PART I - STATE POLICIES ON LABOR RELATIONS CASES SanMig with whom the latter executed a Collective Bargaining Agreement
ter executed a Collective Bargaining Agreement (CBA)
1. San Miguel Corp. Employees Union v. Bersamira, G.R. No. 87700, June 13, 1990
G.R. No. 87700 June 13, 1990
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L.
BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF
BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.
Romeo C. Lagman for petitioners.
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.
MELENCIO-ERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task
by petitioners in this special civil action for certiorari and Prohibition for having issued
the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No.
57055 of his Court entitled "San Miguel Corporation vs. SMCEU-PTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and
with grave abuse of discretion, a labor dispute being involved. Private respondent
San Miguel Corporation (SanMig. for short), for its part, defends the Writ on the
ground of absence of any employer-employee relationship between it and the
contractual workers employed by the companies Lipercon Services, Inc. (Lipercon)
and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of
personality to represent said workers for purposes of collective bargaining. The
Solicitor General agrees with the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising
services with Lipercon and D'Rite (Annexes K and I, SanMig's Comment,
respectively). These companies are independent contractors duly licensed by the
Department of Labor and Employment (DOLE). SanMig entered into those contracts
to maintain its competitive position and in keeping with the imperatives of efficiency,
business expansion and diversity of its operation. In said contracts, it was expressly
understood and agreed that the workers employed by the contractors were to be paid
by the latter and that none of them were to be deemed employees or agents of
SanMig. There was to be no employer-employee relation between the contractors
and/or its workers, on the one hand, and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity)
is the duly authorized representative of the monthly paid rank-and-file employees of
effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's Comment). Section 1 of
their CBA specifically provides that "temporary, probationary, or contract employees
and workers are excluded from the bargaining unit and, therefore, outside the scope
of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig
that some Lipercon and D'Rite workers had signed up for union membership and
sought the regularization of their employment with SMC. The Union alleged that this
group of employees, while appearing to be contractual workers supposedly
independent contractors, have been continuously working for SanMig for a period
ranging from six (6) months to fifteen (15) years and that their work is neither casual
nor seasonal as they are performing work or activities necessary or desirable in the
usual business or trade of SanMig. Thus, it was contended that there exists a "labor-
only" contracting situation. It was then demanded that the employment status of these
workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable
response from SanMig, the Union filed a notice of strike for unfair labor practice, CBA
violations, and union busting (Annex D, Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor
practice (Annex F, Petition).
As in the first notice of strike. Conciliatory meetings were held on the second notice.
Subsequently, the two (2) notices of strike were consolidated and several conciliation
conferences were held to settle the dispute before the National Conciliation and
Mediation Board (NCMB) of DOLE (Annex G, Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by
Lipercon and D'Rite workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before
respondent Court to enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of
LIPERCON and/or D'RITE for the purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of
LIPERCON and D'RITE to demonstrate and/or picket at the plants
and offices of plaintiff within the bargaining unit referred to in the
CBA,...;
1
 d. staging a strike to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to
man the strike area and/or picket lines and/or barricades which the
defendants may set up at the plants and offices of plaintiff within
the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the
other employees and/or contract workers of plaintiff, as well as
those persons lawfully transacting business with plaintiff at the work
places within the bargaining unit referred to in the CBA, ..., to
compel plaintiff to hire the employees or workers of LIPERCON and
D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the
free ingress to, and egress from, the work places within the
bargaining unit referred to in the CBA .., to compel plaintiff to hire
the employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation
of plaintiff at the work places within the bargaining unit referred to in
the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees
or workers of LIPERCON and D'RITE. (Annex H, Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a
Temporary Restraining Order for the purpose of maintaining the status quo, and set
the application for Injunction for hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's
Complaint on the ground of lack of jurisdiction over the case/nature of the action,
which motion was opposed by SanMig. That Motion was denied by respondent Judge
in an Order dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief, where the parties
presented both testimonial and documentary evidence on 25 March 1989, respondent
Court issued the questioned Order (Annex A, Petition) granting the application and
enjoining the Union from Committing the acts complained of, supra. Accordingly, on
29 March 1989, respondent Court issued the corresponding Writ of Preliminary
Injunction after SanMig had posted the required bond of P100,000.00 to answer for
whatever damages petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the
existence of labor dispute. Verily, this court has jurisdiction to take
cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts
for services with Lipercon and D'Rite. The application and contract
for employment of the defendants' witnesses are either with
Lipercon or D'Rite. What could be discerned is that there is no
employer-employee relationship between plaintiff and the
contractual workers employed by Lipercon and D'Rite. This,
however, does not mean that a final determination regarding the
question of the existence of employer-employee relationship has
already been made. To finally resolve this dispute, the court must
extensively consider and delve into the manner of selection and
engagement of the putative employee; the mode of payment of
wages; the presence or absence of a power of dismissal; and the
Presence or absence of a power to control the putative employee's
conduct. This necessitates a full-blown trial. If the acts complained
of are not restrained, plaintiff would, undoubtedly, suffer irreparable
damages. Upon the other hand, a writ of injunction does not
necessarily expose defendants to irreparable damages.
Evidently, plaintiff has established its right to the relief demanded.
(p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking
nullification of the challenged Writ. On 24 April 1989, we issued a Temporary
Restraining Order enjoining the implementation of the Injunction issued by
respondent Court. The Union construed this to mean that "we can now strike," which
it superimposed on the Order and widely circulated to entice the Union membership
to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we
required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62
Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently,
some of the contractual workers of Lipercon and D'Rite had been laid off. The strike
adversely affected thirteen (13) of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the
parties to conciliation. The Union stated that it would lift the strike if the thirty (30)
Lipercon and D'Rite employees were recalled, and discussion on their other
demands, such as wage distortion and appointment of coordinators, were made.
Effected eventually was a Memorandum of Agreement between SanMig and the
Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and Civil
Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective
8 May 1989 to their former jobs or equivalent positions under the same terms and
conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union would
immediately lift the pickets and return to work.
After an exchange of pleadings, this Court, on 12 October 1989, gave due course to
the Petition and required the parties to submit their memoranda simultaneously, the
last of which was filed on 9 January 1990.
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The focal issue for determination is whether or not respondent Court correctly
assumed jurisdiction over the present controversy and properly issued the Writ of
Preliminary Injunction to the resolution of that question, is the matter of whether, or
not the case at bar involves, or is in connection with, or relates to a labor dispute. An
affirmative answer would bring the case within the original and exclusive jurisdiction
of labor tribunals to the exclusion of the regular Courts.
Petitioners take the position that 'it is beyond dispute that the controversy in the
court a quo involves or arose out of a labor dispute and is directly connected or
interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the
ambit of the public respondent's jurisdiction. That the acts complained of (i.e., the
mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-
7, Petitioners' Memo).
On the other hand, SanMig denies the existence of any employer-employee
relationship and consequently of any labor dispute between itself and the Union.
SanMig submits, in particular, that "respondent Court is vested with jurisdiction and
judicial competence to enjoin the specific type of strike staged by petitioner union and
its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit
cannot strike to compel the employer to hire and thereby create an
employment relationship with contractual workers, especially were
the contractual workers were recognized by the union, under the
governing collective bargaining agreement, as excluded from, and
therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining
representative only in the event of a deadlock in a labor dispute
over 'wages, hours of work and all other and of the employment' of
the employees in the unit. The union leaders cannot instigate a
strike to compel the employer, especially on the eve of certification
elections, to hire strangers or workers outside the unit, in the hope
the latter will help re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this
specie of strike does not arise out of a labor dispute, is an abuse of
right, and violates the employer's constitutional liberty to hire or not
to hire. (SanMig's Memorandum, pp. 475-476, Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any
controversy or matter concerning terms and conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing,
or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of employer and employee."
While it is SanMig's submission that no employer-employee relationship exists
between itself, on the one hand, and the contractual workers of Lipercon and D'Rite
on the other, a labor dispute can nevertheless exist "regardless of whether the
disputants stand in the proximate relationship of employer and employee" (Article 212
[1], Labor Code, supra) provided the controversy concerns, among others, the terms
and conditions of employment or a "change" or "arrangement" thereof (ibid). Put
differently, and as defined by law, the existence of a labor dispute is not negative by
the fact that the plaintiffs and defendants do not stand in the proximate relation of
employer and employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom,
what the Union seeks is to regularize the status of the employees contracted by
Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig.
This matter definitely dwells on the working relationship between said employees vis-
a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement
of those terms are thus involved bringing the matter within the purview of a labor
dispute. Further, the Union also seeks to represent those workers, who have signed
up for Union membership, for the purpose of collective bargaining. SanMig, for its
part, resists that Union demand on the ground that there is no employer-employee
relationship between it and those workers and because the demand violates the
terms of their CBA. Obvious then is that representation and association, for the
purpose of negotiating the conditions of employment are also involved. In fact, the
injunction sought by SanMig was precisely also to prevent such representation.
Again, the matter of representation falls within the scope of a labor dispute. Neither
can it be denied that the controversy below is directly connected with the labor
dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-
89; NCMB NCR NS-01-093-83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with
Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a regular
employer-employee relationship may, in fact, be said to exist; whether or not the
Union can lawfully represent the workers of Lipercon and D'Rite in their demands
against SanMig in the light of the existing CBA; whether or not the notice of strike was
valid and the strike itself legal when it was allegedly instigated to compel the
employer to hire strangers outside the working unit; — those are issues the resolution
of which call for the application of labor laws, and SanMig's cause's of action in the
Court below are inextricably linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA
738) relied upon by SanMig is not controlling as in that case there was no controversy
over terms, tenure or conditions, of employment or the representation of employees
that called for the application of labor laws. In that case, what the petitioning union
demanded was not a change in working terms and conditions, or the representation
of the employees, but that its members be hired as stevedores in the place of the
members of a rival union, which petitioners wanted discharged notwithstanding the
existing contract of the arrastre company with the latter union. Hence, the ruling
therein, on the basis of those facts unique to that case, that such a demand could
hardly be considered a labor dispute.
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As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor
tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to its
amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted
on 6 March 1989, Labor Arbiters have original and exclusive jurisdiction to hear and
decide the following cases involving all workers including "1. unfair labor practice
cases; 2. those that workers may file involving wages, hours of work and other terms
and conditions of employment; ... and 5. cases arising from any violation of Article
265 of this Code, including questions involving the legality of striker and lockouts. ..."
Article 217 lays down the plain command of the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and
21 of the Civil Code would not suffice to keep the case within the jurisdictional
boundaries of regular Courts. That claim for damages is interwoven with a labor
dispute existing between the parties and would have to be ventilated before the
administrative machinery established for the expeditious settlement of those disputes.
To allow the action filed below to prosper would bring about "split jurisdiction" which is
obnoxious to the orderly administration of justice (Philippine Communications,
Electronics and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July
1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management
prerogative and its best business judgment to determine whether it should contract
out the performance of some of its work to independent contractors. However, the
rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law
(Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection.
Those contending interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent
Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition
is GRANTED and respondent Judge is enjoined from taking any further action in Civil
Case No. 57055 except for the purpose of dismissing it. The status quo ante
declaration of strike ordered by the Court on 24 May 1989 shall be observed pending
the proceedings in the National Conciliation Mediation Board-Department of Labor
and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-
093-83. No costs.
2. Halagueña v. PAL, G.R. No. 172013, October 2, 2009
G.R. No. 172013 October 2, 2009
PATRICIA HALAGUEÑA, MA. ANGELITA L. PULIDO, MA. TERESITA P.
SANTIAGO, MARIANNE V. KATINDIG, BERNADETTE A. CABALQUINTO, LORNA
B. TUGAS, MARY CHRISTINE A. VILLARETE, CYNTHIA A. STEHMEIER, ROSE
ANNA G. VICTA, NOEMI R. CRESENCIO, and other flight attendants of
PHILIPPINE AIRLINES, Petitioners,
vs.
PHILIPPINE AIRLINES INCORPORATED, Respondent.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to annul and set aside the Decision1 and the Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP. No. 86813.
Petitioners were employed as female flight attendants of respondent Philippine
Airlines (PAL) on different dates prior to November 22, 1996. They are members of
the Flight Attendants and Stewards Association of the Philippines (FASAP), a labor
organization certified as the sole and exclusive certified as the sole and exclusive
bargaining representative of the flight attendants, flight stewards and pursers of
respondent.
On July 11, 2001, respondent and FASAP entered into a Collective Bargaining
Agreement3 incorporating the terms and conditions of their agreement for the years
2000 to 2005, hereinafter referred to as PAL-FASAP CBA.
Section 144, Part A of the PAL-FASAP CBA, provides that:
A. For the Cabin Attendants hired before 22 November 1996:
xxxx
3. Compulsory Retirement
Subject to the grooming standards provisions of this Agreement, compulsory
retirement shall be fifty-five (55) for females and sixty (60) for males. x x x.
In a letter dated July 22, 2003,4 petitioners and several female cabin crews
manifested that the aforementioned CBA provision on compulsory retirement is
discriminatory, and demanded for an equal treatment with their male counterparts.
This demand was reiterated in a letter5 by petitioners' counsel addressed to
respondent demanding the removal of gender discrimination provisions in the coming
re-negotiations of the PAL-FASAP CBA.
On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 2004-2005
CBA proposals6 and manifested their willingness to commence the collective
bargaining negotiations between the management and the association, at the soonest
possible time.
On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with
Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary
Injunction7 with the Regional Trial Court (RTC) of Makati City, Branch 147, docketed
as Civil Case No. 04-886, against respondent for the invalidity of Section 144, Part A
4
of the PAL-FASAP CBA. The RTC set a hearing on petitioners' application for a TRO
and, thereafter, required the parties to submit their respective memoranda.
On August 9, 2004, the RTC issued an Order8 upholding its jurisdiction over the
present case. The RTC reasoned that:
In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which is
allegedly discriminatory as it discriminates against female flight attendants, in
violation of the Constitution, the Labor Code, and the CEDAW. The allegations in the
Petition do not make out a labor dispute arising from employer-employee relationship
as none is shown to exist. This case is not directed specifically against respondent
arising from any act of the latter, nor does it involve a claim against the respondent.
Rather, this case seeks a declaration of the nullity of the questioned provision of the
CBA, which is within the Court's competence, with the allegations in the Petition
constituting the bases for such relief sought.
The RTC issued a TRO on August 10, 2004,9 enjoining the respondent for
implementing Section 144, Part A of the PAL-FASAP CBA.
The respondent filed an omnibus motion10 seeking reconsideration of the order
overruling its objection to the jurisdiction of the RTC the lifting of the TRO. It further
prayed that the (1) petitioners' application for the issuance of a writ of preliminary
injunction be denied; and (2) the petition be dismissed or the proceedings in this case
be suspended.
On September 27, 2004, the RTC issued an Order11 directing the issuance of a writ of
preliminary injunction enjoining the respondent or any of its agents and
representatives from further implementing Sec. 144, Part A of the PAL-FASAP CBA
pending the resolution of the case.
Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari and
Prohibition with Prayer for a Temporary Restraining Order and Writ of Preliminary
Injunction12 with the Court of Appeals (CA) praying that the order of the RTC, which
denied its objection to its jurisdiction, be annuled and set aside for having been
issued without and/or with grave abuse of discretion amounting to lack of jurisdiction.
The CA rendered a Decision, dated August 31, 2005, granting the respondent's
petition, and ruled that:
WHEREFORE, the respondent court is by us declared to have NO JURISDICTION
OVER THE CASE BELOW and, consequently, all the proceedings, orders and
processes it has so far issued therein are ANNULED and SET ASIDE. Respondent
court is ordered to DISMISS its Civil Case No. 04-886.
SO ORDERED.
Petitioner filed a motion for reconsideration,13 which was denied by the CA in its
Resolution dated March 7, 2006.
Hence, the instant petition assigning the following error:
THE COURT OF APPEALS' CONCLUSION THAT THE SUBJECT MATTER IS A
LABOR DISPUTE OR GRIEVANCE IS CONTRARY TO LAW AND
JURISPRUDENCE.
The main issue in this case is whether the RTC has jurisdiction over the petitioners'
action challenging the legality or constitutionality of the provisions on the compulsory
retirement age contained in the CBA between respondent PAL and FASAP.
Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject
of the litigation is incapable of pecuniary estimation and in all cases not within the
exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-
judicial functions. The RTC has the power to adjudicate all controversies except those
expressly witheld from the plenary powers of the court. Accordingly, it has the power
to decide issues of constitutionality or legality of the provisions of Section 144, Part A
of the PAL-FASAP CBA. As the issue involved is constitutional in character, the labor
arbiter or the National Labor Relations Commission (NLRC) has no jurisdiction over
the case and, thus, the petitioners pray that judgment be rendered on the merits
declaring Section 144, Part A of the PAL-FASAP CBA null and void.
Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over
the present case, as the controversy partakes of a labor dispute. The dispute
concerns the terms and conditions of petitioners' employment in PAL, specifically their
retirement age. The RTC has no jurisdiction over the subject matter of petitioners'
petition for declaratory relief because the Voluntary Arbitrator or panel of Voluntary
Arbitrators have original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the CBA. Regular
courts have no power to set and fix the terms and conditions of employment. Finally,
respondent alleged that petitioners' prayer before this Court to resolve their petition
for declaratory relief on the merits is procedurally improper and baseless.
The petition is meritorious.
Jurisdiction of the court is determined on the basis of the material allegations of the
complaint and the character of the relief prayed for irrespective of whether plaintiff is
entitled to such relief.14
In the case at bar, the allegations in the petition for declaratory relief plainly show that
petitioners' cause of action is the annulment of Section 144, Part A of the PAL-FASAP
CBA. The pertinent portion of the petition recites:
CAUSE OF ACTION
5
24. Petitioners have the constitutional right to fundamental equality with men
under Section 14, Article II, 1987 of the Constitution and, within the specific
context of this case, with the male cabin attendants of Philippine Airlines.
26. Petitioners have the statutory right to equal work and employment
opportunities with men under Article 3, Presidential Decree No. 442, The
Labor Code and, within the specific context of this case, with the male cabin
attendants of Philippine Airlines.
27. It is unlawful, even criminal, for an employer to discriminate against
women employees with respect to terms and conditions of employment
solely on account of their sex under Article 135 of the Labor Code as
amended by Republic Act No. 6725 or the Act Strengthening Prohibition on
Discrimination Against Women.
28. This discrimination against Petitioners is likewise against the Convention
on the Elimination of All Forms of Discrimination Against Women (hereafter,
"CEDAW"), a multilateral convention that the Philippines ratified in 1981. The
Government and its agents, including our courts, not only must condemn all
forms of discrimination against women, but must also implement measures
towards its elimination.
29. This case is a matter of public interest not only because of Philippine
Airlines' violation of the Constitution and existing laws, but also because it
highlights the fact that twenty-three years after the Philippine Senate ratified
the CEDAW, discrimination against women continues.
31. Section 114, Part A of the PAL-FASAP 2000-20005 CBA on compulsory
retirement from service is invidiously discriminatory against and manifestly
prejudicial to Petitioners because, they are compelled to retire at a lower age
(fifty-five (55) relative to their male counterparts (sixty (60).
33. There is no reasonable, much less lawful, basis for Philippine Airlines to
distinguish, differentiate or classify cabin attendants on the basis of sex and
thereby arbitrarily set a lower compulsory retirement age of 55 for Petitioners
for the sole reason that they are women.
37. For being patently unconstitutional and unlawful, Section 114, Part A of
the PAL-FASAP 2000-2005 CBA must be declared invalid and stricken down
to the extent that it discriminates against petitioner.
38. Accordingly, consistent with the constitutional and statutory guarantee of
equality between men and women, Petitioners should be adjudged and
declared entitled, like their male counterparts, to work until they are sixty
(60) years old.
PRAYER
WHEREFORE, it is most respectfully prayed that the Honorable Court:
c. after trial on the merits:
(I) declare Section 114, Part A of the PAL-FASAP 2000-2005 CBA INVALID, NULL
and VOID to the extent that it discriminates against Petitioners; x x x x
From the petitioners' allegations and relief prayed for in its petition, it is clear that the
issue raised is whether Section 144, Part A of the PAL-FASAP CBA is unlawful and
unconstitutional. Here, the petitioners' primary relief in Civil Case No. 04-886 is the
annulment of Section 144, Part A of the PAL-FASAP CBA, which allegedly
discriminates against them for being female flight attendants. The subject of litigation
is incapable of pecuniary estimation, exclusively cognizable by the RTC, pursuant to
Section 19 (1) of Batas Pambansa Blg. 129, as amended.15 Being an ordinary civil
action, the same is beyond the jurisdiction of labor tribunals.
The said issue cannot be resolved solely by applying the Labor Code. Rather, it
requires the application of the Constitution, labor statutes, law on contracts and the
Convention on the Elimination of All Forms of Discrimination Against Women,16 and
the power to apply and interpret the constitution and CEDAW is within the jurisdiction
of trial courts, a court of general jurisdiction. In Georg Grotjahn GMBH & Co. v.
Isnani,17 this Court held that not every dispute between an employer and employee
involves matters that only labor arbiters and the NLRC can resolve in the exercise of
their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the
NLRC under Article 217 of the Labor Code is limited to disputes arising from an
employer-employee relationship which can only be resolved by reference to the Labor
Code, other labor statutes, or their collective bargaining agreement.
Not every controversy or money claim by an employee against the employer or vice-
versa is within the exclusive jurisdiction of the labor arbiter. Actions between
employees and employer where the employer-employee relationship is merely
incidental and the cause of action precedes from a different source of obligation is
within the exclusive jurisdiction of the regular court.18 Here, the employer-employee
relationship between the parties is merely incidental and the cause of action
ultimately arose from different sources of obligation, i.e., the Constitution and
CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to the Labor
Code or other labor relations statute or a collective bargaining agreement but by the
general civil law, the jurisdiction over the dispute belongs to the regular courts of
justice and not to the labor arbiter and the NLRC. In such situations, resolution of the
dispute requires expertise, not in labor management relations nor in wage structures
and other terms and conditions of employment, but rather in the application of the
general civil law. Clearly, such claims fall outside the area of competence or expertise
ordinarily ascribed to labor arbiters and the NLRC and the rationale for granting
jurisdiction over such claims to these agencies disappears.19
6
If We divest the regular courts of jurisdiction over the case, then which tribunal or
forum shall determine the constitutionality or legality of the assailed CBA provision?
This Court holds that the grievance machinery and voluntary arbitrators do not have
the power to determine and settle the issues at hand. They have no jurisdiction and
competence to decide constitutional issues relative to the questioned compulsory
retirement age. Their exercise of jurisdiction is futile, as it is like vesting power to
someone who cannot wield it.
In Gonzales v. Climax Mining Ltd.,20 this Court affirmed the jurisdiction of courts over
questions on constitutionality of contracts, as the same involves the exercise of
judicial power. The Court said:
Whether the case involves void or voidable contracts is still a judicial question. It may,
in some instances, involve questions of fact especially with regard to the
determination of the circumstances of the execution of the contracts. But the
resolution of the validity or voidness of the contracts remains a legal or judicial
question as it requires the exercise of judicial function. It requires the ascertainment
of what laws are applicable to the dispute, the interpretation and application of those
laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a
mining conflict. It is essentially judicial. The complaint was not merely for the
determination of rights under the mining contracts since the very validity of those
contracts is put in issue.
In Saura v. Saura, Jr.,21 this Court emphasized the primacy of the regular court's
judicial power enshrined in the Constitution that is true that the trend is towards
vesting administrative bodies like the SEC with the power to adjudicate matters
coming under their particular specialization, to insure a more knowledgeable solution
of the problems submitted to them. This would also relieve the regular courts of a
substantial number of cases that would otherwise swell their already clogged
dockets. But as expedient as this policy may be, it should not deprive the courts
of justice of their power to decide ordinary cases in accordance with the
general laws that do not require any particular expertise or training to interpret
and apply. Otherwise, the creeping take-over by the administrative agencies of
the judicial power vested in the courts would render the judiciary virtually
impotent in the discharge of the duties assigned to it by the Constitution.
To be sure, in Rivera v. Espiritu,22 after Philippine Airlines (PAL) and PAL Employees
Association (PALEA) entered into an agreement, which includes the provision to
suspend the PAL-PALEA CBA for 10 years, several employees questioned its validity
via a petition for certiorari directly to the Supreme Court. They said that the
suspension was unconstitutional and contrary to public policy. Petitioners submit that
the suspension was inordinately long, way beyond the maximum statutory life of 5
years for a CBA provided for in Article 253-A of the Labor Code. By agreeing to a 10-
year suspension, PALEA, in effect, abdicated the workers' constitutional right to
bargain for another CBA at the mandated time.
In that case, this Court denied the petition for certiorari, ruling that there is available to
petitioners a plain, speedy, and adequate remedy in the ordinary course of law. The
Court said that while the petition was denominated as one for certiorari and
prohibition, its object was actually the nullification of the PAL-PALEA agreement. As
such, petitioners' proper remedy is an ordinary civil action for annulment of contract,
an action which properly falls under the jurisdiction of the regional trial courts.
The change in the terms and conditions of employment, should Section 144 of the
CBA be held invalid, is but a necessary and unavoidable consequence of the principal
relief sought, i.e., nullification of the alleged discriminatory provision in the CBA. Thus,
it does not necessarily follow that a resolution of controversy that would bring about a
change in the terms and conditions of employment is a labor dispute, cognizable by
labor tribunals. It is unfair to preclude petitioners from invoking the trial court's
jurisdiction merely because it may eventually result into a change of the terms and
conditions of employment. Along that line, the trial court is not asked to set and fix the
terms and conditions of employment, but is called upon to determine whether CBA is
consistent with the laws.
Although the CBA provides for a procedure for the adjustment of grievances, such
referral to the grievance machinery and thereafter to voluntary arbitration would be
inappropriate to the petitioners, because the union and the management have
unanimously agreed to the terms of the CBA and their interest is unified.
In Pantranco North Express, Inc., v. NLRC,23 this Court held that:
x x x Hence, only disputes involving the union and the company shall be referred to
the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between
them exists which could be brought to a grievance machinery. The problem or dispute
in the present case is between the union and the company on the one hand and
some union and non-union members who were dismissed, on the other hand. The
dispute has to be settled before an impartial body. The grievance machinery with
members designated by the union and the company cannot be expected to be
impartial against the dismissed employees. Due process demands that the dismissed
workers’ grievances be ventilated before an impartial body. x x x .
Applying the same rationale to the case at bar, it cannot be said that the "dispute" is
between the union and petitioner company because both have previously agreed
upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was
only private respondent on his own who questioned the compulsory retirement. x x x.
In the same vein, the dispute in the case at bar is not between FASAP and
respondent PAL, who have both previously agreed upon the provision on the
compulsory retirement of female flight attendants as embodied in the CBA. The
dispute is between respondent PAL and several female flight attendants who
questioned the provision on compulsory retirement of female flight attendants. Thus,
applying the principle in the aforementioned case cited, referral to the grievance
machinery and voluntary arbitration would not serve the interest of the petitioners.
7
Besides, a referral of the case to the grievance machinery and to the voluntary
arbitrator under the CBA would be futile because respondent already implemented
Section 114, Part A of PAL-FASAP CBA when several of its female flight attendants
reached the compulsory retirement age of 55.
Further, FASAP, in a letter dated July 12, 2004, addressed to PAL, submitted its
association's bargaining proposal for the remaining period of 2004-2005 of the PAL-
FASAP CBA, which includes the renegotiation of the subject Section 144. However,
FASAP's attempt to change the questioned provision was shallow and superficial, to
say the least, because it exerted no further efforts to pursue its proposal. When
petitioners in their individual capacities questioned the legality of the compulsory
retirement in the CBA before the trial court, there was no showing that FASAP, as
their representative, endeavored to adjust, settle or negotiate with PAL for the
removal of the difference in compulsory age retirement between its female and male
flight attendants, particularly those employed before November 22, 1996. Without
FASAP's active participation on behalf of its female flight attendants, the utilization of
the grievance machinery or voluntary arbitration would be pointless.
The trial court in this case is not asked to interpret Section 144, Part A of the PAL-
FASAP CBA. Interpretation, as defined in Black's Law Dictionary, is the art of or
process of discovering and ascertaining the meaning of a statute, will, contract, or
other written document.24 The provision regarding the compulsory retirement of flight
attendants is not ambiguous and does not require interpretation. Neither is there any
question regarding the implementation of the subject CBA provision, because the
manner of implementing the same is clear in itself. The only controversy lies in its
intrinsic validity.
Although it is a rule that a contract freely entered between the parties should be
respected, since a contract is the law between the parties, said rule is not absolute.
In Pakistan International Airlines Corporation v. Ople, 25 this Court held that:
The principle of party autonomy in contracts is not, however, an absolute principle.
The rule in Article 1306, of our Civil Code is that the contracting parties may establish
such stipulations as they may deem convenient, "provided they are not contrary to
law, morals, good customs, public order or public policy." Thus, counter-balancing the
principle of autonomy of contracting parties is the equally general rule that provisions
of applicable law, especially provisions relating to matters affected with public policy,
are deemed written into the contract. Put a little differently, the governing principle is
that parties may not contract away applicable provisions of law especially peremptory
provisions dealing with matters heavily impressed with public interest. The law
relating to labor and employment is clearly such an area and parties are not at liberty
to insulate themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other.
Moreover, the relations between capital and labor are not merely contractual. They
are so impressed with public interest that labor contracts must yield to the common
good.x x x 26 The supremacy of the law over contracts is explained by the fact that
labor contracts are not ordinary contracts; these are imbued with public interest and
therefore are subject to the police power of the state.27 It should not be taken to mean
that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of
judicial review and nullification. A CBA, as a labor contract, is not merely contractual
in nature but impressed with public interest. If the retirement provisions in the CBA
run contrary to law, public morals, or public policy, such provisions may very well be
voided.28
Finally, the issue in the petition for certiorari brought before the CA by the respondent
was the alleged exercise of grave abuse of discretion of the RTC in taking cognizance
of the case for declaratory relief. When the CA annuled and set aside the RTC's
order, petitioners sought relief before this Court through the instant petition for review
under Rule 45. A perusal of the petition before Us, petitioners pray for the declaration
of the alleged discriminatory provision in the CBA against its female flight attendants.
This Court is not persuaded. The rule is settled that pure questions of fact may not be
the proper subject of an appeal by certiorari under Rule 45 of the Revised Rules of
Court. This mode of appeal is generally limited only to questions of law which must be
distinctly set forth in the petition. The Supreme Court is not a trier of facts. 29
The question as to whether said Section 114, Part A of the PAL-FASAP CBA is
discriminatory or not is a question of fact. This would require the presentation and
reception of evidence by the parties in order for the trial court to ascertain the facts of
the case and whether said provision violates the Constitution, statutes and treaties. A
full-blown trial is necessary, which jurisdiction to hear the same is properly lodged
with the the RTC. Therefore, a remand of this case to the RTC for the proper
determination of the merits of the petition for declaratory relief is just and
proper.1avvphi1
WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of
the Court of Appeals, dated August 31, 2005 and March 7, 2006, respectively, in CA-
G.R. SP. No. 86813 are REVERSED and SET ASIDE. The Regional Trial Court of
Makati City, Branch 147 is DIRECTED to continue the proceedings in Civil Case No.
04-886 with deliberate dispatch.
3. Portillo v. Rudolf Lietz, Inc., G.R. 196539, October 10, 2012
G.R. No. 196539 October 10, 2012
MARIETTA N. PORTILLO, Petitioner,
vs.
RUDOLF LIETZ, INC., RUDOLF LIETZ and COURT OF APPEALS Respondents.
DECISION
PEREZ, J.:
8
Before us is a petition for certiorari assailing the Resolution 1 dated 14 October 2010
of the Court of Appeals in CA-G.R. SP No. I 065g I which modified its Decision2 dated
31 March 2009, thus allowing the legal compensation or petitioner Marietta N.
Portillo's (Portillo) monetary claims against respondent corporation Rudolf Lietz, Inc.'s
(Lietz Inc.)3 claim for liquidated damages arising from Portillo’s alleged violation of the
"Goodwill Clause" in the employment contract executed by the parties.
The facts are not in dispute.
In a letter agreement dated 3 May 1991, signed by individual respondent Rudolf Lietz
(Rudolf) and conformed to by Portillo, the latter was hired by the former under the
following terms and conditions:
A copy of [Lietz Inc.’s] work rules and policies on personnel is enclosed and an
inherent part of the terms and conditions of employment.
We acknowledge your proposal in your application specifically to the effect that you
will not engage in any other gainful employment by yourself or with any other
company either directly or indirectly without written consent of [Lietz Inc.], and we
hereby accept and henceforth consider your proposal an undertaking on your part, a
breach of which will render you liable to [Lietz Inc.] for liquidated damages.
If you are in agreement with these terms and conditions of employment, please
signify your conformity below.4
On her tenth (10th) year with Lietz Inc., specifically on 1 February 2002, Portillo was
promoted to Sales Representative and received a corresponding increase in basic
monthly salary and sales quota. In this regard, Portillo signed another letter
agreement containing a "Goodwill Clause:"
It remains understood and you agreed that, on the termination of your employment by
act of either you or [Lietz Inc.], and for a period of three (3) years thereafter, you shall
not engage directly or indirectly as employee, manager, proprietor, or solicitor for
yourself or others in a similar or competitive business or the same character of work
which you were employed by [Lietz Inc.] to do and perform. Should you breach this
good will clause of this Contract, you shall pay [Lietz Inc.] as liquidated damages the
amount of 100% of your gross compensation over the last 12 months, it being agreed
that this sum is reasonable and just.5
Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During
her exit interview, Portillo declared that she intended to engage in business—a rice
dealership, selling rice in wholesale.
On 15 June 2005, Lietz Inc. accepted Portillo’s resignation and reminded her of the
"Goodwill Clause" in the last letter agreement she had signed. Upon receipt thereof,
Portillo jotted a note thereon that the latest contract she had signed in February 2004
did not contain any "Goodwill Clause" referred to by Lietz Inc. In response thereto,
Lietz Inc. categorically wrote:
Please be informed that the standard prescription of prohibiting employees from
engaging in business or seeking employment with organizations that directly or
indirectly compete against [Lietz Inc.] for three (3) years after resignation remains in
effect.
The documentation you pertain to is an internal memorandum of your salary increase,
not an employment contract. The absence of the three-year prohibition clause in this
document (or any document for that matter) does not cancel the prohibition itself. We
did not, have not, and will not issue any cancellation of such in the foreseeable
future[.] [T]hus[,] regretfully, it is erroneous of you to believe otherwise. 6
In a subsequent letter dated 21 June 2005, Lietz Inc. wrote Portillo and supposed that
the exchange of correspondence between them regarding the "Goodwill Clause" in
the employment contract was a moot exercise since Portillo’s articulated intention to
go into business, selling rice, will not compete with Lietz Inc.’s products.
Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines,
Limited to head its Pharma Raw Material Department. Ed Keller Limited is purportedly
a direct competitor of Lietz Inc.
Meanwhile, Portillo’s demands from Lietz Inc. for the payment of her remaining
salaries and commissions went unheeded. Lietz Inc. gave Portillo the run around, on
the pretext that her salaries and commissions were still being computed.
On 14 September 2005, Portillo filed a complaint with the National Labor Relations
Commission (NLRC) for non-payment of 1½ months’ salary, two (2) months’
commission, 13th month pay, plus moral, exemplary and actual damages and
attorney’s fees.
In its position paper, Lietz Inc. admitted liability for Portillo’s money claims in the total
amount of P110,662.16. However, Lietz Inc. raised the defense of legal
compensation: Portillo’s money claims should be offset against her liability to Lietz
Inc. for liquidated damages in the amount of ₱869,633.09 7 for Portillo’s alleged
breach of the "Goodwill Clause" in the employment contract when she became
employed with Ed Keller Philippines, Limited.
On 25 May 2007, Labor Arbiter Daniel J. Cajilig granted Portillo’s complaint:
WHEREFORE, judgment is hereby rendered ordering respondents Rudolf Lietz, Inc.
to pay complainant Marietta N. Portillo the amount of Php110,662.16, representing
her salary and commissions, including 13th month pay.8
On appeal by respondents, the NLRC, through its Second Division, affirmed the ruling
of Labor Arbiter Daniel J. Cajilig. On motion for reconsideration, the NLRC stood pat
on its ruling.
9
Expectedly, respondents filed a petition for certiorari before the Court of Appeals,
alleging grave abuse of discretion in the labor tribunals’ rulings.
As earlier adverted to, the appellate court initially affirmed the labor tribunals:
WHEREFORE, considering the foregoing premises, judgment is hereby rendered by
us DENYING the petition filed in this case. The Resolution of the National Labor
Relations Commission (NLRC), Second Division, in the labor case docketed as NLRC
NCR Case No. 00-09- 08113-2005 [NLRC LAC No. 07-001965-07(5)] is
hereby AFFIRMED.9
The disposition was disturbed. The Court of Appeals, on motion for reconsideration,
modified its previous decision, thus:
WHEREFORE, in view of the foregoing premises, we hereby MODIFY the decision
promulgated on March 31, 2009 in that, while we uphold the monetary award in favor
of the [petitioner] in the aggregate sum of ₱110,662.16 representing the unpaid
salary, commission and 13th month pay due to her, we hereby allow legal
compensation or set-off of such award of monetary claims by her liability to
[respondents] for liquidated damages arising from her violation of the "Goodwill
Clause" in her employment contract with them.10
Portillo’s motion for reconsideration was denied.
Hence, this petition for certiorari listing the following acts as grave abuse of discretion
of the Court of Appeals:
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY
EVADING TO RECOGNIZE (sic) THAT THE RESPONDENTS’ EARLIER PETITION
IS FATALLY DEFECTIVE;
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY
OVERSTEPPING THE BOUNDS OF APPELLATE JURISDICTION[;]
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY
MODIFYING ITS PREVIOUS DECISION BASED ON AN ISSUE THAT WAS RAISED
ONLY ON THE FIRST INSTANCE AS AN APPEAL BUT WAS NEVER AT THE
TRIAL COURT AMOUNTING TO DENIAL OF DUE PROCESS[;]
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY
EVADING THE POSITIVE DUTY TO UPHOLD THE RELEVANT LAWS[.]11
Simply, the issue is whether Portillo’s money claims for unpaid salaries may be offset
against respondents’ claim for liquidated damages.
Before anything else, we address the procedural error committed by Portillo, i.e., filing
a petition for certiorari, a special civil action under Rule 65 of the Rules of Court,
instead of a petition for review on certiorari, a mode of appeal, under Rule 45 thereof.
On this score alone, the petition should have been dismissed outright.
Section 1, Rule 45 of the Rules of Court expressly provides that a party desiring to
appeal by certiorari from a judgment or final order or resolution of the Court of
Appeals may file a verified petition for review on certiorari. Considering that, in this
case, appeal by certiorari was available to Portillo, that available recourse foreclosed
her right to resort to a special civil action for certiorari, a limited form of review and a
remedy of last recourse, which lies only where there is no appeal or plain, speedy and
adequate remedy in the ordinary course of law.12
A petition for review on certiorari under Rule 45 and a petition for certiorari under Rule
65 are mutually exclusive remedies. Certiorari cannot co-exist with an appeal or any
other adequate remedy.13 If a petition for review is available, even prescribed, the
nature of the questions of law intended to be raised on appeal is of no consequence.
It may well be that those questions of law will treat exclusively of whether or not the
judgment or final order was rendered without or in excess of jurisdiction, or with grave
abuse of discretion. This is immaterial. The remedy is appeal, not certiorari as a
special civil action.14
Be that as it may, on more than one occasion, to serve the ultimate purpose of all
rules of procedures—attaining substantial justice as expeditiously as possible15 —we
have accepted procedurally incorrect petitions and decided them on the merits. We
do the same here.
The Court of Appeals anchors its modified ruling on the ostensible causal connection
between Portillo’s money claims and Lietz Inc.’s claim for liquidated damages, both
claims apparently arising from the same employment relations. Thus, did it say:
x x x This Court will have to take cognizance of and consider the "Goodwill Clause"
contained [in] the employment contract signed by and between [respondents and
Portillo]. There is no gainsaying the fact that such "Goodwill Clause" is part and
parcel of the employment contract extended to [Portillo], and such clause is not
contrary to law, morals and public policy. There is thus a causal connection between
[Portillo’s] monetary claims against [respondents] and the latter’s claim for liquidated
damages against the former. Consequently, we should allow legal compensation or
set-off to take place. [Respondents and Portillo] are both bound principally and, at the
same time, are creditors of each other. [Portillo] is a creditor of [respondents] in the
sum of ₱110,662.16 in connection with her monetary claims against the latter. At the
same time, [respondents] are creditors of [Portillo] insofar as their claims for
liquidated damages in the sum of ₱980,295.2516 against the latter is concerned.17
We are not convinced.
Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by
the Court of Appeals on the "causal connection between [Portillo’s] monetary claims
against [respondents] and the latter’s claim from liquidated damages against the
former."
10
Art. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as
otherwise provided under this code, the Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in the absence of
stenographic notes, the following case involving all workers, whether agricultural or
nonagricultural:
xxxx
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations; (Underscoring supplied)
Evidently, the Court of Appeals is convinced that the claim for liquidated damages
emanates from the "Goodwill Clause of the employment contract and, therefore, is a
claim for damages arising from the employeremployee relations."
As early as Singapore Airlines Limited v. Paño,18 we established that not all disputes
between an employer and his employee(s) fall within the jurisdiction of the labor
tribunals. We differentiated between abandonment per se and the manner and
consequent effects of such abandonment and ruled that the first, is a labor case,
while the second, is a civil law case.
Upon the facts and issues involved, jurisdiction over the present controversy must be
held to belong to the civil Courts. While seemingly petitioner's claim for damages
arises from employer-employee relations, and the latest amendment to Article 217 of
the Labor Code under PD No. 1691 and BP Blg. 130 provides that all other claims
arising from employer-employee relationship are cognizable by Labor Arbiters
[citation omitted], in essence, petitioner's claim for damages is grounded on the
"wanton failure and refusal" without just cause of private respondent Cruz to report for
duty despite repeated notices served upon him of the disapproval of his application
for leave of absence without pay. This, coupled with the further averment that Cruz
"maliciously and with bad faith" violated the terms and conditions of the conversion
training course agreement to the damage of petitioner removes the present
controversy from the coverage of the Labor Code and brings it within the purview of
Civil Law.
Clearly, the complaint was anchored not on the abandonment per se by private
respondent Cruz of his job—as the latter was not required in the Complaint to report
back to work—but on the manner and consequent effects of such abandonment of
work translated in terms of the damages which petitioner had to suffer.
Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale
Veneer & Plywood, Inc. [citation omitted], the pertinent portion of which reads:
"Although the acts complained of seemingly appear to constitute 'matter involving
employee-employer' relations as Quisaba's dismissal was the severance of a pre-
existing employee-employer relations, his complaint is grounded not on his
dismissal per se, as in fact he does not ask for reinstatement or backwages, but on
the manner of his dismissal and the consequent effects of such dismissal.
"Civil law consists of that 'mass of precepts that determine or regulate the relations . .
. that exist between members of a society for the protection of private interest (1
Sanchez Roman 3).
"The 'right' of the respondents to dismiss Quisaba should not be confused with the
manner in which the right was exercised and the effects flowing therefrom. If the
dismissal was done anti-socially or oppressively as the complaint alleges, then the
respondents violated Article 1701 of the Civil Code which prohibits acts of oppression
by either capital or labor against the other, and Article 21, which makes a person
liable for damages if he wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy, the sanction for which, by way of
moral damages, is provided in article 2219, No. 10. [citation omitted]"
Stated differently, petitioner seeks protection under the civil laws and claims no
benefits under the Labor Code. The primary relief sought is for liquidated
damages for breach of a contractual obligation. The other items demanded are
not labor benefits demanded by workers generally taken cognizance of in labor
disputes, such as payment of wages, overtime compensation or separation
pay. The items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute.19 (Emphasis supplied)
Subsequent rulings amplified the teaching in Singapore Airlines. The reasonable
causal connection rule was discussed. Thus, in San Miguel Corporation v. National
Labor Relations Commission,20 we held:
While paragraph 3 above refers to "all money claims of workers," it is not necessary
to suppose that the entire universe of money claims that might be asserted by
workers against their employers has been absorbed into the original and exclusive
jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in
isolation from but rather within the context formed by paragraph 1 (relating to unfair
labor practices), paragraph 2 (relating to claims concerning terms and conditions of
employment), paragraph 4 (claims relating to household services, a particular species
of employer-employee relations), and paragraph 5 (relating to certain activities
prohibited to employees or to employers). It is evident that there is a unifying element
which runs through paragraph 1 to 5 and that is, that they all refer to cases or
disputes arising out of or in connection with an employer-employee relationship. This
is, in other words, a situation where the rule of noscitur a sociis may be usefully
invoked in clarifying the scope of paragraph 3, and any other paragraph of Article 217
of the Labor Code, as amended. We reach the above conclusion from an examination
of the terms themselves of Article 217, as last amended by B.P. Blg. 227, and even
though earlier versions of Article 217 of the Labor Code expressly brought within the
jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer-
employee relations, [citation omitted]" which clause was not expressly carried over, in
printer's ink, in Article 217 as it exists today. For it cannot be presumed that money
claims of workers which do not arise out of or in connection with their employer-
employee relationship, and which would therefore fall within the general jurisdiction of
11
regular courts of justice, were intended by the legislative authority to be taken away
from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive
basis. The Court, therefore, believes and so holds that the "money claims of
workers" referred to in paragraph 3 of Article 217 embraces money claims
which arise out of or in connection with the employer-employee relationship, or
some aspect or incident of such relationship. Put a little differently, that money
claims of workers which now fall within the original and exclusive jurisdiction
of Labor Arbiters are those money claims which have some reasonable causal
connection with the employer-employee relationship.21 (Emphasis supplied)
We thereafter ruled that the "reasonable causal connection with the employer-
employee relationship" is a requirement not only in employees’ money claims against
the employer but is, likewise, a condition when the claimant is the employer.
In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr.,22 which reiterated
the San Miguel ruling and allied jurisprudence, we pronounced that a non-compete
clause, as in the "Goodwill Clause" referred to in the present case, with a stipulation
that a violation thereof makes the employee liable to his former employer for
liquidated damages, refers to post-employment relations of the parties.
In Dai-Chi, the trial court dismissed the civil complaint filed by the employer to recover
damages from its employee for the latter’s breach of his contractual obligation. We
reversed the ruling of the trial court as we found that the employer did not ask for any
relief under the Labor Code but sought to recover damages agreed upon in the
contract as redress for its employee’s breach of contractual obligation to its "damage
and prejudice." We iterated that Article 217, paragraph 4 does not automatically cover
all disputes between an employer and its employee(s). We noted that the cause of
action was within the realm of Civil Law, thus, jurisdiction over the controversy
belongs to the regular courts. At bottom, we considered that the stipulation referred to
post-employment relations of the parties.
That the "Goodwill Clause" in this case is likewise a postemployment issue should
brook no argument. There is no dispute as to the cessation of Portillo’s employment
with Lietz Inc.23 She simply claims her unpaid salaries and commissions, which Lietz
Inc. does not contest. At that juncture, Portillo was no longer an employee of Lietz
Inc.24The "Goodwill Clause" or the "Non-Compete Clause" is a contractual
undertaking effective after the cessation of the employment relationship between the
parties. In accordance with jurisprudence, breach of the undertaking is a civil law
dispute, not a labor law case.
It is clear, therefore, that while Portillo’s claim for unpaid salaries is a money claim
that arises out of or in connection with an employer-employee relationship, Lietz Inc.’s
claim against Portillo for violation of the goodwill clause is a money claim based on an
act done after the cessation of the employment relationship. And, while the
jurisdiction over Portillo’s claim is vested in the labor arbiter, the jurisdiction over Lietz
Inc.’s claim rests on the regular courts. Thus:
As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to
recover damages based on the parties' contract of employment as redress for
respondent's breach thereof. Such cause of action is within the realm of Civil Law,
and jurisdiction over the controversy belongs to the regular courts. More so must this
be in the present case, what with the reality that the stipulation refers to the
postemployment relations of the parties.
For sure, a plain and cursory reading of the complaint will readily reveal that the
subject matter is one of claim for damages arising from a breach of contract, which is
within the ambit of the regular court's jurisdiction. [citation omitted]
It is basic that jurisdiction over the subject matter is determined upon the allegations
made in the complaint, irrespective of whether or not the plaintiff is entitled to recover
upon the claim asserted therein, which is a matter resolved only after and as a result
of a trial. Neither can jurisdiction of a court be made to depend upon the defenses
made by a defendant in his answer or motion to dismiss. If such were the rule, the
question of jurisdiction would depend almost entirely upon the defendant.25 [citation
omitted]
xxxx
Whereas this Court in a number of occasions had applied the jurisdictional provisions
of Article 217 to claims for damages filed by employees [citation omitted], we hold that
by the designating clause "arising from the employer-employee relations" Article 217
should apply with equal force to the claim of an employer for actual damages against
its dismissed employee, where the basis for the claim arises from or is necessarily
connected with the fact of termination, and should be entered as a counterclaim in the
illegal dismissal case.26
xxxx
This is, of course, to distinguish from cases of actions for damages where the
employer-employee relationship is merely incidental and the cause of action
proceeds from a different source of obligation. Thus, the jurisdiction of regular
courts was upheld where the damages, claimed for were based on tort [citation
omitted], malicious prosecution [citation omitted], or breach of contract, as when
the claimant seeks to recover a debt from a former employee [citation omitted] or
seeks liquidated damages in enforcement of a prior employment
contract. [citation omitted]
Neither can we uphold the reasoning of respondent court that because the resolution
of the issues presented by the complaint does not entail application of the Labor
Code or other labor laws, the dispute is intrinsically civil. Article 217(a) of the Labor
Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive
jurisdiction over claims for damages arising from employer-employee relations─in
other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided
by labor laws, but also damages governed by the Civil Code.27 (Emphasis supplied)
In the case at bar, the difference in the nature of the credits that one has against the
other, conversely, the nature of the debt one owes another, which difference in turn
12
results in the difference of the forum where the different credits can be enforced,
prevents the application of compensation. Simply, the labor tribunal in an employee’s
claim for unpaid wages is without authority to allow the compensation of such claims
against the post employment claim of the former employer for breach of a post
employment condition. The labor tribunal does not have jurisdiction over the civil case
of breach of contract.
We are aware that in Bañez v. Hon. Valdevilla, we mentioned that:
Whereas this Court in a number of occasions had applied the jurisdictional provisions
of Article 217 to claims for damages filed by employees [citation omitted], we hold that
by the designating clause "arising from the employer-employee relations" Article 217
should apply with equal force to the claim of an employer for actual damages against
its dismissed employee, where the basis for the claim arises from or is necessarily
connected with the fact of termination, and should be entered as a counterclaim in the
illegal dismissal case.28
While on the surface, Bañez supports the decision of the Court of Appeals, the facts
beneath premise an opposite conclusion. There, the salesman-employee obtained
from the NLRC a final favorable judgment of illegal dismissal. Afterwards, the
employer filed with the trial court a complaint for damages for alleged nefarious
activities causing damage to the employer. Explaining further why the claims for
damages should be entered as a counterclaim in the illegal dismissal case, we said:
Even under Republic Act No. 875 (the ‘Industrial Peace Act,’ now completely
superseded by the Labor Code), jurisprudence was settled that where the plaintiff’s
cause of action for damages arose out of, or was necessarily intertwined with, an
alleged unfair labor practice committed by the union, the jurisdiction is exclusively
with the (now defunct) Court of Industrial Relations, and the assumption of jurisdiction
of regular courts over the same is a nullity. To allow otherwise would be "to sanction
split jurisdiction, which is prejudicial to the orderly administration of justice." Thus,
even after the enactment of the Labor Code, where the damages separately claimed
by the employer were allegedly incurred as a consequence of strike or picketing of
the union, such complaint for damages is deeply rooted from the labor dispute
between the parties, and should be dismissed by ordinary courts for lack of
jurisdiction. As held by this Court in National Federation of Labor vs. Eisma, 127
SCRA 419:
Certainly, the present Labor Code is even more committed to the view that on policy
grounds, and equally so in the interest of greater promptness in the disposition of
labor matters, a court is spared the often onerous task of determining what essentially
is a factual matter, namely, the damages that may be incurred by either labor or
management as a result of disputes or controversies arising from employer-employee
relations.29
Evidently, the ruling of the appellate court is modeled after the basis used
in Bañez which is the "intertwined" facts of the claims of the employer and the
employee or that the "complaint for damages is deeply rooted from the labor dispute
between the parties." Thus, did the appellate court say that:
There is no gainsaying the fact that such "Goodwill Clause" is part and parcel of the
employment contract extended to [Portillo], and such clause is not contrary to law,
morals and public policy. There is thus a causal connection between [Portillo’s]
monetary claims against [respondents] and the latter’s claim for liquidated damages
against the former. Consequently, we should allow legal compensation or set-off to
take place.30
The Court of Appeals was misguided. Its conclusion was incorrect.
There is no causal connection between the petitioner employees’ claim for unpaid
wages and the respondent employers’ claim for damages for the alleged "Goodwill
Clause" violation. Portillo’s claim for unpaid salaries did not have anything to do with
her alleged violation of the employment contract as, in fact, her separation from
employment is not "rooted" in the alleged contractual violation. She resigned from her
employment. She was not dismissed. Portillo’s entitlement to the unpaid salaries is
not even contested. Indeed, Lietz Inc.’s argument about legal compensation
necessarily admits that it owes the money claimed by Portillo.
The alleged contractual violation did not arise during the existence of the employer-
employee relationship. It was a post-employment matter, a post-employment
violation. Reminders are apt. That is provided by the fairly recent case of Yusen Air
and Sea Services Phils., Inc. v. Villamor,31 which harked back to the previous rulings
on the necessity of "reasonable causal connection" between the tortious damage and
the damage arising from the employer-employee relationship. Yusen proceeded to
pronounce that the absence of the connection results in the absence of jurisdiction of
the labor arbiter. Importantly, such absence of jurisdiction cannot be remedied by
raising before the labor tribunal the tortious damage as a defense. Thus:
When, as here, the cause of action is based on a quasi-delict or tort, which has no
reasonable causal connection with any of the claims provided for in Article 217,
jurisdiction over the action is with the regular courts. [citation omitted]
As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to
recover damages based on the parties’ contract of employment as redress for
respondent’s breach thereof. Such cause of action is within the realm of Civil Law,
and jurisdiction over the controversy belongs to the regular courts. More so must this
be in the present case, what with the reality that the stipulation refers to the
postemployment relations of the parties.
For sure, a plain and cursory reading of the complaint will readily reveal that the
subject matter is one of claim for damages arising from a breach of contract, which is
within the ambit of the regular court’s jurisdiction. [citation omitted]
It is basic that jurisdiction over the subject matter is determined upon the allegations
made in the complaint, irrespective of whether or not the plaintiff is entitled to recover
upon the claim asserted therein, which is a matter resolved only after and as a result
of a trial. Neither can jurisdiction of a court be made to depend upon the defenses
made by a defendant in his answer or motion to dismiss. If such were the rule, the
13
question of jurisdiction would depend almost entirely upon the
defendant.32 (Underscoring supplied).
The error of the appellate court in its Resolution of 14 October 2010 is basic. The
original decision, the right ruling, should not have been reconsidered.1âwphi1
Indeed, the application of compensation in this case is effectively barred by Article
113 of the Labor Code which prohibits wage deductions except in three
circumstances:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any
person, shall make any deduction from wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium on
the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off
has been recognized by the employer or authorized in writing by the individual worker
concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.
WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals in
CA-G.R. SP No. I 06581 dated 14 October 20 I 0 is SET ASIDE. The Decision of the
Court of Appeals in CA-G.R. SP No. I 06581 dated 3 I March :2009
is REINSTATED. No costs.
4. Philippine Commercial International Bank v. Gomez, G.R. No. 199601, November
23, 2015
SECOND DIVISION
G.R. No. 199601, November 23, 2015
PHILIPPINE COMMERCIAL INTERNATIONAL BANK (NOW BDO UNIBANK,
INC., Petitioner, v.JOSEPHINE D. GOMEZ, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari under Rule 45 of the Rules of
Court1 filed by Philippine Commercial International Bank (PCIB) assailing the May 23,
2011 decision2 and the December 7, 2011 resolution3 of the Court of Appeals (CA) in
CA-G.R. CV No. 68288. The CA affirmed the May 25, 1999 decision of the Regional
Trial Court of Makati City, Branch 145 (RTC) in toto.
FACTUAL ANTECEDENTS
Josephine D. Gomez (Josephine) was a teller at the Domestic Airport Branch of the
PCIB when a certain Colin R. Harrington opened Savings Account No. 373-28010-6
with said branch in January 1985.
The following day, Harrington presented two (2) genuine bank drafts dated January 3,
1985, issued by the Bank of New Zealand. The first draft was in the sum of
US$724.57 payable to "C.R. Harrington," while the second draft was in the sum of
US$2,004.76 payable to "Servants C/C.R. Harrington."
The PCIB, on the other hand, alleged that it was a certain Sophia La'O, as a
representative of Harrington, who presented the bank drafts for deposit.
Upon receipt of the bank drafts, Josephine asked her immediate supervisor, Eleanor
Flores, whether the drafts payable to "Servants C/C.R. Harrington" were acceptable
for deposit to the savings account of Harrington. When Flores answered in the
affirmative, and after receiving from the bank's foreign exchange supervision a
Philippine Currency conversion of the amounts reflected in the drafts, Josephine
received the deposit slip. Thereafter, the deposits were duly entered in Harrington's
savings account.
On two (2) separate dates, a certain individual representing himself as Harrington
withdrew the sums of P45,000.00 and P5,600.00. Subsequently, the bank discovered
that the person who made the withdrawals was an impostor. Thus, the bank had to
pay Harrington P50,600.00 representing the amounts of the bank drafts in his name.
The PCIB issued a memorandum asking Josephine to explain why no disciplinary
action should be taken against her for having accepted the bank drafts for deposits.
Josephine reasoned that being a new teller she was not yet fully oriented with the
various aspects of the job. She further alleged that she had asked the approval of her
immediate supervisor prior to receiving the deposits.
On November 14, 1985, the PCIB deducted the amount of P-423.38 from Josephine's
salary. Josephine wrote the PCIB to ask why the deduction was made.
After due investigation on the matter, the PCIB issued another memorandum finding
Josephine grossly negligent and liable for performing acts in violation of established
operating procedures. The memorandum required Josephine to pay the amount of P-
50,600.00 through deductions in her salary, allowance, bonuses, and profit sharing
until the amount is fully paid.
Josephine wrote the PCIB to ask for the basis of its findings that she was grossly
negligent and liable to pay the amount of P50,600.00. During trial, the RTC found that
the PCIB did not even respond to this letter. PCIB, however, alleged that it had
replied to Josephine's letter, and explained that she was afforded due process and
the deductions made prior to January 15, 1986, were merely a withholding pending
14
the investigation.
The PCIB also admitted that as early as January 15, 1986, it had started to deduct
the amount of P 200.00 from Josephine's salary as well as 50% of her bonuses and
profit sharing.
On February 10, 1986, Josephine filed a complaint for damages with prayer for
preliminary injunction before the RTC of Makati City. She claimed that the PCIB had
abused its right by gradually deducting from her salary the amount the bank had to
pay Harrington.
The PCIB filed its answer with counterclaims and a separate complaint with the RTC
of Makati City, which was raffled to Branch 149.
In its May 25, 1999 decision, the RTC rendered judgment in favor of Josephine and
ordered the PCIB to pay her actual damages in the amount of P5,006.00 plus 12%
interest from filing of the complaint; moral damages in the amount of PI 50,000.00;
and attorney's fees in the amount of P-50,000.00.
The RTC considered the PCIB's manner of deducting from the salary and allowance
of Josephine as having been rendered in bad faith and contrary to morals, good
custom, and public policy. This was borne out by the fact that the PCIB had already
deducted from her salary before Josephine received the memorandum finding her
liable for the P50,600.00. In addition, while there were other individuals involved in
this incident, it appeared that it was only Josephine who was made solely
responsible.
On appeal, the PCIB argued that the RTC had no jurisdiction over the case because it
was a labor dispute, which the labor tribunals are more competent to resolve. It also
maintained that there was no factual or legal basis for the RTC to make it liable for
damages and to pay Josephine.
In its May 23, 2011 decision, the CA affirmed the May 25, 1999 RTC decision. It held
that the PCIB was estopped from questioning the jurisdiction of the RTC because it
had filed an answer with counterclaims and even initiated a separate case before a
different branch of the RTC. It upheld the RTC's findings and conclusion in awarding
damages and attorney's fees to Josephine because there was no reason to disturb
them.
The CA, subsequently, denied the PCIB's motion for reconsideration on December 7,
2011; hence, the PCIB filed the present petition.
First, the PCIB contends that the CA gravely erred in ruling that its actions were in
total and wanton disregard of Articles 19 and 21 of the Civil Code because the
courts a quo summarily imputed bad faith on how it had treated Josephine.
Second, the PCIB maintains that the CA gravely erred in awarding moral damages
and attorney's fees to Josephine absent any basis for it while averring that bad faith
cannot be presumed and that Josephine had failed to prove it with clear and
convincing evidence.
OUR RULING
We DENY the present petition for lack of merit.
The civil courts have jurisdiction
over a case when the cause of action
does not have a reasonable causal
connection from the employer-employee
relationship.
Although the PCIB opted not to raise the issue before this Court, we find it prudent
and imperative to justify why the RTC had jurisdiction to take cognizance of
Josephine's complaint despite the fact that her cause of action arose because her
employer arbitrarily deducted from her salary - an act expressly prohibited by our
labor laws.4
Article 224 [217] of the Labor Code provides that the Labor Arbiters have original and
exclusive jurisdiction to hear and decide claims for actual, moral, exemplary, and
other forms of damages arising from employer-employee relations. The legislative
intent appears clear to allow Labor Arbiters to award to an employee not only the
reliefs provided by our labor laws, but also moral and other forms of damages
governed by the Civil Code. Specifically, we have mentioned, in fact, that a complaint
for damages under Articles 19, 20, and 21 of the Civil Code would not suffice to keep
the case without the jurisdictional boundaries of our labor courts -especially when the
claim for damages is interwoven with a labor dispute.5
Nevertheless, when the cause of action has no reasonable connection with any of the
claims provided for in Article 224 of the Labor Code, jurisdiction over the action is with
the regular courts. 6 Here, since Josephine's cause of action is based on a quasi-
delict or tort under Article 19 in relation to Article 21 of the Civil Code, the civil courts
(not the labor tribunals) have jurisdiction over the subject matter of this case.
To be sure, the case of Singapore Airlines Ltd. v. Ernani Cruz Paño is
enlightening:chanRoblesvirtualLawlibrary
Upon the facts and issues involved, jurisdiction over the present controversy must be
held to belong to the civil courts. While seemingly petitioner's claim for damages
arises from employer-employee relations, and the latest amendment to Article 217 of
the Labor Code under PD No. 1691 and BP Big. 130 provides that all other claims
arising from employer-employee relationship are cognizable by Labor Arbiters, in
essence, petitioner's claim for damages is grounded on the "wanton failure and
refusal" without just cause of private respondent Cruz to report for duty despite
repeated notices served upon him of the disapproval of his application for leave of
absence without pay. This, coupled with the further averment that Cruz "maliciously
and with bad faith" violated the terms and conditions of the conversion training course
agreement to the damage of petitioner removes the present controversy from the
coverage of the Labor Code and brings it within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per se by private
respondent Cruz of his job as the latter was not required in the Complaint to report
back to work but on the manner and consequent effects of such abandonment of
15
work translated in terms of the damages which petitioner had to
suffer.7 [emphasis and underscoring supplied]cralawlawlibrary
In the present case, Josephine filed a civil complaint for damages against the PCIB
based on how her employer quickly concluded that she was negligent and hence
arbitrarily started to deduct from her salary. Clearly, without having to dwell on the
merits of the case, Josephine opted to invoke the jurisdiction of our civil courts
because her right to fair treatment was violated.
The discussion in Quisaba v. Sta. Ines-Melale Veneer & Plywood, Inc. is just as
relevant as it is illuminating on the present case, to wit:chanRoblesvirtualLawlibrary
Although the acts complained of seemingly appear to constitute "matters involving
employee-employer relations" as Quisaba's dismissal was the severance of a
preexisting employee-employer relation, his complaint is grounded not on his
dismissal per se as in fact he does not ask for reinstatement or backwages, but on
the manner of his dismissal and the consequent effects of such dismissal.
xxx
The "right" of the respondents to dismiss Quisaba should not be confused with
the mannerin which the right was exercised and the effects flowing therefrom. If the
dismissal was done anti-socially or oppressively, as the complaint alleges, then the
respondents violated article 1701 of the Civil Code which prohibits acts of oppression
by either capital or labor against the other, and article 21, which makes a person
liable for damages if he willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy, the sanction for which, by way of
moral damages, is provided in article 2219, no. 10. (Cf. Phil. Refining Co. v.
Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107).8cralawlawlibrary
From the foregoing, the case at bar is intrinsically concerned with a civil dispute
because it has something to do with Josephine's right under Article 19 of the Civil
Code, and does not involve an existing employer-employee relation within the
meaning of Article 224 of the Labor Code. Josephine's complaint was, therefore,
properly filed with and exclusively cognizable by the RTC.
Questions on whether there was a
preponderance of evidence to justify the
award of damages or whether there was
a causal connection between the given
set of facts and the damage suffered by
the private complainant are questions of fact.
The Court's jurisdiction under a Rule 45 review is limited to reviewing perceived errors
of law, which the lower courts may have committed. The resolution of factual issues is
the function of the lower courts whose findings, when aptly supported by evidence,
bind this Court. This is especially true when the CA affirms the RTC's findings. While
this Court, under established exceptional circumstances, had deviated from the above
rule, we do not find this case to be under any of the exceptions.
Essentially, what the PCIB seeks is a relief from the Court on the issue of the
propriety of the award of damages. On this point alone, the petition must fail, as a
Rule 45 petition bars us from the consideration of factual issues, especially when both
the RTC and the CA were consistent with their rulings.
Nevertheless, we still affirm the assailed CA rulings even if we were to disregard
these established doctrinal rules.
Article 19 of the Civil Code provides that every person in the exercise of his rights and
in the performance of his duties must act with justice, give everyone his due, and
observe honesty and good faith. The principle embodied in this provision is more
commonly known as the "abuse of right principle." The legal sanctions for violations of
this fundamental principle are found in Articles 209 and 2110 of the Civil Code. We
explained how these two provisions correlate with each other in GF Equity, Inc. v.
Valenzona:chanRoblesvirtualLawlibrary
[Article 19], known to contain what is commonly referred to as the principle of abuse
of rights, sets certain standards which must be observed not only in the exercise of
one's rights but also in the performance of one's duties. These standards are the
following: to act with justice; to give everyone his due; and to observe honesty and
good faith. The law, therefore, recognizes a primordial limitation on all rights; that in
their exercise, the norms of human conduct set forth in Article 19 must be
observed. A right, though by itself legal because recognized or granted by law
as such, may nevertheless become the source of some illegality. When a right
is exercised in a manner which does not conform with the norms enshrined in
Article 19 and results in damage to another, a legal wrong is thereby committed
for which the wrongdoer must be held responsible. But while Article 19 lays down
a rule of conduct for the government of human' relations and for the maintenance of
social order, it does not provide a remedy for its violation. Generally, an action for
damages under either Article 20 or Article 21 would be proper.11 [Emphasis
supplied]cralawlawlibrary
Both the RTC and the CA found the acts of the PCIB were in clear violation of Article
19 of the Civil Code and held the PCIB liable for damages. While the PCIB has a right
to penalize employees for acts of negligence, the right must not be exercised unjustly
and illegally. In the instant case, the PCIB made deductions on Josephine's salary
even if the investigation was still pending. Belatedly, the PCIB issued a memorandum
finding Josephine grossly negligent and requiring her to pay the amount which the
bank erroneously paid to Harrington's impostor. When Josephine asked for legal and
factual basis for the finding of negligence, the PCIB refused to give any. Moreover,
the PCIB continued to make deductions on Josephine's salary, allowances, and
bonuses.
The trial court and the CA also noted that while Josephine was penalized, other
employees of the bank involved in the subject transactions were not. It was Josephine
who was made solely responsible for the loss without giving any basis therefor. It was
emphasized that the subject deposit could not have been received by the bank and
entered in Harrington's savings account without the participation of the other bank
employees. The PCIB could have exercised prudence before taking oppressive
actions against Josephine.
16
All told, we find nothing in the record which would warrant the reversal of the position
held by the RTC and the CA. Based on the above discussion, we find the award of
moral damages and attorney's fees in Josephine's favor proper.
WHEREFORE, the petition for review on certiorari is DENIED and consequently, the
May 23, 2011 decision and the December 7, 2011 resolution of the Court of Appeals
in CA-G.R. CV No. 68288 are AFFIRMED in toto.
5. Kiok Loy v. NLRC, G.R. No. L-54334, January 22, 1986
G.R. No. L-54334 January 22, 1986
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM
PLANT, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG
KILUSAN NG PAGGAWA (KILUSAN), respondents.
CUEVAS, J.:
Petition for certiorari to annul the decision 1 of the National Labor Relations
Commission (NLRC) dated July 20, 1979 which found petitioner Sweden Ice Cream
guilty of unfair labor practice for unjustified refusal to bargain, in violation of par. (g) of
Article 2492 of the New Labor Code, 3 and declared the draft proposal of the Union for
a collective bargaining agreement as the governing collective bargaining agreement
between the employees and the management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the Pambansang Kilusang
Paggawa (Union for short), a legitimate late labor federation, won and was
subsequently certified in a resolution dated November 29, 1978 by the Bureau of
Labor Relations as the sole and exclusive bargaining agent of the rank-and-file
employees of Sweden Ice Cream Plant (Company for short). The Company's motion
for reconsideration of the said resolution was denied on January 25, 1978.
Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the
Company with two copies of its proposed collective bargaining agreement. At the
same time, it requested the Company for its counter proposals. Eliciting no response
to the aforesaid request, the Union again wrote the Company reiterating its request
for collective bargaining negotiations and for the Company to furnish them with its
counter proposals. Both requests were ignored and remained unacted upon by the
Company.
Left with no other alternative in its attempt to bring the Company to the bargaining
table, the Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of
Labor Relations (BLR) on ground of unresolved economic issues in collective
bargaining. 5
Conciliation proceedings then followed during the thirty-day statutory cooling-off
period. But all attempts towards an amicable settlement failed, prompting the Bureau
of Labor Relations to certify the case to the National Labor Relations Commission
(NLRC) for compulsory arbitration pursuant to Presidential Decree No. 823, as
amended. The labor arbiter, Andres Fidelino, to whom the case was assigned, set the
initial hearing for April 29, 1979. For failure however, of the parties to submit their
respective position papers as required, the said hearing was cancelled and reset to
another date. Meanwhile, the Union submitted its position paper. The Company did
not, and instead requested for a resetting which was granted. The Company was
directed anew to submit its financial statements for the years 1976, 1977, and 1978.
The case was further reset to May 11, 1979 due to the withdrawal of the Company's
counsel of record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato
Panganiban formally entered his appearance as counsel for the Company only to
request for another postponement allegedly for the purpose of acquainting himself
with the case. Meanwhile, the Company submitted its position paper on May 28,
1979.
When the case was called for hearing on June 4, 1979 as scheduled, the Company's
representative, Mr. Ching, who was supposed to be examined, failed to appear. Atty.
Panganiban then requested for another postponement which the labor arbiter denied.
He also ruled that the Company has waived its right to present further evidence and,
therefore, considered the case submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National
Labor Relations Commission. On July 20, 1979, the National Labor Relations
Commission rendered its decision, the dispositive portion of which reads as follows:
WHEREFORE, the respondent Sweden Ice Cream is hereby
declared guilty of unjustified refusal to bargain, in violation of
Section (g) Article 248 (now Article 249), of P.D. 442, as amended.
Further, the draft proposal for a collective bargaining agreement
(Exh. "E ") hereto attached and made an integral part of this
decision, sent by the Union (Private respondent) to the respondent
(petitioner herein) and which is hereby found to be reasonable
under the premises, is hereby declared to be the collective
agreement which should govern the relationship between the
parties herein.
SO ORDERED. (Emphasis supplied)
Petitioner now comes before Us assailing the aforesaid decision contending that the
National Labor Relations Commission acted without or in excess of its jurisdiction or
with grave abuse of discretion amounting to lack of jurisdiction in rendering the
challenged decision. On August 4, 1980, this Court dismissed the petition for lack of
17
merit. Upon motion of the petitioner, however, the Resolution of dismissal was
reconsidered and the petition was given due course in a Resolution dated April 1,
1981.
Petitioner Company now maintains that its right to procedural due process has been
violated when it was precluded from presenting further evidence in support of its
stand and when its request for further postponement was denied. Petitioner further
contends that the National Labor Relations Commission's finding of unfair labor
practice for refusal to bargain is not supported by law and the evidence considering
that it was only on May 24, 1979 when the Union furnished them with a copy of the
proposed Collective Bargaining Agreement and it was only then that they came to
know of the Union's demands; and finally, that the Collective Bargaining Agreement
approved and adopted by the National Labor Relations Commission is unreasonable
and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.
Collective bargaining which is defined as negotiations towards a collective
agreement,6 is one of the democratic frameworks under the New Labor Code,
designed to stabilize the relation between labor and management and to create a
climate of sound and stable industrial peace. It is a mutual responsibility of the
employer and the Union and is characterized as a legal obligation. So much so that
Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an
employer to refuse "to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages, hours of work, and all
other terms and conditions of employment including proposals for adjusting any
grievance or question arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.
While it is a mutual obligation of the parties to bargain, the employer, however, is not
under any legal duty to initiate contract negotiation.7 The mechanics of collective
bargaining is set in motion only when the following jurisdictional preconditions are
present, namely, (1) possession of the status of majority representation of the
employees' representative in accordance with any of the means of selection or
designation provided for by the Labor Code; (2) proof of majority representation; and
(3) a demand to bargain under Article 251, par. (a) of the New Labor Code . ... all of
which preconditions are undisputedly present in the instant case.
From the over-all conduct of petitioner company in relation to the task of negotiation,
there can be no doubt that the Union has a valid cause to complain against its
(Company's) attitude, the totality of which is indicative of the latter's disregard of, and
failure to live up to, what is enjoined by the Labor Code — to bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that petitioner
Company is GUILTY of unfair labor practice. It has been indubitably established that
(1) respondent Union was a duly certified bargaining agent; (2) it made a definite
request to bargain, accompanied with a copy of the proposed Collective Bargaining
Agreement, to the Company not only once but twice which were left unanswered and
unacted upon; and (3) the Company made no counter proposal whatsoever all of
which conclusively indicate lack of a sincere desire to negotiate. 8 A Company's
refusal to make counter proposal if considered in relation to the entire bargaining
process, may indicate bad faith and this is specially true where the Union's request for
a counter proposal is left unanswered. 9 Even during the period of compulsory
arbitration before the NLRC, petitioner Company's approach and attitude-stalling the
negotiation by a series of postponements, non-appearance at the hearing conducted,
and undue delay in submitting its financial statements, lead to no other conclusion
except that it is unwilling to negotiate and reach an agreement with the Union.
Petitioner has not at any instance, evinced good faith or willingness to discuss freely
and fully the claims and demands set forth by the Union much less justify its
opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers
Union (PAFLU) vs. Herald Publications 11 the rule had been laid down that "unfair
labor practice is committed when it is shown that the respondent employer, after
having been served with a written bargaining proposal by the petitioning Union, did
not even bother to submit an answer or reply to the said proposal This doctrine was
reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein it was further
ruled that "while the law does not compel the parties to reach an agreement, it does
contemplate that both parties will approach the negotiation with an open mind and
make a reasonable effort to reach a common ground of agreement
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed,
petitioner capitalizes on the issue of due process claiming, that it was denied the right
to be heard and present its side when the Labor Arbiter denied the Company's motion
for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various
postponements granted in its behalf, the claimed denial of due process appeared
totally bereft of any legal and factual support. As herein earlier stated, petitioner had
not even honored respondent Union with any reply to the latter's successive letters,
all geared towards bringing the Company to the bargaining table. It did not even
bother to furnish or serve the Union with its counter proposal despite persistent
requests made therefor. Certainly, the moves and overall behavior of petitioner-
company were in total derogation of the policy enshrined in the New Labor Code
which is aimed towards expediting settlement of economic disputes. Hence, this
Court is not prepared to affix its imprimatur to such an illegal scheme and dubious
maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective
Bargaining Agreement which was approved and adopted by the NLRC is a total nullity
for it lacks the company's consent, much less its argument that once the Collective
Bargaining Agreement is implemented, the Company will face the prospect of closing
down because it has to pay a staggering amount of economic benefits to the Union
that will equal if not exceed its capital. Such a stand and the evidence in support
thereof should have been presented before the Labor Arbiter which is the proper
forum for the purpose.
18
We agree with the pronouncement that it is not obligatory upon either side of a labor
controversy to precipitately accept or agree to the proposals of the other. But an
erring party should not be tolerated and allowed with impunity to resort to schemes
feigning negotiations by going through empty gestures. 13 More so, as in the instant
case, where the intervention of the National Labor Relations Commission was
properly sought for after conciliation efforts undertaken by the BLR failed. The instant
case being a certified one, it must be resolved by the NLRC pursuant to the mandate
of P.D. 873, as amended, which authorizes the said body to determine the
reasonableness of the terms and conditions of employment embodied in any
Collective Bargaining Agreement. To that extent, utmost deference to its findings of
reasonableness of any Collective Bargaining Agreement as the governing agreement
by the employees and management must be accorded due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order
issued on August 27, 1980, is LIFTED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
6. Scout Ramon V. Albano Memorial College v. Noriel, 85 SCRA 494 (1978)
G.R. No. L-48347 October 3, 1978
SCOUT RAMON V. ALBANO MEMORIAL COLLEGE, petitioner,
vs.
HON. CARMELO C. NORIEL, and FEDERATION OF FREE WORKERS (Scout
Ramon V. Albano Memorial College Chapter), respondents.
Martiniano A. Valdisimo for petitioner.
Jaime D. Lauron for private respondent.
Solicitor General Estelito P. Mendoza Assistant Solicitor General Reynato S. Puno
and Solicitor Jesus V. Diaz for the Public Respondent.
FERNANDO, Acting C.J.:
The grave abuse of discretion imputed to respondent Director of Labor Relations
Carmelo C. Noriel, when he ordered a certification election at the instance of private
respondent, Federation of Free Workers, was his alleged failure to abide by previous
rulings of the Department of Labor. Assurring such to be the case, the point raised is
not decisive of this controversy, As was made apparent in the Comment of Solicitor
General Estelito P. Mendoza, 1 the challenged order conforms to the decisions of this
Court. Where the law is concerned, it is this Tribunal that speaks authoritatively.-
Petitioner has failed to make out a case. We dismiss.
The controversy began with the filing of a petition for certification election on
September 22, 1977 by the Scout Ramon V. Albano Memorial College Chapter of
private respondent labor union. It alleged that the written consent of 67 employees
out of an alleged total working force of 200, more or less, had been secured. There
was, on October 21, 1977, a motion to dismiss the petition filed by the employer, the
present petitioner. It was based on the lack of the 30% consent requirement as there
were 250 employees, the required thirty percent of the said work force being 75. With
the figure of the actual number of employees in the school establishment thus
supplied, private respondent submitted on October 26, 1977 the additional signatures
of 22 employees in support of its plea for a certification election. There was an
opposition on the part of the present petitioner. It was filed on November 2, 1977.
Then came, fifteen days later, an order from the Med-Arbiter assigned to the case
dismissing the petition for certification on the ground that the compliance with the
30% requirement must be shown as of the time of its filing. Private respondent
appealed to the Bureau of Labor Relations such order of the Med-Arbiter dismissing
its petition. Respondent Noriel on February 8, 1978 sustained the appeal, ordering a
certification election at the Scout Ramon V. Albano Memorial College within twenty
(20) days from receipt thereof, with the following as contending unions: 1. FFW
(Scout Ramon V. Albano Memorial College Chapter): 2. No Union, Petitioner moved
for its reconsideration, but it did not succeed. An appeal to the Secretary of Labor was
likewise of no avail Hence this petition.
As set forth at the outset, there, is no merit to this petition.
1. The present Labor Code did not take effect until November 1,1974. 2 The day
before, on October 31, 1974 this Court, speaking through Justice E. Fernandez now
retired, in Confederation of Citizens Labor union vs. National Labor Relations
Commission, 3 held fast to the existing doctrine emphasizing the significance of a
certification election in a regime of collective bargaining. Then in the first decision
after its effectivity, United Employees Union of Gelmart Industries v. Noriel, 4 It was
pointed out: The constitute ion of collective bargaining is. to recall Cox a prime
manifestation of industrial democracy at, work. The two parties to the relationship,
tabor and management, make their own rules b coming to terms. That is to govern
themselves in matters that really, count. As labor, however, is composed of a number
of individuals, it is indispensable that they be represented by a labor organization of
their choice. Thus may be discerned how crucial is a certification election. So our
decisions from the earliest case of PLDT Employees Union v. PLDT Co. Free
Telephone Workers Union to the latest, Philippine Communications, Electronics &
Electricity Workers' Federation PCWF v. Court of Industrial Relations, had made
clear." 5 The same principle was again given expression in language equally emphatic
in the subsequent case of Philippine Association of Free Labor Unions v. Bureau of
Labor Relations: 6 "Petitioner thus appears to be woefully lacking in awareness of the
significance of a certification election for the collective bargaining process. It is the
fairest and most effective way of determining which labor organization can truly
represent the working force. It is a fundamental postulate that the will of the majority
given expression in an honest election with freedom on the part of the voters to make
19
their choice, is controlling. No better device can assure the institution of industrial
democracy with the two parties to a business enterprise, management and labor,
establishing a regime of self-rule. 7 That is to accord respect to the policy of the Labor
Code, indisputably partial to the holding of a certification election so as to arrive in a
manner definitive and certain concerning the choice of the labor organization to
represent the workers in a collective bargaining unit. 8
2. Conformably to the above basic concept, this Court, in the aforesaid Philippine
Association of Free Labor Unions decision, recognized that the Bureau of Labor
Relations, in the exercise of sound discretion, may order a certification election
notwithstanding the failure to meet the 30% requirement. Once that requisite is
complied with, however, the Code makes, clear that "it shall be mandatory for the
Bureau to conduct a Identification election for the purpose of determining the
representative of the employees in the appropriate bargaining unit and certify the
winner as the exclusive collective bargaining representative of all the employees in
the unit." 9 Necessarily then, the argument of petitioner as to the inability of private
respondent to come up with the required signatures when the petition was first filed
falls to the ground. At any rate, additional signatures were subsequently secured. The
allegation that there was thereafter a retraction on the part of a number of such
signatories lends added support to the decision arrived at by respondent Noriel that
the only way of determining with accuracy the true will of the personnel involved in the
bargaining unit is to conduct a certification petition At any rate. that s a factual matter,
the resolution of which by respondent Noriel is entitled to respect by this Tribunal. 10
3. There is relevance likewise to this excerpt from Monark International, Inc. v. Noriel,
cited in the Comment of Solicitor General Mendoza: "There is another infirmity from
which the petition suffers. It was filed by the employer, the adversary in the collective
bargaining process. Precisely, the institution of collective bargaining is designed to
assure that the other party, labor, is free to choose its representative. To resolve any
doubt on the matter, a certification election, to repeat, is the most appropriate means
of ascertaining its will. It is true that there may be circumstances where the interest of
the employer calls for its being heard on the matter. An obvious instance is where it
invokes the obstacle interposed by the contract-bar rule. This case certainly does not
fall within the exception. Sound policy dictates that as much as possible,
management is to maintain a strictly hands-off policy. For if it does not, it may lend
itself to the legitimate suspicion that it is partial to one of the contending unions. That
is repugnant to the concept of collective bargaining. That is against the letter and
spirit of welfare legislation intended to protect labor and to promote social justice. The
judiciary then should be the last to look with tolerance at such efforts of an employer
to take part in the process leading to the free and untrammeled choice of the
exclusive bargaining representative of the workers." 11
WHEREFORE, the petition for certiorari is dismissed, with Costs. This decision is
immediately executory. The restraining order is hereby lifted. A certification election
must be conducted forthwith.
7. Philippine Airlines, Inc. v. NLRC, 225 SCRA 301 (1993)
G.R. No. 85985 August 13, 1993
PHILIPPINE AIRLINES, INC. (PAL), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P.
ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION
(PALEA), respondents.
Solon Garcia for petitioner.
Adolpho M. Guerzon for respondent PALEA.
MELO, J.:
In the instant petition for certiorari, the Court is presented the issue of whether or not
the formulation of a Code of Discipline among employees is a shared responsibility of
the employer and the employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966
Code of Discipline. The Code was circulated among the employees and was
immediately implemented, and some employees were forthwith subjected to the
disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA)
filed a complaint before the National Labor Relations Commission (NLRC) for unfair
labor practice (Case No. NCR-7-2051-85) with the following remarks: "ULP with
arbitrary implementation of PAL's Code of Discipline without notice and prior
discussion with Union by Management" (Rollo, p. 41). In its position paper, PALEA
contended that PAL, by its unilateral implementation of the Code, was guilty of unfair
labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the
Labor Code. PALEA alleged that copies of the Code had been circulated in limited
numbers; that being penal in nature the Code must conform with the requirements of
sufficient publication, and that the Code was arbitrary, oppressive, and prejudicial to
the rights of the employees. It prayed that implementation of the Code be held in
abeyance; that PAL should discuss the substance of the Code with PALEA; that
employees dismissed under the Code be reinstated and their cases subjected to
further hearing; and that PAL be declared guilty of unfair labor practice and be
ordered to pay damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer
to prescibe rules and regulations regarding employess' conduct in carrying out their
duties and functions, and alleging that by implementing the Code, it had not violated
the collective bargaining agreement (CBA) or any provision of the Labor Code.
Assailing the complaint as unsupported by evidence, PAL maintained that Article 253
of the Labor Code cited by PALEA reffered to the requirements for negotiating a CBA
which was inapplicable as indeed the current CBA had been negotiated.
20
In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the
Labor Code was violated when PAL unilaterally implemented the Code, and cited
provisions of Articles IV and I of Chapter II of the Code as defective for, respectively,
running counter to the construction of penal laws and making punishable any offense
within PAL's contemplation. These provisions are the following:
Sec. 2. Non-exclusivity. — This Code does not contain the entirety
of the rules and regulations of the company. Every employee is
bound to comply with all applicable rules, regulations, policies,
procedures and standards, including standards of quality,
productivity and behaviour, as issued and promulgated by the
company through its duly authorized officials. Any violations thereof
shall be punishable with a penalty to be determined by the gravity
and/or frequency of the offense.
Sec. 7. Cumulative Record. — An employee's record of offenses
shall be cumulative. The penalty for an offense shall be determined
on the basis of his past record of offenses of any nature or the
absence thereof. The more habitual an offender has been, the
greater shall be the penalty for the latest offense. Thus, an
employee may be dismissed if the number of his past offenses
warrants such penalty in the judgment of management even if each
offense considered separately may not warrant dismissal. Habitual
offenders or recidivists have no place in PAL. On the other hand,
due regard shall be given to the length of time between commission
of individual offenses to determine whether the employee's conduct
may indicate occasional lapses (which may nevertheless require
sterner disciplinary action) or a pattern of incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference
but they failed to appear at the scheduled date. Interpreting such failure as a waiver
of the parties' right to present evidence, the labor arbiter considered the case
submitted for decision. On November 7, 1986, a decision was rendered finding no
bad faith on the part of PAL in adopting the Code and ruling that no unfair labor
practice had been committed. However, the arbiter held that PAL was "not totally fault
free" considering that while the issuance of rules and regulations governing the
conduct of employees is a "legitimate management prerogative" such rules and
regulations must meet the test of "reasonableness, propriety and fairness." She found
Section 1 of the Code aforequoted as "an all embracing and all encompassing
provision that makes punishable any offense one can think of in the company"; while
Section 7, likewise quoted above, is "objectionable for it violates the rule against
double jeopardy thereby ushering in two or more punishment for the same
misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was amply
circulated." Noting that PAL's assertion that it had furnished all its employees copies
of the Code is unsupported by documentary evidence, she stated that such "failure"
on the part of PAL resulted in the imposition of penalties on employees who thought
all the while that the 1966 Code was still being followed. Thus, the arbiter concluded
that "(t)he phrase ignorance of the law excuses no one from compliance . . . finds
application only after it has been conclusively shown that the law was circulated to all
the parties concerned and efforts to disseminate information regarding the new law
have been exerted. (p. 39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby
ordered as follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under
the New Code of Discipline and remand the same for further
hearing; and
3. Discuss with PALEA the objectionable provisions specifically
tackled in the body of the decision.
All other claims of the complainant union (is) [are] hereby,
dismissed for lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner
Encarnacion, with Presiding Commissioner Bonto-Perez and Commissioner Maglaya
concurring, found no evidence of unfair labor practice committed by PAL and affirmed
the dismissal of PALEA's charge. Nonetheless, the NLRC made the following
observations:
Indeed, failure of management to discuss the provisions of a
contemplated code of discipline which shall govern the conduct of
its employees would result in the erosion and deterioration of an
otherwise harmonious and smooth relationship between them as
did happen in the instant case. There is no dispute that adoption of
rules of conduct or discipline is a prerogative of management and is
imperative and essential if an industry, has to survive in a
competitive world. But labor climate has progressed, too. In the
Philippine scene, at no time in our contemporary history is the need
for a cooperative, supportive and smooth relationship between
labor and management more keenly felt if we are to survive
economically. Management can no longer exclude labor in the
deliberation and adoption of rules and regulations that will affect
them.
The complainant union in this case has the right to feel isolated in
the adoption of the New Code of Discipline. The Code of Discipline
involves security of tenure and loss of employment — a property
right! It is time that management realizes that to attain effectiveness
in its conduct rules, there should be candidness and openness by
21
 Management and participation by the union, representing its
members. In fact, our Constitution has recognized the principle of
"shared responsibility" between employers and workers and has
likewise recognized the right of workers to participate in "policy and
decision-making process affecting their rights . . ." The latter
provision was interpreted by the Constitutional Commissioners to
mean participation in "management"' (Record of the Constitutional
Commission, Vol. II).
In a sense, participation by the union in the adoption of the code if
conduct could have accelerated and enhanced their feelings of
belonging and would have resulted in cooperation rather than
resistance to the Code. In fact, labor-management cooperation is
now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original
Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed
decision in the sense that the New Code of Discipline should be
reviewed and discussed with complainant union, particularly the
disputed provisions [.] (T)hereafter, respondent is directed to
furnish each employee with a copy of the appealed Code of
Discipline. The pending cases adverted to in the appealed decision
if still in the arbitral level, should be reconsidered by the respondent
Philippine Air Lines. Other dispositions of the Labor Arbiter are
sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents with grave
abuse of discretion in: (a) directing PAL "to share its management prerogative of
formulating a Code of Discipline"; (b) engaging in quasi-judicial legislation in ordering
PAL to share said prerogative with the union; (c) deciding beyond the issue of unfair
labor practice, and (d) requiring PAL to reconsider pending cases still in the arbitral
level (p. 7, Petition; p. 8, Rollo.)
As stated above, the Principal issue submitted for resolution in the instant petition is
whether management may be compelled to share with the union or its employees its
prerogative of formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no law which
mandated the sharing of responsibility therefor between employer and employee.
Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715,
amending Article 211 of the Labor Code, that the law explicitly considered it a State
policy "(t)o ensure the participation of workers in decision and policy-making
processes affecting the rights, duties and welfare." However, even in the absence of
said clear provision of law, the exercise of management prerogatives was never
considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it was held
that management's prerogatives must be without abuse of discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]),
we upheld the company's right to implement a new system of distributing its products,
but gave the following caveat:
So long as a company's management prerogatives are exercised in
good faith for the advancement of the employer's interest and not
for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this
Court will uphold them.
(at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives
is not unlimited. It is circumscribed by limitations found in law, a collective bargaining
agreement, or the general principles of fair play and justice (University of Sto. Tomas
vs. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated in Abbott Laboratories
(Phil.), vs. NLRC (154 713 [1987]), it must be duly established that the prerogative
being invoked is clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they are not
purely business-oriented nor do they concern the management aspect of the
business of the company as in the San Miguel case. The provisions of the Code
clearly have repercusions on the employee's right to security of tenure. The
implementation of the provisions may result in the deprivation of an employee's
means of livelihood which, as correctly pointed out by the NLRC, is a property right
(Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these
aspects of the case which border on infringement of constitutional rights, we must
uphold the constitutional requirements for the protection of labor and the promotion of
social justice, for these factors, according to Justice Isagani Cruz, tilt "the scales of
justice when there is doubt, in favor of the worker" (Employees Association of the
Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991] 635).
Verily, a line must be drawn between management prerogatives regarding business
operations per se and those which affect the rights of the employees. In treating the
latter, management should see to it that its employees are at least properly informed
of its decisions or modes action. PAL asserts that all its employees have been
furnished copies of the Code. Public respondents found to the contrary, which finding,
to say the least is entitled to great respect.
PAL posits the view that by signing the 1989-1991 collective bargaining agreement,
on June 27, 1990, PALEA in effect, recognized PAL's "exclusive right to make and
enforce company rules and regulations to carry out the functions of
management without having to discuss the same with PALEA and much less, obtain
the latter's conformity thereto" (pp. 11-12, Petitioner's Memorandum; pp 180-
181, Rollo.) Petitioner's view is based on the following provision of the agreement:
22
 The Association recognizes the right of the Company to determine
matters of management it policy and Company operations and to 8. Chu v. NLRC, 232 SCRA 764 (1994)
direct its manpower. Management of the Company includes the
right to organize, plan, direct and control operations, to hire, assign
employees to work, transfer employees from one department, to G.R. No. 106107 June 2, 1994
another, to promote, demote, discipline, suspend or discharge
employees for just cause; to lay-off employees for valid and legal
causes, to introduce new or improved methods or facilities or to AGUSTIN CHU, petitioner,
change existing methods or facilities and the right to make and vs.
enforce Company rules and regulations to carry out the functions of NATIONAL LABOR RELATIONS COMMISSION and VICTORIAS MILLING
management. COMPANY, INC. respondents.

The exercise by management of its prerogative shall be done in a Legaspi, Rufon, Necesario & Asso. Law Office for petitioner.
just reasonable, humane and/or lawful manner.
Decena, Tabat, Jardaleza & Tañoso Law Office for private respondent.
Such provision in the collective bargaining agreement may not be interpreted as
cession of employees' rights to participate in the deliberation of matters which may
affect their rights and the formulation of policies relative thereto. And one such mater
is the formulation of a code of discipline. QUIASON, J.:

Indeed, industrial peace cannot be achieved if the employees are denied their just This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse
participation in the discussion of matters affecting their rights. Thus, even before and set aside the Decision of the Fourth Division of the National Labor Relations
Article 211 of the labor Code (P.D. 442) was amended by Republic Act No. 6715, it Commission (NLRC) in Case No. 06-02-10081-89 which dismissed petitioner’s
was already declared a policy of the State, "(d) To promote the enlightenment of appeal and its Resolution dated March 20, 1992, which denied petitioner’s motion for
workers concerning their rights and obligations . . . as employees." This was, of reconsideration.
course, amplified by Republic Act No 6715 when it decreed the "participation of
workers in decision and policy making processes affecting their rights, duties and
welfare." PAL's position that it cannot be saddled with the "obligation" of sharing We dismiss the petition.
management prerogatives as during the formulation of the Code, Republic Act No.
6715 had not yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), I
cannot thus be sustained. While such "obligation" was not yet founded in law when
the Code was formulated, the attainment of a harmonious labor-management
Petitioner retired from the service of private respondent upon reaching the age of
relationship and the then already existing state policy of enlightening workers
sixty under its regular retirement program. He was granted an extention of service by
concerning their rights as employees demand no less than the observance of
the Board of Directors of private respondent under a "Special Contract of
transparency in managerial moves affecting employees' rights.
Employment." The contract provided, inter alia, that its term was for a period of one
year commencing on August 1, 1988; that petitioner was employed as Head of the
Petitioner's assertion that it needed the implementation of a new Code of Discipline Warehousing, Sugar, Shipping and Marine Department; and that he was to receive a
considering the nature of its business cannot be overemphasized. In fact, its being a basic salary of P6,941.00 per month.
local monopoly in the business demands the most stringent of measures to attain
safe travel for its patrons. Nonetheless, whatever disciplinary measures are adopted
Private respondent issued Memorandum No. 1012-PS dated December 12, 1988 and
cannot be properly implemented in the absence of full cooperation of the employees.
Memorandum No. 1028-PS dated January 16, 1989, both providing for a rotation of
Such cooperation cannot be attained if the employees are restive on account, of their
the personnel and other organizational changes. Pursuant to the memoranda,
being left out in the determination of cardinal and fundamental matters affecting their
petitioner was transferred to the Sugar Sales Department.
employment.

Petitioner protested his transfer and requested a reconsideration thereof, which was
WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED.
denied. Consequently, on February 27, 1989, petitioner filed a complaint for illegal
No special pronouncement is made as to costs.
dismissal, contending that he was constructively dismissed from his employment
(RAB IV Case No. 06-02-10081-89).

23
In support of his decision holding that there was no constructive dismissal of
petitioner, the Labor Arbiter said that: (1) petitioner was transferred to the Sugar
Sales Department from the Warehousing, Sugar, Shipping and Marine Department,
both of which are under the Sugar Sales Area; (2) petitioner’s transfer was without
change in rank or salary; (3) petitioner’s designation in either department was the
same; (4) the personnel rotation was pursuant to organizational changes done in the
valid exercise of management prerogatives; (5) there was no bad faith in the transfer
of petitioner, as other employees similarly situated as he were likewise affected; and
(6) petitioner failed to show that he was prejudiced by the changes or transferred to a
demeaning or humiliating position.
Petitioner appealed to the NLRC which, in a resolution dated January 13, 1992,
affirmed the Labor Arbiter’s decision. In a resolution dated March 20, 1992, the NLRC
denied petitioner’s motion for reconsideration.
II
In this petition, petitioner contends that there was no valid exercise of management
prerogative because: (1) his transfer violated the "Special Contract of Employment"
which was the law between the parties; and (2) said transfer was unreasonable and
caused inconvenience to him.
Petitioner argues that private respondent’s prerogative to transfer him was limited by
the "Special Contract of Employment," which was the "law" between the parties.
Thus, petitioner urges that private respondent, by employing him specifically as Head
of the Warehousing, Sugar, Shipping, and Marine Department, waived its prerogative
to reassign him within the term of the contract to another department.
We disagree.
An owner of a business enterprise is given considerable leeway in managing his
business because it is deemed important to society as a whole that he should
succeed. Our law, therefore, recognizes certain rights as inherent in the management
of business enterprises. These rights are collectively called management prerogatives
or acts by which one directing a business is able to control the variables thereof so as
to enhance the chances of making a profit. "Together, they may be taken as the
freedom to administer the affairs of a business enterprise such that the costs of
running it would be below the expected earnings or receipts. In short, the elbow room
in the quest for profits" (Fernandez and Quiason, The Law on Labor Relations, 1963
ed., p. 43).
One of the prerogatives of management, and a very important one at that, is the right
to transfer employees in their work station. In Philippine Japan Active Carbon
Corporation v. National Labor Relations Commission, 171 SCRA 164 (1989), we held:
It is the employer’s prerogative, based on its assessment and
perception of its employees’ qualifications, aptitudes, and
competence to move them around in the various areas of its
business operations in order to ascertain where they will function
with maximum benefit to the company. An employee’s right to
security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change
his assignment or transfer him where he will be most useful. When
his transfer is not unreasonable, nor inconvenient, nor prejudicial to
him, and it does not involve a demotion in rank or a diminution of
his salaries, benefits, and other privileges, the employee may not
complain that it amounts to a constructive dismissal.
In Abbot Laboratories (Phils.) Inc. v. NLRC, 154 SCRA 713 (1987), we also held in
referring to the prerogative of transfer of employees, that:
This is a function associated with the employer’s inherent right to
control and manage effectively its enterprise. Even as the law is
solicitous of the welfare of employees, it must also protect the right
of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own
business affairs to achieve its purpose cannot be denied.
Of course, like other prerogatives, the right to transfer or re-assign is subject to
limitations arising under the law, contract or general principles of fair play and justice
(Abbot Laboratories (Phil.) Inc. v. NLRC, 154 SCRA 713 [1987]). Jurisprudence
proscribes transfers or re-assignments of employees when such acts are
unreasonable and cause inconvenience or prejudice to them (Philippine Japan Active
Carbon Corporation v. NLRC, supra).
We find nothing in the "Special Contract of Employment" invoked by petitioner
wherein private respondent had waived its right to transfer or re-assign petitioner to
any other position in the company. Before such right can be deemed to have been
waived or contracted away, the stipulation to that effect must be clearly stated so as
to leave no room to doubt the intentions of the parties. The mere specification in the
employment contract of the position to be held by the employee is not such
stipulation.
As held in Philippine Japan Active Carbon Corporation v. National Labor Relations
Commission, supra:
An employee’s right to security of tenure does not give him such a
vested right in his position as would deprive the company of its
prerogatives to change his assignment or transfer him where he will
be most useful.
Petitioner’s bare assertion that the transfer was unreasonable and caused him
inconvenience cannot override the fact, as found by the Labor Arbiter and respondent
Commission, that the rotation was made in good faith and was not discriminatory, and
that there was no demotion in rank or a diminution of his salary, benefits and
privileges.
24
WHEREFORE, the petition for certiorari is DISMISSED.
SO ORDERED.
9. San Miguel Brewery Sales Force Union (PTGWO) v. Ople, 170 SCRA 25 (1989)
G.R. No. L-53515 February 8, 1989
SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL
CORPORATION, respondents.
Lorenzo F. Miravite for petitioner.
Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GRIÑO-AQUINO, J.:
This is a petition for review of the Order dated February 28, 1980 of the Minister of
Labor in Labor Case No. AJML-069-79, approving the private respondent's marketing
scheme, known as the "Complementary Distribution System" (CDS) and dismissing
the petitioner labor union's complaint for unfair labor practice.
On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until
January 31, 1981) was entered into by petitioner San Miguel Corporation Sales Force
Union (PTGWO), and the private respondent, San Miguel Corporation, Section 1, of
Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate bargaining unit
shall be entitled to a basic monthly compensation plus commission
based on their respective sales. (p. 6, Annex A; p. 113, Rollo.)
In September 1979, the company introduced a marketing scheme known as the
"Complementary Distribution System" (CDS) whereby its beer products were offered
for sale directly to wholesalers through San Miguel's sales offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice in the
Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to
the existing marketing scheme whereby the Route Salesmen were assigned specific
territories within which to sell their stocks of beer, and wholesalers had to buy beer
products from them, not from the company. It was alleged that the new marketing
scheme violates Section 1, Article IV of the collective bargaining agreement because
the introduction of the CDS would reduce the take-home pay of the salesmen and
their truck helpers for the company would be unfairly competing with them.
The complaint filed by the petitioner against the respondent company raised two
issues: (1) whether the CDS violates the collective bargaining agreement, and (2)
whether it is an indirect way of busting the union.
In its order of February 28, 1980, the Minister of Labor found:
... We see nothing in the record as to suggest that the unilateral
action of the employer in inaugurating the new sales scheme was
designed to discourage union organization or diminish its influence,
but rather it is undisputable that the establishment of such scheme
was part of its overall plan to improve efficiency and economy and
at the same time gain profit to the highest. While it may be admitted
that the introduction of new sales plan somewhat disturbed the
present set-up, the change however was too insignificant as to
convince this Office to interpret that the innovation interferred with
the worker's right to self-organization.
Petitioner's conjecture that the new plan will sow dissatisfaction
from its ranks is already a prejudgment of the plan's viability and
effectiveness. It is like saying that the plan will not work out to the
workers' [benefit] and therefore management must adopt a new
system of marketing. But what the petitioner failed to consider is the
fact that corollary to the adoption of the assailed marketing
technique is the effort of the company to compensate whatever loss
the workers may suffer because of the new plan over and above
than what has been provided in the collective bargaining
agreement. To us, this is one indication that the action of the
management is devoid of any anti-union hues. (pp. 24-25, Rollo.)
The dispositive part of the Minister's Order reads:
WHEREFORE, premises considered, the notice of strike filed by
the petitioner, San Miguel Brewery Sales Force Union-PTGWO is
hereby dismissed. Management however is hereby ordered to pay
an additional three (3) months back adjustment commissions over
and above the adjusted commission under the complementary
distribution system. (p. 26, Rollo.)
The petition has no merit.
Public respondent was correct in holding that the CDS is a valid exercise of
management prerogatives:
25
 Except as limited by special laws, an employer is free to regulate,
according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods,
time, place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2
SCRA 924; Republic Savings Bank vs. CIR 21 SCRA 226, 235.)
(Perfecto V. Hernandez, Labor Relations Law, 1985 Ed., p. 44.)
(Emphasis ours.)
Every business enterprise endeavors to increase its profits. In the process, it may
adopt or devise means designed towards that goal. In Abbott Laboratories vs. NLRC,
154 SCRA 713, We ruled:
... Even as the law is solicitous of the welfare of the employees, it
must also protect the right of an employer to exercise what are
clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be
denied.
So long as a company's management prerogatives are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold them (LVN Pictures Workers vs. LVN, 35 SCRA
147; Phil. American Embroideries vs. Embroidery and Garment Workers, 26 SCRA
634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to
compensate the members of its sales force who will be adversely affected by the
implementation of the CDS by paying them a so-called "back adjustment commission"
to make up for the commissions they might lose as a result of the CDS proves the
company's good faith and lack of intention to bust their union.
WHEREFORE, the petition for certiorari is dismissed for lack of merit.
10. Philippine Airlines, Inc. v. NLRC, 225 SCRA 301 (1993) - Supra
11. Union of the Filipro Employees-Drug v. Nestle, G.R. No. 158930-31, August 22,
2006
G.R. No. 158930-31 August 22, 2006
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES
UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU), Petitioner,
vs.
NESTLÉ PHILIPPINES, INCORPORATED, Respondent.
x-----------------------------------x
G.R. No. 158944-45 August 22, 2006
NESTLÉ PHILIPPINES, INCORPORATED Petitioner,
vs.
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES
UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU), Respondent.
DECISION
CHICO-NAZARIO, J.:
The Case
Before the Court are two (2) petitions for review on certiorari under Rule 45 of the
Rules of Court, as amended. Both seek to annul and set aside the joint: (1)
Decision1 dated 27 February 2003, and (2) Resolution2 dated 27 June 2003, of the
Court of Appeals in CA-G.R. SP No. 698053 and No. 71540.4
G.R. No. 158930-31 was filed by Union of Filipro Employees – Drug, Food and Allied
Industries Unions – Kilusang Mayo Uno (UFE-DFA-KMU) against Nestlé Philippines,
Incorporated (Nestlé) seeking the reverse of the Court of Appeals Decision in so far
as the latter’s failure to adjudge Nestlé guilty of unfair labor practice is concerned, as
well as the Resolution of 27 June 2003 denying its Partial Motion for Reconsideration;
G.R. No. 158944-45 was instituted by Nestlé against UFE-DFA-KMU similarly
seeking to annul and set aside the Decision and Resolution of the Court of Appeals
declaring 1) the Retirement Plan a valid collective bargaining issue; and 2) the scope
of assumption of jurisdiction power of the Secretary of the DOLE to be limited to the
resolution of questions and matters pertaining merely to the ground rules of the
collective bargaining negotiations to be conducted between the parties.
In as much as the cases involve the same set of parties; arose from the same set of
circumstances, i.e., from several Orders issued by then Secretary of the Department
of Labor and Employment (DOLE), Hon. Patricia A. Sto. Tomas, respecting her
assumption of jurisdiction over the labor dispute between Nestlé and UFE-DFA-KMU,
Alabang and Cabuyao Divisions;5 and likewise assail the same Decision and
Resolution of the Court of Appeals, the Court ordered the consolidation of the two
petitions.6
The Facts
From the record and the pleadings filed by the parties, we cull the following material
facts in this case:
On 4 April 2001, in consideration of the impending expiration of the existing collective
bargaining agreement (CBA) between Nestlé and UFE-DFA-KMU7 on 5 June
26
2001,8 in a letter denominated as a Letter of Intent, the Presidents of the Alabang and
Cabuyao Divisions of UFE-DFA-KMU, Ernesto Pasco and Diosdado Fortuna,
respectively, informed Nestlé of their intent to "open our new Collective Bargaining
Negotiation for the year 2001-2004 x x x as early as June 2001."9
In a letter10 dated 10 April 2001, Nestlé acknowledged receipt of the aforementioned
letter. It also informed UFE-DFA-KMU that it was preparing its own counter-proposal
and proposed ground rules that shall govern the conduct of the collective bargaining
negotiations.
On 29 May 2001, in another letter addressed to the UFE-DFA-KMU (Cabuyao
Division), Nestlé underscored its position that "unilateral grants, one-time company
grants, company-initiated policies and programs, which include, but are not limited to
the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by
their very nature not proper subjects of CBA negotiations and therefore shall be
excluded therefrom."11 In addition, it clarified that with the closure of the Alabang
Plant, the CBA negotiations will only be applicable to the covered employees of the
Cabuyao Plant; hence, the Cabuyao Division of UFE-DFA-KMU became the sole
bargaining unit involved in the subject CBA negotiations.
Thereafter, dialogue between the company and the union ensued.
In a letter dated 14 August 2001, Nestlé, claiming to have reached an impasse in said
dialogue, requested12 the National Conciliation and Mediation Board (NCMB),
Regional Office No. IV, Imus, Cavite, to conduct preventive mediation proceedings
between it and UFE-DFA-KMU. Nestlé alleged that despite fifteen (15) meetings
between them, the parties failed to reach any agreement on the proposed CBA. The
request was docketed as NCMB-RBIV-CAB-PM-08-035-01.
Conciliation proceedings nevertheless proved ineffective. Complaining, in essence, of
bargaining deadlock – pertaining to economic issues, i.e., "retirement (plan), panel
composition, costs and attendance, and CBA,"13 UFE-DFA-KMU filed a Notice of
Strike14 on 31 October 2001 with the NCMB docketed as NCMB-RBIV-LAG-NS-10-
037-01. One week later, or on 07 November 2001, another Notice of Strike15 was filed
by the UFE-DFA-KMU docketed as NCMB-RBIV-LAG-NS-11-10-039-01, this time
predicated on Nestlé’s alleged unfair labor practices i.e., bargaining in bad faith in that
it was setting pre-conditions in the ground rules by refusing to include the issue of the
Retirement Plan in the CBA negotiations. A strike vote was then conducted by UFE-
DFA-KMU on 22 November 2001. The result was an overwhelming approval of the
decision to hold a strike.16
On 26 November 2001, in view of the looming strike, Nestlé filed with the DOLE
a Petition for Assumption of Jurisdiction,17 docketed as OS-AJ-0023-01,
fundamentally praying that the Secretary of the DOLE, Hon. Patricia A. Sto. Tomas,
assume jurisdiction over the current labor dispute as mandated by Article 263 (g) of
the Labor Code, as amended, thereby effectively enjoining any impending strike at
the Nestlé Cabuyao Plant in Laguna.
On 29 November 2001, Sec. Sto. Tomas issued an Order18 in OS-AJ-0023-01,
NCMB-RBIV-CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01 & NCMB-RBIV-
LAG-NS-11-10-039-01 assuming jurisdiction over the subject labor dispute between
the parties, the fallo thereof stating that:
CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the
labor dispute at the Nestlé Philippines, Inc. (Cabuyao Plant) pursuant to Article 263
(g) of the Labor Code, as amended.
Accordingly, any strike or lockout is hereby enjoined. The parties are directed to
cease and desist from committing any act that might lead to the further deterioration
of the current labor relations situation.
The parties are further directed to meet and convene for the discussion of the union
proposals and company counter-proposals before the National Conciliation and
Mediation Board (NCMB) who is hereby designated as the delegate/facilitator of this
Office for this purpose. The NCMB shall report to this Office the results of this attempt
at conciliation and delimitation of the issues within thirty (30) days from the parties’
receipt of this Order, in no case later than December 31, 2001. If no settlement of all
the issues is reached, this Office shall thereafter define the outstanding issues and
order the filing of position papers for a ruling on the merits.
UFE-DFA-KMU sought reconsideration19 of the abovequoted Assumption of
Jurisdiction Order on the assertion that:
i. Article 263 (g) of the Labor Code, as amended, is invalid and unconstitutional as it
is in derogation of the provisions dealing on protection to labor, social justice, the bill
of rights, and, generally accepted principle of international law;
ii. compulsory arbitration as a mode of dispute settlement provided for in the Labor
Code and sourced from the 1935 and 1973 constitutions has been discarded and
deleted by the New Charter which instituted in its stead free collective bargaining;
iii. that ILO condemns the continuous exercise by the Secretary of Labor of the power
of compulsory arbitration;
iv. granting that the law is valid, the Secretary has unconstitutionally applied the law;
v. that the company is a business enterprise not belonging to an industry
indispensable to the national interest considering that it is only one among a number
of companies in the country producing milk and nutritional products; that the Cabuyao
plant is only one of the six (6) Nestle plants in the country and could rely on its highly
automated Cagayan de Oro plant for buffer stocks;
vi. that the Secretary acted with grave abuse of discretion in issuing the assailed
order without the benefit of a prior notice and inquiry.
27
In the interregnum, the union interposed a motion for extension of time 20 to file its
position paper as directed by the Assumption of Jurisdiction Order of 29 November
2001.
In an Order21 dated 14 January 2002, Sec. Sto. Tomas denied the aforequoted
motion for reconsideration in this wise:
This is not the first time that this Office had occasion to resolve the grounds and
arguments now being raised x x x. In a more recent case – In re: labor dispute at
Toyota Motor Philippines Corporation x x x this Office ruled:
The constitutionality of the power of the Secretary of Labor under Article 263 (g) of
the Labor Code to assume jurisdiction over a labor dispute in an industry
indispensable to the national interest has been upheld as an exercise of police power
of the constitution. x x x.
xxxx
As ruled by the Supreme Court in the Philtread case:
Article 263 (g) of the Labor Code does not violate the worker’s constitutional right to
strike.
xxxxxx
The foregoing article clearly does not interfere with the worker’s right to strike but
merely regulates it, when in the exercise of such right, national interests will be
affected.
On 15 January 2002, despite the injunction22 contained in Sec. Sto. Tomas’
Assumption of Jurisdiction Order and conciliation efforts by the NCMB, the employee
members of UFE-DFA-KMU at the Nestlé Cabuyao Plant went on strike.
On 16 January 2002, in consideration of the above, Sec. Sto. Tomas issued yet
another Order23 directing: (1) the members of UFE-DFA-KMU to return-to-work within
twenty-four (24) hours from receipt of such Order; (2) Nestlé to accept back all
returning workers under the same terms and conditions existing preceding to the
strike; (3) both parties to cease and desist from committing acts inimical to the on-
going conciliation proceedings leading to the further deterioration of the situation; and
(4) the submission of their respective position papers within ten (10) days from receipt
thereof.
Notwithstanding the Return-To-Work Order, the members of UFE-DFA-KMU
continued with their strike and refused to go back to work as instructed. Thus, Sec.
Sto. Tomas sought the assistance of the Philippine National Police (PNP) for the
enforcement of said order.
At the hearing called on 7 February 2002, Nestlé and UFE-DFA-KMU filed their
respective position papers. In its position paper,24 Nestlé addressed several issues
allegedly pertaining to the current labor dispute, i.e., economic provisions of the CBA
as well as the non-inclusion of the issue of the Retirement Plan in the collective
bargaining negotiations. UFE-DFA-KMU, in contrast, limited itself to tackling the
solitary issue of whether or not the retirement plan was a mandatory subject in its
CBA negotiations with the company on the contention "that the Order of Assumption
of Jurisdiction covers only the issue of Retirement Plan."25
On 8 February 2002, Nestlé moved that UFE-DFA-KMU be declared to have waived
its right to present arguments respecting the other issues raised by the company on
the ground that the latter chose to limit itself to discussing only one (1) issue. Sec.
Sto. Tomas, in an Order26 dated 11 February 2002, however, did not see fit to grant
said motion. She instead allowed UFE-DFA-KMU the chance to tender its stand on
the other issues raised by Nestlé but not covered by its initial position paper paper by
way of a Supplemental Position Paper.
UFE-DFA-KMU afterward filed several pleadings: (1) an Urgent Motion to File a Reply
dated 13 February 2002; (2) a Motion for Time to File Supplemental Position Paper
dated 22 February 2002; and (3) a Manifestation with Motion for Reconsideration of
the Order dated February 11, 2002 dated 27 February 2002. The latter pleading was
an absolute contradiction of the second one praying for additional time to file the
subject supplemental position paper. In said Manifestation, UFE-DFA-KMU explained
that it "realized that the Order of February 11, 2002 appears to be contrary to law and
jurisprudence and is not in conformity with existing laws and the evidence on
record,"27 as the Secretary of the DOLE "could only assume jurisdiction over the
issues mentioned in the notice of strike subject of the current dispute." 28 UFE-DFA-
KMU then went on to clarify that the Amended Notice of Strike did not cite, as one of
the grounds, the CBA deadlock.
On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of UFE-
DFA-KMU.
Frustrated with the foregoing turn of events, UFE-DFA-KMU filed a petition
for certiorari29 with application for the issuance of a temporary restraining order or a
writ of preliminary injunction before the Court of Appeals. The petition was predicated
on the question of whether or not the DOLE Secretary committed grave abuse of
discretion in issuing the Orders of 11 February 2002 and 8 March 2002.
Meanwhile, in an attempt to finally resolve the crippling labor dispute between the
parties, then Acting Secretary of the DOLE, Hon. Arturo D. Brion, came out with
an Order30 dated 02 April 2002, in the main, ruling that:
a. we hereby recognize that the present Retirement Plan at the Nestlé Cabuyao Plant
is a unilateral grant that the parties have expressly so recognized subsequent to the
Supreme Court’s ruling in Nestlé, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4,
1991, and is therefore not a mandatory subject for bargaining;
28
b. the Union’s charge of unfair labor practice against the Company is hereby
dismissed for lack of merit;
c. the parties are directed to secure the best applicable terms of the recently
concluded CBs between Nestlé Phils. Inc. and it eight (8) other bargaining units, and
to adopt these as the terms and conditions of the Nestlé Cabuyao Plant CBA;
d. all union demands that are not covered by the provisions of the CBAs of the other
eight (8) bargaining units in the Company are hereby denied;
e. all existing provisions of the expired Nestlé Cabuyao Plant CBA without any
counterpart in the CBAs of the other eight bargaining units in the Company are
hereby ordered maintained as part of the new Nestlé Cabuyao Plant CBA;
f. the parties shall execute their CBA within thirty (30) days from receipt of this Order,
furnishing this Office a copy of the signed Agreement;
g. this CBA shall, in so far as representation is concerned, be for a term of five (5)
years; all other provisions shall be renegotiated not later than three (3) years after its
effective date which shall be December 5, 2001 (or on the first day six months after
the expiration on June 4, 2001 of the superceded CBA).
Not surprisingly, UFE-DFA-KMU moved to reconsider the aforequoted position of the
DOLE.
On 6 May 2002, the Secretary of the DOLE, Hon. Sto. Tomas, issued the last of the
assailed Orders.31 This order resolved to deny the preceding motion for
reconsideration of UFE-DFA-KMU.
Undaunted still, UFE-DFA-KMU, for the second time, went to the Court of Appeals
likewise via a petition for certiorari seeking to annul, on the ground of grave abuse of
discretion, the Orders of 02 April 2002 and 06 May 2002 of the Secretary of the
DOLE.
The Court of Appeals, acting on the twin petitions for certiorari, determined the issues
in favor of UFE-DFA-KMU in a joint Decision dated 27 February 2003. The dispositive
part thereof states that:
WHEREFORE, in view of the foregoing, there being grave abuse on the part of the
public respondent in issuing all the assailed Orders, both petitions are hereby
GRANTED. The assailed Orders dated February 11, 2001, and March 8, 2001 (CA-
G.R. SP No. 69805), as well as the Orders dated April 2, 2002 and May 6, 2002 (CA-
G.R. SP No. 71540) of the Secretary of Labor and Employment in the case entitled:
"IN RE: LABOR DISPUTE AT NESTLE PHILIPPINES INC. (CABUYAO FACTORY)"
under OS-AJ-0023-01 (NCMB-RBIV-CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-
037-01, NCMB-RBIV-LAG-NS-11-10-039—01) are hereby ANNULLED and SET
ASIDE. Private respondent is hereby directed to resume the CBA negotiations with
the petitioner.32
Dissatisfied, both parties separately moved for the reconsideration of the
abovequoted decision – with Nestlé basically assailing that part of the decision finding
the DOLE Secretary to have gravely abused her discretion when she ruled that the
Retirement Plan is not a valid issue for collective bargaining negotiations; while UFE-
DFA-KMU questions, in essence, the appellate court’s decision in absolving Nestlé of
the charge of unfair labor practice.
The parties’ efforts were all for naught as the Court of Appeals stood pat in its earlier
pronouncements and denied the motions for reconsideration in a joint Resolution
dated 27 June 2003.
Hence, these petitions for review on certiorari separately filed by the parties. Said
petitions were ordered consolidated in a Supreme Court Resolution dated 29 March
2004.
The Issues
UFE-DFA-KMU’s petition for review docketed as G.R. No. 158930-31, is predicated
on the following alleged errors:
I.
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN NOT
HOLDING THAT RESPONDENT IS GUILTY OF UNFAIR LABOR PRACTICE IN
REFUSING TO PROCEED WITH THE CBA NEGOTIATIONS UNLESS PETITIONER
FIRST ADMITS THAT THE RETIREMENT PLAN IN THE COMPANY IS A NON-CBA
MATTER; and
II.
THE CONTENTION THAT THERE IS NO EVIDENCE OF UNFAIR LABOR
PRACTICE ON RESPONDENT NESTLÉ’S PART AND THAT PETITIONER DID
NOT RAISE THE ISSUE OF ULP IN ITS ARGUMENTS BEFORE THE COURT OF
APPEALS IS GROSSLY ERRONEOUS.33
Whereas in G.R. No. 158944-45, petitioner Nestlé challenges the conclusion of the
Court of Appeals on the basis of the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR
IN HOLDING THAT THE POWERS GRANTED TO THE SECRETARY OF LABOR
TO RESOLVE NATIONAL INTEREST DISPUTES UNDER ARTICLE 263 (G) OF
THE LABOR CODE MAY BE LIMITED BY A (SECOND) NOTICE OF STRIKE; and
29
 II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS ERROR
IN ANNULING THE SECRETARY OF LABOR’S JUDGMENT ON THE
RETIREMENT PLAN ISSUE WHICH WAS MERELY A PART OF THE COMPLETE
RESOLUTION OF THE LABOR DISPUTE.34
On the whole, the consolidated cases only raise three (3) fundamental issues for
deliberation by this Court, that is, whether or not the Court of Appeals committed
reversible error, first, in finding the Secretary of Labor and Employment to have
gravely abused her discretion in her pronouncement that the Retirement Plan was not
a proper subject to be included in the CBA negotiations between the parties; hence,
non-negotiable; second, in holding that the assumption powers of the Secretary of
Labor and Employment should have been limited merely to the grounds alleged in the
second Notice of Strike; and third, in not ruling that Nestlé was guilty of unfair labor
practice despite allegedly setting a pre-condition to bargaining – the non-inclusion of
the Retirement Plan as an issue in the collective bargaining negotiations.
The Court’s Ruling
Foremost for our resolution is the matter of the non-inclusion of the Retirement Plan
in the CBA negotiations between Nestlé and UFE-DFA-KMU (Cabuyao Division).
In finding the Secretary of the DOLE to have gravely abused her discretion in holding
that the Retirement Plan is nota valid CBA issue, the Court of Appeals explained that:
Although the Union, thru its President Diosdado Fortuna, signed a Memorandum of
Agreement dated October 8, 1998 together with the private respondent which clearly
states that the "Company agree to extend the following unilateral grants which shall
not form part of the CBA" (citation omitted) however, the same document made a
proviso that "reference on the Retirement Plan in the CBA signed on July 4, 1995,
shall be maintained," x x x thus, this Court is of the belief and so holds that the
Retirement Plan is still a valid CBA issue, hence, it could not be argued that the true
intention of the parties is that the Retirement Plan, although referred in the CBA,
would not in any way form part of the CBA (citation omitted) as it could be clearly
inferred by this Court that it is to be used as an integral part of the CBA and to be
used as a topic for future bargaining, in consonance with the ruling of the Supreme
Court in the previous Nestlé Case that "the Retirement Plan was a collective
bargaining issue right from the start."35
In filing the present petition, Nestle is of the view that after the 1991 Supreme Court
Decision was promulgated, there was obviously an agreement by the parties to no
longer consider the Retirement Plan as a negotiable item subject to bargaining.
Rather, said benefit would be regarded as a unilateral grant outside the ambit of
negotiation. Nestlé justifies such contention by directing the Court’s attention to the
Ground Rules for 1998 Alabang/Cabuyao Factories’ CBA Negotiation (citation
omitted) signed by it and the representatives of UFE-DFA-KMU where both sides
"expressly" recognized Nestlé’s prerogative to initiate unilateral grants which are ‘not
negotiable.’ It likewise cited the Memorandum of Agreement36 entered into by the
parties on 08 October 1998, which also "categorically" referred to the Retirement Plan
as one of the unilateral grants alluded to in the aforementioned Ground Rules. Nestle
then concluded that:
Indeed, the foregoing uncontroverted documents very clearly established the clear
agreement of the parties, after the 1991 Supreme Court Decision, to remove the
Retirement Plan from the scope of bargaining negotiation, and leave the matter upon
the sole initiative and discretion of Nestlé.37
In contrast, UFE-DFA-KMU posits that there is nothing in either of the documents
aboveclaimed that proves that it agreed "to treat the Retirement Plan as a unilateral
grant of the company which is outside the scope of the CBA and hence, not a proper
subject of bargaining." It explained that the MOA alluded to by Nestlé merely speaks
of the improvement38 or the review for the improvement39 of the current Retirement
Plan and nothing else. UFE-DFA-KMU rationalizes that:
Had the objective of the parties been to consider the Retirement Plan as not a subject
for collective bargaining, they would have stated so in categorical terms. Or, they
could have deleted the said benefit from the CBA.
Unfortunately for petitioner, the documents relied upon by it do not state that the
Retirement Plan is no longer a bargainable item. The said benefit was not also
removed or deleted from the CBA.
If ever, what was "unilaterally granted" by petitioner company as appearing on the
above-stated letter and MOA were the "improvements" on the Retirement Plan. The
Retirement Plan could not have been unilaterally granted by the said letter and MOA
since the said Plan predates the said letter and MOA by over two decades.
UFE-DFA-KMU concludes that "[s]ince the Retirement Plan did not derive its
existence from the letter and MOA x x x, the nature of the Retirement Plan was not
altered or changed by the subsequent issuance by petitioner company of the said
letter and MOA. The Retirement Plan remained a CBA item which is a proper subject
of collective bargaining pursuant to the 1991 ruling of this Honorable Court."40
We agree.
The present issue is not one of first impression. In Nestlé Philippines, Inc. v.
NLRC,41 ironically involving the same parties herein, this Court has had the occasion
to affirm that a retirement plan is consensual in nature.
By way of background, the parties therein resorted to a "slowdown" and walked out of
the factory prompting the management to shut down its operations. Collective
bargaining negotiations were conducted but a deadlock was subsequently declared.
The Secretary of Labor assumed jurisdiction over the labor dispute and issued a
return-to-work order. The NLRC thereafter issued its resolution modifying Nestlé’s
existing "non-contributory" Retirement Plan. The company filed a petition for certiorari
30
alleging grave abuse of discretion on the part of the NLRC as Nestlé was arguing that
since its Retirement Plan is non-contributory, it should be a non-issue in CBA
negotiations. Nestlé had the sole and exclusive prerogative to define the terms of the
plan as the employees had no vested and demandable rights thereon – the grant of
such not being a contractual obligation but simply gratuitous. In a ruling contrary to
Nestlé’s position, this Court, through Madame Justice Griño-Aquino, declared that:
The company’s [Nestlé] contention that its retirement plan is non-negotiable, is not
well-taken. The NLRC correctly observed that the inclusion of the retirement plan in
the collective bargaining agreement as part of the package of economic benefits
extended by the company to its employees to provide them a measure of financial
security after they shall have ceased to be employed in the company, reward their
loyalty, boost their morale and efficiency and promote industrial peace, gives "a
consensual character" to the plan so that it may not be terminated or modified at will
by either party (citation omitted).
The fact that the retirement plan is non-contributory, i.e., that the employees
contribute nothing to the operation of the plan, does not make it a non-issue in the
CBA negotiations. As a matter of fact, almost all of the benefits that the petitioner has
granted to its employees under the CBA – salary increases, rice allowances, midyear
bonuses, 13th and 14th month pay, seniority pay, medical and hospitalization plans,
health and dental services, vacation, sick & other leaves with pay – are non-
contributory benefits. Since the retirement plan has been an integral part of the CBA
since 1972, the Union’s demand to increase the benefits due the employees under
said plan, is a valid CBA issue. x x x
xxxx
x x x [E]mployees do have a vested and demandable right over existing benefits
voluntarily granted to them by their employer. The latter may not unilaterally withdraw,
eliminate or diminish such benefits (Art. 100, Labor Code; other citation omitted).
[Emphases supplied.]42
In the case at bar, it cannot be denied that the CBA that was about to expire at that
time contained provisions respecting the Retirement Plan. As the latter benefit was
already subject of the existing CBA, the members of UFE-DFA-KMU were only
exercising their prerogative to bargain or renegotiate for the improvement of the terms
of the Retirement Plan just like they would for all the other economic, as well as non-
economic benefits previously enjoyed by them. Precisely, the purpose of collective
bargaining is the acquisition or attainment of the best possible covenants or terms
relating to economic and non-economic benefits granted by employers and due the
employees. The Labor Code has actually imposed as a mutual obligation of both
parties, this duty to bargain collectively. The duty to bargain collectively is
categorically prescribed by Article 252 of the said code. It states:
ART. 252. MEANING OF DUTY TO BARGAIN COLLECTIVELY. – The duty to
bargain collectively means the performance of a mutual obligation to meet and confer
promptly and expeditiously and in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work, and all other terms and conditions of
employment including proposals for adjusting any grievances or questions arising
under such agreement and executing a contract incorporating such agreement if
requested by either party, but such duty does not compel any party to agree to a
proposal or to make any concession.
Further, Article 253, also of the Labor Code, defines the parameter of said obligation
when there already exists a CBA, viz:
ART. 253. DUTY TO BARGAIN COLLECTIVELY WHEN THERE EXISTS A
COLLECTIVE BARGAINING AGREEMENT. – The duty to bargain collectively shall
also mean that either party shall not terminate nor modify such agreement during its
lifetime. However, either party can serve a written notice to terminate or modify the
agreement at least sixty (60) days prior to its expiration date. It shall be the duty of
both parties to keep the status quo and to continue in full force and effect the terms
and conditions of the existing agreement during the sixty day period and/or until a
new agreement is reached by the parties.
And, in demanding that the terms of the Retirement Plan be opened for renegotiation,
the members of UFE-DFA-KMU are acting well within their rights as we have, indeed,
declared that the Retirement Plan is consensual in character; and so, negotiable.
Contrary to the claim of Nestlé that the categorical mention of the terms ‘unilateral
agreement’ in the letter and the MOA signed by the representatives of UFE-DFA-
KMU, had, for all intents and purposes worked to estop UFE-DFA-KMU from raising it
as an issue in the CBA negotiations, our reading of the same, specifically Paragraph
6 and subparagraph 6.2:
6. Additionally, the COMPANY agree to extend the following unilateral grants which
shall not form part of the Collective Bargaining Agreement (CBA):
xxxx
6.2. Review for improvement of the COMPANY’s Retirement Plan and the reference
on the Retirement Plan in the Collective Bargaining Agreement signed on 4 July 1995
shall be maintained. 43
hardly persuades us that the members of UFE-DFA-KMU have agreed to treat the
Retirement Plan as a benefit the terms of which are solely dependent on the
inclination of the Nestlé and remove the subject benefit from the ambit of the CBA.
The characterization unilaterally imposed by Nestlé on the Retirement Plan cannot
operate to divest the employees of their "vested and demandable right over existing
benefits voluntarily granted by their employer." 44Besides, the contention that UFE-
DFA-KMU has "abandoned" or forsaken our earlier pronouncement vis-à-vis the
consensual nature of a retirement plan is quite inconsistent with, nay, is negated by
its conduct in doggedly asking for a renegotiation of said benefit.
Worth noting, at this point, is the fact that the aforequoted paragraph 6 and its
subparagraphs, particularly subparagraph 6.2, highlights an undeniable fact – that
31
Nestlé recognizes that the Retirement Plan is part of the existing Collective
Bargaining Agreement.
Nestlé further rationalizes that a ruling declaring the Retirement Plan a valid CBA
negotiation issue will inspire other bargaining units to demand for greater benefits in
accordance with their respective appetites. Suffice it to say that the consensual
nature of the Retirement Plan neither gives the union members the unfettered right
nor the unbridled prerogative to demand more than what the company can viably
give.
As regards the scope of the assumption powers of the Secretary of the DOLE, the
appellate court ruled that Sec. Sto. Tomas’ assumption of jurisdiction powers should
have been limited to the disagreement on the ground rules of the collective bargaining
negotiations. The Court of Appeals referred to the minutes of the meeting held on 30
October 2001. That the representative Nestlé was recorded to have stated that "we
are still discussing ground rules and not yet on the CBA negotiations proper, a
deadlock cannot be declared,"45 was a telling fact. The Court of Appeals, thus,
declared that the Secretary "should not have ruled on the questions and issues
relative to the substantive aspect of the CBA simply because there was no conflict on
the CBA yet."46
UFE-DFA-KMU agrees in the above and contends that the requisites of judicial
inquiry require, first and foremost the presence of an actual case controversy. It then
concludes that "[i]f the courts of law cannot act and decide in the absence of an actual
case or controversy, so should be (sic) also the Honorable DOLE Secretary." 47
Nestle, however, contradicts the preceding disquisitions on the ground that such
referral to the minutes of the meeting was erroneous and misleading. It avers that the
Court of Appeals failed to consider the circumstance surrounding said utterance –
that the statement was made during the preventive mediation proceedings and the
UFE-DFA-KMU had not yet filed any notice of strike. It further emphasizes that it was
UFE-DFA-KMU who first alleged bargaining deadlock as the basis for the filing of its
Notice of Strike. Finally, Nestlé clarifies that before the first Notice of Strike was filed,
several conciliation conferences had already been undertaken where both parties had
exchanges of their respective CBA proposals.
In this, we agree with Nestlé. Declaring the Secretary of the DOLE to have acted with
grave abuse of discretion for ruling on substantial matters or issues and not restricting
itself merely on the ground rules, the appellate court and UFE-DFA-KMU would have
us treat the subject labor dispute in a piecemeal fashion.
The power granted to the Secretary of the DOLE by Paragraph (g) of Article 263 of
the Labor Code, to wit:
ART. 263. STRIKES, PICKETING, AND LOCKOUTS. –
xxxx
(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.
xxxx
authorizes her to assume jurisdiction over a labor dispute, causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, and correlatively,
to decide the same.
In the case at bar, the Secretary of the DOLE simply relied on the Notices of Strike
that were filed by UFE-DFA-KMU as stated in her Order of 08 March 2002, to wit:
x x x The records disclose that the Union filed two Notices of Strike. The First is dated
October 31, 2001 whose grounds are cited verbatim hereunder:
"A. Bargaining Deadlock
1. Economic issues (specify)
1. Retirement
2. Panel Composition
3. Costs and Attendance
4. CBA"
The second Notice of Strike is dated November 7, 2001 and the cited ground is like
quoted verbatim below:
"B. Unfair Labor Practices (specify)
Bargaining in bad faith –
Setting pre-condition in the ground rules (Retirement issue)"
32
Nowhere in the second Notice of Strike is it indicated that this Notice is an
amendment to and took the place of the first Notice of Strike. In fact, our Assumption
of Jurisdiction Order dated November 29, 2001 specifically cited the two (2) Notices
of Strike without any objection on the part of the Union x x x. 48
Thus, based on the Notices of Strike filed by UFE-DFA-KMU, the Secretary of the
DOLE rightly decided on matters of substance. Further, it is a fact that during the
conciliation meetings before the NCMB, but prior to the filing of the notices of strike,
the parties had already delved into matters affecting the meat of the collective
bargaining agreement. The appellate court’s reliance on the statement49 of the
representative of Nestlé in ruling that the labor dispute had yet to progress from the
discussion of the ground rules of the CBA negotiations is clearly misleading; hence,
erroneous.
Nevertheless, granting for the sake of argument that the meetings undertaken by the
parties had not gone beyond the discussion of the ground rules, the issue of whether
or not the Secretary of the DOLE could decide issues incidental to the subject labor
dispute had already been answered in the affirmative. The Secretary’s assumption of
jurisdiction power necessarily includes matters incidental to the labor dispute, that is,
issues that are necessarily involved in the dispute itself, not just to those ascribed in
the Notice of Strike; or, otherwise submitted to him for resolution. As held in the case
of International Pharmaceuticals, Inc. v. Sec. of Labor and Employment,50 "x x x [t]he
Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to
assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, and decide the same accordingly.
Necessarily, this authority to assume jurisdiction over the said labor dispute must
include and extend to all questions and controversies arising therefrom, including
cases over which the Labor Arbiter has exclusive jurisdiction." 51 Accordingly, even if
not exactly on the ground upon which the Notice of Strike is based, the fact that the
issue is incidental to the resolution of the subject labor dispute or that a specific issue
had been submitted to the Secretary of the DOLE for her resolution, validly empowers
the latter to take cognizance of and resolve the same.
Secretary Sto. Tomas correctly assumed jurisdiction over the questions incidental to
the current labor dispute and those matters raised by the parties. In any event, the
query as to whether or not the Retirement Plan is to be included in the CBA
negotiations between the parties ineluctably dictates upon the Secretary of the DOLE
to go into the substantive matter of the CBA negotiations.
Lastly, the third issue pertains to the alleged reversible error committed by the Court
of Appeals in holding, albeit impliedly, Nestlé free and clear from any unfair labor
practice. UFE-DFA-KMU argues that Nestlé’s "refusal to bargain on a very important
CBA economic provision constitutes unfair labor practice."52 It explained that Nestlé
set as a precondition for the holding of collective bargaining negotiations the non-
inclusion of the issue of Retirement Plan. In its words, "respondent Nestlé Phils., Inc.
insisted that the Union should first agree that the retirement plan is not a bargaining
issue before respondent Nestlé would agree to discuss other issues in the CBA."53 It
then concluded that "the Court of Appeals committed a legal error in not ruling that
respondent company is guilty of unfair labor practice. It also committed a legal error in
failing to award damages to the petitioner for the ULP committed by the
respondent."54
Nestlé refutes the above argument and asserts that it was only before the Court of
Appeals, and in the second Petition for Certiorari at that, did UFE-DFA-KMU raise the
matter of unfair labor practice. It reasoned that the subject of unfair labor practice
should have been threshed out with the appropriate labor tribunal. In justifying the
failure of the Court of Appeals to find it guilty of unfair labor practice, it stated that:
Under the circumstances, therefore, there was no way for the Court of Appeals to
make a ruling on the issues of unfair labor practice and damages, simply because
there was nothing to support or justify such action. Although petitioner was afforded
by the Secretary the opportunity to be heard and more, it simply chose to omit the
said issues in the proceedings below.55
We are persuaded.
The concept of "unfair labor practice" is defined by the Labor Code as:
ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR
PROSECUTION THEREOF. – Unfair labor practices violate the constitutional right of
workers and employees to self-organization, are inimical to the legitimate interests of
both labor and management, including their right to bargain collectively and otherwise
deal with each other in an atmosphere of freedom and mutual respect, disrupt
industrial peace and hinder the promotion of healthy and stable labor-management
relations.
x x x x.
The same code likewise provides the acts constituting unfair labor practices
committed by employers, to wit:
ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. – It shall be unlawful for
an employer to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
(b) To require as a condition of employment that a person or an employee shall not
join a labor organization or shall withdraw from one to which he belongs;
(c) To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their right to
self-organization;
33
(d) To initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions
of employment in order to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition for
employment, except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement.
Employees of an appropriate collective bargaining unit who are not members of the
recognized collective bargaining agent may be assessed a reasonable fee equivalent
to the dues and other fees paid by members of the recognized collective bargaining
agent, if such non-union members accept the benefits under the collective
agreement. Provided, That the individual authorization required under Article 242,
paragraph (o) of this Code shall not apply to the nonmembers of the recognized
collective bargaining agent; [The article referred to is 241, not 242. – CAA]
(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee
for having given or being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney’s fees to the union or its officers or agents as part
of the settlement of any issue in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers and
agents of corporations associations or partnerships who have actually participated,
authorized or ratified unfair labor practices shall be held criminally liable. [Emphasis
supplied.]
Herein, Nestlé is accused of violating its duty to bargain collectively when it
purportedly imposed a pre-condition to its agreement to discuss and engage in
collective bargaining negotiations with UFE-DFA-KMU.
A meticulous review of the record and pleadings of the cases at bar shows that, of the
two notices of strike filed by UFE-DFA-KMU before the NCMB, it was only on the
second that the ground of unfair labor practice was alleged. Worse, the 7 November
2001 Notice of Strike merely contained a general allegation that Nestlé committed
unfair labor practice by bargaining in bad faith for supposedly "setting pre-condition in
the ground rules (Retirement issue)."56 On the contrary, Nestlé, in its Position Paper,
did not confine itself to the issue of the non-inclusion of the Retirement Plan but
extensively discussed its stance on other economic matters pertaining to the CBA.
Basic is the principle that good faith is presumed and he who alleges bad faith has
the duty to prove the same.57 By imputing bad faith unto the actuations of Nestlé, it
was UFE-DFA-KMU, therefore, who had the burden of proof to present substantial
evidence to support the allegation of unfair labor practice. A perusal of the allegations
and arguments raised by UFE-DFA-KMU in the Memorandum (in G.R. Nos. 158930-
31) will readily disclose that it failed to discharge said onus probandi as there is still a
need for the presentation of evidence other than its bare contention of unfair labor
practice in order to make certain the propriety or impropriety of the unfair labor
practice charge hurled against Nestlé. Under Rule XIII, Sec. 4, Book V of the
Implementing Rules of the Labor Code:
x x x. In cases of unfair labor practices, the notice of strike shall as far as practicable,
state the acts complained of and the efforts to resolve the dispute amicably."
[Emphasis supplied.]
Except for the assertion put forth by UFE-DFA-KMU, neither the second Notice of
Strike nor the records of these cases substantiate a finding of unfair labor practice. It
is not enough that the union believed that the employer committed acts of unfair labor
practice when the circumstances clearly negate even a prima facie showing to
warrant such a belief.58 In its letter59 to UFE-DFA-KMU of 29 May 2001, though
Nestlé underscored its position that "unilateral grants, one-time company grants,
company-initiated policies and programs, which include, but are not limited to the
Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their
very nature not proper subjects of CBA negotiations and therefore shall be excluded
therefrom," such attitude is not tantamount to refusal to bargain. This is especially
true when it is viewed in the light of the fact that eight out of nine bargaining units
have allegedly agreed to treat the Retirement Plan as a unilateral grant. Nestlé,
therefore, cannot be faulted for considering the same benefit as unilaterally granted.
To be sure, it must be shown that Nestlé was motivated by ill will, "bad faith, or fraud,
or 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, or grave
anxiety resulted x x x"60 in disclaiming unilateral grants as proper subjects in their
collective bargaining negotiations.
There is no per se test of good faith in bargaining.61 Good faith or bad faith is an
inference to be drawn from the facts,62 to be precise, the crucial question of whether
or not a party has met his statutory duty to bargain in good faith typically turns on the
facts of the individual case. Necessarily, a determination of the validity of the Nestlé’s
proposition involves an appraisal of the exercise of its management prerogative.
Employers are accorded rights and privileges to assure their self-determination and
independence and reasonable return of capital.63 This mass of privileges comprises
the so-called management prerogatives.64 In this connection, the rule is that good
faith is always presumed. As long as the company’s exercise of the same is in good
faith to advance its interest and not for purpose of defeating or circumventing the
rights of employees under the law or a valid agreement, such exercise will be
upheld.65
34
Construing arguendo that the content of the aforequoted letter of 29 May 2001 laid
down a pre-condition to its agreement to bargain with UFE-DFA-KMU, Nestlé’s
inclusion in its Position Paper of its proposals affecting other matters covered by the
CBA contradicts the claim of refusal to bargain or bargaining in bad faith. Accordingly,
since UFE-DFA-KMU failed to proffer substantial evidence that would overcome the
legal presumption of good faith on the part of Nestlé, the award of moral and
exemplary damages is unavailing.
It must be remembered at all times that the Philippine Constitution, while inexorably
committed towards the protection of the working class from exploitation and unfair
treatment, nevertheless mandates the policy of social justice so as to strike a balance
between an avowed predilection for labor, on the one hand, and the maintenance of
the legal rights of capital, the proverbial hen that lays the golden egg, on the other.
Indeed, we should not be unmindful of the legal norm that justice is in every case for
the deserving, to be dispensed with in the light of established facts, the applicable
law, and existing jurisprudence.66
In sum, from the facts and evidence extant in the records of these consolidated
petitions, this Court finds that 1) the Retirement Plan is still a valid issue for herein
parties collective bargaining negotiations; 2) the Court of Appeals committed
reversible error in limiting to the issue of the ground rules the scope of the power of
the Secretary of Labor to assume jurisdiction over the subject labor dispute; and 3)
Nestlé is not guilty of unfair labor practice. As no other issues are availing, this
ponencia writes finis to the protracted labor dispute between Nestlé and UFE-DFA-
KMU (Cabuyao Division).
WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking
that Nestlé be declared to have committed unfair labor practice in allegedly setting a
precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45, however,
is PARTLY GRANTED in that we REVERSE the ruling of the Court of Appeals in CA
G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely
abused her discretion in failing to confine her assumption of jurisdiction power over
the ground rules of the CBA negotiations; but the ruling of the Court of Appeals on the
inclusion of the Retirement Plan as a valid issue in the collective bargaining
negotiations between UFE-DFA-KMU and Nestlé is AFFIRMED. The parties are
directed to resume negotiations respecting the Retirement Plan and to take action
consistent with the discussions hereinabove set forth. No costs.
12. SHS Perforated Materials, Inc. v. Diaz, 633 SCRA 258 (2010)
G.R. No. 185814 October 13, 2010
SHS PERFORATED MATERIALS, INC., WINFRIED HARTMANNSHENN, and
HINRICH JOHANN SCHUMACHER, Petitioners,
vs.
MANUEL F. DIAZ, Respondent.
DECISION
MENDOZA, J.:
Petitioners, by way of this petition for review on certiorari under Rule 45, seek to
annul and set aside the December 23, 2008 Decision 1 of the Court of Appeals (CA) in
CA-G.R. SP No. 100015, which reversed and set aside the December 29, 2006
Resolution2 of the National Labor Relations Commission (NLRC). The NLRC
Resolution, in turn, reversed and set aside the June 15, 2006 Decision 3 of the Labor
Arbiter (LA).4
THE FACTS
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized
and existing under the laws of the Republic of the Philippines and registered with the
Philippine Economic Zone Authority. Petitioner Winfried
Hartmannshenn (Hartmannshenn), a German national, is its president, in which
capacity he determines the administration and direction of the day-to-day business
affairs of SHS. Petitioner Hinrich Johann Schumacher (Schumacher), also a German
national, is the treasurer and one of the board directors. As such, he is authorized to
pay all bills, payrolls, and other just debts of SHS of whatever nature upon maturity.
Schumacher is also the Executive Vice-President of the European Chamber of
Commerce of the Philippines (ECCP) which is a separate entity from SHS. Both
entities have an arrangement where ECCP handles the payroll requirements of SHS
to simplify business operations and minimize operational expenses. Thus, the wages
of SHS employees are paid out by ECCP, through its Accounting Services
Department headed by Juliet Taguiang (Taguiang).
Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business
Development on probationary status from July 18, 2005 to January 18, 2006, with a
monthly salary of ₱100,000.00. Respondent’s duties, responsibilities, and work hours
were described in the Contract of Probationary Employment,5 as reproduced below:
NAME : Jose Manuel F. Diaz
TITLE/STATUS : Manager for Business Development
LOCATION : Lot C3-2A, Phase I, Camelray
Industrial Park II, Calamba, Laguna
REPORTS TO : Direct to Mr. Winfried
Hartmannshenn
Normal Working Hours : 8:00 a.m. to 5:00 p.m.
subject to requirements of the job
OVERTIME : ________________________
35
JOB DESCRIPTION AND RESPONSIBILITIES:
DAILY/GENERAL DUTIES:
(a) Represent the company in any event organized by PEZA;
(b) Perform sales/marketing functions;
(c) Monitor/follow-up customer’s inquiry on EMPLOYER’s services;
(d) Monitor on-going job orders/projects;
(e) Submit requirements as needed in application/renewal of
necessary permits;
(f) Liaise closely with the other commercial and technical staff of the
company;
(g) Accomplish PEZA documents/requirements for every sales
made; with legal assistance where necessary at EMPLOYER’s
expense; and
(h) Perform other related duties and responsibilities.
OTHER RESPONSIBILITIES:
(a) abide by and perform to the best of his abilities all functions,
duties and responsibilities to be assigned by the EMPLOYER in
due course;
(b) comply with the orders and instructions given from time to time
by the EMPLOYER, INC. through its authorized representatives;
(c) will not disclose any confidential information in respect of the
affairs of the EMPLOYER to any unauthorized person;
(d) perform any other administrative or non-administrative duties,
as assigned by any of the EMPLOYER’s representative from time
to time either through direct written order or by verbal assignment.
The EMPLOYER may take into account EMPLOYEE’s training and
expertise when assigning additional tasks.
AGREED:
(sgd. Manuel Diaz).
In addition to the above-mentioned responsibilities, respondent was also instructed by
Hartmannshenn to report to the SHS office and plant at least two (2) days every work
week to observe technical processes involved in the manufacturing of perforated
materials, and to learn about the products of the company, which respondent was
hired to market and sell.
During respondent’s employment, Hartmannshenn was often abroad and, because of
business exigencies, his instructions to respondent were either sent by electronic mail
or relayed through telephone or mobile phone. When he would be in the Philippines,
he and the respondent held meetings. As to respondent’s work, there was no close
supervision by him.
During meetings with the respondent, Hartmannshenn expressed his dissatisfaction
over respondent’s poor performance. Respondent allegedly failed to make any
concrete business proposal or implement any specific measure to improve the
productivity of the SHS office and plant or deliver sales except for a meagre
₱2,500.00 for a sample product. In numerous electronic mail messages, respondent
acknowledged his poor performance and offered to resign from the company.
Respondent, however, denied sending such messages but admitted that he had
reported to the SHS office and plant only eight (8) times from July 18, 2005 to
November 30, 2005.
On November 16, 2005, in preparation for his trip to the Philippines, Hartmannshenn
tried to call respondent on his mobile phone, but the latter failed to answer. On
November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on
November 22 and 24, 2005, notified respondent of his arrival through electronic mail
messages and advised him to get in touch with him. Respondent claimed that he
never received the messages.
On November 29, 2005, Hartmannshenn instructed Taguiang not to release
respondent’s salary. Later that afternoon, respondent called and inquired about his
salary. Taguiang informed him that it was being withheld and that he had to
immediately communicate with Hartmannshenn. Again, respondent denied having
received such directive.
The next day, on November 30, 2005, respondent served on SHS a demand letter
and a resignation letter. The resignation letter reads:
This is to tender my irrevocable resignation from SHS Perforated Materials, Inc,
Philippines, effective immediately upon receipt of my due and demandable salary for
the period covering November 16 to 30, 2005, which has yet been unpaid and is still
currently being withheld albeit illegally. This covers and amounts to the sum of
Php50,000.00 pesos net of all taxes. As my employment contract clearly shows I
receive a monthly salary of Php100,000.00 net of all taxes.
It is precisely because of illegal and unfair labor practices such as these that I offer
my resignation with neither regret nor remorse.6
36
In the evening of the same day, November 30, 2005, respondent met with
Hartmannshenn in Alabang. The latter told him that he was extremely disappointed
for the following reasons: his poor work performance; his unauthorized leave and
malingering from November 16 to November 30, 2005; and failure to immediately
meet Hartmannshenn upon his arrival from Germany.
Petitioners averred that respondent was unable to give a proper explanation for his
behavior. Hartmannshenn then accepted respondent’s resignation and informed him
that his salary would be released upon explanation of his failure to report to work, and
proof that he did, in fact, work for the period in question. He demanded that
respondent surrender all company property and information in his possession.
Respondent agreed to these "exit" conditions through electronic mail. Instead of
complying with the said conditions, however, respondent sent another electronic mail
message to Hartmannshenn and Schumacher on December 1, 2005, appealing for
the release of his salary.
Respondent, on the other hand, claimed that the meeting with Hartmannshenn took
place in the evening of December 1, 2005, at which meeting the latter insulted him
and rudely demanded that he accept ₱25,000.00 instead of his accrued wage and
stop working for SHS, which demands he refused. Later that same night, he sent
Hartmannshenn and Schumacher an electronic mail message appealing for the
release of his salary. Another demand letter for respondent’s accrued salary for
November 16 to November 30, 2005, 13th month pay, moral and exemplary
damages, and attorney’s fees was sent on December 2, 2005.
To settle the issue amicably, petitioners’ counsel advised respondent’s counsel by
telephone that a check had been prepared in the amount of ₱50,000.00, and was
ready for pick-up on December 5, 2005. On the same date, a copy of the formal reply
letter relating to the prepared payment was sent to the respondent’s counsel by
facsimile transmission. Despite being informed of this, respondent never picked up
the check.
Respondent countered that his counsel received petitioners’ formal reply letter only
on December 20, 2005, stating that his salary would be released subsequent to the
turn-over of all materials owned by the company in his possession. Respondent
claimed that the only thing in his possession was a sample panels folder which he
had already returned and which was duly received by Taguiang on November 30,
2005.
On December 9, 2005, respondent filed a Complaint7 against the petitioners for illegal
dismissal; non-payment of salaries/wages and 13th month pay with prayer for
reinstatement and full backwages; exemplary damages, and attorney’s fees, costs of
suit, and legal interest.
THE RULING OF THE LABOR ARBITER
On June 15, 2006, the LA rendered his decision, the dispositive portion of which
states:
WHEREFORE, premises considered, judgment is hereby rendered declaring
complainant as having been illegally dismissed and further ordering his immediate
reinstatement without loss of seniority rights and benefits. It is also ordered that
complainant be deemed as a regular employee. Accordingly, respondents are hereby
ordered to jointly and severally pay complainant the following
1. P704,166.67 (P100,000.00 x 6.5 + (P100,000.00 x 6.5/12) as backwages;
2. P50,000.00 as unpaid wages;
3. P37,083.33 as unpaid 13th month pay
4. P200,000.00 as moral and exemplary damages;
5. P99,125.00 as attorney’s fees.
SO ORDERED.8
The LA found that respondent was constructively dismissed because the withholding
of his salary was contrary to Article 116 of the Labor Code as it was not one of the
exceptions for allowable wage deduction by the employer under Article 113 of the
Labor Code. He had no other alternative but to resign because he could not be
expected to continue working for an employer who withheld wages without valid
cause. The LA also held that respondent’s probationary employment was deemed
regularized because petitioners failed to conduct a prior evaluation of his performance
and to give notice two days prior to his termination as required by the Probationary
Contract of Employment and Article 281 of the Labor Code. Petitioners’ contention
that they lost trust and confidence in respondent as a managerial employee was not
given credence for lack of notice to explain the supposed loss of trust and confidence
and absence of an evaluation of respondent’s performance.
The LA believed that the respondent complied with the obligations in his contract as
evidenced by his electronic mail messages to petitioners. He ruled that petitioners are
jointly and severally liable to respondent for backwages including 13th month pay as
there was no showing in the salary vouchers presented that such was integrated in
the salary; for moral and exemplary damages for having in bad faith harassed
respondent into resigning; and for attorney’s fees.
THE RULING OF THE NLRC
On appeal, the NLRC reversed the decision of the LA in its December 29, 2006
Resolution, the dispositive portion of which reads:
WHEREFORE, premises considered, the appeal is hereby GRANTED.
The Decision dated June 15, 2006 is hereby REVERSED and SET ASIDE and a new
one is hereby entered:
37
 (1) dismissing the complaint for illegal dismissal for want of merit;
(2) dismissing the claims for 13th month pay, moral and exemplary damages
and attorney’s fees for lack of factual and legal basis; and
(3) ordering respondents to pay the complainant’s unpaid salary for the
period covering November 16-30, 2005 in the amount of FIFTY THOUSAND
PESOS (Php 50,000.00).
SO ORDERED.9
The NLRC explained that the withholding of respondent’s salary was a valid exercise
of management prerogative. The act was deemed justified as it was reasonable to
demand an explanation for failure to report to work and to account for his work
accomplishments. The NLRC held that the respondent voluntarily resigned as
evidenced by the language used in his resignation letter and demand letters. Given
his professional and educational background, the letters showed respondent’s resolve
to sever the employer-employee relationship, and his understanding of the import of
his words and their consequences. Consequently, respondent could not have been
regularized having voluntarily resigned prior to the completion of the probationary
period. The NLRC further noted that respondent’s 13th month pay was already
integrated in his salary in accordance with his Probationary Contract of Employment
and, therefore, no additional amount should be due him.
On January 25, 2007, respondent filed a motion for reconsideration but the NLRC
subsequently denied it for lack of merit in its May 23, 2007 Resolution.
THE RULING OF THE COURT OF APPEALS
The CA reversed the NLRC resolutions in its December 23, 2008 Decision, the
dispositive portion of said decision reads:
WHEREFORE, premises considered, the herein petition is GRANTED and the 29
December 2006 Resolution of the NLRC in NLRC CN RAB-IV-12-21758-05-L, and
the 23 May 2007 Resolution denying petitioner’s Motion for Reconsideration, are
REVERSED and SET ASIDE. Accordingly, a new judgment is hereby entered in that
petitioner is hereby awarded separation pay equivalent to at least one month pay, and
his full backwages, other privileges and benefits, or their monetary equivalent during
the period of his dismissal up to his supposed actual reinstatement by the Labor
Arbiter on 15 June 2006.
SO ORDERED.10
Contrary to the NLRC ruling, the CA held that withholding respondent’s salary was
not a valid exercise of management prerogative as there is no such thing as a
management prerogative to withhold wages temporarily. Petitioners’ averments of
respondent’s failure to report to work were found to be unsubstantiated allegations
not corroborated by any other evidence, insufficient to justify said withholding and
lacking in probative value. The malicious withholding of respondent’s salary made it
impossible or unacceptable for respondent to continue working, thus, compelling him
to resign. The respondent’s immediate filing of a complaint for illegal dismissal could
only mean that his resignation was not voluntary. As a probationary employee entitled
to security of tenure, respondent was illegally dismissed. The CA ruled out actual
reinstatement, however, reasoning out that antagonism had caused a severe strain in
their relationship. It was of the view that separation pay equivalent to at least one
month pay would be a more equitable disposition.
THE ISSUES
Aggrieved, the petitioners come to this Court praying for the reversal and setting
aside of the subject CA decision presenting the following
ISSUES
I
THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR IN
NOT AFFIRMING THE DECISION OF THE NLRC, WHICH WAS BASED ON
SUBSTANTIAL EVIDENCE.
II
THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR IN
NOT AFFIRMING THE NLRC’S HOLDING THAT PETITIONERS’ WITHHOLDING
OF RESPONDENT’S SALARY FOR THE PAYROLL PERIOD NOVEMBER 16-30,
2005 IN VIEW OF RESPONDENT’S FAILURE TO RENDER ACTUAL WORK FOR
SAID PAYROLL PERIOD WAS A VALID EXERCISE OF MANAGEMENT
PREROGATIVE.
III
THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR IN
AFFIRMING THE LABOR ARBITER’S FINDING THAT RESPONDENT HAD BEEN
CONSTRUCTIVELY DISMISSED.
IV
THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR IN
AWARDING RESPONDENT SEPARATION PAY EQUIVALENT TO AT LEAST ONE
MONTH PAY IN LIEU OF REINSTATEMENT, FULL BACKWAGES, AND OTHER
PRIVILEGES AND BENEFITS, OR THEIR MONETARY EQUIVALENT IN VIEW OF
THE FACT THAT RESPONDENT VOLUNTARILY RESIGNED FROM PETITIONER
SHS AND WAS NOT ILLEGALLY DISMISSED.
38
 V Any withholding of an employee’s wages by an employer may only be allowed in the
THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR IN
NOT HOLDING THAT INDIVIDUAL PETITIONERS HARTMANNSHENN AND
SCHUMACHER MAY NOT BE HELD SOLIDARILY AND PERSONALLY LIABLE
WITH PETITIONER SHS FOR THE PAYMENT OF THE MONETARY AWARD TO
RESPONDENT.
The resolution of these issues is dependent on whether or not respondent was
constructively dismissed by petitioners, which determination is, in turn, hinged on
finding out (i) whether or not the temporary withholding of respondent’s salary/wages
by petitioners was a valid exercise of management prerogative; and (ii) whether or not
respondent voluntarily resigned.
THE COURT’S RULING
As a rule, the factual findings of the courts below are conclusive in a petition for
review on certiorari where only errors of law should be reviewed. The case, however,
is an exception because the factual findings of the CA and the LA are contradictory to
that of the NLRC. Thus, a review of the records is necessary to resolve the factual
issues involved and render substantial justice to the parties. 11
Petitioners contend that withholding respondent’s salary from November 16 to
November 30, 2005, was justified because respondent was absent and did not show
up for work during that period. He also failed to account for his whereabouts and work
accomplishments during said period. When there is an issue as to whether an
employee has, in fact, worked and is entitled to his salary, it is within management
prerogative to temporarily withhold an employee’s salary/wages pending
determination of whether or not such employee did indeed work.
We disagree with petitioners.
Management prerogative refers "to the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of employees, supervision of
their work, lay-off and discipline, and dismissal and recall of work." 12 Although
management prerogative refers to "the right to regulate all aspects of employment," it
cannot be understood to include the right to temporarily withhold salary/wages without
the consent of the employee. To sanction such an interpretation would be contrary to
Article 116 of the Labor Code, which provides:
ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for
any person, directly or indirectly, to withhold any amount from the wages of a worker
or induce him to give up any part of his wages by force, stealth, intimidation, threat or
by any other means whatsoever without the worker’s consent.
form of wage deductions under the circumstances provided in Article 113 of the Labor
Code, as set forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by
him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in writing by
the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued
by the Secretary of Labor.
As correctly pointed out by the LA, "absent a showing that the withholding of
complainant’s wages falls under the exceptions provided in Article 113, the
withholding thereof is thus unlawful."13
Petitioners argue that Article 116 of the Labor Code only applies if it is established
that an employee is entitled to his salary/wages and, hence, does not apply in cases
where there is an issue or uncertainty as to whether an employee has worked and is
entitled to his salary/wages, in consonance with the principle of "a fair day’s wage for
a fair day’s work." Petitioners contend that in this case there was precisely an issue
as to whether respondent was entitled to his salary because he failed to report to
work and to account for his whereabouts and work accomplishments during the
period in question.
To substantiate their claim, petitioners presented hard copies of the electronic mail
messages14 sent to respondent on November 22 and 24, 2005, directing the latter to
contact Hartmannshenn; the Affidavit15 of Taguiang stating that she advised
respondent on or about November 29, 2005 to immediately communicate with Mr.
Hartmannshenn at the SHS office; Hartmannshenn’s Counter-Affidavit16 stating that
he exerted earnest efforts to contact respondent through mobile phone;
Schumacher’s Counter-Affidavit17 stating that respondent had not filed any request for
official leave; and respondent’s admission in his Position Paper18 that he found it
absurd to report to the SHS plant when only security guards and machinists were
present.
Respondent, on the other hand, presented reports 19 prepared by him and submitted
to Hartmannshenn on November 18 and 25, 2005; a receipt20 issued to him by
Taguiang for a client’s payment during the subject period; and eight notarized
letters21 of prospective clients vouching for meetings they had with the respondent
during the subject period.
39
The Court finds petitioners’ evidence insufficient to prove that respondent did not
work from November 16 to November 30, 2005. As can be gleaned from respondent’s
Contract of Probationary Employment and the exchanges of electronic mail
messages22 between Hartmannshenn and respondent, the latter’s duties as manager
for business development entailed cultivating business ties, connections, and clients
in order to make sales. Such duties called for meetings with prospective clients
outside the office rather than reporting for work on a regular schedule. In other words,
the nature of respondent’s job did not allow close supervision and monitoring by
petitioners. Neither was there any prescribed daily monitoring procedure established
by petitioners to ensure that respondent was doing his job. Therefore, granting that
respondent failed to answer Hartmannshenn’s mobile calls and to reply to two
electronic mail messages and given the fact that he admittedly failed to report to work
at the SHS plant twice each week during the subject period, such cannot be taken to
signify that he did not work from November 16 to November 30, 2005.
Furthermore, the electronic mail reports sent to Hartmannshenn and the receipt
presented by respondent as evidence of his having worked during the subject period
were not controverted by petitioners. The eight notarized letters of prospective clients
vouching for meetings they had with respondent during the subject period may also
be given credence. Although respondent only presented such letters in support of his
Motion for Reconsideration filed with the NLRC, they may be considered by this Court
in light of Section 10, Rule VII, of the 2005 New Rules of Procedure of the NLRC,
which provides in part that "the rules of procedure and evidence prevailing in courts of
law and equity shall not be controlling and the Commission 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."
While administrative tribunals exercising quasi-judicial functions are free from the
rigidity of certain procedural requirements, they are bound by law and practice to
observe the fundamental and essential requirements of due process in justiciable
cases presented before them.23 In this case, due process was afforded petitioners as
respondent filed with the NLRC a Motion to Set Case for Reception of Additional
Evidence as regards the said letters, which petitioners had the opportunity to, and did,
oppose.
Although it cannot be determined with certainty whether respondent worked for the
entire period from November 16 to November 30, 2005, the consistent rule is that if
doubt exists between the evidence presented by the employer and that by the
employee, the scales of justice must be tilted in favor of the latter24 in line with the
policy mandated by Articles 2 and 3 of the Labor Code to afford protection to labor
and construe doubts in favor of labor. For petitioners’ failure to satisfy their burden of
proof, respondent is presumed to have worked during the period in question and is,
accordingly, entitled to his salary. Therefore, the withholding of respondent’s salary by
petitioners is contrary to Article 116 of the Labor Code and, thus, unlawful.
Petitioners contend that respondent could not have been constructively dismissed
because he voluntarily resigned as evidenced by his resignation letter. They assert
that respondent was not forced to draft the letter and his intention to resign is clear
from the contents and terms used, and that given respondent’s professional and
educational background, he was fully aware of the import and consequences of the
said letter. They maintain that respondent resigned to ‘save face’ and avoid
disciplinary measures due to his allegedly dismal work performance and failure to
report to work.
The Court, however, agrees with the LA and the CA that respondent was forced to
resign and was, thus, constructively dismissed. In Duldulao v. Court of Appeals, it
was written:
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain
by an employer becomes so unbearable on the part of the employee that it would
foreclose any choice by him except to forego his continued employment. It exists
where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay. 25
What made it impossible, unreasonable or unlikely for respondent to continue working
for SHS was the unlawful withholding of his salary. For said reason, he was forced to
resign. It is of no moment that he served his resignation letter on November 30, 2005,
the last day of the payroll period and a non-working holiday, since his salary was
already due him on November 29, 2005, being the last working day of said period. In
fact, he was then informed that the wages of all the other SHS employees were
already released, and only his was being withheld. What is significant is that the
respondent prepared and served his resignation letter right after he was informed that
his salary was being withheld. It would be absurd to require respondent to tolerate the
unlawful withholding of his salary for a longer period before his employment can be
considered as so impossible, unreasonable or unlikely as to constitute constructive
dismissal. Even granting that the withholding of respondent’s salary on November 30,
2005, would not constitute an unlawful act, the continued refusal to release his salary
after the payroll period was clearly unlawful. The petitioners’ claim that they prepared
the check ready for pick-up cannot undo the unlawful withholding.
It is worthy to note that in his resignation letter, respondent cited petitioners’ "illegal
and unfair labor practice"26 as his cause for resignation. As correctly noted by the
CA, respondent lost no time in submitting his resignation letter and eventually filing a
complaint for illegal dismissal just a few days after his salary was withheld. These
circumstances are inconsistent with voluntary resignation and bolster the finding of
constructive dismissal.
Petitioners cite the case of Solas v. Power & Telephone Supply Phils., Inc.27 to
support their contention that the mere withholding of an employee’s salary does not
by itself constitute constructive dismissal. Petitioners are mistaken in anchoring their
argument on said case, where the withholding of the salary was deemed lawful. In the
above-cited case, the employee’s salary was withheld for a valid reason - it was
applied as partial payment of a debt due to the employer, for withholding taxes on his
income and for his absence without leave. The partial payment of a debt due to the
employer and the withholding of taxes on income were valid deductions under Article
113 paragraph (c) of the Labor Code. The deduction from an employee’s salary for a
due and demandable debt to an employer was likewise sanctioned under Article 1706
of the Civil Code. As to the withholding for income tax purposes, it was prescribed by
40
the National Internal Revenue Code. Moreover, the employee therein was indeed
absent without leave.
In this case, the withholding of respondent’s salary does not fall under any of the
circumstances provided under Article 113. Neither was it established with certainty
that respondent did not work from November 16 to November 30, 2005. Hence, the
Court agrees with the LA and the CA that the unlawful withholding of respondent’s
salary amounts to constructive dismissal.
Respondent was constructively dismissed and, therefore, illegally
dismissed.1avvphi1 Although respondent was a probationary employee, he was still
entitled to security of tenure. Section 3 (2) Article 13 of the Constitution guarantees
the right of all workers to security of tenure. In using the expression "all workers," the
Constitution puts no distinction between a probationary and a permanent or regular
employee. This means that probationary employees cannot be dismissed except for
cause or for failure to qualify as regular employees.28
This Court has held that probationary employees who are unjustly dismissed during
the probationary period are entitled to reinstatement and payment of full backwages
and other benefits and privileges from the time they were dismissed up to their actual
reinstatement.29 Respondent is, thus, entitled to reinstatement without loss of
seniority rights and other privileges as well as to full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the time
his compensation was withheld up to the time of actual reinstatement. Respondent,
however, is not entitled to the additional amount for 13th month pay, as it is clearly
provided in respondent’s Probationary Contract of Employment that such is deemed
included in his salary. Thus:
EMPLOYEE will be paid a net salary of One Hundred Thousand (Php100,000.00)
Pesos per month payable every 15th day and end of the month.
The compensation package defined in this paragraph shall represent all that is due
and demandable under this Contract and includes all benefits required by law such as
the 13th month pay. No other benefits, bonus or allowance shall be due the
employee. 30
(emphasis supplied)
Respondent’s reinstatement, however, is no longer feasible as antagonism has
caused a severe strain in their working relationship. Under the doctrine of strained
relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. Payment
liberates the employee from what could be a highly oppressive work environment,
and at the same time releases the employer from the obligation of keeping in its
employ a worker it no longer trusts. Therefore, a more equitable disposition would be
an award of separation pay equivalent to at least one month pay, in addition to his full
backwages, allowances and other benefits.31
With respect to the personal liability of Hartmannshenn and Schumacher, this Court
has held that corporate directors and officers are only solidarily liable with the
corporation for termination of employment of corporate employees if effected with
malice or in bad faith.32 Bad faith does not connote bad judgment or negligence; it
imports dishonest purpose or some moral obliquity and conscious doing of wrong; it
means breach of unknown duty through some motive or interest or ill will; it partakes
of the nature of fraud.33 To sustain such a finding, there should be evidence on record
that an officer or director acted maliciously or in bad faith in terminating the
employee.34
Petitioners withheld respondent’s salary in the sincere belief that respondent did not
work for the period in question and was, therefore, not entitled to it. There was no
dishonest purpose or ill will involved as they believed there was a justifiable reason to
withhold his salary. Thus, although they unlawfully withheld respondent’s salary, it
cannot be concluded that such was made in bad faith. Accordingly, corporate officers,
Hartmannshenn and Schumacher, cannot be held personally liable for the corporate
obligations of SHS.
WHEREFORE, the assailed December 23, 2008 Decision of the Court of Appeals in
CA-G.R. SP No. 100015 is hereby AFFIRMED with MODIFICATION. The additional
amount for 13th month pay is deleted. Petitioners Winfried Hartmannshenn and
Hinrich Johann Schumacher are not solidarily liable with petitioner SHS Perforated
Materials, Inc.
13. Capin-Cadiz v. Brent Hospital and Colleges, Inc., G.R. No. 187417, February 24,
2016
THIRD DIVISION
G.R. No. 187417, February 24, 2016
CHRISTINE JOY CAPIN-CADIZ, Petitioner, v. BRENT HOSPITAL AND
COLLEGES, INC., Respondent.
REYES, J.:
This is a petition for review on certiorari1 under Rule 45 of the Rules of Court assailing
the Resolutions dated July 22, 20082 and February 24, 20093 of the Court of Appeals
(CA) in CA-G.R. SP No. 02373-MIN, which dismissed the petition filed by petitioner
Christine Joy Capin-Cadiz (Cadiz) on the following grounds: (1) incomplete statement
of material dates; (2) failure to attach registry receipts; and (3) failure to indicate the
place of issue of counsel's Professional Tax Receipt (PTR) and Integrated Bar of the
Philippines (IBP) official receipts.
Antecedent Facts
Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges,
41
Inc. (Brent) at the time of her indefinite suspension from employment in 2006. The
cause of suspension was Cadiz's Unprofessionalism and Unethical Behavior
Resulting to Unwed Pregnancy. It appears that Cadiz became pregnant out of
wedlock, and Brent imposed the suspension until such time that she marries her
boyfriend in accordance with law.
Cadiz then filed with the Labor Arbiter (LA) a complaint for Unfair Labor Practice,
Constructive Dismissal, Non-Payment of Wages and Damages with prayer for
Reinstatement.4
Ruling of the Labor Tribunals
In its Decision5 dated April 12, 2007, the LA found that Cadiz's indefinite suspension
amounted to a constructive dismissal; nevertheless, the LA ruled that Cadiz was not
illegally dismissed as there was just cause for her dismissal, that is, she engaged in
premarital sexual relations with her boyfriend resulting in a pregnancy out of
wedlock.6 The LA further stated that her "immoral conduct x x x [was] magnified as
serious misconduct not only by heir getting pregnant as a result thereof before and
without marriage, but more than that, also by the fact that Brent is an institution of the
Episcopal Church in the Philippines operating both a hospital and college where
[Cadiz] was employed."7 The LA also ruled that she was not entitled to reinstatement
"at least until she marries her boyfriend," to backwages and vacation/sick leave pay.
Brent, however, manifested that it was willing to pay her 1311 month pay. The
dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered, ordering [Brent] to pay [Cadiz] 13th
month pay in the sum of Seven Thousand Nine Hundred Seventy & 11/100 Pesos
(P7,970.11).
All other charges and claims are hereby dismissed for lack of merit.
SO ORDERED.8ChanRoblesVirtualawlibrary
Cadiz appealed to the National Labor Relations Commission (NLRC), which affirmed
the LA decision in its Resolution9 dated December 10, 2007. Her motion for
reconsideration having been denied by the NLRC in its Resolution10 dated February
29, 2008, Cadiz elevated her case to the CA on petition for certiorariunder Rule 65.
Ruling of the CA
The CA, however, dismissed her petition outright due to technical defects in the
petition: (1) incomplete statement of material dates; (2) failure to attach registry
receipts; and (3) failure to indicate the place of issue of counsel's PTR and IBP official
receipts.11 Cadiz sought reconsideration of the assailed CA Resolution dated July 22,
2008 but it was denied in the assailed Resolution dated February 24, 2009.12The CA
further ruled that "a perusal of the petition will reveal that public respondent NLRC
committed no grave abuse of discretion amounting to lack or excess of jurisdiction x x
x holding [Cadiz's] dismissal from employment valid." 13
Hence, the present petition. Cadiz argues that -
I
THE HONORABLE [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT HELD
TFIAT [CADIZ'S] IMPREGNATION OUTSIDE OF WEDLOCK IS A GROUND FOR
THE TERMINATION OF [CADIZ'S] EMPLOYMENT14
II
THE [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT UPHELD
THE DISMISSAL OF [CADIZ] ON THE GROUND THAT THE INDEFINITE
SUSPENSION WAS VALID AND REQUIRED [CADIZ] TO FIRST ENTER INTO
MARRIAGE BEFORE SHE CAN BE ADMITTED BACK TO HER EMPLOYMENT15
III
RESPONDENT [NLRC] GRAVELY ABUSED ITS DISCRETION WHEN IT DENIED
[CADIZ'S] CLAIM FOR BACKWAGES, ALLOWANCES, SICK LEAVE PAY,
MATERNITY PAY AND MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S
FEES16
IV
THE [CA] MISPLACED APPLICATION OF THE MATERIAL DATA RULE
RESULTING TO GRAVE ABUSE OF DISCRETION WHEN IT DISMISSED THE
APPEAL17
Cadiz contends, among others, that getting pregnant outside of wedlock is not grossly
immoral, especially when both partners do not have any legal impediment to marry.
Cadiz surmises that the reason for her suspension was not because of her
relationship with her then boyfriend but because of the resulting pregnancy. Cadiz
also lambasts Brent's condition for her reinstatement - that she gets married to her
boyfriend - saying that this violates the stipulation against marriage under Article 136
of the Labor Code. Finally, Cadiz contends that there was substantial compliance with
the rules of procedure, and the CA should not have dismissed the petition. 18
Brent, meanwhile, adopts and reiterates its position before the LA and the NLRC that
Cadiz's arguments are irrational and out of context. Brent argues, among others, that
for Cadiz to limit acts of immorality only to extra-marital affairs is to "change the
norms, beliefs, teachings and practices of BRENT as a Church institution of the x x x
Episcopal Church in the Philippines."19
Ruling of the Court
Ordinarily, the Court will simply gloss over the arguments raised by Cadiz, given that
the main matter dealt with by the CA were the infirmities found in the petition and
which caused the dismissal of her case before it. In view, however, of the significance
of the issues involved in Cadiz's dismissal from employment, the Court will resolve
the petition including the substantial grounds raised herein.
The issue to be resolved is whether the CA committed a reversible error in ruling that:
42
(1) Cadiz's petition is dismissible on ground of technical deficiencies; and (2) the
NLRC did not commit grave abuse of discretion in upholding her dismissal from
employment.
Rules of procedure are mere
tools designed to facilitate the
attainment of justice
In dismissing outright Cadiz's petition, the CA found the following defects: (1)
incomplete statement of material dates; (2) failure to attach registry receipts; and (3)
failure to indicate the place of issue of counsel's PTR and IBP official receipts.
Rule 46, Section 3 of the Rules of Court states the contents of a petition filed with the
CA under Rule 65, viz, "the petition shall x x x indicate the material dates showing
when notice of the judgment or final order or resolution subject thereof was received,
when a motion for new trial or reconsideration, if any, was filed and when notice of the
denial thereof was received." The rationale for this is to enable the CA to determine
whether the petition was filed within the period fixed in the rules. 20 Cadiz's failure to
state the date of receipt of the copy of the NLRC decision, however, is not fatal to her
case since the more important material date which must be duly alleged in a petition
is the date of receipt of the resolution of denial of the motion for
reconsideration,21 which she has duly complied with.22
The CA also dismissed the petition for failure to attach the registry receipt in the
affidavit of service.23Cadiz points out, on the other hand, that the registry receipt
number was indicated in the petition and this constitutes substantial compliance with
the requirement. What the rule requires, however, is that the registry receipt must be
appended to the paper being served.24 Clearly, mere indication of the registry receipt
numbers will not suffice. In fact, the absence of the registry receipts amounts to lack
of proof of service.25 Nevertheless, despite this defect, the Court finds that the ends of
substantial justice would be better served by relaxing the application of technical rules
of procedure.26 With regard to counsel's failure to indicate the place where the IBP
and PTR receipts were issued, there was substantial compliance with the requirement
since it was indicated in the verification and certification of non-forum shopping, as
correctly argued by Cadiz's lawyer.27cralawred
Time and again, the Court has emphasized that rules of procedure are designed to
secure substantial justice. These are mere tools to expedite the decision or resolution
of cases and if their strict and rigid application would frustrate rather than promote
substantial justice, then it must be avoided.28
Immorality as a just cause for
termination of employment
Both the LA and the NLRC upheld Cadiz's dismissal as. one attended with just cause.
The LA, while ruling that Cadiz's indefinite suspension was tantamount to a
constructive dismissal, nevertheless found that there was just cause for her dismissal.
According to the LA, "there was just cause therefor, consisting in her engaging in
premarital sexual relations with Carl Cadiz, allegedly her boyfriend, resulting in her
becoming pregnant out of wedlock."29 The LA deemed said act to be immoral, which
was punishable by dismissal under Brent's rules and which likewise constituted
serious misconduct under Article 282(a) of the Labor Code. The LA also opined that
since Cadiz was Brent's ITuman Resource Officer in charge of implementing its rules
against immoral conduct, she should have been the "epitome of proper
conduct."30 The LA ruled:
[Cadiz's] immoral conduct by having premarital sexual relations with her alleged boy
friend, a former Brent worker and her co-employee, is magnified as serious
misconduct not only by her getting pregnant as a result thereof before and without
marriage, but more than that, also by the fact that Brent is an institution of the
Episcopal Church in the Philippines xxx committed to "developing competent and
dedicated professionals xxx and in providing excellent medical and other health
services to the community for the Glory of God and Service to Humanity." x x x As if
these were not enough, [Cadiz] was Brent's Human Resource Officer charged with,
among others, implementing the rules of Brent against immoral conduct, including
premarital sexual relations, or fornication xxx. She should have been the epitome of
proper conduct, but miserably failed. She herself engaged in premarital sexual
relations, which surely scandalized the Brent community, x x x. 31
The NLRC, for its part, sustained the LA's conclusion.
The Court, however, cannot subscribe to the labor tribunals' conclusions.
Admittedly, one of the grounds for disciplinary action under Brent's policies is
immorality, which is punishable by dismissal at first offense 32 Brent's Policy Manual
provides:
CATEGORY IV
In accordance with Republic Act No. 1052,33 the following are just cause for
terminating an employment of an employee without a definite period:
xxxx
2. Serious misconduct or willful disobedience by the employee of the orders of his
employer or representative in connection with his work, such as, but not limited to the
following:
chanRoblesvirtualLawlibrary
xxxx
b. Commission of immoral conduct or indecency within the company premises, such
as an act of lasciviousness or any act which is sinful and vulgar in nature.
c. Immorality, concubinage, bigamy.34ChanRoblesVirtualawlibrary
Its Employee's Manual of Policies, meanwhile, enumerates "[a]cts of immorality such
as scandalous behaviour, acts of lasciviousness against any person (patient, visitors,
co-workers) within hospital premises"35 as a ground for discipline and discharge.
Brent also relied on Section 94 of the Manual of Regulations for Private Schools
(MRPS), which lists "disgraceful or immoral conduct" as a cause for terminating
employment.36
43

Thus, the question that must be resolved is whether Cadiz's premarital relations with
her boyfriend and the resulting pregnancy out of wedlock constitute immorality. To
resolve this, the Court makes reference to the recently promulgated case of Cheryll
Santos Lens v. St. Scholastica 's College Westgrove and/or Sr. Edna Quiambao,
OSB37
Leus involved the same personal circumstances as the case at bench, albeit the
employer was a Catholic and sectarian educational institution and the petitioner,
Cheryl 1 Santos Leus (Leus), worked as an assistant to the school's Director of the
Lay Apostolate and Community Outreach Directorate. Leus was dismissed from
employment by the school for having borne a child out of wedlock. The Court ruled
in Leus that the determination of whether a conduct is disgraceful or immoral involves
a two-step process: first, a consideration of the totality of the circumstances
surrounding the conduct; and second, an assessment of the said circumstances vis-
a-vis the prevailing norms of conduct, i.e., what the society generally considers moral
and respectable.
In this case, the surrounding facts leading to Cadiz's dismissal are straightforward -
she was employed as a human resources officer in an educational and medical
institution of the Episcopal Church of the Philippines; she and her boyfriend at that
time were both single; they engaged in premarital sexual relations, which resulted into
pregnancy. The labor tribunals characterized these as constituting disgraceful or
immoral conduct. They also sweepingly concluded that as Human Resource Officer,
Cadiz should have been the epitome of proper conduct and her indiscretion "surely
scandalized the Brent community."38
The foregoing circumstances, however, do not readily equate to disgraceful and
immoral conduct. Brent's Policy Manual and Employee's Manual of Policies do not
define what constitutes immorality; it simply stated immorality as a ground for
disciplinary action. Instead, Brent erroneously relied on the standard dictionary
definition of fornication as a form of illicit relation and proceeded to conclude that
Cadiz's acts fell under such classification, thus constituting immorality. 39
Jurisprudence has already set the standard of morality with which an act should be
gauged - it is public and secular, not religious.40 Whether a conduct is considered
disgraceful or immoral should be made in accordance with the prevailing norms of
conduct, which, as stated in Leus, refer to those conducts which are proscribed
because they are detrimental to conditions upon which depend the existence
and progress of human society. The fact that a particular act does not conform to
the traditional moral views of a certain sectarian institution is not sufficient reason to
qualify such act as immoral unless it, likewise, does not conform to public and secular
standards. More importantly, there must be substantial evidence to establish that
premarital sexual relations and pregnancy out of wedlock is considered disgraceful or
immoral.41
The totality of the circumstances of this case does not justify the conclusion that
Cadiz committed acts of immorality. Similar to Leus, Cadiz and her boyfriend were
both single and had no legal impediment to marry at the time she committed the
alleged immoral conduct. In fact, they eventually married on April 15, 2008. 42 Aside
from these, the labor tribunals' respective conclusion that Cadiz's "indiscretion"
"scandalized the Brent community" is speculative, at most, and there is no proof
adduced by Brent to support such sweeping conclusion. Even Brent admitted that it
came to know of Cadiz's "situation" only when her pregnancy became
manifest.43 Brent also conceded that "[a]t the time [Cadiz] and Carl R. Cadiz were just
carrying on their boyfriend-girlfriend relationship, there was no knowledge or evidence
by [Brent] that they were engaged also in premarital sex."44 This only goes to show
that Cadiz did not flaunt her premarital relations with her boyfriend and it was not
carried on under scandalous or disgraceful circumstances. As declared in Leus,
"there is no law which penalizes an unmarried mother by reason of her sexual
conduct or proscribes the consensual sexual activity between two unmarried persons;
that neither does such situation contravene[s] any fundamental state policy enshrined
in the Constitution."45 The fact that Brent is a sectarian institution does not
automatically subject Cadiz to its religious standard of morality absent an express
statement in its manual of personnel policy and regulations, prescribing such religious
standard as gauge as these regulations create the obligation on both the employee
and the employer to abide by the same.46
Brent, likewise, cannot resort to the MRPS because the Court already stressed in
Leus that "premarital sexual relations between two consenting adults who have no
impediment to marry each other, and, consequently, conceiving a child out of
wedlock, gauged from a purely public and secular view of morality, does not amount
to a disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS."47
Marriage as a condition for reinstatement
The doctrine of management prerogative gives an employer the right to "regulate,
according to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and
recall of employees."48 In this case, Brent imposed on Cadiz the condition that she
subsequently contract marriage with her then boyfriend for her to be reinstated.
According to Brent, this is "in consonance with the policy against encouraging illicit or
common-law relations that would subvert the sacrament of marriage." 49
Statutory law is replete with legislation protecting labor and promoting equal
opportunity in employment. No less than the 1987 Constitution mandates that the
"State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities
for all."50 The Labor Code of the Philippines, meanwhile, provides:
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require
as a condition of employment or continuation of employment that a woman employee
shall not get married, or to stipulate expressly or tacitly that upon getting married, a
woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason
of her marriage.
With particular regard to women, Republic Act No. 9710 or the Magna Carta of
Women51 protects women against discrimination in all matters relating to marriage
and family relations, including the right to choose freely a spouse and to enter into
marriage only with their free and full consent.52
44
 oppress or destroy management.62 The Court notes that at the time of Cadiz's
Weighed against these safeguards, it becomes apparent that Brent's condition is indefinite suspension from employment, Leus was yet to be decided by the Court.
coercive, oppressive and discriminatory. There is no rhyme or reason for it. It forces Moreover, Brent was acting in good faith and on its honest belief that Cadiz's
Cadiz to marry for economic reasons and deprives her of the freedom to choose her pregnancy out of wedlock constituted immorality. Thus, fairness and equity dictate
status, which is a privilege that inheres in her as an intangible and inalienable that the award of backwages shall only be equivalent to one (1) year or P109,304.40,
right.53 While a marriage or no-marriage qualification may be justified as a "bona fide computed as follows:
occupational qualification," Brent must prove two factors necessitating its
imposition, viz: (1) that the employment qualification is reasonably related to the
essential operation of the job involved; and (2) that there is a factual basis for Monthly salary P9,108.70
believing that all or substantially all persons meeting the qualification would be unable
to properly perform the duties of the job.54 Brent has not shown the presence of
neither of these factors. Perforce, the Court cannot uphold the validity of said multiplied by one year x x
condition.
or 12 months 12
Given the foregoing, Cadiz, therefore, is entitled to reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation
P109,304.40
was withheld up to the date of actual reinstatement. Where reinstatement is no longer
viable as an option, separation pay should be awarded as an alternative and as a
form of financial assistance.55 In the computation of separation pay, the Court
Finally, with regard to Cadiz's prayer for moral and exemplary damages, the Court
stresses that it should not go beyond the date an employee was deemed to
finds the same without merit. A finding of illegal dismissal, by itself, does not establish
have been actually separated from employment, or beyond the date when
bad faith to entitle an employee to moral damages.63 Absent clear and convincing
reinstatement was rendered impossible.56 In this case, the records do not show
evidence showing that Cadiz's dismissal from Brent's employ had been carried out in
whether Cadiz already severed her employment with Brent or whether she is gainfully
an arbitrary, capricious and malicious manner, moral and exemplary damages cannot
employed elsewhere; thus, the computation of separation pay shall be pegged based
be awarded. The Court nevertheless grants the award of attorney's fees in the
on the findings that she was employed on August 16, 2002, on her own admission in
amount often percent (10%) of the total monetary award, Cadiz having been forced to
her complaint that she was dismissed on November 17, 2006, and that she was
litigate in order to seek redress of her grievances.64
earning a salary of P9,108.70 per month,57 which shall then be computed at a rate of
one (1) month salary for every year of service,58 as follows: WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and
February 24, 2009 of the Court of Appeals in CA-G.R. SP No. 02373-M1N
are REVERSED and SET ASIDE, and a NEW ONE ENTERED finding petitioner
Monthly salary P9,108.70 Christine Joy Capin-Cadiz to have been dismissed without just cause.

multiplied by number of years x Respondent Brent Hospital and Colleges, Inc. is hereby ORDERED TO
in service (Aug 02 to Nov 06) 4
P36,434.80
The Court also finds that Cadiz is only entitled to limited backwages. Generally, the
computation of backwages is reckoned from the date of illegal dismissal until actual
reinstatement.59 In case separation pay is ordered in lieu of reinstatement or
reinstatement is waived by the employee, backwages is computed from the time of
dismissal until the finality of the decision ordering separation pay. 60Jurisprudence
further clarified that the period for computing the backwages during the period of
appeal should end on the date that a higher court reversed the labor arbitration ruling
of illegal dismissal.61 If applied in Cadiz's case, then the computation of backwages
should be from November 17, 2006, which was the time of her illegal dismissal, until
the date of promulgation of this decision. Nevertheless, the Court has also recognized
that the constitutional policy of providing full protection to labor is not intended to
PAY petitioner Christine Joy Capin-Cadiz:
(1) One Hundred Nine Thousand Three Hundred Four Pesos and 40/100
(P109,304.40) as backwages;
(2) Thirty-Six Thousand Four Hundred Thirty-Four Pesos and 80/100 (P36,434.80) as
separation pay; and
(3) Attorney's fees equivalent to ten percent (10%) of the total award.
The monetary awards granted shall earn legal interest at the rate of six percent
(6%) per annum from the date of the finality of this Decision until fully paid.
SO ORDERED
14. Supreme Steel Corp. v. Nagkakaisang Manggagawa Ng Supreme Independent
Union (Nms-Ind-Apl), G.R. No. 185556, March 28, 2011
45

G.R. No. 185556 March 28, 2011
SUPREME STEEL CORPORATION, Petitioner,
vs.
NAGKAKAISANG MANGGAGAWA NG SUPREME INDEPENDENT UNION (NMS-
IND-APL), Respondent.
NACHURA, J.:
This petition for review on certiorari assails the Court of Appeals (CA) Decision 1 dated
September 30, 2008, and Resolution dated December 4, 2008, which affirmed the
finding of the National Labor Relations Commission (NLRC) that petitioner violated
certain provisions of the Collective Bargaining Agreement (CBA).
Petitioner Supreme Steel Pipe Corporation is a domestic corporation engaged in the
business of manufacturing steel pipes for domestic and foreign markets. Respondent
Nagkakaisang Manggagawa ng Supreme Independent Union is the certified
bargaining agent of petitioner’s rank-and-file employees. The CBA2 in question was
executed by the parties to cover the period from June 1, 2003 to May 31, 2008.
The Case
On July 27, 2005, respondent filed a notice of strike with the National Conciliation and
Mediation Board (NCMB) on the ground that petitioner violated certain provisions of
the CBA. The parties failed to settle their dispute. Consequently, the Secretary of
Labor certified the case to the NLRC for compulsory arbitration pursuant to Article
263(g) of the Labor Code.
Respondent alleged eleven CBA violations, delineated as follows:
A. Denial to four employees of the CBA- provided wage increase
Article XII, Section 1 of the CBA provides:
Section 1. The COMPANY shall grant a general wage increase, over and above to all
employees, according to the following schedule:
A. Effective June 1, 2003 ₱14.00 per working day;
B. Effective June 1, 2004 ₱12.00 per working day; and
C. Effective June 1, 2005 ₱12.00 per working day.3
Respondent alleged that petitioner has repeatedly denied the annual CBA increases
to at least four individuals: Juan Niño, Reynaldo Acosta, Rommel Talavera, and Eddie
Dalagon. According to respondent, petitioner gives an anniversary increase to its
employees upon reaching their first year of employment. The four employees
received their respective anniversary increases and petitioner used such anniversary
increase to justify the denial of their CBA increase for the year. 4
Petitioner explained that it has been the company’s long standing practice that upon
reaching one year of service, a wage adjustment is granted, and, once wages are
adjusted, the increase provided for in the CBA for that year is no longer implemented.
Petitioner claimed that this practice was not objected to by respondent as evidenced
by the employees’ pay slips.5
Respondent countered that petitioner failed to prove that, as a matter of company
practice, the anniversary increase took the place of the CBA increase. It contended
that all employees should receive the CBA stipulated increase for the years 2003 to
2005.6
B. Contracting-out labor
Article II, Section 6 of the CBA provides:
Section 6. Prohibition of Contracting Out of Work of Members of Bargaining Unit.
Thirty (30) days from the signing of this CBA, contractual employees in all
departments, except Warehouse and Packing Section, shall be phased out. Those
contractual employees who are presently in the workforce of the COMPANY shall no
longer be allowed to work after the expiration of their contracts without prejudice to
being hired as probationary employees of the COMPANY.7
Respondent claimed that, contrary to this provision, petitioner hired temporary
workers for five months based on uniformly worded employment contracts, renewable
for five months, and assigned them to almost all of the
departments in the company. It pointed out that, under the CBA, temporary workers
are allowed only in the Warehouse and Packing Section; consequently, employment
of contractual employees outside this section, whether direct or agency-hired, was
absolutely prohibited. Worse, petitioner never regularized them even if the position
they occupied and the services they performed were necessary and desirable to its
business. Upon the expiration of their contracts, these workers would be replaced
with other workers with the same employment status. This scheme is a clear
circumvention of the laws on regular employment. 8
Respondent argued that the right to self-organization goes beyond the maintenance
of union membership. It emphasized that the CBA maintains a union shop clause
which gives the regular employees 30 days within which to join respondent as a
condition for their continued employment. Respondent maintained that petitioner’s
persistent refusal to grant regular status to its employees, such as Dindo Buella, who
is assigned in the Galvanizing Department, violates the employees’ right to self-
46
organization in two ways: (1) they are deprived of a representative for collective
bargaining purposes; and (2) respondent is deprived the right to expand its
membership. Respondent contended that a union’s strength lies in its number, which
becomes crucial especially during negotiations; after all, an employer will not bargain
seriously with a union whose membership constitutes a minority of the total workforce
of the company. According to respondent, out of the 500 employees of the company,
only 147 are union members, and at least 60 employees would have been eligible for
union membership had they been recognized as regular employees. 9
For its part, petitioner admitted that it hired temporary workers. It purportedly did so to
cope with the seasonal increase of the job orders from abroad. In order to comply
with the job orders, petitioner hired the temporary workers to help the regular workers
in the production of steel pipes. Petitioner maintained that these workers do not affect
respondent’s membership. Petitioner claimed that it agreed to terminate these
temporary employees on the condition that the regular employees would have to
perform the work that these employees were performing, but respondent refused.
Respondent’s refusal allegedly proved that petitioner was not contracting out the
services being performed by union members. Finally, petitioner insisted that the hiring
of temporary workers is a management prerogative.10
C. Failure to provide shuttle service
Petitioner has allegedly reneged on its obligation to provide shuttle service for its
employees pursuant to Article XIV, Section 7 of the CBA, which provides:
Section 7. Shuttle Service. As per company practice, once the company vehicle used
for the purpose has been reconditioned.11
Respondent claimed that the company vehicle which would be used as shuttle
service for its employees has not been reconditioned by petitioner since the signing of
the CBA on February 26, 2004.12 Petitioner explained that it is difficult to implement
this provision and simply denied that it has reneged on its obligation. 13
D. Refusal to answer for the medical expenses incurred by three employees
Respondent asserted that petitioner is liable for the expenses incurred by three
employees who were injured while in the company premises. This liability allegedly
stems from Article VIII, Section 4 of the CBA which provides:
Section 4. The COMPANY agrees to provide first aid medicine and first aid service
and consultation free of charge to all its employees.14
According to respondent, petitioner’s definition of what constitutes first aid service is
limited to the bare minimum of treating injured employees while still within the
company premises and referring the injured employee to the Chinese General
Hospital for treatment, but the travel expense in going to the hospital is charged to the
employee. Thus, when Alberto Guevarra and Job Canizares, union members, were
injured, they had to pay ₱90.00 each for transportation expenses in going to the
hospital for treatment and going back to the company thereafter. In the case of
Rodrigo Solitario, petitioner did not even shoulder the cost of the first aid medicine,
amounting to ₱2,113.00, even if he was injured during the company sportsfest, but
the amount was deducted, instead, from his salary. Respondent insisted that this
violates the above cited provision of the CBA.15
Petitioner insisted that it provided medicine and first aid assistance to Rodrigo
Solitario.1avvphi1 It alleged that the latter cannot claim hospitalization benefits under
Article VIII, Section 116 of the CBA because he was not confined in a hospital.17
E. Failure to comply with the time-off with pay provision
Article II, Section 8 of the CBA provides:
Section 8. Time-Off with Pay. The COMPANY shall grant to the UNION’s duly
authorized representative/s or to any employee who are on duty, if summoned by the
UNION to testify, if his/her presence is necessary, a paid time-off for the handling of
grievances, cases, investigations, labor-management conferences provided that if the
venue of the case is outside Company premises involving [the] implementation and
interpretation of the CBA, two (2) representatives of the UNION who will attend the
said hearing shall be considered time-off with pay. If an employee on a night shift
attends grievance on labor-related cases and could not report for work due to
physical condition, he may avail of union leave without need of the two (2) days prior
notice.18
Respondent contended that under the said provision, petitioner was obliged to grant a
paid time-off to respondent’s duly authorized representative or to any employee who
was on duty, when summoned by respondent to testify or when the employee’s
presence was necessary in the grievance hearings, meetings, or investigations. 19
Petitioner admitted that it did not honor the claim for wages of the union officers who
attended the grievance meetings because these meetings were initiated by
respondent itself. It argued that since the union officers
were performing their functions as such, and not as employees of the company, the
latter should not be liable. Petitioner further asserted that it is not liable to pay the
wages of the union officers when the meetings are held beyond company time (3:00
p.m.). It claimed that time-off with pay is allowed only if the venue of the meeting is
outside company premises and the meeting involves the implementation and
interpretation of the CBA.20
In reply, respondent averred that the above quoted provision does not make a
qualification that the meetings should be held during office hours (7:00 a.m. to 3:00
p.m.); hence, for as long as the presence of the employee is needed, time spent
during the grievance meeting should be paid.21
F. Visitors’ free access to company premises Respondent charged petitioner with
violation of Article II, Section 7 of the CBA which provides:
47
Section 7. Free Access to Company Premises. Local Union and Federation officers
(subject to company’s security measure) shall be allowed during working hours to
enter the COMPANY premises for the following reasons:
a. To investigate grievances that have arisen;
b. To interview Union Officers, Stewards and members during reasonable
hours; and
c. To attend to any meeting called by the Management or the UNION. 22
G. Failure to comply with reporting time-off provision
Respondent maintained that a brownout is covered by Article XII, Section 3 of the
CBA which states:
Section 3. Reporting Time-Off. The employees who have reported for work but are
unable to continue working because of emergencies such as typhoons, flood,
earthquake, transportation strike, where the COMPANY is affected and in case of fire
which occurs in the block where the home of the employee is situated and not just
across the street and serious illness of an immediate member of the family of the
employee living with him/her and no one in the house can bring the sick family
member to the hospital, shall be paid as follows:
a. At least half day if the work stoppage occurs within the first four (4) hours
of work; and
b. A whole day if the work stoppage occurs after four (4) hours of work. 23
Respondent averred that petitioner paid the employees’ salaries for one hour only of
the four-hour brownout that occurred on July 25, 2005 and refused to pay for the
remaining three hours. In defense, petitioner simply insisted that brownouts are not
included in the above list of emergencies.24
Respondent rejoined that, under the principle of ejusdem generis, brownouts or
power outages come within the "emergencies" contemplated by the CBA provision.
Although brownouts were not specifically identified as one of the emergencies listed
in the said CBA provision, it cannot be denied that brownouts fall within the same kind
or class of the enumerated emergencies. Respondent maintained that the intention of
the provision was to compensate the employees for occurrences which are beyond
their control, and power outage is one of such occurrences. It insisted that the list of
emergencies is not an exhaustive list but merely gives an idea as to what constitutes
an actual emergency that is beyond the control of the employee. 25
H. Dismissal of Diosdado Madayag
Diosdado Madayag was employed as welder by petitioner. He was served a Notice of
Termination dated March 14, 2005 which read:
Please consider this as a Notice of Termination of employment effective March 14,
2005 under Art. 284 of the Labor Code and its Implementing Rules.
This is based on the medical certificate submitted by your attending physician, Lucy
Anne E. Mamba, M.D., Jose R. Reyes Memorial Medical Center dated March 7, 2005
with the following diagnosis:
‘Diabetes Mellitus Type 2’
Please be guided accordingly.26
Respondent contended that Madayag’s dismissal from employment is illegal because
petitioner failed to obtain a certification from a competent public authority that his
disease is of such nature or at such stage that it cannot be cured within six months
even after proper medical treatment. Petitioner also failed to prove that Madayag’s
continued employment was prejudicial to his health or that of his colleagues. 27
Petitioner, on the other hand, alleged that Madayag was validly terminated under Art.
28428 of the Labor Code and that his leg was amputated by reason of diabetes, which
disease is not work-related. Petitioner claimed that it was willing to pay Madayag 13
days for every year of service but respondent was asking for additional benefits.29
I. Denial of paternity leave benefit to two employees
Article XV, Section 2 of the CBA provides:
Section 2. Paternity Leave. As per law[,] [t]he Company shall, as much as possible,
pay paternity leave within 2 weeks from submission of documents.30
Petitioner admitted that it denied this benefit to the claimants for failure to observe the
requirement provided in the Implementing Rules and Regulations of Republic Act No.
8187 (Paternity Leave Act of 1995), that is, to notify the employer of the pregnancy of
their wives and the expected date of delivery.31
Respondent argued that petitioner is relying on technicalities by insisting that the
denial was due to the two employees’ failure to notify it of the pregnancy of their
respective spouses. It maintained that the notification requirement runs counter to the
spirit of the law. Respondent averred that, on grounds of social justice, the oversight
to notify petitioner should not be dealt with severely by denying the two claimants this
benefit.32
J. Discrimination and harassment
48
According to respondent, petitioner was contemptuous over union officers for
protecting the rights of union members. In an affidavit executed by Chito Guadaña,
union secretary, he narrated that Alfred Navarro, Officer-in-Charge of the Packing
Department, had been harsh in dealing with his fellow employees and would even
challenge some workers to a fight. He averred that Navarro had an overbearing
attitude during work and grievance meetings. In November 2004, Navarro removed
Guadaña, a foreman, from his position and installed another foreman from another
section. The action was allegedly brought about by earlier grievances against
Navarro’s abuse. Petitioner confirmed his transfer to another section in violation of
Article VI, Section 6 of the CBA,33 which states in part:
Section 6. Transfer of Employment. – No permanent positional transfer outside can
be effected by the COMPANY without discussing the grounds before the Grievance
Committee. All transfer shall be with advance notice of two (2) weeks. No transfer
shall interfere with the employee’s exercise of the right to self-organization.34
Respondent also alleged that Ariel Marigondon, union president, was also penalized
for working for his fellow employees. One time, Marigondon inquired from
management about matters concerning tax discrepancies because it appeared that
non-taxable items were included as part of taxable income. Thereafter, Marigondon
was transferred from one area of operation to another until he was allegedly forced to
accept menial jobs of putting control tags on steel pipes, a kind of job which did not
require his 16 years of expertise in examining steel pipes. 35
Edgardo Masangcay, respondent’s Second Vice President, executed an affidavit
wherein he cited three instances when his salary was withheld by petitioner. The first
incident happened on May 28, 2005 when petitioner refused to give his salary to his
wife despite presentation of a proof of identification (ID) and letter of authorization. On
June 18, 2005, petitioner also refused to release his salary to Pascual Lazaro despite
submission of a letter of authority and his ID and, as a result, he was unable to buy
medicine for his child who was suffering from asthma attack. The third instance
happened on June 25, 2005 when his salary was short of ₱450.00; this amount was
however released the following week.36
Petitioner explained that the transfer of the employee from one department to another
was the result of downsizing the Warehouse Department, which is a valid exercise of
management prerogative. In Guadaña’s case, Navarro denied that he was being
harsh but claimed that he merely wanted to stress some points. Petitioner explained
that Guadaña was transferred when the section where he was assigned was phased
out due to the installation of new machines. Petitioner pointed out that the other
workers assigned in said section were also transferred.37
For the petitioner, Emmanuel Mendiola, Production Superintendent, also executed an
affidavit attesting that the allegation of Ariel Marigondon, that he was harassed and
was a victim of discrimination for being respondent’s President, had no basis.
Marigondon pointed out that after the job order was completed, he was reassigned to
his original shift and group.38
Petitioner also submitted the affidavits of Elizabeth Llaneta Aguilar, disbursement
clerk and hiring staff, and Romeo T. Sy, Assistant Personnel Manager. Aguilar
explained that she did not mean to harass Masangcay, but she merely wanted to
make sure that he would receive his salary. Affiant Sy admitted that he refused to
release Masangcay’s salary to a woman who presented herself as his (Masangcay’s)
wife since nobody could attest to it. He claimed that such is not an act of harassment
but a precautionary measure to protect Masangcay’s interest.39
K. Non-implementation of COLA in Wage Order Nos. RBIII-10 and 11
Respondent posited that any form of wage increase granted through the CBA should
not be treated as compliance with the wage increase given through the wage boards.
Respondent claimed that, for a number of years, petitioner has complied with Article
XII, Section 2 of the CBA which provides:
Section 2. All salary increase granted by the COMPANY shall not be credited to any
future contractual or legislated wage increases. Both increases shall be implemented
separate and distinct from the increases stated in this Agreement. It should be
understood by both parties that contractual salary increase are separate and distinct
from legislated wage increases, thus the increase brought by the latter shall be
enjoyed also by all covered employees.40
Respondent maintained that for every wage order that was issued in Region 3,
petitioner never hesitated to comply and grant a similar increase. Specifically,
respondent cited petitioner’s compliance with Wage Order No. RBIII-10 and grant of
the mandated ₱15.00 cost of living allowance (COLA) to all its employees. Petitioner,
however, stopped implementing it to non-minimum wage earners on July 24, 2005. It
contended that this violates Article 100 of the Labor Code which prohibits the
diminution of benefits already enjoyed by the workers and that such grant of benefits
had already ripened into a company practice.41
Petitioner explained that the COLA provided under Wage Order No. RBIII-10 applies
to minimum wage earners only and that, by mistake, it implemented the same across
the board or to all its employees. After realizing its mistake, it stopped integrating the
COLA to the basic pay of the workers who were earning above the minimum wage. 42
The NLRC’s Ruling
Out of the eleven issues raised by respondent, eight were decided in its favor; two
(denial of paternity leave benefit and discrimination of union members) were decided
in favor of petitioner; while the issue on visitor’s free access to company premises
was deemed settled during the mandatory conference. The dispositive portion of the
NLRC Decision dated March 30, 2007 reads:
WHEREFORE, Supreme Steel Pipe Corporation (the Company) is hereby ordered to:
1) implement general wage increase to Juan Niño, Eddie Dalagon and
Rommel Talavera pursuant to the CBA in June 2003, 2004 and 2005;
49
2) regularize workers Dindo Buella and 60 other workers and to respect CBA
provision on contracting-out labor; 18) F. Servano - ₱174.02

19) R. Estrella - ₱181.50

3) recondition the company vehicle pursuant to the CBA;
20) A. Marigondon - ₱181.66
4) answer for expenses involved in providing first aid services including
transportation expenses for this purpose, as well as to reimburse Rodrigo
Solitario the sum of ₱2,113.00; 6) pay workers their salary for the 3 hours of the 4 hour brownout as follows:

5) pay wages of union members/officers who attended grievance meetings

as follows: 1) Alagon, Jr., Pedro - ₱130.0875

2) Aliwalas, Cristeto - ₱108.5625

1) D. Serenilla - ₱115.24375
3) Baltazar, Roderick - ₱ 90.1875
2) D. Miralpes - ₱115.80625
4) Bañez, Oliver - ₱ 90.9375
3) E. Mallari - ₱108.7625
5) Prucal, Eduardo - ₱126.015
4) C. Cruz - ₱114.65313
6) Calimquin, Rodillo - ₱131.0362
5) J. Patalbo - ₱161.0625
7) Clave, Arturo - ₱125.64
6) J.J. Muñoz - ₱111.19375
8) Cadavero, Rey - ₱108.5625
7) C. Guadaña - ₱56.94375
9) De Leon, Romulo - ₱124.35
8) J. Patalbo - ₱161.0625
10) Lactao, Noli - ₱126.015
9) E. Mallari - ₱108.7625
11) Layco, Jr., Dandino - ₱130.5375
10) C. Guadaña - ₱113.8875
12) Legaspi, Melencio - ₱127.63
11) A. Marigondon - ₱170.30625
13) Quiachon, Rogelio - ₱130.5525
12) A. Marigondon - ₱181.66
14) Sacmar, Roberto - ₱108.9375
13) A. Marigondon - ₱181.66
15) Tagle, Farian - ₱129.3375
14) E. Masangcay - ₱175.75
16) Villavicencio, Victor - ₱126.015
15) A. Marigondon - ₱181.66
17) Agra, Romale - ₱126.015
16) E. Masangcay - ₱175.75
18) Basabe, Luis - ₱128.5575
17) A. Marigondon - ₱181.66
19) Bornasal, Joel - ₱127.53

50
 On September 30, 2008, the CA rendered a decision dismissing the petition, thus:
20) Casitas, Santiago - ₱128.5575

21) Celajes, Bonifacio - ₱128.1825 WHEREFORE, premises considered, the present petition is hereby DENIED DUE
COURSE and accordingly DISMISSED, for lack of merit. The assailed Decision dated
22) Avenido, Jerry - ₱133.2487 March 30, 2007 and Resolution dated April 28, 2008 of the National Labor Relations
Commission in NLRC NCR CC No. 000305-05 are hereby AFFIRMED.
23) Gagarin, Alfredo - ₱108.9375
With costs against the petitioner.
24) Layson, Paulo - ₱131.745
SO ORDERED.44
25) Lledo, Asalem - ₱128.5575
According to the CA, petitioner failed to show that the NLRC committed grave abuse
26) Marigondon, Ariel - ₱131.745 of discretion in finding that it violated certain provisions of the CBA. The NLRC
correctly held that every employee is entitled to the wage increase under the CBA
27) Orcena, Sonnie - ₱126.015 despite receipt of an anniversary increase. The CA concluded that, based on the
wording of the CBA, which uses the words "general increase" and "over and above," it
28) Servano, Fernando - ₱126.015 cannot be said that the parties have intended the anniversary increase to be given in
lieu of the CBA wage increase.45
29) Versola, Rodrigo - ₱126.015
The CA declared that the withdrawal of the COLA under Wage Order No. RBIII-10
from the employees who were not minimum wage earners amounted to a diminution
7) reinstate Diosdado Madayag to his former position without loss of of benefits because such grant has already ripened into a company practice. It
seniority rights and to pay full backwages and other benefits from 14 March pointed out that there was no ambiguity or doubt as to who were covered by the wage
2005, date of dismissal, until the date of this Decision; if reinstatement is order. Petitioner, therefore, may not invoke error or mistake in extending the COLA to
impossible[,] to pay separation pay of one month pay for every year of all employees and such act can only be construed as "as a voluntary act on the part
service in addition to backwages; of the employer."46 The CA opined that, considering the foregoing, the ruling in Globe
Mackay Cable and Radio Corp. v. NLRC47 clearly did not apply as there was no
8) dismiss the claim for paternity leave for failure of claimants to observe the doubtful or difficult question involved in the present case.48
requirements;
The CA sustained the NLRC’s interpretation of Art. VIII, Section 4 of the CBA as
9) dismiss the charge of harassment and discrimination for lack of merit; and including the expenses for first aid medicine and transportation cost in going to the
to hospital. The CA stressed that the CBA should be construed liberally rather than
narrowly and technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in which it was negotiated
10) continue to implement COLA under Wage Order Nos. [RBIII]-10 & 11
and the purpose which it intended to serve.49
across the board.

Based on the principle of liberal construction of the CBA, the CA likewise sustained
The issue on Visitors’ Free Access to Company Premises is dismissed for being moot
the NLRC’s rulings on the issues pertaining to the shuttle service, time-off for
and academic after it was settled during the scheduled conferences.
attendance in grievance meetings/hearings, and time-off due to brownouts.50

SO ORDERED.43
The CA further held that management prerogative is not unlimited: it is subject to
limitations found in law, a CBA, or the general principles of fair play and justice. It
Forthwith, petitioner elevated the case to the CA, reiterating its arguments on the stressed that the CBA provided such limitation on management prerogative to
eight issues resolved by the NLRC in respondent’s favor. contract-out labor, and compliance with the CBA is mandated by the express policy of
the law.51
The CA’s Ruling
Finally, the CA affirmed the NLRC’s finding that Madayag’s dismissal was illegal. It
emphasized that the burden to prove that the employee’s disease is of such nature or
51
at such stage that it cannot be cured within a period of six months rests on the
employer. Petitioner failed to submit a certification from a competent public authority
attesting to such fact; hence, Madayag’s dismissal is illegal.52
Petitioner moved for a reconsideration of the CA’s decision. On December 4, 2008,
the CA denied the motion for lack of merit.53
Dissatisfied, petitioner filed this petition for review on certiorari, contending that the
CA erred in finding that it violated certain provisions of the CBA.
The Court’s Ruling
The petition is partly meritorious.
It is a familiar and fundamental doctrine in labor law that the CBA is the law between
the parties and compliance therewith is mandated by the express policy of the law. If
the terms of a CBA are clear and there is no doubt as to the intention of the
contracting parties, the literal meaning of its stipulation shall prevail. 54 Moreover, the
CBA must be construed liberally rather than narrowly and technically and the Court
must place a practical and realistic construction upon it. 55 Any doubt in the
interpretation of any law or provision affecting labor should be resolved in favor of
labor.56
Upon these well-established precepts, we sustain the CA’s findings and conclusions
on all the issues, except the issue pertaining to the denial of the COLA under Wage
Order No. RBIII-10 and 11 to the employees who are not minimum wage earners.
The wording of the CBA on general wage increase cannot be interpreted any other
way: The CBA increase should be given to all employees "over and above" the
amount they are receiving, even if that amount already includes an anniversary
increase. Stipulations in a contract must be read together, not in isolation from one
another.57Consideration of Article XIII, Section 2 (non-crediting provision), bolsters
such interpretation. Section 2 states that "[a]ll salary increase granted by the
company shall not be credited to any future contractual or legislated wage increases."
Clearly then, even if petitioner had already awarded an anniversary increase to its
employees, such increase cannot be credited to the "contractual" increase as
provided in the CBA, which is considered "separate and distinct."
Petitioner claims that it has been the company practice to offset the anniversary
increase with the CBA increase. It however failed to prove such material fact.
Company practice, just like any other fact, habits, customs, usage or patterns of
conduct must be proven. The offering party must allege and prove specific, repetitive
conduct that might constitute evidence of habit,58 or company practice. Evidently, the
pay slips of the four employees do not serve as sufficient proof.
Petitioner’s excuse in not providing a shuttle service to its employees is unacceptable.
In fact, it can hardly be considered as an excuse. Petitioner simply says that it is
difficult to implement the provision. It relies on the fact that "no time element [is]
explicitly stated [in the CBA] within which to fulfill the undertaking." We cannot allow
petitioner to dillydally in complying with its obligation and take undue advantage of the
fact that no period is provided in the CBA. Petitioner should recondition the company
vehicle at once, lest it be charged with and found guilty of unfair labor practice.
Petitioner gave a narrow construction to the wording of the CBA when it denied (a)
reimbursement for the first-aid medicines taken by Rodrigo Solitario when he was
injured during the company sportsfest and the transportation cost incurred by Alberto
Guevara and Job Canizares in going to the hospital, (b) payment of the wages of
certain employees during the time they spent at the grievance meetings, and (c)
payment of the employees’ wages during the brownout that occurred on July 25,
2002. As previously stated, the CBA must be construed liberally rather than narrowly
and technically. It is the duty of the courts to place a practical and realistic
construction upon the CBA, giving due consideration to the context in which it is
negotiated and the purpose which it is intended to serve. Absurd and illogical
interpretations should be avoided.59 A CBA, like any other contract, must be
interpreted according to the intention of the parties.60
The CA was correct in pointing out that the concerned employees were not seeking
hospitalization benefits under Article VIII, Section 1 of the CBA, but under Section 4
thereof; hence, confinement in a hospital is not a prerequisite for the claim. Petitioner
should reimburse Solitario for the first aid medicines; after all, it is the duty of the
employer to maintain first- aid medicines in its premises.61 Similarly, Guevara and
Canizares should also be reimbursed for the transportation cost incurred in going to
the hospital. The Omnibus Rules Implementing the Labor Code provides that, where
the employer does not have an emergency hospital in its premises, the employer is
obliged to transport an employee to the nearest hospital or clinic in case of
emergency.62
We likewise agree with the CA on the issue of nonpayment of the time-off for
attending grievance meetings. The intention of the parties is obviously to compensate
the employees for the time that they spend in a grievance meeting as the CBA
provision categorically states that the company will pay the employee "a paid time-off
for handling of grievances, investigations, labor-management conferences." It does
not make a qualification that such meeting should be held during office hours or within
the company premises.
The employees should also be compensated for the time they were prevented from
working due to the brownout. The CBA enumerates some of the instances considered
as "emergencies" and these are "typhoons, flood earthquake, transportation strike."
As correctly argued by respondent, the CBA does not exclusively enumerate the
situations which are considered "emergencies." Obviously, the key element of the
provision is that employees "who have reported for work are unable to continue
working" because of the incident. It is therefore reasonable to conclude that brownout
or power outage is considered an "emergency" situation.
Again, on the issue of contracting-out labor, we sustain the CA. Petitioner, in effect,
admits having hired "temporary" employees, but it maintains that it was an exercise of
management prerogative, necessitated by the increase in demand for its product.
52
Indeed, jurisprudence recognizes the right to exercise management prerogative.
Labor laws also discourage interference with an employer's judgment in the conduct
of its business. For this reason, the Court often declines to interfere in legitimate
business decisions of employers. The law must protect not only the welfare of
employees, but also the right of employers.63 However, the exercise of management
prerogative is not unlimited. Managerial prerogatives are subject to limitations
provided by law, collective bargaining agreements, and general principles of fair play
and justice.64 The CBA is the norm of conduct between the parties and, as previously
stated, compliance therewith is mandated by the express policy of the law. 65
The CBA is clear in providing that temporary employees will no longer be allowed in
the company except in the Warehouse and Packing Section. Petitioner is bound by
this provision. It cannot exempt itself from compliance by invoking management
prerogative. Management prerogative must take a backseat when faced with a CBA
provision. If petitioner needed additional personnel to meet the increase in demand, it
could have taken measures without violating the CBA.
Respondent claims that the temporary employees were hired on five-month contracts,
renewable for another five months. After the expiration of the contracts, petitioner
would hire other persons for the same work, with the same employment status.
Plainly, petitioner’s scheme seeks to prevent employees from acquiring the status of
regular employees. But the Court has already held that, where from the
circumstances it is apparent that the periods of employment have been imposed to
preclude acquisition of security of tenure by the employee, they should be struck
down or disregarded as contrary to public policy and morals. 66 The primary standard
to determine a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the business or trade of
the employer. The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. If the employee has been performing the job
for at least one year, even if the performance is not continuous or merely intermittent,
the law deems the repeated and continuing need for its performance as sufficient
evidence of the necessity, if not indispensability, of that activity to the business of the
employer. Hence, the employment is also considered regular, but only with respect to
such activity and while such activity exists.67
We also uphold the CA’s finding that Madayag’s dismissal was illegal. It is already
settled that the burden to prove the validity of the dismissal rests upon the employer.
Dismissal based on Article 284 of the Labor Code is no different, thus:
The law is unequivocal: the employer, before it can legally dismiss its employee on
the ground of disease, must adduce a certification from a competent public authority
that the disease of which its employee is suffering is of such nature or at such a stage
that it cannot be cured within a period of six months even with proper treatment.
xxxx
In Triple Eight Integrated Services, Inc. v. NLRC, the Court explains why the
submission of the requisite medical certificate is for the employer’s compliance, thus:
The requirement for a medical certificate under Article 284 of the Labor Code cannot
be dispensed with; otherwise, it would sanction the unilateral and arbitrary
determination by the employer of the gravity or extent of the employee’s illness and
thus defeat the public policy on the protection of labor.
x x x x68
However, with respect to the issue of whether the COLA under Wage Order Nos.
RBIII-10 and 11 should be implemented across the board, we hold a different view
from that of the CA. No diminution of benefits would result if the wage orders are not
implemented across the board, as no such company practice has been established.
Diminution of benefits is the unilateral withdrawal by the employer of benefits already
enjoyed by the employees. There is diminution of benefits when it is shown that: (1)
the grant or benefit is founded on a policy or has ripened into a practice over a long
period of time; (2) the practice is consistent and deliberate; (3) the practice is not due
to error in the construction or application of a doubtful or difficult question of law; and
(4) the diminution or discontinuance is done unilaterally by the employer.69
To recall, the CA arrived at its ruling by relying on the fact that there was no ambiguity
in the wording of the wage order as to the employees covered by it. From this, the CA
concluded that petitioner actually made no error or mistake, but acted voluntarily, in
granting the COLA to all its employees. It therefore took exception to the Globe
Mackay case which, according to it, applies only when there is a doubtful or difficult
question involved.
The CA failed to note that Globe Mackay primarily emphasized that, for the grant of
the benefit to be considered voluntary, "it should have been practiced over a long
period of time, and must be shown to have been consistent and deliberate." 70 The
fact that the practice must not have been due to error in the construction or
application of a doubtful or difficult question of law is a distinct requirement.
The implementation of the COLA under Wage Order No. RBIII-10 across the board,
which only lasted for less than a year, cannot be considered as having been practiced
"over a long period of time." While it is true that jurisprudence has not laid down any
rule requiring a specific minimum number of years in order for a practice to be
considered as a voluntary act of the employer, under existing jurisprudence on this
matter, an act carried out within less than a year would certainly not qualify as such.
Hence, the withdrawal of the COLA Wage Order No. RBIII-10 from the salaries of
non-minimum wage earners did not amount to a "diminution of benefits" under the
law.
There is also no basis in enjoining petitioner to implement Wage Order No. RBIII-11
across the board. Similarly, no proof was presented showing that the implementation
of wage orders across the board has ripened into a company practice. In the same
53
way that we required petitioner to prove the existence of a company practice when it
alleged the same as defense, at this instance, we also require respondent to show
proof of the company practice as it is now the party claiming its existence. Absent any
proof of specific, repetitive conduct that might constitute evidence of the practice, we
cannot give credence to respondent’s claim. The isolated act of implementing a wage
order across the board can hardly be considered a company practice, 71 more so
when such implementation was erroneously made.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The CA
Decision September 30, 2008 and Resolution dated December 4, 2008 are
AFFIRMED with MODIFICATION that the order for petitioner to continue
implementing Wage Order No. RBIII-10 and 11 across the board is SET ASIDE.
Accordingly, item 10 of the NLRC Decision dated March 30, 2007 is modified to read
"dismiss the claim for implementation of Wage Order Nos. RBIII-10 and 11 to the
employees who are not minimum wage earners."
15. PLDT v. Paguio, G.R. No. 152689, October 12, 2005
G.R. No. 152689 October 12, 2005
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., ENRIQUE D.
PEREZ, RICARDO R. ZARATE, ISABELO A. FERIDO, JR. and RODOLFO R.
SANTOS, Petitioners,
vs.
ALFREDO S. PAGUIO, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 154072
ALFREDO S. PAGUIO, Petitioner,
vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., ENRIQUE D.
PEREZ, RICARDO R. ZARATE, ISABELO A. FERIDO, JR. and RODOLFO R.
SANTOS, Respondents.
DECISION
QUISUMBING, J.:
This petition for review on certiorari docketed as G.R. No. 152689, assails
the Decision1 dated March 7, 2002 of the Court of Appeals in CA-G.R. SP No.
61528. It is consolidated with the Motions for Reconsideration of this Court’s
Decision2 dated December 3, 2002 in G.R. No. 154072.
The antecedent facts of the case are as follows:
Petitioner Philippine Long Distance Telephone Company, Inc. (PLDT) has 27
Exchanges in its Greater Metro Manila (GMM) Network. Alfredo S. Paguio was the
Head of the Garnet Exchange.
In 1994, PLDT assessed the performance of the 27 Exchanges comprising the GMM
Network. Upon receipt of the ratings, Paguio sent Rodolfo Santos, his immediate
supervisor and the Assistant Vice-President of the GMM East Center, a letter
criticizing the PLDT criteria for performance rating as unfair because they depended
on manpower. He also suggested that the criteria failed to recognize that exchanges
with new plants could easily meet the objectives of GMM compared to those with old
plants. Despite Paguio’s criticism, Garnet Exchange, the oldest plant in GMM,
obtained the top rating in the GMM. Nevertheless, Paguio reiterated his letter to
Santos and objected to the performance rating as it was based only on the attainment
of objectives, without considering other relevant factors.
In June 1996, PLDT rebalanced the manpower of the East Center. Paguio wrote
Santos and requested reconsideration of the manpower rebalancing, claiming it was
unfair to Garnet Exchange because as the oldest exchange in the East Center, it was
disallowed to use contractors for new installations and was not made beneficiary of
the cut-over bonus. After Santos denied his request, Paguio elevated the matter to
respondent Isabelo Ferido, Jr., the First Vice-President-GMM Network Services.
On January 17, 1997, Paguio was reassigned as Head for Special Assignment at the
Office of the GMM East Center and asked to turn over his functions as Garnet
Exchange Head to Tessie Go. Believing that his transfer was a disciplinary action,
Paguio requested Ferido for a formal hearing of the charges against him and asked
that his reassignment be deferred. He also filed a complaint against Santos for grave
abuse of authority and manipulation of the East Center performance. As no action
was taken by Ferido, Paguio elevated the matter to Enrique D. Perez, the Senior
Executive Vice-President and Chief Operating Officer of PLDT, who advised him to
await the resolution of his complaint.
Consequently, Ferido sent Paguio an inter-office memo stating that he found Paguio’s
reassignment in order as it was based on the finding that Paguio was not a team
player and cannot accept decisions of management, which is short of insubordination.
Ferido advised Paguio to transfer to any group in the company that may avail of his
services. Likewise, Perez, thru an inter-office memo, informed Paguio that his transfer
was not in the nature of a disciplinary action that required investigation and that he
agreed with the reasons of the transfer.
Aggrieved, Paguio filed, before the Regional Arbitration Branch of the National Labor
Relations Commission (NLRC), a complaint for illegal dismissal with prayer for
reinstatement and damages. He later amended his complaint to illegal demotion with
prayer for reversion to old position, damages and attorney’s fees. On November 27,
1998, the Labor Arbiter upheld the validity of Paguio’s transfer and dismissed the
complaint.3
Paguio appealed to the NLRC, which reversed the Labor Arbiter’s decision. The
NLRC found the transfer unlawful, firstly, because Paguio’s comments were done in
54
good faith to help his team see their strong and weak points. According to the NLRC,
this showed that he strove to improve his team and was, indeed, a team player. The
NLRC noted that the company’s manual emphasized the importance of
communication and what Paguio did was merely to ventilate his opinions and
observations. Secondly, Paguio’s transfer involved a diminution of his salary, benefits
and other privileges.4
PLDT moved for reconsideration but the same was denied by the
NLRC.5 Consequently, PLDT filed a petition for certiorari with the Court of Appeals.
The appellate court affirmed the decision of the NLRC but deleted the monetary
award representing the 16% monthly salary increase. 6
PLDT appealed directly to this Court. Its petition was docketed as G.R. No. 152689.
On the other hand, Paguio sought for partial reconsideration. Upon the appellate
court’s denial7 of his motion for reconsideration, Paguio elevated the case to this
Court where it was docketed as G.R. No. 154072. On December 3, 2002, the Court
rendered judgment in G.R. No. 154072 and held that Paguio was not entitled to the
monetary award representing the 16% monthly salary increase. However, the Court
awarded him moral and exemplary damages and attorney’s fees.8
Both Paguio and PLDT sought reconsideration. On February 26, 2003, the Court
ordered the consolidation of G.R. No. 152689 and the motions for reconsideration in
G.R. No. 154072.9
In G.R. No. 152689, PLDT imputes the following errors to the appellate court:
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
AFFIRMING THE NLRC’S DECISION AND RESOLUTION BY RULING THAT THE
TRANSFER OR RE-ASSIGNMENT OF PRIVATE RESPONDENT PAGUIO WAS
UNLAWFUL AND ILLEGAL.
THE HONORABLE COURT OF APPEALS’ FINDING ON UNLAWFULNESS OF
PAGUIO’S TRANSFER OR REASSIGNMENT CONSTITUTES A DRASTIC
DEPARTURE OF THE INSTANCES CONSIDERED TO CONSTITUTE AN ILLEGAL
TRANSFER AS RULED IN SETTLED JURISPRUDENCE INVOLVING SIMILAR
CASES.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN CONSIDERING
PETITIONERS’ ACT OF CHANGING THE PRIVATE RESPONDENT’S
ASSIGNMENT ON LEGITIMATE GROUNDS AS TANTAMOUNT TO AN ILLEGAL
TRANSFER.
THE HONORABLE COURT OF APPEALS CONTRADICTED THE SETTLED
JURISPRUDENCE ON THE MATTER WHEN IT ORDERED THE REINSTATEMENT
OF PAGUIO.10
In brief, the petitioner asks this Court to resolve now the legality of Paguio’s transfer.
PLDT contends that the appellate court erred in lending more weight to the factual
findings of the NLRC over those of the Labor Arbiter without stating its basis.
Moreover, PLDT alleges that the NLRC ruling would allow a change of cause of
action since the complaint alleged "illegal demotion" while the decision involved
"illegal transfer." PLDT asserts that the reassignment of Paguio was not a demotion
because it was merely a transfer to a position of equivalent rank and salary.
According to PLDT, transfer, as a rule is allowed by law unless it is vitiated by
improper motive or is used as a disguise to remove or punish the employee. It
maintains that the appellate court failed to ascribe any illicit or improper motive behind
the transfer of Paguio. Lastly, PLDT claims that the reinstatement of Paguio is no
longer possible as his relationship with the company is already strained and that his
position no longer exists due to a company-wide reorganization.
Paguio argues that his transfer was a demotion since he was assigned to a
functionless position with neither office nor staff and deprived of the opportunity to be
promoted as he would have no performance to speak of in his new post.
Prefatorily, we note from the records that there has been no change of cause of
action from "illegal demotion" to "illegal transfer." Illegal demotion is a type of illegal
transfer. Moreover, it is familiar and fundamental doctrine that it is not the title of the
action but the allegations in the pleading that determines the nature of the action. 11
Now, on the crux of the matter, jurisprudence abounds that, except as limited by
special laws, an employer is free to regulate, according to his own discretion and
judgment, all aspects of employment, including the transfer of employees. 12 It is the
employer’s prerogative, based on its assessment and perception of its employees’
qualifications, aptitudes, and competence, to deploy its employees in the various
areas of its business operations in order to ascertain where they will function with
maximum benefit to the company. An employee’s right to security of tenure does not
give him such a vested right in his position as would deprive the company of its
prerogative to change his assignment or transfer him where he will be most useful.13
Nonetheless, as correctly pointed out by the Court of Appeals, there are limits to the
management prerogative. While it may be conceded that management is in the best
position to know its operational needs, the exercise of management prerogative
cannot be utilized to circumvent the law and public policy on labor and social justice.
That prerogative accorded management should not defeat the very purpose for which
our labor laws exist: to balance the conflicting interests of labor and management. By
its very nature, management prerogative must be exercised always with the principles
of fair play and justice.14 In particular, the employer must be able to show that the
transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other
benefits.15 The employer bears the burden of proving that the transfer of the
employee has complied with the foregoing test.16
In the present case, we see no credible reason for Paguio’s transfer except his
criticisms of the company’s performance evaluation methods. Based on the
55
undisputed facts, Garnet Exchange was doing well and excelled in the performance
rating. In the same way, Paguio’s performance was consistently rated as outstanding.
There was also no proof that Paguio refused to comply with any management policy.
Patently, his transfer could not be due to poor performance. Neither was it because
he was needed in the new post for the new assignment was functionless and it was
nothing but a title. Paguio’s transfer could only be caused by the management’s
negative reception of his comments. It is prejudicial to Paguio because it left him out
for a possible promotion as he was assigned to a functionless position with neither
office nor staff.
In the motion for reconsideration in G.R. No. 154072, Paguio maintains that it is
speculation on the part of the Court to rule that he would not maintain his outstanding
performance. Thus, he prays for a monthly salary increase.
In its motion for reconsideration, PLDT points out that one reason for the award of
damages and attorney’s fees was the Court’s mistaken belief that the company failed
to appeal the Court of Appeals’ decision. However, PLDT contends that there was a
pending appeal of the Court of Appeals’ finding of illegal transfer, particularly G.R. No.
152689.
We reiterate our decision in G.R. No. 154072 that awarding a monthly salary increase
would be merely based on speculation. A salary increase is conditioned on both the
outstanding performance of the employee and high returns for the company. It is not
a demandable right but a benefit given by management, subject to the attainment of
specific goals. Paguio’s future performance could not be guaranteed to be excellent,
with high returns to the company, simply because in the past he did excel. That is the
basic reason for a periodic performance rating.
Now, moral damages are recoverable upon sufficient proof of moral suffering, mental
anguish, fright or serious anxiety. The claimant should satisfactorily show the
existence of the factual basis of damages.17 In the present case, though Paguio’s
transfer was found unlawful by the appellate court, our review of the records would
show that there is no factual basis for such an award.
No exemplary damages can be awarded in the absence of moral or actual damages.
And where the awards for moral and exemplary damages are eliminated, so must the
award for attorney’s fees.18
WHEREFORE, the petition in G.R. No. 152689 is DENIED. The Decision dated
March 7, 2002 of the Court of Appeals in CA-G.R. SP No. 61528 is AFFIRMED. The
motion for reconsideration by Alfredo Paguio of the Decisiondated December 3, 2002
in G.R. No. 154072 is DENIED. The motion for reconsideration of Philippine Long
Distance Telephone Company, Inc. is GRANTED IN PART by deleting the award in
the Decision dated December 3, 2002, for moral and exemplary damages and
attorney’s fees.
No pronouncement as to costs.
16. Businessday Information Systems and Services, Inc. v. NLRC, 221 SCRA 9
(1993)
G.R. No. 103575. April 5, 1993.
BUSINESSDAY INFORMATION SYSTEMS AND SERVICES, INC., AND RAUL
LOCSIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NEMESIO MOYA ALFREDO
AMANTE, EDWIN BERSAMINA, SAMUEL CUELA, ROMEO DELA CRUZ, MANUEL
DE JESUS, SEVERINO DELA CRUZ, DANILO ESPIRITU, ANGEL FLORES,
DANILO FRANCISCO, FLORENCIO GLORIOSO, GERARDO MANUEL, ARMANDO
MENDOZA, PEDRO MORELOS, ALEXON ORBETA, ROMEO PEREZ, ALFREDO
SABANDO, NESTOR SANTOS, ALFREDO SEPTRIMO, OSCAR SEVILLA,
EDUARDO SIOSON, REYMUNDO TIONGCO, TERESITA REYES, CARMENCITA
CARPIO, GENARO NABUTAS, DANILO NAMPLATA, AND ROLANDO GAMIT,
respondents.
Quisumbing, Torres & Evangelista for petitioners.
Reynaldo M. Maraan for private respondents.
SYLLABUS
1. LABOR LAWS AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT;
EMPLOYER MAY NOT, IN THE GUISE OF EXERCISING MANAGEMENT
PREROGATIVES, PAY SEPARATION BENEFITS UNEQUALLY; CASE AT BAR. —
Petitioners' right to terminate employees on account of retrenchment to prevent
losses or closure of business operations, is recognized by law, but it may not pay
separation benefits unequally for such discrimination breeds resentment and ill-will
among those who have been treated less generously than others. "Granting that the
16 May 1988 termination was a retrenchment scheme, and the 31 July 1988 and the
28 February 1989 were due to closure, the law requires the granting of the same
amount of separation benefits to the affected employees in any of the cases. The
respondent argued that the giving of more separation benefit to the second and third
batches of employees separated was their expression of gratitude and benevolence
to the remaining employees who have tried to save and make the company viable in
the remaining days of operations. This justification is not plausible. there are workers
in the first batch who have rendered more years of service and could even be said to
be more efficient than those separated subsequently, yet, they did not receive the
same recognition. Understandably, their being retained longer in their job and be not
included in the batch that was first terminated, was a concession enough and may
already be considered as favor granted by the respondents to the prejudice of the
complainants. As it happened, there are workers in the first batch who have rendered
more years in service but received lesser separation pay, because of that
arrangement made by the respondents in paying their termination benefits . . ."
Clearly, there was impermissible discrimination against the private respondents in the
payment of their separation benefits. The law requires an employer to extend equal
56
treatment to its employees. It may not, in the guise of exercising management
prerogatives, grant greater benefits to some and less to others. Management
prerogatives are not absolute prerogatives but are subject to legal limits, collective
bargaining agreements, or general principles of fair play and justice (UST vs. NLRC,
190 SCRA 758). Article 283 of the Labor Code, as amended, protects workers whose
employment is terminated because of closure of the establishment or reduction of
personnel (Abella vs. NLRC, 152 SCRA 141, 145).
2. ID.; ID.; CORPORATE OFFICER NOT PERSONALLY LIABLE FOR MONEY
CLAIMS OF DISCHARGED CORPORATE EMPLOYEES; EXCEPTION. — A
corporate officer is not personally liable for the money claims of discharged corporate
employees unless he acted with evident malice and bad faith in terminating their
employment. There is no evidence in this case that Locsin acted in bad faith or with
malice in carrying out the retrenchment and eventual closure of the company (Garcia
vs. NLRC, 153 SCRA 640), hence, he may not be held personally and solidarily liable
with the company for the satisfaction of the judgment in favor of the retrenched
employees.
3. ID.; GRANT OF BONUS; A PREROGATIVE, NOT AN OBLIGATION, OF
EMPLOYER; ENTIRELY DEPENDENT ON FINANCIAL CAPABILITY OF
EMPLOYER TO GIVE IT. — It is settled do trine that the grant of a bonus is a
prerogative, not an obligation, of the employer (Traders Royal Bank vs. NLRC, 189
SCRA 274). The matter of giving a bonus over and above the worker's lawful salaries
and allowances is entirely dependent on the financial capability of the employer to
give it. The fact that the company's business was no longer profitable (it was in fact
moribund) plus the fact that the private respondents did not work up to the middle of
the year (they were discharge in May 1988) were valid reasons for not granting them
a mid-year bonus. Requiring the company to pay a mid-year bonus to them also
would in effect penalize the company for its generosity to those workers who
remained with the company "till the end" of its days. (Traders Royal Bank vs. NLRC,
supra.) The award must therefore be deleted.
DECISION
GRIÑO-AQUINO, J p:
In this petition for certiorari, the Businessday Information Systems and Services Inc.
(or BSSI for brevity) and its president/manager, Raul Locsin, seek to annul and set
aside the decision dated February 13, 1991 of the National Labor Relations
Commission (NLRC) which affirmed the Labor Arbiter's finding that they (petitioners)
are liable to pay the private respondents separation pay differentials and mid-year
bonus.
BSSI was engaged in the manufacture and sale of computer forms. Due to financial
reverses, its creditors, the Development Bank of the Philippines (DBP) and the Asset
Privatization Trust (APT), took possession of its assets, including a manufacturing
plant in Marilao, Bulacan.
As a retrenchment measure, some plant employees, including the private
respondents, were laid off on May 16, 1988, after prior notice, and were paid
separation pay equivalent to one-half (1/2) month pay for every year of service. Upon
receipt of their separation pay, the private respondents signed individual releases and
quitclaims in favor of BSSI.
BSSI retained some employees in an attempt to rehabilitate its business as a trading
company.
However, barely two and a half months later, these remaining employees were
likewise discharged because the company decided to cease business operations
altogether. Unlike the private respondents, that batch of employees received
separation pay equivalent to a full month's salary for every year of service plus mid-
year bonus.
Protesting against the discrimination in the payment of their separation benefits, the
twenty-seven (27) private respondents filed three (3) separate complaints against the
BSSI and Raul Locsin. These cases were later consolidated.
At the conciliation proceedings before Labor Arbiter Manuel P. Asuncion, petitioners
denied that there was unlawful discrimination in the payment of separation benefits to
the employees. They argued that the first batch of employees was paid
"retrenchment" benefits mandated by law, while the remaining employees were
granted higher "separation" benefits because their termination was on account of the
closure of the business.
Based on the pleadings of the parties, Labor Arbiter Asuncion rendered a decision on
April 25, 1989 in favor of the complainants, now private respondents, the dispositive
portion of which reads:
"WHEREFORE, the respondents are hereby ordered to pay the complainants their
separation pay differentials and mid-year bonus for the year 1988." (p- 38, Rollo).
Upon appeal by the company to the NLRC, the Second Division on February 13,
1991, affirmed the decision of the Labor Arbiter.
Petitioners' motion for reconsideration of the resolution having been denied, they
have taken the present recourse.
In case of retrenchment of a company to prevent losses and closure of business
operation, the law provides:
Art. 283. Closure of establishment and reduction of personnel. — The employer may
also terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operations of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers
57
and the Ministry of Labor and Employment at least one (1) month before the intended
date thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one half (l /2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year." (Labor Code; emphasis supplied.)
Undoubtedly, petitioners' right to terminate employees on account of retrenchment to
prevent losses or closure of business operations, is recognized by law, but it may not
pay separation benefits unequally for such discrimination breeds resentment and ill-
will among those who have been treated less generously than others.
The following observations of the Commission are relevant:
"The respondents cited financial business difficulties to justify their termination of the
complainants' employment on 16 May 1988. They were given one-half (1/2) month of
their salary for every year of service. Due to continuing losses, which is a sign that
business, after the termination did not improve, they closed operations on 31 July
1989, where they dismissed the second batch of employees who were given one (1)
month pay for every year they served. The third batch of employees were terminated
on 28 February 1989, who were likewise given one (1) monthly pay for every year of
service. The business climate obtaining on 16 May 1988 when the complainants were
terminated did not at all defer (sic) improvement-wise, with that of 31 July 1988 nor to
28 February 1989. The internal between the dates of termination was so close to
each other, so that, no improvement in business maybe likely expected. In fact, the
respondents suffered continuous losses, hence, there is no difference in the
circumstances of the business to distinguish.
"Granting that the 16 May 1988 termination was a retrenchment scheme, and the 31
July 1988 and the 28 February 1989 were due to closure, the law requires the
granting of the same amount of separation benefits to the affected employees in any
of the cases. The respondent argued that the giving of more separation benefit to the
second and third batches of employees separated was their expression of gratitude
and benevolence to the remaining employees who have tried to save and make the
company viable in the remaining days of operations. This justification is not plausible.
There are workers in the first batch who have rendered more years of service and
could even be said to be more efficient than those separated subsequently, yet they
did not receive the same recognition. Understandably, their being retained longer in
their job and be not included in the batch that was first terminated, was a concession
enough and may already be considered as favor granted by the respondents to the
prejudice of the complainants. As it happened, there are workers in the first batch
who have rendered more years in service but received lesser separation pay,
because of that arrangement made by the respondents in paying their termination
benefits . . ."
(pp. 36-37, Rollo)
Clearly, there was impermissible discrimination against the private respondents in the
payment of their separation benefits. The law requires an employer to extend equal
treatment to its employees. It may not, in the guise of exercising management
prerogatives, grant greater benefits to some and less to others. Management
prerogatives are not absolute prerogatives but are subject to legal limits, collective
bargaining agreements, or general principles of fair play and justice (UST vs. NLRC,
190 SCRA 758). Article 283 of the Labor Code, as amended, protects workers whose
employment is terminated because of closure of the establishment or reduction of
personnel (Abella vs. NLRC, 152 SCRA 141, 145).
With regard to the private respondents' claim for the mid-year bonus, it is settled
doctrine that the grant of a bonus is a prerogative, not an obligation, of the employer
(Traders Royal Bank vs. NLRC, 189 SCRA 274). The matter of giving a bonus over
and above the worker's lawful salaries and allowances is entirely dependent on the
financial capability of the employer to give it. The fact that the company's business
was no longer profitable (it was in fact moribund) plus the fact that the private
respondents did not work up to the middle of the year (they were discharged in May
1988) were valid reasons for not granting them a mid-year bonus. Requiring the
company to pay a mid-year bonus to them also would in effect penalize the company
for its generosity to those workers who remained with the company till the end" of its
days. (Traders Royal Bank vs. NLRC, supra.) The award must therefore be deleted.
There is merit in the contention of petitioner Raul Locsin that the complaint against
him should be dismissed. A corporate officer is not personally liable for the money
claims of discharged corporate employees unless he acted with evident malice and
bad faith in terminating their employment. There is no evidence in this case that
Locsin acted in bad faith or with malice in carrying out the retrenchment and eventual
closure of the company (Garcia vs. NLRC, 153 SCRA 640), hence, he may not be
held personally and solidarily liable with the company for the satisfaction of the
judgment in favor of the retrenched employees.
WHEREFORE, the resolution of the NLRC ordering the petitioner company to pay
separation pay differentials to the private respondents is AFFIRMED. However, the
award of mid-year bonus to them is hereby deleted and set aside. Petitioner Raul
Locsin is absolved from any personal liability to the respondent employees. No costs.
58