EXECUTIVE ORDER NO.

180 June 1, 1987

PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO
ORGANIZE OF GOVERNMENT EMPLOYEES, CREATING A PUBLIC
SECTOR LABOR-MANAGEMENT COUNCIL, AND FOR OTHER PURPOSES
In accordance with the provisions of the 1987 Constitution, I, CORAZON C. AQUINO,
President of the Philippines, do hereby order:
I. Coverage
Sec. 1. This Executive Order applies to all employees of all branches, subdivisions,
instrumentalities, and agencies, of the Government, including government-owned or
controlled corporations with original charters. For this purpose, employees, covered by
this Executive Order shall be referred to as "government employees".
Sec. 2. All government employees can form, join or assist employees' organizations of
their own choosing for the furtherance and protection of their interests. They can also
form, in conjunction with appropriate government authorities, labor-management
committees, works councils and other forms of workers' participation schemes to achieve
the same objectives.
Sec. 3. High-level employees whose functions are normally considered as policy-making
or managerial or whose duties are of a highly confidential nature shall not be eligible to
join the organization of rank-and-file government employees.
Sec. 4. The Executive Order shall not apply to the members of the Armed Forces of the
Philippines, including police officers, policemen, firemen and jail guards.
II. Protection of the Right to Organize
Sec. 5. Government employees shall not be discriminated against in respect of their
employment by reason of their membership in employees' organizations or participation
in the normal activities of their organization. Their employment shall not be subject to the
condition that they shall not join or shall relinquish their membership in the employees'
organizations.
Sec. 6. Government authorities shall not interfere in the establishment, functioning or
administration of government employees' organizations through acts designed to place
such organizations under the control of government authority.
III. Registration of Employees' Organization
Sec. 7. Government employees' organizations shall register with the Civil Service
Commission and the Department of Labor and Employment. The application shall be
filed with the Bureau of Labor Relations of the Department which shall process the same
in accordance with the provisions of the Labor Code of the Philippines, as amended.
Applications may also be filed with the Regional Offices of the Department of Labor and
Employment which shall immediately transmit the said applications to the Bureau of
Labor Relations within three (3) days from receipt thereof.

Sec. 8. Upon approval of the application, a registration certificate be issued to the

organization recognizing it as a legitimate employees' organization with the right to
represent its members and undertake activities to further and defend its interest. The
corresponding certificates of registration shall be jointly approved by the Chairman of the
Civil Service Commission and Secretary of Labor and Employment.
IV. Sole and Exclusive Employees' Representatives
Sec. 9. The appropriate organizational unit shall be the employers unit consisting of
rank-and-file employees unless circumstances otherwise require.
Sec. 10. The duly registered employees' organization having the support of the majority
of the employees in the appropriate organizational unit shall be designated as the sole and
exclusive representative of the employees.
Sec. 11. A duly registered employees' organization shall be accorded voluntary
recognition upon a showing that no other employees' organization is registered or is
seeking registration, based on records of the Bureau of Labor Relations, and that the said
organizations has the majority support of the rank-and-file employees in the
organizational unit.
Sec. 12. Where there are two or more duly registered employees' organizations in the
appropriate organizational unit, the Bureau of Labor Relations shall, upon petition, order
the conduct of a certification election and shall certify the winner as the exclusive
representative of the rank-and-file employees in said organization unit.
D. Terms and Conditions of Employment in Government Services
Sec. 13. Terms and conditions of employment or improvements thereof, except those
that are fixed by law, may be the subject of negotiations between duly recognized
employees' organizations and appropriate government authorities.
VI. Peaceful Concerted Activities and Strikes
Sec. 14. The Civil Service laws and rules governing concerted activities and strikes in the
government service shall be observed, subject to any legislation that may be enacted by
Congress.
VII. Public Sector Labor-Management Council
Sec. 15. A Public Sector Labor Management Council, hereinafter referred to as the
Council, is hereby constituted to be composed of the following:
1) Chairman, Civil Service Commission Chairman
2) Secretary, Department of Labor and Employment Vice Chairman
3) Secretary, Department of Finance Member
4) Secretary, Department of Justice Member
5) Secretary, Department of Budget and Management Member
The Council shall implement and administer the provisions of this Executive Order. For
this purpose, the Council shall promulgate the necessary rules and regulations to
implement this Executive Order.
VIII. Settlement of Disputes

Sec. 16. The Civil Service and labor laws and procedures, whenever applicable, shall be
followed in the resolution of complaints, grievances and cases involving government
employees. In case any dispute remains unresolved after exhausting all the available
remedies under existing laws and procedures, the parties may jointly refer the dispute to
the Council, for appropriate action.
IX. Effectivity
Sec. 17. This Executive Order shall take effect immediately.
Done in the City of Manila, this 1st day of June, in the year of Our Lord, nineteen
hundred and eighty-seven.

[G.R. Nos. L-14785 & L-14923. November 29, 1960.]

[With resolution of February 27, 1961]
FELIX ABE, ET AL., plaintiffs and appellees, v. FOSTER WHEELER
CORPORATION and CALTEX (PHIL.) INC., defendants and appellants. FELIX
ABE, ET AL., plaintiffs and appellants, v. FOSTER WHEELER CORPORATION
and CALTEX (PHIL.) INC., defendants and appellees.
Ross, Selph & Carrascoso for appellant Caltex (Phil.) Inc.
Nicetas A. Suanes for appellees F. Abe. Et. Al.
SYLLABUS
1. OBLIGATION AND CONTRACTS; EXTENT OF FREEDOM OF CONTRACT.
The freedom of contract under our system of government is not meant to be absolute. It is
understood to be subject to reasonable legislative regulations aimed at the promotion of
public, health, moral, safety and welfare. (St. Louis, etc. R. Co. v. Paul, 173 US 404, 43 L
ed. 746; 19 Sup Ct Rep 419, and others, cited in II Cooleys Constitutional Limitations, p.
1236.)
2. EMPLOYER AND EMPLOYEE; EMPLOYMENT WITHOUT FIXED PERIOD;
RIGHT TO NOTICE BEFORE TERMINATION OF EMPLOYMENT NOT
SUBSTANTIVE. Republic Act 1051 prescribes the manner of terminating
employment without a fixed or definite period by requiring the employer or employee,
before terminating such employment, to notify the other party of such fact. Evidently, the
purpose of the regulation is to give the other party opportunity to find replacement or
substitute, in the case of the employer, and other place of employment or source of
livelihood, in the case of the employee. The right to be thus notified can hardly be
considered substantive, nor does the provision requiring the employer to give the
employee dismissed without such advance notification, the equivalent salary of the latter

for one month, bestow upon said employee any substantive right or interest immediately
upon
execution
of
the
contract
of
employment.
3. COMPLAINTS; WHEN DEEMED SUFFICIENT; RECOURSE WHEN
ALLEGATIONS ARE VAGUE OR INDEFINITE. A complaint is sufficient if it
contains sufficient notice of the cause of action even if the allegations may be vague or
indefinite or in the form of conclusions in which event, the proper recourse would be, not
a motion to dismiss, but a motion for bill of particulars. (I Moran, Comments on the
Rules
of
Court,
1957
Ed.,
p.
111.)
4. PLEADING AND PRACTICE; MOTION FOR EXTENSION OF TIME TO FILE
RECORD ON APPEAL AND PAY APPEAL BOND; DUTY OF COUNSEL. The
granting or denial of a motion for extension of the period within which to file a record on
appeal and to pay the appeal bond is discretionary upon the court. The counsel should not
presume that the motion will be granted, but should take upon himself the duty to inquire,
before the original period has elapsed what action the court has taken on his motion.
DECISION
BARRERA, J.:
In a complaint, twice amended and supplemented, filed against Foster Wheeler
Corporation and Caltex (Phil.) Inc., in the Municipal Court of Manila (Civil Case
No. 40789), Felix Abe and 393 others (pp. 97-111; 118-120, Record on Appeal)
claiming to have been employed by the named defendants on various occasions from
1952 to 1954 in the "Batangas Refinery Construction Project" at Danglaya, Bauan,
Batangas, and discharged from employment in 1954 without notice, each demanded
recovery of separation pay, value of sick and vacation leaves, and overtime
compensation, allegedly due them, computed at the rate ranging from P4.00 to
P16.80
daily,
with
interest
thereon.
Defendant Foster Wheeler Corporation, in its answer, alleged among others, that the
action was improper for a class suit, the claim of each plaintiff being separate and
distinct from the others; that under their written contract of employment, plaintiffs
could be separated from the service without notice or separation pay; that plaintiffs
were fully compensated for any overtime service rendered; and that it was not
obliged, under the law, to grant vacation and sick leave privileges to its employees.
As counterclaim, defendant demanded from each of them the sum of at least P100.00 for
attorneys fees and costs. For its part, Caltex (Phil.) Inc., disclaimed having anything to
do with the employment of any worker in said project, although it also advanced the
same
defenses
as
those
set
up
by
its
co-defendant.
Thereafter, defendants moved for the dismissal of the complaint for lack of cause of
action, it being claimed that plaintiffs were employed after Article 302 of the Code of
Commerce on "Mesada" was repealed, and they were separated from the service before

Republic Act 1052, 1 reviving the said privilege, went into effect. It was thus contended
that for the duration of plaintiffs employment, there was no law imposing on the
employer the duty to give 1-month advance notice or payment of the separation pay
before terminating the services of an employee. Defendants also cited the opinion of
the Chief of the Wage Administration Service, dated June 21, 1954, issued in answer to
their query, to the effect that Republic Act 1052 is not applicable to construction workers
as the ones involved herein. These motions were opposed by plaintiffs.
Allegedly for failure to prove their respective allegations, the Municipality Court
dismissed plaintiffs complaint as well as defendants counterclaim. Plaintiffs
appealed to the Court of First Instance of Manila (Civil Case No. 34601), wherein
both parties reiterated their respective allegations presented in the inferior court.
In its decision of September 11, 1958, copy of which was received by counsel for
plaintiffs
on
September
15,
1958,
the
court
said.
". . . What the Court has found very difficult to resolve is the debate on the termination
pay. All the contracts were executed prior to June 12, 1954, when Republic Act 1052 was
approved; and by decision of the Supreme Court in the case of Lara v. Del Rosario, 94
Phil., 778; 50 Off. Gaz., 11975, which was promulgated less than two months before the
approval of that law, it was held that the right of employees to the Mesada provided by
Article 302 of the Code of Commerce had been repealed by the New Civil Code; and as
the New Civil Code became effective on August 30, 1950, technically from August 30,
1950, up to June 12, 1954, there was no law on mesada existing in the Philippines; . . . . It
is contended for the defendants that since all the contracts entered into with plaintiffs
were executed before June 12, 1954, when Republic Act 1052 became effective, said Act
cannot be given such effect as to make it applicable even to contracts already existing
upon its approval as were the contracts here for if that were the case, the law would
become unconstitutional under the rule prohibiting impairment of contracts. The trouble,
however, is that the law, Republic Act 1052, makes it clearly effective beginning June 12,
1954; that was an indication of the Legislative will that it was to be made effective even
as to contracts executed before but not yet terminated at the time of its approval; and the
presumption is always in favor of constitutionality."cralaw virtua1aw library
And holding that plaintiffs employment was not for a definite period, the court
declared them 2 entitled to separation pay on the basis of their daily salaries,
computed at 26 working days a month, plus interest thereon from the date of the
filing of the complaint, and costs. Defendants Foster Wheeler Corporation and
Caltex (Phil.) Inc. perfected an appeal to this Court, docketed as G.R. No. L-14758.
On the other hand, the twenty (20) plaintiffs excluded from the decision for having,
according to the trial judge, been already paid their "mesada." likewise, interposed
an
appeal
docketed
as
G.R.
No.
L-14923.
Prior to August 30, 1950 3 the workers right to separation pay or "mesada" was secured
by Article 302 of the Code of Commerce. However, in a decision promulgated on April
20,
1954,
this
Court
declared:jgc:chanrobles.com.ph

"As to the months pay (mesada) under Article 302 of the Code of Commerce, Article
2270 of the new Civil Code (Republic Act 386) appears to have repealed said Code of
Commerce governing Agency. This repeal took place on August 30, 1950, when the new
Civil Code went into effect, that is, one year after its publication in the Official
Gazette."cralaw
virtua1aw
library
As a consequence thereof, 4 the legislature enacted Republic Act 1052 which, in full,
reads:jgc:chanrobles.com.ph
"AN ACT TO PROVIDE FOR THE MANNER OF TERMINATING
EMPLOYMENT WITHOUT A DEFINITE PERIOD IN A COMMERCIAL,
INDUSTRIAL OR AGRICULTURAL ESTABLISHMENT OR ENTERPRISE.
xxx
"SECTION 1. In cases of employment, without a definite period, in a commercial,
industrial or agricultural establishment or enterprise, neither the employer nor the
employee shall terminate the employment without serving notice on the other at least one
month in advance.
"The employee, upon whom no such notice was served, shall be entitled to one months
compensation from the date of termination of his employment.
"SEC. 2. Any contract or agreement contrary to the provisions of section one of this Act
shall be null and void.
"SEC. 3. This Act shall take effect upon its approval.
"Approved, June 12, 1954."cralaw virtua1aw library
There is no controversy as to the fact that herein appellees were employed after the
repeal of Article 302 of the Code of Commerce and before the effectivity of Republic
Act 1052. But it is also denied that they were separated from the service (with the
exception of a few) after said Act went into operation. Appellants, however, in
contesting the decision of the lower court ordering them to give the employees
separation pay, contend that as the contracts of employment were entered into at a
time when there was no law granting the workers, the application as to them of the
subsequent enactment restoring the same right constitutes an impairment of their
contractual obligations. We incline to the contrary view.
The freedom of contract, under our system of government, is not meant to be
absolute. 5 The same is understood to be subject to reasonable legislative regulation
aimed at the promotion of public health, moral, safety and welfare. 6 In other
words, the constitutional guaranty of non-impairment of obligations of contract is
limited by the exercise of the police power of the State, in the interest of public

health, safety, moral and general welfare.

By its very nature, Republic Act 1052 is a measure intended to provide protection to
the workingmen, and, in a way, the employers as well, specifically in cases of
employments with indefinite period or duration, by requiring the employer or
employee, as the case may be, before terminating the employment, to give unto the
other notice thereof 30 days in advance, non-observance of which by the employer,
subjects him to payment (to the employee concerned) of a sum equivalent to the
latters compensation for one month. The logical question that may be raised
concerns the nature of Republic Act 1052, i.e., whether it is a regulatory measure,
not a substantive law so that its enactment may properly be considered a valid
exercise of the police power of the State. The answer is in the affirmative.
It may be observed that the Act prescribes the manner of terminating employment a
fixed or definite period, by requiring the employer or employee, before terminating
such employment, to notify the other party of such fact. Evidently, the purpose of
the regulation is to give the other party opportunity to find replacement or
substitute, in the case of the employer, and other place of employment or source of
livelihood, in the case of the employee. The right to be thus notified can hardly be
considered substantive, nor does the provision requiring the employer to give the
employee, dismissed without such advance notification, the equivalent salary of the
latter for 1 month, bestow upon said employee any substantive right or interest
immediately upon execution of the contract of employment. Actually, the enactment
of the law merely makes an employment subject to the requirement that the same would
not be terminated without notifying the other party of the impending termination, 30 days
in advance. And, in case of non-compliance therewith, the employer shall be liable for
payment to the employee of an amount equivalent to the latters compensation for 1
month. It is clear therefrom that this provision on payment may only be availed of in case
of failure to comply with the regulation on the giving of 30 days advance notice; that it
partakes more of a penalty for violation of the requirement which is within the power of
the legislature to impose (See Thorpe v. Ruthland & Burlington R.R. Co., 27 Vt. 140).
The application, therefore, of Republic Act 1052, which was enacted in the exercise of
the police power of the State, to dismissal effected after June 12, 1954, is with legal
sanction.
Neither can it be successfully argued that the herein involved workers do not fall within
the ambit of operation of the law (Rep. Act 1052) in view of the condition contained in
their contract, thus worded:jgc:chanrobles.com.ph
"2. The refinery construction is a project of temporary duration and, hence your payment
term shall also be temporary dependent upon the needs and requirements, as determined
by this Company, of the particular phase of the construction work to which you may
presently or hereafter be assigned. The necessary consequences of your temporary
employment term are:jgc:chanrobles.com.ph
"(a) Your employment may be terminated at any time without obligation to the Company,

upon payment of wages earned through the date of such termination."cralaw virtua1aw
library
As observed by the trial court, it appears from the stipulation of facts entered into
between the parties that almost all of the employees hired under the uniform
contract containing the above condition, were employed in 1952 and worked
continuously until their dismissal in 1954. The work can not thus be considered of
temporary duration, but more or less permanent. It would not then be difficult for
the employers (herein appellants) to know the approximate date when the services
of the employees would no longer be necessary for the purpose of giving them the
necessary 30 day advance notice of dismissal. Under the circumstances, the
aforequoted condition in the contract, while probably proper when the contract was
executed, became, nevertheless, inoperative upon the enactment of Republic Act
1052.
Defendants-appellants similarly raise the jurisdictional question regarding the sufficiency
of the allegations of the complaint to vest original jurisdiction in the Municipal Court and
appellate jurisdiction in the Court of First Instance. The pertinent part of the second
amended complaint (R.A. p. 55) states:jgc:chanrobles.com.ph
"3-a. That a substantial compliance with the desire of this Honorable Court, as can be
gleaned from the order of dismissal, plaintiffs hereby attached Annex A; and made an
integral part of this second amended complaint, showing the dates plaintiffs were hired,
the dates they were discharged without previous notice, the agreed salary computed so
much daily; and that the separation pay, amounting to one month or thirty-days at least
together with the claims for vacation and sick leaves and overtime as the case may be, of
each and every one mentioned in Annex A, and which each and every one claims, will
not exceed ranging from P120.00 to P150.00. . . ." (Italics supplied.)
There is no question that a complaint must contain the ultimate facts constituting
plaintiffs cause or causes of action (Sec. 1, Rule 6, Rules of Court). For purposes of said
Rule, however, it was said that a complaint would be sufficient if it contains sufficient
notice of the cause of action even though the allegations may be vague or indefinite, or in
the form of conclusions, in which event, the proper recourse would be, not a motion to
dismiss, but a motion for a bill of particulars. 7 In the case at bar, the allegations of the
complaint, taken with Annex "A", to our mind, give the necessary information sufficient
enough to enable defendants to plead and prepare for trial, considering that they are the
ones keeping record of the facts of the appellees employment and are in the best position
to know the extent of the latters claims. And, even assuming that they have no such
records, defendants should have moved for a bill of particulars. Failing to do so, they can
not now be heard to complain against the alleged insufficiency or ambiguity of the
complaint.
G.R. No. L-14923
With respect to the appeal of the twenty (20) employees who were executed from the

judgment, it is contended that the lower court gravely abused its discretion in
disapproving their record on appeal and denying their motion for relief. The facts
regarding this incident are not disputed.
Herein appellants received copy of the decision of September 15, 1958. Their motion for
partial reconsideration of the decision, praying for their inclusion therein and filed on
October 9, was denied on October 18, of which counsel for plaintiffs was notified on
October 21. From September 15 to October 9, 24 days had elapsed. The remaining of 6
days started to run again from October 21 and would end on October 27, when the
decision should become final.
On October 24, counsel for plaintiffs filed a motion for extension of time within which to
perfect an appeal, mentioning therein the fact that they were still trying to raise the
necessary amount to cover the appeal bond and incidental expenses. By order of October
25, 1958, copy of which was received by plaintiffs on October 31 (after the 30-day period
had already expired on October 27), the court granted them up to November 8, 1958,
within which to file record on appeal only, but denied the extension with respect to the
filing of the bond. Although the said record on appeal as well as the bond were actually
filed on November 7, the lower court, nonetheless, disapproved the appeal in its order of
November 12, 1958, by reason of their alleged failure to pay the appeal bond on time.
Plaintiffs did not appeal from this order of denial. However, on November 25, 1958,
counsel for plaintiffs filed a motion for relief from the judgment, under Rule 38, which
was denied. It is this order, as well as that disapproving their appeal, that plaintiffsappellants want us to nullify and set aside.
We see nothing abusive or irregular in the actions taken by the lower court. It is true that
the motion for extension of time to perfect the appeal was filed before the expiration of
the reglementary period, and that, although the order extending the period to file the
record on appeal was issued on October 25, copy thereof was received by counsel for the
plaintiffs only on October 31, or after the original period had already lapsed. However,
we can not subscribe to the proposition that the payment of the appeal bond on November
7 constitutes substantial compliance with the Rules.
Admittedly, the granting or denial of a motion for extension of time is discretionary on
the court. Counsel for the plaintiffs, therefore, should not have been presumed that his
motion for extension for the period to file the record on appeal and pay the appeal bond
would be granted, but should have taken upon himself the duty to inquire, before the
original period had lapsed, what action the court took on his said motion. In this case, the
order partly denying the requested extension was issued on October 25, or the day after
the motion was filed. Counsel could have easily informed himself of such fact, had he
only tried to do so, considering that his office (in the Doa Mercedes building, Plaza
Miranda, Quiapo, Manila) is practically only a few blocks away from where the court is
housed. This he could have done before the deadline, October 27. Instead, he waited for
the delivery of the notice to him on October 31, which is too late. Even then, it took him
another seven (7) days before he filed his appeal bond on November 7.

There is, similarly, no basis for the granting of the relief prayed for by the plaintiffsappellants. The motion for relief was based on the alleged excusable negligence of
counsel, consisting of the latters failure to know of the existence of the Opinion of the
Secretary of Justice, dated July 28, 1958 (Op. No. 149, series of 1958), interpreting the 1month salary provided under Republic Act 1052 to mean 30 working days. The finding of
the aforecited Opinion by chance, to our mind, does not partake of the nature of
"discovery" of evidence as contemplated under Rule 38 of the Rules of Court. It must be
remembered that aside from the acknowledged doctrine that the Opinion of the Secretary
of Justice is not binding upon the courts, the matters expressed therein are not evidentiary
facts, but dissertations or discussion of the nature, extent and effect of a given legal issue.
Wherefore, the main decision, insofar as it relates to those of the plaintiffs-employees
who were dismissed after June 12, 1954, is hereby affirmed, as well as the orders of
November 12, and 27, 1958, appealed from. Costs are taxed in G.R. No. L-14785 against
appellants Foster Wheeler Corporation and Caltex (Phil.) Inc., and in G.R. No. L- 14923,
against appellants Felix Abe, Et. Al. So ordered.
Paras, C.J., Bengzon, Labrador, Reyes, J.B.L., Paredes, and Dizon, JJ., concur.
RESOLUTION
February 27, 1961
BARRERA, J.:

In case G.R. No. L-14758 (Felix Abe, et al v. Foster Wheeler Corp., Et. Al.) , defendantsappellants filed separate motions for reconsiderations of the decision herein rendered, on
the ground that (1) the employment of the workers involved in this case was for a definite
period, and (2) Republic Act No. 1052 should not be given retroactive effect.
There is no question that the Batangas Refinery Project is for a specific duration, which
is, until it is completed. Too, the different phases of the construction work, e.g., masonry,
painting, plumbing, etc., may also be considered with definite duration, which is, until
they are finished. Still under the terms of the contract entered into by the workers, the
period or duration of their employment was indefinite. As far as pertinent, the contract
provides:jgc:chanrobles.com.ph
"2. The refinery construction is a project of temporary duration and hence, your
employment terms shall also be temporary dependent upon the needs and requirements,
as determined by this Company, of the particular phase of the construction work to which
you may be presently or hereafter be assigned."cralaw virtua1aw library
Under the aforequoted provision of the contract, the workers term of employment is
made of two conditions: (1) upon the needs and requirements (not duration) of the

particular work to which he (the worker) is assigned and (2) that such needs and
requirements are to be as so determined by the employer. In other words, the duration of
the employment of a worker assigned to a particular kind of work is not necessarily coexistent with the duration of such work, because the employer could, at any stage of the
work, determine whether his services are needed or not. Likewise, the employer could,
even after the termination of a particular work, assign the employee to another phase of
the construction work, if the employer determines that the needs of the work so require.
Clearly, the worker is without any means to know when his services would be considered
by
his
employer
still
necessary
or
not.
As to the other ground relied upon in the motion, the same was already fully discussed in
the
decision.
Plaintiffs-appellants in case G.R. No. L-14923 (Abe, Et. Al. v. Foster Wheeler Corp., Et
Al.,) also filed a motion for reconsideration raising issues which are already fully
considered in the decision. The motions filed in both cases are, therefore, denied for lack
of
merit.
Bengzon, Bautista Angelo, Labrador, Concepcin, Reyes, J.B.L., Paredes and Dizon, JJ.,
concur.

G.R. Nos. L-14785 and L-14923 February 27, 1961

FELIX ABE, ET AL., plaintiffs-appellees,
vs.
FOSTER WHEELER CORPORATION and CALTEX (PHIL.), INC., defendantsappellants.
Nicetas Suanes for plaintiffs-appellees.
Ross, Selph & Carrascoso for defendants-appellants.
RE S O LUTI ON
BARRERA, J.:
In case G.R. No. L-14875 (Felix Abe, et al. v. Foster Wheeler Corp., et al.), defendantsappellants filed separate motions for reconsideration of the decision herein rendered, on
the ground that (1) the employment of the workers involved in this case was for a definite
period; and (2) Republic Act No. 1052 should not be given retroactive effect.

There is no question that the Batangas Refinery Project is for a specific duration, which
is, until it is completed. Too, the different phases of the construction work, e.g., masonry
painting, plumbing, etc., may also be considered with definite duration, which is, until
they are finished. Still, under the terms of the contract entered into by the workers, the
period or duration of their employment was indefinite. As far as pertinent, the contract
provides: .
2. The refinery construction is a project of temporary duration and hence, your
employment term shall also be temporary dependent upon the needs and
requirements, as determined by this Company, of the particular phase of the
connstruction work to which you may be presently or hereafter be assigned ....
Under the aforequoted provision of the contract, the worker's term of employment is
made subject to two conditions: (1) upon the needs and requirements (not duration) of the
particular work to which he (the worker) is assigned; and (2) that such needs and
requirements are to be as so determined by the employer. In other words, the duration of
the employment of a worker assigned to particular kind of work is not necessarily
coexistent with the duration of such work, because the employer could, at any stage of
the work, determine whether his services are needed or not. Likewise, the employer
could, even after the termination of a particular work, assign the employee to another
phase of the construction work, if the employer determines that the needs of the work so
require. Clearly, the worker is without any means to know when his services would be
considered by his employer still necessary or not.
As to the other ground relied upon in the motion, the same was already fully discussed in
the decision.
Plaintiffs-appellants in case G.R. No. L-14923 (Abe, et al. v. Foster Wheeler Corp., et al.)
also filed a motion for reconsideration raising issues which are already fully considered
in the decision.
The motions filed in both cases are, therefore, denied for lack of merit.
Bengzon, Actg. C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes and
Dizon,
JJ.,
concur.
Padilla, J., took no part.

G.R. No. L-5671 August 24, 1910

BENITO DE LOS REYES, plaintiff-appellant,
vs.
VERONICA ALOJADO, defendant-appellee.
Ramon Diokno, for appellant.
No appearance for appellee.
TORRES, J.:
On or about January 22, 1905, Veronica Alojado received, as a loan, from Benito de
los Reyes that the sum P67 .60, for the purpose of paying a debt she owed to Olimpia

Zaballa. It was agreed between Alojado and Reyes that the debtor should remain as
a servant in the house and in the service of her creditor, without any renumeration
whatever, until she should find some one who would furnish her with the said sum
where with to repeat the loan. The defendant, Veronica Alojado, afterwards left the
house of the plaintiff, on March 12, 1906, without having paid him her debt, nor did
she do so at any subsequent date, notwithstanding his demands. The plaintiff,
therefore, on the 15th of march, 1906, filed suit in the court of the justice of the peace
of Santa Rosa, La Laguna, against Veronica Alojado to recover the said sum or, in a
contrary case, to compel her to return to his service. The trial having been had, the justice
of the peace, on April 14, 1906, rendered judgment whereby he sentenced the defendant
to pay to the plaintiff the sum claimed and declared that, in case the debtor should
be insolvent, she should be obliged to fulfill the agreement between her and the
plaintiff. The costs of the trial were assessed against the defendant.
The defendant appealed from the said judgment to the Court of First Instance to
which the plaintiff, after the case had been docketed by the clerk of court, made a motion
on May 4, 1906, requesting that the appeal interposed by the defendant be disallowed,
with the costs of both instances against her. The grounds alleged in support of this
motion. were that the appeal had been filed on the sixth day following that when
judgment was rendered in the trial, on April 14th, and that it, therefore, did not come
within the period of the five days prescribed by section 76 of the Code of Civil
Procedure, as proven by the certificate issued by the justice of the peace of Santa Rosa.
The Court of First Instance, however, by order of July 16, 1906, overruled the
motion of the plaintiff-appellee, for the reasons therein stated, namely, that the
defendant was not notified of the judgment rendered in the case on April 14th of
that year until the 16th of the same month, and the appeal having been filed four
days later, on the 20th, it could having seen that the five days specified by section 76
of the Code of Civil Procedure had not expired. The plaintiff was advised to reproduce
his complaint within ten days, in order that due procedure might he had thereupon.
The plaintiff took exception to the aforementioned order and at the same time reproduced
the complaint he had filed in the court of the justice of the peace, in which, after relating
to the facts hereinbefore stated, added that the defendant, besides the sum abovementioned, had also received from the plaintiff, under the same conditions, various small
amounts between the dates of January 22, 1905, and March 10, 1906, aggregating
altogether P11.97, and that they had not been repaid to him. He therefore asked that
judgment be rendered sentencing the defendant to comply with the said contract and to
pay to the plaintiff the sums referred to, amounting in all to P79.57, and that until this
amount should have been in paid, the defendant should remain gratuitously in the service
of plaintiff's household, and that she should pay the costs of the trial.
The defendant, in her written answer of August 15, 1906, to the aforesaid complaint,
denied the allegations contained in paragraphs 1 and 2 of the complaint and alleged
that, although she had left the plaintiff's service, it was because the latter had paid
her no sum whatever for the services she had rendered in his house. The defendant
likewise denied the conditions expressed in paragraph 4 of the complaint, averring that
the effects purchased, to the amount of P11.97, were in the possession of the plaintiff,
who refused to deliver them to her. She therefore asked that she be absolved from the

complaint and that the plaintiff be absolved from the complaint the wages due her for the
services she had rendered.
The case came to trial on October 19, 1906, and, after the production of testimony by
both parties, the judge, on November 21st of the same year, rendered judgment
absolving the defendant from the complain, with the costs against the plaintiff, and
sentencing the latter to pay to the former the sum of P2.43, the balance found to exist
between the defendant's debt of P79.57 and the wages due her by the plaintiff, which
amounted to P82. The plaintiff, on the 6th of December, filed a written exception to
the judgment aforesaid through the regular channels, and moved for a new trial on
the ground that the findings of fact set forth in the judgment were manifestly
contrary to the weight of the evidence. This motion was overruled on the 17th of the
same month, to which exception was taken by the appellant, who afterwards filed the
proper bill of exceptions, which was approved, certified, and forwarded to the clerk of
this court.
The present suit, initiated in a justice of the peace court and appealed to the Court of First
Instance of La Laguna at a time prior to the enactment of Act No. 1627, which went into
effect on July 1, 1907, which limited to two instances the procedure to be observed in
verbal actions, concerns the collection of certain sum received as a loan by the defendant
from the plaintiff, and of the wages earned by the former for services rendered as a
servant in the said plaintiff's house.
Notwithstanding the denial of the defendant, it is a fact clearly proven, as found in the
judgment appealed from, that the plaintiff did deliver to Hermenegildo de los Santos
the sum of P67.60 to pay a debt was paid by De los Santos with the knowledge and
in behalf of the said defendant who, of her free will, entered the service of the
plaintiff and promised to pay him as soon as she should find the money wherewith to
do so.
The duty to pay the said sum, as well as that of P11.97 delivered to the defendant in
small amounts during the time that she was in the plaintiff's house, is
unquestionable, inasmuch as it is a positive debt demandable of the defendant by
her creditor. (Arts. 1754, 1170, Civil Code.) However, the reason alleged by the
plaintiff as a basis for the loan is untenable, to wit, that the defendant was obliged to
render service in his house as a servant without remuneration whatever and to
remain therein so long as she had not paid her debt, inasmuch as this condition is
contrary to law and morality. (Art. 1255, Civil Code.)
Domestic services are always to be remunerated, and no agreement may subsist in
law in which it is stipulated that any domestic service shall be absolutely gratuitous,
unless it be admitted that slavery may be established in this country through a
covenant entered into between the interested parties.
Articles 1583, 1584, and 1585 of the Civil Code prescribe rules governing the hiring of
services of domestics servants, the conditions of such hire, the term during which the
service may rendered and the wages that accrue to the servant, also the duties of the latter
and of the master. The first of the articles cited provides that a hiring for life by
either of the contracting parties is void, and, according to the last of three articles
just mentioned, besides what is prescribed in the preceding articles with regard to

masters and servants, the provisions of special laws and local ordinances shall be
observed.
During the regime of the former sovereignty, the police regulations governing domestic
service, of the date of September 9, 1848, were in force, article 19 of which it is ordered
that all usurious conduct toward the servants and employees of every class is prohibited,
and the master who, under pretext of an advance of pay or of having paid the debts or the
taxes of his servant, shall have succeeded in retaining the latter in his service at his house,
shall be compelled to pay to such servant all arrears due him and any damages he may
have occasioned him, and the master shall also be fined.
The aforementioned article 1585 of the Civil Code undoubtedly refers to the provisions
of the regulations just cited.
When legal regulations prohibit even a usurious contract and all abuses prejudicial
to subordinates and servant, in connection with their salaries and wages, it will be
understood at once that the compact whereby service rendered by a domestic
servant in the house of any inhabitant of this country is to be gratuitous, is in all
respects reprehensible and censurable; and consequently, the contention of the
plaintiff, that until the defendant shall have paid him her debt she must serve him in
his house gratuitously is absolutely inadmissible.
The trial record discloses no legal reason for the rejection of the findings of fact and
of law contained in the judgment appealed from, nor for an allowance of the errors
attributed appealed from, nor for an allowance of the errors attributed thereto; on
the contrary, the reasons hereinabove stated show the propriety of the said
judgment.
For the foregoing reasons, and accepting those set forth in the judgment appealed from, it
is proper, in our opinion, to affirm and we hereby affirm the said judgment, with the costs
against the appellant.
Arellano, C. J., Johnson, Moreland and Trent, JJ., concur.

G.R. No. L-1573 March 29, 1948

KAISAHAN NG MGA MANGGAGAWA SA KAHOY SA PILIPINAS, petitionerappellant,
vs.
GOTAMCO SAW MILL, respondent-appellee.
Severino P. Izon for petitioner.
Romeo Perfecto for respondent.
HILADO, J.:
In its petition for a writ of certiorari, the "Kaisahan ng mga Manggagawa sa Kahoy sa
Pilipinas" prays, for the reasons therein set forth, that we reverse and vacate the orders of
the Court of Industrial Relations dated September 23, 1946 (Annex A) and March 28,
1947 (Annex B) and its resolution of July 11, 1947 (Annex C).

In the order of September 23, 1946, it is recited that the laborers in the main case
(case No. 31-V of the Court of Industrial Relations) declared a strike on September
10, 1946, "which suspended all the work in the respondent company"; that on
September 19, 1946 (presumably after the case had been brought to the Court of
Industrial Relations) said court informed the parties that the continuation of the
strike would necessarily prejudice both parties, and that a temporary solution,
satisfactory to both parties, must be found to put an end to it, at the same time,
urging both parties to be reasonable in their attitude towards each other; that ample
opportunity was given to both parties to iron out their differences until September
21, 1946, when the court continued the conference at which, among other things, the
leader of the laborers informed the court that, although said laborers were not
exactly satisfied with the arrangement, in order to cooperate with the court and with
the parties so that the laborers could return to work and the company resume its
operation, they had no objection to accepting a temporary settlement of P3.50
without meal, as against the proposal of the company of P2.00 without meal; that
after a series of conferences held on September 23, 1946, the date of the order now
under consideration, the labor leader decided to accept a temporary arrangement of
the wage problem as proposed by management, that is, P2.00 over-all increase
without meal to all striking laborers; that Francisco Cruz, President of the Union,
manifested that he would have a hard time convincing the laborers, but in view of
their desire to preserve that harmony which used to exist between the parties, they
were going to accede to this proposition, provided that the management would
permit the laborers to bring with them home, if available, small pieces of lumber to
be utilized as firewood; that the negotiations culminated in an agreement by which
the laborers would return to their work on Tuesday, September 24, 1946, at 7:00
o'clock in the morning, and the respondent company would resume its operation on said
date under the following conditions:
(1) That all the laborers and workingmen will receive an over-all increase of P2.00
daily, without meal, over the wages received by them before the strike;
(2) That the management will permit the laborers to bring with them home, if
available, small pieces of lumber to be utilized as firewood; and
(3) That the foregoing increase and privilege will take effect upon the return of the
workingmen to work until the final determination of the present controversy.
The same order then proceeds as follows:
Finding the above temporary agreement between the parties to be reasonable
and advantageous to both, the court approves the same and orders the striking
laborers of the respondent company to return to their work on Tuesday,
September 24, 1946 at 7:00 o'clock in the morning, and the respondent company
to resume its operation and admit the striking laborers. The respondent
company is enjoined not to lay-off, suspend or dismiss any laborer affiliated with
the petitioning union, nor suspend the operation of the temporary agreement,
and the labor union is enjoined not to stage a walk-out or strike during the
pendency of the hearing.
From the order of March 27, 1947, it appears that on January 7, 1947, the respondent

Gotamco Saw Mill filed with the Court of Industrial relations an urgent motion asking
that the petitioning union be held for contempt of court for having staged a strike
during the pendency of the main case "in violation of the order of this court dated
September 23, 1946"; that on January 9, 1947, petitioner filed an answer with a
counter-petition alleging, among other things, that a representative of petitioner
conferred with respondent regarding certain discriminations obtaining in the
respondent's saw mill, but instead of entertaining their grievances said respondent
in a haughty and arbitrary manner ordered the stoppage of the work and
consequently the workers did then and there stop working; and in the counterpetition said petitioner asked the respondent be held for contempt for having
employed four new Chinese laborers during the pendency of the hearing of the main
case, without express authority of the court and in violation of section 19 of
Commonwealth Act No. 103, as amended. It is also recited in the said order of March
28, 1947, that on that same date, January 9, 1947, respondent filed with the court another
urgent motion for contempt against the petitioning union for picketing on the premises of
the respondent's saw mill and for grave threats which prevented the remaining laborers
from working.
Upon request of both parties, the court required the presentation of evidence
pertinent to the incidents thus raised. Thereafter, the said order of March 28, 1947, was
entered, and the court stated therein the three questions to be determined as follows: first,
if there was a violation by the petitioning union of the order of said court of September
23, 1946, which would warrant the commencement of contempt proceedings; second,
whether the facts and circumstances attending the picketing constitute contempt of court;
third, whether there was a violation by the respondent of section 19 of the
Commonwealth Act No. 103, as amended, in taking four Chinese laborers pending the
hearing and without express authority of the court; and fourth, whether the dismissal of
Maximino Millan was with or without just cause.
The court, passing upon these questions, found and held:
(1) That there was a violation of the order of the court dated September 23, 1946, by
the petitioning union and thereby ordered Atty. Pastor T. Reyes, special agent of the
court, to take such action as may be warranted in the premises against the person or
persons responsible therefor for contempt:
(2) That the question of picketing being closely and intimately related to the strike
which had been found illegal, did not need to be passed upon, it being imbibed by
question No. 1;
(3) That there being no strong and clear proof on the question of respondent having
violated section 19 of Commonwealth Act No. 103, as amended, respondent was
thereby exonerated from any liability in connection with the alleged employment of
four Chinamen;
(4) That Maximino Millan being of troublesome nature and unworthy to work among
his fellow laborers, his petition for reinstatement contained in demand No. 5 of the
main case was thereby denied.
The above cited resolution of July 11, 1947, was entered by the Court of Industrial
Relations, sitting in banc, and denied reconsideration of its order of March 28, 1947, as

requested by the petitioning union's contention is recited that the provisions of section 19
of Commonwealth Act No. 103, as amended, upon which order of September 23, 1946,
was based, had not been complied with; in other words, that the said order was not issued
in conformity with the requisites of said section, because, it was said, before its issuance
there had been no proper hearing and there was and there was no express finding by the
court that public interest required the return of the striking workers. The further
contention is therein recited that, granting that the order of September 23, 1946, was
issued in conformity with said section 19, said provision is unconstitutional for being in
violation of the organic proscription of involuntary servitude. Passing upon these
contentions, the Court of Industrial Relations said:
The order of September 23, 1946, was issued in conformity with the provisions of
section 19. Said order was proposed and issued on the basis of the agreement entered
into by the parties after the preliminary hearings and conferences. While it is true that
the order of the Court now in question did not make any express finding as to whether
public interest required the return of the striking workers, it is undeniable, however,
that until the numerous incidents arising therefrom since the certification of the
dispute promptly, need not be stated in the said order because it is a fact which is
borne out by the entire record of the case. If the petitioner was aggrieved by the terms
of the order, it could have objected right then and there and could have appealed said
order within the period prescribed by law, and nor to wait after it had become final,
definite, and conclusive. The record shows that the petitioner in its answer answer and
counter-petition for contempt based its complaint upon section 19 (incidental Case
No. 31-V [4]). It is, indeed, strange that after taking advantage of this order and
enjoyed (enjoying) the benefits thereunder, the petitioner now comes to impugn and
challenge the validity. The second motion for reconsideration is the sad instance
where the petitioner attacks the validity of an order under which it once took shelter.
The court believes that section 19 is constitutional. To start with, this section is
presumed to be constitutional. Several laws promulgated which apparently
infringe the human rights of individuals were "subjected to regulation by the
State basically in the exercise of its paramount police power". The provisions of
Act No. 103 were inspired by the constitutional injunction making it the concern
of the State to promote social justice to insure the well being and economic
security of all the people. In order to attain this object, section 19 was
promulgated which grants to labor what it grants to capital and denies to labor
what it denies to capital. Section 19 complements the power of the Court to settle
industrial disputes and renders effective such powers which are conferred upon
it by the different provisions of the Court's organic law, more particularly,
sections 1 and 4, and "other plenary powers conferred upon the Court to enable
it to settle all questions matters, controversies or disputes arising between,
and/or affecting employers and employees", "to prevent non-pacific methods in
the determination of industrial or agricultural disputes" (International HardWood
and Venser Co. vs The Pangil Federation of Laborers, G.R. No. 47178, cited in the
case of Mindanao Bus Co. vs. Mindanao Bus Co. Employees' Association, 40 Off.
Gaz., 115). Section 4 has been upheld in the case aforecited. It appearing that the
power of this Court to execute its orders under section 19 is also the same power it
possesses under section 4 of the same act, it inferentially follows that section 19 is

likewise valid. (Manila Trading and Supply Co. vs. Philippine Labor Union, G.R. No.
47796.)
In Manila Trading and Supply Company vs. Philippine Labor Union, supra, this Court
said:
In the first place, the ultimate effect of petitioner's theory is to concede to the Court of
Industrial Relations the power to decide a case under section 19 but deny it, the power
to execute its decision thereon. The absurdity of this proposition, is too evident to
require argument. In the second place considering that the jurisdiction of the Court of
Industrial Relations under section 19 is merely incidental to the same jurisdiction it
has previously acquired under section 4 of the law, if follows that the power to
execute its orders under section 19 is also the same power that it possesses under
section 4. (40 Off. Gaz., [14th Supp.], No. 23, p. 178.)
Among the powers thus conferred is that to punish a violation of an order such as those
now under consideration as for contempt of court.
We agree with the Court of Industrial Relations that section 19 of Commonwealth
Act No. 103 is constitutional. It does not offend against the constitutional inhibition
prescribing involuntary servitude. An employee entering into a contract of
employment said law went into effect, voluntarily accepts, among other conditions,
those prescribed in said section 19, among which is the "implied condition that when
any dispute between the employer or landlord and the employee, tenant or laborer
has been submitted to the Court of Industrial Relations for settlement or
arbitration, pursuant to the provisions of this Act, and pending award or decision by
it, the employee, tenant or laborer shall not strike or walk out of his employment
when so joined by the court after hearing and when public interest so requires, and
if he has already done so, that he shall forthwith return to it, upon order of the
court, which shall be issued only after hearing when public interest so requires or
when the dispute can not, in its opinion, be promptly decided or settled ...". (Emphasis
supplied.) The voluntariness of the employee's entering into such a contract of
employment he has a free choice between entering into it or not with such an
implied condition, negatives the possibility of involuntary servitude ensuing. The
resolution of July 11, 1947, states that the order of September 23, 1946, was issued after a
series of preliminary hearings or conferences, and we are satisfied that these were
"hearings" within the meaning of the above mentioned section 19 of the law. The record
certainly reveals that what was done during and what resulted from said preliminary
hearings or conferences were reported to the court at a formal hearing. As to public
interest requiring that the court enjoin the strike or walk out, or the return of striking
laborers, aside from the legal presumption that the Court of Industrial Relations complied
with the provisions of the law in this respect, we think that, considering the universally
known fact, of which this Court takes judicial notice, that as a result of the destructions
wrought by the late war, the economic and social rehabilitation of the country urgently
demands the reconstruction work will inevitably tend to paralyze, impede or slow down
the country's program of rehabilitation which, for obvious and natural reasons, the
government is striving to accelerate as much as is humanly possible.
Besides, the order of the court was for the striking workers to return to their work.
And that order was made after hearing, and, moreover, section 19 of Commonwealth

Act No. 103, in providing for an order of the court fro the return of striking
workers, authorizes such order, among other cases, "when the dispute can not, in its
opinion, be promptly decided or settled". The provision says: "... and if he has already
done so (struck or walked out),that he shall forthwith return to it, upon order of the court,
which shall be issued only after hearing when public interest so requires or when the
dispute cannot, in its opinion, be promptly decided or settled, (emphasis supplied). In
other words the order to return, if the dispute can be promptly decided or settled,
may be issued "only after hearing when public interest so requires", but if in the
court's opinion the dispute can not be promptly decided or settled, then it is also
authorized after hearing to issue the order: we construe the provision to mean that
the very impossibility of prompt decision or settlement of the dispute confers upon
the court the power to issue the order for the reason that the public has an interest
in preventing undue stoppage or paralyzation of the wheels of industry. And, as well
stated by the court's resolution of July 11, 1947, this impossibility of prompt decision
or settlement was a fact which was borne out by the entire record of the case and did
not need express statement in the order.
Finally, this Court is not authorized to review the findings of fact made by the Court of
Industrial Relations (Commonwealth Act No. 103, section 15, as amended by
Commonwealth Act 559, section 2; Rule 44, Rules of Court; National Labor Union vs.
Phil. Match Co., 40 Off. Gaz. 8th Supp. p. 134, Bardwell Brothers vs. Phil. Labor Union,
39 Off. Gaz. 1032; Pasumil Workers' Union vs. Court of Industrial Relations, 40 Off.
Gaz. 6th Supp., p. 71).
However, Mr. Justice Briones thinks that we should expressly reserve our opinion on the
constitutionality of the above statutory and reglementary provisions should it, in the
future, become necessary to decide it.
For all theses considerations, the orders and resolution of the Court of Industrial
Relations assailed by the instant petition are hereby affirmed, with costs against
petitioner-appellant. So ordered.
Moran, C.J., Paras, Feria, Pablo, Bengzon, Briones, Padilla and Tuason, JJ., concur.

COLLECTIVE RIGHTS OF LABOR:

G.R. No. L-20303 September 27, 1967

REPUBLIC SAVINGS BANK (now REPUBLIC BANK), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO,
BENJAMIN JARA, FLORENCIO ALLASAS, DOMINGO B. JOLA,

DIOSDADO S. MENDIOLA, TEODORO DE LA CRUZ, NARCISO

MACARAEG and MAURO A. ROVILLOS, respondents.
Lichauco, Picaso & Agcaoili and R. Santayana for petitioner.
G. E. Fajardo for respondents.
CASTRO, J.:
The vital issue in this case is whether the dismissal of the eight (8) respondent
employees by the petitioner Republic Bank (hereinafter referred to as the Bank)
constituted an unfair labor practice within the meaning and intendment of the
Industrial Peace Act (Republic Act 875). The Court of Industrial Relations (CIR)
found it did and its decision is now on appeal before us. The Bank maintains that
the discharge was for cause.
The Bank had in its employ the respondents Rosendo T. Resuello, Benjamin Jara,
Florencio Allasas, Domingo B. Jola, Diosdado S. Mendiola, Teodoro de la Cruz,
Narciso Macaraeg and Mauro A. Rovillos. On July 12, 1958 it discharged Jola
and, a few days after (July 18, 1958), the rest of respondents, for having written
and published "a patently libelous letter . . . tending to cause the dishonor,
discredit or contempt not only of officers and employees of this bank, but also of
your employer, the bank itself."
The letter referred to was a letter-charge which the respondents had written to the
bank president, demanding his resignation on the grounds of immorality, nepotism
in the appointment and favoritism as well as discrimination in the promotion of
bank employees. The letter, dated July 9, 1958, is hereunder reproduced in full:
Mr. Ramon Racelis
President, Republic Savings Bank
Manila
"Dear Mr. President:
We, the undersigned, on behalf of all our members and employees
of the Republic Savings Bank, who have in our hearts only the
most honest and sincere motive to conserve and protect the interest
of the institution and its 200,000 depositors, do hereby, demand the
much needed resignation of His Excellency, Mr. Ramon Racelis as
President and Member of the Board of Directors of the Bank.
Mr. President, you have already, in so many occasions, placed the
Bank on the verge of danger, that now we deem it right and
justifiable for you to leave this Bank and let other more capable
presidents continue the work you have not well accomplished.
In the above instance, we are presenting charges which in our
humble contention properly justifies incapacity on your part to
continue and assume the position as top executive of the huge
institution:
(1) That you Mr. President, have tolerated and practiced
immorality in this Bank. We have been expecting you to do

something about this malpractice which is very disgraceful and

affects the morale of the hundreds of your employees. But so
far, Mr. President, you have just let this thing passed through.
As a matter of fact, you have even promoted these women like
Misses Pacita Mato and Edita Castro. These women are of
questionable characters, Mr. President, and should have had no
place in the Bank as managers or even as mere employees. We
know Mr. President, because it is an open secret in the Bank,
that you have illicit relations with one of them Miss Edita
Castro. As top officer and as father of the employees of the
Bank, you have shown this bad example to your employees.
Mr. President, we are really ashamed of you.
(2) That you have allowed the practice of nepotism in this
Bank. You have employed relatives of yours like Honorio
Ravida; Bienvenido Ravida; Antonio Racelis; Jesus Antonio;
and Argentina Racelis. Not only that Mr. President. You have
also given those nieces and nephews of yours good positions at
the expense of the more capable employees. Mr. President, if
we have to mention all of them, one page will not be enough.
(3) With regards to promotion, you have given more
preferences to your close relatives. When the Bank advocated
the sending of pensionados to States, you have only limited
your choice among your nieces, nephews, and querida, namely,
Miss Argentina Racelis, Mr. Jesus Antonio, Miss Edita Castro,
and her brother-in-law, Mr. Pedro Garcia, Jr. In doing this, Mr.
President, you have only lowered the reputation and standing
of the Republic Savings Bank. There is really no sense in
sending high school and B.S.E. graduates to States to study
advanced banking. Because of this silly decision, it took one
pensionado six months and cost the Bank a total of P10,000.00
just to study Christmas savings. That subject is very simple;
one need not go to States to study savings; that you know full
well, Mr. President. The reason why you sent Miss Castro to
States was because you were also there. Are we not right?
(4) That you Mr. President, tolerated and still tolerating grave
dishonesty in this Bank as evidenced by the following
irregularities and anomalies;
(a) In one of our branches, around P200,000.00 was
mulcted and embezzled by a certain Maximo Donado by
doctoring the ledgers and records of that particular office.
To the present, the amount is still increasing and some
more are being dug up from the records everyday ever
since its discovery in February 1957. In this case you
dismissed Mr. M. Donado, immediately. But this was all
that you did. If you have to go back to the history of the

case, you will find out that your beloved nieces and
nephews are also involved having been managers of that
particular office. Another nephew, the Vice PresidentOperations, then Vice President, Personnel, was also
involved for valid reasons that he did not even shift this
particular employee to other branches or departments since
the beginning when it has been the policy of the Bank to
reshuffle its personnel. If you want to know why your good
nephew did not transfer this employee, we will tell you.
"Your good nephew has eaten too many baskets of
delicious alimango." Mr. President, if there is someone to
be blamed in this particular case, it is your good nephews
and nieces for their gross negligence.
(b) Aside from the one mentioned above, we have also Mr.
Rodolfo Francisco, who in April 1955, maliciously
withdraw (sic) P970.00 in two withdrawal slips from the
account of one depositor in one of our provincial offices,
inserting his name as co-depositor in the savings account
ledger.
(c) In January 1958, Mr. Jose de los Santos expended and
approved representation expense in the amount of P300.00
in one of our provincial offices.
(d) Mr. Federico M. Dabu, the ex-cashier and now
Personnel Manager, incurred a shortage in the amount of
P1,240.00 in the course of the audit on August 3, 1954.
(e) Mr. Jose S. Guevara, Vice-President on Personnel have
(sic) been accepting bribe moneys. One of these amounts to
P4,000.00 which was delivered by a messenger sometime
during the last quarter of 1957.
Mr. President, the anomalies are only a partial list of the
irregularities which so far you have not acted upon. This type of
people should have been fired out from the Bank; yet on the
contrary, you promoted them to higher and responsible positions,
thus, resulting in the demoralization of the more capable
employees.
Mr. President, we hope that you have still a little sense of decency
and propriety left. So, for goodsake and for the welfare of the
Bank, DO RESIGN NOW as President and as Member of the
Board of Directors of the Republic Savings Bank.
Very respectfully yours,
(Sgd.) Rosendo T. Resuello
President, RSB Supervisors' Union (FFW),
(Sgd.) Benjamin Jara

Vice-President RSB Supervisors' Union (FFW)

(Sgd.) Florencio Allasas
Treasurer, RSB Supervisors' Union (FFW)
(Sdg) Domingo B. Jola
Chairman, Executive Committee, RSB Employees' Union
(FFW)
(Sgd.) Diosdado S. Mendiola
Vice-President, RSB Employees Union (FFW)
(Sgd.) Teodoro de la Cruz
Member, Executive Committee, RSB Employees' Union
(FFW)
(Sgd.) Angelino Quiambao
President, RSB Security Guard Union (FFW)
(Sgd.) Narciso Macaraeg
Vice-President, RSB Security Guard Union (FFW)
(Sgd.) Alfredo Bautista
Treasurer, RSB Security Guard Union (FFW)
(Sgd.) Pacifico A. Argao
PRO, RSB Employees' Union (FFW)
(Sgd.) Toribio B. Garcia
Secretary, RSB Security Guard Union (FFW)
(Sgd.) Mauro A. Rovillos
Member, Executive Committee, RSB Supervisors' Union
(FFW)
Copies of this letter were admittedly given to the chairman of the board of directors of the
Bank, and the Governor of the Central Bank.
At the instance of the respondents, prosecutor A. Tirona filed a complaint in the CIR on
September 15, 1958, alleging that the Bank's conduct violated section 4(a) (5) of the
Industrial Peace Act which makes it an unfair labor practice for an employer "to dismiss,
discharge or otherwise prejudice or discriminate against an employee for having filed
charges or for having given or being about to give testimony under this Act."
The Bank moved for the dismissal of the complaint, contending that respondents were
discharged not for union activities but for having written and published a libelous letter
against the bank president. The court denied the motion on the basis of its decision in
another case1 in which it ruled that section 4(a) (5) applies to cases in which an employee
is dismissed or discriminated against for having filed "any charges against his employer."
Whereupon the case was heard.
In 1960, however, this Court overruled the decision of the CIR in the Royal Interocean
case and held that "the charge, the filing of which is the cause of the dismissal of the
employee, must be related to his right to self-organization in order to give rise to unfair
labor practice on the part of the employer," because "under subsection 5 of section 4(a),

the employee's (1) having filed charges or (2) having given testimony or (3) being about
to give testimony, are modified by 'under this Act' appearing after the last item." 2 The
Bank therefore renewed its motion to dismiss, but the court held the motion in abeyance
and proceeded with the hearing.
On July 4, 1962 the court rendered a decision finding the Bank guilty of unfair labor
practice and ordering it to reinstate the respondents, with full back wages and without
loss of seniority and other privileges. This decision was affirmed by the court en banc on
August 9, 1962.
Relying upon Royal Interocean Lines v. CIR,3 and Lakas ng Pagkakaisa sa Peter Paul v.
CIR,4 the Bank argues that the court should have dismissed the complaint because the
discharge of the respondents had nothing to do with their union activities as the latter in
fact admitted at the hearing that the writing of the letter-charge was not a "union action"
but merely their "individual" act.
It will avail the Bank none to gloat over this admission of the respondents. Assuming that
the latter acted in their individual capacities when they wrote the letter-charge they were
nonetheless protected for they were engaged in concerted activity, in the exercise of their
right of self-organization that includes concerted activity for mutual aid and protection, 5
interference with which constitutes an unfair labor practice under section 4(a)(1). This is
the view of some members of this Court. For, as has been aptly stated, the joining in
protests or demands, even by a small group of employees, if in furtherance of their
interests as such, is a concerted activity protected by the Industrial Peace Act. It is not
necessary that union activity be involved or that collective bargaining be contemplated.6
Indeed, when the respondents complained against nepotism, favoritism and other
management practices, they were acting within an area marked out by the Act as a proper
sphere of collective bargaining. Even the reference to immorality was not irrelevant as it
was made to support the respondents' other charge that the bank president had failed to
provide wholesome working conditions, let alone a good moral example, for the
employees by practicing discrimination and favoritism in the appointment and promotion
of certain employees on the basis of illicit relations or blood relationship with them.
In many respects, the case at bar is similar to National Labor Relations Board v. Phoenix
Mutual Life Insurance Co.7 The issue in that case was whether an insurance company was
guilty of an unfair labor practice in interfering with this right of concerted activity by
discharging two agents employed in a branch office. The cashier of that office had
resigned. The ten agents employed there held a meeting and agreed to join in a letter to
the home office objecting to the transfer to their branch office of a cashier from another
branch office to fill the position. They discussed also the question whether to recommend
the promotion of the assistant cashier of their office as the proper alternative. They then
chose one of their number to compose a draft of the letter and submit it to them for
further discussion, approval and signature. The agent selected to write the letter and
another were discharged for their activities in this respect as being, so their notices stated,
completely unpleasant and far beyond the periphery of their responsibility. In holding the
company liable for unfair labor practice, the Circuit Court of Appeals said:
A proper construction is that the employees shall have the right to engage in
concerted activities for their mutual aid or protection even though no union activity

be involved, for collective bargaining be contemplated. Here Davis and Johnson and
other salesmen were properly concerned with the identity and capability of the new
cashier. Conceding they had no authority to appoint a new cashier or even
recommend anyone for the appointment, they had a legitimate interest in acting
concertedly in making known their views to management without being discharged
for that interest. The moderate conduct of Davis and Johnson and the others bore a
reasonable relation to conditions of their employment. It was therefore an unfair labor
practice for respondent to interfere with the exercise of the right of Davis and Johnson
and the other salesmen to engage in concerted activities for their mutual aid or
protection.
Other members of this Court agreed with the CIR that the Bank's conduct violated section
4(a) (5) which makes it an unfair labor practice for an employer to dismiss an employee
for having filed charges under the Act.
Some other members of this Court believe, without necessarily expressing approval of
the way the respondents expressed their grievances, that what the Bank should have done
was to refer the letter-charge to the grievance committee. This was its duty, failing which
it committed an unfair labor practice under section 4(a) (6). For collective bargaining
does not end with the execution of an agreement. It is a continuous process. The duty to
bargain imposes on the parties during the term of their agreement the mutual obligation
"to meet and confer promptly and expeditiously and in good faith . . . for the purpose of
adjusting any grievances or question arising under such agreement" 8 and a violation of
this obligation is, by section 4 (a) (6) and (b) (3) an unfair labor practice. 9 As Professors
Cox and Dunlop point out:
Collective bargaining . . . normally takes the form of negotiations when major
conditions of employment to be written into an agreement are under consideration
and of grievance committee meetings and arbitration when questions arising in the
administration of an agreement are at stake.10
Instead of stifling criticism, the Bank should have allowed the respondents to air their
grievances. Good faith bargaining required of the Bank an open mind and a sincere desire
to negotiate over grievances.11 The grievance committee, created in the collective
bargaining agreements, would have been an appropriate forum for such negotiation.
Indeed, the grievance procedure is a part of the continuous process of collective
bargaining.12 It is intended to promote, as it were, a friendly dialogue between labor and
management as a means of maintaining industrial peace.
The Bank defends its action by invoking its right to discipline for what it calls the
respondents' libel in giving undue publicity to their letter-charge. To be sure, the right of
self-organization of employees is not unlimited, 13 as the right of an employer to discharge
for cause14 is undenied. The Industrial Peace Act does not touch the normal exercise of
the right of an employer to select his employees or to discharge them. It is directed solely
against the abuse of that right by interfering with the countervailing right of selforganization.15 But the difficulty arises in determining whether in fact the discharges are
made because of such a separable cause or because of some other activities engaged in by
employees for the purpose of collective bargaining.16
It is for the CIR, in the first instance, to make the determination, "to weigh the employer's

expressed motive in determining the effect on the employees of management's otherwise

equivocal act."17 For the Act does not undertake the impossible task of specifying in
precise and unmistakable language each incident which constitutes an unfair labor
practice. Rather, it leaves to the court the work of applying the Act's general prohibitory
language in the light of infinite combinations of events which may be charged as
violative of its terms.18 As the Circuit Court of Appeals puts it:
Determining the legality of a dismissal necessarily involves an appraisal of the
employer's motives. In these cases motivations are seldom expressly avowed and
avowals are not always candid. There thus must be a measure of reliance on the
administrative agency knowledgeable in labor-management relations and on the Trial
Examiner who receives the evidence firsthand and is therefore in a unique position to
determine the credibility of the witnesses. Where Examiner and Board are in
agreement there is an increased presumption in favor of their resolution of the issue.19
What we have just essayed underscores at once the difference between Royal Interocean
and Lakas ng Pagkakaisa on the one hand and this case on the other. In Royal Interocean,
the employee's letter to the home office, for writing which she was dismissed,
complained of the local manager's "inconsiderate and untactful attitude" 20 a grievance
which, the court found, "had nothing to do with or did not arise from her union
activities." Nor did the court find evidence of discriminatory discharge in Lakas ng
Pagkakaisa as the letter, which the employee wrote to the mother company in violation of
the local company's rule, denounced "wastage of company funds." In contrast, the
express finding of the court in this case was that the dismissal of the respondents was
made on account of the letter they had written, in which they demanded the resignation of
the bank president for a number of reasons touching labor-management relations
reasons which not even the Bank's judgment that the respondents had committed libel
could excuse it for making summary discharges21 in disregard of its duty to bargain
collectively.
In final sum and substance, this Court is in unanimity that the Bank's conduct, identified
as an interference with the employees' right of self-organization, or as a retaliatory action,
and/or as a refusal to bargain collectively, constituted an unfair labor practice within the
meaning and intendment of section 4(a) of the Industrial Peace Act.
ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9, 1962 of the
Court of Industrial Relations are affirmed, at petitioner's cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Angeles, JJ.,
concur.
Bengzon, J.P., J., took no part.

G.R. No. 85279 July 28, 1989

SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA),
DIONISION T. BAYLON, RAMON MODESTO, JUANITO MADURA, REUBEN

ZAMORA, VIRGILIO DE ALDAY, SERGIO ARANETA, PLACIDO AGUSTIN,

VIRGILIO MAGPAYO, petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON.
CEZAR C. PERALEJO, RTC, BRANCH 98, QUEZON CITY, respondents.
Vicente T. Ocampo & Associates for petitioners.
CORTES, J:
Primarily, the issue raised in this petition is whether or not the Regional Trial
Court can enjoin the Social Security System Employees Association (SSSEA)
from striking and order the striking employees to return to work. Collaterally, it is
whether or not employees of the Social Security System (SSS) have the right to
strike.
The antecedents are as follows:
On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a
complaint for damages with a prayer for a writ of preliminary injunction against
petitioners, alleging that on June 9, 1987, the officers and members of SSSEA
staged an illegal strike and baricaded the entrances to the SSS Building,
preventing non-striking employees from reporting for work and SSS members
from transacting business with the SSS; that the strike was reported to the Public
Sector Labor - Management Council, which ordered the strikers to return to work;
that the strikers refused to return to work; and that the SSS suffered damages as
a result of the strike. The complaint prayed that a writ of preliminary injunction be
issued to enjoin the strike and that the strikers be ordered to return to work; that
the defendants (petitioners herein) be ordered to pay damages; and that the
strike be declared illegal.
It appears that the SSSEA went on strike after the SSS failed to act on the
union's demands, which included: implementation of the provisions of the old
SSS-SSSEA collective bargaining agreement (CBA) on check-off of union dues;
payment of accrued overtime pay, night differential pay and holiday pay;
conversion of temporary or contractual employees with six (6) months or more of
service into regular and permanent employees and their entitlement to the same
salaries, allowances and benefits given to other regular employees of the SSS;
and payment of the children's allowance of P30.00, and after the SSS deducted
certain amounts from the salaries of the employees and allegedly committed acts
of discrimination and unfair labor practices [Rollo, pp. 21-241].
The court a quo, on June 11, 1987, issued a temporary restraining order pending
resolution of the application for a writ of preliminary injunction [Rollo, p. 71.] In
the meantime, petitioners filed a motion to dismiss alleging the trial court's lack of
jurisdiction over the subject matter [Rollo, pp. 72-82.] To this motion, the SSS
filed an opposition, reiterating its prayer for the issuance of a writ of injunction
[Rollo, pp. 209-222]. On July 22,1987, in a four-page order, the court a quo
denied the motion to dismiss and converted the restraining order into an
injunction upon posting of a bond, after finding that the strike was illegal [Rollo,
pp. 83- 86]. As petitioners' motion for the reconsideration of the aforesaid order

was also denied on August 14, 1988 [Rollo, p. 94], petitioners filed a petition for
certiorari and prohibition with preliminary injunction before this Court. Their
petition was docketed as G.R. No. 79577. In a resolution dated October 21,
1987, the Court, through the Third Division, resolved to refer the case to the
Court of Appeals. Petitioners filed a motion for reconsideration thereof, but during
its pendency the Court of Appeals on March 9,1988 promulgated its decision on
the referred case [Rollo, pp. 130-137]. Petitioners moved to recall the Court of
Appeals' decision. In the meantime, the Court on June 29,1988 denied the
motion for reconsideration in G.R. No. 97577 for being moot and academic.
Petitioners' motion to recall the decision of the Court of Appeals was also denied
in view of this Court's denial of the motion for reconsideration [Rollo, pp. 141143]. Hence, the instant petition to review the decision of the Court of Appeals
[Rollo, pp. 12-37].
Upon motion of the SSS on February 6,1989, the Court issued a temporary
restraining order enjoining the petitioners from staging another strike or from
pursuing the notice of strike they filed with the Department of Labor and
Employment on January 25, 1989 and to maintain the status quo [Rollo, pp. 151152].
The Court, taking the comment as answer, and noting the reply and
supplemental reply filed by petitioners, considered the issues joined and the case
submitted for decision.
The position of the petitioners is that the Regional Trial Court had no jurisdiction
to hear the case initiated by the SSS and to issue the restraining order and the
writ of preliminary injunction, as jurisdiction lay with the Department of Labor and
Employment or the National Labor Relations Commission, since the case
involves a labor dispute.
On the other hand, the SSS advances the contrary view, on the ground that the
employees of the SSS are covered by civil service laws and rules and
regulations, not the Labor Code, therefore they do not have the right to strike.
Since neither the DOLE nor the NLRC has jurisdiction over the dispute, the
Regional Trial Court may enjoin the employees from striking.
In dismissing the petition for certiorari and prohibition with preliminary injunction
filed by petitioners, the Court of Appeals held that since the employees of the
SSS, are government employees, they are not allowed to strike, and may be
enjoined by the Regional Trial Court, which had jurisdiction over the SSS'
complaint for damages, from continuing with their strike.
Thus, the sequential questions to be resolved by the Court in deciding whether or
not the Court of Appeals erred in finding that the Regional Trial Court did not act
without or in excess of jurisdiction when it took cognizance of the case and
enjoined the strike are as follows:
1. Do the employees of the SSS have the right to strike?
2. Does the Regional Trial Court have jurisdiction to hear the case initiated by the
SSS and to enjoin the strikers from continuing with the strike and to order them to
return to work?

These shall be discussed and resolved seriatim

I
The 1987 Constitution, in the Article on Social Justice and Human Rights,
provides that the State "shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law" [Art. XIII, Sec. 31].
By itself, this provision would seem to recognize the right of all workers and
employees, including those in the public sector, to strike. But the Constitution
itself fails to expressly confirm this impression, for in the Sub-Article on the Civil
Service Commission, it provides, after defining the scope of the civil service as
"all branches, subdivisions, instrumentalities, and agencies of the Government,
including government-owned or controlled corporations with original charters,"
that "[t]he right to self-organization shall not be denied to government
employees" [Art. IX(B), Sec. 2(l) and (50)]. Parenthetically, the Bill of Rights also
provides that "[tlhe right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not abridged" [Art. III, Sec. 8]. Thus, while there is no
question that the Constitution recognizes the right of government employees to
organize, it is silent as to whether such recognition also includes the right to
strike.
Resort to the intent of the framers of the organic law becomes helpful in
understanding the meaning of these provisions. A reading of the proceedings of
the Constitutional Commission that drafted the 1987 Constitution would show
that in recognizing the right of government employees to organize, the
commissioners intended to limit the right to the formation of unions or
associations only, without including the right to strike.
Thus, Commissioner Eulogio R. Lerum, one of the sponsors of the provision that
"[tlhe right to self-organization shall not be denied to government employees"
[Art. IX(B), Sec. 2(5)], in answer to the apprehensions expressed by
Commissioner Ambrosio B. Padilla, Vice-President of the Commission,
explained:
MR. LERUM. I think what I will try to say will not take that long. When we
proposed this amendment providing for self-organization of government
employees, it does not mean that because they have the right to organize,
they also have the right to strike. That is a different matter. We are only
talking about organizing, uniting as a union. With regard to the right to
strike, everyone will remember that in the Bill of Rights, there is a
provision that the right to form associations or societies whose purpose is
not contrary to law shall not be abridged. Now then, if the purpose of the
state is to prohibit the strikes coming from employees exercising
government functions, that could be done because the moment that is
prohibited, then the union which will go on strike will be an illegal union.
And that provision is carried in Republic Act 875. In Republic Act 875,
workers, including those from the government-owned and controlled, are

allowed to organize but they are prohibited from striking. So, the fear of
our honorable Vice- President is unfounded. It does not mean that
because we approve this resolution, it carries with it the right to strike.
That is a different matter. As a matter of fact, that subject is now being
discussed in the Committee on Social Justice because we are trying to
find a solution to this problem. We know that this problem exist; that the
moment we allow anybody in the government to strike, then what will
happen if the members of the Armed Forces will go on strike? What will
happen to those people trying to protect us? So that is a matter of
discussion in the Committee on Social Justice. But, I repeat, the right to
form an organization does not carry with it the right to strike. [Record of
the Constitutional Commission, vol. 1, p. 569].
It will be recalled that the Industrial Peace Act (R.A. No. 875), which was
repealed by the Labor Code (P.D. 442) in 1974, expressly banned strikes by
employees in the Government, including instrumentalities exercising
governmental functions, but excluding entities entrusted with proprietary
functions:
.Sec. 11. Prohibition Against Strikes in the Government. The terms and
conditions of employment in the Government, including any political
subdivision or instrumentality thereof, are governed by law and it is
declared to be the policy of this Act that employees therein shall not strike
for the purpose of securing changes or modification in their terms and
conditions of employment. Such employees may belong to any labor
organization which does not impose the obligation to strike or to join in
strike: Provided, however, That this section shall apply only to employees
employed in governmental functions and not those employed in
proprietary functions of the Government including but not limited to
governmental corporations.
No similar provision is found in the Labor Code, although at one time it
recognized the right of employees of government corporations established under
the Corporation Code to organize and bargain collectively and those in the civil
service to "form organizations for purposes not contrary to law" [Art. 244, before
its amendment by B.P. Blg. 70 in 1980], in the same breath it provided that "[t]he
terms and conditions of employment of all government employees, including
employees of government owned and controlled corporations, shall be governed
by the Civil Service Law, rules and regulations" [now Art. 276]. Understandably,
the Labor Code is silent as to whether or not government employees may strike,
for such are excluded from its coverage [Ibid]. But then the Civil Service Decree
[P.D. No. 807], is equally silent on the matter.
On June 1, 1987, to implement the constitutional guarantee of the right of
government employees to organize, the President issued E.O. No. 180 which
provides guidelines for the exercise of the right to organize of government
employees. In Section 14 thereof, it is provided that "[t]he Civil Service law and
rules governing concerted activities and strikes in the government service shall
be observed, subject to any legislation that may be enacted by Congress." The

President was apparently referring to Memorandum Circular No. 6, s. 1987 of the

Civil Service Commission under date April 21, 1987 which, "prior to the
enactment by Congress of applicable laws concerning strike by government
employees ... enjoins under pain of administrative sanctions, all government
officers and employees from staging strikes, demonstrations, mass leaves, walkouts and other forms of mass action which will result in temporary stoppage or
disruption of public service." The air was thus cleared of the confusion. At
present, in the absence of any legislation allowing government employees to
strike, recognizing their right to do so, or regulating the exercise of the right, they
are prohibited from striking, by express provision of Memorandum Circular No. 6
and as implied in E.O. No. 180. [At this juncture, it must be stated that the validity
of Memorandum Circular No. 6 is not at issue].
But are employees of the SSS covered by the prohibition against strikes?
The Court is of the considered view that they are. Considering that under the
1987 Constitution "[t]he civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including government-owned
or controlled corporations with original charters" [Art. IX(B), Sec. .2(l) see also
Sec. 1 of E.O. No. 180 where the employees in the civil service are denominated
as "government employees"] and that the SSS is one such governmentcontrolled corporation with an original charter, having been created under R.A.
No. 1161, its employees are part of the civil service [NASECO v. NLRC, G.R.
Nos. 69870 & 70295, November 24,1988] and are covered by the Civil Service
Commission's memorandum prohibiting strikes. This being the case, the strike
staged by the employees of the SSS was illegal.
The statement of the Court in Alliance of Government Workers v. Minister of
Labor and Employment [G.R. No. 60403, August 3, 1:983, 124 SCRA 11 is
relevant as it furnishes the rationale for distinguishing between workers in the
private sector and government employees with regard to the right to strike:
The general rule in the past and up to the present is that 'the terms and
conditions of employment in the Government, including any political
subdivision or instrumentality thereof are governed by law" (Section 11,
the Industrial Peace Act, R.A. No. 875, as amended and Article 277, the
Labor Code, P.D. No. 442, as amended). Since the terms and conditions
of government employment are fixed by law, government workers cannot
use the same weapons employed by workers in the private sector to
secure concessions from their employers. The principle behind labor
unionism in private industry is that industrial peace cannot be secured
through compulsion by law. Relations between private employers and their
employees rest on an essentially voluntary basis. Subject to the minimum
requirements of wage laws and other labor and welfare legislation, the
terms and conditions of employment in the unionized private sector are
settled through the process of collective bargaining. In government
employment, however, it is the legislature and, where properly given
delegated power, the administrative heads of government which fix the
terms and conditions of employment. And this is effected through statutes

or administrative circulars, rules, and regulations, not through collective

bargaining agreements. [At p. 13; Emphasis supplied].
Apropos is the observation of the Acting Commissioner of Civil Service, in his
position paper submitted to the 1971 Constitutional Convention, and quoted with
approval by the Court in Alliance, to wit:
It is the stand, therefore, of this Commission that by reason of the nature
of the public employer and the peculiar character of the public service, it
must necessarily regard the right to strike given to unions in private
industry as not applying to public employees and civil service employees.
It has been stated that the Government, in contrast to the private
employer, protects the interest of all people in the public service, and that
accordingly, such conflicting interests as are present in private labor
relations could not exist in the relations between government and those
whom they employ. [At pp. 16-17; also quoted in National Housing
Corporation v. Juco, G.R. No. 64313, January 17,1985,134 SCRA
172,178-179].
E.O. No. 180, which provides guidelines for the exercise of the right to organize
of government employees, while clinging to the same philosophy, has, however,
relaxed the rule to allow negotiation where the terms and conditions of
employment involved are not among those fixed by law. Thus:
.SECTION 13. Terms and conditions of employment or improvements
thereof, except those that are fixed by law, may be the subject of
negotiations between duly recognized employees' organizations and
appropriate government authorities.
The same executive order has also provided for the general mechanism for the
settlement of labor disputes in the public sector to wit:
.SECTION 16. The Civil Service and labor laws and procedures, whenever
applicable, shall be followed in the resolution of complaints, grievances
and cases involving government employees. In case any dispute remains
unresolved after exhausting all the available remedies under existing laws
and procedures, the parties may jointly refer the dispute to the [Public
Sector Labor- Management] Council for appropriate action.
Government employees may, therefore, through their unions or associations,
either petition the Congress for the betterment of the terms and conditions of
employment which are within the ambit of legislation or negotiate with the
appropriate government agencies for the improvement of those which are not
fixed by law. If there be any unresolved grievances, the dispute may be referred
to the Public Sector Labor - Management Council for appropriate action. But
employees in the civil service may not resort to strikes, walk-outs and other
temporary work stoppages, like workers in the private sector, to pressure the
Govemment to accede to their demands. As now provided under Sec. 4, Rule III
of the Rules and Regulations to Govern the Exercise of the Right of GovernmentEmployees to Self- Organization, which took effect after the instant dispute
arose, "[t]he terms and conditions of employment in the government, including

any political subdivision or instrumentality thereof and government- owned and

controlled corporations with original charters are governed by law and employees
therein shall not strike for the purpose of securing changes thereof."
II
The strike staged by the employees of the SSS belonging to petitioner union
being prohibited by law, an injunction may be issued to restrain it.
It is futile for the petitioners to assert that the subject labor dispute falls within the
exclusive jurisdiction of the NLRC and, hence, the Regional Trial Court had no
jurisdiction to issue a writ of injunction enjoining the continuance of the strike.
The Labor Code itself provides that terms and conditions of employment of
government employees shall be governed by the Civil Service Law, rules and
regulations [Art. 276]. More importantly, E.O. No. 180 vests the Public Sector
Labor - Management Council with jurisdiction over unresolved labor disputes
involving government employees [Sec. 16]. Clearly, the NLRC has no jurisdiction
over the dispute.
This being the case, the Regional Trial Court was not precluded, in the exercise
of its general jurisdiction under B.P. Blg. 129, as amended, from assuming
jurisdiction over the SSS's complaint for damages and issuing the injunctive writ
prayed for therein. Unlike the NLRC, the Public Sector Labor - Management
Council has not been granted by law authority to issue writs of injunction in labor
disputes within its jurisdiction. Thus, since it is the Council, and not the NLRC,
that has jurisdiction over the instant labor dispute, resort to the general courts of
law for the issuance of a writ of injunction to enjoin the strike is appropriate.
Neither could the court a quo be accused of imprudence or overzealousness, for
in fact it had proceeded with caution. Thus, after issuing a writ of injunction
enjoining the continuance of the strike to prevent any further disruption of public
service, the respondent judge, in the same order, admonished the parties to refer
the unresolved controversies emanating from their employer- employee
relationship to the Public Sector Labor - Management Council for appropriate
action [Rollo, p. 86].
III
In their "Petition/Application for Preliminary and Mandatory Injunction," and
reiterated in their reply and supplemental reply, petitioners allege that the SSS
unlawfully withheld bonuses and benefits due the individual petitioners and they
pray that the Court issue a writ of preliminary prohibitive and mandatory
injunction to restrain the SSS and its agents from withholding payment thereof
and to compel the SSS to pay them. In their supplemental reply, petitioners
annexed an order of the Civil Service Commission, dated May 5, 1989, which
ruled that the officers of the SSSEA who are not preventively suspended and
who are reporting for work pending the resolution of the administrative cases
against them are entitled to their salaries, year-end bonuses and other fringe
benefits and affirmed the previous order of the Merit Systems Promotion Board.
The matter being extraneous to the issues elevated to this Court, it is Our view
that petitioners' remedy is not to petition this Court to issue an injunction, but to

cause the execution of the aforesaid order, if it has already become final.
WHEREFORE, no reversible error having been committed by the Court of
Appeals, the instant petition for review is hereby DENIED and the decision of the
appellate court dated March 9, 1988 in CA-G.R. SP No. 13192 is AFFIRMED.
Petitioners' "Petition/Application for Preliminary and Mandatory Injunction" dated
December 13,1988 is DENIED.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

DELIA BANGALISAN, LUCILIN CABALFIN, EMILIA DE GUZMAN, CORAZON

GOMEZ, CORAZON GREGORIO, LOURDES LAREDO, RODOLFO MARIANO,
WILFREDO MERCADO, LIGAYA MONTANCES and CORAZON PAGPAGUITAN,
petitioners, vs. HON. COURT OF APPEALS, THE CIVIL SERVICE COMMISSION
and THE SECRETARY OF THE DEPARTMENT OF EDUCATION, CULTURE AND
SPORTS, respondents.
DECISION
REGALADO, J.:
This is an appeal by certiorari from the judgment of the Court of Appeals in CA-G.R. SP
No. 38316, which affirmed several resolutions of the Civil Service Commission finding
petitioners guilty of conduct prejudicial to the best interest of the service, as well as its
resolution of April 12, 1996 denying petitioners motion for reconsideration.[1]
Petitioners, except Rodolfo Mariano, were among the 800 public school teachers who
staged mass actions on September 17 to 19, 1990 to dramatize their grievances
concerning, in the main, the alleged failure of the public authorities to implement in a just
and correct manner certain laws and measures intended for their material benefit.
On September 17, 1990, the Secretary of the Department of Education, Culture and
Sports (DECS) issued a Return-to-Work Order. Petitioners failed to comply with said
order, hence they were charged by the Secretary with grave misconduct; gross neglect of
duty; gross violation of Civil Service law, rules and regulations and reasonable office
regulations; refusal to perform official duty; gross insubordination; conduct prejudicial to
the best interest of the service; and absence without official leave in violation of PD 807,
otherwise known as the Civil Service Decree of the Philippines. They were
simultaneously placed under preventive suspension.
Despite due notice, petitioners failed to submit their answer to the complaint. On October
30, 1990, the DECS Secretary rendered a decision finding petitioners guilty as charged
and dismissing them from the service effective immediately.

Acting on the motions for reconsideration filed by petitioners Bangalisan, Gregorio,

Cabalfin, Mercado, Montances and Pagpaguitan, the Secretary subsequently modified the
penalty of dismissal to suspension for nine months without pay.
Petitioner Gomez likewise moved for reconsideration with the DECS and then appealed
to the Merit Systems Protection Board (MSPB). The other petitioners also filed
individual appeals to the MSPB, but all of their appeals were dismissed for lack of merit.
Not satisfied with the aforestated adjudication of their respective cases, petitioners
appealed to the Civil Service Commission (CSC). The appeals of petitioners Cabalfin,
Montances and Pagpaguitan were dismissed for having been filed out of time. On motion
for reconsideration, however, the CSC decided to rule on the merits of their appeal in the
interest of justice.
Thereafter, the CSC issued Resolution No. 94-1765 finding Cabalfin guilty of conduct
prejudicial to the best interest of the service and imposing on him a penalty of six months
suspension without pay. The CSC also issued Resolutions Nos. 94-2806 and 94-2384
affirming the penalty of nine months suspension without pay theretofore imposed on
petitioners Montances and Pagpaguitan.
With respect to the appeals of the other petitioners, the CSC also found them guilty of
conduct prejudicial to the best interest of the service. It, however, modified the penalty of
nine months suspension previously meted to them to six months suspension with
automatic reinstatement in the service but without payment of back wages.
All the petitioners moved for reconsideration of the CSC resolutions but these were all
denied,[2] except that of petitioner Rodolfo Mariano who was found guilty only of a
violation of reasonable office rules and regulations because of his failure to inform the
school of his intended absence and to file an application for leave therefor. This petitioner
was accordingly given only a reprimand.[3]
Petitioners then filed a petition for certiorari with this Court but, on August 29, 1995,
their petition was referred to the Court of Appeals pursuant to Revised Administrative
Circular No. 1-95.[4]
On October 20, 1995, the Court of Appeals dismissed the petition for lack of merit.[5]
Petitioners motion for reconsideration was also denied by respondent court,[6] hence the
instant petition alleging that the Court of Appeals committed grave abuse of discretion
when it upheld the resolutions of the CSC (1) that penalized petitioners whose only
offense was to exercise their constitutional right to peaceably assemble and petition the
government for redress of grievances; (2) that penalized petitioner Mariano even after
respondent commission found out that the specific basis of the charges that former
Secretary Cario filed against him was a falsehood; and (3) that denied petitioners their
right to back wages covering the period when they were illegally not allowed to teach.[7]
It is the settled rule in this jurisdiction that employees in the public service may not
engage in strikes. While the Constitution recognizes the right of government employees
to organize, they are prohibited from staging strikes, demonstrations, mass leaves, walkouts and other forms of mass action which will result in temporary stoppage or disruption
of public services. The right of government employees to organize is limited only to the
formation of unions or associations, without including the right to strike.[8]

Petitioners contend, however, that they were not on strike but were merely exercising
their constitutional right peaceably to assemble and petition the government for redress of
grievances. We find such pretension devoid of merit.
The issue of whether or not the mass action launched by the public school teachers during
the period from September up to the first half of October, 1990 was a strike has been
decided by this Court in a resolution, dated December 18, 1990, in the herein cited case
of Manila Public School Teachers Association, et al. vs. Laguio, Jr., supra. It was there
held that from the pleaded and admitted facts, these mass actions were to all intents
and purposes a strike; they constituted a concerted and unauthorized stoppage of, or
absence from, work which it was the teachers duty to perform, undertaken for essentially
economic reasons.
It is an undisputed fact that there was a work stoppage and that petitioners purpose was
to realize their demands by withholding their services. The fact that the conventional term
strike was not used by the striking employees to describe their common course of
action is inconsequential, since the substance of the situation, and not its appearance, will
be deemed to be controlling.[9]
The ability to strike is not essential to the right of association. In the absence of statute,
public employees do not have the right to engage in concerted work stoppages for any
purpose.[10]
Further, herein petitioners, except Mariano, are being penalized not because they
exercised their right of peaceable assembly and petition for redress of grievances but
because of their successive unauthorized and unilateral absences which produced adverse
effects upon their students for whose education they are responsible. The actuations of
petitioners definitely constituted conduct prejudicial to the best interest of the service,
punishable under the Civil Service law, rules and regulations.
As aptly stated by the Solicitor General, It is not the exercise by the petitioners of their
constitutional right to peaceably assemble that was punished, but the manner in which
they exercised such right which resulted in the temporary stoppage or disruption of public
service and classes in various public schools in Metro Manila. For, indeed, there are
efficient but non-disruptive avenues, other than the mass actions in question, whereby
petitioners could petition the government for redress of grievances.[11]
It bears stressing that suspension of public services, however temporary, will inevitably
derail services to the public, which is one of the reasons why the right to strike is denied
government employees.[12] It may be conceded that the petitioners had valid grievances
and noble intentions in staging the mass actions, but that will not justify their absences
to the prejudice of innocent school children. Their righteous indignation does not legalize
an illegal work stoppage.
As expounded by this Court in its aforementioned resolution of December 18, 1990, in
the Manila Public School Teachers Association case, ante:
It is, of course, entirely possible that petitioners and their member-teachers had and have
some legitimate grievances. This much may be conceded. After all, and for one thing,
even the employees of the Court have found reason to complain about the manner in
which the provisions of the salary standardization law on pay adjustments and position
classification have been, or are being, implemented. Nonetheless, what needs to be borne

in mind, trite though it may be, is that one wrong cannot be righted by another, and that
redress, for even the most justifiable complaints, should not be sought through proscribed
or illegal means. The belief in the righteousness of their cause, no matter how deeply and
fervently held, gives the teachers concerned no license to abandon their duties, engage in
unlawful activity, defy constituted authority and set a bad example to their students.
Petitioners also assail the constitutionality of Memorandum Circular No. 6 issued by the
Civil Service Commission. The resolution of the said issue is not really necessary in the
case at bar. The argument of petitioners that the said circular was the basis of their
liability is off tangent.
As a general rule, even in the absence of express statutory prohibition like Memorandum
Circular No. 6, public employees are denied the right to strike or engage in a work
stoppage against a public employer.[13] The right of the sovereign to prohibit strikes or
work stoppages by public employees was clearly recognized at common law. Indeed, it is
frequently declared that modern rules which prohibit such strikes, either by statute or by
judicial decision, simply incorporate or reassert the common law rule.[14]
To grant employees of the public sector the right to strike, there must be a clear and direct
legislative authority therefor.[15] In the absence of any express legislation allowing
government employees to strike, recognizing their right to do so, or regulating the
exercise of the right, employees in the public service may not engage in strikes, walkouts
and temporary work stoppages like workers in the private sector.[16]
On the issue of back wages, petitioners claim is premised on the allegation that their
preventive suspension, as well as the immediate execution of the decision dismissing or
suspending them, are illegal. These submissions are incorrect.
Section 51 of Executive Order No. 292 provides that (t)he proper disciplining authority
may preventively suspend any subordinate officer or employee under his authority
pending an investigation, if the charge against such officer or employee involves
dishonesty, oppression or grave misconduct, or neglect in the performance of duty, or if
there are reasons to believe that the respondent is guilty of charges which would warrant
his removal from the service.
Under the aforesaid provision, it is the nature of the charge against an officer or employee
which determines whether he may be placed under preventive suspension. In the instant
case, herein petitioners were charged by the Secretary of the DECS with grave
misconduct, gross neglect of duty, gross violation of Civil Service law, rules and
regulations, and reasonable office regulations, refusal to perform official duty, gross
insubordination, conduct prejudicial to the best interest of the service and absence
without official leave (AWOL), for joining the teachers mass actions held at Liwasang
Bonifacio on September 17 to 21, 1990. Hence, on the basis of the charges against them,
it was within the competence of the Secretary to place herein petitioners under preventive
suspension.
As to the immediate execution of the decision of the Secretary against petitioners, the
same is authorized by Section 47, paragraph (2), of Executive Order No. 292, thus: The
Secretaries and heads of agencies and instrumentalities, provinces, cities and
municipalities shall have jurisdiction to investigate and decide matters involving
disciplinary action against officers and employees under their jurisdiction. Their

decisions shall be final in case the penalty imposed is suspension for not more than thirty
days or fine in an amount not exceeding thirty days salary. In case the decision rendered
by a bureau or office head is appealable to the Commission, the same shall be executory
except when the penalty is removal, in which case the same shall be executory only after
confirmation by the Secretary concerned.
Petitioners claim of denial of due process must also fail. The records of this case clearly
show that they were given opportunity to refute the charges against them but they failed
to avail themselves of the same. The essence of due process is simply an opportunity to
be heard or, as applied to administrative proceedings, an opportunity to seek
reconsideration of the action or ruling complained of.[17] For as long as the parties were
given the opportunity to be heard before judgment was rendered, the demands of due
process were sufficiently met.[18]
Having ruled that the preventive suspension of petitioners and the immediate execution of
the DECS decision are in accordance with law, the next query is whether or not
petitioners may be entitled to back wages.
The issue regarding payment of back salaries during the period of suspension of a
member of the civil service who is subsequently ordered reinstated, is already settled in
our jurisdiction. Such payment of salaries corresponding to the period when an employee
is not allowed to work may be decreed if he is found innocent of the charges which
caused the suspension and when the suspension is unjustified.[19]
With respect to petitioner Rodolfo Mariano, payment of his back wages is in order. A
reading of the resolution of the Civil Service Commission will show that he was
exonerated of the charges which formed the basis for his suspension. The Secretary of the
DECS charged him with and he was later found guilty of grave misconduct, gross neglect
of duty, gross violation of the Civil Service Law, rules and regulations and reasonable
office regulations, refusal to perform official duty, gross insubordination, conduct
prejudicial to the best interest of the service, and absence without official leave, for his
participation in the mass actions on September 18, 20 and 21, 1990. It was his alleged
participation in the mass actions that was the basis of his preventive suspension and, later,
his dismissal from the service.
However, the Civil Service Commission, in the questioned resolution, made a finding that
Mariano was not involved in the mass actions but was absent because he was in Ilocos
Sur to attend the wake and interment of his grandmother. Although the CSC imposed
upon him the penalty of reprimand, the same was for his violation of reasonable office
rules and regulations because he failed to inform the school of his intended absence and
neither did he file an application for leave covering such absences.[20]
Under Section 23 of the Rules Implementing Book V of Executive Order No. 292 and
other pertinent civil service laws, in violations of reasonable office rules and regulations,
the first offense is punishable by reprimand. To deny petitioner Mariano his back wages
during his suspension would be tantamount to punishing him after his exoneration from
the charges which caused his dismissal from the service.[21]
However, with regard to the other petitioners, the payment of their back wages must be
denied. Although the penalty imposed on them was only suspension, they were not
completely exonerated of the charges against them. The CSC made specific findings that,

unlike petitioner Mariano, they indeed participated in the mass actions. It will be noted
that it was their participation in the mass actions that was the very basis of the charges
against them and their subsequent suspension.
The denial of salary to an employee during the period of his suspension, if he should later
be found guilty, is proper because he had given ground for his suspension. It does not
impair his constitutional rights because the Constitution itself allows suspension for cause
as provided by law and the law provides that an employee may be suspended pending an
investigation or by way of penalty.[22]
Moreover, the general proposition is that a public official is not entitled to any
compensation if he has not rendered any service. As he works, he shall earn. Since
petitioners did not work during the period for which they are now claiming salaries, there
can be no legal or equitable basis to order the payment of such salaries.[23]
It is also noteworthy that in its resolutions, the Civil Service Commission expressly
denied petitioners right to back wages. In the case of Yacia vs. City of Baguio,[24] the
decision of the Commissioner of Civil Service ordering the dismissal of a government
employee on the ground of dishonesty was immediately executed pending appeal, but, on
appeal, the Civil Service Board of Appeals modified that penalty to a fine equivalent to
six months pay. We ruled that the claim of an employee for back wages, for the period
during which he was not allowed to work because of the execution of the decision of the
Commissioner, should be denied.
The appeal boards modified decision did not exonerate the employee nor did it affect the
validity of his dismissal or separation from work pending appeal, as ordered by the Civil
Service Commissioner. Such separation from work pending his appeal remained valid
and effective until it was set aside and modified with the imposition of the lesser penalty
by the appeals board. If the Civil Service Appeals Board had intended to grant him back
salaries and to reduce his penalty to six months fine deductible from such unearned back
salaries, the board could and should have so expressly stated in its decision.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED, but with the
MODIFICATION that petitioner Rodolfo Mariano shall be given back wages without
deduction or qualification from the time he was suspended until his actual reinstatement
which, under prevailing jurisprudence, should not exceed five years.
SO ORDERED.
Padilla, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Francisco, Hermosisima, Jr., and Panganiban, JJ., concur.
Narvasa, C.J., and Torres, Jr., J., on leave.

G.R. No. L-14439 March 25, 1960

NARIC WORKER'S UNION, ET AL., petitioners,

vs.
HON.CARMELINO G. ALVENDIA, ET AL., respondents.
Vicente T. Ocampo for petitioners.
Diosdado V. Salamanca, Bernardo R. Laureta and Qurico T. Carag, Jr. for respondent
NARIC.
REYES, J. B. L., J.:
In an order dated May 27, 1958, respondent Honorable Carmelino Alvendia granted a
writ of preliminary injunction in Civil Case No. 36353 (for damages) of the Court of First
Instance of Manila. Orders of July 1, 1958 and August 20, 1958 of the respondent
Honorable Judge Bonifacio Ysip, respectively, denied herein petitioners' motion to
dismiss the said civil case and motion for reconsideration of the denial. From said orders,
petitioners filed the instant petition for certiorari with prohibition.
It appears that on May 26, 1958, the respondent National Rice and Corn Corporation filed
a complaint versus the herein petitioners, Naric Worker's Union and its officers, in the
Court of First Instance of Manila (Civil Case No. 36353 for Damages with Ex-parte
Petition for Preliminary Injunction) as a result of the alleged blocking and obstruction of
the gates of the respondent company's offices by striking picketers who threatened
violence and bodily harm to persons crossing the union's picket lines. On the same date
that the complaint was filed, respondent Judge Carmelino Alvendia issued ex parte an
order for the issuance of a writ of preliminary injunction, directing the petitioners and
their agents to refrain from the commission of the acts complained of until further orders
from the court.
The writ was subsequently signed by Judge Bonifacio Ysip in May 27. In due time, the
petitioners filed a motion to dismiss the complaint and dissolve the restraining orders,
urging that the respondent court had no jurisdiction over the case since it grows out of a
labor dispute involving an unfair labor practice case (CIR Case No. 1677-ULP), and,
therefore, exclusively cognizable by the Court of Industrial Relations.
Having been unsuccessful in the lower court, petitioners brought this petition for review,
reiterating their contentions in the court below. We granted due course to the petition, and
upon petitioners' filing a bond of P500.00, a writ of preliminary injunction was issued by
this Court.
The parties do not contest that courts of first instance have no jurisdiction in cases that
grow out of labor disputes involving unfair labor practices. 1 Respondent National Rice
and Corn Corporation, however, argues that it (NARIC) has been held, by judicial as well
as administrative and executive pronouncements, to be a body performing governmental
functions2, and according to Section 11 of Republic Act No. 875, petitioners are
precluded from declaring a strike against it.
The portion of the law relied upon by the responde corporation is to this effect
SEC. 11. Prohibition Against Strikes in the Government. The terms and conditions
of employment in the Government, including any political subdivision or
instrumentality thereof, are governed by law and it is declared to be the policy of the
Act that employees therein shall not strike for the purpose of securing changes or
modifications in their terms and conditions of employment. Such employees may

belong to any labor organization which does not impose the obligation to strike or to
join in strike: Provided, however, That this section shall apply only to employees
employed in governmental functions and not to those employed in proprietary
functions of the Government including but not limited to governmental corporations.
(Rep. Act 875)
Conceding that the respondent National Rice and Corn Corporation is an instrumentality
of the Government especially since the law creating it (Republic Act No. 663) expressly
declares the same to be so,3 yet its activities are not purely or exclusively governmental in
nature.
Thus, under the statute, the corporation is empowered, under Section 3 thereof, among
other matters, to buy and sell rice and corn or its by-products; to give loans on reasonable
terms and finance activities in the rice and corn industry; to borrow, raise or secure
money; to mortgage or otherwise encumber its properties; and to enter into, make,
perform and carry out contracts of every class and description necessary or incidental to
its purpose, for which it may derive profits or incur losses.
Now, under the proviso of Section 11 of the Industrial Peace Act (already quoted), the
prohibition to strike is clearly limited to "employees employed in governmental functions
and not to those employed in proprietary functions of the Government" (Sec. 11,
Republic Act 875). Since the work of the members of the petitioning union consists
mainly in hauling goods at the respondent's warehouses, barges and piers, the same bears
only a very remote relation to the governmental functions of respondent corporation, and
the union members are not covered by the prohibition against strikes. Restrictions of the
workers' basic right to collective action to improve their conditions of work or protect
themselves against oppressive practices are to be strictly construed.
If, as stated by the respondents, the petitioners were committing acts of violence and
bodily harm during the Course of their strike, the remedy to enjoin the same lies alot with
the ordinary courts but with the Industrial Court which has exclusive jurisdiction over the
dispute.
Respondents contend that the case of the petitioner does not fall within the jurisdiction of
the Court of Industrial Relations. There is no merit in this assertion. In the leading case of
PAFLU, et al. vs. Tan, et al., 5 Off. Gaz., 5836, we already made it clear that the
Industrial Court has exclusive jurisdiction over the following cases:
(1) When the labor dispute affects an industry which is indispensable to the National
interest and is so certified by the President to the Industrial Court (Section 10,
Republic Act 875); (2) when the controversy refers to the minimum wage under the
Minimum Wage Law (Republic Act 602); (3) when it involve hours of employment
under the Eight Hour Labor Law (Commonwealth Act 444) ; and when it involves an
unfair labor practice (Section 5 (a), Republic Act 875).
It appears that even before the filing of respondent corporation's complaint in Civil Case
No. 36353 of the Court of First Instance of Manila, the Naric Workers' Union had already
filed charges for unfair labor practices against the corporation, leading to the filing of a
complaint before the Industrial Court by a special prosecutor thereat, date June 11, 1958,
and docketed as Case No. 1677-ULP. The charges include the refusal of the corporation
to deal wit the representatives of the complainant union for collective bargaining and its

desire to discriminate against and discourage membership in the complainant union in

violation of sub-paragraphs 4 and 6 of Republic Act 875. It does not appear that the
unfair labor practice case was filed merely to divest the Court of First Instance of its
jurisdiction and it is not, thus, relevant whether the filing of the complaint before the
Industrial Court was prior to or later than the filing of the complaint in the civil case for
damages (Erlanger & Galinger, Inc. vs, Erlanger & Galinger Employees Assn. (NATU),
104 Phil., 17). In National Garments and Textile Workers' Union Paflu vs. Caluag, etc., et
al., G. R. No. L-9104, September 30, 1956, we held:
It appearing that the issue involved in the main case is interwoven with the unfair labor
practice cases pending before the Court of Industrial Relations as to which its jurisdiction
is exclusive, it is evident that it does not fall under the jurisdiction of the trial court even
if it involves acts of violence, intimidation and coercion as averred in the complaint. This
acts come within the purview of Section 9 (d) of Republic Act 875 which may be
enjoined by the Court of Industrial Relations.
The reason for this rule was stated in Erlanger & Galinger, Inc. vs. Erlanger & Galinger
Employees Assn. (NATU), supra.:
Since the picketing and strikes may be mere incidents or consequences of the unfair
labor practice, it is but proper that the issuance of injunction be made by the court
having jurisdiction over the main case, in order that the writ be issued upon
cognizance of all relevant facts.
Since the Court of First Instance had no jurisdiction, the fact that the petitioning union
was declared in default does not affect the merits of the case.
Wherefore, the restraining orders complained of, dated May 19, 1958 and May 27, 1958,
are set aside, and the complaint is ordered dismissed, without prejudice to the National
Rice and Corn Corporation's seeking whatever remedy it is entitled to in the Court of
Industrial Relations. Costs against the corporation.
Bengzon, Bautista Angelo, Concepcion, Barrera and Gutierrez David, JJ., concur.

G.R. No. L-60403 August 3, 1983

ALLIANCE OF GOVERNMENT WORKERS (AGW); PNB-FEMA BANK
EMPLOYEES ASSOCIATION (AGW); KAISAHAN AT KAPATIRAN NG MGA
MANGAGAWA AT KAWANI NG MWSS (AGW); BALARA EMPLOYEES
ASSOCIATION (AGW); GSIS WORKERS ASSOCIATION (AGW); SSS
EMPLOYEES ASSOCIATION (AGW); PVTA EMPLOYEES ASSOCIATION
(AGW); NATIONAL ALLIANCE OF TEACHERS AND OFFICE WORKERS
(AGW); , petitioners,

vs.
THE HONORABLE MINISTER OF LABOR and EMPLOYMENT, PHILIPPINE
NATIONAL BANK (PNB); METROPOLITAN WATERWORKS and SEWERAGE
SYSTEM (MWSS); GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS);
SOCIAL SECURITY SYSTEM (SSS); PHILIPPINE VIRGINIA TOBACCO
ADMINISTRATION (PVTA) PHILIPPINE NORMAL COLLEGE (PNC);
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES (PUP), respondents.
The Solicitor General for MOLE, PNB, SSS, PNC and PUP.
Oliver Gesmundo for petitioners.
Jesus C. Gentiles for petitioner SSSEA-AGW.
GUTIERREZ, JR., J.:
Are the branches, agencies, subdivisions, and instrumentalities of the
Government, including government owned or controlled corporations included
among the 4 "employers"" under Presidential Decree No. 851 which are required
to pay an their employees receiving a basic salary of not more than P1,000.00 a
month, a thirteenth (13th) month pay not later than December 24 of every year?
Petitioner Alliance of Government Workers (AGW) is a registered labor federation
while the other petitioners are its affiliate unions with members from among the
employees of the following offices, schools, or government owned or controlled
corporations:
1. Philippine National Bank (PNB) Escolta Street, Manila
2. Metropolitan Waterworks and Sewerage System (MWSS) Katipunan
Road, Balara, Quezon City
3. Government Service Insurance System (GSIS) Arroceros Street, Manila
4. Social Security System (SSS) East Avenue, Quezon City
5. Philippine Virginia Tobacco Administration (PVTA) Consolacion Building,
Cubao, Quezon City
6. Philippine Normal College (PNC) Ayala Boulevard, Manila
7. Polytechnic University of the Philippines (PUP) Hippodromo Street, Sta.
Mesa, Manila
On February 28, 1983, the Philippine Government Employees Association
(PGEA) filed a motion to come in as an additional petitioner.
Presidential Decree No. 851 provides in its entirety:
WHEREAS, it is necessary to further protect the level of real f wages from
the ravage of world-wide inflation;
WHEREAS, there has been no increase case in the legal minimum wage
rates since 1970;
WHEREAS, the Christmas season is an opportune time for society to
show its concern for the plight of the working masses so they may
properly celebrate Christmas and New Year.

NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the powers

vested in me by the Constitution do hereby decree as follows:
SECTION 1. All employers are hereby required to pay all their employees
receiving a basic salary of not more than Pl,000 a month, regardless of the
nature of their employment, a 13th-month pay not later than December 24
of every year.
SECTION 2. Employers already paying their employees a 13th-month pay
or its equivalent are not covered by this Decree.
SECTION 3. This Decree shall take effect immediately. Done in the City of
Manila, this 16th day of December 1975.
According to the petitioners, P.D. No. 851 requires all employers to pay the 13thmonth pay to their employees with one sole exception found in Section 2 which
states that "(E)mployers already paying their employees a 13th month pay or its
equivalent are not covered by this Decree. " The petitioners contend that Section
3 of the Rules and Regulations Implementing Presidential Decree No. 851
included other types of employers not exempted by the decree. They state that
nowhere in the decree is the secretary, now Minister of Labor and Employment,
authorized to exempt other types of employers from the requirement.
Section 3 of the Rules and Regulations Implementing Presidential Decree No.
851 provides:
Section 3. Employers covered The Decree shall apply to all employers
except to:
a) Distressed employers, such as (1) those which are currently incurring
substantial losses or 112) in the case of non-profit institutions and
organizations, where their income, whether from donations, contributions,
grants and other earnings from any source, has consistently declined by
more than forty (40%) per cent of their normal income for the last two (2) )
years, subject to the provision of Section 7 of this issuance.
b) The Government and any of its political subdivisions, including
government-owned and controlled corporations, except)t those
corporation, operating essentially as private, ,subsidiaries of the
government;
c) Employers already paying their employees 13th-month pay or more in a
calendar year or its equivalent at the of this issuance;
d) Employers of household helpers and persons in the personal service of
another in relation to such workers: and
e) Employers of those who are paid on purely commission, boundary, or
task basis and those who are paid a fixed for performing a specific work,
irrespective of the time consumed in the performance thereof, except
where the workers are paid an piece- rate basis in which case the
employer shall be covered by this issuance :insofar ab such workers are
concerned ...

The petitioners assail this rule as ultra vires and void. Citing Philippine Apparel
Workers'Union v. NIRC et al., (106 SCRA 444); Teoxon v. Members of the Board
of' Administators (33 SCRA 585); Santos u. Hon. Estenzo et al., (109 Phil. 419);
Hilado u. Collector of Internal Revenue (100 Phil. 288), and Olsen & Co. Inc. v.
Aldanese and Trinidad (43 Phil. 259), the petitioners argue that regulations
adopted under legislative authority must be in harmony with the provisions of the
law and for the sole purpose of carrying into effect its general provisions. They
state that a legislative act cannot be amended by a rule and an administrative
officer cannot change the law. Section 3 is challenged as a substantial
modification by rule of a Presidential Decree and an unlawful exercise of
legislative power.
Our initial reaction was to deny due course to the petition in a minute resolution,
however, considering the important issues propounded and the fact, that
constitutional principles are involved, we have now decided to give due course to
the petition, to consider the various comments as answers and to resolve the
questions raised through a full length decision in the exercise of this Court's
symbolic function as an aspect of the power of judicial review.
At the outset, the petitioners are faced with a procedural barrier. The petition is
one for declaratory relief, an action not embraced within the original jurisdiction of
the Supreme Court. (Remotigue v. Osmena,, Jr., 21 SCRA 837; Rural Bank of
Olongapo v. Commission of Land Registration, 102 SCRA 794; De la Llana v.
Alba, 112 SCRA 294). There is no statutory or jurisprudential basis for the
petitioners' statement that the Supreme Court has original and exclusive
jurisdiction over declaratory relief suits where only questions of law are involved.
Jurisdiction is conferred by law. The petitioners have not pointed to any provision
of the Constitution or statute which sustains their sweeping assertion. On this
ground alone, the petition could have been dismissed outright.
Following similar action taken in Nacionalista Party v. Angelo Bautista (85 Phil.
101) and Aquino v. Commission on Elections (62 SCRA 275) we have, however,
decided to treat the petition as one for mandamus. The petition has far reaching
implications and raises questions that should be resolved. Have the respondents
unlawfully excluded the petitioners from the use and enjoyment of rights to which
they are entitled under the law?
An analysis of the "whereases" of P.D. No. 851 shows that the President had in
mind only workers in private employment when he issued the decree. There was
no intention to cover persons working in the government service. The decree
states:
xxx xxx xxx
WHEREAS, there has been no increase in the legal minimum wage rates
since 1970;
xxx xxx xxx
As pointed out by the Solicitor General in his comment for the Minister of Labor
and Employment, the Social Security System the Philippine Normal College, and
Polytechnic University, the contention that govermment owned and controlled

corporations and state colleges and universities are covered by the term "all
employers" is belied by the nature of the 13- month pay and the intent behind the
decree.
The Solicitor General states:
"Presidential Decree No. 851 is a labor standard law which requires covered
employers to pay their employees receiving not more than P1,000.00 a month an
additional thirteenth-month pay. Its purpose is to increase the real wage of the
worker (Marcopper Mining Corp. v. Ople, 105 SCRA 75; and National Federation
of Sugar Workers v. Ovejera, G.R. No. 59743, May 31, 1982) as explained in
the'whereas'clause which read:
WHEREAS, it is necessary to further protect the level of real wages
from the ravage of world-wide inflation;
WHEREAS, there has been no increase in the legal minimum wage
rates since 1970; 11
WHEREAS, the Christmas season is an opportune time for society
to show its concern for the plight of the working masses so they
may celebrate the Christmas and New Year.
xxx xxx xxx
What the P.D. No. 851 intended to cover, as explained in the prefatory
statement of the Decree, are only those in the private sector whose real
wages require protection from world-wide inflation. This is emphasized by
the "whereas" clause which states that 'there has been no increase in the
legal minimum wage rates since 1970'. This could only refer to the private
sector, and not to those in the government service because at the time of
the enactment of Presidential Decree No. 851 in 1975, only the employees
in the private sector had not been given any increase in their minimum
wage. The employees in the government service had already been
granted in 1974 a ten percent across-the-board increase on their salaries
as stated in P.D. No. 525, Section 4.
Moreover, where employees in the government service were to benefit
from labor standard laws, their coverage is explicitly stated in the statute
or presidential enactment. This is evident in (a) Presidential Decree No.
390, Sec. 1 which granted emergency cost of living allowance to
employees in the national government; (b) Republic Act No. 6111, Sec. 10
on medicare benefits; (c) Presidential Decree No -442, Title II, Article 97
on the applicable minimum wage rates; (d) Presidential Decree No. 442,
Title 11, Article 167 (g) on workmen's compensation; (e) Presidential
Decree No. 1123 which provides for increases in emergency allowance to
employees in the private sector and in salary to government employees in
Section 2 thereof; and (f) Executive Order No. 752 granting government
employees a year-end bonus equivalent to one week's pay. Thus, had the
intention been to include government employees under the coverage of
Presidential Decree No. 851, said Decree should have expressly so
provided and there should have been accompanying yearly appropriation

measures to implement the same. That no such express provision was

provided and no accompanying appropriation measure to was passed
clearly show the intent to exclude government employees from the
coverage of P. D. No. 85 1.
We agree.
It is an old rule of statutory construction that restrictive statutes and acts which
impose burdens on the public treasury or which diminish rights and interests, no
matter how broad their terms do not embrace the Sovereign, unless the
Sovereign is specifically mentioned. (See Dollar Savings Bank v. United States,
19 Wall (U.S.) 227; United States v. United Mine Workers of America, 330 U.S.
265). The Republic of the Philippines, as sovereign, cannot be covered by a
general term like "employer" unless the language used in the law is clear and
specific to that effect.
The issue raised in this petition, however, is more basic and fundamental than a
mere ascertainment of intent or a construction of statutory provisions. It is
concerned with a revisiting of the traditional classification of government
employment into governmental functions and proprietary functions and of the
many ramifications that this dichotomous treatment presents in the handling of
concerted activities, collective bargaining, and strikes by government employees
to wrest concessions in compensation, fringe benefits, hiring and firing, and other
terms and conditions of employment.
The workers in the respondent institutions have not directly petitioned the heads
of their respective offices nor their representatives in the Batasang Pambansa.
They have acted through a labor federation and its affiliated unions. In other
words, the workers and employees of these state firms, college, and university
are taking collective action through a labor federation which uses the bargaining
power of organized labor to secure increased compensation for its members.
Under the present state of the law and pursuant to the express language of the
Constitution, this resort to concerted activity with the ever present threat of a
strike can no longer be allowed.
The general rule in the past and up to the present is that "the terms and
conditions of employment in the Government, including any political subdivision
or instrumentality thereof are governed by law" (Section 11, the Industrial Peace
Act, R.A. No. 875, as amended and Article 277, the Labor Code, P.D. No. 442, as
amended). Since the terms and conditions of government employment are fixed
by law, government workers cannot use the same weapons employed by
workers in the private sector to secure concessions from their employers. The
principle behind labor unionism in private industry is that industrial peace cannot
be secured through compulsion by law. Relations between private employers and
their employees rest on an essentially voluntary basis. Subject to the minimum
requirements of wage laws and other labor and welfare legislation, the terms and
conditions of employment in the unionized private sector are settled through the
process of collective bargaining. In government employment, however, it is the
legislature and, where properly given delegated power, the administrative heads

of government which fix the terms and conditions of employment. And this is
effected through statutes or administrative circulars, rules, and regulations, not
through collective bargaining agreements.
At the same time, the old Industrial Peace Act excepted employees and workers
in proprietary functions of government from the above compulsion of law. Thus,
in the past, government employees performing proprietary functions could belong
to labor organizations imposing the obligation to join in strikes or engage in other
concerted action. (Section 11, R.A. 875, as amended). They could and they did
engage in concerted activities and various strikes against government owned
and controlled corporations and other government institutions discharging
proprietary functions. Among the institutions as falling under the exception in
Section 11 of the Industrial Peace Act were respondents Government Service
Insurance System (GSISEA v. Alvendia, 108 Phil. 505) and Social Security
System (SSSEA v. Soriano, 7 SCRA 1016). And this Court has supported labor
completely in the various strikes and concerted activities in firms and agencies
discharging proprietary functions because the Constitution and the laws allowed
these activities.
The exception, however belongs to the past.
The petitioners state in their counter comment filed July 23, 1982 that the 1973
Constitution is categorical about the grant of the rights to self- organization and
collective bargaining to all workers and that no amount of stretched interpretation
of lesser laws like the Labor Code and the Civil Service Act can overturn the
clear message of the Constitution with respect to these rights to self-organization
and collective bargaining.
These statements of the petitioners are error insofar as government workers are
now concerned.
Under the present Constitution, govemment-owned or controlled corporations are
specifically mentioned as embraced by the civil service. (Section 1, Article XII-B,
Constitution). The inclusion of the clause "including every government owned or
controlled corporation" in the 1973 amendments to the Constitution was a
deliberate amendment for an express purpose. There may be those who
disagree with the intent of the framers of the amendment but because it is
fundamental law, we are all bound by it. The amendment was intended to correct
the situation where more favored employees of the government could enjoy the
benefits of two worlds. They were protected by the laws governing government
employment. They could also engage in collective bargaining and join in strikes
to secure higher wages and fringe benefits which equally hardworking employees
engaged in government functions could only envy but not enjoy.
Presidential Decree No. 807, the Civil Service Decree of the Philippines has
implemented the 1973 Constitutional amendment. It is categorical about the
inclusion of personnel of government-owned or controlled corporations in the civil
service and their being subject to civil service requirements:
SECTION 56. Government- owned or Controlled Corporations Personnel.
All permanent personnel of government- owned or controlled

corporations whose positions are now embraced in the civil service shall
continue in the service until they have been given a chance to qualify in an
appropriate examination, but in the meantime, those who do not possess
the appropriate civil service eligibility shall not be promoted until they
qualify in an appropriate civil service examination. Services of temporary
personnel ma be y terminated any time.
Personnel of government-owned or controlled corporations are now part of the
civil service. It would not be fair to allow them to engage in concerted activities to
wring higher salaries or fringe benefits from Government even as other civil
service personnel such as the hundreds of thousands of public school teachers,
soldiers, policemen, health personnel, and other government workers are denied
the right to engage in similar activities.
To say that the words "all employers" in P.D. No. 851 includes the Government
and all its agencies, instrumentalities, and government-owned or controlled
corporations would also result in nightmarish budgetary problems.
For instance, the Supreme Court is trying its best to alleviate the financial
difficulties of courts, judges, and court personnel in the entire country but it can
do so only within the limits of budgetary appropriations. Public school teachers
have been resorting to what was formerly unthinkable, to mass leaves and
demonstrations, to get not a 13th-month pay but promised increases in basic
salaries and small allowances for school uniforms. The budget of the Ministry of
Education, Culture and Sports has to be supplemented every now and then for
this purpose. The point is, salaries and fringe benefits of those embraced by the
civil service are fixed by law. Any increases must come from law, from
appropriations or savings under the law, and not from concerted activity.
The Government Corporate Counsel, Justice Manuel Lazaro, in his consolidated
comment * for respondents GSIS, MWSS, and PVTA gives the background of the
amendment which includes every government-owned or controlled corporation in
the embrace of the civil service:
Records of the 1971 Constitutional Convention show that in the
deliberations held relative to what is now Section 1(1) Article XII-B, supra
the issue of the inclusion of government-owned or controlled corporations
figured prominently.
The late delegate Roberto S. Oca, a recognized labor leader, vehemently
objected to the inclusion of government-owned or controlled corporations
in the Civil Service. He argued that such inclusion would put asunder the
right of workers in government corporations, recognized in jurisprudence
under the 1935 Constitution, to form and join labor unions for purposes of
collective bargaining with their employers in the same manner as in the
private section (see: records of 1971 Constitutional Convention).
In contrast, other labor experts and delegates to the 1971 Constitutional
Convention enlightened the members of the Committee on Labor on the
divergent situation of government workers under the 1935 Constitution,
and called for its rectification. Thus, in a Position Paper dated November-

22, 1971, submitted to the Committee on Labor, 1971 Constitutional

Convention, then Acting Commissioner of Civil Service Epi Rev
Pangramuyen declared:
It is the stand, therefore, of this Commission that by reason of the
nature of the public employer and the peculiar character of the
public service, it must necessarily regard the right to strike given to
unions in private industry as not applying to public employees and
civil service employees. It has been stated that the Government, in
contrast to the private employer, protects the interests of all people
in the public service, and that accordingly, such conflicting interests
as are present in private labor relations could not exist in the
relations between government and those whom they employ.
Moreover, determination of employment conditions as well as
supervision of the management of the public service is in the hands
of legislative bodies. It is further emphasized that government
agencies in the performance of their duties have a right to demand
undivided allegiance from their workers and must always maintain a
pronounced esprit de corps or firm discipline among their staff
members. It would be highly incompatible with these requirements
of the public service, if personnel took orders from union leaders or
put solidarity with members of the working class above solidarity
with the Government. This would be inimical to the public interest.
Moreover, it is asserted that public employees by joining labor
unions may be compelled to support objectives which are political
in nature and thus jeopardize the fundamental principle that the
governmental machinery must be impartial and non-political in the
sense of party politics.' (see: Records of 1971 Constitutional
Convention).
Similarly, Delegate Leandro P. Garcia, expressing support for the inclusion
of government-owned or controlled corporations in the Civil Service,
argued:
It is meretricious to contend that because Govermnent owned or
controlled corporations yield profits, their employees are entitled to
better wages and fringe benefits than employees of Government
other than Government- owned and controlled cor orations which
are not making profits. There is no gainsaying the fact that the
capital they use is the people's (see Records of the 1971
Constitutional Convention).
Summarizing the deliberations of the 1971 Constitutional Convention on
the inclusion of Government owned or controlled corporations, Dean
Joaquin G. Bernas, SJ., of the Ateneo de Manila University Professional
School of Law, stated that government-owned corporations came under
attack as milking cows of a privileged few enjoying salaries far higher than
their counterparts in the various branches of government, while the capital

of these corporations belongs to the Government and government money

is pumped into them whenever on the brink of disaster, and they should
therefore come under the strick surveillance of the Civil Service System.
(Bernas, The 1973 Philippine Constitution, Notes and Cases, 1974 ed., p.
524).
The Government Corporate Counsel cites the precedent setting decision in
Agricultural- Credit and Cooperative Financing Administration (ACCFA v.
Confederation of Unions in Government Corporations and Offtces CUGCO et al.,
30 SCRA 649) as giving the rationale for coverage of government-owned or
controlled corporations by the civil service. We stated ACCFA v. CUGCO that:
... The ACA is a government office or agency engaged in governmental,
not proprietary functions. These functions may not be strictly what
President Wilson described as "constituent" (as distinguished from
'ministrant'), [Bacani vs. National Coconut Corporation, G.R. No. L-9657,
Nov. 29,1956, 53 O.G. p. 2800] such as those relating to the maintenance
of peace and the prevention of crime, those regulating property and
property rights, those relating to the administration of justice and the
determination of political duties of citizens, and those relating to national
defense and foreign relations. Under this traditional classification, such
constituent functions are exercised by the State as attributes of
sovereignty, and not merely to promote the welfare, progress and
prosperity of the people these latter functions being ministrant, the
exercise of which is optional on the part of the government.
The growing complexities of modern society, however, have rendered this
traditional classification of the functions of government quite unrealistic,
not to say obsolete. The areas which used to be left to private enterprise
and initiative and which the government was called upon to enter
optionally, and only "because it was better equipped to administer for the
public welfare than is any private individual or group of individuals,"
(Malcolm, The Government of the Philippines, pp. 19-20; Bacani vs.
National Coconut Corporation, supra) continue to lose their well- defined
boundaries and to be absorbed within activities that the government must
undertake in its sovereign capacity if it is to meet the increasing social
challenges of the times. Here as almost everywhere else the tendency is
undoubtedly towards a greater socialization of economic forces, Here of
course this development was envisioned, indeed adopted as a national
policy, by the Constitution itself in its declaration of principle concerning
the promotion of social justice.
Chief Justice Fernando, then an Associate Justice of this Court, observed in a
concurring opinion that the traditional classification into constituent and ministrant
functions reflects the primacy at that time of the now discredited and repudiated
laissez faire concept carried over into government. He stated:
The influence exerted by American constitutional doctrines unavoidable
when the Philippines was still under American rule notwithstanding, an
influence that has not altogether vanished even after independence, the

laissez faire principle never found fun acceptance in this jurisdiction, even
during the period of its full flowering in the United States. Moreover, to
erase any doubts, the Constitutional Convention saw to it that our
fundamental law embodies a policy of the responsibility thrust on
government to cope with social and economic problems and an earnest
and sincere commitment to the promotion of the general welfare through
state action. It would thus follow that the force of any legal objection to
regulatory measures adversely affecting property rights or to statutes
organizing public corporations that may engage in competition with private
enterprise has been blunted. Unless there be a clear showing of any
invasion of rights guaranteed by the Constitution, their validity is a
foregone conclusion. No fear need be entertained that thereby spheres
hitherto deemed outside government domain have been encroached
upon. With our explicit disavowal of the 'constituent-ministrant' test, the
ghost of the laissez-faire concept no longer stalks the juridical stage."
Our dismissal of this petiti/n should not, by any means, be interpreted to imply
that workers in government-owned and controlled corporations or in state
colleges and universities may not enjoy freedom of association. The workers
whom the petitioners purport to represent have the right, which may not be
abridged, to form associations or societies for purposes not contrary to law.
(Constitution, Article IV, Section 7). This is a right which share with all public
officers and employees and, in fact, by everybody living in this country. But they
may not join associations which impose the obligation to engage in concerted
activities in order to get salaries, fringe benefits, and other emoluments higher
than or different frm that provided by law and regulation.
The very Labor Code, P.D. No. 442 as amended,, which governs the registration
and provides for the rights of legitimate labor organizations states:
ART. 277. Government employees. The terms and conditions of
employment of all government employees, including employees of
government-owned and controlled corporations, shall be governed by the
Civil Service Law, rules and regulations. Their salaries shall be
standardized by the National Assembly as provided for in the new
constitution. However, there shall be no reduction of existing wages,
benefits, and other terms and conditions of employment being enjoyed by
them at the time of the adoption of this code.
Section 6, Article XII-B of the Constitution gives added reasons why the
government employees represented by the petitioners cannot expect treatment in
matters of salaries different from that extended to all others government
personnel. The provision states:
SEC. 6. The National Assembly shall provide for the standardization of
compensation of government officials and employees, including those in
government-owned or controlled corporations, taking into account the
nature of the responsibilities pertaining to, and the qualifications required
for the positions concerned.

It is the legislature or, in proper cases, the administrative heads of government

and not the collective bargaining process nor the concessions wrung by labor
unions from management that determine how much the workers in governmentowned or controlled corporations may receive in terms of salaries, 13th month
pay, and other conditions or terms of employment. There are government
institutions which can afford to pay two weeks, three weeks, or even 13th-month
salaries to their personnel from their budgetary appropriations. However, these
payments must be pursuant to law or regulation. Presidential Decree No. 985 as
amended provides:
xxx xxx xxx
SEC. 2. Declaration of Policy. It is hereby declared to be the policy, of
the national government to provide equal pay for substantially, equal work
and to base differences in pay upon substantive differences in duties and
responsibilities, and qualification requirements of the positions. In
determining rates of pay, due regard shall be given to, among others,
prevailing rates in private industry for comparable work. For this purpose,
there is hereby established a system of compensation standardization and
position classification in the national government for all departments,
bureaus, agencies, and officers including government-owned or controlled
corporations and financial institutions: Provided, That notwithstanding a
standardized salary system established for all employees, additional
financial incentives may be established by government corporations and
financial institutions for their employees to be supported fully from their
corporate funds and for such technical positions as may be approved by
the President in critical government agencies.
The Solicitor-General correctly points out that to interpret P.D. No. 851 as
including government employees would upset the compensation levels of
government employees in violation of those fixed according to P.D. No. 985.
Here as in other countries, government salaries and wages have always been
lower than salaries, wages, and bonuses in the private sector. However, civil
servants have no cause for despair. Service in the government may at times be a
sacrifice but it is also a welcome privilege. Apart from the emotional and psychic
satisfactions, there are various material advantages. The security of tenure
guaranteed to those in the civil service by the Constitution and statutes, the
knowledge that one is working for the most stable of employers and not for
private persons, the merit system in appointments and promotions, the scheme
of vacation, sick, and maternity leave privileges, and the prestige and dignity
associated with public office are only a few of the joys of government
employment.
Section 3 of the Rules and Regulations Implementing Presidential Decree No.
851 is, therefore, a correct interpretation of the decree. It has been implemented
and enforced from December 22, 1975 to the present, The petitioners have
shown no valid reason why it should be nullified because of their petition filed six
and a half years after the issuance and implementation of the rule.

WHEREFORE, the petition is hereby DISMISSED for lack of merit.

SO ORDERED.
Concepcion, Jr., Guerrero Relova, JJ., concur.
Aquino, Melencio-Herrera and Plana, JJ., concur in the result.

G.R. Nos. 113290-91 August 3, 1995

PEDRO O. PALMERIA, SR., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, COCA-COLA BOTTLERS
PHILIPPINES, INC, and LIPERCON SERVICES, INC., respondents.
PUNO, J.:
The facts are hardly disputed. Petitioner Pedro O. Palmeria, Sr., was hired by
private respondent Coca-Cola Bottlers Philippines, Inc. (CCBPI) in June, 1977 as
laborer/bottling crew in its production department with a salary of Thirty-Six
Pesos (P36.00) a day plus ECOLA of Seventeen Pesos (P17.00) a day.
On April 30, 1984, CCBPI entered into a contract of service with co-respondent
Lipercon Services, Inc. The contract was extended on January 1, 1986 for
another year. Under the contract, Lipercon was to provide CCBPI certain work
and services which are not regular or normal to the establishment nor directly
related to the principal business of the CCBPI, Naga-Plant.
Petitioner alleged that after the contract of service was executed, CCBPI made it
appear that he was no longer its employee but that of Lipercon. He was able to
establish, however, that he still worked with the CCBPI, performing jobs normally
necessary in the business of CCBPI, using its tools and equipment and under the
supervision of its supervisors.
On February 15, 1986, petitioner was dismissed from his employment. He was
not allowed to enter the premises of CCBPI. He then filed a complaint principally
far illegal dismissal against CCBPI and Lipercon. 1 CCBPI maintained that petitioner is
not its employee. Lipercon claimed that it is an independent contractor and that petitioner is its
contractual employee. It further averred that petitioner's employment depends on needs of its
clients, more specifically CCBPI. Allegedly, CCBPI had informed Lipercon that it no longer
needed the services of petitioner.
In a Decision, dated January 29, 1993, Executive Labor Arbiter Vito Bose found CCBPI guilty of
illegally dismissing petitioner. He ordered the payment of the following to petitioner:
I.

SEPARATION PAY

P12,960.00

II.

BACKWAGES

62,100.00

III.

OVERTIME PAY

24,321.00

IV.

SERVICE INCENTIVE LEAVE PAY

540.00

V.

PREMIUM PAY FOR HOLIDAY

1,080.00

VI.

13TH MONTH PAY

3,240.00

VII.

NIGHT SHIFT DIFFERENTIAL

3,888.00

P109,684.00
=========

The backwages were computed at three (3) years.

Petitioner appealed to the respondent NLRC. He prayed for: (1) reinstatement with full
backwages; (2) recomputation of the monetary awards based on the salary rate of a CCBPI
regular employee at Eighty-Nine Pesos (P89.00) per day, the inclusion of one (1) sack of rice
per month and the gratuity fee of Two Thousand Pesos (P2,000.00) for every year of service;
and (3) payment of Fifty Thousand Pesos (P50,000.00) as moral damages, Twenty Thousand
Pesos (P20,000.00) as exemplary damages and 10% of the award as attorney's fees.
Respondent NLRC, in a Resolution dated October 21, 1993, affirmed the Decision of Arbiter
Bose. In refusing to reinstate petitioner, it held:
xxx xxx xxx
In the case at bar, we have noted that between respondent CCBPI and complainants lay
along period of litigious confrontation in the course of the instant proceedings. This case
had dragged on for about six (6) long years with several failed attempts at arriving at an
amicable, settlement of the dispute between the parties. Over the years, the respondents
have been consistent and vehement in their opposition to the complainants' attempts to
be reinstated. Under the circumstances, it will certainly not be unreasonable to conclude
that such encounter by the parties over battlegrounds had synthesized a torqued
perception by one of the other. To order therefore complainants' reinstatement at this time
would constitute a myopic, if not reckless, treatment of a highly volatile situation which
could explode, at the slightest provocation, into a bigger and bitter confrontation between
the parties. The parties to a case should not be forced into a situation where a peaceful
relationship is not feasible (Fearl S. Buck Foundation, Inc. vs. NLRC, 182 SCRA 446).
We believe that complainants' reinstatement would serve no purpose other than to
deepen the animosity felt by one against the other. To us, therefore, the award of
separation pay is a better, more prudent alternative, as the same would spare both
complainants and respondent CCBPI from the stress of having to work anew with one
another in a tension-filled environment. Moreover, it will not be unreasonable to believe
that respondent CCBPI had, in the interim, already filled up the positions rendered vacant
upon complainants' dismissal more than six (6) years ago. As the Executive Labor Arbiter
correctly observed, complainants' re-entry at this time would only upset whatever
manning adjustments respondent CCBPI had effected as a result thereof. Certainly the
path of less resistance, under the above circumstances, singularly points to complainants'
separation, for which reason we have no other alternative but to sustain the Executive
Labor Arbiter's decision awarding separation pay to complainants in lieu of reinstatement.
It also held that the Arbiter correctly used Thirty-Six Pesos (P36.00) a day as basis for
computing the monetary awards due to petitioner for that was his salary rate at the time of his
illegal dismissal. It likewise rejected the claim of petitioner for damages as bereft of basis.
In this petition for certiorari, petitioner submits the following issues for resolution.
I

WHETHER OR NOT THE PETITIONER IS ENTITLED TO BE REINSTATED.

II
WHETHER OR NOT THE PRESENT SALARY RATE OF REGULAR EMPLOYEE OF
CCBPI IS THE CORRECT BASIS FOR RECOMPUTING THE AWARD OF MONETARY
CLAIMS OF THE PETITIONER.
III
WHETHER OR NOT THE PETITIONER IS ENTITLED TO THE PAYMENT OF MORAL
AND EXEMPLARY DAMAGES.
We hold that public respondent gravely abused its discretion when it refused to reinstate
petitioner, a victim of illegal dismissal. Section 3, Article XIII of the Constitution guarantees to
our workers security of tenure. Article 279 of the Labor Code, as amended, implements this
constitutional guarantee by providing:
. . . Any 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, 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. (Emphasis ours)
The importance of the remedy of reinstatement to an unjustly dismissed employee cannot be
overstated It the remedy that most effectively restores the right of an employee to his
employment and all its benefits before its violation by his employer. Yet despite all its virtues,
reinstatement does not and cannot fully vindicate all of an employees injuries for
reinstatement no more than compensates for his financial damages. It cannot make up for his
other sufferings, intangible yet valuable, like the psychological devastation which inevitably
visits him after a sudden displacement from work. The first right of an unjustly dismissed
employee is therefore reinstatement to his work and it is our duty to direct it except if his
reinstatement will most probably do him less good and more harm. In determining whether or
not we should order an employee' s reinstatement, our eyes should focus on the need to
protect the over-all interest of the dismissed employee and not on the necessity of preserving
the interest of the employer who caused the unjust dismissal. To give more sensitivity to the
interest of the employer who violated the law is to make a travesty of the constitutional right of
an employee to security of tenure. We do not treat our workers as merchandise and their right
to security of tenure cannot be valued in precise peso-and-centavo terms. It is a right which
cannot be allowed to be devalued by the purchasing power of employers who are only too
willing to bankroll the separation pay of their illegally dismissed employees to get rid of them.
Prescinding from these baseline principles, we hold that the public respondent gravely
abused its discretion when it did not reinstate petitioner. We reject the reasons relied upon by
public respondent in refusing to reinstate petitioner: first, the six (6) years of failed attempts
by the parties at amicable settlement; and second, the belief that CCBPI had in the interim
filled up the position of petitioner. The failed attempts to settle their dispute do not prove that
the relationship between petitioner and CCBPI is already too strained as to be beyond
redemption. To our mind, they merely show that both parties were steadfast in the assertion
of their rights which they could aggresively do without necessarily entertaining animosity to
each other. The alleged "tension-filled environment" between petitioner and CCBPI is
completely unsupported by the records of the case. The relationship of the parties herein has
not been marred by any violence, not even verbal. We fear that the ruling of public
respondent, if not reversed, will breed a lot of mischief and inequity against illegally dismissed
employees. Pursued to its logical extreme, all that a guilty employer has to do to frustrate the
reinstatement of an illegally dismissed employee is to deadlock attempts to settle their
disputes for several years. In the case at bench, these several years of stand-off resulted in
greater damage to the rights of petitioner and there is no better way to repair this damage
than to order his reinstatement. In the same vein, the mere belief that petitioner's position has
already been filled up is too flimsy a reason not to reinstate petitioner. This stance betrays the
unwarranted bent to be concerned more with the interest of the guilty employer rather than

the security of tenure of an innocent worker. This inclination disregards the constitutional call
to pull up the powerless without pulling down the powerful. It is not difficult for employers to
abolish positions in the guise of a cost-cutting measure and we should not be easily swayed
by such schemes which all too often reduce to near nothing what is left of the rubble of rights
of exploited workers. In the case at bench, petitioner is a lowly laborer/bottling crew in the
production department of CCBPI. He cannot by any stretch of the imagination substantially
damage the latter's interest. Given the nature of jobs performed at CCBPI, it is also
inconceivable that it cannot accommodate the needed services of petitioner.
We do not agree with petitioner, however, that his monetary awards should be computed at
Eighty-Nine Peso (P89.00) per day instead of Thirty-Six (P36.00) per day plus Seventeen
Peso (P17.00) of daily ECOLA. In this regard, the Solicitor General correctly comments:
Petitioner was dismissed on February 15, 1986. At that time, he was receiving the daily
wage rate of P36.00 and daily ECOLA of P17.00 as contractual laborer in its Production
Department. Consequently, the computation of his backwages should be based on this
salary that he was receiving at the time of his dismissal. This is consistent with the ruling
of the Honorable Court in this Durabuilt Recapping Plant & Company vs. NLRC, 152
SCRA 328 (1987), viz:
In Insular Life Assurance Employees Association-NATU v. Insular Life Assurance
Co. Ltd. (76 SCRA 50) we held that to fix the amount of backwages without
qualification or deduction simply means that the workers are to be paid their
dismissal or strike pay without deduction for their earnings elsewhere during
their lay-off and without qualification of their backwages as thus fixed; i.e.,
unqualified by any wage increases or other benefits that may have been received
by their co-workers who were not dismissed or did go on strike. The principle is
justified as a realistic, reasonable and mutually beneficial solution for it relieves
the employees from proving earnings during their lay-offs and the employer from
submitting counterproofs. It was meant to obviate the twin evils of idleness on the
part of the employees and attrition and undue delay in satisfying the award on
the part of the employer (New Manila Candy Workers Union NACONWAPAFLU
vs. CIR supra). The same was not to establish an inflexible rule of computation of
any backwages due an employee. (Emphasis supplied)
The computation of petitioner's backwages is correct.
Article 279 of the Labor Code provides:
Art. 279. Security of tenure. In cases of regular the employment, the employer
shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and to his full
backwages computed from the time his compensation was with held from him up
the time of his reinstatement. (Emphasis supplied)
Parenthetically, Article 279 was amended by Section 34 of R.A. No. 6715 which took
effect on March 31, 1989, as follows:
Art. 279. Security of tenure. In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowance, 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. (Emphasis
supplied)
Article 279 of the Labor Code, as amended, however, cannot apply to the present case
because petitioner was illegally dismissed on February 15, 1986. In other words, his case
is still governed by the old provision of Article 279 of the Labor Code. Thus, the case of

Mercury Drug Co. Inc., vs. Court of Industrial Relations, 56 SCRA 694 (1974) which
limited the award of backwages to three (3) years "without deduction or qualification" to
obviate the need for further proceedings, is still applicable to the case at bar. The
amendatory provision of Article 279 of the Labor Code which took effect on March 21,
1989 cannot be applied in the instant case and neither can the case of Alex Ferrer, et al.,
vs. NLRC, et al., G.R. No. 100898, July 5, 1993 as the petitioner therein were illegally
dismissed on September 11, 1989.
The claim of petitioner to moral and exemplary damages is less tenuous. We have searched
the records and found no evidence that CCBPI dismissed petitioner in bad faith. A dismissal
may be contrary to law but by itself, it does not establish bad faith. In Primero vs. IAC, 2 we
ruled:
The legislative intent appears clear to allow recovery in proceedings before Labor
Arbiters of moral and other forms of damages, in all cases or matters arising from
employer-employee relations. This would no doubt include, particularly, instances where
an employee has been unlawfully dismissed. In such a case the Labor Arbiter had
jurisdiction to award to the dismissed employee not only the reliefs specifically provided
by labor laws, but also moral and the forms of damages governed by the Civil Code.
Moral damages would be recoverable, for example, where the dismissal of the employee
was not only effected without authorized cause and/or due process for which relief is
granted by the Labor Code but was attended by bad faith or fraud, or constituted an
act oppressive to labor, or was done in a manner contrary to morals, good customs or
public policy for which the obtainable relief is determined by the Civil Code (not the
Labor Code). Stated otherwise, if the evidence adduced by the employee before the
Labor Arbiter should establish that the employer did indeed terminate the employee's
services without just cause or without judgment it shall be for the employer to reinstate
the employee and pay him his backwages, or exceptionally, for the employee simply to
receive separation pay. These are reliefs explicitly prescribed by the Labor Code. But any
award of moral damages by the Labor Arbiter obviously cannot be based on the Labor
Code but should be grounded on the Civil Code. Such an award cannot be justified solely
upon the premise (otherwise sufficient for redress under the Labor Code) that the
employer fired his employee without just cause or due process. Additional facts must be
pleaded under the Civil Code, these being, to repeat, that the act of dismissal was
attended by bad faith or fraud, was oppressive to labor, or done in a manner contrary to
morals, good customs, or public policy; and, of course, that social humiliation, wounded
feelings, grave anxiety, etc., resulted therefrom. (Emphasis supplied).
IN VIEW WHEREOF, the Resolution of public respondent, dated October 21, 1993 is
modified. Private respondent CCBPI is ordered to reinstate petitioner instead of paying his
separation pay in accord with Article 279 of the Labor Code, as amended. In all other
respects, the appealed Resolution is affirmed. No costs.
SO ORDERED.
Narvuasa, C.J., Regalado, Mendoza and Francisco, JJ., concur.

Republic Act No. 6715 March 2, 1989

AN ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE
CONSTITUTIONAL RIGHTS OF WORKERS TO SELF-ORGANIZATION,
COLLECTIVE BARGAINING AND PEACEFUL CONCERTED ACTIVITIES,

FOSTER INDUSTRIAL PEACE AND HARMONY, PROMOTE THE

PREFERENTIAL USE OF VOLUNTARY MODES OF SETTLING LABOR
DISPUTES, AND REORGANIZE THE NATIONAL LABOR RELATIONS
COMMISSION, AMENDING FOR THESE PURPOSES CERTAIN PROVISIONS
OF PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN
AS THE LABOR CODE OF THE PHILIPPINES, APPROPRIATING FUNDS
THEREFORE AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled::
Section 1. Article 110 of Presidential Decree No. 442, amended, otherwise known as the
Labor Code of the Philippines, is hereby further amended to read as follows:
"Article 110. Worker preference in case of bankruptcy. - In the event of bankruptcy or
liquidation of an employer's business, his workers shall enjoy first preference as regards
their unpaid wages and other monetary claims, any provision of law to the contrary
notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the
claims of the Government and other creditors may be paid."
Section 2. Article 129 of the Labor Code of the Philippines, as amended, is hereby further
amended to read as follows:
"Article 129. Recovery of wages, simple money claims and other benefits. - Upon
complaint of any interested party, the Regional Director of the Department of Labor and
Employment or any of the duly authorized hearing officers of the Department is
empowered, through summary proceeding and after due notice, to hear and decide any
matter involving the recovery of wages and other monetary claims and benefits, including
legal interest, owing to an employee or person employed in domestic or household
service or househelper under this Code, arising from employer-employee relations:
Provided, That such complaint does not include a claim for reinstatement: Provided,
further, That the aggregate money claims of each employee or househelper do not exceed
five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or
resolve the complaint within thirty (30) calendar days from the date of the filing of the
same. Any sum thus recovered on behalf of any employee or househelper pursuant to this
Article shall be held in a special deposit account, and shall be paid, on order of the
Secretary of Labor and Employment or the Regional Director directly to the employee or
househelper concerned. Any such sum not paid to the employee or househelper, because
he cannot be located after diligent and reasonable effort to locate him within a period of
three (3) years, shall be held as a special fund of the Department of Labor and
Employment to be used exclusively for the amelioration and benefit of workers.
"Any decision or resolution of the Regional Director or hearing officer pursuant to this
provision may be appealed on the same grounds provided in Article 223 of this Code,
within five (5) calendar days from receipt of a copy of said decision or resolution, to the
National Labor Relations Commission which shall resolve the appeal within ten (10)
calendar days from the submission of the last pleading required or allowed under its
rules.
"The Secretary of Labor and Employment or his duly authorized representative may
supervise the payment of unpaid wages and other monetary claims and benefits,

including legal interest, found owing to any employee or house helper under this Code."
Section 3. Article 211 of the same Code, as amended by Executive Order No. 111, is
hereby further amended to read as follows:
"Article 211. Declaration of policy. - A. It is the policy of the State:
"(a) To promote and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and conciliation, as
modes of settling labor or industrial disputes;
"(b) To promote free trade unionism as an instrument for the enhancement of
democracy and the promotion of social justice and development;
"(c) To foster the free and voluntary organization of a strong and united labor
movement;
"(d) To promote the enlightenment of workers concerning their rights and
obligations as union members and as employees;
"(e) To provide an adequate administrative machinery for the expeditious
settlement of labor or industrial disputes;
"(f) To ensure a stable but dynamic and just industrial peace; and
"(g) To ensure the participation of workers in decision and policy-making
processes affecting their rights, duties and welfare.
"B. To encourage a truly democratic method of regulating the relations between the
employers and employees by means of agreements freely entered into through
collective bargaining, no court or administrative agency or official shall have the
power to set or fix wages, rates of pay, hours of work or other terms and conditions of
employment, except as otherwise provided under this Code."
Section 4. Article 212 of the Labor Code of the Philippines, as amended, is further
amended to read as follows:
"Article 212. Definitions. - (a) "Commission" means the National Labor Relations
Commission or any of its divisions, as the case may be, as provided under this Code.
"(b) "Bureau" means the Bureau of Labor Relations and/or the Labor Relations
Divisions in the regional offices established under Presidential Decree No. 1, in the
Department Labor.
"(c) "Board" means the National Conciliation and Mediation Board established under
Executive Order No. 126.
"(d) "Council" means the Tripartite Voluntary Arbitration Advisory Council
established under Executive Order No. 126, as amended.
"(e) "Employer" includes any person acting in the interest of an employer, directly or
indirectly. The term shall not include any labor organization or any of its officers or
agents except when acting as employer.
"(f) "Employee" includes any person in the employ of an employer. The term shall
not be limited to the employees of a particular employer, unless this Code so
explicitly states. It shall include any individual whose work has ceased as a result of

or in connection with any current labor dispute or because of any unfair labor practice
if he has not obtained any other substantially equivalent and regular employment.
"(g) "Labor organization" means any union or association of employees which exists
in whole or in part for the purpose of collective bargaining or of dealing with
employers concerning terms and conditions of employment.
"(h) "Legitimate labor organization" means any labor organization duly registered
with the Department of Labor and Employment, and includes any branch or local
thereof.
"(i) "Company union" means any labor organization whose information, function or
administration has been assisted by any act defined as unfair labor practice by this
Code.
"(j) "Bargaining representative" means a legitimate labor organization or any officer
or agent of such organization whether or not employed by the employer.
"(k) "Unfair labor practice" means any unfair labor practice as expressly defined by
this Code.
"(l) "Labor dispute" includes any controversy or matter concerning terms
conditions of employment or the association or representation of persons
negotiating, fixing, maintaining, changing or arranging the terms and conditions
employment, regardless of whether, the disputants stand in the proximate relation
employer and employee.

or
in
of
of

"(m) "Managerial employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions
if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of the
above definitions are considered rank-and-file employees for purposes of this Book.
"(n) "Voluntary Arbitrator" means any person accredited by the Board as such, or any
person named or designated in the collective bargaining agreement by the parties to
act as their voluntary arbitrator, or one chosen, with or without the assistance of the
National Conciliation and Mediation Board, pursuant to a selection procedure agreed
upon in the collective bargaining agreement, or any official that may be authorized by
the Secretary of Labor and Employment to act as voluntary arbitrator upon the written
request and agreement of the parties to a labor dispute.
"(o) "Strike" means any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute.
"(p) "Lockout" means the temporary refusal of an employer to furnish work as a
result of an industrial or labor dispute.
"(q) "Internal union dispute" includes all disputes or grievances arising from any
violation of or disagreement over any provision of the constitution and by-laws of a
union, including, any violation of the rights and conditions of union membership
provided for in this Code.

"(r) "Strike-breaker" means any person who obstructs, impedes, or interferes with by
force, violence, coercion, threats or intimidation any peaceful picketing by employees
during any labor controversy affecting wages, hours or conditions of work or in the
exercise of the right of self-organization or collective bargaining.
"(s) "Strike area" means the establishment, warehouses, depots, plants or offices,
including the sites or premises used as runaway shops, of the employer struck against,
as well as the immediate vicinity actually used by picketing strikers in moving to and
fro before all points of entrance to and exit from said establishment."
Section 5. Article 213 of the Labor Code of the Philippines, as amended, is further
amended to read as follows:
"Article 213. National Labor Relations Commission. - There shall be a National
Labor Relations Commission which shall be attached to the Department of Labor and
Employment for program and policy coordination only, composed of a Chairman and
fourteen (14) members.
"Five (5) members each shall be chosen from among the nominees of the workers and
employers organizations, respectively. The Chairman and the four (4) remaining
members shall come from the public sector, with the latter to be chosen from among
the recommendees of the Secretary of Labor and Employment.
"Upon assumption into office, the members nominated by the workers and employers
organizations shall divest themselves of any affiliation with or interest in the
federation or association to which they belong.
"The Commission may sit en banc or in five (5) divisions, each composed of three (3)
members. The Commission shall sit en banc only for purposes of promulgating rules
and regulations governing the hearing and disposition of cases before any of its
divisions and regional branches and formulating policies affecting its administration
and operations. The Commission shall exercise its adjudicatory and all other powers,
functions, and duties through its divisions. Of the five (5) divisions, the first and
second divisions shall handle cases coming from the National Capital Region and the
third, fourth and fifth divisions, cases from other parts of Luzon, from the Visayas and
Mindanao, respectively. The divisions of the Commission shall have exclusive
appellate jurisdiction over cases within their respective territorial jurisdiction.
"The concurrence of two (2) Commissioners of a division shall be necessary for the
pronouncement of a judgment or resolution. Whenever the required membership in a
division is not complete and the concurrence of two (2) Commissioners to arrive at a
judgment or resolution cannot be obtained, the Chairman shall designate such number
of additional Commissioners from the other divisions as may be necessary.
"The conclusions of a division on any case submitted to it for decision shall be
reached in consultation before the case is assigned to a member for the writing of the
opinion. It shall be mandatory for the division to meet for the purposes of the
consultation ordained herein. A certification to this effect signed by the Presiding
Commissioner of the division shall be issued, and a copy thereof attached to the
record of the case and served upon the parties.
"The Chairman shall be the Presiding Commissioner of the first division, and the four

(4) other members from the public sector shall be the Presiding Commissioners of the
second, third, fourth and fifth divisions, respectively. In case of the effective absence
or incapacity of the Chairman, the Presiding Commissioner of the second division
shall be the Acting Chairman.
"The Chairman, aided by the Executive Clerk of the Commission, shall have the
administrative supervision over the Commission and its regional branches and all its
personnel, including the Executive Labor Arbiters and Labor Arbiters.
"The Commission, when sitting en banc, shall be assisted by the same Executive
Clerk, and, when acting thru its divisions, by said Executive Clerk for its first division
and four (4) other Deputy Executive Clerks for the second, third, fourth and fifth
divisions, respectively, in the performance of such similar or equivalent functions and
duties as are discharged by the Clerk of Court and Deputy Clerks of Court of the
Court of Appeals."
Section 6. Article 214 of the same Code, as amended, is further amended to read as
follows:
"Article 214. Headquarters, branches and provincial extension units. - The
Commission and its first, second and third divisions shall have their main offices in
Metropolitan Manila, and the fourth and fifth divisions in the cities of Cebu and
Cagayan de Oro, respectively. The Commission shall establish as many regional
branches as there are regional offices of the Department of Labor and Employment,
sub-regional branches or provincial extension units. There shall be as many labor
arbiters as may be necessary for the effective and efficient operation of the
Commission. Each regional branch shall be headed by an Executive Labor Arbiter."
Section 7. Article 215 of the same Code is amended to read as follows:
"Article 215. Appointment and qualification. - The Chairman and other
Commissioners shall be members of the Philippine Bar and must have been engaged
in the practice of law in the Philippines for at least fifteen (15) years, with at least five
(5) years experience or exposure in the field of labor-management relations and shall
preferably be residents of the region where they are to hold office. The Executive
Labor Arbiters and Labor Arbiters shall likewise be members of the Philippine Bar
and must have been engaged in the practice of law in the Philippines for at least seven
(7) years, with at least three (3) years experience or exposure in the field of labormanagement relations: Provided, however, That incumbent Executive Labor Arbiters
and Labor Arbiters who have been engaged in the practice of law for at least five (5)
years may be considered as already qualified for purposes of reappointment as such
under this Act.
"The Chairman and the other Commissioners, the Executive Labor Arbiters and
Labor Arbiters shall hold office during good behavior until they reach the age of
sixty-five (65) years, unless sooner removed for cause as provided by law or become
incapacitated to discharge the duties of their office.
"The Chairman, the Division Presiding Commissioners and other Commissioners
shall all be appointed by the President, subject to confirmation by the Commission on
Appointments. Appointment to any vacancy shall come from the nominees of the
sector which nominated the predecessor. The Executive Labor Arbiters and Labor

Arbiters shall also be appointed by the President, upon recommendation of the

Secretary of Labor and Employment, and shall be subject to the Civil Service law,
rules and regulations.
"The Secretary of Labor and Employment shall, in consultation with the Chairman of
the Commission, appoint the staff and employees of the Commission and its regional
branches as the needs of the service may require, subject to the Civil Service law,
rules and regulations, and upgrade their current salaries, benefits and other
emoluments in accordance with law."
Section 8. Art. 216 of the same Code is amended to read as follows:
"Article 216. Salaries, benefits and other emoluments. - The Chairman and members
of the Commission shall receive an annual salary at least equivalent to, and be
entitled to the same allowances and benefits as, those of the Presiding Justice and
Associate Justices of the Court of Appeals, respectively. The Executive Labor
Arbiters shall receive an annual salary at least equivalent to that of an Assistant
Regional Director of the Department of Labor and Employment and shall be entitled
to the same allowances and benefits as that of a Regional Director of said department.
The Labor Arbiters shall receive an annual salary at least equivalent to, and be
entitled to the same allowances and benefits as, that of an Assistant Regional Director
of the Department of Labor and Employment. In no case, however, shall the provision
of this Article result in the diminution of existing salaries, allowances and benefits of
the aforementioned officials."
Section 9. Article 217 of the same code, as amended, is hereby further amended to read
as follows:
"Article 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have the original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the
absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
"(1) Unfair labor practice cases;
"(2) Termination disputes;
"(3) If accompanied with a claim for reinstatement, those cases that workers may
file involving wages, rates of pay, hours of work and other terms and conditions
of employment;
"(4) Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relations;
"(5) Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
"(6) Except claims for employees compensation, social security, medicare and
maternity benefits, all other claims arising from employer-employee relations,
including those of persons in domestic or household service involving an amount
exceeding five thousand pesos (P5,000), whether or not accompanied with a claim

for reinstatement.
"(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters.
"(c) Cases arising from the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation or enforcement of company
personnel policies shall be disposed by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided in said
agreements."
Section 10. Article 218, paragraphs (a), (d) and (e) thereof are hereby amended to read
as follows:
"(a) To promulgate rules and regulations governing the hearing and disposition of
cases before it and its regional branches, as well as those pertaining to its internal
functions and such rules and regulations as may be necessary to carry out the
purposes of this Code;
"(d) To hold any person in contempt directly or indirectly and impose appropriate
penalties therefor in accordance with law.
A person guilty of misbehavior in the presence of or so near the Chairman or any
member of the Commission or any Labor Arbiter as to obstruct or interrupt the
proceedings before the same, including disrespect toward said officials, offensive
personalities toward others, or refusal to be sworn or to answer as a witness, or to
subscribe an affidavit or deposition when lawfully required to do so, may be
summarily adjudged in direct contempt by said officials and punished by fine not
exceeding five hundred pesos (P500) or imprisonment not exceeding five (5) days, or
both if it be the Commission or a member thereof, or by a fine not exceeding one
hundred pesos (P100) or imprisonment not exceeding one (1) day, or both if it be a
Labor Arbiter.
The person adjudged in direct contempt by a Labor Arbiter may appeal to the
Commission and the execution of the judgment shall be suspended pending the
resolution of the appeal upon the filing of such person of a bond on a condition that
he will abide by and perform the judgment of the Commission should the appeal be
decided against him. Judgment of the Commission on direct contempt is immediately
executory and unappealable. Indirect contempt shall be dealth with by the
Commission or Labor Arbiter in the manner prescribed under Rule 71 of the Revised
Rules of Court; and
(e) To enjoin or restrain any actual or threatened commission of any or all prohibited
or unlawful acts or to require the performance of a particular act in any labor dispute
which, if not restrained or performed forthwith, may cause grave or irreparable
damage to any party or render ineffectual any decision in favor of such party:
Provided, That no temporary or permanent injunction in any case involving or
growing out of a labor dispute as defined in this Code shall be issued except after
hearing the testimony of witnesses, with opportunity for cross-examination, in
support of the allegations of a complaint made under oath, and testimony in
opposition thereto, if ordered, and only after a finding of fact by the Commission, to
the effect:

(1) That prohibited or unlawful acts have been threatened and will be committed
unless restrained, or have been committed and will be continued unless restrained,
but no injunction or temporary restraining order shall be issued on account of any
threat, prohibited or unlawful act, except against the person or persons,
association or organization making the threat or committing the prohibited or
unlawful act or actually authorizing or ratifying the same after actual knowledge
thereof;
(2) That substantial and irreparable injury to complainant's property will follow;
(3) That, as to each item of relief to be granted, greater injury will be inflicted
upon defendants by the granting of relief;
(4) That complainant has no adequate remedy at law; and
(5) That the public officers charged with the duty to protect complainant's
property are unable or unwilling to furnish adequate protection.
Such hearing shall be held after due and personal notice thereof has been served, in
such manner as the Commission shall direct, to all known persons against whom
relief is sought, and also to the Chief Executive and other public officials of the
province or city within which the unlawful acts have been threatened or committed
charged with the duty to protect complainant's property: Provided, however, That if a
complainant shall also allege that, unless a temporary restraining order shall be issued
without notices, a substantial and irreparable injury to complainant's property will be
unavoidable, such a temporary restraining order may be issued upon testimony under
oath, sufficient, if sustained, to justify the Commission in issuing a temporary
injunction upon hearing after notice. Such a temporary restraining order shall be
effective for no longer than twenty (20) days and shall become void at the expiration
of said twenty (20) days. No such temporary restraining order or temporary injunction
shall be issued except on condition that complainant shall first file an undertaking
with adequate security in an amount to be fixed by the Commission sufficient to
recompense those enjoined for any loss, expense or damage caused by the
improvident or erroneous issuance of such order or injunction, including all
reasonable costs, together with a reasonable attorney's fee, and expense of defense
against the order or against the granting of any injunctive relief sought in the same
proceeding and subsequently denied by the Commission.
The undertaking herein mentioned shall be understood to constitute an agreement
entered into by the complainant and the surety upon which an order may be rendered
in the same suit or proceeding against said complainant and surety, upon a hearing to
assess damages, of which hearing complainant and surety shall have reasonable
notice, the said complainant and surety submitting themselves to the jurisdiction of
the Commission for that purpose. But nothing herein contained shall deprive any
party having a claim or cause of action under or upon such undertaking from electing
to pursue his ordinary remedy by suit at law or in equity: Provided, further, That the
reception of evidence for the application of a writ of injunction may be delegated by
the Commission to any of its Labor Arbiters who shall conduct such hearing in such
places as he may determine to be accessible to the parties and their witnesses and
shall submit thereafter his recommendation to the Commission."

Section 11. Article 221 of the same Code is hereby amended to read as follows:
Article 221. Technical rules not binding and prior resort to amicable settlement. - In
any proceeding before the Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law and equity shall not be controlling, and it is the
spirit and intention of this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain the facts in each case
speedily and objectively, without regard to technicalities of law or procedure, all in
the interest of due process. In any proceeding before the Commission or any Labor
Arbiter, the parties may be represented by legal counsel but it shall be the duty of the
Chairman, any Presiding Commissioner or Commissioner or any Labor Arbiter to
exercise complete control of the proceedings at all stages.
Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all
efforts towards the amicable settlement of a labor dispute within his jurisdiction on or
before the first hearing. The same rule shall apply to the Commission in the exercise
of its original jurisdiction.
Section 12. Article 223 of the same Code is amended to read as follows:
"Article 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. Such appeal may be
entertained only on any of the following grounds:
"(a) If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter;
"(b) If the decision, order or award was secured through fraud or coercion, including
graft and corruption;
"(c) If made purely on questions of law; and
"(d) If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.
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.
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall
impose reasonable penalty, including fines or censures, upon the erring parties.
In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other
party who shall file an answer not later than ten (10) calendar days from receipt thereof.
The Commission shall decide all cases within twenty (20) calendar days from receipt of

the answer of the appellee.

"The decision of the Commission shall be final and executory after ten (10) calendar days
from receipt thereof by the parties.
Any law enforcement agency may be deputized by the Secretary of Labor and
Employment or the Commission in the enforcement of decisions, awards, or orders."
Section 13. Article 224 of the same Code is amended to read as follows:
Article 224. Execution of decisions, orders, or awards. - (a) The Secretary of Labor
and Employment or any Regional Director, the Commission or any Labor Arbiter or
Med-Arbiter, or the voluntary arbitrator or panel of voluntary arbitrators may, motu
propio or on motion of any interested party, issue a writ of execution on a judgment
within five (5) years from the date it becomes final and executory, requiring a sheriff
or a duly deputized officer to execute or enforce final decisions, orders or awards of
the Secretary of Labor and Employment or Regional Director, the Commission, or the
Labor Arbiter or Med-Arbiter, or voluntary arbitrator or panel of voluntary arbitrators.
In any case, it shall be the duty of the responsible officer to separately furnish
immediately the counsels of record and the parties with copies of said decisions,
orders and awards. Failure to comply with the duty prescribed herein shall subject
such responsible officer to appropriate administrative sanctions.
(b) The Secretary of Labor and Employment, and the Chairman of the Commission
may designate special sheriffs and take any measure under existing laws to ensure
compliance with their decisions, orders or awards and those of Labor Arbiters and
voluntary arbitrators or panel of voluntary arbitrators, including the imposition of
administrative fines which shall not be less than five hundred pesos (P500.00) nor
more than ten thousand pesos (P10,000.00)."
Section 14. The second paragraph of Article 226 of the same Code is likewise hereby
amended to read as follows:
"The Bureau shall have fifteen (15) calendar days to act on labor cases before it,
subject to extension by agreement of the parties."
Section 15. Articles 230, 231 and 232 of the same Code are amended to read as follows:
Article 230. Appointment of bureau personnel. - The Secretary of Labor and
Employment may appoint, in addition to the present personnel of the Bureau and the
Industrial Relations Divisions, such number of examiners and other assistants as may
be necessary to carry out the purpose of this Code."
"Article 231. Registry of unions and file of collective agreements. - The Bureau shall
keep a registry of legitimate labor organizations.
"The Bureau shall also maintain a file of all collective bargaining agreements and
other related agreements and records of settlement of labor disputes, and copies of
orders and decisions of voluntary arbitrators or panel of voluntary arbitrators. The file
shall be open and accessible to interested parties under conditions prescribed by the
Secretary of Labor and Employment, provided that no specific information submitted
in confidence shall be disclosed unless authorized by the Secretary, or when it is at
issue in any judicial litigation or when public interest or national security so requires.

Within thirty (30) days from the execution of a collective bargaining agreement, the
parties shall submit copies of the same directly to the Bureau or the Regional Offices
of the Department of Labor and Employment for registration accompanied with
verified proofs of its posting in two conspicuous places in the place of work and
ratification by the majority of all the workers in the bargaining unit. The Bureau or
Regional Offices shall act upon the application for registration of such collective
bargaining agreement within five (5) calendar days from receipt thereof. The
Regional Offices shall furnish the Bureau with a copy of the collective bargaining
agreement within five (5) days from its submission.
The Bureau or Regional Office shall assess the employer for every collective
bargaining agreement a registration fee of not less than one thousand pesos
(P1,000.00) or in any other amount as may be deemed appropriate and necessary by
the Secretary of Labor and Employment for the effective and efficient administration
of the voluntary arbitration program. Any amount collected under this provision shall
accrue to the Special Voluntary Arbitration Fund.
The Bureau shall also maintain a file, and shall undertake or assist in the publication,
of all final decisions, orders and awards of the Secretary of Labor and Employment,
Regional Directors and the Commission."
Article 232. Prohibition on certification. - The Bureau shall not entertain any petition
for certification election or any other action which may disturb the administration of
duly registered existing collective bargaining agreements affecting the parties except
under Articles 253, 253-A and 256 of this Code.
Section 16. Paragraphs (c) and (j) of Article 241 of the same Code are amended to read
as follows:
(c) The members shall directly elect their officers in the local union, as well as their
national officers in the national union or federation to which they or their local union
is affiliated, by secret ballot at intervals of five (5) years. No qualification
requirement for candidacy to any position shall be imposed other than membership in
good standing in subject labor organization. The secretary or any other responsible
union officer shall furnish the Secretary of Labor and Employment with a list of the
newly-elected officers, together with the appointive officers or agents who are
entrusted with the handling of funds within thirty (30) calendar days after the election
of officers or from the occurrence of any change in the list of officers of the labor
organization;
"(j) Every income or revenue of the organization shall be evidenced by a record
showing its source, and every expenditure of its funds shall be evidenced by a receipt
from the person to whom the payment is made, which shall state the date, place and
purpose of such payment. Such record or receipt shall form part of the financial
records of the organization.
"Any action involving the funds of the organization shall prescribe after three (3)
years from the date of submission of the annual financial report to the Department of
Labor and Employment or from the date the same should have been submitted as
required by law, whichever comes earlier: Provided, That this provision shall apply
only to a legitimate labor organization which has submitted the financial report

requirements under this Code: Provided, further, That failure of any labor
organization to comply with the periodic financial reports required by law and such
rules and regulations promulgated thereunder six (6) months after the effectivity of
this Act shall automatically result in the cancellation of union registration of such
labor organization.'
Section 17. Article 242 of the same Code is amended to read as follows:
"Article 242. Rights of legitimate labor organizations. - A legitimate labor
organization shall have the right:
"(a) To act as the representative of its members for the purpose of collective
bargaining;
"(b) To be certified as the exclusive representative of all the employees in an
appropriate collective bargaining unit for purposes of collective bargaining;
"(c) To be furnished by the employer, upon written request, with his annual
audited financial statements, including the balance sheet and the profit and loss
statement, within thirty (30) calendar days from the date of receipt of the request,
after the union has been duly recognized by the employer or certified as the sole
and exclusive bargaining representative of the employees in the bargaining unit,
or within sixty (60) calendar days before, or during the collective bargaining
negotiation.
"(d) To own property, real or personal, for the use and benefit of the labor
organization and its members;
"(e) To sue and be sued in its registered name; and
"(f) To undertake all other activities designed to benefit the organization and its
members, including cooperative, housing welfare and other projects not contrary
to law.
"Notwithstanding any provision of a general or special law to the contrary, the
income, and the properties of legitimate labor organizations, including grants,
endowments, gifts, donations and contributions they may receive from fraternal and
similar organizations, local or foreign, which are actually, directly and exclusively
used for their lawful purposes, shall be free from taxes, duties and other assessments.
The exemptions provided herein may be withdrawn only by a special law expressly
repealing this provision."
Section 18. Article 245 of the same Code, as amended, is hereby further amended to read
as follows:
"Article 245. Ineligibility of managerial employees to join any labor organization;
right of supervisory employees. - Managerial employees are not eligible to join, assist
or form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own."
Section 19. The third paragraph of Article 247 of the same Code, as amended, is further
amended to read as follows:
"Subject to the exercise by the President or by the Secretary of Labor and

Employment of the powers vested in them by Articles 263 and 264 of this Code, the
civil aspects of all cases involving unfair labor practices, which may include claims
for actual, moral, exemplary and other forms of damages, attorney's fees and other
affirmative relief, shall be under the jurisdiction of the Labor Arbiters. The Labor
Arbiters shall give utmost priority to the hearing and resolution of all cases involving
unfair labor practices. They shall resolve such cases within thirty (30) calendar days
from the time they are submitted for decision."
Section 20. Article 250 of the same Code is amended to read as follows:
"Article 250. Procedure in collective bargaining. - The following procedures shall be
observed in collective bargaining:
"(a) When a party desires to negotiate an agreement it shall serve a written notice
upon the other party with a statement of its proposals. The other party shall make
a reply thereto not later than ten (10) calendar days from receipt of such notice;
"(b) Should differences arise on the basis of such notice and reply, either party
may request for a conference which shall begin not later than ten (10) calendar
days from the date of request;
"(c) If the dispute is not settled, the Board shall intervene upon request of either or
both parties or at its own initiative and immediately call the parties to conciliation
meetings. The Board shall have the power to issue subpoenas requiring the
attendance of the parties to such meetings. It shall be the duty of the parties to
participate fully and promptly in the conciliation meetings the Board may call;
"(d) During the conciliation proceedings in the Board, the parties are prohibited
from doing any act which may disrupt or impede the early settlement of the
disputes; and
"(e) The Board shall exert all efforts to settle disputes amicably and encourage the
parties to submit their case to a voluntary arbitrator."
Section 21. There shall be incorporated after Article 253 of the same Code a new article
which shall read as follows:
"Article 253-A. Terms of a collective bargaining agreement. - Any collective
bargaining agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be entertained
and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of
such five year term of the collective bargaining agreement. All other provisions of the
collective bargaining agreement shall be renegotiated not later than three (3) years
after its execution. Any agreement on such other provisions of the collective
bargaining agreement entered into within six (6) months from the date of expiry of
the term of such other provisions as fixed in the collective bargaining agreement,
shall retroact to the day immediately following such date. If any such agreement is
entered into beyond six months, the parties shall agree on the duration of retroactivity
thereof. In case of a deadlock in the renegotiation of the collective bargaining
agreement, the parties may exercise their rights under this Code."

Section 22. Article 255 of the Labor Code, as amended, is hereby amended to read as
follows:
"Article 255. Exclusive bargaining representation and workers' participation in policy
and decision-making. - The labor organization designated or selected by the majority
of the employees in an appropriate collective bargaining unit shall be the exclusive
representative of the employees in such unit for the purpose of collective bargaining.
However, an individual employee or group of employees shall have the right at any
time to present grievances to their employer.
"Any provision of law to the contrary notwithstanding, workers shall have the right,
subject to such rules and regulations as the Secretary of Labor and Employment may
promulgate, to participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes will directly affect
their rights, benefits and welfare. For this purpose, workers and employers may form
labor-management councils: Provided, That the representatives of the workers in such
labor-management councils shall be elected by at least the majority of all employees
in said establishment."
Section 23. Article 256 of the same Code, as amended, is further amended to read as
follows:
"Article 256. Representation issue in organized establishments. - In organized
establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed before the Department of Labor and Employment
within the sixty-day period before the expiration of a collective bargaining agreement,
the Med-Arbiter shall automatically order an election by secret ballot when the
verified petition is supported by the written consent of at least twenty-five percent
(25%) of all the employees in the bargaining unit to ascertain the will of the
employees in the appropriate bargaining unit. To have a valid election, at least a
majority of all eligible voters in the unit must have cast their votes. The labor union
receiving the majority of the valid votes cast shall be certified as the exclusive
bargaining agent of all the workers in the unit. When an election which provides for
three or more choices results in no choice receiving a majority of the valid votes cast,
a run-off election shall be conducted between the labor unions receiving the two
highest number of votes: Provided, That the total number of votes for all contending
unions is at least fifty per cent (50%) of the number of votes cast.
At the expiration of the freedom period, the employer shall continue to recognize the
majority status of the incumbent bargaining agent where no petition for certification
election is filed."
Section 24. Article 257 of the same Code is amended to read as follows:
Article 257. Petitions in unorganized establishment. - In any establishment where
there is no certified bargaining agent, a certification election shall automatically be
conducted by the Med-Arbiter upon the filing of a petition by a legitimate labor
organization."
Section 25. Article 259 of the same Code is also hereby amended to read as follows:
Article 259. Appeal from certification election orders. - Any party to an election may

appeal the order or results of the election as determined by the Med-Arbiter directly
to the Secretary of Labor and Employment on the ground that the rules and
regulations or parts thereof established by the Secretary of Labor and Employment for
the conduct of the election have been violated. Such appeal shall be decided within
fifteen (15) calendar days.
Section 26. There shall be incorporated after Article 259 of the same Code a new chapter
to read as follows:
TITLE VIII-A
Grievance Machinery and Voluntary Arbitration
"Article 260. Grievance machinery and voluntary arbitration. - The parties to a
collective bargaining agreement shall include therein provisions that will ensure the
mutual observance of its terms and conditions. They shall establish a machinery for
the adjustment and resolution of grievances arising from the interpretation or
implementation of their collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies.
"All grievances submitted to the grievance machinery which are not settled within
seven (7) calendar days from the date of its submission shall automatically be referred
to voluntary arbitration prescribed in the collective bargaining agreement.
"For this purpose, parties to a collective bargaining agreement shall name and
designate in advance a voluntary arbitrator or panel of voluntary arbitrators, or
include in the agreement a procedure for the selection of such voluntary arbitrator or
panel of voluntary arbitrators, preferably from the listing of qualified voluntary
arbitrators duly accredited by the Board. In case the parties fail to select a voluntary
arbitrator or panel of voluntary arbitrators, the Board shall designate the voluntary
arbitrator or panel of voluntary arbitrators, as may be necessary, pursuant to the
selection procedure agreed upon in the collective bargaining agreement, which shall
act with the same force and effect as if the voluntary arbitrator or panel of voluntary
arbitrators have been selected by the parties as described above."
"Article 261. Jurisdiction of voluntary arbitrator and panel of voluntary arbitrators. The voluntary arbitrator or panel of arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the collective bargaining agreement and those
arising from the interpretation or enforcement of company personnel policies referred
to in the immediately preceding Article. Accordingly, violations of a collective
bargaining agreement, except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as grievances under the
collective bargaining agreement. For purposes of this Article, gross violations of a
collective bargaining agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement.
"The Commission, its Regional Offices and the Regional Directors of the Department
of Labor and Employment shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators and shall immediately dispose and refer the same to the grievance
machinery or voluntary arbitration provided in the collective bargaining agreement."

"Article 262. Jurisdiction over other labor disputes. - The voluntary arbitrator or panel
of voluntary arbitrators, upon agreement of the parties, shall also hear and decide all
other labor disputes including unfair labor practices and bargaining deadlocks.
"Article 262-A. Procedures. - The voluntary arbitrator or panel of voluntary
arbitrators shall have the power to hold hearings, receive evidences and take whatever
action is necessary to resolve the issue or issues subject of the dispute, including
efforts to effect a voluntary settlement between parties.
"All parties to the dispute shall be entitled to attend the arbitration proceedings. The
attendance of any third party or the exclusion of any witness from the proceedings
shall be determined by the voluntary arbitrator or panel of voluntary arbitrators.
Hearings may be adjourned for cause or upon agreement by the parties.
"Unless the parties agree otherwise, it shall be mandatory for the voluntary arbitrator
or panel of voluntary arbitrators to render an award or decision within twenty (20)
calendar days from the date of submission of the dispute to voluntary arbitration.
"The award or decision of the voluntary arbitrator or panel of voluntary arbitrators
shall contain the facts and the law on which it is based. It shall be final and executory
after ten (10) calendar days from receipt of the copy of the award or decision by the
parties.
"Upon motion of any interested party, the voluntary arbitrator or panel of voluntary
arbitrators or the Labor Arbiter in the region where the movant resides, in case of the
absence or incapacity of the voluntary arbitrator or panel of voluntary arbitrators for
any reason, may issue a writ of execution requiring either the sheriff of the
Commission or regular courts or any public official whom the parties may designate
in the submission agreement to execute the final decision, order or award.
"Article 262-B. Cost of voluntary arbitration and voluntary arbitrator's fee. - The
parties to a collective bargaining agreement shall provide therein a proportionate
sharing scheme on the cost of voluntary arbitration including the voluntary arbitrator's
fee. The fixing of fee of voluntary arbitrators, or panel of voluntary arbitrators,
whether shouldered wholly by the parties or subsidized by the Special Voluntary
Arbitration Fund, shall take into account the following factors:
"(a) Nature of the case;
"(b) Time consumed in hearing the case;
"(c) Professional standing of the voluntary arbitrator;
"(d) Capacity to pay of the parties; and
"(e) Fees provided for in the Revised Rules of Court."
Section 27. Paragraphs (g) and (i) of Article 263 of the same code, as amended, are
hereby further amended to read as follows:
"(g) When, in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an industry, indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the dispute and decide it or
certify the same to the Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the intended or

impending strike or lockout as specified in the assumption or certification order. If

one has already taken place at the time of assumption or certification, all striking or
locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement agencies
to ensure compliance with this provision as well as with such orders as he may issue
to enforce the same.
"In line with the national concern for and the highest aspect accorded to the right of
patients to life and health, strikes and lockouts in hospitals, clinics and similar
medical institutions shall, to every extent possible, be avoided, and all serious efforts,
not only by labor and management but government as well, be exhausted to
substantially minimize, if not prevent their adverse effects on such life and health,
through the exercise, however legitimate, by labor of its right to strike and by
management to lockout. In labor disputes adversely affecting the continued operation
of such hospitals, clinics, or medical institutions, it shall be the duty of the striking
union or locking-out employer to provide and maintain an effective skeletal work
force of medical and other health personnel, whose movement and services shall be
unhampered and unrestricted, as are necessary to ensure the proper and adequate
protection of the life and health of its patients, most especially emergency cases, for
the duration of the strike or lockout. In such cases, therefore, the Secretary of Labor
and Employment may immediately assume, within twenty four (24) hours from
knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or
certify it to the Commission for compulsory arbitration. For this purpose, the
contending parties are strictly enjoined to comply with such orders, prohibitions
and/or injunctions as are issued by the Secretary of Labor and Employment or the
Commission, under pain of immediate disciplinary action, including dismissal or loss
of employment status or payment by the locking-out employer of backwages,
damages and other affirmative relief, even criminal prosecution against either or both
of them.
"The foregoing notwithstanding, the President of the Philippines shall not be
precluded from determining the industries that, in his opinion, are indispensable to the
national interest, and from intervening at any time and assuming jurisdiction over any
labor dispute in such industries in order to settle or terminate the same.
"(i) The Secretary of Labor and Employment, the Commission or the voluntary
arbitrator or panel of voluntary arbitrators shall decide or resolve the dispute within
thirty (30) calendar days from the date of the assumption of jurisdiction or the
certification or submission of the dispute, as the case may be. The decision of the
President, the Secretary of Labor and Employment, the Commission or the voluntary
arbitrator or panel of voluntary arbitrators shall be final and executory ten (10)
calendar days after receipt thereof by the parties."
Section 28. There is hereby incorporated in lieu of Article 265 of the same Code, which
was repealed by Batas Pambansa Blg. 130, a new provision to read as follows:
"Article 265. Improved offer balloting. - In an effort to settle a strike, the Department
of Labor and Management shall conduct a referendum by secret balloting on the

improved offer of the employer on or before the 30th day of the strike. When at least
a majority of the union members vote to accept the improved offer, the striking
workers shall immediately return to work and the employer shall thereupon readmit
them upon the signing of the agreement.
"In case of a lockout, the Department of Labor and Employment shall also conduct a
referendum by secret balloting on the reduced offer of the union on or before the 30th
day of the lockout. When at least a majority of the board of directors or trustees or the
partners holding the controlling interest in the case of a partnership vote to accept the
reduced offer, the workers shall immediately return to work and the employer shall
thereupon readmit them upon the signing of the agreement."
Section 29. Article 269 of the same Code is amended to read as follows:
"Article 269. Prohibition against aliens; Exceptions. - All aliens, natural or juridical,
as well as all foreign organizations are strictly prohibited from engaging directly or
indirectly in all forms of trade union activities without prejudice to normal contacts
between Philippine labor unions and recognized international labor centers: Provided,
however, That aliens working in the country with valid permits issued by the
Department of Labor and Employment, may exercise the right to self-organization
and join or assist labor organizations of their own choosing for purposes of collective
bargaining: Provided, further, That said aliens are nationals of a country which grants
the same or similar rights to Filipino workers."
Section 30. Paragraph (a) of Article 272 of the same Code is hereby amended to read as
follows:
"Article 272. Penalties. - (a) Any person violating any of the provisions of Article 264
of this Code shall be punished by a fine of not less than one thousand pesos
(P1,000.00) nor more than ten thousand pesos (P10,000.00) and/or imprisonment for
not less than three (3) months nor more than three (3) years, or both such fine and
imprisonment, at the discretion of the court. Prosecution under this provision shall
preclude prosecution for the same act under the Revised Penal Code, and vice-versa."
Section 31. Article 274 of the same Code is amended to read as follows:
"Article 274. Visitorial power. - The Secretary of Labor and Employment or his duly
authorized representative is hereby empowered to inquire into financial activities of
legitimate labor organizations upon the filing of a complaint under oath and duly
supported by the written consent of at least twenty percent (20%) of the total
membership of the labor organization concerned and to examine their books of
accounts and other records to determine compliance or non-compliance with the law
and to prosecute any violations of the law and the union constitution and by-laws:
Provided, That such inquiry or examination shall not be conducted during the sixty
(60) days freedom period nor within thirty (30) days immediately preceding the date
of election of union officials."
Section 32. Article 275 of the same Code is hereby amended to read as follows:
"Article 275. Tripartism and tripartite conferences. - (a) Tripartism in labor relations
is hereby declared a State policy. Towards this end, workers and employers shall, as
far as practicable, be represented in decision and policy-making bodies of the

government.
"(b) The Secretary of Labor and Employment or his duly authorized
representatives may from time to time call a national, regional, or industrial
tripartite conference of representatives of government, workers and employers for
the consideration and adoption of voluntary codes of principles designed to
promote industrial peace based on social justice or to align labor movement
relations with established priorities in economic and social development. In
calling such conference, the Secretary of Labor and Employment may consult
with accredited representatives of workers and employers."
Section 33. Paragraphs (a), (b), (c), (f), (h), and (i) of Article 277 of the same Code, as
amended, is further amended to read as follows:
"(a) All unions are authorized to collect reasonable membership fees, union dues,
assessments and fines and other contributions for labor education and research,
mutual death and hospitalization benefits, welfare fund, strike fund and credit and
cooperative undertakings.
"(b) Subject to the constitutional right of workers to security of tenure and their right
to be protected against dismissal except for a just or authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and Employment.
Any decision taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a complaint with
the regional branch of the National Labor Relations Commission. The burden of
proving that the termination was for a valid or authorized cause shall rest on the
employer. The Secretary of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima facie finding by
the appropriate official of the Department of Labor and Employment before whom
such dispute is pending that the termination may cause a serious labor dispute or is in
implementation of a mass lay-off.
"(c) Any employee, whether employed for a definite period or not, shall, beginning on
his first day of service, be considered an employee for purposes of membership in any
labor union.
"(f) A Special Voluntary Arbitration Fund is hereby established in the Board to
subsidize the cost of voluntary arbitration in cases involving the interpretation and
implementation of the collective bargaining agreement, including the arbitrator's fees,
and for such other related purposes to promote and develop voluntary arbitration. The
Board shall administer the Special Voluntary Arbitration Fund in accordance with the
guidelines it may adopt upon the recommendation of the Council, which guidelines
shall be subject to the approval of the Secretary of Labor and Employment.
Continuing funds needed for this purpose in the initial yearly amount of fifteen
million pesos (P15,000,000.00) shall be provided in the 1989 and subsequent annual

General Appropriations Acts.

"The amount of subsidy in appropriate cases shall be determined by the Board in
accordance with established guidelines issued by it upon the recommendation of the
Council.
"The fund shall also be utilized for the operation of the Council, the training and
education of voluntary arbitrators, and the promotion and the development of a
comprehensive voluntary arbitration program.
"(h) In establishments where no legitimate labor organization exists, labormanagement committees may be formed voluntarily by workers and employers for
the purpose of promoting industrial peace. The Department of Labor and
Management shall endeavor to enlighten and educate the workers and employers on
their rights and responsibilities through labor education with emphasis on the policy
thrusts of this Code.
"(i) To ensure speedy labor justice, the periods provided in this Code within which
decisions or resolutions of labor relations cases or matters should be rendered shall be
mandatory. For this purpose, a case or matter shall be deemed submitted for decision
or resolution upon the filing of the last pleading or memorandum required by the rules
of the Commission or by the Commission itself, or the Labor Arbiter or the Director
of the Bureau of Labor Relations or Med-Arbiter, or the Regional Director.
"Upon expiration of the corresponding period, a certification stating why a decision
or resolution has not been rendered within the said period shall be issued forthwith by
the Chairman of the Commission, the Executive Labor Arbiter, or the Director of the
Bureau of Labor Relations or Med-Arbiter, or the Regional Director, as the case may
be, and a copy thereof served upon the parties.
"Despite the expiration of the applicable mandatory period, the aforesaid officials
shall, without prejudice to any liability which may have been incurred as a
consequence thereof, see to it that the case or matter shall be decided or resolved
without any further delay."
Section 34. Article 279 of the Labor Code is hereby amended to read as follows:
"ARTICLE 279. Security of Tenure. - In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An Employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement."
Section 35. Equity of the Incumbent. - Incumbent career officials and rank-and-file
employees of the National Labor Relations Commission not otherwise affected by this
Act shall continue to hold office without need of reappointment. However, consistent
with the need to professionalize the higher level of its officialdom invested with
adjudicatory powers and salaries or emoluments, all positions of the Commissioners,
Executive Labor Arbiters and Labor Arbiters of the present National Labor Relations
Commissions are hereby declared vacant. However, subject officials shall continue to

temporarily discharge their duties and functions until their successors shall have been
duly appointed and qualified.
Section 36. Rule-Making Authority. - The Secretary of Labor and Employment is hereby
authorized to promulgate such rules and regulations as may be necessary to implement
the provisions of this Act.
Section 37. Funding. - Funds needed to carry out the provisions of this Act shall be taken
from the available funds in the Department of Labor and Employment and shall thereafter
be included in subsequent annual General Appropriations Acts.
Section 38. Repealing Cause. - All laws, decrees, executive orders, letters of
implementations, rules and regulations or part or parts thereof inconsistent with any
provision of this Act are hereby repealed, modified, superseded or amended accordingly.
Section 39. Separability Clause. - If any provision of this Act or the application of such
provision to any person or circumstance is held invalid for any reason, the remainder of
this Act or the application of such provision to other persons or circumstances shall not
be affected thereby.
Section 40. Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in at least two (2) national newspapers of general circulation,
whichever comes earlier.
Approved: March 2, 1989