issue, has said:
x x x The charge of illegal dismissal was prematurely filed. The records show that a month after
Hermosa was placed on a temporary off-detail, she readily filed a complaint against the
petitioners on the presumption that her services were already terminated. Temporary off-detail is
not equivalent to dismissal. In security parlance, it means waiting to be posted. It is a recognized
fact that security guards employed in a security agency may be temporarily sidelined as their
assignments primarily depend on the contracts entered into by the agency with third parties
(Agro Commercial Security Agencies, Inc. vs. NLRC, et al., G.R. Nos. 82823-24, 31 July 1989).
However, it must be emphasized that such temporary inactivity should continue only for six
months. Otherwise, the security agency concerned could be liable for constructive dismissal.[9]
Constructive dismissal exists when an act of clear discrimination, insensibility or disdain, on the
part of an employer has become so unbearable as to leave an employee with no choice but to
forego continued employment.[10] The temporary off-detail of respondent Valenzuela is not such
a case.

280.

Navarro vs NLRC

Facts:
Petitioners (jeepney drivers) filed before the Regional Arbitration Branch a complaint for illegal
dismissal. The minutes of the proceedings indicate that the counsel for private respondents
informed the labor arbiter of the willingness of private respondents to take petitioners back.
Petitioners reportedly turned down private respondents offer since the drivers just want
separation pay.
On April 3, 1992, private respondents were served a copy of the decision of the labor arbiter.
Aggrieved, they filed on April 13, 1992 with NLRC their memorandum on appeal. Nevertheless,
it was only on April 30, 1992, that private respondents filed the appeal bond. Unfortunately, the
aforesaid bond was later discovered to be spurious because the person who signed it was no
longer connected with the insurance company for more than ten years already. It was only on
July 20, 1993, that private respondents posted a substitute bond issued by another company in
the amount of P95,550.00.
Issue:
w/n CA imputing grave abuse of discretion IN ACTING ON THE APPEAL OF PRIVATE
RESPONDENTS WHEN THE DECISION HAS BECOME FINAL FOR NON-FILING OF A
SUPERSEDEAS BOND WITHIN THE REGLEMENTARY PERIOD TO APPEAL.
Ruling:
The perfection of an appeal within the reglementary period and in the manner prescribed by law
is jurisdictional, and noncompliance with such legal requirement is fatal and has the effect of
rendering the judgment final and executory. Such requirement cannot be trifled with.[4]
Article 223 of the Labor Code provides: slx mis
"ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders.
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly

accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.
Perfection of an appeal includes the filing, within the prescribed period, of the memorandum of
appeal containing, among others, the assignment of error/s, arguments in support thereof, the
relief sought and, in appropriate cases, posting of the appeal bond. In case where the judgment
involves a monetary award, as in this case, the appeal may be perfected only upon posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the NLRC.[5]
The amount of the bond must be equivalent to the monetary award, exclusive of moral and
exemplary damages and attorneys fees.
The records indicate that private respondents received the copy of labor arbiters decision on
April 3, 1992, hence, they had only until April 13, 1992 to perfect their appeal. While private
respondents filed their memorandum of appeal on time, they posted surety bond only on April
30, 1992, which is beyond the ten-day reglementary period, a procedural lapse admitted by
private respondents. Private respondents failure to post the required appeal bond within the
prescribed period is inexcusable.[6] Worse, the appeal bond was bogus having been issued by an
officer no longer connected for a long time with the bonding company. Unfortunately, this
irregularity was not sufficiently explained by private respondents. For sure, they cannot avoid
responsibility by disavowing any knowledge of its fictitiousness for they were required to secure
bond only from reputable companies. Corollary, they should have ensured that the bond is
genuine, otherwise, the purpose of requiring the posting of bond, that is, to guarantee the
payment of valid and legal claims against the employer, would not be served.
We are mindful of the fact that this Court, in a number of cases,[7] has relaxed this requirement
on grounds of substantial justice and special circumstances of the case. However, we find no
cogent reason to apply this same liberal interpretation herein when the bond posted was not
genuine. In this case, there is really no bond posted since a fake or expired bond is in legal
contemplation merely a scrap of paper.

281.

Viron Garments vs NLRC

Facts:
On June 4, 1985, the National Federation of Labor Unions (NAFLU), Rodolfo Romero and other
filed a complaint charging petitioner Viron Garments and Dolly Lim with unfair labor practice
thru illegal shutdown, non-payment of wages and allowances for the periods of February 1-15,
and May 16-31, 1985, non-payment of five (5) days of service incentive leave pay from 1983-85
and illegal deduction of P50 to P100 from the private respondents' wages during the months of
September and October, 1984.
On December 20, 1988, Labor Arbiter Dominador B. Saludares rendered a decision (pp. 57-63)
finding the petitioner guilty of unfair labor practice; ordering them jointly and severally, to
restitute the deductions made from the wages private. The total award amounted to Five Million
Four Hundred Sixty Nine Thousand Sixty-One Pesos and 60/100 (P5,469,061.60). The
employees in due time filed a Motion for Execution.
The petitioners appealed to the NLRC.
On April 10, 1990, the NLRC, directed the petitioners to post a cash or surety bond equal to the
monetary awards from a reputable and duly accredited bonding company.
The petitioners asked to be excused from filing a bond until the recomputation of the backwages
was finally resolved.
Petitioners were given a non-extendible period of ten (10) days (from notice) within which to
post a cash or surety bond, otherwise, their appeal would be dismissed.
On July 6, 1990, petitioners filed a Manifestation and Motion with an attached pleading entitled
"Appeal Bond/Undertaking" which they asked the Commission to consider as substantial
compliance with its resolution dated June 20, 1990.
On November 21, 1990, the NLRC dismissed their appeal for failure to file the required cash or
surety bond. The Commission denied the petitioners' Motion for Reconsideration and on
February 25, 1991, issued a Writ of Execution which was served forthwith on the petitioners
together with the Sheriff's Notice of Levy and Sale on Execution of Personal Property.
Issue:
w/n posting of bond is needed for the perfection of appeal

Ruling:
Article 223 of the Labor Code, as amended by Republic Act No. 6715, provides:
Art. 223.

Appeal. Decisions, awards, or orders of the Labor Artiber are final and

executory unless appealed to the Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds:
In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.
The intension of lawmakers to make the bond an indispensable requisite for the perfection of an
appeal by the employer, is clearly limned in the provision that an appeal by the employer may be
perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly
clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the
exclusive means by which an employer's appeal may be perfected.

282. Star Angel Handicraft vs NLRC


Facts:
On February 12, 1992, private respondents filed a complaint against the Star Angel Handicraft
owned by Ildefonso and Estella Nuique, with the Regional Arbitration Branch, Region IV, of the
NLRC, for illegal dismissal, underpayment of wages, overtime pay, premium pay for holidays,
premium pay for rest day, service incentive leave pay and thirteenth-month pay. By agreement of
the parties, private respondents were allowed to report back for work, leaving only the money
claims for the determination of the Labor Arbiter .
On August 19, petitioner received a copy of the decision rendered by the Labor Arbiter dated
July 22, 1992. In the decision, the money claims were resolved in favor of private respondents
with Helen Fribaldos receiving an award of P45,347.00 and Jolito Fribaldos an award of
P48,125.00, or a total sum of P93,472.00.
Petitioner moved for the reconsideration of the decision of the Labor Arbiter. After the denial of
the motion for reconsideration, petitioner appealed to the NLRC with an Urgent Motion to
Reduce Bond, alleging as grounds grave abuse of discretion committed by the Labor Arbiter in
computing the award of the claims based on an erroneous applicable, daily-minimum wage for
the handicraft establishment.
On October 23, without resolving the Urgent Motion to Reduce Bond, the NLRC (Third Division)
dismissed the appeal of petitioner for appellant's failure to put up a bond.
Issue:
The pivotal issue raised by petitioner is whether the NLRC acted with grave abuse of discretion
when it refused to act on the motion to reduce the appeal bond and when it dismissed the appeal
for failure of petitioner to post the appeal bond.
Ruling:
There is a clear distinction between the filing of an appeal within the reglementary period and its
perfection. The latter may transpire after the end of the reglementary period for filing the appeal.
Under Article 223 of the Labor Code, an appeal to the NLRC from the decisions, awards or
orders of the Labor Arbiter must be made "within ten (10) calendar days from receipt of such

decisions, awards or orders." Under Section 3(a) of Rule VI of the New Rules of Procedure of
the NLRC, the appeal fees must be paid and the memorandum of appeal must be filed within the
ten-day reglementary period.
Neither the Labor Code nor its implementing rules specifically provide for a situation where the
appellant moves for a reduction of the appeal bond.
Inasmuch as in practice the NLRC allows the reduction of the appeal bond upon motion of
appellant and on meritorious grounds, it follows that a motion to that effect may be filed within
the reglementary period for appealing. Such motion may be filed in lieu of a bond which amount
is being contested. In the meantime, the appeal is not deemed perfected and the Labor Arbiter
retains jurisdiction over the case until the NLRC has acted on the motion and appellant has filed
the bond as fixed by the NLRC.

283.

Cannette vs NLRC

Facts:
Private respondent is a wholesaler of dry goods. Petitioner started working with private
respondent as helper-utility man on July 11, 1987. Petitioner alleged that he and his coemployees worked from 7:30 a.m. until past 6:00 p.m., but it was made to appear on their time
cards that they worked the regular eight (8) hours from 8:00 a.m. to 5:00 p.m. Thus, they
received compensation for only eight (8) hours work and were underpaid.
Conflicting positions were raised by both the petitioner and the respondent. On the part of the
petitioner, he contends that he was illegally dismissed by the respondent company. On the other
hand, respondent company posed a position that petitioner abandoned his work.
In a Decision, dated March 8, 1993, 4 Labor Arbiter Ray Alan T. Drilon ruled that petitioner did
not abandon his job but was illegally dismissed from service. As per the return of service, Atty.
Enrique Chua, private respondent's counsel, received a copy of the Decision of the labor arbiter
on March 15, 1993. However, private respondent's appeal to the National Labor Relations
Commission (NLRC) was filed only on March 26, 1993, or a day after the lapse of the ten-day
period prescribed by law. Initially, the NLRC dismissed his appeal.
Private respondent moved for a reconsideration of the dismissal of his appeal. He explained that
the copy of the labor arbiter's Decision which was sent by registered mail to his lawyer, Atty.
Enrique Chua, was received by one NENETTE VASQUEZ, a person not under the employ of his
lawyer.
Issue:
Petitioner contends that the NLRC acted with grave abuse of discretion in: (a) declaring private
respondent's appeal to have been seasonably filed;
(b) holding that petitioner was not dismissed but abandoned his employment;
Ruling:
a.) Section 4, Rule 13 of the Rules of Court provides:
Sec. 4. Personal service. Service of the papers may be made by delivering personally a copy
to the party or his attorney, or by leaving it in his office with his clerk or with a person having

charge thereof. If no person is found in his office, or his office is not known, then by leaving the
copy, between the hours of eight in the morning and six in the evening, at the party's or attorney's
residence, if known, with a person of sufficient discretion to receive the same.
We have ruled that where a copy of the decision is served on a person who is neither a clerk nor
one in charge of the attorney's office, such service is invalid. 12 In the case at bar, it is
undisputed that Nenette Vasquez, the person who received a copy of the labor arbiter's Decision,
was neither a clerk of Atty. Chua, respondents counsel, nor a person in charge of Atty. Chua's
office. Hence, her receipt of said Decision on March 15, 1993 cannot be considered as notice to
Atty. Chua. Since a copy of the Decision was actually delivered by Vasquez to Atty. Chua's clerk
only on March 16, 1993, it was only on this date that the ten-day period for the filing of
respondent's appeal commenced to run. Thus, respondent's March 26, 1993 appeal to the NLRC
was seasonably filed.
b.) However, on the issue of illegal dismissal, we find that petitioner did not abandon his
work but was illegally dismissed from service.
Private respondent claims that petitioner abandoned his employment after he was reprimanded
for his past absences. As proof thereof, private respondent submitted the pertinent daily time
records of petitioner from way back May 1990. However, the evidence adduced by private
respondent show that petitioner was last absent from work on May 18-23, 1992. Private
respondent's stance that he reprimanded petitioner for his past absences after the lapse of one
month, or on July 22, 1992 strains the limits of credence. Indeed, private respondent did not cite
any immediate circumstance which could have triggered such a reprimand on that particular day.
The circumstances narrated by private respondent leading to petitioner's alleged abandonment of
work are highly suspect. On top of all, it is difficult to imagine that petitioner would abandon his
job for prior to his dismissal on July 22, 1992, petitioner, a daily-wage earner, had been in the
employ of private respondent since July 11, 1987, or for close to five (5) years. We find it
incongruous for petitioner to give up his job after receiving a mere reprimand from his employer.
What is more telling is that on August 19, 1992 or less than a month from the time he was
dismissed from service, petitioner immediately filed a complaint against his employer for illegal
dismissal with a prayer for reinstatement. Petitioner's acts negate any inference that he
abandoned his work. Abandonment is a matter of intention and cannot be lightly inferred or
legally presumed from certain equivocal acts. To constitute abandonment, there must be clear

proof of deliberate and unjustified intent to discontinue the employment. 15 The burden of
proving abandonment of work as a just cause for dismissal is on the employer. Private
respondent failed to discharge this burden.

284.

Diamonon vs DOLE

Facts:
Petitioner served as the National Executive Vice President of the National Congress of Unions in
the Sugar Industry of the Philippines (NACUSIP) and Vice President for Luzon of the Philippine
Agricultural, Commercial and Industrial Workers Union (PACIWU).
In a letter dated March 23, 1991, petitioner learned of his removal from the positions he held in
both unions in a resolution approved during a meeting of the National Executive Boards of both
unions.
On April 22, 1991, petitioner sought reconsideration of the resolution on his removal. At the
same time, he initiated a complaint (hereafter referred to as FIRST) before the DOLE against the
National President of NACUSIP and PACIWU, private respondent Atty. Zoilo V. de la Cruz, Jr.,
and the members of the National Executive Boards of NACUSIP and PACIWU questioning the
validity of his removal from the positions he held in the two unions.
Issue:
Petitioner emphatically stresses that the only issue on appeal before the DOLE was petitioners
alleged lack of personality to file the complaint. When public respondent "switched" the ground
for dismissal of the complaint from "lack of personality of the [petitioner] to file the complaint"
to "non-exhaustion of administrative remedies," he staunchly claims that the latter committed
grave abuse of discretion amounting to lack or excess of jurisdiction. For, in doing so, the
challenged orders "went outside the issues and purported to adjudicate something upon which the
parties were not heard.
Ruling:
Generally, an appellate court may only pass upon errors assigned. However, this rule is not
without exceptions.In the following instances,the Supreme Court ruled that an appellate court is
accorded a broad discretionary power to waive the lack of assignment of errors and consider
errors not assigned:
(a) Grounds not assigned as errors but affecting the jurisdiction of the court over the subject
matter;

(b) Matters not assigned as errors on appeal but are evidently plain or clerical errors within
contemplation of law;
(c) Matters not assigned as errors on appeal but consideration of which is necessary in arriving at
a just decision and complete resolution of the case or to serve the interests of a justice or to avoid
dispensing piecemeal justice;
(d) Matters not specifically assigned as errors on appeal but raised in the trial court and are
matters of record having some bearing on the issue submitted which the parties failed to raise or
which the lower court ignored; Supreme
(e) Matters not assigned as errors on appeal but closely related to an error assigned;
(f) Matters not assigned as errors on appeal but upon which the determination of a question
properly assigned, is dependent.
There is no reason why this rule should not apply to administrative bodies as well, like the case
before us, for the instant controversy falls squarely under the exceptions to the general rule.
When the Constitution and by-laws of both unions dictated the remedy for intra-union dispute,
such as petitioners complaint against private respondents for unauthorized or illegal
disbursement of unions funds, this should be resorted to before recourse can be made to the
appropriate administrative or judicial body, not only to give the grievance machinery or appeals
body of the union the opportunity to decide the matter by itself, but also to prevent unnecessary
and premature resort to administrative or judicial bodies. Thus, a party with an administrative
remedy must not merely initiate the prescribed administrative procedure to obtain relief, but also
pursue it to its appropriate conclusion before seeking judicial intervention. This rule clearly
applies to the instant case. The underlying principle of the rule on exhaustion of administrative
remedies rests on the presumption that when the administrative body, or grievance machinery, as
in this case, is afforded a chance to pass upon the matter, it will decide the same correctly.
Petitioners premature invocation of public respondents intervention is fatal to his cause of action.
Evidently, when petitioner brought before the DOLE his complaint charging private
respondents with unauthorized and illegal disbursement of union funds, he overlooked or
deliberately ignored the fact that the same is clearly dismissible for non-exhaustion of
administrative remedies.

285.

St. Martin Funeral homes vs NLRC

Facts:
Private respondent alleges that he started working as Operations Manager of petitioner St. Martin
Funeral Home on February 6, 1995. However, there was no contract of employment executed
between him and petitioner nor was his name included in the semi-monthly payroll. On January
22, 1996, he was dismissed from his employment for allegedly misappropriating P38,000.00
which was intended for payment by petitioner of its value added tax (VAT) to the Bureau of
Internal Revenue (BIR).
Petitioner on the other hand claims that private respondent was not its employee but only the
uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home.
Based on the position papers of the parties, the labor arbiter rendered a decision in favor of
petitioner on October 25, 1996 declaring that no employer-employee relationship existed
between the parties and, therefore, his office had no jurisdiction over the case.
On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and
remanding the case to the labor arbiter for immediate appropriate proceedings. 5 Petitioner then
filed a motion for reconsideration which was denied by the NLRC in its resolution dated August
18, 1997 for lack of merit, 6 hence the present petition alleging that the NLRC committed grave
abuse of discretion.
Note: in this case, the petitioner did not file appeal to the court of appeals but directly filed to
Supreme Court.
Issue:
w/n the case should be remanded to court of appeals and observe hierarchy of courts?
Ruling:
affirmed. all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions
for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed
in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired.

Apropos to this directive that resort to the higher courts should be made in accordance with their
hierarchical order, this pronouncement in Santiago vs. Vasquez, et al. 25 should be taken into
account:
One final observation. We discern in the proceedings in this case a propensity on the part of
petitioner, and, for that matter, the same may be said of a number of litigants who initiate
recourses before us, to disregard the hierarchy of courts in our judicial system by seeking relief
directly from this Court despite the fact that the same is available in the lower courts in the
exercise of their original or concurrent jurisdiction, or is even mandated by law to be sought
therein. This practice must be stopped, not only because of the imposition upon the precious time
of this Court but also because of the inevitable and resultant delay, intended or otherwise, in the
adjudication of the case which often has to be remanded or referred to the lower court as the
proper forum under the rules of procedure, or as better equipped to resolve the issues since this
Court is not a trier of facts. We, therefore, reiterate the judicial policy that this Court will not
entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts
or where exceptional and compelling circumstances justify availment of a remedy within and
calling for the exercise of our primary jurisdiction.

286.

Veloso vs China Airlines, Ltd.

Facts:
Petitioner was employed as supervisor of the ticketing section at the Manila branch office of
respondent China Airlines Ltd. (CAL). At the ticketing section, petitioner was assisted by a
senior ticketing agent, Eleanor Go; and two ticketing agents, Julie Chua and Josephine
Lobendino.
On October 29, 1986, private respondent K.Y. Chang, then district manager of the Manila branch
office of CAL, informed petitioner that management had decided to temporarily close its
ticketing section in order to prevent further losses. Petitioner's three assistants were likewise
notified that they too will be temporarily laid off from employment effective October 30, 1986.
CAL decided to permanently close said ticketing section. Thus, on November 5, 1986, petitioner
and her staff members were informed that their recent lay-off from employment will be
considered permanent, effective one month from receipt of such notice. A notice of said
retrenchment was filed with the labor department on November 11, 1986.
On July 1, 1987, petitioner filed with the Arbitration Branch of NLRC a complaint for unfair
labor practice (on the premise that she was dismissed in order to bust the union where she was an
adviser) and illegal dismissal with prayer for reinstatement, payment of backwages, damages
and attorney's fees.
Labor arbiter ruled in favor of the petitioner. On appeal respondent NLRC reversed its ruling.
However, petitioner did not file motion for reconsideration and filed a petition for certiorari over
the Supreme Court without filing a motion for reconsideration over the NLRC.
Issue:
w/n petitioner can file petition for certiorari without filing a motion for reconsideration first?
Ruling:
Negative. This precipitate filing of petition for certiorari under Rule 65 without first moving for
reconsideration of the assailed resolution warrants the outright dismissal of this case. As we have
consistently held in numerous cases,[5] a motion for reconsideration is indispensable, for it

affords the NLRC an opportunity to rectify errors or mistakes it might have committed before
resort to the courts can be had.
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and
adequate remedy in the ordinary course of law against acts of public respondent.[6] In this case,
the plain and adequate remedy expressly provided by law is a motion for reconsideration of the
impugned resolution, to be made under oath and filed within ten (10) days from receipt of the
questioned resolution of the NLRC, a procedure which is jurisdictional.[7] Hence, the filing of
the petition for certiorari in this case is patently violative of prevailing jurisprudence and will not
prosper without undue damage to the fundamental doctrine that undergirds the grant of this
prerogative writ.

287.

Azucena vs Foreign Manpower services

Facts:
On May 7, 1992, petitioner was hired by respondent, K.S. Kasmito (Kasmito), through its agent
co-respondent Foreign Manpower Services (FMS), as Chief Engineer of the Santa Christina, a
Norwegian vessel owned by Kasmito, at a monthly salary of $1,615.00 for a ten-month period.
[3] To facilitate the remittance of his allotments to his wife, petitioner opened a joint account
with her at Pilipinas Bank at its T.M. Kalaw Branch in Manila.
On May 8, 1992, petitioner boarded the Santa Christina[4] and began to discharge his duties as
Chief Engineer. On August 3, 1992, petitioners contract of employment was terminated.
Petitioner thus filed on September 21, 1992, a complaint for non-payment of his allotment with
the Philippine Overseas and Employment Administration (POEA) against herein respondents
FMS, Kasmito and the vessels insurer Fortune Life & General Insurance Co., Inc.,
the POEA ruled in favor of petitioner
Not satisfied, petitioner appealed the POEA decision to the NLRC which entered a new
judgment in his favor
Respondents filed a motion for reconsideration of the NLRC decision which was denied. The
NLRC decision became final and executory.
On August 28, 1995, petitioner filed with the NLRC a complaint for moral and exemplary
damages as well as attorneys fees against respondents, alleging that the POEA has no jurisdiction
to award moral and exemplary damages. Petitioner justified his claim for damages by alleging
that [he] was out of employment for 3 years because of [his] case with the respondent which was
entered in the POEA computer and kept [him] blacklisted in the shipping agencies.
On motion of FMS, on grounds of prescription and lack of jurisdiction, Labor Arbiter Ricardo
Nora dismissed petitioners complaint
On appeal by petitioner, the NLRC, reversed the labor arbiters dismissal order and remanded the
case for appropriate proceedings on the issue of damages.
Finding in favor of petitioner, Labor Arbiter Vladimir Sampang, ordered respondents Kasmito
and FMS to indemnify petitioner the amount of P100,000.00 as moral and exemplary