SECOND DIVISION FVC LABOR UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION (FVCLU-PTGWO), Petitioner, - versus G.R. No.

176249 Present: CARPIO, J., Chairperson, LEONARDO-DE CASTRO, BRION, DEL CASTILLO, and ABAD, JJ.

SAMA-SAMANG NAGKAKAISANG MANGGAGAWA SA FVC-SOLIDARITY OF INDEPENDENT AND GENERAL LABOR ORGANIZATIONS (SANAMA-FVCSIGLO), Respondent.

Promulgated: November 27, 2009

x-------------------------------------------------------------------------------------- x DECISION BRION, J.: We pass upon the petition for review on certiorari under Rule 45 of the Rules of Court[1] filed by FVC Labor UnionPhilippine Transport and General Workers Organization (FVCLU-PTGWO) to challenge the Court of Appeals (CA) decision of July 25, 2006[2] and its resolution rendered on January 15, 2007[3] in C.A. G.R. SP No. 83292.[4] THE ANTECEDENTS The facts are undisputed and are summarized below. On December 22, 1997, the petitioner FVCLU-PTGWO the recognized bargaining agent of the rank-and-file employees of the FVC Philippines, Incorporated (company) signed a five-year collective bargaining agreement (CBA) with the company. The five-year CBA period was from February 1, 1998 to January 30, 2003.[5] At the end of the 3rd year of the five-year term and pursuant to the CBA, FVCLU-PTGWO and the company entered into the renegotiation of the CBA and modified, among other provisions, the CBAs duration. Article XXV, Section 2 of the

renegotiated CBA provides that this re-negotiation agreement shall take effect beginning February 1, 2001 and until May 31, 2003 thus extending the original fiveyear period of the CBA by four (4) months. On January 21, 2003, nine (9) days before the January 30, 2003 expiration of the originally-agreed five-year CBA term (and four [4] months and nine [9] days away from the expiration of the amended CBA period), the respondent Sama-Samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General Labor Organizations (SANAMA-SIGLO) filed before the Department of Labor and Employment (DOLE) a petition for certification election for the same rank-and-file unit covered by the FVCLU-PTGWO CBA. FVCLU-PTGWO moved to dismiss the petition on the ground that the certification election petition was filed outside the freedom period or outside of the sixty (60) days before the expiration of the CBA on May 31, 2003.

Action on the Petition and Related Incidents On June 17, 2003, Med-Arbiter Arturo V. Cosuco dismissed the petition on the ground that it was filed outside the 60-day period counted from the May 31, 2003 expiry date of the amended CBA.[6] SANAMA-SIGLO appealed the Med-Arbiters Order to the DOLE Secretary, contending that the filing of the petition on January 21, 2003 was within 60-days from the January 30, 2003 expiration of the original CBA term. DOLE Secretary Patricia A. Sto. Tomas sustained SANAMA-SIGLOs position, thereby setting aside the decision of the Med-Arbiter.[7] She ordered the conduct of a certification election in the company. FVCLU-PTGWO moved for the reconsideration of the Secretarys decision. On November 6, 2003, DOLE Acting Secretary Manuel G. Imson granted the motion; he set aside the August 6, 2003 DOLE decision and dismissed the petition as the Med-Arbiters Order of June 17, 2003 did.[8] The Acting Secretary held that the amended CBA (which extended the representation aspect of the original CBA by four [4] months) had been ratified by members of the bargaining unit some of whom later organized themselves as SANAMA-SIGLO, the certification election applicant. Since these SANAMA-SIGLO members fully accepted and in fact received the benefits arising from the amendments, the Acting Secretary rationalized that they also accepted the extended term of the CBA and cannot now file a petition for certification election based on the original CBA expiration date.

SANAMA-SIGLO moved for the reconsideration of the Acting Secretarys Order, but Secretary Sto. Tomas denied the motion in her Order of January 30, 2004. [9] SANAMA-SIGLO sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court based on the grave abuse of discretion the Labor Secretary committed when she reversed her earlier decision calling for a certification election. SANAMA-SIGLO pointed out that the Secretarys new ruling is pa tently contrary to the express provision of the law and established jurisprudence. THE CA DECISION The CA found SANAMA-SIGLOs petition meritorious on the basis of the applicable law[10] and the rules,[11] as interpreted in the congressional debates. It set aside the challenged DOLE Secretary decisions and reinstated her earlier ruling calling for a certification election. The appellate court declared: It is clear from the foregoing that while the parties may renegotiate the other provisions (economic and non-economic) of the CBA, this should not affect the five-year representation aspect of the original CBA. If the duration of the renegotiated agreement does not coincide with but rather exceeds the original five-year term, the same will not adversely affect the right of another union to challenge the majority status of the incumbent bargaining agent within sixty (60) days before the lapse of the original five (5) year term of the CBA. In the event a new union wins in the certification election, such union is required to honor and administer the renegotiated CBA throughout the excess period. FVCLU-PTGWO moved to reconsider the CA decision but the CA denied the motion in its resolution of January 15, 2007. [12] With this denial, FVCLU-PTGWO now comes before us to challenge the CA rulings. [13] It argues that in light of the peculiar attendant circumstances of the case, the CA erred in strictly applying Section 11 (11b), Rule XI, Book V of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 9, s. 1997.[14] Apparently, the peculiar circumstances the FVCLU-PTGWO referred to relate to the economic and other provisions of the February 1, 1998 to January 30, 2003 CBA that it renegotiated with the company. The renegotiated CBA changed the CBAs remaining term from February 1, 2001 to May 31, 2003. To FVCLU-PTGWO, this extension of the CBA term also changed the unions exclusive bargaining

representation status and effectively moved the reckoning point of the 60-day freedom period from January 30, 2003 to May 30, 2003. FVCLU-PTGWO thus moved to dismiss the petition for certification election filed on January 21, 2003 (9 days before the expiry date on January 30, 2003 of the original CBA) by SANAMA-SIGLO on the ground that the petition was filed outside the authorized 60-day freedom period. It also submits in its petition that the SANAMA-SIGLO is estopped from questioning the extension of the CBA term under the amendments because its members are the very same ones who approved the amendments, including the expiration date of the CBA, and who benefited from these amendments. Lastly, FVCLU-PTGWO posits that the representation petition had been rendered moot by a new CBA it entered into with the company covering the period June 1, 2003 to May 31, 2008.[15]

Required to comment by the Court[16] and to show cause for its failure to comply,[17] SANAMA-SIGLO manifested on October 10, 2007 that: since the promulgation of the CA decision on July 25, 2006 or three years after the petition for certification election was filed, the local leaders of SANAMA-SIGLO had stopped reporting to the federation office or attending meetings of the council of local leaders; the SANAMA-SIGLO counsel, who is also the SIGLO national president, is no longer in the position to pursue the present case because the local union and its leadership, who are principals of SIGLO, had given up and abandoned their desire to contest the representative status of FVCLU-PTGWO; and a new CBA had already been signed by FVCLU-PTGWO and the company.[18] Under these circumstances, SANAMASIGLO contends that pursuing the case has become futile, and accordingly simply adopted the CA decision of July 25, 2006 as its position; its counsel likewise asked to be relieved from filing a comment in the case. We granted the request for relief and dispensed with the filing of a comment.[19]

THE COURTS RULING

While SANAMA-SIGLO has manifested its abandonment of its challenge to the exclusive bargaining representation status of FVCLU-PTGWO, we deem it necessary in the exercise of our discretion to resolve the question of law raised since this exclusive representation status issue will inevitably recur in the future as workplace parties

avail of opportunities to prolong workplace harmony by extending the term of CBAs already in place.[20] The legal question before us centers on the effect of the amended or extended term of the CBA on the exclusive representation status of the collective bargaining agent and the right of another union to ask for certification as exclusive bargaining agent. The question arises because the law allows a challenge to the exclusive representation status of a collective bargaining agent through the filing of a certification election petition only within 60 days from the expiration of the five-year CBA. Article 253-A of the Labor Code covers this situation and it provides: Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the parties may enter into, shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty day period immediately before the date of expiry of such fiveyear term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code.

This Labor Code provision is implemented through Book V, Rule VIII of the Rules Implementing the Labor Code[21] which states: Sec. 14. Denial of the petition; grounds. The Med-Arbiter may dismiss the petition on any of the following grounds: xxxx (b) the petition was filed before or after the freedom period of a duly registered collective bargaining agreement; provided that

the sixty-day period based on the original collective bargaining agreement shall not be affected by any amendment, extension or renewal of the collective bargaining agreement (underscoring supplied). xxxx The root of the controversy can be traced to a misunderstanding of the interaction between a unions exclusive bargaining representation status in a CBA and the term or effective period of the CBA. FVCLU-PTGWO has taken the view that its exclusive representation status should fully be in step with the term of the CBA and that this status can be challenged only within 60 days before the expiration of this term. Thus, when the term of the CBA was extended, its exclusive bargaining status was similarly extended so that the freedom period for the filing of a petition for certification election should be counted back from the expiration of the amended CBA term. We hold this FVCLU-PTGWO position to be correct, but only with respect to the original five-year term of the CBA which, by law, is also the effective period of the unions exclusive bargaining representation status. While the parties may agree to extend the CBAs original five-year term together with all other CBA provisions, any such amendment or term in excess of five years will not carry with it a change in the unions exclusive collective bargaining status. By express provision of the abovequoted Article 253-A, the exclusive bargaining status cannot go beyond five years and the representation status is a legal matter not for the workplace parties to agree upon. In other words, despite an agreement for a CBA with a life of more than five years, either as an original provision or by amendment, the bargaining unions exclusive bargaining status is effective only for five years and can be challenged within sixty (60) days prior to the expiration of the CBAs first five years. As we said in San Miguel Corp. Employees UnionPTGWO, et al. v. Confesor, San Miguel Corp., Magnolia Corp. and San Miguel Foods, Inc.,[22] where we cited the Memorandum of the Secretary of Labor and Employment dated February 24, 1994: In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a term of three (3) years or one which does not coincide with the said five-year term and said agreement is ratified by majority of the members in the bargaining unit, the subject contract is valid and legal and therefore, binds the contracting parties. The same will however not adversely affect the right of another union to challenge the majority status of the incumbent bargaining

agent within sixty (60) days before the lapse of the original five (5) year term of the CBA.

In the present case, the CBA was originally signed for a period of five years, i.e., from February 1, 1998 to January 30, 2003, with a provision for the renegotiation of the CBAs other provisions at the end of the 3 rd year of the five-year CBA term. Thus, prior to January 30, 2001 the workplace parties sat down for renegotiation but instead of confining themselves to the economic and non-economic CBA provisions, also extended the life of the CBA for another four months, i.e., from the original expiry date on January 30, 2003 to May 30, 2003. As discussed above, this negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWOs exclusive bargaining representation status which remained effective only for five years ending on the original expiry date of January 30, 2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMASIGLO could properly file a petition for certification election. Its petition, filed on January 21, 2003 or nine (9) days before the expiration of the CBA and of FVCLUPTGWOs exclusive bargaining status, was seasonably filed. We thus find no error in the appellate courts ruling reinstating the DOLE order for the conduct of a certification election. If this ruling cannot now be given effect, the only reason is SANAMA-SIGLOs own desistance; we cannot disregard its manifestation that the members of SANAMA themselves are no longer interested in contesting the exclusive collective bargaining agent status of FVCLU-PTGWO. This recognition is fully in accord with the Labor Codes intent to foster industrial peace and harmony in the workplace. WHEREFORE, premises considered, we AFFIRM the correctness of the challenged Decision and Resolution of the Court of Appeals and accordinglyDISMISS the petition, but nevertheless DECLARE that no certification election, pursuant to the underlying petition for certification election filed with the Department of Labor and Employment, can be enforced as this petition has effectively been abandoned. SO ORDERED. THIRD DIVISION

CONTINENTAL STEEL MANUFACTURING CORPORATION, Petitioner,

G.R. No. 182836

Present: CARPIO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ.

- versus -

HON. ACCREDITED VOLUNTARY ARBITRATOR ALLAN S. MONTAO and NAGKAKAISANG MANGGAGAWA NG CENTRO STEEL CORPORATIONSOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (NMCSC-SUPER), Respondents.

Promulgated:

October 13, 2009 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari, under Rule 45 of the Rules of Court, assailing the Decision[1] dated 27 February 2008 and the Resolution[2] dated 9 May 2008 of the Court of Appeals in CA-G.R. SP No. 101697, affirming the Resolution[3] dated 20 November 2007 of respondent Accredited Voluntary Arbitrator Atty. Allan S. Montao (Montao) granting bereavement leave and other death benefits to Rolando P. Hortillano (Hortillano), grounded on the death of his unborn child.

The antecedent facts of the case are as follows:

Hortillano, an employee of petitioner Continental Steel Manufacturing Corporation (Continental Steel) and a member of respondent Nagkakaisang Manggagawa ng Centro Steel Corporation-Solidarity of Trade Unions in the Philippines for Empowerment and Reforms (Union) filed on 9 January 2006, a claim for Paternity Leave, Bereavement Leave and Death and Accident Insurance for dependent, pursuant to the Collective Bargaining Agreement (CBA) concluded between Continental and the Union, which reads:

ARTICLE X: LEAVE OF ABSENCE

xxxx

Section 2. BEREAVEMENT LEAVEThe Company agrees to grant a bereavement leave with pay to any employee in case of death of the employees legitimate dependent (parents, spouse, children, brothers and sisters) based on the following:

2.1 Within Metro Manila up to Marilao, Bulacan - 7 days

2.2 Provincial/Outside Metro Manila - 11 days

xxxx

ARTICLE XVIII: OTHER BENEFITS

xxxx

Section 4. DEATH AND ACCIDENT INSURANCEThe Company shall grant death and accidental insurance to the employee or his family in the following manner:

xxxx

4.3 DEPENDENTSEleven Thousand Five Hundred Fifty Pesos (Php11,550.00) in case of death of the employees legitimate dependents (parents, spouse, and children). In case the employee is single, this benefit covers the legitimate parents, brothers and sisters only with proper legal document to be presented (e.g. death certificate).[4]

The claim was based on the death of Hortillanos unborn child. Hortillanos wife, Marife V. Hortillano, had a premature delivery on 5 January 2006 while she was in the 38th week of pregnancy.[5] According to the Certificate of Fetal Death dated 7 January 2006, the female fetus died during labor due to fetal Anoxia secondary to uteroplacental insufficiency.[6]

Continental Steel immediately granted Hortillanos claim for paternity leave but denied his claims for bereavement leave and other death benefits, consisting of the death and accident insurance.[7]

Seeking the reversal of the denial by Continental Steel of Hortillanos claims for bereavement and other death benefits, the Union resorted to the grievance

machinery provided in the CBA. Despite the series of conferences held, the parties still failed to settle their dispute,[8] prompting the Union to file a Notice to Arbitrate before the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE), National Capital Region (NCR). [9] In a Submission Agreement dated 9 October 2006, the Union and Continental Steel submitted for voluntary arbitration the sole issue of whether Hortillano was entitled to bereavement leave and other death benefits pursuant to Article X, Section 2

and Article XVIII, Section 4.3 of the CBA.[10] The parties mutually chose Atty. Montao, an Accredited Voluntary Arbitrator, to resolve said issue.[11]

When the preliminary conferences again proved futile in amicably settling the dispute, the parties proceeded to submit their respective Position Papers,[12] Replies,[13] and Rejoinders[14] to Atty. Montao.

The Union argued that Hortillano was entitled to bereavement leave and other death benefits pursuant to the CBA. The Union maintained that Article X, Section 2 and Article XVIII, Section 4.3 of the CBA did not specifically state that the dependent should have first been born alive or must have acquired juridical personality so that his/her subsequent death could be covered by the CBA death benefits. The Union cited cases wherein employees of MKK Steel Corporation (MKK Steel) and Mayer Steel Pipe Corporation (Mayer Steel), sister companies of Continental Steel, in similar situations as Hortillano were able to receive death benefits under similar provisions of their CBAs.

The Union mentioned in particular the case of Steve L. Dugan (Dugan), an employee of Mayer Steel, whose wife also prematurely delivered a fetus, which had already died prior to the delivery. Dugan was able to receive paternity leave, bereavement leave, and voluntary contribution under the CBA between his union and Mayer Steel.[15] Dugans child was only 24 weeks in the womb and died before labor, as opposed to Hortillanos child who was already 37 -38 weeks in the womb and only died during labor.

The Union called attention to the fact that MKK Steel and Mayer Steel are located in the same compound as Continental Steel; and the representatives of MKK Steel and Mayer Steel who signed the CBA with their respective employees unions

were the same as the representatives of Continental Steel who signed the existing CBA with the Union.

Finally, the Union invoked Article 1702 of the Civil Code, which provides that all doubts in labor legislations and labor contracts shall be construed in favor of the safety of and decent living for the laborer.

On the other hand, Continental Steel posited that the express provision of the CBA did not contemplate the death of an unborn child, a fetus, without legal personality. It claimed that there are two elements for the entitlement to the benefits, namely: (1) death and (2) status as legitimate dependent, none of which existed in Hortillanos case. Continental Steel, relying on Articles 40, 41 and 42[16] of the Civil Code, contended that only one with civil personality could die. Hence, the unborn child never died because it never acquired juridical personality. Proceeding from the same line of thought, Continental Steel reasoned that a fetus that was dead from the moment of delivery was not a person at all. Hence, the term dependent could not be applied to a fetus that never acquired juridical personality. A fetus that was delivered dead could not be considered a dependent, since it never needed any support, nor did it ever acquire the right to be supported.

Continental Steel maintained that the wording of the CBA was clear and unambiguous. Since neither of the parties qualified the terms used in the CBA, the legally accepted definitions thereof were deemed automatically accepted by both parties. The failure of the Union to have unborn child included in the definition of dependent, as used in the CBA the death of whom would have qualified the parent-employee for bereavement leave and other death benefits bound the Union to the legally accepted definition of the latter term.

Continental Steel, lastly, averred that similar cases involving the employees of its sister companies, MKK Steel and Mayer Steel, referred to by the Union, were irrelevant and incompetent evidence, given the separate and distinct personalities of the companies. Neither could the Union sustain its claim that the grant of bereavement leave and other death benefits to the parent-employee for the loss of an unborn child constituted company practice.

On 20 November 2007, Atty. Montao, the appointed Accredited Voluntary Arbitrator, issued a Resolution[17] ruling that Hortillano was entitled to bereavement leave with pay and death benefits.

Atty. Montao identified the elements for entitlement to said benefits, thus:

This Office declares that for the entitlement of the benefit of bereavement leave with pay by the covered employees as provided under Article X, Section 2 of the parties CBA, three (3) indispensable elements must be present: (1) there is death; (2) such death must be of employees dependent; and (3) such dependent must be legitimate.

On the otherhand, for the entitlement to benefit for death and accident insurance as provided under Article XVIII, Section 4, paragraph (4.3) of the parties CBA, four (4) indispensable elements must be present: (a) there is death; (b) such death must be of employees dependent; (c) such dependent must be legitimate; and (d) proper legal document to be presented.[18]

Atty. Montao found that there was no dispute that the death of an employees legitimate dependent occurred. The fetus had the right to be supported by the parents from the very moment he/she was conceived. The fetus had to rely on another for support; he/she could not have existed or sustained himself/herself without the power or aid of someone else, specifically, his/her mother. Therefore, the fetus was already a dependent, although he/she died during the labor or delivery. There was also no question that Hortillano and his wife were lawfully married, making their dependent, unborn child, legitimate.

In the end, Atty. Montao decreed:

WHEREFORE, premises considered, a resolution is hereby rendered ORDERING [herein petitioner Continental Steel] to pay Rolando P. Hortillano the amount of Four Thousand Nine Hundred Thirty-Nine Pesos (P4,939.00), representing his bereavement leave pay and the amount of

Eleven Thousand Five Hundred Fifty Pesos (P11,550.00) representing death benefits, or a total amount of P16,489.00

The complaint against Manuel Sy, however, is ORDERED DISMISSED for lack of merit.

All other claims are DISMISSED for lack of merit.

Further, parties are hereby ORDERED to faithfully abide with the herein dispositions.

Aggrieved, Continental Steel filed with the Court of Appeals a Petition for Review on Certiorari,[19] under Section 1, Rule 43 of the Rules of Court, docketed as CA-G.R. SP No. 101697.

Continental Steel claimed that Atty. Montao erred in granting Hortilla nos claims for bereavement leave with pay and other death benefits because no death of an employees dependent had occurred. The death of a fetus, at whatever stage of pregnancy, was excluded from the coverage of the CBA since what was contemplated by the CBA was the death of a legal person, and not that of a fetus, which did not acquire any juridical personality. Continental Steel pointed out that its contention was bolstered by the fact that the term death was qualified by the phrase legitimate dependent. It asserted that the status of a child could only be determined upon said childs birth, otherwise, no such appellation can be had. Hence, the conditions sine qua non for Hortillanos entitlement to bereavement leave and other death benefits under the CBA were lacking.

The Court of Appeals, in its Decision dated 27 February 2008, affirmed Atty. Montaos Resolution dated 20 November 2007. The appellate court interpreted death to mean as follows:

[Herein petitioner Continental Steels] exposition on the legal sense in which the term death is used in the CBA fails to impress the Court, and the same is irrelevant for ascertaining the purpose, which the grant of bereavement leave and death benefits thereunder, is intended to serve. While there is no arguing with [Continental Steel] that the acquisition of civil personality of a child or fetus is conditioned on being born alive upon delivery, it does not follow that such event of premature delivery of a fetus could never be contemplated as a death as to be covered by the CBA provision, undoubtedly an event causing loss and grief to the affected employee, with whom the dead fetus stands in a legitimate relation. [Continental Steel] has proposed a narrow and technical significance to the term death of a legitimate dependent as condition for granting bereavement leave and death benefits under the CBA. Following [Continental Steels] theory, there can be no experience of death to speak of. The Court, however, does not share this view. A dead fetus simply cannot be equated with anything less than loss of human life, especially for the expectant parents. In this light, bereavement leave and death benefits are meant to assuage the employee and the latters immediate family, extend to them solace and support, rather than an act conferring legal status or personality upon the unborn child. [Continental Steels] insistence that the certificate of fetal death is for statistical purposes only sadly misses this crucial point.[20]

Accordingly, the fallo of the 27 February 2008 Decision of the Court of Appeals reads:

WHEREFORE, premises considered, the present petition is hereby DENIED for lack of merit. The assailed Resolution dated November 20, 2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montao is hereby AFFIRMED and UPHELD.

With costs against [herein petitioner Continental Steel].[21]

In a Resolution[22] dated 9 May 2008, the Court of Appeals denied the Motion for Reconsideration[23] of Continental Steel.

Hence, this Petition, in which Continental Steel persistently argues that the CBA is clear and unambiguous, so that the literal and legal meaning of deathshould be applied. Only one with juridical personality can die and a dead fetus never acquired a juridical personality.

We are not persuaded.

As Atty. Montao identified, the elements for bereavement leave under Article X, Section 2 of the CBA are: (1) death; (2) the death must be of a dependent, i.e., parent, spouse, child, brother, or sister, of an employee; and (3) legitimate relations of the dependent to the employee. The requisites for death and accident insurance under Article XVIII, Section 4(3) of the CBA are: (1) death; (2) the death must be of a dependent, who could be a parent, spouse, or child of a married employee; or a parent, brother, or sister of a single employee; and (4) presentation of the proper legal document to prove such death, e.g., death certificate.

It is worthy to note that despite the repeated assertion of Continental Steel that the provisions of the CBA are clear and unambiguous, its fundamental argument for denying Hortillanos claim for bereavement leave and other death benefits rests on the purportedly proper interpretation of the terms death and dependent as used in the CBA. If the provisions of the CBA are indeed clear and unambiguous, then there is no need to resort to the interpretation or construction of the same. Moreover, Continental Steel itself admitted that neither management nor the Union sought to define the pertinent terms for bereavement leave and other death benefits during the negotiation of the CBA.

The reliance of Continental Steel on Articles 40, 41 and 42 of the Civil Code for the legal definition of death is misplaced. Article 40 provides that a conceived child acquires personality only when it is born, and Article 41 defines when a child is considered born. Article 42 plainly states that civil personality is extinguished by death.

First, the issue of civil personality is not relevant herein. Articles 40, 41 and 42 of the Civil Code on natural persons, must be applied in relation to Article 37 of the same Code, the very first of the general provisions on civil personality, which reads:

Art. 37. Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in every natural person and is lost only through death. Capacity to act, which is the power to do acts with legal effect, is acquired and may be lost.

We need not establish civil personality of the unborn child herein since his/her juridical capacity and capacity to act as a person are not in issue. It is not a question before us whether the unborn child acquired any rights or incurred any obligations prior to his/her death that were passed on to or assumed by the childs parents. The rights to bereavement leave and other death benefits in the instant case pertain directly to the parents of the unborn child upon the latters death.

Second, Sections 40, 41 and 42 of the Civil Code do not provide at all a definition of death. Moreover, while the Civil Code expressly provides that civil personality may be extinguished by death, it does not explicitly state that only those who have acquired juridical personality could die.

And third, death has been defined as the cessation of life.[24] Life is not synonymous with civil personality. One need not acquire civil personality first before he/she could die. Even a child inside the womb already has life. No less than the Constitution recognizes the life of the unborn from conception,[25]that the State must protect equally with the life of the mother. If the unborn already has life, then the cessation thereof even prior to the child being delivered, qualifies as death.

Likewise, the unborn child can be considered a dependent under the CBA. As Continental Steel itself defines, a dependent is one who relies on another for support; one not able to exist or sustain oneself without the power or aid of someone else. Under said general definition,[26] even an unborn child is adependent of its parents. Hortillanos child could not have reached 38-39 weeks of its gestational life without depending upon its mother, Hortillanos wife, for sustenance. Additionally, it is explicit in the CBA provisions in question that the dependent may be the parent,

spouse, or child of a married employee; or the parent, brother, or sister of a single employee. The CBA did not provide a qualification for the child dependent, such that the child must have been born or must have acquired civil personality, as Continental Steel avers. Without such qualification, then child shall be understood in its more general sense, which includes the unborn fetus in the mothers womb.

The term legitimate merely addresses the dependent childs status in relation to his/her parents. In Angeles v. Maglaya,[27] we have expounded on who is a legitimate child, viz: A legitimate child is a product of, and, therefore, implies a valid and lawful marriage. Remove the element of lawful union and there is strictly no legitimate filiation between parents and child. Article 164 of the Family Code cannot be more emphatic on the matter: Children conceived or born during the marriage of the parents are legitimate. (Emphasis ours.) Conversely, in Briones v. Miguel,[28] we identified an illegitimate child to be as follows: The fine distinctions among the various types of illegitimate children have been eliminated in the Family Code. Now, there are only two classes of children -- legitimate (and those who, like the legally adopted, have the rights of legitimate children) and illegitimate. All children conceived and born outside a valid marriage are illegitimate, unless the law itself gives them legitimate status. (Emphasis ours.)

It is apparent that according to the Family Code and the afore-cited jurisprudence, the legitimacy or illegitimacy of a child attaches upon his/her conception. In the present case, it was not disputed that Hortillano and his wife were validly married and that their child was conceived during said marriage, hence, making said child legitimate upon her conception.

Also incontestable is the fact that Hortillano was able to comply with the fourth element entitling him to death and accident insurance under the CBA, i.e., presentation of the death certificate of his unborn child.

Given the existence of all the requisites for bereavement leave and other death benefits under the CBA, Hortillanos claims for the same should have been granted by Continental Steel.

We emphasize that bereavement leave and other death benefits are granted to an employee to give aid to, and if possible, lessen the grief of, the said employee and his family who suffered the loss of a loved one. It cannot be said that the parents grief and sense of loss arising from the death of their unborn child, who, in this case, had a gestational life of 38-39 weeks but died during delivery, is any less than that of parents whose child was born alive but died subsequently.

Being for the benefit of the employee, CBA provisions on bereavement leave and other death benefits should be interpreted liberally to give life to the intentions thereof. Time and again, the Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of labor.[29] In the same way, the CBA and CBA provisions should be interpreted in favor of labor. In Marcopper Mining v. National Labor Relations Commission,[30] we pronounced:

Finally, petitioner misinterprets the declaration of the Labor Arbiter in the assailed decision that "when the pendulum of judgment swings to and fro and the forces are equal on both sides, the same must be stilled in favor of labor." While petitioner acknowledges that all doubts in the interpretation of the Labor Code shall be resolved in favor of labor, it insists that what is involved-here is the amended CBA which is essentially a contract between private persons. What petitioner has lost sight of is the avowed policy of the State, enshrined in our Constitution, to accord utmost protection and justice to labor, a policy, we are, likewise, sworn to uphold. In Philippine Telegraph & Telephone Corporation v. NLRC [183 SCRA 451 (1990)], we categorically stated that:

When conflicting interests of labor and capital are to be weighed on the scales of social justice, the heavier influence of the latter should be counter-balanced by sympathy and compassion the law must accord the underprivileged worker.

Likewise, in Terminal Facilities and Services Corporation v. NLRC [199 SCRA 265 (1991)], we declared:

Any doubt concerning the rights of labor should be resolved in its favor pursuant to the social justice policy.

IN VIEW WHEREOF, the Petition is DENIED. The Decision dated 27 February 2008 and Resolution dated 9 May 2008 of the Court of Appeals in CA-G.R. SP No. 101697, affirming the Resolution dated 20 November 2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montao, which granted to Rolando P. Hortillano bereavement leave pay and other death benefits in the amounts of Four Thousand Nine Hundred Thirty-Nine Pesos (P4,939.00) and Eleven Thousand Five Hundred Fifty Pesos (P11,550.00), respectively, grounded on the death of his unborn child, are AFFIRMED. Costs against Continental Steel Manufacturing Corporation.

SO ORDERED.

THIRD DIVISION

PATRICIA HALAGUEA, MA. ANGELITA L. PULIDO, MA. TERESITA P. SANTIAGO, MARIANNE V. KATINDIG,

G.R. No. 172013 Present: YNARES-SANTIAGO, J., Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ.

BERNADETTE A. CABALQUINTO, LORNA B. TUGAS, MARY CHRISTINE A. VILLARETE, CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI R. CRESENCIO, and other flight attendants of PHILIPPINE AIRLINES, Petitioners,

- versus -

PHILIPPINE AIRLINES INCORPORATED, Respondent.

Promulgated: October 2, 2009 x--------------------------------------------------x

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision [1] and the Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP. No. 86813. Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on different dates prior to November 22, 1996. They are members of the Flight Attendants and Stewards Association of the Philippines (FASAP), a labor organization certified as the sole and exclusive certified as the sole and exclusive bargaining representative of the flight attendants, flight stewards and pursers of respondent.

On July 11, 2001, respondent and FASAP entered into a Collective Bargaining Agreement[3] incorporating the terms and conditions of their agreement for the years 2000 to 2005, hereinafter referred to as PAL-FASAP CBA.

Section 144, Part A of the PAL-FASAP CBA, provides that:

November xxxx

A. For the Cabin Attendants hired before 22 1996:

3.

Compulsory Retirement

Subject to the grooming standards provisions of this Agreement, compulsory retirement shall be fifty-five (55) for females and sixty (60) for males. x x x.

In a letter dated July 22, 2003,[4] petitioners and several female cabin crews manifested that the aforementioned CBA provision on compulsory retirement is discriminatory, and demanded for an equal treatment with their male counterparts. This demand was reiterated in a letter[5] by petitioners' counsel addressed to

respondent demanding the removal of gender discrimination provisions in the coming re-negotiations of the PAL-FASAP CBA.

On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 20042005 CBA proposals[6] and manifested their willingness to commence the collective bargaining negotiations between the management and the association, at the soonest possible time.

On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary Injunction[7] with the Regional Trial Court (RTC) of Makati City, Branch 147, docketed as Civil Case No. 04-886, against respondent for the invalidity of Section 144, Part A of the PAL-FASAP CBA. The RTC set a hearing on petitioners' application for a TRO and, thereafter, required the parties to submit their respective memoranda.

On August 9, 2004, the RTC issued an Order[8] upholding its jurisdiction over the present case. The RTC reasoned that:

In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which is allegedly discriminatory as it discriminates against female flight attendants, in violation of the Constitution, the Labor Code, and the CEDAW. The allegations in the Petition do not make out a labor dispute arising from employer-employee relationship as none is shown to exist. This case is not directed specifically against respondent arising from any act of the latter, nor does it involve a claim against the respondent. Rather, this case seeks a declaration of the nullity of the questioned provision of the CBA, which is within the Court's competence, with the allegations in the Petition constituting the bases for such relief sought.

The RTC issued a TRO on August 10, 2004,[9] enjoining the respondent for implementing Section 144, Part A of the PAL-FASAP CBA.

The respondent filed an omnibus motion [10] seeking reconsideration of the order overruling its objection to the jurisdiction of the RTC the lifting of the TRO. It further prayed that the (1) petitioners' application for the issuance of a writ of preliminary injunction be denied; and (2) the petition be dismissed or the proceedings in this case be suspended.

On September 27, 2004, the RTC issued an Order[11] directing the issuance of a writ of preliminary injunction enjoining the respondent or any of its agents and representatives from further implementing Sec. 144, Part A of the PAL-FASAP CBA pending the resolution of the case.

Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari and Prohibition with Prayer for a Temporary Restraining Order and Writ of Preliminary Injunction[12] with the Court of Appeals (CA) praying that the order of the RTC, which denied its objection to its jurisdiction, be annuled and set aside for having been issued without and/or with grave abuse of discretion amounting to lack of jurisdiction.

The CA rendered a Decision, dated August 31, 2005, granting the respondent's petition, and ruled that:

WHEREFORE, the respondent court is by us declared to have NO JURISDICTION OVER THE CASE BELOW and, consequently, all the proceedings, orders and processes it has so far issued therein are ANNULED and SET ASIDE. Respondent court is ordered to DISMISS its Civil Case No. 04-886.

SO ORDERED.

Petitioner filed a motion for reconsideration,[13] which was denied by the CA in its Resolution dated March 7, 2006.

Hence, the instant petition assigning the following error:

THE COURT OF APPEALS' CONCLUSION THAT THE SUBJECT MATTER IS A LABOR DISPUTE OR GRIEVANCE IS CONTRARY TO LAW AND JURISPRUDENCE.

The main issue in this case is whether the RTC has jurisdiction over the petitioners' action challenging the legality or constitutionality of the provisions on the compulsory retirement age contained in the CBA between respondent PAL and FASAP.

Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary estimation and in all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial functions. The RTC has the power to adjudicate all controversies except those expressly witheld from the plenary powers of the court. Accordingly, it has the power to decide issues of constitutionality or legality of the provisions of Section 144, Part A of the PAL-FASAP CBA. As the issue involved is constitutional in character, the labor arbiter or the National Labor Relations Commission (NLRC) has no jurisdiction over the case and, thus, the petitioners pray that judgment be rendered on the merits declaring Section 144, Part A of the PALFASAP CBA null and void.

Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over the present case, as the controversy partakes of a labor dispute. The dispute concerns the terms and conditions of petitioners' employment in PAL, specifically their retirement age. The RTC has no jurisdiction over the subject matter of petitioners' petition for declaratory relief because the Voluntary Arbitrator or panel of Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA. Regular courts have no power to set and fix the terms and conditions of employment.

Finally, respondent alleged that petitioners' prayer before this Court to resolve their petition for declaratory relief on the merits is procedurally improper and baseless.

The petition is meritorious. Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the character of the relief prayed for irrespective of whether plaintiff is entitled to such relief.[14] In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners' cause of action is the annulment of Section 144, Part A of the PAL-FASAP CBA. The pertinent portion of the petition recites: CAUSE OF ACTION 24. Petitioners have the constitutional right to fundamental equality with men under Section 14, Article II, 1987 of the Constitution and, within the specific context of this case, with the male cabin attendants of Philippine Airlines. 26. Petitioners have the statutory right to equal work and employment opportunities with men under Article 3, Presidential Decree No. 442, The Labor Code and, within the specific context of this case, with the male cabin attendants of Philippine Airlines. 27. It is unlawful, even criminal, for an employer to discriminate against women employees with respect to terms and conditions of employment solely on account of their sex under Article 135 of the Labor Code as amended by Republic Act No. 6725 or the Act Strengthening Prohibition on Discrimination Against Women. 28. This discrimination against Petitioners is likewise against the Convention on the Elimination of All Forms of Discrimination Against Women (hereafter, CEDAW), a multilateral convention that the Philippines ratified in 1981. The Government and its agents, including our courts, not only must condemn all forms of discrimination against women, but must also implement measures towards its elimination.

29. This case is a matter of public interest not only because of Philippine Airlines' violation of the Constitution and existing laws, but also because it highlights the fact that twenty-three years after the Philippine Senate ratified the CEDAW, discrimination against women continues. 31. Section 114, Part A of the PAL-FASAP 2000-20005 CBA on compulsory retirement from service is invidiously discriminatory against and manifestly prejudicial to Petitioners because, they are compelled to retire at a lower age (fifty-five (55) relative to their male counterparts (sixty (60). 33. There is no reasonable, much less lawful, basis for Philippine Airlines to distinguish, differentiate or classify cabin attendants on the basis of sex and thereby arbitrarily set a lower compulsory retirement age of 55 for Petitioners for the sole reason that they are women. 37. For being patently unconstitutional and unlawful, Section 114, Part A of the PAL-FASAP 2000-2005 CBA must be declared invalid and stricken down to the extent that it discriminates against petitioner. 38. Accordingly, consistent with the constitutional and statutory guarantee of equality between men and women, Petitioners should be adjudged and declared entitled, like their male counterparts, to work until they are sixty (60) years old. PRAYER WHEREFORE, it is most respectfully prayed that the Honorable Court: c. after trial on the merits: (I) declare Section 114, Part A of the PAL-FASAP 20002005 CBA INVALID, NULL and VOID to the extent that it discriminates against Petitioners; x x x x

From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue raised is whether Section 144, Part A of the PAL-FASAP CBA is unlawful and unconstitutional. Here, the petitioners' primary relief in Civil Case No. 04-886 is the annulment of Section 144, Part A of the PAL-FASAP CBA, which allegedly

discriminates against them for being female flight attendants. The subject of litigation is incapable of pecuniary estimation, exclusively cognizable by the RTC, pursuant to Section 19 (1) of Batas Pambansa Blg. 129, as amended.[15] Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals. The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of the Constitution, labor statutes, law on contracts and the Convention on the Elimination of All Forms of Discrimination Against Women, [16] and the power to apply and interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction. In Georg Grotjahn GMBH & Co. v. Isnani,[17] this Court held that not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement.

Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court. [18] Here, the employer-employee relationship between the parties is merely incidental and the cause of action ultimately arose from different sources of obligation , i.e., the Constitution and CEDAW.

Thus, where 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. [19]

If We divest the regular courts of jurisdiction over the case, then which tribunal or forum shall determine the constitutionality or legality of the assailed CBA provision?

This Court holds that the grievance machinery and voluntary arbitrators do not have the power to determine and settle the issues at hand. They have no jurisdiction and competence to decide constitutional issues relative to the questioned compulsory retirement age. Their exercise of jurisdiction is futile, as it is like vesting power to someone who cannot wield it. In Gonzales v. Climax Mining Ltd.,[20] this Court affirmed the jurisdiction of courts over questions on constitutionality of contracts, as the same involves the exercise of judicial power. The Court said: Whether the case involves void or voidable contracts is still a judicial question. It may, in some instances, involve questions of fact especially with regard to the determination of the circumstances of the execution of the contracts. But the resolution of the validity or voidness of the contracts remains a legal or judicial question as it requires the exercise of judicial function. It requires the ascertainment of what laws are applicable to the dispute, the interpretation and application of those laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a mining conflict. It is essentially judicial. The complaint was not merely for the determination of rights under the mining contracts since the very validity of those contracts is put in issue. In Saura v. Saura, Jr.,[21] this Court emphasized the primacy of the regular court's judicial power enshrined in the Constitution that is true that the trend is towards vesting administrative bodies like the SEC with the power to adjudicate matters coming under their particular specialization, to insure a more knowledgeable solution of the problems submitted to them. This would also relieve the regular courts of a substantial number of cases that would otherwise swell their already clogged dockets. But as expedient as this policy may be, it should not deprive the courts of justice of 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. Otherwise, the creeping take-over by the administrative agencies of the judicial power vested in the courts would render

the judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution.

To be sure, in Rivera v. Espiritu,[22] after Philippine Airlines (PAL) and PAL Employees Association (PALEA) entered into an agreement, which includes the provision to suspend the PAL-PALEA CBA for 10 years, several employees questioned its validity via a petition for certiorari directly to the Supreme Court. They said that the suspension was unconstitutional and contrary to public policy. Petitioners submit that the suspension was inordinately long, way beyond the maximum statutory life of 5 years for a CBA provided for in Article 253-A of the Labor Code. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers' constitutional right to bargain for another CBA at the mandated time. In that case, this Court denied the petition for certiorari, ruling that there is available to petitioners a plain, speedy, and adequate remedy in the ordinary course of law. The Court said that while the petition was denominated as one for certiorari and prohibition, its object was actually the nullification of the PAL-PALEA agreement. As such, petitioners' proper remedy is an ordinary civil action for annulment of contract, an action which properly falls under the jurisdiction of the regional trial courts.

The change in the terms and conditions of employment, should Section 144 of the CBA be held invalid, is but a necessary and unavoidable consequence of the principal relief sought, i.e., nullification of the alleged discriminatory provision in the CBA. Thus, it does not necessarily follow that a resolution of controversy that would bring about a change in the terms and conditions of employment is a labor dispute, cognizable by labor tribunals. It is unfair to preclude petitioners from invoking the trial court's jurisdiction merely because it may eventually result into a change of the terms and conditions of employment. Along that line, the trial court is not asked to set and fix the terms and conditions of employment, but is called upon to determine whether CBA is consistent with the laws. Although the CBA provides for a procedure for the adjustment of grievances, such referral to the grievance machinery and thereafter to voluntary arbitration would be inappropriate to the petitioners, because the union and the management have unanimously agreed to the terms of the CBA and their interest is unified.

In Pantranco North Express, Inc., v. NLRC,[23] this Court held that:

x x x 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. x x x . Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the union and petitioner company because both have previously agreed upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was only private respondent on his own who questioned the compulsory retirement. x x x. In the same vein, the dispute in the case at bar is not between FASAP and respondent PAL, who have both previously agreed upon the provision on the compulsory retirement of female flight attendants as embodied in the CBA. The dispute is between respondent PAL and several female flight attendants who questioned the provision on compulsory retirement of female flight attendants. Thus, applying the principle in the aforementioned case cited, referral to the grievance machinery and voluntary arbitration would not serve the interest of the petitioners. Besides, a referral of the case to the grievance machinery and to the voluntary arbitrator under the CBA would be futile because respondent already implemented Section 114, Part A of PAL-FASAP CBA when several of its female flight attendants reached the compulsory retirement age of 55.

Further, FASAP, in a letter dated July 12, 2004, addressed to PAL, submitted its association's bargaining proposal for the remaining period of 2004-2005 of the PAL-

FASAP CBA, which includes the renegotiation of the subject Section 144. However, FASAP's attempt to change the questioned provision was shallow and superficial, to say the least, because it exerted no further efforts to pursue its proposal. When petitioners in their individual capacities questioned the legality of the compulsory retirement in the CBA before the trial court, there was no showing that FASAP, as their representative, endeavored to adjust, settle or negotiate with PAL for the removal of the difference in compulsory age retirement between its female and male flight attendants, particularly those employed before November 22, 1996. Without FASAP's active participation on behalf of its female flight attendants, the utilization of the grievance machinery or voluntary arbitration would be pointless. The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP CBA. Interpretation, as defined in Black's Law Dictionary, is the art of or process of discovering and ascertaining the meaning of a statute, will, contract, or other written document.[24] The provision regarding the compulsory retirement of flight attendants is not ambiguous and does not require interpretation. Neither is there any question regarding the implementation of the subject CBA provision, because the manner of implementing the same is clear in itself. The only controversy lies in its intrinsic validity. Although it is a rule that a contract freely entered between the parties should be respected, since a contract is the law between the parties, said rule is not absolute.

In Pakistan International Airlines Corporation v. Ople,[25] this Court held that:

The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the contracting parties may establish such stipulations as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law, especially provisions relating to matters affected with public policy, are deemed written into the contract. Put a little differently, the governing principle is that parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with

public interest. The law relating to labor and employment is clearly such an area and parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.

Moreover, the relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good.x x x [26] The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts; these are imbued with public interest and therefore are subject to the police power of the state. [27] It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided.[28]

Finally, the issue in the petition for certiorari brought before the CA by the respondent was the alleged exercise of grave abuse of discretion of the RTC in taking cognizance of the case for declaratory relief. When the CA annuled and set aside the RTC's order, petitioners sought relief before this Court through the instant petition for review under Rule 45. A perusal of the petition before Us, petitioners pray for the declaration of the alleged discriminatory provision in the CBA against its female flight attendants. This Court is not persuaded. The rule is settled that pure questions of fact may not be the proper subject of an appeal by certiorari under Rule 45 of the Revised Rules of Court. This mode of appeal is generally limited only to questions of law which must be distinctly set forth in the petition. The Supreme Court is not a trier of facts.[29] The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not is a question of fact. This would require the presentation and reception of evidence by the parties in order for the trial court to ascertain the facts of the case and whether said provision violates the Constitution, statutes and treaties. A full-blown trial is necessary, which jurisdiction to hear the same is properly lodged with the the RTC. Therefore, a remand of this case to the RTC for the

proper determination of the merits of the petition for declaratory relief is just and proper. WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the Court of Appeals, dated August 31, 2005 and March 7, 2006, respectively, in CAG.R. SP. No. 86813 are REVERSED and SET ASIDE. The Regional Trial Court of Makati City, Branch 147 is DIRECTED to continue the proceedings in Civil Case No. 04-886 with deliberate dispatch. SO ORDERED.

THIRD DIVISION

UNIVERSITY OF SANTO TOMAS, Petitioner,

G.R. No. 169940 Present: Ynares-Santiago, J. (Chairperson), Chico-Nazario, Velasco, Jr., Nachura, and Peralta, JJ.

- versus -

SAMAHANG MANGGAGAWA NG UST (SM-UST), Respondent. September 14, 2009 x ---------------------------------------------------------------------------------------- x Promulgated:

DECISION YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari is the January 31, 2005 Decision[1] of the Court of Appeals in CA-G.R. SP No. 72965, which affirmed the May 31, 2002 Order of the Secretary of the Department of Labor and Employment (DOLE) directing the parties to execute a Collective Bargaining Agreement incorporating the terms in said Order with modification that the signing bonus is increased to P18,000.00. Also assailed is the September 23, 2005 Resolution [2] denying the motion for reconsideration.

Respondent Samahang Manggagawa ng U.S.T. (SM-UST) was the authorized bargaining agent of the non-academic/non-teaching rank-and-file daily- and monthly-paid employees (numbering about 619) of petitioner, the Pontifical and Royal University of Santo Tomas, The Catholic University of the Philippines (or UST), a private university in the City of Manila run by the Order of Preachers. In October 2001, during formal negotiations for a new collective bargaining agreement (CBA) for the academic year 2001 through 2006, petitioner submitted its 2001-2006 CBA Proposals which, among others, contained the following economic provisions:

A.

ACADEMIC YEAR 2001-2002 1. 2. 3. Salary increase of P800.00 per month Signing bonus of P10,000.00 Additional Christmas bonus of P2,000.00

B.

ACADEMIC YEAR 2002-2003 1. 2. 3. Salary increase of P1,500.00 per month Additional Christmas bonus of P2,000.00 P6,000,000.00 for salary restructuring

C.

ACADEMIC YEAR 2003-2004 1. 2. Salary increase of P1,700.00 per month Additional Christmas bonus of P2,000.00

In November 2001, the parties agreed in principle on all non-economic provisions of the proposed CBA, except those pertaining to Agency Contract or contractualization (Art. III, Sec. 3 of the proposed CBA), Union Leave of the SM-UST President (No. 4 of the Addendum to the proposed CBA), and hiring preference.

In December 2001, petitioner submitted its final offer on the economic provisions, thus:

A.

ACADEMIC YEAR 2001-2002 1. 2. 3. Salary increase of P1,000.00 per month Signing bonus of P10,000.00 Additional Christmas bonus of P2,000.00

B.

ACADEMIC YEAR 2002-2003 1. 2. 3. Salary increase of P1,700.00 per month Additional Christmas bonus of P2,000.00 P6,190,000.00 to be distributed in the form of salary restructuring

C.

ACADEMIC YEAR 2003-2004 1. 2. Salary increase of P2,000.00 per month Additional Christmas bonus of P2,000.00

On the other hand, respondent reduced its demands for the first year from P8,000.00 monthly salary increase per employee to P7,000.00, and from P75,000.00 signing bonus to P60,000.00 for each employee, but petitioner insisted on its final offer. As a result, respondent declared a deadlock and filed a notice of strike with the National Conciliation and Mediation Board -National Capital Region (NCMB-NCR).

Conciliation and mediation proved to be futile, such that in January 2002, majority of respondents members voted to stage a strike. However, the DOLE Secretary timely assumed jurisdiction over the dispute, and the parties were summoned and heard on their respective claims, and were required to submit their respective position papers.

On May 31, 2002, the DOLE Secretary issued an Order,[3] the pertinent portions of which read, as follows:

x x x In arguing on the reasonableness of its demands, it cites the income of the school from tuition fee increases and the allocation of this amount to the faculty and non-teaching employees of the School x x x. According to the Union, the Schools estimate of the tuition fee increase for the school year 2003-2004 at P76,410,000.00 is erroneous. The Union argues that the total income of the School from tuition fee increases for school year 2003-2004 is P101,000,000.00 more or less, or a net of P98,252,187.36, after deducting adjustments for additional charges, allowances and discounts. This is based on the computation of the Schools Assistant Chief Accountant x x x.

xxxx

The Union feels that the members of the bargaining unit are the least favored. On the wage increases alone, the Union points out that a comparison of the average monthly salary of the non-academic personnel from school year 1995-1996 up to school year 1999-2000 shows a declining relative percentage. For this period, the bargaining unit enjoyed an average monthly salary increase of 14.234%, the lowest being

8.9% in school year 1998-1999 and the highest being 15.38% in school year 1995-1996. The Schools offer for this CBA cycle translates to an increase of only 8.23%, specified as follows: (1) 5.69% increase in school year 2000-2001 (P1,000.00); (2) 9.15% increase in school year 2001-2002 (P1,700.00); and (3) 9.86% increase in 2002-2003 (P2,000.00).

The Union also submits a comparative chart of the allocation to non-academic personnel of the 70% increase in tuition fees from school year 1996-1997 to 1999-2000 x x x. The average percentage allocation to non-academic personnel during this period is 32.8% of the total 70% of total tuition fee increases, the lowest being 20.83% for the school year 1999-2000 and the highest being 43.11% of the total allocation in 19971998. Using P101,036,330.37 as the estimated increase in tuition fee, 70% of this amount, net of adjustment, is P68,775,831.15 x x x. The Union argues that it is entitled to at least the average percentage of allocation to it for the past four (4) school years which is at 32.85%, or P22,592,860.53 of the total allocation of P68,775,831.15.

It maintains, however, that it is entitled to more than the average percentage of its allocation of the total 70% because it is School practice to allocate more than 70% of the total tuition fee increases for the salaries and benefits of School employees. Comparing the employees share in the tuition fee increases from school year 1996-1997 to 19992000, the School allocated an average percentage of 76.75% for the benefits and salaries of its personnel, or from a low of 72% in 1998-1999 to a high of 84.4% in 1996-1997 x x x. If the average is applied this year, the Union argues that the available amount is P75,407,786.29. Because of this practice, the Unionmaintains that the School is already estopped from arguing that the allocation for employee wages and benefits should not exceed 70% of tuition fee increases.

Aside from this amount, the Union maintains that it is entitled to an additional P15,475,000.00, sourced from other income, for the signing bonus or one-time grant of P25,000.00 per member x x x. The Union alleges that it is school practice to appropriate other funds for the wages and benefits of its employees. For the school year 1996-

1997, the School used funds from other sources to fund the P2,000,000.00 hospitalization fund and 50% of the signing bonus for the academic personnel; in 1997-1998 and 1998-1999, it used additional funds for the P1,000,000.00 hospitalization fund of the academic personnel; and in 1999-2000, it used other funds to finance the one-time grant of P10,000.00 each to the non-academic personnel and additional P4,000,000.00 for the hospitalization fund of the academic employees or a total of P17,592,500.00 for the past four (4) academic years x x x.

The School cannot claim that the funds are insufficient to cover the expenses for the CBA because for the fiscal year 2000-2001 alone, the accumulated excess of revenues over expenses at the end of the year totaled P148,881,678.00 x x x. The Statement of Revenues and Expenses from School Operations collated from the audited Financial Statements of the School for the school years 1996-1997 up to 2000-2001 shows that except for school years 1996-1997 and 2000-2001, the School posted a net income from school operations. Its average annual net income from school operations alone is P7,956,187.00 and the net loss in 2000-2001 was a result of the revaluation of the Main Building as part of the assets from its fully depreciated value so that a new depreciation cost was reported and charged to general expenses.

From the foregoing arguments, the Union demands that an amount should be allocated to it annually to finance its demands as follows:

1st Year P38,067,860.00 distributed as follows: P22,592,860.53 (share from tuition fee increases) for the economic benefits with sliding effect on the succeeding years; plus P15,475,000.00 for the one-time signing bonus of P25,000.00 for each employee sourced from other funds.

2nd Year P33,568,970.00 to apply to its demand for salary increase, Christmas bonus, rice subsidy and clothing/uniform allowance.

3rd Year P46,653,295.37 to apply to its demand for salary increase, Christmas bonus, medicine allowance, midyear bonus allowance and meal allowance.

Based on the Unions computation, its demands will cost the School a total of P133,765,125.37 for the entire three (3) year period.

xxxx

Given all the foregoing, we cannot follow the Unions formula and in effect disregard the Schools two other bargaining units; to do so is a distortion of economic reality that will not bring about long term industrial peace. We cannot simply adopt the Schools proposal in light of the parties bargaining history, particularly the pattern of increases in the last cycle. Considering all these, we believe the following to be a fair and reasonable resolution of the wage issue.

1st Year P1,000.00/month 2nd Year P2,000.00/month 3rd Year P2,200.00/month

These increases, at a three-year total of P68,337,600, are less than the three (3)-year increases in the last CBA cycle to accommodate the Schools proven lack of capacity to afford a higher increase, but are still substantial enough to accommodate the workers needs while taking into account the symmetry that must be maintained with the wages of the other bargaining units. On a straight line aggregate of P5,200.00, the non-academic personnel will receive P498.48 less than an Instructor I (member of the faculty union) who received an aggregate of P5,698.48, thus maintaining the gap between the teaching and non-teaching personnel. The salary difference will as well be maintained over the

three (3)-year period of the CBA. An RFI employee (member of the unions bargaining unit) will receive a monthly salary of P21,695.95 while an Instructor I (faculty union member) will have a salary of P22,948.00; while an RF5-5/A (member of the unions bargaining unit) will receive a salary of P23,462.97 compared to an Asst. Prof. 1 (faculty) who will receive P29,250.96. From a total cost of salary increases for the first year at P7,428,000, these costs will escalate to P22,284,000 in the second year, and to P38,625,000 at the third year. Given these figures, the amounts available for distribution and the member of groups sharing these amounts, these increases are by no means minimal.

Signing Bonus A review of the past bargaining history of the parties shows that the School as a matter of course grants a signing bonus. This ranged from P8,000.00 during the first three (3) years of the last CBA to P10,000.00 during the remaining two (2) years of the re-negotiated term. In this instance, the Schools offer of P10,000.00 signing bonus is already reasonable considering that the School could have taken the position that no signing bonus is due on compulsory arbitration in line with the ruling inMeralco v. Quisumbing et al., G.R. No. 127598, 27 January 1999.

Christmas Bonus We note that the members of the bargaining unit receive a P6,500.00 Christmas bonus. Considering this current level, we believe that the Schools offer of P2,000.00 for each of the next three (3) years of the CBA is already reasonable. Under this grant, the workers Christmas bonus will stand at a total of P12,500 at the end of the third year.

Hospitalization Benefit We believe that the current practice is already reasonable and should be maintained.

Meal Allowance The Union failed to show any justification for its demand on this item, hence its demand on the increase of meal allowance is denied.

Rice Allowance We believe an additional 2 sacks of rice on top of the existing 6 sacks of rice is reasonable and is hereby granted, effective on the second year.

Medical Allowance In the absence of any clear justification for an improvement of this benefit, we find the existing practice to be already reasonable and should be maintained.

Uniform/Clothing The Union has not established why the School should grant the benefit; hence this demand is denied.

Mid-year Bonus The P3,000.00 bonus is already fair and should be maintained.

Hazard Pay There is no basis to increase this benefit, the current level being fair and reasonable.

Educational Benefit The existing provision is already generous and should be maintained.

Retirement Plan We are convinced that the 100% of basic salary per year of service is already reasonable and should be maintained.

Hiring Preference Based on the Minutes of Meeting on 18 October 2001 and 8 November 2001, the parties agreed to retain the existing provision; hence, our ruling on this matter is no longer called for.

Contractualization The Unions proposed amendments are legal prohibitions which need not be incorporated in the CBA. The Union has alternative remedies if it desires to assail the Schools contracts with agencies.

Full-time Union Leave of Union President The Union failed to provide convincing reasons why this demand should be favorably granted; hence, the same is denied.

Other Demands All other demands not included in the defined deadlock issues are deemed abandoned, except for existing benefits which the School shall continue to grant at their current levels consistent with the principle of non-diminution of benefits.

WHEREFORE, premises considered, the parties are hereby directed to execute within ten (10) days from receipt of this Order a Collective Bargaining Agreement incorporating the terms and conditions of this Order as well as other agreements made in the course of negotiations and on conciliation.[4]

Respondent filed a motion for reconsideration but it was denied by the Secretary of Labor. Thus, respondent filed an original petition for certiorari with the Court of Appeals, claiming that the awards made by the DOLE Secretary are not supported by the evidence on record and are contrary to law and jurisprudence.

On January 31, 2005, the appellate court rendered the assailed Decision, the dispositive portion of which reads, as follows:

WHEREFORE, premises considered, the petition is partially GRANTED. The assailed Order of May 31, 2002 of Secretary Patricia Sto. Tomas is hereby AFFIRMED with the modification that the P10,000.00 signing bonus awarded is increased to P18,000.00.

SO ORDERED.[5]

In arriving at the foregoing disposition, the appellate court noted that:

Based on UST Chief Accountant Antonio J. Dayags Certification, the tuition fee increment for the SY 2001-2002 amounted to P101,036,330.37. From this amount, the tuition fee adjustment amounting to P2,785,143.00 was deducted leaving a net tuition fee increment of P98,251,189.36.

Pursuant to Section 5 (2) RA 6728, seventy percent (70%) of P98,251,187.36 or P68,775,831.15 is the amount UST has to allocate for salaries, wages, allowances and other benefits of its 2,290 employees, categorized as follows: 619 non-teaching personnel represented by herein petitioner SM-UST; 1,452 faculty members represented by USTFaculty Union (UST-FU) and 219 academic/administrative officials. The last group of employees is excluded from the coverage of the two bargaining units.

Public respondent, taking into consideration the bargaining history of the parties, the needs of the members of Union in relation to the capability of its employer, UST, to grant its demands, the impact of the award on the UST-Faculty Union members (UST-FU), and how the present salary and benefits of the non-academic personnel compare with the compensation of the employees of other learning institutions, arrived at the following fair and reasonable resolution to the wage issue:

1st year P1,000.00/month 2nd year P2,000.00/month 3rd year P2,000.00/month

Based on public respondents arbitral award for the first year (AY 2001-2002), We determine the allocation that SM-UST would get from the 70% of the tuition fee increment for AY 2001-2002 by approximating USTs expense on the increment of salaries/wages, allowances and benefits of the non-teaching personnel:

1.

Increment on Salaries/Wages + 13th month pay (P1,000 x 13 months x 619 employees)

P 8,047,000.00

2.

Signing Bonus (P10,000/employee)

6,190,000.00

3.

P2,000 Christmas Bonus Total

1,238,000.00 P15,475,000.00 ===========

The amount of P15,475,000.00 represents 22.50% of the allocated P68,775,831.00 (70% of the tuition fee increment for AY 2001-2002). UST has allocated P45 million or 65.43% of the P68,775,831 to UST-Faculty Union.

Is the distribution equitable? If the share from the allocated P68,775,831.00 for each bargaining unit would be based on the uni ons membership, then the distribution appears fair and reasonable:

xxxx

Academic

1,452 employees

awarded P45 million

Non-academic

619 employees

awarded P15.475 million

Academic & Administrative 219 employees awarded P8 million_____ P68,475,000.00

Total awarded

The difference between P68,775,831 (70% of incremental tuition fee proceeds) and P68,475,000 (total actual allocation or award to the two bargaining units and the school officials) is P300,831.00, which is only .437% of the 70% mandatory allocation (P68,775,831.00).

The Supreme Court in the case of Cebu Institute of Medicine v. Cebu Institute of Medicine Employees Union National Federation of Labor held that SSS, Medicare and Pag-Ibig employers share may be charged against the seventy percent (70%) incremental tuition fee

increase (sic) as they are, after all, for the benefit of the Universitys teaching and non-teaching personnel. The High Court further ruled that the private educational institution concerned has the discretion on the disposition of the seventy percent (70%) incremental tuition fee increase (sic). It enjoys the privilege of determining how much increase in salaries to grant and the kind and amount of allowances and other benefits to give. The only precondition is that seventy percent (70%) of the incremental tuition fee increase (sic) goes to the payment of salaries, wages, allowances and other benefits of teaching and nonteaching personnel.

In the (sic) light of the foregoing jurisprudence, the University, in order to comply with R.A. 6728, must fully allocate the 70% of the tuition fee increases to salaries, wages, allowances and other benefits of the teaching and non-teaching personnel. The amount of P300,831.00 must therefore be allocated either as salary increment or fringe benefits of the non-teaching personnel.

We noted that USTs non-teaching employees enjoy several fringe benefits.

We listed them down and estimated their costs for AY 2001-2002:

1. 2.

P3,000.00 mid-year bonus 6 sacks of rice/employee @ P1,000.00/sack

P1,857,000.00

3,714,000.00 2,476,000.00

3. 4.

Hospitalization benefit Meal allowance (P600/month/employee)

4,456,800.00

5.

Hazard pay (P200/month for

198 employees) 6. .00 7. SSS (P910.00 employers share per employee) 8. 9. 0.00 Pag-Ibig (2% of the basic pay) Phil Health (P125.00/employee) Total Medicine Allowance (P1,000/month/employee)

entitled 8,430,780.00

7,428,000.00 20,407,000

6,759,480.00 742,800.00 928,500.00_ P28,837,78 =========

==

The allocation for salary increases, 13th month pay, signing bonus and Christmas bonus for USTs teaching and non -teaching employees, as well as the school officials, amount to P68.475 million. This represents almost 70% of the UST incremental tuition fee proceeds for AY 20012002. Considering the fringe benefits being extended to UST employees, it is safe to assume that the funds for such benefits need to be sourced from the Universitys other revenues. We looked into USTs financial statements to determine its financial standing. The financial statements duly audited by independent and credible external auditors constitute the normal method of proof of profit and loss performance of a company. We examined UST audited financial statements from 1997 to 2001 and found that the Universitys other incomes come from parking fees, rent income and interest income. It, likewise, derives income from school operations:

1999 Income from

2000

2001

Operations )

P19,874,937.00

(24,222,602)

(40,905,598

Other Income

85,995,039.00

77,335,032.00

78,358,303

Excess of Revenues Over

Expenses Before Income Tax 96,869,976.00 53,112,480.00 (29,726,651)

Provision for Income Tax 2,122,518.00 2,602,305.00

Excess of Revenues Over Expenses 94,747,458.00 50,510,175.00 (32,115,272)

ACCUMULATED EXCESS OF REVENUES OVER EXPENSES AT END OF YEAR P180,996,950.00 P130,486,775.00 P148,881,678

Thus, if We charge the employees other benefits from the accumulated excess of revenues, We will come up with the following:

Accumulated Excess of Revenues Over Expenses (2001) P148,881,678.00

Less: Other Benefits of Non-Teaching Personnel Balance 0 28,837,780.00 P120,043,898.0

Even if the other benefits of the faculty members were to be charged from the remaining balance of the Accumulated Excess of Revenues Over Expenses, there would still be sufficient amount to fund the other benefits of the non-teaching personnel.

xxxx

However, while We subscribe to USTs position on salary distortion, Our earlier findings support the petitioners contention that the UST has substantial accumulated income and thus, We deem it proper to award an increase, not in salary, to prevent any salary distortion, but in signing bonus. The arbitral award of P10,000 signing bonus per employee awarded by public respondent is hereby increased to P18,000.00.

We are well aware of the need for the University to maintain a sound and viable financial condition in the light of the decreasing number of its enrollees and the increasing costs of construction of buildings and modernization of equipment, libraries, laboratories and other similar facilities. To balance this concern of the University with the need of its non-academic employees, the additional award, which We deem reasonable, and to be funded from the Universitys accumulated income, is thus limited to the increase in signing bonus. [6]

Petitioner filed a motion for reconsideration, which the appellate court denied in its September 23, 2005 Resolution. Hence, the instant petition which raises the following issues:

I. THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF SUBSTANCE WHEN IT RULED THAT THE MEMBERS OF PRIVATE RESPONDENT DID NOT VOLUNTARILY AND KNOWINGLY ACCEPT THE ARBITRAL AWARD OF THE SECRETARY OF DOLE.

II. THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT INCREASED THE SIGNING BONUS AWARDED BY THE SECRETARY OF DOLE TO EACH OF THE MEMBERS OF PRIVATE RESPONDENT FROM P10,000.00 TO P18,000.00.

III. THE HONORABLE COURT OF APPEALS HAS COMPLETELY IGNORED THE CLEAR MANDATE AND INTENTION OF R.A. 6728 OTHERWISE KNOWN AS THE GOVERNMENT ASSISTANCE TO STUDENTS AND TEACHERS IN PRIVATE EDUCATION ACT.

IV. THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT RULED THAT THE FRINGE BENEFITS BEING ENJOYED BY THE ACADEMIC AND NON-ACADEMIC EMPLOYEES OF PETITIONER WERE SOURCED OUT FROM ITS OTHER INCOME.

V. THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT

IGNORED THE TIME HONORED PRINCIPLES GOVERNING PETITION FOR CERTIORARI INVOLVING LABOR CASES.[7]

Petitioner alleges that, as of December 11, 2002, 526 regular non-academic employees out of a total of 619 respondents members have decided to unconditionally abide by the May 31, 2002 Order of the DOLE Secretary. [8] A letter signed by the 526 non-academic employees allegedly reads:

December 3, 2002

TO:

REV. FR. TAMERLANE R. LANA, O.P. Rector

REV. FR. JUAN V. PONCE, O.P. Vice-Rector

KAMI NA NAKALAGDA SA IBABA AY NAGPAPAABOT NG AMING TAHASANG PAGTANGGAP SA AWARD NG SECRETARY OF LABOR SA AMING (CBA) DEADLOCK CASE.

SANA PO AY MA-RELEASE ANG AMING MGA WAGE ADJUSTMENTS AT IBA PANG BENEPISYO BAGO MAG DECEMBER 15, 2002.

x x x x[9]

Petitioner claims that it began paying the wage adjustment and other benefits pursuant to the May 31, 2002 Order of the DOLE Secretary; and that to date, 572 out of the 619 members of respondent have been paid. It now argues that by their acceptance of the award and the resulting payments made to them, the said union

members have ratified its offer and thus rendered moot the case before the Court of Appeals (CA-G.R. SP No. 72965).

Petitioner also argues that the Court of Appeals erred in ordering it to source part of its judgment award from the schools other income, claiming that Republic Act 6728[10] does not compel or require schools to allocate more than 70% of the incremental tuition fee increase for the salaries and benefits of its employees. Citing an authority in education law, it stresses that

Clearly, only 70% may be used for the payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel, since 20% shall go to the improvement or modernization of buildings, equipment, libraries, laboratories, gymnasia and similar facilities and the payment of other costs of operation.

A school does not exist solely for the benefit of its teachers and non-teaching personnel. A school is principally established to deliver quality education at all levels, as the Constitution requires. Therefore, any tuition fee increase authorized by either the DepEd Secretary, the CHED or the Director General of the TESDA for private schools should not solely benefit the teaching and non-teaching personnel but should rather be used for the welfare of the entire school community, particularly the students. The students are entitled as a matter of right to the improvement and modernization of the school buildings, equipment, as this is fundamental to the maintenance or improvement of the quality of education they receive.

Thus, if schools use any part of the 20% reserved for the upgrading of school facilities to supplement the salaries of their academic and nonacademic personnel, they would not only be violating the students constitutional right to quality education through improvement and modernization but also committing a serious infraction of the mandatory provisions of RA 6728.

The law is silent, however, on the remaining ten percent of the tuition fee increase. The DepEd has referred to it as the return of investment for proprietary schools and the free portion for nonstock, non-profit educational institutions. This ten percent (10%) is the only portion of the tuition fee increase which schools may use as they wish.[11]

Petitioner thus concedes liability only up to P300,831.00, which is the remaining balance of the undistributed amount of P68,775,831.00, which represents 70% of the incremental tuition fee proceeds for the period in question.

Petitioner contends further that the appellate courts award of additional signing bonus (from P10,000.00 to P18,000.00) is contrary to the nature and principle behind the grant of such benefit, which is one given as a matter of discretion and cannot be demanded by right,[12] a consideration paid for the goodwill that existed in the negotiations, which culminate in the signing of a CBA.[13] Petitioner claims that since this condition is absent in the parties case, it was erroneous to have rewarded respondent with an increased signing bonus.

Finally, petitioner endorses the original award of the DOLE Secretary, calling her disposition of the case fair and equitable[14] and deserving of our attention, in light of the principle that

The conclusions reached by public respondent (Secretary of Labor) in the discharge of her statutory duty as compulsory arbitrator, demand the high respect of this Court. The study and settlement of these disputes fall within public respondent's distinct administrative expertise. She is especially trained for this delicate task, and she has within her cognizance such data and information as will assist her in striking the equitable balance between the needs of management, labor, and the public. Unless there is clear showing of grave abuse of discretion, this Court cannot and will not interfere with the labor expertise of public respondent x x x.[15]

On the other hand, respondent seeks to sustain the appellate courts disposition, echoing its ruling that even though majority of the non-teaching

employees agreed to petitioners offer and accepted payment thereupon, they are not precluded from receiving additional benefits that the courts may award later on, bearing in mind that

the employer and the employee do not stand on the same footing. Considering the countrys prevailing economic conditions, the employee oftentimes finds himself in no position to resist money proffered, thus, his case becomes one of adherence and not of choice. This being the case, they are deemed not to have waived any of their rights.[16]

As regards petitioners assertion that the funds to cover for the cost of the other benefits awarded by the DOLE Secretary may not be sourced from its other income pursuant to R.A. 6728 as these benefits should only be paid out from the 70% tuition fee increment, respondent argues that R.A. 6728

does not provide that the increase or improvement of the salaries and fringe benefits of the employees should be exclusively funded from the income of the University which is derived from the increase in tuition fees. In fact, the statute has no application with respect to the manner of disposition of the other incomes (as distinguished from income derived from tuition fee increases) of the University, nor does it preclude or exempt the latter from using its other income or part thereof to fund the cost of increases or improvements in the salaries and benefits of its employees. x x x

15. Contrary to the assertion of Petitioner, it is very clear that the funds used by the University to cover the cost of other fringe benefits (under the existing CBA) granted to the non-academic employees for AY 2001-2002 in the amount of P28,837,780.00 as observed by the Court of Appeals, came from the other income of the University and not from the share of the said employees in the income derived from the tuition fee increases during the same period. Logically, the grant of the said fringe benefits could not have come from the amount of P15,475,000.00 which was already allocated by the University to cover the total cost of the increases in the salaries, grant

of signing bonus, and increase in the Christmas bonus to the nonacademic employees for AY 2001-2002.[17]

On the appellate courts award of additional signing bonus, respondent argues that since no strike or any untoward incident occurred, goodwill between the parties remained, which entitles respondents members to receive their signing bonus. Besides, respondent asserts that since petitioner did not appeal the DOLE Secretarys award, it may not now argue against its grant, the issue remaining being the propriety of the awarded amount; that is, whether or not it was proper for the appellate court to have raised it from P10,000.00 to P18,000.00.

We resolve to PARTIALLY GRANT the petition.

To put matters in their proper context, we must first simplify the facts.

Although the parties were negotiating on the CBA for academic years 2001 through 2006 (2001-2006 CBA Proposals), we are here concerned only with the economic provisions for the academic year (AY) 2001-2002, specifically the appellate courts increased award of signing bonus, from P10,000.00 as originally granted by the DOLE Secretary, to P18,000.00; the parties do not appear to question any other disposition made by the DOLE Secretary.

Thus, it has been determined that from the tuition fees for the academic year in question, petitioner earned an increment of P101,036,330.37. Under R.A. 6728, 70% of that amount or the net[18] amount of P68,775,831.15 should be allotted for payment of salaries, wages, allowances and other benefits of teaching and nonteaching personnel except administrators who are principal stockholders of the school.

Of this amount (P68,775,831.15), an aggregate of P15,475,000.00 (or 22.5 %) was allocated to the universitys non-teaching or non-academic personnel, by way of the following:

Increment on Salaries/Wages

P 8,047,000.00

plus 13th month pay (P1,000 x 13 months x 619 non-academic personnel)

Signing Bonus (P10,000 per employee)

6,190,000.00

P2,000 Christmas Bonus

1,238,000.00

TOTAL

15,475,000.00

On the other hand, the amount of P45 million (or 65.43% of P68,775,831.15) was allocated to the teaching personnel.

After distribution of the respective shares of the teaching and non-teaching personnel, there remained a balance of P300,831.00 from the P68,775,831.15.

In addition to the salary increase, signing and Christmas bonuses, the Court of Appeals extended to respondents members the following fringe benefits for AY 2001 2002, which benefits petitioner has been giving its non-teaching employees in the past, and which are included in the DOLE Secretarys award an award which petitioner prays for this Court to affirm in toto:

1. 2.

P3,000.00 mid-year bonus 6 sacks of rice/employee @ P1,000/sack

P1,857,000.00

3,714,000.00 2,476,000.00

3. 4.

Hospitalization benefit Meal allowance

(P600/month/employee) 5. Hazard pay (P200/month for 198 employees) 6. Medicine Allowance (P1,000/month/employee) .00 7. SSS (P910.00 employers share per employee) 8. 9. Pag-Ibig (2% of the basic pay) Philhealth (P125.00/employee)

4,456,800.00

entitled 8,430,780.00

7,428,000.00 20,407,000

6,759,480.00 742,800.00 928,500.00_____________ Total P28,837,780.00

Clearly, these fringe benefits would have to be obtained from sources other than the incremental tuition fee proceeds (P68,775,831.15), since only P15,475,000.00 thereof was set aside for the non-teaching personnel; the rest was allocated to the teaching personnel.

The appellate court, moreover, granted an increase in the signing bonus, that is, from the DOLE Secretarys award of P10,000.00, to P18,000.00. This, exactly, is the parties point of contention.

Going now to the question of whether respondents members individual acceptance of the award and the resulting payments made by petitioner operate as a ratification of the DOLE Secretarys award which renders CA G.R. SP No. 72965 moot, we find that such do not operate as a ratification of the DOLE Secretarys award; nor a waiver of their right to recei ve further benefits, or what they may be entitled to under the law. The appellate court correctly ruled that the respondents members were merely constrained to accept payment at the time. Christmas was then just around the corner, and the union members were in no position to resist the temptation to accept much-needed cash for use during the most auspicious occasion of the year. Time and again, we have held that necessitous men

are not, truly speaking, free men; but to answer a present emergency, will submit to any terms that the crafty may impose upon them.[19]

Besides, as individual components of a union possessed of a distinct and separate corporate personality, respondents members should realize that in joining the organization, they have surrendered a portion of their individual freedom for the benefit of all the other members; they submit to the will of the majority of the members in order that they may derive the advantages to be gained from the concerted action of all.[20] Since the will of the members is personified by its board of directors or trustees, the decisions it makes should accordingly bind them. Precisely, a labor union exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. [21] What the individual employee may not do alone, as for example obtain more favorable terms and conditions of work, the labor organization, through persuasive and coercive power gained as a group, can accomplish better.

Regarding petitioners assertion that it was unlawful for the Court of Appeals to have required it to source the award of fringe benefits (in the amount of P28,837,780.00) from the schools other income, since R.A. 6728 does not compel or require schools to allocate more than 70% of the incremental tuition fee increase for the salaries and benefits of its employees, we find it unnecessary to rule on this matter. These fringe benefits are included in the DOLE Secretarys award an award which petitioner seeks to affirm in toto; this being so, it cannot now argue otherwise. Since it abides by the DOLE Secretarys award, which it finds fair and equitable, it must raise the said amount throu gh sources other than incremental tuition fee proceeds.

Finally, we come to the appellate courts award of additional signing bonus, which we find to be unwarranted under the circumstances. A signing bonus is a grant motivated by the goodwill generated when a CBA is successfully negotiated and signed between the employer and the union.[22] In the instant case, no CBA was successfully negotiated by the parties. It is only because petitioner prays for this Court to affirm in toto the DOLE Secretarys May 31, 2002 Order that we shall allow an award of signing bonus. There would have been no other basis to grant it if petitioner had not so prayed. We shall take it as a manifestation of petitioners liberality, which we cannot now allow it to withdraw. A bonus is a gratuity or act of liberality of the giver;[23] when petitioner filed the instant petition seeking the affirmance of the DOLE Secretarys Order in its entirety, assailing only the increased amount of the signing bonus awarded, it is considered to have unqualifiedly agreed to grant the original award to the respondent unions members.

WHEREFORE, the petition is PARTIALLY GRANTED. The signing bonus of EIGHTEEN THOUSAND PESOS (P18,000.00) per member of respondent Samahang Manggagawa ng U.S.T. as awarded by the Court of Appeals is REDUCED to TEN THOUSAND PESOS (P10,000.00). All other findings and dispositions made by the Court of Appeals in its January 31, 2005 Decision and September 23, 2005 Resolution in CAG.R. SP No. 72965 areAFFIRMED.

SO ORDERED.

NATIONAL UNION OF WORKERS IN HOTELS, RESTAURANTS AND ALLIED INDUSTRIESMANILA PAVILION HOTEL CHAPTER, Petitioner, - versus SECRETARY OF LABOR AND EMPLOYMENT, BUREAU OF LABOR RELATIONS, HOLIDAY INN MANILA PAVILION HOTEL LABOR UNION AND ACESITE PHILIPPINES HOTEL CORPORATION, Respondents.

G.R. No. 181531 Present: QUISUMBING, J., Chairperson, CARPIO MORALES, CHICO-NAZARIO,* LEONARDO-DE CASTRO,** and PERALTA,*** JJ.

Promulgated: July 31, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION CARPIO MORALES, J.: National Union of Workers in Hotels, Restaurants and Allied Industries Manila Pavilion Hotel Chapter (NUWHRAIN-MPHC), herein petitioner, seeks the reversal of the Court of Appeals November 8, 2007 Decision[1] and of the Secretary of Labor and Employments January 25, 2008 Resolution[2] in OS-A-9-52-05 which affirmed the Med-Arbiters Resolutions dated January 22, 2007[3] and March 22, 2007.[4]

A certification election was conducted on June 16, 2006 among the rank-andfile employees of respondent Holiday Inn Manila Pavilion Hotel (the Hotel) with the following results: EMPLOYEES IN VOTERS LIST = 353 TOTAL VOTES CAST NUWHRAIN-MPHC HIMPHLU NO UNION SPOILED SEGREGATED = = 22 3 = 346 = 151 = 169 = 1

In view of the significant number of segregated votes, contending unions, petitioner, NUHWHRAIN-MPHC, and respondent Holiday Inn Manila Pavillion Hotel Labor Union (HIMPHLU), referred the case back to Med-Arbiter Ma. Simonette Calabocal to decide which among those votes would be opened and tallied. Eleven (11) votes were initially segregated because they were cast by dismissed employees, albeit the legality of their dismissal was still pending before the Court of Appeals. Six other votes were segregated because the employees who cast them were already occupying supervisory positions at the time of the election. Still five other votes were segregated on the ground that they were cast by probationary employees and, pursuant to the existing Collective Bargaining Agreement (CBA), such employees cannot vote. It bears noting early on, however, that the vote of one Jose Gatbonton (Gatbonton), a probationary employee, was counted. By Order of August 22, 2006, Med-Arbiter Calabocal ruled for the opening of 17 out of the 22 segregated votes, specially those cast by the 11 dismissed employees and those cast by the six supposedly supervisory employees of the Hotel. Petitioner, which garnered 151 votes, appealed to the Secretary of Labor and Employment (SOLE), arguing that the votes of the probationary employees should have been opened considering that probationary employee Gatbontons vote was tallied. And petitioner averred that respondent HIMPHLU, which garnered 169 votes, should not be immediately certified as the bargaining agent, as the opening of the 17 segregated ballots would push the number of valid votes cast to 338 (151 + 169 + 1 + 17), hence, the 169 votes which HIMPHLU garnered would be one vote short of the majority which would then become 169. By the assailed Resolution of January 22, 2007, the Secretary of Labor and Employment (SOLE), through then Acting Secretary Luzviminda Padilla, affirmed the Med-Arbiters Order. It held that pursuant to Section 5, Rule IX of the Omnibus Rules Implementing the Labor Code on exclusion and inclusion of voters in a certification election, the probationary employees cannot vote, as at the time the Med-Arbiter

issued on August 9, 2005 the Order granting the petition for the conduct of the certification election, the six probationary employees were not yet hired, hence, they could not vote. The SOLE further held that, with respect to the votes cast by the 11 dismissed employees, they could be considered since their dismissal was still pending appeal. As to the votes cast by the six alleged supervisory employees, the SOLE held that their votes should be counted since their promotion took effect months after the issuance of the above-said August 9, 2005 Order of the Med-Arbiter, hence, they were still considered as rank-and-file. Respecting Gatbontons vote, the SOLE ruled that the same could be the basis to include the votes of the other probationary employees, as the records show that during the pre-election conferences, there was no disagreement as to his inclusion in the voters list, and neither was it timely challenged when he voted on el ection day, hence, the Election Officer could not then segregate his vote. The SOLE further ruled that even if the 17 votes of the dismissed and supervisory employees were to be counted and presumed to be in favor of petitioner, still, the same would not suffice to overturn the 169 votes garnered by HIMPHLU. In fine, the SOLE concluded that the certification of HIMPHLU as the exclusive bargaining agent was proper. Petitioners motion for reconsideration having been denied by the SOLE by Resolution of March 22, 2007, it appealed to the Court of Appeals. By the assailed Decision promulgated on November 8, 2007, the appellate court affirmed the ruling of the SOLE. It held that, contrary to petitioners assertion, the ruling in Airtime Specialist, Inc. v. Ferrer Calleja[5] stating that in a certification election, all rank-and-file employees in the appropriate bargaining unit, whether probationary or permanent, are entitled to vote, is inapplicable to the case at bar. For, the appellate court continued, the six probationary employees were not yet employed by the Hotel at the time the August 9, 2005 Order granting the certification election was issued. It thus held that Airtime Specialist applies only to situations wherein the probationary employees were already employed as of the date of filing of the petition for certification election. Respecting Gatbontons vote, the appellate court upheld the SOLEs finding that since it was not properly challenged, its inclusion could no longer be questioned, nor could it be made the basis to include the votes of the six probationary employees. The appellate court brushed aside petitioners contention that the opening of the 17 segregated votes would materially affect the results of the election as there

would be the likelihood of a run-off election in the event none of the contending unions receive a majority of the valid votes cast. It held that the majority contemplated in deciding which of the unions in a certification election is the winner refers to the majority of valid votes cast, not the simple majority of votes cast, hence, the SOLE was correct in ruling that even if the 17 votes were in favor of petitioner, it would still be insufficient to overturn the results of the certification election. Petitioners motion for reconsideration having been denied by Resolution of January 25, 2008, the present recourse was filed. Petitioners contentions may be summarized as follows: 1. 2. Inclusion of Jose Gatbontons vote but excluding the vote of the six other probationary employees violated the principle of equal protection and is not in accord with the ruling in Airtime Specialists, Inc. v. Ferrer-Calleja; The time of reckoning for purposes of determining when the probationary employees can be allowed to vote is not August 9, 2005 the date of issuance by Med-Arbiter Calabocal of the Order granting the conduct of certification elections, but March 10, 2006 the date the SOLE Order affirmed the MedArbiters Order. Even if the votes of the six probationary employees were included, still, HIMPHLU could not be considered as having obtained a majority of the valid votes cast as the opening of the 17 ballots would increase the number of valid votes from 321 to 338, hence, for HIMPHLU to be certified as the exclusive bargaining agent, it should have garnered at least 170, not 169, votes.

3.

Petitioner justifies its not challenging Gatbontons vote because it was precisely its position that probationary employees should be allowed to vote. It thus avers that justice and equity dictate that since Gatbontons vote was counted, th en the votes of the 6 other probationary employees should likewise be included in the tally. Petitioner goes on to posit that the word order in Section 5, Rule 9 of Department Order No. 40-03 reading [A]ll employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the issuance of the order granting the conduct of certification election shall be allowed to vote refers to an order which has already become final and executory, in this case the March 10, 2002 Order of the SOLE. Petitioner thus concludes that if March 10, 2006 is the reckoning date for the determination of the eligibility of workers, then all the segregated votes cast by the probationary employees should be opened and counted, they having already been working at the Hotel on such date.

Respecting the certification of HIMPHLU as the exclusive bargaining agent, petitioner argues that the same was not proper for if the 17 votes would be counted as valid, then the total number of votes cast would have been 338, not 321, hence, the majority would be 170; as such, the votes garnered by HIMPHLU is one vote short of the majority for it to be certified as the exclusive bargaining agent. The relevant issues for resolution then are first, whether employees on probationary status at the time of the certification elections should be allowed to vote, and second, whether HIMPHLU was able to obtain the required majority for it to be certified as the exclusive bargaining agent. On the first issue, the Court rules in the affirmative. The inclusion of Gatbontons vote was proper not because it was not questioned but because probationary employees have the right to vote in a certification election. The votes of the six other probationary employees should thus also have been counted. As Airtime Specialists, Inc. v. Ferrer-Callejaholds: In a certification election, all rank and file employees in the appropriate bargaining unit, whether probationary or permanent are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for purposes of collective bargaining. Collective bargaining covers all aspects of the employment relation and the resultant CBA negotiated by the certified union binds all employees in the bargaining unit. Hence, all rank and file employees, probationary or permanent, have a substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their employment status as basis for eligibility in supporting the petition for certification election. The law refers to all the employees in the bargaining unit. All they need to be eligible to support the petition is to belong to the bargaining unit. (Emphasis supplied) Rule II, Sec. 2 of Department Order No. 40-03, series of 2003, which amended Rule XI of the Omnibus Rules Implementing the Labor Code, provides: Rule II Section 2. Who may join labor unions and workers' associations. - All persons employed in commercial, industrial and agricultural enterprises, including employees of government owned or controlled corporations without original charters established under the Corporation Code, as

well as employees of religious, charitable, medical or educational institutions whether operating for profit or not, shall have the right to self-organization and to form, join or assist labor unions for purposes of collective bargaining: provided, however, that supervisory employees shall not be eligible for membership in a labor union of the rank-and-file employees but may form, join or assist separate labor unions of their own. Managerial employees shall not be eligible to form, join or assist any labor unions for purposes of collective bargaining. Alien employees with valid working permits issued by the Department may exercise the right to self-organization and join or assist labor unions for purposes of collective bargaining if they are nationals of a country which grants the same or similar rights to Filipino workers, as certified by the Department of Foreign Affairs. For purposes of this section, any employee, whether employed for a definite period or not, shall beginning on the first day of his/her service, be eligible for membership in any labor organization. All other workers, including ambulant, intermittent and other workers, the self-employed, rural workers and those without any definite employers may form labor organizations for their mutual aid and protection and other legitimate purposes except collective bargaining. (Emphasis supplied) The provision in the CBA disqualifying probationary employees from voting cannot override the Constitutionally-protected right of workers to self-organization, as well as the provisions of the Labor Code and its Implementing Rules on certification elections and jurisprudence thereon. A law is read into, and forms part of, a contract. Provisions in a contract are valid only if they are not contrary to law, morals, good customs, public order or public policy.[6] Rule XI, Sec. 5 of D.O. 40-03, on which the SOLE and the appellate court rely to support their position that probationary employees hired after the issuance of the Order granting the petition for the conduct of certification election must be excluded, should not be read in isolation and must be harmonized with the other provisions of D.O. Rule XI, Sec. 5 of D.O. 40-03, viz: Rule XI xxxx Section 5. Qualification of voters; inclusion-exclusion. - All employees who are members of the appropriate bargaining unit sought to be represented by the petitioner at the time of the issuance of the order

granting the conduct of a certification election shall be eligible to vote. An employee who has been dismissed from work but has contested the legality of the dismissal in a forum of appropriate jurisdiction at the time of the issuance of the order for the conduct of a certification election shall be considered a qualified voter, unless his/her dismissal was declared valid in a final judgment at the time of the conduct of the certification election. (Emphasis supplied) xxxx Section 13. Order/Decision on the petition. - Within ten (10) days from the date of the last hearing, the Med-Arbiter shall issue a formal order granting the petition or a decision denying the same. In organized establishments, however, no order or decision shall be issued by the Med-Arbiter during the freedom period. The order granting the conduct of a certification election shall state the following: (a) (b) (c) (d) the name of the employer or establishment; the description of the bargaining unit; a statement that none of the grounds for dismissal enumerated in the succeeding paragraph exists; the names of contending labor unions which shall appear as follows: petitioner union/s in the order in which their petitions were filed, forced intervenor, and no union; and a directive upon the employer and the contending union(s) to submit within ten (10) days from receipt of the order, the certified list of employees in the bargaining unit, or where necessary, the payrolls covering the members of the bargaining unit for the last three (3) months prior to the issuance of the order. (Emphasis supplied) xxxx

(e)

Section 21. Decision of the Secretary. - The Secretary shall have fifteen (15) days from receipt of the entire records of the petition within which to decide the appeal. The filing of the memorandum of appeal from the order or decision of the Med-Arbiter stays the holding of any certification election. The decision of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties. No motion for reconsideration of the decision shall be entertained. (Emphasis supplied)

In light of the immediately-quoted provisions, and prescinding from the principle that all employees are, from the first day of their employment, eligible for membership in a labor organization, it is evident that the period of reckoning in determining who shall be included in the list of eligible voters is, in cases where a timely appeal has been filed from the Order of the MedArbiter, the date when the Order of the Secretary of Labor and Employment, whetheraffirming or denying the appeal, becomes final and executory. The filing of an appeal to the SOLE from the Med-Arbiters Order stays its execution, in accordance with Sec. 21, and rationally, the Med-Arbiter cannot direct the employer to furnish him/her with the list of eligible voters pending the resolution of the appeal. During the pendency of the appeal, the employer may hire additional employees. To exclude the employees hired after the issuance of the Med-Arbiters Order but before the appeal has been resolved would violate the guarantee that every employee has the right to be part of a labor organization from the first day of their service. In the present case, records show that the probationary employees, including Gatbonton, were included in the list of employees in the bargaining unit submitted by the Hotel on May 25, 2006 in compliance with the directive of the MedArbiter after the appeal and subsequent motion for reconsideration have been denied by the SOLE, rendering the Med-Arbiters August 22, 2005 Order final and executory 10 days after the March 22, 2007 Resolution (denying the motion for reconsideration of the January 22 Order denying the appeal), and rightly so. Because, for purposes of self-organization, those employees are, in light of the discussion above, deemed eligible to vote. A certification election is the process of determining the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit for purposes of collective bargaining. Collective bargaining, 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. [7] The significance of an employees right to vote in a certification election cannot thus be overemphasized. For he has considerable interest in the determination of who shall represent him in negotiating the terms and conditions of his employment. Even if the Implementing Rules gives the SOLE 20 days to decide the appeal from the Order of the Med-Arbiter, experience shows that it sometimes takes months to be resolved. To rule then that only those employees hired as of the date of the

issuance of the Med-Arbiters Order are qualified to vote would effectively disenfranchise employees hired during the pendency of the appeal. More importantly, reckoning the date of the issuance of the Med-Arbiters Order as the cutoff date would render inutile the remedy of appeal to the SOLE. But while the Court rules that the votes of all the probationary employees should be included, under the particular circumstances of this case and the period of time which it took for the appeal to be decided, the votes of the six supervisory employees must be excluded because at the time the certification elections was conducted, they had ceased to be part of the rank and file, their promotion having taken effect two months before the election. As to whether HIMPHLU should be certified as the exclusive bargaining agent, the Court rules in the negative. It is well-settled that under the so-called double majority rule, for there to be a valid certification election, majority of the bargaining unit must have voted AND the winning union must have garnered majority of the valid votes cast. Prescinding from the Courts ruling that all the probationary employees votes should be deemed valid votes while that of the supervisory employees should be excluded, it follows that the number of valid votes cast would increase from 321 to 337. Under Art. 256 of the Labor Code, the union obtaining the majority of the valid votes cast by the eligible voters shall be certified as the sole and exclusive bargaining agent of all the workers in the appropriate bargaining unit. This majority is 50% + 1. Hence, 50% of 337 is 168.5 + 1 or at least 170. HIMPHLU obtained 169 while petitioner received 151 votes. Clearly, HIMPHLU was not able to obtain a majority vote. The position of both the SOLE and the appellate court that the opening of the 17 segregated ballots will not materially affect the outcome of the certification election as for, so they contend, even if such member were all in favor of petitioner, still, HIMPHLU would win, is thus untenable. It bears reiteration that the true importance of ascertaining the number of valid votes cast is for it to serve as basis for computing the required majority, and not just to determine which union won the elections. The opening of the segregated but valid votes has thus become material. To be sure, the conduct of a certification election has a two-fold objective: to determine the appropriate bargaining unit and to ascertain the majority representation of the bargaining representative, if the employees desire to be represented at all by anyone. It is not simply the determination of who between two or more contending unions won, but whether it effectively ascertains the will of the members of the bargaining unit as to whether they want to be represented and which union they want to represent them. Having declared that no choice in the certification election conducted obtained the required majority, it follows that a run-off election must be held to

determine which between HIMPHLU and petitioner should represent the rank-and-file employees. A run-off election refers to an election between the labor unions receiving the two (2) highest number of votes in a certification or consent election with three (3) or more choices, where such a certified or consent election results in none of the three (3) or more choices receiving the majority of the valid votes cast; provided that the total number of votes for all contending unions is at least fifty percent (50%) of the number of votes cast.[8] With 346 votes cast, 337 of which are now deemed valid and HIMPHLU having only garnered 169 and petitioner having obtained 151 and the choice NO UNION receiving 1 vote, then the holding of a run-off election between HIMPHLU and petitioner is in order. WHEREFORE, the petition is GRANTED. The Decision dated November 8, 2007 and Resolution dated January 25, 2008 of the Court of Appeals affirming the Resolutions dated January 22, 2007 and March 22, 2007, respectively, of the Secretary of Labor and Employment in OS-A-9-52-05 areANNULLED and SET ASIDE. The Department of Labor and Employment-Bureau of Labor Relations is DIRECTED to cause the holding of a run-off election between petitioner, National Union of Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel Chapter (NUWHRAIN-MPC), and respondent Holiday Inn Manila Pavilion Hotel Labor Union (HIMPHLU). SO ORDERED.

UNIVERSITY OF SAN AGUSTIN, INC. Petitioners,

G.R. No. 177594 Present:

- versus -

QUISUMBING, J., Chairperson, CARPIO MORALES, CHICO-NAZARIO,* LEONARDO-DE CASTRO,** and BRION, JJ. Promulgated: July 23, 2009

UNIVERSITY OF SAN AGUSTIN EMPLOYEES UNION- FFW, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION CARPIO MORALES, J.: The University of San Agustin, Inc. (petitioner) seeks via the present petition for review on certiorari partial reconsideration of the Court of Appeals Decision of April 28, 2006[1] and Resolution of April 18, 2007[2] which modified the Voluntary Arbitrators Decision dated June 16, 2003[3] and Resolution dated July 17, 2003[4] in VA Case No. 139-06-03-2003. On July 27, 2000, petitioner forged with the University of San Agustin Employees Union-FFW (respondent) a Collective Bargaining Agreement [5](CBA) effective for five (5) years or from July, 2000 to July, 2005. Among other things, the parties agreed to include a provision on salary increases based on the incremental tuition fee increases or tuition incremental proceeds (TIP) and pursuant to Republic Act No. 6728, The Tuition Fee Law. The said provision on salary increases reads: ARTICLE VIII Economic Provisions xxxx Section 3. Salary Increases. The following shall be the increases under this Agreement. SY 2000-2001 P2,000.00 per month, across the board. SY 2001-2002 P1,500.00 per month or 80% of the TIP, whichever is higher, across the board. SY 2002-2003 P1,500.00 per month or 80% of the TIP, whichever is higher, across the board. (Emphasis supplied) It appears that for the School Year 2001-2002, the parties disagreed on the computation of the salary increases. Respondent refused to accept petitioners proposed across -the-board salary increase of P1,500 per month and its subtraction from the computation of the TIP of the scholarships and tuition fee discounts it grants to deserving students and its employees and their dependents. Respondent likewise rejected petitioners interpretation of the term salary increases as referring not only to the increase in salary but also to corresponding increases in other benefits.

Respondent argued that the provision in question referred to salary increases alone, hence, the phrase P1,500.00 or 80% of the TIP, whichever is higher, should apply only to salary increases and should not include the other increases in benefits received by employees. Resort to the existing grievance machinery having failed, the parties agreed to submit the case to voluntary arbitration. By Decision of June 16, 2003, Voluntary Arbitrator (VA) Indalecio P. Arriola of the Department of Labor and Employment- National Conciliation and Mediation Board, Sub-Regional Office No. VI found for respondent, holding that the salary increases shall be paid out of 80% of the TIP should the same be higher than P1,500. The VA ratiocinated that the existing CBA is the law between the parties, and as it is not contrary to law, morals and public policy and it having been shown that the parties entered into it voluntarily, it should be respected. As to petitioners deduction of scholarship grants and tuition fee discounts from the TIP, the VA ruled that it is invalid, petitioner having waived the collection thereof when it granted the same a waiver which its employees had nothing to do with and the employees should not be made to bear or suffer from the burden. Petitioners move to reconsider the VA Decision was denied by Order of July 27, 2003, hence, it appealed to the Court of Appeals. By Decision of April 28, 2006, the appellate court sustained the VAs interpretation of the questioned CBA provision but reversed its finding on the TIP computation. The appellate court held that the questioned CBA provision is clear and unambiguous, hence, it should be interpreted literally to mean that 80% of the TIP or P1,500, whichever is higher, is to be allotted for the employees salary increases. Respecting the deduction of scholarship grants and tuition fee discounts from the computation of the TIP, the appellate court held that by its very nature, the TIP excludes any sum which petitioner did not obtain or realize, hence, it is only fair that the same be deducted. The appellate court noted, however, that as to scholarship grants and tuition fee discounts which are fully or partly subsidized by the government or private institutions and individuals, petitioner should include them in the TIP computation. Petitioners motion for partial reconsideration of the appellate courts Decision on the interpretation of the questioned CBA provision, as well respondents motion for reconsideration of the Decision on computation of the TIP, was denied.

Hence, the present petition which seeks only the review of the appellate courts interpretation of the questioned provision of the CBA. Petitioner maintains that, like the VA, the appellate court erred in interpreting the questioned provision of the above-quoted Sec. 3, Art. VIIII of the CBA, since Sec. 5(2) of R.A. 6728 only mandates that 70% of the TIP of academic institutions is to be set aside for employees salaries, allowances and other benefits, while at least 20% thereof is to go to the improvement, modernization of buildings, equipment, libraries and other school facilities. Petitioner adds that the interpretation of the provision that 80% of the TIP should go to salary increases alone, to the exclusion of other benefits, is contrary to R.A. 6728, citing Cebu Institute of Medicine v. Cebu Institute of Medicine Employees Union-NFL.[6] Petitioner thus concludes that the general principle that the CBA is the law between the parties is unavailing as it is the law, not the stipulations of the parties, which should prevail. Upon the other hand, respondent, in its Comment[7], maintains that the questioned provision speaks of salary increases alone and was not intended to include other benefits. It asserts that petitioner, in refusing to utilize the 80% of the TIP for salary increases alone, does not want to honor what it voluntarily and knowingly agreed upon in the CBA. Additionally, respondent points out that petitioner never claimed that its consent to the CBA was vitiated with fraud, mistake or intimidation, and that petitioner has always been aware of the provisions of R.A. 6728 and was even assisted by its accountants, internal and external legal counsels during the CBA negotiations, hence, it can not now renege on its commitment under Sec. 3. Art. VIII of the CBA. The petition is bereft of merit. Sec. 3, Art. VIII of the 2000-20005 CBA reads: ARTICLE VIII Economic Provisions xxxx Section 3. Salary Increases. The following shall be the increases under this Agreement. SY 2000-2001 P2,000.00 per month, across the board.

SY 2001-2002 P1,500.00 per month or 80% of the TIP, whichever is higher, across the board. SY 2002-2003 P1,500.00 per month or 80% of the TIP, whichever is higher, across the board. (Emphasis supplied) It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions.[8] If the terms of a contract, in this case the CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control.[9] A reading of the above-quoted provision of the CBA shows that the parties agreed that 80% of the TIP or at the least the amount of P1,500 is to be allocated for individual salary increases. The CBA does not speak of any other benefits or increases which would be covered by the employees share in the TIP, except salary increases. The CBA reflects the incorporation of different provisions to cover other benefits such as Christmas bonus (Art. VIII, Sec. 1), service award (Art. VIII, Sec.5), leaves (Article IX), educational benefits (Sec.2, Art. X), medical and hospitalization benefits (Secs. 3, 4 and 5, Art. 10), bereavement assistance (Sec. 6, Art. X), and signing bonus (Sec. 8, Art. VIII), without mentioning that these will likewise be sourced from the TIP. Thus, petitioners belated claim that the 80% TIP should be taken to mean as covering ALL increases and not merely the salary increases as categorically stated in Sec. 3, Art. VIII of the CBA does not lie. Apropos is the ruling in St. John Colleges, Inc., vs. St. John Academy Faculty and Employees Union[10] where the Court held that the school committed Unfair Labor Practice (ULP) when it unceremoniously closed down allegedly because of the unions unreasonable demands including its insistence on having 100% of the incremental tuition fee increase allotted for their members benefits to be embodied in the CBA. In striking down the schools defense, the Court held: That SJCI agreed to appropriate 100% of the tuition fee increase to the workers benefits sometime in 1995 does not mean that it was helpless in the face of the Unions demands because neither party is obligated to precipitately give in to the proposal of the other party during collective bargaining. (Emphasis supplied) In the present case, petitioner could have, during the CBA negotiations, opposed the inclusion of or renegotiated the provision allotting 80% of the TIP to salary increases alone, as it was and is not under any obligation to accept respondents demands hook, line and sinker. Art. 252 of the Labor Code is clear on the matter:

ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours, of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession. (Emphasis supplied) The records are thus bereft of any showing that petitioner had made it clear during the CBA negotiations that it intended to source not only the salary increases but also the increases in other employee benefits from the 80% of the TIP. Absent any proof that petitioners consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily, had full knowledge of the contents thereof, and was aware of its commitments under the contract. Contrary to petitioners assertion, the rulings in Cebu Institute of Medicine v. Cebu Institute of Medicine Employees Union-NFL and in Centro Escolar University Faculty and Allied Workers Union-Independent v. Court of Appeals[11] are not applicable to the present case. In Cebu Institute, the Court held that SSS contributions and other benefits can be charged to the 70% and that the academic institution has the discretion to dispose of the said 70% with the precondition that the disposition goes to the payment of salaries, wages, allowances and other benefits of its personnel, viz: For sure, the seventy percent (70%) is not to be delivered whole to the employees but packaged in the form of salaries, wages, allowances, and other benefitswhich may be in the form of SSS, Medicare and Pag-Ibig premiums, all intended for the benefit of the employees. In other words, the private educational institution concerned has the discretion on the disposition of the seventy percent (70%) incremental tuition fee increase. It enjoys the privilege of determining how much increase in salaries to grant and the kind and amount of allowances and other benefits to give. The only precondition is that seventy percent (70%) of the incremental tuition fee increase goes to the payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel. (Emphasis supplied) Significantly, this ruling was arrived at in the absence of a CBA between the parties, unlike in the present case.

On the other hand, in Centro Escolar University, the issue was whether the University may source from the 70% incremental proceeds (IP) the integrated IP incorporated into the salaries of its teaching and non-teaching staff pursuant to the CBAs entered into by their union. The controversy arose because the CBA provided different types of salary increases some sourced from the University fund and the salary increases brought about by the IP integration which are deducted from the IP. The Court held that the charging of the integrated IP against the 70% is not violative of the CBA which prohibits the deduction of the CBA-won benefits from the 70% of the IP because the integrated IP provided for in the CBAs of the teaching and the non-teaching staff is actually the share of the employees in the 70% of the IP that is incorporated into their salaries as a result of the negotiation between the university and its personnel. Clearly, the above-cited cases have totally different milieus from the case at bar. Even a perusal of the law will show that it does not make 70% as the mandated ceiling. It reads: SEC. 5. Tuition Fee Supplement for Student in Private High School (1) Financial assistance for tuition for students in private high schools shall be provided by the government through a voucher system in the following manners: (a) For students enrolled in schools charging less than one thousand five hundred pesos (P1,500) per year in tuition and other fees during school year 1988-89 or such amount in subsequent years as may be determined from time to time by the State Assistance Council: The Government shall provide them with a voucher equal to two hundred ninety pesos P290.00: Provided, That the student pays in the 1989-1990 school year, tuition and other fees equal to the tuition and other fees paid during the preceding academic year: Provided, further, That the Government shall reimburse the vouchers from the schools concerned within sixty (60) days from the close of the registration period: Provided, furthermore, That the student's family resides in the same city or province in which the high school is located unless the student has been enrolled in that school during the previous academic year. (b) For students enrolled in schools charging above one thousand five hundred pesos (P1,500) per year in tuition and other fees during the school year 1983-1989 or such amount in subsequent years as may be determined from time to time by the State Assistance Council, no assistance for tuition fees shall be granted by the

Government: Provided, however, That the schools concerned may raise their tuition fee subject to Section 10 hereof. (2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be granted and tuition fee under subparagraph (c) may be increased, on the condition that seventy percent (70%) of the amount subsidized allotted for tuition fee or of the tuition fee increases shall go to the payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel except administrators who are principal stockholders of the school, and may be used to cover increases as provided for in the collective bargaining agreements existing or in force at the time when this Act is approved and made effective: Provided, That government subsidies are not used directly for salaries of teachers of nonsecular subjects. At least twenty percent (20%) shall go to the improvement or modernization of buildings, equipment, libraries, laboratories, gymnasia and similar facilities and to the payment of other costs of operation. For this purpose, schools shall maintain a separate record of accounts for all assistance received from the government, any tuition fee increase, and the detailed disposition and use thereof, which record shall be determined by the State Assistance Council, during business hours, by the faculty, the nonteaching personnel, students of the school concerned, and Department of Education, Culture and Sports and other concerned government agencies.[12] Unmistakably, what the law sets is the minimum, not the maximum percentage, and there is even a 10% portion the disposition of which the law does not regulate. Hence, if academic institutions wish to allot a higher percentage for salary increases and other benefits, nothing in the law prohibits them from doing so. It is axiomatic that labor laws setting employee benefits only mandate the minimum that an employer must comply with, but the latter is not proscribed from granting higher or additional benefits if it so desires, whether as an act of generosity or by virtue of company policy or a CBA, as it would appear in this case. While, in following to the letter the subject CBA provision petitioner will, in effect, be giving more than 80% of the TIP as its personnels share in the tuition fee increase, petitioners remedy lies not in the Courts invalidating the provision, but in the parties clarifying the same in their subsequent CBA negotiations. WHEREFORE, the Decision of the Court of Appeals dated April 28, 2006 and the Resolution dated April 18, 2007, which modified the Decision and Resolution dated July 17, 2003 of the Voluntary Arbitrator in VA Case No. 139-06-03-2003, are AFFIRMED. SO ORDERED.

THIRD DIVISION

G.R. No. 165407 Present: HERMINIGILDO INGUILLO AND ZENAIDA BERGANTE, Petitioners, YNARES-SANTIAGO, J., Chairperson, CARPIO,* CORONA,** - versus NACHURA, and PERALTA, JJ. FIRST PHILIPPINE INC.and/or AMPARO MANAGER, SCALES, POLICARPIO,

Promulgated:

June 5, 2009 Respondents. x-----------------------------------------------------x

DECISION

PERALTA, J.:

Assailed in this petition for review under Rule 45 of the Rules of Court are the Court of Appeals (1) Decision[1] dated March 11, 2004 in CA-G.R. SP No. 73992, which dismissed the Petition for Certiorari of petitioners Zenaida Bergante (Bergante) and

Herminigildo Inguillo (Inguillo); and (2) Resolution[2]dated September 17, 2004 denying petitioners' Motion for Reconsideration. The appellate court sustained the ruling of the National Labor Relations Commission (NLRC) that petitioners were validly dismissed pursuant to a Union Security Clause in the collective bargaining agreement. The facts of the case are as follows:

First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in the manufacturing of weighing scales, employed Bergante and Inguillo as assemblers on August 15, 1977 and September 10, 1986, respectively.

In 1991, FPSI and First Philippine Scales Industries Labor Union (FPSILU)[3] entered into a Collective Bargaining Agreement (CBA), [4] the duration of which was for a period of five (5) years starting on September 12, 1991 until September 12, 1996. On September 19, 1991, the members of FPSILU ratified the CBA in a document entitled RATIPIKASYON NG KASUNDUAN.[5] Bergante and Inguillo, who were members of FPSILU, signed the said document.[6]

During the lifetime of the CBA, Bergante, Inguillo and several FPSI employees joined another union, the Nagkakaisang Lakas ng Manggagawa (NLM), which was affiliated with a federation called KATIPUNAN (NLM-KATIPUNAN, for brevity). Subsequently, NLM-KATIPUNAN filed with the Department of Labor and Employment (DOLE) an intra-union dispute[7] against FPSILU and FPSI. In said case, the Med-Arbiter decided[8] in favor of FPSILU. It also ordered the officers and members of NLM-KATIPUNAN to return to FPSILU the amount of P90,000.00 pertaining to the union dues erroneously collected from the employees. Upon finality of the Med-Arbiter's Decision, a Writ of Execution[9] was issued to collect the adjudged amount from NLM-KATIPUNAN. However, as no amount was recovered, notices of garnishment were issued to United Coconut Planters Bank (Kalookan City Branch)[10] and to FPSI[11] for the latter to hold for FPSILU the earnings of Domingo Grutas, Jr. (Grutas) and Inguillo, formerly FPSILU's President and Secretary for Finance, respectively, to the extent of P13,032.18. Resultantly, the amount of P5,140.55 was collected,[12] P1,695.72 of which came from the salary of Grutas, while the P3,444.83 came from that of Inguillo.

Meanwhile, on March 29, 1996, the executive board and members of the FPSILU addressed a document dated March 18, 1996 denominated as Petisyon [13] to FPSI's general manager, Amparo Policarpio (Policarpio), seeking the termination of the services of the following employees, namely: Grutas, Yolanda Tapang, Shirley Tapang, Gerry Trinidad, Gilbert Lucero, Inguillo, Bergante, and Vicente Go, on the

following grounds:[14] (1) disloyalty to the Union by separating from it and affiliating with a rival Union, the NLM-KATIPUNAN; (2) dereliction of duty by failing to call periodic membership meetings and to give financial reports; ( 3) depositing Union funds in the names of Grutas and former Vice-President Yolanda Tapang, instead of in the name of FPSILU, care of the President; (4) causing damage to FPSI by deliberately slowing down production, preventing the Union to even attempt to ask for an increase in benefits from the former; and (5) poisoning the minds of the rest of the members of the Union so that they would be enticed to join the rival union.

On May 13, 1996, Inguillo filed with the NLRC a complaint against FPSI and/or Policarpio (respondents) for illegal withholding of salary and damages, docketed as NLRC-NCR-Case No. 00-05-03036-96.[15]

On May 16, 1996, respondents terminated the services of the employees mentioned in the Petisyon.

The following day, two (2) separate complaints for illegal dismissal, reinstatement and damages were filed against respondents by: (1) NLM-KATIPUNAN, Grutas, Trinidad, Bergante, Yolanda Tapang, Go, Shirley Tapang and Lucero [16] (Grutas complaint, for brevity); and (2) Inguillo[17] (Inguillo complaint). Both complaints were consolidated with Inguillo's prior complaint for illegal withholding of salary, which was pending before Labor Arbiter Manuel Manansala. After the preliminary mandatory conference, some of the complainants agreed to amicably settle their cases. Consequently, the Labor Arbiter issued an Order[18] dated October 1, 1996, dismissing with prejudice the complaints of Go, Shirley Tapang, Yolanda Tapang, Grutas, and Trinidad.[19] Lucero also settled the case after receiving his settlement money and executing a Quitclaim and Release in favor of FPSI and Policarpio. [20]

Bergante and Inguillo, the remaining complainants, were directed to submit their respective position papers, after which their complaints were submitted for resolution on February 20, 1997.[21]

In their Position Paper,[22] Bergante and Inguillo claimed that they were not aware of a petition seeking for their termination, and neither were they informed of the grounds for their termination. They argued that had they been informed, they would have impleaded FPSILU in their complaints. Inguillo could not think of a valid reason for his dismissal except the fact that he was a very vocal and active member of the NLM-KATIPUNAN. Bergante, for her part, surmised that she was dismissed solely

for being Inguillo's sister-in-law. She also reiterated the absence of a memorandum stating that she committed an infraction of a company rule or regulation or a violation of law that would justify her dismissal.

Inguillo also denounced respondents' act of withholding his salary, arguing that he was not a party to the intra-union dispute from which the notice of garnishment arose. Even assuming that he was, he argued that his salary was exempt from execution.

In their Position Paper,[23] respondents maintained that Bergante and Inguillo's dismissal was justified, as the same was done upon the demand of FPSILU, and that FPSI complied in order to avoid a serious labor dispute among its officers and members, which, in turn, would seriously affect production. They also justified that the dismissal was in accordance with the Union Security Clause in the CBA, the existence and validity of which was not disputed by Bergante and Inguillo. In fact, the two had affixed their signatures to the document which ratified the CBA.

In his Decision[24] dated November 27, 1997, the Labor Arbiter dismissed the remaining complaints of Bergante and Inguillo and held that they were not illegally dismissed. He explained that the two clearly violated the Union Security Clause of the CBA when they joined NLM-KATIPUNAN and committed acts detrimental to the interests of FPSILU and respondents. The dispositive portion of the said Decision states:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring respondents First Philippines Scales, Inc. (First Philippine Scales Industries [FPSI] and Amparo Policarpio, in her capacity as President and General Manager of respondent FPSI, not guilty of illegal dismissal as above discussed. However, considering the length of services rendered by complainants Herminigildo Inguillo and Zenaida Bergante as employees of respondent FPSI, plus the fact that the other complainants in the above-entitled cases were previously granted financial assistance/separation pay through amicable settlement, the afore-named respondents are hereby directed to pay complainants Herminigildo Inguillo and Zenaida Bergante separation pay and accrued legal holiday pay, as earlier computed, to wit:

Herminigildo Inguillo Separation pay ................P22,490.00 Legal Holiday Pay........... Total 839.00 23,329.00

Zenaida Bergante Separation pay.................P43,225.00 Legal Holiday Pay........... Total 839.00 44,064.00

2. Directing the afore-named respondents to pay ten (10%) percent attorney's fees based on the total monetary award to complainants Inguillo and Bergante.

3. Dismissing the claim for illegal withholding of salary of complainant Inguillo for lack of merit as above discussed. 4. Dismissing the other money claims and/or other charges of complainants Inguillo and Bergante for lack of factual and legal basis. 5. Dismissing the complaint of complainant Gilberto Lucero with prejudice for having executed a Quitclaim and Release and voluntary resignation in favor of respondents FPSI and Amparo Policarpio as above-discussed where the former received the amount of P23,334.00 as financial assistance/separation pay and legal holiday pay from the latter. SO ORDERED.[25]

Bergante and Inguillo appealed before the NLRC, which reversed the Labor Arbiter's Decision in a Resolution[26] dated June 8, 2001, the dispositive portion of which provides:

WHEREFORE, the assailed decision is set aside. Respondents are hereby ordered to reinstate complainants Inguillo and Bergante with full backwages from the time of their dismissal up [to] their actual reinstatement. Further, respondents are also directed to pay complainant Inguillo the amount representing his withheld salary for the period March 15, 1998 to April 16, 1998. The sum corresponding to ten percent (10%) of the total judgment award by way of attorney's fees is likewise ordered. All other claims are ordered dismissed for lack of merit.

SO ORDERED.[27]

In reversing the Labor Arbiter, the NLRC[28] ratiocinated that respondents failed to present evidence to show that Bergante and Inguillo committed acts inimical to FPSILU's interest. It also observed that, since the two (2) were not informed of their dismissal, the justification given by FPSI that it was merely constrained to dismiss the employees due to persistent demand from the Union clearly proved the claim of summary dismissal and violation of the employees' right to due process.

Respondents filed a Motion for Reconsideration, which was referred by the NLRC to Executive Labor Arbiter Vito C. Bose for report and recommendation. In its Resolution[29] dated August 26, 2002, the NLRC adopted in toto the report and recommendation of Arbiter Bose which set aside its previous Resolution reversing the Labor Arbiter's Decision. This time, the NLRC held that Bergante and Inguillo were not illegally dismissed as respondents merely put in force the CBA provision on the termination of the services of disaffiliating Union members upon the recommendation of the Union. The dispositive portion of the said Resolution provides:

WHEREFORE, the resolution of the Commission dated June 8, 2001 is set aside. Declaring the dismissal of the complainants as valid, [t]his complaint for illegal dismissal is dismissed. However, respondents are hereby directed to pay complainant Inguillo the amount representing his withheld salary for the period March 15, 1998 to April 16, 1998, plus ten (10%) percent as attorney's fees.

All other claims are ordered dismissed for lack of merit.

SO ORDERED.[30]

Not satisfied with the disposition of their complaints, Bergante and Inguillo filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals (CA). The CA dismissed the petition for lack of merit[31] and denied the subsequent motion for reconsideration.[32] In affirming the legality of the dismissal, the CA ratiocinated, thus:

x x x on the merits, we sustain the view adopted by the NLRC that:

x x x it cannot be said that the stipulation providing that the employer may dismiss an employee whenever the union recommends his expulsion either for disloyalty or for any violation of its by-laws and constitution is illegal or constitutive of unfair labor practice, for such is one of the matters on which management and labor can agree in order to bring about the harmonious relations between them and the union, and cohesion and integrity of their organization. And as an act of loyalty, a union may certainly require its members not to affiliate with any other

labor union and to consider its infringement as a reasonable cause for separation.

The employer FPSI did nothing but to put in force their agreement when it separated the disaffiliating union members, herein complainants, upon the recommendation of the union. Such a stipulation is not only necessary to maintain loyalty and preserve the integrity of the union, but is allowed by the Magna Carta of Labor when it provided that while it is recognized that an employee shall have the right of self-organization, it is at the same time postulated that such rights shall not injure the right of the labor organization to prescribe its own rules with respect to the acquisition or retention of membership therein. Having ratified their CBA and being then members of FPSILU, the complainants owe fealty and are required under the Union Security clause to maintain their membership in good standing with it during the term thereof, a requirement which ceases to be binding only during the 60-day freedom period immediately preceding the expiration of the CBA, which was not present in this case.

x x x the dismissal of the complainants pursuant to the demand of the majority union in accordance with their union security [clause] agreement following the loss of seniority rights is valid and privileged and does not constitute unfair labor practice or illegal dismissal.

Indeed, the Supreme Court has for so long a time already recognized a union security clause in the CBA, like the one at bar, as a specie of closed-shop arrangement and trenchantly upheld the validity of the action of the employer in enforcing its terms as a lawful exercise of its rights and obligations under the contract.

The collective bargaining agreement in this case contains a union security clause-a closed-shop agreement.

A closed-shop agreement is an agreement whereby an employer binds himself to hire only members of the contracting union who must continue to remain members in good standing to keep their jobs. It is the most prized achievement of unionism. It adds membership and compulsory dues. By holding out to loyal members a promise of employment in the closed-shop, it welds group solidarity. (National Labor Union v. Aguinaldo's Echague Inc., 97 Phil. 184). It is a very effective form of union security agreement.

This Court has held that a closed-shop is a valid form of union security, and such a provision in a collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by the Constitution. (Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 87; Manalang v. Artex Development Company, Inc., 21 SCRA 561.)[33]

Hence, the present petition. Essentially, the Labor Code of the Philippines has several provisions under which an employee may be validly terminated, namely: (1) just causes under Article 282;[34] (2) authorized causes under Article 283;[35] (3) termination due to disease under Article 284;[36] and (4) termination by the employee or resignation under Article 285.[37] While the said provisions did not mention as ground the enforcement of the Union Security Clause in the CBA, the dismissal from employment based on the same is recognized and accepted in our jurisdiction. [38]

Union security is a generic term, which is applied to and comprehends closed shop, union shop, maintenance of membership or any other form of agreement which imposes upon employees the obligation to acquire or retain union

membership as a condition affecting employment.[39] There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. [40] A closed-shop, on the other hand, 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. [41]

In their Petition, Bergante and Inguillo assail the legality of their termination based on the Union Security Clause in the CBA between FPSI and FPSILU. Article II[42] of the CBA pertains to Union Security and Representatives, which provides:

The Company hereby agrees to a UNION SECURITY [CLAUSE] with the following terms:

1. All bonafide union members as of the effective date of this agreement and all those employees within the bargaining unit who shall subsequently become members of the UNION during the period of this agreement shall, as a condition to their continued employment, maintain their membership with the UNION under the FIRST PHIL. SCALES INDUSTRIES LABOR UNION Constitution and By-laws and this Agreement;

2. Within thirty (30) days from the signing of this Agreement, all workers eligible for membership who are not union members shall become and to remain members in good standing as bonafide union members therein as a condition of continued employment;

3. New workers hired shall likewise become members of the UNION from date they become regular and permanent workers and shall remain members in good standing as bonafide union members therein as a condition of continued employment;

4. In case a worker refused to join the Union, the Union will undertake to notify workers to join and become union members. If said worker or workers still refuses, he or they shall be notified by the Company of his/her dismissal as a consequence thereof and thereafter terminated after 30 days notice according to the Labor Code.

5. Any employee/union member who fails to retain union membership in good standing may be recommended for suspension or dismissal by the Union Directorate and/or FPSILU Executive Council for any of the following causes:

a) Acts of Disloyalty; b) Voluntary Resignation or Abandonment from the UNION; c) Organization of or joining another labor union or any labor group that would work against the UNION; d) Participation in any unfair labor practice or violation of the Agreement, or activity derogatory to the UNION decision; e) Disauthorization of, or Non-payment of, monthly membership dues, fees, fines and other financial assessments to the Union;

f) Any criminal violation or violent conduct or activity against any UNION member without justification and affecting UNION rights or obligations under the said Agreement.

Verily, the aforesaid provision requires all members to maintain their membership with FPSILU during the lifetime of the CBA. Failing so, and for any of the causes enumerated therein, the Union Directorate and/or FPSILU Executive Council may recommend to FPSI an employee/union member's suspension or dismissal. Records show that Bergante and Inguillo were former members of FPSILU based on their signatures in the document which ratified the CBA. It can also be inferred that they disaffiliated from FPSILU when the CBA was still in force and subsisting, as can be gleaned from the documents relative to the intra-union dispute between FPSILU and NLM-KATIPUNAN. In view of their disaffiliation, as well as other acts allegedly detrimental to the interest of both FPSILU and FPSI, a Petisyon wa s submitted to Policarpio, asking for the termination of the services of employees who failed to maintain their Union membership.

The Court is now tasked to determine whether the enforcement of the aforesaid Union Security Clause justified herein petitioners' dismissal from the service.

In terminating the employment of an employee by enforcing the Union Security Clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union's decision to expel the employee from the union or company.[43]

We hold that all the requisites have been sufficiently met and FPSI was justified in enforcing the Union Security Clause, for the following reasons:

First. FPSI was justified in applying the Union Security Clause, as it was a valid provision in the CBA, the existence and validity of which was not questioned by either party. Moreover, petitioners were among the 93 employees who affixed their signatures to the document that ratified the CBA. They cannot now turn their back and deny knowledge of such provision.

Second. FPSILU acted on its prerogative to recommend to FPSI the dismissal of the members who failed to maintain their membership with the Union. Aside from joining another rival union, FPSILU cited other grounds committed by petitioners and the other employees which tend to prejudice FPSIs interests, i.e., dereliction of duty - by failing to call periodic membership meetings and to give financial reports; depositing union funds in the names of Grutas and former Vice-President Yolanda Tapang, instead of in the name of FPSILU care of the President; causing damage to FPSI by deliberately slowing down production, preventing the Union from even attempting to ask for an increase in benefits from the former; and poisoning the minds of the rest of the members of the Union so that they would be enticed to join the rival union.

Third. FPSILU's decision to ask for the termination of the employees in the Petisyon was justified and supported by the evidence on record. Bergante and Inguillo were undisputably former members of FPSILU. In fact, Inguillo was the Secretary of Finance, the underlying reason why his salary was garnished to satisfy the judgment of the Med-Arbiter who ordered NLM-KATIPUNAN to return the Union dues it erroneously collected from the employees. Their then affiliation with FPSILU was also clearly shown by their signatures in the document which ratified the CBA. Without a doubt, they committed acts of disloyalty to the Union when they failed not only to maintain their membership but also disaffiliated from it. They abandoned FPSILU and even joined another union which works against the former's interests. This is evident from the intra-union dispute filed by NLM-KATIPUNAN against FPSILU. Once affiliated with NLM-KATIPUNAN, Bergante and Inguillo proceeded to recruit other employees to disaffiliate from FPSILU and even collected Union dues from them.

In Del Monte Philippines,[44] the stipulations in the CBA authorizing the dismissal of employees are of equal import as the statutory provisions on dismissal under the Labor Code, since 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. In Caltex Refinery Employees Association (CREA) v. Brillantes,[45] the Court expounded on the effectiveness of union security clause when it held that it is one intended to strengthen the contracting union and to protect it from the fickleness or perfidy of its own members. For without such safeguards, group solidarity becomes uncertain; the union becomes gradually weakened and increasingly vulnerable to company machinations. In this security clause lies the strength of the union during the enforcement of the collective bargaining agreement. It is this clause that provides labor with substantial power in collective bargaining.

Nonetheless, while We uphold dismissal pursuant to a union security clause, the same is not without a condition or restriction. For to allow its untrammeled enforcement would encourage arbitrary dismissal and abuse by the employer, to the detriment of the employees. Thus, to safeguard the rights of the employees, We have said time and again that 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.[46] In like manner, We emphasized that the enforcement of union security clauses is authorized by law, provided such enforcement is not characterized by arbitrariness, and always with due process.[47]

There are two (2) aspects which characterize the concept of due process under the Labor Code: one is substantivewhether the termination of employment was based on the provisions of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural - the manner in which the dismissal was effected. The second aspect of due process was clarified by the Court in King of Kings Transport v. Mamac,[48] stating, thus: (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. x x x (2) 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. (3) 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.

Corollarily, procedural due process in the dismissal of employees requires notice and hearing. The employer must furnish the employee two written notices before termination may be effected. The first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs the employee of the employers decision to dismiss him. [49] The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. [50] In the present case, the required two notices that must be given to herein petitioners Bergante and Inguillo were lacking. The records are bereft of any notice that would have given a semblance of substantial compliance on the part of herein respondents. Respondents, however, aver that they had furnished the employees concerned, including petitioners, with a copy of FPSILU's Petisyon. We cannot consider that as compliance with the requirement of either the first notice or the second notice. While the Petisyon enumerated the several grounds that would justify the termination of the employees mentioned therein, yet such document is only a recommendation by the Union upon which the employer may base its decision. It cannot be considered a notice of termination. For as agreed upon by FPSI and FPSILU in their CBA, the latter may only recommend to the former a Union member's suspension or dismissal. Nowhere in the controverted Union Security Clause was there a mention that once the union gives a recommendation, the employer is bound outright to proceed with the termination. Even assuming that the Petisyon amounts to a first notice, the employer cannot be deemed to have substantially complied with the procedural requirements. True, FPSILU enumerated the grounds in said Petisyon. But a perusal of each of them leads Us to conclude that what was stated were general descriptions, which in no way would enable the employees to intelligently prepare their explanation and defenses. In addition, the Petisyon did not provide a directive that the employees are given opportunity to submit their written explanation within a reasonable period. Finally, even if We are to assume that the Petisyon is a second notice, still, the requirement of due process is wanting. For as We have said, the second notice, which is aimed to inform the employee that his service is already terminated, must state that the employer has considered all the circumstances which involve the charge and the grounds in the first notice have been established to justify the severance of employment. After the claimed dialogue between Policarpio and the employees mentioned in the Petisyon, the latter were simply told not to report for work anymore. These defects are bolstered by Bergante and Inguillo who remain steadfast in denying that they were notified of the specific charges against them nor were they

given any memorandum to that effect. They averred that had they been informed that their dismissal was due to FPSILU's demand/petition, they could have impleaded the FPSILU together with the respondents. The Court has always underscored the significance of the two-notice rule in dismissing an employee and has ruled in a number of cases that non-compliance therewith is tantamount to deprivation of the employees right to due process.[51] As for the requirement of a hearing or conference, We hold that respondents also failed to substantially comply with the same. Policarpio alleged that she had a dialogue with the concerned employees; that she explained to them the demand of FPSILU for their termination as well as the consequences of the Petisyon; and that she had no choice but to act accordingly. She further averred that Grutas even asked her to pay all the involved employees one (1)-month salary for every year of service, plus their accrued legal holiday pay, but which she denied. She informed them that it has been FPSI's practice to give employees, on a case-to-case basis, only one-half () month salary for every year of service and after they have tendered their voluntary resignation. The employees refused her offer and told her that they will just file their claims with the DOLE.[52] Policarpio's allegations are self-serving. Except for her claim as stated in the respondent's Position Paper, nowhere from the records can We find that Bergante and Inguillo were accorded the opportunity to present evidence in support of their defenses. Policarpio relied heavily on the Petisyon of FPSILU. She failed to convince Us that during the dialogue, she was able to ascertain the validity of the charges mentioned in the Petisyon. In her futile attempt to prove compliance with the procedural requirement, she reiterated that the objective of the dialogue was to provide the employees the opportunity to receive the act of grace of FPSI by giving them an amount equivalent to one-half () month of their salary for every year of service. We are not convinced. We cannot even consider the demand and counteroffer for the payment of the employees as an amicable settlement between the parties because what took place was merely a discussion only of the amount which the employees are willing to accept and the amount which the respondents are willing to give. Such non-compliance is also corroborated by Bergante and Inguillo in their pleadings denouncing their unjustified dismissal. In fine, We hold that the dialogue is not tantamount to the hearing or conference prescribed by law. We reiterate, FPSI was justified in enforcing the Union Security Clause in the CBA. However, We cannot countenance respondents' failure to accord herein petitioners the due process they deserve after the former dismissed them outright in order to avoid a serious labor dispute among the officers and members of the bargaining agent.[53] In enforcing the Union Security Clause in the CBA, We are upholding the sanctity and inviolability of contracts. But in doing so, We cannot

override an employees right to due process. [54] In Carino v. National Labor Relations Commission,[55] We took a firm stand in holding that: The power to dismiss is a normal prerogative of the employer. However, this is not without limitation. 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 x x x. 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 respect and protect the rights of their employees, which include the right to labor."

Thus, as held in that case, "the right of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own Union is not wiped away by a Union Security Clause or a Union Shop Clause in a collective bargaining agreement. An employee is entitled to be protected not only from a company which disregards his rights but also from his own Union, the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere dismissal from his job." [56]

In fine, We hold that while Bergante and Inguillo's dismissals were valid pursuant to the enforcement of Union Security Clause, respondents however did not comply with the requisite procedural due process. As in the case of Agabon v. National Labor Relations Commission,[57] where the dismissal is for a cause recognized by the prevailing jurisprudence, the absence of the statutory due process should not nullify the dismissal or render it illegal, or ineffectual. Accordingly, for violating Bergante and Inguillo's statutory rights, respondents should indemnify them the amount of P30,000.00 each as nominal damages. In view of the foregoing, We see no reason to discuss the other matters raised by petitioners. WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated March 11, 2004 and Resolution datedSeptember 17, 2004, in CA-G.R. SP No. 73992, are hereby AFFIRMED WITH MODIFICATION in that while there was a valid ground for dismissal, the procedural requirements for termination, as mandated by law and jurisprudence, were not observed. Respondents First Philippine Scales, Inc. and/or Amparo Policarpio are

hereby ORDERED to PAY petitioners Zenaida Bergante and Herminigildo Inguillo the amount of P30,000.00 each as nominal damages. No pronouncement as to costs. SO ORDERED.

FIRST DIVISION HFS PHILIPPINES, INC., RUBEN T. DEL ROSARIO and IUM SHIPMANAGEMENT AS, Petitioners, Present: G.R. No. 168716

PUNO, C.J., Chairperson, CARPIO, - versus CORONA, LEONARDO-DE CASTRO and BERSAMIN, JJ.

RONALDO R. PILAR, Respondent. Promulgated:

April 16, 2009

x---------------------------------------------------x

DECISION

CORONA, J.:

This petition[1] seeks to reverse and set aside the November 22, 2004 decision[2] and June 22, 2005 resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 85197.

On October 4, 2001, respondent Ronaldo R. Pilar was engaged by petitioners IUM Shipmanagement AS and its Philippine manning agent, HFS Philippines, Inc. (HFS), as a crew member of the Norwegian vessel M/V Hual Triumph under the following terms and conditions:

Duration of the contract Position Basic monthly salary : Hours of work Overtime Vacation leave with pay Point of hire :

: :

9 months Electrician US $981 per month 44 hours per week : US $646 per month 8 days per month : Manila[4]

Respondent boarded the vessel on October 27, 2001.[5]

In March 2002 or roughly four months after he boarded M/V Hual Triumph, respondent complained of loss of appetite, nausea, vomiting and severe nervousness. Despite being given medical treatment, his condition did not improve.

When the vessel reached Nagoya, Japan on April 3, 2002, respondent was brought to the Komatsu Hospital where he was diagnosed with depression and gastric ulcer.[6] The attending physician declared him unfit for work and recommended his hospitalization and repatriation.[7] Respondent returned to Manila on the same day.

Upon reaching Manila, respondent was met by a representative of HFS who immediately brought him to the Medical Center Manila. HFS-designated physician Dr. Nicomedes G. Cruz confirmed that respondent was suffering from major depression. Thus, he placed respondent under continuous medical treatment for several months.[8]

On September 19, 2003, respondent was declared fit to work.[9]

Meanwhile, respondent likewise sought the opinion of other physicians.

Dr. Anselmo T. Tronco of the Philippine General Hospital[10] and Dr. Raymond Jude L. Changco of the Mary Chiles Hospital[11] opined that respondent continued to suffer from major depression.

Dr. Arlito C. Veneracion of the Mary Chiles Hospital, on the other hand, evaluated the results of respondents ultrasound and endoscopy. He revealed that respondent gastritis.
[12]

was

suffering

cholecystolithiasis,

mild

fatty

liver
[13]

and

chronic

Thus, Dr. Veneracion declared respondent unfit to work.

On November 27, 2002, respondent filed a complaint for underpayment of disability and medical benefits and for moral and exemplary damages in the National Labor Relations Commission (NLRC).[14] Because respondent was a registered member of the Associated Marine Officers and Seamans Union of the Philippines (AMOSUP), the NLRC referred the complaint to the National Conciliation and Mediation Board (NCMB) on May 6, 2003.[15]

In his position paper, respondent claimed that, while sleeping during his rest hours on March 9, 2002, he was suddenly awakened by his officer who hit him on the head. He was so traumatized by the incident that thereafter, he lost his appetite, vomited incessantly and experienced severe nervousness. He claimed to be entitled to disability compensation under Article 12 of the Collective Bargaining Agreement (CBA) between AMOSUP and the Norwegian Shipowners Association which provides:

ARTICLE 12 DISABILITY COMPENSATION

If a seafarer due to no fault of his own, suffers injury as a result of an accident while serving on board or while traveling to or from the vessel on the companys business or due to marine peril, and as a result his ability to work is permanently reduced, totally or partially, the Company shall pay him a disability compensation which including the amounts stipulated by the [Philippine Overseas Employment Agencys] rules and regulation shall be maximum:

Radio officers, chief stewards, electricians, electro technicians US $90,000

Ratings

US $70,000

The disability compensation shall be calculated on the basis of the POEAs schedule of disability or impediment for injuries at a percentage recommended by a doctor authorized by the Norwegian authorities for the medical examination of seafarers.

The company shall take out the necessary insurance to cover the benefits mentioned above. Coverage arranged with P & I Club recognized by the Norwegian authorities will meet these requirements. (emphasis supplied)

Petitioners, on the other hand, asserted that in the absence of proof his depression was caused by an accident, respondent was not entitled to disability and medical benefits under Article 12 of the CBA. Instead, he was only entitled to the 120-day sick pay provided under Article 10 of the CBA which provides:

ARTICLE 10 SICKNESS AND INJURY

During the period of employment and at the time of signing off, the officer shall submit to a medical examination when requested by the company or its representative, at the companys expense.

While serving on board, a sick or injured officer is entitled to treatment at the companys expense. The company is not responsible for conservative denial treatment. If the officer is sick or injured at the termination of the service period, he has the same entitlement for a maximum period of one hundred and twenty (120) days from the date of signing off. In accordance with Part II, Section C of the [Philippine Overseas Employment Agencys (POEA)] rules and regulations, the officer must submit to a post-employment medical examination within three (3) working days after his return to the Philippines to obtain these benefits.

If he should be unable by reason of physical incapacity to do so, a written notice to the agency within the same period is deemed as compliance provided the incapacity is certified by the Master or an authorized physician.

In the event of sickness or injury necessitating signingoff, the officer is entitled to travel to Manila at the companys expense.

The officer is entitled to sick pay (at the same rate as basic wage) for up to 120 days after signing off, provided the sickness or the injury is verified by written statement from an authorized physician. The sick pay will be in addition to the vacation leave compensation mentioned in Art. 8 but not in the addition to the termination pay compensation mentioned in Art. 5 points a to c.

It is understood that an officer who is signed off by reason of sickness or injury must return to the Philippines within the usual period of travel from the date and place of disembarkation indicated in homeward bound ticket. On arrival in the Philippines, he shall report to the companys designated physician within three (3) working days from the time of arrival for post employment medical examination, otherwise, the employers liability shall be deemed terminated. In case however, of failure to report due to officers physical incapacity, a written notice to the company within three (3) working days from arrival is deemed as compliance provided the incapacity is certified by the Master or an authorized physician. (emphasis supplied)[16]

Pursuant to this provision, Section 20(B) of the Standard Employment Contract of the POEA between respondent and petitioners (employment contract) stated:

B. COMPENSATION AND BENEFITS FOR ILLNESS AND INJURY

The liabilities of the employer when the seafarer suffers injury or illness during the term of his contract are as follows:

xxx

xxx

xxx

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or of the degree of permanent disability has been assessed by the company-designated physician, but in no case shall this period exceed one-hundred twenty(120) days.

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. (emphasis supplied)

xxx

xxx

xxx

The NCMB held that the nature of respondents occupation significantly contributed to the deterioration of his psychological condition. Respondents depression was therefore a compensable sickness since it arose out of his employment. In view of the principle of social justice (that those who have less in life should have more in the law), the NCMB awarded disability compensation to him: [17]

WHEREFORE, judgment is hereby rendered in favor of [respondent]. [Petitioners], jointly and severally, are hereby ordered to pay disability benefits claimed by [respondent] in accordance with the [AMOSUP]-CBA in the amount of US$90,000 and attorneys fees equivalent to 10% of the total amount awarded.

SO ORDERED.

Aggrieved, petitioners assailed the NCMB decision in the CA via petition for certiorari[18] asserting that it committed grave abuse of discretion in awarding disability compensation to respondent. The NCMB erred in applying Article 12 of the CBA since the respondents depression and gastric ulcer were not due to an accident.

In a decision dated November 22, 2004, the CA held that Article 12 of the CBA applies when a seafarer suffers an injury (1) as a consequence of an accident that took place on board the vessel or (2) while traveling to and from the vessel on company business or (3) due to a marine peril. Since respondents illnesses were not the result of any of the said circumstances, he was not entitled to disability compensation granted by the CBA. Nonetheless, because he proved that his illnesses impaired him, he is entitled to disability benefits granted by Section 32[19] of the employment contract.[20]

Unsatisfied with the decision of the CA, petitioners moved for reconsideration but it was denied.[21]

The primordial issue in this petition is whether respondent is entitled to disability pay.

Petitioners contend that the CA erred in awarding disability pay to respondent. Section 20(B) of the employment contract requires that the seafarer should be declared unfit for work by the company physician. Respondent, in this instance, was declared fit for work by Dr. Cruz.

We deny the petition.

Just like any other contract, a CBA is the law between the contracting parties and compliance therewith in good faith is required by law. [22] be decided in accordance with the CBA. It is undisputed that respondent fell ill while he was onboard M/V Hual Triumph. This fact was confirmed not only by petitioners accredited physicians but also by respondents own independent physicians. Inasmuch as respondent was a registered member of the AMOSUP, the present controversy should

In view thereof, respondent is clearly entitled to sick-pay. Article 10 of the CBA and Section 20(B) of the employment contract apply when a seafarer contracts an illness in the course of his employment. They provide that if, in the opinion of the employer-accredited physician, the nature of the seafarers illness, regardless of its cause, requires a sign-off (or repatriation to Manila), the seafarer is entitled to sickpay equivalent to not more than 120-days worth of regular wage.

However, with regard to whether respondent is entitled to disability compensation, we rule in the negative. Article 12 of the CBA requires:

(a) (b)

the seafarer must suffer an injury; injury must have been the result of an accident while on board or while traveling to or from the vessel on companys business or it must have been due to marine peril and

(c)

as a result of the injury, he becomes totally or partially disabled.

This provision is limited to injuries. It does not cover all kinds of illnesses such as those suffered by respondent. Moreover, neither the NCMB nor the CA found that respondents illnesses were the result of an accident or a marine peril.

Nonetheless, while respondent is not entitled to disability compensation under the CBA, Section 20(B) of the Contract provides:

5. In case of permanent total or partial disability of the seafarer during the term of employment caused by either injury or illness the seafarer shall be compensated in accordance with the schedule of benefits enumerated in Section [32] of this Contract. Computations arising from any illness or disease shall be governed by the rates and rules of compensation applicable at the time the illness or disease was contracted. (emphasis supplied)

Under this provision, a seafarer may be entitled to disability compensation if (1) he is shown to have contracted an illness or suffered an injury in the course of his employment and (2) such illness or injury resulted in his total or partial disability.

In this case, the company-accredited doctor opined that respondent was fit to work but respondents own physicians declared otherwise.

We note that Section 20(B) of the employment contract states that it is the company-designated physician who determines a seafarers fitness to work or his degree of disability. Nonetheless, a claimant may dispute the company-designated physicians report by seasonably consulting another doctor. In such a case, the medical report issued by the latter shall be evaluated by the labor tribunal and the court, based on its inherent merit.[23]

Dr. Tronco made the following observations about respondent:

The [patient] started to feel weak, anxious, depressed, with loss of interest and feeling of hopelessness one month before consultation. These symptoms interfered with work. He was thus repatriated on the fifth month of work as a seaman. He was given anti-depressants which led to his gradual improvement.

Presently, [patient] is energetic and not anxious.

Impression:

major depression

He will be maintained on Zoloft pills within the next [six to nine] months. Prognosis is good.[24]

However, Dr. Chango found that respondents depression persisted:

Patient is under medication but persists to be depressed. In view of this, I recommend that in the Schedule of Disability he be graded 6 (moderate mental disorder) which limits worker to ADL with some directed care.[25]

Dr. Veneracion, on the other hand, issued a certification to the following effect:

This is to certify that I have seen and examined Mr. Ronaldo Pilar on September 22, 2003 at Mary Chiles General Hospital. Ultrasound done at March 26, 2003 showed cholecystilithiasis and mild fatty liver.

Endoscopy with gastric biopsy done April 2, 2003 revealed chronic gastritis.

Diagnosis:

Cholecystilithiasis Mild fatty liver Chronic gastritis

Remarks:

POEA Disability Grade 7 Unfit to work

This certification was issued upon Mr. Rolando Pilars req uest for the purpose of claiming disability benefits. [26]

There was clearly a discrepancy between the certification of the companydesignated physician and those of respondents chosen doctors. The company designated physician expectedly downplayed his findings on the ratings. [27] It is for this reason that the employment contract affords the seaman the option to seek the opinion of an independent physician.[28]

The company-designated physician declared respondent as having suffered a major depression but was already cured and therefore fit to work. On the other hand, the independent physicians stated that respondents major depression persisted and constituted a disability. More importantly, while the former totally ignored the diagnosis of the Japanese doctor that respondent was also suffering from gastric ulcer, the latter addressed this. The independent physicians thus found that respondent was suffering from chronic gastritis and declared him unfit for work.

The bottomline is this: the certification of the company-designated physician would defeat respondents claim while the opinion of the independent physicians would uphold such claim. In such a situation, we adopt the findings favorable to respondent.

The law looks tenderly on the laborer. Where the evidence may be reasonably interpreted in two divergent ways, one prejudicial and the other favorable to him, the balance must be tilted in his favor consistent with the principle of social justice.[29]

WHEREFORE, the petition is hereby DENIED. The November 22, 2004 decision and June 22, 2005 resolution of the Court of Appeals in CA-G.R. SP No. 85197 affirming the May 27, 2002 decision of the National Conciliation Mediation Board in NCMB Case No. NCMB-NCR-CRN Case No. 06-007-03 areAFFIRMED.

Costs against petitioners.

SO ORDERED.

DE LA SALLE UNIVERSITY and DR. CARMELITA I. QUEBENGCO, Petitioners,

G.R. 177283 Present:

No.

- versus -

DE LA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEANAFTEU), Respondent.

QUISUMBING, CARPIO MORALES, TINGA, VELASCO, JR., BRION, JJ.

Promulgated: April 7, 2009

SECOND DIVISION x --------------------------------------------------x DECISION CARPIO MORALES, J. On challenge by the De La Salle University and its Executive Vice President Dr. Carmelita I. Quebengco (petitioners) via the present petition for review on certiorari is the Court of Appeals First Division Decision of September 16, 2005[1] in CA-G.R. No. SP No. 81220 which SET ASIDE the National Labor Relations Commission (NLRC) Second Division Orders of June 26, 2003 and September 30, 2003 affirming the dismissal of the complaint for Unfair Labor Practices (ULP) filed by De La Salle University Employees Association (respondent), and DIRECTED the NLRC Second Division to transmit the records of the said complaint to the NLRC Third Division.

The antecedent facts of the case are as follows: In 2001, a splinter group of respondent led by one Belen Aliazas (Aliazas group) filed a petition for conduct of elections with the Department of Labor and Employment (DOLE), alleging that the then incumbent officers of respondent had failed to call for a regular election since 1985. Disputing the Aliazas groups allegation, respondent claimed that an election was conducted in 1987 but by virtue of the enactment of Republic Act 6715, [2] which amended the Labor Code, the term of office of its officers was extended to five years or until 1992 during which a general assembly was held affirming their hold-over tenure until the termination of collective bargaining negotiations; and that a collective bargaining agreement (CBA) was executed only on March 30, 2000. Acting on the petition for the conduct of election filed by the Aliazas group, the DOLE-NCR held, by Decision of March 19, 2001, that the holdover authority of respondents incumbent set of officers had been extinguished by virtue of the execution of the CBA. It accordingly ordered the conduct of elections to be placed under the control and supervision of its Labor Relations Division [3] and subject to preelection conferences. The conditions for the conduct of election imposed by the DOLE-NCR notwithstanding, respondent called for a regular election on July 9, 2001, without prior notice to the DOLE and without the conduct of pre-election conference, prompting the Aliazas group to file an Urgent Motion for Intervention with the Bureau of Labor Relations (BLR) of the DOLE. The BLR granted the Aliazas groups motion for intervention three days before the intended date of election or on July 6, 2001 and thus disposed as follows: WHEREFORE, without necessarily resolving the merits of the appeal and considering the urgency of the issues raised by appellees and the limited time involved, the motion is hereby GRANTED. Consequently, appellants and or the members of the DLSUEA-COMELEC headed by Mr. Dominador Almodovar or any of their authorized representatives are hereby directed to cease and desist from holding the general election of DLSUEA officers on 9 July 2001, until further ordered by this Office. SO ORDERED.[4] (Emphasis and underscoring supplied) The Aliazas group thereupon, via letter of August 7, 2001 to Brother Rolando Dizon, FSC, President of petitioner DLSU, requested the University to please put on escrow all union dues/agency fees and whatever money considerations deducted from salaries of concerned co-academic personnel until such time that an election of union

officials has been scheduled and subsequent [5] held. (Underscoring in the original; emphasis supplied)

elections

has

been

Responding to the Aliazas groups request, petitioners, citing t he abovementioned DOLE and BLR Orders, advised respondent by letter of August 16, 2001 as follows: x x x By virtue of the 19 March 2001 Decision and the 06 July 2001 Order of the Department of Labor and Employment (DOLE), the hold-over authority of your incumbent set of officers has been considered extinguished and an election of new union officers, to be conducted and supervised by the DOLE has been directed to be held. Until the result of this election comes out and a declaration by the DOLE of the validly elected officers is made, a void in the Union leadership exists. In the light of these circumstances, the University has no other alternative but to temporarily do the following: 1. Establish a savings account for the Union where all collected union dues and agency fees will be deposited and held in trust; and 2. Discontinue normal relations with any group within the Union including the incumbent set of officers. We are informing you of this decision of the University not only for your guidance but also for the apparent reason that the University does not want itself to be unnecessarily involved in your intra-union dispute. This is the only way that the University can maintain neutrality on this matter of grave concern. (Emphasis and underscoring supplied) Petitioners above-quoted move drew respondent to file a complaint against petitioners for Unfair Labor Practice (ULP complaint), claiming that petitioners unduly interfered with its internal affairs and discriminated against its members. The ULP complaint was docketed as NLRC-NCR Case No. S-30-08-03757-01. During the pendency of its ULP complaint or on March 7, 2002, respondent filed its First Notice of Strike with the Office of the Secretary of Labor (OSL), charging petitioners for 1) gross violation of the CBA and 2) bargaining in bad faith which was certified for compulsory arbitration to the NLRC (certified case). The certified case, docketed as NLRC-NCR CC000222-02, was raffled to the NLRC Third Division. In the meantime, Labor Arbiter Felipe Pati, by Decision of July 12, 2002, dismissed respondents ULP complaint. Respondent appealed to the NLRC. The

appeal was docketed as NLRC-NCR CA No. 033173-02 and lodged at the NLRC Second Division. While the dismissal of its ULP complaint was pending appeal before the NLRC Second Division, respondent, on behalf of some of its members, filed four other cases against petitioners which were lodged at the NLRC Second Division. Respondent thereafter filed in the certified case which was lodged at the NLRC Third Division a motion to have its four other cases and its ULP complaint then pending appeal before the NLRC Second Division to have these cases subsumed in the certified case. The NLRC Third Division granted respondents motion by Order of April 30, 2003. Petitioners moved to reconsider this Order but it was denied, prompting petitioners to elevate the matter via certiorari to the Court of Appeals. This petition, docketed as CA G.R. No. SP-79798, was raffled to the appellate courts Tenth Division. The NLRC Second Division, in the meantime, affirmed by Decision of June 26, 2003, the dismissal by the Arbiter of respondents ULP complaint. Respondent thus elevated the case to the Court of Appeals via certiorari, docketed as CA-G.R. No. 81220. This was raffled to the appellate courts First Division. By Decision of June 17, 2004, the Court of Appeals Tenth Division, to which petitioners certiorari petition in CA-G.R. No. SP-79798 challenging the April 30, 2003 NLRC Third Division Order subsuming respondents complaints including the ULP Complaint under the certified case, REVERSED the said Order of the NLRC Third Division[6] with respect to the subsuming of respondents ULP complaint under the certified case, the ULP complaint having been, at the time the NLRC Third Division Order was issued, already disposed of (dismissed) by the Arbiter and was in fact pending appeal before the NLRC SecondDivision. Thus the Tenth Division of the appellate court held: Anent ULP case with docket No. NLRC-NCR Case No. S-30-08-0375701 raffled to Labor Arbiter Pati for resolution, private respondent gravely erred in including it among the cases to be consolidated with NLRC NCR CC No. 000222-02. The case is obviously no longer under arbitration. The records show that when complainant-appellee (respondent Union) filed its motion to consolidate the cases on January 28, 2003 and the resolution of the said motion by the Third Division of the NLRC on April 30, 2003 granting the desired consolidation, NLRC-NCR Case No. S30-08-03757-01 had already been disposed of by Labor Arbiter Pati and was, in fact, already on appeal before the Second Division of the NLRC, docketed therein as NLRC-NCR CA No. 033173-02.According to the Union itself, on June 26, 2003, the NLRC affirmed the decision of Labor

Arbiter Pati and on September 30, 2003, it denied the Unions motion for reconsideration. x x x (Citation omitted) The NLRC had thus already exhausted its jurisdiction over NLRCNCR CA No. 033173-02. Consequently, the same case is now removed from the ambit of compulsory arbitration and may only be subject of judicial review via the special civil action of certiorari in this Court. But we are not informed if such a judicial action has been taken.[7] (Emphasis and underscoring supplied) The Court of Appeals First Division subsequently resolving respondents petition for certiorari in CA-G.R. No. 81220 (which assailed the affirmance by the NLRC Second Division of the Arbiters dismissal of its ULP complaint), upon the sole issue of whether the NLRC [Second Division] committed grave abuse of discretion . . . in ignoring the order of the [NLRC] 3rd Division declaring subsumed or absorbed [herein respondents ULP complaint] in the certified case, ans wered the same in the affirmative via the herein challenged September 16, 2005 Decision. It thus SET ASIDE the NLRC Second Division Order affirming the dismissal of respondents ULP complaint and accordingly ordered said NLRC Second Division to transmit the entire records of the ULP complaint to the NLRC Third Division to which said ULP complaint had priorly been ordered consolidated by the latter Division with the certified case. WHEREFORE, premises considered, the petition is granted. Accordingly, the Order dated June 26, 2003 of National Labor Relations Commission (NLRC) as well as the Order dated September 30, 2003 are hereby SET ASIDE. The 2nd Division of the NLRC is hereby directed to transmit the entire records of the case to the 3rdDivision [of the NLRC] for its resolution. SO ORDERED.[8] (Underscoring supplied) Hence, petitioners petition for review on cert iorari at bar. Petitioners contend that the First Division of the Court of Appeals disregarded the ruling of the appellate courts Tenth Division setting aside the NLRCThird Division Order subsuming respondents ULP complaint, which was lodged at the NLRC Second Division, under the certified case pending with said NLRC Third Division. They fault the First Division of the appellate court for I . . . RULING THAT THE SECOND DIVISION OF THE NLRC COMMITTED SERIOUS ERROR OR GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED THE

RULING OF LABOR ARBITER FELIPE P. PATI DATED 12 JULY 2002 (THROUGH ITS RESOLUTION AND ORDER DATED 26 JUNE 2003 AND 30 SEPTEMBER 2003, RESPECTIVELY) CONSIDERING THAT: A. WHEN THE NLRCS SECOND DIVISION RENDERED ITS 26 JUNE 2003 RESOLUTION, WHICH DISMISSED THE APPEAL FILED BY THE UNION AND AFFIRMED THE 12 JULY 2002 DECISION OF LABOR ARBITER FELIPE P. PATI IN NLRC NCR CASE NO. 30-08-0357-01 (NLRC NCR CA NO. 033173-02), THE CONSOLIDATION ORDER OF THE NLRC THIRD DIVISION IN NCMB-NCR-NS NO. 03-093-02 (NLRC NCR CC NO. 00022202) WHICH WAS ISSUED ON 30 APRIL 2003 HAD NOT YET ATTAINED FINALITY. . . . [NOT] TAK[ING] COGNIZANCE OF THE DECISION RENDERED BY THE TENTH DIVISION OF THE SAME COURT DATED 17 JUNE 2004, ANNULLING AND SETTING ASIDE THE 30 APRIL 2003 AND 28 JULY 2003 RESOLUTIONS OF THE THIRD DIVISION, WHICH ORDERED THE CONSOLIDATION OF ALL CASES FILED BY THE UNION AGAINST THE UNIVERSITY.[9]

B.

In any event, petitioners contend that II THE SECOND DIVISION OF THE NLRC DID NOT GRAVELY ABUSE ITS DISCRETION WHEN IT HELD THAT THE PETITIONERS WERE NOT GUILTY OF UNFAIR LABOR PRACTICE, CONSIDERING THAT THE TEMPORARY MEASURES IMPLEMENTED BY THE UNIVERSITY WERE UNDERTAKEN IN GOOD FAITH AND ONLY TO MAINTAIN ITS NEUTRALITY AMID THE INTRAUNION DISPUTE.[10] (Underscoring supplied) The petition is partly meritorious.

The June 17, 2004 Decision of the appellate courts Tenth Division SETTING ASIDE the order of consolidation issued by the NLRC Third Divisionbecame final and executory on July 11, 2004. The herein challenged appellate courts First Division Decision REVERSING the NLRC Second Division Order which affirmed the dismissal of respondents ULP complaint and directing that the records of said complaint be transmitted to the NLRC Third Division was promulgated on September 16, 2005. It is thus clear that the appellate courts Tenth Division Decision declaring that the NLRC Third Divisions order subsuming respondents ULP complaint (then

pending appeal before the NLRC Second Division) under the certified case pending before it (NLRC Third division) had become final and executory on July 11, 2004. Therefore, with respect to the herein challenged Decision of the appellate courts First Division ordering the NLRC Second Division to transmit the records of respondents ULP complaint to the NLRC Third Division, the same can no longer be effected, the appellate courts TenthDivision ruling having, it bears repeating, become final. To still transmit to the NLRC Third Division respondents ULP complaint on appeal which has already been resolved by the NLRC Second Division would lead to absurd consequences. On the other matter raised by petitioners that their acts of withholding union and agency dues and suspension of normal relations with respondents incumbent set of officers pending the intra-union dispute did not constitute interference, the Court finds for respondent. Pending the final resolution of the intra-union dispute, respondents officers remained duly authorized to conduct union affairs. The clarification letter of May 16, 2003 issued by BLR Director Hans Leo J. Cacdac enlightens: We take this opportunity to clarify that there is no void in the DLSUEA leadership. The 19 March 2001 Decision of DOLE-NCR Regional Director should not be construed as an automatic termination of the incumbent officers tenure of office. As duly-elected officers of the DLSUEA, their leadership is not deemed terminated by the expiration of their terms of office, for they shall continue their functions and enjoy the rights and privileges pertaining to their respective positions in a holdover capacity, until their successors shall have been elected and qualified.[11] (Emphasis and underscoring supplied) It bears noting that at the time petitioners questioned moves were adopted, a valid and existing CBA had been entered between the parties. It thus behooved petitioners to observe the terms and conditions thereof bearing on union dues and representation. It is axiomatic in labor relations that a CBA entered into by a legitimate labor organization and an employer becomes the law between the parties, compliance with which is mandated by express policy of the law.[12] Respecting the issue of damages, respondent, in its Position Paper before the Labor Arbiter, prayed for the award of exemplary damages, nominal damages, and attorneys fees. Exemplary or corrective damages are imposed by way of example or correction for the public good in addition to the moral, temperate, liquidated or compensatory

damages. While the amount of exemplary damages need not be proved, respondent must show proof of entitlement to moral, temperate or compensatory damages before the Court may consider awarding exemplary damages. No such damages were prayed for, however, hence, the Court finds no basis to grant the prayer for exemplary damages.

Nonetheless, the grant of nominal damages and attorneys fees to respondent under Article 2221[13] and Article 2208 (8)[14] of the Civil Code, respectively, is in order. WHEREFORE, the petition, insofar as the challenged Court of Appeals First Division Decision ordering the transmittal by the NLRC Second Divisionof the records of respondents ULP complaint to the NLRC Third Division is concerned, has become moot. In so far as the petition involves the merits of the NLRC Second Division Decision is concerned, the same is REVERSED and a NEW one is entered finding petitioners liable for Unfair Labor Practice, and ordering them to pay respondent nominal damages in the amount of P250,000 and attorneys fees in the amount of P50,000. SO ORDERED.

SECOND DIVISION RFM CORPORATION-FLOUR DIVISION and SFI FEEDS DIVISION, Petitioner, G.R. No. 162324 Present: QUISUMBING, J., Chairperson, CARPIO MORALES, TINGA, VELASCO, JR., and BRION, JJ.

- versus KASAPIAN NG MANGGA-GAWANG PINAGKAISA-RFM (KAMPI-NAFLU-KMU) and SANDIGAN AT UGNAYAN NG MANGGAGAWANG PINAGKAISA-SFI (SUMAPI-NAFLU-KMU) Respondents.

Promulgated:

February 4, 2009 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION CARPIO MORALES, J.: Petitioner RFM Corporation (RFM) is a domestic corporation engaged in flourmilling and animal feeds manufacturing. Sometime in 2000, its Flour Division and SFI Feeds Division entered into collective bargaining agreements (CBAs) with their respective labor unions, the Kasapian ng Manggagawang Pinagkaisa-RFM (KAMPINAFLU-KMU) for the Flour Division, and Sandigan at Ugnayan ng Manggagawang Pinagkaisa-SFI (SUMAPI-NAFLU-KMU) for the Feeds Division (respondents). The CBAs, which contained similar provisions, were effective for five years, from July 1, 2000 up to June 30, 2005. Sec. 3, Art. XVI of each of the CBAs reads: Section. 3. Special Holidays with Pay The COMPANY agrees to make payment to all daily paid employees, in respect of any of the days enumerated hereunto if declared as special holidays by the national government: a) b) c) Black Saturday November 1 December 31

The compensation rate shall be the regular rate. Any work beyond eight (8) hours shall be paid the standard ordinary premium. (Emphasis and underscoring supplied) During the first year of the effectivity of the CBAs in 2000, December 31 which fell on a Sunday was declared by the national government as a special holiday. Respondents thus claimed payment of their members salaries, invoking the above-stated CBA provision. Petitioner refused the claims for payment, averring that December 31, 2000 was not compensable as it was a rest day. The controversy resulted in a deadlock, drawing the parties to submit the same for voluntary arbitration. Following the submission by the parties of their respective position papers, Voluntary Arbitrator (VA) Bernardino M. Volante, by Decision[1] of October 11, 2001,

declared that the above-quoted provision of the CBA is clear. It accordingly ruled in favor of respondents and ordered petitioner to pay the salaries of respondents members for December 31, 2000, and to pay attorneys fees to respondents equivalent to 10% of the monetary award. Its motion for reconsideration of the VA ruling having been denied, [2] petitioner appealed to the Court of Appeals which affirmed the same by Decision [3] dated October 30, 2003. The appellate court held that if it was indeed petitioners intent to pay the salaries of daily-paid employees during a special holiday, even if unworked, only if such special holiday fell on weekdays, then it should have been clearly and expressly stipulated in the CBAs. And it held inapplicable Kimberly Clark Philippines v. Lorredo[4] cited by petitioner which case held that whenever there is a conflict between the words in the CBA and the evident intention of the parties, the latter prevails. For, so the appellate court explained, there were no words or provisions in the CBAs which would result in an absurd interpretation vis a vis the parties true intention. In sustaining the award of attorneys fees, the appellate court ruled that respondents were entitled thereto as they were compelled to engage a lawyer to pursue their claims. Petitioners motion for reconsideration having been denied, the present petition was filed. Petitioner insists that the CBA provision in question was intended to protect the employees from reduction of their take-home pay, hence, it was not meant to remunerate them on Sundays, which are rest days, nor to increase their salaries. On the award of attorneys fees, petitioner argues that it is not warranted as it did not arbitrarily refuse to pay respondents demands. The petition is bereft of merit.

If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, as in the herein questioned provision, the literal meaning thereof shall prevail. That is settled.[5] As such, the daily-paid employees must be paid their regular salaries on the holidays which are so declared by the national government, regardless of whether they fall on rest days.

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor. Its purpose is not merely to prevent diminution of the monthly income of the workers on account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay.[6] (Emphasis and underscoring supplied) The CBA is the law between the parties, hence, they are obliged to comply with its provisions.[7] Indeed, if petitioner and respondents intended the provision in question to cover payment only during holidays falling on work or weekdays, it should have been so incorporated therein. Petitioner maintains, however, that the parties failed to foresee a situation where the special holiday would fall on a rest day. The Court is not persuaded. The Labor Code specifically enjoins that in case of doubt in the interpretation of any law or provision affecting labor, it should be interpreted in favor of labor.[8] Respondents having been compelled to litigate as a result of petitioners failure to satisfy their valid claim, the Court deems it just and equitable to sustain the award of attorneys fees. WHEREFORE, the petition is DENIED. SO ORDERED.

FIRST DIVISION

[G.R. No. 145561. June 15, 2005]

HONDA PHILS., INC., petitioner, vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA, respondent. DECISION YNARES-SANTIAGO, J.:

This petition for review under Rule 45 seeks the reversal of the Court of Appeals decision[1] dated September 14, 2000[2] and its resolution[3] dated October 18, 2000, in CA-G.R. SP No. 59052. The appellate court affirmed the decision dated May 2, 2000 rendered by the Voluntary Arbitrator who ruled that petitioner Honda Philippines, Inc.s (Honda) pro-rated payment of the 13th and 14th month pay and financial assistance to its employees was invalid. As found by the Court of Appeals, the case stems from the Collective Bargaining Agreement (CBA) forged between petitioner Honda and respondent union Samahan ng Malayang Manggagawa sa Honda (respondent union) which contained the following provisions: Section 3. 13th Month Pay The COMPANY shall maintain the present practice in the implementation [of] the 13th month pay. Section 6. 14th Month Pay The COMPANY shall grant a 14th Month Pay, computed on the same basis as computation of 13th Month Pay. Section 7. The COMPANY agrees to continue the practice of granting, in its discretion, financial assistance to covered employees in December of each year, of not less than 100% of basic pay. This CBA is effective until year 2000. In the latter part of 1998, the parties started re-negotiations for the fourth and fifth years of their CBA. When the talks between the parties bogged down, respondent union filed a Notice of Strike on the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. On March 31, 1999, then Department of Labor and Employment (DOLE) Secretary Laguesma assumed jurisdiction over the labor dispute and ordered the parties to cease and desist from committing acts that would aggravate the situation. Both parties complied accordingly. On May 11, 1999, however, respondent union filed a second Notice of Strike on the ground of unfair labor practice alleging that Honda illegally contracted out work to the detriment of the workers. Respondent union went on strike and picketed the premises of Honda on May 19, 1999. On June 16, 1999, DOLE Acting Secretary Felicisimo Joson, Jr. assumed jurisdiction over the case and certified the same to the National Labor Relations Commission (NLRC) for compulsory arbitration. The striking employees were ordered to return to work and the management accepted them back under the same terms prior to the strike staged. On November 22, 1999, the management of Honda issued a memorandum[4] announcing its new computation of the 13th and 14th month pay to be granted to all its employees whereby the thirty-one (31)-day long strike shall be

considered unworked days for purposes of computing said benefits. As per the companys new formula, the amount equivalent to 1/12 of the employees basic salary shall be deducted from these bonuses, with a commitment however that in the event that the strike is declared legal, Honda shall pay the amount deducted. Respondent union opposed the pro-rated computation of the bonuses in a letter dated November 25, 1999. Honda sought the opinion of the Bureau of Working Conditions (BWC) on the issue. In a letter dated January 4, 2000,[5] the BWC agreed with the pro-rata payment of the 13th month pay as proposed by Honda. The matter was brought before the Grievance Machinery in accordance with the parties existing CBA but when the issue remained unresolved, it was submitted for voluntary arbitration. In his decision[6] dated May 2, 2000, Voluntary Arbitrator Herminigildo C. Javen invalidated Hondas computation, to wit: WHEREFORE, in view of all foregoing premises being duly considered and evaluated, it is hereby ruled that the Companys implementation of pro-rated 13th Month pay, 14th Month pay and Financial Assistance [is] invalid. The Company is thus ordered to compute each provision in full month basic pay and pay the amounts in question within ten (10) days after this Decision shall have become final and executory. The three (3) days Suspension of the twenty one (21) employees is hereby affirmed. SO ORDERED.[7] Hondas Motion for Partial Reconsideration was denied in a resolution dated May 22, 2000. Thus, a petition was filed with the Court of Appeals, however, the petition was dismissed for lack of merit. Hence, the instant petition for review on the sole issue of whether the pro-rated computation of the 13th month pay and the other bonuses in question is valid and lawful. The petition lacks merit. A collective bargaining agreement 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. [8] As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy.[9] Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.[10] In some instances, however, the provisions of a CBA may become contentious, as in this case. Honda wanted to implement a pro-rated computation of the benefits based on the no work, no pay rule. According to the company, the phrase present practice as mentioned in the CBA refers to the manner and requisites with respect to the payment of the bonuses, i.e., 50% to be given in May and the other 50% in

December of each year. Respondent union, however, insists that the CBA provisions relating to the implementation of the 13th month pay necessarily relate to the computation of the same. We agree with the findings of the arbitrator that the assailed CBA provisions are far from being unequivocal. A cursory reading of the provisions will show that they did not state categorically whether the computation of the 13 th month pay, 14th month pay and the financial assistance would be based on on e full months basic salary of the employees, or pro-rated based on the compensation actually received. The arbitrator thus properly resolved the ambiguity in favor of labor as mandated by Article 1702 of the Civil Code.[11] The Court of Appeals affirmed the arbitrators finding and added that the computation of the 13 th month pay should be based on the length of service and not on the actual wage earned by the worker. We uphold the rulings of the arbitrator and the Court of Appeals. Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence. It is not our function to assess and evaluate the evidence all over again, particularly where the findings of both the arbiter and the Court of Appeals coincide.[12] Presidential Decree No. 851, otherwise known as the 13th Month Pay Law, which required all employers to pay their employees a 13th month pay, was issued to protect the level of real wages from the ravages of worldwide inflation. It was enacted on December 16, 1975 after it was noted that there had been no increase in the minimum wage since 1970 and the Christmas season was an opportune time for society to show its concern for the plight of the working masses so that they may properly celebrate Christmas and New Year.[13] Under the Revised Guidelines on the Implementation of the 13 th month pay issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. The guidelines pertinently provides: The basic salary of an employee for the purpose of computing the 13 th month pay shall include all remunerations or earnings paid by his employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances.[14] (Emphasis supplied) For employees receiving regular wage, we have interpreted basic salary to mean, not the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. Thus, we exclude from the computation of basic salary payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays. [15] In Hagonoy Rural Bank v. NLRC,[16] St.

Michael Academy v. NLRC,[17] Consolidated Food Corporation v. NLRC,[18] and similar cases, the 13th month pay due an employee was computed based on the employees basic monthly wage multiplied by the number of months worked in a calendar year prior to separation from employment. The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year.[19] The Court of Appeals thus held that: Considering the foregoing, the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker. In the present case, there being no gap in the service of the workers during the calendar year in question, the computation of the 13th month pay should not be pro-rated but should be given in full.[20](Emphasis supplied) More importantly, it has not been refuted that Honda has not implemented any pro-rating of the 13th month pay before the instant case. Honda did not adduce evidence to show that the 13th month, 14th month and financial assistance benefits were previously subject to deductions or pro-rating or that these were dependent upon the companys financial standing. As held by the Voluntary Arbitrator: The Company (Honda) explicitly accepted that it was the strike held that prompt[ed] them to adopt a pro-rata computation, aside [from] being in [a] state of rehabilitation due to 227M substantial losses in 1997, 114M in 1998 and 215M lost of sales in 1999 due to strike. This is an implicit acceptance that prior to the strike, a full month basic pay computation was the present practice intended to be maintained in the CBA.[21] The memorandum dated November 22, 1999 which Honda issued shows that it was the first time a pro-rating scheme was to be implemented in the company. It was a convenient coincidence for the company that the work stoppage held by the employees lasted for thirty-one (31) days or exactly one month. This enabled them to devise a formula using 11/12 of the total annual salary as base amount for computation instead of the entire amount for a 12-month period. That a full month payment of the 13th month pay is the established practice at Honda is further bolstered by the affidavits executed by Feliteo Bautista and Edgardo Cruzada. Both attested that when they were absent from work due to motorcycle accidents, and after they have exhausted all their leave credits and were no longer receiving their monthly salary from Honda, they still received the full amount of their 13th month, 14th month and financial assistance pay.[22] The case of Davao Fruits Corporation v. Associated Labor Unions, et al. presented an example of a voluntary act of the employer that has ripened into a company practice. In that case, the employer, from 1975 to 1981, freely and
[23]

continuously included in the computation of the 13 th month pay those items that were expressly excluded by the law. We have held that this act, which was favorable to the employees though not conforming to law, has ripened into a practice and therefore can no longer be withdrawn, reduced, diminished, discontinued or eliminated. Furthermore, in Sevilla Trading Company v. Semana,[24] we stated: With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. In the above quoted case of Davao Fruits Corporation vs. Associated Labor Unions, the company practice lasted for six (6) years. In another case, Davao Integrated Port Stevedoring Services vs. Abarquez, the employer, for three (3) years and nine (9) months, approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. While in Tiangco vs. Leogardo, Jr. the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years and four (4) months. In all these cases, this Court held that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. This, we rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code.[25] (Emphasis supplied) Lastly, the foregoing interpretation of law and jurisprudence is more in keeping with the underlying principle for the grant of this benefit. It is primarily given to alleviate the plight of workers and to help them cope with the exorbitant increases in the cost of living. To allow the pro-ration of the 13th month pay in this case is to undermine the wisdom behind the law and the mandate that the workingmans welfare should be the primordial and paramount consideration.[26] What is more, the factual milieu of this case is such that to rule otherwise inevitably results to dissuasion, if not a deterrent, for workers from the free exercise of their constitutional rights to self-organization and to strike in accordance with law.[27] WHEREFORE, the instant petition is DENIED. The decision and the resolution of the Court of Appeals dated September 14, 2000 and October 18, 2000, respectively, in CA-G.R. SP No. 59052, affirming the decision rendered by the Voluntary Arbitrator on May 2, 2000, are hereby AFFIRMED in toto. SO ORDERED.

SECOND DIVISION

TSPIC CORPORATION, Petitioner,

G.R. No. 163419 Present:

- versus -

QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ.

TSPIC EMPLOYEES UNION (FFW), representing MARIA FE FLORES, FE CAPISTRANO, AMY DURIAS,[1] CLAIRE EVELYN VELEZ, JANICE OLAGUIR, JERICO ALIPIT, GLEN BATULA, SER JOHN HERNANDEZ, RACHEL NOVILLAS, NIMFA ANILAO, ROSE SUBARDIAGA, VALERIE CARBON, OLIVIA EDROSO, MARICRIS DONAIRE, ANALYN AZARCON, ROSALIE RAMIREZ, JULIETA ROSETE, JANICE NEBRE, NIA ANDRADE, CATHERINE YABA, DIOMEDISA ERNI,[2] MARIO SALMORIN, LOIDA COMULLO,[3] MARIE ANN DELOS SANTOS,[4] JUANITA YANA, and Promulgated: SUZETTE DULAY, Respondents. February 13, 2008 x-----------------------------------------------------------------------------------------x DECISION VELASCO, JR., J.: The path towards industrial peace is a two-way street. Fundamental fairness and protection to labor should always govern dealings between labor and management. Seemingly conflicting provisions should be harmonized to arrive at an interpretation that is within the parameters of the law, compassionate to labor, yet, fair to management. In this Petition for Review on Certiorari under Rule 45, petitioner TSPIC Corporation (TSPIC) seeks to annul and set aside the October 22, 2003 Decision[5] and April 23, 2004 Resolution[6] of the Court of Appeals (CA) in CA-G.R. SP No. 68616,

which affirmed the September 13, 2001 Decision[7] of Accredited Voluntary Arbitrator Josephus B. Jimenez in National Conciliation and Mediation Board Case No. JBJ-AVA2001-07-57. TSPIC is engaged in the business of designing, manufacturing, and marketing integrated circuits to serve the communication, automotive, data processing, and aerospace industries. Respondent TSPIC Employees Union (FFW) (Union), on the other hand, is the registered bargaining agent of the rank-and-file employees of TSPIC. The respondents, Maria Fe Flores, Fe Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir, Jerico Alipit, Glen Batula, Ser John Hernandez, Rachel Novillas, Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, are all members of the Union. In 1999, TSPIC and the Union entered into a Collective Bargaining Agreement (CBA) for the years 2000 to 2004. The CBA included a provision on yearly salary increases starting January 2000 until January 2002. Section 1, Article X of the CBA provides, as follows:
[8]

Section 1. Salary/ Wage Increases.Employees covered by this Agreement shall be granted salary/wage increases as follows: a) Effective January 1, 2000, all employees on regular status and within the bargaining unit on or before said date shall be granted a salary increase equivalent to ten percent (10%) of their basic monthly salary as of December 31, 1999. b) Effective January 1, 2001, all employees on regular status and within the bargaining unit on or before said date shall be granted a salary increase equivalent to twelve (12%) of their basic monthly salary as of December 31, 2000. c) Effective January 1, 2002, all employees on regular status and within the bargaining unit on or before said date shall be granted a salary increase equivalent to eleven percent (11%) of their basic monthly salary as of December 31, 2001. The wage salary increase of the first year of this Agreement shall be over and above the wage/salary increase, including the wage distortion adjustment, granted by the COMPANY on November 1, 1999 as per Wage Order No. NCR-07. The wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases under future Wage Orders, that may be issued after Wage Order No. NCR-07, and shall be considered as correction of any wage distortion that may have been brought about by the said future Wage Orders. Thus the

wage/salary increases in 2001 and 2002 shall be deemed as compliance to future wage orders after Wage Order No. NCR-07. Consequently, on January 1, 2000, all the regular rank-and-file employees of TSPIC received a 10% increase in their salary. Accordingly, the following nine (9) respondents (first group) who were already regular employees received the said increase in their salary: Maria Fe Flores, Fe Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir, Jerico Alipit, Glen Batula, Ser John Hernandez, and Rachel Novillas.[9] The CBA also provided that employees who acquire regular employment status within the year but after the effectivity of a particular salary increase shall receive a proportionate part of the increase upon attainment of their regular status. Sec. 2 of the CBA provides: SECTION 2. Regularization Increase.A covered daily paid employee who acquires regular status within the year subsequent to the effectivity of a particular salary/wage increase mentioned in Section 1 above shall be granted a salary/wage increase in proportionate basis as follows: Regularization Period 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Equivalent Increase 100% 75% 50% 25%

Thus, a daily paid employee who becomes a regular employee covered by this Agreement only on May 1, 2000, i.e., during the second quarter and subsequent to the January 1, 2000 wage increase under this Agreement, will be entitled to a wage increase equivalent to seventyfive percent (75%) of ten percent (10%) of his basic pay. In the same manner, an employee who acquires regular status on December 1, 2000 will be entitled to a salary increase equivalent to twenty-five percent (25%) of ten percent (10%) of his last basic pay. On the other hand, any monthly-paid employee who acquires regular status within the term of the Agreement shall be granted regularization increase equivalent to 10% of his regular basic salary. Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National Capital Region, issued Wage Order No. NCR-08[10] (WO No. 8) which raised the daily minimum wage from PhP 223.50 to PhP 250 effective November 1, 2000. Conformably, the wages of 17 probationary employees, namely: Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa

Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay (second group), were increased to PhP 250.00 effective November 1, 2000. On various dates during the last quarter of 2000, the above named 17 employees attained regular employment[11] and received 25% of 10% of their salaries as granted under the provision on regularization increase under Article X, Sec. 2 of the CBA. In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine employees (first group), who were senior to the abovelisted recently regularized employees, received less wages. On January 19, 2001, a few weeks after the salary increase for the year 2001 became effective, TSPICs Human Resources Department notified 24 employees,[12] namely: Maria Fe Flores, Janice Olaguir, Rachel Novillas, Fe Capistrano, Jerico Alipit, Amy Durias, Glen Batula, Claire Evelyn Velez, Ser John Hernandez, Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, and Marie Ann Delos Santos, that due to an error in the automated payroll system, they were overpaid and the overpayment would be deducted from their salaries in a staggered basis, starting February 2001. TSPIC explained that the correction of the erroneous computation was based on the crediting provision of Sec. 1, Art. X of the CBA. The Union, on the other hand, asserted that there was no error and the deduction of the alleged overpayment from employees constituted diminution of pay. The issue was brought to the grievance machinery, but TSPIC and the Union failed to reach an agreement. Consequently, TSPIC and the Union agreed to undergo voluntary arbitration on the solitary issue of whether or not the acts of the management in making deductions from the salaries of the affected employees constituted diminution of pay. On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding that the unilateral deduction made by TSPIC violated Art. 100 [13] of the Labor Code. The fallo reads: WHEREFORE, in the light of the law on the matter and on the facts adduced in evidence, judgment is hereby rendered in favor of the Union and the named individual employees and against the company, thereby ordering the [TSPIC] to pay as follows: 1) to the sixteen (16) newly regularized employees named above, the amount of P12,642.24 a month or a total of P113,780.16 for

nine (9) months or P7,111.26 for each of them as well as an additional P12,642.24 (for all), or P790.14 (for each), for every month after 30 September 2001, until full payment, with legal interests for every month of delay; 2) to the nine (9) who were hired earlier than the sixteen (16); also named above, their respective amount of entitlements, according to the Unions correct computation, ranging from P110.22 per month (or P991.98 for nine months) to P450.58 a month (or P4,055.22 for nine months), as well as corresponding monthly entitlements after 30 September 2001, plus legal interests until full payment, to Suzette Dulay, the amount of P608.14 a month (or P5,473.26), as well as corresponding monthly entitlements after 30 September 2001, plus legal interest until full payment, Attorneys fees equal to 10% of all the above monetary awards. The claim for exemplary damages is denied for want of factual basis. The parties are hereby directed to comply with their joint voluntary commitment to abide by this Award and thus, submit to this Office jointly, a written proof of voluntary compliance with this DECISION within ten (10) days after the finality hereof. SO ORDERED.[14] TSPIC filed a Motion for Reconsideration which was denied in a Resolution dated November 21, 2001. Aggrieved, TSPIC filed before the CA a petition for review under Rule 43 docketed as CA-G.R. SP No. 68616. The appellate court, through its October 22, 2003 Decision, dismissed the petition and affirmed in toto the decision of the voluntary arbitrator. The CA declared TSPICs computation allowing PhP 287 as daily wages to the newly regularized employees to be correct, noting that the computation conformed to WO No. 8 and the provisions of the CBA. According to the CA, TSPIC failed to convince the appellate court that the deduction was a result of a system error in the automated payroll system. The CA explained that when WO No. 8 took effect on November 1, 2000, the concerned employees were still probationary employees who were receiving the minimum wage of PhP 223.50. The CA said that effective November 1, 2000, said employees should have received the minimum wage of PhP 250. The CA held that when respondents became regular employees on November 29, 2000, they should be allowed the salary increase granted them under

3)

4)

the CBA at the rate of 25% of 10% of their basic salary for the year 2000; thereafter, the 12% increase for the year 2001 and the 10% increase for the year 2002 should also be made applicable to them.[15] TSPIC filed a Motion for Reconsideration which was denied by the CA in its April 23, 2004 Resolution. TSPIC filed the instant petition which raises this sole issue for our resolution: Does the TSPICs decision to deduct the alleged overpayment from the salaries of the affected members of the Union constitute diminution of benefits in violation of the Labor Code? TSPIC maintains that the formula proposed by the Union, adopted by the arbitrator and affirmed by the CA, was flawed, inasmuch as it completely disregarded the crediting provision contained in the last paragraph of Sec. 1, Art. X of the CBA. We find TSPICs contention meritorious. A Collective Bargaining Agreement is the law between the parties It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions. [16] We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda: A collective bargaining agreement or 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. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law. [17] Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control.[18] However, sometimes, as in this case, though the provisions of the CBA seem clear and unambiguous, the parties sometimes arrive at conflicting interpretations. Here, TSPIC wants to credit the increase granted by WO No. 8 to the increase granted under the CBA. According to TSPIC, it is specifically provided in the CBA that the salary/wage increase for the year 2001 shall be deemed inclusive of the mandated minimum wage increases under future wage orders that may be issued after Wage Order No. 7. The Union, on the other hand, insists that the crediting provision of the CBA finds no application in the present case, since at the time WO

No. 8 was issued, the probationary employees (second group) were not yet covered by the CBA, particularly by its crediting provision. As a general rule, in the interpretation of a contract, the intention of the parties is to be pursued.[19] Littera necat spiritus vivificat. An instrument must be interpreted according to the intention of the parties. It is the duty of the courts to place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and the purpose which it is intended to serve.[20] Absurd and illogical interpretations should also be avoided. Considering that the parties have unequivocally agreed to substitute the benefits granted under the CBA with those granted under wage orders, the agreement must prevail and be given full effect. Paragraph (b) of Sec. 1 of Art. X of the CBA provides for the general agreement that, effective January 1, 2001, all employees on regular status and within the bargaining unit on or before said date shall be granted a salary increase equivalent to twelve (12%) of their basic monthly salary as of December 31, 2000. The 12% salary increase is granted to all employees who (1) are regular employees and (2) are within the bargaining unit. Second paragraph of (c) provides that the salary increase for the year 2000 shall not include the increase in salary granted under WO No. 7 and the correction of the wage distortion for November 1999. The last paragraph, on the other hand, states the specific condition that the wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases under future wage orders, that may be issued after WO No. 7, and shall be considered as correction of the wage distortions that may be brought about by the said future wage orders. Thus, the wage/salary increases in 2001 and 2002 shall be deemed as compliance to future wage orders after WO No. 7. Paragraph (b) is a general provision which allows a salary increase to all those who are qualified. It, however, clashes with the last paragraph which specifically states that the salary increases for the years 2001 and 2002 shall be deemed inclusive of wage increases subsequent to those granted under WO No. 7. It is a familiar rule in interpretation of contracts that conflicting provisions should be harmonized to give effect to all.[21] Likewise, when general and specific provisions are inconsistent, the specific provision shall be paramount to and govern the general provision. [22] Thus, it may be reasonably concluded that TSPIC granted the salary increases under the condition that any wage order that may be subsequently issued shall be credited against the previously granted increase. The intention of the parties is clear: As long as an employee is qualified to receive the 12% increase in salary, the employee shall be granted the increase; and as long as an employee is granted the 12% increase, the amount shall be credited against any wage order issued after WO No. 7.

Respondents should not be allowed to receive benefits from the CBA while avoiding the counterpart crediting provision. They have received their regularization increases under Art. X, Sec. 2 of the CBA and the yearly increase for the year 2001. They should not then be allowed to avoid the crediting provision which is an accompanying condition. Respondents attained regular employment status before January 1, 2001. WO No. 8, increasing the minimum wage, was issued after WO No. 7. Thus, respondents rightfully received the 12% salary increase for the year 2001 granted in the CBA; and consequently, TSPIC rightfully credited that 12% increase against the increase granted by WO No. 8. Proper formula for computing the salaries for the year 2001 Thus, the proper computation of the salaries of individual respondents is as follows: (1) With regard to the first group of respondents who attained regular employment status before the effectivity of WO No. 8, the computation is as follows: For respondents Jerico Alipit and Glen Batula:[23] Wage rate before WO No. 8... PhP 234.67 Increase due to WO No. 8 setting the minimum wage at PhP 250. 15.33 Total Salary upon effectivity of WO No. 8. PhP 250.00 Increase for 2001 (12% of 2000 salary)........... PhP 30.00 Less the wage increase under WO No. 8. 15.33 Total difference between the wage increase for 2001 and the increase granted under WO No. 8.. PhP 14.67 Wage rate by December 2000..... PhP 250.00 Plus total difference between the wage increase for 2001 and the increase granted under WO No. 8.. 14.67 Total (Wage rate range beginning January 1, 2001) PhP 264.67 For respondents Ser John Hernandez and Rachel Novilla s:[24] Wage rate range before WO No. 8.PhP 234.68 Increase due to WO No. 8 setting the minimum wage at PhP 250.. 15.32 Total Salary upon effectivity of WO No. 8... PhP 250.00 Increase for 2001 (12% of 2000 salary) PhP 30.00

Less the wage increase under WO No. 8.. 15.32 Total difference between the wage increase for 2001 and the increase granted under WO No. 8. PhP 14.68 Wage rate by December 2000......... PhP 250.00 Plus total difference between the wage increase for 2001 and the increase granted under WO No. 8.. 14.68 Total (Wage rate range beginning January 1, 2001) .. PhP 264.68 For respondents Amy Durias, Claire Evelyn Velez, and Janice Olaguir:[25] Wage rate range before WO No. 8.. PhP 240.26 Increase due to WO No. 8 setting the minimum wage at PhP 250 9.74 Total Salary upon effectivity of WO No. 8. PhP 250.00 Increase for 2001 (12% of 2000 salary). PhP 30.00 Less the wage increase under WO No. 8 9.74 Total difference between the wage increase for 2001 and the increase granted under WO No. 8.. PhP 20.26 Wage rate by December 2000. PhP 250.00 Plus total difference between the wage increase for 2001 and the increase granted under WO No. 8.. 20.26 Total (Wage rate range beginning January 1, 2001).. PhP 270.26 For respondents Ma. Fe Flores and Fe Capistrano:[26] Wage rate range before WO No. 8 PhP 245.85 Increase due to WO No. 8 setting the minimum wage at PhP 250.. 4.15 Total Salary upon effectivity of WO No. 8... PhP 250.00 Increase for 2001 (12% of 2000 salary). PhP 30.00 Less the wage increase under WO No. 8........... 4.15 Total difference between the wage increase for 2001 and the increase granted under WO No. 8. PhP 25.85 Wage rate by December 2000. PhP 250.00 Plus total difference between the wage increase for 2001 and the increase granted under WO No. 8.. 25.85 Total (Wage rate range beginning January 1, 2001).. PhP 275.85

(2) With regard to the second group of employees, who attained regular employment status after the implementation of WO No. 8, namely: Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, the proper computation of the salaries for the year 2001, in accordance with the CBA, is as follows: Compute the increase in salary after the implementation of WO No. 8 by subtracting the minimum wage before WO No. 8 from the minimum wage per the wage order to arrive at the wage increase, thus: Minimum Wage per Wage Order.. PhP 250.00 Wage rate before Wage Order.. 223.50 Wage Increase. PhP 26.50 Upon attainment of regular employment status, the employees salaries were increased by 25% of 10% of their basic salaries, as provided for in Sec. 2, Art. X of the CBA, thus resulting in a further increase of PhP 6.25, for a total of PhP 256.25, computed as follows: Wage rate after WO No. 8. PhP 250.00 Regularization increase (25 % of 10% of basic salary). 6.25 Total (Salary for the end of year 2000).. PhP 256.25 To compute for the increase in wage rates for the year 2001, get the increase of 12% of the employees salaries as of December 31, 2000; then subtract from that amount, the amount increased in salaries as granted under WO No. 8 in accordance with the crediting provision of the CBA, to arrive at the increase in salaries for the year 2001 of the recently regularized employees. Add the result to their salaries as of December 31, 2000 to get the proper salary beginningJanuary 1, 2001, thus: Increase for 2001 (12% of 2000 salary)... PhP 30.75 Less the wage increase under WO No. 8. 26.50 Difference between the wage increase for 2001 and the increase granted under WO No. 8.... PhP 4.25 Wage rate after regularization increase... PhP 256.25 Plus total difference between the wage increase and the increase granted under WO No. 8. 4.25 Total (Wage rate beginning January 1, 2001). PhP 260.50 With these computations, the crediting provision of the CBA is put in effect, and the wage distortion between the first and second group of employees is cured. The first group of employees who attained regular employment status before the

implementation of WO No. 8 is entitled to receive, starting January 1, 2001, a daily wage rate within the range of PhP 264.67 to PhP 275.85, depending on their wage rate before the implementation of WO No. 8. The second group that attained regular employment status after the implementation of WO No. 8 is entitled to receive a daily wage rate of PhP 260.50 starting January 1, 2001. Diminution of benefits TSPIC also maintains that charging the overpayments made to the 16 respondents through staggered deductions from their salaries does not constitute diminution of benefits. We agree with TSPIC. Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees. There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a policy or has ripened into a practice over a long period; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.[27] As correctly pointed out by TSPIC, the overpayment of its employees was a result of an error. This error was immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously granted benefit may be withdrawn without violating the prohibition against non-diminution of benefits. We ruled in GlobeMackay Cable and Radio Corp. v. NLRC: Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law. Payment may be said to have been made by reason of a mistake in the construction or application of a doubtful or difficult question of law. (Article 2155, in relation to Article 2154 of the Civil Code). Since it is a past error that is being corrected, no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code may be said to have resulted by virtue of the correction.[28] Here, no vested right accrued to individual respondents when TSPIC corrected its error by crediting the salary increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the CBA. Hence, any amount given to the employees in excess of what they were entitled to, as computed above, may be legally deducted by TSPIC from the employees salaries. It was also compassionate and fair that TSPIC deducted the

overpayment in installments over a period of 12 months starting from the date of the initial deduction to lessen the burden on the overpaid employees. TSPIC, in turn, must refund to individual respondents any amount deducted from their salaries which was in excess of what TSPIC is legally allowed to deduct from the salaries based on the computations discussed in this Decision. As a last word, it should be reiterated that though it is the states responsibility to afford protection to labor, this policy should not be used as an instrument to oppress management and capital. [29] In resolving disputes between labor and capital, fairness and justice should always prevail. We ruled in Norkis Union v. Norkis Trading that in the resolution of labor cases, we have always been guided by the State policy enshrined in the Constitution: social justice and protection of the working class. Social justice does not, however, mandate that every dispute should be automatically decided in favor of labor. In any case, justice is to be granted to the deserving and dispensed in the light of the established facts and the applicable law and doctrine.[30] WHEREFORE, premises considered, the September 13, 2001 Decision of the Labor Arbitrator in National Conciliation and Mediation Board Case No. JBJ-AVA-200107-57 and the October 22, 2003 CA Decision in CA-G.R. SP No. 68616 are hereby AFFIRMED with MODIFICATION. TSPIC is herebyORDERED to pay respondents their salary increases in accordance with this Decision, as follows: Name of Employee Nimfa Anilao Rose Subardiaga Valerie Carbon Olivia Edroso Maricris Donaire Analyn Azarcon Rosalie Ramirez Julieta Rosete Janice Nebre Nia Andrade Catherine Yaba Diomedisa Erni Mario Salmorin Loida Camullo Marie Ann Delos Santos Juanita Yana Daily Wage Rate 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 260.5 No. of Working Days in a Month 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 26 No. of Months in a Year 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 Total Salary for 2001 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00 81,276.00

Suzette Dulay Jerico Alipit Glen Batula Ser John Hernandez Rachel Novillas Amy Durias Claire Evelyn Velez Janice Olaguir Maria Fe Flores Fe Capistrano

260.5 264.67 264.67 264.68 264.68 270.26 270.26 270.26 275.85 275.85

26 26 26 26 26 26 26 26 26 26

12 12 12 12 12 12 12 12 12 12

81,276.00 82,577.04 82,577.04 82,580.16 82,580.16 84,321.12 84,321.12 84,321.12 86,065.20 86,065.20

The award for attorneys fees of ten percent (10%) of the total award is MAINTAINED. SO ORDERED.