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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 152494 September 22, 2004
MARIANO ONG, doing business under the name and style
MILESTONE METAL MANUFACTURING,petitioner,
vs.
THE COURT OF APPEALS, CONRADO DABAC, BERNABE
TAYACTAC, MANUEL ABEJUELLA, LOLITO ABELONG,
RONNIE HERRERO, APOLLO PAMIAS, JAIME ONGUTAN,
NOEL ATENDIDO, CARLOS TABBAL, JOEL ATENDIDO,
BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO
ATENDIDO, JR., LODULADO FAA and JAIME
LOZADA, respondents.
D E C I S I O N
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari assailing the
decision
1
of the Court of Appeals in CA-G.R. SP No. 62129,
dated October 10, 2001, which dismissed the petition for
certiorari for lack of merit, as well as the resolution,
2
dated
March 7, 2002, denying the motion for reconsideration.
Petitioner is the sole proprietor of Milestone Metal
Manufacturing (Milestone), which manufactures, among
others, wearing apparels, belts, and umbrellas.
3
Sometime
in May 1998, the business suffered very low sales and
productivity because of the economic crisis in the country.
Hence, it adopted a rotation scheme by reducing the
workdays of its employees to three days a week or less for
an indefinite period.
4

On separate dates, the 15 respondents filed before the
National Labor Relations Commission (NLRC) complaints
for illegal dismissal, underpayment of wages, non-payment
of overtime pay, holiday pay, service incentive leave pay,
13th month pay, damages, and attorneys fees against
petitioner. These were consolidated and assigned to Labor
Arbiter Manuel Manasala.
Petitioner claimed that 9 of the 15 respondents were not
employees of Milestone but of Protone Industrial
Corporation which, however, stopped its operation due to
business losses. Further, he claims that respondents
Manuel Abuela, Lolita Abelong, Ronnie Herrero, Carlos
Tabbal, Conrado Dabac, and Lodualdo Faa were not
dismissed from employment; rather, they refused to work
after the rotation scheme was adopted. Anent their
monetary claims, petitioner presented documents
showing that he paid respondents minimum wage, 13th
month pay, holiday pay, and contributions to the SSS,
Medicare, and Pag-Ibig Funds.
5

On November 25, 1999, the Labor Arbiter rendered a
decision awarding to the respondents the aggregate
amount of P1,111,200.40 representing their wage
differential, holiday pay, service incentive leave pay and
13th month pay, plus 10% thereof as attorneys fees.
Further, petitioner was ordered to pay the respondents
separation pay equivalent to month salary for every year
of service due to the indefiniteness of the rotation scheme
and strained relations caused by the filing of the
complaints.
6

Petitioner filed with the NLRC a notice of appeal with a
memorandum of appeal and paid the docket fees therefor.
However, instead of posting the required cash or surety
bond, he filed a motion to reduce the appeal bond. The
NLRC, in a resolution dated April 28, 2000, denied the
motion to reduce bond and dismissed the appeal for
failure to post cash or surety bond within the
reglementary period.
7
Petitioners motion for
reconsideration was likewise denied.
8

Petitioner filed a petition for certiorari with the Court of
Appeals alleging that the NLRC acted with grave abuse of
discretion in dismissing the appeal for non-perfection of
appeal although a motion to reduce appeal bond was
seasonably filed. However, the petition was dismissed and
thereafter the motion for reconsideration was likewise
dismissed for lack of merit.
9

Hence, this petition for review on the following
assignment of errors:
I.
PUBLIC RESPONDENT COURT OF APPEALS
COMMITTED SERIOUS ERROR AND GRAVE ABUSE
OF DISCRETION IN AFFIRMING THE DECISION OF
THE NLRC DISMISSING THE APPEAL OF
PETITIONERS (sic) FOR NON-PERFECTION WHEN A
MOTION TO REDUCE APPEAL BOND WAS
SEASONABLY FILED WHICH IS ALLOWED BY THE
RULES OF PROCEDURE OF THE NLRC.
II.
PUBLIC RESPONDENT COURT OF APPEALS
COMMITTED SERIOUS ERROR AND GRAVE ABUSE
OF DISCRETION IN AFFIRMING THE DISMISSAL BY
NLRC OF PETITIONERS APPEAL AND IN EFFECT
UPHOLDING THE ERRONEOUS DECISION OF THE
LABOR ARBITER AWARDING SEPARATION PAY TO
PRIVATE RESPONDENTS DESPITE THE FINDING
THAT THERE WAS NO ILLEGAL DISMISSAL MADE
BY MILESTONE.
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III.
PUBLIC RESPONDENT COURT OF APPEALS
COMMITTED SERIOUS ERROR IN AFFIRMING THE
NLRCS DISMISSAL OF PETITIONERS APPEAL AND
IN EFFECT UPHOLDING THE ERRONEOUS DECISION
OF THE LABOR ARBITER THAT PETITIONER
MILESTONE HAS VIOLATED THE MINIMUM WAGE
LAW AND THAT PRIVATE RESPONDENTS WERE
UNDERPAID.
IV.
PUBLIC RESPONDENT COURT OF APPEALS
COMMITTED SERIOUS ERROR IN AFFIRMING THE
NLRCS DISMISSAL OF PETITIONERS APPEAL AND
IN EFFECT UPHOLDING THE ERRONEOUS DECISION
OF THE LABOR ARBITER THAT PETITIONER
MILESTONE HAS NOT PAID PRIVATE
RESPONDENTS THEIR SERVICE INCENTIVE LEAVE
PAY, 13th MONTH PAY, AND HOLIDAY PAY.
V.
PUBLIC RESPONDENT COURT OF APPEALS
COMMITTED SERIOUS ERROR IN AFFIRMING THE
NLRCS DISMISSAL OF PETITIONERS APPEAL AND
IN EFFECT UPHOLDING THE ERRONEOUS DECISION
OF THE LABOR ARBITER THAT THE EVIDENCE
SUBMITTED BY PRIVATE RESPONDENTS IN
SUPPORT OF THEIR CLAIMS ARE NOT SELF-
SERVING, IRRELEVANT AND IMMATERIAL TO THE
FACTS AND LAW IN ISSUE IN THIS CASE.
10

The petition lacks merit.
Time and again it has been held that the right to appeal is
not a natural right or a part of due process, it is merely a
statutory privilege, and may be exercised only in the
manner and in accordance with the provisions of law. The
party who seeks to avail of the same must comply with the
requirements of the rules. Failing to do so, the right to
appeal is lost.
11

Article 223 of the Labor Code, as amended, sets forth the
rules on appeal from the Labor Arbiters monetary award:
ART. 223. Appeal. Decisions, awards, or orders of
the Labor Arbiter are final and executory unless
appealed to the Commission by any or both
parties within ten (10) calendar days from receipt
of such decisions, awards, or orders. x x x.
x x x x x x x x x
In case of a judgment involving a monetary award,
an appeal by the employer may be
perfected onlyupon the posting of a cash or
surety bond issued by a reputable bonding
company duly accredited by the Commission in
the amount equivalent to the monetary award in
the judgment appealed from. (Emphasis ours)
The pertinent provisions of Rule VI of the New Rules of
Procedure of the NLRC,
12
which were in effect when
petitioner filed his appeal, provide:
Section 1. Periods of Appeal. Decisions, awards
or orders of the Labor Arbiter and the POEA
Administrator shall be final and executory unless
appealed to the Commission by any or both
parties within ten (10) calendar days from receipt
of such decisions, awards or orders of the Labor
Arbiter x x x.
x x x x x x x x x
Section 3. Requisites for Perfection of Appeal. (a)
The appeal shall be filed within the reglementary
period as provided in Section 1 of this Rule; shall
be under oath with proof of payment of the
required appeal fee and the posting of a cash or
surety bond as provided in Section 5 of this Rule;
shall be accompanied by a memorandum of
appeal which shall state the grounds relied upon
and the arguments in support thereof; the relief
prayed for; and a statement of the date when the
appellant received the appealed decision, order or
award and proof of service on the other party of
such appeal.
A mere notice of appeal without complying with
the other requisite aforestated shall not stop the
running of the period for perfecting an appeal.
x x x x x x x x x
Section 6. Bond. In case the decision of the Labor
Arbiter, the Regional Director or his duly
authorized Hearing Officer involves a monetary
award, an appeal by the employer shall be
perfected only upon the posting of a cash or
surety bond, which shall be in effect until final
disposition of the case, issued by a reputable
bonding company duly accredited by the
Commission or the Supreme Court in an amount
equivalent to the monetary award, exclusive of
damages and attorneys fees.
The employer, his counsel, as well as the bonding
company, shall submit a joint declaration under oath
attesting that the surety bond posted is genuine.
The Commission may, in justifiable cases and upon
Motion of the Appellant, reduce the amount of
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the bond. The filing of the motion to reduce bond
shall not stop the running of the period to perfect
appeal. (Emphasis ours)
In the case at bar, petitioner received the decision of the
Labor Arbiter on January 6, 2000. He filed his notice of
appeal with memorandum of appeal and paid the
corresponding appeal fees on January 17, 2000, the last
day of filing the appeal. However, in lieu of the required
cash or surety bond, he filed a motion to reduce bond
alleging that the amount of P1,427,802,04 as bond is
"unjustified and prohibitive" and prayed that the same be
reduced to a "reasonable level." The NLRC denied the
motion and consequently dismissed the appeal for non-
perfection. Petitioner now contends that he was deprived
of the chance to post bond because the NLRC took 102
days to decide his motion.
Petitioners argument is unavailing.
While, Section 6, Rule VI of the NLRCs New Rules of
Procedure allows the Commission to reduce the amount of
the bond, the exercise of the authority is not a matter of
right on the part of the movant but lies within the sound
discretion of the NLRC upon showing of meritorious
grounds.
13
Petitioners motion reads:
1. The appeal bond which respondents-appellants
will post in this case is P1,427,802.04. They are
precisely questioning this amount as being
unjustified and prohibitive under the premises.
2. The amount of this appeal bond must be
reduced to a reasonable level by this Honorable
Office.
WHEREFORE, in view thereof, it is respectfully
prayed of this Honorable Office that the appeal
bond of P1,427,802.04 be reduced.
14

After careful scrutiny of the motion to reduce appeal
bond, we agree with the Court of Appeals that the NLRC
did not act with grave abuse of discretion when it denied
petitioners motion for the same failed to either elucidate
why the amount of the bond was "unjustified and
prohibitive" or to indicate what would be a "reasonable
level."
15

In Calabash Garments, Inc. v. NLRC,
16
it was held that "a
substantial monetary award, even if it runs into millions,
does not necessarily give the employer-appellant a
"meritorious case" and does not automatically warrant a
reduction of the appeal bond."
Even granting arguendo that petitioner has meritorious
grounds to reduce the appeal bond, the result would have
been the same since he failed to post cash or surety bond
within the prescribed period.
The above-cited provisions explicitly provide that an
appeal from the Labor Arbiter to the NLRC must be
perfected within ten calendar days from receipt of such
decisions, awards or orders of the Labor Arbiter. In a
judgment involving a monetary award, the appeal shall be
perfected only upon (1) proof of payment of the required
appeal fee; (2) posting of a cash or surety bond issued by a
reputable bonding company; and (3) filing of a
memorandum of appeal. A mere notice of appeal without
complying with the other requisites mentioned shall not
stop the running of the period for perfection of
appeal.
17
The posting of cash or surety bond is not only
mandatory but jurisdictional as well, and non-compliance
therewith is fatal and has the effect of rendering the
judgment final and executory.
18
This requirement is
intended to discourage employers from using the appeal
to delay, or even evade, their obligation to satisfy their
employees just and lawful claims.
19

The intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by
the employer is underscored by the provision that an
appeal by the employer may be perfected only upon the
posting of a cash or surety bond. The word "only" makes it
perfectly clear that the lawmakers intended the posting of
a cash or surety bond by the employer to be the exclusive
means by which an employers appeal may be perfected.
20

The fact that the NLRC took 102 days to resolve the
motion will not help petitioners case. The NLRC Rules
clearly provide that "the filing of the motion to reduce
bond shall not stop the running of the period to perfect
appeal."Petitioner should have seasonably filed the appeal
bond within the ten-day reglementary period following the
receipt of the order, resolution or decision of the NLRC to
forestall the finality of such order, resolution or decision.
In the alternative, he should have paid only a moderate
and reasonable sum for the premium, as was held
inBiogenerics Marketing and Research Corporation v.
NLRC,
21
to wit:
x x x The mandatory filing of a bond for the
perfection of an appeal is evident from the
aforequoted provision that the appeal may be
perfected only upon the posting of cash or surety
bond. It is not an excuse that the over P2 million
award is too much for a small business enterprise,
like the petitioner company, to shoulder.The law
does not require its outright payment, but only
the posting of a bond to ensure that the award
will be eventually paid should the appeal fail.
What petitioners have to pay is a moderate and
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reasonable sum for the premium for such
bond. (Emphasis ours)
While the bond requirement on appeals involving
monetary awards has been relaxed in certain cases, this
can only be done where there was substantial compliance
of the Rules or where the appellants, at the very least,
exhibited willingness to pay by posting a partial
bond.
22
Petitioners reliance on the case of Rosewood
Processing, Inc. v. NLRC
23
is misplaced. Petitioner in the
said case substantially complied with the rules by posting a
partial surety bond of fifty thousand pesos issued by
Prudential Guarantee and Assurance, Inc. while his motion
to reduce appeal bond was pending before the NLRC.
In the case at bar, petitioner did not post a full or partial
appeal bond within the prescribed period, thus, no appeal
was perfected from the decision of the Labor Arbiter. For
this reason, the decision sought to be appealed to the
NLRC had become final and executory and therefore
immutable. Clearly, then, the NLRC has no authority to
entertain the appeal, much less to reverse the decision of
the Labor Arbiter. Any amendment or alteration made
which substantially affects the final and executory
judgment is null and void for lack of jurisdiction, including
the entire proceeding held for that purpose.
24

WHEREFORE, in view of the foregoing, the petition
is DENIED. The assailed decision of the Court of Appeals in
CA-G.R. SP No. 62129, dated October 10, 2001, dismissing
the petition for certiorari for lack of merit, isAFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., Quisumbing, Carpio, and Azcuna, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 130866 September 16, 1998
ST. MARTIN FUNERAL HOME, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
BIENVENIDO ARICAYOS, respondents.

REGALADO, J.:
The present petition for certiorari stemmed from a
complaint for illegal dismissal filed by herein private
respondent before the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. III, in
San Fernando, Pampanga. Private respondent alleges that
he started working as Operations Manager of petitioner St.
Martin Funeral Home on February 6, 1995. However, there
was no contract of employment executed between him
and petitioner nor was his name included in the semi-
monthly payroll. On January 22, 1996, he was dismissed
from his employment for allegedly misappropriating
P38,000.00 which was intended for payment by petitioner
of its value added tax (VAT) to the Bureau of Internal
Revenue (BIR).
1

Petitioner on the other hand claims that private
respondent was not its employee but only the uncle of
Amelita Malabed, the owner of petitioner St. Martin's
Funeral Home. Sometime in 1995, private respondent,
who was formerly working as an overseas contract worker,
asked for financial assistance from the mother of Amelita.
Since then, as an indication of gratitude, private
respondent voluntarily helped the mother of Amelita in
overseeing the business.
In January 1996, the mother of Amelita passed away, so
the latter then took over the management of the business.
She then discovered that there were arrears in the
payment of taxes and other government fees, although
the records purported to show that the same were already
paid. Amelita then made some changes in the business
operation and private respondent and his wife were no
longer allowed to participate in the management thereof.
As a consequence, the latter filed a complaint charging
that petitioner had illegally terminated his employment.
2

Based on the position papers of the parties, the labor
arbiter rendered a decision in favor of petitioner on
October 25, 1996 declaring that no employer-employee
relationship existed between the parties and, therefore,
his office had no jurisdiction over the case.
3

Not satisfied with the said decision, private respondent
appealed to the NLRC contending that the labor arbiter
erred (1) in not giving credence to the evidence submitted
by him; (2) in holding that he worked as a "volunteer" and
not as an employee of St. Martin Funeral Home from
February 6, 1995 to January 23, 1996, or a period of about
one year; and (3) in ruling that there was no employer-
employee relationship between him and petitioner.
4

On June 13, 1997, the NLRC rendered a resolution setting
aside the questioned decision and remanding the case to
the labor arbiter for immediate appropriate
proceedings.
5
Petitioner then filed a motion for
reconsideration which was denied by the NLRC in its
resolution dated August 18, 1997 for lack of merit,
6
hence
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the present petition alleging that the NLRC committed
grave abuse of discretion.
7

Before proceeding further into the merits of the case at
bar, the Court feels that it is now exigent and opportune to
reexamine the functional validity and systemic
practicability of the mode of judicial review it has long
adopted and still follows with respect to decisions of the
NLRC. The increasing number of labor disputes that find
their way to this Court and the legislative changes
introduced over the years into the provisions of
Presidential Decree (P.D.) No. 442 (The Labor Code of the
Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The
Judiciary Reorganization Act of 1980) now stridently call
for and warrant a reassessment of that procedural aspect.
We prefatorily delve into the legal history of the NLRC. It
was first established in the Department of Labor by P.D.
No. 21 on October 14, 1972, and its decisions were
expressly declared to be appealable to the Secretary of
Labor and, ultimately, to the President of the Philippines.
On May 1, 1974, P.D. No. 442 enacted the Labor Code of
the Philippines, the same to take effect six months after its
promulgation.
8
Created and regulated therein is the
present NLRC which was attached to the Department of
Labor and Employment for program and policy
coordination only.
9
Initially, Article 302 (now, Article 223)
thereof also granted an aggrieved party the remedy of
appeal from the decision of the NLRC to the Secretary of
Labor, but P.D. No. 1391 subsequently amended said
provision and abolished such appeals. No appellate review
has since then been provided for.
Thus, to repeat, under the present state of the law, there
is no provision for appeals from the decision of the
NLRC.
10
The present Section 223, as last amended by
Section 12 of R.A. No. 6715, instead merely provides that
the Commission shall decide all cases within twenty days
from receipt of the answer of the appellee, and that such
decision shall be final and executory after ten calendar
days from receipt thereof by the parties.
When the issue was raised in an early case on the
argument that this Court has no jurisdiction to review the
decisions of the NLRC, and formerly of the Secretary of
Labor, since there is no legal provision for appellate review
thereof, the Court nevertheless rejected that thesis. It held
that there is an underlying power of the courts to
scrutinize the acts of such agencies on questions of law
and jurisdiction even though no right of review is given by
statute; that the purpose of judicial review is to keep the
administrative agency within its jurisdiction and protect
the substantial rights of the parties; and that it is that part
of the checks and balances which restricts the separation
of powers and forestalls arbitrary and unjust
adjudications.
11

Pursuant to such ruling, and as sanctioned by subsequent
decisions of this Court, the remedy of the aggrieved party
is to timely file a motion for reconsideration as a
precondition for any further or subsequent remedy,
12
and
then seasonably avail of the special civil action
of certiorari under Rule 65,
13
for which said Rule has now
fixed the reglementary period of sixty days from notice of
the decision. Curiously, although the 10-day period for
finality of the decision of the NLRC may already have
lapsed as contemplated in Section 223 of the Labor Code,
it has been held that this Court may still take cognizance of
the petition for certiorari on jurisdictional and due process
considerations if filed within the reglementary period
under Rule 65.
14

Turning now to the matter of judicial review of NLRC
decisions, B.P. No. 129 originally provided as follows:
Sec. 9. Jurisdiction. The Intermediate
Appellate Court shall exercise:
(1) Original jurisdiction to issue writs
of mandamus,
prohibition, certiorari, habeas corpus,
and quo warranto, and auxiliary writs or
processes, whether or not in aid of its
appellate jurisdiction;
(2) Exclusive original jurisdiction over
actions for annulment of judgments of
Regional Trial Courts; and
(3) Exclusive appellate jurisdiction over all
final judgments, decisions, resolutions,
orders, or awards of Regional Trial Courts
and quasi-judicial agencies,
instrumentalities, boards, or commissions,
except those falling within the appellate
jurisdiction of the Supreme Court in
accordance with the Constitution, the
provisions of this Act, and of subparagraph
(1) of the third paragraph and
subparagraph (4) of the fourth paragraph
of Section 17 of the Judiciary Act of 1948.
The Intermediate Appellate Court shall
have the power to try cases and conduct
hearings, receive evidence and perform
any and all acts necessary to resolve
factual issues raised in cases falling within
its original and appellate jurisdiction,
including the power to grant and conduct
new trials or further proceedings.
These provisions shall not apply to
decisions and interlocutory orders issued
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under the Labor Code of the Philippines
and by the Central Board of Assessment
Appeals.
15

Subsequently, and as it presently reads, this provision was
amended by R.A. No. 7902 effective March 18, 1995, to
wit:
Sec. 9. Jurisdiction. The Court of
Appeals shall exercise:
(1) Original jurisdiction to issue writs
of mandamus,
prohibition, certiorari, habeas corpus,
and quo warranto, and auxiliary writs or
processes, whether or not in aid of its
appellate jurisdiction;
(2) Exclusive original jurisdiction over
actions for annulment of judgments of
Regional Trial Courts; and
(3) Exclusive appellate jurisdiction over all
final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts
and quasi-judicial agencies,
instrumentalities, boards or commissions,
including the Securities and Exchange
Commission, the Social Security
Commission, the Employees
Compensation Commission and the Civil
Service Commission, except those falling
within the appellate jurisdiction of the
Supreme Court in accordance with the
Constitution, the Labor Code of the
Philippines under Presidential Decree No.
442, as amended, the provisions of this
Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the
fourth paragraph of Section 17 of the
Judiciary Act of 1948.
The Court of Appeals shall have the power
to try cases and conduct hearings, receive
evidence and perform any and all acts
necessary to resolve factual issues raised
in cases falling within its original and
appellate jurisdiction, including the power
to grant and conduct new trials or further
proceedings. Trials or hearings in the
Court of Appeals must be continuous and
must be completed within, three (3)
months, unless extended by the Chief
Justice.
It will readily be observed that, aside from the change in
the name of the lower appellate court,
16
the following
amendments of the original provisions of Section 9 of B.P.
No. 129 were effected by R.A. No. 7902, viz.:
1. The last paragraph which excluded its application to
the Labor Code of the Philippines and the Central Board of
Assessment Appeals was deleted and replaced by a new
paragraph granting the Court of Appeals limited powers to
conduct trials and hearings in cases within its jurisdiction.
2. The reference to the Labor Code in that last paragraph
was transposed to paragraph (3) of the section, such that
the original exclusionary clause therein now provides
"except those falling within the appellate jurisdiction of
the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of
this Act, and of subparagraph (1) of the third paragraph
and subparagraph (4) of the fourth paragraph of Section
17 of the Judiciary Act of 1948." (Emphasis supplied).
3. Contrarily, however, specifically added to and included
among the quasi-judicial agencies over which the Court of
Appeals shall have exclusive appellate jurisdiction are the
Securities and Exchange Commission, the Social Security
Commission, the Employees Compensation Commission
and the Civil Service Commission.
This, then, brings us to a somewhat perplexing impass,
both in point of purpose and terminology. As earlier
explained, our mode of judicial review over decisions of
the NLRC has for some time now been understood to be
by a petition for certiorari under Rule 65 of the Rules of
Court. This is, of course, a special original action limited to
the resolution of jurisdictional issues, that is, lack or excess
of jurisdiction and, in almost all cases that have been
brought to us, grave abuse of discretion amounting to lack
of jurisdiction.
It will, however, be noted that paragraph (3), Section 9 of
B.P. No. 129 now grants exclusive appellate jurisdiction to
the Court of Appeals over all final adjudications of the
Regional Trial Courts and the quasi-judicial agencies
generally or specifically referred to therein except, among
others, "those falling within the appellate jurisdiction of
the Supreme Court in accordance with . . . the Labor Code
of the Philippines under Presidential Decree No. 442, as
amended, . . . ." This would necessarily contradict what has
been ruled and said all along that appeal does not lie from
decisions of the NLRC.
17
Yet, under such excepting clause
literally construed, the appeal from the NLRC cannot be
brought to the Court of Appeals, but to this Court by
necessary implication.
The same exceptive clause further confuses the situation
by declaring that the Court of Appeals has no appellate
jurisdiction over decisions falling within the appellate
jurisdiction of the Supreme Court in accordance with the
Constitution, the provisions of B.P. No. 129, and those
Page 7 of 54

specified cases in Section 17 of the Judiciary Act of 1948.
These cases can, of course, be properly excluded from the
exclusive appellate jurisdiction of the Court of Appeals.
However, because of the aforementioned amendment by
transposition, also supposedly excluded are cases falling
within the appellate jurisdiction of the Supreme Court in
accordance with the Labor Code. This is illogical and
impracticable, and Congress could not have intended that
procedural gaffe, since there are no cases in the Labor
Code the decisions, resolutions, orders or awards wherein
are within the appellate jurisdiction of the Supreme Court
or of any other court for that matter.
A review of the legislative records on the antecedents of
R.A. No. 7902 persuades us that there may have been an
oversight in the course of the deliberations on the said Act
or an imprecision in the terminology used therein. In fine,
Congress did intend to provide for judicial review of the
adjudications of the NLRC in labor cases by the Supreme
Court, but there was an inaccuracy in the term used for
the intended mode of review. This conclusion which we
have reluctantly but prudently arrived at has been drawn
from the considerations extant in the records of Congress,
more particularly on Senate Bill No. 1495 and the
Reference Committee Report on S. No. 1495/H. No.
10452.
18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco
delivered his sponsorship speech
19
from which we
reproduce the following excerpts:
The Judiciary Reorganization Act, Mr.
President, Batas Pambansa Blg. 129,
reorganized the Court of Appeals and at
the same time expanded its jurisdiction
and powers. Among others, its appellate
jurisdiction was expanded to cover not
only final judgment of Regional Trial
Courts, but also all final judgment(s),
decisions, resolutions, orders or awards of
quasi-judicial agencies, instrumentalities,
boards and commissions, except those
falling within the appellate jurisdiction of
the Supreme Court in accordance with the
Constitution, the provisions of BP Blg. 129
and of subparagraph 1 of the third
paragraph and subparagraph 4 of Section
17 of the Judiciary Act of 1948.
Mr. President, the purpose of the law is to
ease the workload of the Supreme Court
by the transfer of some of its burden of
review of factual issues to the Court of
Appeals. However, whatever benefits that
can be derived from the expansion of the
appellate jurisdiction of the Court of
Appeals was cut short by the last
paragraph of Section 9 of Batas Pambansa
Blg. 129 which excludes from its coverage
the "decisions and interlocutory orders
issued under the Labor Code of the
Philippines and by the Central Board of
Assessment Appeals.
Among the highest number of cases that
are brought up to the Supreme Court
are labor cases. Hence, Senate Bill No.
1495 seeks to eliminate the exceptions
enumerated in Section 9 and, additionally,
extends the coverage of appellate review
of the Court of Appeals in the decision(s)
of the Securities and Exchange
Commission, the Social Security
Commission, and the Employees
Compensation Commission to reduce the
number of cases elevated to the Supreme
Court. (Emphases and corrections ours)
xxx xxx xxx
Senate Bill No. 1495 authored by our
distinguished Colleague from Laguna
provides the ideal situation of drastically
reducing the workload of the Supreme
Court without depriving the litigants of the
privilege of review by an appellate
tribunal.
In closing, allow me to quote the
observations of former Chief Justice
Teehankee in 1986 in the Annual Report of
the Supreme Court:
. . . Amendatory legislation
is suggested so as to
relieve the Supreme Court
of the burden of reviewing
these cases which present
no important issues
involved beyond the
particular fact and the
parties involved, so that
the Supreme Court may
wholly devote its time to
cases of public interest in
the discharge of its
mandated task as the
guardian of the
Constitution and the
guarantor of the people's
basic rights and additional
task expressly vested on it
now "to determine
Page 8 of 54

whether or not there has
been a grave abuse of
discretion amounting to
lack of jurisdiction on the
part of any branch or
instrumentality of the
Government.
We used to have 500,000 cases pending all
over the land, Mr. President. It has been
cut down to 300,000 cases some five years
ago. I understand we are now back to
400,000 cases. Unless we distribute the
work of the appellate courts, we shall
continue to mount and add to the number
of cases pending.
In view of the foregoing, Mr. President,
and by virtue of all the reasons we have
submitted, the Committee on Justice and
Human Rights requests the support and
collegial approval of our Chamber.
xxx xxx xxx
Surprisingly, however, in a subsequent session, the
following Committee Amendment was introduced by the
said sponsor and the following proceedings transpired:
20

Senator Roco. On page 2, line 5, after the
line "Supreme Court in accordance with
the Constitution," add the phrase "THE
LABOR CODE OF THE PHILIPPINES UNDER
P.D. 442, AS AMENDED." So that it
becomes clear, Mr. President, that issues
arising from the Labor Code will still be
appealable to the Supreme Court.
The President. Is there any objection?
(Silence) Hearing none, the amendment is
approved.
Senator Roco. On the same page, we move
that lines 25 to 30 be deleted. This was
also discussed with our Colleagues in the
House of Representatives and as we
understand it, as approved in the House,
this was also deleted, Mr. President.
The President. Is there any objection?
(Silence) Hearing none, the amendment is
approved.
Senator Roco. There are no further
Committee amendments, Mr. President.
Senator Romulo. Mr. President, I move
that we close the period of Committee
amendments.
The President. Is there any objection?
(Silence) Hearing none, the amendment is
approved. (Emphasis supplied).
xxx xxx xxx
Thereafter, since there were no individual amendments,
Senate Bill No. 1495 was passed on second reading and
being a certified bill, its unanimous approval on third
reading followed.
21
The Conference Committee Report on
Senate Bill No. 1495 and House Bill No. 10452, having
theretofore been approved by the House of
Representatives, the same was likewise approved by the
Senate on February 20, 1995,
22
inclusive of the dubious
formulation on appeals to the Supreme Court earlier
discussed.
The Court is, therefore, of the considered opinion that
ever since appeals from the NLRC to the Supreme Court
were eliminated, the legislative intendment was that the
special civil action of certiorari was and still is the proper
vehicle for judicial review of decisions of the NLRC. The use
of the word "appeal" in relation thereto and in the
instances we have noted could have been a lapsus
plumae because appeals by certiorari and the original
action for certiorari are both modes of judicial review
addressed to the appellate courts. The important
distinction between them, however, and with which the
Court is particularly concerned here is that the special civil
action ofcertiorari is within the concurrent original
jurisdiction of this Court and the Court of
Appeals;
23
whereas to indulge in the assumption that
appeals by certiorari to the Supreme Court are allowed
would not subserve, but would subvert, the intention of
Congress as expressed in the sponsorship speech on
Senate Bill No. 1495.
Incidentally, it was noted by the sponsor therein that some
quarters were of the opinion that recourse from the NLRC
to the Court of Appeals as an initial step in the process of
judicial review would be circuitous and would prolong the
proceedings. On the contrary, as he commendably and
realistically emphasized, that procedure would be
advantageous to the aggrieved party on this reasoning:
On the other hand, Mr. President, to allow
these cases to be appealed to the Court of
Appeals would give litigants the advantage
to have all the evidence on record be
reexamined and reweighed after which
the findings of facts and conclusions of
said bodies are correspondingly affirmed,
modified or reversed.
Page 9 of 54

Under such guarantee, the Supreme Court
can then apply strictly the axiom that
factual findings of the Court of Appeals are
final and may not be reversed on appeal
to the Supreme Court. A perusal of the
records will reveal appeals which are
factual in nature and may, therefore, be
dismissed outright by minute
resolutions.
24

While we do not wish to intrude into the Congressional
sphere on the matter of the wisdom of a law, on this score
we add the further observations that there is a growing
number of labor cases being elevated to this Court which,
not being a trier of fact, has at times been constrained to
remand the case to the NLRC for resolution of unclear or
ambiguous factual findings; that the Court of Appeals is
procedurally equipped for that purpose, aside from the
increased number of its component divisions; and that
there is undeniably an imperative need for expeditious
action on labor cases as a major aspect of constitutional
protection to labor.
Therefore, all references in the amended Section 9 of B.P.
No. 129 to supposed appeals from the NLRC to the
Supreme Court are interpreted and hereby declared to
mean and refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should hence forth be
initially filed in the Court of Appeals in strict observance of
the doctrine on the hierarchy of courts as the appropriate
forum for the relief desired.
Apropos to this directive that resort to the higher courts
should be made in accordance with their hierarchical
order, this pronouncement in Santiago vs. Vasquez, et
al.
25
should be taken into account:
One final observation. We discern in the
proceedings in this case a propensity on
the part of petitioner, and, for that matter,
the same may be said of a number of
litigants who initiate recourses before us,
to disregard the hierarchy of courts in our
judicial system by seeking relief directly
from this Court despite the fact that the
same is available in the lower courts in the
exercise of their original or concurrent
jurisdiction, or is even mandated by law to
be sought therein. This practice must be
stopped, not only because of the
imposition upon the precious time of this
Court but also because of the inevitable
and resultant delay, intended or
otherwise, in the adjudication of the case
which often has to be remanded or
referred to the lower court as the proper
forum under the rules of procedure, or as
better equipped to resolve the issues since
this Court is not a trier of facts. We,
therefore, reiterate the judicial policy that
this Court will not entertain direct resort
to it unless the redress desired cannot be
obtained in the appropriate courts or
where exceptional and compelling
circumstances justify availment of a
remedy within and calling for the exercise
of our primary jurisdiction.
WHEREFORE, under the foregoing premises, the instant
petition for certiorari is hereby REMANDED, and all
pertinent records thereof ordered to be FORWARDED, to
the Court of Appeals for appropriate action and disposition
consistent with the views and ruling herein set forth,
without pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Romero, Bellosillo, Melo, Puno,
Vitug, Kapunan, Mendoza, Panganiban Martinez,
Quisumbing and Purisima, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 152550 June 8, 2005
BORJA ESTATE AND/OR THE HEIRS OF MANUEL AND
PAULA BORJA and ATTY. MILA LAUIGAN IN HER
CAPACITY AS THE ESTATE ADMINISTRATOR, petitioners,
vs.
SPOUSES ROTILLO BALLAD and ROSITA
BALLAD, respondents.
D E C I S I O N
TINGA, J.:
In this petition for review
1
under Rule 45 of the Rules of
Court, petitioners Borja Estate and/or the Heirs of Manuel
and Paula Borja and Atty. Mila Lauigan, in her capacity as
the estate administrator (the Borjas) assail
theResolution
2
of the Court of Appeals Thirteenth Division
denying their motion for reconsideration and the D E C I S I
O N
3
of the same division in CA-G.R. SP No. 60700, the
dispositive portion of which states:
WHEREFORE, foregoing considered, the assailed
Resolutions dated April 14, 2000 and May 31, 2000 are
herebyAFFIRMED in toto. The present petition is
hereby DISMISSED for lack of merit.
Page 10 of 54

SO ORDERED.
4

The above ruling of the Court of Appeals affirmed
the Resolution
5
of the National Labor Relations
Commission (NLRC), the decretal portion of which reads:
WHEREFORE, premises considered, respondents Motion
for Reduction of Bond is hereby DISMISSED for lack of
merit.
The instant Appeal is hereby DISMISSED for failure to post
a cash or surety bond within the reglementary period.
SO ORDERED.
6

The Borjass motion for reconsideration of the above-
quoted NLRC Resolution was likewise dismissed in
anotherResolution.
7

As the Borjass appeal was not given due course, the Labor
Arbiters D E C I S I O N
8
was in effect affirmed, the
dispositive portion of which states:
WHEREFORE, with all the foregoing considerations,
judgment is hereby rendered declaring the Spouses Rotillo
and Rosita Ballad as illegally and unjustly dismissed in a
whimsical and capricious manner which is oppressive to
labor and respondents are jointly and severally ordered to
reinstate complainants to their position as overseers
without loss of seniority rights with full backwages,
allowances and other benefits, computed as of the
promulgation of this decision, as follows:
1. P25,245.00 - Backwages, June to October
30, 1999
x 2 (P166 x 365 over 12 x 5
months)


P50,490.00
Backwages for both
complainants
2. P 5,0490.00 13th month pay x 3 years
P15,147.00
x 2


P30,294.00 - 13th month pay for both
complainants
3. P100,000.00 - Moral damages, for both
complainants
4. P50,000.00 Exemplary damages, for
both complainants


P230,784.00

5. P272,646.00 - Separation pay, in case
reinstatement is no longer
feasible(P5049 x 27 years x 2
for both complainants)
6. Money equivalent of 12 cavans of shelled corn
per harvest, transportations expenses,
allowances and other benefits being enjoyed
as overseers from the time these were
withheld from them until actual payment, to
be computed in the pre-execution hearing.
7. Plus one percent interest per month and ten
percent attorneys fees. All other claims are
hereby dismissed.
SO ORDERED.
9

The case arose out of the complaint filed by private
respondents Spouses Rotillo and Rosita Ballad (Ballad
spouses) against the Borjas for illegal dismissal, non
payment of 13th month pay, separation pay, incentive
pay, holiday and premiums pay plus differential pay, and
moral and exemplary damages with the Regional
Arbitration Branch No. II of the NLRC in Tuguegarao,
Cagayan, on 8 June 1999.
10

The Ballad spouses had been employed as overseers of the
Borja Estate by its owners, the spouses Manuel Borja and
Paula Borja, since 1972. Their appointment as such was
later made in writing per the certification of appointment
issued by Paula Borja.
11

The Borja Estate comprises around two hundred (200)
hectares of agricultural lands located in the towns of Iguig,
Amulung, Enrile, Solana and Baggao, Cagayan Province. It
includes two apartment buildings consisting of eleven
Page 11 of 54

doors for rent, both located at Caritan, Tuguegarao,
Cagayan.
12

As overseers, the Ballad spouses duties included the
collection of owners share of the harvest from the tenants
and the delivery of such share to the estate administrator,
as well as to account for it. They also collected monthly
rentals from the lessees of the apartment and tendered
the same to the administrator. They were tasked to
oversee the lands and buildings entrusted to them and
were instructed to report any untoward incident or
incidents affecting said properties to the administrator.
They were allegedly required to work all day and night
each week including Saturdays, Sundays and holidays.
13

For their compensation, the Ballad spouses received a
monthly salary of P1,000.00 for both of them, or P500.00
each. They were provided residential quarters plus food
and traveling allowances equivalent to twelve (12) cavans
of shelled corn every crop harvest.
14
In the year 1980, said
salary was increased to P2,500.00 for each of them by
Paula Borja when she came from abroad. Until the time
before their dismissal, the Ballad spouses received the
same amount.
15

The Ballad spouses further alleged that they were
appointed as the attorney-in-fact of the owners to
represent the latter in courts and/or government offices in
cases affecting the titling of the Borjas unregistered lands,
and to institute and prosecute recovery of possession
thereof, as well as in ejectment cases.
16

They narrated that when the spouses Manuel and Paula
Borja went to the United States of America, their children
Lumen, Leonora and Amelia succeeded to the ownership
and management of the Borja Estate. On 16 October 1986,
the Ballad spouses claimed that Amelia or Mely, then
residing in Rochester, New York, wrote then administrator
Mrs. Lim informing her that the heirs had extended the
services of the Ballad spouses and ordered Mrs. Lim to pay
the hospitalization expenses of Rotillo Ballad which
accrued to Ten Thousand Pesos (P10,000.00). It is also
alleged that Mely had instructed Mrs. Lim to cause the
registration of the Ballad spouses as Social Security System
(SSS) members so that in case any of the latter gets sick,
SSS will shoulder their medical expenses and not the
Borjas.
17

On 10 November 1996, according to the Ballad spouses,
when Francisco Borja, brother of the late Manuel Borja,
was appointed the new administrator, he issued
immediately a memorandum to all the tenants and lessees
of the Borja Estate to transact directly with him and to pay
their monthly rentals to him or to his overseers, the Ballad
spouses.
18

Upon his appointment, Francisco Borja allegedly promised
to give the Ballad spouses their food and traveling
allowances aforestated but not the twelve (12) cavans per
harvest which he reduced to two (2) cavans per harvest.
Francisco Borja also stopped giving the Ballad spouses
their allowances. For twenty-seven (27) years that the
Ballad spouses were in the employ of the Borjas they were
purportedly not paid holiday pay, overtime pay, incentive
leave pay, premiums and restday pay, 13th month pay,
aside from the underpayment of their basic salary.
19

In June 1999, the Ballad spouses alleged that Francisco
Borja unceremoniously dismissed them and caused this
dismissal to be broadcast over the radio, which caused the
former to suffer shock and physical and mental injuries
such as social humiliation, besmirched reputation,
wounded feelings, moral anxiety, health deterioration and
sleepless nights.
20

Thus, the filing of a case against petitioners before the
Labor Arbiter. The Borjas interposed the defense that
respondents had no cause of action against them because
the latter were not their employees. The Borjas insisted
that the Ballad spouses were allowed to reside within the
premises of the Borja Estate only as a gesture of gratitude
for Rosita Ballads assistance in the registration of a parcel
of land; and that they were merely utilized to do some
errands from time to time. As to the money claims, the
Borjas claimed the defense of prescription.
21

As aforestated, the Labor Arbiter ruled that the Ballad
spouses had been illegally dismissed, after concluding that
they had been employees of the Borjas.
22

Aggrieved by the decision, the Borjas filed their appeal on
26 November 1999 before the NLRC together with
aMotion for Reduction of Bond.
23

In a Resolution dated 14 April 2000, the NLRC dismissed
the petitioners Motion for Reduction of Bond.Petitioners
appeal was likewise dismissed in the same Resolution for
failure to post a cash or surety bond within the
reglementary period.
24
Petitioners Motion for
Reconsideration was also denied for lack of merit in
anotherResolution.
25

Petitioners elevated the case to the Court of Appeals by
way of a special civil action of certiorari. On 31 October
2001, the Court of Appeals affirmed the Resolutions of the
NLRC holding that the filing of a cash or surety bond issine
qua non to the perfection of appeal from the labor
monetarys award.
The Court of Appeals noted that the Borjas received a copy
of the Labor Arbiters D E C I S I O N
26
on 18 November
1999. They thereafter filed their Notice of
Appeal and Appeal on 26 November 1999. On even date,
Page 12 of 54

they also filed a Motion for Reduction of Bond. However,
no proof was shown that the Borjas were able to post the
required bond during the same period of time to appeal.
27

The Court of Appeals observed that petitioners were able
to post a bond only on 17 December 1999 in the amount
of Forty Thousand Pesos (P40,000.00) when the same
should have been done during the same period of appeal.
As this was not done and as no justifiable reason was given
for the late filing, the Court of Appeals ruled that the
decision of the Labor Arbiter had become final and
executory.
28

The Court of Appeals likewise relied on the Labor Arbiters
finding that the Ballad spouses were employees of the
petitioners.
29

Hence, the instant petition.
In this petition, petitioners in essence assert that the Court
of Appeals erred in agreeing with the NLRC that the
posting of a cash or surety bond during the period of time
to file an appeal is mandatory and the failure to do so
would have the effect of rendering the appealed decision
final and executory. Petitioners further insist that they
never hired the Ballad spouses as employees.
30

In a Resolution
31
dated 24 April 2002, the Court initially
resolved to deny the petition for failure of the petitioners
to show any reversible error in the decisions and
resolution of the Labor Arbiter, the NLRC and the Court of
Appeals.
However, the Court in a Resolution
32
dated 11 November
2002 decided to reinstate the petition after considering
petitioners arguments contained in their Motion for
Reconsideration,
33
in which the Borjas stressed that the
only issue sought to be resolved by their Petition is the
correct interpretation of the rule requiring the posting of a
bond for the perfection of an appeal. They implored the
Court to contrive a definitive ruling on the matter which in
their estimation has sowed confusion among practitioners
as well as to those exercising quasi-judicial and judicial
functions.
34

There is no merit in the petition.
The appeal bond is required under Article 223 of the Labor
Code which provides:
ART. 223. Appeal. - Decisions, awards or orders of the
Labor Arbiter are final and executory unless appealed to
the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or
orders. . . .
In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission, in
the amount equivalent to the monetary award in the
judgment appealed from.
. . . .
Rule VI of the New Rules of Procedure of the NLRC
implements this Article with its Sections 1, 3, 5, 6 and 7
providing pertinently as follows:
Section. 1. Periods of Appeal.- Decisions, awards, or orders
of the Labor Arbiter and the POEA Administrator shall be
final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from
receipt of such decisions, awards or orders of the Labor
Arbiter or of the Administrator, and in case of a decision of
the Regional Director or his duly authorized Hearing
Officer within five (5) calendar days from receipt of such
decisions, awards or orders . . .
Section 3. Requisites for Perfection of Appeal.(a) The
appeal shall be filed within the reglementary period as
provided in Sec. 1 of this Rule; shall be under oath with
proof of payment of the required appeal fee and the
posting of a cash or surety bond as provided in Sec. 5 of
this Rule; shall be accompanied by memorandum of
appeal which shall state the grounds relied upon and the
arguments in support thereof; the relief prayed for; and a
statement of the date when the appellant received the
appealed decision, order or award and proof of service on
the other party of such appeal.
A mere notice of appeal without complying with the other
requisite aforestated shall not stop the running of the
period for perfecting an appeal.
Section 5. Appeal Fee. The appellant shall pay an appeal
fee of One hundred (P100.00) pesos to the Regional
Arbitration Branch, Regional Office, or to the Philippine
Overseas Employment Administration and the official
receipt of such payment shall be attached to the records
of the case.
Section 6. Bond. In case the decision of the Labor
Arbiter, the Regional Director or his duly authorized
Hearing Officer involves a monetary award, an appeal by
the employer shall be perfected only upon the posting of a
cash or surety bond, which shall be in effect until final
disposition of the case, issued by a reputable bonding
company duly accredited by the Commission or the
Supreme Court in an amount equivalent to the monetary
award, exclusive of damages and attorneys fees.
. . . .
Page 13 of 54

The Commission may, in justifiable cases and upon Motion
of the Appellant, reduce the amount of the bond. The
filing of the motion to reduce bond shall not stop the
running of the period to perfect appeal.
Section 7. No extension of Period.- No motion or request
for extension of the period within which to perfect an
appeal shall be allowed.
Thus, it is clear from the foregoing that the appeal from
any decision, award or order of the Labor Arbiter to the
NLRC shall be made within ten (10) calendar days from
receipt of such decision, award or order, and must be
under oath, with proof of payment of the required appeal
fee accompanied by a memorandum of appeal. In case the
decision of the Labor Arbiter involves a monetary award,
the appeal is deemed perfected only upon the posting of a
cash or surety bond also within ten (10) calendar days
from receipt of such decision in an amount equivalent to
the monetary award.
35
1avvphi1
The intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by
the employer is underscored by the provision that an
appeal may be perfected "only upon the posting of a cash
or surety bond." The word "only" makes it perfectly clear
that the lawmakers intended the posting of a cash or
surety bond by the employer to be the exclusive means by
which an employers appeal may be considered
completed.
36
The law however does not require its outright
payment, but only the posting of a bond to ensure that the
award will be eventually paid should the appeal fail. What
petitioners have to pay is a moderate and reasonable sum
for the premium of such bond.
37

The word "may", on the other hand refers to the
perfection of an appeal as optional on the part of the
defeated party, but not to the posting of an appeal bond, if
he desires to appeal.
38

Evidently, the posting of a cash or surety bond is
mandatory. And the perfection of an appeal in the manner
and within the period prescribed by law is not only
mandatory but jurisdictional.
39
To extend the period of the
appeal is to delay the case, a circumstance which would
give the employer the chance to wear out the efforts and
meager resources of the worker to the point that the
latter is constrained to give up for less than what is due
him.
40
As ratiocinated in the case of Viron Garments Mftg.
v. NLRC:
41

The requirement that the employer post a cash or surety
bond to perfect its/his appeal is apparently intended to
assure the workers that if they prevail in the case, they will
receive the money judgment in their favor upon the
dismissal of the employers appeal. It was intended to
discourage employers from using an appeal to delay, or
even evade, their obligation to satisfy their employees
just and lawful claims.
42

In the case at bar, while the petitioners Appeal
Memorandum and Motion for Reduction of Bond, which
was annexed thereto, were both filed on time,
43
the
appeal was not perfected by reason of the late filing and
deficiency of the amount of the bond for the monetary
award with no explanation offered for such delay and
inadequacy.
As there was no appeal bond filed together with
the Appeal Memorandum within the ten (10)-day period
provided by law for the perfection of appeal, it follows
that no appeal from the decision of the Labor Arbiter had
been perfected.
44
Accordingly, the Decision of the Labor
Arbiter became final and executory upon the expiration of
the reglementary period.
While it is true that this Court has relaxed the application
of the rules on appeal in labor cases, it has only done so
where the failure to comply with the requirements for
perfection of appeal was justified or where there was
substantial compliance with the rules. Hence, the Supreme
Court has allowed tardy appeals in judicious
cases,e.g., where the presence of any justifying
circumstance recognized by law, such as fraud, accident,
mistake or excusable negligence, properly vested the
judge with discretion to approve or admit an appeal filed
out of time; where on equitable grounds, a belated appeal
was allowed as the questioned decision was served
directly upon petitioner instead of her counsel of record
who at the time was already dead;
45
where the counsel
relied on the footnote of the notice of the decision of the
labor arbiter that the aggrieved party may appeal . . .
within ten (10) working days; in order to prevent a
miscarriage of justice or unjust enrichment such as where
the tardy appeal is from a decision granting separation pay
which was already granted in an earlier final decision; or
where there are special circumstances in the case
combined with its legal merits or the amount and the issue
involved.
46

Here, no justifiable reason was put forth by the petitioners
for the non-filing of the required bond, or the late filing of
the defective bond for that matter as in fact the bond they
filed late on 17 December 1999 in the amount of Forty
Thousand Pesos (P40,000.00) was not even equivalent to
the reduced amount of bond they prayed for in
their Motion for Reduction of Bond.
47
The Court then is not
prepared to hold that the petitioners Motion for
Reduction of Bond was substantial compliance with the
Labor Code for failure to demonstrate willingness to abide
by their prayer in said Motion.
Page 14 of 54

In addition, no exceptional circumstances obtain in the
case at bar which would warrant the relaxation of the
bond requirement as a condition for perfecting the appeal.
It bears stressing that the bond is sine qua non to the
perfection of appeal from the labor arbiters monetary
award. The requirements for perfecting an appeal must be
strictly followed as they are considered indispensable
interdictions against needless delays and for orderly
discharge of judicial business. The failure of the petitioners
to comply with the requirements for perfection of appeal
had the effect of rendering the decision of the labor
arbiter final and executory and placing it beyond the
power of the NLRC to review or reverse it.1avvphi1 As a
losing party has the right to file an appeal within the
prescribed period, so also the winning party has the
correlative right to enjoy the finality of the resolution of
his/her case.
48

WHEREFORE, in view of the foregoing considerations, the
petition is DENIED for lack of merit. Costs against
petitioners.
SO ORDERED.
Austria-Martinez, (Acting Chairman), Callejo, Sr., and
Chico-Nazario, JJ., concur.
Puno, (Chairman), on official leave.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 87530 June 13, 1990
GERONIMO SADOL, petitioner,
vs.
PILIPINAS KAO, INC., REQUITO VEGA, BELEN GOMEZ,
ARTURO GOMEZ & NLRC SECOND DIVISION,respondents.
Oliver A. Luproso for petitioner.
Cayetano W. Paderanga for private respondent.

GANCAYCO, J.:
The issue posed in this case is whether or not a party who
failed to appeal from a decision of the labor arbiter to the
National Labor Relations Commission (NLRC) within the
ten (10) day reglementary period can still participate in a
separate appeal timely interposed by the adverse party by
filing a motion for reconsideration of a decision of the
NLRC on such appeal.
Petitioner was recruited as a laborer by private
respondents Requito Vega, Antonio Gomez and Belen
Gomez, who are the owners of Vega & Co., a private
recruitment agency, with assignment at respondent
Pilipinas Kao, Inc. (PKI for brevity), particularly at the Pit
Burning area. Sometime on April 16, 1984, he was
allegedly summarily dismissed. Hence, on July 24, 1986, he
filed a complaint for reinstatement and backwages with
Region X of the Department of Labor and Employment in
Cagayan de Oro City.
On November 13, 1986, the labor arbiter ordered all
parties to submit their position papers. Only petitioner
complied. On December 17, 1986, petitioner filed an
urgent motion that the failure of respondent to file their
position papers is a waiver and so judgment should be
rendered in favor of petitioner. Similar motions were filed
by petitioner on January 23, 1987 and May 15, 1987.
On June 26, 1987, the labor arbiter rendered a decision
ordering private respondents to jointly and solidarity pay
petitioner his separation pay computed at one month for
every year of service within the reglementary period.
Petitioner appealed to the NLRC. Said respondents also
appealed but it was filed out of time.
On August 26, 1988, the Second Division of the NLRC
promulgated a decision modifying the appealed decision in
that respondent PKI was ordered to reinstate petitioner to
his former position without loss of seniority rights and
other accrued benefits and with full backwages from the
time of dismissal up to his actual reinstatement, and in
case reinstatement is impossible, payment of full
backwages and separation pay of one (1) month salary for
every year of service. The appeal of respondent Pig was
dismissed for having been filed out of time.
The PKI allegedly received a copy of the decision of the
NLRC only on September 13, 1988. A motion for
reconsideration of said decision dated September 22, 1988
was filed by said respondent and a similar motion was filed
by Samahang Kabuhayan ng Barangay Luz Banzon (SKLB
for brevity) to which an opposition was filed by petitioner.
On September 30, 1988, a resolution was promulgated by
the same division of the NLRC, setting aside its decision
and dismissing the case for lack of merit. A motion for
reconsideration thereof filed by petitioner who besides
questioning its findings of facts raised the issue that said
respondent's appeal having been filed out of time its
motion for reconsideration of the decision should not have
been entertained as it raised issues for the first on appeal
which were not raised before the labor arbiter. This
motion was denied on November 27, 1988.
Page 15 of 54

Hence, the herein petition for certiorari wherein petitioner
recites the following assignment of errors:
I
THE HONORABLE COMMISSION, SECOND
DIVISION, SERIOUSLY ERRED IN FINDING
THAT RESPONDENTS REQUITO VEGA,
ARTURO GOMEZ AND BELEN GOMEZ IS A
LAWFUL INDEPENDENT LABOR
CONTRACTOR;
II
THE HONORABLE COMMISSION, SECOND
DIVISION, SERIOUSLY ERRED IN FINDING
IN ITS RESOLUTION THAT COMPLAINANT-
APPELLANT VOLUNTARILY ABANDONED
HIS JOB;
III
THE HONORABLE COMMISSION, SECOND
DIVISION, SERIOUSLY ERRED AND/OR
COMMITTED GRAVE ABUSE OF
DISCRETION IN GIVING DUE COURSE
AND/OR ENTERTAINING THE MOTION FOR
RECONSIDERATION FILED BY
RESPONDENT-APPELLANTS AND
REVERSING ITS OWN
DECISION/RESOLUTION DATED AUGUST
26, 1988;
IV
THE HONORABLE COMMISSION, SECOND
DIVISION, SERIOUSLY ERRED IN FAILING
TO GIVE DUE CONSIDERATION OF
COMPLAINANT-APPELLANT'S OPPOSITION
TO MOTION FOR RECONSIDERATION
DATED SEPTEMBER 27, 1988.
1

The third and fourth assignment of errors shall first be
resolved.
There is no question that private respondents failed to file
a timely appeal from the derision of the labor arbiter while
the petitioner was able to interpose his appeal within the
reglementary period. It is also an accepted postulate that
issues not raised in the lower court or the labor arbiter
may not be raised for the first time on appeal.
Note is taken of the fact that even the Solicitor General
refused to represent the NLRC in this proceeding as it
shares the view of petitioner that the decision of the labor
arbiter having become final by the failure to respondent
PKI to appeal on time the NLRC may no longer amend,
modify, much less set aside the same.
2

This posture is correct insofar as respondent PKI is
concerned. However, as petitioner had filed a timely
appeal the NLRC had jurisdiction to give due se to his
appeal and render the decision of August 28, 1988, a copy
of which was furnished respondents. Having lost the right
to appeal can respondent PKI file a motion for
reconsideration of said decision? The Court resolves the
question in the affirmative. The rules of technicality must
yield to the broader interest of justice. It is only by giving
due course to the motion for reconsideration that was
timely filed that the NLRC may be able, to equitably
evaluate the conflicting versions of facts presented by the
parties.
In the now questioned resolution of the NLRC dated
September 30,1988, the following findings and conclusions
were made:
Respondent SKLB assails the finding of the
Commission that it is engaged in labor-
only contracting. In support thereof,
respondent submitted a Clearance
Certificate issued by the Department of
Labor and Employment, Regional Office
No. 10 situated in Cagayan de Oro City,
certifying to its being cleared for issuance
of a permit as a labor contractor. It also
submitted payrolls showing that it indeed
operated as such independent labor
contractor in accordance with Article 106
of the Labor Code.
Attached to respondent SKLB's motion
likewise is the joint affidavit of one Mario
T. Ecarnum and Benito U. Ecarnum who
jointly stated that they were neighbors
and co- workers of the complainant in the
pit burning area, in a work contracted by
aforesaid respondent with respondent
Pilipinas Kao, Inc.; that complainant
abandoned his work starting April 19,1984
when he went to Manila to apply for work
abroad and it wall only about eight (8)
months later that he returned when he
failed to secure an overseas employment;
that complainant's prolonged absence was
without prior permission or leave of
absence.
Respondent SKLB further contends that it
meets all requirements set by law and
jurisprudence pertaining to an
independent labor contractor, citing the
case of Vda. de Eustaquio vs. Workmen's
Compensation Commission, 97 SCRA 255,
thus:
Page 16 of 54

An independent
contractor is one who, in
rendering services,
exercise an independent
employment or
occupation and represents
the will of his employer
only as to the results of his
work; and who is engaged
to perform a certain
service to another
according to his own
manner and methods, free
from control and direction
of his employer in all
matters connected with
the performance of the
service, except as to the
result of the work.
To further buttress respondent SKLB's
claim of being an independent labor
contractor and employer of complainant,
it submitted a copy of a Memorandum
dated April 21, 1984 sent to complainant
requiring the latter to report to its office
immediately otherwise he would be
deemed to have abandoned his work.
It does strike Us as odd that if indeed
complainant was dismissed sometime in
April 1984 it took him almost three (3)
years before filing the instant case for
illegal dismissal . This circumstance adds a
significant dimension to respondent's
position that indeed complainant
abandoned his job to look for greener
pastures and it was only when he failed to
find such opportunity that he came back
to demand that he be allowed to resume
the employment which he
unceremoniously abandoned.
All the foregoing undisputed taken
together, preponderate in favor of
respondent SKLB's claim of being a lawful
independent labor contractor which
employed complainant who unjustifiably
abandoned his employment.
WHEREFORE, the derision sought to be
reconsidered is hereby SET ASIDE and a
new one entered, dismissing the case for
lack of merit.
3

The factual findings of the NLRC are conclusive on this
Court because the same appear to be supported by
substantial evidence.
WHEREFORE, the petition is DISMISSED for lack of merit.
No costs.
SO ORDERED.
Narvasa (Chairman), Cruz and Medialdea, JJ., concur.
Grio-Aquino, J., is on leave.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 126322 January 16, 2002
YUPANGCO COTTON MILLS, INC., petitioner,
vs.
COURT OF APPEALS, HON. URBANO C. VICTORIO, SR.,
Presiding Judge, RTC Branch 50, Manila, RODRIGO SY
MENDOZA, SAMAHANG MANGGAGAWA NG ARTEX
(SAMAR-ANGLO) represented by its Local President
RUSTICO CORTEZ, and WESTERN GUARANTY
CORPORATION, respondents.
PARDO, J.:
The Case
The case is a petition for review on certiorari of the
decision of the Court of Appeals
1
dismissing the petition
ruling that petitioner was guilty of forum shopping and
that the proper remedy was appeal in due course, not
certiorari or mandamus.
In its decision, the Court of Appeals sustained the trial
court's ruling that the remedies granted under Section 17,
Rule 39 of the Rules of Court are not available to the
petitioner because the Manual of Instructions for Sheriffs
of the NLRC does not include the remedy of an
independent action by the owner to establish his right to
his property.
The Facts
The facts, as found by the Court of Appeals, are as follows:
"From the records before us and by petitioner's
own allegations and admission, it has taken the
following actions in connection with its claim that
a sheriff of the National Labor Relations
Commission "erroneously and unlawfully levied"
upon certain properties which it claims as its own.
Page 17 of 54

"1. It filed a notice of third-party claim with the
Labor Arbiter on May 4, 1995.
"2. It filed an Affidavit of Adverse Claim with the
National Labor Relations Commission (NLRC) on
July 4, 1995, which was dismissed on August 30,
1995, by the labor Arbiter.
"3. It filed a petition for certiorari and prohibition
with the Regional Trial Court of Manila, Branch 49,
docketed as Civil Case No. 95-75628 on October 6,
1995. The Regional Trial Court dismissed the case
on October 11, 1995 for lack of merit.
"4. It appealed to the NLRC the order of the Labor
Arbiter dated August 13, 1995 which dismissed the
appeal for lack of merit on December 8, 1995.
"5. It filed an original petition for mandatory
injunction with the NLRC on November 16, 1995.
This was docketed as Case No. NLRC-NCR-IC.
0000602-95. This case is still pending with that
Commission.
"6. It filed a complaint in the Regional Trial Court
in Manila which was docketed as Civil Case No. 95-
76395. The dismissal of this case by public
respondent triggered the filing of the instant
petition.
"In all of the foregoing actions, petitioner raised a
common issue, which is that it is the owner of the
properties located in the compound and buildings
of Artex Development Corporation, which were
erroneously levied upon by the sheriff of the NLRC
as a consequence of the decision rendered by the
said Commission in a labor case docketed as NLRC-
NCR Case No. 00-05-02960-90."
2

On March 29, 1996, the Court of Appeals promulgated a
decision
3
dismissing the petition on the ground of forum
shopping and that petitioner's remedy was to seek relief
from this Court.
On April 18, 1996, petitioner filed with the Court of
Appeals a motion for reconsideration of the
decision.
4
Petitioner argued that the filing of a complaint
for accion reinvindicatoria with the Regional Trial Court
was proper because it is a remedy specifically granted to
an owner (whose properties were subjected to a writ of
execution to enforce a decision rendered in a labor dispute
in which it was not a party) by Section 17 (now 16), Rule
39, Revised Rules of Court and by the doctrines laid down
in Sy v. Discaya,
5
Santos v. Bayhon
6
and Manliguez v. Court
of Appeals.
7

In addition, petitioner argued that the reliefs sought and
the issues involved in the complaint for recovery of
property and damages filed with the Regional Trial Court
of Manila, presided over by respondent judge, were
entirely distinct and separate from the reliefs sought and
the issues involved in the proceedings before the Labor
Arbiter and the NLRC. Besides, petitioner pointed out that
neither the NLRC nor the Labor Arbiter is empowered to
adjudicate matters involving ownership of properties.
On August 27, 1996, the Court of Appeals denied
petitioner's motion for reconsideration.
8

Hence, this appeal.
9

The Issues
The issues raised are (1) whether the Court of Appeals
erred in ruling that petitioner was guilty of forum
shopping, and (2) whether the Court of Appeals erred in
dismissing the petitioner's accion reinvindicatoria on the
ground of lack of jurisdiction of the trial court.
The Court's Ruling
On the first issue raised, we rule that there was no forum
shopping:
In Golangco v. Court of Appeals,
10
we held:
"What is truly important to consider in
determining whether forum shopping exists or not
is the vexation caused the courts and parties-
litigant by a party who asks different courts and/or
administrative agencies to rule on the same on
related caused and/or grant the same or
substantially the same reliefs, in the process
creating possibility of conflicting decisions being
rendered by the different for a upon the same
issues.
"xxx xxx xxx
"There is no forum-shopping where two different
orders were questioned, two distinct causes of
action and issues were raised, and two objectives
were sought." (Underscoring ours)
In the case at bar, there was no identity of parties, rights
and causes of action and reliefs sought.
The case before the NLRC where Labor Arbiter Reyes
issued a labor dispute between Artex and Samar-Anglo.
Petitioner was not a party to the case. The only issue
petitioner raised before the NLRC was whether or not the
writ of execution issued by the labor arbiter could be
satisfied against the property of petitioner, not a party to
the labor case.
Page 18 of 54

On the other hand, the accion reinvindicatoria filed by
petitioner in the trial court was to recover the property
illegally levied upon and sold at auction. Hence, the causes
of action in these cases were different.
The rule is that "for forum-shopping to exist both actions
must involve the same transactions, the same
circumstances. The actions must also raise identical causes
of action, subject matter and issues.
11

In Chemphil Export & Import Corporation v. Court of
Appeals,
12
we ruled that:
"Forum-shopping or the act of a party against
whom an adverse judgment has been rendered in
one forum, of seeking another (and possible)
opinion in another forum (other than by appeal or
the special civil action of certiorari), or the
institution of two (2) or more actions or
proceedings grounded on the same cause on the
supposition that one or the other would make a
favorable disposition."
On the second issue, a third party whose property has
been levied upon by a sheriff to enforce a decision against
a judgment debtor is afforded with several alternative
remedies to protect its interests. The third party may avail
himself of alternative remedies cumulatively, and one will
not preclude the third party from availing himself of the
other alternative remedies in the event he failed in the
remedy first availed of.
Thus, a third party may avail himself of the following
alternative remedies:
a) File a third party claim with the sheriff of the
Labor Arbiter, and
b) If the third party claim is denied, the third party
may appeal the denial to the NLRC.
13

Even if a third party claim was denied, a third party may
still file a proper action with a competent court to recover
ownership of the property illegally seized by the sheriff.
This finds support in Section 17 (now 16), Rule 39, Revised
Rules of Court, to wit:
"SEC. 17 (now 16). Proceedings where property
claimed by third person. - If property claimed by
any other person than the judgment debtor or his
agent, and such person makes an affidavit of his
title thereto or right to the possession thereof,
stating the grounds of such right or title, and serve
the same upon the officer making the levy, and a
copy thereof upon the judgment creditor, the
officer shall not be bound to keep the property,
unless such judgment creditor or his agent, on
demand of the officer, indemnify the officer
against such claim by a bond in a sum not greater
than the value of the property levied on. In case of
disagreement as to such value, the same shall be
determined by the court issuing the writ of
execution. 1wphi1.nt
"The officer is not liable for damages, for the
taking or keeping of the property, to any third-
party claimant unless a claim is made by the latter
and unless an action for damages is brought by
him against the officer within one hundred twenty
(120) days from the date of the filing of the
bond. But nothing herein contained shall prevent
such claimant or any third person from vindicating
his claim to the property by any proper action.
"When the party in whose favor the writ of
execution runs, is the Republic of the Philippines,
or any officer duly representing it, the filing of
such bond shall not be required, and in case the
sheriff or levying officer is sued for damages as a
result of the levy, he shall be represented by the
Solicitor General and if held liable therefor, the
actual damages adjudged by the court shall be
paid by the National Treasurer out of such funds
as may be appropriated for the purpose."
(Underscoring ours)
In Sy v. Discaya,
14
we ruled that:
"The right of a third-party claimant to file an
independent action to vindicate his claim of
ownership over the properties seized is reserved
by Section 17 (now 16), Rule 39 of the Rules of
Court, x x x :
"xxx xxx xxx
"As held in the case of Ong v. Tating, et. al.,
construing the aforecited rule, a third person
whose property was seized by a sheriff to answer
for the obligation of a judgment debtor may
invoke the supervisory power of the court which
authorized such execution. Upon due application
by the third person and after summary hearing,
the court may command that the property be
released from the mistaken levy and restored to
the rightful owner or possession. What said court
do in these instances, however, is limited to a
determination of whether the sheriff has acted
rightful or wrongly in the performance of his
duties in the execution of judgment, more
specifically, if he has indeed take hold of property
not belonging to the judgment debtor. The court
does not and cannot pass upon the question of
title to the property, with any character of finality.
Page 19 of 54

It can treat of the matter only insofar as may be
necessary to decide if the sheriff has acted
correctly or not. It can require the sheriff to
restore the property to the claimant's possession if
warranted by the evidence. However, if the
claimant's proof do not persuade the court of the
validity of his title or right of possession thereto,
the claim will be denied.
"Independent of the above-stated recourse, a
third-party claimant may also avail of the remedy
known as "terceria', provided in Section 17 (now
16), Rule 39, by serving on the officer making the
levy an affidavit of his title and a copy thereof
upon the judgment creditor. The officer shall not
be bound to keep the property, unless such
judgment creditor or his agent, on demand of the
officer, indemnifies the officer against such claim
by a bond in a sum not greater than the value of
the property levied on. An action for damages may
be brought against the sheriff within one hundred
twenty (120) days from the filing of the bond.
"The aforesaid remedies are nevertheless without
prejudice to 'any proper action' that a third-party
claimant may deem suitable to vindicate 'his claim
to the property.' Such a 'proper action' is,
obviously, entirely distinct from that explicitly
prescribed in Section 17 of Rule 39, which is an
action for damages brought by a third-party
claimant against the officer within one hundred
twenty (120) days from the date of the filing of the
bond for the taking or keeping of the property
subject of the 'terceria'.
"Quite obviously, too, this 'proper action' would
have for its object the recovery of ownership or
possession of the property seized by the sheriff, as
well as damages resulting from the allegedly
wrongful seizure and detention thereof despite
the third-party claim; and it may be brought
against the sheriff and such other parties as may
be alleged to have colluded with him in the
supposedly wrongful execution proceedings, such
as the judgment creditor himself. Such 'proper
action', as above pointed out, is and should be an
entirely separate and distinct action from that in
which execution has issued, if instituted by a
stranger to the latter suit.
"The remedies above mentioned are cumulative
and may be resorted to by a third-party claimant
independent of or separately from and without
need of availing of the others. If a third-party
claimant opted to file a proper action to vindicate
his claim of ownership, he must institute an
action, distinct and separate from that in which
the judgment is being enforced, with the court of
competent jurisdiction even before or without
need of filing a claim in the court which issued the
writ, the latter not being a condition sine qua non
for the former. In such proper action, the validity
and sufficiency of the title of the third-party
claimant will be resolved and a writ of preliminary
injunction against the sheriff may be issued."
(Emphasis and underscoring ours)
In light of the above, the filing of a third party claim with
the Labor Arbiter and the NLRC did not preclude the
petitioner from filing a subsequent action for recovery of
property and damages with the Regional Trial Court. And,
the institution of such complaint will not make petitioner
guilty of forum shopping.
15

In Santos v. Bayhon,
16
wherein Labor Arbiter Ceferina
Diosana rendered a decision in NLRC NCR Case No. 1-313-
85 in favor of Kamapi, the NLRC affirmed the decision.
Thereafter, Kamapi obtained a writ of execution against
the properties of Poly-Plastic Products or Anthony Ching.
However, respondent Priscilla Carrera filed a third-party
claim alleging that Anthony Ching had sold the property to
her. Nevertheless, upon posting by the judgment creditor
of an indemnity bond, the NLRC Sheriff proceeded with
the public auction sale. Consequently, respondent Carrera
filed with Regional Trial Court, Manila an action to recover
the levied property and obtained a temporary restraining
order against Labor Arbiter Diosana and the NLRC Sheriff
from issuing a certificate of sale over the levied property.
Eventually, Labor Arbiter Santos issued an order allowing
the execution to proceed against the property of Poly-
Plastic Products. Also, Labor Arbiter Santos and the NLRC
Sheriff filed a motion to dismiss the civil case instituted by
respondent Carrera on the ground that the Regional Trial
Court did not have jurisdiction over the labor case. The
trial court issued an order enjoining the enforcement of
the writ of execution over the properties claimed by
respondent Carrera pending the determination of the
validity of the sale made in her favor by the judgment
debtor Poly-Plastic Products and Anthony Ching.
In dismissing the petition for certiorari filed by Labor
Arbiter Santos, we ruled that:
"x x x. The power of the NLRC to execute its
judgments extends only to properties
unquestionably belonging to the judgment debtor
(Special Servicing Corp. v. Centro La Paz, 121 SCRA
748).
"The general rule that no court has the power to
interfere by injunction with the judgments or
decrees of another court with concurrent or
coordinate jurisdiction possessing equal power to
grant injunctive relief, applies only when no third-
Page 20 of 54

party claimant is involved (Traders Royal Bank v.
Intermediate Appellate Court, 133 SCRA 141
[1984]). When a third-party, or a stranger to the
action, asserts a claim over the property levied
upon, the claimant may vindicate his claim by an
independent action in the proper civil court which
may stop the execution of the judgment on
property not belonging to the judgment debtor."
(Underscoring ours)
in Consolidated Bank and Trust Corp. v. Court of Appeals,
193 SCRA 158 [1991], we ruled that:
"The well-settled doctrine is that a 'proper levy' is
indispensable to a valid sale on execution. A sale
unless preceded by a valid levy is void. Therefore,
since there was no sufficient levy on the execution
in question, the private respondent did not take
any title to the properties sold thereunder x x x.
"A person other than the judgment debtor who
claims ownership or right over the levied
properties is not precluded, however, from taking
other legal remedies." (Underscoring ours)
Jurisprudence is likewise replete with rulings that since the
third-party claimant is not one of the parties to the action,
he could not, strictly speaking, appeal from the order
denying his claim, but should file a separate
reinvindicatory action against the execution creditor or the
purchaser of the property after the sale at public auction,
or a complaint for damages against the bond filed by the
judgment creditor in favor of the sheriff.
17

And in Lorenzana v. Cayetano,
18
we ruled that:
"The rights of a third-party claimant should not be
decided in the action where the third-party claim
has been presented, but in a separate action to be
instituted by the third person. The appeal that
should be interposed if the term 'appeal' may
properly be employed, is a separate
reinvidincatory action against the execution
creditor or the purchaser of the property after the
sale at public auction, or complaint for damages to
be charged against the bond filed by the judgment
creditor in favor of the sheriff. Such
reinvindicatory action is reserved to the third-
party claimant."
A separate civil action for recovery of ownership of the
property would not constitute interference with the
powers or processes of the Arbiter and the NLRC which
rendered the judgment to enforce and execute upon the
levied properties. The property levied upon being that of a
stranger is not subject to levy. Thus, a separate action for
recovery, upon a claim and prima-facie showing of
ownership by the petitioner, cannot be considered as
interference.
The Fallo
WHEREFORE, the Court REVERSES the decision of the
Court of Appeals and the resolution denying
reconsideration.
19
In lieu thereof, the Court renders
judgment ANNULLING the sale on execution of the subject
property conducted by NLRC Sheriff Anam Timbayan in
favor of respondent SAMAR-ANGLO and the subsequent
sale of the same to Rodrigo Sy Mendoza. The Court
declares the petitioner to be the rightful owner of the
property involved and remands the case to the trial court
to determine the liability of respondents SAMAR-ANGLO,
Rodrigo Sy Mendoza, and WESTERN GUARANTY
CORPORATION to pay actual damages that petitioner
claimed.
Costs against respondents, except the Court of
Appeals.1wphi1.nt
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago,
JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 87297 August 5, 1991
ALFREDO VELOSO and EDITO LIGUATON petitioners,
vs.
DEPARTMENT OF LABOR AND EMPLOYMENT, NOAH'S
ARK SUGAR CARRIERS AND WILSON T. GO,respondents.

CRUZ, J.:p
The law looks with disfavor upon quitclaims and releases
by employees who are inveigled or pressured into signing
them by unscrupulous employers seeking to evade their
legal responsibilities. On the other hand, there are
legitimate waivers that represent a voluntary settlement
of laborer's claims that should be respected by the courts
as the law between the parties.
In the case at bar, the petitioners claim that they were
forced to sign their respective releases in favor of their
employer, the herein private respondent, by reason of
Page 21 of 54

their dire necessity. The latter, for its part, insists that the
petitioner entered into the compromise agreement freely
and with open eyes and should not now be permitted to
reject their solemn commitments.
The controversy began when the petitioners, along with
several co-employees, filed a complaint against the private
respondent for unfair labor practices, underpayment, and
non-payment of overtime, holiday, and other benefits.
This was decided in favor of the complainants on October
6,1987. The motion for reconsideration, which was treated
as an appeal, was dismissed in a resolution dated February
17, 1988, the dispositive portion of which read as follows:
WHEREFORE, the instant appeal is hereby
DISMISSED and the questioned Order
affirmed with the modification that the
monetary awards to Jeric Dequito,
Custodio Ganuhay Conrado Mori and
Rogelio Veloso are hereby deleted for
being settled. Let execution push through
with respect to the awards to Alfredo
Veloso and Edito Liguaton.
On February 23, 1988, the private respondent filed a
motion for reconsideration and recomputation of the
amount awarded to the petitioners. On April 15, 1988,
while the motion was pending, petitioner Alfredo Veloso,
through his wife Connie, signed a Quitclaim and Release
for and in consideration of P25,000.00,
1
and on the same
day his counsel, Atty. Gaga Mauna, manifested
"Satisfaction of Judgment" by receipt of the said sum by
Veloso.
2
For his part, petitioner Liguaton filed a motion to
dismiss dated July 16, 1988, based on a Release and
Quitclaim dated July 19,1988 ,
3
for and in consideration of
the sum of P20,000.00 he acknowledged to have received
from the private respondent.
4

These releases were later impugned by the petitioners on
September 20, 1988, on the ground that they were
constrained to sign the documents because of their
"extreme necessity." In an Order dated December 16,
1988, the Undersecretary of Labor rejected their
contention and ruled:
IN VIEW THEREOF, complainants Motion
to Declare Quitclaim Null and Void is
hereby denied for lack of merit and the
compromise agreements/settlements
dated April 15, 1988 and July 19, 1988 are
hereby approved. Respondents' motion
for reconsideration is hereby denied for
being moot and academic.
Reconsideration of the order having been denied on
March 7, 1989, the petitioners have come to this Court
oncertiorari. They ask that the quitclaims they have signed
be annulled and that writs of execution be issued for the
sum of P21,267.92 in favor of Veloso and the sum of
P26,267.92 in favor of Liguaton in settlement of their
claims.
Their petition is based primarily on Pampanga Sugar
Development Co., Inc. v. Court of Industrial
Relations,
5
where it was held:
... while rights may be waived, the same
must not be contrary to law, public order,
public policy, morals or good customs or
prejudicial to a third person with a right
recognized by law. (Art. 6, New Civil Code)
...
... The above-quoted provision renders the
quitclaim agreements void ab initio in
their entirety since they obligated the
workers concerned to forego their
benefits, while at the same time,
exempted the petitioner from any liability
that it may choose to reject. This runs
counter to Art. 22 of the new Civil Code
which provides that no one shall be
unjustly enriched at the expense of
another.
The Court had deliberated on the issues and the
arguments of the parties and finds that the petition must
fail. The exception and not the rule shall be applied in this
case.
The case cited is not apropos because the quitclaims
therein invoked were secured by the employer after it had
already lost in the lower court and were subsequently
rejected by this Court when the employer invoked it in a
petition for certiorari. By contrast, the quitclaims in the
case before us were signed by the petitioners while the
motion for reconsideration was still pending in the DOLE,
which finally deemed it on March 7, 1989. Furthermore,
the quitclaims in the cited case were entered into without
leave of the lower court whereas in the case at bar the
quitclaims were made with the knowledge and approval of
the DOLE, which declared in its order of December 16,
1988, that "the compromise agreement/settlements dated
April 15, 1988 and July 19, 1988 are hereby approved."
It is also noteworthy that the quitclaims were voluntarily
and knowingly made by both petitioners even if they may
now deny this. In the case of Veloso, the quitclaim he had
signed carried the notation that the sum stated therein
had been paid to him in the presence of Atty. Gaga
Mauna, his counsel, and the document was attested by
Atty. Ferdinand Magabilin, Chief of the Industrial Relations
Division of the National Capitol Region of the DOLE. In the
case of Liguaton, his quitclaim was made with the
Page 22 of 54

assistance of his counsel, Atty. Leopoldo Balguma, who
also notarized it and later confirmed it with the filing of
the motion to dismiss Liguaton's complaint.
The same Atty. Balguma is the petitioners' counsel in this
proceeding. Curiously, he is now challenging the very same
quitclaim of Liguaton that he himself notarized and
invoked as the basis of Liguaton's motion to dismiss, but
this time for a different reason. whereas he had earlier
argued for Liguaton that the latter's signature was a
forgery, he has abandoned that contention and now
claims that the quitclaim had been executed because of
the petitioners' dire necessity.
"Dire necessity" is not an acceptable ground for annulling
the releases, especially since it has not been shown that
the employees had been forced to execute them. It has
not even been proven that the considerations for the
quitclaims were unconscionably low and that the
petitioners had been tricked into accepting them. While it
is true that the writ of execution dated November 24,
1987, called for the collection of the amount of P46,267.92
each for the petitioners, that amount was still subject to
recomputation and modification as the private
respondent's motion for reconsideration was still pending
before the DOLE. The fact that the petitioners accepted
the lower amounts would suggest that the original award
was exorbitant and they were apprehensive that it would
be adjusted and reduced. In any event, no deception has
been established on the part of the Private respondent
that would justify the annulment of the Petitioners'
quitclaims.
The applicable law is Article 227 of the Labor Code
providing clearly as follows:
Art. 227. Compromise agreements. Any
compromise settlement, including those
involving labor standard laws, voluntarily
agreed upon by the parties with the
assistance of the Bureau or the regional
office of the Department of Labor, shall be
final and binding upon the parties. The
National Labor Relations Commission or
any court shall not assume jurisdiction
over issues involved therein except in case
of non-compliance thereof or if there
is prima facie evidence that the settlement
was obtained through fraud,
misrepresentation or coercion.
The petitioners cannot renege on their agreement simply
because they may now feel they made a mistake in not
awaiting the resolution of the private respondent's motion
for reconsideration and recomputation. The possibility
that the original award might have been affirmed does not
justify the invalidation of the perfectly valid compromise
agreements they had entered into in good faith and with
full voluntariness. In General Rubber and Footwear Corp.
vs. Drilon,
6
we "made clear that the Court is not saying
that accrued money claims can never be effectively waived
by workers and employees." As we later declared
in Periquet v. NLRC:
7

Not all waivers and quitclaims are invalid
as against public policy. If the agreement
was voluntarily entered into and
represents a reasonable settlement, it is
binding on the parties and may not later
be disowned simply because of a change
of mind. It is only where there is clear
proof that the waiver was wangled from
an unsuspecting or gullible person, or the
terms of settlement are unconscionable
on its face, that the law will step in to
annul the questionable transaction. But
where it is shown that the person making
the waiver did so voluntarily, with full
understanding of what he was doing, and
the consideration for the quitclaim is
credible and reasonable, the transaction
must be recognized as a valid and binding
undertaking. As in this case.
We find that the questioned quitclaims were voluntarily
and knowingly executed and that the petitioners should
not be relieved of their waivers on the ground that they
now feel they were improvident in agreeing to the
compromise. What they call their "dire necessity" then is
no warrant to nullify their solemn undertaking, which
cannot be any less binding on them simply because they
are laborers and deserve the protection of the
Constitution. The Constitution protects the just, and it is
not the petitioners in this case.
WHEREFORE, the petition is DISMISSED, with costs against
the petitioners. It is so ordered.
Narvasa (Chairman), Gancayco, Grio-Aquino and
Medialdea, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 161003 May 6, 2005
FELIPE O. MAGBANUA, CARLOS DE LA CRUZ, REMY
ARNAIZ, BILLY ARNAIZ, ROLLY ARNAIZ, DOMINGO
SALARDA, JULIO CAHILIG and NICANOR
LABUEN, petitioners,
Page 23 of 54

vs.
RIZALINO UY, respondent.
D E C I S I O N
PANGANIBAN, J.:
Rights may be waived through a compromise agreement,
notwithstanding a final judgment that has already settled
the rights of the contracting parties. To be binding, the
compromise must be shown to have been voluntarily,
freely and intelligently executed by the parties, who had
full knowledge of the judgment. Furthermore, it must not
be contrary to law, morals, good customs and public
policy.
The Case
Before us is a Petition for Review
1
under Rule 45 of the
Rules of Court, assailing the May 31, 2000 Decision
2
and
the October 30, 2003 Resolution
3
of the Court of Appeals
(CA) in CA-GR SP No. 53581. The challenged Decision
disposed as follows:
"WHEREFORE, having found that public
respondent NLRC committed grave abuse of
discretion, the Court hereby SETS ASIDE the two
assailed Resolutions and REINSTATES the order of
the Labor Arbiterdated February 27, 1998."
4

The assailed Resolution denied reconsideration.
The Facts
The CA relates the facts in this wise:
"As a final consequence of the final and executory
decision of the Supreme Court in Rizalino P. Uy v.
National Labor Relations Commission, et. al. (GR
No. 117983, September 6, 1996) which affirmed
with modification the decision of the NLRC in NLRC
Case No. V-0427-93, hearings were conducted [in
the National Labor Relations Commission Sub-
Regional Arbitration Branch in Iloilo City] to
determine the amount of wage differentials due
the eight (8) complainants therein, now
[petitioners]. As computed, the award amounted
to P1,487,312.69 x x x.
"On February 3, 1997, [petitioners] filed a Motion
for Issuance of Writ of Execution.
"On May 19, 1997, [respondent] Rizalino Uy filed a
Manifestation requesting that the cases be
terminated and closed, stating that the judgment
award as computed had been complied with to
the satisfaction of [petitioners]. Said Manifestation
was also signed by the eight (8) [petitioners].
Together with the Manifestation is a Joint Affidavit
dated May 5, 1997 of [petitioners], attesting to the
receipt of payment from [respondent] and waiving
all other benefits due them in connection with
their complaint.
x x x x x x x x x
"On June 3, 1997, [petitioners] filed an Urgent
Motion for Issuance of Writ of Execution wherein
they confirmed that each of them
received P40,000 from [respondent] on May 2,
1997.
"On June 9, 1997, [respondent] opposed the
motion on the ground that the judgment award
had been fully satisfied. In their Reply,
[petitioners] claimed that they received only
partial payments of the judgment award.
x x x x x x x x x
"On October 20, 1997, six (6) of the eight (8)
[petitioners] filed a Manifestation requesting that
the cases be considered closed and terminated as
they are already satisfied of what they have
received (a total ofP320,000) from [respondent].
Together with said Manifestation is a Joint
Affidavit in the local dialect, dated October 20,
1997, of the six (6) [petitioners] attesting that they
have no more collectible amount from
[respondent] and if there is any, they are
abandoning and waiving the same.
"On February 27, 1998, the Labor Arbiter issued an
order denying the motion for issuance of writ of
execution and [considered] the cases closed and
terminated x x x.
"On appeal, the [National Labor Relations
Commission (hereinafter NLRC)] reversed the
Labor Arbiter and directed the immediate issuance
of a writ of execution, holding that a final and
executory judgment can no longer be altered and
that quitclaims and releases are normally frowned
upon as contrary to public policy."
5

Ruling of the Court of Appeals
The CA held that compromise agreements may be entered
into even after a final judgment.
6
Thus, petitioners validly
released respondent from any claims, upon the voluntary
execution of a waiver pursuant to the compromise
agreement.
7

Page 24 of 54

The appellate court denied petitioners motion for
reconsideration for having been filed out of time.
8

Hence, this Petition.
9

The Issues
Petitioners raise the following issues for our consideration:
"1. Whether or not the final and executory
judgment of the Supreme Court could be subject
to compromise settlement;
"2. Whether or not the petitioners affidavit
waiving their awards in [the] labor case executed
without the assistance of their counsel and labor
arbiter is valid;
"3. Whether or not the ignorance of the
jurisprudence by the Court of Appeals and its
erroneous counting of the period to file [a] motion
for reconsideration constitute a denial of the
petitioners right to due process."
10

The Courts Ruling
The Petition has no merit.
First Issue:
Validity of the Compromise Agreement
A compromise agreement is a contract whereby the
parties make reciprocal concessions in order to resolve
their differences and thus avoid or put an end to a
lawsuit.
11
They adjust their difficulties in the manner they
have agreed upon, disregarding the possible gain in
litigation and keeping in mind that such gain is balanced by
the danger of losing.
12
Verily, the compromise may be
either extrajudicial (to prevent litigation) or judicial (to end
a litigation).
13

A compromise must not be contrary to law, morals, good
customs and public policy; and must have been freely and
intelligently executed by and between the parties.
14
To
have the force of law between the parties,
15
it must
comply with the requisites and principles of
contracts.
16
Upon the parties, it has the effect and the
authority of res judicata, once entered into.
17

When a compromise agreement is given judicial approval,
it becomes more than a contract binding upon the parties.
Having been sanctioned by the court, it is entered as a
determination of a controversy and has the force and
effect of a judgment.
18
It is immediately executory and not
appealable, except for vices of consent or forgery.
19
The
nonfulfillment of its terms and conditions justifies the
issuance of a writ of execution; in such an instance,
execution becomes a ministerial duty of the court.
20

Following these basic principles, apparently unnecessary is
a compromise agreement after final judgment has been
entered. Indeed, once the case is terminated by final
judgment, the rights of the parties are settled. There are
no more disputes that can be compromised.
Compromise Agreements
after Final Judgment
The Court is tasked, however, to determine the legality of
a compromise agreement after final judgment, not
theprudence of entering into one. Petitioners vehemently
argue that a compromise of a final judgment is invalid
under Article 2040 of the Civil Code, which we quote:
21

"Art. 2040. If after a litigation has been decided by
a final judgment, a compromise should be agreed
upon, either or both parties being unaware of the
existence of the final judgment, the compromise
may berescinded.
"Ignorance of a judgment which may be revoked
or set aside is not a valid ground for attacking a
compromise." (Bold types supplied)
The first paragraph of Article 2040 refers to a scenario in
which either or both of the parties are unaware of a
courts final judgment at the time they agree on a
compromise. In this case, the law allows either of them
to rescindthe compromise agreement. It is evident from
the quoted paragraph that such an agreement is not
prohibited or void or voidable. Instead, a remedy to
impugn the contract, which is an action for rescission, is
declared available.
22
The law allows a party to rescind a
compromise agreement, because it could have been
entered into in ignorance of the fact that there was
already a final judgment. Knowledge of a decisions finality
may affect the resolve to enter into a compromise
agreement.
The second paragraph, though irrelevant to the present
case, refers to the instance when the courts decision is
still appealable or otherwise subject to modification.
Under this paragraph, ignorance of the decision is not a
ground to rescind a compromise agreement, because the
parties are still unsure of the final outcome of the case at
this time.
Petitioners argument, therefore, fails to convince. Article
2040 of the Civil Code does not refer to the validity of a
compromise agreement entered into after final judgment.
Moreover, an important requisite, which is lack of
Page 25 of 54

knowledge of the final judgment, is wanting in the present
case.
Supported by Case Law
The issue involving the validity of a compromise
agreement notwithstanding a final judgment is not
novel. Jesalva v. Bautista
23
upheld a compromise
agreement that covered cases pending trial, on appeal,
and with final judgment.
24
The Court noted that Article
2040 impliedly allowed such agreements; there was no
limitation as to when these should be entered
into.
25
Palanca v. Court of Industrial Relations
26
sustained a
compromise agreement, notwithstanding a final judgment
in which only the amount of back wages was left to be
determined. The Court found no evidence of fraud or of
any showing that the agreement was contrary to law,
morals, good customs, public order, or public policy.
27

Gatchalian v. Arlegui
28
upheld the right to compromise
prior to the execution of a final judgment. The Court ruled
that the final judgment had been novated and superseded
by a compromise agreement.
29
Also, Northern Lines, Inc. v.
Court of Tax Appeals
30
recognized the right to compromise
final and executory judgments, as long as such right was
exercised by the proper party litigants.
31

Rovero v. Amparo,
32
which petitioners cited, did not set
any precedent that all compromise agreements after final
judgment were invalid. In that case, the customs
commissioner imposed a fine on an importer, based on
the appraised value of the goods illegally brought to the
country. The latters appeal, which eventually reached this
Court, was denied. Despite a final judgment, the customs
commissioner still reappraised the value of the goods and
effectively reduced the amount of fine. Holding that he
had no authority to compromise a final judgment, the
Court explained:
"It is argued that the parties to a case may enter
into a compromise about even a final judgment
rendered by a court, and it is contended x x x that
the reappraisal ordered by the Commissioner of
Customs and sanctioned by the Department of
Finance was authorized by Section 1369 of the
[Revised Administrative Code]. The contention
may be correct as regards private parties who are
the owners of the property subject-matter of the
litigation, and who are therefore free to do with
what they own or what is awarded to them, as
they please, even to the extent of renouncing the
award, or condoning the obligation imposed by
the judgment on the adverse party. Not so,
however, in the present case. Here, the
Commissioner of Customs is not a private party
and is not the owner of the money involved in the
fine based on the original appraisal. He is a mere
agent of the Government and acts as a trustee of
the money or property in his hands or coming
thereto by virtue of a favorable judgment. Unless
expressly authorized by his principal or by law, he
is not authorized to accept anything different from
or anything less than what is adjudicated in favor
of the Government."
33
(Bold types supplied)
Compliance with the
Rule on Contracts
There is no justification to disallow a compromise
agreement, solely because it was entered into after final
judgment. The validity of the agreement is determined by
compliance with the requisites and principles of contracts,
not by when it was entered into. As provided by the law on
contracts, a valid compromise must have the following
elements: (1) the consent of the parties to the
compromise, (2) an object certain that is the subject
matter of the compromise, and (3) the cause of the
obligation that is established.
34

In the present factual milieu, compliance with the
elements of a valid contract is not in issue. Petitioners do
not challenge the factual finding that they entered into a
compromise agreement with respondent. There are no
allegations of vitiated consent. Neither was there any
proof that the agreement was defective or could be
characterized as
rescissible,
35
voidable,
36
unenforceable,
37
or
void.
38
Instead, petitioners base their argument on the
sole fact that the agreement was executed despite a final
judgment, which the Court had previously ruled to be
allowed by law.
Petitioners voluntarily entered into the compromise
agreement, as shown by the following facts: (1) they
signed respondents Manifestation (filed with the labor
arbiter) that the judgment award had been satisfied;
39
(2)
they executed a Joint Affidavit dated May 5, 1997,
attesting to the receipt of payment and the waiver of all
other benefits due them;
40
and (3) 6 of the 8 petitioners
filed a Manifestation with the labor arbiter on October 20,
1997, requesting that the cases be terminated because of
their receipt of payment in full satisfaction of their
claims.
41
These circumstances also reveal that respondent
has already complied with its obligation pursuant to the
compromise agreement. Having already benefited from
the agreement, estoppel bars petitioners from challenging
it.
Advantages of Compromise
A reciprocal concession inherent in a compromise
agreement assures benefits for the contracting parties. For
the defeated litigant, obvious is the advantage of a
compromise after final judgment. Liability arising from the
Page 26 of 54

judgment may be reduced. As to the prevailing party, a
compromise agreement assures receipt of payment.
Litigants are sometimes deprived of their winnings
because of unscrupulous mechanisms meant to delay or
evade the execution of a final judgment.
The advantages of a compromise agreement appear to be
recognized by the NLRC in its Rules of Procedure. As part
of the proceedings in executing a final judgment, litigants
are required to attend a pre-execution conference to
thresh out matters relevant to the execution.
42
In the
conference, any agreement that would settle the final
judgment in a particular manner is necessarily a
compromise.
Novation of an Obligation
The principle of novation supports the validity of a
compromise after final judgment. Novation, a mode of
extinguishing an obligation,
43
is done by changing the
object or principal condition of an obligation, substituting
the person of the debtor, or surrogating a third person in
the exercise of the rights of the creditor.
44

For an obligation to be extinguished by another, the law
requires either of these two conditions: (1) the
substitution is unequivocally declared, or (2) the old and
the new obligations are incompatible on every point.
45
A
compromise of a final judgment operates as a novation of
the judgment obligation, upon compliance with either
requisite.
46
In the present case, the incompatibility of the
final judgment with the compromise agreement is evident,
because the latter was precisely entered into to supersede
the former.
Second Issue:
Validity of the Waiver
Having ruled on the validity of the compromise agreement
in the present suit, the Court now turns its attention to the
waiver of claims or quitclaim executed by petitioners. The
subject waiver was their concession when they entered
into the agreement. They allege, however, that the
absence of their counsel and the labor arbiter when they
executed the waiver invalidates the document.
Not Determinative
of the Waivers Validity
The presence or the absence of counsel when a waiver is
executed does not determine its validity. There is no law
requiring the presence of a counsel to validate a waiver.
The test is whether it was executed voluntarily, freely and
intelligently; and whether the consideration for it was
credible and reasonable.
47
Where there is clear proof that
a waiver was wangled from an unsuspecting or a gullible
person, the law must step in to annul such transaction.
48
In
the present case, petitioners failed to present any
evidence to show that their consent had been vitiated.
The law is silent with regard to the procedure for
approving a waiver after a case has been
terminated.
49
Relevant, however, is this reference to the
NLRCs New Rules of Procedure:
"Should the parties arrive at any agreement as to
the whole or any part of the dispute, the same
shall be reduced to writing and signed by the
parties and their respective counsel, or authorized
representative, if any,
50
before the Labor Arbiter.
"The settlement shall be approved by the Labor
Arbiter after being satisfied that it was voluntarily
entered into by the parties and after having
explained to them the terms and consequences
thereof.
"A compromise agreement entered into by the
parties not in the presence of the Labor Arbiter
before whom the case is pending shall be
approved by him, if after confronting the parties,
particularly the complainants, he is satisfied that
they understand the terms and conditions of the
settlement and that it was entered into freely and
voluntarily by them and the agreement is not
contrary to law, morals, and public policy."
51

This provision refers to proceedings in a
mandatory/conciliation conference during the initial stage
of the litigation. Such provision should be made applicable
to the proceedings in the pre-execution conference, for
which the procedure for approving a waiver after final
judgment is not stated. There is no reason to make a
distinction between the proceedings in
mandatory/conciliation and those in pre-execution
conferences.
The labor arbiters absence when the waivers were
executed was remedied upon compliance with the above
procedure. The Court observes that the arbiter made
searching questions during the pre-execution conference
to ascertain whether petitioners had voluntarily and freely
executed the waivers.
52
Likewise, there was evidence that
they made an intelligent choice, considering that the
contents of the written waivers had been explained to
them.
53
The labor arbiters absence when those waivers
were executed does not, therefore, invalidate them.
The Court declines to rule on the allegation that
respondents counsels encroached upon the professional
employment of petitioners lawyer when they facilitated
the waivers.
54
The present action is not the proper forum
in which to raise any charge of professional misconduct.
More important, petitioners failed to present any
supporting evidence.
Page 27 of 54

The third issue, which refers to the timely filing of
petitioners Motion for Reconsideration filed with the CA,
will no longer be discussed because this Courts decision
has resolved the case on the merits.
WHEREFORE, the Petition is DENIED and the assailed
Decision AFFIRMED. Costs against petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia,
JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 76427 February 21, 1989
JOHNSON AND JOHNSON LABOR UNION-FFW, DANTE
JOHNSON MORANTE, MYRNA OLOVEJA AND ITS OTHER
INDIVIDUAL UNION MEMBERS, petitioners
vs.
DIRECTOR OF LABOR RELATIONS, AND OSCAR
PILI, respondents.
Rogelio R. Udarbe for petitioners.
The Solicitor General for public respondent.
Manuel V. Nepomuceno for private respondent.

GUTIERREZ, JR., J.:
The sole issue in this petition for review on certiorari is
whether or not the public respondent committed grave
abuse of discretion in ruling that the private respondent is
entitled to the financial aid from the compulsory
contributions of the petitioner-union afforded to its
members who have been suspended or terminated from
work without reasonable cause.
The provision for the grant of financial aid in favor of a
union member is embodied in the petitioner-union's
Constitution and By-laws, Article XIII, Section 5, of which
reads:
A member who have (sic) been suspended
or terminated without reasonable cause
shall be extended a financial aid from the
compulsory contributions in the amount
of SEVENTY FIVE CENTAVOS (P0. 75) from
each member weekly. (p. 18, Rollo)
On May 6, 1985, the private respondent, a member of the
petitioner-union was dismissed from his employment by
employer Johnson & Johnson (Phil.) Inc., for non-
disclosure in his job application form of the fact that he
had a relative in the company in violation of company
policies.
On July 1985, a complaint was filed by the private
respondent against the officers of the petitioner-union
docketed as NRC- LRD-M-7-271-85 alleging, among others,
that the union officers had refused to provide the private
respondent the financial aid as provided in the union
constitution despite demands for payment thereof The
petitioner-union and its officers counter-alleged, in their
answer, that the said financial aid was to be given only in
cases of termination or suspension without any reasonable
cause; that the union's executive board had the
prerogative to determine whether the suspension or
termination was for a reasonable cause or not; and that
the union, in a general membership meeting, had resolved
not to extend financial aid to the private respondent.
While the grievance procedure as contained in the union's
collective bargaining agreement was being undertaken,
the private respondent, on August 26, 1985, filed a case
for unfair labor practice and illegal dismissal against his
employer docketed as NLRC-NCR Case No. 6-1912-85.
On September 27, 1985, Med-Arbiter Anastacio L. Bactin
issued an order dismissing for lack of merit the complaint
of the private respondent against the petitioners for
alleged violation of the union constitution and by-laws.
On appeal, the then public respondent Director
Cresenciano B. Trajano, on April 17, 1986, rendered the
decision assailed in this petition. The dispositive portion of
the said decision reads:
WHEREFORE, premises considered, the
appeal of complainant Oscar Pili is hereby
granted and the Order appealed from is
hereby set aside. Appellees, therefore, are
hereby ordered to pay the complainant
the sum of P0.75/week per union member
to be computed from the time of the
complainant's termination from
employment to the time he acquired
another employment should his complaint
for illegal dismissal against the company
be resolved in his favor; provided, that if
his complaint against the company be
dismissed, appellees are absolved from
paying the complainant anything. (p. 115,
Records)
Page 28 of 54

Both parties moved for reconsideration. The petitioners
reiterated that since the private respondent's termination
was for a reasonable cause, it would be unjust and unfair if
financial aid were to be given in the event that the latter's
case for illegal dismissal is decided against him. The private
respondent, on the other hand, prayed for the
amendment of the dispositive portion in order that the
grant of financial aid be made without any qualifications.
On June 16, 1986, a Manifestation and/or Opposition to
the Motion for Reconsideration filed by the petitioners
was filed by the private respondent stating that he was
being discriminated against considering that one Jerwin
Taguba, another union member, was terminated for
dishonesty and loss of confidence but was granted
financial aid by the petitioners while Taguba's complaint
against the company was still pending with the National
Labor Relation Commission.
The public respondent separately resolved the above
motions. On June 26, 1986, an order was issued denying
the petitioners' motion for reconsideration. On August 19,
1986, the public respondent modified its decision dated
April 17, 1986 and its aforestated order as follows:
Considering that complainant Pili is
similarly situated as Jerwin Taguba
coupled with the need to obviate any
discriminating treatment to the former, it
is only just and appropriate that our
Decision dated 17 April 1986 be modified
in such a manner that respondents
immediately pay the complainant the sum
of P0.75/ week per union member to be
computed from the time of his dismissal
from the company, without prejudice to
refund of the amount that shall be paid to
Pili in the event the pending case is finally
resolved against him.
WHEREFORE, and as above qualified, this
Bureau's Decision dated 17 April 1986 and
the Order dated 26 June 1986 are hereby
modified to the extent that the
respondents are directed to immediately
pay complainant the sum of P0.75/week
per union member to be computed from
the time of his termination from his
employment until his case against the
employer company shall have been finally
resolved and/or disposed. (p. 53, Rollo)
Meanwhile, on July 25, 1986, a motion for issuance of a
writ of execution was filed by the private respondent in
order to collect from the petitioners the amount of
financial aid to which the former was entitled.
On September 1, 1986, the petitioners moved for a
reconsideration of the public respondent's resolution
dated August 19, 1986 on the grounds that Taguba's
affidavit cannot support the private respondent's claim
that he is also entitled to the financial aid provided in the
union's constitution and that the union cannot be
compelled to grant the said aid in the absence of a special
fund for the purpose.
On October 28, 1986, the public respondent through
Director Pura Ferrer-Calleja denied the petitioners' motion
for reconsideration stating that Article XIII, Section 5 of the
union's constitution and by-laws does not require a special
fund so that all union members similarly situated as the
private respondent must be entitled to the same right and
privilege regarding the grant of financial aid as therein
provided.
On December 18, 1986, a writ of execution was issued by
the public respondent in the following tenor:
NOW THEREFORE, you are hereby directed
to proceed to the premises of Johnson and
Johnson (FFW) located at Edison Road, Bo.
Ibayo, Paranaque, Metro Manila to collect
from the said union through its Treasurer,
Myrna Oloveja or to any responsible
officer of the union the amount of Twenty
Thousand Five Hundred Twenty Pesos
(P20,520.00), more or less representing
financial assistance to complainant under
the union's constitution and by-laws. In
case you fail to collect said amount in
cash, you are to cause the satisfaction of
the same on the union's movable or
immovable properties not exempt from
execution. You are to return this writ
within fifteen (15) days from your
compliance hereby together with your
report thereon. You may collect your legal
fees from the respondent union. (p. 55,
Rollo)
On December 24, 1986, the instant petition was filed with
prayer for a preliminary injunction. The temporary
restraining order issued by the Chief Justice on December
24, 1986 was confirmed in our resolution dated January 7,
1987.
The grounds relied upon by the petitioners are as follows:
A. THAT THE DECISION/ORDER IN
QUESTION IS CONTRARY TO LAW.
Page 29 of 54

B. THAT RESPONDENT OFFICIAL ACTED
WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION.
C. THAT WITH RESPECT TO PETITIONING
MEMBERS, THEY HAVE BEEN DEPRIVED OF
THEIR CONSTITUTIONAL RIGHT TO DUE
PROCESS OF LAW. (P. 13, Rollo)
We find unmeritorious the contention of the petitioners
that the questioned decision and order are contrary to law
for being tantamount to compelling the union to disburse
it funds without the authority of the general membership
and to collect from its members without the benefit of
individual payroll authorization.
Section 5, Article XIII of the petitioner-union's constitution
and by-laws earlier aforequoted is self-executory. The
financial aid extended to any suspended or terminated
union member is realized from the contributions declared
to be compulsory under the said provision in the amount
of seventy-five centavos due weekly from each union
member. The nature of the said contributions being
compulsory and the fact that the purpose as stated is for
financial aid clearly indicate that individual payroll
authorizations of the union members are not necessary.
The petitioner-union's constitution and by-laws govern the
relationship between and among its members. As in the
interpretation of contracts, if the terms are clear and leave
no doubt as to the intention of the parties, the literal
meaning of the stipulations shall control. (See Government
Service Insurance System v. Court of Appeals, 145 SCRA
311 [1986]). Section 5, Article XIII of the said constitution
and by-laws is in line with the petitioner- union's aims and
purposes which under Sec. 2, Article II include
To promote, establish and devise schemes
of mutual assistance among the members
in labor disputes.
Thus, there is no doubt that the petitioner-union can be
ordered to release its funds intended for the promotion of
mutual assistance in favor of the private respondent.
We likewise find untenable the argument of the
petitioners that the public respondent, in granting
financial aid to the private respondent, in effect,
substituted the decision of the petitioner-union to do
otherwise and that in so doing, the public respondent
gravely abused its discretion amounting to lack of
jurisdiction. The union constitution is a covenant between
the union and its members and among the members.
There is nothing in their constitution which leaves the legal
interpretation of its terms unilaterally to the union or its
officers or even the general membership. It is noteworthy
to quote the ruling made by the public respondent in this
respect, to wit:
The union constitution and by-laws clearly
show that any member who is suspended
or terminated from employment without
reasonable cause is entitled to financial
assistance from the union and its
members. The problem, however, is that
the constitution does not indicate which
body has the power to determine whether
a suspension or dismissal is for reasonable
cause or not. To our mind, the
constitution's silence on this matter is a
clear recognition of the labor arbiter's
exclusive jurisdiction over dismissal cases.
After all, the union's constitution and by-
laws is valid only insofar as it is not
inconsistent with existing laws. ... . (BLR
decision, p. 2; p. 115, Records)
An aggrieved member has to resort to a government
agency or tribunal. Considering that quasi-judicial agencies
like the public respondent's office have acquired expertise
since their jurisdiction is confined to specific matter, their
findings of fact in connection with their rulings are
generally accorded not only respect but at times even
finality if supported by substantial evidence. (See Manila
Mandarin Employees Union v. National Labor Relations
Commission, 154 SCRA 368 [1987]) Riker v. Ople, 155 SCRA
85 [1987]; and Palencia v. National Labor Relations
Commission, 153 SCRA 247 [1987]. We note from the
records that the petitioners have conflicting
interpretations of the same disputed provision one in
favor of Jerwin Taguba and another against the private
respondent.
On the ancillary issue presented by the petitioners
whether or not the petitioning union members have been
deprived of their right to due process of law because they
were never made parties to the case under consideration,
we rule that the fact that the union officers impleaded
since the inception of the case acted in a representative
capacity on behalf of the entire union's membership
substantially meets the requirements of due process with
respect to the said union members. Moreover, the
complaint filed against the union involves the
interpretation of its constitution favoring an aggrieved
member. The members are bound by the terms of their
own constitution. A suit to enforce a union constitution
does not have to be brought against each individual
member, especially where several thousand members
form the membership. If there is any violation of the right
to due process in the case at bar it is as regards the private
respondent since the petitioners-union has dispensed with
due process in deciding not to extend financial aid to the
Page 30 of 54

private respondent in the absence yet of a ruling by the
labor arbiter on whether his dismissal was for a reasonable
cause or not.
The remedy of the petitioners is to strike out or amend the
objectionable features of their constitution. They cannot
expect the public respondent to assist them in its non-
enforcement or violation.
WHEREFORE, PREMISES CONSIDERED, the instant petition
is hereby DISMISSED in the absence of a showing of grave
abuse of discretion on the part of the public respondent.
The decision of the public respondent dated April 17, 1986
as modified in a resolution dated August 17, 1986 is
AFFIRMED. The temporary restraining order issued by the
Court on December 24,1986 is SET ASIDE.
SO ORDERED.
Fernan C.J., Feliciano, Bidin and Cortes, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-43495-99 January 20, 1990
TROPICAL HUT EMPLOYEES' UNION-CGW, JOSE ENCINAS,
JOSE LUIS TRIBINO, FELIPE DURAN, MANUEL MANGYAO,
MAMERTO CAHUCOM, NEMESIO BARRO, TEODULFO
CAPAGNGAN, VICTORINO ABORRO, VIDAL MANTOS,
DALMACIO DALDE, LUCIO PIASAN, CANUTO LABADAN,
TERESO ROMERDE, CONRADO ENGALAN, SALVADOR
NERVA, BERNARDO ENGALAN, BONIFACIO CAGATIN,
BENEDICTO VALDEZ, EUSEBIO SUPILANAS, ALFREDO
HAMAYAN, ASUERO BONITO, GAVINO DEL CAMPO,
ZACARIAS DAMING, PRUDENCIO LADION, FULGENCIO
BERSALUNA, ALBERTO PERALES, ROMEO MAGRAMO,
GODOFREDO CAMINOS, GILDARDO DUMAS, JORGE
SALDIVAR, GENARO MADRIO, SEGUNDINO KUIZON, LUIS
SANDOVAL, NESTOR JAPAY, ROGELIO CUIZON, RENATO
ANTIPADO, GREGORIO CUEVO, MARTIN BALAZUELA,
CONSTANCIO CHU, CRISPIN TUBLE, FLORENCIO CHIU,
FABIAN CAHUCOM, EMILIANO VILLAMOR, RESTITUTO
HANDAYAN, VICTORINO ESPEDILLA, NOEL CHUA,
ARMANDO ALCORANO, ELEUTERIO TAGUIK, SAMSON
CRUDA, DANILO CASTRO, CENON VALLENAS, DANILO
CAWALING, SIMPLICIO GALLEROS, PERFECTO CUIZON,
PROCESO LAUROS, ANICETO BAYLON, EDISON ANDRES,
REYNALDO BAGOHIN, IRENEO SUPANGAN, RODRIGO
CAGATIN, TEODORO ORENCIO, ARMANDO LUAYON,
JAIME NERVA, NARCISO CUIZON, ALFREDO DEL ROSARIO,
EDUARDO LORENZO, PEDRO ARANGO, VICENTE
SUPANGAN, JACINTO BANAL AND BONIFACIO
PUERTO, petitioners,
vs.
TROPICAL HUT FOOD MARKET, INC., ESTELITA J. QUE,
ARTURO DILAG, MARCELINO LONTOK JR., NATIONAL
ASSOCIATION OF TRADE UNIONS (NATU), NATIONAL
LABOR RELATIONS COMMISSION (NLRC), HON. DIEGO P.
ATIENZA, GERONIMO Q. QUADRA, FEDERICO C.
BORROMEO, AND HON. BLAS F. OPLE,respondents.
Pacifico C. Rosal for petitioners.
Marcelino Lontok, Jr. for private respondents.
Dizon, Vitug & Fajardo Law Office for Tropical Hut Food
Market, Inc. and Que.

MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 seeking to set
aside the decisions of the public respondents Secretary of
Labor and National Labor Relations Commission which
reversed the Arbitrators rulings in favor of petitioners
herein.
The following factual background of this case appears from
the record:
On January 2, 1968, the rank and file workers of the
Tropical Hut Food Market Incorporated, referred to herein
as respondent company, organized a local union called the
Tropical Hut Employees Union, known for short as the
THEU, elected their officers, adopted their constitution
and by-laws and immediately sought affiliation with the
National Association of Trade Unions (NATU). On January
3, 1968, the NATU accepted the THEU application for
affiliation. Following such affiliation with NATU,
Registration Certificate No. 5544-IP was issued by the
Department of Labor in the name of the Tropical Hut
Employees Union NATU. It appears, however, that
NATU itself as a labor federation, was not registered with
the Department of Labor.
After several negotiations were conducted between THEU-
NATU, represented by its local president and the national
officers of the NATU, particularly Ignacio Lacsina,
President, Pacifico Rosal, Executive Vice-President and
Marcelino Lontok, Jr., Vice President, and respondent
Tropical Hut Food Market, Incorporated, thru its President
and General Manager, Cesar Azcona, Sr., a Collective
Bargaining Agreement was concluded between the parties
on April 1, 1968, the term of which expired on March 31,
1971. Said agreement' contained these clear and
unequivocal terms:
Page 31 of 54

This Agreement made and entered into
this __________ day of ___________,
1968, by and between:
The Tropical Hut Food Market, Inc., a
corporation duly organized and existing
under and by virtue of the laws of the
Republic of the Philippines, with principal
office at Quezon City, represented in this
Act by its President, Cesar B. Azcona
(hereinafter referred to as the Company)
and
The Tropical Hut Employees Union
NATU, a legitimate labor organization duly
organized and existing in accordance with
the laws of the Republic of the Philippines,
and affiliated with the National
Association of Trade Unions, with offices
at San Luis Terraces, Ermita, Manila, and
represented in this Act by its undersigned
officers (hereinafter referred to as the
UNION)
Witnesseth:
xxx xxx xxx
Article I
Coverage and Effectivity
Sec. 1. The COMPANY recognizes the
UNION as the sole and exclusive collective
bargaining agent for all its workers and
employees in all matters concerning
wages, hours of work, and other terms
and conditions of employment.
xxx xxx xxx
Article III
Union Membership and Union Check-off
Sec. 1 . . . Employees who are already
members of the UNION at the time of the
signing of this Agreement or who become
so thereafter shall be required to maintain
their membership therein as a condition of
continued employment.
xxx xxx xxx
Sec. 3Any employee who is expelled
from the UNION for joining another
federation or forming another union, or
who fails or refuses to maintain his
membership therein as required, . . . shall,
upon written request of the UNION be
discharged by the COMPANY. (Rollo, pp.
667-670)
And attached to the Agreement as Appendix "A" is a
check-off Authorization Form, the terms of which are as
follows:
We, the undersigned, hereby designate
the NATIONAL Association of Trade
Unions, of which the TROPICAL HUT
EMPLOYEES UNION is an affiliate as sole
collective bargaining agent in all matters
relating to salary rates, hours of work and
other terms and conditions of
employment in the Tropical Hut Food
Market, Inc. and we hereby authorize the
said company to deduct the amount
of Four (P 4.00) Pesos each every month as
our monthly dues and to deliver the
amount to the Treasurer of the Union or
his duly authorized representatives. (Rollo,
pp. 680-684)
On May 21, 1971, respondent company and THEU-NATU
entered into a new Collective Bargaining Agreement which
ended on March 31, 1974. This new CBA incorporated the
previous union-shop security clause and the attached
check-off authorization form.
Sometime in July, 1973, Arturo Dilag, incumbent President
of THEU-NATU, was appointed by the respondent
company as Assistant Unit Manager. On July 24, 1973, he
wrote the general membership of his union that for reason
of his present position, he was resigning as President of
the THEU-NATU effective that date. As a consequence
thereof, his Vice-President, Jose Encinas, assumed and
discharged the duties of the presidency of the THEU-
NATU.
On December 19,1973, NATU received a letter dated
December 15, 1973, jointly signed by the incumbent
officers of the local union informing the NATU that THEU
was disaffiliating from the NATU federation. On December
20, 1973, the Secretary of the THEU, Nemesio Barro, made
an announcement in an open letter to the general
membership of the THEU, concerning the latter's
disaffiliation from the NATU and its affiliation with the
Confederation of General Workers (CGW). The letter was
passed around among the members of the THEU-NATU, to
which around one hundred and thirty-seven (137)
signatures appeared as having given their consent to and
Page 32 of 54

acknowledgment of the decision to disaffiliate the THEU
from the NATU.
On January 1, 1974, the general membership of the so-
called THEU-CGW held its annual election of officers, with
Jose Encinas elected as President. On January 3, 1974,
Encinas, in his capacity as THEU-CGW President, informed
the respondent company of the result of the elections. On
January 9, 1974, Pacifico Rosal, President of the
Confederation of General Workers (CGW), wrote a letter in
behalf of complainant THEU-CGW to the respondent
company demanding the remittance of the union dues
collected by the Tropical Hut Food Mart, Incorporated to
the THEU-CGW, but this was refused by the respondent
company.
On January 11, 1974, the NATU thru its Vice-President
Marcelino Lontok, Jr., wrote Vidal Mantos, requiring the
latter to assume immediately the position of President of
the THEU-NATU in place of Jose Encinas, but the position
was declined by Mantos. On the same day, Lontok, Jr.,
informed Encinas in a letter, concerning the request made
by the NATU federation to the respondent company to
dismiss him (Encinas) in view of his violation of Section 3 of
Article III of the Collective Bargaining Agreement. Encinas
was also advised in the letter that NATU was returning the
letter of disaffiliation on the ground that:
1. Under the restructuring program NOT of
the Bureau of Labor but of the Philippine
National Trade Union Center in
conjunction with the NATU and other
established national labor centers, retail
clerks and employees such as our
members in the Tropical Hut pertain to
Industry II which by consensus, has been
assigned already to the jurisdiction of the
NATU;
2. The right to disaffiliate belongs to the
union membership who on the basis of
verified reports received by have not
even been consulted by you regarding the
matter;
3. Assuming that the disaffiliation decision
was properly reached; your letter
nevertheless is unacceptable in view of
Article V, Section 1, of the NATU
Constitution which provides that
"withdrawal from the organization shall he
valid provided three (3) months notice of
intention to withdraw is served upon the
National Executive Council." (p. 281, Rollo)
In view of NATU's request, the respondent
company, on the same day, which was January 11,
1974, suspended Encinas pending the application
for clearance with the Department of Labor to
dismiss him. On January 12, 1974, members of the
THEU-CGW passed a resolution protesting the
suspension of Encinas and reiterated their
ratification and approval of their union's
disaffiliation from NATU and their affiliation with
the Confederation of General Workers (CGW). It
was Encinas' suspension that caused the filing of
NLRC Case No. LR-2511 on January 11, 1974
against private respondents herein, charging them
of unfair labor practice.
On January 15,1974, upon the request of NATU,
respondent company applied for clearance with the
Secretary of Labor to dismiss the other officers and
members of THEU-CGW. The company also suspended
them effective that day. NLRC Case No. LR-2521 was filed
by THEU-CGW and individual complainants against private
respondents for unfair labor practices.
On January 19, 1974, Lontok, acting as temporary
chairman, presided over the election of officers of the
remaining THEU-NATU in an emergency meeting pending
the holding of a special election to be called at a later date.
In the alleged election, Arturo Dilag was elected acting
THEU-NATU President together with the other union
officers. On February 14, 1974, these temporary officers
were considered as having been elected as regular officers
for the year 1974.
On January 30, 1974, petitioner THEU-CGW wrote a letter
to Juan Ponce Enrile, Secretary of National Defense,
complaining of the unfair labor practices committed by
respondent company against its members and requesting
assistance on the matter. The aforementioned letter
contained the signatures of one hundred forty-three (143)
members.
On February 24,1974, the secretary of THEU-NATU,
notified the entire rank and file employees of the company
that they will be given forty-eight (48) hours upon receipt
of the notice within which to answer and affirm their
membership with THEU-NATU. When the petitioner
employees failed to reply, Arturo Dilag advised them thru
letters dated February 26, March 2 and 5, 1974, that the
THEU-NATU shall enforce the union security clause set
forth in the CBA, and that he had requested respondent
company to dismiss them.
Respondent company, thereafter, wrote the petitioner
employees demanding the latter's comment on Dilag's
charges before action was taken thereon. However, no
comment or reply was received from petitioners. In view
of this, Estelita Que, President/General Manager of
respondent company, upon Dilag's request, suspended
twenty four (24) workers on March 5, 1974, another thirty
seven (37) on March 8, 1974 and two (2) more on March
Page 33 of 54

11, 1974, pending approval by the Secretary of Labor of
the application for their dismissal.
As a consequence thereof, NLRC Case Nos. LR-2971, LR-
3015 and an unnumbered case were filed by petitioners
against Tropical Hut Food Market, Incorporated, Estelita
Que, Hernando Sarmiento and Arturo Dilag.
It is significant to note that the joint letter petition signed
by sixty-seven (67) employees was filed with the Secretary
of Labor, the NLRC Chairman and Director of Labor
Relations to cancel the words NATU after the name of
Tropical Hut Employee Union under Registration
Certificate No. 5544 IP. Another letter signed by one
hundred forty-six (146) members of THEU-CGW was sent
to the President of the Philippines informing him of the
unfair labor practices committed by private respondents
against THEU-CGW members.
After hearing the parties in NLRC Cases Nos. 2511 and
2521 jointly filed with the Labor Arbiter, Arbitrator Daniel
Lucas issued an order dated March 21, 1974, holding that
the issues raised by the parties became moot and
academic with the issuance of NLRC Order dated February
25, 1974 in NLRC Case No. LR-2670, which directed the
holding of a certification election among the rank and file
workers of the respondent company between the THEU-
NATU and THEU-CGW. He also ordered: a) the
reinstatement of all complainants; b) for the respondent
company to cease and desist from committing further acts
of dismissals without previous order from the NLRC and
for the complainant Tropical Hut Employees UNION-CGW
to file representation cases on a case to case basis during
the freedom period provided for by the existing CBA
between the parties (pp. 91-93, Rollo).
With regard to NLRC Case Nos. LR-2971, LR-3015, and the
unnumbered case, Arbitrator Cleto T. Villatuya rendered a
decision dated October 14, 1974, the dispositive portion of
which states:
Premises considered, a DECISION is hereby
rendered ordering respondent company to
reinstate immediately the sixty three (63)
complainants to their former positions
with back wages from the time they were
illegally suspended up to their actual
reinstatement without loss of seniority
and other employment rights and
privileges, and ordering the respondents
to desist from further committing acts of
unfair labor practice. The respondent
company's application for clearance filed
with the Secretary of Labor to terminate
the subject complainants' services
effective March 20 and 23, 1974, should
be denied.
SO ORDERED. (pp. 147-148, Rollo)
From the orders rendered above by Abitrator Daniel Lucas
in NLRC Cases No. LR-2511 and LR-2521 and by Arbitrator
Cleto Villatuya in NLRC Cases Nos. LR-2971, LR-3015, and
the unnumbered case, all parties thereto, namely,
petitioners herein, respondent company, NATU and Dilag
appealed to the National Labor Relations Commission.
In a decision rendered on August 1, 1975, the National
Labor Relations Commission found the private
respondents' appeals meritorious, and stated, inter alia:
WHEREFORE, in view of the foregoing
premises, the Order of Arbitrator Lucas in
NLRC CASE NOS. LR-2511, 2521 and the
decision of Arbitrator Villatuya in NLRC
CASE NOS. LR-2971, 3015 and the
unnumbered Case are hereby REVERSED.
Accordingly, the individual complainants
are deemed to have lost their status as
employees of the respondent company.
However, considering that the individual
complainants are not presumed to be
familiar with nor to have anticipated the
legal mesh they would find themselves in,
after their "disaffiliation" from National
Association of Trade Unions and the THEU-
NATU, much less the legal consequences
of the said action which we presume they
have taken in all good faith; considering,
further, that the thrust of the new
orientation in labor relations is not
towards the punishment of acts violative
of contractual relations but rather towards
fair adjustments of the resulting
complications; and considering, finally, the
consequent economic hardships that
would be visited on the individual
complainants, if the law were to be strictly
enforced against them, this Commission is
constrained to be magnanimous in this
instant, notwithstanding its obligation to
give full force and effect to the majesty of
the law, and hereby orders the
respondent company, under pain of being
cited for contempt for failure to do so, to
give the individual complainants a second
chance by reemploying them upon their
voluntary reaffirmation of membership
and loyalty to the Tropical Hut Employees
Union-NATU and the National Association
of Trade Unions in the event it hires
additional personnel.
SO ORDERED. (pp. 312-313, Rollo)
Page 34 of 54

The petitioner employees appealed the decision of the
respondent National Labor Relations Commission to the
Secretary of Labor. On February 23, 1976, the Secretary of
Labor rendered a decision affirming the findings of the
Commission, which provided inter alia:
We find, after a careful review of the
record, no sufficient justification to alter
the decision appealed from except that
portion of the dispositive part which
states:
. . . this Commission . . .
hereby orders respondent
company under pain of
being cited for contempt
for failure to do so, to give
the individual
complainants a second
chance by reemploying
them upon their voluntary
reaffirmation of
membership and loyalty
to the Tropical Hut
Employees UNION-NATU
and the National
Association of Trade
Union in the event it hires
additional personnel.
Compliance by respondent of the above
undertaking is not immediately feasible
considering that the same is based on an
uncertain event, i.e., reemployment of
individual complainants "in the event that
management hires additional personnel,"
after they shall have reaffirmed their
loyalty to THEU-NATU, which is unlikely.
In lieu of the foregoing, and to give
complainants positive relief pursuant to
Section 9, Implementing Instruction No. 1.
dated November 9, 1972, respondent is
hereby ordered to grant to all the
individual complainants financial
assistance equivalent to one (1) month
salary for every year of service.
WHEREFORE, with the modification as
above indicated, the Decision of the
National Labor Relations Commission is
hereby affirmed.
SO ORDERED.(pp. 317-318, Rollo)
From the various pleadings filed and arguments adduced
by petitioners and respondents, the following issues
appear to be those presented for resolution in this petition
to wit: 1) whether or not the petitioners failed to exhaust
administrative remedies when they immediately elevated
the case to this Court without an appeal having been made
to the Office of the President; 2) whether or not the
disaffiliation of the local union from the national
federation was valid; and 3) whether or not the dismissal
of petitioner employees resulting from their unions
disaffiliation for the mother federation was illegal and
constituted unfair labor practice on the part of respondent
company and federation.
We find the petition highly meritorious.
The applicable law then is the Labor Code, PD 442, as
amended by PD 643 on January 21, 1975, which states:
Art. 222. Appeal . . .
xxx xxx xxx
Decisions of the Secretary of Labor may be
appealed to the President of the
Philippines subject to such conditions or
limitations as the President may direct.
(Emphasis ours)
The remedy of appeal from the Secretary of Labor to the
Office of the President is not a mandatory requirement
before resort to courts can be had, but an optional relief
provided by law to parties seeking expeditious disposition
of their labor disputes. Failure to avail of such relief shall
not in any way served as an impediment to judicial
intervention. And where the issue is lack of power or
arbitrary or improvident exercise thereof, decisions of the
Secretary of Labor may be questioned in
a certiorari proceeding without prior appeal to the
President (Arrastre Security Association TUPAS v. Ople,
No. L-45344, February 20, 1984, 127 SCRA 580). Since the
instant petition raises the same issue of grave abuse of
discretion of the Secretary of Labor amounting to lack of
or in excess of jurisdiction in deciding the controversy, this
Court can properly take cognizance of and resolve the
issues raised herein.
This brings Us to the question of the legality of the
dismissal meted to petitioner employees. In the celebrated
case of Liberty Cotton Mills Workers Union v. Liberty
Cotton Mills, L-33187, September 4, 1975, 66 SCRA 512,
We held that the validity of the dismissals pursuant to the
union security clause in the collective bargaining
agreement hinges on the validity of the disaffiliation of the
local union from the federation.
The right of a local union to disaffiliate from its mother
federation is well-settled. A local union, being a separate
and voluntary association, is free to serve the interest of
all its members including the freedom to disaffiliate when
circumstances warrant. This right is consistent with the
Page 35 of 54

constitutional guarantee of freedom of association
(Volkschel Labor Union v. Bureau of Labor Relations, No. L-
45824, June 19, 1985, 137 SCRA 42).
All employees enjoy the right to self organization and to
form and join labor organizations of their own choosing for
the purpose of collective bargaining and to engage in
concerted activities for their mutual aid or protection. This
is a fundamental right of labor that derives its existence
from the Constitution. In interpreting the protection to
labor and social justice provisions of the Constitution and
the labor laws or rules or regulations, We have always
adopted the liberal approach which favors the exercise of
labor rights.
Relevant on this point is the basic principle We have
repeatedly in affirmed in many rulings:
. . . The locals are separate and distinct
units primarily designed to secure and
maintain an equality of bargaining power
between the employer and their
employee-members in the economic
struggle for the fruits of the joint
productive effort of labor and capital; and
the association of the locals into the
national union (PAFLU) was in furtherance
of the same end. These associations are
consensual entities capable of entering
into such legal relations with their
member. The essential purpose was the
affiliation of the local unions into a
common enterprise to increase by
collective action the common bargaining
power in respect of the terms and
conditions of labor. Yet the locals
remained the basic units of association,
free to serve their own and the common
interest of all, subject to the restraints
imposed by the Constitution and By-Laws
of the Association, and free also to
renounce the affiliation for mutual welfare
upon the terms laid down in the
agreement which brought it into
existence. (Adamson & Adamson, Inc. v.
CIR, No. L-35120, January 31, 1984, 127
SCRA 268; Elisco-Elirol Labor Union
(NAFLU) v. Noriel, No. L-41955, December
29, 1977, 80 SCRA 681; Liberty Cotton
Mills Workers Union v. Liberty Cotton
Mills, Inc., supra).
The inclusion of the word NATU after the name of the local
union THEU in the registration with the Department of
Labor is merely to stress that the THEU is NATU's affiliate
at the time of the registration. It does not mean that the
said local union cannot stand on its own. Neither can it be
interpreted to mean that it cannot pursue its own
interests independently of the federation. A local union
owes its creation and continued existence to the will of its
members and not to the federation to which it belongs.
When the local union withdrew from the old federation to
join a new federation, it was merely exercising its primary
right to labor organization for the effective enhancement
and protection of common interests. In the absence of
enforceable provisions in the federation's constitution
preventing disaffiliation of a local union a local may sever
its relationship with its parent (People's Industrial and
Commercial Employees and Workers Organization (FFW) v.
People's Industrial and Commercial Corporation, No.
37687, March 15, 1982, 112 SCRA 440).
There is nothing in the constitution of the NATU or in the
constitution of the THEU-NATU that the THEU was
expressly forbidden to disaffiliate from the federation (pp.
62, 281, Rollo), The alleged non-compliance of the local
union with the provision in the NATU Constitution
requiring the service of three months notice of intention
to withdraw did not produce the effect of nullifying the
disaffiliation for the following grounds: firstly, NATU was
not even a legitimate labor organization, it appearing that
it was not registered at that time with the Department of
Labor, and therefore did not possess and acquire, in the
first place, the legal personality to enforce its constitution
and laws, much less the right and privilege under the Labor
Code to organize and affiliate chapters or locals within its
group, and secondly, the act of non-compliance with the
procedure on withdrawal is premised on purely technical
grounds which cannot rise above the fundamental right of
self-organization.
Respondent Secretary of Labor, in affirming the decision of
the respondent Commission, concluded that the supposed
decision to disaffiliate was not the subject of a free and
open discussion and decision on the part of the THEU-
NATU general membership (p. 305, Rollo). This, however,
is contradicted by the evidence on record. Moreover, We
are inclined to believe Arbitrator Villatuya's findings to the
contrary, as follows:
. . . . However, the complainants refute
this allegation by submitting the following:
a) Letter dated December 20, 1.973 signed
by 142 members (Exhs. "B to B-5")
resolution dated January 12, 1974, signed
by 140 members (Exhs. "H to H-6") letter
dated February 26, 1974 to the
Department of Labor signed by 165
members (Exhs. "I to I-10"); d) letter dated
January 30, 1974 to the Secretary of the
National Defense signed by 144 members
(Exhs. "0 to 0-5") and; e) letter dated
March 6, 1974 signed by 146 members
Page 36 of 54

addressed to the President of the
Philippines (Exhs. "HH to HH-5"), to show
that in several instances, the members of
the THEU-NATU have acknowledged their
disaffiliation from NATU. The letters of the
complainants also indicate that an
overwhelming majority have freely and
voluntarily signed their union's
disaffiliation from NATU, otherwise, if
there was really deception employed in
securing their signatures as claimed by
NATU/ Dilag, it could not be possible to
get their signatures in five different
documents. (p. 144, Rollo)
We are aware of the time-honored doctrine that the
findings of the NLRC and the Secretary of Labor are
binding on this Court if supported by substantial evidence.
However, in the same way that the findings of facts
unsupported by substantial and credible evidence do not
bind this Court, neither will We uphold erroneous
conclusions of the NLRC and the Secretary of Labor when
We find that the latter committed grave abuse of
discretion in reversing the decision of the labor arbiter
(San Miguel Corporation v. NLRC, L-50321, March 13,
1984, 128 SCRA 180). In the instant case, the factual
findings of the arbitrator were correct against that of
public respondents.
Further, there is no merit in the contention of the
respondents that the act of disaffiliation violated the union
security clause of the CBA and that their dismissal as a
consequence thereof is valid. A perusal of the collective
bargaining agreements shows that the THEU-NATU, and
not the NATU federation, was recognized as the sole and
exclusive collective bargaining agent for all its workers and
employees in all matters concerning wages, hours of work
and other terms and conditions of employment (pp. 667-
706, Rollo). Although NATU was designated as the sole
bargaining agent in the check-off authorization form
attached to the CBA, this simply means it was acting only
for and in behalf of its affiliate. The NATU possessed the
status of an agent while the local union remained the basic
principal union which entered into contract with the
respondent company. When the THEU disaffiliated from its
mother federation, the former did not lose its legal
personality as the bargaining union under the CBA.
Moreover, the union security clause embodied in the
agreements cannot be used to justify the dismissals meted
to petitioners since it is not applicable to the
circumstances obtaining in this case. The CBA imposes
dismissal only in case an employee is expelled from the
union for joining another federation or for forming
another union or who fails or refuses to maintain
membership therein. The case at bar does not involve the
withdrawal of merely some employees from the union but
of the whole THEU itself from its federation. Clearly, since
there is no violation of the union security provision in the
CBA, there was no sufficient ground to terminate the
employment of petitioners.
Public respondents considered the existence of Arturo
Dilag's group as the remaining true and valid union. We,
however, are inclined to agree instead with the
Arbitrator's findings when he declared:
. . . . Much more, the so-called THEU-NATU
under Dilag's group which assumes to be
the original THEU-NATU has a very
doubtful and questionable existence not
to mention that the alleged president is
performing supervisory functions and not
qualified to be a bona fide member of the
rank and file union. (p. 146, Rollo)
Records show that Arturo Dilag had resigned in the past as
President of THEU-NATU because of his promotion to a
managerial or supervisory position as Assistant Unit
Manager of respondent Company. Petitioner Jose Encinas
replaced Dilag as President and continued to hold such
position at the time of the disaffiliation of the union from
the federation. It is therefore improper and contrary to
law for Dilag to reassume the leadership of the remaining
group which was alleged to be the true union since he
belonged to the managerial personnel who could not be
expected to work for the betterment of the rank and file
employees. Besides, managers and supervisors are
prohibited from joining a rank and file union (Binalbagan
Isabela Sugar Co., Inc. (BISCOM) v. Philippine Association
of Free Labor Unions (PAFLU), et al., L-18782, August 29,
1963, 8 SCRA 700). Correspondingly, if a manager or
supervisor organizes or joins a rank and file union, he will
be required to resign therefrom (Magalit, et al. v. Court of
Industrial Relations, et al., L-20448, May 25, 1965,14 SCRA
72).
Public respondents further submit that several employees
who disaffiliate their union from the NATU subsequently
retracted and reaffirmed their membership with the
THEU-NATU. In the decision which was affirmed by
respondent Secretary of Labor, the respondent
Commission stated that:
. . . out of the alleged one hundred and
seventy-one (171) members of the THEU-
CGW whose signatures appeared in the
"Analysis of Various Documents Signed by
Majority Members of the THEU-CGW,
(Annex "T", Complainants), which
incidentally was relied upon by Arbitrator
Villatuya in holding that complainant
THEU-CGW commanded the majority of
employees in respondent company,
Page 37 of 54

ninety-three (93) of the alleged signatories
reaffirmed their membership with the
THEU-NATU and renounced whatever
connection they may have had with other
labor unions, (meaning the complainant
THEU-CGW) either through resolution or
membership application forms they have
unwittingly signed." (p. 306, Rollo)
Granting arguendo, that the fact of retraction is true, the
evidence on record shows that the letters of retraction
were executed on various dates beginning January 11,
1974 to March 8, 1974 (pp. 278-280, Rollo). This shows
that the retractions were made more or less after the
suspension pending dismissal on January 11, 1974 of Jose
Encinas, formerly THEU-NATU President, who became
THEU-CGW President, and the suspension pending their
dismissal of the other elected officers and members of the
THEU-CGW on January 15, 1974. It is also clear that some
of the retractions occurred after the suspension of the first
set of workers numbering about twenty-four (24) on
March 5, 1974. There is no use in saying that the
retractions obliterated the act of disaffiliation as there are
doubts that they were freely and voluntarily done
especially during such time when their own union officers
and co-workers were already suspended pending their
dismissal.
Finally, with regard to the process by which the workers
were suspended or dismissed, this Court finds that it was
hastily and summarily done without the necessary due
process. The respondent company sent a letter to
petitioners herein, advising them of NATU/Dilag's
recommendation of their dismissal and at the same time
giving them forty-eight (48) hours within which to
comment (p. 637, Rollo). When petitioners failed to do so,
respondent company immediately suspended them and
thereafter effected their dismissal. This is certainly not in
fulfillment of the mandate of due process, which is to
afford the employee to be dismissed an opportunity to be
heard.
The prerogative of the employer to dismiss or lay-off an
employee should be done without abuse of discretion or
arbitrainess, for what is at stake is not only the employee's
name or position but also his means of livelihood. Thus,
the discharge of an employee from his employment is null
and void where the employee was not formally
investigated and given the opportunity to refute the
alleged findings made by the company (De Leon v. NLRC, L-
52056, October 30, 1980, 100 SCRA 691). Likewise, an
employer can be adjudged guilty of unfair labor practice
for having dismissed its employees in line with a closed
shop provision if they were not given a proper hearing
(Binalbagan-Isabela Sugar Co., Inc.,(BISCOM) v. Philippine
Association of Free Labor Unions (PAFLU) et al., L-18782,
August 29, 1963, 8 SCRA 700).
In view of the fact that the dispute revolved around the
mother federation and its local, with the company
suspending and dismissing the workers at the instance of
the mother federation then, the company's liability should
be limited to the immediate reinstatement of the workers.
And since their dismissals were effected without previous
hearing and at the instance of NATU, this federation
should be held liable to the petitioners for the payment of
their backwages, as what We have ruled in the Liberty
Cotton Mills Case (supra).
ACCORDINGLY, the petition is hereby GRANTED and the
assailed decision of respondent Secretary of Labor is
REVERSED and SET ASIDE, and the respondent company is
hereby ordered to immediately reinstate all the petitioner
employees within thirty (30) days from notice of this
decision. If reinstatement is no longer feasible, the
respondent company is ordered to pay petitioners
separation pay equivalent to one (1) month pay for every
year of service. The respondent NATU federation is
directed to pay petitioners the amount of three (3) years
backwages without deduction or qualification. This
decision shall be immediately executory upon
promulgation and notice to the parties.
SO ORDERED.
Narvasa, Cruz, Gancayco and Grio-Aquino, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 131235 November 16, 1999
UST FACULTY UNION (USTFU), GIL Y. GAMILLA, CORAZON
QUI, NORMA CALAGUAS, IRMA POTENCIANO, LUZ DE
GUZMAN, REMEDIOS GARCIA, RENE ARNEJO, EDITHA
OCAMPO, CESAR REYES, CELSO NIERRA, GLICERIA
BALDRES, MA. LOURDES MEDINA, HIDELITA GABO,
MAFEL YSRAEL, LAURA ABARA, NATIVIDAD SANTOS,
FERDINAND LIMOS, CARMELITA ESPINA, ZENAIDA
FAMORCA, PHILIP AGUINALDO, BENEDICTA ALAVA and
LEONCIO CASAL, petitioners,
vs.
Dir. BENEDICTO ERNESTO R. BITONIO JR. of the Bureau of
Labor Relations, Med-Arbiter TOMAS F. FALCONITIN of
The National Capital Region, Department of Labor and
Employment (DOLE), EDUARDO J. MARIO JR., MA.
MELVYN ALAMIS, NORMA COLLANTES, URBANO
ALABAGIA, RONALDO ASUNCION, ZENAIDA BURGOS,
ANTHONY CURA, FULVIO M. GUERRERO, MYRNA
Page 38 of 54

HILARIO, TERESITA MEER, FERNANDO PEDROSA, NILDA
REDOBLADO, RENE SISON, EVELYN TIROL and ROSIE
ALCANTARA,respondents.

PANGANIBAN, J.:
There is a right way to do the right thing at the right time
for the right reasons,
1
and in the present case, in the right
forum by the right parties. While grievances against union
leaders constitute legitimate complaints deserving
appropriate redress, action thereon should be made in the
proper forum at the proper time and after observance of
proper procedures. Similarly, the election of union officers
should be conducted in accordance with the provisions of
the union's constitution and bylaws, as well as the
Philippine Constitution and the Labor Code. Specifically,
while all legitimate faculty members of the University of
Santo Tomas (UST) belonging to a collective bargaining
unit may take part in a duly convened certification
election, only bona fide members of the UST Faculty Union
(USTFU) may participate and vote in a legally called
election for union officers. Mob hysteria, however well-
intentioned, is not a substitute for the rule of law.
The Case
The Petition for Certiorari before us assails the August 15,
1997 Resolution
2
of Director Benedicto Ernesto R. Bitonio
Jr. of the Bureau of Labor Relations (BLR) in BLR Case No.
A-8-49-97, which affirmed the February 11, 1997 Decision
of Med-Arbiter Tomas F. Falconitin. The med-arbiters
Decision disposed as follows:
WHEREFORE, premises considered,
judgment is hereby rendered declaring the
election of USTFU officers conducted on
October 4, 1996 and its election results as
null and void ab initio.
Accordingly, respondents Gil Gamilla, et
al are hereby ordered to cease and desist
from acting and performing the duties and
functions of the legitimate officers of [the]
University of Santo Tomas Faculty Union
(USTFU) pursuant to [the] union's
constitution and by-laws (CBL).
The Temporary Restraining Order (TRO)
issued by this Office on December 11,
1996 in connection with the instant
petition, is hereby made and declared
permanent.
3

Likewise challenged is the October 30, 1997 Resolution
4
of
Director Bitonio, which denied petitioners' Motion for
Reconsideration.
The Facts
The factual antecedents of the case are summarized in the
assailed Resolution as follows:
Petitioners-appellees [herein Private
Respondents] Marino, et. al. (appellees)
are duly elected officers of the UST Faculty
Union (USTFU). The union has a subsisting
five-year Collective Bargaining Agreement
with its employer, the University of Santo
Tomas (UST). The CBA was registered with
the Industrial Relations Division, DOLE-
NCR, on 20 February 1995. It is set to
expire on 31 May 1998.
On 21 September 1996, appellee
Collantes, in her capacity as Secretary
General of USTFU, posted a notice
addressed to all USTFU members
announcing a general assembly to be held
on 05 October 1996. Among others, the
general assembly was called to elect
USTFU's next set of officers. Through the
notice, the members were also informed
of the constitution of a Committee on
Elections (COMELEC) to oversee the
elections. (Annex "B", petition)
On 01 October 1996, some of herein
appellants filed a separate petition with
the Med-Arbiter, DOLE-NCR, directed
against herein appellees and the members
of the COMELEC. Docketed as Case No.
NCR-OD-M-9610-001, the petition alleged
that the COMELEC was not constituted in
accordance with USTFU's constitution and
by-laws (CBL) and that no rules had been
issued to govern the conduct of the 05
October 1996 election.
On 02 October 1996, the secretary general
of UST, upon the request of the various
UST faculty club presidents (See paragraph
VI, Respondents' Comment and Motion to
Dismiss), issued notices allowing all faculty
members to hold a convocation on 04
October 1996 (See Annex "C" Petition;
Annexes "4" to "10", Appeal).
Denominated as [a] general faculty
assembly, the convocation was supposed
to discuss the "state of the unratified UST-
USTFU CBA" and "status and election of
USTFU officers" (Annex "11", Appeal)
Page 39 of 54

On 04 October 1996, the med-arbiter in
Case No. NCR-OD-M-9610-001 issued a
temporary restraining order against herein
appellees enjoining them from conducting
the election scheduled on 05 October
1996.
Also on 04 October 1996, and as earlier
announced by the UST secretary general,
the general faculty assembly was held as
scheduled. The general assembly was
attended by members of the USTFU and,
as admitted by the appellants, also by
"non-USTFU members [who] are members
in good standing of the UST Academic
Community Collective Bargaining Unit"
(See paragraph XI, Respondents' Comment
and Motion to Dismiss). On this occasion,
appellants were elected as USTFU's new
set of officers by acclamation and clapping
of hands (See paragraphs 40 to 50, Annex
"12", Appeal).
The election of the appellants came about
upon a motion of one Atty. Lopez,
admittedly not a member of USTFU, that
the USTFU CBL and "the rules of the
election be suspended and that the
election be held [on] that day" (See
paragraph 39, Idem.)
On 11 October 1996, appellees filed the
instant petition seeking injunctive reliefs
and the nullification of the results of the
04 October 1996 election. Appellees
alleged that the holding of the same
violated the temporary restraining order
issued in Case No. NCR-OD-M-9610-001.
Accusing appellants of usurpation,
appellees characterized the election as
spurious for being violative of USTFU's
CBL, specifically because the general
assembly resulting in the election of
appellants was not called by the Board of
Officers of the USTFU; there was no
compliance with the ten-day notice rule
required by Section 1, Article VIII of the
CBL; the supposed elections were
conducted without a COMELEC being
constituted by the Board of Officers in
accordance with Section 1, Article IX of the
CBL; the elections were not by secret
balloting as required by Section 1, Article V
and Section 6, Article IX of the CBL, and,
the general assembly was convened by
faculty members some of whom were not
members of USTFU, so much so that non-
USTFU members were allowed to vote in
violation of Section 1, Article V of the CBL.
On 24 October 1996, appellees filed
another urgent ex-parte motion for a
temporary restraining order, this time
alleging that appellants had served the
former a notice to vacate the union office.
For their part, appellants moved to dismiss
the original petition and the subsequent
motion on jurisdictional grounds. Both the
petition and the motion were captioned to
be for "Prohibition, Injunction with Prayer
for Preliminary Injunction and Temporary
Restraining Order." According to the
appellants, the med-arbiter has no
jurisdiction over petitions for prohibition,
"including the ancillary remedies of
restraining order and/or preliminary
injunction, which are merely incidental to
the main petition for PROHIBITION"
(Paragraph XVIII3, Respondents' Comment
and Motion to Dismiss). Appellants also
averred that they now constituted the
new set of union officers having been
elected in accordance with law after the
term of office of appellees had expired.
They further maintained that appellees'
scheduling of the 5 October 1996 elections
was illegal because no rules and
regulations governing the elections were
promulgated as required by USTFU's CBL
and that one of the members of the
COMELEC was not a registered member of
USTFU. Appellants likewise noted that the
elections called by the appellees should
have been postponed to allow the
promulgation of rules and regulations and
to "insure a free, clean, honest and orderly
elections and to afford at the same time
the greater majority of the general
membership to participate" (See
paragraph V, Idem). Finally, appellants
contended that the holding of the general
faculty assembly on 04 October 1996 was
under the control of the Council of
College/Faculty Club Presidents in
cooperation with the USTFU Reformist
Alliance and that they received the
Temporary Restraining Order issued in
Case No. NCR-OD-M-9610-001 only on 07
October 1996 and were not aware of the
same on 04 October 1996.
On 03 December 1996, appellants and UST
allegedly entered into another CBA
covering the period from 01 June 1996 to
Page 40 of 54

31 May 2001 (Annex 11, appellants'
Rejoinder to the Reply and Opposition).
Consequently, appellees again moved for
the issuance of a temporary restraining
order to prevent appellants from making
further representations that [they] had
entered into a new agreement with UST.
Appellees also reiterated their earlier
stand that appellants were usurping the
former's duties and functions and should
be stopped from continuing such acts.
On 11 December 1996, over appellants'
insistence that the issue of jurisdiction
should first be resolved, the med-arbiter
issued a temporary restraining order
directing the respondents to cease and
desist from performing any and all acts
pertaining to the duties and functions of
the officers and directors of USTFU.
In the meantime, appellants claimed that
the new CBA was purportedly ratified by
an overwhelming majority of UST's
academic community on 12 December
1996 (Annexes 1 to 10, Idem). For this
reason, appellants moved for the dismissal
of what it denominated as appellees'
petition for prohibition on the ground that
this had become moot and academic.
5

Petitioners appealed the med-arbiter's Decision to the
labor secretary,
6
who transmitted the records of the case
to the Bureau of Labor Relations which, under Department
Order No. 9, was authorized to resolve appeals of intra-
union cases, consistent with the last paragraph of Article
241 of the Labor Code.
7

The Assailed Ruling
Agreeing with the med-arbiter that the USTFU officers'
purported election held on October 4, 1994 was void for
having been conducted in violation of the union's
Constitution and Bylaws (CBL), Public Respondent Bitonio
rejected petitioners' contention that it was a legitimate
exercise of their right to self-organization. He ruled that
the CBL, which constituted the covenant between the
union and its members, could not be suspended during the
October 4, 1996 general assembly of all faculty members,
since that assembly had not been convened or authorized
by the USTFU.
Director Bitonio likewise held that the October 4, 1996
election could not be legitimized by the recognition of the
newly "elected" set of officers by UST or by the alleged
ratification of the new CBA by the general membership of
the USTFU. Ruled Respondent Bitonio:
This submission is flawed. The issue at
hand is not collective bargaining
representation but union leadership, a
matter that should concern only the
members of USTFU. As pointed out by the
appellees, the privilege of determining
who the union officers will be belongs
exclusively to the members of the union.
Said privilege is exercised in an election
proceeding in accordance with the union's
CBL and applicable law.
To accept appellants' claim to legitimacy
on the foregoing grounds is to invest in
appellants the position, duties,
responsibilities, rights and privileges of
USTFU officers without the benefit of a
lawful electoral exercise as defined in
USTFU's CBL and Article 241(c) of the
Labor Code. Not to mention the fact that
labor laws prohibit the employer from
interfering with the employees in the
latter' exercise of their right to self-
organization. To allow appellants to
become USTFU officers on the strength of
management's recognition of them is to
concede to the employer the power of
determining who should be USTFU's
leaders. This is a clear case of interference
in the exercise by USTFU members of their
right to self-organization.
8

Hence, this Petition.
9

The Issues
The main issue in this case is whether the public
respondent committed grave abuse of discretion in
refusing to recognize the officers "elected" during the
October 4, 1996 general assembly. Specifically, petitioners
in their Memorandum urge the Court to resolve the
following questions:
10

(1) Whether the Collective Bargaining Unit
of all the faculty members in that General
Faculty Assembly had the right in that
General Faculty Assembly to suspend the
provisions of the Constitution and By-Laws
of the USTFU regarding the elections of
officers of the union[.]
(2) Whether the suspension of the
provisions of the Constitution and By-Laws
of the USTFU in that General Faculty
Assembly is valid pursuant to the
constitutional right of the Collective
Page 41 of 54

Bargaining Unit to engage in "peaceful
concerted activities" for the purpose of
ousting the corrupt regime of the private
respondents[.]
(3) Whether the overwhelming ratification
of the Collective Bargaining Agreement
executed by the petitioners in behalf of
the USTFU with the University of Santo
Tomas has rendered moot and academic
the issue as to the validity of the
suspension of the Constitution and By-
Laws and the elections of October 4, 1996
in the General Faculty Assembly[.]
The Courts Ruling
The petition is not meritorious. Petitioners fail to convince
this Court that Director Bitonio gravely abused his
discretion in affirming the med-arbiter and in refusing to
recognize the binding effect of the October 4, 1996
general assembly called by the UST administration.
First Issue:
Right to Self-Organization
and Union Membership
At the outset, the Court stresses that National Federation
of Labor (NFL) v. Laguesma
11
has held that challenges
against rulings of the labor secretary and those acting on
his behalf, like the director of labor relations, shall be
acted upon by the Court of Appeals, which has concurrent
jurisdiction with this Court over petitions for certiorari.
However, inasmuch as the memoranda in the instant case
have been filed prior to the promulgation and finality of
our Decision in NFL, we deem it proper to resolve the
present controversy directly, instead of remanding it to
the Court of Appeals. Having disposed of the foregoing
procedural matter, we now tackle the issues in the present
case seriatim.
Self-organization is a fundamental right guaranteed by the
Philippine Constitution and the Labor Code. Employees
have the right to form, join or assist labor organizations for
the purpose of collective bargaining or for their mutual aid
and protection.
12
Whether employed for a definite period
or not, any employee shall be considered as such,
beginning on his first day of service, for purposes of
membership in a labor union.
13

Corollary to this right is the prerogative not to join, affiliate
with or assist a labor union.
14
Therefore, to become a
union member, an employee must, as a rule, not only
signify the intent to become one, but also take some
positive steps to realize that intent. The procedure for
union membership is usually embodied in the union's
constitution and bylaws.
15
An employee who becomes a
union member acquires the rights and the concomitant
obligations that go with this new status and becomes
bound by the union's rules and regulations.
When a man joins a labor union (or almost
any other democratically controlled
group), necessarily a portion of his
individual freedom is surrendered for the
benefit of all members. He accepts the will
of the majority of the members in order
that he may derive the advantages to be
gained from the concerted action of all.
Just as the enactments of the legislature
bind all of us, to the constitution and by-
laws of the union (unless contrary to good
morals or public policy, or otherwise
illegal), which are duly enacted through
democratic processes, bind all of the
members. If a member of a union dislikes
the provisions of the by-laws, he may seek
to have them amended or may withdraw
from the union; otherwise, he must abide
by them. It is not the function of courts to
decide the wisdom or propriety of
legitimate by-laws of a trade union.
On joining a labor union, the constitution
and by-laws become a part of the
member's contract of membership under
which he agrees to become bound by the
constitution and governing rules of the
union so far as it is not inconsistent with
controlling principles of law. The
constitution and by-laws of an
unincorporated trade union express the
terms of a contract, which define the
privileges and rights secured to, and duties
assumed by, those who have become
members. The agreement of a member on
joining a union to abide by its laws and
comply with the will of the lawfully
constituted majority does not require a
member to submit to the determination of
the union any question involving his
personal rights.
16

Petitioners claim that the numerous anomalies allegedly
committed by the private respondents during the latter's
incumbency impelled the October 4, 1996 election of the
new set of USTFU officers. They assert that such exercise
was pursuant to their right to self-organization.
Petitioners' frustration over the performance of private
respondents, as well as their fears of a "fraudulent"
election to be held under the latter's supervision, could
Page 42 of 54

not justify the method they chose to impose their will on
the union. Director Bitonio aptly elucidated:
17

The constitutional right to self-
organization is better understood in the
context of ILO Convention No. 87
(Freedom of Association and Protection of
Right to Organize), to which the
Philippines is signatory. Article 3 of the
Convention provides that workers'
organizations shall have the right to draw
up their constitution and rules and to elect
their representatives in full freedom, free
from any interference from public
authorities. The freedom conferred by the
provision is expansive; the responsibility
imposed on union members to respect the
constitution and rules they themselves
draw up equally so. The point to be
stressed is that the union's CBL is the
fundamental law that governs the
relationship between and among the
members of the union. It is where the
rights, duties and obligations, powers,
functions and authority of the officers as
well as the members are defined. It is the
organic law that determines the validity of
acts done by any officer or member of the
union. Without respect for the CBL, a
union as a democratic institution
degenerates into nothing more than a
group of individuals governed by mob rule.
Union Election vs.
Certification Election
A union election is held pursuant to the union's
constitution and bylaws, and the right to vote in it is
enjoyed only by union members. A union election should
be distinguished from a certification election, which is the
process of determining, through secret ballot, the sole and
exclusive bargaining agent of the employees in the
appropriate bargaining unit, for purposes of collective
bargaining.
18
Specifically, the purpose of a certification
election is to ascertain whether or not a majority of the
employees wish to be represented by a labor organization
and, in the affirmative case, by which particular labor
organization.
19

In a certification election, all employees belonging to the
appropriate bargaining unit can vote.
20
Therefore,
a unionmember who likewise belongs to the appropriate
bargaining unit is entitled to vote in said election.
However, the reverse is not always true; an employee
belonging to the appropriate bargaining unit but who is
not a member of the union cannot vote in the union
election, unless otherwise authorized by the constitution
and bylaws of the union. Verily, union affairs and elections
cannot be decided in a non-union activity.
In both elections, there are procedures to be followed.
Thus, the October 4, 1996 election cannot properly be
called a union election, because the procedure laid down
in the USTFU's CBL for the election of officers was not
followed. It could not have been a certification election
either, because representation was not the issue, and the
proper procedure for such election was not followed. The
participation of non-union members in the election
aggravated its irregularity.
Second Issue:
USTFU's Constitution and
By Laws Violated
The importance of a union's constitution and bylaws
cannot be overemphasized. They embody a covenant
between a union and its members and constitute the
fundamental law governing the members' rights and
obligations.
21
As such, the union's constitution and bylaws
should be upheld, as long as they are not contrary to law,
good morals or public policy.
We agree with the finding of Director Bitonio and Med-
Arbiter Falconitin that the October 4, 1996 election was
tainted with irregularities because of the following
reasons.
First, the October 4, 1996 assembly was not called by the
USTFU. It was merely a convocation of faculty clubs, as
indicated in the memorandum sent to all faculty members
by Fr. Rodel Aligan, OP, the secretary general of the
University of Santo Tomas.
22
It was not convened in
accordance with the provision on general membership
meetings as found in the USTFU's CBL, which reads:
ARTICLE VIII-MEETINGS OF THE UNION
Sec. 1. The Union shall hold regular
general membership meetings at least
once every three (3) months. Notices of
the meeting shall be sent out by the
Secretary-General at least ten (10) days
prior to such meetings by posting in
conspicuous places, preferably inside
Company premises, said notices. The date,
time and place for the meetings shall be
determined by the Board of Officers.
23

Unquestionably, the assembly was not a union meeting. It
was in fact a gathering that was called and participated in
Page 43 of 54

by management and non-union members. By no legal fiat
was such assembly transformed into a union activity by
the participation of some union members.
Second, there was no commission on elections to oversee
the election, as mandated by Sections 1 and 2 of Article IX
of the USTFU's CBL, which provide:
ARTICLE IX - UNION ELECTION
Sec. 1. There shall be a
Committee on Election
(COMELEC) to be created
by the Board of Officers at
least thirty (30) days
before any regular or
special election. The
functions of the COMELEC
include the following:
a) Adopt and promulgate
rules and regulations that
will ensure a free, clean,
honest and orderly
election, whether regular
or special;
b) Pass upon qualifications
of candidates;
c) Rule on any question or
protest regarding the
conduct of the election
subject to the procedure
that may be promulgated
by the Board of Officers;
and
d) Proclaim duly elected
officers.
Sec. 2. The COMELEC shall
be composed of a
chairman and two
members all of whom
shall be appointed by the
Board of Officers.
xxx xxx xxx
24

Third, the purported election was not done by secret
balloting, in violation of Section 6, Article IX of the USTFU's
CBL, as well as Article 241 (c) of the Labor Code.
The foregoing infirmities considered, we cannot attribute
grave abuse of discretion to Director Bitonio's finding and
conclusion. In Rodriguez v. Director, Bureau of Labor
Relations,
25
we invalidated the local union elections held
at the wrong date without prior notice to members and
conducted without regard for duly prescribed ground
rules. We held that the proceedings were rendered void by
the lack of due process undue haste, lack of adequate
safeguards to ensure integrity of the voting, and the
absence of the notice of the dates of balloting.
Third Issue:
Suspension of USTFU's CBL
Petitioners contend that the October 4, 1996 assembly
"suspended" the union's CBL. They aver that the
suspension and the election that followed were in
accordance with their "constituent and residual powers as
members of the collective bargaining unit to choose their
representatives for purposes of collective bargaining."
Again they cite the numerous anomalies allegedly
committed by the private respondents as USTFU officers.
This argument does not persuade.
First, as has been discussed, the general faculty assembly
was not the proper forum to conduct the election of
USTFU officers. Not all who attended the assembly were
members of the union; some, apparently, were even
disqualified from becoming union members, since they
represented management. Thus, Director Bitonio correctly
observed:
Further, appellants cannot be heard to say
that the CBL was effectively suspended
during the 04 October 1996 general
assembly. A union CBL is a covenant
between the union and its members and
among members (Johnson and Johnson
Labor Union-FFW, et al. v. Director of
Labor Relations, 170 SCRA 469). Where
ILO Convention No. 87 speaks of a union's
full freedom to draw up its constitution
and rules, it includes freedom from
interference by persons who are not
members of the union. The democratic
principle that governance is a matter for
the governed to decide upon applies to
the labor movement which, by law and
constitutional mandate, must be
assiduously insulated against intrusions
coming from both the employer and
complete strangers if the "protection to
labor clause" of the constitution is to be
guaranteed. By appellant's own evidence,
the general faculty assembly of 04 October
1996 was not a meeting of USTFU. It was
attended by members and non-members
alike, and therefore was not a forum
appropriate for transacting union matters.
Page 44 of 54

The person who moved for the suspension
of USTFU's CBL was not a member of
USTFU. Allowing a non-union member to
initiate the suspension of a union's CBL,
and non-union members to participate in
a union election on the premise that the
union's CBL had been suspended in the
meantime, is incompatible with the
freedom of association and protection of
the right to organize.
If there are members of the so-called
"academic community collective
bargaining unit" who are not USTFU
members but who would nevertheless
want to have a hand in USTFU's affairs, the
appropriate procedure would have been
for them to become members of USTFU
first. The procedure for membership is
very clearly spelled out in Article IV of
USTFU's CBL. Having become members,
they could then draw guidance from Ang
Malayang Manggagawa Ng Ang Tibay
v. Ang Tibay, 103 Phil. 669. Therein the
Supreme Court held that "if a member of
the union dislikes the provisions of the by-
laws he may seek to have them amended
or may withdraw from the union;
otherwise he must abide by them." Under
Article XVII of USTFU's CBL, there is also a
specific provision for constitutional
amendments. What is clear therefore is
that USTFU's CBL provides for orderly
procedures and remedies which
appellants could have easily availed
[themselves] of instead of resorting to an
exercise of their so-called "residual
power".
26

Second, the grievances of the petitioners could have been
brought up and resolved in accordance with the procedure
laid down by the union's CBL
27
and by the Labor
Code.
28
They contend that their sense of desperation and
helplessness led to the October 4, 1996 election. However,
we cannot agree with the method they used to rectify
years of inaction on their part and thereby ease bottled-up
frustrations, as such method was in total disregard of the
USTFU's CBL and of due process. The end never justifies
the means.
We agree with the solicitor general's observation that "the
act of suspending the constitution when the questioned
election was held is an implied admission that the election
held on that date [October 4, 1996] could not be
considered valid under the existing USTFU constitution . .
.."
29

The ratification of the new CBA executed between the
petitioners and the University of Santo Tomas
management did not validate the void October 4, 1996
election. Ratified were the terms of the new CBA, not the
issue of union leadership a matter that should be
decided only by union members in the proper forum at the
proper time and after observance of proper procedures.
Epilogue
In dismissing this Petition, we are not passing upon the
merits of the mismanagement allegations imputed by the
petitioners to the private respondents; these are not at
issue in the present case. Petitioners can bring their
grievances and resolve their differences with private
respondents in timely and appropriate proceedings. Courts
will not tolerate the unfair treatment of union members
by their own leaders. When the latter abuse and violate
the rights of the former, they shall be dealt with
accordingly in the proper forum after the observance of
due process.
WHEREFORE, the Petition is hereby DISMISSED and the
assailed Resolutions AFFIRMED. Costs against petitioners.
SO ORDERED.
Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 100898 July 5, 1993
ALEX FERRER, RAFAEL FERRER HENRY DIAZ, DOMINGO
BANCOLITA, GIL DE GUZMAN, and FEDERATION OF
DEMOCRATIC LABOR UNIONS, (FEDLU), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND
DIVISION), HUI KAM CHANG (In his capacity as General
Manager of Occidental Foundry Corporation),
OCCIDENTAL FOUNDRY CORPORATION, MACEDONIO S.
VELASCO (In his capacity as representative of the
Federation of Free Workers), GENARO CAPITLE, JESUS
TUMAGAN, ERNESTO BARROGA, PEDRO LLENA,
GODOFREDO PACHECO, MARCELINO CASTILLO, GEORGE
IGNAS, PIO DOMINGO, and JAIME
BAYNADO, respondents.
Genrosa P. Jacinto and Raymundo D. Mallilin for private
respondents.
Page 45 of 54


MELO, J.:
The petition for certiorari before us seeks to annul and set
aside: (a) the decision dated June 20, 1991 of the Second
Division of the National Labor Relations Commission
(NLRC) (Penned by Commissioner Rustico L. Diokno and
concurred in by Presiding Commissioner Edna Bonto-Perez
and Commissioner Domingo H. Zapanta) which affirmed in
toto the decision of April 5, 1990 of Labor Arbiter Eduardo
J. Carpio dismissing the complaint for illegal dismissal and
unfair labor practice on the ground that both the company
and the union merely complied with the collective
bargaining agreement provision sanctioning the
termination of any employee who fails to retain
membership in good standing with the union; and (b) the
NLRC resolution denying the motion for the
reconsideration of said decision (NLRC NCR Case No. 00-
10-04855-89).
Petitioners were regular and permanent employees of the
Occidental Foundry Corporation (OFC) in Malanday,
Valenzuela, Metro Manila which was under the
management of Hui Kam Chang. As piece workers,
petitioners' earnings ranged from P110 to P140 a day.
They had been in the employ of OFC for about ten years at
the time of their dismissal in 1989 (p. 38, Rollo).
On January 5, 1989, the Samahang Manggagawa ng
Occidental Foundry Corporation-FFW (SAMAHAN) and the
OFC entered into a collective bargaining agreement (CBA)
which would be effective for the three-year period
between October 1, 1988 and September 30, 1991
(Memorandum for OFC and Hui Kam Chang, p. 6, Rollo; p.
551). Article II thereof provides for a union security clause
thus:
Sec. 1 The company agrees that all
permanent and regular factory workers in
the company who are members in good
standing of the union or who thereafter
may become members, shall as a
condition of continued employment,
maintain their membership in the union in
good standing for the duration of the
agreement.
xxx xxx xxx
Sec. 3 The parties agree that failure to
retain membership in good standing with
the UNION shall be ground for the
operation of paragraph 1 hereof and the
dismissal by the company of the aforesaid
employee upon written request by the
union. The aforesaid request shall be
accompanied by a verified carbon original
of the Board of (sic) Resolution by the
UNION signed by at least a majority of its
officers/directors. (p. 562, Rollo.)
On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN,
filed in the Department of Labor and Employment (DOLE),
a complaint for the expulsion from SAMAHAN of the
following officers: Genaro Capitle (president), Jesus
Tumagan (vice-president), Godofredo Pacheco (auditor),
and Marcelino Pacheco (board member) (Case No. NCR-
00-M-89-11-01). The complaint was founded on said
officers' alleged inattentiveness to the economic demands
of the workers. However, on September 4, 1989,
petitioners Diaz and Alex Ferrer withdrew the petition (p.
590, Rollo).
On September 10, 1989, petitioners conducted a special
election of officers of the SAMAHAN (pp. 205 & 583,Rollo).
Said election was, however, later questioned by the FFW.
Nonetheless, the elected set of officers tried to dissuade
the OFC from remitting union dues to the officers led by
Capitle who were allied with the FFW. Later, however,
Romulo Erlano, one of the officers elected at the special
election, manifested to the DOLE that he was no longer
objecting to the remittance of union dues to the officers
led by Capitle. Petitioners' move to stage a strike based on
economic demands was also later disowned by members
of the SAMAHAN.
The intraunion squabble came to a head when, on
September 11, 1989, a resolution expelling petitioners
from the SAMAHAN was issued by the aforesaid union
officials headed by Capitle, together with board members
George Ignas, Pio Domingo, and Jaime Baynado (pp. 286 &
599, Rollo). The following day, Capitle sent OFC the
following letter:
1
2

S
e
p
t
e
m
b
e
r

1
9
8
9
Page 46 of 54

Mr. Hui Kam Chang
General Manager
Malanday, Valenzuela
Metro Manila
Dear Mr. Chang:
In compliance with Article II, Sec. 3 of the
Union Security Clause as enunciated in our
Collective Bargaining Agreement, I would
like you to dismiss the following
employees on the ground of failure to
retain membership in good standing:
1. Alex
Ferrer
2. Gil de
Guzman
3. Henry
Diaz
4.
Domingo
Bancolita
5. Rafael
Ferrer, Jr.
Attached herewith is the verified carbon
original of the Board Resolution of the
union signed by the majority of its
officers/directors.
Thank you very much.
V
e
r
y

t
r
u
l
y

y
o
u
r
s
,
(
S
g
d
.
)

G
E
N
A
R
O

C
A
P
I
T
L
E

P
r
e
s
i
d
e
n
t
(p. 66, Rollo.)
Although petitioners received this letter weeks after its
date, it appears that on that same date, they had learned
about their dismissal from employment as shown by the
letter also dated September 13, 1989 which they sent the
Federation of Democratic Labor Unions (FEDLU). They
volunteered therein to be admitted as members of the
FEDLU and requested that they be represented
("katawanin") by said federation before the DOLE in the
complaint which they intended to file against the union
(SAMAHAN), the FFW and the company for illegal
dismissal, reinstatement, and other benefits in accordance
with law
(p. 74, Rollo).
Thereafter, on various dates, petitioners sent individual
letters to Hui Kam Chang professing innocence of the
charges levelled against them by the SAMAHAN and the
FFW and pleading that they be reinstated (pp. 69-
73,Rollo). Their letters appear to have elicited no
response.
Thus, contending that their dismissal was without cause
and in utter disregard of their right to due process of law,
petitioners, through the FEDLU, filed a complaint for illegal
dismissal and unfair labor practice before the NLRC against
Hui Kam Chang, OFC, Macedonio S. Velasco (as
representative of the FFW) the FFW, and the SAMAHAN
officers headed by Capitle (p. 75, Rollo).
Page 47 of 54

In due course, after the case was ventilated through
position papers and other documents, the labor arbiter
rendered a decision dismissing petitioners' complaint (pp.
79-89, Rollo). He found that in dismissing petitioners, OFC
was "merely complying with the mandatory provisions of
the CBA the law between it and the union." He added:
To register compliance with the said
covenant, all that is necessary is a written
request of the union requesting dismissal
of the employees who have failed to
retain membership in good standing with
the union. The matter or question,
therefore of determining why and how did
complainants fail to retain membership in
good standing is not for the company to
inquire via formal investigation. By having
the request of the union, a legal
presumption that the request was born
out of a formal inquiry by the union that
subject employees failed to exist. This
means generally that where a valid closed
shop or similar agreement is in force with
respect to a particular bargaining unit as in
the case a quo, the employer shall refuse
to employ any person unless he is a
member of the majority union and the
employer shall dismiss employees who fail
to retain their membership in the majority
union. This must be deemed a just cause
recognized by law and jurisprudence. The
effect is discrimination to encourage
membership in other unions. (pp. 86-
87, Rollo.)
Hence, the labor arbiter concluded, the dismissal of
petitioners was an exercise of legitimate management
prerogative which cannot be considered as an unfair labor
practice. On whether the SAMAHAN and the FFW could be
held liable for illegal dismissal and unfair labor practice,
the arbiter opined that since there was no employer-
employee relationship between petitioners and
respondent unions, the complaint against the latter has no
factual and legal bases, because petitioners "should not
have confused expulsion from membership in the union as
one and the same incident to their subsequent
employment termination."
Consequently, petitioners appealed to the NLRC on the
grounds that there was prima facie evidence of abuse of
discretion on the part of the labor arbiter and that he
committed serious errors in his findings of facts.
On June 20, 1991, the NLRC rendered the herein
questioned decision affirming in toto the decision of the
arbiter. Petitioners motion for the reconsideration of the
NLRC decision having been denied, they resorted to the
instant petition for certiorari which presents the issue of
wether or not respondent Commision gravely abused its
discretion in affirming the decision of the labor arbiter
which is allegedly in defiance of the elementary principles
of procedural due process as the petitioners were
summarily dismissed from employment without an
investigation having been conducted by the OFC on the
veracity of the allegation of the SAMAHAN-FFW that they
violated the CBA.
A CBA is the law between the company and the union and
compliance therewith is mandated by the express policy to
give protection to labor. Said policy should be given
paramount consideration unless otherwise provided for by
law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]. A
CBA provision for a closed shop is a valid form of union
security and it is not a restriction on the right or freedom
of association guaranteed by the Constitution (Lirag Textile
Mill, Inc. vs. Blanco, 109 SCRA 87 [1981]. However, in the
implementation of the provisions of the CBA, both parties
thereto should see to it that no right is violated or
impaired. In the case at bar, while it is true that the CBA
between OFC and the SAMAHAN provided for the
dismissal of employees who have not maintained their
membership in the union, the manner in which the
dismissal was enforced left much to be desired in terms of
respect for the right of petitioners to procedural due
process.
In the first place, the union has a specific provision for the
permanent or temporary "expulsion" of its erring
members in its constitution and by-laws ("saligang batas at
alituntunin"). Under the heading membership and removal
("pag-aanib at pagtitiwalag"), it states:
Sec. 4. Ang sinumang kasapi ay maaring
itwalag (sic) ng Samahan pangsamantala o
tuluyan sa pamamagitan (sic) ng tatlo't
ikaapat () na bahagi ng dami ng bilang ng
Pamunuang Tagapagpaganap. Pagkaraan
lamang sa pandinig sa kanyang
kaso. Batay sa sumusunod:
(a) Sinumang gumawa ng mga bagay
bagay na labag at lihis sa patakaran ng
Samahan.
(b) Sinumang gumawa ng mga bagay na
maaaring ikabuwag ng Samahan.
(c) Hindi paghuhulog ng butaw sa loob ng
tatlong buwan na walang sakit o Doctor's
Certificate.
(d) Hindi pagbibigay ng abuloy na
itinatadhana ng Samahan.
Page 48 of 54

(e) Sinumang kasapi na natanggal sa
kapisanan at gustong, sumapi uli ay
magpapanibago ng bilang, mula sa taon ng
kanyang pagsapi uli sa Samahan.
(Emphasis supplied; Ibid., p. 177).
No hearing ("pandinig") was ever conducted by the
SAMAHAN to look into petitioners' explanation of their
moves to oust the union leadership under Capitle, or their
subsequent affiliation with FEDLU. While it is true that
petitioners' actions might have precipitated divisiveness
and, later, showed disloyalty to the union, still, the
SAMAHAN should have observed its own constitution and
by-laws by giving petitioners an opportunity to air their
side and explain their moves. If, after an investigation the
petitioners were found to have violated union rules, then
and only then should they be subjected to proper
disciplinary measures.
Here lies the distinction between the facts of this case and
that of Cario vs. NLRC (185 SCRA 177 [1990]) upon which
the Solicitor General heavily relies in supporting the stand
of petitioners. In Cario, the erring union official was given
the chance to answer the complaints against him before
an investigating committee created for that purpose. On
the other, hand, herein petitioners were not given even
one opportunity to explain their side in the controversy.
This procedural lapse should not have been overlooked
considering the union security provision of the CBA.
What aggravated the situation in this case is the fact that
OFC itself took for granted that the SAMAHAN had actually
conducted an inquiry and considered the CBA provision for
the closed shop as self-operating that, upon receipt of a
notice that some members of the SAMAHAN had failed to
maintain their membership in good standing in accordance
with the CBA, it summarily dismissed petitioners. To make
matters worse, the labor arbiter and the NLRC shared the
same view in holding that "(t)he matter or question,
therefore, of determining why and how did complainants
fail to retain membership in good standing is not for the
company to inquire via formal investigation" (pp. 87 &
135, Rollo). In this regard, the following words of my
learned brother, Mr. Justice Feliciano, in the Resolution
in Cario are apt:
4. Turning now to the involvement of the
Company in the dismissal of petitioner
Cario, we note that the Company upon
being formally advised in writing of the
expulsion of petitioner Cario from the
Union, in turn simply issued a termination
letter to Cario, the termination being
made effective the very next day. We
believe that the Company should have
given petitioner Cario an opportunity to
explain his side of the controversy with
the Union. Notwithstanding the Union's
Security Clause in the CBA, the Company
should have reasonably satisfied itself by
its own inquiry that the Union had not
been merely acting arbitrarily and
capriciously in impeaching and expelling
petitioner Cario . . .
xxx xxx xxx
5. We conclude that the Company had
failed to accord to petitioner Cario the
latter's right to procedural due process.
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 CBA. 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
hence dismissal from his job. (pp. 186 &
189.)
The need for a company investigation is founded on the
consistent ruling of this Court that the twin requirements
of notice and hearing which are essential elements of due
process must be met in employment-termination cases.
The employee concerned must be notified of the
employer's intent to dismiss him and of the reason or
reasons for the proposed dismissal. The hearing affords
the employee an opportunity to answer the charge or
charges against him and to defend himself therefrom
before dismissal is effected (Kwikway Engineering Works
vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC, 202 SCRA
7 [1991]). Observance to the letter of company rules on
investigation of an employee about to be dismissed is not
mandatory. It is enough that there is due notice and
hearing before a decision to dismiss is made (Mendoza vs.
NLRC, 195 SCRA 606 (1991]). But even if no hearing is
conducted, the requirement of due process would have
been met where a chance to explain a party's side of the
controversy had been accorded him (Philippine Airlines,
Inc. vs. NLRC, 198 SCRA 748 [1991]).
If an employee may be considered illegally dismissed
because he was not accorded fair investigation (Hellenic
Philippine Shipping vs. Siete, 195 SCRA 179 (1991]), the
more reason there is to strike down as an inexcusable and
disdainful rejection of due process a situation where there
is no investigation at all (See: Colegio del Sto. Nio vs.
NLRC, 197 SCRA 611 [1991]; Artex Development Co., Inc.
vs. NLRC, 187 SCRA 611 [1990]). The need for the
Page 49 of 54

observance of an employee's right to procedural due
process in termination cases cannot be overemphasized.
After all, one's employment, profession, trade, or calling is
a "property right" and the wrongful interference therewith
gives rise to an actionable wrong (Callanta vs. Carnation
Philippines, Inc., 145 SCRA 268 (1986]). Verily, a man's
right to his labor is property within the meaning of
constitutional guarantees which he cannot be deprived of
without due process (Batangas Laguna Tayabas Bus Co. vs.
Court of Appeals, 71 SCRA 470 [1976]).
While the law recognizes the right of an employer to
dismiss employees in warranted cases, it frowns upon
arbitrariness as when employees are not accorded due
process (Tan, Jr. vs. NLRC, 183 SCRA 651 [1990]). Thus, the
prerogatives of the OFC to dismiss petitioners should not
have been whimsically done for it unduly exposed itself to
a charge of unfair labor practice for dismissing petitioners
in line with the closed shop provision of the CBA, without a
proper hearing (Tropical Hut Employees' Union-CGW vs.
Tropical Hut Food Market, Inc., 181 SCRA 173 [1990];
citing Binalbagan-Isabela Sugar Co., Inc. (BISCOM) vs.
Philippine Association of Free Labor Unions (PAFLU), 8
SCRA 700 [1983]). Neither can the manner of dismissal be
considered within the ambit of managerial prerogatives,
for while termination of employment is traditionally
considered a management prerogative, it is not an
absolute prerogative subject as it is to limitations founded
in law, the CBA, or general principles of fair play and
justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758
[1990]).
Under Rule XIV, Sections 2, 5, and 6 of the rules
implementing Batas Pambansa Blg. 130, the OFC and the
SAMAHAN should solidarity indemnify petitioners for the
violation of their right to procedural due process (Great
Pacific Life Assurance Corporation vs. NLRC, 187 SCRA
694[1990], citing Wenphil vs. NLRC, 170 SCRA 69 [1989],
Cario vs. NLRC, supra). However, such penalty may be
imposed only where the termination of employment is
justified and not when the dismissal is illegal as in this case
where the damages are in the form of back wages.
As earlier discussed, petitioners' alleged act of sowing
disunity among the members of the SAMAHAN could have
been ventilated and threshed out through a grievance
procedure within the union itself. But resort to such
procedure was not pursued. What actually happened in
this case was that some members, including petitioners,
tried to unseat the SAMAHAN leadership headed by
Capitle due to the latter's alleged inattention to
petitioners' demands for the implementation of the P25-
wage increase which took effect on July 1, 1989. The
intraunion controversy was such that petitioners even
requested the FFW to intervene to facilitate the
enforcement of the said wage increase (Petition, p. 54; p.
55, Rollo).
Petitioners sought the help of the FEDLU only after they
had learned of the termination of their employment upon
the recommendation of Capitle. Their alleged application
with federations other than the FFW (Labor Arbiter's
Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be
considered as disloyalty to the SAMAHAN, nor may the
filing of such applications denote that petitioners failed to
maintain in good standing their membership in the
SAMAHAN. The SAMAHAN is a different entity from FFW,
the federation to which it belonged. Neither may it, be
inferred that petitioners sought disaffiliation from the FFW
for petitioners had not formed a union distinct from that
of the SAMAHAN. Parenthetically, the right of a local union
to disaffiliate from a federation in the absence of any
provision in the federation's constitution preventing
disaffiliation of a local union is legal (People's Industrial
and Commercial Employees and Worker's Org. (FFW) vs.
People's Industrial and Commercial Corp., 112 SCRA 440
(1982]). Such right is consistent with the constitutional
guarantee of freedom of association (Tropical Hut
Employees Union-CGW vs. Tropical Hut Food Market, Inc.,
181 SCRA 173 [1990]).
Hence, while petitioners' act of holding a special election
to oust Capitle, et al. may be considered as an act of
sowing disunity among the SAMAHAN members, and,
perhaps, disloyalty to the union officials, which could have
been dealt with by the union as a disciplinary matter, it
certainly cannot be considered as constituting disloyalty to
the union. Faced with a SAMAHAN leadership which they
had tried to remove as officials, it was but a natural act of
self-preservation that petitioners fled to the arms of the
FEDLU after the union and the OFC had tried to terminate
their employment. Petitioners should not be made
accountable for such an act.
With the passage of Republic Act No. 6715 which took
effect on March 21, 1989, Article 279 of the Labor Code
was amended to read as follows:
Security of Tenure. In cases of regular
employment, the employer shall not
terminate the services of an employee
except for a just cause or when authorized
by this Title. An employee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority
rights and other privileges and to his full
backwages, inclusive of allowances, and to
his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up
to the time of his actual reinstatement.
and as implemented by Section 3, Rule 8 of the 1990 New
Rules of Procedure of the National Labor Relations
Page 50 of 54

Commission, it would seem that the Mercury Drug Rule
(Mercury Drug Co., Inc. vs. Court of Industrial Relations, 56
SCRA 694 [1974]) which limited the award of back wages
of illegally dismissed workers to three (3) years "without
deduction or qualification" to obviate the need for further
proceedings in the course of execution, is no longer
applicable.
A legally dismissed employee may now be paid his back
wages, allowances, and other benefits for the entire
period he was out of work subject to the rule enunciated
before the Mercury Drug Rule, which is that the employer
may, however, deduct any amount which the employee
may have earned during the period of his illegal
termination (East Asiatic Company, Ltd. vs. Court of
Industrial Relations, 40 SCRA 521 [1971]). Computation of
full back wages and presentation of proof as to income
earned elsewhere by the illegally dismissed employee
after his termination and before actual reinstatement
should be ventilated in the execution proceedings before
the Labor Arbiter concordant with Section 3, Rule 8 of the
1990 new Rules of Procedure of the National Labor
Relations Commission.
Inasmuch as we have ascertained in the text of this
discourse that the OFC whimsically dismissed petitioners
without proper hearing and has thus opened OFC to a
charge of unfair labor practice, it ineluctably follows that
petitioners can receive their back wages computed from
the moment their compensation was withheld after their
dismissal in 1989 up to the date of actual reinstatement. In
such a scenario, the award of back wages can extend
beyond the 3-year period fixed by the Mercury Drug Rule
depending, of course, on when the employer will reinstate
the employees.
It may appear that Article 279 of the Labor Code, as
amended by Republic Act No. 6715, has made the
employer bear a heavier burden than that pronounced in
the Mercury Drug Rule, but perhaps Republic Act No. 6715
was enacted precisely for the employer to realize that the
employee must be immediately restored to his former
position, and to impress the idea that immediate
reinstatement is tantamount to a cost-saving measure in
terms of overhead expense plus incremental productivity
to the company which lies in the hands of the employer.
WHEREFORE, the decision appealed from is hereby SET
ASIDE and private respondents are hereby ordered to
reinstate petitioners to their former or equivalent
positions without loss of seniority rights and with full back
wages, inclusive of allowances and other benefits or their
monetary equivalent, pursuant to Article 279 of the Labor
Code, as amended by Republic Act No. 6715.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 85333 February 26, 1990
CARMELITO L. PALACOL, ET AL., petitioners,
vs.
PURA FERRER-CALLEJA, Director of the Bureau of Labor
Relations, MANILA CCBPI SALES FORCE UNION, and
COCA-COLA BOTTLERS (PHILIPPINES), INC., respondents.
Wellington B. Lachica for petitioners.
Adolpho M. Guerzon for respondent Union.

GANCAYCO, J.:
Can a special assessment be validly deducted by a labor
union from the lump-sum pay of its members, granted
under a collective bargaining agreement (CBA),
notwithstanding a subsequent disauthorization of the
same by a majority of the union members? This is the
main issue for resolution in the instant petition for
certiorari.
As gleaned from the records of the case, the pertinent
facts are as follows:
On October 12, 1987, the respondent Manila CCBPI Sales
Force Union (hereinafter referred to as the Union), as the
collective bargaining agent of all regular salesmen, regular
helpers, and relief helpers of the Manila Plant and Metro
Manila Sales Office of the respondent Coca-Cola Bottlers
(Philippines), Inc. (hereinafter referred to as the Company)
concluded a new collective bargaining agreement with the
latter.
1
Among the compensation benefits granted to the
employees was a general salary increase to be given in
lump sum including recomputation of actual commissions
earned based on the new rates of increase.
On the same day, the president of the Union submitted to
the Company the ratification by the union members of the
new CBA and authorization for the Company to deduct
union dues equivalent to P10.00 every payday or P20.00
every month and, in addition, 10% by way of special
assessment, from the CBA lump-sum pay granted to the
union members. The last one among the aforementioned
is the subject of the instant petition.
As embodied in the Board Resolution of the Union dated
September 29, 1987, the purpose of the special
Page 51 of 54

assessment sought to be levied is "to put up a cooperative
and credit union; purchase vehicles and other items
needed for the benefit of the officers and the general
membership; and for the payment for services rendered
by union officers, consultants and others."
2
There was
also an additional proviso stating that the "matter of
allocation ... shall be at the discretion of our incumbent
Union President."
This "Authorization and CBA Ratification" was obtained by
the Union through a secret referendum held in separate
local membership meetings on various dates.
3
The total
membership of the Union was about 800. Of this number,
672 members originally authorized the 10% special
assessment, while 173 opposed the same.
4

Subsequently however, one hundred seventy (170)
members of the Union submitted documents to the
Company stating that although they have ratified the new
CBA, they are withdrawing or disauthorizing the deduction
of any amount from their CBA lump sum. Later, 185 other
union members submitted similar documents expressing
the same intent. These members, numbering 355 in all
(170 + 185), added to the original oppositors of 173,
turned the tide in favor of disauthorization for the special
assessment, with a total of 528 objectors and a remainder
of 272 supporters.
5

On account of the above-mentioned disauthorization, the
Company, being in a quandary as to whom to remit the
payment of the questioned amount, filed an action for
interpleader with the Bureau of Labor Relations in order to
resolve the conflicting claims of the parties concerned.
Petitioners, who are regular rank-and-file employees of
the Company and bona fide members of the Union, filed a
motion/complaint for intervention therein in two groups
of 161 and 94, respectively. They claimed to be among
those union members who either did not sign any
individual written authorization, or having signed one,
subsequently withdrew or retracted their signatures
therefrom.
Petitioners assailed the 10% special assessment as a
violation of Article 241(o) in relation to Article 222(b) of
the Labor Code. Article 222(b) provides as follows:
ART. 222. Appearances and Fees.
xxx xxx xxx
(b) No attorney's fees,
negotiation fees or similar
charges of any kind arising
from any collective
bargaining negotiations or
conclusion of the
collective agreement shall
be imposed on any
individual member of the
contracting union;
Provided, however, that
attorney's fees may be
charged against union
funds in an amount to be
agreed upon by the
parties. Any contract,
agreement or
arrangement of any sort
to the contrary shall be
null and void.
On the other hand, Article 241(o) mandates that:
ART. 241. Rights and conditions of
membership in a labor organization.
xxx xxx xxx
(o) Other than for
mandatory activities
under the Code, no special
assessments, attorney's
fees, negotiation fees or
any other extraordinary
fees may be checked off
from any amount due to
an employee without an
individual written
authorization duly signed
by the employee. The
authorization should
specifically state the
amount, purpose and
beneficiary of the
deduction;
As authority for their contention, petitioners
cited Galvadores v. Trajano,
6
wherein it was ruled that no
check-offs from any amount due employees may be
effected without individual written authorizations duly
signed by the employees specifically stating the amount,
purpose, and beneficiary of the deduction.
In its answer, the Union countered that the deductions not
only have the popular indorsement and approval of the
general membership, but likewise complied with the legal
requirements of Article 241 (n) and (o) of the Labor Code
in that the board resolution of the Union imposing the
questioned special assessment had been duly approved in
a general membership meeting and that the collection of a
special fund for labor education and research is mandated.
Article 241(n) of the Labor Code states that
Page 52 of 54

ART. 241. Rights and conditions of
membership in a labor organization.
xxx xxx xxx
(n) No special assessment or other
extraordinary fees may be levied upon the
members of a labor organization unless
authorized by a written resolution of a
majority of all the members at a general
membership meeting duly called for the
purpose. The secretary of the organization
shall record the minutes of the meeting
including the list of all members present,
the votes cast, the purpose of the special
assessment or fees and the recipient of
such assessments or fees. The record shall
be attested to by the president;
Med-Arbiter Manases T. Cruz ruled in favor of petitioners
in an order dated February 15, 1988 whereby he directed
the Company to remit the amount it had kept in trust
directly to the rank-and-file personnel without delay.
On appeal to the Bureau of Labor Relations, however, the
order of the Med-Arbiter was reversed and set aside by
the respondent-Director in a resolution dated August 19,
1988 upholding the claim of the Union that the special
assessment is authorized under Article 241 (n) of the Labor
Code, and that the Union has complied with the
requirements therein.
Hence, the instant petition.
Petitioners allege that the respondent-Director committed
a grave abuse of discretion amounting to lack or excess of
jurisdiction when she held Article 241 (n) of the Labor
Code to be the applicable provision instead of Article
222(b) in relation to Article 241(o) of the same law.
According to petitioners, a cursory examination and
comparison of the two provisions of Article 241 reveals
that paragraph (n) cannot prevail over paragraph (o). The
reason advanced is that a special assessment is not a
matter of major policy affecting the entire union
membership but is one which concerns the individual
rights of union members.
Petitioners further assert that assuming arguendo that
Article 241(n) should prevail over paragraph (o), the Union
has nevertheless failed to comply with the procedure to
legitimize the questioned special assessment by: (1)
presenting mere minutes of local membership meetings
instead of a written resolution; (2) failing to call a general
membership meeting; (3) having the minutes of three (3)
local membership meetings recorded by a union director,
and not by the union secretary as required; (4) failing to
have the list of members present included in the minutes
of the meetings; and (5) failing to present a record of the
votes cast.
7
Petitioners concluded their argument by
citingGalvadores.
After a careful review of the records of this case, We are
convinced that the deduction of the 10% special
assessment by the Union was not made in accordance
with the requirements provided by law.
Petitioners are correct in citing the ruling of this Court
in Galvadores which is applicable to the instant case. The
principle "that employees are protected by law from
unwarranted practices that diminish their compensation
without their known edge and consent"
8
is in accord with
the constitutional principle of the State affording full
protection to labor.
9

The respondent-Union brushed aside the defects pointed
out by petitioners in the manner of compliance with the
legal requirements as "insignificant technicalities." On the
contrary, the failure of the Union to comply strictly with
the requirements set out by the law invalidates the
questioned special assessment. Substantial compliance is
not enough in view of the fact that the special assessment
will diminish the compensation of the union members.
Their express consent is required, and this consent must
be obtained in accordance with the steps outlined by law,
which must be followed to the letter. No shortcuts are
allowed.
The applicable provisions are clear. The Union itself admits
that both paragraphs (n) and (o) of Article 241 apply.
Paragraph (n) refers to "levy" while paragraph (o) refers to
"check-off" of a special assessment. Both provisions must
be complied with. Under paragraph (n), the Union must
submit to the Company a written resolution of a majority
of all the members at a general membership meeting duly
called for the purpose. In addition, the secretary of the
organization must record the minutes of the meeting
which, in turn, must include, among others, the list of all
the members present as well as the votes cast.
As earlier outlined by petitioners, the Union obviously
failed to comply with the requirements of paragraph (n). It
held local membership meetings on separate occasions, on
different dates and at various venues, contrary to the
express requirement that there must be a general
membership meeting. The contention of the Union that
"the local membership meetings are precisely the very
general meetings required by law"
10
is untenable because
the law would not have specified a general membership
meeting had the legislative intent been to allow local
meetings in lieu of the latter.
Page 53 of 54

It submitted only minutes of the local membership
meetings when what is required is a written resolution
adopted at the general meeting. Worse still, the minutes
of three of those local meetings held were recorded by a
union director and not by the union secretary. The
minutes submitted to the Company contained no list of
the members present and no record of the votes cast.
Since it is quite evident that the Union did not comply with
the law at every turn, the only conclusion that may be
made therefrom is that there was no valid levy of the
special assessment pursuant to paragraph (n) of Article
241 of the Labor Code.
Paragraph (o) on the other hand requires an individual
written authorization duly signed by every employee in
order that a special assessment may be validly checked-
off. Even assuming that the special assessment was validly
levied pursuant to paragraph (n), and granting that
individual written authorizations were obtained by the
Union, nevertheless there can be no valid check-off
considering that the majority of the union members had
already withdrawn their individual authorizations. A
withdrawal of individual authorizations is equivalent to no
authorization at all. Hence, the ruling in Galvadores that
"no check-offs from any amounts due employees may be
effected without an individual written authorization signed
by the employees ... " is applicable.
The Union points out, however, that said disauthorizations
are not valid for being collective in form, as they are "mere
bunches of randomly procured signatures, under loose
sheets of paper."
11
The contention deserves no merit for
the simple reason that the documents containing the
disauthorizations have the signatures of the union
members. The Court finds these retractions to be valid.
There is nothing in the law which requires that the
disauthorization must be in individual form.
Moreover, it is well-settled that "all doubts in the
implementation and interpretation of the provisions of the
Labor Code ... shall be resolved in favor of labor."
12
And as
previously stated, labor in this case refers to the union
members, as employees of the Company. Their mere
desire to establish a separate bargaining unit, albeit
unproven, cannot be construed against them in relation to
the legality of the questioned special assessment. On the
contrary, the same may even be taken to reflect their
dissatisfaction with their bargaining representative, the
respondent-Union, as shown by the circumstances of the
instant petition, and with good reason.
The Med-Arbiter correctly ruled in his Order that:
The mandate of the majority rank and file
have (sic) to be respected considering they
are the ones directly affected and the
realities of the high standards of survival
nowadays. To ignore the mandate of the
rank and file would enure to destabilizing
industrial peace and harmony within the
rank and file and the employer's fold,
which we cannot countenance.
Moreover, it will be recalled that precisely
union dues are collected from the union
members to be spent for the purposes
alluded to by respondent. There is no
reason shown that the regular union dues
being now implemented is not sufficient
for the alleged expenses. Furthermore, the
rank and file have spoken in withdrawing
their consent to the special assessment,
believing that their regular union dues are
adequate for the purposes stated by the
respondent. Thus, the rank and file having
spoken and, as we have earlier mentioned,
their sentiments should be respected.
Of the stated purposes of the special assessment, as
embodied in the board resolution of the Union, only the
collection of a special fund for labor and education
research is mandated, as correctly pointed out by the
Union. The two other purposes, namely, the purchase of
vehicles and other items for the benefit of the union
officers and the general membership, and the payment of
services rendered by union officers, consultants and
others, should be supported by the regular union dues,
there being no showing that the latter are not sufficient to
cover the same.
The last stated purpose is contended by petitioners to fall
under the coverage of Article 222 (b) of the Labor Code.
The contention is impressed with merit. Article 222 (b)
prohibits attorney's fees, negotiations fees and similar
charges arising out of the conclusion of a collective
bargaining agreement from being imposed on any
individual union member. The collection of the special
assessment partly for the payment for services rendered
by union officers, consultants and others may not be in the
category of "attorney's fees or negotiations fees." But
there is no question that it is an exaction which falls within
the category of a "similar charge," and, therefore, within
the coverage of the prohibition in the aforementioned
article. There is an additional proviso giving the Union
President unlimited discretion to allocate the proceeds of
the special assessment. Such a proviso may open the door
to abuse by the officers of the Union considering that the
total amount of the special assessment is quite
considerable P1,027,694.33 collected from those union
members who originally authorized the deduction, and
P1,267,863.39 from those who did not authorize the same,
or subsequently retracted their authorizations.
13
The
Page 54 of 54

former amount had already been remitted to the Union,
while the latter is being held in trust by the Company.
The Court, therefore, stakes down the questioned special
assessment for being a violation of Article 241, paragraphs
(n) and (o), and Article 222 (b) of the Labor Code.
WHEREFORE, the instant petition is hereby GRANTED. The
Order of the Director of the Bureau of Labor Relations
dated August 19, 1988 is hereby REVERSED and SET ASIDE,
while the order of the Med-Arbiter dated February 17,
1988 is reinstated, and the respondent Coca-Cola Bottlers
(Philippines), Inc. is hereby ordered to immediately remit
the amount of P1,267,863.39 to the respective union
members from whom the said amount was withheld. No
pronouncement as to costs. This decision is immediately
executory.
SO ORDERED.
Narvasa, Grio-Aquino and Medialdea, JJ., concur.
Cruz, J., took no part.