Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176249 November 27, 2009
FVC LABOR UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS
ORGANIZATION (FVCLU-PTGWO), Petitioner,
vs.
SAMA-SAMANG NAGKAKAISANG MANGGAGAWA SA FVC-SOLIDARITY OF
INDEPENDENT AND GENERAL LABOR ORGANIZATIONS (SANAMA-FVC-
SIGLO), Respondent.
D E C I S I O N
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 five-year 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 patently 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
1avvphi1
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, SANAMA-SIGLO 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 five-year 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:
x x x x
(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).
x x x x
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 above-quoted 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 Union
PTGWO, 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 3rd 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,
SANAMA-SIGLO 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 FVCLU-PTGWOs 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 accordingly DISMISS 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.
ARTURO D. BRION
Associate Justice


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 182836 October 13, 2009
CONTINENTAL STEEL MANUFACTURING CORPORATION, Petitioner,
vs.
HON. ACCREDITED VOLUNTARY ARBITRATOR ALLAN S. MONTAO and
NAGKAKAISANG MANGGAGAWA NG CENTRO STEEL CORPORATION-SOLIDARITY
OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (NMCSC-
SUPER), Respondents.
D E C I S I O N
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
x x x x
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
x x x x
ARTICLE XVIII: OTHER BENEFITS
x x x x
Section 4. DEATH AND ACCIDENT INSURANCEThe Company shall grant death
and accidental insurance to the employee or his family in the following manner:
x x x x
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 Hortillanos
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 death should
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 a
dependent 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 dependentmay 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 legitimateupon her conception.1avvphi1
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.
MINITA V. CHICO-NAZARIO
Associate Justice

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 172013 October 2, 2009
PATRICIA HALAGUEA, MA. ANGELITA L. PULIDO, MA. TERESITA P. SANTIAGO,
MARIANNE V. KATINDIG, 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,
vs.
PHILIPPINE AIRLINES INCORPORATED, Respondent.
D E C I S I O N
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:
A. For the Cabin Attendants hired before 22 November 1996:
x x x x
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 2004-
2005 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 PAL-FASAP 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 2000-2005 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.1avvphi1
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 CA-
G.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.
DIOSDADO M. PERALTA
Associate Justice


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 169940 September 14, 2009
UNIVERSITY OF SANTO TOMAS, Petitioner,
vs.
SAMAHANG MANGGAGAWA NG UST (SM-UST), Respondent.
D E C I S I O N
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. Salary increase of P800.00 per month
2. Signing bonus of P10,000.00
3. Additional Christmas bonus of P2,000.00
B. ACADEMIC YEAR 2002-2003
1. Salary increase of P1,500.00 per month
2. Additional Christmas bonus of P2,000.00
3. P6,000,000.00 for salary restructuring
C. ACADEMIC YEAR 2003-2004
1. Salary increase of P1,700.00 per month
2. 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. Salary increase of P1,000.00 per month
2. Signing bonus of P10,000.00
3. Additional Christmas bonus of P2,000.00
B. ACADEMIC YEAR 2002-2003
1. Salary increase of P1,700.00 per month
2. Additional Christmas bonus of P2,000.00
3. P6,190,000.00 to be distributed in the form of salary restructuring
C. ACADEMIC YEAR 2003-2004
1. Salary increase of P2,000.00 per month
2. 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.
x x x x
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 1997-1998. 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 1999-2000, 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 Union maintains 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, mid-year 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.
x x x x
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 in Meralco 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 UST-Faculty 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 1,238,000.00
Total

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 unions membership, then the
distribution appears fair and reasonable:
x x x x
Academic 1,452 employees awarded P45 million
Non-academic 619 employees awarded P15.475 million
Academic &
Administrative 219 employees awarded P8 million


Total awarded P68,475,000.00
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 non-teaching personnel."a1f
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.
P3,000.00 mid-year bonus
P1,857,000.0
0
2. 6 sacks of rice/employee
@ P1,000.00/sack 3,714,000.00
3. Hospitalization benefit 2,476,000.00
4. Meal allowance
(P600/month/employee) 4,456,800.00
5. Hazard pay (P200/month for
198 entitled employees) 8,430,780.00
6. Medicine Allowance
(P1,000/month/employee) 7,428,000.00 20,407,000.00
7. SSS (P910.00 employers
share per employee) 6,759,480.00
8. Pag-Ibig (2% of the basic pay) 742,800.00

9. Phil Health (P125.00/employee) 928,500.00

Total
P28,837,780.00
=============
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 2001-2002. 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 2000 2001
Income from
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 28,837,780.00
Balance

P120,043,898.00
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.
x x x x
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 non-academic
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 non-stock, 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 non-academic 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
non-teaching 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
plus 13th month pay
(P1,000 x 13 months x 619
non-academic personnel)
P 8,047,000.00
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.
P3,000.00 mid-year bonus
P1,857,000.0
0
2. 6 sacks of rice/employee
@ P1,000/sack 3,714,000.00
3. Hospitalization benefit 2,476,000.00
4. Meal allowance
(P600/month/employee)
4,456,800.00
5. Hazard pay (P200/month for
198 entitled employees)
8,430,780.00
6. Medicine Allowance
(P1,000/month/employee) 7,428,000.00 20,407,000.00
7. SSS (P910.00 employers
share per employee)
6,759,480.00

8. Pag-Ibig (2% of the basic pay) 742,800.00

9. Philhealth (P125.00/employee) 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 receive 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.1avvphi1
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 through 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 CA-G.R. SP No. 72965 are AFFIRMED.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice




Republic of the Philippines
SUPREME COURT
Manila
G.R. No. 181531 July 31, 2009
NATIONAL UNION OF WORKERS IN HOTELS, RESTAURANTS AND ALLIED INDUSTRIES-
MANILA PAVILION HOTEL CHAPTER, Petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT, BUREAU OF LABOR RELATIONS,
HOLIDAY INN MANILA PAVILION HOTEL LABOR UNION AND ACESITE PHILIPPINES
HOTEL CORPORATION, Respondents.
D E C I S I O N
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-and-
file employees of respondent Holiday Inn Manila Pavilion Hotel (the Hotel) with
the following results:
EMPLOYEES IN VOTERS LIST = 353
TOTAL VOTES CAST = 346
NUWHRAIN-MPHC = 151
HIMPHLU = 169
NO UNION = 1
SPOILED = 3
SEGREGATED = 22
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 election 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. 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;
2. 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 Med-Arbiters Order.
3. 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.
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, then
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-Calleja holds:
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
x x x x
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)
x x x x
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) the name of the employer or establishment;
(b) the description of the bargaining unit;
(c) a statement that none of the grounds for dismissal enumerated in the
succeeding paragraph exists;
(d) 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
(e) 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)
x x x x
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 ofreckoning 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 Med-
Arbiter, the date when the Order of the Secretary of Labor andEmployment,
whether affirming 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
Med-Arbiter 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 cut-off date would render inutile the remedy of appeal to the
SOLE.1avvph!1
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 are ANNULLED 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.
CONCHITA CARPIO MORALES
Associate Justice
WE CONCUR:

Republic of the Philippines
SUPREME COURT
Manila
G.R. No. 177594 July 23, 2009
UNIVERSITY OF SAN AGUSTIN, INC. Petitioners,
vs.
UNIVERSITY OF SAN AGUSTIN EMPLOYEES UNION- FFW, Respondent.
D E C I S I O N
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
x x x x
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
x x x x
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.1avvphi1
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 benefits which 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)1avvphi1
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 non-
teaching 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.
CONCHITA CARPIO MORALES
Associate Justice
WE CONCUR:


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 165407 June 5, 2009
HERMINIGILDO INGUILLO and ZENAIDA BERGANTE, Petitioners,
vs.
FIRST PHILIPPINE SCALES, Inc. and/or AMPARO POLICARPIO,
Manager, Respondents.
D E C I S I O N
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
entitledRATIPIKASYON 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 ofP90,000.00
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 ofP13,032.18. 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.1avvphi1
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........... 839.00
Total 23,329.00
Zenaida Bergante
Separation pay................. P43,225.00
Legal Holiday Pay........... 839.00
Total 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" was 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 counter-offer 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 dated September 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.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 168716 April 16, 2009
HFS PHILIPPINES, INC., RUBEN T. DEL ROSARIO and IUM SHIPMANAGEMENT
AS, Petitioners,
vs.
RONALDO R. PILAR, Respondent.
D E C I S I O N
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 : 9 months
Position : Electrician
Basic monthly salary : US $981 per month
Hours of work : 44 hours per week
Overtime : US $646 per month
Vacation leave with pay : 8 days per month
Point of hire : 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 was suffering "cholecystolithiasis, mild fatty liver and chronic
gastritis."
12
Thus, Dr. Veneracion declared respondent unfit to work.
13

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 signing-off, 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:
x x x x x x x x x
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)
x x x x x x x x x
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
Inasmuch as
respondent was a registered member of the AMOSUP, the present controversy
should 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.
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 sick-pay 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) the seafarer must suffer an injury;
(b) 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
1avvphi1
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 request for the purpose of
claiming disability benefits.
26

There was clearly a discrepancy between the certification of the company-
designated 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 are AFFIRMED.
Costs against petitioners.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 169254 August 23, 2012
DE LA SALLE UNIVERSITY, Petitioner,
vs.
DE LA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEA-
NAFTEU), Respondent.
LEONARDO-DE CASTRO,
*

PERLAS-BERNABE,
**

D E C I S I O N
LEONARDO-DE CASTRO, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the March 4, 2005 Decision
1
and August 5, 2005 Resolution
2
of
the Court of Appeals in CA-G.R. SP No. 82472, entitled De La Salle University
versus the Honorable Secretary of Labor and De La Salle University Employees
Association(DLSUEA-NAFTEU), which affirmed the November 17, 2003
Decision
3
and January 20, 2004 Order
4
of the Secretary of Labor in OS-AJ-0033-
2003 (NCMB-NCR-NS-08-246-03). These decisions and resolutions consistently
found petitioner guilty of unfair labor practice for failure to bargain collectively
with respondent.
This petition involves one of the three notices of strike filed by respondent De La
Salle University Employees Association (DLSUEANAFTEU) against petitioner De La
Salle University due to its refusal to bargain collectively with it in light of the intra-
union dispute between respondents two opposing factions. The following
narration of facts will first discuss the circumstances surrounding the said intra-
union conflict between the rival factions of respondent union and, thereafter,
recite the cases relating to the aforementioned conflict, from the complaint for
unfair labor practice to the subsequent notices of strike, and to the assumption
of jurisdiction by the Secretary of Labor.
Petition for Election of Union
Officers
On May 30, 2000, some of respondents members headed by Belen Aliazas (the
Aliazas faction) filed a petition for the election of union officers in the Bureau of
Labor Relations (BLR).
5
They alleged therein that there has been no election for
respondents officers since 1992 in supposed violation of the respondent unions
constitution and by-laws which provided for an election of officers every three
years.
6
It would appear that respondents members repeatedly voted to
approve the hold-over of the previously elected officers led by Baylon R. Baez
(Baez faction) and to defer the elections to expedite the negotiations of the
economic terms covering the last two years of the 1995-2000 collective
bargaining agreement (CBA)
7
pursuant to Article 253-A of the Labor Code.
8

On March 19, 2001, BLR Regional Director Alex E. Maraan issued a Decision
ordering the conduct of an election of union officers to be presided by the Labor
Relations Division of the Department of Labor and Employment-National Capital
Region (DOLE-NCR).
9
He noted therein that the members of the Baez faction
were not elected by the general membership but were appointed by the
Executive Board to their positions since 1985.
10

The Baez faction appealed the said March 19, 2001 Decision of the BLR
Regional Director.
While the appeal was pending, the Aliazas faction filed a Very Urgent Motion for
Intervention in the BLR. They alleged therein that the Baez faction, in complete
disregard of the March 19, 2001 Decision, scheduled a "regular" election of
union officers without notice to or participation of the DOLE-NCR.
11

In an Order dated July 6, 2001, BLR Director IV Hans Leo J. Cacdac granted the
motion for intervention.
12
He held that the unilateral act of setting the date of
election on July 9, 2001 and the disqualification of the Aliazas faction by the
DLSUEA-COMELEC supported the intervening factions fear of biased elections.
13

Thereafter, in a Resolution dated May 23, 2002, BLR Director Cacdac dismissed
the appeal of the Baez faction. The salient portions thereof stated:
The exercise of a union members basic liberty to choose the union leadership is
guaranteed in Article X of [respondents] constitution and by-laws. Section 4
mandates the conduct of a regular election of officers on the first Saturday of
July and on the same date every three years thereafter.
In unequivocal terms, Article 241(c) of the Labor Code states that "[t]he
members shall directly elect their officers, including those of the national union
or federation, to which they or their union is affiliated, by secret ballot at intervals
of five (5) years."
[The Baez faction] admitted that no elections were conducted in 1992 and
1998, when the terms of office of the officers expired. This Office emphasizes that
even the decision to dispense with the elections and allow the hold-over officers
to continue should have been subjected to a secret ballot under Article 241(d)
which states:
The members shall determine by secret ballot, after due deliberation, any
question of major policy affecting the entire membership of the organization,
unless the nature of the organization or force majeure renders such secret ballot
impractical, in which case the board of directors of the organization may make
the decision in behalf of the general membership.
With the clear and open admission that no election transpired even after the
expiration of the union officers terms of office, the call for the conduct of
elections by the Regional Director was valid and should be
sustained.
14
(Emphases supplied.)
Subsequently, in a memorandum dated May 16, 2003, BLR Director Cacdac
stated that there was no void in the union leadership as the March 19, 2001
Decision of Regional Director Maraan did not automatically terminate the Baez
factions tenure in office. He explained therein that "[a]s duly-elected officers of
[respondent], 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 hold-over capacity,
until their successors shall have been elected and qualified."
15

On August 28, 2003, an election of union officers under the supervision of the
DOLE was conducted. The Baez faction emerged as the winner thereof.
16
The
Aliazas faction contested the election results.
On October 29, 2003, the Baez faction was formally proclaimed as the winner in
the August 28, 2003 election of union officers.
17

The Complaint for Unfair Labor
Practices and Three Notices of
Strike
On March 20, 2001, despite the brewing conflict between the Aliazas and Baez
factions, petitioner entered into a five-year CBA covering the period from June
1, 2000 to May 31, 2005.
18

On August 7, 2001, the Aliazas faction wrote a letter to petitioner requesting it to
place in escrow the union dues and other fees deducted from the salaries of
employees pending the resolution of the intra-union conflict. We quote the
pertinent portion of the letter here:
The [BLR], in its March 19, 2001 [decision], declared that the hold-over capacity
as president of Mr. Baylon Baez, as well as that of the other officers [of
respondent] has been extinguished. It was likewise stated in the [decision] that
"to further defer the holding of a local election is whimsical, capricious and is a
violation of the union members rights under Article 241 and is punishable by
expulsion."
This being so, we would like to request [petitioner] to please put on escrow all
union dues/agency fees and whatever money considerations deducted from
salaries of the concerned co-academic personnel until such time that an
election of union officials has been scheduled and subsequent elections has
been held. We fully understand that putting the collection on escrow means the
continuance of our monthly deductions but the same will not be remitted to
respondents funds.
19

Petitioner acceded to the request of the Aliazas faction and informed the Baez
faction of such fact in a letter dated August 16, 2001. Petitioner explained:
It is evident that the intra-union dispute between the incumbent set of officers of
your Union on one hand and a sizeable number of its members on the other
hand has reached serious levels. 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 [come] out and a declaration by the DOLE of the validly elected officers
is made, a void in the Union leadership exists.
In 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 the 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 [petitioner] not only for your guidance
but also for the apparent reason that [it] does not want itself to be unnecessarily
involved in your intra-union dispute. This is the only way [petitioner] can maintain
neutrality on this matter of grave concern.
20
(Emphasis supplied.)
In view of the foregoing decision of petitioner, respondent filed a complaint for
unfair labor practice in the National Labor Relations Commission (NLRC) on
August 21, 2001.
21
It alleged that petitioner committed a violation of Article
248(a) and (g) of the Labor Code which provides:
Article 248. Unfair labor practices of employers. It shall be unlawful for an
employer to commit any of the following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to
self-organization.
x x x x
(d) To initiate, dominate, assist or otherwise interfere with the formation or
administrator of any labor organization, including the giving of financial or other
support to it or its organizers or supporters.
Respondent union asserted that the creation of escrow accounts was not an act
of neutrality as it was influenced by the Aliazas factionss letter and was an act
of interference with the internal affairs of the union. Thus, petitioners non-
remittance of union dues and discontinuance of normal relations with it
constituted unfair labor practice.
Petitioner, for its defense, denied the allegations of respondent and insisted that
its actions were motivated by good faith.
Meanwhile, on March 7, 2002, respondent filed a notice of strike in the National
Conciliation and Mediation Board (NCMB).
22

Shortly thereafter, or on July 12, 2002, Labor Arbiter Felipe P. Pati dismissed the
August 21, 2001 complaint for unfair labor practice against petitioner for lack of
merit in view of the May 23, 2002 decision of the BLR, affirming the need to
conduct an election of the unions officers.
23
The labor arbiter, in effect, upheld
the validity of petitioners view that there was a void in the leadership of
respondent.
The July 12, 2002 Decision of Labor Arbiter Pati, however, did not settle matters
between respondent and petitioner.
On March 15, 2003, respondent sent a letter to petitioner requesting for the
renegotiation of the economic terms for the fourth and fifth years of the then
current CBA, to wit:
This refers to the re-negotiation of the economic provisions for the [fourth and
fifth] year[s] of the 2000-2005 [CBA] that will commence sometime in March
2003.
In this regard, the [Baez faction] for and in behalf of [respondent] would like to
respectfully request your good office to provide us a copy of the latest Audited
Financial Statements of [petitioner,] including its budget performance report so
that [petitioner] and [respondent through] their respective authorized
representatives could facilitate the negotiations thereof.
We are furnishing [petitioner through] your good self a copy of [our] CBA
economic proposals for the [fourth and fifth] year[s] of the 2000-2005 CBA signed
by its authorized negotiating panel.
We also request [petitioner] to furnish us a copy of its counter proposals as well
as a list of its negotiating panel not later than ten (10) days from receipts of [our]
CBA proposals so that [we] and [petitioner] can now proceed with the initial
conference to discuss the ground rules that will govern the CBA negotiation.
24

In a letter dated March 20, 2003,
25
petitioner denied respondents request. It
stated therein:
Pursuant to the [d]ecisions of appropriate government authority, and consistent
with the position enunciated and conveyed to you by [petitioner] in my letter
dated August 16, 2001, there is a conclusion of fact that there is an absolute void
in the leadership of [respondent]. Accordingly, your representation as President
or officer of, as well as, that of all persons purporting to be officers and members
of the board of the said employees association [will] not [be] recognized.
Normal relations with the union cannot occur until the said void in the leadership
of [respondent] is appropriately filled. Affected by the temporary suspension of
normal relations with[respondent] is the renegotiation of the economic provisions
of the 2002-2005 CBA. No renegotiation can occur given the void in the
leadership of [respondent.]
26

As a consequence of the aforementioned letter, respondent filed a second
notice of strike on April 4, 2003.
27
Upon the petition filed by petitioner on April 11,
2003,
28
the Secretary of Labor assumed jurisdiction over the matter pursuant to
Article 263 of the Labor Code
29
as petitioner, an educational institution, was
considered as belonging to an industry indispensable to national interest and
docketed the case as OS-AJ-0015-2003.
30

On June 26, 2003, the Second Division of the NLRC affirmed the July 12, 2002
Decision of Labor Arbiter Pati.
31
Respondent moved for reconsideration but it was
denied by the NLRC in a Resolution dated September 30, 2003.
32

Meanwhile, on July 28, 2003, the Secretary of Labor issued a Decision
33
in OS-AJ-
0015-2003, finding petitioner guilty of violating Article 248(g) in relation to Article
252 of the Labor Code.
34
The salient portion thereof stated:
The University is guilty of refusal to bargain amounting to an unfair labor practice
under Article 248(g) of the Labor Code. Indeed there was a requirement on both
parties of the performance of the mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an
agreement. Undoubtedly, both [petitioner] and [respondent] entered into a
[CBA] on [March 20, 2001. The term of the said CBA commenced on [June 1,
2000 and with the expiration of the economic provisions on the third year,
[respondent] initiated negotiation by sending a letter dated March 15, 2003,
together with the CBA proposal. In reply to the letter of [respondent], [petitioner]
in its letter dated [March 20, 2003 refused.
Such an act constituted an intentional avoidance of a duty imposed by law.
There was nothing in the [March 19, 2001 and July 6, 2001 orders] of Director
Maraan and Cacdac which restrained or enjoined compliance by the parties
with their obligations under the CBA and under the law. The issue of union
leadership is distinct and separate from the duty to bargain.
In fact, BLR Director Cacdac clarified that there was no void in [respondents]
leadership. The pertinent decision dated March 19, 2001 x x x reads
35
:
We take this opportunity to clarify that there is no void in [respondents]
leadership. The [March 19, 2001 decision] x x x should not be construed as an
automatic termination of the incumbent officers[] tenure of office. As duly-
elected officers of [respondent], 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 hold-
over capacity, until their successors shall have been elected and qualified.
It is thus very clear. x x x. This official determination by the BLR Director [Cacdac]
removes whatever cloud of doubt on the authority of the incumbent to negotiate
for and in behalf of [respondent] as the bargaining agent of all the covered
employees. [Petitioner] is duty bound to negotiate collectively pursuant to Art.
252 of the Labor Code, as amended.
x x x x
On the question: [i]s [petitioner] guilty of unfair labor practice? This office
resolves the issue in the affirmative. Citing the case of the Divine Word University
of Tacloban v. Secretary of Labor, [petitioner] is guilty of unfair labor practice in
refusing to abide by its duty to bargain collectively. The refusal of [petitioner] to
bargain is tainted with bad faith amounting to unfair labor practice. There is no
other way to resolve the issue given the facts of the case and the law on the
matter.
WHEREFORE, premises considered, this Office finds [petitioner] guilty of refusal to
bargain collectively in violation of Article 252 in relation to Article 248 of the
Labor Code, as amended. Management is hereby directed to cease and desist
from refusing to bargain collectively. The parties are therefore directed to
commence negotiations effective immediately.
36
(Citations omitted.)
On August 1, 2003, respondent reiterated its demand on petitioner to bargain
collectively pursuant to the aforementioned Decision of the Secretary of Labor.
37

On August 4, 2003, petitioner sent a letter to respondent explaining that it cannot
act on the latters letter. The August 4, 2003 letter of petitioner stated:
[Petitioners] counsel is preparing a Motion for Reconsideration that would be
filed with the Office of the Secretary of Labor and Employment. Under the Rule,
[petitioner] still has the remedy of filing such Motion with the Office of the
Secretary before elevating the matter to higher authorities should it become
necessary.
We, therefore, regret to advise you that [petitioner] cannot accede to your
demand to immediately commence negotiations for the CBA with your group or
any other group of Union members, as the case may be, until such time that the
case before the Secretary is resolved with finality. We will, therefore, continue to
defer the CBA negotiations pending final resolution of the matter.
As regards your other demands, [petitioner] is of the position that the matters
subject of said demands are still pending before the various offices of the Labor
Arbiters and NLRC and, therefore, it cannot act on the same until such time that
said cases are likewise resolved with finality. It cannot be assumed that all these
cases that you filed have been rendered moot and academic by the
Secretarys Decision, otherwise you would, in effect, be admitting that you have
engaged in "forum shopping."
38

Failing to secure a reconsideration of the July 28, 2003 Decision of the Secretary
of Labor, petitioner assailed the same in the Court of Appeals via a petition
for certiorari docketed as CA-G.R. SP No. 81649.
On August 27, 2003, respondent filed the third notice of strike,
39
in the wake of
petitioners August 4, 2003 letter and citing among others petitioners alleged
violation of the CBA and continuing refusal to bargain in good faith. Petitioner,
on the other hand, filed a petition for assumption of jurisdiction for this third
notice of strike.
40
Again, the Secretary of Labor assumed jurisdiction. This case
was docketed as OS-AJ-0033-2003.
On November 17, 2003, the Secretary of Labor, in resolving OS-AJ-0033-2003,
cited the July 28, 2003 Decision in OS-AJ-0015-2003, and consequently declared
that petitioner committed an unfair labor practice. The salient portions of said
Decision stated:
Considering that this case, docketed as Case No. OS-AJ-0033-2003 is based on
the same set of facts with another case, involving the same parties numbered as
OS-AJ-0015-2003, and based on the same factual and legal circumstances, we
have to consistently hold that the [petitioner] has indeed failed to comply with its
obligation under the law. As a matter of fact, it admits in persisting to refuse
despite the fact that there is no more legal obstacle preventing the
commencement of the Collective Bargaining Negotiation between the
parties. Anent the so called void in the Union leadership, We declared that the
same does not constitute a valid ground to refuse to negotiate
because [petitioners] duty to bargain under the law is due and demandable
under the law by [respondent] as a whole and not by any faction within the
union.
x x x x
x x x Events have lately turned out in favor of [respondent], thereby obliterating
any further justification on the part of [petitioner] not to bargain. On October 29,
2003, the new Regional Director of DOLENCR, Ciriaco E. Lagunzad III, issued a
resolution declaring the Baez group as the duly elected officers of the Union. x
x x.
x x x x
The above election results were the outcome of a duly-held union election,
supervised by the Departments Regional Office. This was the election ordered in
the [July 6, 2001 and March 19, 2001 orders of the BLR]. This was also the same
election invoked by [petitioners] in trying to justify it continuing refusal to
bargain.
The [members of the Baez faction have] reportedly taken their oath of office
and have qualified. [Petitioner] is now under estoppel from recognizing them,
considering that it committed in writing to recognize and commence bargaining
once a set of duly elected officers [is] proclaimed after an election duly
conducted under the supervision of the Department.
x x x x
Not only has [petitioner] refused to negotiate with [respondent], it has unduly
withheld the money belonging to the bargaining agent. Both these acts are
illegal and are tantamount to Unfair Labor Practice under Article 248 in relation
to Article 252 of the Labor Code x x x.
ACCORDINGLY, all the foregoing premises being duly considered, this Office
hereby declares that [petitioner] committed Unfair Labor Practice in violation of
[Article 248 in relation to Article 252 of the Labor Code x x x. [Petitioner] and its
duly authorized officers and personnel are therefore ordered to cease and desist
from committing said acts under pain of legal sanction.
[Petitioner] is therefore specifically directed to commence collective bargaining
negotiation with [respondents] without further delay and to immediately turn
over to the Baez group the unlawfully withheld union dues and agency fees
with legal interest corresponding to the period of the unlawful withholding. All
these specific directives should be done within ten (10) days from receipt of this
Decision and with sufficient proof of compliance herewith to be submitted
immediately thereafter.
41

In accordance with the terms of the aforementioned Decision, petitioner turned
over to respondent the collected union dues and agency fees from employees
which were previously placed in escrow amounting to P441,924.99.
42

Nonetheless, petitioner moved for the reconsideration of the November 17, 2003
Decision of the Secretary of Labor but it was denied in an Order dated January
20, 2004.
Aggrieved, petitioner filed a petition for certiorari under Rule 65 of the Rules of
Court with the Court of Appeals. Petitioner alleged therein that the Secretary of
Labor committed grave abuse of discretion by holding that it (petitioner) was
liable for unfair labor practice. Taking a contrary stance to the findings of the
Secretary of Labor, petitioner stressed that it created the escrow accounts for the
benefit of the winning faction and undertook temporary measures in light of the
March 19, 2001 and July 6, 2001 Orders of the BLR. Thus, it should not be
penalized for taking a hands-off stance in the intra-union controversy between
the Aliazas and Baez factions.
In a Decision dated March 4, 2005, the Court of Appeals affirmed the November
17, 2003 Decision and January 20, 2004 Order of the Secretary of Labor and
dismissed the said petition. It held:
[Petitioner] finds reason to refuse to negotiate with [respondents incumbent
officers] because of the alleged "void in the union leadership" declared by the
Regional Director in his March 19, 2001 decision, [but] after the election of the
union officers held on August 28, 2003, continued refusal by the University to
negotiate amounts to unfair labor practice. The non-proclamation of the newly
elected union officers cannot be used as an excuse to fulfill the duty to bargain
collectively.
43
(Emphasis supplied.)
Petitioner moved for reconsideration but it was denied in a Resolution dated
August 5, 2005. The Court of Appeals noted that petitioners arguments were a
mere "rehash of the issues and discussions it presented in its petition and in the
relevant pleadings submitted x x x."
44

Meanwhile, the Court of Appeals dismissed CA-G.R. SP No. 81649 (which
assailed the July 28, 2003 Decision in OS-AJ-0015-2003), in a Decision dated
March 18, 2005.
45
The said decision likewise found that petitioner erred in
unilaterally suspending negotiations with respondent since the pendency of the
intra-union dispute was not a justifiable reason to do so.
Petitioner moved for reconsideration of the aforesaid decision in CAG. R. SP No.
81649 but it was denied in a Resolution dated June 7, 2005
46
due to lack of merit.
Aggrieved, petitioner elevated both the assailed decisions and resolutions in this
case and in CA-G.R. SP No. 81649, which was docketed as G.R. No. 168477, to
this Court. Petitioner, in both instances, essentially argued that it did not
maliciously evade its duty to bargain. On the contrary, it asserts that it merely
relied in good faith on the March 19, 2001 Decision of the BLR that there was a
void in respondents leadership.
47

This Court, through its Third Division, denied G.R. No. 168477 in a minute
resolution dated July 20, 2005 due to the petitions "failure x x x to show that a
reversible error had been committed by the appellate court."
48
The motion for
reconsideration was denied with finality on September 21,
2005
49
and entry of judgment was made on November 3, 2005.
50

Meanwhile, respondent was ordered to file a comment herein, and,
subsequently, this petition was given due course.
We note that both G.R. No. 168477 and this petition are offshoots of petitioners
purported temporary measures to preserve its neutrality with regard to the
perceived void in the union leadership. While these two cases arose out of
different notices to strike filed on April 3, 2003 and August 27, 2003, it is
undeniable that the facts cited and the arguments raised by petitioner are
almost identical. Inevitably, G.R. No. 168477 and this petition seek only one
relief, that is, to absolve petitioner from respondents charge of committing an
unfair labor practice, or specifically, a violation of Article 248(g) in relation to
Article 252 of the Labor Code.
For this reason, we are constrained to apply the law of the case doctrine in light
of the finality of our July 20, 2005 and September 21, 2005 resolutions in G.R. No.
168477. In other words, our previous affirmance of the Court of Appeals finding
that petitioner erred in suspending collective bargaining negotiations with the
union and in placing the union funds in escrow considering that the intra-union
dispute between the Aliazas and Baez factions was not a justification therefor
is binding herein. Moreover, we note that entry of judgment in G.R. No. 168477
was made on November 3, 2005, and that put to an end to the litigation of said
issues once and for all.
51

The law of the case has been defined as the opinion delivered on a former
appeal. It means that whatever is once irrevocably established as the
controlling legal rule or decision between the same parties in the same case
continues to be the law of the case, whether correct on general principles or
not, so long as the facts on which such decision was predicated continue to be
the facts of the case before the court.
52

In any event, upon our review of the records of this case, we find that the Court
of Appeals committed no reversible error in its assailed Decision dated March 4,
2005 and Resolution dated August 5, 2005. Petitioners reliance on the July 12,
2002 Decision of Labor Arbiter Pati, and the NLRCs affirmance thereof, is
misplaced. The unfair labor practice complaint dismissed by Labor Arbiter Pati
questioned petitioners actions immediately after the March 19, 2001 Decision of
BLR Regional Director Maraan, finding that "the reason for the hold-over [of the
previously elected union officers] is already extinguished." The present
controversy involves petitioners actions subsequent to (1) the clarification of
said March 19, 2001 Maraan Decision by BLR Director Cacdac who opined in a
May 16, 2003 memorandum that the then incumbent union officers (i.e., the
Baez faction) continued to hold office until their successors have been elected
and qualified, and (2) the July 28, 2003 Decision of the Secretary of Labor in OS-
AJ-0015-2003 ruling that the very same intra-union dispute (subject of several
notices of strike) is insufficient ground for the petitioner to suspend CBA
negotiations with respondent union. We take notice, too, that the aforesaid
Decision of Labor Arbiter Pati has since been set aside by the Court of Appeals
and such reversal was upheld by this Courts Second Division in its Decision
dated April 7, 2009 in G.R. No. 177283, wherein petitioner was found liable for
unfair labor practice.
53

Neither can petitioner seek refuge in its defense that as early as November 2003
it had already released the escrowed union dues to respondent and normalized
relations with the latter. The fact remains that from its receipt of the July 28, 2003
Decision of the Secretary of Labor in OS-AJ-0015-2003 until its receipt of the
November 17, 2003 Decision of the Secretary of Labor in OS-AJ-0033-2003,
petitioner failed in its duty to collectively bargain with respondent union without
valid reason. At most, such subsequent acts of compliance with the issuances in
OS-AJ-0015-2003 and OS-AJ-0033-2003 merely rendered moot and academic
the Secretary of Labors directives for petitioner to commence collective
bargaining negotiations within the period provided.
To conclude, we hold that the findings of fact of the Secretary of Labor and the
Court of Appeals, as well as the conclusions derived therefrom, were amply
supported by evidence on record. Thus, in line with jurisprudence that such
findings are binding on this Court, we see no reason to disturb the same.
54

WHEREFORE, the petition is DENIED.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 162324 February 4, 2009
RFM CORPORATION-FLOUR DIVISION and SFI FEEDS DIVISION, Petitioner,
vs.
KASAPIAN NG MANGGA-GAWANG PINAGKAISA-RFM (KAMPI-NAFLU-KMU) and
SANDIGAN AT UGNAYAN NG MANGGAGAWANG PINAGKAISA-SFI (SUMAPI-
NAFLU-KMU) Respondents.
D E C I S I O N
CARPIO MORALES, J.:
Petitioner RFM Corporation (RFM) is a domestic corporation engaged in flour-
milling 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
(KAMPI-NAFLU-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) Black Saturday
b) November 1
c) 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.1avvphi1
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)1avvphi1.zw+
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.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 145561 June 15, 2005
HONDA PHILS., INC., petitioner,
vs.
SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA, respondent.
D E C I S I O N
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 13th month pay,
14th month pay and the financial assistance would be based on one 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 13th
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 13
th
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 13
th
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 allremunerations 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
13
th
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 13
th
month pay before the instant case. Honda did not adduce
evidence to show that the 13
th
month, 14
th
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 13
th
month, 14
th
month and financial assistance pay.
22

The case of Davao Fruits Corporation v. Associated Labor Unions, et
al.
23
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 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 13
th
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.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 145561 June 15, 2005
HONDA PHILS., INC., petitioner,
vs.
SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA, respondent.
D E C I S I O N
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 13th month pay,
14th month pay and the financial assistance would be based on one 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 13th
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 13
th
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 13
th
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 allremunerations 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
13
th
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 13
th
month pay before the instant case. Honda did not adduce
evidence to show that the 13
th
month, 14
th
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 13
th
month, 14
th
month and financial assistance pay.
22

The case of Davao Fruits Corporation v. Associated Labor Unions, et
al.
23
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 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 13
th
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.