G.R. No. 140960 January 20, 2003 b.
20, 2003 b. the said complainants, being entitled to the CBA benefits during the regular
LUDO & LUYM CORPORATION, petitioner,
vs.
FERDINAND SAORNIDO as voluntary arbitrator and LUDO EMPLOYEES UNION (LEU)
representing 214 of its officers and members, respondents.
This petition for review on certiorari seeks to annul and set aside the decision of the Court of Appeals
1
promulgated on July 6, 1999 and its Order denying petitioner’s motion for reconsideration in CA-G.R.
SP No. 44341.
The relevant facts as substantially recited by the Court of Appeals in its decision are as follows:
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation engaged in the
manufacture of coconut oil, corn starch, glucose and related products. It operates a manufacturing
plant located at Tupas Street, Cebu City and a wharf where raw materials and finished products are
shipped out.
In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu Arrastre
Services (CLAS) for the loading and unloading of its finished products at the wharf. Accordingly,
several arrastre workers were deployed by CLAS to perform the services needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as regular rank-and-file
employees of LUDO every time the latter needed additional manpower services. Said employees
thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the exclusive
bargaining agent of the rank-and-file employees.
On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO which
provides certain benefits to the employees, the amount of which vary according to the length of
service rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members’ period of service the time during
which they rendered arrastre services to LUDO through the CLAS so that they could get higher
benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole issue of the date of
regularization of the workers for resolution by the Voluntary Arbitrator.
In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent employees
were engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS is a
labor-only contractor of petitioner.2 It disposed of the case thus:
WHEREFORE, in view of the foregoing, this Voluntary Arbitrator finds the claims of the
complainants meritorious and so hold that:
a. the 214 complainants, as listed in the Annex A, shall be considered regular employees of
the respondents six (6) months from the first day of service at CLAS;
employment, are awarded a) sick leave, b) vacation leave & c) annual wage and salary
increases during such period in the amount of FIVE MILLION SEVEN HUNDRED SEVEN
THOUSAND TWO HUNDRED SIXTY ONE PESOS AND SIXTY ONE CENTAVOS
(P5,707,261.61) as computed in "Annex A";
c. the respondents shall pay attorney’s fees of ten (10) percent of the total award;
d. an interest of twelve (12) percent per annum or one (1) percent per month shall be
imposed to the award from the date of promulgation until fully paid if only to speed up
the payment of these long over due CBA benefits deprived of the complaining workers.
Accordingly, all separation and/or retirement benefits shall be construed from the date of
regularization aforementioned subject only to the appropriate government laws and other social
legislation.
SO ORDERED.3
In due time, LUDO filed a motion for reconsideration, which was denied. On appeal, the Court of
Appeals affirmed in toto the decision of the Voluntary Arbitrator, thus:
WHEREFORE, finding no reversible error committed by respondent voluntary arbitrator, the
instant petition is hereby DISMISSED.
SO ORDERED.4
Hence this petition. Before us, petitioner raises the following issues:
I
WHETHER OR NOT BENEFITS CONSISTING OF SALARY INCREASES, VACATION LEAVE AND SICK
LEAVE BENEFITS FOR THE YEARS 1977 TO 1987 ARE ALREADY BARRED BY PRESCRIPTION
WHEN PRIVATE RESPONDENTS FILED THEIR CASE IN JANUARY 1995;
II
WHETHER OR NOT A VOLUNTARY ARBITRATOR CAN AWARD BENEFITS NOT CLAIMED IN THE
SUBMISSION AGREEMENT.5
Petitioner contends that the appellate court gravely erred when it upheld the award of benefits which
were beyond the terms of submission agreement. Petitioner asserts that the arbitrator must confine
its adjudication to those issues submitted by the parties for arbitration, which in this case is the sole
issue of the date of regularization of the workers. Hence, the award of benefits by the arbitrator was
done in excess of jurisdiction.6
Respondents, for their part, aver that the three-year prescriptive period is reckoned only from the
time the obligor declares his refusal to comply with his obligation in clear and unequivocal terms. In
this case, respondents maintain that LUDO merely promised to review the company records in
response to respondents’ demand for adjustment in the date of their regularization without making a
categorical statement of refusal.7 On the matter of the benefits, respondents argue that the arbitrator
is empowered to award the assailed benefits because notwithstanding the sole issue of the date of
regularization, standard companion issues on reliefs and remedies are deemed incorporated.
Otherwise, the whole arbitration process would be rendered purely academic and the law creating it
inutile.8
The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and Labor Arbiters is clearly
defined and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code,
read:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. --- (a) Except as otherwise provided
under this Code the Labor 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 cases
involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases:
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wage, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
xxx
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. — The Voluntary
Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear
and decide all unresolved grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies referred to in the immediately preceding article. Accordingly,
violations of a Collective Bargaining Agreement, except those which are gross in character, shall
no longer be treated as unfair labor practice and shall be resolved as grievances under the
Collective Bargaining Agreement. For purposes of this article, gross violations of Collective
Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately
dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement.
Art. 262. Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes
including unfair labor practices and bargaining deadlocks."
In construing the above provisions, we held in San Jose vs. NLRC, 9 that the jurisdiction of the Labor
Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in
the Labor Code, Articles 217, 261 and 262, can possibly include money claims in one form or
another.10 Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC,11 compulsory arbitration
has been defined both as "the process of settlement of labor disputes by a government agency which
has the authority to investigate and to make an award which is binding on all the parties, and as a
mode of arbitration where the parties are compelled to accept the resolution of their dispute through
arbitration by a third party (emphasis supplied)."12 While a voluntary arbitrator is not part of the
governmental unit or labor department’s personnel, said arbitrator renders arbitration services
provided for under labor laws.
Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to
make a final settlement since arbitration is the final resort for the adjudication of disputes.13 The
succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a
labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence,
thus:
In general, the arbitrator is expected to decide those questions expressly stated and limited in
the submission agreement. However, since arbitration is the final resort for the adjudication of
disputes, the arbitrator can assume that he has the power to make a final settlement. Thus,
assuming that the submission empowers the arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this instance can reasonable assume that his powers
extended beyond giving a yes-or-no answer and included the power to reinstate him with or
without back pay.
In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary
jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of
his own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The
Arbitrator, as already indicated, viewed his authority as embracing not merely the determination
of the abstract question of whether or not a performance bonus was to be granted but also, in
the affirmative case, the amount thereof.
By the same token, the issue of regularization should be viewed as two-tiered issue. While the
submission agreement mentioned only the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the law on voluntary arbitration was created –
speedy labor justice. It bears stressing that the underlying reason why this case arose is to
settle, once and for all, the ultimate question of whether respondent employees are entitled to
higher benefits. To require them to file another action for payment of such benefits would
certainly undermine labor proceedings and contravene the constitutional mandate providing full
protection to labor.14
As regards petitioner’s contention that the money claim in this case is barred by prescription, we hold
that this contention is without merit. So is petitioner’s stance that the benefits claimed by the
respondents, i.e., sick leave, vacation leave and 13th-month pay, had already prescribed, considering
the three-year period for the institution of monetary claims.15 Such determination is a question of fact
which must be ascertained based on the evidence, both oral and documentary, presented by the
parties before the Voluntary Arbitrator. In this case, the Voluntary Arbitrator found that prescription
has not as yet set in to bar the respondents’ claims for the monetary benefits awarded to them. Basic
is the rule that findings of fact of administrative and quasi-judicial bodies, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded not only
great respect but even finality.16 Here, the Voluntary Arbitrator received the evidence of the parties
first-hand. No compelling reason has been shown for us to diverge from the findings of the Voluntary remittances from route salesmen, preparing vouchers for disbursement and keeping funds inside
Arbitrator, especially since the appellate court affirmed his findings, that it took some time for the vault."
respondent employees to ventilate their claims because of the repeated assurances made by the
petitioner that it would review the company records and determine therefrom the validity of the
2. On January 31, 1985 at 5:00 in the afternoon, complainant sought and was granted
claims, without expressing a categorical denial of their claims. As elucidated by the Voluntary
permission by the Regional Accountant (Remus Banogon) to leave the office to attend to
Arbitrator:
personal matter (to buy some milk for his infant child). When he returned to the office after an
hour, he proceeded to work and discovered a shortage of P10,004.56. He relayed the matter to
The respondents had raised prescription as defense. The controlling law, as ruled by the High the security guard and to his supervisor, the Regional Accountant, the following morning.
Court, is: Together with the General Accounting Clerk, complainant and the Regional Accountant counted
and reviewed the transactions of the previous day but could not account for the shortage. This
matter was reported to the Operations Manager.
"The cause of action accrues until the party obligated refuses xxx to comply with his duty. Being
warded off by promises, the workers not having decided to assert [their] right[s], [their] causes
of action had not accrued…" (Citation omitted.) 3. Due to this incident complainant was grounded and an investigation ensued. After the
investigation, . . . (the employer, San Miguel Corporation) demanded payment of the shortage
from . . . (Divinagracia). On May 31, 1985 . . . (the latter) was dismissed. . . . (He later)
Since the parties had continued their negotiations even after the matter was raised before the
instituted.
Grievance Procedure and the voluntary arbitration, the respondents had not refused to comply
. . . an action on December 23, 1985 for illegal dismissal.
with their duty. They just wanted the complainants to present some proofs. The complainant’s
cause of action had not therefore accrued yet. Besides, in the earlier voluntary arbitration case
aforementioned involving exactly the same issue and employees similarly situated as the Divinagracia's action resulted in a judgment by the Labor Arbiter dated March 29, 1980. The Arbiter
complainants’, the same defense was raised and dismissed by Honorable Thelma Jordan, concluded that Divinagracia had indeed been illegally dismissed and directed his reinstatement with
Voluntary Arbitrator. full back wages. The Arbiter believed Divinagracia's claim that "he formally turned over the funds to
the Regional Accountant (Remus Banogon) before he took a temporary leave of absence on January
31, 1985;" that when he returned an hour or so later, " the Accountant had (already) left the office;"
In fact, the respondents’ promised to correct their length of service and grant them the back
and that since "the latter had duplicate keys to the cashier's (Divinagracia's) booth and knew the
CBA benefits if the complainants can prove they are entitled rendered the former in estoppel,
combination of the vault safe," Banogon was as likely a suspect as he (Divinagracia) himself was, yet
barring them from raising the defense of laches or prescription. To hold otherwise amounts to
Banogon was never investigated, much less disciplined.
rewarding the respondents for their duplicitous representation and abet them in a dishonest
scheme against their workers.17
On appeal by San Miguel Corporation, the NLRC sustained the Arbiter's conclusion that Divinagracia's
employment had in truth been unlawfully terminated. It however modified the Arbiter's judgment by
Indeed, as the Court of Appeals concluded, under the equitable principle of estoppel, it will be the
directing that the reinstatement of Divinagracia thereby decreed be "without backwages for he is not
height of injustice if we will brush aside the employees’ claims on a mere technicality, especially when
totally blameless."
it is petitioner’s own action that prevented them from interposing the claims within the prescribed
period.
Nullification of this decision of the NLRC, rendered on November 25, 1988, is what is sought in this
special civil action initiated in this Court by San Miguel Corporation (SMC). SMC contends that the
WHEREFORE, the petition is denied. The appealed decision of the Court of Appeals in CA-G.R. SP No.
following findings in that decision were arrived at with grave abuse of discretion, to wit:
44341 and the resolution denying petitioner’s motion for reconsideration, are AFFIRMED. Costs
against petitioner. SO ORDERED.
1) there had been a formal turn-over of funds from Divinagracia to his immediate superior —
Regional Accountant Remus Banogon — at the time that, with the latter's permission,
G.R. No. 88268 June 2, 1992
Divinagracia went out of his office on a personal errand;

SAN MIGUEL CORPORATION, petitioner,

2) Banogon might have taken some of the money left by Divinagracia in the vault inside his
vs.
booth, since Banogon had duplicate keys to that booth and knew the combination of the vault;
NATIONAL LABOR RELATIONS COMMISSION and FRANCISCO DIVINAGRACIA, respondents.
and

The basic facts from which the controversy at bar has arisen are not in dispute. They are summarized
3) the testimony of Accounting Clerk Jocelyn B. Longno is undeserving of credit.
in the challenged decision of the respondent National Labor Relations Commission (NLRC) of
November 25, 1988 as follows.
At the administrative investigation conducted by SMC respecting Divinagracia's shortage, as well as in
the proceedings before the Labor Arbiter, evidence was given by the persons who were with
1. Francisco Divinagracia "started working with . . . (San Miguel Corporation) on November 16,
Divinagracia at the time of the incident: Remus Banogon and Jocelyn Longno.
1977 as accounting clerk. On July 24, 1982 he held the position of Regional Cashier of Bacolod
Beer Region with basic monthly salary of P2,200. His job entailed the receiving of cash
Banogon pertinently deposed that —
 1) although he really did have a key to the Cashier's office and knew the combination of the
vault lock, he never entered the cashier's booth on January 31, 1985, when the shortage
supposedly happened; moreover, he did not have a key to the drawer of the Cashier's table
where some of the remittances were supposedly placed; and
2) It is not true that there was a turn-over of the Cashier's funds, booth or vault to him; such
a turn-over not being "done in absences of short duration like Divinagracia's absence from
5:30 p.m. to 6:45 p.m.
Jocelyn B. Longno testified that —
1) as shown in two (2) sketches of the Accounting Office in which she was at the time working
together with Remus Banogon, Francisco Divinagracia and others, Divinagracia's Cashier's
booth "is situated in such a way that I would be able to see if someone should enter it . . .
(and) Remus Banogon's table was just next to my table . . . (such that). I would surely notice
if he left his table;"
2) she did not leave her table inside the Accounting Office from the time that Divinagracia left
at about 5:30 P.M. until she went home at about 6:45 P.M.; "(n)either Remus Banogon nor
anybody else entered the Cashier's Booth on that period that Francisco Divinagracia III was
out . . . (and in fact) Remus Banogon did not leave his table until 6:30 P.M. when he was
already going home;" and
3) she herself left the Accounting Office at about 6:45 P.M. and locked its door; and as she was
going out of the gate, she met Divinagracia coming back.
From the foregoing evidence, the NLRC drew the conclusion that Divinagracia's "failure to account
could not be solely attributable to him since other persons have similar access to the company funds,"
and his complainant's function is lodged, was likewise in the performance of his duty."
What in effect the NLRC is saying is that since both Divinagracia and Banogon had no access to the
former's office and the vault therein, it is not possible to hold only Divinagracia liable for the shortage
in his funds, since Banogon might himself have surreptitiously gone inside Divinagracia's booth,
opened the vault and made off with some of the money lying there. The evidence, however, is that
while Banogon indeed had access to Divinagracia's office and its vault, Banogon had not gone into
that office at all at any time during the hour that Divinagracia was away. What the NLRC has done is
to make a selective acceptance of Banogon's testimony, according credit to such part thereof as was
consistent with obscuration of Divinagracia's liability for the shortage, and conveniently ignoring so
much of it as was inconsistent. It accorded credit to Banogon's statement that he had a key to
Divinagracia's office and knew the combination to the vault, but it rejected his declaration, forming
part of the same testimony, that he had never entered Divinagracia's booth on the day in question.
That rejection cannot in the circumstances be regarded as otherwise than whimsical, capricious, even
irrational. No reason whatsoever has been given by NLRC for that rejection, or why Banogon is
deemed a credible witness in part and branded as undeserving of belief in another, specially when
Banogon's statements are corroborated in their entirety by the other evidence on record, Jocelyn B.
Longno's testimony and the unchallenged sketches of Divinagracia's Cashier's Booth in relation to the
adjacent or surrounding working areas.
Neither does the NLRC cite any cause to disbelieve the evidence given by Longno, basically to the
effect that Banogon had never entered the office of Divinagracia while the latter was out on personal
business. This lack of justification is attempted to be cured by the NLRC's counsel by such arguments
as —
1) . . . (while it) may be true that she had no ill-motive as to falsely testify against . . .
(Divinagracia), (h)owever, she had to protect her employment with petitioner (SMC); and
2) . . . while Longno was rendering overtime work, her concern and attention were focused on
her work. It was unnatural for her to have noticed that Banogon never left his desk while she
was concentrating on her work. Longno then biased and cannot be relied upon on this point.
The first argument is unintelligible. Its import is that while Longno had "no ill-motive" to testify falsely
against Divinagracia, she nevertheless did so "to protect her employment with petitioner." Why her
employment would be imperilled by her testifying otherwise than she actually did (e.g., that
Divinagracia was faultless, or it was some other employee who had taken the money, etc.) is not
explained. The second argument is cut from the same bolt. It insists that Longno could not have
noticed what Banogon was doing at all since she was concentrated on her work, despite Longno's
positive declaration that she would surely have noticed if Bagonon had entered the booth of
Divinagracia while the later was out for an hour and fifteen minutes because her desk was right
beside Bagonon's and she was so situated that Divinagracia's booth was within her view at any given
moment. Why stark speculation or plain guessing should be preferred to affirmative testimony is also
not explained.
In any event, it is clear that the NLRC's conclusions regarding the evidence have nothing to support
them and hence must be struck down, as already stated, for being whimsical and capricious, arrived
at with grave abuse of discretion.
WHEREFORE, the petition is GRANTED. The Decision of the respondent National Labor Relations
Commission of November 25, 1988 is NULLIFIED AND SET ASIDE, and the complaint of illegal
dismissal is DISMISSED, without pronouncement as to costs. SO ORDERED.
G.R. No. 211588, September 09, 2015
WORLD'S BEST GAS, INC., v. HENRY VITAL, JOINED BY HIS WIFE FLOSERFINA VITAL,
The Facts
Vital was one of the incorporators of WBGI, holding P500,000.00 worth of shares of stocks
therein.5 As a separate business venture, Vital and his wife, respondent Floserfina Vital (respondents),
sourced Liquefied Petroleum Gas (LPG) from WBGI and distributed the same through ERJ Enterprises
owned by them.6 As of respondents' last statement of account, their outstanding balance with
WBGI for unpaid LPG amounted to P923,843.59.7
On January 6, 1999, Vital was appointed as Internal Auditor and Personnel Manager by WBGI's
President/CEO and continued to serve as such until his mandatory retirement on September 25,
2003.8Upon his retirement, WBGI's Board of Directors computed Vital's retirement benefits at
P82,500.00 by multiplying his P15,000.00 monthly pay by 5.5 years, which was the number of years
he served as Internal Auditor and Personnel Manager. WBGI also agreed to acquire Vital's
P500,000.00 shares of stocks at par value.9
After offsetting the P500,000.00 due from WBGI's acquisition of his shares of stocks against ERJ
Enterprises' P923,843.59 outstanding balance to WBGI, Vital claimed that the unpaid salaries
and separation pay due him amounted to P845,000.00 and P250,000.00, respectively, leaving
a net amount of P671,156.41 payable to him. WBGI rejected Vital's claim and contended that after
offsetting, Vital actually owed it P369,156.19.10
On January 4, 2006, Vital filed a complaint before the National Labor Relations Commission (NLRC)
— Regional Arbitration Branch III (RAB), docketed as NLRC Case No. RAB-III-01-9671-06, for non-
payment of separation and retirement benefits, underpayment of salaries/wages and
13thmonth pay, illegal reduction of salary and benefits, and damages.11
For its part, WBGI averred that the Labor Arbiter (LA) had no jurisdiction over the complaint because
Vital is not an employee, but a mere incorporator and stockholder of WBGI, hence, no employer-
employee relationship exists between them.12
The LA Ruling
In a Decision13 dated May 3, 2006, the LA found that the issues between Vital and WBGI are intra-
corporate in nature as they arose between the relations of a stockholder and the corporation, and not
from an employee and employer relationship.14 Thus, the LA dismissed the case for lack of
jurisdiction,15prompting Vital to file his complaint16 for payment of unpaid salaries, separation and
retirement benefits, and damages on July 19, 2007 before the RTC, docketed as Civil Case No.
8694.17
The RTC Ruling
In a Decision18 dated December 12, 2011, the RTC, acting as a special commercial court, oppositely
found that Vital was an employee of WBGI and thereby, upheld his claim of P845,000.00 and
P250,000.00 in unpaid salaries and separation pay. However, the RTC offset these amounts, including
the P500,000.00 due from WBGFs acquisition of Vital's shares of stocks, against the P923,843.59
payable to WBGI from ERJ Enterprises, thus, awarding Vital the net amount of P671,156.41, with
legal interest from date of demand until full payment, P50,000.00 as attorney's fees and costs of suit
plus litigation expenses.19
The RTC ratiocinated that since the positions of Internal Auditor and Personnel Manager were not
provided for in WBGI's By-Laws, Vital was not a corporate officer but an employee entitled to
employment benefits. It also maintained that it had jurisdiction to rule on the main intra-corporate
controversy, together with the question of damages and employment benefits.20
Aggrieved, WBGI elevated the case to the CA on appeal. 21
The CA Ruling
In a Decision22 dated September 30, 2013, the CA dismissed the appeal, agreeing with the RTC's
finding that Vital was an employee of WGBI. While the CA observed that the RTC's award of
employment benefits to Vital was improper, as the same was under the exclusive jurisdiction of the
labor arbiters, it still ruled on said claim, reasoning that it has the eventual authority to review the
labor courts' decision on the matter.23
WBGI filed a motion for reconsideration24 which was, however, denied in a Resolution25 dated March
4, 2014; hence, the present petition.
The Issue Before the Court
The main issue to be resolved is whether or not the CA erred in ruling upon Vital's claim of
P845,000.00 and P250,000.00 in unpaid salaries and separation pay.
The Court's Ruling
The petition is partly meritorious.
At the outset, it should be pointed out that the instant case actually involves three (3) distinct causes
of action, namely, (1) Vital's claim for P845,000.00 and P250,000.00 in unpaid salaries and
separation pay; (2) the P923,843.59 in arrearages payable to WBGI from ERJ Enterprises, which was
admitted by Vital but not claimed by WBGI; and (3) Vital's claim of P500,000.00 due from WBGI's
acquisition of Vital's shares of stocks. All of the foregoing were threshed out by the RTC in its
December 12, 2011 Decision, and effectively upheld by the CA on appeal.
However, the RTC's adjudication of the first cause of action was improper since the same is one which
arose from Vital and WBGI's employer-employee relations, involving an amount exceeding P5,000.00,
hence, belonging to the jurisdiction of the labor arbiters pursuant to Article 217 of the Labor Code:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code, the Labor 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
cases involving all workers, whether agricultural or non-agricultural:chanRoblesvirtualLawlibrary
1. Unfair labor practice cases;ChanRoblesVirtualawlibrary
2. Termination disputes;ChanRoblesVirtualawlibrary
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of
employment;ChanRoblesVirtualawlibrary
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and
6. Except claims for Employees' Compensation, Social Security, Medicare and maternity benefits, all
other claims arising from employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five thousand pesos
(P5,000.00) regardless of whether accompanied with a claim for reinstatement.
xxxx
Having no subject matter jurisdiction to resolve claims arising from employer-employee relations, the
RTC's ruling on Vital's claim of P845,000.00 and P250,000.00 in unpaid salaries and separation pay is,
thus, null and void, and therefore, cannot perpetuate even if affirmed on appeal,26 rendering the CA's
ratiocination that it "has the eventual authority to review the labor courts' decision on the
matter"27direly infirm. As a result, WBGI's petition is meritorious on this score. However, since the
dismissal is grounded on lack of jurisdiction, then the same should be considered as a dismissal
without prejudice.28As such, Vital may re-file29the same claim, including those related thereto
(e.g., moral and exemplary damages, and attorney's fees) before the proper labor tribunal.
Contrary to its lack of jurisdiction over claims arising from employer-employee relations, the RTC has:
(a) general jurisdiction to adjudicate on the P923,843.59 in arrearages payable to WBGI from
ERJ Enterprises, which was admitted by Vital but not claimed by WBGI;30 and (b) special
jurisdiction, as a special commercial court, to adjudicate on Vital's claim of P500,000.00 from
WBGI's acquisition of his shares of stocks.31 Indeed, even acting as a special commercial court,
the RTC's general jurisdiction to adjudicate on the first-mentioned claim is retained.
With the RTC's jurisdiction established over the above-mentioned causes of action, Vital's claim
of P500,000.00 due from WBGI's acquisition of his shares of stocks should therefore
be offset against the P923,843.59 in arrearages payable to WBGI by ERJ Enterprises owned by
respondents, as prayed for by him. Hence, no amount can be adjudicated in Vital's favor, since it is
the respondents who, after due computation, would be left liable to WBGI in the net amount
of P423,843.59. This notwithstanding, WBGI cannot recover this latter amount in this case since it
never interposed a permissive counterclaim therefor in its answer.32 It is well-settled that courts
cannot grant a relief not prayed for in the pleadings or in excess of what is being sought by the
party.33WBGI may, however, opt to file a separate collection suit, including those related
thereto (e.g., moral and exemplary damages, and attorney's fees), to recover such sum.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated September 30, 2013 and the
Resolution dated March 4, 2014 of the Court of Appeals in CA-G.R. SP No. 123497 are hereby SET
ASIDE. A new one is entered:chanRoblesvirtualLawlibrary
(a) DISMISSING respondent Henry Vital's (Vital) labor claims of P845,000.00 and P250,000.00 in
unpaid salaries and separation pay against petitioner World's Best Gas, Inc.'s (WBGI), WITHOUT
PREJUDICE as stated in this Decision; and
(b) RECOGNIZING WBGI's liability to Vital in the amount of P500,000.00 due from the acquisition of
his shares of stocks. This amount is, however, OFFSET against the P923,843.59 in arrearages
payable to WBGI by ERJ Enterprises owned by Vital and his wife, respondent Floserfma Vital, leaving
a net amount of P423,843.59, which WBGI may claim in a separate case as stated in this Decision.
G.R. No. 203355, August 18, 2015
LEO R. ROSALES, EDGAR SOLIS JONATHAN G. RANIOLA, LITO FELICIANO, RAYMUNDO
DIDAL, JR., NESTOR SALIN, ARNULFO S. ABRIL, RUBEN FLORES, DANTE FERMA AND
MELCHOR SELGA, Petitioners, v. NEW A.N.J.H. ENTERPRISES & N.H. OIL MILL CORPORATION,
NOEL AWAYAN, MA. FE AWAYAN, BYRON ILAGAN, HEIDI A. ILAGAN AND AVELINO
AWAYAN, Respondents.
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the September
5, 2012 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 124395, which, in turn, affirmed the
Resolutions of the National Labor Relations Commission (NLRC) dated December 28, 2011 2 and
February 28, 20123 in NLRC-LAC Case No. 07-001796-11.
Respondent New ANJH Enterprises (New ANJH) is a sole proprietorship owned by respondent Noel
Awayan (Noel). Petitioners are its former employees who worked as machine operators, drivers,
helpers, lead and boiler men.
Allegedly due to dwindling capital, on February 11, 2010, Noel wrote the Director of the Department
of Labor and Employment (DOLE) Region IV-A a letter regarding New ANJH's impending cessation of
operations and the sale of its assets to respondent NH Oil Mill Corporation (NH Oil), as well as the
termination of thirty-three (33) employees by reason thereof.4 On February 13, 2010, Noel met with
the 33 affected employees, which included petitioners, to inform them of his plan.5 On even date, he
gave the employees uniformly-worded Notices dated February 12, 20106 informing them of the
cessation of operations of New ANJH effective March 15, 2010 and the sale of its assets to a
corporation. Noel also offered the employees, including petitioners, their separation pay.
On March 5, 2010, Noel signed a Deed of Sale selling the equipment, machines, tools and/or other
devices being used by New ANJH Enterprises for the manufacturing and/or extraction of coconut oil
for P950,000 to NH Oil, as represented by respondent Heidi A. Ilagan (Heidi), Noel's
sister.7cralawrednad
Parenthetically, the Articles of Incorporation of NH Oil were prepared on January 27, 2010 with Noel
appearing to have more than two-thirds (2/3) of the subscribed capital stock of the corporation.8 The
remaining shares had been subscribed by Heidi and other members of the Awayan
family.9cralawrednad
On March 8, 2010, respondents New ANJH and Noel filed before the NLRC Sub-Regional Arbitration
Branch No. IV (NLRC-SRAB-IV), San Pablo City a "Letter Request for Intervention," which was
docketed as SRAB-IV-03-5066-10-L. The letter request reads:cralawlawlibrary
Please be informed that the business operations of the New ANJH Enterprises, a single Proprietorship
engaged in oil extraction situated in San Pablo City, will be permanently closed effective 15 March
2010 due to lack of capital caused by enormous uncollected receivables/debts and the necessity for
the plant to undergo general repairs and maintenance.
xxxx
In this connection, we respectfully request that we be allowed to effect the payment of the
separation benefits to our employees before your Office and with your kind intervention to ensure
that we are properly guided by the provisions of law in this undertaking.10 (Emphasis supplied)
On March. 16, 2010, petitioners Lito Feliciano (Feliciano), Edgar Solis (Solis), and Nestor Salin (Salin)
received their respective separation pays, signed the corresponding check vouchers and
executed Quitclaims and Release before Labor Arbiter Melchisedek A. Guan (LA Guan) of NLRC SRAB-
IV San Pablo Office.11cralawrednad
On March 27, 2010, petitioner Leo Rosales (Rosales) similarly received his separation pay from Noel
and signed a Quitclaim and Release.12 On March 29, 2010, the other petitioners, Amulfo Abril (Abril),
Raymundo Didal (Didal), Ruben Flores (Flores), Melchor Selga (Selga), Jonathan Ranola (Ranola), and
Dante Ferma (Ferma) also received their separation benefits and signed their respective Quitclaims
and Release and check vouchers.13cralawrednad
Following the payments thus made to petitioners and their execution of Quitclaims and Release, LA
Guan issued four (4) Orders, to wit: three Orders all dated March 22, 2010 for petitioners Feliciano,
Solis, and Salin;14 and one Order dated April 8, 2010 for petitioners Abril, Flores, Didal, Ferma,
Rosales, Selga and Ranola.15 In the said Orders, LA Guan declared the "labor dispute" between New
ANJH and petitioners as "dismissed with prejudice on ground of settlement."16cralawrednad
Petitioners, however, filed a complaint for illegal dismissal, docketed as NLRC Case No. RAB-IV-04-
00649-10-L, with NLRC Regional Arbitration Branch IV (NLRC-RAB-IV) in Calamba City. They alleged
in their complaint that while New ANJH stopped its operations on March 15, 2010, it resumed its
operations as NH Oil using the same machineries and with the same owners and
management.17 Petitioners thus claimed that the sale of the assets of New ANJH to NH Oil was a
circumvention of their security of tenure.
In a Decision dated April 29, 2011,18 Executive Labor Arbiter Generoso V. Santos (ELA Santos) found
that petitioners had been illegally dismissed and ordered their reinstatement and the payment of One
Million Six Thousand Forty-Five and 87/100 Pesos (P1,006,045.87) corresponding to the petitioners'
full backwages less the amount paid to them as their respective "separation pay." In ruling for the
petitioners, ELA Santos ratiocinated that the buyer "in the 'impending sale' undisclosed in the notices
of [petitioners] is divulged by subsequent development to be practically the same as the seller."
Hence, for ELA Santos, it was extremely difficult to conclude that the sale was genuine and can validly
justify the termination of the petitioners.
Respondents filed their Notice of Appeal with Appeal Memorandum19 along with a Verified Motion to
Reduce Bond20 with the NLRC. They also posted 60% of the award ordered by the LA, or Six Hundred
Three Thousand Six Hundred Twenty-Seven and 52/100 Pesos (P603,627.52), as their appeal
bond.21cralawrednad

Meanwhile, petitioners also filed a Memorandum of Partial Appeal contending that ELA Santos erred in
failing to award them moral and exemplary damages.22cralawrednad
On September 24, 2011, the NLRC issued a Decision23 denying respondents' Verified Motion to Reduce
Bond for lack of merit and so dismissing their appeal for non-perfection. In the same Decision, the
NLRC also granted petitioners' partial appeal by modifying ELA Santos' Decision to include the award
of P20,000.00 to each petitioner as moral and exemplary damages.24cralawrednad
Respondents filed their Motion for Reconsideration with Motion to Admit Additional Appeal Cash
Bond25cralawredwith corresponding payment of additional cash bond.26cralawrednad
While the motion was opposed by petitioners,27 the NLRC, in its Resolution dated December 28,
2011,28reversed its earlier Decision and ordered the dismissal of petitioners' complaint on the ground
that it was barred by the Orders issued by LA Guan under the doctrine of res judicata. Further, the
NLRC pointed out that the sale of New ANJH's assets to NH Oil Mill was in the exercise of sound
management prerogative and there was no proof that it was made to defeat petitioners' security of
tenure.
In its Resolution dated February 28, 2012,29 the NLRC denied petitioners' Motion for Reconsideration.
Hence, petitioners filed a petition for certiorari with the CA.
In the assailed Decision,30 the appellate court denied the petition for certiorari, thereby affirming the
NLRC's Resolutions dated December 28, 2011 and February 28, 2012.
In its Decision, the appellate court held that private respondents had substantially complied with the
rule requiring the posting of an appeal bond equivalent to the total award given to the employees.
More importantly, so the CA held, the Orders rendered by LA Guan in NLRC Case No. SRAB IV-03-
5066-10-L were considered final and binding upon the parties and had the force and effect of a
judgment rendered by the labor arbiter. Thus, the appellate court declared that the petitioners'
complaint for illegal dismissal was already barred by res judicata.
Aggrieved by the CA's Decision, petitioners are now before this Court on a petition for review on
certiorari.
We find the petition to be with merit.
The suspension of the period to perfect the appeal upon the filing of a motion to reduce
bond
On the issue of perfecting the appeal, the CA was correct when it pointed out that Rule VI of the New
Rules of Procedure of the NLRC provides that a motion to reduce bond shall be entertained "upon the
posting of a bond in a reasonable amount in relation to the monetary award." As to what the
"reasonable amount" is, the NLRC has wide discretion in determining the reasonableness of the bond
for purposes of perfecting an appeal. In Garcia v. KJ Commercial,31 this Court
explained:cralawlawlibrary
The filing of a motion to reduce bond and compliance with the two conditions stop the running of the
period to perfect an appeal. x x x
xxxx
The NLRC has full discretion to grant or deny the motion to reduce bond, and it may rule on
the motion beyond the 10-day period within which to perfect an appeal. Obviously, at the
time of the filing of the motion to reduce bond and posting of a bond in a reasonable amount, there is
no assurance whether the appellant's motion is indeed based on "meritorious ground" and whether
the bond he or she posted is of a "reasonable amount." Thus, the appellant always runs the risk of
failing to perfect an appeal.
x x x In order to give full effect to the provisions on motion to reduce bond, the appellant must be
allowed to wait for the ruling of the NLRC on the motion even beyond the 10-day period to
perfect an appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground
and that the amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC
denies the motion, the appellant may still file a motion for reconsideration as provided
under Section 15, Rule VII of the Rules. If the NLRC grants the motion for reconsideration
and rules that there is indeed meritorious ground and that the amount of the bond posted
is reasonable, then the appeal is perfected. If the NLRC denies the motion, then the decision of
the labor arbiter becomes final and executory.
xxx
In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the period
to perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines, Inc.
v. Bautista, the Court held:cralawlawlibrary
"Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award may
be perfected only upon the posting of cash or surety bond. The Court, however, has relaxed this
requirement under certain exceptional circumstances in order to resolve controversies on their merits.
These circumstances include: (1) fundamental consideration of substantial justice; (2) prevention of
miscarriage of justice or of unjust enrichment; and (3) special circumstances of the case combined
with its legal merits, and the amount and the issue involved."32 (emphasis and underscoring supplied)
In this case, the NLRC had reconsidered its original position and declared that the 60% bond was
reasonable given the merits of the justification provided by respondents in their Motion to Reduce
Bond, as supplemented by their Motion for Reconsideration with Motion to Admit Additional Appeal
Cash Bond. The CA affirmed the merits of the grounds cited by respondents in their motions and the
reasonableness of the bond originally posted by respondents. This is in accord with the guidelines
established in McBurnie v. Ganzon,33 where this Court declared that the posting of a provisional cash
or surety bond equivalent to ten percent (10%) of the monetary award subject of the appeal is
sufficient provided that there is meritorious ground therefor, viz:cralawlawlibrary
[O]n the matter of the filing and acceptance of motions to reduce appeal bond, as provided in Section
6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that henceforth, the
following guidelines shall be observed:cralawlawlibrary
(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the
following conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is
posted;
(b) For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting
of a provisional cash or surety bond equivalent to ten percent (10%) of the monetary award
subject of the appeal, exclusive of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day
reglementary period to perfect an appeal from the labor arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the
final amount of bond that shall be posted by the appellant, still in accordance with the standards of
meritorious grounds and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that
exceeds the amount of the provisional bond, the appellant shall be given a fresh period of
ten (10) days from notice of the NLRC order within which to perfect the appeal by posting
the required appeal bond.34 emphasis and underscoring added)
It is noted that the respondents have eventually posted the full amount of the award ordered by the
labor arbiter. Thus, given the absence of grave abuse of discretion on the part of the NLRC and the
affirmation of the CA of the reasonableness of the motions and the amount of bond posted, there is
no ground for this Court to reverse the CA's finding that the appeal had been perfected.
Res Judicata does not bar the filing of the complaints for illegal dismissal
On the matter of the application of the doctrine of res judicata, however, this Court is loath to sustain
the finding of the appellate court and the NLRC. For res judicata to apply, the concurrence of the
following requisites must be verified: (1) the former judgment is final; (2) it is rendered by a court
having jurisdiction over the subject matter and the parties; (3) it is a judgment or an order on the
merits; (4) there is-between the first and the second actions-identity of parties, of subject matter,
and of causes of action.35cralawrednad
The petitioners dispute the existence of all of the foregoing requisites. First, petitioners contend that
LA Guan does not have jurisdiction to issue the Orders in SRAB-IV-03-5066-10-L since, in the first
place, Noel's letter request for guidance in the payment of separation pay is allegedly not a "labor
dispute."
Article 219 (previously Article 212) of the Labor Code defines a "labor dispute" as "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." As separation pay concerns a term and condition of employment, Noel's request to be
guided in the payment thereof is clearly a labor dispute under the Labor Code.
The proper payment of separation pay further falls under the jurisdiction of the labor arbiter pursuant
to Art. 224 (previously Art. 217) of the Labor Code, as it is mandated as a necessary condition for the
termination of employees, viz,:cralawlawlibrary
Art. 224. Jurisdiction of the Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code,the Labor 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
cases involving all workers, whether agricultural or non agricultural:ChanRoblesvirtualLawlibrary
1. Unfair labor practice cases;
2. Termination disputes;
xxxx
6. Except claims for employees compensation, social security, medicare and maternity
benefits, all other claims arising from employer-employee relations, including
those of persons in domestic or household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of whether accompanied with a claim
for reinstatement. (Emphasis supplied)
The invocation of the labor arbiter's jurisdiction by way of a letter request instead of a complaint is of
no moment, as it is well-settled that the application of technical rules of procedure is relaxed in labor
cases.
The third requisite, however, is not present. The Orders rendered by LA Guan cannot be considered as
constituting a judgment on the merits. The Orders simply manifest that petitioners "are amenable to
the computations made by the company respecting their separation pay." Nothing more. They do not
clearly state the petitioners' right or New ANJH's corresponding duty as a result of the
termination.36cralawrednad
Similarly, the fourth requisite is- also absent. While there may be substantial identity of the parties,
there is no identity of subject matter or cause of action. In SME Bank, Inc. v. De Guzman,37 this Court
held that the acceptance of separation pay is an issue distinct from the legality of the dismissal of the
employees. We held:cralawlawlibrary
The conformity of the employees to the corporation's act of considering them as terminated and their
subsequent acceptance of separation pay does not remove the taint of illegal dismissal. Acceptance
of separation pay does not bar the employees from subsequently contesting the legality of
their dismissal, nor does it estop them from challenging the legality of their separation from the
service.38 (Emphasis supplied)
In the absence of the third and fourth requisites, the appellate court should have proceeded to rule on
the validity of petitioners' termination.
Piercing the veil of corporate existence is justified in the present case.
The application of the doctrine of piercing the veil of corporate fiction is frowned upon. However, this
Court will not hesitate to disregard the corporate fiction if it is used to such an extent that injustice,
fraud, or crime is committed against another in disregard of his rights.39cralawrednad
In this case, petitioners advance the application of the doctrine because they were terminated from
employment on the pretext that there will be an impending permanent closure of the business as a
result of an intended sale of its assets to an undisclosed corporation, and that there will be a change
in the management. The termination notices received by petitioners identically read:cralawlawlibrary
Nais po naming ipaabot sa inyo na ang New ANJH Enterprises ay ihihinto na ang operasyon dahil sa
nagpasya ako bilang may-ari na ipagbili na ang ari-arian nito sa iba kung kayat magkakaroon ng
pagpapalit sa pamumunuan nito.
Kaugnay po nito at ayon sa itinatadhana ng batas ay nais kong ipaabot sa inyo na 30 araw matapos
ninyong matanggap ang pasabing ito o simula sa Marso 15, 2010 ay ititigil na ang operasyon ng New
ANJH Enterprises at sa nasabi ring petsa ay matatapos na rin ang pagtratrabaho o "employment"
ninyo sa New ANJH Enterprises.40
Subsequent events, however, revealed that the buyer of the assets of their employer was a
corporation owned by the same employer and members of his family. Furthermore, the business re-
opened in less than a month under the same management.
Admittedly, mere ownership by a single stockholder of all or nearly all of the capital stock of the
corporation does not by itself justify piercing the corporate veil. Nonetheless, in this case, other
circumstances show that the buyer of the assets of petitioners' employer is none other than his alter
ego.41 We quote with approval the observations of ELA Santos:cralawlawlibrary
Respondents did not allege that they informed complainants neither did they state in the notices of
termination that the buyer in the "impending sale" is NH Oil Mill. Pondering on these observations,
this Office finds it too difficult to surmise that respondents' omission was not deliberate, and so this
Office holds that Noel was not in good faith in dealing with complainants. The information disclosed by
the Certificate of Registration and Articles of Incorporation of NH Oil Mill explains respondents'
motive. Its stockholders are members of [Noel's] family known to complainants, and Noel is
the controlling stockholder and director. The immediate resumption of operation after cessation
of operation on March 15, 2010 further explains it. While complainants failed to prove that the
stockholders in NH Oil Mill were those who managed ANJH, respondents did not dispute that
there was no change in the management people, premises, tools, devices, equipment, and
machinery under NH Oil Mill. The buyer in the "impending sale" undisclosed in the notices
to complainants is divulged by subsequent development to be practically the same as the
seller. These things are inconsistent with good faith.
xxxx
Here, complainants' employment was terminated for the alleged sale of assets of ANJH to NH Oil Mill
that would allegedly entail [a] change of management. The Deed of Sale dated March 5, 2010 [that]
respondents presented (Annex "20", respondents position paper) to prove the "sale," states that [for]
the consideration of Nine Hundred Fifty Thousand Pesos (Php950,000.00), Noel sold to NH Oil Mill the
equipment, machines, tool and/or other devises being used by ANJH for manufacturing and/or
extraction of coconut oil. This Office cannot simply accept it as sufficient proof of sale by the seller to
a distinct and separate entity.
xxxx
The subscribed capital stock of Noel and Heidi [in NH Oil] are worth Php790,000.00 and
Php190,000.00, respectively, or the total of Php980,000.00. Respondents claim that Noel was
managing ANJH and Heidi was its Secretary. The Deed of Sale is signed by Noel and Heidi,
Noel as [sellerl, and Heidi as representative of NH Oil Mill.Respondents did not enumerate what
[were] the equipment etc. subject of the "sale," and how they were depreciated, and what [were] the
equipment/machines owned by Avelino and rented by NH Oil Mill and for how much? Therefrom, it is
extremely difficult to conclude by quantum of evidence acceptable to [a] reasonable mind, [that] the
"sale to a distinct entity" is genuine. And while the notices of termination state that there would be
[a] change in management, this Office notes that respondents do not deny that Noel and Heidi
continue to manage NH Oil Mill. Therefore, as far as complainants' employment is concerned, this
Office pierces the veil of corporate fiction of NH Oil Mill and finds that the purported sale thereto of
the assets of ANJH is insufficient to validly terminate such employment. This Office cannot rule
otherwise without running afoul to the mandate of the Constitution securing to the workingman his
employment, and guaranteeing to him full protection. So this Office declares that complainants were
illegally dismissed.42 (emphasis and underscoring supplied)
Clearly, the milieu of the present case compels this Court to remove NH Oil's corporate mask as it had
become, and was used as, a shield for fraud, illegality and inequity against the petitioners.
WHEREFORE, the instant petition is GRANTED and the Decision dated September 5, 2012 of the
Court of Appeals in CA-G.R. SP No. 124395, affirming the Resolutions of the National Labor Relations
Commission (NLRC) dated December 28, 2011 and February 28, 2012 in NLRC-LAC Case No. 07-
001796-11, is hereby REVERSED and SET ASIDE. The Decision of Executive Labor Arbiter Generoso
Santos in NLRC Case No. RAB-IV-04-00649-10-L to the effect that petitioners were illegally dismissed
is REINSTATED. SO ORDERED.
G.R. No. 192573 October 22, 2014
RICARDO N. AZUELO, Petitioner,
vs.
ZAMECO II ELECTRIC COOPERATIVE, INC., Respondent.
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision2 dated February 26, 2010 and Resolution3 dated June 10, 2010
issued by the Court of Appeals (CA) in CA-G.R. SP No. 107762, which affirmed the Decision4 dated
September 22, 2008 and Resolution5 dated December 15, 2008 of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 052567-07.
The Facts
Petitioner Ricardo N. Azuelo (Azuelo) was employed by the respondent ZAMECO II Electric
Cooperative, Inc. (ZAMECO) as a maintenance worker. It appears that sometime in March 2006,
Azuelo filed with the Regional Arbitration Branch (RAB) of the NLRC in San Fernando City, Pampanga
a Complaint6 for illegal dismissal and non-payment of benefits against ZAMECO. The complaint was
docketed as NLRC Case No. RAB III-03-9912-06 and was assigned to Labor Arbiter (LA) Mariano" L.
Bactin (LA Bactin). After several mediations, LA Bactin ordered the parties to submit their respective
position papers on July 14, 2006.
On July 14, 2006, Azuelo, instead of submitting his position paper, moved that the submission of his
position paper be extended to August 4, 2006, which was granted by LA Bactin. On August 4, 2006,
Azuelo again failed to submit his position paper. LA Bactin then directed Azuelo to submit his position
papers on August 22, 2006. On the said date, Azuelo, instead of submitting his position paper, moved
for the issuance of an order directing ZAMECO to furnish him with a complete copy of the
investigation report as regards his dismissal. ZAMECO opposed the said motion, asserting that it has
already furnished Azuelo with a copy of its investigation report.
On November 6, 2006, LA Bactin issued an Order,7 which reads:
Record shows that respondent has already filed its position paper while complainant, despite ample
opportunity given him, failed to file his[,] leaving this office with no option but to dismiss this case for
lack of interest.
WHEREFORE, let this case be, as it is hereby dismissed for lack of[merit].
SO ORDERED.8
Azuelo received a copy of LA Bactin's Order dated November 6, 2006 on November 17, 2006. On
November 21, 2006, Azuelo again filed a complaint with the RAB of the NLRC in San Fernando City,
Pampanga for illegal dismissal with money claims against ZAMECO, containing the same allegations in
his first complaint. The case was docketed as NLRC Case No. RAB-III-11-10779-06 and was assigned
to LA Reynaldo V. Abdon (LA Abdon).
On December 20, 2006, ZAMECO filed a Motion to Dismiss9 the second complaint filed by Azuelo on
the ground of res judicata. ZAMECO pointed out that Azuelo had earlier filed a similar complaint,
which was dismissed by LA Bactin due to his unreasonable failure to submit his position paper despite
ample opportunity given to him by LA Bactin. ZAMECO likewise averred that Azuelo should have
appealed from LA Bactin's Order dated November 6, 2006 instead of filing a complaint for illegal
dismissal anew.
Azuelo opposed ZAMECO's motion to dismiss,10 alleging that the dismissal of his first complaint by LA
Bactin was without prejudice. He explained that his failure to submit his position paper was due to
ZAMECO's refusal to furnish him with the complete documents pertaining to his illegal dismissal. He
further claimed that, since the dismissal of his first complaint was without prejudice, his remedy was
either to file a motion for reconsideration or to re-file the case within 10 days from receipt of the
order of dismissal.
On March 12, 2007, LA Abdon issued an Order,11 which dismissed Azuelo's second complaint for illegal
dismissal on the ground of res judicata. LA Abdon pointed out that the dismissal of Azuelo's first
complaint for illegal dismissal was with prejudice; that the appropriate remedy available to Azuelo
against LA Bactin's dismissal of the first complaint was to appeal from the same and not to file a
second complaint for illegal dismissal.
On appeal, the NLRC, in its Decision12 dated September 22, 2008, affirmed the Order issued on March
12, 2007 by LA Abdon. The NLRC pointed out that LA Bactin gave Azuelo ample opportunity to submit
his position paper, which he still failed to do. That his failure to prosecute his action for unreasonable
length of time indeed warranted the dismissal of his first complaint, which is deemed to be with
prejudice, unless otherwise stated. Considering that the Order issued on November 6, 2006 by LA
Bactin did not qualify the nature of the dismissal of the first complaint, the NLRC opined that the said
dismissal is with prejudice. Thus, the filing of the second complaint for illegal dismissal is already
barred by the prior dismissal of Azuelo' s first complaint.
Azuelo sought reconsideration13 of the Decision dated September 22, 2008 but it was denied by the
NLRC in its Resolution14 dated December 15, 2008.
Azuelo then filed a petition for certiorari15 with the CA, alleging that the NLRC gravely abused its
discretion in ruling that the dismissal of his first complaint was with prejudice, thus constituting a bar
to the filing anew of his complaint for illegal dismissal against ZAMECO. He likewise asserted that,
since the dismissal of his first complaint was without prejudice, the remedy available to him, contrary
to LA Abdon's ruling, was to re-file his complaint, which he did.
On February 26, 2010, the CA rendered the herein assailed Decision,16 which denied the petition for
certiorari filed by Azuelo. The CA held that the NLRC did not commit any abuse of discretion in
affirming the dismissal of Azuelo' s second complaint for illegal dismissal on the ground of res
judicata. That the dismissal of the first complaint, which was with prejudice, bars the filing of a
subsequent complaint for illegal dismissal based on the same allegations.
Azuelo's Motion for Reconsideration17 was denied by the CA in its Resolution18 dated June 10, 2010.
Hence, the instant petition.
Issue
Essentially, the issue set forth by Azuelo for the Court's resolution is whether the dismissal of his first
complaint for illegal dismissal, on the ground of lack of interest on his part to prosecute the same,
bars the filing of another complaint for illegal dismissal against ZAMECO based on the same
allegations.
Ruling of the Court
The petition is denied.
At the outset, it should be stressed that in a petition for review under Rule 45 of the Rules of Court,
such as the instant petition, where the CA' s disposition in a labor case is sought to be calibrated, the
Court's review is quite limited. In ruling for legal correctness, the Court has to view the CA decision in
the same context that the petition for certiorari it ruled upon was presented to it; the Court has to
examine the CA decision from the prism of whether it correctly determined the presence or absence of
grave abuse .of discretion in the NLRC decision before it, not on the basis of whether the NLRC
decision on the merits of the case was correct.19 "The phrase 'grave abuse of discretion' is well-
defined in our jurisprudence. It exists where an act of a court or tribunal is performed with a
capricious or whimsical exercise of judgment equivalent to lack of jurisdiction. The abuse of discretion
must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to
perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion or personal hostility."20
After a thorough review of the records of the instant case, the Court finds that the CA did not commit
any reversible error in upholding the dismissal of Azuelo's second complaint for illegal dismissal on the
ground of res judicata. The NLRC did not abuse its discretion in ruling that the Order issued on
November 6, 2006 by LA Bactin, which dismissed the first complaint filed by Azuelo, was an
adjudication on the merits.
At the core of the instant petition is the determination of the nature of the dismissal of Azuelo's first
complaint, i.e., whether the dismissal is with prejudice as held by the labor tribunals. The Order
issued on November 6, 2006 by LA Bactin is silent as to the nature of the dismissal; it merely stated
that the complaint was dismissed due to Azuelo's failure, despite ample opportunity afforded him, to
submit his position paper.
Ultimately, the question that has to be resolved is this - whether the dismissal of a complaint for
illegal dismissal due to the unreasonable failure of the complainant to submit his position paper
amounts to a dismissal with prejudice.
The 2005 Revised Rules of Procedure of the NLRC (2005 Revised Rules), the rules applicable at the
time of the controversy, is silent as to the nature of the dismissal of a complaint on the ground of
unreasonable failure to submit a position paper by the complainant. Nevertheless, the 2005 Revised
Rules, particularly Section 3, Rule I thereof, provides for the suppletory application of the Rules of
Court to arbitration proceedings before the LAs and the NLRC in the absence of any applicable
provisions therein, viz:
Section 3. Suppletory Application of the Rules of Court. - In the absence of any applicable provisions
in these Rules, and in order to effectuate the objectives of the Labor Code, the pertinent provisions of
the Rules of Court of the Philippines may, in the interest of expeditious dispensation of labor justice
and whenever practicable and convenient, be applied by analogy or in a suppletory character and
effect. (Emphases ours)
The unjustified failure of a complainant in arbitration proceedings before the LA to submit his position
paper is akin to the case of a complainant's failure to prosecute his action for an unreasonable length
of time in ordinary civil proceedings. In both cases, the complainants are remiss, sans reasonable
cause, to prove the material allagations in their respective complaints. Accordingly, the Court sees no
reason not to apply the rules relative to unreasonable failure to prosecute an action in ordinary civil
proceedings to the unjustified failure of a complainant to submit his position paper in arbitration
proceedings before the LA.
In this regard, Section 3, Rule 17 of the Rules of Court provides that:
Section 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, the plaintiff fails to appear
on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for
an unreasonable length of time, or to comply with these Rules or any order of the court, the
complaint may be dismissed upon motion of the defendant or upon the court's own motion, without
prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate
action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court. (Emphases ours)
"The dismissal of a case for failure to prosecute has the effect of adjudication on the merits, and is
necessarily understood to be with prejudice to the filing of another action, unless otherwise provided
in the order of dismissal. Stated differently, the general rule is that dismissal of a case for failure to
prosecute is to be regarded as an adjudication on the merits and with prejudice to the filing of
another action, and the only exception is when the order of dismissal expressly contains a
qualification that the dismissal is without prejudice."21
Thus, in arbitration proceedings before the LA, the dismissal of a complaint on account of the
unreasonable failure of the complainant to submit his position paper is likewise regarded as an
adjudication on the merits and with prejudice to the filing of another complaint, except when the
LA's order of dismissal expressly states otherwise.
As already stated, the Order dated November 6, 2006, which dismissed Azuelo's first complaint due to
his unreasonable failure to submit his position paper is unqualified. It is thus considered as an
adjudication on the merits and with prejudice to filing of another complaint. Accordingly, the NLRC did
not abuse its discretion when it affirmed LA Abdon' s dismissal of the second complaint for illegal
dismissal. Azuelo' s filing of a second complaint for illegal dismissal against ZAMECO based on the
same allegations cannot be permitted lest the rule on res judicata be transgressed.
"Under the rule of res judicata, a final judgment or decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or their privies, in all later suits and on all points
and matters determined in the previous suit. The term literally means a 'matter adjudged, judicially
acted upon, or settled by judgment.' The principle bars a subsequent suit involving the same parties,
subject matter, and cause of action. The rationale for the rule is that 'public policy requires that
controversies must be settled with finality at a given point in time."'22
Azuelo's insistence that the dismissal of his first complaint by LA Bactin was without prejudice since
he was not remiss in pursuing his complaint for illegal dismissal is plainly untenable. To stress, the
Order dated November 6, 2006 was unqualified; hence, the dismissal is deemed with prejudice
pursuant to Section 3, Rule 17 of the Rules of Court. In any case, the Court finds Azuelo's failure to
file his position paper, despite ample opportunity therefor, unjustified. On this score, LA Abdon' s
observation is instructive, thus:
That complainant failed to prosecute his action for unreasonable length of time before Labor Arbiter
Bactin is supported by the records of the case. Records show that as early as July 14, 2006,
complainant was already required to submit his position paper on said date. However, instead of
submitting one, he requested for "more time" or until August 4, 2006 within which to submit his
position paper x x x. Came August 4, 2006, complainant failed to submit the required position paper
and again requested for an extension of time until August 22, 2006. The reason given was due [to]
"voluminous workload" xx x. Despite the extensions given to complainant, the latter failed to submit
his position paper on due date. Instead, what complainant submitted on August 22, 2006 is a Motion
For the Issuance of Order Directing Respondent to Furnish Complainant The Complete Copy of
Investigation Report. As correctly ruled by Labor Arbiter Abdon, the filing of the said motion is of no
moment. The fact remains that more than one (1) month has already lapsed from the time
complainant was first required to submit his position paper on July 14, 2006 up to the last extension
on August 22, 2006. Further, if complainant really intends to prosecute his case within the reasonable
time, he should not have waited for August 22, 2006 to file said motion.
It is also worth stressing that under Section 7, Rule V of the NLRC Rules of Procedure, parties are
directed to submit position paper within an inextendible period of ten (10) calendar days from the
date of termination of the mandatory conciliation and mediation conference. Clearly, complainant
went beyond this period.23 (Emphasis and italics in the original)
an order directing ZAMECO to produce the said investigation report. However, Azuelo only moved for
the production of the investigation report on the due date of the third extension of time granted him
by LA Bactin to submit his position paper. It is thus apparent that Azuelo's motion seeking the
production of the investigation report is merely a ruse to further extend the period given to Azuelo
within which to submit his position paper.
Nonetheless, Azuelo contended that technical rules of procedure, such as the rule on dismissals of
actions due to the fault of the plaintiff under Section 3, Rule 17 of the Rules of Court, does not apply
to proceedings before the LAs and the NLRC. Hence, Azuelo claimed, LA Abdon erred in dismissing his
second complaint for illegal dismissal.
The Court does not agree.
Indeed, technical rules of procedure are not binding in labor cases.1âwphi1 The LAs and the NLRC are
mandated to use every and all reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of the law or procedure.24 Nevertheless, though technical
rules of procedure are not ends in themselves, they are necessary for an effective and expeditious
administration of justice.25
The non-applicability of technical rules of procedure in labor cases should not be made a license to
disregard the rights of employers against unreasonable and/or unjustified claims. Azuelo was given
sufficient chances to establish his claim against ZAMECO, which he failed to do when he did not
submit his position paper despite several extensions granted him. He cannot now be allowed to raise
anew his supposed illegal dismissal as it would be plainly unjust to ZAMECO. It bears stressing that
the expeditious disposition of labor cases is mandated not only for the benefit of the employees, but
of the employers as well.
It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a
recognition of the inherent economic inequality between labor and management. The intent is to
balance the scale of justice; to put up the two parties on relatively equal positions. There may be
cases where the circumstances warrant favoring labor over the interests of management but never
should the scale be so tilted if the result is an injustice to the employer, Justicia remini regarda est
(Justice is to be denied to none).26
Lastly, the Court notes that Azuelo sought the wrong remedy in assailing the Order dated November
6, 2006 issued by LA Bactin. Considering that the dismissal of Azuelo's first complaint was already an
adjudication on the merits, he should have filed a verified memorandum of appeal with the RAB of the
NLRC in San Fernando City, Pampanga within 10 calendar days from receipt of the said order
pursuant to Section 1, Rule VI of the 2005 Revised Rules instead of re-filing his complaint for illegal
dismissal.27 His failure to do so rendered LA Bactin' s Order dated November 6, 2006, which dismissed
his first complaint for illegal dismissal, final and executory.
WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision
dated February 26, 2010 and Resolution dated June 10, 2010 of the Court of Appeals in CA-G.R. SP
No. 107762 are hereby AFFIRMED.
SO ORDERED.

If indeed Azuelo could not prepare his position paper due to the alleged refusal of ZAMECO to furnish
him with its investigation report on his dismissal, he should have immediately sought the issuance of
G.R. No. 168612 December 10, 2014 This will confirm your selection and that you will undergo training for the position of Foreman I (PG B)
of the Tank Finishing Section, Distribution Transformer Manufacturing and Repair effective August 25,
1997.
PHILIPPINE ELECTRIC CORPORATION (PHILEC), Petitioner,
vs.
COURT OF APPEALS, NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB), You will be trained as a Foreman I,and shall receive the following training allowance until you have
Department of Labor and Employment, RAMON T. JIMENEZ, in his capacity as Voluntary completed the training/observation period which shall not exceed four (4) months.
Arbitrator, PHILEC WORKERS' UNION (PWU), ELEODORO V. LIPIO, and EMERLITO C.
IGNACIO, Respondents.
First Month ----- 350.00
An appeal to reverse or modify a Voluntary Arbitrator's award or decision must be filed before the
Second month ----- 815.00
Court of Appeals within 10 calendar days from receipt of the award or decision.
Third month ----- 815.00
This is a petition1 for review on certiorari of the Court of Appeals’ decision2 dated May 25, 2004,
dismissing the Philippine Electric Corporation’s petition for certiorari for lack of merit. Philippine Fourth month ----- 815.00
Electric Corporation (PHILEC) is a domestic corporation "engaged in the manufacture and repairs of
high voltage transformers."3 Among its rank-and-file employees were Eleodoro V. Lipio (Lipio) and
Emerlito C. Ignacio, Sr. (Ignacio, Sr.), former members of the PHILEC Workers’ Union (PWU).4 PWU is Please be guided accordingly.10
a legitimate labor organization and the exclusive bargaining representative of PHILEC’s rank-and-file
employees.5 Ignacio, Sr., then DT-Assembler with Pay Grade VII,11 was likewise selected for training for the
position of Foreman I.12 On August 21, 1997, PHILEC served Ignacio, Sr. a
From June 1, 1989 to May 31, 1997, PHILEC and its rank-and-file employees were governed by memorandum,13 instructing him to undergo training with the following schedule of allowance:
collective bargaining agreements providing for the following step increases in an employee’s basic
salary in case of promotion:6 This will confirm your selection and that you will undergo training for the position of Foreman I (PG B)
of the Assembly Section, Distribution Transformer Manufacturing and Repair effective
Rank-and-File (PWU)
Pay August 25, 1997.
Grade June 1, 1989 to June 1, 1992 to June 1, 1994 to
May 31, 1992 May 31, 1994 May 31, 1997
You will be trained as a Foreman I,and shall receive the following training allowance until you have
I – II 50 60 65 completed the training/observation period which shall not exceed four (4) months.

II – III 60 70 78
First Month ----- 255.00
III – IV 70 80 95
Second month ----- 605.00
IV – V 80 110 120
Third month ----- 1,070.00
V- VI 100 140 150

VI – VII 120 170 195 Fourth month ----- 1,070.00

VII – VIII 170 230 255

Please be guided accordingly.14
VIII – IX 220 290 340

IX – X 260 350 455 On September 17, 1997, PHILEC and PWU entered into a new collective bargaining agreement,
effective retroactively on June 1, 1997 and expiring on May 31, 1999.15 Under Article X, Section 4 of
the June 1, 1997 collective bargaining agreement, a rank-and-file employee promoted shall be
On August 18, 1997 and with the previous collective bargaining agreements already expired, PHILEC entitled to the following step increases in his or her basic salary:16
selected Lipio for promotion from Machinist under Pay Grade VIII7 to Foreman I under Pay Grade
B.8 PHILEC served Lipio a memorandum,9 instructing him to undergo training for the position of
Section 4. STEP INCREASES. [Philippine Electric Corporation] shall adopt the following step increases
Foreman I beginning on August 25, 1997. PHILEC undertook to pay Lipio training allowance as
on the basic salary in case of promotion effective June 1, 1997. Such increases shall be based on the
provided in the memorandum:
scale below or upon the minimum of the new pay grade to which the employee is promoted,
whichever is higher:
 Pay Grade Step Increase WHETHER OR NOT PHILEC’s MANNER OF IMPLEMENTING THE STEP INCREASES IN CONNECTION
WITH THE PROMOTION OF INDIVIDUAL COMPLAINANTS IN RELATION TO THE PROVISIONS OF
I - II ₱80.00
SECTION 4, ARTICLE X OF THE CBA CONSTITUTES UNFAIR LABOR PRACTICE.21
II - III ₱105.00
III - IV ₱136.00 In their submission agreement, PWU and PHILEC designated Hon. Ramon T. Jimenez as Voluntary
IV - V ₱175.00 Arbitrator (Voluntary Arbitrator Jimenez).22
V - VI ₱224.00
VI - VII ₱285.00 Voluntary Arbitrator Jimenez, in the order23 dated January 4, 1999, directed the parties to file their
respective position papers.
VII - VIII ₱361.00
VIII - IX ₱456.00
In its position paper,24 PWU maintained that PHILEC failed to follow the schedule of step increases
IX - X ₱575.00 under Article X, Section 4 of the June 1, 1997 collective bargaining agreement. Machinist I, Lipio’s
To be promoted, a rank-and-file employee shall undergo training or observation and shall receive position before he underwent training for Foreman I, fell under Pay Grade VIII, while Foreman I fell
training allowance as provided in Article IX, Section 1(f) of the June 1, 1997 collective bargaining under Pay Grade X. Following the schedule under Article X, Section 4 of the June 1, 1997 collective
agreement:17 bargaining agreement and the formula under Article IX, Section 1(f), Lipio should be paid training
allowance equal to the step increase for pay grade bracket VIII-IX for the first month of training. For
Section 1. JOB POSTING AND BIDDING: the succeeding months, Lipio should be paid an allowance equal to the step increase for pay grade
bracket VIII-IX plus the step increase for pay grade bracket IX-X, thus:25

....
First Month ----- ₱456.00
(f) Allowance for employees under Training or Observation shall be on a graduated basis as follows:
Second month ----- ₱1,031.00

For the first month of training, the allowance should be equivalent to one step increase of the next Third month ----- ₱1,031.00
higher grade. Every month thereafter the corresponding increase shall be equivalent to the next
higher grade until the allowance for the grade applied for is attained. Fourth month ----- ₱1,031.00.

As an example, if a Grade I employee qualifies for a Grade III position, he will receive the training
allowance for Grade I to Grade II for the first month. On the second month, he will receive the
training allowance for Grade I to Grade II plus the allowance for Grade II to Grade III. He will then
continue to receive this amount until he finishes his training or observation period.18
Claiming that the schedule of training allowance stated in the memoranda served on Lipio and
Ignacio,Sr. did not conform to Article X, Section 4 of the June 1, 1997 collective bargaining
agreement, PWU submitted the grievance to the grievance machinery.19
With respect to Ignacio, Sr., he was holding the position of DTAs sembler under Pay Grade VII when
hewas selected to train for the position of Foreman I under Pay Grade X. Thus, for his first month of
training, Ignacio, Sr. should be paid training allowance equal to the step increase under pay grade
bracket VII-VIII. For the second month, he should be paid an allowance equal to the step increase
under pay grade bracket VIIVIII plus the step increase under pay grade bracket VIII-IX. For the third
and fourth months, Ignacio, Sr. should receive an allowance equal to the amount he received for the
second month plus the amount equal to the step increase under pay grade bracket IX-X, thus:26

PWU and PHILEC failed to amicably settle their grievance. Thus, on December 21, 1998, the parties First Month ----- ₱361.00
filed a submission agreement20 with the National Conciliation and Mediation Board, submitting the
following issues to voluntary arbitration: Second month ----- ₱817.00

Third month ----- ₱1,392.00

I
WHETHER OR NOT PHILEC VIOLATED SECTION 4 (Step Increases) ARTICLE X (Wage and Position
Standardization) OF THE EXISTING COLLECTIVE BARGAINING AGREEMENT (CBA) IN IMPLEMENTING
THE STEP INCREASES RELATIVE TO THE PROMOTION OF INDIVIDUAL COMPLAINANTS.
II
Fourth month ----- ₱1,392.00.
For PHILEC’s failure to apply the schedule of step increases under Article X of the June 1, 1997
collective bargaining agreement, PWU argued that PHILEC committed an unfair labor practice under
Article 24827 of the Labor Code.28
In its position paper,29 PHILEC emphasized that it promoted Lipio and Ignacio, Sr. while it was still
negotiating a new collective bargaining agreement with PWU. Since PHILEC and PWU had not yet
negotiated a new collective bargaining agreement when PHILEC selected Lipio and Ignacio, Sr. for
training, PHILEC applied the "Modified SGV" pay grade scale in computing Lipio’s and Ignacio, Sr.’s Pay grade bracket I–IX covered rank-and-file employees, while pay grade bracket A–F covered
training allowance.30 supervisory employees.35

This "Modified SGV" pay grade scale, which PHILEC and PWU allegedly agreed to implement beginning Under the "Modified SGV" pay grade scale, the position of Foreman I fell under Pay Grade B. PHILEC
on May 9, 1997, covered both rank-and-file and supervisory employees.31 According to PHILEC, its then computed Lipio’s and Ignacio, Sr.’s training allowance accordingly.36
past collective bargaining agreements withthe rank-and-file and supervisory unions resulted in an
overlap of union membership in Pay Grade IX of the rank-and-file employees and Pay Grade A of the
PHILEC disputed PWU’s claim of unfair labor practice. According to PHILEC, it did not violate its
supervisory employees.32 Worse, past collective bargaining agreements resulted in rank-and-file
collective bargaining agreement with PWU when it implemented the "Modified SGV" scale. Even
employees under Pay Grades IX and X enjoying higher step increases than supervisory employees
assuming that it violated the collective bargaining agreement, PHILEC argued that its violation was
under Pay Grades A and B:33
not "gross" or a "flagrant and/or malicious refusal to comply with the economic provisions of [the
collective bargaining agreement]."37 PHILEC, therefore, was not guilty of unfair labor practice.38
Pay Grade
Pay Grade Scale
Scale under the Voluntary Arbitrator Jimenez held in the decision39 dated August 13, 1999, that PHILEC violated its
Step Increase under the Step Increase
Rank-and-File collective bargaining agreement with PWU.40 According to Voluntary Arbitrator Jimenez, the June 1,
Supervisory CBA
CBA 1997 collective bargaining agreement governed when PHILEC selected Lipio and Ignacio, Sr. for
promotion on August 18 and 21, 1997.41 The provisions of the collective bargaining agreement being
VIII-IX ₱340.00 A ₱290.00 the law between the parties, PHILEC should have computed Lipio’s and Ignacio, Sr.’s training
allowance based on Article X, Section 4 of the June 1, 1997 collective bargaining agreement.42
IX-X ₱455.00 A-B ₱350.00

As to PHILEC’s claim that applying Article X, Section 4 would result in salary distortion within PHILEC’s
To preserve the hierarchical wage structure within PHILEC’s enterprise, PHILEC and PWU allegedly enterprise, Voluntary Arbitrator Jimenez ruled that this was "a concern that PHILEC could have
agreed to implement the uniform pay grade scale under the "Modified SGV" pay grade system, thus: 34 anticipated and could have taken corrective action"43 before signing the collective bargaining
agreement.

Pay Grade
Step Increase Voluntary Arbitrator Jimenez dismissed PWU’s claim of unfair labor practice.44 According to him,
Rank-and-File Supervisory PHILEC’s acts "cannot be considered a gross violation of the [collective bargaining agreement] nor . .
. [a] flagrant and/or malicious refusal to comply withthe economic provisions of the [agreement]." 45
I – II ₱65.00
Thus, Voluntary Arbitrator Jimenez ordered PHILEC to pay Lipio and Ignacio, Sr. training allowance
II-III ₱78.00 based on Article X, Section 4 and Article IX, Section 1 of the June 1, 1997 collective bargaining
agreement.46
III-IV ₱95.00

IV-V ₱120.00 PHILEC received a copy of Voluntary Arbitrator Jimenez’s decision on August 16, 1999.47 On August
26, 1999, PHILEC filed a motion for partial reconsideration48 of Voluntary Arbitrator Jimenez’s
V-VI ₱150.00 decision.

VI-VII ₱195.00
In the resolution49 dated July 7, 2000, Voluntary Arbitrator Jimenez denied PHILEC’s motion for partial
reconsideration for lack of merit. PHILEC received a copy of the July 7, 2000 resolution on August 11,
VII-VIII ₱255.00
2000.50
VIII-IX A ₱350.00
On August 29, 2000, PHILEC filed a petition51 for certiorari before the Court of Appeals, alleging that
IX-X A-B ₱465.00 Voluntary Arbitrator Jimenez gravely abused his discretion in rendering his decision.52 PHILEC
maintained that it did not violate the June 1, 1997 collective bargaining agreement.53 It applied the
X-XI B-C ₱570.00 "Modified SGV" pay grade rates toavoid salary distortion within its enterprise.54

XI-XII C-D ₱710.00

In addition, PHILEC argued that Article X, Section 4 of the collective bargaining agreement did not
D-E ₱870.00 apply to Lipio and Ignacio, Sr. Considering that Lipio and Ignacio, Sr. were promoted to a supervisory
position, their training allowance should be computed based on the provisions of PHILEC’s collective
E-F ₱1,055.00 bargaining agreement with ASSET, the exclusive bargaining representative of PHILEC’s supervisory
employees.55
The Court of Appeals affirmed Voluntary Arbitrator Jimenez’s decision.56 It agreed that PHILEC was
bound to apply Article X, Section 4 of its June 1, 1997 collective bargaining agreement with PWU in
computing Lipio’s and Ignacio, Sr.’s training allowance.57 In its decision, the Court of Appeals denied
due course and dismissed PHILEC’s petition for certiorari for lack of merit.58
PHILEC filed a motion for reconsideration, which the Court of Appeals denied in the resolution59 dated
June 23, 2005.
On August 3, 2005, PHILEC filed its petition for review on certiorari before this court, 60 insisting that it
did not violate its collective bargaining agreement with PWU.61 PHILEC maintains that Lipio and
Ignacio, Sr. were promoted to a position covered by the pay grade scale for supervisory
employees.62 Consequently, the provisions of PHILEC’s collective bargaining agreement with its
supervisory employees should apply, not its collective bargaining agreement with PWU.63 To insist on
applying the pay grade scale in Article X, Section 4, PHILEC argues, would result in a salary distortion
within PHILEC.64
In the resolution65 dated September 21, 2005,this court ordered PWU to comment on PHILEC’s
petition for review on certiorari.
In its comment,66 PWU argues that Voluntary Arbitrator Jimenez did not gravely abuse his discretion
in rendering his decision. He correctly applied the provisions of the PWU collective bargaining
agreement, the law between PHILEC and its rank-and-file employees, in computing Lipio’s and
Ignacio, Sr.’s training allowance.67
On September 27, 2006, PHILEC filed its reply,68 reiterating its arguments in its petition for review on
certiorari.
The issue for our resolution is whether Voluntary Arbitrator Jimenez gravely abused his discretion in
directing PHILEC to pay Lipio’s and Ignacio, Sr.’s training allowance based on Article X, Section 4 of
the June 1, 1997 rank-and-file collective bargaining agreement.
This petition should be denied.
I Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall
The Voluntary Arbitrator’s decision
dated August 13, 1999 is already final and
executory
We note that PHILEC filed before the Court of Appeals a petition for certiorari under Rule 65 of the
Rules ofCourt against Voluntary Arbitrator Jimenez’s decision.69
This was not the proper remedy.
Instead, the proper remedy to reverse or modify a Voluntary Arbitrator’s or a panel of Voluntary
Arbitrators’ decision or award is to appeal the award or decision before the Court of Appeals. Rule 43,
Sections 1 and 3 of the Rules of Court provide:
Section 1. Scope.
This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from
awards, judgments, final orders or resolutions of orauthorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission,
Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President,
Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents,
Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory
Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act
No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural
Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by
law.
....
Sec. 3. Where to appeal.
An appeal under this Rule may be taken to the Court of Appeals within the period and in the manner
herein provided, whether the appeal involves questions of fact, of law, or mixed questions of fact and
law. (Emphasis supplied)
A Voluntary Arbitrator or a panel of Voluntary Arbitrators has the exclusive original jurisdiction over
grievances arising from the interpretation or implementation of collective bargaining agreements.
Should the parties agree, a Voluntary Arbitrator or a panel of Voluntary Arbitrators shall also resolve
the parties’ other labor disputes, including unfair labor practices and bargaining deadlocks. Articles
261 and 262 of the Labor Code provide:
ART. 261. JURISDICTION OF VOLUNTARY ARBITRATORS OR PANEL OF VOLUNTARY ARBITRATORS.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction
to hear and decide all unresolved grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation or enforcement of company
personnel policies referred to in the immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining
mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances, or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator orpanel of Voluntary Arbitrators and shall immediately dispose
and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective
Bargaining Agreement.
ART. 262. JURISDICTION OVER OTHER LABOR DISPUTES.
The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also
hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.
In Luzon Development Bank v. Association of Luzon Development Bank Employees,70 this court ruled
that the proper remedy against the award or decision of the Voluntary Arbitratoris an appeal before
the Court of Appeals. This court first characterized the office ofa Voluntary Arbitrator or a panel of
Voluntary Arbitrators as a quasi-judicial agency, citing Volkschel Labor Union, et al. v. NLRC71 and Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of
Oceanic Bic Division (FFW) v. Romero:72 the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph 4 of the fourth paragraph of Section 17 of the Judiciary Act of
In Volkschel Labor Union, et al. v. NLRC, et al.,on the settled premise that the judgments of courts
1948. (Emphasis supplied)
and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that
the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., this Luzon Development Bankwas decided in 1995 but remains "good law."75 In the 2002 case of
Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial Alcantara, Jr. v. Court of Appeals,76 this court rejected petitioner Santiago Alcantara, Jr.’s argument
capacity." Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a that the Rules of Court, specifically Rule 43, Section 2, superseded the Luzon Development Bank
panel, enjoys in law the status of a quasijudicial agency but independent of, and apart from, the NLRC ruling:
since his decisions are not appealable to the latter.73 (Citations omitted)
Petitioner argues, however, that Luzon Development Bank is no longer good law because of Section 2,
This court then stated that the office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators, Rule 43 of the Rules of Court, a new provision introduced by the 1997 revision. The provision reads:
even assuming that the office is not strictly a quasi-judicial agency, may be considered an
instrumentality, thus:
SEC. 2. Cases not covered. -This Rule shall not apply to judgments or final orders issued under the
Labor Code of the Philippines.
Assuming arguendo that the voluntaryarbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
The provisions may be new to the Rules of Court but it is far from being a new law. Section 2, Rule 42
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it
of the 1997 Rules of Civil Procedure, as presently worded, is nothing more but a reiteration of the
was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators
exception to the exclusive appellate jurisdiction of the Court of Appeals, as provided for in Section 9,
here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Batas Pambansa Blg. 129,7 as amended by Republic Act No. 7902:8
Arbitration Commission, that the broader term "instrumentalities" was purposely included in the
above-quoted provision.
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including
An "instrumentality" is anything used as a means or agency. Thus, the terms governmental "agency"
the Securities and Exchange Commission, the Employees’ Compensation Commission and the Civil
or "instrumentality" are synonymous in the sense that either of them is a means by which a
Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in
government acts, or by which a certain government act or function is performed. The word
accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No.
"instrumentality," with respect to a state, contemplates an authority to which the state delegates
442, as amended, the provisions of this Act and of subparagraph (1) of the third paragraph and
governmental power for the performance of a state function. An individual person, like an
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
administrator or executor, is a judicial instrumentality in the settling of an estate, in the same manner
that a sub-agent appointed by a bankruptcy court is an instrumentality of the court, and a trustee in
bankruptcy of a defunct corporation is an instrumentality of the state. The Court took into account this exception in Luzon Development Bank but, nevertheless, held that
the decisions of voluntary arbitrators issued pursuant to the Labor Codedo not come within its ambit:
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the x x x. The fact that [the voluntary arbitrator’s] functions and powers are provided for in the Labor
contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129.74 (Citations Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial
omitted) instrumentality as contemplated therein. It will be noted that, although the Employees’ Compensation
Commission is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the
present Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its
Since the office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators is considered a quasi-
decisions to the Court of Appeals under the foregoing rationalization, and this was later adopted by
judicial agency, this court concluded that a decision or award rendered by a Voluntary Arbitrator is
Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
appealable before the Court of Appeals. Under Section 9 of the Judiciary Reorganization Act of 1980,
the Court of Appeals has the exclusive original jurisdiction over decisions or awards of quasi-judicial
agencies and instrumentalities: A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
Section 9. Jurisdiction. The Court of Appeals shall exercise:
therein.77 (Emphases in the original)

....
This court has since reiterated the Luzon Development Bankruling in its decisions.78

3. Exclusive appellate jurisdiction over all final judgements, resolutions, orders or awardsof Regional
Article 262-A of the Labor Code provides that the award or decision of the Voluntary Arbitrator "shall
Trial Courts and quasijudicial agencies, instrumentalities, boards or commission, including the
befinal and executory after ten (10) calendar days from receipt of the copy of the award or decision
Securities and Exchange Commission, the Social Security Commission, the Employees Compensation
by the parties":
Art. 262-A. PROCEDURES. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the
power to hold hearings, receive evidences and take whatever action isnecessary to resolve the issue
or issues subject of the dispute, including efforts to effect a voluntary settlement between parties.
All parties to the dispute shall beentitled to attend the arbitration proceedings. The attendance of any
third party or the exclusion of any witness from the proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned for cause or upon agreement
by the parties.
Unless the parties agree otherwise, it shall be mandatory for the Voluntary Arbitrator or panel of
Voluntary Arbitrators to render an award or decision within twenty (20) calendar days from the date
of submission of the dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators shall contain the
facts and the law on which it is based. It shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators or the
Labor Arbiter in the region where the movant resides, in case of the absence or incapacity of the
Voluntary Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a writ of execution
requiring either the sheriff of the Commission or regular courts or any public official whomthe parties
may designate in the submission agreement to execute the final decision, order or award. (Emphasis
supplied)
Thus, in Coca-Cola Bottlers Philippines, Inc. Sales Force UnionPTGWO-BALAIS v. Coca Cola-Bottlers
Philippines, Inc.,79 this court declared that the decision of the Voluntary Arbitrator had become final
and executory because it was appealed beyond the 10-day reglementary period under Article 262-A of
the Labor Code.
It is true that Rule 43, Section 4 of the Rules of Court provides for a 15-day reglementary period for
filing an appeal:
Section 4. Period of appeal. — The appeal shall be taken within fifteen (15) days from notice of the
award, judgment, final order or resolution, or from the date of its last publication, if publication is
required by law for its effectivity, or of the denial of petitioner's motion for new trial or
reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only one
(1) motion for reconsideration shall be allowed. Upon proper motion and the payment of the full
amount of the docket fee before the expiration of the reglementary period, the Court of Appeals may
grant an additional period of fifteen (15) days only within which to file the petition for review. No
further extension shall be granted except for the most compelling reason and in no case to exceed
fifteen (15) days. (Emphasis supplied)
The 15-day reglementary period has been upheld by this court in a long line of cases.80 In AMA
Computer College-Santiago City, Inc. v. Nacino,81 Nippon Paint Employees Union-OLALIA v. Court of
Appeals,82 Manila Midtown Hotel v. Borromeo,83 and Sevilla Trading Company v. Semana,84 this court
denied petitioners’ petitions for review on certiorari since petitioners failed to appeal the Voluntary
Arbitrator’s decision within the 15-day reglementary period under Rule43. In these cases, the Court of
Appeals had no jurisdiction to entertain the appeal assailing the Voluntary Arbitrator’s decision.
Despite Rule 43 providing for a 15-day period to appeal, we rule that the Voluntary Arbitrator’s
decision mustbe appealed before the Court of Appeals within 10 calendar days from receipt of the
decision as provided in the Labor Code.
Appeal is a "statutory privilege,"85 which may be exercised "only in the manner and in accordance
withthe provisions of the law."86 "Perfection of an appeal within the reglementary period is not only
mandatory but also jurisdictional so that failure to doso rendered the decision final and executory,
and deprives the appellate court of jurisdiction to alter the final judgment much less to entertain the
appeal."87
We ruled that Article 262-A of the Labor Code allows the appeal of decisions rendered by Voluntary
Arbitrators.88Statute provides that the Voluntary Arbitrator’s decision "shall befinal and executory
after ten (10) calendar days from receipt of the copy of the award or decision by the parties." Being
provided in the statute,this 10-day period must be complied with; otherwise, no appellate court
willhave jurisdiction over the appeal. This absurd situation occurs whenthe decision is appealed on the
11th to 15th day from receipt as allowed under the Rules, but which decision, under the law, has
already become final and executory.
Furthermore, under Article VIII, Section 5(5) of the Constitution, this court "shall not diminish,
increase, or modify substantive rights" in promulgating rules of procedure in courts.89 The 10-day
period to appeal under the Labor Code being a substantive right, this period cannot be
diminished, increased, or modified through the Rules of Court.90
In Shioji v. Harvey,91 this court held that the "rules of court, promulgated by authority of law, have
the force and effect of law, if not in conflict with positive law."92 Rules of Court are "subordinate to the
statute."93 In case of conflict between the law and the Rules of Court, "the statute will prevail." 94
The rule, therefore, is that a Voluntary Arbitrator’s award or decision shall be appealed before the
Court of Appeals within 10 days from receipt of the award or decision. Should the aggrieved party
choose to file a motion for reconsideration with the Voluntary Arbitrator,95 the motion must be filed
within the same 10-day period since a motion for reconsideration is filed "within the period for taking
an appeal."96
A petition for certiorari is a special civil action "adopted to correct errors of jurisdiction committed by
the lower court or quasi-judicial agency, or when there is grave abuse of discretion on the part of
such court or agency amounting to lack or excess of jurisdiction."97 An extraordinary remedy,98 a
petition for certiorari may be filed only if appeal is not available.99 If appeal is available, an appeal
must be taken even if the ground relied upon is grave abuse of discretion.100
As an exception to the rule, this court has allowed petitions for certiorari to be filed in lieu of an
appeal "(a) when the public welfare and the advancement of public policy dictate; (b) when the
broader interests of justice so require; (c) when the writs issued are null; and (d) when the
questioned order amounts to an oppressive exercise of judicial authority."101
In Unicraft Industries International Corporation, et al. v. The Hon. Court of Appeals,102 petitioners filed
a petition for certiorari against the Voluntary Arbitrator’s decision. Finding that the Voluntary
Arbitrator rendered an award without giving petitioners an opportunity to present evidence, this court
allowed petitioners’ petition for certiorari despite being the wrong remedy. The Voluntary Arbitrator’s
award, thiscourt said, was null and void for violation of petitioners’ right to due process. This court
decided the case on the merits.
In Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-ALU,103 petitioner likewise filed a
petition for certiorari against the Voluntary Arbitrator’s decision, alleging that the decision lacked
basis in fact and in law. Ruling that the petition for certiorari was filed within the reglementary period
for filing an appeal, this court allowed petitioner’s petition for certiorari in "the broader interests of
justice."104
In Mora v. Avesco Marketing Corporation,105 this court held that petitioner Noel E. Mora erred in filing
a petition for certiorari against the Voluntary Arbitrator’s decision. Nevertheless, this court decided
the case on the merits "in the interest of substantial justice to arrive at the proper conclusion that is
conformable to the evidentiary facts."106
None of the circumstances similar to Unicraft, Leyte IV Electric Cooperative, and Moraare present in
this case. PHILEC received Voluntary Arbitrator Jimenez’s resolution denying its motion for partial
reconsideration on August 11, 2000.107 PHILEC filed its petition for certiorari before the Court
ofAppeals on August 29, 2000,108 which was 18 days after its receipt of Voluntary Arbitrator Jimenez’s
resolution. The petition for certiorari was filed beyond the 10-day reglementary period for filing an
appeal. We cannot consider PHILEC’s petition for certiorari as an appeal.
There being no appeal seasonably filed in this case, Voluntary Arbitrator Jimenez’s decision became
final and executory after 10 calendar days from PHILEC’s receipt of the resolution denying its motion
for partial reconsideration.109 Voluntary Arbitrator Jimenez’s decision is already "beyond the purview
of this Court to act upon."110
II
PHILEC must pay training allowance
based on the step increases provided in
the June 1, 1997 collective bargaining
agreement
The insurmountable procedural issue notwithstanding, the case will also fail on its merits. Voluntary
Arbitrator Jimenez correctly awarded both Lipio and Ignacio, Sr. training allowances based on the
amounts and formula provided in the June 1, 1997 collective bargaining agreement.
A collective bargaining agreement is "a contract executed upon the request of either the employer or
the exclusive bargaining representative of the employees incorporating the agreement reached after
negotiations 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." 111 A
collective bargaining agreement being a contract, its provisions "constitute the law between the
parties"112 and must be complied with in good faith.113
PHILEC, as employer, and PWU, as the exclusive bargaining representative of PHILEC’s rank-and-file
employees, entered into a collective bargaining agreement, which the parties agreed to make
effective from June 1, 1997 to May 31, 1999. Being the law between the parties, the June 1, 1997
collective bargaining agreement must govern PHILEC and its rank-and-file employees within the
agreed period.
Lipio and Ignacio, Sr. were rank-and-file employees when PHILEC selected them for training for the
position of Foreman I beginning August 25, 1997. Lipio and Ignacio, Sr. were selected for training
during the effectivity of the June 1, 1997 rank-and-file collective bargaining agreement. Therefore,
Lipio’s and Ignacio, Sr.’s training allowance must be computed based on Article X, Section 4 and
ArticleIX, Section 1(f) of the June 1, 1997 collective bargaining agreement.
Contrary to PHILEC’s claim, Lipio and Ignacio, Sr. were not transferred out of the bargaining unit
when they were selected for training. Lipio and Ignacio, Sr. remained rank-and-file employees while
they trained for the position of Foreman I. Under Article IX, Section 1(e) of the June 1, 1997 collective
bargaining agreement,114 a trainee who is "unable to demonstrate his ability to perform the work . . .
shall be reverted to his previous assignment. . . ."115According to the same provision, the trainee
"shall hold that job on a trial or observation basis and . . . subject to prior approval of the authorized
management official, be appointed to the position in a regular capacity."116
Thus, training is a condition precedent for promotion. Selection for training does not mean automatic
transfer out of the bargaining unit of rankand-file employees.
Moreover, the June 1, 1997 collective bargaining agreement states that the training allowance of a
rank-and-file employee "whose application for a posted job is accepted shall [be computed] in
accordance with Section (f) of [Article IX]."117 Since Lipio and Ignacio, Sr. were rank-and-file
employees when they applied for training for the position of Foreman I, Lipio’s and Ignacio, Sr.’s
training allowance must be computed based on Article IX, Section 1(f) of the June 1, 1997 rank-and-
file collective bargaining agreement.
PHILEC allegedly applied the "Modified SGV" pay grade scale to prevent any salary distortion within
PHILEC’s enterprise. This, however, does not justify PHILEC’s non-compliance with the June 1, 1997
collective bargaining agreement. This pay grade scale is not provided in the collective bargaining
agreement. In Samahang Manggagawa sa Top Form Manufacturing United Workers of the Philippines
(SMTFM-UWP) v. NLRC,118 this court ruled that "only provisions embodied in the [collective bargaining
agreement] should be so interpreted and complied with. Where a proposal raised by a contracting
party does not find print in the [collective bargaining agreement], it is not part thereof and the
proponent has no claim whatsoever to its implementation."119
Had PHILEC wanted the "Modified SGV" pay grade scale applied within its enterprise, "it could have
requested or demanded that [the ‘Modified SGV’ scale] be incorporated in the [collective bargaining
agreement]."120 PHILEC had "the means under the law to compel [PWU] to incorporate this specific
economic proposal in the [collective bargaining agreement]."121 It "could have invoked Article 252 of
the Labor Code"122 to incorporate the "Modified SGV" pay grade scale in its collective bargaining
agreement with PWU. But it did not. Since this "Modified SGV" pay grade scale does not appear in
PHILEC’s collective bargaining agreement with PWU, PHILEC cannot insist on the "Modified SGV" pay
grade scale’s application. We reiterate Voluntary Arbitrator Jimenez’s decision dated August 13, 1999
where he said that:
. . . since the signing of the current CBA took place on September 27, 1997, PHILEC, by oversight,
may have overlooked the possibility of a wage distortion occurring among ASSET-occupied positions.
It is surmised that this matter could have been negotiated and settled with PWU before the actual
signing of the CBA on September 27. Instead, PHILEC, again, allowed the provisions of Art. X, Sec. 4
of the CBA to remain the way it is and is now suffering the consequences of its laches. 123 (Emphasis in
the original)
We note that PHILEC did not dispute PWU’s contention that it selected several rank-and-file
employees for training and paid them training allowance based on the schedule provided in the
collective bargaining agreement effective at the time of the trainees’ selection.124 PHILEC cannot
choose when and to whom to apply the provisions of its collective bargaining agreement. The
provisions of a collective bargaining agreement must be applied uniformly and complied with in good
faith.
Given the foregoing, Lipio’s and Ignacio, Sr.’s training allowance should be computed based on Article
X, Section 4 in relation to Article IX, Section 1(f) of the June 1, 1997 rank-and-file collective
bargaining agreement. Lipio, who held the position of Machinist before selection for training as
Foreman I, should receive training allowance based on the following schedule:
Petitioner Philippine Electric Corporation is ORDERED to PAY respondent Eleodoro V. Lipio a total of
₱3,549.00 for a four (4)-month training for the position of Foreman I with legal interest of 12% per
annum from August 22, 2000 until the amount's full satisfaction.
For respondent Emerlito C. Ignacio, Sr., Philippine Electric Corporation is ORDERED to PAY a total of
₱3,962.00 for a four (4)-month training for the position of Foreman I with legal interest of 12% per
annum from August 22, 2000 until the amount's full satisfaction.

SO ORDERED.
First Month ----- ₱456.00

Second month ----- ₱1,031.00 G.R. No. 200746 August 6, 2014

Third month ----- ₱1,031.00

BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP and/or VILMA GENON, EDISA
HORTELANO, LOURDES ARANAS, TONY FORMENTERA, RENEBOY LEYSON, MA. ALONA
Fourth month ----- ₱1,031.00
ACALDO, MA. CONCEPCION ABAO, TERESITA CALINAWAN, NICIFORO CABANSAG, STELLA
BARONGO, MARILYN POTOT, WELMER ABANID, LORENZO ALIA, LINO PARADERO,
Ignacio, Sr., who held the position of DT-Assembler before selection for training as Foreman I, should DIOSDADO ANDALES, LUCENA ABESIA, and ARMANDO YBAÑEZ, Petitioners,
receive training allowance based on the following schedule: vs.
BENSON INDUSTRIES, INC., Respondent.

First Month ----- ₱361.00 Before the Court is a petition for review on certiorari1 assailing the Decision2 dated September 27,
2011 and the Resolution3 dated January 31, 2012 of the Court of Appeals (CA)in CA-G.R. SP No.
Second month ----- ₱817.00 03842 which reversed and set aside the Decision4 dated October 24, 2008 of the Voluntary Arbitrator
(VA) of the National Conciliation and Mediation Board (NCMB), and accordingly deleted the award to
Third month ----- ₱1,392.00 petitioners Vilma Genon, Edisa Hortelano, Lourdes Aranas, Tony Formentera, Reneboy Leyson, Ma.
Alona Acaldo, Ma. Concepcion Abao, Teresita Calinawan, Niciforo Cabansag, Stella Barongo, Marilyn
Fourth month ----- ₱1,392.00 Potot, Welmer Abanid, Lorenzo Alia, Lino Paradero, Diosdado Andales, Lucena Abesia, and Armando
Ybañez (petitioners) of additional separation pay equivalent to four (4) days of work for every year of
service.
Considering that Voluntary Arbitrator Jimenez’s decision awarded sums of money, Lipio and Ignacio,
Sr. are entitled to legal interest on their training allowances. Voluntary Arbitrator Jimenez’s decision
having become final and executory on August 22, 2000, PHILEC is liable for legal interest equal to The Facts
12% per annum from finality of the decision until full payment as this court ruled in Eastern Shipping
Lines, Inc. v. Court of Appeals:125 Respondent Benson Industries, Inc. (Benson) is a domestic corporation engaged in the manufacturing
of greencoils with the brand name Lion-Tiger Mosquito Killer. OnFebruary 12, 2008, Benson sent its
When the judgment of the court awarding a sum of money becomes final and executory, the rate of employees, including herein petitioners, a notice5 informing them of their intended termination from
legal interest. . . shall be 12% per annum from such finality until its satisfaction, this interim period employment, to be effected on March 15, 2008 on the ground of closure and/or cessation of business
being deemed to be by then as equivalent to a forbearance of credit.126 operations. In consequence, the majority of Benson’s employees resigned.6 Meanwhile, petitioners,
through Benson Industries Employees Union-ALU-TUCP (Union), filed a notice of strike, claiming that
the company’s supposed closure was merely a ploy to replace the union members with lower paid
The 6% legal interest under CircularNo. 799, Series of 2013, of the Bangko Sentral ng Pilipinas workers, and, as a result, increase its profit at their expense.7 The strike did not, however, push
Monetary Board shall not apply, Voluntary Arbitrator Jimenez’s decision having become final and through due to the parties’ amicable settlement during the conciliation proceedings before the NCMB,
executory prior to the effectivity of the circular on July 1, 2013.1avvphi1 In Nacar v. Gallery whereby petitioners accepted Benson’s payment of separation pay, computed at 15 days for every
Frames,127 we held that: year of service, as per the parties’ Memorandum of Agreement8 dated April 9, 2008.9

. . . with regard to those judgments that have become final and executory prior to July 1, 2013, said
judgments shall not be disturbed and shall continue to be implemented applying the rate of interest
fixed therein.128
WHEREFORE, the petition for review on certiorari is DENIED. The Court of Appeals' decision dated May
25, 2004 is AFFIRMED.
This notwithstanding, petitioners proffered a claim for the payment of additional separation pay atthe
rate of four (4) days for every year of service. As basis, petitioners invoked Section 1, Article VIII of
the existing collective bargaining agreement (CBA) executed by and between the Union and Benson
which states that "[Benson]shall pay to any employee/laborer who is terminated from the service
without any fault attributable to him, a ‘Separation Pay’ equivalentto not less than nineteen (19) days’
pay for every year of service based upon the latest rate of pay of the employee/laborer
concerned."10 Benson opposed petitioners’ claim, averring that the separation pay already paid to
them was already more than what the law requires. Reaching an impasse on the conflict, the parties
referred the issue to voluntary arbitration, wherein the validityof Benson’s closure was brought up as
well.11
The VA Ruling
In a Decision12 dated October 24, 2008 (October 24, 2008 VA Decision), the VA ruled in favor of
petitioners, and, thus, ordered Benson to pay each of them separation benefits in "an amount
equivalent to four (4) days for every year of service based on the latest rate of pay of the [individual
petitioner] concerned subject to whatever legally valid deductions chargeable against [said individual
petitioner] whenever applicable."13
The VA ratiocinated that in computing the amount of separation benefits due to petitioners, the basis
should be the provision of the existing CBA between Benson and the Union which explicitly states that
should the employees be terminated through no fault of their own, they should be awarded separation
benefits at the rate of 19 days for every year of service. In this regard, the VA opined that the
provisions of the CBA should be given effect because it expresses the latest agreement of the union
and the company, not to mention the fact that it gives more benefits to the employees.14
Separately, the VA found adequate proof to support Benson’s position that it was indeed in a state of
insolvency, which, therefore, justified its closure and/or cessation of business operations on the
ground of serious business losses and/or financial reverses.15
Dissatisfied, Benson elevated the matter on appeal before the CA.
The CA Ruling In a Decision16 dated September 27, 2011, the CA reversed and set aside the VA’s
ruling, and accordingly deleted the award of additional separation benefits equivalent to four (4) days
of work for every year of service. It held that despite the express provision in the CBA stating that
Benson should pay its employees who were terminated without their fault separation benefits
equivalent to at least 19 days’ pay for every year of service, Benson cannot be compelled to do so
considering its current financial status.17
Aggrieved, petitioners moved for reconsideration, which was, however, denied by the CA in a
Resolution18 dated January 31, 2012, hence, this petition.
The Issue Before the Court
The sole issue for the Court’s resolution is whether or not the CA correctly deleted the award to
petitioners of additional separation benefits equivalent to four (4) days of work for every year of
service.
The Court’s Ruling
The petition is impressed with merit.
Closure of business may be consideredas a reversal of an employer’s fortune whereby there is a
complete cessation of business operations and/or an actual locking-up of the doors ofthe
establishment, usually due to financial losses. Under the Labor Code, it is treated as an authorized
cause for termination, aimed at preventing further financial drain upon an employer who cannot
anymore pay its employees since business has already stopped. As a form of recompense, the
employer is required to pay its employees separation benefits, except when the closure is due to
serious business losses.19 Article 297 (formerly Article 283)20 of the Labor Code, as amended, states
this rule:
Art. 297. 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 ofoperation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, x x x. 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 (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) monthsshall be considered one (1) whole
year. (Emphasis and underscoring supplied)
While serious business losses generally exempt the employer from paying separation benefits, it must
bepointed that the exemption only pertains to the obligation of the employer under Article 297 of the
Labor Code. This is because of the law’s express parameter thatmandates payment of separation
benefits "in case of closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses." The policy distinction underlying Article 297 – that is,
the distinction between closures due to serious business losses and those which are not – was deftly
discussed by the Court in the case of Cama v. Joni’s Food Services, Inc.,21 as follows:
The Constitution, while affording full protection to labor, nonetheless, recognizes "theright of
enterprises to reasonable returns on investments, and to expansion and growth." In line with this
protection afforded to business by the fundamental law, Article283 [(now, Article 297)] of the Labor
Code clearly makes a policy distinction. It is only in instances 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" that employees whose employment has been terminated as a
result are entitled to separation pay. In other words, Article 283 [(now, Article 297)] of the Labor
Code does not obligate an employer to pay separation benefits when the closure is due to serious
losses. To require anemployer to be generous when it is no longer in a position todo so, in our view,
would be unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and the law
in protecting the rights of the working man, authorizes neither the oppression nor the self-destruction
of the employer. x x x.22 (Emphasis supplied)
When the obligation to pay separation benefits, however, is not sourced from law (particularly,
Article297 of the Labor Code), but from contract,23 such as an existing collective bargaining
agreement between the employer and its employees, an examination of the latter’s provisions
becomes necessary in order to determine the governing parameters for the said obligation. To
reiterate, an employer which closes shop due to serious business losses is exempt from paying
separation benefits under Article 297 of the Labor Code for the reason that the said provision
explicitly requires the same only when the closure is not due to serious business losses; conversely,
the obligation is maintained when the employer’s closure is not due to serious business losses. For a
similar exemption to obtain against a contract, such as a CBA, the tenor ofthe parties’ agreement
ought to be similar to the law’s tenor. When the parties, however, agree to deviate therefrom, and
unqualifiedly covenant the payment of separation benefits irrespective of the employer’sfinancial
position, thenthe obligatory force of that contract prevails and its terms should be carried out to its
full effect. Verily, it is fundamental that obligations arising from contracts have the force of law
between the contracting parties and thus should be complied with in good faith;24 and parties are
bound by the stipulations, clauses, terms and conditions they have agreed to, the only limitation
being that these stipulations, clauses, terms and conditions are not contrary to law, morals, public
order or public policy.25 Hence, if the terms of a CBA are clear and there is no doubt as to the
intention ofthe contracting parties, the literal meaning of its stipulations shall prevail.26 As enunciated
in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:27
A collective bargaining agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient provided these are not
contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties and compliance therewith is mandated by the
express policy of the law.28
In this case, it is undisputed thata CBA was forged by the employer, Benson, and its employees,
through the Union, to govern their relations effective July 1, 2005 to June 30, 2010.It is equally
undisputed that Benson agreed to and was thus obligated under the CBA to pay its employees who
had been terminated without any fault attributable to them separation benefits at the rate of 19 days
for every year of service. This is particularly found in Section 1, Article VIII of the same contract, to
wit:
Section 1. Separation Pay – The Company shall pay to any employee/laborer who is terminated from
the service without any fault attributable to him, a "Separation Pay"equivalent to not less than
nineteen (19) days’ pay for every year of service based upon the latest rate of pay of the
employee/laborer concerned.29
As may be gleaned from the following whereas clauses in a Memorandum of Agreement30 dated
November 20, 2003 between the parties, Benson had been fully aware of its distressed financial
condition even at the time of the previous CBA (effective from July 1, 2000 to June 30, 2005):
WHEREAS, on February 01, 2001 the Company and the Union entered into a Collective Bargaining
Agreement (CBA) with effectivity from July 01, 2000 to June 30, 2005;
xxxx
WHEREAS, the Company and the Union recognize that the Philippines is at present in grave economic
crisis;
WHEREAS, the Union recognizes and acknowledges that the Company in particular is in grave financial
difficulties and that the Company is hard up to meet its financial obligations to creditor banksthat said
creditor banks have even threatened to foreclose the mortgages on and toseize the Company’s
factory, realties, machineries and assets and in fact, the Bank of the Philippine Islands, one of the
creditor banks scheduled on November 17, 1998 a foreclosure sale of the Company’s factory, realties,
machineries and assets in Extrajudicial Foreclosure Case No. EJF-2773-CEB;
x x x x (Emphases supplied)
Benson even admits in its Comment that it was already saddled with loan from banks as early as
199731 and that it had been unable to service its loan obligations.32 And yet, nothing appears on
record to discount the fact that it still unqualifiedly and freely agreedto the separation pay provision in
the July 1, 2005 to June 30, 2010 CBA, its distressed financial condition notwithstanding.
Thus, in view of the foregoing, the Court disagrees with the CA in negating Benson’s obligation to pay
petitioners their full separation benefits under the said agreement. The postulation that Benson had
closed its establishment and ceased operations due to serious business losses cannot be accepted as
an excuse to clear itself of any liability since the ground of serious business losses is not, unlike Article
297 of the Labor Code, considered as an exculpatory parameter under the aforementioned CBA.
Clearly, Benson, with full knowledge of its financial situation, freely and voluntarily entered into such
agreement with petitioners. Hence, having failed to show that the subject CBA provision on separation
benefits is contrary to law, morals, public order orpublic policy, or that the same can be interpreted as
one with a condition – for instance, that the parties actually contemplated non-payment of separation
benefits in the event of closure due to serious business losses – the Court isconstrained to reinstate
the October 24, 2008 VA Decision ordering Benson to pay each of the petitioners separation benefits
in "an amount equivalent to four (4) days for every year of service based on the latest rate of pay of
the [individual petitioner] concerned, subject to whatever legallyvalid deductions chargeable against
[said individual petitioner], whenever applicable."33
Analogous to the foregoing is the Court’s disquisition in Lepanto Ceramics, Inc. v. Lepanto Ceramics
Employees Association,34 whereby the employer therein was held liable for the payment of Christmas
bonus benefits, considering that the grant thereof was voluntarily and unqualifiedly agreed upon by
the parties under the CBA despite the employer’s full awareness of its distressed financial position (as
Benson in this case), viz.:
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and
they are obliged to comply with its provisions. This principle stands strong and true in the case at bar.
A reading of the provision of the CBA reveals that the same provides for the giving of a "Christmas
gift package/bonus" without qualification. Terse and clear, the said provision did not state that the
Christmas package shall be made to depend on the petitioner’s financial standing. The records are
also bereft of any showing that the petitioner made it clear during the CBA negotiations that the
bonus was dependent on any condition. Indeed, if the petitioner and respondent Association intended
that the 3,000.00 bonus would be dependent on the company earnings, such intention should have
been expressed in the CBA.
It is noteworthy that in petitioner’s 1998 and 1999 financial Statements, it took note that"the 1997
financial crisis in the Asian region adversely affected the Philippine economy."
From the foregoing, petitioner cannot insist on business losses as a basis for disregarding its
undertaking. It is manifestly clear that petitioner was very much aware of the imminence and
possibility of business losses owing to the 1997 financial crisis.In 1998, petitioner suffered a net loss
of ₱14,347,548.00. Yet it gave a ₱3,000.00 bonus to the members of the Association. In 1999, when
petitioner’s very own financial statement reflected that "the positive developments in the economy
have yet to favorably affect the operations of the company," and reported a loss of ₱346,025,733.00,
it entered into the CBA with the respondent Association whereby it contracted to grant a Christmas
gift package/bonus to the latter. Petitioner supposedly continued to incur losses on the years 2000
and 2001. Still and all, this did not deter it from honoring the CBA provision onChristmas bonus as it
continued to give ₱3,000.00 each to the members of the respondent Association in the years 1999,
2000 and 2001.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under the
CBA.The rule is settled that any benefit and supplement being enjoyed by the employees cannot be
reduced, diminished, discontinued oreliminated by the employer. The principle of non-diminution of
benefits is founded on the constitutional mandate to protect the rights of workers and to promote
their welfare and to afford labor full protection.
Hence, absent any proof that petitioner’s consent was vitiated by fraud, mistake or duress, it is
presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and
was aware of its commitments under the contract.35 (Emphases and underscoring supplied; citations
omitted)
A similar disposition was also made in the case of Eastern Telecommunications Philippines, Inc.v.
Eastern Telecoms Employees Union,36 wherein the Court held as follows:
The parties to the contract must be presumed to have assumed the risks of unfavorable
developments.1âwphi1 Itis, therefore, only in absolutely exceptional changes of circumstances that
equity demands assistance for the debtor. In the case at bench, the Court determines that ETPI’s
claimed depressed financial state will not release it from the binding effect of the 2001-2004 CBA Side
Agreement.
ETPI appears to be well aware ofits deteriorating financial condition when it entered into the 2001-
2004 CBA Side Agreement with ETEU and obliged itself to pay bonuses to the members of ETEU.
Considering that ETPI had been continuously suffering huge losses from 2000 to 2002, its business
losses in the year 2003 were not exactly unforeseen or unexpected. Consequently, it cannot be said
that the difficulty in complying with its obligation under the Side Agreement was "manifestly beyond
the contemplation ofthe parties." Besides, as held in Central Bank of the Philippines v. Court of
Appeals, mere pecuniary inability to fulfill anengagement does not discharge a contractual obligation.
Contracts, once perfected, are binding between the contracting parties. Obligations arising therefrom
have the force of law and should be complied with in good faith. ETPI cannot renege from the
obligation it has freely assumed when it signed the 2001-2004 CBA Side Agreement.37 (Emphases and
underscoring supplied; citations omitted)
To quell any doubts, it bears pointing out that the CA’s reliance on Galaxie Steel Workers Union
(GSWU-NAFLU-KMU) v. NLRC38 and Cama v. Joni’s Food Services, Inc.39 was actually misplaced since
no CBA was involved in those cases. As such, consistent with the parameters of Article 297 of the
Labor Code asabove-discussed, the payment of separation benefits in view of the employer’s serious
business losses in those cases was not in order. In the same light, North Davao Mining Corporation v.
NLRC40 was speciously applied by the CA given that the payment of separation benefits in that case
was not sourcedfrom a contractual CBA obligation but merely from a unilateral company practice
which was deemed as an act of generosity on the part. of the employer. It was in this context that the
Court held that "to require [the company] to continue being generous when it is no longer in a
position to do so would certainly be unduly oppressive, unfair and most revolting to the
conscience."41 The factual dissimilarity of these cases to Benson and petitioners' situation therefore
precludes the application of the same ruling. Accordingly, finding no cogent reason for Benson not to
comply with its obligations under the July 1, 2005 to June 30, 2010 CBA, and considering further that
the interpretation of any law or provision affecting labor should be interpreted in favor of labor,42 the
Court hereby reverses the CA Decision and reinstates the October 24, 2008 VA Decision.
WHEREFORE, the petition is GRANTED. The Decision dated September 27, 2011 and the Resolution
dated January 31, 2012 of the Court of Appeals in CA-G.R. SP No. 03842 are hereby REVERSED and
SET ASIDE. The Decision dated October 24, 2008 of the Voluntary Arbitrator of the National
Conciliation and Mediation Board is REINSTATED. SO ORDERED
G.R. No. 161006, October 14, 2015
ROGELIO BARONDA, Petitioner, v. HON. COURT OF APPEALS, AND HIDECO SUGAR MILLING
CO., INC., Respondents.
The reinstatement aspect of the Voluntary Arbitrator's award or decision is immediately executory
from its receipt by the parties.chanRoblesvirtualLawlibrary
The Case
The petitioner assails the decision1 promulgated on August 21, 2003 in CA-G.R. SP No. 67059,
whereby the Court of Appeals (CA) annulled and set aside the order issued by the Voluntary
Arbitrator2 granting his motion for the issuance of the writ of execution.3chanRoblesvirtualLawlibrary
Antecedents
Respondent Hideco Sugar Milling Co., Inc. (HIDECO) employed the petitioner as a mud press truck
driver with a daily salary of P281.00. On May 1, 1998, he hit HIDECO's transmission lines while
operating a dump truck, causing a total factory blackout from 9:00 pm until 2:00 am of the next day.
Power was eventually restored but the restoration cost HIDECO damages totaling P26,481.11.
Following the incident, HIDECO served a notice of offense requiring him to explain the incident within
three days from notice. He complied. Thereafter, the management conducted its investigation, and,
finding him guilty of negligence, recommended his dismissal.4 On June 15, 1998, the resident
manager served a termination letter and informed him of the decision to terminate his employment
effective at the close of office hours of that day. Hence, HIDECO no longer allowed him to report to
work on the next day.5chanroblesvirtuallawlibrary
In August 1998, the petitioner, along with another employee also dismissed by HIDECO, filed in the
Office of the Voluntary Arbitrator of the National Conciliation and Mediation Board in Tacloban City a
complaint for illegal dismissal against HIDECO.
Voluntary Arbitrator Antonio C. Lopez, Jr. handled the case and eventually rendered his decision on
January 13, 1999 by finding the petitioner's dismissal illegal, and ordering his reinstatement.
Voluntary Arbitrator Lopez, Jr. deemed the petitioner's separation from the service from June 16,
1998 to January 15, 1999 as a suspension from work without pay, and commanded him to pay on
installment basis the damages sustained by HIDECO from the May 1, 1998 incident he had
caused,6 to wit:7chanroblesvirtuallawlibrary
Wherefore, in so far as the case of ROGELIO BARONDA is concerned, this Office finds his dismissal
illegal and reinstatement is therefore ordered. His separation on June 16, 1998 up to January 15,
1999 is deemed suspension without pay for his negligent acts, and is further ordered to pay
respondent employer the sum of P26,484.41 for actual damages at P1,500.00 every month deductible
from his salary until complete payment is made.
HIDECO filed a motion for reconsideration,8 but the Voluntary Arbitrator denied the motion on August
11, 2000.9 Accepting the outcome, HIDECO reinstated the petitioner on September 29,
2000.10chanroblesvirtuallawlibrary
Thereafter, on October 9, 2000, the petitioner filed his manifestation with motion for the issuance of
the writ of execution in the Office of the Voluntary Arbitrator,11 praying for the execution of the
decision, and insisting on being entitled to backwages and other benefits corresponding to the period
from January 16, 1999 up to September 28, 2000 totaling P192,268.66 based on Article 279 of the
Labor Code ("An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement'').
HIDECO opposed the petitioner's motion for execution,12 and simultaneously presented its own motion
for execution to enforce the decision of the Voluntary Arbitrator directing the petitioner to pay the
actual damages totaling P26,484.41 at the rate of P1,500.00/month deductible from his salary
starting in January 2001 until complete payment was made.13chanroblesvirtuallawlibrary
In his order dated March 20, 2001,14 the Voluntary Arbitrator denied the petitioner's motion for
execution on the ground that the decision did not award any backwages; and granted HIDECO's
motion for execution by directing the petitioner to pay HIDECO P26,484.41 at the rate of
P1,500.00/month.
On May 17, 2001, the petitioner filed another motion for execution praying that a writ of execution
requiring HIDECO to pay to him unpaid wages, 13th month pay and bonuses from January 16, 2001,
the date when his reinstatement was effected, until his actual reinstatement.15 HIDECO opposed the
petitioner's second motion for execution because "the items prayed for by the complainant in his
Motion for Issuance of Writ of Execution are not included in the dispository portion of the decision of
the voluntary arbitrator, neither are the said items mentioned in any part of the same
decision."16chanroblesvirtuallawlibrary
On July 25, 2001, however, the Voluntary Arbitrator granted the petitioner's second motion for
execution,17 to wit:
Wherefore, for failure of complainant to re-admit complainant nor reinstate him in the payroll for the
period from January 21, [1999] up to September 28, 2000, let an order or execution issue for the
satisfaction of his reinstatement wages in the amount of P155,647.00 (554 days at P281.00 per day),
13 month pay in the amount of P7,200.00, bonus in the amount of P8,000.00 for 1999, and
P8,000.00 for his signing bonus.
The sheriff of the National Labor Relations Commission, Regional Arbitration Branch No. VIII is
directed to implement the writ.
So ordered.
The Voluntary Arbitrator cited as basis Article 223 of the Labor Code, which pertinently provides:
Art. 223. Appeal -
xxxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar
as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing prior
to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for reinstatement provided herein.
Having received a copy of the order of July 25, 2001 on August 7, 2001,18 HIDECO instituted a special
civil action for certiorari in the Court of Appeals (CA) on October 2,
2001.19chanRoblesvirtualLawlibrary
Decision of the CA
HIDECO's petition for certiorari averred that the Voluntary Arbitrator had acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in issuing the July 25, 2001 order. It listed the
following issues, namely:
I. The voluntary arbitrator, in rendering the assailed order actually granted an award without giving
due process to the herein petitioner.20chanroblesvirtuallawlibrary
II. The voluntary arbitrator resolved the (second) motion by applying Art. 223 of the Labor Code. Was
this the correct law to apply under the circumstances? Did he have jurisdiction to apply this
law?21chanroblesvirtuallawlibrary
III. The decision dated January 13, 1999 clearly stated the relief that had been granted to the
complainant Baronda, which was reinstatement. Baronda was reinstated on September 29, 2000, thus
[HIDECO] had complied with the decision. The questions therefore: Could a relief that is not written in
the decision be executed? Since the voluntary arbitrator clearly did this in this case, is it not correct to
say that he committed grave abuse of discretion?22chanroblesvirtuallawlibrary
IV. In the assailed Order dated July 25, 2001 the Voluntary Arbitrator said, among others, that it
treated a second motion for the issuance of a writ of execution, and that a first motion had already
been denied on the ground that no backwages had been awarded to the complainant Baronda. Did he
have any legal basis then to issue two different and contradictory orders for what are essentially
similar motions?23chanrobleslaw
In his comment,24 the petitioner countered that the petition for certiorari should be dismissed
considering that HIDECO should have appealed the decision of the Voluntary Arbitrator under Rule 43
of the Rules of Court because certiorari was not a substitute for a lost appeal; that HIDECO did not file
a motion for reconsideration of the questioned order, which would have been an adequate remedy at
law; that the petition for certiorari did not raise any jurisdictional error on the part of the Voluntary
Arbitrator but only factual and legal issues not proper in certiorari; and that the Voluntary Arbitrator
did not commit any error, much less grave abuse of discretion amounting to lack or excess of
jurisdiction in rendering the questioned order.
In the decision promulgated on August 21, 2003,25 the CA treated HIDECO's petition for certiorari as a
petition for review brought under Rule 43, and brushed aside the matters raised by the petitioner. It
observed that the petition for certiorari included the contents required by Section 6, Rule 43 for the
petition for review; that the writ of execution was proper only when the decision to be executed
carried an award in favor of the movant; that the Voluntary Arbitrator had issued the writ of execution
for backwages despite his decision lacking such award for backwages; and that the reliance by the
Voluntary Arbitrator on Article 223 of the Labor Code was misplaced because said provision referred
to decisions, awards or orders of the Labor Arbiter, not the Voluntary Arbitrator. It disposed as
follows:
WHEREFORE, the instant petition is hereby GRANTED and the questioned Order dated July 25,
2001 of the public respondent ANNULLED and SET ASIDE. SO ORDERED
G.R. No. 211145, October 14, 2015
SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD REP. BY ITS PRESIDENT, ALFIE
ALIPIO, Petitioner, v. BUREAU OF LABOR RELATIONS, HANJIN HEAVY INDUSTRIES AND
CONSTRUCTION CO., LTD. (HHIC-PHIL.), Respondents.
The right to self-organization is not limited to unionism. Workers may also form or join an association
for mutual aid and protection and for other legitimate purposes.
This is a petition for review on certiorari seeking to reverse and set aside the July 4, 2013
Decision1 and the January 28, 2014 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
123397, which reversed the November 28, 2011 Resolution3 of the Bureau of Labor Relations (BLR)
and reinstated the April 20, 2010 Decision4 of the Department of Labor and Employment (DOLE)
Regional Director, cancelling the registration of Samahan ng Manggagawa sa Hanjin Shipyard
(Samahan) as a worker's association under Article 243 (now Article 249) of the Labor Code.
The Facts
On February 16, 2010, Samahan, through its authorized representative, Alfie F. Alipio, filed an SO DECIDED.12
application for registration5 of its name "Samahan ng Mga Manggagawa sa Hanjin Shipyard" with the
The Ruling of the Bureau of Labor Relations
DOLE. Attached to the application were the list of names of the association's officers and members,
signatures of the attendees of the February 7, 2010 meeting, copies of their Constitution and By-laws.
Aggrieved, Samahan filed an appeal13 before the BLR, arguing that Hanjin had no right to petition for
The application stated that the association had a total of 120 members.
the cancellation of its registration. Samahan pointed out that the words "Hanjin Shipyard," as used in
its application for registration, referred to a workplace and not as employer or company. It explained
On February 26, 2010, the DOLE Regional Office No. 3, City of San Fernando, Pampanga (DOLE-
that when a shipyard was put up in Subic, Zambales, it became known as Hanjin Shipyard. Further,
Pampanga), issued the corresponding certificate of registration6 in favor of Samahan.
the remaining 63 members signed the Sama-Samang Pagpapatunay which stated that they were
either working or had worked at Hanjin. Thus, the alleged misrepresentation committed by Samahan
On March 15, 2010, respondent Hanjin Heavy Industries and Construction Co., Ltd. Philippines
had no leg to stand on.14
(Hanjin), with offices at Greenbeach 1, Renondo Peninsula, Sitio Agustin, Barangay Cawag, Subic Bay
Freeport Zone, filed a petition7 with DOLE-Pampanga praying for the cancellation of registration of
In its Comment to the Appeal,15 Hanjin averred that it was a party-in-interest. It reiterated that
Samahan's association on the ground that its members did not fall under any of the types of workers
Samahan committed misrepresentation in its application for registration before DOLE Pampanga.
enumerated in the second sentence of Article 243 (now 249).
While Samahan insisted that the remaining 63 members were either working, or had at least worked
in Hanjin, only 10 attested to such fact, thus, leaving its 53 members without any workplace to claim.
Hanjin opined that only ambulant, intermittent, itinerant, rural workers, self-employed, and those
without definite employers may form a workers' association. It further posited that one third (1/3) of
On September 6, 2010, the BLR granted Samahan's appeal and reversed the ruling of the Regional
the members of the association had definite employers and the continued existence and registration
Director. It stated that the law clearly afforded the right to self-organization to all workers including
of the association would prejudice the company's goodwill.
those without definite employers.16 As an expression of the right to self-organization, industrial,
commercial and self-employed workers could form a workers' association if they so desired but
On March 18, 2010, Hanjin filed a supplemental petition,8 adding the alternative ground that
subject to the limitation that it was only for mutual aid and protection.17 Nowhere could it be found
Samahan committed a misrepresentation in connection with the list of members and/or voters who
that to form a workers' association was prohibited or that the exercise of a workers' right to self-
took part in the ratification of their constitution and by-laws in its application for registration. Hanjin
organization was limited to collective bargaining.18
claimed that Samahan made it appear that its members were all qualified to become members of the
workers' association.
The BLR was of the opinion that there was no misrepresentation on the part of Samahan. The phrase,
"KAMI, ang mga Manggagawa sa Hanjin Shipyard" if translated, would be: "We, the workers at Hanjin
On March 26, 2010, DOLE-Pampanga called for a conference, wherein Samahan requested for a 10-
Shipyard." The use of the preposition "at" instead of "of " would indicate that "Hanjin Shipyard" was
day period to file a responsive pleading. No pleading, however, was submitted. Instead, Samahan
intended to describe a place.19 Should Hanjin feel that the use of its name had affected the goodwill of
filed a motion to dismiss on April 14, 2010.9
the company, the remedy was not to seek the cancellation of the association's registration. At most,
the use by Samahan of the name "Hanjin Shipyard" would only warrant a change in the name of the
The Ruling of the DOLE Regional Director
association.20 Thus, the dispositive portion of the BLR decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region III Director Ernesto C. Bihis
On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of Hanjin. He found that the
dated 20 April 2010 is REVERSED and SET ASIDE.
preamble, as stated in the Constitution and By-Laws of Samahan, was an admission on its part that
all of its members were employees of Hanjin, to wit:
Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain in the roster of
KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay naglalayong na isulong ang
legitimate workers' association.21
pagpapabuti ng kondisyon sa paggawa at katiyakan sa hanapbuhay sa pamamagitan ng patuloy na
pagpapaunlad ng kasanayan ng para sa mga kasapi nito. Naniniwala na sa pamamagitan ng aming On October 14, 2010, Hanjin filed its motion for reconsideration.22
mga angking lakas, kaalaman at kasanayan ay anting maitataguyod at makapag-aambag sa
kaunlaran ng isang lipunan. Na mararating at makakamit ang antas ng pagkilala, pagdakila at In its Resolution,23 dated November 28, 2011, the BLR affirmed its September 6, 2010 Decision, but
pagpapahalaga sa mga tulad naming mga manggagawa. directed Samahan to remove the words "Hanjin Shipyard" from its name. The BLR explained that the
Labor Code had no provision on the use of trade or business name in the naming of a worker's
x x x10 association, such matters being governed by the Corporation Code. According to the BLR, the most
equitable relief that would strike a balance between the contending interests of Samahan and Hanjin
The same claim was made by Samahan in its motion to dismiss, but it failed to adduce evidence that
was to direct Samahan to drop the name "Hanjin Shipyard" without delisting it from the roster of
the remaining 63 members were also employees of Hanjin. Its admission bolstered Hanjin's claim that
legitimate labor organizations. The fallo reads:
Samahan committed misrepresentation in its application for registration as it made an express
WHEREFORE, premises considered, our Decision dated 6 September 2010 is hereby AFFIRMED with a
representation that all of its members were employees of the former. Having a definite employer,
DIRECTIVE for SAMAHAN to remove "HANJIN SHIPYARD" from its name.
these 57 members should have formed a labor union for collective bargaining.11 The dispositive
portion of the decision of the Dole Regional Director, reads:
SO RESOLVED.24
WHEREFORE, premises considered, the petition is hereby GRANTED. Consequently, the Certificate of
Registration as Legitimate Workers Association (LWA) issued to the SAMAHAN NG MGA Unsatisfied, Samahan filed a petition for certiorari25 under Rule 65 before the CA, docketed as CA-G.R.
MANGGAGAWA SA HANJIN SHIPYARD (SAMAHAN) with Registration Numbers R0300-1002-WA-009 SP No. 123397.
dated February 26, 2010 is hereby CANCELLED, and said association is dropped from the roster of
labor organizations of this Office. In its March 21, 2012 Resolution,26 the CA dismissed the petition because of Samahan's failure to file
a motion for reconsideration of the assailed November 28, 2011 Resolution.
On April 17, 2012, Samahan filed its motion for reconsideration27 and on July 18, 2012, Hanjin filed its
comment28 to oppose the same. On October 22, 2012, the CA issued a resolution granting Samahan's
motion for reconsideration and reinstating the petition. Hanjin was directed to file a comment five (5)
days from receipt of notice.29
On December 12, 2012, Hanjin filed its comment on the petition,30 arguing that to require Samahan
to change its name was not tantamount to interfering with the workers' right to self-
organization.31 Thus, it prayed, among others, for the dismissal of the petition for Samahan's failure
to file the required motion for reconsideration.32
On January 17, 2013, Samahan filed its reply.33
On March 22, 2013, Hanjin filed its memorandum.34
The Ruling of the Court of Appeals
On July 4, 2013, the CA rendered its decision, holding that the registration of Samahan as a
legitimate workers' association was contrary to the provisions of Article 243 of the Labor Code. 35 It
stressed that only 57 out of the 120 members were actually working in Hanjin while the phrase in the
preamble of Samahan's Constitution and By-laws, "KAMI, ang mga Manggagawa sa Hanjin Shipyard"
created an impression that all its members were employees of HHIC. Such unqualified manifestation
which was used in its application for registration, was a clear proof of misrepresentation which
warranted the cancellation of Samahan's registration.
It also stated that the members of Samahan could not register it as a legitimate worker's association
because the place where Hanjin's industry was located was not a rural area. Neither was there any
evidence to show that the members of the association were ambulant, intermittent or itinerant
workers.36
At any rate, the CA was of the view that dropping the words "Hanjin Shipyard" from the association
name would not prejudice or impair its right to self-organization because it could adopt other
appropriate names. The dispositive portion reads:
WHEREFORE, the petition is DISMISSED and the BLR's directive, ordering that the words "Hanjin
Shipyard" be removed from petitioner association's name, is AFFIRMED. The Decision dated April 20,
2010 of the DOLE Regional Director in Case No. R0300-1003-CP-001, which ordered the cancellation
of petitioner association's registration is REINSTATED.
SO ORDERED.37
Hence, this petition, raising the following
ISSUES
I. THE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT SAMAHAN CANNOT FORM
A WORKERS' ASSOCIATION OF EMPLOYEES IN HANJIN AND INSTEAD SHOULD HAVE
FORMED A UNION, HENCE THEIR REGISTRATION AS A WORKERS' ASSOCIATION SHOULD
BE CANCELLED.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE REMOVAL/DELETION OF
THE WORD "HANJIN" IN THE NAME OF THE UNION BY REASON OF THE COMPANY'S
PROPERTY RIGHT OVER THE COMPANY NAME "HANJIN."38
Samahan argues that the right to form a workers' association is not exclusive to intermittent,
ambulant and itinerant workers. While the Labor Code allows the workers "to form, join or assist labor
organizations of their own choosing" for the purpose of collective bargaining, it does not prohibit them
from forming a labor organization simply for purposes of mutual aid and protection. All members of
Samahan have one common place of work, Hanjin Shipyard. Thus, there is no reason why they
cannot use "Hanjin Shipyard" in their name.39
Hanjin counters that Samahan failed to adduce sufficient basis that all its members were employees
of Hanjin or its legitimate contractors, and that the use of the name "Hanjin Shipyard" would create
an impression that all its members were employess of HHIC.40
Samahan reiterates its stand that workers with a definite employer can organize any association for
purposes of mutual aid and protection. Inherent in the workers' right to self-organization is its right to
name its own organization. Samahan referred "Hanjin Shipyard" as their common place of work.
Therefore, they may adopt the same in their association's name.41
The Court's Ruling
The petition is partly meritorious.
Right to self-organization includes right to form a union, workers' association and labor management
councils
More often than not, the right to self-organization connotes unionism. Workers, however, can also
form and join a workers' association as well as labor-management councils (LMC). Expressed in the
highest law of the land is the right of all workers to self-organization. Section 3, Article XIII of the
1987 Constitution states:
Section 3. 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. It shall
guarantee 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. xxx
[Emphasis Supplied]
And Section 8, Article III of the 1987 Constitution also states:
Section 8. The right of the people, including those employed in the public and private sectors, to
form unions, associations, or societies for purposes not contrary to law shall not be abridged.
In relation thereto, Article 3 of the Labor Code provides:
Article 3. Declaration of basic policy. The State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed and regulate the
relations between workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of
work.
[Emphasis Supplied]
As Article 246 (now 252) of the Labor Code provides, the right to self-organization includes the right
to form, join or assist labor organizations for the purpose of collective bargaining through
representatives of their own choosing and to engage in lawful concerted activities for the same
purpose for their mutual aid and protection. This is in line with the policy of the State to foster the
free and voluntary organization of a strong and united labor movement as well as to make sure that
workers participate in policy and decision-making processes affecting their rights, duties and
welfare.42
The right to form a union or association or to self-organization comprehends two notions, to wit: (a)
the liberty or freedom, that is, the absence of restraint which guarantees that the employee may act
for himself without being prevented by law; and (b) the power, by virtue of which an employee may,
as he pleases, join or refrain from joining an association.43
In view of the revered right of every worker to self-organization, the law expressly allows and even
encourages the formation of labor organizations. A labor organization is defined as "any union or
association of employees which exists in whole or in part for the purpose of collective bargaining or of
dealing with employers concerning terms and conditions of employment."44 A labor organization has
two broad rights: (1) to bargain collectively and (2) to deal with the employer concerning terms and
conditions of employment. To bargain collectively is a right given to a union once it registers itself
with the DOLE. Dealing with the employer, on the other hand, is a generic description of interaction
between employer and employees concerning grievances, wages, work hours and other terms and
conditions of employment, even if the employees' group is not registered with the DOLE.45
A union refers to any labor organization in the private sector organized for collective bargaining and
for other legitimate purpose,46 while a workers' association is an organization of workers formed for
the mutual aid and protection of its members or for any legitimate purpose other than collective
bargaining.47
Many associations or groups of employees, or even combinations of only several persons, may qualify
as a labor organization yet fall short of constituting a labor union. While every labor union is a labor
organization, not every labor organization is a labor union. The difference is one of organization,
composition and operation.48
Collective bargaining is just one of the forms of employee participation. Despite so much interest in
and the promotion of collective bargaining, it is incorrect to say that it is the device and no other,
which secures industrial democracy. It is equally misleading to say that collective bargaining is the
end-goal of employee representation. Rather, the real aim is employee participation in whatever
form it may appear, bargaining or no bargaining, union or no union.49 Any labor organization which
may or may not be a union may deal with the employer. This explains why a workers' association or
organization does not always have to be a labor union and why employer-employee collective
interactions are not always collective bargaining.50
To further strengthen employee participation, Article 255 (now 261)51 of the Labor Code mandates
that workers shall have the right to participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes will directly affect their rights,
benefits and welfare. For this purpose, workers and employers may form LMCs.
A cursory reading of the law demonstrates that a common element between unionism and the
formation of LMCs is the existence of an employer-employee relationship. Where neither party is an
employer nor an employee of the other, no duty to bargain collectively would exist.52 In the same
manner, expressed in Article 255 (now 261) is the requirement that such workers be employed in the
establishment before they can participate in policy and decision making processes.
In contrast, the existence of employer-employee relationship is not mandatory in the formation of
workers' association. What the law simply requires is that the members of the workers' association, at
the very least, share the same interest. The very definition of a workers' association speaks of
"mutual aid and protection."
Right to choose whether to form or join a union or workers' association belongs to workers
themselves
In the case at bench, the Court cannot sanction the opinion of the CA that Samahan should have
formed a union for purposes of collective bargaining instead of a workers' association because the
choice belonged to it. The right to form or join a labor organization necessarily includes the right to
refuse or refrain from exercising the said right. It is self-evident that just as no one should be denied
the exercise of a right granted by law, so also, no one should be compelled to exercise such a
conferred right.53 Also inherent in the right to self-organization is the right to choose whether to form
a union for purposes of collective bargaining or a workers' association for purposes of providing
mutual aid and protection.
The right to self-organization, however, is subject to certain limitations as provided by law. For
instance, the Labor Code specifically disallows managerial employees from joining, assisting or
forming any labor union. Meanwhile, supervisory employees, while eligible for membership in labor
organizations, are proscribed from joining the collective bargaining unit of the rank and file
employees.54 Even government employees have the right to self-organization. It is not, however,
regarded as existing or available for purposes of collective bargaining, but simply for the furtherance
and protection of their interests.55
Hanjin posits that the members of Samahan have definite employers, hence, they should have formed
a union instead of a workers' association. The Court disagrees. There is no provision in the Labor
Code that states that employees with definite employers may form, join or assist unions only.
The Court cannot subscribe either to Hanjin's position that Samahan's members cannot form the
association because they are not covered by the second sentence of Article 243 (now 249), to wit:
Article 243. Coverage and employees' right to self-organization. All persons employed in
commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational
institutions, whether operating for profit or not, shall have the right to self-organization and to form,
join, or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employers may form labor organizations for their
mutual aid and protection. (As amended by Batas Pambansa Bilang 70, May 1, 1980)
[Emphasis Supplied]
Further, Article 243 should be read together with Rule 2 of Department Order (D.O.) No. 40-03,
Series of 2003, which provides:
RULE II
COVERAGE OF THE RIGHT TO SELF-ORGANIZATION
Section 1. Policy. - It is the policy of the State to promote the free and responsible exercise of the
right to self-organization through the establishment of a simplified mechanism for the speedy
registration of labor unions and workers associations, determination of representation status and
resolution of inter/intra-union and other related labor relations disputes. Only legitimate or registered
labor unions shall have the right to represent their members for collective bargaining and other
purposes. Workers' associations shall have the right to represent their members for purposes other
than collective bargaining.
Section 2. Who may join labor unions and workers' associations. - All persons employed in
commercial, industrial and agricultural enterprises, including employees of government owned or
controlled corporations without original charters established under the Corporation Code, as well as
employees of religious, charitable, medical or educational institutions whether operating for profit or
not, shall have the right to self-organization and to form, join or assist labor unions for purposes of
collective bargaining: provided, however, that supervisory employees shall not be eligible for
membership in a labor union of the rank-and-file employees but may form, join or assist separate
labor unions of their own. Managerial employees shall not be eligible to form, join or assist any labor
unions for purposes of collective bargaining. Alien employees with valid working permits issued by the
Department may exercise the right to self-organization and join or assist labor unions for purposes of
collective bargaining if they are nationals of a country which grants the same or similar rights to
Filipino workers, as certified by the Department of Foreign Affairs.

For purposes of this section, any employee, whether employed for a definite period or not, shall
beginning on the first day of his/her service, be eligible for membership in any labor organization.
All other workers, including ambulant, intermittent and other workers, the self-employed, rural
workers and those without any definite employers may form labor organizations for their mutual aid
and protection and other legitimate purposes except collective bargaining.
[Emphases Supplied]
Clearly, there is nothing in the foregoing implementing rules which provides that workers, with
definite employers, cannot form or join a workers' association for mutual aid and protection. Section 2
thereof even broadens the coverage of workers who can form or join a workers' association. Thus, the
Court agrees with Samahan's argument that the right to form a workers' association is not exclusive
to ambulant, intermittent and itinerant workers. The option to form or join a union or a workers'
association lies with the workers themselves, and whether they have definite employers or not.
No misrepresentation on the part of Samahan to warrant cancellation of registration
In this case, Samahan's registration was cancelled not because its members were prohibited from
forming a workers' association but because they allegedly committed misrepresentation for using the
phrase, "KAMI, ang mga Manggagawa sa HAN JIN Shipyard."
Misrepresentation, as a ground for the cancellation of registration of a labor organization, is
committed "in connection with the adoption, or ratification of the constitution and by-laws or
amendments thereto, the minutes of ratification, the list of members who took part in the ratification
of the constitution and by-laws or amendments thereto, and those in connection with the election of
officers, minutes of the election of officers, and the list of voters, xxx."56
In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director granted the petition for
the cancellation of certificate of registration of Samahang Lakas Manggagawa sa Takata (Salamat)
after finding that the employees who attended the organizational meeting fell short of the 20% union
registration requirement. The BLR, however, reversed the ruling of the DOLE Regional Director,
stating that petitioner Takata Corporation (Takata) failed to prove deliberate and malicious
misrepresentation on the part of respondent Salamat. Although Takata claimed that in the list of
members, there was an employee whose name appeared twice and another was merely a project
employee, such facts were not considered misrepresentations in the absence of showing that the
respondent deliberately did so for the purpose of increasing their union membership. The Court ruled
in favor of Salamat.
In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition for cancellation of
certificate of registration was denied. The Court wrote:
If the union's application is infected by falsification and like serious irregularities, especially
those appearing on the face of the application and its attachments, a union should be denied
recognition as a legitimate labor organization. Prescinding from these considerations, the
issuance to the Union of Certificate of Registration No. RO300-00-02-UR-0003 necessarily implies that
its application for registration and the supporting documents thereof are prima facie free from any
vitiating irregularities. Another factor which militates against the veracity of the allegations in
the Sinumpaang Petisyon is the lack of particularities on how, when and where respondent
union perpetrated the alleged fraud on each member. Such details are crucial for in the
proceedings for cancellation of union registration on the ground of fraud or
misrepresentation, what needs to be established is that the specific act or omission of the union
deprived the complaining employees-members of their right to choose.
[Emphases Supplied]
Based on the foregoing, the Court concludes that misrepresentation, to be a ground for the
cancellation of the certificate of registration, must be done maliciously and deliberately. Further, the
mistakes appearing in the application or attachments must be grave or refer to significant matters.
The details as to how the alleged fraud was committed must also be indubitably shown.
The records of this case reveal no deliberate or malicious intent to commit misrepresentation on the
part of Samahan. The use of such words "KAMI, ang mga Manggagawa sa HANJIN Shipyard" in the
preamble of the constitution and by-laws did not constitute misrepresentation so as to warrant the
cancellation of Samahan's certificate of registration. Hanjin failed to indicate how this phrase
constitutes a malicious and deliberate misrepresentation. Neither was there any showing that the
alleged misrepresentation was serious in character. Misrepresentation is a devious charge that cannot
simply be entertained by mere surmises and conjectures.
Even granting arguendo that Samahan's members misrepresented themselves as employees or
workers of Hanjin, said misrepresentation does not relate to the adoption or ratification of its
constitution and by-laws or to the election of its officers.
Removal of the word "Hanjin Shipyard" from the association's name, however, does not infringe on
Samahan's right to self-organization
Nevertheless, the Court agrees with the BLR that "Hanjin Shipyard" must be removed in the name of
the association. A legitimate workers' association refers to an association of workers organized for
mutual aid and protection of its members or for any legitimate purpose other than collective
bargaining registered with the DOLE.59 Having been granted a certificate of registration, Samahan's
association is now recognized by law as a legitimate workers' association.
According to Samahan, inherent in the workers' right to self-organization is its right to name its own
organization. It seems to equate the dropping of words "Hanjin Shipyard" from its name as a restraint
in its exercise of the right to self-organization. Hanjin, on the other hand, invokes that "Hanjin
Shipyard" is a registered trade name and, thus, it is within their right to prohibit its use.
As there is no provision under our labor laws which speak of the use of name by a workers'
association, the Court refers to the Corporation Code, which governs the names of juridical persons.
Section 18 thereof provides:
No corporate name may be allowed by the Securities and Exchange Commission if the proposed name
is identical or deceptively or confusingly similar to that of any existing corporation or to any
other name already protected by law or is patently deceptive, confusing or contrary to existing laws.
When a change in the corporate name is approved, the Commission shall issue an amended certificate
of incorporation under the amended name.
[Emphases Supplied]
The policy underlying the prohibition in Section 18 against the registration of a corporate name which
is "identical or deceptively or confusingly similar" to that of any existing corporation or which is
"patently deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud
upon the public which would have occasion to deal with the entity concerned, the evasion of legal
obligations and duties, and the reduction of difficulties of administration and supervision over
corporations.60
For the same reason, it would be misleading for the members of Samahan to use "Hanjin Shipyard" in
its name as it could give the wrong impression that all of its members are employed by Hanjin.
Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly states:
The change of name of a labor organization shall not affect its legal personality. All the rights and
obligations of a labor organization under its old name shall continue to be exercised by the labor
organization under its new name.
Thus, in the directive of the BLR removing the words "Hanjin Shipyard," no abridgement of Samahan's
right to self-organization was committed.
WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013 Decision and the January 28,
2014 Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE. The September 6,
2010 Resolution of the Bureau of Labor Relations, as modified by its November 28, 2011 Resolution,
is REINSTATED. SO ORDERED.
G.R. No. 166866 March 27, 2008
REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE ECONOMIC ZONE
AUTHORITY (PEZA) through its Director General, LILIA B. DE LIMA, Petitioner,
vs.
ANTONIO and LILI FLORENDO,* Respondents.
This is a petition for review on certiorari1 of the February 7, 2005 decision2 of the Court of Appeals
(CA) in CA-G.R. SP No. 86718. The CA dismissed petitioner Republic of the Philippines' petition for
certiorari and prohibition assailing various orders of the Regional Trial Court (RTC), Lapu-Lapu City,
Cebu, Branch 27, in connection with the execution of the RTC's judgment dated December 21, 1993
in Civil Case No. 2415-L, as modified by the decision of the CA dated June 25, 2002 in CA-G.R. CV No.
54765. This pertained to a case for expropriation of respondent spouses Antonio and Lili Florendo's
properties.3
Petitioner Republic of the Philippines is represented in this case by the Philippine Economic Zone
Authority (PEZA), a government corporation created under RA 7916,4 as amended.
On April 14, 1991, the Export Processing Zone Authority, (PEZA), predecessor of PEZA, filed a
complaint for the expropriation of seven parcels of land (Lot Nos. 4703-B-part, 4702-C, 4702-B,
4704, 4705-H, 4709 and 4710)5located at Barrio Ibo, Lapu-Lapu City, Cebu, owned by respondents.
The complaint was filed in the RTC of Lapu-Lapu City, Branch 27 and docketed as Civil Case No. 2415-
L. The purpose of the expropriation was to establish and develop an export processing zone or a part
thereof on those real properties.6
After trial on the merits, the RTC rendered a decision ordering the expropriation of the seven parcels
of land and payment of just compensation of ₱1,500 per sq. m. with 12% interest per annum from
the time petitioner took possession on March 12, 1992 until full payment thereof.7 For the aggregate
area of 17,967.5 sq. m., the total compensation was ₱26,951,250.
Petitioner filed an appeal in the CA docketed as CA-G.R. CV No. 54765 to question the correctness of
the valuation of ₱1,500 per sq. m. as just compensation.8 Pending appeal, petitioner and respondents
reached an amicable settlement and agreed on the following:
1. ₱1,500 per sq. m. valuation fixed by the RTC;
2. waiver by respondents of the payment of the court-awarded 12% interest and
3. presentation by respondents of clean titles of all the subject properties before payment by
petitioner.
Accordingly, the parties executed a deed of absolute sale dated June 25, 2001 which set out the
terms and conditions of their settlement, the transfer of ownership of Lot No. 4704 under TCT No.
21289 from respondents to petitioner and the execution by the parties of the corresponding deed of
absolute sale for the remaining six lots as soon as respondents could settle or clear the encumbrances
or other problems affecting them.9
Thereafter, the consideration for Lot Nos. 4705-H, 4709 and 4710 was paid by petitioner and
ownership was subsequently transferred to it. Petitioner prepared a joint motion to dismiss the
expropriation case but respondent Antonio Florendo refused to sign because there were still three lots
(Lot Nos. 4703-B-part, 4702-C and 4702-B) which had not yet been paid. Respondents could not clear
these properties of their encumbrances and liens as there were pending cases filed by third party
claimants over them. Instead, they proposed that a partial compromise agreement be executed to
cover the four lots that had already been sold and transferred to PEZA. Petitioner, however, found the
proposal unacceptable and contrary to their compromise agreement.10
While the parties were still trying to decide whether a partial compromise agreement or a joint motion
to dismiss should be executed, the CA rendered a decision11 in CA-G.R. CV No. 54765 dated June 25,
2002 affirming the decision of the RTC with the modification that the fair market value of the subject
properties should be ₱1,000 per sq. m. instead of ₱1,500 per sq. m. No appeal was taken by either
party. Neither did they inform the CA that they had already entered into a compromise
agreement.12 Hence, the decision attained finality on July 18, 2002.13
On October 28, 2002, respondents filed a motion for execution of the final judgment of the CA with
respect to the three parcels of land, namely Lot Nos. 4703-B-part, 4702-C and 4702-B.14 In an order
dated March 21, 2003, the RTC granted respondents’ motion and a writ of execution was issued on
April 24, 2003.15 Consequently, notices of garnishment16 were served on the Land Bank of the
Philippines, Lapu-Lapu City Branch which was petitioner’s depository bank, for the amount of
₱6,108,300.17
On May 19, 2003, petitioner filed a motion to quash the writ of execution and an urgent ex-
parte motion to lift the garnishment. Both motions were denied by the RTC in an order dated May 21,
2004 on the ground that, since the deed of absolute sale executed by the parties while the appeal was
pending in the CA was not approved by the latter, the agreement did not bind it and did not moot the
decision it promulgated. In the same order, the RTC ordered the sheriff to implement the writ of
execution dated April 24, 2003.18
Thereafter, notices of garnishment19 were served upon business establishments and other locators of
PEZA20prompting petitioner to file motions to recall, lift and set aside the notices of garnishment.21
On September 15, 2004, the RTC denied petitioner's motion for reconsideration of the order dated
May 21, 2004.22Aggrieved anew, petitioner filed a petition for certiorari and prohibition in the CA
docketed as CA-G.R. SP No. 86718.
In a decision promulgated on February 7, 2005, the CA dismissed the petition for lack of merit. It held
that there was no supervening event that would render execution of the judgment unjust. However, it
directed that in executing the final judgment, any amount that might have already been paid by
petitioner to respondents with respect to the four lots should be deducted.23
Hence this petition with prayer for the issuance of a temporary restraining order and writ of
preliminary injunction. In a resolution dated February 21, 2005, we directed the parties to maintain
the status quo before the issuance of the order dated March 21, 2003 until further orders from the
Court.24lavvphil
Petitioner raises the following issues: (1) whether the compromise agreement of the parties
constituted res judicataand therefore the June 25, 2002 decision of the CA could not have superseded
it and (2) whether or not there was a supervening event that rendered the execution of the final
judgment inequitable.
The parties agree that out of the seven lots, four had been sold and paid for. The three other lots
remain unpaid because respondents could not deliver the clean titles of these lots to petitioner in
accordance with their compromise agreement.25
Petitioner argues that the parties' compromise agreement became res judicata and was implemented
upon the payment of the four lots. Accordingly, respondents are estopped from repudiating this
agreement by insisting on the execution of the June 25, 2002 CA decision.26
Respondents counter that there was no perfected compromise agreement over the three remaining
lots as they were not taken out of the judgment of the appealed case in the CA which became final.
Execution of this final judgment would therefore be proper and just compensation for these remaining
lots should be paid.27
We grant the petition.
The pertinent terms and conditions of the parties' compromise agreement were expressed in the
"whereas" clauses of the June 25, 2001 deed of sale they executed:
WHEREAS, on 21 December 1993, the [RTC] rendered its decision fixing the just compensation of the
7 lots at Php1,500 per sq.m. or a total sum of Php26,951,250.00 plus twelve percent (12%) interest
per annum from 12 March 1992 until fully paid; which judgment was appealed by the VENDEE to the
Court of Appeals under CA-G.R. CV No. 54765 which is still pending with the said court;
WHEREAS, the parties have mutually agreed to settle the said expropriation case amicably
with the VENDEE waiving so much of the court awarded interest thereby saving the
government much needed funds for other public purposes;
WHEREAS, for this purpose, the Board of Directors of the VENDEE has issued board Resolution No.
00-416 dated 29 December 2000 approving the purchase of the aforementioned lots for
Php26,951,250.00;
WHEREAS, the parties have agreed to execute a Deed of Absolute Sale covering initially the lot under
TCT No. 21289 (1 of the 7 lots of the vendors, which has only a minor encumbrance/problem)
considering that the remaining 6 lots of the vendors either have encumbrances or are untitled, with
the understanding that the parties shall execute the corresponding Deed of Absolute Sale for
the remaining 6 lots the moment the VENDORS shall have settled/cleared the
encumbrances/problems affecting the other 6 lots; (Emphasis supplied)
xxx xxx xxx
A compromise agreement is a contract whereby the parties make reciprocal concessions in order to
resolve their differences and thus avoid litigation or to put an end to one already commenced.28 When
it complies with the requisites and principles of contracts, it becomes a valid agreement which has the
force of law between the parties.29 It has the effect and authority of res judicata once entered
into,30 even without judicial approval.31
A compromise agreement is a simple contract which is perfected by mere consent.32 From that
moment of the meeting of the minds of the parties, it becomes binding on them. To be valid, judicial
approval is not required.33
When a compromise agreement is given judicial approval, it becomes more than a contract binding
upon the parties. Having been sanctioned by the court, it is a determination of the controversy and
has the force and effect of a judgment. It is immediately executory and not appealable, except for
vices of consent, forgery, fraud, misrepresentation and coercion.34 Thus, although a compromise
agreement has the effect and authority of res judicata upon the parties even without judicial approval,
no execution may issue until it has received the approval of the court where the litigation is pending
and compliance with the terms of the agreement is thereupon decreed.35
The first question to answer is whether there was a perfected compromise agreement with respect to
the remaining three lots which have not been paid by petitioner because respondents could not
deliver clean titles thereto.
The compromise agreement the parties executed was in the form of a contract of sale. The elements
of a valid contract of sale are: (a) consent or meeting of the minds; (b) determinate subject matter
and (c) price certain in money or its equivalent.36 All the elements are present here. The parties
agreed on the sale of a determinate object (the seven lots) and the price certain (₱26,951,250). 37
Respondents, however, insist that, as to the three lots, there was no meeting of the minds because
the condition relating to the delivery of clean titles was not fulfilled. Respondents are wrong.
The delivery of clean titles was not a condition imposed on the perfection of the contract of sale but a
condition imposed on petitioner's obligation to pay the purchase price of these lots.38 In Jardine
Davies Inc. v. CA,39 we distinguished between a condition imposed on the perfection of a contract and
a condition imposed merely on the performance of an obligation. While failure to comply with the first
condition results in the failure of a contract, non-compliance with the second merely gives the other
party options and/or remedies to protect its interests.40
The next question is whether this perfected compromise agreement is valid despite the finality of
judgment of the CA. In Magbanua v. Uy,41 we answered in the affirmative:
The issue involving the validity of a compromise agreement notwithstanding a final judgment is not
novel. Jesalva v. Bautista upheld a compromise agreement that covered cases pending trial, on
appeal, and with final judgment. The Court noted that Article 2040 impliedly allowed such
agreements; there was no limitation as to when these should be entered into. Palanca v. Court of
Industrial Relations sustained a compromise agreement, notwithstanding a final judgment in which
only the amount of back wages was left to be determined. The Court found no evidence of fraud or of
any showing that the agreement was contrary to law, morals, good customs, public order, or public
policy.
Gatchalian v. Arlegui upheld the right to compromise prior to the execution of a final judgment. The
Court ruled that the final judgment had been novated and superseded by a compromise agreement. 42
Accordingly, we hold that the compromise agreement reached by the parties while the appeal was
pending in the CA is valid. When the CA rendered its June 25, 2002 decision, it unknowingly
adjudicated a case which, for all intents and purposes, had already been closed and terminated by the
parties themselves when they agreed on a settlement.43 It does not matter that the CA decision
lapsed into finality when neither party questioned it. A compromise agreement is still valid even if
there is already a final and executory judgment.44
Furthermore, compromises are favored and encouraged by the courts.45 Parties are bound to abide by
them in good faith.46 Since they have the force of law between the parties, no party may discard them
unilaterally.47
Consequently, considering that the June 25, 2002 decision of the CA had been superseded by the
compromise agreement of the parties, the various orders of the RTC directing the execution of the
said June 25, 2002 CA decision were invalid and of no force and effect.48
And since the compromise agreement between the parties has been upheld and the execution of the
June 25, 2002 CA decision has been invalidated, it is no longer necessary to resolve the second
issue.49
WHEREFORE, the petition is hereby GRANTED. The February 7, 2005 decision of the Court of
Appeals in CA-G.R. SP No. 86718 is SET ASIDE. The following orders of the Regional Trial Court,
Lapu-Lapu City, Cebu, Branch 27 are hereby declared NULL AND VOID:
(1) order of the RTC, Lapu-Lapu City, Branch 27 dated March 21, 2003 granting respondents'
motion for execution;
(2) order of the RTC dated May 21, 2004 denying petitioner’s motion to quash writ of
execution and motion to lift garnishment;
(3) order of the RTC dated September 15, 2004 denying petitioner’s motion for
reconsideration of the order dated May 21, 2004;
(4) writ of execution dated April 24, 2003 and
(5) notices of garnishment dated May 14, 2003, June 22, 2004, and September 23, 2004,
and all other orders and notices pursuant to the writ of execution.
The status quo order issued by this Court on February 21, 2005 is LIFTED. SO ORDERED.
G.R. No. 158929 August 3, 2010
ROSARIO P. TAN, Petitioner,
vs.
ARTEMIO G. RAMIREZ, MOISES G. RAMIREZ, RODRIGO G. RAMIREZ, DOMINGO G. RAMIREZ,
and MODESTA RAMIREZ ANDRADE, Respondents.
We resolve in this Decision the petition for review on certiorari1 filed by petitioner Rosario P. Tan
(petitioner) who seeks to reverse and set aside the decision2 dated January 28, 2003 and the
resolution3 dated June 19, 2003 of the former Seventh Division of the Court of Appeals (CA) in CA-
G.R. SP No. 66120. The assailed CA decision declared Roberto Ramirez, father and predecessor-in-
interest of respondents Artemio G. Ramirez, Moises G. Ramirez, Rodrigo G. Ramirez, Domingo G.
Ramirez, and Modesta Ramirez Andrade (respondents), as the lawful owner of a 86,433-square meter
parcel of land in Mahaba, Apid, Inopacan, Leyte, known as Cadastral Lot No. 3483, Case 12, CAD
637-D, Inopacan Cadastre (subject property). The assailed CA resolution denied the petitioner’s
motion for reconsideration.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are briefly summarized below.
On August 11, 1998, the petitioner, representing her parents (spouses Crispo and Nicomedesa P.
Alumbro), filed with the Municipal Circuit Trial Court (MCTC) of Hindang-Inopacan, Leyte a complaint
for the recovery of ownership and possession and/or quieting of title of a one-half portion of the
subject property against the respondents.4
The petitioner alleged that her great-grandfather Catalino Jaca Valenzona was the owner of the
subject property under a 1915 Tax Declaration (TD) No. 2724. Catalino had four children:
Gliceria,5 Valentina, Tomasa, and Julian; Gliceria inherited the subject property when Catalino died;
Gliceria married Gavino Oyao, but their union bore no children; when Gliceria died on April 25, 1952,
Gavino inherited a one-half portion of the subject property, while Nicomedesa acquired the other half
through inheritance, in representation of her mother, Valentina, who had predeceased Gliceria, and
through her purchase of the shares of her brothers and sisters. In 1961, Nicomedesa constituted
Roberto as tenant of her half of the subject property; on June 30, 1965, Nicomedesa bought Gavino’s
one-half portion of the subject property from the latter’s heirs, Ronito and Wilfredo Oyao,6 evidenced
by a Deed of Absolute Sale of Agricultural Land;7 on August 3, 1965, Nicomedesa sold to Roberto this
one-half portion in a Deed of Absolute Sale of Agricultural Land;8 and in 1997, Nicomedesa discovered
that since 1974, Roberto had been reflecting the subject property solely in his name under TD No.
4193.
The respondents, on the other hand, traced ownership of the subject property to Gavino who
cultivated it since 1956; Roberto bought half of the subject property from Nicomedesa on August 3,
1965,9 and the remaining half from Gavino’s heirs, Ronito and Wilfredo Oyao, on October 16,
1972.10 On January 9, 1975, a certain Santa Belacho, claiming to be Gavino’s natural child, filed a
complaint with the Court of First Instance of Baybay, Leyte against Roberto, Nicomedesa, Ronito and
Wilfredo Oyao, docketed as Civil Case No. B-565, for recovery of possession and ownership of two (2)
parcels of land, including the subject property;11 on September 16, 1977, Roberto bought the subject
property from Belacho through a Deed of Absolute Sale of Land; and on October 5, 1977, Roberto and
Nicomedesa entered into a Compromise Agreement with Belacho to settle Civil Case No. B-565.
Belacho agreed in this settlement to dismiss the case and to waive her interest over the subject
property in favor of Roberto, and the other parcel of land in favor of Nicomedesa in consideration of
₱1,800.00.12
THE MCTC RULING
In a Decision dated April 2, 2001, the MCTC found that Catalino’s 1915 TD No. 2724 was not the
source of Gavino’s 1945 TD No. 3257 because it involved the other parcel of land subject of Civil Case
No. B-565. It noted that the subject property was the conjugal property of Gavino and Gliceria;
Gliceria’s death in 1952 dissolved the conjugal partnership and entitled Gavino to a one-half portion
as his conjugal share, while Gliceria’s one-half share should be equally divided among Gavino and
Gliceria’s brothers and sisters or their children. It held that Roberto was entitled to only three-fourths,
as this was Gavino’s entire share, while the petitioner was entitled to one-fourth of the subject
property, and gave the parties sixty days to effect the partition.13
The MCTC brushed aside the respondents’ argument that they acquired the subject property by
ordinary acquisitive prescription, noting that bad faith attended their possession because they were
well aware of Nicomedesa’s claim of ownership over a one-half portion of the subject property, long
before the property was tax declared solely in Roberto’s name in 1974. It observed that the required
thirty-year period for extraordinary acquisitive prescription was not met because the respondents had
only twenty-four years of adverse possession, counted from 1974 until the filing of the complaint in
1998.14
THE RTC RULING
On appeal, Judge Abraham B. Apostol15 of the Regional Trial Court (RTC), Branch 18, Hilongos, Leyte,
rendered a two-page Decision dated June 29, 2001, which we quote in full:
I. The Case
THIS IS A COMPLAINT FOR Recovery of Ownership And Possession And/Or Quieting of Title With
Damages filed by Plaintiffs against defendants on a parcel of land located at Mahaba, Apid, Inopacan,
Leyte presently described as follows:
A parcel of land situated at Mahaba, Inopacan, Leyte, bounded on the NORTH by Camotes Sea; EAST
by Camotes Sea; SOUTH by Lot 3478, 3476, 3473, WEST by Lot 3480 covered by Tax Declaration No.
4193 in the name of Roberto Ramirez.
After a full blown hearing, a DECISION was rendered, the decretal portion being:
WHEREFORE, all the foregoing considered the court hereby decrees:
1. That plaintiff and defendants are lawful co-owners of Lot 3483 as afore-described;
2. That the shares of the parties shall be divided and apportioned in the following manner:
plaintiff shall own one-fourth (1/4) of Lot 3483 and defendants shall collectively own three-
fourth (3/4) of Lot 3483;
3. That the parties are hereby given sixty days from receipt hereof within which to effect the
actual partition among themselves observing the foregoing proportion, proportionately
sharing the expenses therefor and to submit to the court for final approval the project of
partition including the proposed subdivision plan prepared by a geodetic engineer;
4. That should the parties be unable to voluntarily agree to make the partition, they shall so
inform the court within thirty days from receipt hereof.
5. That the parties equally share the costs of this suit.
SO ORDERED.
II. Facts of the Case:
a. Version of the Plaintiffs is extant on the rollo of the case summarized on Appeal by a
MEMORANDUM but negligently forgetting to enumerate their PRAYERS.
b. Version of the Defendants is also extant on the records of the case and clearly expanded
via a MEMORANDUM.
III. Court Findings/Ruling:
THIS COURT adopts in toto the DECISION of the Court a quo, slightly correcting no. 2 of the same to
conform to the fallo of the DECISION which stated a "proportion of 1:3[.]"
No. 2 shall therefore read as follows:
2. That the shares of the parties shall be divided and apportioned in the following manner: plaintiff
shall own ONE-THIRD (1/3) of Lot 3483 and defendants shall collectively own TWO-THIRDS (2/3) of
Lot 3483.
SO ORDERED.16
The respondents elevated the case to the CA via a petition for review under Rule 42 of the Rules of
Court, insisting that the lower courts erred in finding that the petitioner is a co-owner since they have
already acquired the entire area of the subject property by ordinary acquisitive prescription.
THE CA RULING
The CA decided the appeal on January 28, 2003. It set aside the Decisions dated April 2, 2001 and
June 29, 2001 of the MCTC and the RTC, respectively, and declared Roberto as the lawful owner of
the entire area of the subject property. The appellate court found that the October 5, 1977
Compromise Agreement executed by Belacho gave Roberto’s possession of the subject property the
characters of possession in good faith and with just title; the respondents’ twenty-one years of
possession, from execution of the compromise agreement in 1977 until the filing of the case in 1998,
is more than the required ten-year possession for ordinary acquisitive prescription. The CA also noted
that Roberto also enjoyed just title because Belacho executed a contract of sale in his favor on
September 16, 1977.17
After the CA’s denial18 of her motion for reconsideration,19 the petitioner filed the present petition for
review on certiorari under Rule 45 of the Rules of Court.
THE PETITION
The petitioner contends that the CA misappreciated the legal significance of the compromise
agreement and the contract of sale, both executed by Belacho, and thus concluded that the
respondents were possessors in good faith and with just title and could acquire the subject property
through ordinary acquisitive prescription. She argues that the parties merely entered into the
compromise agreement to settle the case. She further argues that Roberto entered the contract of
sale in bad faith because the sale took place during the pendency of Civil Case No. B-565.
The respondents submit that they are possessors in good faith and with just title because Roberto
bought the subject property from Belacho in a contract of sale dated September 16, 1977, and the
compromise agreement, executed on October 5, 1977, recognized Roberto’s ownership of the subject
property.
THE ISSUE
The core issue is whether the CA erred in relying upon the compromise agreement and the contract of
sale to conclude that the respondents had been possessors in good faith and with just title and could
acquire the subject property through ordinary acquisitive prescription.
OUR RULING
We find the petition meritorious.
This Court is not a trier of facts. However, if the inference drawn by the appellate court from the facts
is manifestly mistaken, as in the present case, we can review the evidence to allow us to arrive at the
correct factual conclusions based on the record.20
Prescription as a mode of acquiring ownership
Prescription, as a mode of acquiring ownership and other real rights over immovable property,21 is
concerned with lapse of time in the manner and under conditions laid down by law, namely, that the
possession should be in the concept of an owner, public, peaceful, uninterrupted, and adverse. 22 The
party who asserts ownership by adverse possession must prove the presence of the essential
elements of acquisitive prescription.23
Acquisitive prescription of real rights may be ordinary or extraordinary.24 Ordinary acquisitive
prescription requires possession in good faith and with just title for ten years.25 In extraordinary
prescription, ownership and other real rights over immovable property are acquired through
uninterrupted adverse possession for thirty years without need of title or of good faith.26
Possession "in good faith" consists in the reasonable belief that the person from whom the thing is
received has been the owner thereof, and could transmit his ownership.27 There is "just title" when
the adverse claimant came into possession of the property through one of the modes recognized by
law for the acquisition of ownership or other real rights, but the grantor was not the owner or could
not transmit any right.28
Compromise agreement not a valid basis
of possession in good faith and just title
We find that the CA mistakenly relied upon the compromise agreement, executed by Belacho to
conclude that the respondents were possessors in good faith and with just title who acquired the
property through ordinary acquisitive prescription.
In Ramnani v. Court of Appeals,29 we held that the main purpose of a compromise agreement is to
put an end to litigation because of the uncertainty that may arise from it. Reciprocal concessions are
the very heart and life of every compromise agreement.30 By the nature of a compromise agreement,
it brings the parties to agree to something that neither of them may actually want, but for the peace
it will bring them without a protracted litigation.31
In the present case, to avoid any conflict with Belacho, Roberto and Nicomedesa paid ₱1,800.00 in
consideration of Belacho’s desistance from further pursuing her claim over two (2) parcels of land,
including the subject property. Thus, no right can arise from the compromise agreement because the
parties executed the same only to buy peace and to write finis to the controversy; it did not create or
transmit ownership rights over the subject property. In executing the compromise agreement, the
parties, in effect, merely reverted to their situation before Civil Case No. B-565 was filed.
Contract of sale cannot support
claim of good faith and just title
Neither can the respondents benefit from the contract of sale of the subject property, executed by
Belacho in favor of Roberto, to support their claim of possession in good faith and with just title. In
the vintage case of Leung Yee v. F.L. Strong Machinery Co. and Williamson,32 we explained good faith
in this manner:
One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim
that he has acquired title thereto in good faith as against the true owner of the land or of an interest
therein; and the same rule must be applied to one who has knowledge of facts which should have put
him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the
title of his vendor.33
Good faith, or the want of it, can be ascertained only from the acts of the one claiming it, as it is a
condition of mind that can only be judged by actual or fancied token or signs.34
In the present case, no dispute exists that Roberto, without Nicomedesa’s knowledge or participation,
bought the subject property on September 16, 1977 or during the pendency of Civil Case No. B-565.
Roberto, therefore, had actual knowledge that Belacho’s claim to ownership of the subject property,
as Gavino’s purported heir, was disputed because he (Roberto) and Nicomedesa were the defendants
in Civil Case No. B-565. Roberto even admitted that he bought the subject property from Belacho to
"avoid any trouble."35 He, thus, cannot claim that he acted in good faith under the belief that there
was no defect or dispute in the title of the vendor, Belacho.
Not being a possessor in good faith and with just title, the ten-year period required for ordinary
acquisitive prescription cannot apply in Roberto’s favor. Even the thirty-year period under
extraordinary acquisitive prescription has not been met because of the respondents’ claim to have
been in possession, in the concept of owner, of the subject property for only twenty-four years, from
the time the subject property was tax declared in 1974 to the time of the filing of the complaint in
1998.1avvphi1
Based on the foregoing, the CA erred in finding that the respondents acquired the petitioner’s one-
fourth portion of the subject property through acquisitive prescription. As aptly found by the MCTC,
the respondents are only entitled to three-fourths of the subject property because this was Gavino’s
rightful share of the conjugal estate that Roberto bought from Ronito and Wilfredo Oyao.
RTC Decision did not conform to the
requirements of the Constitution and
of the Rules of Court
Before closing, we cannot close our eyes to the failure of the RTC decision to measure up to the
standard set by Section 14 of Article VIII of the Constitution, as well as Section 1 of Rule 36 and
Section 1, Rule 120 of the Rules on Civil Procedure, that a decision, judgment or final order
determining the merits of the case shall state, clearly and distinctly, the facts and the law on which it G.R. No. 190381 October 6, 2010
is based. Our Administrative Circular No. 1 of January 28, 1988 reiterates this requirement and
stresses that judges should make complete findings of facts in their decisions, scrutinize closely the
COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner,
legal aspects of the case in the light of the evidence presented, and avoid the tendency to generalize
vs.
and to form conclusions without detailing the facts from which such conclusions are deduced.
RODRIGO MERCADO, ANTONIO VILLERO, LUISITO MANTIBE, MARCELO FABIAN, EDMUNDO
YALUNG, EDILBERTO GUEVARRA, MICHAEL GUICO, ANGEL FERNANDO, ERNESTO DELA
In Yao v. Court of Appeals,36 we emphasized: CRUZ, EFREN FERNANDO, ROBERTO TORRES, JIMMY DUNGO, WILLY OCAMPO, SANDRO
DIZON, ALLAN OCAMPO, CARLITO MANABAT, CARLITO SINGIAN, JAY MANABAT, ERIC
AQUINO, RODRIGO DAVID, NICOLAS LUQUIAZ,* LUCIO MANTIBE, PRUDENCIO PALALON,
Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a
RAFAEL CABRERA, ROMMER SINGIAN,** ROGELIO MALIT, ALVIN ANDAYA, EMERITO B.
paramount component of due process and fair play. It is likewise demanded by the due process clause
DUNGCA, ALMIRANTE GORAL,*** AND NICOLAS CURA, Respondents.
of the Constitution. The parties to a litigation should be informed of how it was decided, with an
explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot
simply say that judgment is rendered in favor of X and against Y and just leave it at that without any Before us is a Manifestation and Motion1 filed by respondents, stating that petitioner has satisfied the
justification whatsoever for its action. The losing party is entitled to know why he lost, so he may judgment award in their favor by way of a Compromise Agreement2 dated June 16, 2010. On the
appeal to the higher court, if permitted, should he believe that the decision should be reversed. A basis of the Compromise Agreement, the parties filed a motion for judgment, which was granted by
decision that does not clearly and distinctly state the facts and the law on which it is based leaves the the Labor Arbiter in an Order3 dated June 21, 2010, declaring NLRC Case No. RAB-III-02-3910-
parties in the dark as to how it was reached and is precisely prejudicial to the losing party, who is 02,4 the origin of the instant case, as closed and terminated. Respondents pray that the petition for
unable to pinpoint the possible errors of the court for review by a higher tribunal. More than that, the review before us be dismissed for having been rendered moot and academic by petitioner’s
requirement is an assurance to the parties that, in reaching judgment, the judge did so through the satisfaction of judgment. The Compromise Agreement reads—
processes of legal reasoning. It is, thus, a safeguard against the impetuosity of the judge, preventing
him from deciding ipse dixit. Vouchsafed neither the sword nor the purse by the Constitution but
COMPROMISE AGREEMENT
nonetheless vested with the sovereign prerogative of passing judgment on the life, liberty or property
of his fellowmen, the judge must ultimately depend on the power of reason for sustained public
confidence in the justness of his decision.37 WHEREAS, in February 2002, MICHAEL MEROVIN GUICO ["Guico"], ANGEL FERNANDO ["Fernando"],
LUISITO MANTIBE ["Mantibe"], WILLY OCAMPO ["Ocampo"], ALLAN OCAMPO ["Ocampo"],
ALMERANTE GORAL ["Goral"], CARLITO MANABAT ["Manabat"], ERNESTO DELA CRUZ ["Dela Cruz"],
The RTC decision did not distinctly and clearly set forth, nor substantiate, the factual and legal bases
JAY MANABAT ["Manabat"], NICOLAS CURA ["Cura"], SANDRO DIZON ["Dizon"], NICOLAS LUQUIAS
for its affirmance of the MCTC decision. It contained no analysis of the evidence of the parties nor
["Luquias"], RODRIGO MERCADO ["Mercado"], ALVIN ANDAYA ["Andaya"], ANTONIO VILLERO
reference to any legal basis in reaching its conclusions. Judges must inform the parties to a case of
["Villero"], EDILBERTO GUEVARRA ["Guevarra"], EFREN FERNANDO ["Fernando"], EMERITO DUNGCA
the legal basis for their decision so that if a party appeals, it can point out to the appellate court the
["Dungca"], ERIC AQUINO ["Aquino"], JIMMY DUNGO ["Dungo"], MARCELO FABIAN ["Fabian"],
points of law to which it disagrees. Judge Apostol should have known the exacting standard imposed
ROBERTO TORRES ["Torres"], RODRIGO DAVID ["David"], ROMER SINGIAN ["Singian"], CARLITO
on courts by the Constitution and should not have sacrificed the constitutional standard for brevity’s
SINGIAN ["Singian"], EDMUNDO YALUNG ["Yalung"], PRUDENCIO PALALON ["Palalon"], RAFAEL
sake. Had he thoroughly read the body of the MCTC decision, he would have clearly noted that the
CABRERA ["Cabrera"], ROGELIO MALIT ["Malit"] and LUCIO MANTIBE ["Mantibe"] (collectively, the
"proportion of 1:3," stated in the penultimate paragraph of the decision, meant that the petitioner
"Complainants") were among the complainants who filed a complaint for illegal dismissal and
was entitled to one-fourth, while the respondents were entitled to three-fourths, of the subject
regularization with claims for wage and benefits differential according to CBA, moral and exemplary
property.
damages against COCA COLA BOTTLERS PHILIPPINES INC. [the "Company"] docketed as NLRC Case
No. RAB-III-02-3901-02 and NLRC NCR CA No. 037888-03 entitled "Rodrigo Mercado, et al. v. Coca-
WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE the decision dated Cola Bottlers Phils., Inc., et al."
January 28, 2003 and the resolution dated June 19, 2003 of the former Seventh Division of the Court
of Appeals in CA-G.R. SP No. 66120. The decision dated April 2, 2001 of the Municipal Circuit Trial
WHEREAS, on 30 September 2003, Labor Arbiter Herminio V. Suelo rendered a Decision dismissing
Court of Hindang-Inopacan, Leyte in Civil Case No. 196 is REINSTATED. No pronouncement as to
the Complaint against the Company;
costs. SO ORDERED.

WHEREAS, complainant’ Appeal was granted by the NLRC in its 30 July 2008 Resolution; the
dispositive portion of which states:

WHEREFORE, the Motion for Reconsideration of complainants is GRANTED. The Decision dated
January 31, 2005 is SET ASIDE and VACATED, and NEW ONE entered;

(a) declaring respondent Coca-Cola Bottlers Phils., Inc. as the employer of complainants;

(b) finding complainants to have been dismissed illegally;

 (c) ordering Coca-Cola Bottlers Philippines, Inc. to reinstate complainants to their former
Almerante Goral 2,655,550.00
positions as regular employees without loss of seniority rights and with other privileges and
with payment of full backwages from the date of dismissal on June 3, 2002 until actual Carlito Manabat 2,655,550.00
reinstatement;
Ernesto Dela Cruz 2,655,550.00
(d) declaring Romac Services & Trading Co. Inc. and Rogelio S. Cunanan General Services to
be engaged in labor-only contracting; and Jay Manabat 2,655,550.00

Nicolas Cura 2,655,550.00

(e) ordering respondent Coca-Cola Bottlers Phils. Inc. to pay attorney’s fees at 10% of the
total award. Sandro Dizon 2,655,550.00

The other claims are dismissed for lack of merit. Nicolas Luquias 2,941,000.00

Rodrigo Mercado 2,941,000.00

SO ORDERED.
Alvin Andaya 3,036,150.00
WHEREAS, CCBPI filed a Petition for Certiorari with the Court of Appeals docketed as CA G.R. SP No.
108404 entitled "Coca-Cola Bottlers Philippines, Inc. vs. National Labor Relations Commission and Antonio Villero 3,036,150.00
Rodrigo Mercado, et al."
Edilberto Guevarra 3,036,150.00

WHEREAS, on 20 August 2009, the Eight Division of the Court of Appeals rendered a Decision denying Efren Fernando 3,036,150.00
the Petition;
Emerito Dungca 3,036,150.00
WHEREAS, the Company filed a Motion for Reconsideration which was denied by the Court of Appeals
Eric Aquino 3,036,150.00
in its 18 November 2009 Resolution;
Jimmy Dungo 3,036,150.00
WHEREAS, the Company filed a Petition for Review on Certiorari with the Supreme Court, which is
docketed as G.R. No. 190381 entitled "Coca-Cola Bottlers Philippines, Inc. vs. Rodrigo Mercado, et al." Marcelo Fabian 3,036,150.00

Roberto Torres 3,036,150.00

WHEREAS, the Company has nevertheless decided to settle/satisfy complainants’ claims/award and
thus put an end to NLRC Case No. RAB-III-02-3901-02; NLRC NCR CA No. 037888-03; CA G.R. SP Rodrigo David 3,036,150.00
No. 108404 and G.R. No. 190381;
Romer Singian 3,036,150.00
NOW THEREFORE, for and in consideration of the foregoing premises and the mutual covenants set
forth hereinbelow, the parties agree as follows: Carlito Singian 3,269,700.00

Edmundo Yalung 3,269,700.00

1. Complainants shall each receive financial assistance in the amount as follows:
Prudencio Palalon 3,269,700.00

NAME AMOUNT Rafael Cabrera 3,269,700.00

Michael Merovin Guico ₱ 2,153,850.00 Rogelio Malit 3,269,700.00

Angel Fernando 2,266,300.00 Lucio Mantibe 3,330,250.00

Luisito Mantibe 2,266,300.00

as complete settlement of their claims in NLRC NCR Case No. 00-07-07574-99/NLRC NCR CA No.
Willy Ocampo 2,266,300.00 030908-02 and/or full satisfaction of the judgment award, including the reinstatement aspect thereof,
in CA G.R. SP No. 108404 and G.R. No. 190381.
Allan Ocampo 2,655,550.00
 2. Complainants agree that the amount received is in consideration of any and all monetary
(Signed)
claims they might have as well as and including separation pay in lieu of their actual
SANDRO DIZON
reinstatement as regular employees including any other liability or claims arising from, in
relation to and/or in connection with their assignment with the Company. (Signed)
NICOLAS LUQUIAS
3. By virtue of this Agreement, complainants consider their claims (including the
reinstatement aspect thereof) in NLRC RAB III-02-3901-02/NLRC NCR CA No. 037888-03 as (Signed)
fully settled, and the judgment award in CA G.R. SP No. 108404 and G.R. No. 190381 RODRIGO MERCADO
(including the reinstatement aspect thereof) as fully satisfied, and hereby consider said cases
as dismissed, with prejudice, and undertake to desist from prosecuting and/or instituting any (Signed)
other case or claim against any and/or all the respondents. ALVIN ANDAYA

(Signed)
IN WITNESS WHEREOF, the parties have hereunto affixed their signatures this 16th day of June 2010 ANTONIO VILLERO
at the City of San Fernando, Pampanga.
(Signed)
EDILBERTO GUEVARRA
COMPLAINANTS: LAGUESMA MAGSALIN CONSULTA
& GASTARDO (Signed)
Counsel for Coca-Cola Bottlers EFREN FERNANDO
(Signed) Philippines, Inc.
MICHAEL MEROVIN GUICO 706 Prestige Tower, F. Ortigas Jr. Road (Signed)
Ortigas Center, Pasig City EMERITO DUNGCA

(Signed) By: (Signed)

ANGEL FERNANDO ERIC AQUINO

(Signed) BERNARDINO F. CONSULTA (Signed)

LUISITO MANTIBE PTR No. 5922571; 01-11-10; Pasig City JIMMY DUNGO
IBP No. 810944; 01-11-10; Quezon City
Roll No. 33337 (Signed)
(Signed) MCLE Compliance No. III-0010894 MARCELO FABIAN
WILLY OCAMPO 31 March 2010
(Signed)
(Signed) (Signed) ROBERTO TORRES
ALLAN OCAMPO CARLOS LUIS L. FERNANDEZ
PTR No. 5922576; 01-11-10; Pasig City (Signed)
(Signed) IBP No. 810942; 01-11-10; Quezon City RODRIGO DAVID
Roll No. 45321
ALMERANTE GORAL MCLE Compliance No. III-0010898 (Signed)
31 March 2010 ROMER SINGIAN

(Signed) (Signed)
CARLITO MANABAT CARLITO SINGIAN

(Signed) (Signed)
ERNESTO DELA CRUZ EDMUNDO YALUNG

(Signed) (Signed)
JAY MANABAT PRUDENCIO PALALON

(Signed) (Signed)
NICOLAS CURA RAFAEL CABRERA
 5. x x x finally declare that [they] have read and fully understand this document, and the
(Signed)
release, waiver and quitclaim hereby given is made willingly and voluntarily and with full
ROGELIO MALIT
knowledge of [their] rights under the law.7
(Signed)
LUCIO MANTIBE The Joint Release, Waiver and Quitclaim was signed individually by respondents and their counsel of
record.
Assisted by:

(Signed)
ATTY. NENITA C. MAHINAY
In its own Manifestation and Compliance,5 petitioner confirms the parties’ amicable settlement
through the Compromise Agreement and professes that it interposes no objection to respondents’
prayer for dismissal of the petition. Petitioner also submits, aside from a copy of the Compromise
Agreement, a Joint Release, Waiver and Quitclaim6 dated June 16, 2010, where the respondents
acknowledged receipt of the amounts indicated in the Compromise Agreement as complete settlement
of all their claims against petitioner, relative to this case, and in consideration of which they—
1. x x x remise, release and forever discharge the Company, its successors-in-interest,
stockholders, officers, directors, agents or employees from any action, sum of money,
damages, claims and demands whatsoever, which in law or in equity [they] ever had, now
have, or which [they, their] successors and assigns hereafter may have by reason of any
matter, cause or thing whatsoever, up to the time of these presents, the intention hereof
being completely and absolutely to release the Company as well as its successors-in-interest,
stockholders, officers, directors, agents or employees from all liabilities arising wholly,
partially or directly from our temporary assignment/engagement with the Company.
Under the Civil Code of the Philippines,8 contracting parties may establish such stipulations, clauses,
terms, and conditions, as they deem convenient, so long as they are not contrary to law, morals,
good customs, public order, or public policy. A compromise agreement is a contract whereby the
parties undertake reciprocal obligations to resolve their differences in order to avoid litigation or put
an end to one already instituted.9 It is a judicial covenant having the force and effect of a judgment,
subject to execution in accordance with the Rules of Court, and having the effect and authority of res
judicata upon its approval by the court where the litigation is pending.10
Finding the Compromise Agreement dated June 16, 2010 between petitioner and respondents to be
validly executed, not being contrary to law, morals, good customs, public order, or public policy, we,
therefore, accept and affirm the same.
WHEREFORE, the Manifestation and Motion of respondents Rodrigo Mercado, et al. is GRANTED. The
Compromise Agreement dated June 16, 2010 between petitioner Coca-Cola Bottlers Philippines, Inc.
and respondents Rodrigo Mercado, et al. is AFFIRMED, and judgment is rendered accordingly. The
instant controversy is DISMISSED. No costs.
SO ORDERED.

2. x x x acknowledge the temporary nature of [their] assignment/engagement with the

Company and the absence of an employer-employee relationship between [them] and the
Company, and [they] further acknowledge that [they] have no intention whatsoever of being
reinstated to [their] previous assignment at the Company.

3. x x x also manifest that the payment by the Company of any or all of the foregoing sum of
money shall not be taken by [them, their] heirs or assigns as a confession and/or admission
of liability on the part of the Company, as well as its successors-in-interest, stockholders,
officers, directors, agents or employees for any matter, cause, demand or claim that [they]
may have against any or all of them. [They] acknowledge that [they] have received all
amounts that are now, or in the future, may be due [them] from the Company. [They] also
acknowledge that during the entire period of [their] temporary assignment/engagement with
the Company, [they] received and were paid all compensations, benefits and privileges to
which [they] were entitled under the law, and if [they] are hereinafter be found in any
manner to have been entitled to any amount, the above consideration is a full and complete
satisfaction of any and all such undisclosed claims.

4. x x x warrant that [they] will institute no action and will not continue to prosecute any
pending action, against the Company, as well as its successors-in-interest, stockholders,
officers, directors, agents or employees, by reason of [their] temporary
assignment/engagement with the Company, including the case docketed as G.R. No. 190381
pending before the Supreme Court.1avvphi1